As filed with the Securities and Exchange Commission on August 27, 1998
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
THE LESLIE FAY COMPANY, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3197085
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1412 Broadway, New York, New York 10018
(Address of Principal Executive Offices) (Zip Code)
1997 Management Stock Option Plan
of
The Leslie Fay Company, Inc.
(Full title of the plan)
John J. Pomerantz
The Leslie Fay Company, Inc.
1412 Broadway
New York, New York 10018
(212) 221-4000
(Name, address and telephone number, including area code, of agent for service)
with a copy to:
Michael J. Shef, Esq.
Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036
Approximate date of commencement of proposed sale to public:
As soon as practicable after the effective date of this Registration Statement.
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Title of Proposed maximum Proposed
securities Amount to be offering price per maximum aggregate Amount of
to be registered registered(1) share offering price registration fee
- ------------------------------------------------------------------------------------------------------------------------------------
Common Stock, par
value $.01 per share 1,172,580 $3.2641 (2) $3,827,432.20 (2) $1,129.09 (2)
- ------------------------------------------------------------------------------------------------------------------------------------
Common Stock, par
value $.01 per share 1,327,420 $6.1875 (3) $8,213,411.20 (3) $2,422.96 (3)
- ------------------------------------------------------------------------------------------------------------------------------------
Total 2,500,000 $4.8163 $12,040,843.40 $3,552.05
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Pursuant to Rule 416(b), there shall also be deemed covered hereby all
additional securities resulting from anti-dilution adjustments under
the Plan.
(2) Estimated pursuant to Rule 457(h), solely for the purpose of calculat-
ing the registration fee on the basis of the exercise price of
presently outstanding options.
(3) Estimated pursuant to Rule 457(c), solely for the purpose of
calculating the registration fee on the basis of the average of the
high and low ask and bid prices per share of the Registrant's Common
Stock on the over-the-counter market bulletin board on August 26,
1998.
<PAGE>
PART II.
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents heretofore filed by the registrant
with the Securities and Exchange Commission (Commission File No. 1-9196)
pursuant to Section 13(a) of the Securities Exchange Act of 1934 (the "1934
Act") are incorporated herein by reference:
(a) The registrant's Annual Report on Form 10-K for the year
ended January 3, 1998;
(b) The registrant's Quarterly Report on Form 10-Q for the
quarter ended April 4, 1998; and
(c) The registrant's Quarterly Report on Form 10-Q for the
quarter ended July 4, 1998.
All documents filed subsequent to the date of this
Registration Statement pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934
Act and prior to the filing of a post-effective amendment which indicates that
all securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference in this
Registration Statement and to be a part hereof from the date of the filing of
such documents. Any statement contained in a document incorporated or deemed to
be incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement.
Item 4. Description of Securities.
The following is a summary description of the Company's
Capital Stock and certain provisions of the Company's Certificate of
Incorporation and By-Laws. The following discussion is qualified in its entirety
by reference to such exhibits.
Common Stock
The Company is authorized to issue up to 20,000,000 shares of
Common Stock, par value $.01 per share. As of August 4, 1998 there were issued
and outstanding 6,812,000 shares of Common Stock.
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<PAGE>
Preferred Stock
The Company is authorized to issue up to 500,000 shares of preferred
stock, par value $.01 per share. No shares of preferred stock are outstanding
and the Company has no present plans for the issuance thereof.
Voting Rights
Holders of Common Stock have one vote for each share held on
all matters submitted to a vote of stockholders. The quorum required for an
ordinary meeting of stockholders consists of at least a majority of the voting
power of the outstanding shares of the Company entitled to vote generally in the
election of directors, represented in person or by proxy. The shares of common
stock do not have cumulative voting rights in the election of directors. Thus,
the holders of more than 50% of the Common Stock have the power to elect all of
the directors, to the exclusion of the remaining stockholders.
The Certificate of Incorporation provides that a Business
Combination with an Interested Stockholder (as said terms are defined therein)
must be approved by the affirmative vote of the holders of at least 80% of the
outstanding voting stock, including the affirmative vote of the holders of at
least 80% of the voting stock not owned by the interested stockholder or any
affiliate thereof. Such provisions do not apply in the event the Business
Combination has been approved by a majority of the Continuing Directors (as
defined in the Certificate of Incorporation) or if the consideration paid in the
combination meets certain provisions which are particularly set forth in the
Certificate of Incorporation.
Dividend and Other Rights
Subject to the prior rights of any series of preferred stock
which may from time to time be outstanding, holders of Common Stock are entitled
to receive dividends, when, as and if declared by the Board of Directors out of
the funds legally available therefor and, upon the liquidation, dissolution or
winding up of the Company, are entitled to share ratably in all assets remaining
after payment of liabilities and payment of accrued dividends and at liquidation
preferences on the preferred stock, if any. The financing agreement with CIT
dated June 2, 1997, however, permits the Company to pay dividends and repurchase
stock in the aggregate amount of $5,000,000 in each of fiscal 1998 and 1999 only
if, after giving effect to such payment, there are no continuing events of
default under said financing agreement and if the Company has at least
$5,000,000 in undrawn availability. Holders of Common Stock have no preemptive
rights and have no rights to convert their Common Stock into any other
securities.
Item 5. Interests of Named Experts and Counsel.
Not Applicable.
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<PAGE>
Item 6. Indemnification of Directors and Officers.
(a) Section 145 of the General Corporation Law of the State of
Delaware (the "DGCL") provides, in general, that a corporation incorporated
under the laws of the State of Delaware, such as the registrant, may indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding (other than an
action by or in the right of the corporation) by reason of the fact that such
person is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by such person
in connection with such action, suit or proceeding if such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe such person's conduct was
unlawful.
In the case of a derivative action, a Delaware corporation may
indemnify any such person against expenses (including attorneys' fees) actually
and reasonably incurred by such person in connection with the defense or
settlement of such action or suit if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
Court of Chancery of the State of Delaware or any other court in which such
action was brought determines such person is fairly and reasonably entitled to
indemnity for such expenses.
(b) Article IX of the registrant's Amended and Restated
Certificate of Incorporation provides: "A director of the Corporation shall not
be personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability (i) for any
breach of such director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the General Corporation Law of the State of Delaware, or (iv) for any
transaction from which the director derived an improper personal benefit. Any
repeal or modification of this Article IX, shall not adversely affect any right
or protection of a director of the Corporation existing hereunder in respect of
any act or omission occurring prior to such repeal or modification."
Article X of the registrant's Amended and Restated Certificate
of Incorporation provides: "Each person who is or was or had agreed to become a
director or officer of the Corporation, or each such person who is or was
serving or who had agreed to serve at the request of the Board of Directors or
an officer of the Corporation as an employee or agent of the Corporation or as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise (including the heirs, executor,
administrators or estate of such person), shall be indemnified by the
Corporation, in accordance with the By-laws of the Corporation, to the fullest
extent permitted from time to time by the General Corporation Law of the State
of Delaware as the same exists or may hereafter be amended (but, in the case of
any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than said law permitted
the Corporation to provide prior to such amendment) or any other applicable laws
as presently or hereafter in effect. The
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<PAGE>
Corporation may, by action of the Board of Directors, provide indemnification to
employees and agents of the Corporation, and to persons serving as employees or
agents of another corporation, partnership, joint venture, trust or other
enterprise, at the request of the Corporation, with the same scope and effect as
the foregoing indemnification of directors and officers. The Corporation shall
be required to indemnify any person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
(or part thereof) was authorized by the Board of Directors or is a proceeding to
enforce such person's claim to indemnification pursuant to the rights granted by
this Certificate of Incorporation or otherwise by the Corporation. Without
limiting the generality or the effect of the foregoing, the Corporation may
enter into one or more agreements with any person which provide for
indemnification greater or different than that provided in this Article X. Any
amendment or repeal of this Article X shall not adversely affect any right or
protection existing hereunder in respect of any act or omission occurring prior
to such amendment or repeal."
(c) Article VI of the registrant's By-Laws provides: "(A) Each
person who was or is made a party or is threatened to be made a party to or is
involved in any action, suit, or proceeding, whether civil, criminal,
administrative or investigative (hereinafter a "proceeding"), by reason of the
fact that he or she or a person of whom he or she is the legal representative is
or was a director or officer of the Corporation or is or was serving at the
request of the Corporation as a director or officer of another corporation or of
a partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans maintained or sponsored by the Corporation,
whether the basis of such proceeding is alleged action in an official capacity
as a director or officer or in any other capacity while serving as a director or
officer, shall be indemnified and held harmless by the Corporation to the
fullest extent authorized by the General Corporation Law of the State of
Delaware as the same exists or may hereafter be amended (but, if permitted by
applicable law, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights than
said law permitted the Corporation to provide prior to such amendment), against
all expense, liability and loss (including attorneys' fees, judgments, fines,
ERISA excise taxes or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be a director or
officer and shall inure to the benefit of his or her heirs, executors and
administrators; provided, however, that except as provided in paragraph (C) of
this By-law, the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person only if such proceeding (or part thereof) initiated by such person
was authorized by the Board of Directors. The right to indemnification conferred
in this By-law shall be a contract right and shall include the right to be paid
by the Corporation the expenses incurred in defending any such proceeding in
advance of its final disposition, such advances to be paid by the Corporation
within 20 days after the receipt by the Corporation of a statement or statements
from the claimant requesting such advance or advances from time to time;
provided, however, that if the General Corporation Law of the State of Delaware
requires, the payment of such expenses incurred by a director or officer in his
or her capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of a proceeding, shall be made only upon delivery to
the Corporation of an undertaking by or on behalf of such director or
II-4
<PAGE>
officer, to repay all amounts so advanced if it shall ultimately be determined
that such director or officer is not entitled to be indemnified under this
By-law or otherwise.
