RICHTON INTERNATIONAL CORPORATION
--------------------------
Notice of Annual Meeting of Stockholders
to be held April 26, 2000
--------------------------
The Annual Meeting of Stockholders of Richton International Corporation
(the "Company") will be held at the New York Athletic Club, 180 Central Park
South, New York, New York, on April 26, 2000 at 11:00 a.m. for the purpose of
considering and acting upon the following:
1. Election of three directors.
2. Approval of the Richton International Corporation 2000 Long-Term
Incentive Plan.
3. Confirmation of the appointment of Arthur Andersen & Co. L.L.P. as
independent auditors for the calendar year ending December 31, 2000.
4. Such other business as may legally come before the meeting and any
adjournments or postponements thereof.
The Board of Directors has fixed the close of business on March 17, 2000
as the record date for determining the stockholders having the right to notice
of and to vote at the meeting. For a period of a least 10 days prior to the
meeting, the Company will make available at its offices a complete list of the
stockholders entitled to vote at the meeting showing the address of each
stockholder and the number of shares registered in the name of each stockholder
as of the record date. You are cordially invited to attend.
By order of the Board of Directors
FRED R. SULLIVAN
Chairman of the Board
New York, New York
March 22, 2000
IMPORTANT
================================================================================
In order to ensure your representation at the meeting, you
are urged to sign, date and return the enclosed proxy in the
enclosed envelope (on which no postage is necessary if
mailed in the United States).
================================================================================
<PAGE>
RICHTON INTERNATIONAL CORPORATION
--------------------------
PROXY STATEMENT
For Annual Meeting of Stockholders
to be held April 26, 2000
--------------------------
Proxies in the form enclosed with this Proxy Statement are solicited by
the Board of Directors of Richton International Corporation ("Richton" or the
"Company") to be used at the Annual Meeting of Stockholders to be held at 11:00
a.m. on April 26, 2000 at the New York Athletic Club, 180 Central Park South,
New York, New York or at any adjournments or postponements thereof (the
"Meeting"), for the purposes set forth in the Notice of Annual Meeting. The
Company's principal executive offices are located at 767 Fifth Avenue, New York,
New York 10153. This Proxy Statement and the form of proxy will first be mailed
to stockholders on or about March 22, 2000.
THE VOTING AND VOTE REQUIRED
On the record date for the Meeting, March 17, 2000 (the "Record Date"),
there were 3,006,237 shares of common stock, par value $.10 per share (the
"Common Stock") outstanding, each of which is entitled to one vote. A majority
of the outstanding shares entitled to vote must be present at the Meeting in
person or by proxy to constitute a quorum. Directors are elected by a plurality
of the votes cast (i.e., the three nominees with the highest number of votes
will be elected). The affirmative vote of a majority of the votes cast at the
Meeting is required for the approval to the Company's 2000 Long-Term Incentive
Plan (the "Plan" or the "2000 Plan") and for the confirmation of the appointment
of the independent auditors. Abstentions and broker non-votes will be included
for purposes of determining the presence of a quorum but will be disregarded and
have no effect on the outcome of the vote on any matters presented at the
Meeting.
All shares represented by valid proxies will be voted in accordance with
the instructions contained thereon. As to the election of the directors, the
proxy will be voted in favor of the nominees for director named herein unless a
direction is indicated to withhold authority to vote for either of the listed
nominees. As to the approval of the Plan and confirmation of the appointment of
independent auditors, the proxy will be voted in favor of each such proposal
unless a direction is given to vote against or to abstain from voting thereon.
Any stockholder executing and returning a proxy has the power to revoke it at
any time before its exercise (i) by filing with the Secretary of the Company a
written instruction revoking it, (ii) by submitting a later dated proxy or (iii)
by attending the Meeting and voting in person.
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's By-laws provide that the Board of Directors shall be divided
into three Classes as nearly equal as may be possible with terms of office
having staggered expiration dates. In accordance with the Company's By-laws, the
Board of Directors has fixed the number of directors of the Company at six. At
the Meeting, the stockholders will be asked to elect two directors to the Class
having a three-year term which expires at the 2003 Annual Meeting, and one
director to the Class having a term which expires at the 2001 Annual Meeting.
The three other directors, constituting the members of the two Classes whose
terms of office expire at the 2001 and 2002 Annual Meetings, will not be
nominees for election at the Meeting, and will continue in office until the
expiration of their respective terms.
Nominees for Election to Office for a term
expiring at the 2003 Annual Meeting
RICHARD P. BARNITT, 61, Financial and accounting consultant. Mr. Barnitt was
formerly Senior Vice President and Chief Financial Officer of Kidde, Inc.
He is a financial consultant to the Company and serves as a director and
member of the Audit Committee of Joule, Inc.
DONALD A. McMAHON, 69, Private Investor. Mr. McMahon was the President and Chief
Executive Officer of Royal Crown Corporation, Inc. from 1975 to 1985 and
the President of Baker Industries from 1970 to 1974. Mr. McMahon currently
serves as a director of Intelligent Systems Corp. He was first elected as
Director of the Company in 1997 and presently serves on the Compensation
and Audit Committee.
Nominee for Election to Office for a term
expiring at the 2001 Annual Meeting
STANLEY J. LEIFER, 70, President of Stanley J. Leifer Associates, management and
marketing consultants. Mr. Leifer was Vice President, Marketing for
Braunstein Co. Inc., a manufacturer of jewelry, since November, 1995. Mr.
Leifer was Vice President, Marketing for Paul H. Gesswein Co., a
distributor of tools equipment and supplies for the manufacturer of
jewelry, from March 1992 until October, 1995. From March 1990 until March
1992, Mr. Leifer served as Vice President, Marketing for CitiTraffic, a
traffic information service. Mr. Leifer was first elected a director in
1993 and presently serves on the Audit Committee.
Director to continue in Office for a term
expiring at the 2001 Annual Meeting
THOMAS J. HILB, 62, President and Chief Executive Officer of Hilb & Co., Inc., a
real estate development company (1982 to date). Mr. Hilb was first elected
as a Director of the Company in 1973 and presently serves on the
Compensation Committee.
Directors to continue in Office for a term
expiring at the 2002 Annual Meeting
FRED R. SULLIVAN, 85, Chairman of the Board and Chief Executive Officer of the
Company since May 1989. Formerly Chairman and President of Interim Systems
Corporation, a supplier of temporary personnel and health care services
(September 1987-December 1990). Prior to 1987, Mr. Sullivan was Chairman
of the Board and President of Kidde, Inc., a multi-market manufacturing
and service organization. Currently serves as Director of Sequa
Corporation. Mr. Sullivan served as a Director of the Company from 1977 to
1980 and since 1981. Mr. Sullivan presently serves on the Executive
Committee.
NORMAN E. ALEXANDER, 85, Chairman of the Board and Chief Executive Officer of
Sequa Corporation, a company that manufactures, repairs and coats
components of gas turbine engines and produces military electro-optics and
machinery for the manufacture and printing of seamless aluminum beverage
cans. Mr. Alexander was first elected as a Director of the Company in
September 1990 and presently serves on the Executive Committee.
2
<PAGE>
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held four meetings in calendar year 1999. Each
director attended 100% of the aggregate number of meetings of the Board and
committees on which he served during 1999.
The Company has Audit, Executive and Compensation Committees. The Board
does not have a Nominating Committee. The Audit Committee met once in 1999. The
Compensation Committee met twice in 1999. The Executive Committee did not meet
in 1999.
