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As filed with the Securities and Exchange Commission on September 17, 1998
Registration No. 333-
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------------------
LILLIAN VERNON CORPORATION
--------------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 13-2529859
-------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
One Theall Road, Rye, New York 10580-1450
-----------------------------------------
(Address of principal executive offices)
1997 Stock Option Plan For Non-Employee Directors
-------------------------------------------------
(Full Title of Plan)
Lillian Vernon
----------------------------------
Chairman and Chief Executive Officer
Lillian Vernon Corporation
One Theall Road
Rye, New York 10580-1450
(914) 925-1200
----------------------------------
(Name, address, including zip code, and telephone number,
including area code of agent for service)
A copy of all communications, including communications sent
to the agent for service should be sent to:
Alan M. Rashes Esq.
Salon, Marrow & Dyckman, LLP
685 Third Avenue
New York, New York 10017
(212) 661-7100
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CALCULATION OF REGISTRATION FEE
- ------------------------------------------------------------------------------
Proposed
Title of Each Proposed Maximum
Class of Maximum Aggregate Amount of
Securities to Amount to be Offering Price Offering Registration
be Registered Registered per Share Price Fee
- ------------------------------------------------------------------------------
Stock Options 50,000(1) - - (2)
Common Stock, 50,000(3)(4) $15.0625(5) $753,125 $222.17
Par Value $.01
per share
- --------------
(1) Represents options to be granted pursuant to the 1997 Stock Option
Plan For Non-Employee Directors (the "Non-Employee Directors Option Plan") of
the Registrant. Options to purchase 50,000 shares of Common Stock to be granted
pursuant to the Non-Employee Directors Option Plan were previously registered
pursuant to the Registrant's Registration Statement on Form S-8 (File No.
333-36467) filed with the Commission on September 26, 1997.
(2) No registration fee is required pursuant to Rule 457(h)(2).
(3) Shares issuable upon exercise of stock options under the
Non-Employee Directors Option Plan.
(4) Includes an indeterminable number of shares of common stock which
may become issuable pursuant to the anti-dilution provisions of the
Non-Employee Directors Option Plan.
(5) Calculated solely for the purpose of determining the registration
fee pursuant to Rule 457(c) based upon the closing price of the Common Stock as
reported by the American Stock Exchange (the "AMEX") on September 15, 1998.
<PAGE>
Introduction
On July 15, 1998, the stockholders of Lillian Vernon Corporation (the
"Registrant" or the "Company") approved a 50,000 share increase in the number
of shares of Common Stock reserved under the 1997 Stock Option Plan for
Non-Employee Directors (the "Non-Employee Directors Option Plan" or the
"Plan"). The instant Registration Statement registers the additional 50,000
shares which are reserved for issuance under the Non-Employee Directors Option
Plan.
Incorporation by Reference
On September 20, 1997, a Form S-8 Registration Statement, (File No.
333-36467) registering, in part, 50,000 shares of Common Stock, reserved for
issuance under the exercise of options pursuant to the Non-Employee Directors
Option Plan, was filed with the Securities and Exchange Commission (the
"Commission") and became effective. The contents of Registration Statement No.
333-36467 are hereby incorporated by reference, as modified by amendments to
the Non-Employee Directors Option Plan, which amendments were approved by the
stockholders of the Registrant on July 15, 1998, and which amendments are
described herein. See "Amendments to the Non-Employee Directors Option Plan".
Amendments to the Non-Employee Directors Option Plan
On July 15, 1998, the stockholders of the Registrant approved
amendments to the Non-Employee Directors Option Plan.
The Non-Employee Directors Option Plan was amended to provide that
non-employee directors receive options to purchase shares upon their
appointment to the Registrant's Board of Directors if such appointment is on a
date other than that of an Annual Meeting of Stockholders. This grant of
options is in addition to the grant of options on the date of the Company's
Annual Meeting, which had previously been provided for under the Plan.