"(F) The right to Indemnification and the payment of expenses
incurred in defending a proceeding in advance of its final disposition conferred
in this By-law shall not be exclusive of any other right which any person may
have or hereafter acquire under any statute, provision of the Certificate of
Incorporation, By-laws, agreement, vote of stockholders or Disinterested
Directors or otherwise. No repeal or modification of this By-law shall in any
way diminish or adversely affect the rights of any director, officer, employee
or agent of the Corporation hereunder in respect of any occurrence or matter
arising prior to any such repeal or modification.
"(G) The Corporation may maintain insurance, at its expense,
to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the General Corporation Law of the State of Delaware. To
the extent that the Corporation maintains any policy or policies providing such
insurance, each such director or officer, and each such agent or employee to
which rights to Indemnification have been granted as provided in paragraph (H)
of this By-law, shall be covered by such policy or policies in accordance with
its or their terms to the maximum extent of the coverage thereunder for any such
director, officer, employee or agent.
"(H) The Corporation may, to the extent authorized from time
to time by the Board of Directors, grant rights to Indemnification, and rights
to be paid by the Corporation the expenses incurred in defending any proceeding
in advance of its final disposition, to any employee or agent of the
Corporation, and to persons serving as employees or agents of another
corporation, partnership, joint venture, trust or other enterprise, at the
request of the Corporation, to the fullest extent of the provisions of this
By-law with respect to the Indemnification and advancement of expenses of
directors and officers of the Corporation."
Sections (B) - (E) and Sections (I) - (K) of Article VI of the
registrant's By-laws set forth the procedures for obtaining indemnification.
Item 7. Exemption from Registration Claimed.
Not Applicable.
II-5
<PAGE>
Item 8. Exhibits.
Exhibit
Number Description
- ------ -----------
4.01 Amended and Restated Certificate of Incorporation of the
registrant. Incorporated by reference to Exhibit 1 to the
registrant's Current Report on Form 8-K for an event dated
June 4, 1997.
*4.02 Amendment to Certificate of Incorporation of the registrant.
4.03 Amended and Restated By-Laws of the registrant. Incorporated
by reference to Exhibit 2 to the registrant's Current Report
on Form 8-K for an event dated June 4, 1998.
*4.04 Form of Stock Option Contract for Incentive Stock Options.
*4.05 Form of Stock Option Contract for Non-Qualified Stock Options.
*4.06 1997 Management Stock Option Plan.
*5.01 Opinion of Parker Chapin Flattau & Klimpl, LLP as to the
legality of the Common Stock being offered.
*23.01 Consent of Arthur Andersen LLP.
*23.02 Consent of Parker Chapin Flattau & Klimpl, LLP (contained in
Exhibit 5.01).
*24.01 Power of attorney of certain officers and directors of the
registrant (contained in the signature page).
- --------------
* Filed herewith.
Item 9. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers
or sales are being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts
or events arising after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which,
II-6
<PAGE>
individually or in the aggregate, represent a fundamental change in the
information set forth in the registration statement;
(iii) To include any material information
with respect to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8, and the information required to
be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any
liability under the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
The undersigned registrant hereby undertakes that,
for purposes of determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 that is incorporated by reference
in this registration statement shall be deemed to be a new registration
statement relating to the securities offered herein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions
described in Item 6 above, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York, State of New York, on the 26th day of
August, 1998.
THE LESLIE FAY COMPANY, INC.
By: /s/ John J. Pomerantz
-----------------------------------
John J. Pomerantz
Chief Executive Officer and
Chairman of the Board of Directors
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature is below constitutes and appoints each of John J. Pomerantz, John A.
Ward and Warren T. Wishart his true and lawful attorney-in-fact and agent, each
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto each said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent or either of
them or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the following persons in
the capacities indicated on the 26th day of August, 1998.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ John J. Pomerantz Chairman, Chief Executive Officer and Director
- ----------------------------
John J. Pomerantz
/s/ John A. Ward President and Director
- ----------------------------
John A. Ward
Chief Financial Officer, Senior Vice President -
/s/ Warren T. Wishart Administration and Finance and Treasurer
- ----------------------------
Warren T. Wishart
II-8
<PAGE>
/s/ Clifford B. Cohn Director
- ----------------------------
Clifford B. Cohn
/s/ Mark B. Dickstein Director
- ----------------------------
Mark B. Dickstein
/s/ Chaim Y. Edelstein Director
- ----------------------------
Chaim Y. Edelstein
/s/ Mark Kaufman Director
- ----------------------------
Mark Kaufman
/s/ Bernard Olsoff Director
- ----------------------------
Bernard Olsoff
/s/ Robert L. Sind Director
- ----------------------------
Robert L. Sind
</TABLE>
II-9
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
4.01 Amended and Restated Certificate of Incorporation of the
registrant. Incorporated by reference to Exhibit 1 to the
registrant's Current Report on Form 8-K for an event dated
June 4, 1997.
*4.02 Amendment to the Certificate of Incorporation of the
registrant.
4.03 Amended and Restated By-Laws of the registrant. Incorporated
by reference to Exhibit 2 to the registrant's Current Report
on Form 8-K for an event dated June 4, 1997.
*4.04 Form of Stock Option Contract for Incentive Stock Options.
*4.05 Form of Stock Option Contract for Non-Qualified Stock Options.
*4.06 1997 Management Stock Option Plan.
*5.01 Opinion of Parker Chapin Flattau & Klimpl, LLP, as to the
legality of the Common Stock being offered.
*23.01 Consent of Arthur Andersen LLP.
*23.02 Consent of Parker Chapin Flattau & Klimpl, LLP (contained in
Exhibit 5.01).
*24.01 Power of attorney of certain officers and directors of the
registrant (contained in the signature page).
- --------------
* Filed herewith
E-1
EXHIBIT 4.02
CERTIFICATE OF AMENDMENT
OF THE
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
THE LESLIE FAY COMPANY, INC.
It is hereby certified that:
1. The name of the corporation (hereinafter called the
"Corporation") is THE LESLIE FAY COMPANY, INC.
2. The Amended and Restated Certificate of Incorporation of
the Corporation is hereby amended as follows:
(a) Section (A) of Article IV is hereby deleted in its
entirety and the following new Section (A) is hereby substituted in its place:
" (A) Authorized Stock. The total number of shares of
stock which the Corporation shall have authority to issue is twenty
million five hundred thousand (20,500,000), consisting of twenty
million (20,000,000) shares of common stock, par value $.01 per share
("Common Stock"), and five hundred thousand (500,000) shares of
preferred stock, par value $.01 per share ("Preferred Stock")."
(b) Article VI is hereby deleted in its entirety.
3. The amendments to the Amended and Restated Certificate of
Incorporation herein certified have been duly adopted in accordance with the
provisions of Section 242 of the Delaware General Corporation Law.
Signed on July 17, 1998.
/s/ John J. Pomerantz
-----------------------------
John J. Pomerantz
Chief Executive Officer
Attest:
/s/ Warren T. Wishart
- --------------------------
Warren T. Wishart
Secretary
EXHIBIT 4.04
ISO
STOCK OPTION AGREEMENT dated as of , between The Leslie Fay
Company, Inc., a Delaware corporation (referred to hereinafter as the
"Corporation"), and _______________ (the "Optionee").
In accordance with the provisions of The Leslie Fay Company,
Inc. 1997 Management Stock Option Plan (referred to hereinafter as the "Plan"),
the Compensation Committee (referred to hereinafter as the "Committee") of the
Board of Directors of the Corporation (the "Board") has authorized the execution
and delivery of this Agreement. Capitalized terms used herein without definition
shall have the respective meanings ascribed to such terms in the Plan, a copy of
which is attached hereto and made a part hereof.
NOW, THEREFORE, in consideration of the premises and for other
good and valuable consideration, the Corporation and Optionee agree as follows:
1. Grant of Stock Option. Subject to all the terms and
conditions of this Agreement and the Plan, the Corporation hereby grants to the
Optionee on the date hereof an option (the "Stock Option") to purchase up to
_________ shares of common stock, par value $.01 per share (the "Common Stock")
of the Corporation (such number being subject to adjustment as provided in
Section 11 of this Agreement). This Stock Option is intended to constitute an
Incentive Stock Option within the meaning of section 422 of the Code.
2. Exercise Price. The exercise price per share of Common
Stock covered by the Stock Option shall be $________.
3. Vesting. The Optionee's right to purchase shares under the
Stock Option shall vest as follows: (i) with respect to 33% of the shares of
Common Stock subject thereto on the first anniversary of the date of grant; (ii)
with respect to an additional 33% of the shares of Common Stock subject thereto
on the second anniversary of the date of grant; and (iii) with respect to an
additional 34% of the shares of Common Stock subject thereto on the third
anniversary of the date of grant. The right to purchase shares under this Stock
Option shall be cumulative, so that if the full number of shares purchasable in
a period shall not be purchased, the balance may be purchased at any time or
from time to time thereafter, but not after the expiration of the Stock Option.
The Optionee must be a full time active employee of the Corporation or any
Affiliate on the respective vesting date as a condition to any non-vested
portion becoming vested. The vesting requirements of this Section 3 shall be
waived automatically and the Stock Option shall be fully vested upon a Change in
Control.
4. Exercise. Vested portions of the Stock Option shall be
exercisable in part or in full at any time after each corresponding vesting
date, but no part of the Stock Option shall be exercisable after the expiration
of ten years from the date hereof. Except as provided in Section 7 hereof, the
Stock Option may not be exercised at any time unless the holder thereof is then
a full time, active employee of the Corporation or one of its Affiliates. Rights
under the Stock Option which have become vested may be exercised only as to full
shares of Common Stock.
<PAGE>
5. Method of Exercising Stock Option. Subject to the vesting
requirements, the Stock Option may be exercised by written notice of exercise to
the Corporation, which notice shall specify the number of shares of Common Stock
subject to the Stock Option to be purchased and shall be signed by the person
exercising the Stock Option.