The principal functions of the Audit Committee are to make recommendations
to the Board as to the engagement of independent auditors, to review the scope
of the audit and the auditors' fees, to discuss the results of the audit with
the independent auditors and determine what action, if any, is required with
respect to Richton's internal controls and to make a general review of
developments in financial reporting and accounting. In addition, the Audit
Committee reviews, considers and reports to the Board of Directors with respect
to any transactions which could involve actual or potential conflicts of
interest between the Company and any of its officers, directors or affiliates.
The members of the Audit Committee are Donald A. McMahon and Stanley J. Leifer,
neither of whom is an employee of the Company.
The Compensation Committee reviews and approves employment agreements
with, and annual salaries, bonuses, profit participation and other compensation
of, executives of the Company, and administers and grants benefits under the
Company's Long Term Incentive Plan. The members of the Compensation Committee
are Thomas J. Hilb and Donald A. McMahon.
Director Compensation
Each non-employee Director, receives and annual retainer of $18,000.00 and
$500.00 per Committee Meeting, for those Committee Meetings held on a day on
which there is no Board Meeting.
3
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table shows certain information with respect to beneficial
ownership of shares of the Common Stock as of March 17, 2000 by all persons
known to the Company to be the beneficial owners of more than 5% of the
Company's outstanding shares:
<TABLE>
<CAPTION>
Shares
Beneficially Percent
Name & Address of Beneficial Owner Owned of Class (1)
- ---------------------------------- ----- ------------
<S> <C> <C>
Fred R. Sullivan ................................ 1,643,197(2) 48.2%
c/o Richton International Corporation
767 Fifth Avenue, New York, New York
FRS Capital Company, LLC ........................ 1,239,274(3) 36.3%
c/o Richton International Corporation
767 Fifth Avenue, New York, New York
The Franc M. Ricciardi Residuary Trust .......... 208,923(4) 6.9%
c/o Richton International Corporation
767 Fifth Avenue, New York, New York
Fred A. Sullivan ................................ 407,000(5) 13.5%
857 Fifth Avenue, New York, New York
</TABLE>
- ----------
(1) In determining the percent of class, shares which could be acquired
through the exercise of stock options and warrants that are presently
exercisable or exercisable within 60 days are deemed outstanding for the
purpose of computing that person's, but only that person's, percentage.
(2) Includes (i) 208,923 shares owned by the Franc M. Ricciardi Residuary
Trust, of which Mr. Fred R. Sullivan is the sole trustee, (ii) 70,000
shares which may be acquired through the exercise of stock options, all of
which are currently exercisable, (iii) shares held in FRS Capital Company,
LLC (see Note (3) below) and (iv) 20,000 shares issued in December 1998
and 20,000 shares issued in August 1999, pursuant to restricted stock
grants which provides for vesting at the rate of one-third in each year
commencing on December 1, 1998 and August 8, 1999, respectively. Does not
include 27,000 shares owned by Mr. Sullivan's wife, of which Mr. Fred R.
Sullivan disclaims beneficial ownership.
(3) These shares were transferred from Mr. Fred R. Sullivan to this company
and include 336,250 shares which may be acquired through the exercise of
warrants which are currently exercisable. While Mr. Sullivan has sole
voting authority over the shares held by FRS Capital Company, LLC, his
son, Fred A. Sullivan, has a majority equity interest in FRS Capital
Company, LLC.
(4) Does not include 62,107 shares owned directly by Mrs. Rosemarie S.
Ricciardi, widow of Franc M. Ricciardi, former Chairman of Richton.
(5) Does not include shares held by FRS Capital Company, LLC. See Note (3)
above.
4
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
The following table sets forth information regarding beneficial ownership
of the Common Stock, as of March 17, 2000, by the directors, nominees for the
Board of Directors, persons named in the Summary Compensation table below and by
the directors and executive officers as a group:
<TABLE>
<CAPTION>
Shares Beneficially Percent of
Beneficial Owner Owned Class(1)
---------------- ----- --------
<S> <C> <C>
Fred R. Sullivan ............................ 1,643,197(2) 48.2%
Norman E. Alexander ......................... 5,000 *
Richard P. Barnitt .......................... 1,000 *
David R.Ficca ............................... 8,500 *
Cornelius F. Griffin ........................ 112,000 3.7%
Thomas J. Hilb .............................. 51,137 1.7%
Stanley J. Leifer ........................... 16,551 *
Donald A. McMahon ........................... 3,000 *
All Directors and Officers
as a group ("7" persons) .................. 1,840,385(2) 53.9%
</TABLE>
- ----------
* Less than one percent (1%).
(1) In determining the percent of class, shares which could be acquired
through the exercise of stock options and warrants that are presently
exercisable or exercisable within 60 days are deemed outstanding for the
purpose of computing that person's, but only that person's, percentage.
(2) Includes (i) 208,923 shares owned by the Franc M. Ricciardi Residuary
Trust, of which Mr. Fred R. Sullivan is the sole trustee, (ii) 70,000
shares which may be acquired through the exercise of stock options, all of
which are currently exercisable, (iii) shares held in FRS Capital Company,
LLC (see Note (3) under Principal Stockholders Table) and (iv) 20,000
shares issued in December 1998 and August 1999, respectively, pursuant to
restricted stock grants which provide for vesting at the rate of one-third
in each year commencing on November 30, 1998 and August 8, 1999,
respectively. Does not include 27,000 shares owned by Mr. Sullivan's wife,
of which Mr. Fred R. Sullivan disclaims beneficial ownership.
5
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND RELATED MATTERS
The following table sets forth the compensation information for the
Company's Chief Executive Officer and the only other executive officer of the
Company whose total compensation in 1999 exceeded $100,000 for the three fiscal
years ended December 31, 1999:
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation Awards
------------------- ------------------------
Securities Restricted
Name and Underlying Stock
Principal Position Year Salary Bonus Options Award(1)
- ------------------ ---- ------ ----- ------- --------
<S> <C> <C> <C> <C> <C>
Fred R. Sullivan ................... 1999 $250,000 $ 0 0 $277,000
Chairman and 1998 250,000 0 0 170,000
Chief Executive Officer 1997 250,000 85,000 30,000 0
Cornelius F. Griffin ............... 1999 150,000 60,000 0 0
Vice President and 1998 150,000 50,000 0 0
Chief Financial Officer 1997 150,000 35,000 0 0
</TABLE>
- ----------
(1) Value of restricted shares of Richton common stock on date of grant. Such
shares vest over a three-year period and are subject to forfeiture or
acceleration under certain conditions. Mr. Sullivan held a total of 33,333
shares of restricted stock as of December 31, 1999 which, on that date,
had an aggregate market value of $472,000.
Aggregated Option Exercises in Last Fiscal Year and FY-End Option Values
<TABLE>
<CAPTION>
Value of Unexercised in-
Share Acquired Value Realized Number of Unexercised the-Money Options
On Exercise(#) ($)(1) Options at Year End (#) at Year End($)(1)
Name Exercisable/Unexercisable Exercisable/Unexercisable
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fred R. Sullivan ....... 50,000 $599,000 70,000/0 720,000/0
</TABLE>
- ----------
(1) Value is the difference between the market value of the Company's common
stock on December 31, 1999 and the exercise price. The closing market
price on December 31, 1999 was $14 3/16 per share.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following persons served on the Compensation Committee during the last
completed calendar year: Thomas J. Hilb and Donald A. McMahon. No member of the
Compensation Committee had any relationship constituting an interlock or insider
participation under Item 402(j) of Regulation S-K.
6
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The overall objectives of the Company's compensation program are to
attract and retain the best possible executive talent.
The primary element of the Company's compensation program consists of
fixed compensation in the form of base salary and discretionary cash bonus.
Another element of the Company's compensation program consists of variable
compensation in the form of stock options and restricted stock grants ("stock
awards"). The Compensation Committee's policies with respect to each of these
elements, including the bases for the compensation awarded to Mr. Sullivan, the
Company's chief executive officer, are discussed below.
