<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12.
</TABLE>
LIBBEY INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
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<PAGE> 2
LIBBEY INC.
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AND
PROXY STATEMENT
- --------------------------------------------------------------------------------
MEETING DATE
MAY 6, 1999
YOUR VOTE IS IMPORTANT!
Please mark, date and sign the enclosed proxy card and promptly
return it to the Company in the enclosed envelope.
[LIBBEY LOGO]
<PAGE> 3
LIBBEY INC.
P.O. BOX 10060
300 MADISON AVENUE
TOLEDO, OHIO 43699-0060
-------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
-------------------------------------------------------------------------
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Libbey
stockholders which will be held Thursday, May 6, 1999, at 2:00 p.m. in the
Belvedere Room at The Toledo Club, 235 14th Street (Madison Avenue and 14th
Street), Toledo, Ohio.
At the meeting, stockholders will elect two directors for a term of three
years, vote on approval of The 1999 Equity Participation Plan of Libbey Inc. and
will transact such other business as may properly come before the meeting.
The close of business on March 18, 1999 is the record date for voting at
the meeting. Only stockholders owning the Company's common stock, par value $.01
per share, on the record date are entitled to notice of, and to vote at, the
Annual Meeting.
Please sign, date and return your Proxy in the enclosed envelope as soon as
possible so that your shares can be voted at the meeting. If the shares are held
in more than one name, all holders of record should sign.
Management sincerely appreciates your support.
By Order of the Board of Directors,
John F. Meier
Chairman of the Board and Chief
Executive
Officer
Arthur H. Smith
Secretary
March 31, 1999
Toledo, Ohio
<PAGE> 4
LIBBEY INC.
PROXY STATEMENT
This statement is furnished in connection with the solicitation on behalf
of the Board of Directors of Libbey Inc., a Delaware corporation ("Libbey" or
"Company"), of proxies for use at the Annual Meeting of Stockholders of the
Company ("Annual Meeting"), to be held in the Belvedere Room at The Toledo Club,
235 14th Street (Madison Avenue and 14th Street), Toledo, Ohio on May 6, 1999 at
2:00 p.m. and at any and all adjournments thereof. It is anticipated that the
mailing to stockholders of this Proxy Statement and the enclosed proxy will
commence on or about March 31, 1999. A complete list of stockholders entitled to
vote at the Annual Meeting will be maintained at the Company's principal
executive offices at 300 Madison Avenue, P.O. Box 10060, Toledo, Ohio 43699-
0060 for a period of at least ten days prior to the Annual Meeting.
Only stockholders of record at the close of business on March 18, 1999 will
be entitled to vote at the meeting. At such date, there were 16,245,770 shares
of the Company's common stock outstanding. Each share of common stock is
entitled to one vote. The holders of a majority of the total shares issued and
outstanding, whether present in person or represented by proxy, will constitute
a quorum for the transaction of business at the meeting. Votes cast in person or
by proxy will be tabulated by the inspectors of election appointed for the
meeting and will determine whether or not a quorum is present. Abstentions will
be counted as shares that are present and entitled to vote for purposes of
determining the presence of a quorum but as unvoted for purposes of determining
the matter to which the abstention applies. If a broker indicates on the proxy
that it does not have discretionary authority as to certain shares to vote on a
particular matter, those shares will not be considered as present and entitled
to vote with respect to that matter. The common stock outstanding on the record
date held by the trustee under the Company's Stock Purchase and Supplemental
Retirement Plan, Stock Purchase and Retirement Savings Plan and Long-Term
Savings Plan and Trust will be voted by the trustee in accordance with written
instructions from participants in such plans or, as to those shares for which no
instructions are received, in a uniform manner as a single block in accordance
with the instructions received with respect to the majority of shares of each
respective plan for which instructions were received.
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation and By-Laws provide that the
Board of Directors ("Board of Directors" or "Board") is divided into three
classes. Each year the stockholders are asked to elect the members of a class
for a term of three years.
On December 15, 1998, the Board of Directors acknowledged the retirement of
Board member Terry L. Wilkison. The Company wishes to acknowledge the generous
service and valuable counsel of Mr. Wilkison who has served on the Board of
Directors since 1987. His commitment and contributions to the Company are
greatly appreciated.
Currently, the term of office for members of Class III of the Board of
Directors will expire on the date of the Annual Meeting in 1999. The members of
Class III are William A. Foley and Terence P. Stewart. The Board of Directors
has fixed the number of directors to be elected at the 1999 Annual Meeting at
two and has nominated Mr. Foley and Mr. Stewart for election to Class III. Those
persons who are elected directors at the 1999 Annual Meeting will hold office
until their terms expire on the date of the 2002 Annual Meeting or until the
election and qualification of their successors. The terms of office of the
members of Class I and Class II of the Board of Directors will expire,
respectively, on the date of the Annual Meeting in 2000 and 2001.
1
<PAGE> 5
So far as the Board has been advised, only the two persons named above as
nominees will be nominated for election as directors at the Annual Meeting. It
is intended that the shares represented by proxies in the accompanying form will
be voted for the election of these two nominees unless authority to so vote is
withheld. The nominees have consented to being named herein and to serve if
elected. If either of them should become unavailable prior to the Annual
Meeting, the proxy will be voted for a substitute nominee or nominees designated
by the Board of Directors or the number of directors may be reduced accordingly.
The Board, however, expects each of the nominees to be available. Directors
shall be elected by a plurality of the votes of the shares present in person or
represented by proxy at the meeting and entitled to vote on the election of
directors. A stockholder entitled to vote for the election of directors may
withhold authority to vote for all or certain nominees.
The following information, which has been provided by the directors, sets
forth for each of the nominees for election to the Board of Directors and for
each director whose term continues, his name, age, principal occupation and
employment during at least the past five years, the name of the corporation or
other organization, if any, in which such occupation and employment is carried
on and the period during which such person has served as a director of the
Company.
1999 NOMINEES (CLASS III):
WILLIAM A. FOLEY, age 51, has been a director of the Company since
September 1994. Mr. Foley has been Chairman of the Board, President and Chief
Executive Officer of LESCO, Inc. since October 1994. From July 1993 to October
1994, he was President and Chief Executive Officer of LESCO, Inc. He is a member
of the Compensation Committee. Mr. Foley is also a director of Alltrista
Corporation.
TERENCE P. STEWART, age 50, has been a director of the Company since
October 1997. Mr. Stewart is managing partner of Stewart and Stewart, a law firm
based in Washington, D.C. specializing in trade and international law issues,
where he has worked since 1976. Mr. Stewart is a member of the Audit Committee.
The Board of Directors unanimously recommends a vote FOR both nominees.
CONTINUING DIRECTORS:
PETER C. MCC. HOWELL, age 49, has been a director of the Company since
October 1993. Mr. Howell was the Chairman and Chief Executive Officer of
Signature Brands USA, Inc. (formerly known as Health o meter, Inc.) from August
1994 to August 1997. From 1989 to August 1994, Mr. Howell was President, Chief
Executive Officer and a director of Mr. Coffee, inc. Mr. Howell is a member of
Class II of the Board of Directors and a member of the Audit Committee. He is
also a director of Global-Tech Appliances, Inc.
JOHN F. MEIER, age 51, has been a director of the Company since 1987 and
Chairman of the Board and Chief Executive Officer of the Company since June
1993. He is a member of Class I of the Board of Directors. Mr. Meier is also a
director of Cooper Tire and Rubber Company.
CAROL B. MOERDYK, age 48, has been a director of the Company since February
1998. Ms. Moerdyk is Senior Vice President, North American and Australian
Contract Operations of Boise Cascade Office Products Corporation. She served as
Chief Financial Officer of Boise Cascade Office Products Corporation from 1995
to February 1998. From August 1992 to February 1995, she was Vice President,
Assistant to the General Manager of Boise Cascade Office Products Corporation.
Ms. Moerdyk is a member of Class I of the Board of Directors and a member of the
Audit and Compensation Committees.
GARY L. MOREAU, age 44, has been a director of the Company since September
1996. Mr. Moreau is President and Chief Executive Officer of Lionel L.L.C., a
position he has held since January 1996. From 1991 until that time, Mr. Moreau
served as President and Chief Operating Officer
2
<PAGE> 6
of Oneida LTD. Mr. Moreau is a member of Class I of the Board of Directors and a
member of the Compensation Committee. Mr. Moreau is also a director of GSW, Inc.
RICHARD I. REYNOLDS, age 52, has been a director of the Company since June
1993. Mr. Reynolds has been the Executive Vice President and Chief Operating
Officer of the Company since November 1995. From June 1993 to November 1995, Mr.
Reynolds was Vice President and Chief Financial Officer of the Company. He is a
member of Class II of the Board of Directors.
COMPENSATION OF DIRECTORS:
Non-management directors receive a retainer for service on the Board at the
annual rate of $21,000, a fee for attendance at Board meetings of $750 per
meeting and a fee for attendance at committee meetings of $500 per meeting. The
retainer and all fees are payable in cash quarterly or subject to deferral. In
1998, each of the directors except Mr. Moreau elected to defer all or a portion
of the retainer and fees into an account, the value of which is based upon the
value of the Company's common stock plus dividends. Management directors do not
receive additional compensation for service on the Board of Directors.
BOARD MEETINGS AND COMMITTEES OF THE BOARD:
The Board of Directors met thirteen times during 1998. During 1998, each
incumbent member of the Board of Directors attended 75% or more of the aggregate
number of meetings of the Board and of committees of the Board of which he or
she was a member.
The Board of Directors currently has an Audit Committee and a Compensation
Committee. The Company does not have a nominating committee or any regularly
constituted committee performing the functions of such a committee. The Audit
Committee makes recommendations to the Board of Directors as to the engagement
or discharge of the independent auditors; reviews the plan and results of the
auditing engagement with the independent auditors; reviews the scope and results
of the Company's internal auditing procedures; reviews the adequacy of the
Company's system of internal accounting controls; and directs and supervises
investigations into matters within the scope of its duties. The Audit Committee
met twice during 1998. The Audit Committee is comprised of Mr. Howell, Ms.
Moerdyk and Mr. Stewart.
The Compensation Committee of the Board of Directors is comprised of
directors who are not officers or employees of the Company and are not eligible
to participate in any of the Company's executive compensation programs. The
Compensation Committee has overall responsibility for administering the
executive compensation program of the Company. The Compensation Committee
regularly evaluates the executive compensation program to ensure its
appropriateness in the context of the Company's business and its competitiveness
with the compensation practices of other companies. From time to time, the
Compensation Committee seeks the advice of independent experts in evaluating
plan design, compensation levels and administration. Each year the Compensation
Committee reviews and approves salaries for the executive officers of the
Company. The Compensation Committee is also responsible for administering the
Stock Option Plan for Key Employees and certain other incentive compensation
plans covering executive officers. The Compensation Committee met four times
during 1998. The Compensation Committee is comprised of Mr. Foley, Ms. Moerdyk
and Mr. Moreau.
OTHER DIRECTOR INFORMATION:
During 1998 the law firm of Stewart and Stewart, of which Mr. Stewart is a
partner, received fees of approximately $73,707 from the Company for legal
services in connection with various international trade matters. The Company
anticipates that it will continue to utilize the legal services of Stewart and
Stewart in the future in connection with international trade matters.
3
<PAGE> 7
EXECUTIVE COMPENSATION
The following table sets forth the annual and long-term compensation paid
by the Company for the last three completed fiscal years to the Company's Chief
Executive Officer ("CEO") and the four most highly compensated executive
officers other than the CEO who were serving as such at the end of 1998
(collectively, including the CEO, the "named executive officers").
SUMMARY COMPENSATION TABLE:
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION ---------------------------------
-------------------------------- AWARDS PAYOUTS
OTHER ----------------------- -------
ANNUAL RESTRICTED SHARES ALL OTHER
COMPEN- STOCK UNDERLYING LTIP COMPEN-
NAME & PRINCIPAL POSITION YEAR SALARY(1) BONUS(2) SATION(3) AWARDS OPTIONS PAYOUTS SATION(4)
------------------------- ---- --------- -------- --------- ---------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John F. Meier 1998 $428,750 $167,212 $ 263 0 30,000 0 $12,862
Chairman of the Board 1997 $395,000 0 $ 592 0 0 0 $11,850
and Chief Executive 1996 $353,333 $139,920 0 0 25,000 0 $ 9,325
Officer
Richard I. Reynolds 1998 $299,063 $ 97,195 $ 228 0 22,000 0 $ 8,971
Executive Vice 1997 $275,000 0 $ 223 0 0 0 $ 8,250
President and Chief 1996 $212,708 $ 70,000 $ 241 0 16,000 0 $ 6,381
Operating Officer
Kenneth G. Wilkes 1998 $179,438 $ 46,653 $ 815 0 11,500 0 $ 5,382
Vice President, 1997 $165,000 0 $6,353 0 0 0 $ 4,275
Chief Financial Officer 1996 $150,625 $ 39,765 $ 444 0 8,500 0 $ 4,519
and Treasurer
L. Frederick Ashton 1998 $172,248 $ 44,784 $ 500 0 6,500 0 $ 5,104
Vice President, 1997 $162,896 0 $3,255 0 0 0 $ 4,715
General Sales Manager 1996 $156,387 $ 41,286 $ 187 0 6,500 0 $ 4,692
Arthur H. Smith 1998 $175,000 $ 39,812 $ 0 0 12,500 0 $ 5,250
Vice President, 1997 $161,116 0 $4,524 0 0 0 $ 4,719
General Counsel and 1996 $152,628 $ 39,050 $ 33 0 8,500 0 $ 4,579
Secretary
</TABLE>
- ---------------
(1) Includes amounts deferred at the election of the named executive officer
pursuant to the salary reduction provisions of benefit plans.
(2) The amounts disclosed in this column represent awards under the Libbey Inc.
Senior Management Incentive Plan.
(3) The amounts disclosed in this column represent amounts reimbursed for the
payment of taxes payable with respect to perquisites. In each year, the
aggregate incremental cost of perquisites and other personal benefits for
any executive officer did not exceed the lesser of $50,000 or 10% of base
salary plus bonus.
(4) The amounts disclosed in this column represent matching cash contributions
to the Libbey Inc. Stock Purchase and Retirement Savings Plan, a defined
contribution plan, and the Libbey Inc. Executive Savings Plan, a non-
qualified plan designed to provide similar benefits to the extent such
benefits cannot, under limitations of the Internal Revenue Code, be provided
by the Stock Purchase and Retirement Savings Plan.
OPTION GRANTS IN 1998:
The following table sets forth information on stock option grants to the
named executive officers during 1998 pursuant to the Company's Stock Option Plan
for Key Employees. The Company does not maintain a stock appreciation rights
plan covering executive officers.
4
<PAGE> 8
<TABLE>
<CAPTION>
GRANT
INDIVIDUAL GRANTS DATE VALUE
----------------------------------------------------------- ----------------
NUMBER OF SHARES % OF TOTAL
UNDERLYING OPTIONS
OPTIONS GRANTED TO
GRANTED EMPLOYEES IN EXERCISE EXPIRATION GRANT DATE
NAME (#) FISCAL YEAR PRICE DATE PRESENT VALUE(1)
---- ---------------- ------------ -------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
John F. Meier............... 30,000 18.84 $38.4375 6/6/08 $458,121
Richard I. Reynolds......... 22,000 13.82 $38.4375 6/6/08 $335,955
Kenneth G. Wilkes........... 11,500 7.22 $38.4375 6/6/08 $175,613
L. Frederick Ashton......... 6,500 4.08 $38.4375 6/6/08 $ 99,260
Arthur H. Smith............. 12,500 7.85 $38.4375 6/6/08 $190,884
</TABLE>
- ---------------
(1) Options are granted at the fair market value at the date of the grant and
become exercisable to the extent of 40% of the grant on the first
anniversary of the grant and thereafter an additional 20% of the grant
becomes exercisable on each of the second, third and fourth anniversaries of
the grant.
