INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
ALLOU HEALTH & BEAUTY CARE, INC.
------------------------------------------------
(Name of Registrant as Specified in its Charter)
ALLOU HEALTH & BEAUTY CARE, INC.
------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
[_] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of security to which transaction applies:
-------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
-------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------
[X] 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:
$125
-------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
Preliminary Proxy Statement
-------------------------------------------------------------
3) Filing Party:
Registrant
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4) Date Filed:
July 5, 1996
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<PAGE>
ALLOU HEALTH & BEAUTY CARE, INC.
50 Emjay Boulevard
Brentwood, New York 11717
----------------------------------------
Notice of Annual Meeting of Stockholders
September 11, 1996
----------------------------------------
NOTICE IS HEREBY GIVEN that the 1996 Annual Meeting of Stockholders (the
"Meeting") of ALLOU HEALTH & BEAUTY CARE, INC., a Delaware corporation (the
"Company"), will be held in the Boardroom of the American Stock Exchange located
at 86 Trinity Place, New York, New York 10006, on Wednesday, September 11, 1996,
10:00 a.m., to consider and act upon the following:
1. The election of the seven (7) persons named in the accompanying
Proxy Statement to serve as the Board of Directors of the
Company until the next Annual Meeting of Stockholders and until
their successors are elected and qualified;
2. Approval of the Company's 1995 Nonqualified Stock Option Plan,
which provides for up to 500,000 shares of the Company's Class B
Common Stock to be issued to key employees (including officers
and directors) of the Company, as more fully set forth in the
Proxy Statement;
3. Approval of the Company's 1996 Stock Option Plan, which provides
for up to 1,000,000 shares of the Company's Class A Common Stock
to be issued to employees (including officers and directors) of
the Company, as more fully set forth in the Proxy Statement;
4. Approval of an amendment to the Company's Certificate of
Incorporation (i) to confirm that the shares of Class B Common
Stock are convertible at any time into shares of Class A Common
Stock on a one-for-one basis, which previously has been included
in the Company's public disclosures; (ii) to provide that the
shares of Class B Common Stock are freely transferable; and
(iii) to increase the authorized Class B Common Stock from
1,700,000 to 2,200,000 shares; and
5. The transaction of such other business as may properly come
before the Meeting or any adjournments thereof.
Only stockholders of record of the Class A Common Stock, $.001 par value, and
the Class B Common Stock, $.001 par value, of the Company at the close of
business on July 18, 1996 are entitled to receive notice of and to attend the
Meeting. At least 10 days prior to the Meeting, a complete list of the
stockholders entitled to vote will be available for inspection by any
stockholder, for any purpose germane to the Meeting, during ordinary business
hours, at 1211 Avenue of the Americas, 17th floor, New York, New York 10036. If
you do not expect to be present, you are requested to fill in, date and sign the
enclosed Proxy, which is solicited by the Board of Directors of the Company, and
to mail it promptly in the enclosed envelope. In the event you decide to attend
the Meeting in person, you may, if you desire, revoke your Proxy and vote your
shares in person.
Dated: July 19, 1996
By Order of the Board of Directors
JACK JACOBS
Secretary
IMPORTANT
---------
THE RETURN OF YOUR SIGNED PROXY AS PROMPTLY AS POSSIBLE WILL GREATLY
FACILITATE ARRANGEMENTS FOR THE MEETING. NO POSTAGE IS REQUIRED IF THE PROXY IS
RETURNED IN THE ENVELOPE ENCLOSED FOR YOUR CONVENIENCE AND MAILED IN THE UNITED
STATES.
<PAGE>
ALLOU HEALTH & BEAUTY CARE, INC.
50 Emjay Boulevard
Brentwood, New York 11717
----------------------------------------
Proxy Statement
Annual Meeting of Stockholders
September 11, 1996
----------------------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Allou Health & Beauty Care, Inc., a
Delaware corporation (the "Company"), to be voted at the Annual Meeting of
Stockholders of the Company (the "Meeting") which will be held in the Boardroom
of the American Stock Exchange, 86 Trinity Place, New York, New York 10006 on
Wednesday, September 11, 1996 at 10:00 A.M., local time, and any adjournment or
adjournments thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting of Stockholders and in this Proxy Statement.
The principal executive offices of the Company are located at 50 Emjay
Boulevard, Brentwood, New York 11717. The approximate date on which this Proxy
Statement and accompanying Proxy will first be sent or given to stockholders is
July 25, 1996.
A Proxy, in the accompanying form, which is properly executed, duly
returned to the Company and not revoked will be voted in accordance with the
instructions contained therein and, in the absence of specific instructions,
will be voted in favor of the proposal and in accordance with the judgment of
the person or persons voting the proxies on any other matter that may be brought
before the Meeting. Each such Proxy granted may be revoked at any time
thereafter by writing to the Secretary of the Company prior to the Meeting, by
execution and delivery of a subsequent proxy or by attendance and voting in
person at the Meeting, except as to any matter or matters upon which, prior to
such revocation, a vote shall have been cast pursuant to the authority conferred
by such Proxy. The cost of soliciting proxies will be borne by the Company.
Following the mailing of the proxy materials, solicitation of proxies may be
made by officers and employees of the Company, or anyone acting on their behalf,
by mail, telephone, telegram or personal interview.
VOTING SECURITIES
Stockholders of record as of the close of business on July 18, 1996 (the
"Record Date") will be entitled to notice of, and to vote at, the Meeting or any
adjournments thereof. On the Record Date, there were 4,552,225 outstanding
shares of Class A Common Stock, $.001 par value ("Class A Common Stock"), and
1,200,000 outstanding shares of Class B Common Stock, $.001 par value ("Class B
Common Stock," together with the Class A Common Stock, are hereinafter
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<PAGE>
collectively referred to as, the "Common Stock"). Each holder of Class A Common
Stock is entitled to one vote for each share held by such holder and each holder
of Class B Common Stock is entitled to five votes for each share held by such
holder. By virtue of their holdings of Class A Common Stock and Class B Common
Stock, the officers and directors of the Company will be able to pass the four
proposals being submitted at the Meeting. The presence, in person or by proxy,
of the holders of a majority of the outstanding shares of Common Stock is
necessary to constitute a quorum at the Meeting.
Proxies submitted that are voted to abstain with respect to the matter
will be considered cast with respect to that matter. Proxies subject to broker
non-votes with respect to such matter will not be considered cast with respect
to that matter.
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth as of July 18, 1996 certain information
regarding the ownership of voting securities of the Company by each stockholder
known to the management of the Company to be (i) the beneficial owner of more
than 5% of the Company's outstanding Common Stock, (ii) the directors during the
last fiscal year and nominees for director of the Company, (iii) the executive
officers named in the Summary Compensation table herein under "Executive
Compensation" and (iv) all executive officers and directors as a group. The
Company believes that the beneficial owners of the Common Stock listed below,
based on information furnished by such owners, have sole investment and voting
power with respect to such shares.
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial Ownership Percent of
Name and ----------------------- ----------
Principal Position Class B Class A Class B Class A
------------------ ------- ------- ------- -------
<S> <C> <C> <C> <C>
Victor Jacobs 687,500(1)(2) 70,100(3)(4) 52.88% 1.52%
Chairman of the Board and
Chief Executive Officer
Herman Jacobs 393,750(1)(2) 85,000(3)(5) 30.29% 1.83%
President and
Chief Operating Officer
Jack Jacobs 393,750(1)(2) 85,000(3)(6) 30.29% 1.83%
Vice President of Purchasing and
Secretary
Ramon Montes 25,000(2) 123,500(3)(7) 2.08% 2.64%
Executive Vice President
David Shamilzadeh -- 77,750(3)(8) -- 1.68%
Senior Vice President of Finance and
Chief Financial Officer
Sol Naimark -- -- -- --
Jeffrey Berg -- -- -- --
FMR Corp. -- 340,500(10) -- 7.48%
82 Devonshire Street
Boston, MA 02109
Heartland Advisors, Inc. -- 362,900(11) -- 7.97%
790 North Milwaukee Street
Milwaukee, WI 53202
</TABLE>
-4-
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial Ownership Percent of
Name and ----------------------- ----------
Principal Position Class B Class A Class B Class A
------------------ ------- ------- ------- -------
<S> <C> <C> <C> <C>
Kenneth B. Dart -- 253,400(12) -- 5.57%
P.O. Box 31300-SMB
Grand Cayman
Cayman Islands, B.W.I.
Ross Financial Corporation -- 253,400(12) -- 5.57%
P.O. Box 31363-SMB
Grand Cayman
Cayman Islands, B.W.I.
T. Rowe Price Associates, Inc. -- 450,000(13) -- 9.89%
T. Rowe Price Small Cap Value Fund
100 E. Pratt Street
Baltimore, MD 21202
All directors 1,500,000(2)(9) 441,350(2)(3)(4) 100% 9.01%
and officers as a (5)(6)(7)(8)
group (7 persons)
</TABLE>
(1) Includes 100,000 shares of the Company's Class B Common Stock which may
be acquired pursuant to options granted under the Company's 1992 Stock
Option Plan (the "1992 Plan").
(2) Shares of Class B Common Stock have five (5) votes per share. Assuming
exercise of all their respective options, Messrs. Victor Jacobs, Herman
Jacobs, Jack Jacobs and Ramon Montes and all directors and officers as a
group have the power to vote approximately 31.53%, 18.44%, 18.44%, 2.33%
and 63.05% of the votes attributable to total outstanding stock of the
Company, respectively. The owners have sole voting and investment power
with respect to their respective shares.
(3) Except as otherwise stated in the notes below, only includes shares of
the Company's Class A Common Stock which may be acquired pursuant to
options granted under the Company's Amended and Restated 1989 Stock
Option Plan (the "1989 Plan") and the Company's 1991 Stock Option Plan
(the "1991 Plan").
(4) Includes 10,100 shares of Class A Common Stock owned by Mr. Victor
Jacobs.
(5) Includes 25,000 shares of Class A Common Stock owned by Mr. Herman
Jacobs.
(6) Includes 25,000 shares of Class A Common Stock owned by Mr. Jack Jacobs.
(7) Includes 21,000 shares of Class A Common Stock owned by Mr. Ramon
Montes.
(8) Includes 15,000 shares of Class A Common Stock owned by Mr. David
Shamilzadeh.
(9) Includes 300,000 shares of the Class B Common Stock which may be
acquired pursuant to options granted under the 1992 Plan.
(10) The information contained herein with respect to these shares has been
obtained from Schedule 13G, dated February 14, 1996, filed by the
beneficial owner.
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<PAGE>
(11) The information contained herein with respect to these shares has been
obtained from Schedule 13G, dated February 9, 1996, filed by the
beneficial owner.
(12) The information contained herein with respect to these shares has been
obtained from Schedule 13G, dated January 4, 1996, filed by the
beneficial owners in a joint filing.
(13) The information contained herein with respect to these shares has been
obtained from Schedule 13G, dated October 10, 1995, filed by the
beneficial owners in a joint filing.
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<PAGE>
ACTION TO BE TAKEN AT THE MEETING
Proposal 1
ELECTION OF DIRECTORS
At the Meeting, seven (7) directors are to be elected to serve until the
next Annual Meeting of Stockholders and until their successors shall be duly
elected and qualified. The number of nominees was determined by the Board of
Directors pursuant to the Company's By-laws. Unless otherwise specified, all
proxies will be voted in favor of the seven nominees listed below as directors
of the Company.
All of the nominees were elected directors at the 1995 Annual Meeting of
Stockholders. The term of the current directors expires at the Meeting.