Base Salaries. Base salaries for executive officers are determined based
upon the Compensation Committee's evaluation of the responsibilities of the
position held, the experience of the individual, reference to historical levels
of salary paid by the Company, the cash flow needs of the Company and the
relative performance of the Company.
Cash Bonus. When appropriate in light of the prevailing business
conditions, the Compensation Committee approves a grant of a cash bonus to
certain executive officers. In determining whether to award such bonuses and the
amounts of any such bonuses, the Compensation Committee considers those factors
that it deems most relevant at the time, including the executive officer's
performance, subjectively determined, for the year.
Incentive Compensation Awards. The third component of an executive's
compensation is stock awards. Stock awards reflect the Company's desire to
provide an equity incentive for the executive officers to have the Company
prosper over the long term. The exercise price of stock option awards is set at
a price equal to or greater than the market price of the Common Stock at the
time of the grant. The options therefore do not have any value to the executive
unless the market price of the Common Stock rises. The number of stock awards
granted in any year is based upon the discretion of the Compensation Committee.
In 1999, the Compensation Committee awarded restricted stock grants covering
20,000 shares.
Chief Executive Officer Compensation. In setting Mr. Sullivan's
compensation, the Compensation Committee considered factors such as individual
performance (without reference to any specific performance-related targets) and
individual experience and expertise, subject, however, to the Compensation
Committee's intention to continue to provide Mr. Sullivan with a base salary
which the Compensation Committee considers to be low relative to what it
believes to be the compensation levels of chief executives of other comparable
companies (generally, privately held companies of similar size in the industry
and not the companies included in the peer group index) and subject to the cash
flow needs of the Company. No particular weight is given by the Compensation
Committee to any one of the foregoing factors.
The Compensation Committee intends to limit executive compensation in
order to maximize cash flow and to ensure full deductibility of compensation in
light of the limitation on the deductibility of certain compensation in excess
of one million dollars under Section 162(m) of the Internal Revenue Code as
amended. Based on current levels of base salary, the Compensation Committee
recommended no adjustment with respect to compensation in light of these
limitations. The Compensation Committee considers it unlikely that the
limitations will apply to compensation of its executive officers in the near
future.
The Compensation Committee
of the Board of Directors
Thomas J. Hilb, Chairman
Donald A. McMahon
7
<PAGE>
PERFORMANCE GRAPH
The following graph illustrates the return that would have been realized
(assuming reinvestment of dividends) by an investor who invested $100 on
December 31, 1994 in each of (i) the Company's Common Stock, (ii) the American
Stock Exchange Market Value Index and (iii) a market capitalization of a
selected peer group of companies.
Comparison of 5-Year Cumulative Total Return*
Among Richton International Corporation
The AMEX Market Index and Peer Group Index1
[The following table was depicted as a line chart]
* $100 INVESTED ON DEC. 31, 1994 IN STOCK OR INDEX --
INCLUDING REINVESTMENT OF DIVIDENDS
FISCAL YEAR ENDING DEC. 31.
<TABLE>
<CAPTION>
Fiscal Year Ending
----------------------------------------------------------------------
Company 1994 1995 1996 1997 1998 1999
- ------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Richton International 100 94.74 126.32 177.19 256.14 403.51
Peer Group 100 133.74 208.42 245.66 171.13 175.62
AMEX Market 100 128.68 130.73 163.50 175.49 224.19
</TABLE>
- ----------
(1) Includes Central Garden & Pet Co., Central Sprinkler Corp., Hughes Supply
Inc., Lindsay Manufacturing Co., SCP Pool Corp., Toro Co. and Valmont
Industries Inc.
8
<PAGE>
RELATED TRANSACTIONS AND OTHER MATTERS
In October 1993, Fred R. Sullivan, Chairman of the Board of Directors and
Chief Executive Officer of the Company, loaned the Company $1,181,250 pursuant
to an unsecured subordinated promissory note (the "1993 Promissory Note"). In
October 1999, the Company made final payment on the remaining principal and
interest due. In March 1995, Mr. Sullivan loaned the Company $1,000,000 pursuant
to an unsecured subordinated promissory note (the "1995 Promissory Note"). The
1995 Promissory Note bears interest at a rate of 10% per annum, payable
quarterly, and provides for the payment of principal in ten semi-annual
installments. In connection with such loan, Mr. Sullivan was issued 100,000
warrants to acquire 100,000 shares of the Company's common stock at $3.00 per
share which represented the fair market value at the time of issuance. The
remaining balance on the outstanding loan, as of December 31, 1999 is $150,000.
Mr. David R. Ficca, a Director, also serves as a consultant to the
Company. He received an initial payment of $40,000 in January, 1999 and is
currently paid $5,000 per month. He received no Director's fees as a member of
the Company's Board and will retire from the Board effective on the meeting
date.
PROPOSAL 2
APPROVAL OF THE 2000 LONG-TERM INCENTIVE PLAN
The Board of Directors and stockholders of the Company have previously
approved the 1990 Long-Term Incentive Plan (the "1990 Plan") covering 415,000
shares. To date, options or stock awards covering 355,000 shares have been
granted under the 1990 Plan. The Board of Directors believes that an incentive
plan remains a desirable way to attract and retain executives and other key
employees and consultants of the Company. However, the 1990 Plan, by its terms,
expires on June 11, 2000. Accordingly, the Board has adopted, subject to
stockholder approval, the 2000 Long-Term Incentive Plan (the "Plan" or the "2000
Plan") for use in connection with the issuance of nonqualified and incentive
stock options and restricted stock grants to key employees, including officers
and consultants, who render significant services to the Company and its
subsidiaries. The 2000 Plan is substantially identical to the 1990 Plan except
that the number of shares subject to grants or awards under the 2000 Plan has
been set at 100,000. Any shares remaining unused (not subject to grants or
awards) under the 1990 Plan will not be available for grants or awards after the
adoption of the 2000 Plan. At present, approximately ten persons would be
eligible to receive grants or awards under the Plan.
The Board of Directors recommends
A vote FOR this proposal.
Summary of Material Provisions of the Plan
The purpose of the Plan is to provide management with sufficient
flexibility regarding the forms of incentive compensation that the Company will
have at its disposal in rewarding employees and consultants who render
significant services to the Company by offering key personnel equity ownership
in the Company.
The Plan, as proposed, is printed in full and attached to this Proxy
Statement as Exhibit A, and is incorporated herein by reference. The Plan
summary contained herein is qualified in its entirety by reference to the full
text of the Plan.
The Plan is administered by the Compensation Committee (the "Committee"),
which shall consist of two or more members of the Board who are "non-employee
directors" within the meaning of Rule 16b-3 of the Securities Exchange Act of
1934, as amended the ("Exchange Act"). The Committee shall have full authority,
subject to the provisions of the Plan, among other things, to determine the
persons to whom stock options or restricted stock awards (collectively,
"Awards") will be granted, to determine the exercise price of the stock options,
to determine terms and conditions of Awards and to prescribe, amend and rescind
rules and regulations relating to the Plan.
Grants of Awards may be made under the Plan to key employees and
consultants of the Company and its subsidiaries, in the discretion of the
Committee. Stock options may be either "incentive stock options," as such term
is defined in Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), or nonqualified stock options. The exercise price of a stock option may
not be less than the fair market value per share of Common Stock on the date of
grant. Stock options shall be exercisable at the times and upon the conditions
that the Committee may determine, as reflected in the applicable Award
agreement. The exercise period shall be determined by the Committee; provided,
however, that in the case of an incentive stock option, such exercise period
shall not exceed ten years from the date of grant of such incentive stock option
and in the case of nonqualified stock options, such exercise period may not
exceed ten years and one day.