Present value is calculated using the Black-Scholes option pricing model.
Assumptions used in calculating the reported values include (a) an expected
volatility based on the monthly change for the period June 18, 1993 through
the date of the grant (June 5, 1998 in the case of all named executive
officers), (b) a weighted average risk-free rate of return of 5.5%, (c)
dividend yield of .8%, and (d) a time of exercise of 7 years. No adjustments
were made for non-transferability or forfeiture.
AGGREGATED OPTION EXERCISES AND YEAR-END VALUES:
The following table sets forth the aggregate dollar value of unexercised
options held at the end of 1998 by the named executive officers. The value is
based upon a share price of $28.9375, the closing price on the New York Stock
Exchange on December 31, 1998. None of the named executive officers exercised
any options in 1998.
<TABLE>
<CAPTION>
UNDERLYING OPTIONS IN-THE-MONEY OPTIONS
SHARES ACQUIRED VALUE AT FY-END AT FY-END
NAME ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- --------------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
John F. Meier.............. 0 0 175,653 44,500 $2,394,470 $47,344
Richard I. Reynolds........ 0 0 143,538 31,200 $2,028,937 $29,825
Kenneth G. Wilkes.......... 0 0 73,205 16,400 $ 990,980 $15,919
L. Frederick Ashton........ 0 0 66,673 10,300 $ 952,051 $12,488
Arthur H. Smith............ 0 0 131,524 17,400 $1,958,651 $15,919
</TABLE>
RETIREMENT PLANS:
The Company maintains a qualified retirement plan, the Libbey Inc. Salaried
Cash Balance Pension Plan ("Salary Plan"), for its salaried employees, including
executive officers, and a Supplemental Retirement Benefit Plan ("SERP"), which
is a non-qualified plan designed to provide substantially identical retirement
benefits to the extent that such benefits cannot, under the limitations of the
Internal Revenue Code, be provided by the Salary Plan. The retirement plans were
amended effective January 1, 1998 so that benefits will no longer be determined
by the highest consecutive three-year annual earnings but will be determined by
annual Company contribution credits equal to a percentage of annual earnings
plus interest. Employees with 10 years of service with Libbey and who are age
55, or who are age 45 and have a combined age and years of service equal to 65,
as of December 1997, will receive commencing upon retirement the greater of
their cash balance account or a special minimum benefit ("Special Minimum
Benefit") computed pursuant to the formula in effect prior to the amendment, for
service prior to December 31, 2007.
The following table illustrates the estimated annual retirement benefits
which would be provided by the Special Minimum Benefit under the Salary Plan and
the SERP in various average earnings classifications upon normal retirement at
age 65 for those named executive officers for whom the Special Minimum Benefit
is anticipated to apply, namely Messrs. Meier, Reynolds, Ashton and Smith:
5
<PAGE> 9
<TABLE>
<CAPTION>
HIGHEST
CONSECUTIVE
THREE-YEAR YEARS OF CREDITED SERVICE
AVERAGE --------------------------------------------------------------------------
EARNINGS 15 20 25 30 35 40 45
- ----------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$100,000 18,903 25,204 31,506 37,807 44,108 46,608 49,108
$125,000 24,108 32,144 40,181 48,217 56,253 59,378 62,503
$150,000 29,313 39,084 48,856 58,627 68,398 72,148 75,898
$175,000 34,518 46,024 57,531 69,037 80,543 84,918 89,293
$200,000 39,723 52,964 66,206 79,447 92,688 97,688 102,688
$225,000 44,928 59,904 74,881 89,857 104,833 110,458 116,083
$250,000 50,133 66,844 83,556 100,267 116,978 123,228 129,478
$300,000 60,747 80,997 101,246 121,495 141,744 149,244 156,744
$400,000 82,176 109,568 136,960 164,352 191,744 201,744 211,744
$450,000 92,890 123,854 154,817 185,781 216,744 227,994 239,244
$500,000 103,605 138,139 172,674 207,209 241,744 254,244 266,744
$600,000 125,033 166,711 208,389 250,066 291,744 306,744 321,744
$700,000 146,462 195,282 244,103 292,923 341,744 359,244 376,744
</TABLE>
At December 31, 1998, Messrs. Meier, Reynolds, Wilkes, Ashton and Smith had
total Credited Service under the Salary Plan and the SERP, respectively, of 28
years, 28 years, 5 years, 28 years and 30 years.
The above pension table sets forth benefits calculated on a straight-life
annuity basis and reflects the greater of the regular benefit, the Special
Minimum Benefit or the "grandfathered" benefit available under the formula in
effect prior to January 1, 1989. The regular benefit and the Special Minimum
Benefit do not contain an offset for social security or other amounts, whereas
the "grandfathered" benefit does provide for a partial offset for social
security benefits.
Annual covered earnings include base salary and amounts earned under the
Senior Management Incentive Plan and the covered compensation under the Special
Minimum Benefit of the retirement plan is the highest consecutive three year
average of such amounts. The retirement benefit may be adjusted if the employee
has more or less than 35 years of credited service or retires prior to age 65.
The Salary Plan and the SERP provide for additional benefit accruals beyond age
65 and for annual annuity benefits as well as an optional lump sum form of
benefit. The lump sum option is designed to be equivalent in value to that of
the lifetime annual annuity benefit.
Under the amended retirement plans effective January 1, 1998, each
participant in the plans on December 31, 1997 is credited with an opening cash
balance equal to the single sum amount of the participant's accrued benefit as
of December 31, 1997 based upon retirement at age 65 and actuarial assumptions
as to rate of interest and mortality. For each plan year beginning January 1,
1998, the Company will make an annual contribution credit to the participant's
cash balance account in accordance with the following table and the cash balance
account will be credited with interest annually at the 30-year Treasury
Securities rate in effect in October of the preceding plan year with a minimum
of 5 percent and a maximum of 10 percent. Normal retirement age is 65 under the
amended retirement plans. Company contributions and interest are credited with
respect to service beyond the age of 65. The estimated annual benefit payable to
Mr. Wilkes commencing upon his retirement is
6
<PAGE> 10
$112,098 based upon assumptions that salary increases will be 3 percent annually
and that the applicable rate of interest will be 7 percent annually after 1999.
<TABLE>
<CAPTION>
SUM OF AGE CONTRIBUTION PERCENTAGE CONTRIBUTION PERCENTAGE OF
AND YEARS OF COMPENSATION UNDER SOCIAL COMPENSATION AT OR ABOVE
BENEFIT SERVICE SECURITY WAGE BASE SOCIAL SECURITY WAGE BASE
--------------- ------------------------- --------------------------
<S> <C> <C>
0 but less than 30......................... 1.5% 3.0%
30 but less than 34........................ 1.7 3.4
34 but less than 38........................ 1.9 3.8
38 but less than 42........................ 2.1 4.2
42 but less than 46........................ 2.3 4.6
46 but less than 50........................ 2.7 5.4
50 but less than 60........................ 3.2 6.4
60 but less than 70........................ 4.0 8.0
70 but less than 80........................ 5.5 11.0
80 but less than 90........................ 7.0 12.7
90 and over................................ 9.0 14.7
</TABLE>
EXECUTIVE EMPLOYMENT AGREEMENTS:
Libbey has entered into employment agreements with each of the Company's
executive officers, including the named executive officers, that entitle them to
receive their base salaries and to participate in designated benefit plans of
the Company. Each employment agreement also provides that the officer's
employment is not for any specified term and may be terminated at any time. In
addition, each agreement provides that, in the event of the officer's
termination other than for "cause" (as defined in the agreements), payment of
base salary will continue for two years in Mr. Meier's case and one year in the
case of the other executive officers. The employment agreements also provide
that the officer's base salary may be adjusted periodically and that benefit
plans in which the officer is entitled to participate may be adjusted or
terminated by the Company at any time, but that no vested or accrued benefit may
be adversely affected.
CHANGE IN CONTROL AGREEMENTS:
To induce and help assure continuity of management and operations, the
Company has entered into agreements (the "Agreements") with certain executives
including the named executive officers which provide for certain severance
benefits in the event an executive's employment is terminated following a Change
in Control (as defined in the Agreements).
Under the Agreements with the named executive officers, benefits are paid
if, after a Change in Control, the Company terminates a named executive officer
other than for Cause (as defined in the Agreements) or disability or if the
named executive officer terminates employment for "Good Reason" (as specified in
the Agreements) or for any reason within a period of thirty days following the
first anniversary of a Change in Control. These severance benefits include: (a)
the executive's salary through the termination date; (b) severance pay equal to
three times the named executive's annual base salary and three times the greater
of the target annual bonus or the annual bonus for the prior year; (c)
acceleration of the exercisability of stock options; (d) medical and health
benefits for three years following termination reduced to the extent comparable
benefits are received from another employer; (e) outplacement and financial
planning services; and (f) full vesting in, and additional three year accrual of
benefits under, the Company's qualified and non-qualified retirement plans,
which amounts shall not be less than $250,000. The Agreements provide that the
benefits are net of any applicable federal excise tax and that the Company will
pay legal fees and expenses incurred by the named executive to enforce his or
her rights under the Agreements.
7
<PAGE> 11
COMPENSATION COMMITTEE REPORT:
Compensation Policies Applicable to Executive Officers. The Company's
overall compensation program for salaried employees has been established and is
administered to ensure that employee compensation motivates superior job
performance and the achievement of business objectives. With respect to
executive officer compensation, the policies followed in designing and
administering this component of the overall program are based upon the main
objective of increasing stockholder value through increasing operating income
and return on invested capital. The Compensation Committee (the "Committee")
believes that this can best be accomplished by an executive compensation program
which (1) attracts and retains highly qualified individuals; (2) includes major
components directly linked to increases in recognized measures of stockholder
value; and (3) rewards superior performance as measured by financial and
non-financial factors. Compensation for executive officers is currently
deductible for federal income tax purposes and the Committee intends to
structure the Company's compensation and benefit plans to meet the requirements
for continued deduction.
Executive officer compensation consists of annual base salary and annual
incentive awards. Annual base salaries plus target annual bonus awards are set
at levels which are intended to be competitive within the industry and with
companies of comparable size. In 1998, Towers Perrin, a nationally recognized
compensation and employee benefits consulting firm, was retained to assist the
Company in assessing the competitiveness of base salary and target total cash
compensation. In this assignment, Towers Perrin reviewed the Company's executive
compensation program. In conducting this review, it examined several 1998 survey
sources. The Company was compared to companies of comparable size. The peer
group used by the Company to measure the performance of its stock was not used
to compare compensation in view of significant differences between the Company
and the peer group with regard to capital structure and the diversity, size and
scope of the businesses in which various members of the peer group engage.
The Committee further reviewed and adjusted base salaries in 1998. The
Committee intends to review base salaries annually, and in consultation from
time to time with outside professional advisers, intends to make adjustments
depending upon competitive salary levels, past individual performance as
measured by both qualitative and quantitative factors and the potential for
making significant contributions in the future. Individual factors are expected
to be more significant than overall Company performance in a particular year in
determining base salary levels and the rate of increase, while Company
performance is expected to be more significant in determining short-term and
long-term incentive compensation. The Committee reviews periodically the
incentive compensation and long-term compensation components of the executive
compensation program and other aspects of the Company's executive compensation
program and arrangements with its executives for appropriateness in the context
of the Company's business and circumstances and for competitiveness with the
compensation practices of other companies.
The incentive compensation components of the executive compensation program
are designed to provide rewards for past contributions and motivation for future
performance. The performance goals and criteria for these components are tied
directly to factors which the Committee believes will enhance the financial
success of the Company and increase stockholder value. Thus, the total payouts
under the annual incentive plan are determined primarily by the Company's
performance against operating budget goals and in particular operating income
and economic value added or EVA(R)(1) budget goals. However, qualitative factors
such as progress in implementing the strategic plan and employee commitment to,
and involvement in, Company goals are important elements in determining payout
levels. The Committee believes that these and other qualitative factors will
lead to the increased profitability of the Company and should be recognized and
taken into consideration in determining the payout levels. Total actual payouts
may be adjusted above or below target amounts
- ---------------
1EVA(R) is a registered trademark of Stern Stewart & Co.
8
<PAGE> 12
based upon Company performance which exceeds or fails to meet pre-established
goals. Individual performance against established goals will affect individual
payments.
The Committee believes that a stock-based incentive plan is an important
element of long-term compensation. The value of such plans for the executive is
tied directly to stock price increases and thus provides strong incentives for
increasing stockholder value. It was determined that a stock option plan with
exercise prices set at market value on the date of grant would focus
management's attention on earnings performance sustained on a long-term basis.
The initial Libbey Inc. Stock Option Plan for Key Employees ("Option Plan") was
approved by the Board of Directors and stockholders of the Company prior to
completion of its initial public offering on June 24, 1993, and in 1995 the
Board of Directors and the Stockholders of the Company approved and adopted an
Amended and Restated Libbey Inc. Stock Option Plan for Key Employees. The Option
Plan is a broad-based program covering executive officers and other management
employees. Exercise dates are deferred for one year from date of grant subject
to acceleration in specified instances. The number of shares covered by option
grants is based upon the individual's potential to make a contribution to the
earnings growth of the Company. In 1993, all of the named executive officers
listed in the Compensation table of this proxy statement became equity investors
in the Company and were granted stock options. All but a small percentage of
shares authorized to be issued under the Option Plan have been granted. The
Committee has approved and is seeking stockholder approval for adoption of The
1999 Equity Participation Plan of Libbey Inc. to permit the Company to continue
to grant stock options to incentivize current employees and to provide
additional flexibility if circumstances of the Company's business and
opportunities warrant different forms of equity participation compensation to
incentivize current employees and attract new executives through awards other
than stock options.
Compensation of Chief Executive Officer. The compensation policies
described above apply as well to the compensation of the Chief Executive Officer
("CEO"). The Committee is directly responsible for determining the salary level
of the CEO and for all awards and grants to the CEO under the incentive
components of the compensation program. The overall compensation package for the
CEO is designed to recognize that the CEO bears primary responsibility for
increasing the value of stockholders' investments. Thus, a substantial portion
of the CEO's compensation is incentive-based, providing greater compensation as
direct and indirect financial measures of stockholder value increase. The
Committee believes that the current and changing business and industry
environment requires a high degree of leadership, innovation and prudent risk
taking in order to meet and sustain corporate objectives for increasing
stockholder value. The CEO's compensation is thus structured and administered to
motivate and reward the successful exercise of these qualities.
The annual base salary and target bonus level of the CEO, as with other
executives, is based upon a review, in consultation with the Committee's outside
consultants, of similar positions within the industry and of companies of
comparable size. Base salary was adjusted in 1998. The incentive components of
the CEO's compensation package consist of the annual incentive award and stock
options. The factors described above for all executive officers are also used in
determining the level of awards, grants and payouts under these plans for the
CEO.
