<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Jean Philippe Fragrances, Inc.
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
JEAN PHILIPPE FRAGRANCES, INC.
551 FIFTH AVENUE
NEW YORK, NEW YORK 10176
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 10, 1998
TO THE STOCKHOLDERS:
Notice is hereby given that the annual meeting of stockholders (the 'Annual
Meeting') of Jean Philippe Fragrances, Inc. (the 'Company') has been called for
and will be held at 10:00 A.M., New York City Time, on Friday, July 10, 1998, at
the offices of the Company, 551 Fifth Avenue, New York, New York 10176 for the
following purposes:
1. To elect a Board of Directors consisting of seven (7) directors to
hold office until the next Annual Meeting and until their successors shall
have been elected and qualify;
2. To approve the adoption of the Company's 1998 Stock Option Plan;
3. To ratify the appointment by the Board of Directors of Richard A.
Eisner & Company, LLP, to serve as the independent certified public
accountants for the current fiscal year; and
4. To consider and transact such other business as may properly come
before the Annual Meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on June 8, 1998 as
the record date for the determination of the stockholders entitled to notice of,
and to vote at, the Annual Meeting or any adjournments thereof. The list of
stockholders entitled to vote at the Annual Meeting will be available for
examination by any stockholder at the Company's offices at 551 Fifth Avenue, New
York, New York 10176, for ten (10) days prior to July 10, 1998.
By Order of the Board of Directors
Henry E. Dominitz,
Secretary
Dated: June 8, 1998
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE FILL IN, SIGN, AND
DATE THE PROXY SUBMITTED HEREWITH AND RETURN IT IN THE ENCLOSED STAMPED
ENVELOPE. THE GIVING OF SUCH PROXY WILL NOT AFFECT YOUR RIGHT TO REVOKE SUCH
PROXY IN PERSON SHOULD YOU LATER DECIDE TO ATTEND THE MEETING. THE ENCLOSED
PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS.
<PAGE>
JEAN PHILIPPE FRAGRANCES, INC.
PROXY STATEMENT
GENERAL
This proxy statement is furnished by the Board of Directors of Jean
Philippe Fragrances, Inc., a Delaware corporation (the 'Company'), with offices
located at 551 Fifth Avenue, New York, New York 10176, in connection with the
solicitation of proxies to be used at the annual meeting of stockholders of the
Company to be held on July 10, 1998 and at any adjournments thereof (the 'Annual
Meeting'). This proxy statement will be mailed to stockholders beginning
approximately June 9, 1998. If a proxy in the accompanying form is properly
executed and returned, the shares represented thereby will be voted as
instructed on the proxy. Any proxy may be revoked by a stockholder prior to its
exercise upon written notice to the Secretary of the Company, or by a
stockholder voting in person at the Annual Meeting.
All properly executed proxies received prior to the Annual Meeting will be
voted at the Annual Meeting in accordance with the instructions marked thereon
or otherwise as provided therein. Unless instructions to the contrary are
indicated, proxies will be voted FOR the election of seven (7) directors; FOR
the adoption of the 1998 Stock Option Plan; and FOR the ratification of the
selection by the Board of Directors of Richard A. Eisner & Company, LLP, as the
independent certified public accountants of the Company.
A copy of the annual report of the Company for fiscal year ended December
31, 1997, which contains financial statements audited by the Company's
independent certified public accountants, accompanies this proxy statement.
The cost of preparing, assembling and mailing this notice of meeting, proxy
statement, proxy and the enclosed annual report will be borne by the Company. In
addition to solicitation of the proxies by use of the mails, some of the
officers and regular employees of the Company, without extra remuneration, may
solicit proxies personally or by telephone, telegraph, or cable. The Company may
also request brokerage houses, nominees, custodians and fiduciaries to forward
soliciting material to the beneficial owners of the Common Stock. The Company
will reimburse such persons for their expenses in forwarding soliciting
material.
VOTING SECURITIES AND
PRINCIPAL HOLDERS THEREOF
The Board of Directors has fixed the close of business on June 8, 1998 as
the record date (the 'Record Date') for the determination of stockholders
entitled to notice of, and to vote at the Annual Meeting. Only stockholders on
the Record Date will be able to vote at the Annual Meeting.
As of the Record Date, 8,799,781 shares of the Company's common stock,
$.001 par value per share ('Common Stock') are outstanding, and each share will
be entitled to one (1) vote, with no shares having cumulative voting rights.
Holders of shares of Common Stock are entitled to vote on all matters. Unless
otherwise indicated herein, a majority of the votes represented by shares
present or represented at the Annual Meeting is required for approval of each
matter which will be submitted to stockholders. The Company also has 1,000,000
shares of Preferred Stock, $.001 par value per share authorized, none of which
are outstanding.
Management of the Company has been informed that the affiliates of the
Company intend to vote in favor of the proposals contained herein, and
therefore, such proposals are likely to pass. Management knows of no business
other than those specified in Items 1, 2 and 3 of the Notice of Annual Meeting
which will be presented
1
<PAGE>
for consideration at the Annual Meeting. If any other matter is properly
presented, it is the intention of the persons named in the enclosed proxy to
vote in accordance with their best judgment.
The following table sets forth information, as of the Record Date with
respect to the beneficial ownership of the Company's Common Stock by each person
known by the Company to be the beneficial owner of more than five percent (5%)
of the Company's outstanding Common Stock:
<TABLE>
<CAPTION>
AMOUNT OF APPROXIMATE
NAME AND ADDRESS BENEFICIAL PERCENT OF
OF BENEFICIAL OWNER OWNERSHIP(1) CLASS
- ------------------------------------------------- ------------ -----------
<S> <C> <C>
3,276,549(2) 34.5%
Jean Madar
c/o Inter Parfums, S.A.
4, Rond Point Des Champs Elysees
75008 Paris, France
3,006,549(3) 31.7%
Philippe Benacin
c/o Inter Parfums, S.A.
4, Rond Point Des Champs Elysees
75008 Paris, France
516,000(4) 5.9%
Wellington Management Company, LLP
75 State Street, Boston, MA 02109
512,400(5) 5.8%
Dimensional Fund Advisors, Inc.
1299 Ocean Avenue, 11th Fl.
Santa Monica, CA 90401
</TABLE>
- ------------
(1) All shares of Common Stock are directly held unless otherwise stated.
(2) Consists of 2,588,049 shares held directly and options to purchase 688,500
shares.
(3) Consists of 2,318,049 shares held directly and options to purchase 688,500
shares.
(4) Information is derived from a Schedule 13G dated January 14, 1998 of
Wellington Management Company, LLP ('Wellington'). Wellington is a
registered investment advisor and may be deemed to be the beneficial owner
of the shares which are held of record by its clients.
(5) Information is derived from a Schedule 13G dated February 9, 1998 of
Dimensional Fund Advisor Inc. ('DFA'). DFA may be deemed to be the
beneficial owner of the shares which are owned by its advisory clients. DFA
disclaims beneficial ownership of all of the shares.
2
<PAGE>
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
GENERAL
The members of the Board of Directors are each elected for a one-year term
or until their successors are elected and qualify with a plurality of votes cast
in favor of their election. The Board of Directors consisted of seven (7)
persons during fiscal year ended December 31, 1997 ('Fiscal 1997'). All seven
(7) members of the Board, Messrs. Jean Madar, Philippe Benacin, Russell
Greenberg, Francois Heilbronn, Joseph A. Caccamo, Jean Levy and Robert
Bensoussan- Torres were elected by the stockholders at the Company's last annual
meeting of stockholders held in August 1997. All seven (7) members of the Board
are nominees for re-election to the Board at the 1998 Annual Meeting.
Messrs. Jean Madar, Philippe Benacin, Russell Greenberg, Francois
Heilbronn, Joseph A. Caccamo, Jean Levy and Robert Bensoussan-Torres are
nominees for election as directors. Unless authority is withheld, the proxies in
the accompanying form will be voted in favor of the election of the nominees
named above as directors. If any nominee should subsequently become unavailable
for election, the persons voting the accompanying proxy may in their discretion
vote for a substitute.
BOARD OF DIRECTORS
The Board of Directors has the responsibility for establishing broad
corporate policies and for the overall performance of the Company. Although
certain directors are not involved in day-to-day operating details, members of
the Board are kept informed of the Company's business by various reports and
documents made available to them. The Board of Directors held nine (9) meetings
(or executed consents in lieu thereof), including meetings of committees of the
full Board in Fiscal 1997, and all of the directors attended at least 75% of the
meetings of the Board and committee meetings of which they were a member.
The Board of Directors has the following standing committees: audit
committee (to review the results of the audits performed by the Company's
independent accountants, as well as reviewing recommendations, if any, made by
the independent accountants), the stock option committee (to administer the
Company's stock option plans) and the executive compensation committee, which
oversees the compensation of executives of the Company. During Fiscal 1997, the
stock option committee consisted of Messrs. Heilbronn and Levy; the Audit
Committee consisted of Messrs. Heilbronn, Caccamo and Levy; and the Executive
Compensation Committee consisted of Messrs. Heilbronn, Caccamo and Levy.
For Fiscal 1997, the stock option committee took action by the execution of
one (1) written consent in lieu of one (1) meeting, and the audit committee held
one (1) meeting in January 1998. Additionally for Fiscal 1997, the executive
compensation committee took action by the execution of one (1) written consent
in lieu of one (1) meeting in January 1998. See 'Compensation Committee
Interlocks and Insider Participation' and 'Report on Executive Compensation,'
infra.
3
<PAGE>
The following table sets forth information, as of the Record Date with
respect to the beneficial ownership of the Company's Common Stock by the
executive officers and directors of the Company and the directors and officers
of the Company as a group:
<TABLE>
<CAPTION>
AMOUNT OF APPROXIMATE
NAME AND ADDRESS BENEFICIAL PERCENT OF
OF BENEFICIAL OWNER OWNERSHIP(6) CLASS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C>
Jean Madar 3,276,549(7) 34.5%
c/o Inter Parfums, S.A.
