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-69e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Exchange Act Rule 14a-11 or Rule 14a-12
MENLEY & JAMES, INC.
- ---------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- ---------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
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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:
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MENLEY & JAMES, INC.
100 Tournament Drive
Horsham, Pennsylvania 19044
April 21, 1998
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
which will be held at the Grand Hyatt New York, New York, New York, on
Thursday, May 21, 1998 at 10:00 a.m.
The Notice and Proxy Statement on the following pages contain details
concerning the business to come before the meeting. Management will report on
current operations, and there will be an opportunity for discussion concerning
the Company and its activities. Please sign and return your proxy card in the
enclosed envelope to ensure that your shares will be represented and voted at
the meeting even if you cannot attend. You are urged to sign and return the
enclosed proxy card even if you plan to attend the meeting.
I look forward to personally meeting all stockholders who are able to
attend.
Sincerely,
/s/ Lawrence D. White
Lawrence D. White
President and Chief Executive Officer
<PAGE>
MENLEY & JAMES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 21, 1998
To the Stockholders of
Menley & James, Inc.
Notice Is Hereby Given that the Annual Meeting of the Stockholders of
Menley & James, Inc. (the "Meeting") will be held at the Grand Hyatt New
York, Park Avenue at Grand Central, New York, New York, on Thursday, May 21,
1998, at 10:00 a.m. local time for the following purposes:
1. To elect six directors to serve for one-year terms until the
1999 Annual Meeting of Stockholders;
2. To ratify the selection, by the Board of Directors, of Ernst &
Young LLP, independent auditors, to audit the Company's
consolidated financial statements for the year ended December
31, 1998;
3. To approve an amendment to the Company's 1991 Stock Option Plan
amending and restating the Plan and increasing the number of
shares reserved for issuance by 300,000 shares, from 380,000 to
680,000; and
4. To transact such other business as may properly come before the
Meeting in connection with the foregoing or otherwise.
The Board of Directors has fixed the close of business on April 17, 1998
as the record date for the purpose of determining stockholders entitled to
notice of and to vote at the Meeting or any postponement or adjournment
thereof. A list of such stockholders will be open to the examination of any
stockholder during regular business hours for a period of ten days prior to
the Meeting at the offices of Menley & James, Inc. at 100 Tournament Drive,
Horsham, Pennsylvania.
In order to assure a quorum, it is important that the stockholders who do
not expect to attend the Meeting in person fill in, sign, date and return the
enclosed proxy in the accompanying envelope.
By Order of the Board of Directors,
Greg L. Kearl
Secretary
Horsham, Pennsylvania
April 21, 1998
<PAGE>
MENLEY & JAMES, INC.
100 Tournament Drive
Horsham, Pennsylvania 19044
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
May 21, 1998
The enclosed proxy is solicited by the Board of Directors of Menley &
James, Inc. (the "Company") for use at the 1998 Annual Meeting of Stockholders
(the "Meeting") to be held at the Grand Hyatt New York, Park Avenue at Grand
Central, New York, New York, on Thursday, May 21, 1998 at 10:00 a.m. local
time, and at any postponement or adjournment thereof. The enclosed proxy,
properly executed and received by the Secretary of the Company prior to the
Meeting, and not revoked, will be voted in accordance with the directions
thereon, and if no directions are indicated, the proxy will be voted for each
nominee for election as a director and for approval of the selection of Ernst
& Young LLP as independent auditors for the Company for the year ended
December 31, 1998. If any other matter should be presented at the Meeting
upon which a vote may properly be taken, the shares represented by the proxy
will be voted with respect thereto at the discretion of the person or persons
holding such proxy. Proxies may be revoked by stockholders at any time prior
to the voting of the proxy by written notice to the Company, by submitting a
new proxy or by personal ballot at the Meeting.
The principal executive offices of the Company are located at 100
Tournament Drive, Horsham, Pennsylvania, 19044.
As of the close of business on April 17, 1998, the record date for
determining stockholders entitled to vote at the Meeting, the Company had
6,163,518 shares of its $.01 par value common stock (the "Common Shares")
issued and outstanding. Each Common Share is entitled to one vote at the
Meeting. The first date on which this proxy statement and the enclosed form
of proxy are being sent to the Company's stockholders is on or about
April 21, 1998.
ITEM 1. ELECTION OF DIRECTORS
The Board of Directors of the Company presently consists of six members.
At the Meeting, six directors will be elected to hold office for one-year
terms until the 1999 Annual Meeting of Stockholders, and until their
successors have been elected and qualified. The proxy will be voted in
accordance with the directions thereon, or if no directions are indicated, for
election of the six directors named below whose election has been proposed and
recommended by the Board of Directors. If any nominee shall, prior to the
Meeting, become unavailable for election as a director, the persons named in
the accompanying form of proxy will vote in their discretion for a nominee, if
any, that may be recommended by the Board of Directors, or the Board of
Directors may reduce the number of directors to eliminate the vacancy. The
presence, in person or by proxy, of a majority of the outstanding Common
Shares is required for a quorum for the election of directors at the Meeting,
but if a quorum should not be present, the Meeting may be adjourned from time
to time until a quorum has been obtained.
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INFORMATION AS TO NOMINEES FOR ELECTION AS DIRECTORS
Certain information concerning the Company's Directors is set forth
below:
Year
Directorship
Name Age Position with the Company Began
- ------------------------------------------------------------------------------
Peter J. Carr 42 Director 1990
Greg L. Kearl 47 Director, Executive Vice President,
Chief Operating Officer, 1991
Secretary & Treasurer
James T. McMillan, II 51 Director 1996
Bruce W. Simpson 56 Director 1996
James E. Thomas 37 Director 1992
Lawrence D. White 52 Director, Chairman of the Board,
President and Chief Executive Officer 1990
The business experience, directorships in other companies and Board of
Directors committee memberships of the nominees for election are set forth
below:
Peter J. Carr has been a principal of Carr & Company, LLC, an investment
and financial advisory company, since January 1990. Mr. Carr was formerly a
Managing Director and a member of the Board of Directors of Dean Witter
Capital Corporation and Dean Witter Realty Inc., where he was employed from
September 1982 to December 1989. Mr. Carr is also President and Chairman of
Empyrean Holdings Corporation, a private equity investment company. Mr. Carr
is presently Chairman of the Compensation Committee.
Greg L. Kearl was employed by SmithKline Consumer Products, a division of
SmithKline Beecham Corporation (SB), from 1984 until May 1990 in a variety of
positions, including Vice President of Sales from August 1986 until May 1990,
Director -- New Products from August 1986 to November 1986, and National Sales
Director from 1984 to August 1986. Prior to working at SB, Mr. Kearl was at
McNeil Consumer Products Company in a variety of positions including Eastern
Regional Sales Manager from 1983 to 1984, Director of Special Markets Region
from 1982 to 1983 and Director of Sales Administration from 1981 to 1982.
James T. McMillan, II is the Chairman and Chief Executive Officer of
Ferndale Laboratories, Inc. Mr. McMillan has served as Chairman of Ferndale
Laboratories, Inc. since 1990. He joined Ferndale Laboratories, Inc. in 1985
as Vice Chairman and Chief Executive Officer. Mr. McMillan is a member of the
Audit Committee and has been a Director since July 1996.
Bruce W. Simpson is the President and Chief Executive Officer of Medeva
Pharmaceuticals, Inc. (formerly Adams Laboratories, Inc.) a division of Medeva
Plc. From 1973 to 1992 he was employed by Fisons Corporation in a variety of
positions including Executive Vice President and General Manager of U.S.
Operations from October 1988 to February 1992 and Vice President, Sales and
Marketing, from June 1982 to October 1988. Mr. Simpson is a member of the
Compensation Committee and has been a director since July 1996.