The Committee believes that the CEO's compensation for 1998 was directly
related to the size and the overall performance of the Company as measured by
financial criteria and important qualitative factors. Financial performance
during the year was measured by the growth in operating income and EVA(R) as
compared to the financial goals for the Company.
William A. Foley, Chairman
Carol B. Moerdyk
Gary L. Moreau
9
<PAGE> 13
PERFORMANCE GRAPH:
The graph below compares the total stockholder return on Libbey common
stock to the cumulative total return for two broad market indices, the Standard
& Poor's 500 Stock Index ("S&P 500") and the Standard & Poor's Small Cap 600
Index ("S&P Small Cap 600")and to the cumulative total return for two peer
groups. The indices reflect the year-end market value of an investment in the
stock of each company in the index, including additional shares assumed to have
been acquired with cash dividends, if any.
Beginning in 1999, the Company compares itself to the S&P Small Cap 600 to
which the Company was added in 1998. The graph below compares the total
stockholder return on Libbey common stock to the cumulative total return of both
the S&P 500 and the S&P Small Cap indices.
In addition, due to changes in the businesses in the peer group of
companies formerly used by the Company for comparison of stockholder returns,
the Company now compares itself to a new peer group. The peer group is limited
to those companies for which market quotations are available. The eight
companies in the old peer group were chosen because their lines of business or
product end uses were comparable to those of the Company. The old peer group
consisted of Corning, Inc., Ekco Group Inc., General Housewares Corp., Lancaster
Colony Corp., Newell Co., Oneida LTD., Premark International Inc. and Rubbermaid
Inc.
In 1998, Corning, Inc. sold its line of business that was comparable to the
Company's business and product end uses and Newell Co. announced the acquisition
of Rubbermaid Inc., which acquisition was consummated in March 1999. As a
result, Corning, Inc. and Rubbermaid Inc. are not included in the new peer group
and Mikasa, Inc. has been added so that the new peer group includes seven
companies (namely, Ekco Group Inc., General Housewares Corp., Lancaster Colony
Corp., Mikasa, Inc., Newell Co., Oneida LTD, and Premark International Inc.)
whose lines of business or product end uses are comparable to those of the
Company.
The graph assumes a $100 investment in Libbey stock on January 1, 1994 and
also assumes investments of $100 in each of the S&P 500, the S&P Small Cap 600
and both the old and new peer group indices, respectively, on January 1, 1994.
The value of these investments on December 31 of each year from 1994 through
1998 is shown in the table below the graph.
10
<PAGE> 14
LIBBEY PERFORMANCE GRAPH
INDEXED RETURNS
<TABLE>
<CAPTION>
Base
Period Years Ending
------- -----------------------------------------------
Dec. Dec. Dec. Dec. Dec. Dec.
Company Name/Index 93 94 95 96 97 98
------------------ ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
LIBBEY INC. 100 107.13 140.43 176.06 238.52 186.00
S&P 500 INDEX 100 101.32 139.40 171.40 228.59 293.91
S&P SMALL CAP 600
INDEX 100 95.23 123.76 150.14 188.56 186.10
NEW PEER GROUP 100 105.44 126.00 173.97 238.06 233.16
OLD PEER GROUP 100 100.04 109.45 145.55 165.61 186.38
</TABLE>
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of December 31, 1998 with
respect to any person known to the Company to be the beneficial owner of more
than five percent of its common stock based upon Schedule 13Gs received by the
Company except as otherwise noted and as of March 16, 1999, with respect to each
of the Company's directors and nominees for director, each of the named
executive officers and all directors and executive officers of the Company as a
group and shares held by the trustee of the Company's Stock Purchase and
Retirement Savings Plan, Stock Purchase and Supplemental Retirement Plan and
Long-Term Savings Plan and Trust. The shares owned by the executive officers set
forth below include the shares held in their accounts in the Stock Purchase and
11
<PAGE> 15
Retirement Savings Plan of the Company. An asterisk indicates ownership of less
than one percent of the outstanding stock.
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES PERCENT
OF BENEFICIAL OWNER BENEFICIALLY OWNED 1 & 2 OF CLASS
------------------- ------------------------ --------
<S> <C> <C>
Ariel Capital Management, Inc.(3) 2,527,065 15.01
307 North Michigan Avenue
Chicago, IL 60601
Baron Capital Group, Inc.(4) 3,806,800 22.62
767 Fifth Avenue
New York, NY 10153
Capital Guardian Trust Company(5) 1,354,000 8.04
11100 Santa Monica Boulevard
Los Angeles, CA 90025-3384
Key Trust Company of Ohio N.A.(6) 826,708 5.09
4900 Tiedeman Road
Brooklyn, Ohio 44144
L. Frederick Ashton 88,144 *
William A. Foley 500 *
Peter C. McC. Howell(7) 1,750 *
John F. Meier(8) 208,216 1.23
Carol B. Moerdyk 655 *
Gary L. Moreau 500 *
Richard I. Reynolds 176,068 1.04
Arthur H. Smith 163,879 *
Terence P. Stewart 550 *
Kenneth G. Wilkes 89,390 *
Directors & Executive Officers as a Group 796,448 4.72
</TABLE>
- ---------------
(1) For purposes of this table, a person or group of persons is deemed to have
beneficial ownership of any shares as of a given date which such person has
the right to acquire within 60 days after such date. For purposes of
computing the percentage of outstanding shares held by each person or group
of persons named above on a given date, any security which such person has
the right to acquire within 60 days of such date is deemed outstanding, but
is not deemed to be outstanding for the purpose of computing the percentage
ownership of any other person. The information includes all currently
exercisable options granted to Messrs. Meier, Reynolds, Wilkes, Ashton and
Smith. The number of shares beneficially owned includes shares subject to
options as follows: Mr. Meier-175,653; Mr. Reynolds-143,538; Mr.
Wilkes--73,205; Mr. Ashton--66,673; Mr. Smith--131,524, and all executive
officers as a group--640,682.
(2) The table includes the number of equivalent shares of common stock that
Messrs. Meier, Reynolds, Wilkes, Ashton, Smith and all officers as a group
held in the Libbey Stock Purchase and Retirement Savings Plan as of March
16, 1999.
(3) 3 The Schedule 13G received by the Company from Ariel Capital Management,
Inc. indicates that it is the beneficial owner of 2,527,065 common shares
with sole dispositive power with respect to 2,527,065 common shares and sole
voting power with respect to 2,527,065 common shares.
(4) The amended Schedule 13G dated February 3, 1999, received by the Company
from Baron Capital Group, Inc., BAMCO, Inc., Baron Capital Management, Inc.,
Baron Asset Fund and Ronald Baron, indicates as of February 3, 1999
beneficial ownership of 3,806,800 common shares with shared dispositive
power with respect to 3,806,800 common shares and shared voting power with
respect to 3,806,800 common shares. Baron Capital Group, Inc., a holding
company, and Ronald Baron, President of each of the reporting persons, are
reported to hold beneficial ownership of 3,806,800 common shares with shared
dispositive power with respect to 3,806,800 common shares and shared voting
power with respect to 3,806,800 common shares. BAMCO, Inc and Baron Capital
Management, Inc. are reported to be investment advisors with beneficial
ownership of 3,032,000 and 774,800 common shares respectively, with shared
dispositive power with respect to 3,032,000 and 774,800 common shares,
respectively, and shared voting power with respect to 3,032,000 and 774,800
common shares, respectively. Baron Asset Fund is reported to be an
investment company with beneficial ownership of 2,920,000 common shares with
shared dispositive power with respect to 2,920,000 common shares and shared
voting power with respect to 2,920,000 common shares. Each of the reporting
persons disclaim beneficial ownership of the shares for which they share
power.
(5) The Schedule 13G received by the Company from Capital Guardian Trust Company
and Capital International, Inc. indicates Capital Guardian Trust Company has
beneficial ownership of 1,354,000 shares of common stock with sole
dispositive power with respect to 1,354,000 common shares and sole voting
power with respect to 1,214,000 common
12
<PAGE> 16
shares. Capital Guardian Trust Company, a bank, is the beneficial owner of
these shares as a result of serving as investment manager of various
institutional accounts. The Schedule 13G also indicates that Capital
International, Inc., an investment adviser to institutional accounts, has
beneficial ownership of 157,500 shares of common stock with sole dispositive
power with respect to 157,500 common shares and sole voting power with
respect to 157,500 common shares. Beneficial ownership is disclaimed by both
Capital Guardian Trust Company and Capital International, Inc.
(6) Key Trust Company of Ohio, N.A., as trustee of the Company's Stock Purchase
and Retirement Savings Plan is the beneficial owner of 652,030 common
shares; and as trustee of the Company's Stock Purchase and Supplemental
Retirement Plan is the beneficial owner of 174,162 common shares; and as
trustee of the Company's Long-Term Savings Plan and Trust is the beneficial
owner of 516 common shares. These plans are defined contribution plans for
the Company's employees, each of whom has the right to instruct the trustee
as to the manner in which the equivalent shares of the Company in his or her
account in the Plans are to be voted.
(7) Includes 750 shares held by family members of Mr. Howell. Mr. Howell
disclaims any beneficial interest in such shares.
(8) Includes 8,406 shares held by family members of Mr. Meier. Mr. Meier
disclaims any beneficial interest in such shares.
PROPOSAL TO APPROVE THE 1999 EQUITY PARTICIPATION
PLAN OF LIBBEY INC.
GENERAL:
The Board of Directors has recommended shareholder approval of adoption of
the 1999 Equity Participation Plan of Libbey Inc. (the "Plan") in order to
continue to provide stock-based incentive compensation to certain employees and
as a means of providing other stock based incentive compensation to key
employees. Currently, employees are eligible to receive only options under the
Amended and Restated Stock Option Plan for Key Employees (the "Key Executive
Plan"). At this time only a limited number of shares remain available for grant
of options to employees under the Key Executive Plan. In addition to option
grants, the Plan will provide Libbey Inc. with the ability to incentivize
current employees and to attract new executives through the award of other
stock-based incentive compensation.
On March 27, 1999, the Board adopted the Plan. The principal purposes of
the Plan are to provide incentives for key employees of the Company and its
subsidiaries through granting of options, stock appreciation rights ("SARs") and
other awards ("Awards"), thereby stimulating their personal and active interest
in the Company's development and financial success, and inducing them to remain
in the Company's employ.
Under the Plan, not more than 1,000,000 shares of Common Stock are
authorized for issuance upon exercise of options, SARs and other Awards, or upon
vesting of other Awards, of which no more than 100,000 shares may be issued as
restricted stock, performance awards or deferred stock or any combination
thereof. Furthermore, the maximum number of shares which may be subject to
options, SARs or other Awards granted under the Plan to any individual in any
fiscal year cannot exceed 75,000 (subject to adjustment as provided in the
Plan).
As of March 18, 1999, a total of 1,372,846 shares were subject to
outstanding stock options held by approximately 73 officers and key employees
under the Key Executive Plan, and only 8,584 shares remained available for the
grant of new stock options under the Key Executive Plan. On March 18, 1999, the
closing price of the Company's Common Stock on the New York Stock Exchange was
$32.125 per share.
The Common Stock available under the Plan upon exercise of options, SARs
and other Awards may either be previously authorized but unissued shares or
treasury shares. The Committee will make appropriate adjustments in the number
and kind of securities subject to the Plan and to outstanding Awards thereunder
to reflect dividends or other distributions; a recapitalization,
reclassification, stock split, reverse stock split, or reorganization, merger or
consolidation of the Company; the split-up, spin-off, combination, repurchase,
liquidation or dissolution of the Company; the sale, transfer, exchange of
Common Stock or other securities of the Company, issuance of warrants or other
rights to purchase
13
<PAGE> 17
Common Stock or other securities of the Company; or any other similar corporate
transaction or event (an "extraordinary corporate event").
If any portion of an option, SAR or other Award expires or is canceled
without having been fully exercised, or is exercised for cash (as permitted
under the Plan), the shares which were subject to the unexercised portion of
such option, SAR or other Award will continue to be available for issuance under
the Plan.
The principal features of the Plan are summarized below, but the summary is
qualified in its entirety by reference to the Plan itself. Copies of the Plan
can be obtained by making written request of the Company's Secretary and the
Plan is set forth in its entirety in Appendix A.
ADMINISTRATION:
The Compensation Committee of the Board or a subcommittee thereof (the
"Committee") will administer the Plan. The Committee will consist solely of at
least two members of the Board, each of whom is a "non-employee director" for
purposes of Rule 16b-3 under the Exchange Act ("Rule 16b-3") and, with respect
to options, SARs and other Awards which are intended to constitute
performance-based compensation under Section 162(m) of the Code, an "outside
director" for purposes of Section 162(m) of the Code. Subject to the terms and
conditions of the Plan, the Committee has the authority to select the employees
to whom Awards are to be made, to determine the number of shares to be subject
thereto and the terms and conditions thereof, and to make all other
determinations and to take all other actions necessary or advisable for the
administration of the Plan. The Committee is also authorized to adopt, amend and
rescind rules relating to the administration of the Plan.
PAYMENT FOR SHARES:
The exercise or purchase price for all options, SARs and other Awards that
provide a right to acquire Common Stock, together with any applicable tax
required to be withheld, must be paid in full in cash at the time of exercise or
purchase or may, with the approval of the Committee, be paid in whole or in part
in Common Stock owned by the recipient (or issuable upon exercise of the option)
valued at its fair market value on the date of exercise or through delivery of
other property which constitutes good and valuable consideration, through
delivery of a recourse promissory note bearing interest payable to the Company,
or through delivery of a notice that the optionee has placed a market sell order
with a broker with respect to shares of Common Stock then issuable upon exercise
of the option, and that the broker has been directed to pay the net proceeds of
the sale to the Company in satisfaction of the exercise price, or by a
combination of the foregoing. In addition, the Committee may, in its discretion,
allow a delay in payment up to thirty (30) days from the date the option, or
portion thereof, is exercised.
AMENDMENT AND TERMINATION:
Amendments of the Plan to increase the number of shares as to which
options, SARs or other Awards may be made or to modify the maximum number of
shares which may be subject to options, SARs or other Awards granted under the
Plan to any individual in any fiscal year (except for adjustments resulting from
stock splits and the like, and mergers, consolidations and other corporate
transactions), require the approval of the Company's stockholders. In all other
respects, the Plan can be wholly or partially amended or otherwise modified,
suspended or terminated at any time or from time to time by the Committee,
unless such action would otherwise require stockholder approval as a matter of
applicable law, regulation or rule. Amendments of the Plan will not, without the
consent of the participant, alter or impair any rights or obligations under any
option, SAR or other Award previously awarded, unless the agreement governing
such option, SAR or other Award itself otherwise expressly so provides. No
termination date is specified for the Plan.
14
<PAGE> 18
ELIGIBILITY:
Options, SARs and other Awards under the Plan may be granted to individuals
who are then officers or other employees of the Company or any of its present or
future subsidiaries and who are determined by the Committee to be key employees.
All officers and other key employees are eligible to participate in the Plan.
More than one option, SAR or other Award may be granted to an employee, but the
aggregate fair market value (determined at the time of grant) of shares with
respect to which an ISO (as defined herein) is first exercisable by an optionee
(i.e., "vests") during any calendar year cannot exceed $100,000.