The Non-Employee Directors Option Plan was also amended to provide
that the number of shares included in each option grant be at least 2,500
shares and not more than 5,000 shares, such number to be determined by the
members of the Board of Directors who are not eligible to receive grants
pursuant to the Non-Employee Directors Option Plan.
The Non-Employee Directors Plan was also amended to modify the
definition of the directors who are eligible to receive grants of options under
the Plan. An Eligible Director is defined as a director of the Company who is
not an employee or officer of the Company, or its subsidiaries, and who does
not receive compensation from the Company for services rendered as a
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consultant or in any other capacity, other than a director, except for an
amount that would not have to be disclosed pursuant to Regulation 229.404(a) of
the Securities Act of 1934 (the "Exchange Act"), does not possess an interest
in any other transactions that would have to be disclosed pursuant to
Regulation 229.404(a) of the Exchange Act, or is not engaged in a business
relationship for which disclosure would be required pursuant to Regulation
229.404(b) of the Exchange Act.
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Part II
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed with the Commission by Lillian Vernon
Corporation, a Delaware corporation (the "Company") are incorporated as to
their respective dates in this Registration Statement by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1998;
(b) The Company's Quarterly Report on Form 10-Q for the quarter ended
May 30, 1998;
(c) All other reports filed by the Company pursuant to Section 13(a)
and 15(d) of the Securities Exchange Act of 1934 since the end of the Company's
fiscal year ended February 28, 1998; and
(d) The description of the Company's Common Stock contained in the
Company's Form 8-A dated July 16, 1987 and the Company's Registration Statement
on Form S-1, Registration No. 33-15430, declared effective on August 13, 1987.
All documents filed by the Company with the Commission, pursuant to
Section 13, 14 or 15(d) of the Exchange Act hereto, but prior to the filing of
a post-effective amendment to the Registration Statement which indicates that
all securities offered hereby have been sold or which deregisters all such
securities then remaining unsold, shall be deemed to be incorporated herein by
reference and to be a part hereof from their respective dates of filing. Any
statement contained herein shall be deemed to be modified or superseded for
purposes of the Prospectus to the extent that a statement contained herein or
in any other subsequently filed document, which also is or deemed to be
incorporated by reference herein, modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTEREST OF NAMED EXPERTS AND COUNSEL
The legality of the shares offered hereby has been passed upon for the
Company by Salon, Marrow & Dyckman, LLP, 685 Third Avenue, New York, New York
10017. Leo Salon, a partner of Salon, Marrow & Dyckman, LLP, a director of the
Company, owns 2,250 shares of Common Stock. He has the right to acquire 4,500
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shares of Common Stock pursuant to the Company's 1987 Performance Unit,
Restricted Stock, Non-Qualified Option and Incentive Stock Option Plan and the
right to acquire 12,500 shares of Common Stock pursuant to the Company's 1993
Stock Option Plan for Non-Employee Directors. Mr. Salon also has the right to
acquire 5,000 shares of Common Stock pursuant to the Company's 1997 Performance
Unit, Restricted Stock, Non-Qualified Option and Incentive Stock Option Plan.
Mr. Salon is a director of the Lillian Menasche Vernon Foundation, Inc. a
charitable foundation, which Foundation owns an aggregate of 536,098 shares of
Common Stock.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 102 of the Delaware General Corporation Law ("DGCL") allows a
corporation to eliminate the personal liability of directors of a Company to
the Company or to any of its stockholders for monetary damage for a breach of
his fiduciary duty as a director, except in the case where the director
breaches his duty of loyalty, fails to act in good faith, engages in
intentional misconduct or knowingly violates a law, authorizes the payment of a
dividend or approves a stock repurchase in violation of the DGCL or obtains an
improper personal benefit. The Company's Certificate of Incorporation, a copy
of which is incorporated by reference, contains a provision which eliminates
directors' personal liability as set forth above.
Section 145 of the DGCL permits a corporation to indemnify its
directors and officers.