Such notice shall be accompanied by payment of the full
purchase price by certified or bank check or, at the option of the Optionee, by
delivery of unrestricted shares of Common Stock registered in the name of the
Optionee duly assigned to the Corporation with the assignment guaranteed by a
bank, trust company or member firm of the New York Stock Exchange, Inc., or by a
combination of the foregoing. Any such shares so delivered by the Optionee upon
exercise of a Stock Option (i) must have been held by the Optionee for such
period of time and in such manner as is required by generally accepted
accounting principles to prevent the exercise of the Stock Option from being
deemed additional cash compensation to the Optionee chargeable against the
earnings of the Corporation, and (ii) shall be deemed to have a value per share
equal to the Fair Market Value of the shares on such date.
Payment for any shares subject to the Stock Option may also be
made by delivering a properly executed exercise notice to the Corporation,
together with a copy of irrevocable instructions to a broker to deliver promptly
to the Corporation the amount of sale or loan proceeds necessary to pay the
purchase price, and, if requested by the Optionee, the amount of any federal,
state, local or foreign withholding taxes. To facilitate the foregoing, the
Corporation may enter into agreements for coordinated procedures with one or
more brokerage firms.
No shares of Common Stock shall be issued until full payment
therefor has been made. The Optionee shall have the rights of a stockholder of
the Corporation holding the shares of Common Stock that are subject to the Stock
Option (including, if applicable, the right to vote the shares and the right to
receive dividends), when the Optionee has given written notice of exercise, has
paid in full for such shares and, if requested, has represented to and agreed
with the Corporation in writing that such Optionee is acquiring the shares
without a view to the public resale or distribution thereof in violation of
applicable securities laws; provided, however, that if the Optionee has elected
to defer receipt of all or a portion of the shares of Common Stock subject to
the Stock Option in accordance with procedures established by the Committee, the
Optionee shall not have any rights as a stockholder with respect to such
deferred shares unless and until shares of Common Stock are actually delivered
to the Optionee with respect thereto, except to the extent otherwise determined
by the Committee.
6. Limited Transferability of Stock Option. The Stock Option
shall not be transferable by the Optionee other than by will or by the laws of
descent and distribution. The Stock Option shall be exercisable, subject to the
terms of this Agreement and the Plan, during the Optionee's lifetime, only by
the Optionee or the guardian or legal representative of the Optionee named on
the signature page to this Agreement.
-2-
<PAGE>
7. Termination of Employment.
(a) If the Optionee's employment terminates by reason
of death, the Stock Option may thereafter be exercised, to the extent then
exercisable, or on such accelerated basis as the Committee may determine, for a
period of one year from the date of such death or until the expiration of the
stated term of the Stock Option, whichever period is the shorter.
(b) If the Optionee's employment terminates by reason
of Disability, the Stock Option may thereafter be exercised by the Optionee, to
the extent it was exercisable at the time of termination, or on such accelerated
basis as the Committee may determine, for a period of three years from the date
of such termination of employment or until the expiration of the stated term of
the Stock Option, whichever period is the shorter, provided, however, that if
the Optionee dies within such period, the Stock Option shall, notwithstanding
the expiration of such period, continue to be exercisable to the extent to which
it was exercisable at the time of death for a period of 12 months from the date
of such death or until the expiration of the stated term of the Stock Option,
whichever period is the shorter. In the event of termination of employment by
reason of Disability, if the Stock Option is exercised after the expiration of
the exercise periods that apply for purposes of section 422 of the Code, such
option will thereafter be treated as a Nonqualified Stock Option.
(c) If the Optionee's employment terminates by reason
of Retirement, the Stock Option may thereafter be exercised by the Optionee, to
the extent it was exercisable at the time of such Retirement, or on such
accelerated basis as the Committee may determine, for a period of five years
from the date of such termination of employment or until the expiration of the
stated term of the Stock Option, whichever period is the shorter; provided,
however that if the Optionee dies within such period the Stock Option shall,
notwithstanding the expiration of such period, continue to be exercisable to the
extent to which it was exercisable at the time of death for a period of 12
months from the date of such death or until the expiration of the stated term of
the Stock Option, whichever period, is shorter. In the event of termination of
employment by reason of Retirement, if the Stock Option is exercised after the
expiration of the exercise periods that apply for purposes of section 422 of the
Code, such option will thereafter be treated as a Nonqualified Stock Option.
(d) Unless otherwise determined by the Committee: (i)
if the Optionee incurs a Termination of Employment for Cause, the Stock Option
shall thereupon terminate; and (ii) if the Optionee incurs a Termination of
Employment for any reason other than death, Disability or Retirement or for
Cause, the Stock Option, to the extent then exercisable, or on such accelerated
basis as the Committee may determine, may be exercised for the lesser of three
months from the date of such Termination of Employment or the balance of the
Stock Option's term; provided, however, that if the Optionee dies within such
three-month period, the Stock Option shall continue to be exercisable to the
extent to which it was exercisable at the time of death for a period of 12
months from the date of such death or until the expiration of the stated
-3-
<PAGE>
term of the Stock Option, whichever period is the shorter. Notwithstanding the
foregoing, if the Optionee incurs a Termination of Employment at or after a
Change in Control, or other than by reason of death, Disability or Retirement,
the Stock Option shall be exercisable for the lesser of (1) six months and one
day from the date of such Termination of Employment, and (2) the balance of the
Stock Option's term. In the event of Termination of Employment, if the Stock
Option is exercised after the expiration of the exercise periods that apply for
purposes of section 422 of the Code, such option will thereafter be treated as
Nonqualified Stock Option.
8. Cashing Out of Stock Option. On receipt of written notice
of exercise, the Committee with the consent of the Optionee may elect to cash
out all or part of the portion of the shares of Common Stock for which the Stock
Option is being exercised by paying the Optionee an amount, in Cash or Common
Stock, equal to the excess of the Fair Market Value of the Common Stock over the
exercise price times the number of shares of Common Stock for which the Stock
Option is being exercised on the effective date of such cash-out.
9. Change in Control Cash-Out. Notwithstanding any other
provision of this Agreement or the Plan, during the 60-day period from and after
a Change in Control (the "Exercise Period"), the Optionee shall have the right,
whether or not the Stock Option is fully exercisable and in lieu of the payment
of the exercise price for the shares of Common Stock being purchased under the
Stock Option and by giving notice to the Corporation, to elect (within the
Exercise Period) to surrender all or part of the Stock Option to the Corporation
and to receive cash, within 30 days of such notice, in an amount equal to the
amount by which the Change in Control Price per share of Common Stock on the
date of such election shall exceed the exercise price per share of Common Stock
under the Stock Option (the "Spread") multiplied by the number of shares of
Common Stock granted under the Stock Option as to which the right granted under
this Section 9 shall have been exercised. Notwithstanding the foregoing, if any
right granted pursuant to this Agreement would make a Change in Control
transaction ineligible for pooling-of-interests accounting under APB No. 16,
that but for the nature of such grant would otherwise be eligible for such
accounting treatment, the Committee shall have the ability to substitute for the
cash payable pursuant to such right Common Stock with a Fair Market Value equal
to the cash that would otherwise be payable hereunder.
10. General Restriction. Notwithstanding any other provision
of this Agreement or the Plan, if at any time the Board shall determine, in its
discretion, that the registration or qualification of the shares subject to the
Stock Option upon any securities exchange or under any state or federal law or
regulation, or the consent, approval or permit of any state or federal
governmental agency, is necessary or advisable as a condition of, or in
connection with, the granting of the Stock Option or the issue or purchase of
shares thereunder, the Corporation shall not be required to issue or deliver any
certificate or certificates for shares of Common Stock purchased upon exercise
of the Stock Option unless and until such listing, registration, qualification,
consent, approval or permit shall have been effected or obtained free of any
conditions not acceptable to the Board.
-4-
<PAGE>
11. Certain Transactions. In the event of any change in
capitalization, such as a stock split or combination or in the case of any
merger, consolidation, separation, including a spin-off, exchange of shares or
other distribution of stock or property of the Corporation, any reorganization
(whether or not such reorganization comes within the definition of such term in
section 368 of the Code) or any partial or complete liquidation or dissolution
of the Corporation, the Committee or Board may make such substitution or
adjustments in the aggregate number and kind of shares subject to the Stock
Option and/or such other equitable substitution or adjustments as it may
determine to be appropriate in its sole discretion; provided, however, that the
number of shares subject to the Stock Option shall always be a whole number.
12. Transfer of Shares. The certificates for shares purchased
upon exercise of the Stock Option may include any legend which the Committee
deems appropriate to reflect any restrictions on transfer of such shares.
13. Right to Employment. Nothing contained herein shall confer
upon the Optionee any right to be continued in the employment of the Corporation
or of any of its Affiliates or interfere in any way with the right of the
Corporation or any of its Affiliates to terminate his employment at any time.
14. Definitions. Any terms or provisions used herein which are
defined in the Code or the regulations thereunder or corresponding provisions of
subsequent laws and regulations in effect at the time the Stock Option is
granted shall have the respective meanings as therein defined.
15. Amendment. The Board or the Committee may, from time to
time, require the modification or amendment of the terms of this Agreement;
provided, however, that no termination, modification or amendment of this
Agreement shall, without the consent of the Optionee, impair his rights
hereunder.
16. Notices. Notices hereunder shall be in writing, and if to
the Corporation, shall be delivered personally to the Treasurer of the
Corporation or mailed to its principal office, The Leslie Fay Company, Inc. 1412
Broadway, 2nd Floor, New York, New York 10018, addressed to the attention of the
Treasurer, and if to the Optionee, shall be delivered personally or mailed to
the Optionee at his address as the same appears on the records of the
Corporation.
17. Interpretation. All decisions and interpretations made by
the Board or the Committee with regard to any question arising hereunder or
under the Plan shall be binding and conclusive on the Corporation and the
Optionee. In the event there is any inconsistency between the provisions of this
Agreement and the Plan, the provisions of the Plan shall govern.
18. Successors and Assigns. This Agreement shall bind and
inure to the benefit of the parties hereto and the successors and assigns of the
Corporation and, to the extent provided herein, to the personal representatives,
legatees and heirs of the Optionee.