The Board of Directors has no reason to expect that any of the nominees
will be unable to stand for election at the date of the Meeting. In the event
that a vacancy among the original nominees occurs prior to the Meeting, the
proxies will be voted for a substitute nominee or nominees named by the Board of
Directors and for the remaining nominees. Directors are elected by a plurality
of the votes cast.
The following table sets forth information about each executive officer,
director and nominee for director of the Company.
Year First
Elected or
Name Age Appointed Present Position with the Company
- ---- --- --------- ---------------------------------
Victor Jacobs 63 1985 Chairman of the Board of Directors
and Chief Executive Officer
Herman Jacobs 36 1985 President, Chief Operating Officer and
Director
Ramon Montes 50 1989 Executive Vice President and Director
David Shamilzadeh 50 1990 Senior Vice President of Finance,
Chief Financial Officer and Director
Jack Jacobs 33 1991 Vice President of Purchasing,
Secretary and Director
Sol Naimark 36 1991 Director
Jeffrey Berg 53 1994 Director
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<PAGE>
VICTOR JACOBS has served as Chairman of the Board since December 1985.
He also served as Chief Executive Officer from December 1985 to April 1990 and
was reelected Chief Executive Officer in October 1994.
HERMAN JACOBS has served as President of the Company since December 1985
and as Chief Operating Officer since February 1994. He also served as Chief
Financial Officer of the Company from December 1985 to April 1990.
RAMON MONTES joined the Company in July 1986 as Sales Manager becoming
Vice President of Operations and Sales in April 1987 and a director in April
1988, he was elected Executive Vice President in February 1994.
DAVID SHAMILZADEH has served as the Chief Financial Officer of the
Company since April 1990 and was elected Senior Vice President for Finance in
February 1994. Prior to that time, he served as the Controller of the Company
from November 1988 to April 1990.
JACK JACOBS has served as Vice President of Purchasing since June 1986
and Secretary since January 1989.
SOL NAIMARK has been a Partner at the law firm of Naimark & Tannenbaum
for over five years.
JEFFREY BERG has served as President of Health Care Insights, a
financial and technology consulting firm, since March 1991. From February 1990
to March 1991, Dr. Berg worked as a financial analyst for William K. Woodruff &
Co., an investment bank. From June 1987 until January 1990 Dr. Berg served as
Vice President of Research for J.C. Bradford & Co., an investment bank. Dr. Berg
has worked in research and development for Johnson & Johnson Products, Inc. and
General Foods Corporation. Dr. Berg currently serves on the Board of Directors
of Bio-Imaging Technologies, Inc. and Biologix International Ltd.
Herman Jacobs and Jack Jacobs are brothers and sons of Victor Jacobs.
Directors who are not employed by the Company receive $1,000 for each Board
meeting attended and an additional $250 for each committee meeting attended.
-8-
<PAGE>
CERTAIN INFORMATION ABOUT THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Board of Directors is responsible for the management of the Company.
During the fiscal year ended March 31, 1996, the Board of Directors of the
Company held two meetings and acted by unanimous written consent on three
occasions. All of the directors attended both meetings of the Board. The Board
has established Audit, Stock Option and Compensation Committees. There is no
standing nominating committee.
The functions of the Audit Committee include the nomination of
independent auditors for appointment by the Board; meeting with the independent
auditors to review and approve the scope of their audit engagement; meeting with
the Company's financial management and the independent auditors to review
matters relating to internal accounting controls, the Company's accounting
practices and procedures and other matters relating to the financial condition
of the Company; and to report to the Board periodically with respect to such
matters. The Audit Committee currently consists of Sol Naimark, Jeffrey Berg and
David Shamilzadeh. The Audit Committee held three formal meetings, attended by
all committee members, and had informal discussions from time to time during the
fiscal year ended March 31, 1996.
The function of the Stock Option Committee is to administer the 1989
Plan, 1991 Plan and 1992 Plan. The Stock Option Committee currently consists of
Sol Naimark and Jeffrey Berg. The Stock Option Committee acted by unanimous
written consent on one occasion, and met informally from time to time during the
fiscal year ended March 31, 1996.
In June 1995, the Board of Directors established a Compensation
Committee. The function of the Compensation Committee is to review and recommend
to the Board of Directors the appropriate compensation of executive officers of
the Company. The Compensation Committee currently consists of Victor Jacobs,
Herman Jacobs, Jack Jacobs, David Shamilzadeh and Jeffrey Berg. The Compensation
Committee held one formal meeting, attended by all committee members, acted by
unanimous written consent on one occasion and had informal discussions from time
to time during the fiscal year ended March 31, 1996.
SECTION 16(a) REPORTING
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers, and persons who own
more than 10% of the Company's Common Stock, to file with the Securities and
Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Officers, directors and greater than 10% shareholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) reports they
file. To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company during the one-year period ended March 31,
1996, all Section 16(a) filing requirements applicable to its officers,
directors and greater than ten-percent beneficial owners were complied with.
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<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and
long term compensation of the Company's chief executive officer and other four
most highly compensated executive officers of the Company for services in all
capacities to the Company and its subsidiaries during the Company's 1996, 1995
and 1994 fiscal years.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation Awards
------------------- -------------------
Name and Principal Fiscal Securities
Position Year Salary ($) Bonus ($) Underlying Options (#)
---------- ------ ---------- --------- ----------------------
<S> <C> <C> <C> <C>
Victor Jacobs 1996 300,000 -- 100,000(1)
Chairman of Board and 1995 150,000 -- 100,000
Chief Executive Officer 1994 150,000 331,354 --
Herman Jacobs 1996 300,000 -- 100,000(1)
President and 1995 150,000 -- 100,000
Chief Operating Officer 1994 150,000 331,354 --
Jack Jacobs 1996 300,000 -- 100,000(1)
Vice President of Purchasing and 1995 150,000 -- 100,000
Secretary 1994 150,000 331,354 --
Ramon Montes 1996 240,371 75,000 20,000
Executive Vice President 1995 250,385 40,000 25,000
1994 225,000 60,712 --
David Shamilzadeh 1996 220,603 -- 20,000
Senior Vice President of Finance 1995 220,558 -- 25,000
and Chief Financial Officer 1994 227,345 -- 50,000
</TABLE>
(1) Options to purchase 100,000 shares of Class B Common Stock were granted
to each of Victor Jacobs, Herman Jacobs and Jack Jacobs on August 1,
1995 pursuant to the 1995 Nonqualified Stock Option Plan, which grants
are subject to stockholder approval of the 1995 Nonqualified Stock
Option Plan at the Meeting. See "Employment Agreements" and Proposal 2.
-10-
<PAGE>
STOCK OPTION PLANS
In January 1989, the Company adopted the 1989 Plan, which was amended
and restated in November 1989; in May 1991, the Company adopted the 1991 Plan,
which was approved by stockholders in August 1991; and in July 1992, the Company
adopted the 1992 Plan, which was adopted by the stockholders in October 1992
(collectively, the "Plans"). The 1989 Plan provides for the grant of options to
purchase an aggregate of 150,000 shares of the Company's Class A Common Stock.
To date, options to purchase 150,000 shares have been granted under the 1989
Plan. The 1991 Plan provides for the grant of options to purchase an aggregate
of 650,000 shares of Class A Common Stock. To date, options to purchase all of
the 650,000 shares have been granted under the 1991 Plan. The 1992 Plan provides
for the grant of options to key employees of the Company to purchase an
aggregate 500,000 shares of the Company's Class B Common Stock. To date, options
to purchase all of the 500,000 shares have been granted under the 1992 Plan.
The Plans are each administered by a Stock Option Committee (the
"Committee") approved by the Board of Directors of the Company. The Committee
has the authority under the Plans to determine the terms of options granted
under such Plan, including, among other things, the individuals who shall
receive options, the times when they shall receive them, whether an incentive
stock option and/or non-qualified stock option shall be granted, the number of
shares to be subject to each option and the date each option shall become
exercisable. Options granted under the Plans may be designated as "incentive
stock options", under Section 422 of the Internal Revenue Code of 1986, as
amended, or non-qualified options, which do not meet such requirements.
The Committee may set the exercise price for the options, which must be
at least 100% of the fair market value of the Common Stock on the date of grant
(or, in the case of an incentive stock option granted to an optionee who owns
stock possessing more than 10% of the voting power of the Company's Common
Stock, 110% of the fair market value of the Common Stock on the date of grant).
The Committee may also set the period during which each option may be
exercised which shall not exceed 10 years from the date of grant (or in the case
of an incentive stock option granted to a stockholder who owns stock possessing
more than 10% of the voting power of the Common Stock, five years from the date
of grant). The Plans also provide that each employee who is an optionee shall
agree to remain in the employ of the Company for a term of at least one year.
The 1989 Plan will terminate on January 19, 1999, the 1991 Plan will terminate
on May 29, 2001 and the 1992 Plan will terminate on July 9, 2002.
On August 1, 1995, the Board of Directors of the Company adopted,
subject to the approval of the Company's stockholders, the 1995 Nonqualified
Stock Option Plan, which the Board of Directors amended on July 12, 1996. For a
description of the 1995 Nonqualified Stock Option Plan, see Proposal 2. On July
12, 1996, the Board of Directors of the Company adopted, subject to the approval
of the Company's stockholders, the 1996 Stock Option Plan. For a description of
the 1996 Stock Option Plan, see Proposal 3.
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<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth the details of options granted to those
individuals listed in the Summary Compensation Table who received options during
the fiscal year ended March 31, 1996.
<TABLE>
<CAPTION>
Number of Percent of Exercise
Securities Total Options of Potential Realizable Value
Underlying Granted To Base at Assumed Annual Rate
Options Employees In Price Expiration of Stock Price Appreciation
Name Granted (#) Fiscal Year ($/Sh) Date for Option Term(1)
---- ----------- ------------- -------- ------ -------------------
5% ($) 10% ($)
------ -------
<S> <C> <C> <C> <C> <C> <C>
Victor Jacobs 100,000(2) 22.91% 5.80(3) 7/31/2005 364,759 924,371
Herman Jacobs 100,000(2) 22.91% 5.80(3) 7/31/2005 364,759 924,371
Jack Jacobs 100,000(2) 22.91% 5.80(3) 7/31/2005 364,759 924,371
Ramon Montes 20,000(4) 4.58% 6.00(5) 10/25/2000 33,154 73,261
David Shamilzadeh 20,000(6) 4.58% 6.00(5) 10/25/2000 33,154 73,261
</TABLE>
(1) The dollar amounts under these columns are the result of calculations at
the hypothetical rates of 5% and 10% set by the Securities and Exchange
Commission and therefore are not intended to forecast possible future
appreciation, if any, of the Company's Common Stock price.
(2) Options to purchase 100,000 shares of Class B Common Stock were granted
to each of Victor Jacobs, Herman Jacobs and Jack Jacobs on August 1,
1995 pursuant to the 1995 Nonqualified Stock Option Plan, which grants
are subject to stockholder approval of the 1995 Nonqualified Stock
Option Plan at the Meeting. See "Employment Agreements" and Proposal 2.
Such options are exercisable as to 100% of such shares on the earlier of
August 1, 2002 or as of the end of any fiscal year in which the
Company's earnings before interest and taxes increase at least 15% over
the Company's earnings before interest and taxes for the fiscal year
ended March 31, 1995.
(3) Representing at least 110% of the fair market value of the Company's
Common Stock on the date of grant.
(4) Options to purchase 20,000 shares were granted to Mr. Montes on October
26, 1995, and are exercisable on a cumulative basis with respect to
5,000 shares on October 26, 1996, an additional 5,000 shares on each of
October 26, 1997, October 26, 1998 and October 26, 1999.