James E. Thomas has been employed since 1989 by E.M. Warburg, Pincus &
Co., LLC, where he currently serves as a Managing Director. Prior to that, he
was Vice President with Goldman Sachs International. Mr. Thomas is a Director
of Anergen, Inc., Celtrix Pharmaceuticals, Inc., Transkaryotic
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Therapies, Inc., Xomed Surgical Products, Inc. and a number of privately-held
companies. Mr. Thomas is presently Chairman of the Audit Committee and a
member of the Compensation Committee.
Lawrence D. White was Vice President of Marketing and Sales for
SmithKline Consumer Products, a division of SB from January 1986 to May 1990.
Prior to working at SB, Mr. White was at Revlon's Norcliff Thayer Division as
Vice President of Marketing from 1982 to 1985, as Director of Brand Management
from 1981 to 1982, as Marketing Group Director from 1978 to 1981, and as a
Brand Manager from 1977 to 1978.
The Company has agreed that, so long as Warburg, Pincus Investors, L.P.
("Warburg") holds at least 20% of the outstanding Common Shares, Warburg will
have the right to nominate up to two directors, and the Company will use its
best efforts to cause such persons to remain on the Board of Directors,
provided, however, that in no event does Warburg have the right under the
agreement to nominate more than one-half of the number of directors serving at
any time. Currently, only one director serves as a designee of Warburg,
although Warburg has the right to nominate a second director. If Warburg owns
less than 20% but more than 5% of the Common Shares, Warburg will have the
right to nominate one director. Mr. Thomas has been nominated for director by
Warburg. Officers are selected by and serve at the discretion of the Board of
Directors.
The Company's Restated Certificate of Incorporation provides that, to the
fullest extent permitted by Delaware law, its directors shall not be liable
for monetary damages for breach of the directors' fiduciary duty of care to
the Company and its stockholders. This provision in the Restated Certificate
of Incorporation does not eliminate the duty of care and in appropriate
circumstances, equitable remedies such as injunction, rescission or other
forms of nonmonetary relief would remain available under Delaware law. In
addition, each director will continue to be subject to liability for breach of
the director's duty of loyalty to the Company, for acts or omissions not taken
or made in good faith or involving intentional misconduct, for knowing
violations of law, for actions leading to improper personal benefit to the
director, and for payment of dividends or approval of stock repurchases or
redemptions that are unlawful under Delaware law. The provision also does not
affect a director's liabilities under any other laws, such as the federal
securities law.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE 'FOR' THE ELECTION OF THE SIX
DIRECTORS NAMED ABOVE.
Board of Directors' Meetings, Committees and Fees
The Board of Directors met five times during 1997.
In 1997, the Board of Directors had standing Audit and Compensation
Committees. The Audit Committee is comprised of James T. McMillan, II and
James E. Thomas. The Compensation Committee is comprised of Peter J. Carr,
Bruce W. Simpson and James E. Thomas. The Board of Directors has no standing
Nominating Committee.
The Audit Committee recommends to the Board of Directors the engagement
of the independent auditors of the Company and reviews with the independent
auditors the scope and results of the Company's audits. The Audit Committee
meets with management and with the Company's independent auditors to review
matters relating to the quality of financial reporting and internal accounting
control, including the nature, extent and results of their audits, and
otherwise maintains communications between
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the Company's independent auditors and the Board of Directors. The Audit
Committee met once during 1997.
The Compensation Committee reviews the performance of corporate officers,
established overall employee compensation policies and recommends to the Board
of Directors major compensation programs. The Compensation Committee also
reviews and approves salary arrangements and other remuneration for executive
officers of the Company and is responsible for review of certain employee
benefit plans. The Compensation Committee did not meet during 1997.
During 1997, all of the directors, except Mr. Simpson, attended at least
75% of the aggregate of (i) all Board meetings during the time he was a member
of the Board, and (ii) all Committee meetings of which he was a member.
During 1997, Mr. Simpson attended less than 75% of all board meetings. Mr.
Simpson is a member of the Compensation Committee.
The Company has agreed to compensate Mr. McMillan and Mr. Simpson for
serving on the Board of Directors through an annual grant of a stock option
for 15,000 Common Shares at the current market price on the date of grant.
Except for the above named directors the Company presently does not pay its
other directors for serving on the Board of Directors or its committees.
Directors are reimbursed for their out-of-pocket expenses incurred in
attending meetings.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
ownership of the Common Stock of the Company as of April 1, 1998, by (i) each
person known by the Company to be the beneficial owner of more than 5% of the
outstanding Common Stock, (ii) each director of the Company, and (iii) all
directors and officers of the Company as a group. Except as otherwise noted,
the named beneficial owner has sole voting and investment power with respect
to the Common Stock:
Shares of
Common Stock
Beneficially Percentage
Name and Address Owned Owned
- ------------------------------------------------------------------------------
Warburg, Pincus Investors, L.P.(1) ....... 3,020,478 47.9%
466 Lexington Avenue
New York, New York 10017
OTC Group L.P.(2) ........................ 93,100 1.5
89 Highland Avenue
Montclair, New Jersey 07042
James E. Thomas(1) ....................... -- --
466 Lexington Avenue
New York, New York 10017
Peter J. Carr ............................ 76,257 1.2
89 Highland Avenue
Montclair, New Jersey 07042
James T. McMillan, II(3) ................. 115,000 1.8
780 West Eight Mile Road
Ferndale, Michigan 48220
Bruce W. Simpson(4) ...................... 30,000 0.5
755 Jefferson Road
Rochester, New York 14623
Lawrence D. White(5) ..................... 290,121 4.6
Greg L. Kearl(5) ......................... 295,121 4.7
All executive officers and directors as
a group (6 persons) ..................... 899,599 14.3
- -------------
(1) Warburg, Pincus Investors, L.P. ("Warburg") is a Delaware limited
partnership engaged in making venture capital and related investments.
The sole general partner of Warburg is Warburg, Pincus & Co., a New York
general partnership ("WP"). E.M. Warburg, Pincus & Co., LLC ("EMW LLC")
manages Warburg. The members of EMW LLC are substantially the same as the
partners of WP. Lionel I. Pincus is the managing partner of WP and the
managing member of EMW LLC and may be deemed to control both WP and EMW
LLC. WP, as the sole general partner of Warburg, has a 20% interest in the
profits of Warburg. Mr. Thomas, a director of the Company, is a Managing
Director and member of EMW LLC and a general partner of WP. As such, Mr.
Thomas may be deemed to have an indirect pecuniary interest (within the
meaning of Rule 16a-1 under the Securities Exchange Act of 1934 (the
"Exchange Act")) in an indeterminate portion of the shares benefically
owned by Warburg and WP. All of the shares of Common Stock indicated as
owned by Mr. Thomas are owned directly by Warburg and are included because
of Mr. Thomas' affiliation with Warburg. Mr. Thomas disclaims "beneficial
ownership" of these shares within the meaning of Rule 13d-3 under the
Exchange Act, except to the extent of his indirect pecuniary interest.
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(2) Peter J. Carr is currently the general partner of OTC Group L.P. Mr. Carr
is deemed to have beneficial ownership of the Common Shares of the Company
that are owned by OTC Group L.P.
(3) Includes (i) 85,000 shares of Common Stock held by the James T. McMillan,
II Trust and (ii) options to purchase 30,000 shares of Common Stock which
Mr. McMillan has the right to acquire within 60 days.
(4) Represents options to purchase 30,000 shares of Common Stock which Mr.
Simpson has the right to acquire within 60 days.
(5) Includes options to purchase 38,000 shares of Common Stock which Mr. White
and Mr. Kearl have the right to acquire within 60 days.
EXECUTIVE COMPENSATION AND RELATED INFORMATION
The information below is provided with respect to the compensation of Mr.
White, the Company's Chief Executive Officer, and Mr. Kearl, the Company's
Chief Operating Officer, as the only other executive officer whose aggregate
compensation in 1997 exceeded $100,000.
