AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 5, 1997
REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------------------
DEPARTMENT 56, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3684956
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification Number)
ONE VILLAGE PLACE 55344
6436 CITY WEST PARKWAY (Zip Code)
EDEN PRAIRIE, MN
(Address of registrant's
principal executive offices)
DEPARTMENT 56, INC. 1997 STOCK INCENTIVE PLAN
(Full title of the plan)
DAVID H. WEISER, ESQ.
DEPARTMENT 56, INC.
ONE VILLAGE PLACE, 6436 CITY WEST PARKWAY
EDEN PRAIRIE, MINNESOTA 55344
(Name and address of agent for service)
(612) 944-5600
(Telephone number, including area code, of agent for service)
-----------------------------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
================================= ======================= ======================== ================ ===============
Proposed Maximum
Title of Securities Proposed Maximum Aggregate Amount of
to be Registered Amount to be Registered Offering Price Per Share Offering Price Registration Fee
- --------------------------------- ----------------------- ------------------------ ---------------- ----------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value(FN1) 1,500,000 shares(FN2) *(FN3) *(FN3) $12,721.87(FN3)
================================= ======================= ======================== ================ ================
<FN>
1 The Registration Statement also pertains to Rights to Purchase
Series A Junior Participating Preferred Stock ("Rights") of the
Registrant. Upon the occurrence of certain prescribed events, one
Right will be issued for each share of Common Stock. Until the
occurrence of such events, the Rights are not exercisable, will
be evidenced by the certificate for the Common Stock and will be
transferred along with and only with the Common Stock.
2 Plus such additional shares as may be made available in order to
adjust to reflect a change in capitalization.
3 As of the date hereof, no options or other awards have been
granted under the Department 56, Inc. 1997 Stock Incentive Plan.
Accordingly, estimated pursuant to Rule 457(c) and (h) under the
Securities Act of 1933, as amended, solely for purposes of
calculating the amount of the registration fee, the proposed
maximum offering price per share is based upon a price of $28.75
per share, the average of the high and low sales prices for the
Common Stock on December 1, 1997.
</FN>
</TABLE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents, which are filed with the Securities
and Exchange Commission, are incorporated in this Registration
Statement on Form S-8 (the "Registration Statement") by reference:
(a) The Company's Annual Report on Form 10-K for the
fiscal year ended December 28, 1996.
(b) All other reports filed by the Company pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), since December
28, 1996.
(c) The description of the Shares contained in the
Company's Registration Statement on Form 8-A filed with the
Securities and Exchange Commission (the "Commission") on
April 23, 1993 and the description of the rights to purchase
Series A Junior Participating Preferred Stock of the
Company, contained in the Company's Registration Statement
on Form 8-A filed with the Commission on April 23, 1997.
All documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the
filing of a post-effective amendment which indicates that all
securities registered hereunder have been sold or which deregisters
all securities then remaining unsold, shall be deemed to be
incorporated by reference herein and to be a part hereof from the date
of the filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Certain legal matters with respect to the securities offered
hereby will be passed upon for the Company by David Weiser, Esq.,
Senior Vice President of the Company.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of Delaware (the
"DGCL") provides, in summary, that the directors and officers of the
Company may, under certain circumstances, be indemnified by the
Company against all expenses incurred by or imposed upon them as a
result of actions, suits or proceedings brought against them as such
directors and officers, or as directors or officers of any other
organization at the request of the Company, if they act in good faith
and in a manner they reasonably believe to be in or not opposed to the
best interests of the Company and, with respect to any criminal action
or proceeding, have no reasonable cause to believe their conduct was
unlawful, except that no indemnification shall be made against
expenses in respect of any claim, issue or matter as to which they
shall have been adjudged to be liable to the Company unless and only
to the extent that the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, they are
fairly and reasonably entitled to indemnity for such expenses which
such court shall deem proper. Section 145 of the DGCL also provides
that directors and officers of the Company are entitled to such
indemnification by the Company to the extent that such persons are
successful on the merits or otherwise in defending any such action,
suit or proceeding.
The By-Laws of the Company generally provide that the
Company shall indemnify, to the fullest extent permitted by Delaware
law, any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit,
arbitration, alternative dispute resolution mechanism, investigation,
administrative hearing or any other proceeding, whether civil,
criminal, administrative hearing or investigative (other than an
action by or in the right of the Company) (each, a "Proceeding") by
reason of the fact that he is or was a director or officer of the
Company, or is or was serving at the request of the Company as a
director, officer, employee or agent of another entity, against
expenses (including attorneys' fees) and losses, claims, liabilities,
judgments, fines and amounts paid in settlement actually incurred by
him in connection with such Proceeding. The By-Laws also provide that
the Company may advance litigation expenses to a director, officer,
employee or agent upon receipt of an undertaking by or on behalf of
such director, officer, employee or agent to repay such amount if it
is ultimately determined that the director, officer, employee or agent
is not entitled to be indemnified by the Company.
The Restated Certificate of Incorporation of the Company
provides that directors of the Company shall not be personally liable
to the Company or any of its stockholders for monetary damages for any
breach of fiduciary duty as a director, except for liability in
respect of (i) a breach of the director's duty of loyalty to the
Company or its stockholders, (ii) any acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation
of law, (iii) any willful or negligent declaration of an unlawful
dividend, stock purchase or redemption, or (iv) any transaction from
which the director derived an improper personal benefit. The Restated
Certificate of Incorporation also provides that if the DGCL is amended
to permit further elimination or limitation of the personal liability
of directors then the liability of the directors of the Company shall
be eliminated or limited to the fullest extent permitted by the DGCL
as so amended.
The Company has entered, and may in the future enter, into
agreements to provide indemnification for its directors and certain
officers in addition to the indemnification provided for in the
By-Laws. These agreements, among other things, will indemnify the
Company's directors and certain officers to the fullest extent
permitted by Delaware law for certain expenses (including attorneys'
fees), and all losses, claims, liabilities, judgments, fines and
settlement amounts incurred by such person arising out of or in
connection with such person's service as a director or officer of the
Company or an affiliate of the Company.
In addition, the Department 56, Inc. 1997 Stock Incentive
Plan (the "Plan") provides that the Company will indemnify the members
of the Committee appointed to administer the Plan for all costs and
expenses and, to the extent permitted by applicable law, any liability
incurred in connection with defending against, responding to,
negotiation for the settlement of or otherwise dealing with any claim,
cause of action or dispute of any kind arising in connection with any
actions in administering the Plan or in authorizing or denying
authorization to any transaction thereunder. The Committee shall
consist of at least two directors of the Company and may consist of
the entire Board of Directors. In addition, the Board may, by
resolution, authorize a committee consisting of one or more directors
of the Company to make grants of options to certain eligible employees
who are not officers of the Company.
Policies of insurance are maintained by the Company under
which its directors and officers are insured, within the limits and
subject to the limitations of the policies, against certain expenses
in connection with the defense of, and certain liabilities which might
be imposed as a result of, actions, suits or proceedings to which they
are parties by reason of being or having been such directors or
officers.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
4.1 -- Specimen form of the Company's Common Stock certificate
(incorporated by reference to Exhibit 4.1 to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1994).
4.2 -- Restated Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 3.1 to the Company's
Quarterly Report on Form 10-Q for the quarter ended July 3,
1993).
4.3 -- Restated By-Laws of the Company (incorporated by reference
to Exhibit 3.2 to the Company's Registration Statement on
Form S-1 (Registration No. 33-61514)) and to Exhibits 1 and
2 to the Company's Current Report on Form 8-K dated February
15, 1996.
4.4 -- Department 56, Inc. 1997 Stock Incentive Plan (as amended
through December 5, 1997).
4.5 -- Rights Agreement, dated as of April 23, 1997, between
Department 56, Inc., a Delaware Corporation, and ChaseMellon
Shareholders Services, L.L.C., a New Jersey limited
liability company as the Rights Agent, annexed as Exhibit 1
to Form 8A filed on April 23, 1997.
5.1 -- Opinion of David Weiser, Esq., Senior Vice President of the
Company, as to the validity of the securities being
registered.
23.1 -- Consent of Deloitte & Touche LLP.
23.2 -- Consent of David Weiser, Esq., Senior Vice President of the
Company (included in Exhibit 5.1 to this Registration
Statement).
24.1 -- Power of Attorney.
ITEM 9. UNDERTAKINGS
The Company hereby undertakes:
(a) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
Registration Statement to include any material information
with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material
change to such information in the Registration Statement.
(b) That, for the purpose of determining any liability
under the Securities Act of 1933, as amended (the
"Securities Act"), each post-effective amendment to this
Registration Statement shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering
thereof.
(c) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of the
offering.
(d) That, for purposes of determining any liability
under the Securities Act, each filing of the Company's
annual report pursuant to Section 13(a) or Section 15(d) of
the Exchange Act that is incorporated by reference in this
Registration Statement shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the
Company in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Company certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Eden Prairie,
State of Minnesota, on December 5, 1997.
DEPARTMENT 56, INC.
By /s/ Susan E. Engel
-------------------------------------
Susan E. Engel
Chief Executive Officer and President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below hereby constitutes and appoints, Sandra J.