9
<PAGE>
In the event that the employment or service of a grantee shall terminate
(other than by reason of death, disability or cause), all stock options that are
not exercisable at the time of such termination shall terminate and all stock
options that are exercisable at the time of such termination may be exercised
for a period of three months immediately following such termination (but in no
case after the stock options expire in accordance with their terms). In the
event that the employment or service of a grantee shall be terminated for cause,
all stock options held by the grantee at the time of such termination shall
terminate. In the event that the employment or service of a grantee shall
terminate by reason of death or disability, all stock options that are not
exercisable at the time of such termination shall terminate and all stock
options that are exercisable at the time of such termination may be exercised
for a period of one year immediately following such termination (but in no case
after the stock options expire in accordance with their terms).
Incentive stock options will be designed to comply with the provisions of
the Code, and will be subject to restrictions contained in the Code. Incentive
stock options will be granted at not less than fair market value of the stock
subject to the option on the date of grant and will extend for a term of up to
ten years. Incentive stock options granted to any person who owns more than 10%
of the combined voting power of the Company's outstanding securities must be
granted at prices that are not less than 110% of fair market value and may not
extend for more than five years.
The purchase price of Common Stock purchased upon the exercise of a stock
option may be paid in cash or, in the discretion of the Committee, by delivery
of Common Stock owned by the grantee or in combination of cash and Common Stock.
Restricted stock may be granted to participants. The Committee may provide
that a restricted stock award will vest upon the satisfaction of certain
restrictions, including restrictions based on service. In general, restricted
shares may not be sold, transferred or hypothecated, and the stock will be
placed in escrow, until restrictions are removed or expire. Grantees of
restricted stock shall have voting rights and receive dividends prior to the
time when restrictions lapse.
Awards granted under the Plan shall not be transferable otherwise than by
will or by the laws of descent and distribution. The Plan may, at any time and
from time to time, be altered, amended, suspended, or terminated by the Board of
Directors, in whole or in part; provided that, any amendment increasing the
number of shares subject to the Plan, extending the duration of the Plan or
changing categories of persons who are eligible to receive Awards under the
Plan, shall not be effective unless approved by the requisite vote of
stockholders. In addition, no amendment may be made which adversely affects any
of the rights of a grantee under any Award theretofore granted, without such
grantee's consent.
Unless terminated earlier by the Board of Directors, the Plan will expire on
March 14, 2010.
The benefits to be derived from the Plan to the eligible participating
individuals and groups cannot be estimated, as grants will be made in the sole
discretion of the Committee, based on a variety of factors.
Certain Federal Income Tax Consequences of Awards
The following discussion is a brief summary of the principal United States
Federal income tax consequences under current Federal income tax laws relating
to Awards under the Plan. This summary is not intended to be exhaustive and,
among other things, does not describe state, local or foreign income and other
tax consequences.
Options
Non-Qualified Stock Options. An optionee will not recognize any taxable
income upon the grant of a nonqualified stock option and the Company will not be
entitled to a tax deduction with respect to the grant of a nonqualified stock
option. Upon exercise, the excess of the fair market value of a share of Common
Stock on the exercise date over the option exercise price will be taxable as
ordinary income to the optionee and will be subject to applicable withholding
taxes. The Company will generally be entitled to a tax deduction at such time in
the amount of such ordinary income.
In the event of a sale of a share of Common Stock received upon the
exercise of a nonqualified stock option, any appreciation or depreciation after
the exercise date generally will be taxed as capital gain or loss and will be
long-term capital gain or loss if the holding period for such Common Stock is
more than one year.
10
<PAGE>
Incentive Stock Options. An optionee will not recognize any taxable income
at the time of grant or timely exercise of an incentive stock option and the
Company will not be entitled to a tax deduction with respect to such grant or
exercise. Exercise of an incentive stock option may, however, give rise to
taxable compensation income subject to applicable withholding taxes, and a tax
deduction to the Company, if the incentive stock option is not exercised on a
timely basis (generally, while the optionee is employeed by the Company or
within 90 days after termination of employment) or if the optionee subsequently
engages in a "disqualifying disposition," as described below. The amount by
which the fair market value of the Common Stock on the exercise date of an
incentive stock option exceeds the exercise price generally will increase the
optionee's "alternative minimum taxable income."
A sale or exchange by an optionee of shares acquired upon the exercise of
an incentive stock option more than one year after the transfer of the shares to
such optionee and more than two years after the date of grant will result in any
difference between the net sale proceeds and the exercise price being treated as
long-term capital gain (or loss) to the optionee. If such sale or exchange takes
place within two years after the date of grant of the incentive stock option or
within one year from the date of transfer of the incentive stock option shares
to the optionee, such sale or exchange will generally constitute a
"disqualifying disposition" of such shares that will have the following results:
any excess of (i) the lesser of (a) the fair market value of the shares at the
time of exercise and (b) the amount realized on such disqualifying disposition
of the shares over (ii) the option exercise price of such shares, will be
ordinary income to the optionee, subject to applicable withholding taxes, and
the Company will be entitled to a tax deduction in the amount of such income.
Any further gain or loss after the date of exercise generally will qualify as
capital gain or loss and will not result in any deduction by the Company.
Exercise with Shares. If an optionee uses previously acquired shares of
Common Stock to pay the exercise price of an option, the optionee would not
ordinarily recognize any taxable income to the extent that the number of new
shares of Common Stock received upon exercise of the option does not exceed the
number of previously acquired shares so used. If non-recognition treatment
applies to the payment for option shares with previously acquired shares, the
tax basis of the option shares received without recognition of taxable income is
the same as the basis of the shares surrendered as payment. In the case of an
incentive stock option, if a greater number of shares of Common Stock is
received upon exercise than the number of shares surrendered in payment of the
option price, such excess shares will have a zero basis in the hands of the
holder. Where a nonqualified stock option is being exercised, the option holder
will be required to include in gross income (and the Company will be entitled to
deduct) an amount equal to the fair market value of the additional shares on the
date the option is exercised less any cash paid in connection with the exercise
of another option whether or not an incentive stock option, and if, at the time
of such transfer, the stock so transferred has not been held for the holding
period required in order to receive favorable treatment under the rules
governing incentive stock options, then such transfer will be treated as a
disqualifying disposition of the shares so transferred.
Restricted Stock Grant Agreements. The grant of shares pursuant to
restricted stock grant agreements will not be taxable to the recipient until the
termination of the restricted period with respect thereto, unless the recipient
makes an election under Section 83(b) of the Code (the "Section 83(b)
election"), within 30 days after the shares are issued, to be taxed on the award
at the time it is made. If a Section 83(b) election is not made, the recipient
will recognize ordinary income in the year of termination of the restricted
period equal to the fair market value of the shares at the time of termination
of the restricted period (less any amount paid for the shares). If a Section
83(b) election is made, the recipient will recognize income in the year in which
such recipient is granted the restricted shares. The disposition of the shares
following the termination of the restricted period will result in tax
consequences similar to the disposition of shares acquired upon exercise of
nonqualified stock options.
PROPOSAL 3
CONFIRMATION OF AUDITORS
The Board of Directors of Richton has appointed Arthur Andersen & Co.
L.L.P. ("Arthur Andersen") as the Company's independent auditors for the
calendar year ending December 31, 2000 and seeks confirmation by the
stockholders with respect to this appointment. If the appointment of Arthur
Andersen is not confirmed by stockholders, such appointment will be resubmitted
to the Board of Directors for further consideration.