4, Rond Point Des Champs Elysees
75008 Paris, France
Philippe Benacin 3,006,549(8) 31.7%
c/o Inter Parfums, S.A.
4, Rond Point Des Champs Elysees
75008 Paris, France
Russell Greenberg 57,000(9) Less than 1%
c/o Jean Philippe Fragrances, Inc.
551 Fifth Avenue
New York, NY 10176
Francois Heilbronn 10,500(10) Less than 1%
12 Rue Pierre Leroux
75007 Paris, France
Joseph A. Caccamo 19,000(9) Less than 1%
7509 Ridgefield Lane
Lake Worth, FL 33467
Jean Levy 4,000(9) Less than 1%
29 rue du Colisee
75008 Paris, France
Robert Bensoussan-Torres 3,000(9) Less than 1%
c/o Christian Lacroix
73 Rue du Faubourg St. Honore
75008 Paris, France
Bruce Elbilia 60,000(9) Less than 1%
c/o Jean Philippe Fragrances, Inc.
551 Fifth Avenue
New York, NY 10176
Wayne C. Hamerling 60,000(9) Less than 1%
c/o Jean Philippe Fragrances, Inc.
551 Fifth Avenue
New York, NY 10176
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
AMOUNT OF APPROXIMATE
NAME AND ADDRESS BENEFICIAL PERCENT OF
OF BENEFICIAL OWNER OWNERSHIP(6) CLASS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C>
Jaime Resnik 44,500(9) Less than 1%
c/o Jean Philippe Fragrances, Inc.
551 Fifth Avenue
New York, NY 10176
All Directors and Officers as a Group (10 Persons) 6,541,098(11) 62.7%
</TABLE>
- ------------
(6) All shares of Common Stock are directly held unless otherwise stated.
(7) Consists of 2,588,049 shares held directly and options to purchase 688,500
shares.
(8) Consists of 2,318,049 shares held directly and options to purchase 688,500
shares.
(9) Consists of options to purchase shares of Common Stock.
(10) Consists of 4,500 shares held directly and options to purchase 6,000 shares
of Common Stock.
(11) Consists of 4,910,598 shares held directly and options to purchase
1,625,100 shares of Common Stock.
As of March 31, 1998, the executive officers and directors of the Company
were as follows:
<TABLE>
<CAPTION>
NAME POSITION
- ---------------------------------------------- ----------------------------------------------
<S> <C>
Jean Madar Chairman of the Board and Chief Executive
Officer of Jean Philippe and Director General
of Inter Parfums
Philippe Benacin Vice Chairman of the Board and President of
Jean Philippe and President of Inter Parfums
Russell Greenberg Director, Executive Vice President and Chief
Financial Officer
Francois Heilbronn Director
Joseph A. Caccamo Director
Jean Levy Director
Robert Bensoussan-Torres Director
Bruce Elbilia Executive Vice President
Wayne C. Hamerling Executive Vice President
Jaime Resnik Executive Vice President
</TABLE>
The directors will serve until the next annual meeting of stockholders and
thereafter until their successors shall have been elected and qualified. With
the exception of Mr. Benacin, the officers are elected annually by the directors
and serve at the discretion of the board of directors. See 'Executive
Compensation--Employment Agreement'. There are no family relationships between
executive officers or directors of the Company.
The following sets forth biographical information as to the business
experience of each executive officer and director of the Company for at least
the past five (5) years.
Jean Madar
Jean Madar, age 37, a Director, has been the Chairman of the Board of
Directors (since inception), and a co-founder of the Company with Mr. Benacin.
From inception until December 1993 he was the President of the Company; in
January 1994 he became Director General of Inter Parfums; and in January 1997 he
became Chief
5
<PAGE>
Executive Officer of the Company. Mr. Madar was previously the managing director
of Inter Parfums, from September 1983 until June 1985. At Inter Parfums, he had
the responsibility of overseeing the marketing operations of its foreign
distribution, including market research analysis and actual marketing campaigns.
Mr. Madar graduated from The French Higher School of Economic and Commercial
Sciences (ESSEC) in 1983.
Philippe Benacin
Mr. Benacin, age 39, a Director, has been the Vice Chairman of the Board
since September 1991, and is a co-founder of the Company with Mr. Madar. He was
elected the Executive Vice President in September 1991, Senior Vice President in
April 1993, and President of the Company in January 1994. In addition, has been
the President of Inter Parfums for more than the past five (5) years. Mr.
Benacin graduated from The French Higher School of Economic and Commercial
Sciences (ESSEC) in 1983.
Russell Greenberg
Mr. Greenberg, age 41, the Chief Financial Officer, was Vice-President,
Finance when he joined the Company in June 1992; became Executive Vice President
in April 1993; and was appointed to the Board of Directors in February 1995. He
is a certified public accountant licensed in the State of New York, and is a
member of the American Institute of Certified Public Accountants and the New
York State Society of Certified Public Accountants. After graduating from The
Ohio State University in 1980, he was employed in public accounting. From July
1987 through June 1992, he was with Richard A. Eisner & Company, the independent
accountants of the Company.
Francois Heilbronn
Mr. Heilbronn, age 37, a Director, is a graduate of Harvard Business School
with a Master of Business Administration degree and is currently working as a
consultant for the firm of M.M. Friedrich, Heilbronn & Fiszer, of which he is a
partner. He was formerly employed by The Boston Consulting Group, Inc. from 1986
through 1991 as a management consultant. He graduated from Institut D'Etudes
Politiques De Paris in June 1983. From 1984 to 1986, he worked as a financial
analyst for Lazard Freres & Co.
Joseph A. Caccamo
Mr. Caccamo, age 42 and who has been a practicing attorney since 1981, is a
Director and the principal of Joseph A. Caccamo Attorney at Law, P.A., the
general counsel to the Company. From May 1987 through February 1991, he was an
associate of Parker Chapin Flattau & Klimpl, New York City, and from February
1991 through August 1991, he was of counsel to Brandeis, Bernstein & Wasserman,
New York City. In September 1991 he became counsel to the Company through a
predecessor firm, Joseph A. Caccamo Attorney at Law, P.C., and presently is in
private practice. From August 1992 through September 1997, he was a director of
Hydron Technologies, Inc, a company primarily engaged in the development of
cosmetic/personal care products, which has its common stock listed on The Nasdaq
Stock Market.
Jean Levy
Jean Levy, age 65, a Director since August 1996, worked for twenty-seven
(27) years at L'Oreal, and was the President and Chief Executive Officer of
Cosmair, the exclusive United States licensee of L'Oreal from 1983 through June
1987. In addition, he is the former President and Chief Executive Officer of
Sanofi Beaute (France). For the past five years, Mr. Levy has been an
independent advisor as well as a consultant for economic
6
<PAGE>
development to local governments in France. A graduate of 'l'Institut d'Etudes
Politiques de Paris,' he also attended Yale Graduate School and was a recipient
of a Fulbright Scholarship. He was also a Professor at 'l'Institut d'Etudes
Politiques de Paris'.
Robert Bensoussan-Torres
Robert Bensoussan-Torres, age 40, has been the Chief Executive Office of
Christian Lacroix, Paris, a subsidiary of LVMH Group, since February 1993.
Christian Lacroix is a French Houte Couture House and has activities in the
field of apparel, accessories and fragrances. From December 1990 through January
1993 he was based in Munich, Germany, as the International Sales Director of The
Escada Group.
Bruce Elbilia
Mr. Elbilia, age 38, Executive Vice President joined the Company in June
1986 as the National Sales Director, and from that time until 1994, he was in
charge of the Company's marketing efforts. In 1994 Mr. Elbilia became head of
international sales and marketing for Jean Philippe, and has expanded Jean
Philippe's export sales to South America, the Middle East and Eastern Europe.
Mr. Elbilia received a Bachelor of Business Administration degree, with a major
in International Business/Marketing from George Washington University in
Washington, D.C., which he attended from 1977-1981.
Wayne C. Hamerling
Mr. Hamerling, age 41, was Vice President, Sales, from May 1987 through
April 1993, when he became Executive Vice President. Mr. Hamerling has over
eighteen (18) years experience in the fragrance and cosmetic business. From 1980
through 1983 he was employed by Rite Aid Drug Stores; from 1983 through 1985, he
was the Senior Buyer for Valley Fair Stores, and from 1985 through May 1987, he
was the National Sales Manager for Happy Valley Fragrances.
Jaime Resnik
Mr. Resnik, age 37, became an Executive Vice President in July 1994, and is
in charge of operations. He joined the Company in April 1992 as Operations
Manager in charge of production and planning. From October 1988 through April
1991, Mr. Resnik was the Licensing Audit Manager for Jordache Enterprises, with
responsibility for auditing approximately thirty (30) licensees with sales in
excess of $250 million. From April 1991 through April 1992, Mr. Resnik was the
Director of International Licensing for Jordache Enterprises, with
responsibility for overseeing the licensing activities of approximately fifty
(50) licensees world wide. Mr. Resnik graduated with honors from the University
of Miami in 1983 with a B.A. in management.