Horbach, David H. Weiser and Timothy J. Schugel, and each or any one
of them, as his or her true and lawful attorneys-in-fact and agents,
each acting alone, with full powers of substitution and
resubstitution, for such person in his or her name, place and stead,
in any and all capacities, to sign any and all amendments to this
Registration Statement, including any and all post-effective
amendments, and any and all documents in connection therewith, and to
file the same, with all exhibits thereto, and all documents in
connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all
intents and purposes as he or she might or could do in person, and
hereby ratifies, approves and confirms all that his or her said
attorneys-in-fact and agents, each acting alone, or his or her
substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following persons
in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Susan E. Engel
- ------------------------- Chief Executive Officer,
Susan E. Engel President and Director December 5, 1997
/s/ Todd L. Bachman
- ------------------------- Director December 5, 1997
Todd L. Bachman
/s/ Sandra J. Horbach
- ------------------------- Director December 5, 1997
Sandra J. Horbach
/s/ Wm. Brian Little
- ------------------------- Director December 5, 1997
Wm. Brian Little
/s/ Steven G. Rothmeier
- ------------------------- Director December 5, 1997
Steven G. Rothmeier
/s/ Vin Weber
- ------------------------- Director December 5, 1997
Vin Weber
/s/ Maxine Clark
- ------------------------- Director December 5, 1997
Maxine Clark
/s/ Gary Matthews
- ------------------------- Director December 5, 1997
Gary Matthews
EXHIBIT INDEX
PAGE NO. IN
EXHIBIT SEQUENTIALLY
NO. DESCRIPTION OF EXHIBIT NUMBERED COPY
- ------- ---------------------- -------------
4.1 Specimen form of the Company's Common Stock
certificate (incorporated by reference to
Exhibit 4.1 to the Company's Annual Report
on Form 10-K for the fiscal year ended
December 31, 1994).
4.2 Restated Certificate of Incorporation of
the Company (incorporated by reference to
Exhibit 3.1 to the Company's Quarterly
Report on Form 10-Q for the quarter ended
July 3, 1993).
4.3 Restated By-Laws of the Company
(incorporated by reference to Exhibit 3.2
to the Company's Registration Statement on
Form S-1 (Registration No. 33-61514)) and
to Exhibits 1 and 2 to the Company's
Current Report on Form 8-K dated February
15, 1996.
4.4 Department 56, Inc. 1997 Stock Incentive
Plan (as amended through December 5, 1997.(FN*) 7
4.5 Rights Agreement, dated as of April 23,
1997, between Department 56, Inc., a
Delaware Corporation, and Chase Mellon
Shareholders Services, L.L.C., or New
Jersey limited liability company as the
Rights Agents, annexed as Exhibit 1 to Form
8A filed on April 23, 1997.
5.1 Opinion of David Weiser, Esq., Senior Vice
President of the Company, as to the
validity of the securities being
registered.(FN*) 25
23.1 Consent of Deloitte & Touche LLP.(FN*) 26
23.2 Consent of David Weiser, Esq., Senior Vice
President of the Company (included in
Exhibit 5.1 to this Registration
Statement).
24.1 Power of Attorney (included in the signature
page to this Registration Statement)
[FN]
*Filed herewith.
</FN>
DEPARTMENT 56, INC.
1997 STOCK INCENTIVE PLAN
(As Amended through December 5, 1997)
DEPARTMENT 56, INC.
1997 STOCK INCENTIVE PLAN
1. Purpose.
-------
The purpose of this Plan is to strengthen Department
56, Inc., a Delaware corporation (the "Company"), by providing an
incentive to its officers, employees, consultants, directors and
advisors and thereby encouraging them to devote their abilities and
industry to the success of the Company's business enterprise. It is
intended that this purpose be achieved by extending to officers,
employees, consultants and directors of the Company and its
Subsidiaries an added long-term incentive for high levels of
performance and unusual efforts through the grant of Incentive Stock
Options, Nonqualified Stock Options, Stock Appreciation Rights,
Restricted Stock, Performance Units, Performance Shares and Dividend
Equivalent Rights (as each term is hereinafter defined).
2. Definitions.
-----------
For purposes of the Plan:
2.1 "Adjusted Fair Market Value" means, in the event of
a Change in Control, the greater of (i) the highest price per Share
paid to holders of the Shares in any transaction (or series of
transactions) constituting or resulting in a Change in Control or (ii)
the highest Fair Market Value of a Share during the ninety (90) day
period ending on the date of a Change in Control.
2.2 "Agreement" means the written agreement between the
Company and an Optionee or Grantee evidencing the grant of an Option
or Award and setting forth the terms and conditions thereof.
2.3 "Award" means a grant of Restricted Stock, a Stock
Appreciation Right, a Performance Award, a Dividend Equivalent Right
or any or all of them.
2.4 "Board" means the Board of Directors of the
Company.
2.5 "Cause" means the commission of an act of fraud or
intentional misrepresentation or an act of embezzlement,
misappropriation or conversion of assets or opportunities of the
Company or any Subsidiary.
2.6 "Change in Capitalization" means any increase or
reduction in the number of Shares, or any change (including, but not
limited to, a change in value) in the Shares or exchange of Shares for
a different number or kind of shares or other securities of the
Company or another corporation, by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, spin-off,
split-up, issuance of warrants or rights or debentures, stock
dividend, stock split or reverse stock split, cash dividend, property
dividend, combination or exchange of shares, repurchase of shares,
change in corporate structure or otherwise.
2.7 A "Change in Control" shall mean the occurrence
during the term of the Plan of:
(a) An acquisition (other than directly from the
Company) of any voting securities of the Company (the
"Voting Securities") by any "Person" (as the term person is
used for purposes of the Exchange Act), immediately after
which such Person has "Beneficial Ownership" (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of
fifty-one percent (51%) or more of the combined voting power
of the Company's then outstanding Voting Securities;
provided, however, in determining whether a Change in
Control has occurred, Voting Securities which are acquired
in a "Non-Control Acquisition" (as hereinafter defined)
shall not constitute an acquisition which would cause a
Change in Control. A "Non-Control Acquisition" shall mean an
acquisition by (i) an employee benefit plan (or a trust
forming a part thereof) maintained by (A) the Company or (B)
any corporation or other Person of which a majority of its
voting power or its voting equity securities or equity
interest is owned, directly or indirectly, by the Company
(for purposes of this definition, a "Subsidiary"), (ii) the
Company or its Subsidiaries, or (iii) any Person in
connection with a "Non-Control Transaction" (as hereinafter
defined);
(b) The individuals who, as of May 16, 1997, are
members of the Board (the "Incumbent Board"), cease for any
reason to constitute at least two-thirds of the members of
the Board; provided, however, that if the election, or
nomination for election by the Company's common
stockholders, of any new director was approved by a vote of
at least two-thirds of the Incumbent Board, such new
director shall, for purposes of this Plan, be considered as
a member of the Incumbent Board; provided further, however,
that no individual shall be considered a member of the
Incumbent Board if such individual initially assumed office
as a result of either an actual or threatened "Election
Contest" (as described in Rule 14a-11 promulgated under the
Exchange Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than
the Board (a "Proxy Contest") including by reason of any
agreement intended to avoid or settle any Election Contest
or Proxy Contest; or
(c) The consummation of:
(i) A merger, consolidation or reorganization with
or into the Company or in which securities of the Company
are issued, unless such merger, consolidation or
reorganization is a "Non-Control Transaction." A
"Non-Control Transaction" is a merger, consolidation or
reorganization with or into the Company or in which
securities of the Company are issued where
(A) the stockholders of the Company,
immediately before such merger, consolidation or
reorganization, own, directly or indirectly immediately
following such merger, consolidation or reorganization,
at least sixty percent (60%) of the combined voting
power of the outstanding voting securities of the
corporation resulting from such merger or consolidation
or reorganization (the "Surviving Corporation") in
substantially the same proportion as their ownership of
the Voting Securities immediately before such merger,
consolidation or reorganization,
(B) the individuals who were members of the
Incumbent Board immediately prior to the execution of
the agreement providing for such merger, consolidation
or reorganization constitute at least two-thirds of the
members of the board of directors of the Surviving
Corporation, or a corporation beneficially owning a
majority of the Voting Securities of the Surviving
Corporation,
(C) no Person other than (1) the Company, (2)
any Subsidiary, (3) any employee benefit plan (or any
trust forming a part thereof) maintained immediately
prior to such merger, consolidation or reorganization
by the Company or any Subsidiary, or (4) any Person
who, immediately prior to such merger, consolidation or
reorganization had Beneficial Ownership of fifty-one
percent (51%) or more of the then outstanding Voting
Securities owns, directly or indirectly fifty-one
percent (51%) or more of the combined voting power of
the Surviving Corporation's then outstanding voting
securities;
(ii) A complete liquidation or dissolution of the
Company; or
(iii) The sale or other disposition of all or
substantially all of the assets of the Company to any Person
(other than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not
be deemed to occur solely because any Person (the "Subject Person")
acquired Beneficial Ownership of more than the permitted amount of the
outstanding Voting Securities as a result of the acquisition of Voting
Securities by the Company which, by reducing the number of Voting
Securities outstanding, increases the proportional number of shares
Beneficially Owned by the Subject Persons, provided that if a Change
in Control would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by the Company, and
after such share acquisition by the Company, the Subject Person
becomes the Beneficial Owner of any additional Voting Securities which
increases the percentage of the then outstanding Voting Securities
Beneficially Owned by the Subject Person, then a Change in Control
shall occur.