AWARDS UNDER THE PLAN:
The Plan provides that the Committee may grant or issue stock options,
SARs, restricted stock, deferred stock, dividend equivalents, performance
awards, stock payments and other stock related benefits, or any combination
thereof. Each Award will be set forth in a separate agreement with the person
receiving the Award and will indicate the type, terms and conditions of the
Award. Nonqualified Stock Options ("NQSOs") will provide for the right to
purchase Common Stock at a specified price which may not be less than fair
market value on the date of grant, and usually will become exercisable (in the
discretion of the Committee) in one or more installments after the grant date.
NQSOs may be granted for any term specified by the Committee.
Incentive Stock Options ("ISOs") will be designed to comply with the
provisions of the Code and will be subject to certain restrictions contained in
the Code. Among such restrictions, ISOs must have an exercise price not less
than the fair market value of a share of Common Stock on the date of grant, may
only be granted to employees, must expire within a specified period of time
following the optionee's termination of employment, and must be exercised within
ten years after the date of grant; but may be subsequently modified to
disqualify them from treatment as ISOs. In the case of an ISO granted to an
individual who owns (or is deemed to own) at least 10% of the total combined
voting power of all classes of stock of the Company, the Plan provides that the
exercise price must be at least 110% of the fair market value of a share of
Common Stock on the date of grant and the ISO must expire no later than the
fifth anniversary of the date of its grant.
Restricted Stock may be sold to participants at various prices (but not
below par value) and made subject to such restrictions as may be determined by
the Committee. Restricted stock, typically, may be repurchased by the Company at
the original purchase price if the conditions or restrictions are not met. In
general, restricted stock may not be sold, or otherwise transferred or
hypothecated, until restrictions are removed or expire. Purchasers of restricted
stock, unlike recipients of options, will have voting rights and will receive
dividends prior to the time the restrictions lapse.
Deferred Stock may be awarded to participants, typically without payment of
consideration, but subject to vesting conditions based on performance criteria
established by the Committee. Like restricted stock, deferred stock may not be
sold, or otherwise transferred or hypothecated, until vesting conditions are
removed or expire. Unlike restricted stock, deferred stock will not be issued
until the deferred stock Award has vested, and recipients of deferred stock
generally will have no voting or dividend rights prior to the time when vesting
conditions are satisfied. Stock Appreciation Rights may be granted in connection
with stock options or other Awards, or separately. SARs granted by the Committee
in connection with stock options or other Awards will provide for payments to
the holder based upon increases in the price of the Company's Common Stock over
the exercise price of the related option or other Awards. Except as required by
Section 162(m) of the Code with respect to a SAR intended to qualify as
performance-based compensation as described in Section 162(m) of the Code, there
are no restrictions specified in the Plan on the exercise of SARs or the amount
of gain realizable therefrom, although restrictions may be imposed by the
Committee in the SAR agreements. The Committee may elect to pay SARs in cash or
in Common Stock or in a combination of both.
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<PAGE> 19
Dividend Equivalents represent the value of the dividends per share paid by
the Company, calculated with reference to the number of shares covered by the
stock options, SARs or other Awards held by the participant.
Performance Awards may be granted by the Committee to participants based
upon, among other things, the contributions, responsibilities and other
compensation of the particular employee. Generally, these Awards will be based
upon specific performance targets and may be paid in cash or in Common Stock or
in a combination of both. Performance Awards may include "phantom" stock awards
that provide for payments based upon increases in the price of the Company's
Common Stock over a predetermined period. Performance Awards may also include
bonuses granted by the Committee and which may be payable in cash or in Common
Stock or in a combination of both.
Stock Payments may be authorized by the Committee in the form of shares of
Common Stock or an option or other right to purchase Common Stock as part of a
deferred compensation arrangement in lieu of all or any part of compensation,
including bonuses, that would otherwise be payable in cash to the participant.
The Committee may designate key employees as "Section 162(m) Participants,"
whose compensation for a given fiscal year may be subject to the limit on
deductible compensation imposed by Section 162(m) of the Code. The Committee may
grant to Section 162(m) Participants restricted stock, deferred stock, SARs,
dividend equivalents, performance awards and stock payments that vest or become
exercisable upon the attainment of performance targets for the Company which are
related to one or more of the following performance goals: (i) net income; (ii)
pre-tax income; (iii) operating income; (iv) cash flow; (v) earnings per share;
(vi) earnings before interest, taxes, depreciation and amortization; (vii)
return on equity; (viii) return on invested capital or assets; (ix) cost
reductions or savings; (x) the market price of a share of the Company's Common
Stock; (xi) funds from operations; and (xii) economic value added.
PLAN BENEFITS:
The benefits, amounts and values to be received by the named executive
officers, individually and as a group, and by other employees of the Company
under the Plan are not determinable.
MISCELLANEOUS PROVISIONS:
The Committee has discretion under the Plan to provide that options and
other rights to acquire Common Stock will expire at specified times following,
or become exercisable in full upon, the occurrence of certain specified
extraordinary corporate events; but in such event the Committee may also give
optionees and other grantees the right to exercise their outstanding options or
rights in full during some period prior to such events, even though the options
or other Awards have not yet become fully exercisable, and the Committee may
also provide that all restrictions imposed on some or all shares of restricted
stock and/or deferred stock shall lapse, and some or all shares of restricted
stock may cease to be subject to the Company's right to repurchase after such
event. The Plan specifies that the Company may make loans to key employees to
enable them to exercise options, purchase shares or realize the benefits of
other Awards granted under the Plan. The terms and conditions of any such loan
are to be set by the Committee.
The dates on which options or other Awards under the Plan first become
exercisable and on which they expire will be set forth in individual Award
agreements setting forth the terms of the Awards. These Agreements generally
will provide that options and other Awards expire upon termination of the
participant's employment, although the Committee may provide that such options
or other Awards continue to be exercisable following a termination, or following
a Change in Control (as defined in the Plan) of the Company, or because of the
grantee's retirement, death, disability or otherwise. Similarly, restricted
stock granted under the Plan which has not vested generally will be subject to
repurchase by the Company in the event of the grantee's termination of
employment, although the Committee may make exceptions, based on the reason for
termination or on other factors. In the event of a Change in Control of the
Company, outstanding options automatically vest.
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<PAGE> 20
Upon an extraordinary corporate event, the Committee may determine the
conditions upon which outstanding options vest.
Generally, no option, SAR or other Award granted under the Plan may be
sold, pledged, assigned or transferred in any manner other than by will or the
laws of descent and distribution, unless and until such rights or awards have
been exercised, or the shares underlying such rights or awards have been issued,
and all restrictions applicable to such shares have lapsed. Awards may be
transferred by gift to or for the benefit of an immediate family member of a
holder, with the consent of the Committee. Other than Awards that have been so
transferred, during the lifetime of the holder of any option or right, the
option or right may be exercised only by the holder.
As a condition to the issuance or delivery of stock or payment of other
compensation pursuant to the exercise or lapse of restrictions of any option or
other Award granted under the Plan, the Company requires participants to
discharge applicable withholding tax obligations. Shares held by or to be issued
to a participant may also be used to discharge tax withholding obligations
related to exercise of options or receipt of other Awards, subject to the
discretion of the Committee to disapprove such use.
The Plan must be approved by the stockholders within twelve months of the
date of its adoption. Options, SARs and other Awards under the Plan may be
granted prior to such approval, provided that such options, SARs or other Awards
may not vest or become exercisable prior to the stockholders' approval of the
Plan, and that if such approval is not received within the twelve month period,
all such options, SARs and other Awards shall become null and void.
SECURITIES LAWS:
The Plan is intended to conform to the extent necessary with all provisions
of the Securities Act of 1933, as amended, and the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and any and all regulations and rules
promulgated by the Securities and Exchange Commission thereunder, including
without limitation Rule 16b-3. The Plan will be administered, and options will
be granted and may be exercised, only in such a manner as to conform to such
laws, rules and regulations. To the extent permitted by applicable law, the Plan
and options granted thereunder shall be deemed amended to the extent necessary
to conform to such laws, rules and regulations.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES:
The tax consequences of the Plan under current federal law are summarized
in the following discussion which deals with the general tax principles
applicable to the Plan, and is intended for general information only. In
addition, the tax consequences described below are subject to the limitation of
Section 162(m) of the Code ("Section 162(m)"), as discussed in further detail
below. Alternative minimum tax and state and local income taxes are not
discussed. Tax laws are complex and subject to change and may vary depending on
individual circumstances and from locality to locality. The tax information
summarized is not tax advice.
Nonqualified Stock Options. For federal income tax purposes, an optionee
generally will not recognize taxable income on the grant of an NQSO under the
Plan. The optionee will recognize ordinary income, and the Company generally
will be entitled to a deduction, upon the exercise of an NQSO. The amount of
income recognized (and the amount generally deductible by the Company) generally
will be equal to the excess, if any, of the fair market value of the shares at
the time of exercise over the aggregate exercise price paid for the shares,
regardless of whether the exercise price is paid in cash or in shares or other
property. An optionee's basis for the stock for purposes of determining his or
her gain or loss upon a subsequent disposition of the shares generally will be
the fair market value of the stock on the date of exercise of the NQSO, and any
subsequent gain or loss will generally be taxable as capital gain or loss.
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Incentive Stock Options. An optionee generally will not recognize taxable
income upon either the grant or exercise of an ISO. However, the amount by which
the fair market value of the shares at the time of exercise exceeds the exercise
price will be an "item of tax preference" for the optionee. Generally, upon the
sale or other taxable disposition of the shares of Common Stock acquired upon
exercise of an ISO, the optionee will recognize income taxable as capital gains
in an amount equal to the excess, if any, of the amount realized in such
disposition over the option exercise price, provided that no disposition of the
shares has taken place within either (a) two years from the date of grant of the
ISO or (b) one year from the date of exercise. If the shares of Common Stock are
sold or otherwise disposed of before the end of the one-year and two-year
periods specified above, the difference between the ISO exercise price and the
fair market value of the shares on the date of exercise generally will be
taxable as ordinary income; the balance of the amount realized from such
disposition, if any, generally will be taxed as capital gain. If the shares of
Common Stock are disposed of before the expiration of the one-year and two-year
periods and the amount realized is less than the fair market value of the shares
at the date of exercise, the optionee's ordinary income generally is limited to
the excess, if any, of the amount realized in such disposition over the option
exercise price paid. The Company (or other employer corporation) generally will
be entitled to a tax deduction with respect to an ISO only to the extent the
optionee has ordinary income upon sale or other disposition of the shares of
Common Stock.
Stock Appreciation Rights. No taxable income is generally recognized upon
the receipt of an SAR, but upon exercise of the SAR the fair market value of the
shares (or cash in lieu of shares) received generally will be taxable as
ordinary income to the recipient in the year of such exercise. The Company
generally will be entitled to a compensation deduction for the same amount which
the recipient recognizes as ordinary income.
Restricted Stock and Deferred Stock. A participant to whom restricted or
deferred stock is issued generally will not recognize taxable income upon such
issuance and the Company generally will not then be entitled to a deduction,
unless, in the case of restricted stock, an election is made under Section 83(b)
of the Code. However, when restrictions on shares of restricted stock lapse,
such that the shares are no longer subject to a substantial risk of forfeiture,
the participant generally will recognize ordinary income and the Company
generally will be entitled to a deduction for an amount equal to the excess of
the fair market value of the shares at the date such restrictions lapse over the
purchase price therefor. Similarly, when deferred stock vests and is issued to a
participant, the participant generally will recognize ordinary income and the
Company generally will be entitled to a deduction for the amount equal to the
fair market value of the shares at the date of issuance. If an election is made
under Section 83(b) of the Code with respect to qualifying restricted stock, the
participant generally will recognize ordinary income at the date of issuance
equal to the excess, if any, of the fair market value of the shares at that date
over the purchase price therefor and the Company will be entitled to a deduction
for the same amount. The Code does not permit a Section 83(b) election to be
made with respect to deferred stock.
Dividend Equivalents. A recipient of a dividend equivalent award generally
will not recognize taxable income at the time of grant, and the Company will not
be entitled to a deduction at that time. When a dividend equivalent is paid, the
participant generally will recognize ordinary income, and the Company will be
entitled to a corresponding deduction.
Performance Awards. A participant who has been granted a performance award
generally will not recognize taxable income at the time of grant, and the
Company will not be entitled to a deduction at that time. When an award is paid,
whether in cash or Common Stock, the participant generally will recognize
ordinary income, and the Company will be entitled to a corresponding deduction.
Stock Payments. A participant who receives a stock payment in lieu of a
cash payment that would otherwise have been made will generally be taxed as if
the cash payment has been received, and the Company generally will be entitled
to a deduction for the same amount.
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Deferred Compensation. Participants who defer compensation generally will
recognize no income, gain or loss for federal income tax purposes when NQSOs are
granted in lieu of amounts otherwise payable, and the Company will not be
entitled to a deduction at that time. When and to the extent such NQSOs are
exercised, the rules regarding NQSOs outlined above will generally apply.
Section 162(m) Limitation. In general, under Section 162(m), income tax
deductions of publicly-held corporations may be limited to the extent total
compensation (including base salary, annual bonus, stock option exercises and
non-qualified benefits paid) for certain executive officers exceeds $1,000,000
(less the amount of any "excess parachute payments" as defined in Section 280G
of the Code) in any one year. However, under Section 162(m), the deduction limit
does not apply to certain "performance-based compensation" established by an
independent compensation committee which is adequately disclosed to, and
approved by, stockholders. In particular, stock options and SARs will satisfy
the "performance-based compensation" exception if the awards are made by a
qualifying compensation committee, the plan sets the maximum number of shares
that can be granted to any person within a specified period and the compensation
is based solely on an increase in the stock price after the grant date (i.e.,
the option exercise price is equal to or greater than the fair market value of
the stock subject to the award on the grant date). Performance or incentive
awards granted under the Plan may qualify as "qualified performance-based
compensation" for purposes of Section 162(m) if such awards are granted or vest
upon the preestablished objective performance goals described above.
The Company has attempted to structure the Plan in such a manner that the
Committee can determine the terms and conditions of stock options, SARs and
performance and incentive awards granted thereunder such that remuneration
attributable to such awards will not be subject to the $1,000,000 limitation.
The Company has not, however, requested a ruling from the IRS or an opinion of
counsel regarding this issue. This discussion will neither bind the IRS nor
preclude the IRS from adopting a contrary position.
REASONS FOR ADOPTION OF THE PLAN:
The Key Executive Plan currently provides that 1,800,000 shares of Common
Stock are authorized for issuance. As of March 18, 1999, approximately 8,584
shares remained available for future awards under the Key Executive Plan. Also
on that date, options held by approximately 73 officers and key employees and
covering approximately 1,372,876 shares were outstanding under the Key Executive
Plan, of which 1,105,747 were exercisable. The Board has determined that it is
advisable to continue to provide stock-based incentive compensation to the
Company's key employees, thereby continuing to align the interests of such
employees with those of the stockholders, and that awards under the Plan are an
effective means of providing such compensation.
REQUIRED VOTE FOR APPROVAL AND RECOMMENDATION OF THE BOARD OF DIRECTORS:
In order to preserve full deductibility of performance-based awards under
the Plan under Section 162(m) of the Code, and as required in order to grant
Incentive Stock Options, Libbey Inc. is requesting that its stockholders approve
the Plan. The affirmative vote of a majority of votes cast on the proposal to
adopt the Plan is required to approve the Proposal. Your Board of Directors
recommends a vote FOR approval of the Plan.
INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee, the Board of Directors of
the Company has selected Ernst & Young LLP as independent auditors for the
Company for the fiscal year ending December 31, 1999.
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A representative of Ernst & Young LLP is expected to attend the Annual
Meeting and will have an opportunity to make a statement if the representative
so desires. The representative will be available to respond to appropriate
questions.
OTHER BUSINESS
As of the date of this Proxy Statement, neither the Board nor management
knows of any other business that will be presented for consideration at the
Annual Meeting. However, if other proper matters are presented at the meeting,
it is the intention of the proxy holders named in the accompanying proxy to take
such action as shall be in accordance with their judgment on such matters. All
other matters to be voted upon by stockholders will require a majority vote of
common stock represented in person or by proxy.
GENERAL INFORMATION
REVOCABILITY OF PROXIES:
Any proxy solicited hereby may be revoked by the person giving it at any
time before it has been exercised at the Annual Meeting by giving notice of
revocation to the Company in writing or at the Annual Meeting.
SOLICITATION COSTS:
The Company will pay the cost of preparing and mailing this proxy statement
and other costs of the proxy solicitation made by the Company's Board of
Directors. Certain of the Company's officers and employees may solicit the
submission of proxies authorizing the voting of shares in accordance with the
Board of Directors' recommendations, but no additional remuneration will be paid
by the Company for the solicitation of those proxies. Such solicitations may be
made by personal interview, telephone or telegram. Arrangements have been made
with Corporate Investor Communications, Inc. to perform a broker-nominee search
and provide solicitation services at an estimated cost to the Company of $5,000
plus expenses for out-of-pocket costs. Arrangements have also been made with
brokerage firms and others for the forwarding of proxy solicitation materials to
the beneficial owners of common stock, and the Company will reimburse them for
reasonable out-of-pocket expenses incurred in connection therewith.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT:
Section 16(a)of the Exchange Act requires the Company's officers and
directors, and persons who own more than ten percent of a registered class of
the Company's equity securities, to file reports of ownership and changes in
ownership (Forms 3, 4 and 5) with the Securities and Exchange Commission and the
New York Stock Exchange. Officers, directors and greater-than-ten-percent
holders are required by SEC regulation to furnish the Company with copies of all
such forms which they file.
Based solely on the Company's review of the copies of Forms 3 and 4 and
amendments thereto received by it during 1998, Forms 5 and amendments thereto
received by it with respect to fiscal 1998, or written representations from
certain reporting persons that no Forms 5 were required to be filed by those
persons, the Company believes that during the fiscal year ending December 31,
1998, all filing requirements applicable to its officers, directors and
greater-than-ten-percent beneficial owners subject to Section 16 of the Exchange
Act were complied with.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING:
A stockholder desiring to submit a proposal for inclusion in the Company's
Proxy Statement for the 2000 Annual Meeting must deliver the proposal so that it
is received by the Company no later
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than December 1, 1999. The Company requests that all such proposals be addressed
to Arthur H. Smith, Vice President, General Counsel and Secretary, Libbey Inc.,
300 Madison Avenue, P.O. Box 10060, Toledo, Ohio 43699-0060.
REPORTS TO STOCKHOLDERS:
The Company has mailed this Proxy Statement and a copy of its 1998 Annual
Report to each stockholder entitled to vote at the Annual Meeting. Included in
the 1998 Annual Report are the Company's consolidated financial statements for
the year ended December 31, 1998.
A copy of the Company's Annual Report on Form 10-K for the year ended
December 31, 1998, including the financial statement schedules, as filed with
the Securities and Exchange Commission, may be obtained without charge by
sending a written request therefore to Libbey Inc., Attention: Investor
Relations, Kenneth G. Wilkes, Vice President, Chief Financial Officer and
Treasurer, 300 Madison Avenue, P.O. Box 10060, Toledo, Ohio 43699-0060.
By Order of the Board of Directors,
ARTHUR H. SMITH, Secretary
Toledo, Ohio
March 31, 1999
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APPENDIX A
THE 1999 EQUITY PARTICIPATION PLAN
OF
LIBBEY INC.
Libbey Inc., a Delaware corporation, has adopted The 1999 Equity
Participation Plan of Libbey Inc. (the "Plan"), effective May 6, 1999, for the
benefit of its eligible employees.
The purposes of the Plan are as follows:
(1) To provide an additional incentive for key Employees (as such
terms are defined below) to further the growth, development and financial
success of the Company by personally benefiting through the ownership of
Company stock and/or rights which recognize such growth, development and
financial success.
(2) To enable the Company to obtain and retain the services of key
Employees considered essential to the long range success of the Company by
offering them an opportunity to own stock in the Company and/or rights
which will reflect the growth, development and financial success of the
Company.
ARTICLE I.
DEFINITIONS
1.1. General. Wherever the following terms are used in the Plan they shall
have the meanings specified below, unless the context clearly indicates
otherwise.
1.2. Administrator. "Administrator" shall mean the Committee unless the
Board has assumed the authority for administration of the Plan generally as
provided in Section 10.1.
1.3. Award. "Award" shall mean an Option, a Restricted Stock award, a
Performance Award, a Dividend Equivalents award, a Deferred Stock award, a Stock
Payment award or a Stock Appreciation Right which may be awarded or granted
under the Plan (collectively, "Awards").
1.4. Award Agreement. "Award Agreement" shall mean a written agreement
executed by an authorized officer of the Company and the Holder which shall
contain such terms and conditions with respect to an Award as the Administrator
shall determine, consistent with the Plan.
1.5. Award Limit. "Award Limit" shall mean Seventy Five Thousand (75,000)
shares of Common Stock, as adjusted pursuant to Section 11.3 of the Plan.
1.6. Board. "Board" shall mean the Board of Directors of the Company.
1.7. Change in Control.
(a) any Person (as defined below) is or becomes the Beneficial Owner (as
defined below), directly or indirectly, of securities of the Company
representing twenty percent (20%) or more of the combined voting power of the
Company's then outstanding securities. For purposes of this Agreement, (A) the
term "Person" is used as such term is used in Sections 13(d) and 14(d) of the
Exchange Act; provided, however, that the term shall not include the Company,
any trustee or other fiduciary holding securities under an employee benefit plan
of the Company, and any corporation owned, directly or indirectly, by the
shareholders of the Company, in substantially the same proportions as their
ownership of stock of the Company, and (B) the term "Beneficial Owner" shall
have the meaning given to such term in Rule 13d-3 under the Exchange Act; and
provided, further, that this subsection (a) shall not apply to any Person who is
the Beneficial Owner, directly or indirectly, of securities of the Company
representing twenty percent (20%) or more of the combined voting power of the
Company's then outstanding securities as of the effective date of this Plan so
long
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as such Person does not beneficially own, or increase such beneficial ownership
to, twenty-five percent (25%) or more of the combined voting power of the
Company's then outstanding securities;
(b) during any period of two (2) consecutive years (not including any
period prior to the execution of this Agreement), individuals who at the
beginning of such period constitute the Board, and any new director (other than
a director designated by a person who has entered into an agreement with the
Company to effect a transaction described in Sections 2(a), (c) or (d)) whose
election by the Board or nomination for election by the Company's shareholders
was approved by a vote of at least two-thirds ( 2/3) of the directors then still
in office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved (hereinafter
referred to as "Continuing Directors"), cease for any reason to constitute at
least a majority thereof;
(c) the shareholders of the Company approve a merger or consolidation of
the Company with any other corporation (or other entity), other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 66 2/3% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation;
(d) the shareholders of the Company approve a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the Company of all
or substantially all of the Company's assets; or
(e) any Person is or becomes the Beneficial Owner, directly or indirectly,
of securities of the Company representing ten percent (10%) or more of the
combined voting power of the Company's then outstanding securities (a "10%
Owner") and (A) the identity of the Chief Executive Officer of the Company is
changed during the period beginning sixty (60) days before the attainment of the
ten percent (10%) beneficial ownership and ending two (2) years thereafter, or
(B) individuals constituting at least one-third ( 1/3) of the members of the
Board at the beginning of such period shall cease for any reason to serve on the
Board during the period beginning sixty (60) days before the attainment of the
ten percent (10%) beneficial ownership and ending two (2) years thereafter;
provided, however, that this subsection (e) shall not apply to any Person who is
a 10% Owner as of the effective date of this Plan so long as such Person does
not increase such beneficial ownership by five percent (5%) or more over the
percentage so owned by such Person as of the effective date of the Plan.
1.8 Code. "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.9 Committee. "Committee" shall mean the Compensation Committee of the
Board, or another committee or subcommittee of the Board, appointed as provided
in Section 10.1.
1.10. Common Stock. "Common Stock" shall mean the common stock of the
Company, par value $.01 per share, and any equity security of the Company issued
or authorized to be issued in the future, but excluding any preferred stock and
any warrants, options or other rights to purchase Common Stock.
1.11. Company. "Company" shall mean Libbey Inc., a Delaware corporation.
1.12. Deferred Stock. "Deferred Stock" shall mean Common Stock awarded
under Article VIII of the Plan.
1.13. Dividend Equivalent. "Dividend Equivalent" shall mean a right to
receive the equivalent value (in cash or Common Stock) of dividends paid on
Common Stock, awarded under Article VIII of the Plan.
1.14. DRO. "DRO" shall mean a domestic relations order as defined by the
Code or Title I of the Employee Retirement Income Security Act of 1974, as
amended, or the rules thereunder.
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1.15. Employee. "Employee" shall mean any officer or other employee (as
defined in accordance with Section 3401(c) of the Code) of the Company, or of
any corporation which is a Subsidiary.
1.16. Exchange Act. "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
1.17. Fair Market Value. "Fair Market Value" of a share of Common Stock as
of a given date shall be (a) the closing price of a share of Common Stock on the
principal exchange on which shares of Common Stock are then trading, if any (or
as reported on any composite index which includes such principal exchange), on
the trading day previous to such date, or if shares were not traded on the
trading day previous to such date, then on the next preceding date on which a
trade occurred, or (b) if Common Stock is not traded on an exchange but is
quoted on NASDAQ or a successor quotation system, the mean between the closing
representative bid and asked prices for the Common Stock on the trading day
previous to such date as reported by NASDAQ or such successor quotation system;
or (c) if Common Stock is not publicly traded on an exchange and not quoted on
NASDAQ or a successor quotation system, the Fair Market Value of a share of
Common Stock as established by the Administrator acting in good faith.
1.18. Holder. "Holder" shall mean a person who has been granted or awarded
an Award.
1.19. Incentive Stock Option. "Incentive Stock Option" shall mean an option
which conforms to the applicable provisions of Section 422 of the Code and which
is designated as an Incentive Stock Option by the Administrator.
1.20. Non-Qualified Stock Option. "Non-Qualified Stock Option" shall mean
an Option which is not designated as an Incentive Stock Option by the
Administrator.
1.21. Option. "Option" shall mean a stock option granted under Article IV
of the Plan. An Option granted under the Plan shall, as determined by the
Administrator, be either a Non-Qualified Stock Option or an Incentive Stock
Option.
1.22. Performance Award. "Performance Award" shall mean a cash bonus, stock
bonus or other performance or incentive award that is paid in cash, Common Stock
or a combination of both, awarded under Article VIII of the Plan.
1.23. Performance Criteria. "Performance Criteria" shall mean the following
business criteria with respect to the Company, any Subsidiary or any division or
operating unit: (a) net income, (b) pre-tax income, (c) operating income, (d)
cash flow, (e) earnings per share, (f) return on equity, (g) return on invested
capital or assets, (h) cost reductions or savings, (i) funds from operations,
(j) appreciation in the fair market value of Common Stock, (k) earnings before
any one or more of the following items: interest, taxes, depreciation or
amortization, (l) performance against operating budget goals, and (m) economic
value added.
1.24. Plan. "Plan" shall mean The 1999 Equity Participation Plan of Libbey
Inc.
1.25. Restricted Stock. "Restricted Stock" shall mean Common Stock awarded
under Article VII of the Plan.
1.26. Rule 16b-3. "Rule 16b-3" shall mean that certain Rule 16b-3 under the
Exchange Act, as such Rule may be amended from time to time.
1.27. Section 162(m) Participant. "Section 162(m) Participant" shall mean
any key Employee designated by the Administrator as a key Employee whose
compensation for the fiscal year in which the key Employee is so designated or a
future fiscal year may be subject to the limit on deductible compensation
imposed by Section 162(m) of the Code.
1.28. Securities Act. "Securities Act" shall mean the Securities Act of
1933, as amended.
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1.29. Stock Appreciation Right. "Stock Appreciation Right" shall mean a
stock appreciation right granted under Article IX of the Plan.
1.30. Stock Payment. "Stock Payment" shall mean (a) a payment in the form
of shares of Common Stock, or (b) an option or other right to purchase shares of
Common Stock, as part of a deferred compensation arrangement, made in lieu of
all or any portion of the compensation, including without limitation, salary,
bonuses and commissions, that would otherwise become payable to a key Employee
in cash, awarded under Article VIII of the Plan.
1.31. Subsidiary. "Subsidiary" shall mean any corporation in an unbroken
chain of corporations beginning with the Company if each of the corporations
other than the last corporation in the unbroken chain then owns stock possessing
fifty percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
1.32. Substitute Award. "Substitute Award" shall mean an Option granted
under this Plan upon the assumption of, or in substitution for, outstanding
equity awards previously granted by a company or other entity in connection with
a corporate transaction, such as a merger, combination, consolidation or
acquisition of property or stock; provided, however, that in no event shall the
term "Substitute Award" be construed to refer to an award made in connection
with the cancellation and repricing of an Option.
1.33. Termination of Employment. "Termination of Employment" shall mean the
time when the employee-employer relationship between a Holder and the Company or
any Subsidiary is terminated for any reason, with or without cause, including,
but not by way of limitation, a termination by resignation, discharge, death,
disability or retirement; but excluding (a) terminations where there is a
simultaneous reemployment or continuing employment of a Holder by the Company or
any Subsidiary, (b) at the discretion of the Administrator, terminations which
result in a temporary severance of the employee-employer relationship, and (c)
at the discretion of the Administrator, terminations which are followed by the
simultaneous establishment of a consulting relationship by the Company or a
Subsidiary with the former employee. The Administrator, in its absolute
discretion, shall determine the effect of all matters and questions relating to
Termination of Employment, including, but not by way of limitation, the question
of whether a Termination of Employment resulted from a discharge for good cause,
and all questions of whether a particular leave of absence constitutes a
Termination of Employment; provided, however, that, with respect to Incentive
Stock Options, unless otherwise determined by the Administrator in its
discretion, a leave of absence, change in status from an employee to an
independent contractor or other change in the employee-employer relationship
shall constitute a Termination of Employment if, and to the extent that, such
leave of absence, change in status or other change interrupts employment for the
purposes of Section 422(a)(2) of the Code and the then applicable regulations
and revenue rulings under said Section.
ARTICLE II.
SHARES SUBJECT TO PLAN
2.1. Shares Subject to Plan.
(a) The shares of stock subject to Awards shall be Common Stock,
initially shares of the Company's Common Stock, par value $.01 per share.