7
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth a summary of all compensation awarded to,
earned by or paid to, the Company's Chief Executive Officer and each of the four
(4) most highly compensated executive officers of the Company whose compensation
exceeded $100,000 per annum for services rendered in all capacities to the
Company and its subsidiaries during fiscal years ended December 31, 1997,
December 31, 1996 and December 31, 1995:]
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM AWARDS
ANNUAL COMPENSATION -------------------------------
------------------------------------------------ SECURITIES
NAME AND OTHER ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS(#)(12) COMPENSATION
- ------------------------------- ---- --------- -------- --------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jean Madar,(13) 1997 267,000 -0- 18,000(14) 325,000 -0-
Chairman of the Board, Chief 1996 210,700 -0- 30,500(14) 33,500 -0-
Executive Officer of Jean 1995 175,800 -0- 20,800(14) 100,000 -0-
Philippe and Director General
of Inter Parfums
Philippe Benacin,(15) 1997 86,000 25,000 33,000(16) 325,000 -0-
Chief Executive Officer, 1996 101,000 17,200 82,844(17) 33,500 -0-
President of Jean Philippe 1995 96,000 -0- 681,200(18) 100,000 -0-
and President of Inter
Parfums
Russell Greenberg,(19) 1997 213,600 15,000 2,214 22,500 -0-
Executive Vice President and 1996 200,000 4,500 2,042 6,000 -0-
Chief Financial Officer 1995 182,500 4,500 2,219 9,000 -0-
Bruce Elbilia,(19) 1997 168,000 18,500 78,473(20) 25,500 -0-
Executive Vice President 1996 168,000 4,571 58,994(20) 6,000 -0-
1995 168,000 18,500 56,510(20) 9,000 -0-
Wayne C. Hamerling,(21) 1997 166,120 7,000 55,363(22) 25,500 -0-
Executive Vice President 1996 157,004 3,500 74,903(23) 6,000 -0-
1995 157,004 3,500 86,974(24) 9,000 -0-
</TABLE>
- ------------------
(12) Includes options granted in 1997 as a replacement for out of the money
options. See Table entitled '10 Year Options Repricings'.
(13) Mr. Madar became Chief Executive Officer in January 1997. As of December
31, 1997, Mr. Madar held 2,638,049 restricted shares of Common Stock, with
an aggregate value of $18,136,586 based upon the closing price of the
Company's Common Stock as reported by the Nasdaq Stock Market, National
Market system, of $6.875.
(14) Consists of lodging expenses.
(15) Mr. Benacin was the Chief Executive Officer in 1995 and 1996. Compensation
figures for Mr. Benacin are approximate, as he is paid in French francs,
and conversion into U.S. dollars was made at the average exchange rates
prevailing during the respective periods. As of December 31, 1997, Mr.
Benacin held 2,318,049 restricted shares of Common Stock, with an aggregate
value of $15,936,586 based upon the closing price of the Company's Common
Stock as reported by the Nasdaq Stock Market, National Market system, of
$6.875.
(16) Consists of $31,000 for lodging expenses and $2,000 for automobile
expenses.
(17) Consists of noncash compensation of $52,334 attributable to the difference
between the exercise price and the value of certain restricted shares of
Common Stock acquired upon the exercise of stock options; approximately
$2,300 for automobile expenses and $28,200 for lodging expenses.
(18) Consists of noncash compensation of $650,000 attributable to the difference
between the exercise price and the value of certain restricted shares of
Common Stock acquired upon the exercise of stock options; approximately
$2,400 for automobile expenses and $28,800 for lodging expenses.
(19) No restricted shares of Common Stock were held as of December 31, 1997.
(Footnotes continued on next page)
8
<PAGE>
(Footnotes continued from previous page)
(20) Consists of selling commissions.
(21) As of December 31, 1997, Mr. Hamerling held 10,000 restricted shares of
Common Stock, with an aggregate value of $68,750 based upon the closing
price of the Company's Common Stock as reported by the Nasdaq Stock Market,
National Market system, of $6.875.
(22) Consists of selling commissions of $50,863 and non cash compensation of
$4,500 equal to the value of personal use of a company leased automobile.
(23) Consists of selling commissions of $70,067 and non cash compensation of
$4,836 equal to the value of personal use of a company leased automobile.
(24) Consists of selling commissions equal to $82,160 and noncash compensation
of $4,814 equal to the value of personal use of a Company leased
automobile.
The following table sets forth certain information relating to stock option
grants during Fiscal 1997 to the Company's Chief Executive Officer and each of
the four (4) most highly compensated executive officers of the Company whose
compensation exceeded $100,000 per annum for services rendered in all capacities
to the Company and its subsidiaries during Fiscal 1997:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUALIZED GRANTS
- ------------------------------------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE
UNDERLYING GRANTED TO OR BASE
OPTIONS EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE
- ------------------------------ ----------- ------------ ---------- ----------
<S> <C> <C> <C> <C>
Jean Madar.................... 30,000 3.9% $5.687 04/26/02
Jean Madar.................... 295,000(25) 38.6% $5.687 04/26/02
Philippe Benacin.............. 30,000 3.9% $5.687 04/26/02
Philippe Benacin.............. 295,000(25) 38.6% $5.687 04/26/02
Russell Greenberg............. 9,000 1.2% $5.687 04/26/02
Russell Greenberg............. 13,500(25) 1.8% $5.687 04/26/02
Bruce Elbilia................. 9,000 1.2% $5.687 04/26/02
Bruce Elbilia................. 16,500(25) 2.2% $5.687 04/26/02
Wayne Hamerling............... 9,000 1.2% $5.687 04/26/02
Wayne Hamerling............... 16,500(25) 2.2% $5.687 04/26/02
<CAPTION>
POTENTIAL REALIZED VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE
APPRECIATION FOR OPTION TERM
--------------------------------------------------------
NAME FIVE (5%) PERCENT ($) TEN (10%) PERCENT ($)
- ------------------------------ --------------------------- ---------------------------
<S> <C> <C>
Jean Madar.................... 10,369 24,979
Jean Madar.................... 101,961 245,627
Philippe Benacin.............. 10,369 24,979
Philippe Benacin.............. 101,961 245,627
Russell Greenberg............. 3,111 7,494
Russell Greenberg............. 4,666 11,241
Bruce Elbilia................. 3,111 7,494
Bruce Elbilia................. 5,703 13,738
Wayne Hamerling............... 3,111 7,494
Wayne Hamerling............... 5,703 13,738
</TABLE>
- ------------------
(25) Consists of options granted in Fiscal 1997 as replacements for, and
repricings of, options previously granted in prior fiscal years. See the
table entitled, 'Option Repricings for Last Ten Years.'
The following table sets forth certain information relating to option
exercises effected during Fiscal 1997, and the value of options held as of such
date by each of the Chief Executive Officer and the four (4) most highly
9
<PAGE>
compensated executive officers of the Company whose compensation exceeded
$100,000 per annum for services rendered in all capacities to the Company and
its subsidiaries during Fiscal 1997:
AGGREGATE OPTION EXERCISES FOR FISCAL 1997
AND YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE(26) OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1997 (#) DECEMBER 31, 1997 ($)
--------------------- ------------------------
SHARES ACQUIRED VALUE ($) EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE REALIZED(27) UNEXERCISABLE UNEXERCISABLE
- ----------------------------------- --------------- ------------ --------------------- ------------------------
<S> <C> <C> <C> <C>
Jean Madar......................... 0 0 658,500/0 $ 398,662/$0
Philippe Benacin................... 0 0 658,500/0 $ 398,662/$0
Russell Greenberg.................. 0 0 48,000/0 $ 28,980/$0
Bruce Elbilia...................... 0 0 51,000/0 $ 32,544/$0
Wayne C. Hamerling................. 0 0 51,000/0 $ 32,544/$0
</TABLE>
- ------------------
(26) Total value of unexercised options is based upon the fair market value of
the Common Stock as reported by the Nasdaq Stock Market of $6.875 on
December 31, 1997.
(27) Value realized in dollars is based upon the difference between the fair
market value of the Common Stock on the date of exercise, and the exercise
price of the option.
The following table sets forth certain information regarding repricings of
options held by all executive officers of the Company for the last ten (10)
years.
10 YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF ORIGINAL
SECURITIES MARKET PRICE EXERCISE OPTION TERM
UNDERLYING OF STOCK AT PRICE AT TIME NEW REMAINING AT
OPTIONS TIME OF OF REPRICING EXERCISE DATE OF
REPRICED OR REPRICING OR OR AMENDMENT PRICE REPRICING OR
NAME DATE AMENDED (#) AMENDMENT ($) ($) ($) AMENDMENT
- --------------------------- ----------- ----------- ------------- ------------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Jean Madar, Chief Executive
Officer.................. 04/27/97 60,000 5.687 7.00 5.6875 3/15/97*
04/27/97 75,000 5.687 6.825 5.687 9/8/97
04/27/97 90,000 5.687 6.833 5.687 10/15/97
04/27/97 70,687 5.687 7.00 5.687 12/11/97
02/22/94 100,000 10.00 12.00 10.00 01/11/98
11/01/94 100,000 7.00 10.00 7.00 01/11/98
02/22/94 70,687 10.00 11.36 10.00 12/11/97
11/01/94 70,687 7.00 10.00 7.00 12/11/97
11/01/94 60,000 7.00 8.958 7.00 03/15/97
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF ORIGINAL
SECURITIES MARKET PRICE EXERCISE OPTION TERM
UNDERLYING OF STOCK AT PRICE AT TIME NEW REMAINING AT
OPTIONS TIME OF OF REPRICING EXERCISE DATE OF
REPRICED OR REPRICING OR OR AMENDMENT PRICE REPRICING OR
NAME DATE AMENDED (#) AMENDMENT ($) ($) ($) AMENDMENT
- --------------------------- ----------- ----------- ------------- ------------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Philippe Benacin,
President................ 04/27/97 60,000 5.687 7.00 5.687 3/15/97*
04/27/97 75,000 5.687 6.825 5.687 9/8/97
04/27/97 90,000 5.687 6.833 5.687 10/15/97
04/27/97 70,687 5.687 7.00 5.687 12/11/97
02/22/94 100,000 10.00 12.00 10.00 01/11/98
11/01/94 100,000 7.00 10.00 7.00 01/11/98
02/22/94 70,687 10.00 11.36 10.00 12/11/97
11/01/94 70,687 7.00 10.00 7.00 12/11/97
11/01/94 60,000 7.00 8.958 7.00 03/15/97
Russell Greenberg,
Executive V.P............ 04/27/97 6,000 5.687 6.667 5.687 09/9/97
04/27/97 7,500 5.687 7.00 5.687 12/11/97
06/29/92** 7,500 6.667 8.00 6.667 05/31/97
02/22/94 1,500 10.00 12.00 10.00 04/28/98
11/01/94 1,500 7.00 10.00 7.00 04/28/98
02/22/94 7,500 10.00 11.36 10.00 12/11/97
11/01/94 7,500 7.00 10.00 7.00 12/11/97
02/22/94 5,000 10.00 12.00 10.00 10/12/98
11/01/94 5,000 7.00 10.00 7.00 10/12/98
Bruce Elbilia, Executive
V.P...................... 04/27/97 9,000 5.687 6.667 5.687 09/9/97
04/27/97 7,500 5.687 7.00 5.687 12/11/97
03/06/90*** 6,000 2.25 4.4625 2.25 12/18/90
02/22/94 1,500 10.00 12.00 10.00 04/28/98
11/01/94 1,500 7.00 10.00 7.00 04/28/98
02/22/94 7,500 10.00 11.36 10.00 12/11/97
11/01/94 7,500 7.00 10.00 7.00 12/11/97
02/22/94 5,000 10.00 12.00 10.00 10/12/98
11/01/94 5,000 7.00 10.00 7.00 10/12/98
Wayne Hamerling, Executive
V.P...................... 04/27/97 9,000 5.687 6.667 5.687 09/9/97
04/27/97 7,500 5.687 7.00 5.687 12/11/97
03/06/90*** 6,000 2.25 4.4625 2.25 12/18/90
02/22/94 1,500 10.00 12.00 10.00 04/28/98
11/01/94 1,500 7.00 10.00 7.00 04/28/98
02/22/94 7,500 10.00 11.36 10.00 12/11/97
11/01/94 7,500 7.00 10.00 7.00 12/11/97
02/22/94 5,000 10.00 12.00 10.00 10/12/98
11/01/94 5,000 7.00 10.00 7.00 10/12/98
</TABLE>
- ------------------
* Expired.