2.8 "Code" means the Internal Revenue Code of 1986, as
amended.
2.9 "Committee" means a committee, as described in
Section 3.1, appointed by the Board from time to time to administer
the Plan and to perform the functions set forth herein.
2.10 "Company" means Department 56, Inc.
2.11 "Director" means a director of the Company.
2.12 "Director Option" means an Option granted pursuant
to Section 6.
2.13 "Disability" means a physical or mental infirmity
which impairs the Optionee's ability to perform substantially his or
her duties for a period of one hundred eighty (180) consecutive days.
2.14 "Dividend Equivalent Right" means a right to
receive all or some portion of the cash dividends that are or would be
payable with respect to Shares.
2.15 "Division" means any of the operating units or
divisions of the Company designated as a Division by the Committee.
2.16 "Eligible Director" means a Director who is not an
employee of the Company or any Subsidiary.
2.17 "Eligible Individual" means any Director (other
than an Eligible Director), officer or employee of the Company or a
Subsidiary, or any consultant or advisor who is receiving cash
compensation from the Company or a Subsidiary designated by the
Committee as eligible to receive Options or Awards subject to the
conditions set forth herein.
2.18 "Employee Option" means an Option granted pursuant
to Section 5.
2.19 "Exchange Act" means the Securities Exchange Act
of 1934, as amended.
2.20 "Fair Market Value" on any date means the average
of the high and low sales prices of the Shares on such date on the
principal national securities exchange on which such Shares are listed
or admitted to trading, or if such Shares are not so listed or
admitted to trading, the average of the per Share closing bid price
and per Share closing asked price on such date as quoted on the
National Association of Securities Dealers Automated Quotation System
or such other market in which such prices are regularly quoted, or, if
there have been no published bid or asked quotations with respect to
Shares on such date, the Fair Market Value shall be the value
established by the Board in good faith and, in the case of an
Incentive Stock Option, in accordance with Section 422 of the Code.
2.21 "Grantee" means a person to whom an Award has been
granted under the Plan.
2.22 "Incentive Stock Option" means an Option
satisfying the requirements of Section 422 of the Code and designated
by the Committee as an Incentive Stock Option.
2.23 "Nonemployee Director" means a Director who is a
"nonemployee director" within the meaning of Rule 16b-3 promulgated
under the Exchange Act.
2.24 "Nonqualified Stock Option" means an Option which
is not an Incentive Stock Option.
2.25 "Option" means a Nonqualified Stock Option, an
Incentive Stock Option, Director Option, or any or all of them.
2.26 "Optionee" means a person to whom an Option has
been granted under the Plan.
2.27 "Outside Director" means a director of the Company
who is an "outside director" within the meaning of Section 162(m) of
the Code and the regulations promulgated thereunder.
2.28 "Parent" means any corporation which is a parent
corporation (within the meaning of Section 424(e) of the Code) with
respect to the Company.
2.29 "Performance Awards" means Performance Units,
Performance Shares or either or both of them.
2.30 "Performance Cycle" means the time period
specified by the Committee at the time a Performance Award is granted
during which the performance of the Company, a Subsidiary or a
Division will be measured.
2.31 "Performance Objectives" has the meaning set forth
in Section 10.1.
2.32 "Performance Shares" means Shares issued or
transferred to an Eligible Individual under Section 10.3.
2.33 "Performance Units" means Performance Units
granted to an Eligible Individual under Section 10.2.
2.34 "Plan" means the Department 56, Inc. 1997 Stock
Incentive Plan, as amended from time to time.
2.35 "Pooling Transaction" means an acquisition of or
by the Company in a transaction which is intended to be treated as a
"pooling of interests" under generally accepted accounting principles.
2.36 "Restricted Stock" means Shares issued or
transferred to an Eligible Individual pursuant to Section 9.
2.37 "Shares" means the common stock, par value $.01
per share, of the Company.
2.38 "Stock Appreciation Right" means a right to
receive all or some portion of the increase in the value of the Shares
as provided in Section 8 hereof.
2.39 "Stockholders Agreement" means a stockholders
agreement governing the rights, duties and obligations of present or
future employees or directors, as the case may be, of the Company or
its Subsidiaries with respect to Shares granted or sold to such
persons, or issued pursuant to options or other awards granted to such
persons, in such form as is in use by the Company at the time of
exercise of an Option or any part thereof or the issuance of Shares
pursuant to an Award and which the Company elects to require an
Optionee or Grantee to execute in connection with the issuance of
Shares.
2.40 "Subsidiary" means any corporation which is a
subsidiary corporation (within the meaning of Section 424(f) of the
Code) with respect to the Company.
2.41 "Successor Corporation" means a corporation, or a
parent or subsidiary thereof within the meaning of Section 424(a) of
the Code, which issues or assumes a stock option in a transaction to
which Section 424(a) of the Code applies.
2.42 "Ten-Percent Stockholder" means an Eligible
Individual, who, at the time an Incentive Stock Option is to be
granted to him or her, owns (within the meaning of Section 422(b)(6)
of the Code) stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company, or of a
Parent or a Subsidiary.
3. Administration.
--------------
3.1 The Plan shall be administered by the Committee
which shall hold meetings at such times as may be necessary for the
proper administration of the Plan. The Committee shall keep minutes of
its meetings. A quorum shall consist of not less than two members of
the Committee and a majority of a quorum may authorize any action. Any
decision or determination reduced to writing and signed by a majority
of all of the members of the Committee shall be as fully effective as
if made by a majority vote at a meeting duly called and held. The
Committee shall consist of at least two (2) Directors and may consist
of the entire Board; provided, however, that (A) except as provided in
clause (B) below, (i) if the Committee consists of less than the
entire Board, each member shall be a Nonemployee Director and (ii) to
the extent necessary for any Option or Award intended to qualify as
performance-based compensation under Section 162(m) of the Code to so
qualify, each member of the Committee, whether or not it consists of
the entire Board, shall be an Outside Director and (B) the Board may,
by resolution, authorize a committee (the "Non-Officer Grant
Committee") consisting of one or more Directors to make grants of
Employee Options to Eligible Individuals who are not officers of the
Company, subject to such restrictions and limitations as the Board
shall set forth in such resolution and as otherwise provided in the
Plan. References to the term Committee in Sections 3.2(a) and Section
5 shall be deemed to include the Non-Officer Grant Committee wherever
it is used insofar as it relates to the Committee's authority and
responsibility to make grants and establish the terms of Employee
Options but only to the extent that the Non-Officer Grant Committee is
acting within the scope of its authority as established by the Board.
No member of the Committee shall be liable for any action, failure to
act, determination or interpretation made in good faith with respect
to this Plan or any transaction hereunder, except for liability
arising from his or her own willful misfeasance, gross negligence or
reckless disregard of his or her duties. The Company hereby agrees to
indemnify each member of the Committee and the Non-Officer Grant
Committee for all costs and expenses and, to the extent permitted by
applicable law, any liability incurred in connection with defending
against, responding to, negotiating for the settlement of or otherwise
dealing with any claim, cause of action or dispute of any kind arising
in connection with any actions in administering this Plan or in
authorizing or denying authorization to any transaction hereunder.
3.2 Subject to the express terms and conditions set
forth herein, the Committee shall have the power from time to time to:
(a) determine those Eligible Individuals to whom
Employee Options shall be granted under the Plan and the
number of such Employee Options to be granted and to
prescribe the terms and conditions (which need not be
identical) of each such Employee Option, including the
purchase price per Share subject to each Employee Option,
and make any amendment or modification to any Option
Agreement consistent with the terms of the Plan;
(b) select those Eligible Individuals to whom
Awards shall be granted under the Plan and to determine the
number of Stock Appreciation Rights, Performance Units,
Performance Shares, Shares of Restricted Stock and/or
Dividend Equivalent Rights to be granted pursuant to each
Award, the terms and conditions of each Award, including the
restrictions or Performance Objectives relating to such
Units or Shares, the maximum value of each Performance Unit
and Performance Share and make any amendment or modification
to any Agreement consistent with the terms of the Plan;
(c) construe and interpret the Plan and the
Options and Awards granted hereunder and to establish, amend
and revoke rules and regulations for the administration of
the Plan, including, but not limited to, correcting any
defect or supplying any omission, or reconciling any
inconsistency in the Plan or in any Agreement, in the manner
and to the extent it shall deem necessary or advisable so
that the Plan complies with applicable law including Rule
16b-3 under the Exchange Act and the Code to the extent
applicable, and otherwise to make the Plan fully effective.
All decisions and determinations by the Committee in the
exercise of this power shall be final, binding and
conclusive upon the Company, its Subsidiaries, the Optionees
and Grantees and all other persons having any interest
therein;
(d) determine the duration and purposes for leaves
of absence which may be granted to an Optionee or Grantee on
an individual basis without constituting a termination of
employment or service for purposes of the Plan;
(e) exercise its discretion with respect to the
powers and rights granted to it as set forth in the Plan;
and
(f) generally, exercise such powers and to perform
such acts as are deemed necessary or advisable to promote
the best interests of the Company with respect to the Plan.