Article IV of the Company's By-Laws provides for indemnification of
corporate agents as follows:
"Section 1. Non-Derivative Actions. The Company shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or contemplated action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Company) by reason of the fact that he is or was a director,
officer or employee of the Company, or is or was serving at the request of the
Company as a director, officer or employee 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 him in connection with such action, suit or proceeding,
if he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Company, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the
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person did not act in good faith and in a manner which he reasonably believed
to be in or not opposed to the best interests of the Company, and, with respect
to any criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful."
"Section 2. Derivative Actions. The Company shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or contemplated action or suit by or in the right of the Company to
procure a judgment in its favor by reason of the fact that he is or was a
director, officer or employee of the Company, or is or was serving at the
request of the Company as a director, officer or employee of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
connection with the defense or settlement of such action or suit or proceeding
if he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Company and 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 Company unless
and only to the extent that the Court of Chancery of Delaware or the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication or liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper."
"Section 3. Expenses. To the extent that a director, officer or
employee of the Company has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in Section 1 and 2 of
this Article IV, or in defense of any claim, issue or matter therein, he shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith."
"Section 4. Standard of Conduct. Any indemnification under Sections 1
and 2 of this Article IV (unless ordered by a court) shall be made by the
Company only as authorized in the specific case upon a determination that
indemnification of the director, officer or employee is proper in the
circumstances because he has met the applicable standard of conduct set forth
in Sections 1 and 2. Such determination shall be made (1) by the Board of
Directors by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or (2) if such quorum is not
obtainable, or, even if obtainable, a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (3) by a
majority vote of the stockholders."
"Section 5. Undertakings. Expenses incurred in defending a civil,
criminal, administrative or investigative action, suit or
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proceeding may be paid by the Company in advance of the final disposition of
such action, suit or proceeding if authorized by the Board of Directors in the
specific case and only upon receipt of an undertaking by or on behalf of the
director, officer or employee to repay such amount unless it shall ultimately
be determined that he is entitled to be indemnified by the Company as
authorized in this Article IV."
"Section 6. Non-Exclusivity. The indemnification provided by this
Article IV shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under any By-Law, agreement, vote of
stockholders or disinterested directors, statute, court decision, insurance
policy or otherwise, now or hereafter in effect, and shall continue as to a
person who has ceased to be a director, officer or employee and shall inure to
the benefit of the heirs, executors and administrators of such a person."
"Section 7. Insurance. The Company may purchase and maintain insurance
on behalf of any person who is or was a director, officer or employee of the
Company, or is or was serving at the request of the Company as a director,
officer or employee of another corporation, partnership, joint venture, trust
or other enterprise, against any liability asserted against him and incurred by
him in any such capacity, or arising out of his status as such, whether or not
the Company would have the power to indemnify him against such liability under
the provisions of this Article IV or of the General Corporation Law of the
State of Delaware."
"Section 8. Definitions. For the purpose of this Article IV,
references to "other enterprises" shall include employee benefit plans;
references to "fines" shall include any excise taxes assessed on a person with
respect to an employee benefit plan; and references to "serving at the request
of the Company" shall include any service as a director, officer or employee of
the Company which imposes duties on, or involves services by, such director,
officer or employee with respect to any employee benefit plan, its participants
or beneficiaries; and a person who acting in good faith and in a manner he
reasonably believes to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the Company" as referred to in this Article
IV".
"Section 9. Indemnification Agreements. Without limiting the
generality of the foregoing, the Company shall have the express authority to
enter into such agreements as the Board of Directors deems appropriate for the
indemnification of present or future directors and officers of the Company in
connection with their service to or status with the Company or any other
corporation, entity or enterprise with whom such person is serving at the
express written request of the Company."
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The Company has entered into indemnification agreements with its
officers and directors providing for payment of (i) all expenses incurred by an
officer and director in connection with any potential liability, (ii) any
awards or judgments rendered against said officer and director and (iii) any
amounts paid in settlement, provided that the officer and director did not act
in bad faith and acted in a manner he or she reasonably believed to be in or
not opposed to the best interests of the Company. The indemnification
agreements provide for advancement of expenses in certain circumstances.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
3 Articles of Incorporation, as amended
and By Laws(1)
4.1 1997 Stock Option Plan For Non-Employee
Directors, as amended. E-1
5.1 Opinion of Salon, Marrow & Dyckman, LLP E-6
23.1 Consent of Salon, Marrow & Dyckman, LLP to be named in the
Registration Statement. Reference is made to Exhibit 5.1 to
this Registration Statement which includes such
consent.