(5) Representing at least 100% of the fair market value of the Company's
Common Stock on the date of grant.
(6) Options to purchase 20,000 shares were granted to Mr. Shamilzadeh on
October 26, 1995 and are exercisable on a cumulative basis with respect
to 5,000 shares on October 26, 1996, an additional 5,000 shares on each
of October 26, 1997, October 26, 1998 and October 26, 1999.
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<PAGE>
Option Exercises in Last Fiscal Year and Fiscal Year-End Option Value
The following table contains information concerning the number and value
of options exercised during the fiscal year ended March 31, 1996 and number and
value of unexercised options at March 31, 1996 held by Messrs. V. Jacobs, H.
Jacobs, J. Jacobs, R. Montes and D. Shamilzadeh. The Company does not use SARs
as compensation.
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Options Held Options Held
at Fiscal Year-End at Fiscal Year End
Shares Acquired Value (Exercisable/ (Exercisable/
Name on Exercise (#) Realized ($) Unexercisable) (#) Unexercisable)(1) ($)
- ----------------- --------------- ----------- -------------------- ---------------------
<S> <C> <C> <C> <C>
Victor Jacobs 10,000 37,500 160,000/175,000(2) 81,250/100,313
Herman Jacobs 25,000 93,750 160,000/175,000(2) 81,250/100,313
Jack Jacobs 25,000 93,750 160,000/175,000(2) 81,250/100,313
Ramon Montes 13,000 45,500 83,750/61,250 97,266/43,672
David Shamilzadeh 12,500 43,750 56,625/87,875 12,773/0
</TABLE>
- ------------------
(1) Fair market value of the underlying securities (the closing price of the
Company's Common Stock on the American Stock Exchange) at fiscal year
end (March 31, 1995) minus the exercise price.
(2) Included in the totals for "Unexercised Options--Unexercisable" for
Victor Jacobs, Herman Jacobs and Jack Jacobs is an option to purchase
100,000 shares of Class B Common Stock that was granted pursuant to the
Company's 1995 Stock Option Plan, which grant is subject to stockholder
approval of the 1995 Stock Option Plan at the Meeting. See "Employment
Agreements" and Proposal 2. The option is exercisable as to 100% of such
shares on the earlier of August 1, 2002 or as of the end of any fiscal
year in which the Company's earnings before interest and taxes increase
at least 15% over the Company's earnings before interest and taxes for
the fiscal year ended March 31, 1995.
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
There were no long-term incentive plan awards by the Company during the
fiscal year ended March 31, 1996.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with each of Victor,
Herman and Jack Jacobs for a three-year term, commencing as of August 1, 1995,
each of which provides for annual salaries of $300,000. Such agreements also
provide for each individual to receive in each year of the Agreement a bonus
equal to 3% of any increase in the Company's earnings before interest and taxes
compared to the prior fiscal year up to the first $2,000,000 of such increase,
2% of any
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<PAGE>
increase greater than $2,000,000 but less than $3,000,000 and 1% of any increase
in excess of $3,000,000. Under each agreement, each individual was granted
options to purchase 100,000 shares of the Company's Class B Common Stock at an
exercise price of $5.80 under the Company's 1995 Nonqualified Stock Option Plan,
which grants are subject to stockholder approval of the 1995 Nonqualified Stock
Option Plan at the Meeting. See Proposal 2.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee, which was established in June
1995, participate in all deliberations concerning executive compensation. During
the fiscal year ended March 31, 1996, the Board of Directors participated in all
deliberations concerning executive compensation. As of June 1996, the
Compensation Committee consisted of Victor Jacobs, Chairman of the Board and
Chief Executive Officer, Herman Jacobs, President and Chief Operating Officer,
Jack Jacobs, Vice President of Purchasing and Secretary, David Shamilzadeh,
Senior Vice President of Finance and Chief Financial Officer, and Jeffrey Berg.
No executive officer of the Company serves as a member of the board of directors
or compensation committee of any entity which has one or more executive officers
serving as a member of the Company's Board of Directors.
PERFORMANCE GRAPH
The following graph compares the cumulative return to holders of the
Company's Common Stock for the five years ended March 31, 1996 with the Standard
& Poor's 500 Index and a peer group index(1) for the same period. The comparison
assumes $100 was invested on April 1, 1991 in the Company's Common Stock and in
each of the comparison groups, and assumes reinvestment of dividends. The
Company paid no dividends during the periods.
[GRAPHICAL REPRESENTATION OF DATA BELOW]
<TABLE>
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Allou Health & Beauty Care, 100.00 256.52 321.74 313.04 308.70 249.98
Inc.
S&P 500 Index 100.00 111.04 127.95 129.84 150.05 198.22
Peer Group(1) 100.00 100.26 113.03 150.24 263.40 316.90
</TABLE>
- ----------------------
(1) The peer group selected by the Company includes the Company, Bergen
Brunswig Corporation, Bindley Western Industries, Inc., Cardinal
Distribution Inc., Choice Drug Systems, Inc., Chronimed Inc., Foxmeyer
Corp., Krelitz Industries Inc., McKesson Corporation, Moore Medical
Corp., National Intergroup, Inc., Owens & Minor Inc. and Systemed Inc.
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<PAGE>
COMPENSATION COMMITTEE'S REPORT
CONCERNING EXECUTIVE COMPENSATION
OVERVIEW
Since June 1995, compensation determinations have been made by the
Compensation Committee, except for those decisions relating to the granting of
stock options which are made by the Stock Option Committee. The Company seeks to
provide executive compensation that will support the achievement of the
Company's financial goals while attracting and retaining talented executives and
rewarding superior performance. In performing this function, the Compensation
Committee reviews executive compensation surveys and other available information
and may from time to time consult with independent compensation consultants. The
Compensation Committee presently consists of Victor Jacobs, Herman Jacobs, Jack
Jacobs, David Shamilzadeh and Jeffrey Berg.
The Company seeks to provide an overall level of compensation to the
Company's executives that is competitive within the Company's industry and other
companies of comparable size and complexity. Compensation in any particular case
may vary from any industry average on the basis of annual and long-term Company
performance as well as individual performance. The Compensation Committee
exercises its discretion to set compensation where in its judgment external,
internal or individual circumstances warrant it.
In general, the Company compensates its executive officers through a
combination of base salary, annual incentive compensation in the form of cash
bonuses and long-term incentive compensation in the form of stock options. In
addition, executive officers participate in benefit plans, including medical,
dental and retirement plans, that are available generally to the Company's
employees.
The Stock Option Committee of the Board of Directors administers the
1989 Plan, the 1991 Plan and the 1992 Plan. The duties of such committee include
the granting of stock options to executive employees of the Company. The Stock
Option Committee determines the number of shares granted to individuals, as well
as, among other things, the exercise price and vesting periods of such options.
The Compensation Committee has made recommendations to the Stock Option
Committee from time to time with respect to the grant of stock options to
executive officers, taking into account their level of responsibility,
compensation level, contribution to the Company's performance and the future
goals and the performance expected of them. However, the final determination of
the grant of options rests with the Stock Option Committee.
EXECUTIVE OFFICER COMPENSATION
During the fiscal year ended March 31, 1996, the Company entered into
employment contracts with Victor Jacobs, Herman Jacobs and Jack Jacobs, which
agreements are currently in effect and expire in July 1998. See "Employment
Agreements." The base salary, bonuses, benefits
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and conditions of these contracts were determined through a review of previous
employment terms for these individuals as well as a review of the recent trends
in the Company's revenues and profits. The Company believes that the base salary
levels currently in effect are competitive to salary levels in similarly
situated companies. In addition, the Compensation Committee at the time decided
to link such employees compensation directly to the Company's earnings before
interest and taxes.
Under the terms of such Employment Agreements, Victor Jacobs, Herman
Jacobs and Jack Jacobs were each granted options to purchase 100,000 shares of
Class B Common Stock, respectively. Such options were granted under the terms of
the 1995 Nonqualified Stock Option Plan, which is subject to the approval of the
Company's stockholders at the Meeting. See Proposal 2. The Compensation
Committee feels that options and other stock-based performance compensation
arrangements are an effective incentive for managers to create value for
stockholders since the value of an option bears a direct relationship to the
Company's stock price.
The Compensation Committee believes that linking executive compensation
to corporate performance results in a better alignment of compensation with
corporate goals and shareholder interests. As performance goals are met or
exceeded, resulting in increased value to shareholders, executives are rewarded
commensurately. The Compensation Committee believes that compensation levels
during fiscal 1996 adequately reflect the Company's compensation goals and
policies.
Respectfully submitted,
Victor Jacobs
Herman Jacobs
Jack Jacobs
David Shamilzadeh
Jeffrey Berg
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company purchases from and, on occasion, sells to various entities
that are controlled by the family of Mr. Victor Jacobs, the Company's Chairman
of the Board. During the fiscal year ended March 31, 1996, the Company purchased
products aggregating $1,735,661 from related parties and sold no products to
related parties. The prices that the Company charges for products sold by the
Company are comparable to prices the Company charges to unaffiliated buyers for
similar products. It has been and will continue to be the policy of the Company
that transactions between it and its directors, principal stockholders and
affiliates be on terms no less favorable to the Company than could be obtained
from unaffiliated persons.
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<PAGE>
PROPOSAL 2
APPROVAL OF 1995 NONQUALIFIED STOCK OPTION PLAN
GENERAL
On August 1, 1995, the Board of Directors of the Company adopted,
subject to the approval of the Company's stockholders, the 1995 Nonqualified
Stock Option Plan, which the Board of Directors amended on July 12, 1995 (the
"1995 Plan"). Pursuant to the 1995 Plan, key employees of the Company, which
currently include five directors of the Company who are employees, are eligible
to receive grants of nonqualified stock options, to purchase an aggregate of
500,000 shares of the Company's Class B Common Stock. Each holder of Class B
Common Stock is entitled to five votes for each share held by such holder.
Implementation of the 1995 Plan is contingent upon the stockholders' approval of
the amendment to the Company's Certificate of Incorporation increasing the
authorized shares of the Class B Common Stock from 1,700,000 to 2,200,000. See
Proposal 4.
The Board of Directors believes that the adoption of the 1995 Plan will
enable the Company to retain key employees of outstanding ability. Accordingly,
the Board of Directors unanimously recommends that stockholders ratify the
adoption of the 1995 Plan.
DESCRIPTION OF THE PLAN
The following summary of the 1995 Plan is qualified in its entirety by
reference to Exhibit A to this Proxy Statement, which contains a complete text
of the 1995 Plan. The 1995 Plan is administered by a Stock Option Committee (
the "1995 Committee") consisting of at least two disinterested directors
selected by the Board of Directors, or two non-employee directors should
recently proposed rules be adopted by the SEC. The 1995 Committee has the
authority under the 1995 Plan to determine, in accordance with the provisions of
the Plan, the terms of options granted under the Plan, including, among other
things, the individuals who will receive options, the times when they will
receive them, the number of shares to be subject to each option, and the date or
dates each option will become exercisable. No members of the 1995 Committee will
be permitted to participate in the 1995 Plan.
Subject to certain limitations contained in the 1995 Plan, options may
be granted for terms to be established by the 1995 Committee; however, no option
may be granted after 10 years from the date of the Plan's adoption. The maximum
number of shares subject to stock options that may be granted to any individual
during any calendar year may not exceed 100,000 shares. Options may not be
granted at an exercise price that is less than the fair market value of the
underlying shares on the date the options are granted. Inasmuch as the shares
subject to the 1995 Plan are convertible at any time into shares of the
Company's Class A Common Stock on a share for share basis, the market value of
such Class A Common Stock will be used to determine the fair market value for
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options granted under the 1995 Plan. An optionee may, if provided for in the
optionee's stock option contract, elect to pay for the shares to be received
upon exercise of his option in cash, shares of Common Stock of the Company or
any combination thereof. To date 100,000 options have been granted to each of
Victor Jacobs, Herman Jacobs and Jack Jacobs at an exercise price of $5.80 under
the 1995 Plan, subject to stockholder approval of the 1995 Plan at the Meeting.