4. Stock Subject to the Plan; Grant Limitations.
--------------------------------------------
4.1 The maximum number of Shares that may be made the
subject of Options and Awards granted under the Plan is 1,500,000. The
maximum number of Shares that any Eligible Individual may receive
during the term of the Plan in respect of Options and Awards may not
exceed 500,000 Shares. The maximum dollar amount of cash or the fair
market value of Shares that any Eligible Individual may receive during
the term of the Plan in respect of Performance Units denominated in
dollars may not exceed $5,000,000. Upon a Change in Capitalization the
maximum number of Shares referred to in the first two sentences of
this Section 4.1 shall be adjusted in number and kind pursuant to
Section 13. The Company shall reserve for the purposes of the Plan,
out of its authorized but unissued Shares or out of Shares held in the
Company's treasury, or partly out of each, such number of Shares as
shall be determined by the Board.
4.2 Upon the granting of an Option or an Award, the
number of Shares available under Section 4.1 for the granting of
further Options and Awards shall be reduced as follows:
(a) In connection with the granting of an Option
or an Award (other than the granting of a Performance Unit
denominated in dollars), the number of Shares shall be
reduced by the number of Shares in respect of which the
Option or Award is granted or denominated.
(b) In connection with the granting of a
Performance Unit denominated in dollars, the number of
Shares shall be reduced by an amount equal to the quotient
of (i) the dollar amount in which the Performance Unit is
denominated, divided by (ii) the Fair Market Value of a
Share on the date the Performance Unit is granted.
4.3 Whenever any outstanding Option or Award or portion
thereof expires, is cancelled or is otherwise terminated for any
reason without having been exercised or payment having been made in
respect of the entire Option or Award, the Shares allocable to the
expired, cancelled or otherwise terminated portion of the Option or
Award may again be the subject of Options or Awards granted hereunder.
5. Option Grants for Eligible Individuals.
--------------------------------------
5.1 Authority of Committee. Subject to the provisions
of the Plan and to Section 4.1 above, the Committee shall have full
and final authority to select those Eligible Individuals who will
receive Employee Options and the terms and conditions of the grant to
such Eligible Individuals shall be set forth in an Agreement;
provided, however, that no person shall receive any Incentive Stock
Options unless he or she is an employee of the Company, a Parent or a
Subsidiary at the time the Incentive Stock Option is granted.
5.2 Purchase Price. The purchase price or the manner in
which the purchase price is to be determined for Shares under each
Employee Option shall be determined by the Committee and set forth in
the Agreement; provided, however, that the purchase price per Share
under each Employee Incentive Stock Option shall not be less than 100%
of the Fair Market Value of a Share on the date the Option is granted
(110% in the case of an Incentive Stock Option granted to a
Ten-Percent Stockholder).
5.3 Maximum Duration. Employee Options granted
hereunder shall be for such term as the Committee shall determine,
provided that no Option shall be exercisable after the expiration of
ten (10) years from the date it is granted (five (5) years in the case
of an Incentive Stock Option granted to a Ten-Percent Stockholder).
The Committee may, subsequent to the granting of any Employee Option,
extend the term thereof but in no event shall the term as so extended
exceed the maximum term provided for in the preceding sentence.
5.4 Vesting. Subject to Section 7.4 hereof, each
Employee Option shall become exercisable in such installments
(which need not be equal) and at such times as may be designated by
the Committee and set forth in the Agreement. To the extent not
exercised, installments shall accumulate and be exercisable, in whole
or in part, at any time after becoming exercisable, but not later than
the date the Employee Option expires. The Committee may accelerate the
exercisability of any Employee Option or portion thereof at any time.
5.5 Modification or Substitution. The Committee may, in
its discretion, modify outstanding Employee Options or accept the
surrender of outstanding Employee Options (to the extent not
exercised) and grant new Employee Options in substitution for them.
Notwithstanding the foregoing, no modification of an Employee Option
shall adversely alter or impair any rights or obligations under the
Employee Option without the Optionee's consent.
6. Eligible Director Provisions.
----------------------------
6.1 Option Grants for Eligible Directors.
------------------------------------
(a) Grant. Director Options shall be granted as
follows:
(i) Initial Grant. Each Eligible Director who
becomes a Director after the conclusion of the 1997 annual meeting of
stockholders of the Company shall, upon becoming a Director, be
granted a Director Option in respect of a number of Shares equal to
the product of 2000 and a fraction, the numerator of which is the
number of regularly scheduled Board meetings remaining on such date
before the next annual meeting of the stockholders of the Company and
the denominator of which is the number of regularly scheduled Board
meetings between the preceding and next following annual meeting of
the stockholders of the Company; provided, however, that an Eligible
Director who first becomes a Director as a result of his or her
election at an annual meeting of the stockholders of the Company shall
not be granted a Director Option pursuant to this Section 6.1(a)(i).
(ii) Annual Grant. Each Eligible Director
shall be granted a Director Option in respect of 2,000 Shares on the
first business day after the annual meeting of the stockholders of the
Company in each year that the Plan is in effect provided that the
Eligible Director is a Director on such date.
All Director Options shall be evidenced by an Agreement
containing such other terms and conditions not inconsistent with the
provisions of this Plan as determined by the Board; provided, however,
that such terms shall not vary the price, amount or timing of Director
Options provided under this Section 6.1, including provisions dealing
with vesting, forfeiture and termination of such Director Options.
(b) Purchase Price. The purchase price for Shares under
each Director Option shall be equal to 100% of the Fair Market Value
of such Shares on the date the Director Option is granted.
(c) Vesting. Subject to Sections 6.1(d) and 7.4, each
Director Option shall become fully vested and exercisable with respect
to 50% of the Shares subject thereto on the first business day after
each of the first and second annual meetings of stockholders of the
Company held after the grant of such Director Option; provided,
however, that the Optionee continues to serve as a Director as of such
date. If an Optionee ceases to serve as a Director for any reason, the
Optionee shall have no rights with respect to any Director Option
which has not then vested pursuant to the preceding sentence and the
Optionee shall automatically forfeit any Director Option which remains
unvested.
(d) Duration. Subject to Section 7.4, each Director
Option shall terminate on the date which is the tenth anniversary of
the date of grant, unless terminated earlier as follows:
(i) If an Optionee's service as a Director
terminates for any reason other than Cause, the Optionee may for a
period of one (1) year after such termination exercise his or her
Option to the extent, and only to the extent, that such Option or
portion thereof was vested and exercisable as of the date the
Optionee's service as a Director terminated, after which time the
Option shall automatically terminate in full.
(ii) If an Optionee's service as a Director
terminates for Cause, the Option granted to the Optionee hereunder
shall immediately terminate in full and no rights thereunder may be
exercised.
(iii) If an Optionee dies while a Director or
within the one (1) year period after termination of service as a
Director as described in clause (i) of this Section 6.1(d), the Option
granted to the Optionee may be exercised at any time within twelve
(12) months after the Optionee's death by the person or persons to
whom such rights under the Option shall pass by will, or by the laws
of descent or distribution, after which time the Option shall
terminate in full; provided, however, that an Option may be exercised
to the extent, and only to the extent, that the Option or portion
thereof was exercisable on the date of death or earlier termination of
the Optionee's services as a Director.
6.2 Election to Receive Shares in Lieu of Directors' Fees.
-----------------------------------------------------
(a) Election. Each Eligible Director may elect, on
a form provided for such purpose by the Committee, to have all or any
part (but only in 25% increments) of his or her Directors' Fees
converted into, and transferred to him or her, in the form of Shares
(an "Election"). For purposes of this Section 6.2, "Directors' Fees"
means all cash annual retainer and meeting fees payable by the Company
to an Eligible Director with respect to services rendered by such
Eligible Director.
(b) Time of Election; Effective Date of Election.
An Eligible Director may make an Election on or prior to June 10th or
December 10th of any particular year during his or her directorship.
An Election made on or prior to June 10th shall be effective with
respect to Directors' Fees payable on or after July 1st of such year.
An Election made on or prior to December 10th shall be effective with
respect to Directors' Fees payable on or after January 1st of the
following year.
(c) Shares Received in Lieu of Fees. On each date
following the effective date of an Election on which Director Fees
would otherwise be paid (a "Director Payment Date"), the Directors'
Fees that an Eligible Director would have received but for his or her
Election shall be converted into the right to receive a number of
Shares with a Fair Market Value (determined as of the Director Payment
Date) equal to 110% of such Directors' Fees. Shares shall be issued by
the Company to an Eligible Director who has made an Election as
promptly as practicable following each Director Payment Date.
(d) Election Effective Until Revoked. An Eligible
Director's Election shall remain effective until revoked. An Eligible
Director may revoke his or her Election (a "Revocation") on a form
provided for such purpose by the Committee on or prior to June 10th or
December 10th of any particular year during his or her directorship. A
Revocation made on or prior to June 10th shall be effective with
respect to Directors' Fees payable on or after July 1st of such year.
A Revocation made on or prior to December 10th shall be effective with
respect to Directors' Fees payable on or after January 1st of the
following year.
6.3 Limitations on Amendment. The provisions in this
Section 6 shall not be amended more than once every six months, other
than to comport with changes in the Code or the rules and regulations
thereunder.
7. Terms and Conditions Applicable to All Options.
----------------------------------------------
7.1 Non-transferability. No Option granted hereunder
shall be transferable by the Optionee to whom granted except by will
or the laws of descent and distribution, and an Option may be
exercised during the lifetime of such Optionee only by the Optionee or
his or her guardian or legal representative. The terms of such Option
shall be final, binding and conclusive upon the beneficiaries,
executors, administrators, heirs and successors of the Optionee.