** The number of shares and the prices have been adjusted to reflect the 3:2
split effected in November 1993.
*** The number of shares and the prices have been adjusted to reflect the 1:2.5
reverse split effected in August 1990 and the 3:2 split effected in November
1993.
11
<PAGE>
In April 1997, the Stock Option Committee of the Board of Directors ('Stock
Option Committee'), on recommendation of the Chairman of the Board, canceled and
terminated all outstanding options which had exercise prices in excess of the
market price, and either expired in March 1997 or were to expire shortly
thereafter (collectively the 'Out of the Money Options') for its executive
officers, and granted nonqualified stock options as replacement options to such
executive officers, each exercisable for a five (5) year period at the purchase
of $5.687 per share.
The Stock Option Committee acknowledged that the market price of the
Corporation's Common Stock as quoted on The Nasdaq Stock Market, National Market
System had declined substantially, thus negating the intended benefit of the
options previously granted with higher exercise prices; and such committee
believed that it was in the best interests of the Company to provide the
intended incentive to management of the Company by canceling the Out of the
Money Options and replacing them with options with exercise prices at the fair
market value at such time. During Fiscal 1997 the Stock Option Committee
consisted of Jean Levy and Francois Heilbronn.
Employment Agreements
As part of the acquisition by the Company of the controlling interest in
Inter Parfums in 1991, the Company entered into an employment agreement with
Philippe Benacin. The agreement provides that Mr. Benacin will be employed as
Vice Chairman of the Board and President and Chief Executive Officer of IP
Holdings and its subsidiary, Inter Parfums. The initial term expired on
September 2, 1992, and has subsequently been automatically renewed for
additional annual periods. The agreement provides for automatic annual renewal
terms, unless either party terminates the agreement upon 120 days notice. Mr.
Benacin is entitled to receive an annual salary is 600,000ff (approximately US$
120,000) together with 5,000ff per month (approximately US$1,000) for lodging
expenses, both of which are subject to increases in the discretion of the Board
of Directors. In addition he is to receive a nonaccountable expense allowance of
1,200ff (approximately US$ 240) per week and reimbursement for all out-of-pocket
expenses associated with the acquisition, operation and maintenance of an
automobile. The agreement also provides for indemnification and a covenant not
to compete for one (1) year after termination of employment.
Compensation of Directors
Each of Mr. Robert Bensoussan-Torres and Mr. Levy receives $1,000 for each
board meeting at which they participate. Mr. Caccamo receives $500 for each
board meeting at which he participates.
On January 14, 1994, the Board of Directors of the Company adopted the 1994
Nonemployee Stock Option Plan (the '1994 Plan'). The purpose of the 1994 Plan is
to assist the Company in attracting and retaining key directors who are
responsible for continuing growth and success of the Company. The 1994 Plan was
approved by the stockholders of the Company on July 8, 1994.
The 1994 Plan provides for the grant of nonqualified stock options to
nonemployee directors to purchase an aggregate of 25,000 shares of Common Stock.
Options to purchase 1,000 shares are granted on each February 1st to all
nonemployee directors for as long as each is a nonemployee director on such
date, except for Joseph A. Caccamo, who is granted options to purchase 4,000
shares. Further, options to purchase 1,000 shares are to be granted to persons
who become nonemployee directors at the time they become nonemployee directors.
The exercise price of all options granted or to be granted under the 1994 Plan
is to be equal to the fair market value of the Company's Common Stock on
12
<PAGE>
the date of grant, and the term of each option shall be for a five (5) year
period, subject to earlier termination as set forth in the 1994 Plan.
In accordance with the terms of the 1994 Plan, options to purchase shares
of common stock were granted at the then fair market value, as follows: On
February 1, 1997, 1,000 shares were granted to Francois Heilbronn, and 4,000
shares were granted to Joseph A. Caccamo, all at the exercise price of $6.4375
per share.
On March 13, 1997, the Board of Directors of the Company adopted, subject
to the approval of its stockholders, the 1997 Nonemployee Stock Option Plan (the
'1997 Plan'). The purpose of the 1997 Plan is to assist the Company in
attracting and retaining key directors who are responsible for continuing growth
and success of the Company. The 1997 Plan was approved by the stockholders of
the Company at the annual meeting of shareholders held in July 1997.
The 1997 Plan provides for the grant of nonqualified stock options to
nonemployee directors to purchase an aggregate of 25,000 shares of Common Stock.
Options to purchase 1,000 shares are granted on each February 1st to all
nonemployee directors for as long as each is a nonemployee director on such date
(except for Mr. Caccamo as noted above) after all the shares of the 1994 Plan
have been used.
On March 13, 1997, one time grants of options to purchase 2,000 shares were
made to each of Jean Levy and Robert Bensoussan-Torres at the exercise price of
$6.00 per share under the 1994 Plan and the 1997 Plan.
On February 1, 1998, options to purchase 1,000 shares were granted to each
of Francois Heilbronn, Jean Levy and Robert Bensoussan-Torres, and an option to
purchase 4,000 shares was granted to Joseph A. Caccamo at the exercise price of
$6.97 per share under the aforementioned plans.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors established the Executive Compensation Committee of
the Board of Directors (the 'Compensation Committee') in July 1993 to oversee
all issues of executive compensation, except for the administration of the
Company's stock option plans, which are administered by the stock option
committee of the Board of Directors.
In Fiscal 1997, the Compensation Committee took action by the execution of
one (1) written consent in lieu of one (1) meeting. In addition, individual
committee members did discuss compensation of the Company's executive officers
with both the Chairman of the Board and the Chief Financial Officer. The
following persons participated in discussions concerning executive compensation
during Fiscal 1997, with generally the Chairman of the Board taking the
initiative and recommending executive compensation levels: Jean Madar, the
Chairman of the Board of Directors, Philippe Benacin, a director, President, and
President of Inter Parfums, S.A., a subsidiary of the Company, Joseph A.
Caccamo, a director and principal of counsel to the Company, and Russell
Greenberg, an Executive Vice President, Chief Financial Officer and a director.
13
<PAGE>
REPORT ON EXECUTIVE COMPENSATION
General
The Securities and Exchange Commission ('Commission') has adopted rules
which require most public companies to provide detailed information regarding
compensation and benefits provided to their chief executive officer and to each
of the four (4) most highly compensated executive officers, other than the chief
executive officer, whose annual base salary and bonus compensation was in excess
of $100,000. The executive officers of the Company being discussed for Fiscal
1997 are: Jean Madar (the Chief Executive Officer), Philippe Benacin, Russell
Greenberg, Bruce Elbilia and Wayne C. Hamerling. Mr. Benacin was the Chief
Executive Officer for fiscal year ended December 31, 1996, and Mr. Madar became
the Chief Executive Officer in January 1997, with Mr. Benacin remaining the
President of the Company and Inter Parfums.
Executive compensation packages generally include a base salary, annual
incentives tied to individual performance and long term incentives tied to the
performance of the Company. In addition, the Company provides a comprehensive
medical insurance plan. Generally, executive officers have their compensation
reviewed annually.
Base Salary
Base salaries for executive officers are initially determined by evaluating
the responsibilities of the position held and the experience of the individual,
and by reference to the competitive market place for executive talent. Base
salaries for executive officers are reviewed on an annual basis, including those
subject to contractual adjustments, and adjustments are determined by evaluating
the performance of the Company and of each executive officer, as well as whether
nature of the responsibilities of the executive has changed.
In January 1997 Mr. Madar became the Chief Executive Officer of the
Company, and for Fiscal 1997 the base salary of Jean Madar was increased to
$267,000 from $210,700 for fiscal year ended December 31, 1996, because the
Compensation Committee believed that the increase in base salary was
commensurate with the increased responsibilities of the position of Chief
Executive Officer. In addition, for Fiscal 1997 the base salary of Jean Madar
was paid by the parent company reflecting the broader responsibilities of the
Chief Executive Officer. Previously, Mr. Madar was paid from Inter Parfums, the
Company's operating French subsidiary, in his capacity as the Managing Director
of Inter Parfums based in Paris.
Mr. Benacin, the President of Inter Parfums Holding S.A., the Company's
direct French subsidiary, and President of Inter Parfums, S.A., the Company's
indirect, operating French subsidiary, is also the President of the Company. Mr.
Benacin's base compensation is paid to him in French francs by the Company's
French operating subsidiary, and has been determined in accordance with the
terms of his employment agreement executed in November 1991. The amount of his
base compensation has remained constant; however, when converted to United
States dollars, such compensation has decreased as the result of fluctuations in
currency exchange rates.