On July 2, 1996, the market value for the options granted subject to the 1995
Plan was $0.95 per share or an aggregate of $95,000 for each optionee.
FEDERAL INCOME TAX CONSEQUENCES
For a discussion of the federal income tax consequences under the
current tax law of nonqualified stock options, see "Federal Income Tax
Consequences" under Proposal 3.
VOTE REQUIRED FOR APPROVAL AND RECOMMENDATION
In accordance with the Delaware General Corporation Law and the
Company's Certificate of Incorporation, the affirmative vote of a majority of
the votes cast at the Meeting by the holders of the outstanding shares of Common
Stock entitled to vote thereon who are present in person or by proxy is required
to ratify the adoption of the 1995 Nonqualified Stock Option Plan. Abstentions
and broker non-votes are not considered cast.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE PROPOSAL TO
RATIFY THE ADOPTION OF THE 1995 NONQUALIFIED STOCK OPTION PLAN.
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<PAGE>
Proposal 3
APPROVAL OF 1996 STOCK OPTION PLAN
GENERAL
On July 12, 1996, the Board of Directors of the Company adopted, subject
to the approval of the Company's stockholders, the 1996 Stock Option Plan (the
"1996 Plan"). Pursuant to the 1996 Plan, employees of the Company, which
currently include five directors of the Company who are employees, are eligible
to receive grants of options that are intended to qualify as incentive stock
options, within the meaning of Section 422 of the Code ("ISOs"), or that are
nonqualified stock options ("NQSOs") to purchase an aggregate of 1,000,000
shares of the Company's Class A Common Stock.
The Board of Directors believes that the adoption of the 1996 Plan will
enable the Company to retain employees of outstanding ability. Accordingly, the
Board of Directors unanimously recommends that stockholders ratify the adoption
of the 1996 Plan.
DESCRIPTION OF THE PLAN
The following summary of the 1996 Plan is qualified in its entirety by
reference to Exhibit B to this Proxy Statement, which contains a complete text
of the 1996 Plan. The 1996 Plan is administered by a Stock Option Committee (
the "1996 Committee") consisting of at least two disinterested directors
selected by the Board of Directors, or two non-employee directors should
recently proposed rules be adopted by the SEC. The 1996 Committee has the
authority under the 1996 Plan to determine, in accordance with the provisions of
the Plan, the terms of options granted under the Plan, including, among other
things, the individuals who will receive options, the times when they will
receive them, whether an ISO and/or an NQSO will be granted, the number of
shares to be subject to each option, and the date or dates each option will
become exercisable. No members of the 1996 Committee will be permitted to
participate in the 1996 Plan.
Subject to certain limitations contained in the 1996 Plan, options may
be granted for terms to be established by the 1996 Committee; however, no stock
option may be granted after 10 years from the date of the Plan's adoption. The
maximum number of shares subject to stock options that may be granted to any
individual during any calendar year may not exceed 100,000 shares. Options may
not be granted at a price that is less than 100% of the fair market value on the
date the options are granted (110% in the case of persons owning more than 10%
of the total combined voting power of the Company, any of its subsidiaries or of
a parent). An optionee may, if provided for in the optionee's stock option
contract, elect to pay for the shares to be received upon exercise of his option
in cash, shares of Common Stock of the Company or any combination thereof. To
date no options have been granted under the 1996 Plan.
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<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of the federal income tax
consequences under current tax law of incentive and nonqualified stock options.
It does not purport to cover all of the special rules, including special rules
relating to 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 or the ownership and disposition of restricted stock.
An optionee will not recognize taxable income for federal income tax
purposes upon the grant of a NQSO or an ISO.
Upon the exercise of a NQSO, the optionee will recognize 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 will generally be entitled to a deduction for such amount at that time.
If the optionee later sells shares acquired pursuant to the exercise of a NQSO,
he or she will recognize long-term or short-term capital gain or loss, depending
on the period for which the shares were held. Long-term capital gain is
generally subject to more favorable tax treatment than ordinary income or
short-term capital gain. Proposed legislation would treat long-term capital gain
even more favorably. There can be no assurance, however, that such proposed
legislation will be enacted.
Upon the exercise of an ISO, the optionee will not recognize taxable
income. If the optionee disposes of the shares acquired pursuant to the exercise
of an ISO more than two years after the date of grant and more than one 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, all or a portion of the gain will be treated as ordinary income
and the Company will generally be entitled to deduct such amount.
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 ISO, the excess of the fair market value of the shares over the
exercise price therefor is an adjustment which increases alternative minimum
taxable income. In addition, the optionee's basis in such shares is increased by
such excess 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 ISO adjustment) 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.
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<PAGE>
VOTE REQUIRED FOR APPROVAL AND RECOMMENDATION
In accordance with the Delaware General Corporation Law and the
Company's Certificate of Incorporation, the affirmative vote of a majority of
the votes cast at the Meeting by the holders of the outstanding shares of Common
Stock entitled to vote thereon who are present in person or by proxy is required
to ratify the adoption of the 1996 Stock Option Plan. Abstentions and broker
non-votes are not considered cast.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE PROPOSAL TO
RATIFY THE ADOPTION OF THE 1996 STOCK OPTION PLAN.
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Proposal 4
AMENDMENT TO CERTIFICATE OF INCORPORATION
On July 12, 1996, the Board of Directors of the Company unanimously
approved for submission to the Company's stockholders an amendment to Article
Fourth of the Company's Certificate of Incorporation: (1) to confirm that the
shares of Class B Common Stock are convertible at any time into shares of Class
A Common Stock on a one-for-one basis, which previously has been included in the
Company's public disclosures; (2) to provide that the shares of Class B Common
Stock are freely transferable; and (3) to increase the authorized Class B Common
Stock from 1,700,000 to 2,200,000 shares. The following summary of the proposed
amendment to Article Fourth (the "Proposed Amendment") is qualified in its
entirety by reference to Exhibit C to this Proxy Statement, which contains a
complete text of the Proposed Amendment.
CONVERTIBILITY OF CLASS B COMMON STOCK
Although previous disclosures have explicitly so stated, the Company's
Certificate of Incorporation does not specifically provide that shares of Class
B Common Stock are convertible into shares of Class A Common Stock on a
one-for-one basis. On advice of counsel, the Board of Directors has determined
that language providing for the convertibility of Class B Common Stock into
shares of Class A Common Stock on a one-for-one basis should be contained in the
Company's Certificate of Incorporation so that there is no doubt of the rights
of holders of Class B Common Stock.
Each share of Class B Common Stock has five votes per share, while each
share of Class A Common Stock has one vote per share. The Class A Common Stock
is traded on the American Stock Exchange. Because there is no established public
trading market for the Class B Common Stock, the Board of Directors believes
that holders of Class B Common Stock may desire to forego their voting rights if
they wish to sell their shares of Common Stock. Conversions of Class B Common
Stock would increase the number of shares traded on the American Stock Exchange
and will reduce the concentration of voting control by the holders of Class B
Common Stock.
TRANSFERABILITY OF CLASS B COMMON STOCK
Previous disclosures by the Company have provided that each share of
Class B Common Stock is automatically converted into one share of Class A Common
Stock upon its sale or transfer, except if such sale or transfer is to one or
more holders of Class B Common Stock, certain family members of the holders of
Class B Common Stock or certain trusts for their benefit. The Board of Directors
believes that holders of Class B Common Stock may desire to sell or transfer
their shares of Class B Common Stock to others than those listed above with the
five-votes-per-share right intact. These sales may result in a change in voting
control of the Company. None of the holders of Class B Common Stock currently
has indicated an intention to sell their shares. Because
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<PAGE>
there is no established public trading market for the Class B Common Stock, such
a sale or transfer would be made in a privately negotiated transaction.
INCREASE IN AUTHORIZED CLASS B COMMON STOCK
The Proposed Amendment will increase the number of shares of Class B
Common Stock that the Company is authorized to issue from 1,700,000 to 2,200,000
(the "Increase").
Purpose of the Increase
The purpose of the Increase is to authorize the issuance of a sufficient
number of shares of Class B Common Stock for the grant of stock options under
the proposed 1995 Plan. See Proposal 2. If the stockholders vote against the
Increase, the Company will not be able to make grants of stock options under the
1995 Plan and will have to rescind grants already made to Victor Jacobs, Herman
Jacobs and Jack Jacobs. See Proposal 2 and "Employment Agreements." The Board of
Directors believes that the adoption of the 1995 Plan will enable the Company to
retain key employees of outstanding ability. Accordingly, the Board of Directors
unanimously recommends that stockholders approve the Proposed Amendment.
Possible Adverse Effects of the Increase
The issuance of the additional Class B Common Stock may have certain
adverse effects upon the current holders of Common Stock. The issuance of
further Class B Common Stock would increase the number of shares of Class B
Common Stock outstanding, thereby diluting percentage ownership of existing
stockholders, as well as possibly diluting book value per share and/or earnings
per share. In addition, because the Class B Common Stock has five votes per
share, the issuance of additional shares of Class B Common Stock would dilute
the voting rights of the Class A Common Stock.
Possible Anti-Takeover Effects of the Increase
When in the judgment of the Board of Directors such action would be in
the best interests of the stockholders and the Company, the issuance of
additional shares of Class B Common Stock, which have five votes per share,
could be used to create voting or other impedi ments or to discourage persons
seeking to gain control of the Company, for example, by the sale of shares to
purchasers favorable to the Board of Directors. The existence of the additional
authorized shares could have the effect of discouraging unsolicited takeover
attempts. Such issuance of common stock could also have the effect of diluting
the earnings per share and book value per share of the Class B Common Stock held
by then existing holders of common stock.
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<PAGE>
VOTE REQUIRED FOR APPROVAL AND RECOMMENDATION
In accordance with the Delaware General Corporation Law and the
Company's Certificate of Incorporation, the affirmative vote of a majority of
the outstanding shares of Common Stock entitled to vote thereon is required to
adopt the Proposed Amendment.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE PROPOSED
AMENDMENT.
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<PAGE>
ACCOUNTANTS
Mayer Rispler & Company served as the Company's independent auditors for
the fiscal year ended March 31, 1996, and it is expected that Mayer Rispler &
Company will act in that capacity for the fiscal year ending March 31, 1997. A
representative of Mayer Rispler & Company is expected to be present at the
Meeting with the opportunity to make a statement if he desires to do so and to
be available to respond to appropriate questions from shareholders.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1997 Annual
Meeting must be received by the Company for inclusion in its proxy materials by
March 27, 1997.
OTHER MATTERS
Management does not intend to bring before the Meeting any matters other
than those specifically described above and knows of no matters other than the
foregoing to come before the Meeting. If any other matters or motions properly
come before the Meeting, it is the intention of the persons named in the
accompanying Proxy to vote such Proxy in accordance with their judgment on such
matters or motions, including any matters dealing with the conduct of the
Meeting.
By Order of the Board of Directors
Jack Jacobs
Secretary
July 19, 1996
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<PAGE>
EXHIBIT A
1995 NONQUALIFIED STOCK OPTION PLAN
of
ALLOU HEALTH & BEAUTY CARE, INC.