-5-
<PAGE>
19. Governing Law. This Agreement shall be governed by an
construed in accordance with the laws of the State of Delaware without regard to
the conflict of laws principles thereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
THE LESLIE FAY COMPANY, INC.
-------------------------------
Name:
Title:
-----------------------------------
[Optionee]
-6-
EXHIBIT 4.05
NON-QUALIFIED
STOCK OPTION AGREEMENT dated as of , between The Leslie Fay
Company, Inc., a Delaware corporation (referred to hereinafter as the
"Corporation"), and _______________ (the "Optionee").
In accordance with the provisions of The Leslie Fay Company,
Inc. 1997 Management Stock Option Plan (referred to hereinafter as the "Plan"),
the Compensation Committee (referred to hereinafter as the "Committee") of the
Board of Directors of the Corporation (the "Board") has authorized the execution
and delivery of this Agreement. Capitalized terms used herein without definition
shall have the respective meanings ascribed to such terms in the Plan, a copy of
which is attached hereto and made a part hereof.
NOW, THEREFORE, in consideration of the premises and for other
good and valuable consideration, the Corporation and Optionee agree as follows:
1. Grant of Stock Option. Subject to all the terms and
conditions of this Agreement and the Plan, the Corporation hereby grants to the
Optionee on the date hereof an option (the "Stock Option") to purchase up to
_________ shares of common stock, par value $.01 per share (the "Common Stock")
of the Corporation (such number being subject to adjustment as provided in
Section 11 of this Agreement). This Stock Option is not intended to constitute
an Incentive Stock Option within the meaning of section 422 of the Code.
2. Exercise Price. The exercise price per share of Common
Stock covered by the Stock Option shall be $________.
3. Vesting. The Optionee's right to purchase shares under the
Stock Option shall vest as follows: (i) with respect to 33% of the shares of
Common Stock subject thereto on the first anniversary of the date of grant; (ii)
with respect to an additional 33% of the shares of Common Stock subject thereto
on the second anniversary of the date of grant; and (iii) with respect to an
additional 34% of the shares of Common Stock subject thereto on the third
anniversary of the date of grant. The right to purchase shares under this Stock
Option shall be cumulative, so that if the full number of shares purchasable in
a period shall not be purchased, the balance may be purchased at any time or
from time to time thereafter, but not after the expiration of the Stock Option.
The Optionee must be a full time active employee of, or a consultant to, the
Corporation or any Affiliate on the respective vesting date as a condition to
any non-vested portion becoming vested. The vesting requirements of this Section
3 shall be waived automatically and the Stock Option shall be fully vested upon
a Change in Control.
4. Exercise. Vested portions of the Stock Option shall be
exercisable in part or in full at any time after each corresponding vesting
date. Except as provided in Section 7 hereof, the Stock Option may not be
exercised at any time unless the holder thereof is then a full time, active
employee of, or a consultant to, the Corporation or one of its Affiliates.
Rights under
<PAGE>
the Stock Option which have become vested may be exercised only as to full
shares of Common Stock.
5. Method of Exercising Stock Option. Subject to the vesting
requirements, the Stock Option may be exercised by written notice of exercise to
the Corporation, which notice shall specify the number of shares of Common Stock
subject to the Stock Option to be purchased and shall be signed by the person
exercising the Stock Option.
Such notice shall be accompanied by payment of the full
purchase price by certified or bank check or, at the option of the Optionee, by
delivery of unrestricted shares of Common Stock registered in the name of the
Optionee duly assigned to the Corporation with the assignment guaranteed by a
bank, trust company or member firm of the New York Stock Exchange, Inc., or by a
combination of the foregoing. Any such shares so delivered by the Optionee upon
exercise of a Stock Option (i) must have been held by the Optionee for such
period of time and in such manner as is required by generally accepted
accounting principles to prevent the exercise of the Stock Option from being
deemed additional cash compensation to the Optionee chargeable against the
earnings of the Corporation, and (ii) shall be deemed to have a value per share
equal to the Fair Market Value of the shares on such date.
Payment for any shares subject to the Stock Option may also be
made by delivering a properly executed exercise notice to the Corporation,
together with a copy of irrevocable instructions to a broker to deliver promptly
to the Corporation the amount of sale or loan proceeds necessary to pay the
purchase price, and, if requested by the Optionee, the amount of any federal,
state, local or foreign withholding taxes. To facilitate the foregoing, the
Corporation may enter into agreements for coordinated procedures with one or
more brokerage firms.
No shares of Common Stock shall be issued until full payment
therefor has been made. The Optionee shall have the rights of a stockholder of
the Corporation holding the shares of Common Stock that are subject to the Stock
Option (including, if applicable, the right to vote the shares and the right to
receive dividends), when the Optionee has given written notice of exercise, has
paid in full for such shares and, if requested, has represented to and agreed
with the Corporation in writing that such Optionee is acquiring the shares
without a view to the public resale or distribution thereof in violation of
applicable securities laws; provided, however, that if the Optionee has elected
to defer receipt of all or a portion of the shares of Common Stock subject to
the Stock Option in accordance with procedures established by the Committee, the
Optionee shall not have any rights as a stockholder with respect to such
deferred shares unless and until shares of Common Stock are actually delivered
to the Optionee with respect thereto, except to the extent otherwise determined
by the Committee.
6. Limited Transferability of Stock Option. The Stock Option
shall not be transferable by the Optionee other than (i) by will or by the laws
of descent and distribution or (ii) pursuant to (1) a qualified domestic
relations order (as defined in the Code or title I of the
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<PAGE>
Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder) or (2) a gift to such Optionee's children, whether directly or
indirectly or by means of a trust or partnership or otherwise. The Stock Option
shall be exercisable, subject to the terms of this Agreement and the Plan,
during the Optionee's lifetime, only by the Optionee or the guardian or legal
representative of the Optionee named on the signature page to this Agreement or
any person to whom the Stock Option is transferred in accordance with the
preceding sentence.
7. Termination of Employment or Service.
(a) If the Optionee's employment or service
terminates by reason of death, the Stock Option may thereafter be exercised, to
the extent then exercisable, or on such accelerated basis as the Committee may
determine, for a period of one year from the date of such death or until the
expiration of the stated term of the Stock Option, whichever period is the
shorter.
(b) If the Optionee's employment or service
terminates by reason of Disability, the Stock Option may thereafter be exercised
by the Optionee, to the extent it was exercisable at the time of termination, or
on such accelerated basis as the Committee may determine, for a period of three
years from the date of such termination of employment or service or until the
expiration of the stated term of the Stock Option, whichever period is the
shorter, provided, however, that if the Optionee dies within such period, the
Stock Option shall, notwithstanding the expiration of such period, continue to
be exercisable to the extent to which it was exercisable at the time of death
for a period of 12 months from the date of such death or until the expiration of
the stated term of the Stock Option, whichever period is the shorter.
(c) If the Optionee's employment or service
terminates by reason of Retirement, the Stock Option may thereafter be exercised
by the Optionee, to the extent it was exercisable at the time of such
Retirement, or on such accelerated basis as the Committee may determine, for a
period of five years from the date of such termination of employment or service
or until the expiration of the stated term of the Stock Option, whichever period
is the shorter; provided, however that if the Optionee dies within such period
the Stock Option shall, notwithstanding the expiration of such period, continue
to be exercisable to the extent to which it was exercisable at the time of death
for a period of 12 months from the date of such death or until the expiration of
the stated term of the Stock Option, whichever period, is shorter.
(d) Unless otherwise determined by the Committee: (i)
if the Optionee incurs a Termination of Employment for Cause, the Stock Option
shall thereupon terminate; and (ii) if the Optionee incurs a Termination of
Employment for any reason other than death, Disability or Retirement or for
Cause, the Stock Option, to the extent then exercisable, or on such accelerated
basis as the Committee may determine, may be exercised for the lesser of three
months from the date of such Termination of Employment or the balance of the
Stock Option's term; provided, however, that if the Optionee dies within such
three-month period, the Stock Option shall continue to be exercisable to the
extent to which it was exercisable at the time of
-3-
<PAGE>
death for a period of 12 months from the date of such death or until the
expiration of the stated term of the Stock Option, whichever period is the
shorter. Notwithstanding the foregoing, if the Optionee incurs a Termination of
Employment at or after a Change in Control, or other than by reason of death,
Disability or Retirement, the Stock Option shall be exercisable for the lesser
of (1) six months and one day from the date of such Termination of Employment,
and (2) the balance of the Stock Option's term.
8. Cashing Out of Stock Option. On receipt of written notice
of exercise, the Committee with the consent of the Optionee may elect to cash
out all or part of the portion of the shares of Common Stock for which the Stock
Option is being exercised by paying the Optionee an amount, in Cash or Common
Stock, equal to the excess of the Fair Market Value of the Common Stock over the
exercise price times the number of shares of Common Stock for which the Stock
Option is being exercised on the effective date of such cash-out.
9. Change in Control Cash-Out. Notwithstanding any other
provision of this Agreement or the Plan, during the 60-day period from and after
a Change in Control (the "Exercise Period"), the Optionee shall have the right,
whether or not the Stock Option is fully exercisable and in lieu of the payment
of the exercise price for the shares of Common Stock being purchased under the
Stock Option and by giving notice to the Corporation, to elect (within the
Exercise Period) to surrender all or part of the Stock Option to the Corporation
and to receive cash, within 30 days of such notice, in an amount equal to the
amount by which the Change in Control Price per share of Common Stock on the
date of such election shall exceed the exercise price per share of Common Stock
under the Stock Option (the "Spread") multiplied by the number of shares of
Common Stock granted under the Stock Option as to which the right granted under
this Section 9 shall have been exercised. Notwithstanding the foregoing, if any
right granted pursuant to this Agreement would make a Change in Control
transaction ineligible for pooling-of-interests accounting under APB No. 16,
that but for the nature of such grant would otherwise be eligible for such
accounting treatment, the Committee shall have the ability to substitute for the
cash payable pursuant to such right Common Stock with a Fair Market Value equal
to the cash that would otherwise be payable hereunder.