Compensation Committee Report on Executive Compensation
The Company's executive compensation policies are formulated by the
Compensation Committee of the Board of Directors. The Company maintains a
philosophy that compensation of its executive officers should be competitive
with similarly situated executives of its competitors and peer companies. In
addition, compensation is linked to each executive officer's performance, as
well as the overall operating performance of the Company. The Compensation
Committee may make discretionary increases in the salary based on the
executive's contribution to the Company.
Executive officers may also receive grants of stock options annually
under the Company's 1991 Stock Option Plan. Options are granted at a price
equal to the fair market value of the Company's Common Shares on the date of
grant. The Board of Directors feels that annual grants of stock options at or
above fair market value are an effective means of aligning an executive's
compensation with the interests of stockholders, since the value of such
options are tied directly to increases in the market value of the Company's
Common Shares. No options were granted to or exercised by either Messrs.
White or Kearl in 1997.
Executive officers may also participate in the Corporation's
tax-qualified employee savings and investment and retirement plan (the
"Savings and Retirement Plan") on the same basis as other employees of the
Company. In 1997, the Company contributed 2% to each eligible employee's
account under the Savings and Retirement plan without regard to such
employee's level of contribution. Amounts contributed to the Savings and
Retirement Plan by an employee may not exceed the lesser of 15% of total
compensation on a pre-tax basis or the statutorily prescribed annual limit
($9,500 in 1997) in any year. The Company maintains the Savings and
Retirement Plan for the benefit of all employees who meet the eligibility
requirements and does not maintain any special or additional retirement
arrangements for its executive officers.
COMPENSATION COMMITTEE
Peter J. Carr
Bruce W. Simpson
James E. Thomas
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SUMMARY COMPENSATION TABLE
The table below sets forth all compensation paid by the Company to each
of Messrs. White and Kearl for the last three years.
All Other
Name and Principal Position Year Salary Bonus Compensation
- ------------------------------------------------------------------------------
Lawrence D. White, Director, 1997 $190,000 -0- $ 6,362(1)
President and Chief 1996 $190,000 -0- $ 6,522
Executive Officer 1995 $190,000 -0- $ 3,135
Greg L. Kearl, Director, 1997 $174,500 -0- $ 4,982(2)
Executive Vice President, 1996 $174,500 -0- $ 4,718
Chief Operating Officer, 1995 $174,500 -0- $ 4,658
Secretary and Treasurer
- -------------
(1) Represents insurance premiums paid by the Company in the amount of $3,162
for disability and term life insurance for the benefit of Mr. White and
contributions by the Company to Mr. White's account in the Savings and
Retirement Plan in the amount of $3,200.
(2) Represents insurance premiums paid by the Company in the amount of $1,782
for disability and term life insurance for the benefit of Mr. Kearl and
contributions by the Company to Mr. Kearl's account in the Savings and
Retirement Plan in the amount of $3,200.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year End Option Values
This table provides information regarding the exercise of options during
the fiscal year and the number and value of unexercised options held at year
end.
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options Options
at Fy-End (#) at Fy-End ($)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized($) Unexercisable Unexercisable
- -------------------------------------------------------------------------------
Lawrence D. White - 0 - -- 38,000 --
-- --
Greg L. Kearl - 0 - -- 38,000 --
-- --
Employment Contracts and Termination of Employment and Change-in-Control
Arrangements
Each of Messrs. White and Kearl has a severance agreement with the
Company effective October 25, 1995, having indefinite terms. Salary
Increases are at the discretion of the Compensation Committee of the Board of
Directors, which also has the discretion to award bonuses based upon the
achievement of annual and strategic objectives. Each agreement provides
for a termination payment equal to one year's base salary in effect
immediately prior to the termination date. Payment would be made upon
the discharge for reasons other than cause. Additional monthly payments
will be made ending the earlier of
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six months or the date the executive secures full-time employment. One year's
payment would also be made should there be a change of control and within two
months following the change of control the executive elects to resign or
within eighteen months following the change of control the Company terminates
the executive's employment other than for cause. Health and life insurance
benefits in effect immediately prior to the termination date will continue for
a period of eighteen months from the date of termination. Each agreement also
provides for a six-month payment of full base salary upon termination for
disability.
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee in 1997 were Peter J. Carr,
Bruce W. Simpson and James E. Thomas. No member of the Compensation Committee
is either presently or formerly an officer or employee of the Company. No
executive officer of the Company served on any board of directors or
compensation committee of any entity, other than the Company, with which any
member of the Compensation Committee is affiliated.
Performance Graph
The graph set forth below compares the cumulative total return on the
Company's Common Stock during the five-year period ending December 31, 1997,
against the cumulative total return on the NASDAQ Stock Index and the NASDAQ
Pharmaceutical Stock Index, assuming $100 was invested on January 1, 1993.
[The following table was represented by a line graph in the
printed document.]
- ------------------------------------------------------------------------------
NASDAQ
MENLEY PHARMACEUTICAL NASDAQ
& JAMES STOCKS STOCK INDEX
- ------------------------------------------------------------------------------
1992 100 100 100
1993 30 89 115
1994 15 67 112
1995 20 123 159
1996 29 123 195
1997 30 127 240
- ------------------------------------------------------------------------------
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than 10%
of the Company's Common Stock to file initial reports of beneficial ownership
and changes in beneficial ownership of the Company's Common Stock with the
Securities and Exchange Commission ("SEC") and the National Association of
Securities Dealers, Inc. Such persons are also required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms they file. To the
Company's knowledge, based solely on a review of the copies of such reports
furnished to the Company and written representations as to transactions for
which reports are required, during 1997 such individuals complied with all
Section 16(a) filing requirements.
ITEM 2. RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS
Upon recommendation of the Audit Committee, the Board of Directors
proposes and recommends that the stockholders ratify the selection of the firm
of Ernst & Young LLP to serve as independent auditors of the Company for
the year ended December 31, 1998. Ernst & Young LLP has served as the
Company's independent auditors from 1990 to 1997. Unless otherwise
directed by the stockholders, proxies will be voted for approval of the
selection of Ernst & Young LLP to audit the Company's consolidated financial
statements for the year ended December 31, 1998.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
SELECTION OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS
FOR 1998.
ITEM 3. PROPOSAL TO APPROVE THE AMENDED AND RESTATED 1991 STOCK OPTION
PLAN
Subject to stockholder approval, the Board of Directors has amended and
restated the W.K.W. Holdings, Inc. 1991 Stock Option Plan (the "Option Plan")
(as amended, the "Amended Option Plan") in order to (i) change its name to the
Menley & James, Inc. Amended and Restated 1991 Stock Option Plan, (ii) limit
to 100,000 the aggregate number of options to purchase Common Shares
("Options") that may be issued to any individual under the Amended Option Plan
during any fiscal year, and (iii) increase the number of Common Shares that
may be purchased pursuant to the exercise of Options by 300,000 shares, from
380,000 to 680,000.
The following summary of the Amended Option Plan is qualified in its
entirety by express reference to the text of the Amended Option Plan as filed
with the Securities and Exchange Commission. Under the Amended Option Plan,
Options may be granted which are qualified as "incentive stock options"
("ISOs") within the meaning of Section 422 of the Internal Revenue Code (the
"Code") and Options which are not so qualified ("NQSOs").
PURPOSE AND ELIGIBILITY
The primary purpose of the Amended Option Plan is to attract and retain
the best available directors, officers and employees for positions of
substantial responsibilities with the Company and any of its subsidiaries and
to provide an additional incentive to such directors, officers and employees
to exert their maximum efforts toward the success of the Company and its
subsidiaries. All directors, officers and
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employees of the Company and its subsidiaries are eligible to be granted
Options under and participate in the Amended Option Plan; however, ISOs may
not be granted to directors who are not employees of the Company or its
subsidiaries. The approximate number of directors, officers and employees
eligible to participate in the Amended Option Plan is thirty-one.