Arthur Andersen has acted as independent auditors of Richton since fiscal
year 1970. During the fiscal year ended December 31, 1999, Arthur Andersen
rendered audit and tax services to the Company consisting of the
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examination of the Company's financial statements and consultation and
assistance in connection with filing the Company's Annual Report on Form 10-K
with the Securities and Exchange Commission.
One or more representatives of Arthur Andersen will be available at the
Meeting to respond to appropriate questions, and those representatives will also
have an opportunity to make a statement if they desire to do so.
The Board of Directors recommends
a vote FOR this proposal.
SUBMISSION OF STOCKHOLDER PROPOSALS FOR 2001
ANNUAL MEETING OF STOCKHOLDERS
Under the proxy rules of the Securities and Exchange Commission,
stockholder proposals intended for inclusion in next year's proxy statement
pursuant to Rule 14a-8 under the Exchange Act of 1934, must be received by the
Company by November 22, 2000. These proposals should be sent to the Secretary of
the Company at 767 Fifth Avenue, New York, New York 10153. In order for
stockholder proposals made outside of Rule 14a-8 under the Exchange Act to be
considered "timely" within the meaning of Rule 14a-4(c) under the Exchange Act,
such proposals must be received by the Company at the address set forth in the
previous sentence by February 5, 2001.
MISCELLANEOUS
Other Matters
Management knows of no matters other than the foregoing to be brought
before the Meeting, but if such other matters properly come before the Meeting
the persons named in the accompanying form of proxy will vote such proxy on such
matters in accordance with their best judgment.
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors and executive officers, and persons who own more than 10% of the
registered class of our equity securities, to file reports of ownership of, and
transactions in, our securities with the Securities and Exchange Commission.
Such directors, executive officers and 10% shareholders are also required to
furnish us with copies of all Section 16(a) forms they file. Based solely on a
review of the copies of such forms we received, and on written representations
from certain reporting persona, we believe that all Section 16(a) filing
requirements applicable to our directors, executive officers and 10%
shareholders were complied with during the year.
Annual Report on Form 10-K
A copy of the Company's Annual Report, which includes a copy of Form 10-K
for the fiscal year ended December 31, 1999, accompanies this Proxy Statement.
The Company will provide copies of any exhibit to the Form 10-K to stockholders,
upon request of such person and such person's payment of the Company's
reasonable expenses of furnishing such exhibit.
Solicitation of Proxies
The entire cost of the solicitation of proxies will be borne by the
Company. The Company has retained Georgeson Shareholder Communications, Inc. to
solicit proxies in the form enclosed and will pay such firm a fee of
approximately $5,500. In addition, proxies may be solicited by directors,
officers and regular employees of Richton, without extra compensation, by
telephone, facsimile transmission, mail or personal interview. The Company will
reimburse brokerage houses and other custodians, nominees and fiduciaries for
their reasonable expenses for sending proxies and proxy material to the
beneficial owners of its Common Stock.
EVERY STOCKHOLDER, WHETHER OR NOT HE OR SHE EXPECTS TO ATTEND THE
ANNUAL MEETING IN PERSON, IS URGED TO EXECUTE THE PROXY AND RETURN
IT PROMPTLY IN THE ENCLOSED BUSINESS REPLY ENVELOPE.
By Order of the Board of Directors
FRED R. SULLIVAN
Chairman of the Board
New York, New York
March 22, 2000
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EXHIBIT A
RICHTON INTERNATIONAL CORPORATION
2000 LONG-TERM INCENTIVE PLAN
PURPOSE
The purpose of the 2000 Long-Term Incentive Plan (the "2000 Plan" or
"Plan") of Richton International Corporation (the "Company") is to provide an
incentive to key employees, directors and consultants whose present and
potential contributions to the Company and its Subsidiaries (as such term is
defined in Section 2 below) are or will be important to the success of the
Company by affording them an opportunity to acquire a proprietary interest in
the Company. It is intended that this purpose will be effected through (a) the
granting of stock options and (b) the grant of shares of Common Stock, $.10 par
value per share, of the Company ("Common Stock"), pursuant to restricted stock
grant agreements (collectively, such options and grants of shares are referred
to herein as "Awards"). Stock options may be granted under the 2000 Plan which
qualify as "Incentive Stock Options" under Section 422 of the Internal Revenue
Code of 1986, as it may be hereafter amended (the "Code"). Such options are
sometimes referred to as an "ISO" or collectively as "ISOs." The 2000 Plan is
intended to replace the Company's 1990 Long Term Incentive Plan, which shall
expire by its terms on June 11, 2000.
1. ELIGIBILITY
Awards may be made or granted to key employees and consultants who are
deemed to have rendered significant services to the Company or its Subsidiaries
and who are deemed to have the potential to contribute to the future success of
the Company (such eligible persons being referred to herein as "Eligible
Participants"). The term "employees" shall include officers who are employees of
the Company or of a Subsidiary, as well as other employees of the Company and
its Subsidiaries. A director of the Company or of any Subsidiary who is not also
an employee of the Company or of one of its Subsidiaries will not be eligible to
receive any Awards under the Long-term Plan. No ISO shall be granted to any
person who is not an employee of the Company or a Subsidiary at the time of
grant. No ISO shall be granted to an employee who, at the time the option is
granted, owns stock possessing more than 10% of the total combined voting power
of all classes of capital stock of the employer corporation (as such term is
used in the Code) or any Parent or Subsidiary of the employer corporation,
provided, however, that an ISO may be granted to such an employee, if at the
time such ISO is granted, the option price is at least 110 percent of the fair
market value of stock subject to the ISO on the date of grant (as determined
pursuant to Subsection 6(a) hereof) and such ISO, by its terms, is not
exercisable after the expiration of five years from the date such option is
granted. The terms "Subsidiary" and "Parent" as used herein shall have the
meanings given them in Section 424 of the Code. Awards may be made to employees
or consultants who hold or have held options, or shares under this 2000 Plan or
any other plans of the Company.
2. STOCK SUBJECT TO THE PLAN
The shares that may be issued upon exercise of options and rights and
which may be sold under the 2000 Plan shall not exceed in the aggregate 100,000
shares of Common Stock, as adjusted to give effect to the anti-dilution
provisions contained in Section 8 hereof. Such shares may be authorized and
unissued shares, or treasury shares purchased by the Company and reserved for
issuance under the 2000 Plan. If a stock option for any reason expires or is
terminated without having been exercised in full, or if shares issued pursuant
to restricted stock grant agreements are forfeited to the Company in accordance
with the terms thereof, those shares relating to an unexercised stock option or
shares which have been forfeited shall again become available for grant under
the 2000 Plan. The total number of shares of Common Stock subject to Awards
which are granted to any Eligible Participant during any tax year of the Company
shall not exceed 100,000 shares of Common Stock (subject to adjustment as
provided herein).
3. AWARDS UNDER THE PLAN
Awards under the 2000 Plan may be of two types. They are: "stock options,"
and "restricted stock grants." An option, including an ISO, is a right to
purchase Common Stock in accordance with Section 6 hereof. A "restricted stock
grant" is the grant of Common Stock, which is nontransferable, and subject to
substantial risk of forfeiture, until specific conditions, based on continuing
employment, are met.
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4. ADMINISTRATION
(a) Procedure. The 2000 Plan shall be administered by a Committee of two
or more persons established by the Board of Directors, each member of which
shall be a "non-employee director" as such term is or shall be defined in Rule
16b-3 (or any successor provision to such rule) promulgated by the Securities
and Exchange Commission under the Securities Exchange Act of 1934, as amended
(the "Committee") and an "outside director" as defined in Section 162(m) of the
Internal Revenue Code of 1986 as amended. The 2000 Plan is intended, to the
extent applicable, to satisfy the requirements of Section 162(m) of the Code,
and shall be interpreted in a manner consistent with the requirements thereof.