23.2 Consent of PricewaterhouseCoopers LLP E-8
24.0 Power of Attorney (set forth in the signature page).
ITEM 9. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to the Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
- --------------
(1) Filed with the Registration Statement on Form S-1 (File No.
33-15430) and with Form 10-Q for the Quarter ended August 28, 1987 and
incorporated by reference herein.
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(ii) To reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviations from the low or high end
of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20% change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective 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 of such information in the Registration Statement;
Provided however that paragraphs (a)(l)(i) and (a)(l)(ii) shall
not apply to information contained in periodic reports filed by the registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in this 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.
(b) 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.
(c) 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
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provisions, 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 is against public policy as expressed
in the Act and will be governed by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for the 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 Rye, New York on this 16th day of September, 1998.
LILLIAN VERNON CORPORATION
Dated: September 16, 1998 By: /s/ Lillian Vernon
--------------------
Lillian Vernon
Chairman of the Board
and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below, hereby constitutes and appoints Lillian Vernon and Leo Salon and each
acting alone, his true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name, place and stead,
in any and all capacities, to sign any or all amendments and supplements to
this Registration Statement and to file the same with all exhibits thereto and
other documents in connection with all exhibits thereto, with the Securities
and Exchange Commission, granting unto said attorney-in-fact and agents full
power and authority to do and perform each and every act and thing necessary or
appropriate to be done with respect to this Registration Statement on Form S-8
or any amendments or supplements hereto 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 attorneys-in-fact and agents, each acting alone, or
his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Exchange Act of 1933, as
amended, this Registration Statement has been signed by the following persons
in their respective capacities with Lillian Vernon Corporation and on the dates
indicated.
Signature Title Date
--------- ----- ----
/s/ Lillian Vernon Chairman of the Board September 16, 1998
- ------------------------ of Directors and
Lillian Vernon Chief Executive
Officer (Principal
Executive Officer)
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/s/ Richard P. Randall Senior Vice September 16, 1998
- -------------------------- President-Chief
Richard P. Randall Financial Officer
(Principal Financial
and Accounting
Officer)
/s/ Howard P. Goldberg President and September 16, 1998
- -------------------------- Director
Howard P. Goldberg
/s/ David C. Hochberg Vice President-Public September 16, 1998
- -------------------------- Affairs and Director
David C. Hochberg
/s/ Leo Salon Director September 16, 1998
- --------------------------
Leo Salon
/s/ Bert W. Wasserman Director September 16, 1998
- --------------------------
Bert W. Wasserman
/s/ Richard A. Berman Director September 16, 1998
- --------------------------
Richard A. Berman
/s/ Jonah Gitlitz Director September 16, 1998
- --------------------------
Jonah Gitlitz
/s/ Elizabeth M. Eveillard Director September 16, 1998
- --------------------------
Elizabeth M. Eveillard
11
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INDEX TO EXHIBITS
4.1 1997 Stock Option Plan for Non-Employee E-1
Directors, as amended
5.1 Opinion of Salon, Marrow & Dyckman, LLP E-6
23.1 Consent of Salon, Marrow & Dyckman, LLP
(included in Exhibit 5.1)
23.2 Consent of PricewaterhouseCoopers LLP E-8
12
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Exhibit 4.1
LILLIAN VERNON CORPORATION
1997 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
1. Purpose
The Purpose of the Lillian Vernon Corporation Stock Option Plan for
Non-Employee Directors (the "Plan") is to increase the proprietary and vested
interest of the non-employee directors of the Lillian Vernon Corporation (the
"Company") in the growth and performance of the Company by granting such
directors options to purchase shares of Common Stock, $.01 par value per share
(the "Stock"), of the Company.