7.2 Method of Exercise. The exercise of an Option shall
be made only by a written notice delivered in person or by mail to the
Secretary of the Company at the Company's principal executive office,
specifying the number of Shares to be purchased and accompanied by
payment therefor and otherwise in accordance with the Agreement
pursuant to which the Option was granted and, if the Committee then
requires, a fully executed Stockholders Agreement. The purchase price
for any Shares purchased pursuant to the exercise of an Option shall
be paid in either of the following forms (or any combination thereof):
(i) cash or (ii) the transfer of Shares to the Company upon such terms
and conditions as determined by the Committee. Notwithstanding the
foregoing, (i) the Committee shall have discretion to determine at the
time of grant of each Employee Option or at any later date (up to and
including the date of exercise) the form of payment acceptable in
respect of the exercise of such Employee Option and (ii) Options may
be exercised pursuant to such cashless exercise procedures which are,
from time to time, deemed acceptable by the Committee. The written
notice pursuant to this Section 7.2 may also provide instructions from
the Optionee to the Company that upon receipt of the purchase price in
cash from the Optionee's broker or dealer, designated as such on the
written notice, in payment for any Shares purchased pursuant to the
exercise of an Option, the Company shall issue such Shares directly to
the designated broker or dealer. Any Shares transferred to the Company
as payment of the purchase price under an Option shall be valued at
their Fair Market Value on the day preceding the date of exercise of
such Option. If requested by the Committee, the Optionee shall deliver
the Agreement evidencing the Option to the Secretary of the Company
who shall endorse thereon a notation of such exercise and return such
Agreement to the Optionee. No fractional Shares (or cash in lieu
thereof) shall be issued upon exercise of an Option and the number of
Shares that may be purchased upon exercise shall be rounded to the
nearest number of whole Shares.
7.3 Rights of Optionees. No Optionee shall be deemed
for any purpose to be the owner of any Shares subject to any Option
unless and until (i) the Option shall have been exercised pursuant to
the terms thereof, (ii) the Company shall have issued and delivered
the Shares to the Optionee and (iii) the Optionee's name shall have
been entered as a stockholder of record on the books of the Company.
Thereupon, the Optionee shall have full voting, dividend and other
ownership rights with respect to such Shares, subject to such terms
and conditions as may be set forth in the applicable Agreement.
7.4 Effect of Change in Control. In the event of a
Change in Control, all Options outstanding on the date of such Change
in Control shall become immediately and fully exercisable. In
addition, to the extent set forth in an Agreement evidencing the grant
of an Option, an Optionee will be permitted to surrender to the
Company for cancellation within sixty (60) days after such Change in
Control, any Option or portion of an Option to the extent not yet
exercised and the Optionee will be entitled to receive a cash payment
in an amount equal to the excess, if any, of (x) (A) in the case of a
Nonqualified Stock Option, the greater of (1) the Fair Market Value,
on the date preceding the date of surrender, of the Shares subject to
the Option or portion thereof surrendered or (2) the Adjusted Fair
Market Value of the Shares subject to the Option or portion thereof
surrendered or (B) in the case of an Incentive Stock Option, the Fair
Market Value, on the date preceding the date of surrender, of the
Shares subject to the Option or portion thereof surrendered, over (y)
the aggregate purchase price for such Shares under the Option or
portion thereof surrendered. In the event an Optionee's employment
with, or service as a Director of, the Company is terminated by the
Company within two years following a Change in Control each Option
held by the Optionee that was exercisable as of the date of
termination of the Optionee's employment or service shall remain
exercisable for a period ending not before the earlier of (A) the
first anniversary of the termination of the Optionee's employment or
service or (B) the expiration of the stated term of the Option.
8. Stock Appreciation Rights. The Committee may, in its
discretion, either alone or in connection with the grant of an
Employee Option, grant Stock Appreciation Rights in accordance with
the Plan, the terms and conditions of which shall be set forth in an
Agreement. If granted in connection with an Employee Option, a Stock
Appreciation Right shall cover the same Shares covered by the Employee
Option (or such lesser number of Shares as the Committee may
determine) and shall, except as provided in this Section 8, be subject
to the same terms and conditions as the related Employee Option.
8.1 Time of Grant. A Stock Appreciation Right may be
granted (i) at any time if unrelated to an Option, or (ii) if related
to an Employee Option, either at the time of grant, or at any time
thereafter during the term of the Option.
8.2 Stock Appreciation Right Related to an Employee
Option.
-----------------------------------------------
(a) Exercise. A Stock Appreciation Right granted
in connection with an Employee Option shall be exercisable at such
time or times and only to the extent that the related Employee Option
is exercisable, and will not be transferable except to the extent the
related Employee Option is transferable. A Stock Appreciation Right
granted in connection with an Incentive Stock Option shall be
exercisable only if the Fair Market Value of a Share on the date of
exercise exceeds the purchase price specified in the related Incentive
Stock Option Agreement.
(b) Amount Payable. Upon the exercise of a Stock
Appreciation Right related to an Employee Option, the Grantee shall be
entitled to receive an amount determined by multiplying (A) the excess
of the Fair Market Value of a Share on the date preceding the date of
exercise of such Stock Appreciation Right over the per Share purchase
price under the related Employee Option, by (B) the number of Shares
as to which such Stock Appreciation Right is being exercised.
Notwithstanding the foregoing, the Committee may limit in any manner
the amount payable with respect to any Stock Appreciation Right by
including such a limit in the Agreement evidencing the Stock
Appreciation Right at the time it is granted.
(c) Treatment of Related Options and Stock
Appreciation Rights Upon Exercise. Upon the exercise of a Stock
Appreciation Right granted in connection with an Employee Option, the
Employee Option shall be cancelled to the extent of the number of
Shares as to which the Stock Appreciation Right is exercised, and upon
the exercise of an Employee Option granted in connection with a Stock
Appreciation Right or the surrender of such Employee Option pursuant
to Section 7.4, the Stock Appreciation Right shall be cancelled to the
extent of the number of Shares as to which the Employee Option is
exercised or surrendered.
8.3 Stock Appreciation Right Unrelated to an Option.
The Committee may grant to Eligible Individuals Stock Appreciation
Rights unrelated to Options. Stock Appreciation Rights unrelated to
Options shall contain such terms and conditions as to exercisability
(subject to Section 8.7), vesting and duration as the Committee shall
determine, but in no event shall they have a term of greater than ten
(10) years. Upon exercise of a Stock Appreciation Right unrelated to
an Option, the Grantee shall be entitled to receive an amount
determined by multiplying (A) the excess of the Fair Market Value of a
Share on the date preceding the date of exercise of such Stock
Appreciation Right over the Fair Market Value of a Share on the date
the Stock Appreciation Right was granted, by (B) the number of Shares
as to which the Stock Appreciation Right is being exercised.
Notwithstanding the foregoing, the Committee may limit in any manner
the amount payable with respect to any Stock Appreciation Right by
including such a limit in the Agreement evidencing the Stock
Appreciation Right at the time it is granted.
8.4 Method of Exercise. Stock Appreciation Rights shall
be exercised by a Grantee only by a written notice delivered in person
or by mail to the Secretary of the Company at the Company's principal
executive office, specifying the number of Shares with respect to
which the Stock Appreciation Right is being exercised. If requested by
the Committee, the Grantee shall deliver the Agreement evidencing the
Stock Appreciation Right being exercised and the Agreement evidencing
any related Employee Option to the Secretary of the Company who shall
endorse thereon a notation of such exercise and return such Agreement
to the Grantee.
8.5 Form of Payment. Payment of the amount determined
under Sections 8.2(b) or 8.3 may be made in the discretion of the
Committee, solely in whole Shares in a number determined at their Fair
Market Value on the date preceding the date of exercise of the Stock
Appreciation Right, or solely in cash, or in a combination of cash and
Shares. If the Committee decides to make full payment in Shares and
the amount payable results in a fractional Share, payment for the
fractional Share will be made in cash.
8.6 Modification or Substitution. Subject to the terms
of the Plan, the Committee may modify outstanding Awards of Stock
Appreciation Rights or accept the surrender of outstanding Awards of
Stock Appreciation Rights (to the extent not exercised) and grant new
Awards in substitution for them. Notwithstanding the foregoing, no
modification of an Award shall adversely alter or impair any rights or
obligations under the Agreement without the Grantee's consent.
8.7 Effect of Change in Control. In the event of a
Change in Control, all Stock Appreciation Rights shall become
immediately and fully exercisable. Notwithstanding Sections 8.3 and
8.5, to the extent set forth in an Agreement evidencing the grant of a
Stock Appreciation Right unrelated to an Option, upon the exercise of
such a Stock Appreciation Right or any portion thereof during the
sixty (60) day period following a Change in Control, the amount
payable shall be in cash and shall be an amount equal to the excess,
if any, of (A) the greater of (x) the Fair Market Value, on the date
preceding the date of exercise, of the Shares subject to Stock
Appreciation Right or portion thereof exercised and (y) the Adjusted
Fair Market Value, on the date preceding the date of exercise, of the
Shares over (B) the aggregate Fair Market Value, on the date the Stock
Appreciation Right was granted, of the Shares subject to the Stock
Appreciation Right or portion thereof exercised. In the event an
Optionee's employment or service with the Company is terminated by the
Company within two years following a Change in Control, each Option
held by the Optionee that was exercisable as of the date of
termination of the Optionee's employment or service shall remain
exercisable for a period ending not before the earlier of (A) the
first anniversary of the termination of the Optionee's employment or
service or (B) the expiration of the stated term of the Option.