1. PURPOSES OF THE PLAN. This nonqualified stock option plan (the
"Plan") is designed to provide an incentive to key employees (including
directors and officers who are employees) of Allou Health & Beauty Care, Inc., a
Delaware corporation (the "Company"), and its present and future subsidiary
corporations, as defined in Paragraph 19 ("Subsidiaries"). The Plan provides for
the grant of options which do not qualify as "incentive stock options" ("ISOs")
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code").
2. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Paragraph 12,
the aggregate number of shares of Class B Common Stock, $.001 par value per
share, of the Company ("Class B Common Stock") for which options may be granted
under the Plan shall not exceed 500,000. Such shares of Class B Common Stock
may, in the discretion of the Board of Directors of the Company (the "Board of
Directors"), consist either in whole or in part of authorized but unissued
shares of Class B Common Stock or shares of Class B 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 Class B Common Stock as
will be sufficient to satisfy the requirements of the Plan. Subject to the
provisions of Paragraph 13, any shares of Class B Common Stock subject to an
option which for any reason expires, is canceled or is terminated unexercised or
which ceases for any reason to be exercisable shall again become available for
the granting of options under the Plan.
3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by a
committee of the Board of Directors consisting of not less than two Directors
(the "Committee"). Each member of the Committee shall be (a) a "disinterested
person" within the meaning of Rule 16b-3 (or any successor rule or regulation)
promulgated under the Securities Exchange Act of 1934 ("Rule 16b-3") until such
time as the amendments to Rule 16b-3 adopted by the Securities and Exchange
Commission on May 30, 1996 in Release No. 34-37260 become effective with respect
to the Plan (the "New Rule Date") and (b) from and after the New Rule Date, a
"non-employee director" within the meaning of Rule 16b-3. 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.
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<PAGE>
Subject to the express provisions of the Plan, the Committee shall have
the authority, in its sole discretion: to determine the key employees who shall
receive options; the times when they shall receive options; the number of shares
of Class B Common Stock to be subject to each option; the term of each option;
the date each option shall become exercisable; whether an option shall be
exercisable in whole, in part or in installments, and, if in installments, the
number of shares of Class B Common Stock 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 of Class B Common Stock 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; the form of payment of the
exercise price; whether to restrict the sale or other disposition of the shares
of Class B Common Stock acquired upon the exercise of an option and to waive any
such restriction; whether to subject the exercise of all or any portion of an
option to the fulfillment of contingencies as specified in the contract referred
to in Paragraph 11 (the "Contract"), including without limitation, contingencies
relating to entering into a covenant not to compete with the Company and its
Subsid iaries, to financial objectives for the Company, a Subsidiary, 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 determine the amount, if
any, necessary to satisfy the Company's obligation to withhold taxes or other
amounts; the fair market value of a share of Class B Common Stock; to construe
the respective Contracts and the Plan; with the consent of the optionee, to
cancel or modify an option, provided such option as modified would be permitted
to be granted on such date under the terms of the Plan; to prescribe, amend and
rescind rules and regulations relating to 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.
No member or former member of the Committee shall be liable for any
action, failure to act or determination made in good faith with respect to the
Plan or any option hereunder.
4. ELIGIBILITY. The Committee may from time to time, consistent with the
purposes of the Plan, grant options to key employees (including officers and
directors who are employees) of the Company or any of its Subsidiaries. Such
options granted shall cover such number of shares of Class B Common Stock as the
Committee may determine; provided, however, that the maximum number of shares
subject to options that may be granted to any individual during any calendar
year under the Plan (the "162(m) Maximum") shall not exceed 100,000 shares.
5. EXERCISE PRICE. The exercise price of the shares of Class B Common
Stock under each option shall be determined by the Committee; provided, however,
that the exercise price shall not be less than the fair market value of the
shares of Class B Common Stock subject thereto.
The fair market value of a share of Class B Common Stock on any day
shall be (a) if the principal market for the Class B Common Stock is a national
securities exchange, the average of the highest and lowest sales prices per
share of Class B Common Stock on such day as reported by
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<PAGE>
such exchange or on a composite tape reflecting transactions on such exchange,
(b) if the principal market for the Class B Common Stock is not a national
securities exchange and the Class B Common Stock is quoted on The Nasdaq Stock
Market ("Nasdaq"), and (i) if actual sales price information is available with
respect to the Class B Common Stock, the average of the highest and lowest sales
prices per share of Class B Common Stock on such day on Nasdaq, or (ii) if such
information is not available, the average of the highest bid and lowest asked
prices per share of Class B Common Stock on such day on Nasdaq, or (c) if the
principal market for the Class B Common Stock is not a national securities
exchange and the Class B Common Stock is not quoted on Nasdaq, the average of
the highest bid and lowest asked prices per share of Class B Common Stock on
such day as reported on the OTC Bulletin Board Service or by National Quotation
Bureau, Incorporated or a comparable service; provided, however, 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, the fair market value of the
Class B Common Stock shall be determined by the Board by any method consistent
with applicable regulations adopted by the Treasury Department relating to stock
options.
6. TERM. The term of each option granted pursuant to the Plan shall be
such term as is established by the Committee, in its sole discretion, at or
before the time such option is granted.
7. EXERCISE. An option (or any part or installment thereof), to the
extent then exercisable, shall be exercised by giving written notice to the
Company at its principal office stating which option is being exercised,
specifying the number of shares of Class B Common Stock as to which such option
is being exercised and accompanied by payment in full of the aggregate exercise
price therefor (or the amount due on exercise if the Contract with respect to an
option permits installment payments) (a) in cash or by certified check or (b) if
the applicable Contract permits, with previously acquired shares of Class A
Common Stock, $.001 par value per share, of the Company ("Class A Common Stock)
and/or Class B 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 with any combination of cash, certified check or shares of Class A
Common Stock and/or Class B Common Stock. In such case, the fair market value of
the Class B Common Stock shall be determined in accordance with Paragraph 5. The
fair market value of the Class A Common Stock shall be determined in accordance
with Paragraph 5 by substituting "Class A" for "Class B" in every place it
appears in such definition.
The Committee may, in its discretion, permit payment of the exercise
price of an option by delivery by the optionee of a properly executed notice,
together with a copy of his irrevocable instructions to a broker acceptable to
the Committee to deliver promptly to the Company the amount of sale or loan
proceeds sufficient to pay such exercise price. In connection therewith, the
Company may enter into agreements for coordinated procedures with one or more
brokerage firms.
A person entitled to receive Class B Common Stock upon the exercise of
an option shall not have the rights of a stockholder with respect to such shares
of Class B Common Stock until
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the date of issuance of a stock certificate to him for such shares; provided,
however, that until such stock certificate is issued, any optionee using
previously acquired shares of Class A Common Stock and/or Class B Common Stock
in payment of an option exercise price shall continue to have the rights of a
stockholder with respect to such previously acquired shares.
In no case may a fraction of a share of Class B Common Stock be
purchased or issued under the Plan.
8. TERMINATION OF RELATIONSHIP. Except as may otherwise be expressly
provided in the applicable Contract, any optionee whose employment with the
Company (and its Subsidiaries) has terminated for any reason other than his
death or Disability (as defined in Paragraph 19) may exercise such option, to
the extent exercisable on the date of such termination, at any time within three
months after the date of termination, but not thereafter and in no event after
the date the option would otherwise have expired; provided, however, that if his
employment is terminated either (a) for cause, or (b) without the consent of the
Company, such option shall terminate immediately. Except as may otherwise be
expressly provided in the applicable Contract, options granted under the Plan
shall not be affected by any change in the status of the holder so long as he
continues to be an employee or a consultant or advisor of the Company or any of
its Subsidiaries (regardless of having been transferred from one corporation to
another).
For the purposes of the Plan, an employment relationship shall be deemed
to exist between an individual and a corporation if, at the time of the
determination, the individual was an employee of such corporation for purposes
of Section 422(a) of the Code. As a result, an individual on military, sick
leave or other bona fide leave of absence shall continue to be considered an
employee for purposes of the Plan during such leave if the period of the leave
does not exceed 90 days, or, if longer, so long as the individual's right to
reemployment with the Company (or a related corporation) is guaranteed either by
statute or by contract. If the period of leave exceeds 90 days and the
individual's right to reemployment is not guaranteed by statute or by contract,
the employment relationship shall be deemed to have terminated on the 91st day
of such leave.
Nothing in the Plan or in any option granted under the Plan shall confer
on any individual any right to continue in the employ of the Company or any of
its Subsidiaries, or as a director of the Company, or interfere in any way with
any right of the Company or any of its Subsidiaries to terminate the holder's
relationship at any time for any reason whatsoever without liability to the
Company or any of its Subsidiaries.
9. DEATH OR DISABILITY OF AN OPTIONEE. Except as may otherwise be
expressly provided in the applicable Contract, if an optionee dies (a) while he
is employed by the Company or any of its Subsidiaries, (b) within three months
after the termination of his employment (unless such termination was for cause
or without the consent of the Company) or (c) within one year following the
termination of his employment by reason of Disability, his option may be
exercised, to the extent exercisable on the date of his death, by his executor,
administrator or other person at the
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time entitled by law to his rights under such option, at any time within one
year after death, but not thereafter and in no event after the date the option
would otherwise have expired.
Except as may otherwise be expressly provided in the applicable
Contract, any optionee whose employment has terminated by reason of Disability
may exercise his option, to the extent exercisable upon the effective date of
such termination, at any time within one year after such date, but not
thereafter and in no event after the date the option would otherwise have
expired.
10. COMPLIANCE WITH SECURITIES LAWS. The Committee may require, in its
discretion, as a condition to the exercise of any option that either (a) a
Registration Statement under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the shares of Class B Common Stock to be
issued upon such exercise shall be effective and current at the time of
exercise, or (b) there is an exemption from registration under the Securities
Act for the issuance of shares of Class B Common Stock upon such exercise.
Nothing herein shall be construed as requiring the Company to register under the
Securities Act the shares subject to any option.
The Committee may require the optionee to execute and deliver to the
Company his representations and warranties, in form and substance satisfactory
to the Committee, that (a) the shares of Class B Common Stock to be issued upon
the exercise of the option are being acquired by the optionee for his own
account, for investment only and not with a view to the resale or distribution
thereof, and (b) any subsequent resale or distribution of shares of Class B
Common Stock by such optionee will be made only pursuant to (i) a Registration
Statement under the Securities Act which is effective and current with respect
to the shares of Class B Common Stock being sold, or (ii) a specific exemption
from the registration requirements of the Securities Act, but in claiming such
exemption, the optionee shall, prior to any offer of sale or sale of such shares
of Class B Common Stock, provide the Company with a favorable written opinion of
counsel, in form and substance satisfactory to the Company, as to the
applicability of such exemption to the proposed sale or distribution.
In addition, if at any time the Committee shall determine in its
discretion that the listing or qualification of the shares of Class B Common
Stock subject to such option on any securities exchange or under any applicable
law, or the consent or approval of any governmental agency or regulatory body,
is necessary or desirable as a condition to, or in connection with, the granting
of an option or the issue of shares of Class B Common Stock thereunder, such
option 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.
11. STOCK OPTION CONTRACTS. Each option 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.
12. ADJUSTMENTS UPON CHANGES IN COMMON STOCK. Notwithstanding any other
provision of the Plan, in the event of any change in the outstanding Common
Stock by
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reason of a stock dividend, recapitalization, merger in which the Company is the
surviving corporation, split-up, spin-off, combination or exchange of shares or
the like, the aggregate number and kind of shares subject to the Plan, the
aggregate number and kind of shares subject to each outstanding option and the
exercise price thereof, and the number and kind of shares subject to the 162(m)
Maximum shall be appropriately adjusted by the Board of Directors, whose
determination shall be conclusive.