ADMINISTRATION
The Amended Option Plan is administered by the administrative committee
(the "Committee") appointed by the Board of Directors from among its members,
which consists of at least two members thereof. The Committee, in its sole
discretion, determines which directors, officers and employees are to receive
grants of Options pursuant to the Amended Option Plan ("Participants"). In
addition, the Committee determines the terms of all Options granted thereunder
including the exercise price for an Option, the time or times at which Options
will be granted, become exercisable and forfeitable, and the number of shares
covered by an Option. The Committee interprets the Amended Option Plan and
makes all other determinations deemed advisable for the administration of the
Amended Option Plan. The Committee may, in its discretion, provide for the
accelerated vesting and exercisability of Options, upon the occurrence of such
events as it deems appropriate.
SHARES SUBJECT TO THE AMENDED OPTION PLAN
The Option Plan originally allowed for the grant of an aggregate of
200,000 Common Shares. As a result of the Company's 1.9 to 1.0 stock split,
that number was increased to 380,000. The Amended Option Plan proposes to
increase the total number of Common Shares which may be issued thereunder by
300,000 to 680,000 in the aggregate.
TERMS AND CONDITIONS OF OPTIONS
The terms and conditions of Options granted under the Amended Option Plan
will be set out in option agreements between the Company and Participants
which will contain such provisions as the Committee from time to time deems
appropriate. The terms of each Option granted under the Amended Option Plan
will be determined by the Committee and be consistent with the terms of the
Amended Option Plan. The exercise price for any Option will be determined by
the Committee, but will not be less than the par value per Common Share on the
date of grant and no Option will be exercisable after the expiration of ten
years from the date of its grant. For ISOs, the exercise price will not be
less than the fair market value of the Common Shares on the date of grant. No
participant may be granted Options to purchase more than 100,000 Common Shares
in any one calendar year.
SPECIAL CONDITIONS APPLICABLE TO ISOs
ISOs may not be granted under the Amended Option Plan to a person who
owns stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company, any subsidiary or any parent corporation of
the Company, unless (i) the exercise price of the ISO is at least 110% of the
fair market value of the Common Shares on the date of grant, and (ii) the term
of the ISO is not longer than five years. If the fair market value of the
Common Shares with respect to which ISOs are exercisable for the first time by
any optionee during any calendar year (under all plans of the Company and its
parent corporations and any subsidiary corporations) exceeds $100,000, such
ISOs will be treated, to the extent of such excess, as NQSOs.
10
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PAYMENT UPON EXERCISE
Payment in full for the number of Common Shares purchase pursuant to the
exercise of any Option must be made to the Company at the time of such
exercise. Payment for such shares shall be made in cash, by certified check
or by bank cashier's check. Payment in full shall include payment of any
amount the Company deems necessary to satisfy its obligations to withhold
Federal, state or local income or other taxes with respect to such Common
Shares. Payment may also be made by such other lawful means as may be
prescribed by the Committee in its discretion.
ADJUSTMENT FOR RECAPITALIZATION, MERGER, ETC.
If any change is made to the Common Shares by reason of any merger,
consolidation, reorganization, recapitalization, reclassification, stock
dividend, split-up, combination of shares, exchange of shares, or otherwise,
appropriate adjustments will be made by the Committee to the number of Common
Shares available under the Amended Option Plan, number of shares and price per
Common Shares subject to each outstanding Option and the maximum number of
shares available for grant to any Participant in any fiscal year. In the
event of a merger or other business combination, outstanding Options remain
exercisable in the event the Company is the surviving entity. If the Company
is dissolved or sells substantially all of its assets, all outstanding Options
terminate.
MARKET VALUE
On April 7, 1998, the closing price of a Common Share on the NASDAQ
SmallCap Market was $1.38.
TRANSFERABILITY OF OPTIONS
No grant of Options, or any right of interest therein, is assignable or
transferable except by will or the laws of the descent and distribution and,
during the lifetime of an optionee, Options are exercisable only by the
optionee or his legal representative.
TERMINATION OR AMENDMENT
The Amended Option Plan will terminate on April 10, 2008. The Board of
Directors may terminate or amend the Amended Option Plan at any time; provided
that, without shareholder approval, no such action will (i) increase the
maximum number of shares for which Options may be granted under the Amended
Option Plan, or (ii) change the class of persons eligible to become
Participants.
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief discussion of the Federal income tax
consequences of transactions under the Amended Option Plan based on the Code,
as in effect as of the date of this summary. This discussion is not intended
to be exhaustive and does not describe the state or local tax consequences.
ISOs. No taxable income is realized by the optionee upon the grant or
exercise of an ISO. If Common Shares are issued to an optionee pursuant to
the exercise of an ISO, and if no disqualifying disposition of such shares is
made by such optionee within two years after the date of grant or within one
year after the transfer of such shares to such optionee, then (1) upon sale
of such shares, any amount
11
<PAGE>
realized in excess of the Option price will be taxed to such optionee as a
long-term capital gain and any loss sustained will be a long-term capital
loss, and (2) no deduction will be allowed to the optionee's employer for
federal income tax purposes.
If the Common Shares acquired upon the exercise of an ISO are disposed of
prior to the expiration of either holding period described above, generally
(1) the optionee will realize ordinary income in the year of disposition in an
amount equal to the excess (if any) of the fair market value of such shares at
exercise (or, if less, the amount realized on the disposition of such shares)
over the Option price paid for such shares, and (2) the optionee's employer
will be entitled to deduct such amount for federal income tax purposes if the
amount represents an ordinary and necessary business expense. Any further
gain (or loss) realized by the optionee upon the sale of the Common Shares
will be taxed as short-term or long-term capital gain (or loss), depending on
how long the shares have been held, and will not result in any deduction by
the employer.
Subject to certain exceptions for disability or death, if an ISO is
exercised more than three months following termination of employment, the
exercise of the Option will generally be taxed as the exercise of a NQSO.
For purposes of determining whether an optionee is subject to any
alternative minimum tax liability, an optionee who exercises an ISO generally
would be required to increase his or her alternative minimum taxable income,
and compute the tax basis in the stock so acquired, in the same manner as if
the optionee had exercised an NQSO. Each optionee is potentially subject to
the alternative minimum tax. In substance, a taxpayer is required to pay the
higher of his/her alternative minimum tax liability or his/her "regular"
income tax liability. As a result, a taxpayer has to determine his/her
potential liability under the alternative minimum tax.
NQSOs. With respect to NQSOs: (1) no income is realized by the optionee
at the time the Option is granted; (2) generally, at exercise, ordinary income
is realized by the optionee in an amount equal to the excess, if any, of the
fair market value of the shares on such date over the exercise price, and the
optionee's employer is generally entitled to a tax deduction in the same
amount, subject to applicable tax withholding requirements; and (3) at sale,
appreciation (or depreciation) after the date of exercise is treated as either
short-term or long-term capital gain (or loss) depending on how long the
shares have been held.
NEW PLAN BENEFITS
The grant of Options under the Amended Option Plan is entirely within the
discretion of the Committee. The Company cannot determine the extent of
Option grants that will be made in the future, and no Options have been
granted subject to stockholder approval. Therefore, the Company has omitted
the tabular disclosure of the benefits of amounts allocated under the Amended
Option Plan. Information with respect to compensation paid and other
benefits, including Options, granted in respect of the 1997 fiscal year to the
named executive officers is set forth in the Summary Compensation Table.
APPROVAL BY STOCKHOLDERS
The effectiveness of the Amended Option Plan and any Option granted
thereunder is subject to approval by an affirmative vote of a majority of the
Common Shares present at the Annual Meeting, in person or by proxy, and
entitled to vote thereon. Until such approval is obtained, the Amended Option
12
<PAGE>
Plan shall not be effective. If the Amended Option Plan is not approved, the
Option Plan will continue in operation and Options may continue to be granted
thereunder, subject to the original limitations contained therein.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE AMENDED
OPTION PLAN.