In Fiscal 1997, Mr. Greenberg, the Chief Financial Officer, had his base
salary increased to $215,000 from $200,000.The increase of $15,000 or 7.5% was
based upon the recommendation of the Chairman of the Board as to his
satisfaction with the job performance of Mr. Greenberg.
In Fiscal 1997, Mr. Elbilia, the executive in charge of export sales for
the Company's United States operations, did not received any increase in base
salary, and such annual base salary remained at $168,000. Mr. Hamerling, the
executive in charge of wholesale sales, has his salary increased to $166,120
from $157,004,
14
<PAGE>
an increase of $9,116 or 5.8%.Such increase for Mr. Hamerling was the first
increase in his base salary for the past two (2) fiscal years.
After a thorough review, the Chairman of the Board determined that the base
salaries paid to such executives was fair in the view of their responsibilities,
length of service to the Company, performance and compensation levels to peers,
as to which the Compensation Committee concurs.
Annual Incentives
Messrs. Elbilia and Hamerling have their annual incentives tied to sales,
which is directly related to the efficacy and productivity of their areas of
responsibility, export sales and wholesale sales, respectively. The predicates
for the determination and payment of selling commissions to Messrs. Elbilia and
Hamerling were determined in accordance with internal sales and budget
projections. Messrs. Elbilia and Hamerling received, in Fiscal 1997, $78,473 and
$50,863, respectively, in sales commissions.
Long Term Incentives
The long term incentives are geared towards linking benefits to corporate
performance through the grant of stock options. All options are granted with an
exercise price equal to the fair market value of the underlying Common Stock on
the date of grant, and terminate on or shortly after severance of the
relationship between the Company and the executive. Unless the market price of
the Company's Common Stock increases, corporate executives have will no tangible
benefit. Thus, they are provided with the extra incentive to increase individual
performance with the ultimate goal of increased overall Company performance.
Enhanced executive incentives which result in increased corporate performance
tend to build company loyalty.
In April 1997, the Stock Option Committee of the Board of Directors ('Stock
Option Committee'), on recommendation of the Chairman of the Board, canceled and
terminated all outstanding options which had exercise prices in excess of the
market price, and either expired in March 1997 or were to expire shortly
thereafter (collectively the 'Out of the Money Options') for its executive
officers, and granted nonqualified stock options as replacement options to such
executive officers, each exercisable for a five (5) year period at the purchase
of $5.687 per share, the fair market value at the time of grant.
The Stock Option Committee acknowledged that the market price of the
Corporation's Common Stock as quoted on The Nasdaq Stock Market, National Market
System had declined substantially, thus negating the intended benefit of the
options previously granted with higher exercise prices; and such committee
believed that it was in the best interests of the Company to provide the
intended incentive to management of the Company by canceling the Out of the
Money Options and replacing them with options with exercise prices at the fair
market value at such time. During Fiscal 1997 the Stock Option Committee
consisted of Jean Levy and Francois Heilbronn, both members of the Compensation
Committee.
In Fisca1 1997 the Stock Option Committee authorized the grant of
replacement options for each of Messrs. Madar and Benacin to purchase 295,000
shares of Common Stock at the fair market value at the time of grant. The
aggregate 'potential unrealized value' of such options, calculated in accordance
with the rules of the Commission (see the chart entitled 'Options Grants in Last
Fiscal Year,' supra) is approximately $101,961 to $245,627. Additionally, in
Fiscal 1997, each of Messrs. Madar and Benacin were awarded options to purchase
30,000 shares of Common Stock at the fair market value at the time of grant. The
aggregate 'potential unrealized value' of such options, calculated in accordance
with the rules of the Commission (see the chart entitled 'Options Grants in Last
Fiscal Year,' supra) is approximately $10,369 to $24,979.
15
<PAGE>
Such potential rewards are a powerful incentive for increased individual
performance, and ultimately increased Company performance. In view of the fact
that the two (2) persons most responsible for the Company's operations are
Messrs. Madar and Benacin, the Compensation Committee believes such incentives
to be fair to both Messrs. Madar and Benacin and to the Company's stockholders.
In Fisca1 1997 the Stock Option Committee authorized the grant of
replacement options (for the reasons set forth above) for each of Messrs.
Greenberg, Elbilia and Hamerling, to purchase 13,500, 16,500 and 16,500 shares
of Common Stock, respectively, at the fair market value at the time of grant.
Additionally, in Fiscal 1997 each of Messrs. Greenberg, Elbilia and Hamerling
were awarded options to purchase 9,000 shares of Common Stock at the fair market
value at the time of grant. The number of shares for which options were granted
was recommended by the Chairman of the Board. Thus, a portion of their
compensation was contingent on the success of the Company, and in view of the
performance of the Company as a whole and each of the executives individually
during Fiscal 1997, the Compensation Committee believes such incentives are fair
to both the executives and to the Company's stockholders.
Conclusion
The Compensation Committee believes that its present policies to date, with
its emphasis on rewarding performance, has served to focus the efforts of the
Company's executives on the attainment of a high rate of growth and
profitability for the Company, which management believes will result in a
substantial increase in value to the Company's stockholders.
Francois Heilbronn
Joseph A. Caccamo
and Jean Levy
16
<PAGE>
PERFORMANCE GRAPH
The following graph compares the performance for the periods indicated in
the graph of the Company's Common Stock with the performance of the Nasdaq
Market Index and the average performance of a group of the Company's peer
corporations consisting of: Alberto-Culver (Class A and B shares), Alfin, Inc.,
Aloette Cosmetics Inc., American Safety Razor Co., Applewoods, Inc., Avon
Products Inc., Azurel, Ltd., Beauticontrol Cosmetics, Carson, Inc., CCA
Industries, Inc., Chromatics Color Science, Del Laboratories Inc., Dep Corp.,
Dial Corp., Erox Corp., Estee Lauder Cosmetics, Inc., French Fragrances, Inc.,
Gillette Co., Guest Supply Inc., the Company, The Lamaur Corporation, Nutramax
Products Inc., Parlux Fragrances Inc., Revlon, Inc., Stephan Co., Styling
Technology Corp. and Tristar Corp. The graph assumes that the value of the
investment in the Company's Common Stock and each index was $100 at the
beginning of the period indicated in the graph, and that all dividends were
reinvested.
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
JEAN PHILIPPE FRAGRANCES, INC. 100 99 60 65 52 55
MG GROUP INDEX 100 100.55 124.61 171.83 265.69 319.95
NASDAQ MARKET INDEX 100 119.95 125.94 163.35 202.35 248.30
17
<PAGE>
CERTAIN TRANSACTIONS
Transactions with French Subsidiaries
In connection with certain previously reported acquisitions by Inter
Parfums in 1993 and 1994, funding for such acquisitions was advanced by Jean
Philippe to its direct subsidiary, IP Holdings, which in turn advanced such
funds to Inter Parfums, its subsidiary. The advance was carried on the books of
IP Holdings as convertible debt.
In January 1998, the Company, through IP Holdings, exercised its rights to
convert the remaining portion of its convertible debt, approximately $4.4
million, into 318,326 additional shares of Inter Parfums bringing the total
shares outstanding to 2,209,000. The conversion price was approximately $14 per
share while Inter Parfums stock is presently trading at approximately $32 per
share.
In connection with the acquisitions by Inter Parfums of the world-wide
rights under the Burberrys License Agreement and the Brosseau License Agreement,
Jean Philippe guaranteed the obligations of Inter Parfums under the Burberrys
License Agreement and the distribution agreement for Ombre Rose fragrances.
Jean Philippe and Elite have guaranteed the obligations of IP Holdings and
Inter Parfums to Republic National Bank of New York (France).
Repurchase of Shares from Officers and Directors
In February 1998 Joseph A. Caccamo, a Director and principal of Joseph A.
Caccamo Attorney at Law, P.A., general counsel to the Company, exercised an
option granted in April 1997 to purchase 7,500 shares of Common Stock at $5.8435
per share. In connection with the Company's stock repurchase program, in
February 1998 the Company purchased from Joseph A. Caccamo the 7,500 shares at
$7.25 per share, the fair market value at the time of such purchase.
Remuneration of Counsel
Joseph A. Caccamo, a director of the Company, is the principal of Joseph A.
Caccamo Attorney at Law, P.A., general counsel to the Company. In Fiscal 1997,
Mr. Caccamo was paid an aggregate of $98,202 in legal fees and for reimbursement
of disbursements incurred on behalf of the Company, and Mr. Caccamo firm
presently receives a monthly retainer of $7,750 together with reimbursement for
expenses. Mr. Caccamo receives $500 for each board meeting at which he
participates.
On February 1, 1998 in accordance with the terms of the Company's stock
option plan, Mr. Caccamo was granted an option with a term of five (5) years to
purchase 4,000 shares at $6.97 per share, the fair market value at the time of
grant.
18
<PAGE>
PROPOSAL NO. 2:
PROPOSAL TO ADOPT THE COMPANY'S
1998 STOCK OPTION PLAN
GENERAL
On April 27, 1998, the Board of Directors of the Company adopted, subject
to the approval of the Company's stockholders, the 1998 Stock Option Plan (the
'1998 Plan), a copy of which is included as Exhibit A to this Proxy Statement.
Under the 1998 Plan, 'incentive stock options' within the meaning of Section
442A of the Internal Revenue Code of 1986, as amended (the 'Code'), may be
granted to key employees, including officers and directors who are employees,
and nonqualified stock options and/or stock appreciation rights ('SARs') may be
granted to key employees, officers, directors and consultants, of the Company
and its present and future subsidiaries to purchase an aggregate of 150,000
shares of the Company's Common Stock (the 'Common Stock').