The aggregate number of such shares which may be issued upon exercise of
such Options or rights or upon any such awards under the Plan shall not
exceed One Million (1,000,000), of which no more than One Hundred Thousand
(100,000) shares may be issued as Restricted Stock, Performance Awards or
Deferred Stock or any combination thereof. The shares of Common Stock
issuable upon exercise of such Options or rights or upon any such awards
may be either previously authorized but unissued shares or treasury shares.
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(b) The maximum number of shares which may be subject to Awards,
granted under the Plan to any individual in any fiscal year shall not
exceed the Award Limit. To the extent required by Section 162(m) of the
Code, shares subject to Options which are canceled continue to be counted
against the Award Limit.
2.2 Add-back of Options and Other Rights. If any Option, or other right to
acquire shares of Common Stock under any other Award under the Plan, expires or
is canceled without having been fully exercised, or is exercised in whole or in
part for cash as permitted by the Plan, the number of shares subject to such
Option or other right but as to which such Option or other right was not
exercised prior to its expiration, cancellation or exercise may again be
optioned, granted or awarded hereunder, subject to the limitations of Section
2.1. Furthermore, any shares subject to Awards which are adjusted pursuant to
Section 11.3 and become exercisable with respect to shares of stock of another
corporation shall be considered canceled and may again be optioned, granted or
awarded hereunder, subject to the limitations of Section 2.1. Shares of Common
Stock which are delivered by the Holder or withheld by the Company upon the
exercise of any Award under the Plan, in payment of the exercise price thereof
or tax withholding thereon, may again be optioned, granted or awarded hereunder,
subject to the limitations of Section 2.1. If any shares of Restricted Stock are
surrendered by the Holder or repurchased by the Company pursuant to Section 7.4
or 7.5 hereof, such shares may again be optioned, granted or awarded hereunder,
subject to the limitations of Section 2.1. Notwithstanding the provisions of
this Section 2.2, no shares of Common Stock may again be optioned, granted or
awarded if such action would cause an Incentive Stock Option to fail to qualify
as an incentive stock option under Section 422 of the Code.
ARTICLE III.
GRANTING OF AWARDS
3.1. Award Agreement. Each Award shall be evidenced by an Award Agreement.
Award Agreements evidencing Awards intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall contain such
terms and conditions as may be necessary to meet the applicable provisions of
Section 162(m) of the Code. Award Agreements evidencing Incentive Stock Options
shall contain such terms and conditions as may be necessary to meet the
applicable provisions of Section 422 of the Code.
3.2. Provisions Applicable to Section 162(m) Participants.
(a) The Committee, in its discretion, may determine whether an Award
is to qualify as performance-based compensation as described in Section
162(m)(4)(C) of the Code.
(b) Notwithstanding anything in the Plan to the contrary, the
Committee may grant any Award to a Section 162(m) Participant, including
Restricted Stock, the restrictions with respect to which lapse upon the
attainment of performance goals which are related to one or more of the
Performance Criteria and any performance or incentive award described in
Article VIII that vests or becomes exercisable or payable upon the
attainment of performance goals which are related to one or more of the
Performance Criteria.
(c) To the extent necessary to comply with the performance-based
compensation requirements of Section 162(m)(4)(C) of the Code, with respect
to any Award granted under Articles VII and VIII which may be granted to
one or more Section 162(m) Participants, no later than ninety (90) days
following the commencement of any fiscal year in question or any other
designated fiscal period or period of service (or such other time as may be
required or permitted by Section 162(m) of the Code), the Committee shall,
in writing, (i) designate one or more Section 162(m) Participants, (ii)
select the Performance Criteria applicable to the fiscal year or other
designated fiscal period or period of service, (iii) establish the various
performance targets, in terms of an objective formula or standard, and
amounts of such Awards, as applicable, which may be earned for such fiscal
year or other designated fiscal period or period of service and
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(iv) specify the relationship between Performance Criteria and the
performance targets and the amounts of such Awards, as applicable, to be
earned by each Section 162(m) Participant for such fiscal year or other
designated fiscal period or period of service. Following the completion of
each fiscal year or other designated fiscal period or period of service,
the Committee shall certify in writing whether the applicable performance
targets have been achieved for such fiscal year or other designated fiscal
period or period of service. In determining the amount earned by a Section
162(m) Participant, the Committee shall have the right to reduce (but not
to increase) the amount payable at a given level of performance to take
into account additional factors that the Committee may deem relevant to the
assessment of individual or corporate performance for the fiscal year or
other designated fiscal period or period of service.
(d) Furthermore, notwithstanding any other provision of the Plan any
Award which is granted to a Section 162(m) Participant and is intended to
qualify as performance-based compensation as described in Section
162(m)(4)(C) of the Code shall be subject to any additional limitations set
forth in Section 162(m) of the Code (including any amendment to Section
162(m) of the Code) or any regulations or rulings issued thereunder that
are requirements for qualification as performance-based compensation as
described in Section 162(m)(4)(C) of the Code, and the Plan shall be deemed
amended to the extent necessary to conform to such requirements.
3.3. Limitations Applicable to Section 16 Persons.
Notwithstanding any other provision of the Plan, the Plan, and any Award
granted or awarded to any individual who is then subject to Section 16 of the
Exchange Act, shall be subject to any additional limitations set forth in any
applicable exemptive rule under Section 16 of the Exchange Act (including any
amendment to Rule 16b-3 of the Exchange Act) that are requirements for the
application of such exemptive rule. To the extent permitted by applicable law,
the Plan and Awards granted or awarded hereunder shall be deemed amended to the
extent necessary to conform to such applicable exemptive rule.
3.4. Consideration. In consideration of the granting of an Award under the
Plan, the Holder shall agree, in the Award Agreement, to remain in the employ of
(or, as applicable, to consult for) the Company or any Subsidiary for a period
of at least one year (or such shorter period as may be fixed in the Award
Agreement or by action of the Administrator following grant of the Award) after
the Award is granted.
3.5. At-Will Employment. Nothing in the Plan or in any Award Agreement
hereunder shall confer upon any Holder any right to continue in the employ of
the Company or any Subsidiary, or shall interfere with or restrict in any way
the rights of the Company and any Subsidiary, which are hereby expressly
reserved, to discharge any Holder at any time for any reason whatsoever, with or
without cause, except to the extent expressly provided otherwise in a written
employment agreement between the Holder and the Company and any Subsidiary.
ARTICLE IV.
GRANTING OF OPTIONS
4.1. Eligibility. Any Employee selected by the Committee pursuant to
Section 4.4(a)(i) shall be eligible to be granted an Option.
4.2. Disqualification for Stock Ownership. No person may be granted an
Incentive Stock Option under the Plan if such person, at the time the Incentive
Stock Option is granted, owns stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company or any
then existing Subsidiary or parent corporation (within the meaning of Section
422 of the Code) unless such Incentive Stock Option conforms to the applicable
provisions of Section 422 of the Code.
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4.3. Qualification of Incentive Stock Options. No Incentive Stock Option
shall be granted to any person who is not an Employee.
4.4. Granting of Options.
(a) The Committee shall from time to time, in its absolute discretion,
and subject to applicable limitations of the Plan:
(i) Determine which Employees are key Employees and select from
among them (including Employees who have previously received Awards
under the Plan) those who in its opinion should be granted Options;
(ii) Subject to the Award Limit, determine the number of shares to
be subject to such Options granted to the selected key Employees;
(iii) Subject to Section 4.3, determine whether such Options are to
be Incentive Stock Options or Non-Qualified Stock Options and whether
such Options are to qualify as performance-based compensation as
described in Section 162(m)(4)(C) of the Code; and
(iv) Determine the terms and conditions of such Options, consistent
with the Plan; provided, however, that the terms and conditions of
Options intended to qualify as performance-based compensation as
described in Section 162(m)(4)(C) of the Code shall include, but not be
limited to, such terms and conditions as may be necessary to meet the
applicable provisions of Section 162(m) of the Code.
(b) Upon the selection of a key Employee to be granted an Option, the
Committee shall instruct the Secretary of the Company to issue the Option
and may impose such conditions on the grant of the Option as it deems
appropriate.
(c) Any Incentive Stock Option granted under the Plan may be modified
by the Committee, with the consent of the Holder, to disqualify such Option
from treatment as an "incentive stock option" under Section 422 of the
Code.
4.5. Options in Lieu of Cash Compensation. Options may be granted under the
Plan to Employees in lieu of cash bonuses which would otherwise be payable to
such Employees, pursuant to such policies which may be adopted by the
Administrator from time to time.
ARTICLE V.
TERMS OF OPTIONS
5.1. Option Price. The price per share of the shares subject to each Option
shall not be less than one hundred percent (100%) of the Fair Market Value of a
share of Common Stock on the date the Option is granted and in the case of
Incentive Stock Options granted to an individual then owning (within the meaning
of Section 424(d) of the Code) more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or any Subsidiary or parent
corporation thereof (within the meaning of Section 422 of the Code), such price
shall not be less than one hundred ten percent (110%) of the Fair Market Value
of a share of Common Stock on the date the Option is granted (or the date the
Option is modified, extended or renewed for purposes of Section 424(h) of the
Code).
5.2. Option Term. The maximum term of each Non-Qualified Stock Option shall
be ten (10) years and one (1) day from the date the Non-Qualified Stock Option
is granted. The maximum term of each Incentive Stock Option shall be ten (10)
years from the date the Incentive Stock Option is granted, or five (5) years
from the date the Incentive Stock Option is granted if the Incentive Stock
Option is granted to an individual then owning (within the meaning of Section
424(d) of the Code) more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or any Subsidiary or parent
corporation thereof (within the meaning of Section 422 of the
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Code). Except as limited by requirements of Section 422 of the Code and
regulations and rulings thereunder applicable to Incentive Stock Options, the
Committee may extend the term of any outstanding Option in connection with any
Termination of Employment of the Holder, or amend any other term or condition of
such Option relating to such a termination.
5.3. Option Vesting
(a) The period during which the right to exercise, in whole or in
part, an Option granted to an Employee vests in the Holder shall be set by
the Committee and the Committee may determine that an Option may not be
exercised in whole or in part for a specified period after it is granted;
provided, however, that, unless the Committee otherwise provides in the
terms of the Award Agreement or otherwise, no Option shall be exercisable
by any Holder who is then subject to Section 16 of the Exchange Act within
the period ending six months and one day after the date the Option is
granted. At any time after grant of an Option, the Committee may, in its
sole and absolute discretion and subject to whatever terms and conditions
it selects, accelerate the period during which an Option granted to an
Employee vests.
(b) No portion of an Option which is unexercisable at Termination of
Employment shall thereafter become exercisable, except as may be otherwise
provided by the Committee either in the Award Agreement or by action of the
Committee following the grant of the Option.
(c) To the extent that the aggregate Fair Market Value of stock with
respect to which "incentive stock options" (within the meaning of Section
422 of the Code, but without regard to Section 422(d) of the Code) are
exercisable for the first time by a Holder during any calendar year (under
the Plan and all other incentive stock option plans of the Company and any
parent or subsidiary corporation, within the meaning of Section 422 of the
Code) of the Company, exceeds $100,000, such Options shall be treated as
Non-Qualified Options to the extent required by Section 422 of the Code.
The rule set forth in the preceding sentence shall be applied by taking
Options into account in the order in which they were granted. For purposes
of this Section 5.3(c), the Fair Market Value of stock shall be determined
as of the time the Option with respect to such stock is granted.
5.5. Substitute Awards.
Notwithstanding the foregoing provisions of this Article V to the contrary,
in the case of an Option that is a Substitute Award, the price per share of the
shares subject to such Option may be less than the Fair Market Value per share
on the date of grant, provided, that the excess of:
(a) the aggregate Fair Market Value (as of the date such Substitute
Award is granted) of the shares subject to the Substitute Award; over
(b) the aggregate exercise price thereof; does not exceed the excess
of;
(c) the aggregate fair market value (as of the time immediately
preceding the transaction giving rise to the Substitute Award, such fair
market value to be determined by the Committee) of the shares of the
predecessor entity that were subject to the grant assumed or substituted
for by the Company; over
(d) the aggregate exercise price of such shares.
ARTICLE VI.
EXERCISE OF OPTIONS
6.1. Partial Exercise. An exercisable Option may be exercised in whole or
in part. However, an Option shall not be exercisable with respect to fractional
shares and the Administrator may require that, by the terms of the Option, a
partial exercise be with respect to a minimum number of shares.
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6.2. Manner of Exercise. All or a portion of an exercisable Option shall be
deemed exercised upon delivery of all of the following to the Secretary of the
Company or his office:
(a) A written notice complying with the applicable rules established
by the Administrator stating that the Option, or a portion thereof, is
exercised. The notice shall be signed by the Holder or other person then
entitled to exercise the Option or such portion of the Option;
(b) Such representations and documents as the Administrator, in its
absolute discretion, deems necessary or advisable to effect compliance with
all applicable provisions of the Securities Act and any other federal or
state securities laws or regulations. The Administrator may, in its
absolute discretion, also take whatever additional actions it deems
appropriate to effect such compliance including, without limitation,
placing legends on share certificates and issuing stop-transfer notices to
agents and registrars;
(c) In the event that the Option shall be exercised pursuant to
Section 11.1 by any person or persons other than the Holder, appropriate
proof of the right of such person or persons to exercise the Option; and
(d) Full cash payment to the Secretary of the Company for the shares
with respect to which the Option, or portion thereof, is exercised.
However, the Administrator, may in its discretion (i) allow a delay in
payment up to thirty (30) days from the date the Option, or portion
thereof, is exercised; (ii) allow payment, in whole or in part, through the
delivery of shares of Common Stock which have been owned by the Holder for
at least six months, duly endorsed for transfer to the Company with a Fair
Market Value on the date of delivery equal to the aggregate exercise price
of the Option or exercised portion thereof; (iii) allow payment, in whole
or in part, through the surrender of shares of Common Stock then issuable
upon exercise of the Option having a Fair Market Value on the date of
Option exercise equal to the aggregate exercise price of the Option or
exercised portion thereof; (iv) allow payment, in whole or in part, through
the delivery of property of any kind which constitutes good and valuable
consideration; (v) allow payment, in whole or in part, through the delivery
of a full recourse promissory note bearing interest (at no less than such
rate as shall then preclude the imputation of interest under the Code) and
payable upon such terms as may be prescribed by the Administrator; (vi)
allow payment, in whole or in part, through the delivery of a notice that
the Holder has placed a market sell order with a broker with respect to
shares of Common Stock then issuable upon exercise of the Option, and that
the broker has been directed to pay a sufficient portion of the net
proceeds of the sale to the Company in satisfaction of the Option exercise
price, provided that payment of such proceeds is then made to the Company
upon settlement of such sale; or (vii) allow payment through any
combination of the consideration provided in the foregoing subparagraphs
(ii), (iii), (iv), (v) and (vi). In the case of a promissory note, the
Administrator may also prescribe the form of such note and the security to
be given for such note. The Option may not be exercised, however, by
delivery of a promissory note or by a loan from the Company when or where
such loan or other extension of credit is prohibited by law.