DATE FOR SUBMISSION OF STOCKHOLDER PROPOSAL
Appropriate proposals from stockholders intending to be present at the
1999 annual meeting of stockholders must be received by the Company for
inclusion in the Company's proxy statement and form of proxy relating to that
meeting on or before December 26, 1998.
MISCELLANEOUS
The Company will bear all of the costs of the solicitation of proxies for
use at the Meeting. In addition to the use of the mails, proxies may be
solicited by a personal interview, telephone and telegram by directors,
officers and employees of the Company, who will undertake such activities
without additional compensation. Banks, brokerage houses and other
institutions, nominees or fiduciaries will be requested to forward the proxy
materials to the beneficial owners of the Common Shares of record held by such
persons and entities and will be reimbursed for their reasonable expenses
incurred in connection with forwarding such material.
Stockholders who do not expect to attend in person are urged to sign,
date and return the enclosed proxy in the envelope provided. In order to
avoid unnecessary expense, we ask your cooperation in mailing your proxy
promptly, no matter how large or how small your holdings may be.
Shares which are present or represented by proxy at the Annual Meeting
will be counted regardless of whether the holder of the shares or the proxy
fails to vote on a proposal ("abstention") or whether a broker with authority
fails to exercise its authority with respect thereto (a "broker nonvote").
Abstentions and broker nonvotes will not be included, however, in the
tabulation of votes cast on proposals presented to stockholders. With regard
to the election of directors, votes will be cast in favor of or withheld from
each nominee; votes that are withheld (i.e., abstentions and broker nonvotes)
will have no effect.
At the date of this Proxy Statement, management has no knowledge of any
business, other than that described herein, which will be presented for
consideration at the Meeting. In the event any other business is properly
presented at the Meeting, it is intended that the persons named in the
enclosed proxy will have authority to vote such proxy in accordance with
their judgment on such business.
13
<PAGE>
- ------------------------------------------------------------------------------
MENLEY & JAMES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF
MENLEY & JAMES, INC. IN CONNECTION
WITH ITS ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 21, 1998
The undersigned stockholder of Menley & James, Inc. (the "Company")
hereby appoints Lawrence D. White and Greg L. Kearl, or either of them, the
true and lawful attorneys, agents and proxies of the undersigned, each with
full power of substitution to vote all the shares of the Company's common
stock, $.01 par value per share, which the undersigned may be entitled to vote
at the Annual Meeting of Stockholders of the Company to be held on May 21,
1998, and at any adjournment or postponement of such meeting, with all powers
which the undersigned would possess if personally present, in the manner
indicated on the reverse side of this proxy and upon such other business as
may lawfully come before the meeting. IF NO DIRECTION AS TO THE MANNER OF
VOTING THE PROXY IS MADE, THE PROXY WILL BE VOTED FOR THE ELECTION OF
DIRECTORS AND FOR ITEMS 2 AND 3 AS INDICATED ON THE REVERSE SIDE HEREOF.
(Continued on reverse side)
- ----------------------------FOLD AND DETACH HERE------------------------------
If no direction is made, this proxy will be voted FOR proposals 1, 2 and 3.
Please mark your votes as indicated in this example [x]
1. ELECTION OF DIRECTORS
NOMINEES: Peter J. Carr, Greg L. Kearl, James T. McMillan, II, Bruce W.
Simpson, James E. Thomas, and Lawrence D. White as a Director of the
Company to serve until the Company's 1999 Annual Meeting and until their
successors are elected and qualified.
FOR all nominees listed above (except as marked to the contrary) [ ]
WITHHOLD AUTHORITY to vote for all nominees listed above. [ ]
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.)
______________________________________________________________________________
2. Ratification of Ernst & Young LLP as the independent certified public
accountants of the corporation.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Proposal to approve an amendment to the Company's 1991 Stock Option Plan to
increase the number of shares of Common Stock reserved for issuance by
300,000 shares from 380,000 to 680,000.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Dated: _______________________________________, 1998
______________________________________________________________________________
(Signature)
______________________________________________________________________________
(Signature if held jointly)
PLEASE SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
- ----------------------------FOLD AND DETACH HERE------------------------------
ADMISSION TICKET
Annual Meeting
of
Menley & James, Inc.
Thursday, May 21, 1998
10:00 a.m.
Grand Hyatt New York
Park Avenue at Grand Central
New York, New York
==============================================================================
Agenda
* Election of Directors
* Ratification of the appointment of independent public accountants
* Proposal to approve an amendment to the Company's 1991 Stock Option Plan
* Report on the progress of the corporation
* Discussion on matters of current interest
* Informal discussion among stockholders in attendance
==============================================================================
<PAGE>
Index to Exhibits
Exhibit
#
10.29 Amended and Restated 1991 Stock Option Plan
10.30 Stock Option Agreement
<PAGE>
EXHIBIT 10.29
MENLEY & JAMES, INC.
AMENDED AND RESTATED
1991 STOCK OPTION PLAN
* * *
ARTICLE I.
Purpose
The Menley & James, Inc. Amended and Restated 1991 Stock Option Plan (the
"Plan") is intended as an incentive to improve the performance, encourage the
continued employment, and increase the proprietary interest of certain
directors, officers and employees of Menley & James, Inc. (the "Company") and
its Subsidiaries who shall participate in the Plan. The Plan is designed to
grant such directors, officers and employees the opportunity to share in the
Company's long-term success through stock ownership and to afford them the
opportunity for additional compensation related to the value of the Company's
stock.
The word "Company", when used in the Plan with reference to employment,
shall include Subsidiaries of the Company. The word "Subsidiary", when used
in the Plan, shall mean any subsidiary corporation of the Company within the
meaning of Section 424(f) of the Internal Revenue Code of 1986, as amended
(the "Code").
It is intended that certain options granted under the Plan and designated
as incentive stock options in the option agreements qualify as "incentive
stock options" under Section 422 of the Code.
For purposes of the Plan, the term "Effective Date" shall mean April 10,
1998.
ARTICLE II.
Administration
The Plan shall be administered by a committee (the "Committee") appointed
by the Board of Directors of the Company (the "Board") from among its members
and shall consist of not less than two members thereof.
Subject to the provisions of the Plan, the Committee shall have sole
authority, in its absolute discretion: (a) to determine, subject to approval
of the Board as provided in ARTICLE IV, which of the eligible Participants (as
hereinafter defined) shall be granted options; (b) to authorize the granting
of both incentive stock options and non-qualified stock options; (c) to
determine the times when options shall be granted and the number of shares to
be subject to options; (d) to determine the option price of the shares subject
to each option, which price
(EX-10.29)
-1-
<PAGE>
shall be not less than the minimum specified in ARTICLE V; (e) to determine the
time or times when each option becomes exercisable, the duration of the
exercise period and any other restrictions on the exercise of options issued
hereunder; (f) to prescribe the form or forms of the option agreements under
the Plan (which forms shall be consistent with the terms of the Plan but need
not be identical and may contain such terms as the Committee may deem
appropriate to carry out the purposes of the Plan); (g) to determine the
nature of any rights and restrictions to be imposed on shares subject to
options issued hereunder; (h) to adopt, amend and rescind such rules and
regulations as, in its opinion, may be advisable in the administration of the
Plan; (i) to construe and interpret the Plan, the option agreements under
the Plan and the rules and regulations adopted from time to time, if any; and
(j) to make all other determinations deemed necessary or advisable for the
administration of the Plan. All decisions, determinations and interpretations
of the Committee shall be final and binding on all optionees.
ARTICLE III.
Stock
The stock to be subject to options granted under the Plan shall be shares
of authorized but unissued common stock, par value $0.01 (the "Stock"), of the
Company, or previously issued shares of such Stock reacquired by the Company
and held in its treasury, as determined by the Board. Under the Plan, the
total number of shares of Stock which may be purchased pursuant to options
granted hereunder shall not exceed, in the aggregate, 680,000 shares, except
as such number of shares shall be adjusted in accordance with the provisions
of ARTICLE X hereof. In addition, the maximum number of shares of Stock as to
which options may be granted to any individual during any fiscal year of the
Company shall not exceed 100,000.