10. General Restriction. Notwithstanding any other provision
of this Agreement or the Plan, if at any time the Board shall determine, in its
discretion, that the registration or qualification of the shares subject to the
Stock Option upon any securities exchange or under any state or federal law or
regulation, or the consent, approval or permit of any state or federal
governmental agency, is necessary or advisable as a condition of, or in
connection with, the granting of the Stock Option or the issue or purchase of
shares thereunder, the Corporation shall not be required to issue or deliver any
certificate or certificates for shares of Common Stock purchased upon exercise
of the Stock Option unless and until such listing, registration, qualification,
consent, approval or permit shall have been effected or obtained free of any
conditions not acceptable to the Board.
-4-
<PAGE>
11. Certain Transactions. In the event of any change in
capitalization, such as a stock split or combination or in the case of any
merger, consolidation, separation, including a spin-off, exchange of shares or
other distribution of stock or property of the Corporation, any reorganization
(whether or not such reorganization comes within the definition of such term in
section 368 of the Code) or any partial or complete liquidation or dissolution
of the Corporation, the Committee or Board may make such substitution or
adjustments in the aggregate number and kind of shares subject to the Stock
Option and/or such other equitable substitution or adjustments as it may
determine to be appropriate in its sole discretion; provided, however, that the
number of shares subject to the Stock Option shall always be a whole number.
12. Transfer of Shares. The certificates for shares purchased
upon exercise of the Stock Option may include any legend which the Committee
deems appropriate to reflect any restrictions on transfer of such shares.
13. Right to Employment or Service. Nothing contained herein
shall confer upon the Optionee any right to be continued in the employment or
service of the Corporation or of any of its Affiliates or interfere in any way
with the right of the Corporation or any of its Affiliates to terminate his
employment or service at any time.
14. Definitions. Any terms or provisions used herein which are
defined in the Code or the regulations thereunder or corresponding provisions of
subsequent laws and regulations in effect at the time the Stock Option is
granted shall have the respective meanings as therein defined.
15. Amendment. The Board or the Committee may, from time to
time, require the modification or amendment of the terms of this Agreement;
provided, however, that no termination, modification or amendment of this
Agreement shall, without the consent of the Optionee, impair his rights
hereunder.
16. Notices. Notices hereunder shall be in writing, and if to
the Corporation, shall be delivered personally to the Treasurer of the
Corporation or mailed to its principal office, The Leslie Fay Company, Inc. 1412
Broadway, 2nd Floor, New York, New York 10018, addressed to the attention of the
Treasurer, and if to the Optionee, shall be delivered personally or mailed to
the Optionee at his address as the same appears on the records of the
Corporation.
17. Interpretation. All decisions and interpretations made by
the Board or the Committee with regard to any question arising hereunder or
under the Plan shall be binding and conclusive on the Corporation and the
Optionee. In the event there is any inconsistency between the provisions of this
Agreement and the Plan, the provisions of the Plan shall govern.
18. Successors and Assigns. This Agreement shall bind and
inure to the benefit of the parties hereto and the successors and assigns of the
Corporation and, to the extent provided herein, to the personal representatives,
legatees and heirs of the Optionee.
-5-
<PAGE>
19. Governing Law. This Agreement shall be governed by an
construed in accordance with the laws of the State of Delaware without regard to
the conflict of laws principles thereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
THE LESLIE FAY COMPANY, INC.
-------------------------------
Name:
Title:
-----------------------------------
[Optionee]
-6-
EXHIBIT 4.06
1997 MANAGEMENT STOCK OPTION PLAN (as
amended through April 14, 1998)
SECTION 1. Purpose; Definitions
The purpose of the Plan is to give the Corporation a competitive
advantage in attracting, retaining and motivating key employees (including
officers and directors) and consultants to provide the Corporation and its
Affiliates with a stock option plan providing incentives more directly linked to
the profitability of the Corporation's businesses and increases in stockholder
value.
For purposes of the Plan, the following terms are defined as set forth
below:
(a) "Affiliate" means a corporation or other entity controlled by, or under
common control with, the Corporation and designated by the Committee
from time to time as such.
(b) "Board" means the Board of Directors of the Corporation.
(c) "Cause" shall have the meaning ascribed thereto in an employment
agreement, if any, between the optionee and the Corporation or any of
its Affiliates. In the absence of such an employment agreement, "Cause"
shall mean (unless otherwise defined in the Stock Option Agreement) (i)
conviction of an optionee for committing a felony under federal law or
the law of the state in which such action occurred, (ii) perpetration
by the optionee of an illegal act which causes significant economic
injury to the Corporation or any of its Affiliates or of a common law
fraud against the Corporation or any of its Affiliates, or (iii)
continuing willful and deliberate failure on the part of an optionee to
perform his or her employment duties in any material respect. The
Committee shall have the sole discretion to determine whether "Cause"
exists, and its determination shall be final.
(d) "Change in Control" and "Change in Control Price" have the meanings set
forth in Sections 7(b) and (c), respectively.
(e) "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor thereto.
(f) "Commission" means the Securities and Exchange Commission or any
successor agency.
(g) "Committee" means the Committee referred to in Section 2.
<PAGE>
(h) "Common Stock" means the common stock, par value $.01 per share, of the
Corporation and any other shares into which such common stock shall
thereafter be changed by reason of a recapitalization, merger,
consolidation, split-up, combination, exchange of shares or the like.
(i) "Corporate Transaction" means a reorganization, merger or consolidation
or sale or other disposition of all or substantially all of the assets
of the Corporation.
(j) "Corporation" means The Leslie Fay Company, Inc., a Delaware
corporation.
(k) "Disability" means permanent and total disability as determined under
procedures established by the Committee for purposes of the Plan.
(l) "Early Retirement" means retirement from active employment with the
Corporation or any of its Affiliates pursuant to the early retirement
provisions of the applicable pension plan of such employer.
(m) "Effective Date" means June 4, 1997.
(n) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor thereto.
(o) "Fair Market Value" means, except as provided in Section 5(a) , as of
any given date, the mean between the highest and lowest reported sales
prices of a share of Common Stock on the New York Stock Exchange, Inc.
Composite Tape or, if not listed on such exchange, on any other
national securities exchange on which the Common Stock is then listed
or admitted to unlisted trading privileges or on NASDAQ. If there is no
regular public trading market for such Common Stock, the Fair Market
Value of the Common Stock shall be determined by the Committee in good
faith.
(p) "Incentive Stock Option" means any Stock Option designated as, and
qualified as, an "incentive stock option" within the meaning of section
422 of the Code.
(q) "NASDAQ" means the National Association of Securities Dealers, Inc.
Automated Quotation system.
(r) "Non-Employee director" means a member of the Board who qualifies as a
Non-Employee director as defined in rule 16b-3(b)(3), as promulgated by
the Commission under the Exchange Act, or any successor definition
adopted by the Commission.
(s) "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
2
<PAGE>
(t) "Normal Retirement" means retirement from active employment with the
Corporation or any of its Affiliates at or after age 65.
(u) "Plan" means The Leslie Fay Company, Inc. 1997 Management Stock Option
Plan, as set forth herein and as hereinafter amended from time to time.
(v) "Retirement" means Normal Retirement or Early Retirement.
(w) "Rule 16b-3" means Rule 16b-3, as promulgated and interpreted by the
Commission under Section 16(b) of the Exchange Act, as amended from
time to time.
(x) "Stock Option" means an option granted under Section 5.
(y) "Stock Option Agreement" means the agreement with an optionee pursuant
to which a Stock Option is granted, as provided in Section 5.
(z) "Termination of Employment" means the termination of the optionee's
employment with the Corporation and any of its Affiliates. An optionee
employed by the Corporation or any of its Affiliates shall also be
deemed to incur a Termination of Employment if any of its Affiliates
ceases to be such an Affiliate and the optionee does not immediately
thereafter become an employee of the Corporation or another Affiliate.
Temporary absences from employment because of illness, vacation or
leave of absence and transfers among the Corporation and its Affiliates
shall not be considered Terminations of Employment.
In addition, certain other terms used herein have definitions
given to them in the first place in which they are used.
Section 2. Administration
The Plan shall be administered by the Compensation Committee or such
other committee of the Board as the Board may from time to time designate (the
"Committee"), which shall be composed of not less than two Non-Employee
Directors, each of whom shall be an "outside director" for purposes of section
162(m)(4) of the Code, and shall be appointed by and serve at the pleasure of
the Board.
The Committee shall have plenary authority to grant Stock Options
pursuant to the terms of the Plan to employees (including officers and
directors) and consultants of the Corporation and its Affiliates.
Among other things, the Committee shall have the authority, subject to
the terms of the Plan (including Schedule A hereto):
3
<PAGE>
(a) To select the employees and consultants to whom Stock Options may from
time to time be granted;
(b) To determine whether and to what extent Incentive Stock Options and
Non-Qualified Stock Options or any combination thereof are to be
granted hereunder;
(c) To determine the number of shares of Common Stock to be covered by each
Stock Option granted hereunder;
(d) To determine the terms and conditions of any Stock Option granted
hereunder (including, but not limited to, the exercise price (subject
to Section 5(a)), any vesting condition, restriction or limitation
(which may be related to the performance of the optionee, the
Corporation or any Affiliate) and any vesting acceleration, forfeiture
or waiver regarding any Stock Option and the shares of Common Stock
relating thereto, based on such factors as the Committee shall
determine;
(e) To modify, amend or adjust the terms and conditions of any Stock
Option, at any time or from time to time;
(f) To determine to what extent and under what circumstances Common Stock
and other amounts payable with respect to a Stock Option shall be
deferred; and
(g) To determine under what circumstances a Stock Option may be settled in
cash or Common Stock under Section 5(j).
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall
from time to time deem advisable, to interpret the terms and provisions of the
Plan and any Stock Option issued under the Plan (and any agreement relating
thereto) and otherwise to supervise the administration of the Plan.