The purpose of the 1998 Plan is to aid the Company in attracting and
retaining key employees, directors and consultants and to secure for the Company
the benefits of the incentive inherent in equity ownership by such persons who
are responsible for the Company's continuing growth and success. Accordingly,
the Board of Directors unanimously recommends that stockholders approve the 1998
Plan. The approval of the 1998 Plan by the stockholders will require the
affirmative vote of the holders of a majority of the shares of Common Stock
entitled to vote at the Annual Meeting. If the 1998 Plan is not approved by the
stockholders at the Annual Meeting, it, and any options granted thereunder prior
to the Annual Meeting will terminate.
SHARES SUBJECT TO THE 1998 PLAN
The maximum number of shares as to which options may be granted under the
1998 Plan (subject to adjustment as described below) is 150,000 shares of Common
Stock. Upon expiration, cancellation or termination of unexercised options, the
shares with respect to which such options shall have been granted will again be
available for grant under the 1998 Plan.
ADMINISTRATION
The 1998 Plan is administered by the Board of Directors, or if appointed,
by a stock Option Committee consisting of at least two (2) non-employee members
of the Board of Directors, none of whom is eligible to participate under the
1998 Plan. (The group administering the 1998 Plan is referred to as the
'Committee').
GRANTS OF OPTIONS
The Committee has the authority under the 1998 Plan to determine the terms
of options and/or SARs granted under the 1998 Plan, including, among other
things, whether an option shall be an incentive or a nonqualified stock option,
the individuals who shall receive them, whether an SAR shall be granted
separately, in tandem with or in addition to options, the number of shares to be
subject to each option and/or SAR, the date or dates each option or SAR shall
become exercisable and the exercise price or base price of each option and SAR;
provided, however, that the exercise price of an incentive stock option may not
be less than 100% of the fair market value of the Common stock on the date of
grant and not less than 110% of the fair market value in the case of an optionee
who at the time of grant owns more than 10% of the total combined voting power
of the Company, or of any subsidiary or parent of the Company.
19
<PAGE>
TERMS AND CONDITIONS OF OPTIONS
The options and SARs to be granted under the 1998 Plan will be subject to,
among other things, the following terms and conditions:
(a) Options and SARs may be granted for terms determined by the Committee,
provided, however, that the term of an incentive stock option may not exceed ten
(10) years, and in the case of an optionee who at the time of grant owns more
than ten percent (10%) of the combined voting power of the Company, or of any
subsidiary or parent of the Company, the term of an incentive option may not
exceed five (5) years.
(b) Options are payable in full upon exercise or, in the discretion of the
Committee, installments. Payment of the exercise price of an option may be made,
in the discretion of the Committee, in cash, in shares of Common Stock or any
combination thereof.
(c) Options and SARs may not be transferred other than by will or by the
laws of descent and distribution, and may be exercised during he employee's
lifetime only by him or her.
(d) If the employment of the holder of an incentive option is terminated
for any reason other than death or a permanent and total disability, then the
incentive option may be exercised, to the extent exercisable by the holder at
the time of termination of employment, within three (3) months thereafter, but
in no event after expiration of then term of the incentive option. However, if
such employment was terminated either for cause or without the consent of the
Company, then such option shall terminate immediately. Any and all nonqualified
stock options or SARs granted shall terminate simultaneously with the
termination of association of the holder of such nonqualified option or SAR with
the Company for any reason other than the death or permanent and total
disability of such holder.
(e) In the case of the death or disability of the holder of an option
and/or SAR while employed (or death within three (3) months after termination of
employment), his or her legal representative or beneficiaries may exercise the
option, within twelve (12) months after the date of such death or disability,
but in no event after the expiration of the term of the option and/or SAR.
(f) The holder is required to pay to the Company the amount which the
Company determines is necessary to meet its obligation to withhold federal,
state and local taxes incurred by reason of the exercise of a nonqualified stock
option or the disqualifying disposition of shares acquired upon the exercise of
an incentive stock option.
OPTION CONTRACTS
Each option and/or SAR will be evidenced by a written contract between the
Company and the employee receiving the grant. Such contract may provide, among
other things, that (a) the holder agrees to remain in the employ of the Company
or a subsidiary, at the election of the Company, for the later of (i) the period
of time determined by the Committee at or before the time of grant or (ii) the
date to which he is then contractually obligated to remain associated with the
Company or a subsidiary, and (c) the optionee will notify the Company of any
disqualifying disposition of shares acquired pursuant to the exercise of an
incentive stock option and pay any required withholding or other tax.
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ADJUSTMENT IN EVENT OF CAPITAL CHANGES
Appropriate adjustments shall be made in the number and kind of shares
available under the 1998 Plan, in the number and kind of shares subject to each
outstanding option and SAR and in the exercise prices and base prices thereof in
the event of any change in the Common Stock by reason of any stock dividend,
recapitalization, merger, consolidation, reorganization, split-up, combination
or exchange of shares or the like.
DURATION AND AMENDMENT OF THE 1998 PLAN
No option may be granted pursuant to the 1998 Plan after April 26, 2008.
The Board of Directors may at any time terminate or amend the 1998 Plan;
provided, however, that without the approval of the Company's stockholders, no
amendment may be made which would (a) increase the maximum number of shares
available for the grant of options (except the anti-dilution adjustments
described above), (b) otherwise materially increase the benefits accruing to
participants under the 1998 Plan or (c) change the eligibility requirements for
employees who may receive options.
FEDERAL INCOME TAX TREATMENT
The following is a general summary of the federal income tax consequences
under current tax law of incentive stock options, nonqualified stock options and
SARs. It does not purport to cover all of the special rules, including special
rules relating to optionees subject to Section 16(b) of the Securities Exchange
Act of 1934, as amended, and the exercise of an option with previously-acquired
shares, or the state or local income or other tax consequences inherent in the
ownership and exercise of stock options and the ownership and disposition of the
underlying shares.
An optionee will not recognize taxable income for federal income tax
purposes upon the grant of an incentive stock option, a nonqualified stock
option or an SAR.
In the case of an incentive stock option, no taxable income is recognized
upon exercise of the option. If the optionee disposes of the shares acquired
pursuant to the exercise of an incentive stock option more than two (2) years
after the date of grant and more than one (1) year after the transfer of the
shares to him or her, the optionee will recognize long-term capital gain or loss
and the Company will not be entitled to a deduction. However, if the optionee
disposes of such shares within the required holding period, a portion of his or
her gain will be treated as ordinary income and the Company will generally be
entitled to deduct such amount.
Upon the exercise of a nonqualified stock option, the optionee recognizes
ordinary income in an amount equal to the excess, if any, of the fair market
value of the shares acquired on the date of exercise over the exercise price
thereof, and the Company is generally entitled to a deduction for such amount of
the date of exercise so long as the Company properly withholds income taxes
thereon. If the optionee later sells shares acquired pursuant to the
nonqualified stock option, he or she will recognize long-term or short-term
capital gain or loss.
In the case of an SAR, the optionee recognizes ordinary income and the
Company may deduct an amount equal to the excess, if any, of the fair market
value of the shares of Common Stock on the exercise date over the base price
thereof.
Net capital gains (net long term less net short term gains) are taxed at
rates ranging from a 10% marginal rate for persons in the 15% tax bracket, to a
28% marginal rate, depending upon the length of time the shares are held,
whereas ordinary income can be taxed at 36% and 39.6% marginal rates.
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In addition to the federal income tax consequences described above, an
optionee may be subject to the alternative minimum tax, which is payable to the
extent it exceeds the optionee's regular tax. For this purpose, upon the
exercise of an incentive stock option, the excess of the fair market value of
the shares over the exercise price therefor is a tax preference item. In
addition, the optionee's basis in such shares is increased by such amount for
purposes of computing the gain or loss on the disposition of the shares for
alternative minimum tax purposes. If an optionee is required to pay an
alternative minimum tax, the amount of such tax which is attributable to
deferral preferences (including the incentive stock option preference) is
allowed as a credit against the optionee's regular tax liability in subsequent
years. To the extent the credit is not used, it is carried forward.
OPTIONS GRANTED UNDER THE 1998 PLAN
On April 27, 1998, options to purchase 30,000 shares, were granted to each
of Jean Madar and Philippe Benacin, and options to purchase 9,000 shares were
granted to each of Russell Greenberg, Bruce Elbilia, Wayne Hamerling and Jaime
Resnik, all exercisable at $7.75 per share for a five (5) year period. Such
options are not exercisable unless and until the 1998 Plan is ratified by the
stockholders. If the 1998 Plan is not so ratified, then those options shall be
cancelled.
REQUIRED VOTE
The affirmative vote of the holders of a majority of the outstanding shares
of Common Stock is required for the passage of this proposal.
PROPOSAL NO. 3:
RATIFICATION OF SELECTION OF
RICHARD A. EISNER & COMPANY, LLP AS INDEPENDENT AUDITORS
The Board of Directors has selected the firm of Richard A. Eisner &
Company, LLP independent certified public accountants, to audit the accounts for
the Company the for fiscal year ending December 31, 1998 ('Fiscal 1998'). The
firm of Richard A. Eisner & Company, LLP has audited the Company's financial
statements since 1991. The Company is advised that neither that firm nor any of
its partners has any material direct or indirect relationship with the Company.
The Board of Directors considers Richard A. Eisner & Company, LLP to be well
qualified for the function of serving as the Company's auditors. The Delaware
General Corporation Law does not require the approval of the selection of
auditors by the Company's stockholders, but in view of the importance of the
financial statement to stockholders, the Board of Directors deems it desirable
that they pass upon its selection of auditors. In the event the stockholders
disapprove of the selection, then the Board of Directors will consider the
selection of other auditors. The Board of Directors recommends that you vote in
favor of the above proposal in view of the familiarity of Richard A. Eisner &
Company, LLP with the Company's financial and other affairs due to its previous
service as auditors for the Company.
A representative of Richard A. Eisner & Company, LLP is expected to be
present at the Annual Meeting with the opportunity to make a statement if he
desires to do so, and is expected to be available to respond to appropriate
questions.
Unless otherwise directed by the stockholder giving the proxy, the proxy
will be voted for the ratification of the selection by the Board of Directors of
Richard A. Eisner & Company, LLP as the Company's independent certified public
accountants for Fiscal 1998.