Each option granted under the Plan shall be evidenced by an option
agreement between the Company and the optionee containing such provisions as
may be determined by the Committee, but shall be subject to the following
terms and conditions:
(a) Each share of Stock purchased through the exercise of an option
shall be paid for in full at the time of the exercise; and
(b) Each option shall become exercisable by the optionee in accordance
with any vesting schedule established by the Committee pursuant to ARTICLE VI
of the Plan.
The number of shares of Stock available for grant of options under the Plan
shall be decreased by the sum of the number of shares with respect to which
options have been issued and are then outstanding and the number of shares
issued upon exercise of options. In the event that any outstanding option
(EX-10.29)
-2-
<PAGE>
for any reason expires, lapses, or is cancelled prior to the end of the
period during which options may be granted, the shares of Stock called for by
the unexercised portion of such option may again be subject to an option under
the Plan.
ARTICLE IV.
Eligibility of Participants
Subject to ARTICLE VII, directors, officers and employees of the Company
who have been selected by the Committee and approved by the Board as
participants (collectively referred to as "Participants" and individually as a
"Participant") shall be eligible to receive grants of options under the Plan;
provided, however, that notwithstanding any other provision of the Plan to the
contrary, no director of the Company other than directors who are employees of
the Company shall be eligible to receive incentive stock options.
Participation in the Plan shall be limited to eligible Participants who have
entered into option agreements with the Company. No Participant, however,
shall at any time have a right to be selected for participation in the Plan.
ARTICLE V.
Option Price
The option price of each option granted under the Plan shall be
determined by the Committee; provided, however, that in the case of each
incentive stock option granted under the Plan, the option price shall not be
less than the fair market value at the time the option is granted. In no
event shall the option price of any option be less than the par value per
share of Stock on the date an option is granted.
At any time when the Stock is quoted on the National Association of
Securities Dealers Automated Quotation System ("NASDAQ"), the fair market
value shall be deemed to be the mean between the last quoted bid and asked
prices on NASDAQ on the date immediately preceding the date on which the
option is granted, or, if not quoted on that day, then on the last preceding
date on which such stock is quoted. If the Stock is listed on one or more
national securities exchanges, the fair market value shall be deemed to be the
mean between the highest and lowest sale prices reported on the principal
national securities exchange on which such stock is listed and traded on the
date immediately preceding the date on which the option is granted, or, if
there is no such sale on that date, then on the last preceding date on which
such a sale was reported. If the Stock is not quoted on NASDAQ or listed on
an exchange, or representative quotes are not otherwise available, the fair
market value of the Stock shall mean the amount determined by the Committee to
be the fair market value based upon a good faith
(EX-10.29)
-3-
<PAGE>
attempt to value the Stock accurately and computed in accordance with
applicable regulations of the Internal Revenue Service.
ARTICLE VI.
Terms and Conditions of Options
Options granted under the Plan shall vest and become exercisable in such
installments as the Committee shall determine at the time of grant. Options
may be exercisable in whole or in part and if an option is exercisable in
part, the portion thereof which is exercisable and not exercised shall remain
exercisable.
Any other provision of the Plan notwithstanding and subject to ARTICLE
VII, no option shall be granted after the date which is ten years from the
Effective Date (the "Termination Date") nor shall any option, if granted, be
exercised after the date which is ten years after the option is granted.
Options granted hereunder may provide that if prior to the Termination
Date an optionee shall cease to be employed by the Company for any reason
other than death, disability or for cause, the option will remain exercisable
by the optionee for a period not extending beyond three months after the date
of cessation of employment, but in no event later than the Termination Date,
to the extent it was exercisable at the time of cessation of employment.
Options granted hereunder may provide that if prior to the Termination Date an
optionee shall cease to be employed by the Company for reasons of death or
disability, the option will remain exercisable by the optionee or, in the
event of his death, by the person or persons to whom the optionee's rights
under the option would pass by will or the applicable laws of descent and
distribution for a period not extending beyond one year after the date of
death or disability, but in no event later than the Termination Date, to the
extent it was exercisable at the time of death or disability. Options granted
hereunder may provide that if prior to the Termination Date an optionee shall
cease to be employed by the Company by reason of termination of employment by
the Company for cause, or by voluntary termination at a time when the Company
is entitled to terminate such optionee's employment for cause, the option shall
terminate immediately. For purposes of the Plan, the Company shall have
"cause" to terminate an optionee's employment hereunder upon (i) the commission
by the optionee of a proven act of fraud or embezzlement against the Company,
(ii) the engaging by the optionee in willful misconduct or gross negligence
which is demonstrably and materially injurious to the Company, monetarily or
otherwise, (iii) failure of the optionee to render services to the Company in
accordance with such optionee's duties as an employee of the Company or (iv)
the optionee being convicted of a misdemeanor involving an act of moral
turpitude or a felony.
(EX-10.29)
-4-
<PAGE>
For purposes of the Plan, in the case of a Participant who is a director,
references to employment herein shall be deemed to refer to such director's
service to the Company in such capacity.
Notwithstanding the foregoing, stock options granted hereunder shall
provide that no option shall be exercisable after the optionee's cessation of
employment with the Company if at the time of exercise the By-Laws of the
Company limit the ownership of common stock of the Company to selected
persons, including employees of the Company.
ARTICLE VII.
Special Provisions Applicable Only to Incentive Stock Options
To the extent the aggregate fair market value (determined at the time the
option is granted) of the Stock with respect to which incentive stock options
may be exercisable for the first time by an optionee during any calendar year
(under this Plan and any other stock option plan of the Company and any parent
or subsidiary thereof) exceeds $100,000, such incentive stock options shall be
treated as options which are non-qualified stock options.
No incentive stock option may be granted to an individual who, at the
time the option is granted, owns directly, or indirectly within the meaning of
Section 425(d) of the Code, stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or of any parent
or subsidiary thereof, unless such option (i) has an option price of at least
110% of the fair market value of the Stock on the date of the grant of such
option; and (ii) such option by its terms cannot be exercised more than five
years after the date it is granted.
Each optionee who receives an incentive stock option must agree to notify
the Company in writing immediately after the optionee makes a disqualifying
disposition of any Stock acquired pursuant to the exercise of an incentive
stock option. A disqualifying disposition is any disposition (including any
sale) of such Stock before the later of (a) two years after the date the
optionee was granted the incentive stock option or (b) one year after the date
the optionee acquired Stock by exercising the incentive stock option.
ARTICLE VIII.
Payment for Shares
Payment for shares of Stock acquired pursuant to an option granted
hereunder shall be made in full, upon exercise of the option, in immediately
available funds in United States
(EX-10.29)
-5-
<PAGE>
dollars, by certified or bank cashier's check. Payment in full shall include
payment of any amounts required under paragraph (b) of Article XIX. Payment
may also be made by such other lawful means as may be prescribed by the
Committee in its discretion.
ARTICLE IX.
Non-Transferability of Option Rights and Stock
During the lifetime of the optionee, the option shall be exercisable only
by the optionee. No option shall be transferable, except by will or the laws
of descent and distribution.
ARTICLE X.
Adjustment for Recapitalization, Merger, Etc.
The aggregate number of shares of Stock which may be purchased or
acquired pursuant to options granted hereunder, the aggregate number of shares
as to which options may be granted to any individual during any fiscal year,
the number of shares of Stock covered by each outstanding option and the price
per share thereof in each such option shall be appropriately adjusted for any
increase or decrease in the number of outstanding shares of Stock resulting
from a stock split or other subdivision or consolidation of shares of Stock or
for other capital adjustments or payments of stock dividends or distributions
or other increases or decreases in the outstanding shares of Stock effected
without receipt of consideration by the Company. Any adjustment shall be
conclusively determined by the Committee.