6.3. Conditions to Issuance of Stock Certificates. The Company shall not be
required to issue or deliver any certificate or certificates for shares of stock
purchased upon the exercise of any Option or portion thereof prior to
fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock exchanges on
which such class of stock is then listed;
(b) The completion of any registration or other qualification of such
shares under any state or federal law, or under the rulings or regulations
of the Securities and Exchange Commission or any other governmental
regulatory body which the Administrator shall, in its absolute discretion,
deem necessary or advisable;
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(c) The obtaining of any approval or other clearance from any state or
federal governmental agency which the Administrator shall, in its absolute
discretion, determine to be necessary or advisable;
(d) The lapse of such reasonable period of time following the exercise
of the Option as the Administrator may establish from time to time for
reasons of administrative convenience; and
(e) The receipt by the Company of full payment for such shares,
including payment of any applicable withholding tax, which in the
discretion of the Administrator may be in the form of consideration used by
the Holder to pay for such shares under Section 6.2(d).
6.4. Rights as Stockholders. Holders shall not be, nor have any of the
rights or privileges of, stockholders of the Company in respect of any shares
purchasable upon the exercise of any part of an Option unless and until
certificates representing such shares have been issued by the Company to such
Holders.
6.5. Ownership and Transfer Restrictions. The Administrator, in its
absolute discretion, may impose such restrictions on the ownership and
transferability of the shares purchasable upon the exercise of an Option as it
deems appropriate. Any such restriction shall be set forth in the respective
Award Agreement and may be referred to on the certificates evidencing such
shares. The Holder shall give the Company prompt notice of any disposition of
shares of Common Stock acquired by exercise of an Incentive Stock Option within
(a) two years from the date of granting (including the date the Option is
modified, extended or renewed for purposes of Section 424(h) of the Code) such
Option to such Holder or (b) one year after the transfer of such shares to such
Holder.
6.6. Limitations on Exercise of Options. Holders may be required to comply
with any timing or other restrictions with respect to the settlement or exercise
of an Option, including a window-period limitation, as may be imposed in the
discretion of the Administrator.
ARTICLE VII.
AWARD OF RESTRICTED STOCK
7.1. Eligibility. Subject to the Award Limit and the limitation on the
number of shares available for grant as Restricted Stock set forth in Section
2.1, Restricted Stock may be awarded to any Employee who the Committee
determines is a key Employee and who should receive such an Award.
7.2. Award of Restricted Stock.
(a) The Committee may from time to time, in its absolute discretion:
(i) Determine which Employees are key Employees and select from
among them (including Employees who have previously received other
awards under the Plan) as in its opinion should be awarded Restricted
Stock; and
(ii) Determine the purchase price, if any, and other terms and
conditions applicable to such Restricted Stock, consistent with the
Plan.
(b) The Committee shall establish the purchase price, if any, and form
of payment for Restricted Stock; provided, however, that such purchase
price shall be no less than the par value of the Common Stock to be
purchased, unless otherwise permitted by applicable state law. In all
cases, legal consideration shall be required for each issuance of
Restricted Stock.
(c) Upon the selection of a key Employee to be awarded Restricted
Stock, the Committee shall instruct the Secretary of the Company to issue
such Restricted Stock and may impose such conditions on the issuance of
such Restricted Stock as it deems appropriate.
7.3. Rights as Stockholders. Subject to Section 7.4, upon delivery of the
shares of Restricted Stock to the escrow holder pursuant to Section 7.6, the
Holder shall have, unless otherwise provided
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by the Committee, all the rights of a stockholder with respect to said shares,
subject to the restrictions in his or her Award Agreement, including the right
to receive all dividends and other distributions paid or made with respect to
the shares; provided, however, that in the discretion of the Committee, any
extraordinary distributions with respect to the Common Stock shall be subject to
the restrictions set forth in Section 7.4.
7.4. Restriction. All shares of Restricted Stock issued under the Plan
(including any shares received by holders thereof with respect to shares of
Restricted Stock as a result of stock dividends, stock splits or any other form
of recapitalization) shall, in the terms of each individual Award Agreement, be
subject to such restrictions as the Committee shall provide, which restrictions
may include, without limitation, restrictions concerning voting rights and
transferability and restrictions based on duration of employment with the
Company, Company performance and individual performance; provided, however,
that, unless the Committee otherwise provides in the terms of the Award
Agreement or otherwise, no share of Restricted Stock granted to a person subject
to Section 16 of the Exchange Act shall be sold, assigned or otherwise
transferred until at least six months and one day have elapsed from the date on
which the Restricted Stock was issued, and provided, further, that, except with
respect to shares of Restricted Stock granted to Section 162(m) Participants, by
action taken after the Restricted Stock is issued, the Committee may, on such
terms and conditions as it may determine to be appropriate, remove any or all of
the restrictions imposed by the terms of the Award Agreement. Restricted Stock
may not be sold or encumbered until all restrictions are terminated or expire.
If no consideration was paid by the Holder upon issuance, a Holder's rights in
unvested Restricted Stock shall lapse, and such Restricted Stock shall be
surrendered to the Company without consideration, upon Termination of Employment
with the Company; provided, however, except with respect to shares of Restricted
Stock granted to Section 162(m) Participants, the Committee in its sole and
absolute discretion may provide that no such lapse or surrender shall occur in
the event of a Termination of Employment without cause or following any Change
in Control of the Company or because of the Holder's retirement, or otherwise.
7.5. Repurchase of Restricted Stock. The Committee shall provide in the
terms of each individual Award Agreement that the Company shall have the right
to repurchase from the Holder the Restricted Stock then subject to restrictions
under the Award Agreement immediately upon a Termination of Employment between
the Holder and the Company, at a cash price per share equal to the price paid by
the Holder for such Restricted Stock; provided, however, that, except with
respect to shares of Restricted Stock granted to Section 162(m) Participants,
the Committee in its sole and absolute discretion may provide that no such right
of repurchase shall exist in the event of a Termination of Employment without
cause or following any Change in Control of the Company or because of the
Holder's retirement, death or disability or otherwise.
7.6. Escrow. The Secretary of the Company or such other escrow holder as
the Committee may appoint shall retain physical custody of each certificate
representing Restricted Stock until all of the restrictions imposed under the
Award Agreement with respect to the shares evidenced by such certificate expire
or shall have been removed.
7.7. Legend. In order to enforce the restrictions imposed upon shares of
Restricted Stock hereunder, the Committee shall cause a legend or legends to be
placed on certificates representing all shares of Restricted Stock that are
still subject to restrictions under Award Agreements, which legend or legends
shall make appropriate reference to the conditions imposed thereby.
7.8. Section 83(b) Election. If a Holder makes an election under Section
83(b) of the Code, or any successor section thereto, to be taxed with respect to
the Restricted Stock as of the date of transfer of the Restricted Stock rather
than as of the date or dates upon which the Holder would otherwise be taxable
under Section 83(a) of the Code, the Holder shall deliver a copy of such
election to the Company immediately after filing such election with the Internal
Revenue Service.
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ARTICLE VIII.
PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS, DEFERRED STOCK, STOCK PAYMENTS
8.1. Eligibility. Subject to the Award Limit, one or more Performance
Awards, Dividend Equivalents, awards of Deferred Stock, and/or Stock Payments
may be granted to any Employee whom the Committee determines is a key Employee
and who should receive such an Award.
8.2. Performance Awards. Any key Employee selected by the Committee may be
granted one or more Performance Awards. The value of such Performance Awards may
be linked to any one or more of the Performance Criteria or other specific
performance criteria determined appropriate by the Committee, in each case on a
specified date or dates or over any period or periods determined by the
Committee. In making such determinations, the Committee shall consider (among
such other factors as it deems relevant in light of the specific type of award)
the contributions, responsibilities and other compensation of the particular key
Employee.
8.3. Dividend Equivalents.
(a) Any key Employee selected by the Committee may be granted Dividend
Equivalents based on the dividends declared on Common Stock, to be credited
as of dividend payment dates, during the period between the date a Stock
Appreciation Right, Deferred Stock or Performance Award is granted, and the
date such Stock Appreciation Right, Deferred Stock or Performance Award is
exercised, vests or expires, as determined by the Committee. Such Dividend
Equivalents shall be converted to cash or additional shares of Common Stock
by such formula and at such time and subject to such limitations as may be
determined by the Committee.
(b) Any Holder of an Option may be granted Dividend Equivalents based
on the dividends declared on Common Stock, to be credited as of dividend
payment dates, during the period between the date an Option is granted, and
the date such Option is exercised, vests or expires, as determined by the
Committee. Such Dividend Equivalents shall be converted to cash or
additional shares of Common Stock by such formula and at such time and
subject to such limitations as may be determined by the Committee.
(d) Dividend Equivalents granted with respect to Options intended to
be qualified performance-based compensation for purposes of Section 162(m)
of the Code shall be payable, with respect to pre-exercise periods,
regardless of whether such Option is subsequently exercised. Stock
Payments.
8.4. Stock Payments Any key Employee selected by the Committee may receive
Stock Payments in the manner determined from time to time by the Committee. The
number of shares shall be determined by the Committee and may be based upon the
Performance Criteria or other specific performance criteria determined
appropriate by the Committee, determined on the date such Stock Payment is made
or on any date thereafter.
8.5. Deferred Stock. Any key Employee selected by the Committee may be
granted an award of Deferred Stock in the manner determined from time to time by
the Committee. The number of shares of Deferred Stock shall be determined by the
Committee and may be linked to the Performance Criteria or other specific
performance criteria determined to be appropriate by the Committee, in each case
on a specified date or dates or over any period or periods determined by the
Committee. Common Stock underlying a Deferred Stock award will not be issued
until the Deferred Stock award has vested, pursuant to a vesting schedule or
performance criteria set by the Committee. Unless otherwise provided by the
Committee, a Holder of Deferred Stock shall have no rights as a Company
stockholder with respect to such Deferred Stock until such time as the Award has
vested and the Common Stock underlying the Award has been issued.
8.6. Term. The term of a Performance Award, Dividend Equivalent, award of
Deferred Stock and/or Stock Payment shall be set by the Committee in its
discretion.
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8.7. Exercise or Purchase Price. The Committee may establish the exercise
or purchase price of a Performance Award, shares of Deferred Stock, or shares
received as a Stock Payment; provided, however, that such price shall not be
less than the par value for a share of Common Stock, unless otherwise permitted
by applicable state law.
8.8. Exercise Upon Termination of Employment. A Performance Award, Dividend
Equivalent, award of Deferred Stock and/or Stock Payment is exercisable or
payable only while the Holder is an Employee; provided, however, that except
with respect to Performance Awards granted to Section 162(m) Participants, that
the Administrator in its sole and absolute discretion may provide that the
Performance Award, Dividend Equivalent, award of Deferred Stock and/or Stock
Payment may be exercised or paid subsequent to a Termination of Employment
without cause, or following a Change in Control of the Company, or because of
the Holder's retirement, death or disability, or otherwise.
8.9. Form of Payment. Payment of the amount determined under Section 8.2 or
8.3 above shall be in cash, in Common Stock or a combination of both, as
determined by the Committee. To the extent any payment under this Article VIII
is effected in Common Stock, it shall be made subject to satisfaction of all
provisions of Section 6.3.
ARTICLE IX.
STOCK APPRECIATION RIGHTS
9.1. Grant of Stock Appreciation Rights. A Stock Appreciation Right may be
granted to any key Employee selected by the Committee. A Stock Appreciation
Right may be granted (a) in connection and simultaneously with the grant of an
Option, (b) with respect to a previously granted Option, or (c) independent of
an Option. A Stock Appreciation Right shall be subject to such terms and
conditions not inconsistent with the Plan as the Committee shall impose and
shall be evidenced by an Award Agreement.
9.2. Coupled Stock Appreciation Rights.
(a) A Coupled Stock Appreciation Right ("CSAR") shall be related to a
particular Option and shall be exercisable only when and to the extent the
related Option is exercisable.
(b) A CSAR may be granted for no more than the number of shares
subject to the simultaneously or previously granted Option to which it is
coupled.
(c) A CSAR shall entitle the Holder (or other person entitled to
exercise the Option pursuant to the Plan) to surrender to the Company
unexercised a portion of the Option to which the CSAR relates (to the
extent then exercisable pursuant to its terms) and to receive from the
Company in exchange therefor an amount determined by multiplying the
difference obtained by subtracting the Option exercise price from the Fair
Market Value of a share of Common Stock on the date of exercise of the CSAR
by the number of shares of Common Stock with respect to which the CSAR
shall have been exercised, subject to any limitations the Committee may
impose.
9.3. Independent Stock Appreciation Rights.
(a) An Independent Stock Appreciation Right ("ISAR") shall be
unrelated to any Option and shall have a term set by the Committee. An ISAR
shall be exercisable in such installments as the Committee may determine.
An ISAR shall cover such number of shares of Common Stock as the Committee
may determine; provided, however, that unless the Committee otherwise
provides in the terms of the ISAR or otherwise, no ISAR granted to a person
subject to Section 16 of the Exchange Act shall be exercisable until at
least six months have elapsed from (but excluding) the date on which the
Option was granted. The exercise price per share of Common Stock subject to
each ISAR shall be set by the Committee. An ISAR is exercisable only while
the Holder is an Employee; provided that the Committee may determine that
the ISAR may be exercised
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subsequent to Termination of Employment without cause, or following a
Change in Control of the Company, or because of the Holder's retirement,
death or disability, or otherwise.
(b) An ISAR shall entitle the Holder (or other person entitled to
exercise the ISAR pursuant to the Plan) to exercise all or a specified
portion of the ISAR (to the extent then exercisable pursuant to its terms)
and to receive from the Company an amount determined by multiplying the
difference obtained by subtracting the exercise price per share of the ISAR
from the Fair Market Value of a share of Common Stock on the date of
exercise of the ISAR by the number of shares of Common Stock with respect
to which the ISAR shall have been exercised, subject to any limitations the
Committee may impose.
9.4. Payment and Limitations on Exercise.
(a) Payment of the amounts determined under Section 9.2(c) and
9.3(b) above shall be in cash, in Common Stock (based on its Fair Market
Value as of the date the Stock Appreciation Right is exercised) or a
combination of both, as determined by the Committee. To the extent such
payment is effected in Common Stock it shall be made subject to
satisfaction of all provisions of Section 6.3 above pertaining to Options.
(b) Holders of Stock Appreciation Rights may be required to comply
with any timing or other restrictions with respect to the settlement or
exercise of a Stock Appreciation Right, including a window-period
limitation, as may be imposed at the discretion of the Committee.
ARTICLE X.
ADMINISTRATION
10.1. Compensation Committee. The Compensation Committee (or another
committee or a subcommittee of the Board assuming the functions of the Committee
under the Plan) shall consist solely of two or more Independent Directors
appointed by and holding office at the pleasure of the Board, each of whom is
both a "non-employee director" as defined by Rule 16b-3 and an "outside
director" for purposes of Section 162(m) of the Code. Appointment of Committee
members shall be effective upon acceptance of appointment. Committee members may
resign at any time by delivering written notice to the Board. Vacancies in the
Committee may be filled by the Board.
10.2. Duties and Powers of Committee. It shall be the duty of the Committee
to conduct the general administration of the Plan in accordance with its
provisions. The Committee shall have the power to interpret the Plan and the
Award Agreements, and to adopt such rules for the administration,
interpretation, and application of the Plan as are consistent therewith, to
interpret, amend or revoke any such rules and to amend any Award Agreement
provided that the rights or obligations of the Holder of the Award that is the
subject of any such Award Agreement are not affected adversely. Any such grant
or award under the Plan need not be the same with respect to each Holder. Any
such interpretations and rules with respect to Incentive Stock Options shall be
consistent with the provisions of Section 422 of the Code. In its absolute
discretion, the Board may at any time and from time to time exercise any and all
rights and duties of the Committee under the Plan except with respect to matters
which under Rule 16b-3 or Section 162(m) of the Code, or any regulations or
rules issued thereunder, are required to be determined in the sole discretion of
the Committee.