9. Restricted Stock.
-----------------
9.1 Grant. The Committee may grant to Eligible
Individuals Awards of Restricted Stock, and may issue Shares of
Restricted Stock in payment in respect of vested Performance Units (as
hereinafter provided in Section 10.2), which shall be evidenced by an
Agreement between the Company and the Grantee. Each Agreement shall
contain such restrictions, terms and conditions as the Committee may,
in its discretion, determine and (without limiting the generality of
the foregoing) such Agreements may require that an appropriate legend
be placed on Share certificates. Awards of Restricted Stock shall be
subject to the terms and provisions set forth below in this Section 9.
9.2 Rights of Grantee. Shares of Restricted Stock
granted pursuant to an Award hereunder shall be issued in the name of
the Grantee as soon as reasonably practicable after the Award is
granted provided that the Grantee has executed an Agreement evidencing
the Award, the appropriate blank stock powers and, in the discretion
of the Committee, an escrow agreement and any other documents which
the Committee may require as a condition to the issuance of such
Shares. If a Grantee shall fail to execute the Agreement evidencing a
Restricted Stock Award, the appropriate blank stock powers and, in the
discretion of the Committee, an escrow agreement and any other
documents which the Committee may require within the time period
prescribed by the Committee at the time the Award is granted, the
Award shall be null and void. At the discretion of the Committee,
Shares issued in connection with a Restricted Stock Award shall be
deposited together with the stock powers with an escrow agent (which
may be the Company) designated by the Committee. Unless the Committee
determines otherwise and as set forth in the Agreement, upon delivery
of the Shares to the escrow agent, the Grantee shall have all of the
rights of a stockholder with respect to such Shares, including the
right to vote the Shares and to receive all dividends or other
distributions paid or made with respect to the Shares.
9.3 Non-transferability. Until the restrictions upon
the Shares of Restricted Stock awarded to a Grantee shall have lapsed
in the manner set forth in Section 9.4, such Shares shall not be sold,
transferred or otherwise disposed of and shall not be pledged or
otherwise hypothecated, nor shall they be delivered to the Grantee.
9.4 Lapse of Restrictions.
(a) Generally. Restrictions upon Shares of
Restricted Stock awarded hereunder shall lapse at such time or times
and on such terms and conditions as the Committee may determine, which
restrictions shall be set forth in the Agreement evidencing the Award.
(b) Effect of Change in Control. The Committee
shall determine at the time of the grant of an Award of Restricted
Stock the extent to which, if any, the restrictions upon Shares of
Restricted Stock shall lapse upon a Change in Control. The Agreement
evidencing the Award shall set forth such provisions.
9.5 Modification or Substitution. Subject to the terms
of the Plan, the Committee may modify outstanding Awards of Restricted
Stock or accept the surrender of outstanding Shares of Restricted
Stock (to the extent the restrictions on such Shares have not yet
lapsed) and grant new Awards in substitution for them. Notwithstanding
the foregoing, no modification of an Award shall adversely alter or
impair any rights or obligations under the Agreement without the
Grantee's consent.
9.6 Treatment of Dividends. At the time an Award of
Shares of Restricted Stock is granted, the Committee may, in its
discretion, determine that the payment to the Grantee of dividends, or
a specified portion thereof, declared or paid on such Shares by the
Company shall be (i) deferred until the lapsing of the restrictions
imposed upon such Shares and (ii) held by the Company for the account
of the Grantee until such time. In the event that dividends are to be
deferred, the Committee shall determine whether such dividends are to
be reinvested in Shares (which shall be held as additional Shares of
Restricted Stock) or held in cash. If deferred dividends are to be
held in cash, there may be credited at the end of each year (or
portion thereof) interest on the amount of the account at the
beginning of the year at a rate per annum as the Committee, in its
discretion, may determine. Payment of deferred dividends in respect of
Shares of Restricted Stock (whether held in cash or as additional
Shares of Restricted Stock), together with interest accrued thereon,
if any, shall be made upon the lapsing of restrictions imposed on the
Shares in respect of which the deferred dividends were paid, and any
dividends deferred (together with any interest accrued thereon) in
respect of any Shares of Restricted Stock shall be forfeited upon the
forfeiture of such Shares.
9.7 Delivery of Shares. Upon the lapse of the
restrictions on Shares of Restricted Stock, the Committee shall cause
a stock certificate to be delivered to the Grantee with respect to
such Shares, free of all restrictions hereunder.
10. Performance Awards.
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10.1 (a) Performance Objectives. Performance Objectives
for Performance Awards may be expressed in terms of (i) earnings per
Share, (ii) pre-tax profits, (iii) operating income, (iv) EBIT, (v)
EBITDA, (vi) net earnings, (vii) return on equity or assets, (viii)
revenues or (ix) any combination of the foregoing. Performance
Objectives may be in respect of the performance of the Company and its
Subsidiaries (which may be on a consolidated basis), a Subsidiary or a
Division. Performance Objectives may be absolute or relative and may
be expressed in terms of a progression within a specified range. The
Performance Objectives with respect to a Performance Cycle shall be
established in writing by the Committee by the earlier of (i) the date
on which a quarter of the Performance Cycle has elapsed or (ii) the
date which is 90 days after the commencement of the Performance Cycle,
and in any event while the performance relating to the Performance
Objectives remain substantially uncertain. At the time of the granting
of a Performance Award and to the extent permitted under Section
162(m) of the Code and the regulations thereunder, the Committee may
provide for the manner in which the Performance Objectives will be
measured to reflect the impact of specified corporate transactions,
extraordinary events, accounting changes and other similar events.
(b) Determination of Performance. Prior to the
vesting, payment, settlement or lapsing of any restrictions with
respect to any Performance Award made to a Grantee who is subject to
Section 162(m) of the Code, the Committee shall certify in writing
that the applicable Performance Objectives have been satisfied;
provided, however, that satisfaction of any applicable Performance
Objectives shall be made without regard to any change in accounting
standards that may be required after the Performance Objectives are
established.
10.2 Performance Units. The Committee, in its
discretion, may grant Awards of Performance Units to Eligible
Individuals, the terms and conditions of which shall be set forth in
an Agreement between the Company and the Grantee. Performance Units
may be denominated in Shares or a specified dollar amount and,
contingent upon the attainment of specified Performance Objectives
within the Performance Cycle, represent the right to receive payment
as provided in Section 10.2(b) of (i) in the case of Share-denominated
Performance Units, the Fair Market Value of a Share on the date the
Performance Unit was granted, the date the Performance Unit became
vested or any other date specified by the Committee, (ii) in the case
of dollar-denominated Performance Units, the specified dollar amount
or (iii) a percentage (which may be more than 100%) of the amount
described in clause (i) or (ii) depending on the level of Performance
Objective attainment; provided, however, that the Committee may at the
time a Performance Unit is granted, specify a maximum amount payable
in respect of a vested Performance Unit. Each Agreement shall specify
the number of the Performance Units to which it relates, the
Performance Objectives which must be satisfied in order for the
Performance Units to vest and the Performance Cycle within which such
Performance Objectives must be satisfied.
(a) Vesting and Forfeiture. Subject to Section
10.1(b) and 10.4, a Grantee shall become vested with respect to the
Performance Units to the extent that the Performance Objectives set
forth in the Agreement are satisfied for the Performance Cycle.
(b) Payment of Awards. Payment to Grantees in
respect of vested Performance Units shall be made within sixty (60)
days after the last day of the Performance Cycle to which such Award
relates unless the Agreement evidencing the Award provides for the
deferral of payment, in which event the terms and conditions of the
deferral shall be set forth in the Agreement. Subject to Section 10.4,
such payments may be made entirely in Shares valued at their Fair
Market Value as of the day preceding the date of payment or such other
date specified by the Committee, entirely in cash, or in such
combination of Shares and cash as the Committee in its discretion,
shall determine at any time prior to such payment; provided, however,
that if the Committee in its discretion determines to make such
payment entirely or partially in Shares of Restricted Stock, the
Committee must determine the extent to which such payment will be in
Shares of Restricted Stock and the terms of such Restricted Stock at
the time the Award is granted.
10.3 Performance Shares. The Committee, in its
discretion, may grant Awards of Performance Shares to Eligible
Individuals, the terms and conditions of which shall be set forth in
an Agreement between the Company and the Grantee. Each Agreement may
require that an appropriate legend be placed on Share certificates.
Awards of Performance Shares shall be subject to the following terms
and provisions:
(a) Rights of Grantee. The Committee shall provide
at the time an Award of Performance Shares is made, the time or times
at which the actual Shares represented by such Award shall be issued
in the name of the Grantee; provided, however, that no Performance
Shares shall be issued until the Grantee has executed an Agreement
evidencing the Award, the appropriate blank stock powers and, in the
discretion of the Committee, an escrow agreement and any other
documents which the Committee may require as a condition to the
issuance of such Performance Shares. If a Grantee shall fail to
execute the Agreement evidencing an Award of Performance Shares, the
appropriate blank stock powers and, in the discretion of the
Committee, an escrow agreement and any other documents which the
Committee may require within the time period prescribed by the
Committee at the time the Award is granted, the Award shall be null
and void. At the discretion of the Committee, Shares issued in
connection with an Award of Performance Shares shall be deposited
together with the stock powers with an escrow agent (which may be the
Company) designated by the Committee. Except as restricted by the
terms of the Agreement, upon delivery of the Shares to the escrow
agent, the Grantee shall have, in the discretion of the Committee, all
of the rights of a stockholder with respect to such Shares, including
the right to vote the Shares and to receive all dividends or other
distributions paid or made with respect to the Shares.