If the Company shall be the surviving corporation in any merger or
reorganization or other business combination, any option granted hereunder
shall cover the securities or other property to which a holder of the number
of shares of Stock covered by the unexercised portion of the option would have
been entitled pursuant to the terms of the merger. Upon any merger or
reorganization or other business combination in which the Company shall not be
the surviving corporation, or a dissolution or liquidation of the Company, or
a sale of all or substantially all of the Company's assets, all outstanding
options shall terminate, subject to the right of the surviving or resulting
corporation to grant the Participants substitute options to purchase its
shares on such terms and conditions, both as to the number of shares and
otherwise, which the Committee shall deem appropriate.
Stock option agreements under the Plan may, at the discretion of the
Committee, provide that upon stockholder approval of a merger, reorganization
or other business combination, whether or not the Company is the surviving
corporation, or a sale of all or substantially all of the Company's assets,
all unmatured installments of the options shall vest and become immediately
exercisable in full.
(EX-10.29)
-6-
<PAGE>
The foregoing adjustments and the manner of application of the foregoing
provisions, including the issuance of any substitute options, shall be
determined by the Committee in its sole discretion. Any such adjustment may
provide for the elimination of any fractional share which might otherwise
become subject to an option.
ARTICLE XI.
No Obligation to Exercise Option
Granting of an option shall impose no obligation on the recipient to
exercise such option.
ARTICLE XII.
Use of Proceeds
The proceeds received from the sale of Stock pursuant to the Plan shall
be used for general corporate purposes.
ARTICLE XIII.
Rights as a Stockholder
An optionee shall have no rights as a stockholder with respect to any
share covered by his option until such person shall have become the holder of
record of such share, and such person shall not be entitled to any dividends
or distributions or other rights in respect of such share for which the record
date is prior to the date on which such person shall have become the holder of
record thereof, except as otherwise provided in ARTICLE X.
ARTICLE XIV.
Employment Rights
No provision in the Plan or in any option granted hereunder shall confer
on any optionee any right to continue in the employ of the Company, or to
interfere in any way with the right of the Company to terminate the optionee's
employment at any time.
ARTICLE XV.
Compliance with Law
The Company is relieved from any liability for the non-issuance or non-
transfer or any delay in the issuance or transfer of any shares of Stock subject
to options under the Plan which results from the inability of the Company to
obtain, or from any delay in obtaining, from any regulatory body having
jurisdiction or authority, any requisite approval to issue or transfer any
(EX-10.29)
-7-
<PAGE>
such shares if counsel for the Company deems such approval necessary for
lawful issuance or transfer thereof.
Each option granted under the Plan is subject to the requirement that if
at any time the Board determines, in its discretion, that the listing,
registration or qualification of shares of Stock issuable upon exercise of
options is required by any securities exchange or under any state or Federal
law, or that the consent or approval of any governmental regulatory body is
necessary or desirable as a condition of, or in connection with, the grant of
options or the issuance of shares of Stock, no shares of Stock shall be
issued, in whole or in part, unless such listing, registration, qualification,
consent or approval has been effected or obtained free of any conditions or
with such conditions as are acceptable to the Board.
ARTICLE XVI.
Cancellation of Options
The Committee, in its discretion, may, with the consent of any optionee,
cancel any outstanding option hereunder.
ARTICLE XVII.
Effective Date; Expiration Date of Plan
The Plan (as amended and restated) shall become effective upon April 10,
1998, the date of adoption of the Plan by the Board, subject to approval by
the shareholders of the Company at its annual meeting to be held on May 21,
1998. The expiration date of the Plan, after which no option may be granted
hereunder, shall be April 10, 2008.
ARTICLE XVIII.
Amendment or Discontinuance of Plan
The Board may terminate, amend or modify the Plan in its sole discretion
at any time or from time to time after the Effective Date. Notwithstanding
the preceding provisions of this ARTICLE XVIII, no such action shall, without
shareholder approval, increase the number of shares as to which options may be
granted or change the class of employees eligible to receive options under the
new Plan.
ARTICLE XIX.
Miscellaneous
(a) Options shall be evidenced by option agreements (which need not
be identical) in such forms as the Committee may from time to time approve.
Such agreements shall conform to the terms and conditions of the Plan
and may provide that the grant
(EX-10.29)
-8-
<PAGE>
of any option under the Plan and Stock acquired pursuant to the Plan shall
also be subject to such other conditions (whether or not applicable to the
option or Stock received by any other optionee) as the Committee determines
appropriate, including, without limitation, provisions to assist the optionee
in financing the purchase of Stock through the exercise of options, provisions
for the forfeiture of, or restrictions on, resale or other disposition of
shares under the Plan, provisions giving the Company the right to repurchase
shares acquired under the Plan in the event the participant elects to dispose
of such shares, and provisions to comply with Federal and state securities
laws and Federal and state income tax withholding requirements.
(b) The Company may, in its discretion, require that an optionee pay to
the Company, at the time of exercise, such amount as the Company deems
necessary to satisfy its obligations to withhold Federal, state, or local
income or other taxes incurred by reason of the exercise or the transfer of
shares thereupon.
(c) Each optionee shall file with the Committee a written designation of
one or more persons as beneficiary, who shall be entitled to exercise options
which are exercisable, if any, or to receive shares of Stock distributable, if
any, under the Plan upon the optionee's death. An optionee may, from time to
time, revoke or change his beneficiary designation without the consent of any
prior beneficiary by filing a new designation with the Committee. The last
such designation received by the Committee shall be controlling; provided,
however, that no designation, or change or revocation thereof, shall be
effective unless received by the Committee prior to the optionee's death, and
in no event shall it be effective as of a date prior to such receipt.
(d) If the Committee shall find that any person to whom any amount is
payable under the Plan is unable to care for his affairs because of illness or
accident, or is a minor, or has died, then any payment due
to such person or his estate (unless a prior claim therefor has been made by a
duly appointed legal representative), may, if the Committee so directs the
Company, be paid to his spouse, child, relative, an institution maintaining or
having custody of such person, or any other person deemed by the Committee to
be a proper recipient on behalf of such person otherwise entitled to payment.
Any such payment shall be a complete discharge of the liability of the
Committee and the Company therefor.
(e) No member of the Committee shall be personally liable by reason of
any contract or other instrument executed by such member or on his behalf in
his capacity as a member of the Committee nor for any mistake of judgment made
in good faith, and the Company shall indemnify and hold harmless each member
of the Committee and each other employee, officer or director of the Company
to whom any duty or power relating to the administration
(EX-10.29)
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<PAGE>
or interpretation of the Plan may be allocated or delegated, against any cost
or expense (including counsel fees) or liability (including any sum paid in
settlement of a claim) arising out of any act or omission to act in connection
with the Plan unless arising out of such person's own fraud or bad faith;
provided, however, that approval of the Board shall be required for the payment
of any amount in settlement of a claim against any such person. The foregoing
right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the Company's
Certificate of Incorporation or By-Laws, as a matter of law, or otherwise, or
any power that the Company may have to indemnify them or hold them harmless.
(f) The Plan shall be governed by and construed in accordance with the
internal laws of the State of Delaware without reference to the principles of
conflicts of law thereof.
(g) No provision of the Plan shall require the Company, for the purpose
of satisfying any obligations under the Plan, to purchase assets or place any
assets in a trust or other entity to which contributions are made or otherwise
to segregate any assets, nor shall the Company maintain separate bank
accounts, books, records or other evidence of the existence of a segregated or
separately maintained or administered fund for such purposes. Optionees shall
have no rights under the Plan other than as unsecured general creditors of the
Company, except that insofar as they may have become entitled to payment of
additional compensation by performance of services, they shall have the same
rights as other employees under general law.