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STOCKHOLDERS' PROPOSALS
Proposals of stockholders intended to be presented at the 1999 Annual
Meeting of stockholders must be received in writing, by the President of the
Company at its offices by February 8, 1999, in order to be considered for
inclusion in the Company's proxy statement relating to that meeting.
By Order of the Board of Directors
Henry E. Dominitz,
Secretary
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EXHIBIT A
1998 STOCK OPTION PLAN
OF
JEAN PHILIPPE FRAGRANCES, INC.
1. Purposes of the Plan. This stock option plan (the 'Plan') is designed
to provide an incentive to key employees, officers, directors and consultants of
Jean Philippe Fragrances, Inc., a Delaware corporation (the 'Company'), and its
present and future subsidiary corporations, as defined in Paragraph 17
('Subsidiaries'), and to offer an additional inducement in obtaining the
services of such individuals. The Plan provides for the grant of 'incentive
stock options,' within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended (the 'Code'), nonqualified stock options and stock
appreciation rights ('SARs').
2. Shares Subject to the Plan. The aggregate number of shares of Common
Stock, $.001 par value per share, of the Company ('Common Stock') for which
options or SARs may be granted under the Plan shall not exceed 150,000. Such
shares may, in the discretion of the Board Directors, consist either in whole or
in part of authorized but unissued shares of Common Stock or shares of Common
Stock held in the treasury of the Company. The Company shall at all times during
the term of the Plan reserve and keep available such number of shares of Common
Stock as will be sufficient to satisfy the requirements of the Plan. Subject to
the provisions of Paragraph 14, any shares subject to an option or SAR which for
any reason expire, are canceled or are terminated unexercised (other than those
which expire, are canceled or terminated pursuant to the exercise of a tandem
SAR or option) shall again become available for the granting of options or SARs
under the Plan. The number of shares of Common Stock underlying that portion of
an option or SAR which is exercised (regardless of the number of shares actually
issued) shall not again become available for grant under the Plan.
3. Administration of the Plan.
(a) The Plan shall be administered by the Board of Directors, or if
appointed, by a Stock Option Committee consisting of not less than two (2)
members of the Board of Directors, each of whom shall be a 'non-employee
director' within the meaning of Rule 16b-3 promulgated by the Securities and
Exchange Commission. (The group administering the plan is referred to as the
'Committee'). The failure of any of the Committee members to qualify as a
'non-employee director' shall not otherwise affect the validity of the grant of
any option or SAR, or the issuance of shares of Common Stock otherwise validly
issued upon exercise of any such option. A majority of the members of the
Committee shall constitute a quorum, and the acts of a majority of the members
present at any meeting at which a quorum is present, and any acts approved in
writing by all members without a meeting, shall be the acts of the Committee.
(b) Subject to the express provisions of the Plan, the Committee shall have
the authority, in its sole discretion, to determine the individuals who shall
receive options and SARS; the times when they shall receive them; whether an
option shall be an incentive or a nonqualified stock option; whether an SAR
shall be granted separately, in tandem with or in addition to an option; the
number of shares to be subject to each option and SAR; the term of each option
and SAR; the date each option and SAR shall become exercisable; whether an
option or SAR shall be exercisable in whole, in part or in installments, and if
in installments, the number of shares to be subject to each installment; whether
the installments shall be cumulative, the date each installment shall become
exercisable and the term of each installment; whether to accelerate the date of
exercise of any installment; whether shares may be issued on exercise of an
option as partly paid, and, if so, the dates when future installments of the
exercise price shall become due and the amounts of such installments; the
exercise price of each option and the base price of each SAR; the form of
payment of the exercise price; the form of payment by the Company upon the
optionee's exercise of an SAR; whether to require that the optionee remain in
the employ
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of the Company or its Subsidiaries for a period of time from and after the date
the option or SAR is granted to him; the amount necessary to satisfy the
Company's obligation to withhold taxes; whether to restrict the sale or other
disposition of the shares of Common Stock acquired upon the exercise of an
option or SAR and to waive any such restriction; to subject the exercise of all
or any portion of an option or SAR to the fulfillment of contingencies as
specified in the Contract (described in Paragraph 12), including without
limitations, contingencies relating to financial objectives (such as earnings
per share, cash flow return, return on investment or growth in sales) for a
specified period for the Company, a division, a product line or other category,
and/or the period of continued employment of the optionee with the Company or
its Subsidiaries, and to determine whether such contingencies have been met; to
construe the respective Contracts and the Plan; with the consent of the
optionee, to cancel or modify an option or SAR, provided such option or SAR as
modified would be permitted to be granted on such date under the terms of the
Plan; and to make all other determinations necessary or advisable for
administering the Plan. The determinations of the Committee on the matters
referred to in this Paragraph 3 shall be conclusive.
4. Eligibility. The Committee may, consistent with the purposes of the
Plan, grant incentive stock options to key employees (including officers and
directors who are employees) and nonqualified stock options and/or SARs to key
employees, officers, directors and consultants of the Company or any of its
Subsidiaries from time to time, within ten (10) years from the date of adoption
of the Plan by the Board of Directors, covering such number of shares of Common
Stock as the Committee may determine; provided, however, that the aggregate
market value (determined at the time the stock option is granted) of the shares
for which any eligible person may be granted incentive stock options under the
Plan or any plan of the Company, or of a Parent or a Subsidiary of the Company
which are exercisable for the first time by such optionee during any calendar
year shall not exceed $100,000. Any option (or portion thereof) granted in
excess of such amount shall be treated as a nonqualified stock option.
5. Exercise Price and Base Price.
(a) The exercise price of the shares of Common Stock under each option and
the base price for each SAR shall be determined by the Committee; provided,
however, in the case of an incentive stock option, the exercise price shall not
be less than 100% of the fair market value of the Common Stock on the date of
grant, and further provided, that if, at the time an incentive stock option is
granted, the optionee owns (or is deemed to own) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company, of any of its Subsidiaries or of a Parent, the exercise price shall not
be less than 110% of the fair market value of the Common Stock subject to the
option at the time of the granting of such option.
(b) The fair market value of the Common stock on any day shall be (a) if
the principal market for the Common stock is a national securities exchange, the
average between the high and low sales prices of the Common stock on such day as
reported by such exchange or on a consolidated tape reflecting transactions on
such exchange; (b) if the principal market for the Common Stock is not a
national securities exchange and the Common Stock is quoted on The Nasdaq Stock
Market ('NASDAQ'), and (i) if actual sales price information is available with
respect to the Common Stock, then the average between the high and low sales
prices of the Common Stock on such day on NASDAQ, or (ii) if such information is
not available, then the average between the highest bid and lowest asked prices
for the Common Stock on such day on NASDAQ; or (c) if the principal market for
the Common Stock is not a national securities exchange and the Common Stock is
not quoted on NASDAQ, then the average between the highest bid and lowest asked
prices for the Common Stock on such day as reported by The Nasdaq Bulletin
Board, or a comparable service; provided that if clauses (a), (b) and (c) of
this Paragraph are all inapplicable, or if no trades have been made or no quotes
are available for such day, then the fair market value of the Common Stock shall
be determined by the Committee by any method consistent with
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applicable regulations adopted by the Treasury Department relating to stock
options. The determination of the Committee shall be conclusive in determining
the fair market value of the stock.
6. Term. The term of each option and SAR granted pursuant to the Plan
shall be such term as is established by the Committee, in its sole discretion,
at or before the term of each incentive stock option granted pursuant to the
Plan shall be for a period not exceeding ten (10) years from the date of
granting thereof, and further, provided, that if, at the time an incentive stock
option is granted, the optionee owns (or is deemed to own) stock possessing more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company, of any of its Subsidiaries or of a Parent, the term of the
incentive stock option shall be for a period not exceeding five (5) years.
Options shall be subject to earlier termination as hereinafter provided.
7. Exercise.
(a) An option or SAR (or any part or installment thereof) shall be
exercised by giving written notice to the Company at its principal office (at
present 551 Fifth Avenue, New York, NY 10176) stating whether an incentive or
nonqualified stock option or SAR is being exercised, specifying the number of
shares as to which such option or SAR is being exercised, and in the case of an
option, accompanied by payment in full of the aggregate exercise price therefor
(or the amount due on exercise if the Contract permits installment payments) in
the discretion of the Committee (a) in cash or by certified check, (b) with
previously acquired shares of Common Stock having an aggregate fair market
value, on the date of exercise, equal to the aggregate exercise price of all
options being exercised, or (c) any combination thereof. In addition, upon the
exercise of a nonqualified stock option or SAR, the Company may withhold cash
and/or shares of Common Stock to be issued with respect thereto having an
aggregate fair market value equal to the amount which it determined is necessary
to satisfy its obligation to withhold Federal, state and local income taxes or
other taxes incurred by reason of such exercise. Alternatively, the Company may
require the holder to pay to the Company such amount, in cash, promptly upon
demand. The Company shall not be required to issue any shares pursuant to any
such option or SAR until all required payments have been made. Fair market value
of the shares shall be determined in accordance with Paragraph 5.
(b) A person entitled to receive Common Stock upon the exercise of an
option or SAR shall not have the rights of a shareholder with respect to such
shares until the date of issuance of a stock certificate to him for such shares;
provided, however, that until such stock certificate is issued, any option
holder using previously acquired shares in payment of an option exercise price
shall have the rights of a shareholder with respect to such previously acquired
shares.
(c) In no case may a fraction of a share be purchased or issued under the
Plan. Any option granted in tandem with an SAR shall no longer be exercisable to
the extent the SAR is exercised, and the exercise of the related option shall
cancel the SAR to the extent of such exercise.
8. Stock Appreciation Rights.
(a) An SAR may be granted separately, in tandem with or in addition to any
option, and may be granted before, simultaneously with or after the grant of an
option hereunder. In addition, the holder of an option may, in lieu of making
the payment required at the time of exercise under Paragraph 7, include in the
written notice referred to therein an 'election' to exercise the option as an
SAR. In such case, the Committee shall have fifteen (15) days from the receipt
of notice of the election to decide, in its sole discretion, whether or not to
accept the election and notify the option holder of its decision. If the
Committee consents, such exercise shall be treated as the exercise of an SAR
with a base price equal to the exercise price.