The Committee may act only by a majority of its members then in office,
except that the Committee may (i) delegate to an officer of the Corporation such
of its powers and authority under the Plan as it deems appropriate (provided
that no such delegation may be made that would cause Stock Options or other
transactions under the Plan to fail to be exempt from Section 16(b) of the
Exchange Act) and (ii) authorize any one or more of the members of the Committee
or any officer of the Corporation to execute and deliver documents on behalf of
the Committee.
Any determination made by the Committee or pursuant to delegated
authority pursuant to the provisions of the Plan with respect to any Stock
Option shall be made in the sole discretion of the Committee or such delegate at
the time of the grant of the Stock Option or, unless in contravention of any
express terms of the Plan or Stock Option Agreement, at any time thereafter. All
decisions made by the Committee or any appropriately delegated officer pursuant
to the
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provisions of the Plan shall be final and binding on all persons, including the
Corporation and Plan participants.
Notwithstanding any provision of the Plan to the contrary, the mere
fact that a Committee member shall fail to qualify as a "Non-Employee Director"
or "outside director" within the meaning of Rule 16b-3 and section 162(m) of the
Code, respectively, shall not invalidate any Stock Option granted by the
Committee, which Stock Option is otherwise validly granted under the Plan.
No member of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Stock Option
granted hereunder.
Any authority granted to the Committee may also be exercised by the
full Board, except to the extent that the grant or exercise of such authority
would cause any Stock Option or transaction to become subject to (or lose an
exemption under) the short-swing profit recovery provisions of Section 16 of the
Exchange Act. To the extent that any permitted action taken by the Board
conflicts with action taken by the Committee, the Board action shall control.
Notwithstanding the foregoing or any other provision of this Plan,
there is hereby approved and authorized, and the Committee shall grant, Stock
Options to purchase up to 412,118 shares of Common Stock (the "Emergence
Grants") to the persons and on the terms and conditions set forth in Schedule A
and the form of Stock Option Agreement appended thereto, which terms the
Committee shall not have the discretion to modify without the consent of the
optionee affected thereby. All future grants of Common Stock made pursuant to
this Plan are subject to Committee approval. In the event of any inconsistency
between the terms of this Plan and Schedule A (including the appended form of
Stock Option Agreement), the terms of this Plan shall prevail.
Section 3. Common Stock Subject to Plan
The total number of shares of Common Stock reserved and available for
grant under the Plan shall be 1,250,000. No participant may be granted Stock
Options covering in excess of 500,000 shares of Common Stock over the life of
the Plan. Shares subject to a Stock Option under the Plan may be authorized and
unissued shares or may be treasury shares.
If any Stock Option expires, terminates or is canceled without being
exercised, shares subject to such Stock Option shall again become available for
distribution in connection with Stock Options granted under the Plan.
In the event of any change in capitalization, such as a stock split or
combination or, in the case of any merger, consolidation, separation, including
a spin-off, exchange of shares or other distribution of stock or property of the
Corporation, any reorganization (whether or not such reorganization comes within
the definition of such term in section 368 of the Code) or any partial
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or complete liquidation of the Corporation, the Committee or Board may make such
substitution or adjustment in the aggregate number and kind of shares reserved
for issuance under the Plan, in the number, kind and exercise price of shares
subject to outstanding Stock Options and/or such other equitable substitution or
adjustment (including, but not limited to, cashing out the Stock Options as it
may determine to be appropriate in its sole discretion; provided, however, that
the number of shares subject to any Stock Option shall always be a whole number.
In addition, the Committee is hereby authorized to make adjustments in
the terms and conditions of, and the criteria included in, Stock Options
heretofore granted in recognition of unusual or nonrecurring events affecting
the Corporation, any Affiliate, or the financial statements of the Corporation
or any Affiliate, or of changes in applicable laws, regulations, or accounting
principles, whenever the Committee determines that such adjustments are
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan.
Section 4. Eligibility
Employees of and consultants to the Corporation and any of its
Affiliates who are responsible for or contribute to the management, growth and
profitability of the business of the Corporation and its Affiliates are eligible
to be granted Stock Options under the Plan. No grant shall be made under this
Plan to a director who is not an employee of the Corporation or any of its
Affiliates.
Section 5. Stock Options
Stock Options may be of two types: Incentive Stock Options and
Nonqualified Stock Options. Any Stock Option granted under the Plan shall be in
such form as the Committee may from time to time approve.
The Committee shall have the authority to grant any optionee Incentive
Stock Options, Nonqualified Stock Options or both types of Stock Options;
provided, however, that grants hereunder are subject to the aggregate limit on
grants to individual participants set forth in Section 3 and the grant schedule
set forth in Schedule A attached hereto. Incentive Stock Options may be granted
only to employees of the Corporation and its subsidiaries (within the meaning of
section 424(f) of the Code). To the extent that any Stock Option is not
designated as an Incentive Stock Option or even if so designated does not
qualify as an Incentive Stock Option, it shall constitute a Nonqualified Stock
Option.
Stock Options shall be evidenced by Stock Option Agreements, the terms
and provisions of which may differ. A Stock Option Agreement shall indicate on
its face whether it is intended to be an agreement for an Incentive Stock Option
or a Nonqualified Stock Option. The grant of a Stock Option shall occur on the
date the Committee by resolution selects an individual to be a participant in
any grant of a Stock Option, determines the number of shares of Common Stock to
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be subject to such Stock Option to be granted to such individual and specifies
the terms and provision of the Stock Option. The Corporation shall notify a
participant of any grant of a Stock Option, and a Stock Option Agreement shall
be duly executed and delivered by the Corporation to the participant. Such Stock
Option Agreement shall become effective upon execution by the Corporation and
the participant.
Anything in the Plan to the contrary notwithstanding, no term of the
Plan relating to Incentive Stock Options shall be interpreted, amended or
altered nor shall any discretion or authority granted under the Plan be
exercised so as to disqualify the Plan under section 422 of the Code, or,
without the consent of the affected optionee, to disqualify any Incentive Stock
Option under such section 422.
Stock Options granted under the Plan shall be subject to the following
terms and conditions and shall contain such additional terms and conditions as
the Committee shall deem desirable:
(a) Exercise Price. The exercise price per share of Common Stock
purchasable under a Stock Option shall be determined by the Committee
and set forth in the Stock Option Agreement; provided that the exercise
price per share of Common Stock purchasable under an Incentive Stock
Option shall not be less than the Fair Market Value of the Common Stock
subject to the Incentive Stock Option on the date of grant.
(b) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Incentive Stock Option shall be exercisable more than
10 years after the date the Stock Option is granted.
(c) Exercisability. Except as otherwise provided herein, Stock Options
shall be exercisable at such time or times and subject to such terms
and conditions as shall be determined by the Committee. If the
Committee provides that any Stock Option is exercisable only in
installments, the Committee may at any time waive such installment
exercise provisions, in whole or in part, based on such factors as the
Committee may determine. In addition, the Committee may at any time
accelerate the exercisability of any Stock Option. Any Stock Option
that is not exercised within its applicable exercise period shall
expire automatically.
(d) Method of Exercise. Subject to the provisions of this Section 5, Stock
Options may be exercised, in whole or in part, at any time during the
option term by giving written notice of exercise to the Corporation
specifying the number of shares of Common Stock subject to the Stock
Option to be purchased.
Such notice shall be accompanied by payment in full of the purchase
price by certified or bank check or such other instrument as the Corporation may
accept. If approved by the Committee, payment, in full or in part, may also be
made in the form of Common Stock already owned by the optionee of the same class
as the Common Stock subject to the Stock Option
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(based on the Fair Market Value of the Common Stock on the date the Stock Option
is exercised); provided, however, that such shares of already owned Common Stock
do not constitute "restricted securities" within the meaning of Rule 144(a)(3)
under the Securities Act of 1933, as amended, and have been held by the optionee
for such period of time and in such manner as is required by Generally Accepted
Accounting Principles to prevent the exercise of the Stock Option from being
deemed additional cash compensation of the optionee chargeable against the
earnings of the Corporation; and provided, further, that in the case of an
Incentive Stock Option the right to make a payment in the form of already owned
shares of Common Stock of the same class as the Common Stock subject to the
Stock Option must be authorized by the Committee at the time the Stock Option is
granted.
In the discretion of the Committee, payment for any shares subject to a
Stock Option may also be made by delivering a properly executed exercise notice
to the Corporation, together with a copy of irrevocable instructions to a broker
to deliver promptly to the Corporation the amount of sale or loan proceeds
necessary to pay the purchase price, and, if requested, the amount of any
federal, state, local or foreign withholding taxes. To facilitate the foregoing,
the Corporation may enter into agreements for coordinated procedures with one or
more brokerage firms.
In addition, in the discretion of the Committee, payment for any shares
subject to a Stock Option may also be made by instructing the Committee to
withhold a number of such shares having a Fair Market Value equal to the
aggregate exercise price of such Stock Option.
No shares of Common Stock shall be issued until full payment therefore
has been made. Except as otherwise provided in Section 5(1) below, an optionee
shall have all of the rights of a stockholder of the Corporation holding the
class or series of Common Stock that is subject to such Stock Option (including,
if applicable, the right to vote the shares and the right to receive dividends),
when the optionee has given written notice of exercise, has paid in full for
such shares and, if requested, has given the representation described in Section
10(a).
(e) Nontransferability of Stock Options. No Stock Option shall be
transferable by the optionee other than (i) by will or by the laws of
descent and distribution; (ii) in the case of a Nonqualified Stock
Option, pursuant to (A) a qualified domestic relations order (as
defined in the Code or Title I of the Employee Retirement Income
Security Act of 1974, as amended, or the rules thereunder) and (B) a
gift to such optionee's children, whether directly or indirectly or by
means of a trust or partnership or otherwise; or (iii) if expressly
permitted under the applicable Stock Option Agreement, pursuant to the
terms set forth therein. All Stock Options shall be exercisable,
subject to the terms of this Plan, during the optionee's lifetime, only
by the optionee, the guardian or legal representative of the optionee
named in the Stock Option Agreement, or any person to whom an option is
transferred in accordance with the preceding sentence.