2. Administration
The Plan shall be administered by the Company's Board of Directors (the
"Board"). Subject to the provisions of the Plan, the Board shall be authorized
to interpret the Plan, to establish, amend and rescind any rules and
regulations relating to the Plan and to make all other determinations necessary
or advisable for the administration of the Plan; provided, however, that the
Board shall have no discretion with respect to the selection of directors to
receive options under the Plan, the purchase price thereunder or the timing of
grants of options under the Plan. The Board shall have limited discretion, as
provided in paragraph 5 herein, with respect to the number of shares of stock
subject to such options. The determination of the Board in the administration
of the Plan, as described herein, shall be final and conclusive. The Secretary
of the Company shall be authorized to implement the Plan in accordance with its
terms and to take such actions of a ministerial nature as shall be necessary to
effectuate the intent and purposes thereof. The validity, construction and
effect of the Plan and any rules and regulations relating to the Plan shall be
determined in accordance with the laws of the State of Delaware.
3. Eligibility
The class of individuals eligible for grant of options under the Plan shall be
Eligible Directors, as defined below. An Eligible Director shall mean a
director of the Company who is not an employee or an officer of the Company or
its subsidiaries and who does not receive compensation from the Company for
services rendered as a consultant or in any other capacity other than a
director, except for an amount that would not have to be disclosed pursuant to
Regulation 229.404(a) of the Securities Exchange Act of 1934 (the "Exchange
Act"), does not possess an interest in any other transactions that would have
to be disclosed pursuant to Regulation 229.404(a) of the Exchange Act and is
not engaged in a business relationship for which disclosure would be required
pursuant to Regulation 229.404(b) of the Exchange Act. Any holder of an option
granted hereunder shall hereinafter be referred to as a "Participant".
<PAGE>
4. Shares Subject to the Plan
Subject to adjustment as provided in Section 6, an aggregate of 100,000 shares
of Stock shall be available for issuance upon the exercise of options granted
under the Plan. The shares of Stock deliverable upon the exercise of options
may be made available from authorized but unissued shares or shares reacquired
by the Company, including shares purchased in the open market or in private
transactions. If any option granted under the Plan shall terminate for any
reason without having been exercised, the shares subject to, but not delivered
under, such option shall be available for other options.
5. Grant, Terms and Conditions of Options
Each individual who is an Eligible Director will be granted an option to
purchase shares of Stock as of the date of each Annual Stockholders Meeting,
commencing with the Annual Stockholders Meeting following the meeting approving
the Plan. Additionally, each individual who is an Eligible Director, will be
granted an option to purchase shares of stock as of the date that the
individual is appointed to the Board of Directors. The number of shares subject
to each such option shall be at least 2,500 shares but not more than 5,000
shares, such number to be determined by the members of the Board who are not
eligible to receive options pursuant to the Plan. The options granted will be
nonstatutory stock options, not intended to qualify under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code") and shall have the
following terms and conditions:
(a) Price. The Purchase price per share of Stock deliverable upon the exercise
of each option shall be 100% of the Fair Market Value per share of the Stock on
the date the option is granted. For purposes of this Plan, Fair Market Value
shall be the closing price per share as reported for consolidated trading of
issues listed on the principal securities exchange where the Stock is traded on
the date in question, or, if the Stock shall not have traded on such date, the
closing price per share on the first date prior thereto on which the Stock was
so traded or if the Stock is not traded on a securities exchange, Fair Market
Value shall be deemed to be the average of the closing bid and asked prices of
the Stock in the over-the-counter-market on the date the option is granted or
on the next preceding date on which such closing bid and asked prices were
recorded.
(b) Payment. Options may be exercised only upon payment of the purchase price
thereof in full. Such payment shall be made in cash or in Stock, which shall
have a Fair Market Value (determined in accordance with the rules of Paragraph
(a) above) at least equal to the aggregate exercise price of the shares being
purchased, or a combination of cash and stock.