In the event of (a) the liquidation or dissolution of the Company, or
(b) a merger in which the Company is not the surviving corporation or a
consolidation, any outstanding options shall terminate, unless other provision
is made therefor in the transaction.
13. AMENDMENTS AND TERMINATION OF THE PLAN. The Plan was adopted by the
Board of Directors as of August 1, 1995. No option may be granted under the Plan
after July 31, 2005. 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, to comply with the provisions of Rule
16b-3, Section 162(m) of the Code or any change in applicable law or to
regulations or rulings of administrative agencies; provided, however, that no
amendment shall be effective without the requisite prior or subsequent
stockholder approval which would (a) except as contemplated in Paragraph 12,
increase the maximum number of shares of Class B Common Stock for which options
may be granted under the Plan or change the 162(m) Maximum, (b) prior to the New
Rule Date, materially increase the benefits to participants under the Plan or
(c) change the eligibility requirements 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. The power of the Committee to construe and administer any
options granted under the Plan prior to the termination or suspension of the
Plan nevertheless shall continue after such termination or during such
suspension.
14. NON-TRANSFERABILITY OF OPTIONS. No option granted under the Plan
shall be transferable otherwise than by will or the laws of descent and
distribution, and options may be exercised, during the lifetime of the holder
thereof, only by him or his legal representatives. Except to the extent provided
above, options may not be assigned, transferred, pledged, hypothecated or
disposed of in any way (whether by operation of law or otherwise) and shall not
be subject to execution, attachment or similar process.
15. WITHHOLDING TAXES. The Company may withhold cash and/or, subject to
any applicable limitations under Rule 16b-3, shares of Class B Common Stock to
be issued with respect thereto having an aggregate fair market value equal to
the amount which it determines is necessary to satisfy its obligation to
withhold Federal, state and local income taxes or other amounts incurred by
reason of the grant or exercise of an option, its disposition, or the
disposition of the underlying shares of Class B Common Stock. 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 of
Class B Common Stock pursuant to any such option until all required
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payments have been made. Fair market value of the shares of Class B Common Stock
shall be determined in accordance with Paragraph 5.
16. LEGENDS; PAYMENT OF EXPENSES. The Company may endorse such legend or
legends upon the certificates for shares of Class B Common Stock issued upon
exercise of an option under the Plan and may issue such "stop transfer"
instructions to its transfer agent in respect of such shares as it determines,
in its discretion, to be necessary or appropriate to (a) prevent a violation of,
or to perfect an exemption from, the registration requirements of the Securities
Act, or (b) implement the provisions of the Plan or any agreement between the
Company and the optionee with respect to such shares of Class B Common Stock.
The Company shall pay all issuance taxes with respect to the issuance of
shares of Class B Common Stock upon the exercise of an option granted under the
Plan, as well as all fees and expenses incurred by the Company in connection
with such issuance.
17. USE OF PROCEEDS. The cash proceeds from the sale of shares of Class
B Common Stock pursuant to the exercise of options under the Plan shall be added
to the general funds of the Company and used for corporate purposes.
18. 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 of a Constituent Corporation (as defined in Paragraph
19) or assume the prior options of such Constituent Corporation.
19. DEFINITIONS.
a. "Constituent Corporation" shall mean any corporation which
engages with the Company, its Parent or any Subsidiary in a transaction to which
Section 424(a) of the Code applies (or would apply if the option assumed or
substituted were an ISO), or any Parent or any Subsidiary of such corporation.
b. "Disability" shall mean a permanent and total disability within
the meaning of Section 22(e)(3) of the Code.
c. "Subsidiary" shall have the same definition as "subsidiary
corporation" in Section 424(f) of the Code.
20. GOVERNING LAW. The Plan, such options as may be granted hereunder
and all related matters shall be governed by, and construed in accordance with,
the laws of the State of Delaware, without regard to conflict of law provisions.
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21. PARTIAL INVALIDITY. The invalidity or illegality of any provision
herein shall not affect the validity of any other provision.
22. STOCKHOLDER APPROVAL. The Plan shall be subject to approval by the
affirmative vote of a majority of the shares present in person or by proxy and
entitled to vote with respect to the adoption of the Plan at the next duly held
meeting of the Company's stockholders at which a quorum is present. No options
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. Notwithstanding the foregoing, if
the Plan is not approved by a vote of the stockholders of the Company on or
before December 31, 1996, the Plan and any options granted hereunder shall
terminate.
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EXHIBIT B
1996 STOCK OPTION PLAN
of
ALLOU HEALTH & BEAUTY CARE, INC.
1. PURPOSES OF THE PLAN. This stock option plan (the "Plan") is designed
to provide an incentive to employees (including officers and directors who are
employees) of and consultants to ALLOU HEALTH & BEAUTY CARE, INC., a Delaware
corporation (the "Company"), or any of its Subsidiaries, as defined in Paragraph
19, and to offer an additional inducement in obtaining the services of such
individuals. The Plan provides for the grant of "incentive stock options"
("ISOs") within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"), and nonqualified stock options ("NQSOs"), but the
Company makes no warranty as to the qualification of any option as an "incentive
stock option" under the Code.
2. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Paragraph 12,
the aggregate number of shares of Class A Common Stock, $.001 par value per
share, of the Company ("Class A Common Stock") for which options may be granted
under the Plan shall not exceed 1,000,000. Such shares of Class A Common Stock
may, in the discretion of the Board of Directors of the Company (the "Board of
Directors"), consist either in whole or in part of authorized but unissued
shares of Class A Common Stock or shares of Class A Common Stock held in the
treasury of the Company. Subject to the provisions of Paragraph 13, any shares
of Class A Common Stock subject to an option which for any reason expires, is
canceled or is terminated unexercised or which ceases for any reason to be
exercisable shall again become available for the granting of options under the
Plan. The Company shall at all times during the term of the Plan reserve and
keep available such number of shares of Class A Common Stock as will be
sufficient to satisfy the requirements of the Plan.
3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by a
committee of the Board of Directors consisting of not less than two Directors
(the "Committee"). Each member of the Committee shall be (a) a "disinterested
person" within the meaning of Rule 16b-3 (or any successor rule or regulation)
promulgated under the Securities Exchange Act of 1934 ("Rule 16b-3") until such
time as the amendments to Rule 16b-3 adopted by the Securities and Exchange
Commission on May 30, 1996 in Release No. 34-37260 become effective with respect
to the Plan (the "New Rule Date") and (b) from and after the New Rule Date, a
"non-employee director" within the meaning of Rule 16b-3. A majority of the
members of the Committee shall constitute a quorum,
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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.
Subject to the express provisions of the Plan, the Committee shall have
the authority, in its sole discretion: to determine the employees and
consultants who shall receive options; the times when they shall receive
options; whether an option granted to an employee shall be an ISO or a NQSO; the
number of shares of Class A Common Stock to be subject to each option; the term
of each option; the date each option shall become exercisable; whether an option
shall be exercisable in whole, in part or in installments, and, if in
installments, the number of shares of Class A Common Stock 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 of Class A
Common Stock 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; the form of
payment of the exercise price; whether to restrict the sale or other disposition
of the shares of Class A Common Stock acquired upon the exercise of an option
and to waive any such restriction; whether to subject the exercise of all or any
portion of an option to the fulfillment of contingencies as specified in the
Contract (as described in Paragraph 11), including without limitations,
contingencies relating to entering into a covenant not to compete with the
Company and its Subsidiaries, to financial objectives for the Company, a
Subsidiary, a division, a product line or other category, and/or the period of
continued relationship of the optionee with the Company or its Subsidiaries, and
to determine whether such contingencies have been met; when an optionee is
Disabled (as defined in Paragraph 19); and to determine the amount, if any,
necessary to satisfy the obligation of the Company or a Subsidiary to withhold
taxes or other amounts with respect to the grant, exercise or disposition of an
option or the disposition of the underlying shares of Class A Common Stock; the
fair market value of a share of Class A Common Stock; to construe the respective
Contracts and the Plan; with the consent of the optionee, to cancel or modify an
option, provided that the modified provision is permitted to be included in an
option granted under the Plan on the date of the modification, and provided,
further, that in the case of a modification (within the meaning of Section
424(h) of the Code) of an ISO, such option as modified would be permitted to be
granted on the date of such modification under the terms of the Plan; to
prescribe, amend and rescind rules and regulations relating to the Plan; from
and after the New Rule Date to approve any provision that, under Rule 16b-3,
requires the approval of the Board of Directors, a committee of "non-employee
directors" or the stockholders to be exempt (unless otherwise specifically
provided herein); 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. Any controversy or claim
arising out of or relating to the Plan, any option granted under the Plan or any
Contract shall be unilaterally determined by the Committee in its sole
discretion. No member or former member of the Committee shall be liable for any
action, failure to act or determination made in good faith with respect to the
Plan or any option granted hereunder.
4. ELIGIBILITY. The Committee may, consistent with the purposes of the
Plan, grant options from time to time, to employees (including officers and
directors who are
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employees) of, and consultants to, the Company or any of its Subsidiaries.
Options granted shall cover such number of shares of Class A Common Stock as the
Committee may determine; provided, however, that the maximum number of shares of
Class A Common Stock for which options may be granted to any individual during a
calendar year under the Plan is 100,000 (the "162(m) Maximum"); and provided,
further, that the aggregate market value (determined at the time the option is
granted) of the shares of Class A Common Stock for which any eligible employee
may be granted ISOs under the Plan or any other plan of the Company 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. The $100,000 ISO
limitation shall be applied by taking ISOs into account in the order in which
they were granted. Any option (or the portion thereof) granted in excess of such
amount shall be treated as a NQSO.
5. EXERCISE PRICE. The exercise price of the shares of Class A Common
Stock under each option shall be determined by the Committee; provided, however,
that the exercise price shall not be less than 100% of the fair market value of
the Class A Common Stock subject to such option on the date of grant; and
provided, further, that if, at the time an ISO is granted, the optionee owns (or
is deemed to own under Section 424(d) of the Code) stock possessing more than
10% of the total combined voting power of all classes of stock of the Company,
any of its Subsidiaries or a Parent, the exercise price of such ISO shall not be
less than 110% of the fair market value of the Class A Common Stock subject to
such ISO on the date of grant.
The fair market value of a share of Class A Common Stock on any day
shall be (a) if the principal market for the Class A Common Stock is a national
securities exchange, the average between the highest and lowest sales prices per
share of the Class A Common Stock on such day as reported by such exchange or on
a composite tape reflecting transactions on such exchange, (b) if the principal
market for the Class A Common Stock is not a national securities exchange and
the Class A Common Stock is quoted on The Nasdaq Stock Market ("Nasdaq"), and
(i) if actual sales price information is available with respect to the Class A
Common Stock, the average between the high and low sales prices per share of the
Class A Common Stock on such day on Nasdaq, or (ii) if such information is not
available, the average between the highest bid and the lowest asked prices for
the Class A Common Stock on such day on Nasdaq, or (c) if the principal market
for the Class A Common Stock is not a national securities exchange and the Class
A Common Stock is not quoted on Nasdaq, the average between the highest bid and
lowest asked prices per share for the Class A Common Stock on such day as
reported on the OTC Bulletin Board Service, National Quotation Bureau,
Incorporated 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, the fair market value of a share of Class A
Common Stock shall be determined by the Committee by any method consistent with
applicable regulations adopted by the Treasury Department relating to stock
options.