(b) Non-transferability. Until any restrictions
upon the Performance Shares awarded to a Grantee shall have lapsed in
the manner set forth in Sections 10.3(c) or 10.4, such Performance
Shares shall not be sold, transferred or otherwise disposed of and
shall not be pledged or otherwise hypothecated, nor shall they be
delivered to the Grantee. The Committee may also impose such other
restrictions and conditions on the Performance Shares, if any, as it
deems appropriate.
(c) Lapse of Restrictions. Subject to Sections
10.1(b) or 10.4, restrictions upon Performance Shares awarded
hereunder shall lapse and such Performance Shares shall become vested
at such time or times and on such terms, conditions and satisfaction
of Performance Objectives as the Committee may, in its discretion,
determine at the time an Award is granted.
(d) Treatment of Dividends. At the time the Award
of Performance Shares is granted, the Committee may, in its
discretion, determine that the payment to the Grantee of dividends, or
a specified portion thereof, declared or paid on actual Shares
represented by such Award which have been issued by the Company to the
Grantee shall be (i) deferred until the lapsing of the restrictions
imposed upon such Performance Shares and (ii) held by the Company for
the account of the Grantee until such time. In the event that
dividends are to be deferred, the Committee shall determine whether
such dividends are to be reinvested in shares of Stock (which shall be
held as additional Performance Shares) or held in cash. If deferred
dividends are to be held in cash, there may be credited at the end of
each year (or portion thereof) interest on the amount of the account
at the beginning of the year at a rate per annum as the Committee, in
its discretion, may determine. Payment of deferred dividends in
respect of Performance Shares (whether held in cash or in additional
Performance Shares), together with interest accrued thereon, if any,
shall be made upon the lapsing of restrictions imposed on the
Performance Shares in respect of which the deferred dividends were
paid, and any dividends deferred (together with any interest accrued
thereon) in respect of any Performance Shares shall be forfeited upon
the forfeiture of such Performance Shares.
(e) Delivery of Shares. Upon the lapse of the
restrictions on Performance Shares awarded hereunder, the Committee
shall cause a stock certificate to be delivered to the Grantee with
respect to such Shares, free of all restrictions hereunder.
10.4 Effect of Change in Control. In the event of a
Change in Control:
(a) With respect to Performance Units, the Grantee
shall (i) become vested in a percentage of Performance Units as
determined by the Committee at the time of the Award of such
Performance Units and as set forth in the Agreement and (ii) be
entitled to receive in respect of all Performance Units which become
vested as a result of a Change in Control, a cash payment within ten
(10) days after such Change in Control in an amount as determined by
the Committee at the time of the Award of such Performance Unit and as
set forth in the Agreement.
(b) With respect to Performance Shares,
restrictions shall lapse immediately on all or a portion of the
Performance Shares as determined by the Committee at the time of the
Award of such Performance Shares and as set forth in the Agreement.
(c) The Agreements evidencing Performance Shares
and Performance Units shall provide for the treatment of such Awards
(or portions thereof) which do not become vested as the result of a
Change in Control, including, but not limited to, provisions for the
adjustment of applicable Performance Objectives.
10.5 Modification or Substitution. Subject to the terms
of the Plan, the Committee may modify outstanding Performance Awards
or accept the surrender of outstanding Performance Awards and grant
new Performance Awards in substitution for them. Notwithstanding the
foregoing, no modification of a Performance Award shall adversely
alter or impair any rights or obligations under the Agreement without
the Grantee's consent.
11. Dividend Equivalent Rights.
--------------------------
Dividend Equivalent Rights may be granted to Eligible
Individuals and Eligible Directors in tandem with an Option or Award
or as a separate Award. The terms and conditions applicable to each
Dividend Equivalent Right shall be specified in the Agreement under
which the Dividend Equivalent Right is granted. Amounts payable in
respect of Dividend Equivalent Rights may be payable currently or
deferred until the lapsing of restrictions on such Dividend Equivalent
Rights or until the vesting, exercise, payment, settlement or other
lapse of restrictions on the Option or Award to which the Dividend
Equivalent Rights relate. In the event that the amount payable in
respect of Dividend Equivalent Rights are to be deferred, the
Committee shall determine whether such amounts are to be held in cash
or reinvested in Shares or deemed (notionally) to be reinvested in
Shares. If amounts payable in respect of Dividend Equivalent Rights
are to be held in cash, there may be credited at the end of each year
(or portion thereof) interest on the amount of the account at the
beginning of the year at a rate per annum as the Committee, in its
discretion, may determine. Dividend Equivalent Rights may be settled
in cash or Shares or a combination thereof, in a single installment or
multiple installments.
12. Effect of a Termination of Employment.
-------------------------------------
The Agreement evidencing the grant of each Option and
each Award shall set forth the terms and conditions applicable to such
Option or Award upon a termination of the employment or service (or
other change in the status) of the Optionee or Grantee by the Company,
a Subsidiary or a Division (including a termination or change by
reason of the sale of a Subsidiary or a Division), which, except for
Director Options, shall be as the Committee may, in its discretion,
determine at the time the Option or Award is granted or thereafter.
13. Adjustment Upon Changes in Capitalization.
-----------------------------------------
(a) In the event of a Change in Capitalization,
the Committee shall conclusively determine the appropriate
adjustments, if any, to (i) the maximum number and class of Shares or
other stock or securities with respect to which Options or Awards may
be granted under the Plan, (ii) the maximum number and class of Shares
or other stock or securities with respect to which Options or Awards
may be granted to any Eligible Individual during the term of the Plan,
(iii) the number and class of Shares or other stock or securities
which are subject to outstanding Options or Awards granted under the
Plan and the purchase price therefor, if applicable, and (iv) the
number and class of Shares or other securities in respect of which
Director Options are to be granted under Section 6.
(b) Any such adjustment in the Shares or other
stock or securities subject to outstanding Incentive Stock Options
(including any adjustments in the purchase price) shall be made in
such manner as not to constitute a modification as defined by Section
424(h)(3) of the Code and only to the extent otherwise permitted by
Sections 422 and 424 of the Code.
(c) If, by reason of a Change in Capitalization, a
Grantee of an Award shall be entitled to, or an Optionee shall be
entitled to exercise an Option with respect to, new, additional or
different shares of stock or securities, such new, additional or
different shares shall thereupon be subject to all of the conditions,
restrictions and performance criteria which were applicable to the
Shares subject to the Award or Option, as the case may be, prior to
such Change in Capitalization.
14. Effect of Certain Transactions. Subject to Sections 7.4,
8.7, 9.4(b) and 10.4 or as otherwise provided in an Agreement, in the
event of (i) the liquidation or dissolution of the Company or (ii) a
merger or consolidation of the Company (a "Transaction"), the Plan and
the Options and Awards issued hereunder shall continue in effect in
accordance with their respective terms, except that following a
Transaction each Optionee and Grantee shall be entitled to receive in
respect of each Share subject to any outstanding Options or Awards, as
the case may be, upon exercise of any Option or payment or transfer in
respect of any Award, the same number and kind of stock, securities,
cash, property, or other consideration that each holder of a Share was
entitled to receive in the Transaction in respect of a Share;
provided, however, that such stock, securities, cash, property, or
other consideration shall remain subject to all of the conditions,
restrictions and performance criteria which were applicable to the
Options and Awards prior to such Transaction.
15. Interpretation.
--------------
(a) The Plan is intended to comply with Rule 16b-3
promulgated under the Exchange Act and the Committee shall interpret
and administer the provisions of the Plan or any Agreement in a manner
consistent therewith. Any provisions inconsistent with such Rule shall
be inoperative and shall not affect the validity of the Plan.
(b) Unless otherwise expressly stated in the relevant
Agreement, each Option, Stock Appreciation Right and Performance Award
granted under the Plan is intended to be performance-based
compensation within the meaning of Section 162(m)(4)(C) of the Code.
The Committee shall not be entitled to exercise any discretion
otherwise authorized hereunder with respect to such Options or Awards
if the ability to exercise such discretion or the exercise of such
discretion itself would cause the compensation attributable to such
Options or Awards to fail to qualify as performance-based
compensation.
16. Pooling Transactions.
--------------------
Notwithstanding anything contained in the Plan or any
Agreement to the contrary, in the event of a Change in Control which
is intended to constitute a Pooling Transaction, the Committee shall
take such actions, if any, as are specifically recommended by an
independent accounting firm retained by the Company to the extent
reasonably necessary in order to assure that the Pooling Transaction
will qualify as such, including but not limited to (i) deferring the
vesting, exercise, payment, settlement or lapsing of restrictions with
respect to any Option or Award, (ii) providing that the payment or
settlement in respect of any Option or Award be made in the form of
cash, Shares or securities of a successor or acquirer of the Company,
or a combination of the foregoing and (iii) providing for the
extension of the term of any Option or Award to the extent necessary
to accommodate the foregoing, but not beyond the maximum term
permitted for any Option or Award.