(c) Exercisability and Term of Options. Options shall be exercisable in whole
or in part at all times during the period
<PAGE>
beginning one year from the date of grant. The options granted shall be for a
term of not more than 10 years or until terminated, as provided in Paragraph
(d) below.
(d) Termination of Service as Eligible Director.
(i) Except as provided in subparagraph (ii) of this Paragraph (d), all
outstanding options held by a Participant shall be automatically cancelled upon
such Participant's termination of service as an Eligible Director.
(ii) Upon termination of a Participant's service as an Eligible Director by
reason of such Participant's declining to stand for reelection, becoming an
employee of the Company or a subsidiary thereof or becoming disabled (as
defined in the Company's Profit Sharing Plan) all outstanding options held by
such Participant on the date of such termination shall expire up to five years
from the date upon which the Participant ceases to be an Eligible Director but
in no event after the specified expiration date of such option. In the event of
the death of a Participant (whether before or after termination of service as
an Eligible Director), all outstanding options held by such Participant (and
not previously cancelled or expired) on the date of such death, shall be fully
exercisable by the Participant's legal representative within one year after the
date of death (without regard to the expiration date of the option specified in
accordance with the preceding sentence).
(e) Nontransferability of Options. No option shall be transferable by a
Participant otherwise than by will or the laws of descent and distribution, and
during the lifetime of the Participant to whom an option is granted it may be
exercised only by the Participant or by the Participant's guardian or legal
representative. Notwithstanding the above, options may be transferred pursuant
to a qualified domestic relations order.
(f) Listing and Registration. Each option shall be subject to the requirement
that if at any time the Board shall determine, in its discretion, that the
listing, registration or qualification of the Stock subject to such option upon
any securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of such option or the issue
or purchase of shares thereunder, no such option may be exercised in whole or
in part unless such listing, registration, qualification, consent or approval
shall have been effected or obtained free of any condition not acceptable to
the Board.
(g) Option Agreement. Each option granted hereunder shall be evidenced by an
agreement with the Company which shall contain the terms and provisions set
forth herein and shall otherwise be consistent with the provisions of the Plan.
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6. Adjustment of and Changes in Stock
In the event of a stock split, stock dividend, subdivision or combination of
the Stock or other change in corporate structure affecting the Stock, the
number of shares of Stock authorized by the Plan shall be increased or
decreased proportionately, as the case may be, and the number of shares of
Stock subject to any outstanding option shall be increased or decreased
proportionately, as the case may be, with appropriate corresponding adjustment
in the purchase price per share of Stock thereunder.
7. Mergers, Sales and Change of Control
In the case of (i) any merger, consolidation or combination of the Company with
or into another corporation (other than a merger, consolidation or combination
in which the Company is the continuing corporation and which does not result in
its outstanding Stock being converted into or exchanged for different
securities, cash or other property, or any combination thereof) or a sale of
all or substantially all of the assets of the Company or (ii) a Change in
Control (as defined below) of the Company, the holder of each option then
outstanding immediately prior to such Change in Control shall (unless the Board
determines otherwise) have the right to receive on the date or effective date
of such event an amount equal to the excess of the Fair Market Value on such
date of (a) the securities, cash or other property, or combination thereof,
receivable upon such merger, consolidation or combination in respect of a share
of Stock, in the cases covered by clause (i) above, or in the case of a sale of
assets referred to in such clause (i), a share of Stock, or (b) the final
tender offer price in the case of a tender offer resulting in a Change in
Control or (c) the value of the Stock covered by the option as determined by
the Board, in the case of Change in Control by reason of any other event, over
the exercise price of such option, multiplied by the number of shares of Stock
subject to such option. Such amount will be payable fully in cash or stock.