6. TERM. The term of each option granted pursuant to the Plan shall be
such term as is established by the Committee, in its sole discretion, as set
forth in the applicable Contract; provided, however, that the term of each ISO
granted pursuant to the Plan shall be for a period not exceeding 10 years from
the date of grant thereof, and provided, further, that if, at the time an ISO
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is granted, the optionee owns (or is deemed to own under Section 424(d) of the
Code) stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company, any of its Subsidiaries or a Parent, the term
of the ISO shall be for a period not exceeding five years from the date of
grant. Options shall be subject to earlier termination as hereinafter provided.
7. EXERCISE. An option (or any part or installment thereof), to the
extent then exercisable, shall be exercised by giving written notice to the
Company at its principal office, stating which ISO or NQSO is being exercised,
specifying the number of shares of Class A Common Stock as to which such option
is being exercised and accompanied by payment in full of the aggregate exercise
price therefor (or the amount due on exercise if the Contract permits
installment payments) (a) in cash or by certified check or (b) if the Contract
so permits, with previously acquired shares of Class A 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 with any combination of cash,
certified check or shares of Class A Common Stock.
The Committee may, in its discretion, permit payment of the exercise
price of an option by delivery by the optionee of a properly executed exercise
notice, together with a copy of his irrevocable instructions to a broker
acceptable to the Committee to deliver promptly to the Company the amount of
sale or loan proceeds sufficient to pay such exercise price. In connection
therewith, the Company may enter into agreements for coordinated procedures with
one or more brokerage firms.
A person entitled to receive Class A Common Stock upon the exercise of
an option shall not have the rights of a stockholder with respect to such shares
of Class A Common Stock 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 of Class A Common Stock in
payment of an option exercise price shall continue to have the rights of a
stockholder with respect to such previously acquired shares.
In no case may a fraction of a share of Class A Common Stock be
purchased or issued under the Plan.
8. TERMINATION OF RELATIONSHIP. Except as may otherwise be expressly
provided in the applicable Contract, any holder of an option whose relationship
with the Company (and its Subsidiaries) as an employee or a consultant has
terminated for any reason other than his death or Disability (as defined in
Paragraph 19) may exercise such option, to the extent exercisable on the date of
such termination, at any time within three months after the date of termination,
but not thereafter and in no event after the date the option would otherwise
have expired; provided, however, that if such relationship shall be terminated
either (a) for Cause (as defined in Paragraph 19), or (b) without the consent of
the Company, said option shall terminate immediately. Except as may otherwise be
expressly provided in the applicable Contract, options granted under the Plan
shall not be affected by any change in the status of the holder so long as he
continues to be an
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employee or a consultant of the Company or any of the Subsidiaries (regardless
of having changed from one to the other or having been transferred from one
corporation to another).
For purposes of the Plan, an employment relationship shall be deemed to
exist between an individual and a corporation if, at the time of the
determination, the individual was an employee of such corporation for purposes
of Section 422(a) of the Code. As a result, an individual on military, sick
leave or other bona fide leave of absence shall continue to be considered an
employee for purposes of the Plan during such leave if the period of the leave
does not exceed 90 days, or, if longer, so long as the individual's right to
reemployment with the Company (or a related corporation) is guaranteed either by
statute or by contract. If the period of leave exceeds 90 days and the indi
vidual's right to reemployment is not guaranteed by statute or by contract, the
employment relationship shall be deemed to have terminated on the 91st day of
such leave. In addition, for pur poses of the Plan, an optionee's employment
with a Subsidiary of the Company shall be deemed to have terminated on the date
such corporation ceases to be a Subsidiary of the Company.
Nothing in the Plan or in any option granted under the Plan shall confer
on any individual any right to continue in the employ of, or as a consultant to,
the Company or any of its Subsidiaries, or interfere in any way with any right
of the Company or any of its Subsidiaries to terminate such relationship at any
time for any reason whatsoever without liability to the Company or any of its
Subsidiaries.
9. DEATH OR DISABILITY OF AN OPTIONEE. Except as may otherwise be
expressly provided in the applicable Contract, if an optionee dies (a) while he
is an employee of, or consultant to, the Company or any of its Subsidiaries, (b)
within three months after the termination of such relationship (unless such
termination was for Cause or without the consent of the Company) or (c) within
one year following the termination of such relationship by reason of the
optionee's Disability, his option may be exercised, to the extent exercisable on
the date of his death, by his Legal Representative (as defined in Paragraph 19)
at any time within one year after death, but not thereafter and in no event
after the date the option would otherwise have expired.
Except as may otherwise be expressly provided in the applicable
Contract, any optionee whose relationship as an employee of, or consultant to,
has terminated by reason of his Disability may exercise his option, to the
extent exercisable upon the effective date of such termination, at any time
within one year after such date, but not thereafter and in no event after the
date the option would otherwise have expired.
10. COMPLIANCE WITH SECURITIES LAWS. The Committee may require, in its
sole discretion, as a condition to the exercise of any option that either (a) a
Registration Statement under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the shares of Class A Common Stock to be
issued upon such exercise shall be effective and current at the time of
exercise, or (b) there is an exemption from registration under the Securities
Act for the issuance of shares of Class A Common Stock upon such exercise.
Nothing herein shall be construed
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as requiring the Company to register shares subject to any option under the
Securities Act or to keep any Registration Statement effective or current.
The Committee may require, in its sole discretion, as a condition to the
exercise of an option under the Plan, that the optionee execute and deliver to
the Company his representations and warranties, in form, substance and scope
satisfactory to the Committee, which the Committee determines are necessary or
convenient to facilitate the perfection of an exemption from the registration
requirements of the Securities Act, applicable state securities laws or other
legal requirements, including without limitation that (a) the shares of Class A
Common Stock to be issued upon the exercise of the option are being acquired by
the optionee for his own account, for investment only and not with a view to the
resale or distribution thereof, and (b) any subsequent resale or distribution of
shares of Class A Common Stock by such optionee will be made only pursuant to
(i) a Registration Statement under the Securities Act which is effective and
current with respect to the shares of Class A Common Stock being sold, or (ii) a
specific exemption from the registration requirements of the Securities Act, but
in claiming such exemption, the optionee shall prior to any offer of sale or
sale of such shares of Class A Common Stock provide the Company with a favorable
written opinion of counsel satisfactory to the Company, in form, substance and
scope sat isfactory to the Company, as to the applicability of such exemption to
the proposed sale or distribution.
In addition, if at any time the Committee shall determine in its
discretion that the listing or qualification of the shares of Class A Common
Stock subject to such option on any securities exchange or under any applicable
law, or the consent or approval of any governmental agency or regulatory body,
is necessary or desirable as a condition of, or in connection with, the granting
of an option, or the issuance of shares of Class A Common Stock thereunder, such
option 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.
11. STOCK OPTION CONTRACTS. Each option 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.
12. ADJUSTMENTS UPON CHANGES IN COMMON STOCK. Not withstanding any other
provisions of the Plan, in the event of any change in the outstanding Class A
Common Stock by reason of a stock dividend, recapitalization, merger or
consolidation in which the Company is the surviving corporation, spin-off,
split-up, combination or exchange of shares or the like, the aggregate number
and kind of shares subject to the Plan, the aggregate number and kind of shares
subject to each outstanding option, the exercise price thereof and the 162(m)
Maximum shall be appropriately adjusted by the Board of Directors, whose
determination shall be conclusive. Such adjustment may provide for the
elimination of fractional shares, which might otherwise be subject to options
without payment therefor.
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In the event of (a) the liquidation or dissolution of the Company or (b)
a merger in which the Company is not the surviving corporation or a
consolidation, any outstanding options shall terminate, unless other provision
is made therefor in the transaction.
13. AMENDMENTS AND TERMINATION OF THE PLAN. The Plan was adopted by the
Board of Directors on July 10, 1996. No option may be granted under the Plan
after July 9, 2006. 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 ISOs granted hereunder
meet the requirements for "incentive stock options" under the Code, to comply
with the provisions of Rule 16b-3, Section 162(m) of the Code, or any change in
applicable law or to regulations or rulings of administrative agencies;
provided, however, that no amendment shall be effective without the requisite
prior or subsequent stockholder approval that would (a) except as contemplated
in Para graph 12, increase the maximum number of shares of Class A Common Stock
for which options may be granted under the Plan or the 162(m) Maximum, (b) prior
to the New Rule Date, 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. The power of the Committee to
construe and administer any options granted under the Plan prior to the
termination or suspension of the Plan nevertheless shall continue after such
termination or during such suspension.
14. NON-TRANSFERABILITY OF OPTIONS. No option granted under the Plan
shall be transferable otherwise than by will or the laws of descent and
distribution, and options may be exercised, during the lifetime of the holder
thereof, only by him or his Legal Representatives. Except to the extent provided
above, options may not be assigned, transferred, pledged, hypothecated or
disposed of in any way (whether by operation of law or otherwise) and shall not
be subject to execution, attachment or similar process.
15. WITHHOLDING TAXES. The Company or a Subsidiary may withhold cash
and/or, subject to any applicable limitations under Rule 16b-3, shares of Class
A Common Stock to be issued with respect thereto having an aggregate fair market
value on the exercise date equal to the amount which the Committee determines is
necessary to satisfy the obligation of the Company or any of its Subsidiaries to
withhold Federal, state and local taxes or other amounts incurred by reason of
the grant or exercise of an option, its disposition, or the disposition of the
underlying shares of Class A Common Stock. Alternatively, the Company may
require the holder to pay to the Company or a Subsidiary such amount, in cash,
promptly upon demand. The Company shall not be required to issue any shares of
Class A Common Stock pursuant to any such option until all required payments
have been made. Fair market value of the shares of Class A Common Stock shall be
determined in accordance with Paragraph 5.
16. LEGENDS; PAYMENT OF EXPENSES. The Company may endorse such legend or
legends upon the certificates for shares of Class A Common Stock issued upon
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exercise of an option under the Plan and may issue such "stop transfer"
instructions to its transfer agent in respect of such shares as it determines,
in its discretion, to be necessary or appropriate to (a) prevent a violation of,
or to perfect an exemption from, the registration requirements of the Securities
Act and applicable state securities laws, (b) implement the provisions of the
Plan or any agreement between the Company and the optionee with respect to such
shares of Class A Common Stock, or (c) permit the Company to determine the
occurrence of a "disqualifying disposition," as described in Section 421(b) of
the Code, of the shares of Class A Common Stock transferred upon the exercise of
an ISO granted under the Plan.
The Company shall pay all issuance taxes with respect to the issuance of
shares of Class A Common Stock upon the exercise of an option granted under the
Plan, as well as all fees and expenses incurred by the Company in connection
with such issuance.
17. USE OF PROCEEDS. The cash proceeds from the sale of shares of Class
A Common Stock pursuant to the exercise of options under the Plan shall be added
to the general funds of the Company and used for such general corporate purposes
as the Board of Directors may determine.
18. 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 of a Constituent Corporation (as defined in Paragraph
19) or assume the prior options of such Constituent Corporation.
19. DEFINITIONS.
a. "Cause" shall mean (i) if there is a written employment or
consulting agreement between the optionee and the Company or any of its
Subsidiaries that defines termination of such relationship for cause, cause as
defined in such agreement, and (ii) in all other cases, cause as defined by
applicable state law.
b. "Constituent Corporation" shall mean any corporation which
engages with the Company or any of its Subsidiaries in a transaction to which
Section 424(a) of the Code applies (or would apply if the option assumed or
substituted were an ISO), or any Parent (as defined herein) or any Subsidiary of
such corporation.
c. "Disability" shall mean a permanent and total disability within
the meaning of Section 22(e)(3) of the Code.
d. "Legal Representative" shall mean the executor, administrator or
other person who at the time is entitled by law to exercise the rights of a
deceased or incapacitated optionee with respect to an option granted under the
Plan.