17. Termination and Amendment of the Plan.
-------------------------------------
The Plan shall terminate on the day preceding the tenth
anniversary of the date of its adoption by the Board and no Option or
Award may be granted thereafter. The Board may sooner terminate the
Plan and the Board may at any time and from time to time amend, modify
or suspend the Plan; provided, however, that:
(a) no such amendment, modification, suspension or
termination shall impair or adversely alter any Options or Awards
theretofore granted under the Plan, except with the consent of the
Optionee or Grantee, nor shall any amendment, modification, suspension
or termination deprive any Optionee or Grantee of any Shares which he
or she may have acquired through or as a result of the Plan; and
(b) to the extent necessary under applicable law,
no amendment shall be effective unless approved by the stockholders of
the Company in accordance with applicable law.
18. Non-Exclusivity of the Plan.
---------------------------
The adoption of the Plan by the Board shall not be
construed as amending, modifying or rescinding any previously approved
incentive arrangement or as creating any limitations on the power of
the Board to adopt such other incentive arrangements as it may deem
desirable, including, without limitation, the granting of stock
options otherwise than under the Plan, and such arrangements may be
either applicable generally or only in specific cases.
19. Limitation of Liability.
-----------------------
As illustrative of the limitations of liability of the
Company, but not intended to be exhaustive thereof, nothing in the
Plan shall be construed to:
(i) give any person any right to be granted an Option
or Award other than at the sole discretion of the Committee;
(ii) give any person any rights whatsoever with respect
to Shares except as specifically provided in the Plan;
(iii) limit in any way the right of the Company to
terminate the employment of any person at any time; or
(iv) be evidence of any agreement or understanding,
expressed or implied, that the Company will employ any person at any
particular rate of compensation or for any particular period of time.
20. Regulations and Other Approvals; Governing Law.
----------------------------------------------
20.1 Except as to matters of federal law, this Plan and
the rights of all persons claiming hereunder shall be construed and
determined in accordance with the laws of the State of Delaware
without giving effect to conflicts of law principles.
20.2 The obligation of the Company to sell or deliver
Shares with respect to Options and Awards granted under the Plan shall
be subject to all applicable laws, rules and regulations, including
all applicable federal and state securities laws, and the obtaining of
all such approvals by governmental agencies as may be deemed necessary
or appropriate by the Committee.
20.3 The Board may make such changes as may be
necessary or appropriate to comply with the rules and regulations of
any government authority, or to obtain for Eligible Individuals
granted Incentive Stock Options the tax benefits under the applicable
provisions of the Code and regulations promulgated thereunder.
20.4 (a) Each Option and Award is subject to the
requirement that, if at any time the Committee determines, in its
discretion, that the listing, registration or qualification of Shares
issuable pursuant to the Plan 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 an Option or Award or the
issuance of Shares, no Options or Awards shall be granted or payment
made or Shares issued, in whole or in part, unless listing,
registration, qualification, consent or approval has been effected or
obtained free of any conditions as acceptable to the Committee.
(b) Notwithstanding anything to the contrary
contained in the Plan or any Agreement, as a prerequisite to the
granting, vesting, payment, settlement or lapsing of restrictions with
respect to an Option or Award, the Committee may require the Optionee
or Grantee, as the case may be, to execute and deliver a Stockholders
Agreement in a form acceptable to the Committee.
20.5 Notwithstanding anything contained in the Plan or
any Agreement to the contrary, in the event that the disposition of
Shares acquired pursuant to the Plan is not covered by a then current
registration statement under the Securities Act of 1933, as amended
(the "Securities Act"), and is not otherwise exempt from such
registration, such Shares shall be restricted against transfer to the
extent required by the Securities Act and Rule 144 or other
regulations thereunder. The Committee may require any individual
receiving Shares pursuant to an Option or Award granted under the
Plan, as a condition precedent to receipt of such Shares, to represent
and warrant to the Company in writing that the Shares acquired by such
individual are acquired without a view to any distribution thereof and
will not be sold or transferred other than pursuant to an effective
registration thereof under said Act or pursuant to an exemption
applicable under the Securities Act or the rules and regulations
promulgated thereunder. The certificates evidencing any of such Shares
shall be appropriately amended to reflect their status as restricted
securities as aforesaid.
21. Miscellaneous.
-------------
21.1 Multiple Agreements. The terms of each Option or
Award may differ from other Options or Awards granted under the Plan
at the same time, or at some other time. The Committee may also grant
more than one Option or Award to a given Eligible Individual during
the term of the Plan, either in addition to, or in substitution for,
one or more Options or Awards previously granted to that Eligible
Individual.
21.2 Withholding of Taxes.
--------------------
(a) At such times as an Optionee or Grantee
recognizes taxable income in connection with the receipt of Shares or
cash hereunder (a "Taxable Event"), the Optionee or Grantee shall pay
to the Company an amount equal to the federal, state and local income
taxes and other amounts as may be required by law to be withheld by
the Company in connection with the Taxable Event (the "Withholding
Taxes") prior to the issuance, or release from escrow, of such Shares
or the payment of such cash. The Company shall have the right to
deduct from any payment of cash to an Optionee or Grantee an amount
equal to the Withholding Taxes in satisfaction of the obligation to
pay Withholding Taxes. In satisfaction of the obligation to pay
Withholding Taxes to the Company, the Optionee or Grantee may make a
written election (the "Tax Election"), which may be accepted or
rejected in the discretion of the Committee, to have withheld a
portion of the Shares then issuable to him or her having an aggregate
Fair Market Value equal to the Withholding Taxes; provided, however,
that the Committee, by resolution, may provide that all Tax Elections
related to Options granted prior to the revocation of such resolution
(by all or only specified Optionees as set forth in such resolution)
will be deemed to have been approved without any subsequent action by
the Committee.
(b) If an Optionee makes a disposition, within the
meaning of Section 424(c) of the Code and regulations promulgated
thereunder, of any Share or Shares issued to such Optionee pursuant to
the exercise of an Incentive Stock Option within the two-year period
commencing on the day after the date of the grant or within the
one-year period commencing on the day after the date of transfer of
such Share or Shares to the Optionee pursuant to such exercise, the
Optionee shall, within ten (10) days of such disposition, notify the
Company thereof, by delivery of written notice to the Company at its
principal executive office.
(c) The Committee shall have the authority, at the
time of grant of an Option or Award under the Plan or at any time
thereafter, to award tax bonuses to designated Optionees or Grantees,
to be paid upon their exercise of Employee Options or payment in
respect of Awards granted hereunder. The amount of any such payments
shall be determined by the Committee. The Committee shall have full
authority in its absolute discretion to determine the amount of any
such tax bonus and the terms and conditions affecting the vesting and
payment thereof.
22. Effective Date. The effective date of the Plan shall be
as determined by the Board, subject only to the approval by the
affirmative vote of the holders of a majority of the securities of the
Company present, or represented, and entitled to vote at a meeting of
stockholders duly held in accordance with the applicable laws of the
State of Delaware within twelve (12) months of the adoption of the
Plan by the Board.
[LETTERHEAD OF DEPARTMENT 56 INC.]
Exhibit 5.1
December 5, 1997
Board of Directors
Department 56, Inc.
One Village Place, 6436 City West Parkway
Eden Prairie, Minnesota 55344
Re: Registration Statement on Form S-8;
----------------------------------
Department 56, Inc. 1997 Stock Incentive Plan
---------------------------------------------
Gentlemen:
I am Senior Vice President of Department 56 Inc., a Delaware
corporation (the "Company"), and have acted as counsel for the Company
in connection with the Company's Registration Statement on Form S-8,
dated December 5, 1997 (the "Registration Statement"), relating to the
registration under the Securities Act of 1933, as amended, of the
offering of up to 1,500,000 shares (the "Shares") of the common stock,
par value $.01 per share, of the Company pursuant to the Department
56, Inc. 1997 Stock Incentive Plan (the "Plan"), and an indeterminate
number of interests in the Plan.
As the basis for the opinion hereinafter expressed, I have
examined such statutes, regulations, corporate records and documents,
certificates of corporate and public officials and other instruments
as I have deemed necessary or advisable for the purposes of this
opinion. In such examination I have assumed the authenticity of all
documents submitted to me as originals and the conformity with the
original documents of all documents submitted to me as copies. In this
opinion, the Shares include the associated rights that may be issued
with the Shares pursuant to the Rights Agreement dated as of April 23,
1997, between the Company and ChaseMellon Shareholders Services,
L.L.C. as rights agent.
Based on the foregoing and on such legal considerations as I
have deemed relevant, I am of the opinion that:
(1) The Shares have been duly and validly authorized by
the Company.
(2) Upon the issuance by the Company of the Shares and
the payment therefor pursuant to the Plan, the
Shares will be validly issued, fully paid and
non-assessable.
I hereby consent to the use of this opinion as an exhibit to
the Registration Statement and the reference to me in the Registration
Statement under the heading "Interests of Named Experts and Counsel."
Very truly yours,
/S/ David H. Weiser, Esq.
- -------------------------
David H. Weiser, Esq.
Senior Vice President
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration
Statement of Department 56, Inc. on Form S-8 relating to the 1997
Stock Incentive Plan of our reports dated February 14, 1997, appearing
in and incorporated by reference in the Annual Report on Form 10-K of
Department 56, Inc. for the year ended December 28, 1996.
/S/ DELOITTE & TOUCHE LLP
Minneapolis, Minnesota
December 3, 1997