(h) Each member of the Committee and each member of the Board shall be
fully justified in relying, acting or failing to act, and shall not be liable
for having so relied, acted or failed to act in good faith, upon any report
made by the independent public accountant of the Company and upon any other
information furnished in connection with the Plan by any person or persons
other than such member.
(i) Except as otherwise specifically provided in the relevant plan
document, no payment under the Plan shall be taken into account in determining
any benefits under any pension, retirement, profit-sharing, group insurance or
other benefit plan of the Company.
(j) The expenses of administering the Plan shall be borne by the
Company.
(k) Masculine pronouns and other words of masculine gender shall refer
to both men and women.
(EX-10.29)
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EXHIBIT 10.30
STOCK OPTION AGREEMENT
This Option Agreement (the "Agreement"), is made as of the 8th day of
November, 1991, between Menley & James, Inc., a Delaware corporation (the
"Company"), and the person signing this Agreement adjacent to the caption
"Participant" on the signature page hereof, which person (the "Participant")
is an employee or director of the Company or a Subsidiary. Capitalized terms
used and not otherwise defined herein shall have the meanings attributed
thereto in the Menley & James, Inc. Amended and Restated 1991 Stock Option
Plan (the "Plan").
WHEREAS, pursuant to the Plan, the Company desires to afford the
Participant the opportunity to purchase shares of the Company's $0.01 par
value Common Stock (the "Stock");
NOW, THEREFORE, in connection with the mutual covenants hereinafter set
forth and for other good and valuable consideration, the parties hereto agree
as follows:
1. Grant of Options. The Company hereby grants to the Participant the
right and option (the right to purchase any one share of Stock pursuant to
this Plan being an "Option") to purchase an aggregate of _____ shares of
Stock, such shares being subject to adjustment as provided in ARTICLE X of the
Plan, and on the terms and conditions herein set forth.
2. Purchase Price. The purchase price of each share of Stock covered
by the Options shall be equal to $_____ per share.
3. Term of Options. The term of the Options shall be for a period of
ten (10) years from the Effective Date of the Plan.
4. Vesting of Options. The Options, subject to the terms, conditions
and limitations contained herein, shall vest and become exercisable during the
three-year period commencing on the date of grant of such Options at the rates
of thirty-three percent (33%), thirty-three percent (33%) and thirty-four
percent (34%) on each respective anniversary of the date of grant.
5. Termination of Employment. (a) In the event Participant's
employment with the Company is terminated for reasons other than due to death,
disability, or for cause, the Options shall remain exercisable for a period of
up to three months after cessation of employment, to the extent they were
exercisable at the time of cessation of employment. In the event the
Participant's employment with the Company terminates by death or disability,
the Options shall remain exercisable for a period of up to twelve months after
cessation of employment, to the extent they were exercisable at the time of
cessation of employment.
(EX-10.30)
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<PAGE>
(b) If a Participant's employment with the Company is terminated
for cause, or, at the time of a Participant's voluntary termination the
Company is entitled to terminate such Participant for cause, as defined in the
Plan, all unexercised Options granted to such Participant shall lapse and be
cancelled.
In the case of a Participant who is a director of the Company,
references to employment herein shall be deemed to refer to the director's
service to the Company in such capacity.
6. Transferability of Option. A Participant may not voluntarily or
involuntarily sell, pledge, mortgage, hypothecate, give, transfer, create a
security interest in, or a lien or trust (voting or otherwise) with
respect to, or assign or otherwise encumber or dispose of any Option or any
share of Stock issued upon the exercise of an Option except as expressly
permitted pursuant to the Plan.
7. No Rights as a Shareholder. The Participant shall have no rights as
a shareholder with respect to any shares of Stock covered by the Options until
the date of issuance of a stock certificate for such Stock. No adjustments,
other than as provided in ARTICLE X of the Plan, shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property) or
distributions for which the record date is prior to the date such stock
certificate is issued.
8. Registration; Governmental Approval. Each Option granted herein is
subject to the requirement that, if at any time the Board determines, in its
discretion, that the listing, registration, or qualification of shares of
Stock issuable upon exercise of Options is required by any securities exchange
or under any state or Federal law, or the consent or approval of any
governmental regulatory body is necessary or desirable as a condition of, or
in connection with the grant of Options, or the issuance of shares of Stock,
no shares of Stock shall be issued, in whole or in part, unless such listing,
registration, qualification, consent or approval has been effected or obtained
free of any conditions or with such conditions as are acceptable to the Board.
9. Method of Exercising Option. Subject to the terms and conditions of
this Agreement, the Options may be exercised by written notice to the Company
at its offices located at Horsham, Pennsylvania. Such notice shall state the
election to exercise Options and the number of shares of Stock in respect of
which they are being exercised, and shall be signed by the person or persons
so exercising the Option. Such notice shall either:
(a) be accompanied by payment of the full purchase price of such
shares of Stock, in which event the Company shall deliver a certificate or
certificates representing such shares of Stock as soon as practicable after
the notice shall be received; or
(EX-10.30)
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<PAGE>
(b) fix a date, not less than five (5) nor more than ten (10)
business days from the date such notice shall be received by the Company, for
the payment of the full purchase price of such shares of Stock against
delivery of a certificate or certificates representing such shares of Stock.
Payment of such purchase price shall be made in United States
dollars by certified check or bank cashier's check payable to the order of the
Company, or by such other means as may be prescribed by the Committee in its
sole discretion. The certificate or certificates for the shares of Stock as
to which the Options shall have been so exercised shall be registered in the
name of the person or persons so exercising the Options; or if the Options
shall be exercised by the Participant, and if the Participant shall so request
in the notice exercising the Options, such shares shall be registered in the
name of the Participant and another person, as joint tenants with right of
survivorship, and shall be delivered as provided above to or upon the written
order of the person or persons exercising the Options. All shares of Stock
that shall be purchased upon the exercise of Options as provided herein shall
be fully paid and non-assessable.
10. Income Tax Withholding. Upon the exercise of an Option, in whole
or in part, or, except where an election is made under Section 83(b) of the
Code, upon such later date as the Stock acquired pursuant to such exercise
ceases to be subject to a substantial risk of forfeiture under Section
83(c)(1) of the Code or ceases to be non-transferable within the meaning of
Section 83(c)(2) of the Code, the excess of the fair market value (determined
as of the date of such exercise or such later date, as the case may be) of the
Stock subject to the portion of the Option so exercised over the purchase
price of such stock will be treated as compensation or other income subject to
withholding for income tax purposes. The Company may make such provisions and
take such steps as it may deem necessary or appropriate for the withholding of
all federal, state, local and other taxes required by law to be withheld with
respect to an Option, including, but not limited to, deducting the amount of
any such withholding taxes from the amount to be paid hereunder, whether in
Stock or in cash, or from any other amount then or thereafter payable to the
optionee, or requiring the Participant, his beneficiary or legal
representative, to pay to the Company the amount required to be withheld or to
execute such documents as the Company deems necessary or desirable to enable
it to satisfy its withholding obligations.
11. Non-Qualified Options. The Options granted hereunder are not
intended to be incentive stock options within the meaning of Section 422 of
the Code.
12. Binding Effect. This Agreement shall be binding upon the heirs,
executors, administrators and successors of the parties hereto.
(EX-10.30)
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<PAGE>
13. Governing Law. This Agreement shall be construed and interpreted
in accordance with the laws of the State of Delaware.
14. Headings. Headings are for the convenience of the parties and are
not deemed to be part of this Agreement.
15. Plan. The terms and provisions of the Plan are incorporated herein
by reference. In the event of a conflict or inconsistency between
discretionary terms and provisions of the Plan and the express provisions of
this Agreement, this Agreement shall govern and control. In all other
instances of conflicts or inconsistencies or omissions, the terms and
provisions of the Plan shall govern and control.
EXECUTED the day and year first written above.
MENLEY & JAMES, INC.
COMPANY:
By:________________________________
Name:
Title:
PARTICIPANT:
By:________________________________
Name:
(EX-10.30)
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