(f) Termination by Death. Unless otherwise determined by the Committee, if
an optionee's employment or service terminates by reason of death, any
Stock Option held by such
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optionee may thereafter be exercised, to the extent then exercisable,
or on such accelerated basis as the Committee may determine, for a
period of one year (or such other period as the Committee may specify
in the Stock Option Agreement) from the date of such death or until the
expiration of the stated term of such Stock Option, whichever period is
the shorter.
(g) Termination by Reason of Disability. Unless otherwise determined by the
Committee, if an optionee's employment terminates by reason of
Disability, any Stock Option held by such optionee may thereafter be
exercised by the optionee, to the extent it was exercisable at the time
of termination , or on such accelerated basis as the Committee may
determine for a period of three years (or such shorted period as the
Committee may specify in the Stock Option Agreement) from the date of
such termination of employment or until the expiration of the stated
term of such Stock Option, whichever period is the shorter; provided,
however, that if the optionee dies within such period, any unexercised
Stock Option held by such optionee shall, notwithstanding the
expiration of such period, continue to be exercisable to the extent to
which it was exercisable at the time of death for a period of 12 months
from the date of such death or until the expiration of the stated term
of such Stock Option, whichever period is the shorter. In the event of
termination of employment by reason of Disability, if an Incentive
Stock Option is exercised after the expiration of the exercise periods
that apply for purposes of section 422 of the Code, such Stock Option
will thereafter be treated as a Nonqualified Stock Option.
(h) Termination by Reason of Retirement. Unless otherwise determined by the
Committee, if an optionee's employment terminates by reason of
Retirement, any Stock Option held by such optionee may thereafter be
exercised by the optionee, to the extent it was exercisable at the time
of such Retirement, or on such accelerated basis as the Committee may
determine, for a period of five years (or such shorter period as the
Committee may specify in the Stock Option Agreement) from the date of
such termination of employment or until the expiration of the stated
term of such Stock Option, whichever period is the shorter; provided,
however, that if the optionee dies within such period any unexercised
Stock Option held by such optionee shall, notwithstanding the expiation
of such period, continue to be exercisable to the extent to which it
was exercisable at the time of death for a period of 12 months from the
date of such death or until the expiration of the stated term of such
Stock Option, whichever period is the shorter. In the event of
termination of employment by reason of Retirement, if an Incentive
Stock Option is exercised after the expiration of the exercise periods
that apply for purposes of section 422 of the Code, such Stock Option
will thereafter be treated as a Nonqualified Stock Option.
(i) Other Termination. Unless otherwise determined by the Committee: (i) if
an optionee incurs a Termination of Employment for Cause, all Stock
Options held by such optionee, whether or not then exercisable, shall
thereupon terminate; and (ii) if an optionee incurs a Termination of
Employment for any reason other than death, Disability or Retirement or
for Cause, any Stock Option held by such optionee, to the extent then
exercisable, or on
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such accelerated basis as the Committee may determine, may be exercised
for the lesser of three months from the date of such Termination of
Employment or the balance of such Stock Option's term; provided,
however, that if the optionee dies within such three-month period, any
unexercised Stock Option held by such optionee shall, notwithstanding
the expiration of such three-month period, continue to be exercisable
to the extent to which it was exercisable at the time of death for a
period of 12 months from the date of such death or until the expiration
of the stated term of such Stock Option, whichever period is the
shorter. Notwithstanding the foregoing, if an optionee incurs a
Termination of Employment at or after a Change in Control (as defined
in Section 7(b)), other than by reason of Cause, death, Disability or
Retirement, any Stock Option, to the extent then exercisable, held by
such optionee shall be exercisable for the lesser of (1) six months and
one day from the date of such Termination of Employment, and (2) the
balance of such Stock Option's term. In the event of Termination of
Employment, if an Incentive Stock Option is exercised after the
expiration of the exercise periods that apply for purposes of section
422 of the Code, such Stock Option will thereafter be treated as a
Nonqualified Stock Option.
(j) Cashing Out of Stock Option. On receipt of written notice of exercise,
the Committee, with the consent of the optionee, may elect to cash out
all or part of the portion of the shares of Common Stock for which a
Stock Option is being exercised by paying the optionee an amount, in
cash or Common Stock, equal to the excess of the Fair Market Value of
the Common Stock over the exercise price times the number of shares of
Common Stock for which the Stock Option is being exercised on the
effective date of such cash-out.
(k) Change in Control Cash-Out. Notwithstanding any other provisions of the
Plan, during the 60-day period from and after a Change in Control (the
"Exercise Period"), unless the Committee shall determine otherwise at
the time of grant, an optionee shall have the right, whether or not the
Stock Option is fully exercisable and in lieu of the payment of the
exercise price for the shares of Common Stock being purchased under the
Stock Option and by giving notice to the Corporation, to elect (within
the Exercise Period) to surrender all or part of the Stock Option to
the Corporation and to receive cash, within 30 days of such notice, in
an amount equal to the amount by which the Change in Control Price per
share of Common Stock on the date of such election shall exceed the
exercise price per share of Common Stock under the Stock Option (the
"Spread") multiplied by the number of shares of Common Stock granted
under the Stock Option as to which the right granted under this Section
5(k) shall have been exercised. Notwithstanding the foregoing, if any
right granted pursuant to this Section 5(k) would make a Change in
Control transaction ineligible for pooling-of-interests accounting
under APB No. 16 that, but for the nature of such grant, would
otherwise be eligible for such accounting treatment, the Committee
shall have the ability to substitute for the cash payable pursuant to
such right Common Stock with a Fair Market Value equal to the cash that
would otherwise be payable hereunder.
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(l) Deferral of Option Shares. The Committee may from time to time
establish procedures pursuant to which an optionee may elect to defer,
until a time or times later than the exercise of a Stock Option,
receipt of all or a portion of the shares of Common Stock subject to
such Stock Option and/or to receive cash at such later time or times in
lieu of such deferred shares, all on such terms and conditions as the
Committee shall determine. If any such deferrals are permitted, then
notwithstanding Section 5(d) above, an optionee who elects such
deferral shall not have any rights as s stockholder with respect to
such deferred shares unless and until shares of Common Stock are
actually delivered to the optionee with respect thereto, except to the
extent otherwise determined by the Committee.
Section 6. Tax Offset Bonuses
At the time a Stock Option is granted hereunder or at any time
thereafter, the Committee may grant to the participant receiving such Stock
Option the right to receive a cash payment in an amount specified by the
Committee, to be paid at such time or times (if ever) as the Stock Option
results in compensation income to the participant, for the purpose of assisting
the participant to pay the resulting taxes, all as determined by the Committee
and on such other terms and conditions as the Committee shall determine.
Section 7. Change in Control Provisions
(a) Impact of Event. Notwithstanding any other provision of the Plan to the
contrary, in the event of a Change in Control, any Stock Options
outstanding as of the date such Change in Control is determined to have
occurred, and which are not then exercisable and vested, shall become
fully exercisable and vested to the full extent of the original grant.
(b) Definition of Change in Control. For purposes of the Plan, a "Change in
Control" shall mean the occurrence of any of the following:
(i) any person or "group" (within the meaning of Section 13(d)(3) of
the Exchange Act), other than Dickstein Partners, Inc. and/or any of its
affiliates (as defined in Rule 12b-2 under the Exchange Act), acquiring
"beneficial ownership" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of fifty percent (50%) or more of the aggregate voting
power of the capital stock of the Corporation; or
(ii) the sale of all or substantially all of the Corporation's assets
in one or more related transactions; or
(iii) any merger, consolidation, reorganization or similar event of the
Corporation or any of its subsidiaries, as a result of which the holders of the
voting stock of the Corporation immediately prior to such merger, consolidation,
reorganization or similar event do not hold at
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least fifty-one percent (51%) of the aggregate voting power of the capital stock
of the surviving entity.
(c) Change in Control Price. For purposes of the Plan, "Change in Control
Price" means the higher of (i) the highest reported sales price,
regular way, of a share of Common Stock in any transaction reported on
the New York Stock Exchange Composite Tape or other national securities
exchange on which such shares are listed or on NASDAQ during the 60-day
period prior to and including the date of a Change in Control or (ii)
if the Change in Control is the result of a tender or exchange offer or
a Corporate Transaction, the highest price per share of Common Stock
paid in such tender or exchange offer or Corporate Transaction;
provided, however, that in the case of Incentive Stock Options, the
Change in Control Price shall be in all cases the Fair Market Value of
the Common Stock on the date such Incentive Stock Option is exercised.
To the extent that the consideration paid in any such transaction
described above consists all or in part of securities or other noncash
consideration, the value of such securities or other noncash
consideration shall be determined in the sole discretion of the Board.
(d) In the event that the Corporation is merger or consolidated with
another corporation and, whether or not the Corporation shall be the
surviving corporation, there shall be any change in the shares of
Common Stock by reason of such merger or consolidation, or in the event
that all or substantially all of the assets of the Corporation are
acquired by another person, or in the event of a reorganization or
liquidation of the Corporation (each such event being hereinafter
referred to as a "Reorganization Event"), then the Committee may, by
written notice to each optionee, provide that his Stock Options will be
terminated unless exercised withing 30 days (or such longer period as
the Committee shall determine in its sole discretion) after the date of
such notice (with or without acceleration of the exercisability of such
Stock Options).
Section 8. Term, Amendment and Termination
The Plan will terminate 10 years after the Effective Date. Under the
Plan, Stock Options outstanding as of such date shall not be affected or
impaired by the termination of the Plan.
The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration or discontinuation shall be made which would impair the rights of an
optionee under a Stock Option theretofore granted without the optionee's
consent, except such an amendment made to cause the Plan to qualify for any
exemption provided by Rule 16b-3. In addition, no such amendment shall be made
without the approval of the Corporation's stockholders to the extent such
approval is required by law or agreement or necessary to comply with any tax or
regulatory requirement.
The Committee may amend the terms of any Stock Option theretofore
granted, prospectively or retroactively, but no such amendment shall impair the
rights of any holder
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without the holder's consent, except such an amendment made to cause the Plan or
Stock Option to qualify for any exemption provided by Rule 16b-3.