(b) Upon the exercise of an SAR, the holder shall be entitled to receive an
amount equal to the excess of the fair market value of a share of Common Stock
on the date of exercise over the base price of the SAR. Such amount shall be
paid, in the discretion of the Committee, in cash, Common Stock having a fair
market value on
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the date of payment equal to such amount, or a combination thereof. For purposes
of this Paragraph 8, fair market value shall be determined in accordance with
Paragraph 5.
9. Termination of Association with the Company.
(a) Any holder of an incentive option whose association with the Company
(and its Subsidiaries) has terminated for any reason other than his death or
permanent and total disability (as defined in Section 22(e)(3) of the Code) may
exercise such option, to the extent exercisable on the date of such termination,
at any time within three (3) months after the date of termination, but in no
event after the expiration of the term of the option; provided, however, that if
his association shall be terminated either (i) for cause, or (ii) without the
consent of the Company, said option shall terminate immediately.
(b) Any and all nonqualified stock options or SARs granted under the Plan
shall terminate simultaneously with the termination of association of the holder
of such nonqualified option or SAR with the Company (and its Subsidiaries) for
any reason other than the death or permanent and total disability (as defined in
Section 22(e)(3) of the Code) of such holder.
(c) Options and SARs granted under the Plan shall not be affected by any
change in the status of an optionee so long as he continues to be associated
with the Company or any of the Subsidiaries.
(d) Nothing in the Plan or in any option or SAR granted under the Plan
shall confer on any individual any right to continue to be associated with the
Company or any of its Subsidiaries, or interfere in any way with the right of
the Company or any of its Subsidiaries to terminate the holder's association at
any time for any reason whatsoever without liability to the Company or any of
its subsidiaries.
10. Death or Disability of an Optionee.
(a) If an optionee dies while he is associated with the Company or any of
its Subsidiaries, or within three (3) months after such termination for the
holder of an incentive option (unless such termination was for cause or without
the consent of the Company), the option or SAR may be exercised, to the extent
exercisable on the death, by his executor, administrator or other person at the
time entitled by law to his rights under the option or SAR, at any time within
one (1) year after death, but in no event after the expiration of the term of
the option or SAR.
(b) Any holder whose association with the Company or its Subsidiaries has
terminated by reason of a permanent and total disability (as defined in Section
22(e) (3) of the Code) may exercise his option or SAR, to the extent exercisable
upon the effective date of such termination, at any time within one (1) year
after such date, but in no event after the expiration of the term of the option
or SAR.
11. Compliance with Securities Laws. The Committee may require, in its
discretion, as a condition to the exercise of an option or SAR that either (a) a
registration statement under the Securities Act of 1933, as amended (the
'Securities Act'), with respect to such shares shall be effective at the time of
exercise or (b) there is an exemption from registration under the Securities Act
for the issuance of shares of Common Stock upon such exercise. Nothing herein
shall be construed as requiring the Company to register shares subject to any
option or SAR under the Securities Act. In addition, if at any time the
Committee shall determine in its discretion that the listing or qualification of
the shares subject to such option or SAR on any securities exchange or under any
applicable 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 an option or SAR, or the issue of shares thereunder, such option or SAR may
not be exercised in whole or in part unless such listing, qualification, consent
or approval shall have been effected or obtained free of any conditions not
acceptable to the Committee.
12. Stock Option and SAR Contracts. Each option and SAR shall be evidenced
by an appropriate Contract which shall be duly executed by the Company and the
optionee, and shall contain such terms and conditions not inconsistent herewith
as may be determined by the Committee, and which shall provide, among other
things,
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(a) that the optionee agrees that he will remain in the employ of the Company or
its Subsidiaries, at the election of the Company, for the later of (i) the
period of time determined by the Committee at or before the time of grant or
(ii) the date to which he is then contractually obligated to remain associated
with the Company or its Subsidiaries, (b) that in the event of the exercise of
an option or an SAR which is paid with Common stock, unless the shares of Common
Stock received upon such exercise shall have been registered under an effective
registration statement under the Securities Act, such shares will be acquired
for investment and not with a view to distribution thereof, and that such shares
may not be sold except in compliance with the applicable provisions of the
Securities Act, and (c) that in the event of any disposition of the shares of
Common Stock acquired upon the exercise of an incentive stock option within two
(2) years from the date of grant of the option or one (1) year from the date of
transfer of such shares to him, the optionee will notify the Company thereof in
writing within 30 days after such disposition, pay the Company, on demand, in
cash an amount necessary to satisfy its obligation, if any, to withhold any
Federal, state and local income taxes or other taxes by reason of such
disqualifying disposition and provide the Company, on demand, with such
information as the Company shall reasonably request to determine such
obligation.
13. Adjustments upon Changes in Common Stock. Notwithstanding any other
provisions of the Plan, in the event of any change in the outstanding Common
Stock by reason of a stock dividend, recapitalization, merger, consolidation,
reorganization, split-up, combination or exchange of shares or the like, the
aggregate number and kind of shares available under the Plan, the aggregate
number and kind of shares subject to each outstanding option and SAR and the
exercise prices and base prices thereof shall be appropriately adjusted by the
Board of Directors, whose determination shall be conclusive.
14. Amendments and Termination of the Plan. The Plan was adopted by the
Board of Directors on April 27, 1998. No options may be granted under the Plan
after April 26, 2008. The Board of Directors, without further approval of the
Company's stockholders, may at any time suspend or terminate the Plan, in whole
or in part, or amend it from time to time in such respects as it may deem
advisable, including, without limitation, in order that incentive stock options
granted hereunder meet the requirements for 'incentive stock options' under the
Code, or any comparable provisions thereafter enacted and conform to any change
in applicable law or to regulations or rulings of administrative agencies;
provided, however, that no amendment shall be effective without the prior or
subsequent approval of a majority of the Company's outstanding stock entitled to
vote thereon which would (a) except as contemplated in Paragraph 13, increase
the maximum number of shares for which options may be granted under the Plan,
(b) materially increase the benefits to participants under the plan or (c)
change the eligibility requirements for individuals entitled to receive options
hereunder. No termination, suspension or amendment of the Plan shall, without
the consent of the holder of an existing option affected thereby, adversely
affect his rights under such option.
15. Nontransferability of Options. No option or SAR granted under the Plan
shall be transferable otherwise than by will or the laws of descent and
distribution, or qualified domestic relations order as defined in the Code or
Title I of the Employee Retirement Income Security Act, and options and SARs may
be exercised, during the lifetime of the holder thereof, only by him or his
legal representatives. Except to the extent provided above, options and SARs may
not be assigned, transferred, pledged, hypothecated or disposed of in any way
(whether by operation of law or otherwise) and shall not subject to execution,
attachment or similar process.
16. Substitutions and Assumptions of Options of Certain Constituent
Corporations. Anything in this Plan to the contrary notwithstanding, the Board
of directors may, without further approval by the stockholders, substitute new
options for prior options and new SARs for prior SARs of a Constituent
Corporation (as defined in Paragraph 17) or assume the prior options or SARs of
such Constituent Corporation.
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17. Definitions.
(a) The term 'Subsidiary' shall have the same definition as 'subsidiary
corporation' in Section 425(f) of the Code.
(b) The term 'Parent' shall have the same definition as 'parent
corporation' in Section 425(e) of the Code.
(c) The term 'Constituent Corporation' shall mean any corporation which
engages with the Company, its Parent or Subsidiary, in a transaction to which
Section 425(a) of the Code applies (or would apply if the option or SAR assumed
or substituted were an incentive stock option), or any Parent or any Subsidiary
of such corporation.
18. Conditions Precedent. The Plan shall be subject to
(a) approval by the holders of a majority of shares of the Company's
capital stock outstanding and entitled to vote thereon at the next meeting of
its stockholders, or the written consent of the holders of a majority of shares
that would have been entitled to vote thereon, and no options or SARs granted
hereunder may be exercised prior to such approval, provided that the date of
grant of any options granted hereunder shall be determined as if the Plan had
not been subject to such approval; and
(b) notification of the adoption of the Plan to The Nasdaq Stock Market by
the filing of the appropriate documents, forms and exhibits, and no options or
SARs granted hereunder may be exercised prior to fifteen (15) days after such
filing, provided that the date of grant of any options granted hereunder shall
be determined as if the Plan had not been subject to such filing.
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JEAN PHILLIPE FRAGRANCES, INC.
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Jean Madar and Philippe Benacin as proxies
(the "Proxies"), each with power of substitution and resubstitution, to vote
all shares of Common Stock, $.001 par value per share, of Jean Philippe
Fragrances, Inc. (the "Company") held of record by the undersigned on June 8,
1998 at the Annual Meeting of stockholders to be held at 551 Fifth Avenue, New
York, New York 10176, July 10, 1998 at 10:00 A.M. New York City time, or at
any adjournments thereof, as directed below, and in their discretion on all
other matters coming before the meeting of any adjournments thereof.
Please mark boxes / / in blue or black ink.
1. Election of seven (7) directors: Jean Madar, Philippe Benacin, Russell
Greenberg, Francois Heilbronn, Joseph A. Caccamo, Jean Levy and Robert
Bensoussan-Torres (Mark only one of the two boxes for this item)
[ ] VOTE FOR all nominees named above except those who may be named on this
line:
(OR)
[ ] VOTE WITHHELD as to all nominees named above.
2. Proposal to adopt the Company's 1998 Stock Option Plan:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Proposal to ratify appointment of Richard A. Eisner & Company, LLP as the
Company's independent certified public accountants:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
<PAGE>
When properly executed, this Proxy will be voted as directed. If no
direction is made, this Proxy will be voted "FOR" Proposals 1, 2, and 3.
Please mark, date, sign and return this Proxy promptly in the enclosed
envelope.
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney or executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Dated: , 1998
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Signature
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Print Name(s)
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Signature, if held jointly