Any determination by the Board made pursuant to this Section 7 will be made as
to all outstanding options and shall be made (a) in cases covered by clause (i)
above, prior to the occurrence of such event, (b) in the event of a tender or
exchange offer, prior to the purchase of any Stock pursuant thereto by the
offeror and (c) in the case of a Change in Control by reason of any other
event, just prior to or as soon as practicable after such Change in Control. A
"Change in Control" shall be deemed to have occurred if following (i) a tender
or exchange offer for voting securities of the Company (other than any such
offer made by the Company), or (ii) a proxy contest for the election of
directors of the Company, the persons who were directors of the Company
immediately before the initiation of such event (or directors who
4
<PAGE>
were appointed by such directors) cease to constitute a majority of the Board
of Directors of the Company upon the completion of such tender or exchange
offer or proxy contest or within one year after such completion.
8. No Rights of Shareholders
Neither a Participant nor a Participant's legal representative shall be, or
have any of the rights and privileges of, a stockholder of the Company in
respect of any shares purchasable upon the exercise of any option in whole or
in part, unless and until certificates for such shares shall have been issued.
9. Plan Amendments
The Plan may be amended by the Board, as it shall deem advisable or to conform
to any change in any law or regulation applicable thereto; provided, that the
Board may not, without the authorization and approval of shareholders; (i)
increase the number of shares which may be purchased pursuant to options
hereunder, either individually or in the aggregate, (ii) change the
requirements of Section 5(a) that option grants be priced at Fair Market Value,
(iii) modify in any respect the class of individuals who constitute Eligible
Directors; or (iv) materially increase the benefits accruing to Participants
hereunder. The provisions of Sections 3 and 5 may not be amended more often
than once every six months, other than to comply with changes in the Code, the
Employee Retirement Income Security Act, or the rules under either such
statute.
10. Effective Date and Duration of Plan
The Plan shall become effective on the day following the Company's Annual
Stockholders Meeting at which the Plan is approved by the holders of a majority
of the outstanding shares of common stock of the Company. The Plan shall
terminate on the day following the fifth Annual Stockholders Meeting at which
Directors are elected following the Annual Stockholders Meeting at which the
Plan was approved by Shareholders, unless the Plan is extended or terminated at
an earlier date by Stockholders.
5
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[Salon, Marrow & Dyckman, LLP Letterhead]
September 16, 1998
Lillian Vernon Corporation
One Theall Road
Rye, New York 10580-1450
Re: Lillian Vernon Corporation - 1997 Stock Option Plan
for Non-Employee Directors
Gentlemen and Ladies:
We have acted as counsel for Lillian Vernon Corporation (the "Company") in
connection with the preparation and filing of the Registration Statement on
Form S-8 relating to the Company's amended 1997 Stock Option Plan for
Non-Employee Directors (the "Plan"). We have examined the Plan, are familiar
with the proceedings by which the Plan and the amendments to the Plan have been
authorized, and are familiar with the Company's Certificate of Incorporation,
as amended, the Company's By-Laws, and such other corporate records and
documents as we have deemed necessary to express our opinion herein. We have
assumed the genuineness of all signatures and the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified or photostatic copies, and the
authenticity of the originals of such latter documents.
Based upon the foregoing and having due regard to legal considerations we
deem relevant, we are of the opinion that the shares of Common Stock have been
duly and validly authorized for issuance by the Company, and when issued under
the circumstances contemplated by the Plan will be validly issued, fully paid
and non-assessable.
<PAGE>
Lillian Vernon Corporation
September 16, 1998
Page 2
We hereby consent to the reference to our firm in the Registration
Statement on Form S-8 and the Prospectus being filed with the Securities and
Exchange Commission.
Very truly yours,
/s/SALON, MARROW & DYCKMAN, LLP
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement
of Lillian Vernon Corporation on Form S-8 of our report dated April 15, 1998 on
our audits of the consolidated financial statements of Lillian Vernon
Corporation and Subsidiaries as of February 28, 1998 and February 22, 1997, and
for each of the three fiscal years in the period ended February 28, 1998, which
report is included in its Annual Report on Form 10-K of Lillian Vernon
Corporation filed with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934. We also consent to the reference to our Firm
under the heading "Experts".
PRICEWATERHOUSECOOPERS LLP
September 16, 1998