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e. "Parent" shall have the same definition as "parent corporation"
in Section 424(e) of the Code.
f. "Subsidiary" shall have the same definition as "subsidiary
corporation" in Section 424(f) of the Code.
20. GOVERNING LAW; CONSTRUCTION. The Plan, such options as may be
granted hereunder, the Contracts and all related matters shall be governed by,
and construed in accordance with, the laws of the State of New York, without
regard to conflict of law provisions. Neither the Plan nor any Contract shall be
construed or interpreted with any presumption against the Company by reason of
the Company causing the Plan or Contract to be drafted. Whenever from the
context it appears appropriate, any term stated in either the singular or plural
shall include the plural and the singular, and any term stated in the masculine,
feminine or neuter shall include the masculine, feminine and neuter.
21. PARTIAL INVALIDITY. The invalidity, illegality or unenforceability
of any provision herein shall not affect the validity, legality or
enforceability of any other provision, all of which shall be valid, legal and
enforceable to the fullest extent permitted by applicable law.
22. STOCKHOLDER APPROVAL. The Plan shall be subject to approval by the
affirmative vote of the majority of shares present in person or represented by
proxy and entitled to vote thereon at the next duly held meeting of the
Company's stockholders at which a quorum is present. No options granted pursuant
to the Plan may be exercised prior to such approval, provided that the date of
grant of any options granted thereunder shall be determined as if the Plan had
not been subject to such approval. Notwithstanding the foregoing, if the Plan is
not approved by a vote of the stockholders of the Company on or before July 9,
1997, the Plan and any options granted thereunder shall terminate.
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EXHIBIT C
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
ALLOU HEALTH & BEAUTY CARE, INC.
It is hereby certified that:
1. The name of the corporation (hereinafter called the "Corporation") is
ALLOU HEALTH & BEAUTY CARE, INC.
2. The certificate of incorporation of the Corporation is hereby amended
by striking out Article "FOURTH" thereof and by substituting in lieu of said
Article the following new Article "FOURTH":
"FOURTH: The aggregate number of shares which the Corporation
shall have authority to issue is 13,200,000, divided into three classes:
(i) 10,000,000 shares of Class A Common Stock, par value $.001 per share
(the "Class A Common Stock"); (ii) 2,200,000 shares of Class B Common
Stock, par value $.001 per share (the "Class B Common Stock"); (iii)
1,000,000 shares preferred stock, par value $.001 per share (the
"Preferred Stock") (the Class A Common Stock and the Class B Common
Stock collectively referred to herein as the "Common Stock").
A. Common Stock
(1) General. The voting, dividend and liquidation rights of the
holders of the Common Stock are subject to and qualified by the rights
of the holders of the Preferred Stock of any class as may be designated
by the Board of Directors upon any issuance of the Preferred Stock of
any class.
(2) Voting. Each holder of Class A Common Stock shall have one
vote in respect of each share of Class A Common Stock held by him and
each holder of Class B Common Stock shall have five votes in respect of
each share of Class B Common Stock held by him on all matters voted upon
by the stockholders.
(3) Dividends. Dividends may be declared and paid on the Common
Stock from funds lawfully available therefor as and when determined by
the Board of Directors and subject to any preferential dividend rights
of any then outstanding Preferred Stock.
(4) Liquidation. Upon the dissolution or liquidation of the
Company, whether voluntary or involuntary, holders of Common Stock will
be entitled to
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receive all assets of the Company available for distribution to its
stockholders, subject to any preferential rights of any then outstanding
Preferred Stock.
(5) Transferability. All outstanding shares of Common Stock
shall be freely transferable.
(6) Conversion of Class B Common Stock. All outstanding shares
of Class B Common Stock shall be convertible at all times, at the
election of the holder thereof, into an equal number of fully paid and
nonassessable shares of Class A Common Stock by delivery of written
notice by the holder of such shares of Class B Common Stock to the
Corporation, or its transfer agent, of his election together with the
certificate(s) representing the shares to be converted. Thereupon, the
Corporation, or its transfer agent, as the case may be, shall exchange
such certificate(s) for a certificate or certificates representing an
equal number of shares of Class A Common Stock. Shares of Class B Common
Stock shall be deemed to have been converted immediately prior to the
close of business on the day upon which the Corporation, or its transfer
agent, received such shares for conversion. The person entitled to
receive the Class A Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder of such Class A Common
Stock at such time. Thereafter, the shares of Class B Common Stock so
converted shall be authorized and unissued shares of Class B Common
Stock of the Corporation.
With respect to any shares of Class B Common Stock converted
into Class A Common Stock, until surrender as hereinafter provided, each
outstanding certificate, which prior to such conversion represented
shares of Class B Common Stock, shall be deemed for all purposes to
evidence ownership of the number of shares of Class A Common Stock into
which the shares of Class B Common Stock shall have been converted. Upon
surrender to the Corporation, or its transfer agent, for cancellation of
the certificate or certificates representing such shares, the holder
thereof shall be entitled to receive a certificate or certificates
representing the number of shares of Class A Common Stock to which such
holder is entitled.
B. Preferred Stock
The relative rights, preferences and limitations of the shares
of Preferred Stock are as follows:
The Preferred Stock may be issued, from time to time, in one or
more series, with such designations, preferences and relative
participating, optional or other rights, qualifications, limitations or
restrictions thereof as shall be stated and expressed in the resolution
or resolutions providing for the issue of such series adopted by the
Board of Directors from time to time, pursuant to the authority herein
given, a copy of which resolution or resolutions shall have been set
forth in a Certificate made, executed, acknowledged, filed and recorded
in the manner required by the laws of the State of Delaware in order to
make the same effective. Each series shall consist of such number of
shares as shall be stated and expressed in such resolution or
resolutions providing for the issuance of the stock of such series. All
shares of any one series of Preferred Stock shall be alike in every
particular. The authority of the Board of Directors with respect to each
series shall include, but not be limited to, determination of the
following:
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(1) the number of shares constituting that series and
the distinctive designation of that series;
(2) whether the holders of shares of that series shall
be entitled to receive dividends and, if so, the rates of such
dividends, conditions under which and times such dividends may
be declared or paid, any preference of any such dividends to,
and the relation to, the dividends payable on any other class or
classes of stock or any other series of the same class and
whether dividends shall be cumulative or noncumulative and, if
cumulative, from which date or dates;
(3) whether the holders of shares of that series shall
have voting rights in addition to the voting rights provided by
law and, if so, the terms of such voting rights;
(4) whether shares of that series shall have conversion
or exchange privileges into or for, at the option of either the
holder or the Corporation or upon the happening of a specified
event, shares of any other class or classes or of any other
series of the same or other class or classes of stock of the
Corporation and, if so, the terms and conditions of such
conversion or exchange including provision for adjustment of the
conversion or exchange rate in such events as the Board of
Directors shall determine;
(5) whether shares of that series shall be redeemable
and, if so, the terms and conditions of such redemption,
including the date or dates upon or after which they shall be
redeemable and the amount per share payable in case redemption,
which amount may vary under different conditions and at
different redemption dates;
(6) whether shares of that series shall be subject to
the operation of a retirement or sinking fund and, if so
subject, the extent to and the manner in which it shall be
applied to the purchase or redemption of the shares of that
series, and the terms and provisions relative to the operation
thereof;
(7) the rights of shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up
of the Corporation and any preference of any such rights to, and
the relation to, the rights in respect thereto of any class or
classes of stock or any other series of the same class; and
(8) whether shares of that series shall be subject or
entitled to any other preferences, and the other relative,
participating, optional or other special rights and
qualifications, limitations or restrictions of shares of that
series and, if so, the terms thereof;
provided, however, that if the stated dividends and amounts
payable on liquidation with respect to shares of any series of
Preferred Stock are not paid in full, then the shares of all
series of Preferred Stock shall share ratably in the payment of
dividends including accumulations, if any, in accordance with
the sums which would be payable on such shares if all dividends
were declared and paid in full, and in any distribution of
assets (other than by way if
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dividends) in accordance with the sums which would be payable on
such distribution if all sums payable were discharged in full."
3. The amendment of the certificate of incorporation herein certified
has been duly adopted in accordance with the provisions of Section 242 of the
General Corporation Law of the State of Delaware. Signed and attested to on
September __, 1996.
____________________________
Herman Jacobs, President and
Chief Operating Officer
Attest:
_________________________
Jack Jacobs, Secretary
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ALLOU HEALTH & BEAUTY CARE, INC.
PROXY
ANNUAL MEETING OF STOCKHOLDERS - SEPTEMBER 11, 1996
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints, as proxies for the undersigned,
Victor Jacobs and Herman Jacobs and each of them, with full power of
substitution, to vote all shares of Common Stock of the undersigned in Allou
Health & Beauty Care, Inc. (the "Company") at the Annual Meeting of Stockholders
of the Company to be held at the Boardroom of the American Stock Exchange, 86
Trinity Place, New York, New York, 10006 on September 11, 1996, at 10:00 a.m.,
local time (the receipt of Notice of which meeting and the Proxy Statement
accompanying the same being hereby acknowledged by the undersigned), or at any
adjournments thereof, upon the matter described in the Notice of Meeting and
Proxy Statement and upon such other business as may properly come before such
meeting or any adjournments thereof, hereby revoking any proxies heretofore
given.
EACH PROPERLY EXECUTED PROXY WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATIONS MADE ON THE REVERSE SIDE HEREOF. IF NO SPECIFICATIONS ARE MADE,
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED "FOR" THE LISTED NOMINEES AND
"FOR" THE LISTED PROPOSALS.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
<PAGE>
Please mark boxes [X] in blue or black ink.
1. Election of Directors:
(INSTRUCTION: TO WITHHOLD AUTHORITY FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE
THROUGH THE NOMINEE'S NAME IN THE LIST ABOVE)
FOR ALL NOMINEES [_] WITHHOLD AUTHORITY [_]
(except as marked to to vote for all nominees
the contrary below)
(Victor Jacobs, Herman Jacobs, Ramon
Montes, David Shamilzadeh, Jack Jacobs,
Sol Naimark, Jeffrey Berg)
2. Approval of the Company's 1995 Nonqualified Stock
Option Plan for a maximum of 500,000 shares of the
Company's Class B Common Stock.
FOR [_] AGAINST [_] ABSTAIN [_]
3. Approval of the Company's 1996 Stock Option Plan
for a maximum of 1,000,000 shares of the Company's
Class A Common Stock.
FOR [_] AGAINST [_] ABSTAIN [_]
4. Approval of the amendment to the Company's
Certificate of Incorporation: (i) to confirm that
the shares of Class B Common Stock are convertible
at any time into shares of Class A Common Stock on
a one-for-one basis, which previously has been
included in the Company's public disclosures; (ii)
to provide that the shares of Class B Common Stock
are freely transferable; and (iii) to increase the
authorized Class B Common Stock from 1,700,000 to
2,200,000 shares
FOR [_] AGAINST [_] ABSTAIN [_]
5. In their discretion, the Proxies are authorized to
vote upon such other business as may properly come
before the Meeting.
FOR [_] AGAINST [_] ABSTAIN [_]
NOTE: Please sign your name or
names exactly as set forth hereon.
If signed as attorney, executor,
administrator, trustee or guardian,
please indicate the capacity in
which you are acting. Proxies by
corporations should be signed by a
duly authorized officer and should
bear the corporate seal.
Dated ______________________ , 1996
___________________________________
Signature of Stockholder
___________________________________
Print Name(s)
Please Sign and Return the Proxy Promptly in the Enclosed Envelope.