Committee members shall serve for such term as the Board of Directors shall
determine, and shall be subject to removal at any time by the Board of
Directors.
(b) Powers of the Committee. Subject to the provisions of the 2000 Plan,
the Committee shall have the authority in its discretion: (i) to determine, upon
review of relevant information, the fair market value of the Common Stock; (ii)
to determine the exercise price per share of stock options to be granted; (iii)
to determine the Eligible Participants to whom, and time or times at which,
Awards shall be granted and the number of shares to be issuable pursuant to each
stock option or restricted stock grant agreement; (iv) to construe and interpret
the 2000 Plan; (v) to prescribe, amend and rescind rules and regulations
relating to the 2000 Plan; (vi) to determine the terms and provisions of each
Award (which need not be identical); and (vii) to make all other determinations
necessary to or advisable for the administration of the 2000 Plan.
5. DURATION OF THE PLAN
The 2000 Plan shall be subject to the affirmative vote of stockholders
holding a majority of the number of shares of Stock of the Company entitled to
vote. The 2000 Plan shall remain in effect (with respect to grants of Awards)
for a term of ten (10) years from March 15, 2000 (the date of adoption by the
Board of Directors) unless sooner terminated under Section 16 hereof, provided,
however, that the terms of the 2000 Plan shall thereafter remain in effect with
respect to Awards granted during such period which have not expired, or whose
forfeiture provisions have not lapsed, prior to the termination of the 2000
Plan. Notwithstanding any of the foregoing to the contrary, the Board of
Directors (but not the Committee) shall have the authority to amend the 2000
Plan pursuant to Section 17 hereof, provided, however, that Awards already made
shall remain in full force and effect as if the 2000 Plan had not been amended
or terminated.
6. OPTIONS
Options shall be evidenced by stock option agreements in such form, and
not inconsistent with the 2000 Plan, as the Committee shall approve from time to
time, which agreements shall contain in substance the following terms and
conditions:
(a) Option Price; Number of Shares. The option price, which shall be
approved by the Committee, shall in no event be less than one hundred percent
(100%) of the fair market value of the Common Stock at the time the option is
granted. The fair market value of the Common Stock, for the purposes of the 2000
Plan, shall mean: (i) if the Common Stock is traded on a national securities
exchange or on the NASDAQ National Market System ("NMS"), the per-share closing
price of the Common Stock on the principal securities exchange (presently the
American Stock Exchange) on which they are listed or on NMS, as the case may be,
on the date of grant (or if there is no closing price for such date of grant,
then the last preceding business day on which there was a closing price); or
(ii) if the Common Stock is not traded on a national securities exchange or the
NMS but is traded in the over-the-counter market and quotations are published on
the NASDAQ quotation system (but not on NMS), the mean between the per-share
closing bid and asked prices of the Common Stock on the date of grant as
reported by NASDAQ (or if there are no closing bid and asked prices for such
date of grant, then the last preceding business day on which there were reported
closing bid and asked prices); or (iii) if the Common Stock is traded in the
over-the--counter market, but bid and asked quotations are not published on
NASDAQ, the mean between the closing bid and asked prices per share for the
Common Stock as furnished by a broker-dealer which regularly furnishes price
quotations for the Common Stock.
The option agreement shall specify the total number of shares to which it
pertains and whether such options are ISOs or are not ISOs. With respect to ISOs
granted under the 2000 Plan, the aggregate fair market value (determined at the
time an ISO is granted) of the shares of Common Stock with respect to which ISOs
are
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exercisable for the first time by such employee during any calendar year shall
not exceed $100,000 under all plans of the Company or its Parents or
Subsidiaries. To the extent the aggregate fair market value (determined at the
time of grant) of stock with respect to which ISOs first become exercisable by
an option holder during any calendar year exceeds $100,000, such options will be
treated as non-qualified stock options.
(b) Restrictions on Transfer and Exercise. Options issued pursuant to the
Plan (i) shall not be transferable other than by will or the laws of descent and
distribution and (ii) shall be exercisable during the optionee's life only by
the optionee or, in case of the optionee's disability, the optionee's guardian
or legal representative.
(c) Terms and Conditions. Subject to the provisions of paragraph 6(a), at
the time an option is granted, the Committee will determine the terms and
conditions to be satisfied before shares may be purchased, including the dates
on which shares subject to the option may first be purchased. (The period from
the date of grant of an option until the date on which such option may first be
exercised is referred to herein as the "Waiting Period.") At the time an option
is granted, the Board of Directors shall fix the period within which it may be
exercised, which for an ISO, shall not be more than ten (10) years from the date
of grant or, for a non-ISO, shall not be more than ten (10) years and one (1)
day from the date of grant. (Any of such periods is referred to herein as the
"Exercise Period.")
(d) Form and Time of Payment. Stock purchased pursuant to exercise of an
option shall be paid for at the time of purchase either in cash or by certified
check or, in the discretion of the Committee, as set forth in the stock option
agreement (i) in lieu of cash, through the delivery of shares of Common Stock
valued at their fair market value on the date of exercise, or (ii) in a
combination of cash and shares of Common Stock. Upon receipt of payment, the
Company shall, without transfer or issue tax to the option holder or other
person entitled to exercise the option, deliver to the option holder (or such
other person) a certificate or certificates for the shares so purchased.
(e) Effect of Termination or Death. In the event that an option holder
ceases to be an employee or consultant of the Company or of any of its
Subsidiaries for any reason other than permanent disability (as such term may be
defined in the Code and as determined by the Committee) or death, any option,
including any unexercised portion thereof, which was otherwise exercisable on
the date of termination, shall expire unless exercised within a period of up to
three months from the date of termination, but in no event may the option be
exercised after the expiration of the Exercise Period; provided, however, that
if the Committee shall determine that an option holder shall have been
discharged for cause, options granted and not yet exercised shall terminate
immediately and be null and void as of the date of termination. In the event of
the death of an option holder during the three month period after termination
(except termination for cause), the option shall be exercisable by his or her
personal representatives, heirs or legatees to the same extent that the option
holder could have exercised the option if he or she had not died, for up to
three months from the date of death, but in no event after the expiration of the
Exercise Period. In the event of the termination by reason of permanent
disability of an option holder while an employee or consultant of the Company or
of any Subsidiary, that portion of the option granted to such employee or
consultant which had become exercisable by the date of termination shall
continue to be exercisable for up to twelve (12) months after the date of
permanent disability, but in no event may the option be exercised after the
expiration of the Exercise Period. In the event of the death of an option holder
while an employee or consultant of the Company or any of its Subsidiaries, or
during the twelve (12) month period after the date of permanent disability of
the option holder, that portion of the option which had become exercisable on
the date of death shall be exercisable by his or her personal representatives,
heirs or legatees for up to twelve (12) months after the date of death, but in
no event may the option be exercised after expiration of the Exercise Period.
Except as the Committee shall determine otherwise, in the event an option holder
ceases to be an employee or consultant of the Company or of any Subsidiary for
any reason, including death, prior to the lapse of the Waiting Period, his or
her option shall terminate and be null and void.
(f) Other Provisions. Each option granted under the 2000 Plan may contain
such other terms, provisions and conditions not inconsistent with the 2000 Plan
as may be determined by the Committee.
7. RESTRICTED STOCK GRANTS
The Committee may authorize, in its discretion, the grant of shares of
Common Stock to Eligible Participants pursuant to restricted stock grant
agreements in such form, and not inconsistent with the 2000 Plan, as the Board
of Directors shall approve from time to time and shall include substantially the
following terms and conditions as the Board shall determine:
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(a) Eligibility. Eligible Participants with a minimum of six (6) months of
continuous prior service to the Company at the date of grant, shall be eligible
to receive restricted stock grants in consideration of such services, in such
amounts and with such forfeiture provisions (subject to the other provisions of
this Section 7) as the Committee shall determine.