Subject to the above provisions, the Board shall have authority to
amend the Plan to take into account changes in law and tax and accounting rules
as well as other developments, and to grant Stock Options that qualify for
beneficial treatment under such rules without stockholder approval.
Section 9. Unfunded Status of Plan
It is currently intended that the Plan constitute an "unfunded" plan
for incentive and deferred compensation. The Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Common Stock or make payments; provided, however, that
unless the Committee otherwise determines, the existence of such trusts or other
arrangements is consistent with the "unfunded" status of the Plan.
Section 10. General Provisions
(a) The Committee may require each person purchasing or receiving shares
pursuant to a Stock Option to represent to and agree with the
Corporation in writing that such person is acquiring the shares without
a view to the public resale or distribution thereof in violation of
applicable securities laws. the certificates for such shares may
include any legend which the Committee deems appropriate to reflect any
restriction on transfer.
Notwithstanding any other provision of the Plan or agreements made
pursuant thereto, the Corporation shall not be required to issue or deliver any
certificate or certificates for shares of Common Stock under the Plan prior to
fulfillment of each of the following conditions:
(i) Any registration or other qualification of such shares of the
Corporation under any state of federal law or regulation, or the maintaining in
effect of any such registration or other qualification which the Committee
shall, in its absolute discretion upon the advice of counsel, deem necessary or
advisable; and
(ii) Obtaining any other consent, approval, or permit from any state or
federal governmental agency which the Committee shall, in its absolute
discretion after receiving the advice of counsel, determine to be necessary or
advisable.
(b) Nothing contained in the Plan shall prevent the Corporation or any
Affiliate from adopting other or additional compensation arrangements
for its employees.
(c) Adoption of the Plan shall not confer upon any employee or consultant
any right to continued employment or service, nor shall it interfere in
any way with the right of the
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Corporation or any Affiliate to terminate the employment or service of
any employee or consultant at any time.
(d) No later than the date as of which an amount first becomes includible
in the gross income of the participant for federal income tax purposes
with respect to any Stock Option theretofore granted under the Plan,
the participant shall pay to the Corporation, or make arrangements
satisfactory to the Corporation regarding the payment of, any federal,
state, local or foreign taxes of any kind required by law to be
withheld with respect to such amount. Unless otherwise determined by
the Committee, withholding obligations may be settled with Common
Stock, including Common Stock that is part of the Stock Option that
gives rise to the withholding requirement. The obligations of the
Corporation under the Plan shall be conditional on such payment or
arrangements, and the Corporation and its Affiliates shall, to the
extent permitted by law, have the rights to deduct any such taxes from
any payment otherwise due to the participant. The Committee may
establish such procedures as it deems appropriate, including making
irrevocable elections, for the settlement of withholding obligations of
Common Stock.
(e) The Committee shall establish such procedures as it deems appropriate
for a participant to designate a beneficiary to whom any amounts
payable in the event of the participant's death are to be paid or by
whom any rights of the participant, after the participant's death, may
be exercised.
(f) In the case of a grant of a Stock Option to any employee of a
subsidiary of the Corporation, the Corporation may, if the Committee so
directs, issue or transfer the shares of Common Stock, if any, covered
by the Stock Option to the subsidiary, for such lawful consideration as
the Committee may specify, upon the condition or understanding that the
subsidiary thereafter will transfer the shares of Common Stock to the
employee in accordance with the terms of the Stock Option specified by
the Committee pursuant to the provisions of the Plan.
(g) The Plan and all Stock Options granted and actions taken thereunder
shall be governed by and construed in accordance with the laws of the
State of Delaware, without reference to principles of conflict of laws.
(h) No participant or other person shall have any claim to be granted any
Stock Option, and there is no obligation for uniformity of treatment of
participants, or holders or beneficiaries of Stock Options. The terms
and conditions of Stock Options and the Committee's determinations and
interpretations with respect thereto need not be the same with respect
to each participant (whether or not such participants are similarly
situated).
(i) Nothing contained in the Plan shall prevent the Corporation or any
Affiliate from adopting or continuing in effect other compensation
arrangements, which may, but need not,
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provide for the grant of options (subject to stockholder approval if
such approval is required), and such arrangements may be either
generally applicable or applicable only in specific cases.
(j) If any provision of the Plan or any Stock Option Agreement is or
becomes or is deemed to be invalid, illegal, or unenforceable in any
jurisdiction, or would disqualify the Plan or any Stock Option under
any law deemed applicable by the Committee, such provision shall be
construed or deemed amended to conform to the applicable laws, or if it
cannot be construed or deemed amended without, in the determination of
the Committee, materially altering the intent of the Plan or the Stock
Option Agreement, such provision shall be stricken and the remainder of
the Plan and any such Stock Option Agreement shall remain in full force
and effect.
(k) No fractional share shall be issued or delivered pursuant to the Plan
or any Stock Option Agreement, and the Committee shall determine
whether cash, securities or other property shall be paid or transferred
in lieu of any fractional share or whether such fractional share or any
rights thereto shall be canceled, terminated or otherwise eliminated.
(l) Headings are given to the Sections and subsections of the Plan solely
as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
(m) Any and all payments of shares of Common Stock or cash hereunder shall
be granted, transferred or paid in consideration of services performed
for the Corporation or for its Affiliates by the grantee. All such
grants, issuances and payments shall constitute a special incentive
payment to the optionee and shall not, unless otherwise determined by
the Committee, be taken into account in computing the amount of salary
or compensation of the optionee for the purposes of determining any
pension, retirement, death or other benefits under (i) any pension,
retirement, life insurance or other benefit plan of the Corporation or
any Affiliate or (ii) any agreement between the Corporation or any
Affiliate, on the one hand, and the optionee on the other hand.
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Schedule A
A. Grant Schedule. Participants* will receive Stock Options as follows:
(i) Effective Date. On the Effective Date, Stock Options (the
"Initial Options") will be granted for 206,059 shares of the
Common Stock.
(ii) 1996 Fiscal Year. If the Corporation achieves an EBITDA** of
at least 4.2 million (before profit sharing, excluding
Castleberry, and including Hue licensing revenues) in the 1996
fiscal year, Stock Options (the "1996 Options") will be
granted for an additional 206,059 shares of the Common Stock.
(iii) 1998 Fiscal Year. On January 4, 1998, Stock Options (the "1998
Options") will be granted for an additional 182,879 shares of
the Common Stock.
B. Vesting Schedule.
(i) Vesting of Initial Options. One-third of the Initial Options
will vest on each of the first three anniversaries of the
Effective Date; provided however, that all of the Initial
Options will vest immediately upon a Change in Control.
(ii) Vesting of 1996 Options. One-third of the 1996 Options will
vest on each of the first three anniversaries of the date of
grant; provided however, that all of the 1996 Options will
vest immediately upon a Change in Control.
(iii) Vesting of 1998 Options. One-fourth of the 1998 Options will
vest immediately upon grant and one-fourth of the 1998 Options
will vest on each of the first three anniversaries of the date
of grant; provided however, that all of the 1998 Options will
vest immediately upon a Change in Control.
- -----------
* For purposes of clauses A(i) and A(ii), "Participants" means John J.
Pomerantz, John A. Ward, Catharine Bandel-Wirtshafter, Dominick Felicetti
and Warren T. Wishart and, for purposes of clause A(iii), "Participants"
means John J. Pomerantz, John A. Ward, Dominick Felicetti and Warren T.
Wishart.
** EBITDA means consolidated earnings before interest, taxes, depreciation and
amortization, as determined pursuant to generally accepted accounting
principles in effect in the United States from time to time.
16
EXHIBIT 5.01
PARKER CHAPIN FLATTAU & KLIMPL, LLP
COUNSELLORS AT LAW
1211 AVENUE OF THE AMERICAS
NEW YORK, NY 10036-8735
(212) 704-6000
CABLE LAWPARK
FAX (212) 704-6288
TELEX 640347
August 27, 1998
The Leslie Fay Company, Inc.
1412 Broadway
New York, New York 10018
Gentlemen:
We have acted as counsel to The Leslie Fay Company, Inc. (the
"Registrant") in connection with its Registration Statement on Form S-8 (the
"Registration Statement") to be filed with the Securities and Exchange
Commission relating to 2,500,000 shares of Common Stock, par value $.01 per
share, of the Registrant, issuable upon exercise of options granted or to be
granted under the Registrant's 1997 Management Stock Option Plan (the "Plan").
In connection with the foregoing, we have examined, among
other things, the Plan, the Registration Statement and originals or copies,
satisfactory to us, of all such corporate records and of all such agreements,
certificates and other documents as we have deemed relevant and necessary as a
basis for the opinion hereinafter expressed. In such examination, we have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to us as originals and the conformity with the original documents of
documents submitted to us as copies. As to any facts material to such opinion,
we have, to the extent that relevant facts were not independently established by
us, relied on certificates of public officials and certificates, oaths and
declarations of officers or other representatives of the Registrant.
Based upon and subject to the foregoing, we are of the opinion
that the shares of Common Stock to be issued pursuant to the exercise of options
granted or to be granted under the Plan will be, when issued pursuant to the
provisions of the Plan, validly issued, fully paid and non-assessable.
<PAGE>
The Leslie Fay Company, Inc.
August 27, 1998
Page 2
We hereby consent to the filing of a copy of this opinion as
an exhibit to the Registration Statement.
Very truly yours,
/s/Parker Chapin Flattau & Klimpl, LLP
Parker Chapin Flattau & Klimpl, LLP
EXHIBIT 23.01
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement on Form S-8 relating to the 1997
Management Stock Option Plan of The Leslie Fay Company, Inc. of our report dated
February 27, 1998, except with respect to Note 6 as to which the date is March
31, 1998, included in The Leslie Fay Company, Inc.'s Form 10-K for the year
ended January 3, 1998 and to all references to our Firm included in this
Registration Statement.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
New York, New York
August 25, 1998