(b) Restrictions Against Disposition. Shares of Common Stock acquired by
an Eligible Participant pursuant to a restricted stock grant agreement under the
2000 Plan shall not be sold, transferred, or otherwise disposed of and shall not
be pledged or otherwise hypothecated, except as provided in the restricted stock
grant agreement. These restrictions on any such sale, transfer or other
disposition, or any pledge or other hypothecation shall hereinafter be referred
to as "restrictions against disposition." Certificates for all shares issued
pursuant to restricted stock grants shall be issued in the recipient's name but
shall be held in escrow by the Company, together with stock powers executed by
the recipient transferring such shares back to the Company, pending lapse of the
restrictions against disposition. For each recipient of a restricted stock
grant, the Company shall have an escrow account (the "Escrow Account")
consisting of all shares granted pursuant to restricted stock grant agreements,
plus any additional shares issued pursuant to stock dividends thereon, minus
shares as to which the restrictions against disposition have lapsed.
(c) Termination of Service and Forfeiture of Shares. The restricted stock
grant agreements shall provide that if employment terminates other than by
retirement with the consent of the Company or by death, then the shares subject
to the restricted stock grant agreement as to which the restrictions against
disposition have not lapsed, (the "Restricted Period") shall be forfeited to the
Company immediately without payment of any consideration, in accordance with the
restricted stock grant agreement.
(d) Forfeiture of Shares Upon Death or Retirement. In the event of the
death of a recipient of a restricted stock grant while an employee of the
Company or any Subsidiary, or his retirement with the consent of the Company, in
either case after the six-month period referred to in Subsection 9(c) herein,
all shares subject to any restricted stock grant shall remain the property of
the recipient or his estate, as the case may be, and the restrictions against
disposition shall lapse at the rate stated in the restricted stock grant
agreement.
(e) Voting Rights and Dividends. Recipients of restricted stock grants
shall be entitled to vote all shares covered by such grants and to receive any
dividends (except that stock dividends paid, or shares of stock issuable upon
stock splits or distributions, with respect to shares as to which restrictions
have not lapsed, shall be added to the recipient's Escrow Account and shall be
either distributed or forfeited together with the shares as to which such shares
were initially issued pursuant to stock dividends, distributions or stock
splits).
8. ANTI-DILUTION PROVISIONS AND
ADJUSTMENTS ON RECAPITALIZATION
In the event of any change in the capital structure or business of the
Company by reason of any stock dividend or extraordinary dividend, stock split
or reverse stock split, recapitalization, reorganization, merger, consolidation,
split-up, combination or exchange of shares, non-cash distributions with respect
to its outstanding Common Stock or capital stock other than Common Stock,
reclassification of the Company's capital stock, any sale or transfer of all or
part of the Company's assets or business, or any similar change affecting the
Company's capital structure or business or the capital structure of any business
of any subsidiary or a change in control of the Company, as determined by the
Committee or the Board, and as such Committee or the Board determines in good
faith that an adjustment is necessary or appropriate under the Plan to prevent
substantial dilution or enlargement of the rights granted to, or available for,
Eligible Participants under the Plan or as otherwise necessary to reflect the
change, then the aggregate number and kind of shares of Common Stock which may
be issued under the Plan, the number and kind of shares (including shares of
another issuer) subject to outstanding option under the Plan and the option
price thereof shall be appropriately adjusted consistent with such change in
such manner as the Committee or the Board may deem equitable to prevent
substantial dilution or enlargement of the rights granted to, or available for,
Eligible Participants under the Plan or as otherwise necessary to reflect the
change, and any such adjustment determined by the Committee or the Board in good
faith shall be binding and conclusive on the Company and all Eligible
Participants and their respective heirs, executors, administrators, successors
and assigns. In connection with any event described in this paragraph, the
Committee or the Board may provide, in its sole discretion, for the cancellation
of any outstanding options and payment in cash or other property in exchange
therefor. Notice of any adjustment shall be given by the Committee or the Board
to each Eligible Participant whose option has been
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adjusted and such adjustment (whether or not such notice is given) shall be
effective and binding for all purposes of the 2000 Plan. Any fractional shares
resulting from the foregoing adjustments will be eliminated. In the event the
Committee shall disagree with the Board with respect to the foregoing
adjustments, the Board's determination will be final and conclusive.
9. ACCELERATION
(a) Notwithstanding any contrary waiting period in any stock option
agreement, or any Restricted Period with respect to any shares issued pursuant
to any restricted stock grant agreement, or in the 2000 Plan, but subject to any
determination by the Committee to provide otherwise at the time such Award is
granted or subsequent thereto, each outstanding option granted under the 2000
Plan shall become exercisable in full for the aggregate number of shares covered
thereby, and each share issued pursuant to a restricted stock grant agreement
shall vest and be distributed out of the Escrow Account unconditionally on the
first day following the occurrence of any of the following: (a) the approval by
the stockholders of the Company of an Approved Transaction; (b) a Control
Purchase; or (c) a Board Change.
(b) For the purposes of this Section 9, the following definitions shall
have the following meanings:
(i) An "Approved Transaction" shall mean any of the following
transactions which are outside the control of the Eligible Participation:
(A) any consolidation or merger of the Company in which the Company is not
the continuing or surviving corporation or pursuant to which shares of
Common Stock would be converted into cash, securities or other property,
other than a merger of the Company in which the holders of Common Stock
immediately prior to the merger have the same proportionate ownership of
common stock of the surviving corporation immediately after the merger, or
(B) any sale, lease, exchange, or other transfer (in one transaction or a
series of related transactions) of all, or substantially all, of the
assets of the Company, or (C) the adoption of any plan or proposal for the
liquidation or dissolution of the Company.
(ii) A "Control Purchase" shall mean circumstances in which any
person (as such term is defined in Sections 13(d)(3) and 14(d)(2) of the
Exchange Act), corporation or other entity (other than the Eligible
Participant or any group which includes such Eligible Participant, the
Company or any employee benefit plan sponsored by the Company or any
Subsidiary) (A) shall purchase any Common Stock (or securities convertible
into the Company's Common Stock) for cash, securities or any other
consideration pursuant to a tender offer or exchange offer, without the
prior consent of the Board of Directors, or (B) shall become the
"beneficial owner" (as such term is defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing twenty-five percent (25%) or more of the combined voting
power of the then outstanding securities of the Company ordinarily (and
apart from rights accruing under special circumstances) having the right
to vote in the election of directors (calculated as provided in paragraph
(d) of such Rule 13d-3 (or any successor rule) in the case of rights to
acquire the Company's securities).
(iii) A "Board Change" shall mean circumstances in which (A) a
change in control is required to be reported under Regulation 14A (or any
successor regulation) under the Exchange Act or (B) during any period of
twenty-seven consecutive months or less, individuals who at the beginning
of such period constitute the entire Board shall cease for any reason to
constitute a majority thereof unless the election, or the nomination for
election by the Company's stockholders, of each such new director was
approved by a vote of at least a majority of the directors then still in
office. Notwithstanding the preceding sentence, no new director shall be
considered a member of such majority whose initial assumption of office
occurs as a result of any actual or threatened election contest with
respect to the election or removal of directors by or on behalf of a
person (as such term is defined in (ii) above) other than the Board.
10. CONTINUATION OF RELATIONSHIP; LEAVE OF ABSENCE
(a) Nothing in the 2000 Plan or any Award made hereunder shall interfere
with or limit in any way the right of the Company or of any Subsidiary to
terminate any Eligible Participant's employment or consultancy at any time, nor
confer upon any Eligible Participant any right to continue any such relationship
with the Company or Subsidiary.
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(b) For purposes of the 2000 Plan, a transfer of an employee from the
Company to a Subsidiary or vice versa, or from one Subsidiary to another, or a
leave of absence duly authorized by the Company shall not be deemed a
termination of employment or consultancy or a break in an applicable period, as
the case may be. In the case of an approved leave of absence, the Committee may
make such provisions with respect to continuance of options or forfeiture of
shares previously granted pursuant to restricted stock grant agreements while on
leave from the Company or a Subsidiary as the Committee may deem equitable.
11. GENERAL RESTRICTION
Each Award made under the 2000 Plan shall be subject to the requirement
that, if at any time the Committee shall determine, in its sole and subjective
discretion, that the registration, qualification or listing of the shares
subject to such Award upon a securities exchange or under any state or federal
law, or the consent or approval of any government regulatory body, is necessary
or desirable as a condition of, or in connection with, the granting or exercise
of such Award, the Company shall not be required to issue such shares unless
such registration, qualification, listing, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Committee.
Nothing in the 2000 Plan or any agreement or grant hereunder shall obligate the
Company to effect any such registration, qualification or listing.
12. RIGHTS AS A STOCKHOLDER
The holder of a stock option shall have no rights as a stockholder with
respect to any shares covered by the stock option until the date of issuance of
a stock certificate to him for such shares related to the exercise or discharge
thereof.
13. NON-ASSIGNABILITY OF STOCK OPTIONS
No stock option shall be assignable or transferable by an Eligible
Participant except by will or by the laws of descent and distribution and,
during the lifetime of an Eligible Participant, may only be exercised by him or,
in the case of disability, by a guardian or legal representative.
14. WITHHOLDING TAXES
Whenever under the 2000 Plan shares are to be issued in satisfaction of
stock options granted thereunder, or pursuant to restricted stock grants, the
Company shall have the right to require the Eligible Participant to remit to the
Company an amount sufficient to satisfy federal, state and local withholding tax
requirements prior to the delivery of any certificate or certificates for such
shares or at such later time as the Company may determine that such taxes are
due. Whenever under the 2000 Plan payments are made in cash, such payment shall
be net of an amount sufficient to satisfy federal, state and local withholding
tax requirements.
15. NON-EXCLUSIVITY OF THE PLAN
Neither the adoption of the 2000 Plan by the Board of Directors nor any
provision of the 2000 Plan shall be construed as creating any limitations on the
power of the Board of Directors (but not the Committee) to adopt such additional
compensation arrangements as it may deem desirable, including, without
limitation, the granting of the stock options otherwise than under the 2000
Plan, and such arrangements may be either generally applicable or applicable
only in specific cases.
16. AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN
The Board of Directors (but not the Committee) may at any time amend,
alter, suspend or discontinue the 2000 Plan, but no amendment, alteration,
suspension or discontinuation shall be made which would impair the rights of any
recipient of a stock option or Common Stock pursuant to a restricted stock grant
under any agreement theretofore entered into hereunder, without his consent, or
which, without the requisite vote of the stockholders of the Company approving
such action, would:
(a) except as is provided in Section 9 of the 2000 Plan, increase the
total number of shares of stock reserved for the purposes of the 2000 Plan or
increase the number of shares subject to Awards which may be granted to any
Eligible Participant during any tax year of the Company; or
6
<PAGE>
(b) extend the duration of the 2000 Plan; or
(c) change the category of persons who can be Eligible Participants under
the 2000 Plan.
No amendment to the 2000 Plan shall be effective without Stockholder
approval if the Board of Directors determines that such approval is necessary or
appropriate in order to satisfy Section 162 (m) of the Code.
17. NON-UNIFORM DETERMINATIONS
The Committee's determinations under the 2000 Plan, including without
limitation, (i) the determination of the Eligible Participants to receive
Awards, (ii) the form, amount and timing of such Awards and (iii) the terms and
provisions of Awards and the instruments evidencing the same, need not be
uniform and may be made by it selectively among Eligible Participants who
receive, or who are eligible to receive, Awards under the 2000 Plan, whether or
not such Eligible Participants are similarly situated.
18. LIMITATIONS ON EXERCISE
Notwithstanding anything to the contrary contained in the 2000 Plan, any
agreement evidencing any Award hereunder may contain such provisions as the
Committee deem appropriate to ensure that the penalty provisions of Section 4999
of the Code, or any successor thereto, will not apply to any stock or cash
received by the holder from the Company.
19. GOVERNING LAW
The 2000 Plan shall be governed by, and construed in accordance with, the
laws of the State of Delaware.
20. EXCULPATION OF COMMITTEE MEMBERS
Each member of the Committee and each officer and employee of the Company
shall be fully justified in relying or acting in good faith upon any information
furnished in connection with the administration of the Plan by any appropriate
person or persons other than such person. In no event shall any person who is or
shall have been a member of the Committee or an officer or employee of the
Company be held liable for any determination made or other action taken or any
omission to act reliance upon any such information, or for any action (including
the furnishings of information) taken or any failure to act, if in good faith.
21. FINALITY OF DETERMINATIONS
Each determination, interpretation, or other action made or taken pursuant
to the provisions of the Plan by the Committee shall be final and shall be
binding and conclusive for all purposes.
7
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PROXY
RICHTON INTERNATIONAL CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
For the Annual Meeting of Stockholders called for April 26, 2000
The undersigned hereby appoints Marshall Bernstein and CORNELIUS F. GRIFFIN and
each of them as proxies with full power of substitution to represent the
undersigned at the Annual Meeting of Stockholders of RICHTON INTERNATIONAL
CORPORATION (the "Company"), to be held on April 26, 2000 at 11:00 a.m., at the
New York Athletic Club, 180 Central Park South, New York, New York, or at any
adjournments or postponements thereof, and to vote in the name and on behalf of
the undersigned all shares which the undersigned would be entitled to vote as
fully and with the same effect as the undersigned might do if personally
present.
Election of three directors as set forth in accompanying proxy statement.
Nominees: Richard P. Barnitt
Stanley J. Leifer
Donald A. McMahon
You are encouraged to specify your choices by marking the appropriate boxes, SEE
REVERSE SIDE, but you need not mark any boxes if you wish to vote in accordance
with the Board of Directors' recommendations.
PLEASE SIGN AND DATE THIS CARD ON THE REVERSE SIDE
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FOLD AND DETACH
<PAGE>
- ------------------------------------------------------------
The Board of Directors recommends a vote FOR the election
of the directors and FOR Item 2 and Item 3 below.
- ------------------------------------------------------------
1. Election of Directors FOR WITHHELD
(See Reverse) [] []
2. Proposal to approve and adopt FOR AGAINST ABSTAIN
Richton International [] [] []
Corporation 2000 Long-Term
Incentive Plan
3. Ratification of appointment of FOR AGAINST ABSTAIN
the Independent Auditors [] [] []
For, except vote withheld
from the following nominee:
- ---------------------------
Please mark
your votes as
in this example [x]
This proxy, when properly executed, will be voted in the manner directed herein.
If no direction is made, this proxy will be voted FOR the election of the
directors and FOR Item 2 and Item 3.
- --------------------------------------------------------------------------------
The proxies are hereby authorized to vote in their discretion upon such
other matters as may properly come before the meeting and any adjournments
or postponements thereof.
SIGNATURE(S)--------------------------------------------------DATE----------2000
Note: Please sign exactly as your name appears hereon. Joint owners should each
sign. When signing as an attorney, executor, administrator, trustee or
guardian, please give full title as such.
- --------------------------------------------------------------------------------
FOLD AND DETACH