10.3. Majority Rule; Unanimous Written Consent. The Committee shall act by
a majority of its members in attendance at a meeting at which a quorum is
present or by a memorandum or other written instrument signed by all members of
the Committee.
10.4. Compensation; Professional Assistance; Good Faith Actions. Members of
the Committee shall receive such compensation for their services as members as
may be determined by the Board. All expenses and liabilities which members of
the Committee incur in connection with the administration of the Plan shall be
borne by the Company. The Committee may, with the approval of the Board, employ
attorneys, consultants, accountants, appraisers, brokers, or other persons. The
Committee, the
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Company and the Company's officers and Directors shall be entitled to rely upon
the advice, opinions or valuations of any such persons. All actions taken and
all interpretations and determinations made by the Committee or the Board in
good faith shall be final and binding upon all Holders, the Company and all
other interested persons. No members of the Committee or Board shall be
personally liable for any action, determination or interpretation made in good
faith with respect to the Plan or Awards, and all members of the Committee and
the Board shall be fully protected by the Company in respect of any such action,
determination or interpretation.
10.5. Delegation of Authority to Grant Awards. The Committee may, but need
not, delegate from time to time some or all of its authority to grant Awards
under the Plan to a committee consisting of one or more members of the Committee
or of one or more officers of the Company; provided, however, that the Committee
may not delegate its authority to grant Awards to individuals (i) who are
subject on the date of the grant to the reporting rules under Section 16(a) of
the Exchange Act, (ii) who are Section 162(m) Participants or (iii) who are
officers of the Company who are delegated authority by the Committee hereunder.
Any delegation hereunder shall be subject to the restrictions and limits that
the Committee specifies at the time of such delegation of authority and may be
rescinded at any time by the Committee. At all times, any committee appointed
under this Section 10.5 shall serve in such capacity at the pleasure of the
Committee.
ARTICLE XI.
MISCELLANEOUS PROVISIONS
11.1. Not Transferable. No Award under the Plan may be sold, pledged,
assigned or transferred in any manner other than by will or the laws of descent
and distribution or, subject to the consent of the Administrator, pursuant to a
DRO, unless and until such Award has been exercised, or the shares underlying
such Award have been issued, and all restrictions applicable to such shares have
lapsed. No Award or interest or right therein shall be liable for the debts,
contracts or engagements of the Holder or his or her successors in interest or
shall be subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be voluntary
or involuntary or by operation of law by judgment, levy, attachment, garnishment
or any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect, except to
the extent that such disposition is permitted by the preceding sentence.
During the lifetime of the Holder, only he or she may exercise an Option or
other Award (or any portion thereof) granted to him or her under the Plan,
unless it has been disposed of with the consent of the Administrator pursuant to
a DRO. After the death of the Holder, any exercisable portion of an Option or
other Award may, prior to the time when such portion becomes unexercisable under
the Plan or the applicable Award Agreement, be exercised by his or her personal
representative or by any person empowered to do so under the deceased Holder's
will or under the then applicable laws of descent and distribution.
Notwithstanding the foregoing provisions of this Section 11.1, the
Administrator, in its sole discretion, may determine to grant to any Holder an
Award which, by its terms as set forth in the applicable Award Agreement, may be
transferred by the Holder, in writing and with prior written notice to the
Administrator, by gift, without the receipt of any consideration, to a member of
the Holder's immediate family, as defined in Rule 16a-1 under the Exchange Act,
or to a trust for the exclusive benefit of, or any other entity owned solely by,
such members, provided that an Award that has been so transferred shall continue
to be subject to all of the terms and conditions of the Award as applicable to
the original Holder, and the transferee shall execute any and all such documents
requested by the Administrator in connection with the transfer, including
without limitation to evidence the transfer and to satisfy any requirements for
an exemption for the transfer under applicable federal and state securities
laws.
11.2. Amendment, Suspension or Termination of the Plan. Except as otherwise
provided in this Section 11.2, the Plan may be wholly or partially amended or
otherwise modified, suspended or
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terminated at any time or from time to time by the Administrator. However,
without approval of the Company's stockholders given within twelve months before
or after the action by the Administrator, no action of the Administrator may,
except as provided in Section 11.3, increase the limits imposed in Section 2.1
on the maximum number of shares which may be issued under the Plan. No
amendment, suspension or termination of the Plan shall, without the consent of
the Holder, alter or impair any rights or obligations under any Award
theretofore granted or awarded, unless the Award itself otherwise expressly so
provides. No Awards may be granted or awarded during any period of suspension or
after termination of the Plan, and in no event may any Incentive Stock Option be
granted under the Plan after the first to occur of the following events:
(a) The expiration of ten years from the date the Plan is adopted by
the Board; or
(b) The expiration of ten years from the date the Plan is approved by
the Company's stockholders under Section 11.4.
11.3. Changes in Common Stock or Assets of the Company, Acquisition or
Liquidation of the Company and Other Corporate Events.
(a) Subject to Section 11.3(d), in the event that the Administrator
determines that any dividend or other distribution (whether in the form of
cash, Common Stock, other securities, or other property), recapitalization,
reclassification, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase, liquidation,
dissolution, or sale, transfer, exchange or other disposition of all or
substantially all of the assets of the Company, or exchange of Common Stock
or other securities of the Company, issuance of warrants or other rights to
purchase Common Stock or other securities of the Company, or other similar
corporate transaction or event, in the Administrator's sole discretion,
affects the Common Stock such that an adjustment is determined by the
Administrator to be appropriate in order to prevent dilution or enlargement
of the benefits or potential benefits intended to be made available under
the Plan or with respect to an Award, then the Administrator shall, in such
manner as it may deem equitable, adjust any or all of
(i) the number and kind of shares of Common Stock (or other
securities or property) with respect to which Awards may be granted or
awarded (including, but not limited to, adjustments of the limitations
in Section 2.1 on the maximum number and kind of shares which may be
issued and adjustments of the Award Limit),
(ii) the number and kind of shares of Common Stock (or other
securities or property) subject to outstanding Awards, and
(iii) the grant or exercise price with respect to any Award.
(b) Subject to Sections 11.3(b)(vii) and 11.3(d), in the event of any
transaction or event described in Section 11.3(a) or any unusual or
nonrecurring transactions or events affecting the Company, any affiliate of
the Company, or the financial statements of the Company or any affiliate,
or of changes in applicable laws, regulations, or accounting principles,
the Administrator, in its sole and absolute discretion, and on such terms
and conditions as it deems appropriate, either by the terms of the Award or
by action taken prior to the occurrence of such transaction or event and
either automatically or upon the Holder's request, is hereby authorized to
take any one or more of the following actions whenever the Administrator
determines that such action is appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made
available under the Plan or with respect to any Award under the Plan, to
facilitate such transactions or events or to give effect to such changes in
laws, regulations or principles:
(i) To provide for either the purchase of any such Award for an
amount of cash equal to the amount that could have been attained upon
the exercise of such Award or realization of the Holder's rights had
such Award been currently exercisable or payable or fully vested or
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the replacement of such Award with other rights or property selected by
the Administrator in its sole discretion;
(ii) To provide that the Award cannot vest, be exercised or become
payable after such event;
(iii) To provide that such Award shall be exercisable as to all
shares covered thereby, notwithstanding anything to the contrary in
Section 5.3 or 5.4 or the provisions of such Award;
(iv) To provide that such Award be assumed by the successor or
survivor corporation, or a parent or subsidiary thereof, or shall be
substituted for by similar options, rights or awards covering the stock
of the successor or survivor corporation, or a parent or subsidiary
thereof, with appropriate adjustments as to the number and kind of
shares and prices; and
(v) To make adjustments in the number and type of shares of Common
Stock (or other securities or property) subject to outstanding Awards,
and in the number and kind of outstanding Restricted Stock or Deferred
Stock and/or in the terms and conditions of (including the grant or
exercise price), and the criteria included in, outstanding options,
rights and awards and options, rights and awards which may be granted in
the future.
(vi) To provide that, for a specified period of time prior to such
event, the restrictions imposed under an Award Agreement upon some or
all shares of Restricted Stock or Deferred Stock may be terminated, and,
in the case of Restricted Stock, some or all shares of such Restricted
Stock may cease to be subject to repurchase under Section 7.5 or
forfeiture under Section 7.4 after such event.
(vii) Notwithstanding any other provision of the Plan, in the event
of a Change in Control, each outstanding Award shall, immediately prior
to the effective date of the Change in Control, automatically become
fully exercisable for all of the shares of Common Stock at the time
subject to such rights and may be exercised for any or all of those
shares as fully vested shares of Common Stock.
(viii) In the event of any transaction described in
Section 11.3(a), each outstanding Award shall, immediately prior to the
effective date of such transaction, automatically become fully
exercisable for all of the shares of Common Stock at the time subject to
such rights or fully vested, as applicable, and may be exercised for any
or all of those shares as fully-vested shares of Common Stock. However,
an outstanding right shall not so accelerate if and to the extent:
(i) such right is, in connection with such transaction, either to be
assumed by the successor or survivor corporation (or parent thereof) or
to be replaced with a comparable right with respect to shares of the
capital stock of the successor or survivor corporation (or parent
thereof) or (ii) the acceleration of exercisability of such right is
subject to other limitations imposed by the Administrator at the time of
grant. The determination of comparability of rights under clause
(i) above shall be made by the Administrator, and its determination
shall be final, binding and conclusive.
(c) Subject to Sections 11.3(d), 3.2 and 3.3, the Administrator may,
in its discretion, include such further provisions and limitations in any
Award, agreement or certificate, as it may deem equitable and in the best
interests of the Company.
(d) With respect to Awards which are granted to Section 162(m)
Participants and are intended to qualify as performance-based compensation
under Section 162(m)(4)(C), no adjustment or action described in this
Section 11.3 or in any other provision of the Plan shall be authorized to
the extent that such adjustment or action would cause such Award to fail to
so qualify under Section 162(m)(4)(C), or any successor provisions thereto.
No adjustment or action described in this Section 11.3 or in any other
provision of the Plan shall be authorized to the extent that such
adjustment or action would cause the Plan to violate Section 422(b)(1) of
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the Code. Furthermore, no such adjustment or action shall be authorized to
the extent such adjustment or action would result in short-swing profits
liability under Section 16 or violate the exemptive conditions of
Rule 16b-3 unless the Administrator determines that the Award is not to
comply with such exemptive conditions. The number of shares of Common Stock
subject to any Award shall always be rounded to the next whole number.
(e) Notwithstanding the foregoing, in the event that the Company
becomes a party to a transaction that is intended to qualify for "pooling
of interests" accounting treatment and, but for one or more of the
provisions of this Plan or any Award Agreement, would so qualify, then this
Plan and any Award Agreement shall be interpreted so as to preserve such
accounting treatment, and to the extent that any provision of the Plan or
any Award Agreement would disqualify the transaction from pooling of
interests accounting treatment (including, if applicable, an entire Award
Agreement), then such provision shall be null and void. All determinations
to be made in connection with the preceding sentence shall be made by the
independent accounting firm whose opinion with respect to "pooling of
interests" treatment is required as a condition to the Company's
consummation of such transaction.
(f) The existence of the Plan, the Award Agreement and the Awards
granted hereunder shall not affect or restrict in any way the right or
power of the Company or the shareholders of the Company to make or
authorize any adjustment, recapitalization, reorganization or other change
in the Company's capital structure or its business, any merger or
consolidation of the Company, any issue of stock or of options, warrants or
rights to purchase stock or of bonds, debentures, preferred or prior
preference stocks whose rights are superior to or affect the Common Stock
or the rights thereof or which are convertible into or exchangeable for
Common Stock, or the dissolution or liquidation of the Company, or any sale
or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or otherwise.
11.4. Approval of Plan by Stockholders. The Plan will be submitted for the
approval of the Company's stockholders within twelve months after the date of
the Board's initial adoption of the Plan. Awards may be granted or awarded prior
to such stockholder approval, provided that such Awards shall not be exercisable
nor shall such Awards vest prior to the time when the Plan is approved by the
stockholders, and provided further that if such approval has not been obtained
at the end of said twelve-month period, all Awards previously granted or awarded
under the Plan shall thereupon be canceled and become null and void. In
addition, if the Board determines that Awards other than Options or Stock
Appreciation Rights which may be granted to Section 162(m) Participants should
continue to be eligible to qualify as performance-based compensation under
Section 162(m)(4)(C) of the Code, the Performance Criteria must be disclosed to
and approved by the Company's stockholders no later than the first stockholder
meeting that occurs in the fifth year following the year in which the Company's
stockholders previously approved the Performance Criteria.
11.5. Tax Withholding. The Company shall be entitled to require payment in
cash or deduction from other compensation payable to each Holder of any sums
required by federal, state or local tax law to be withheld with respect to the
issuance, vesting, exercise or payment of any Award. The Administrator may in
its discretion and in satisfaction of the foregoing requirement allow such
Holder to elect to have the Company withhold shares of Common Stock otherwise
issuable under such Award (or allow the return of shares of Common Stock) having
a Fair Market Value equal to the sums required to be withheld.
11.6. Loans. The Committee may, in its discretion, extend one or more loans
to key Employees in connection with the exercise or receipt of an Award granted
or awarded under the Plan, or the issuance of Restricted Stock or Deferred Stock
awarded under the Plan. The terms and conditions of any such loan shall be set
by the Committee.
11.7. Forfeiture Provisions. Pursuant to its general authority to determine
the terms and conditions applicable to Awards under the Plan, the Administrator
shall have the right to provide, in the
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terms of Awards made under the Plan, or to require a Holder to agree by separate
written instrument, that (a) (i) any proceeds, gains or other economic benefit
actually or constructively received by the Holder upon any receipt or exercise
of the Award, or upon the receipt or resale of any Common Stock underlying the
Award, must be paid to the Company, and (ii) the Award shall terminate and any
unexercised portion of the Award (whether or not vested) shall be forfeited, if
(b)(i) a Termination of Employment occurs prior to a specified date, or within a
specified time period following receipt or exercise of the Award, or (ii) the
Holder at any time, or during a specified time period, engages in any activity
in competition with the Company, or which is inimical, contrary or harmful to
the interests of the Company, as further defined by the Administrator or (iii)
the Holder incurs a Termination of Employment for cause.
11.8. Effect of Plan Upon Options and Compensation Plans. The adoption of
the Plan shall not affect any other compensation or incentive plans in effect
for the Company or any Subsidiary. Nothing in the Plan shall be construed to
limit the right of the Company (a) to establish any other forms of incentives or
compensation for Employees of the Company or any Subsidiary or (b) to grant or
assume options or other rights or awards otherwise than under the Plan in
connection with any proper corporate purpose including, but not by way of
limitation, the grant or assumption of options in connection with the
acquisition by purchase, lease, merger, consolidation or otherwise, of the
business, stock or assets of any corporation, partnership, limited liability
company, firm or association.
11.9. Compliance with Laws. The Plan, the granting and vesting of Awards
under the Plan and the issuance and delivery of shares of Common Stock and the
payment of money under the Plan or under Awards granted or awarded hereunder are
subject to compliance with all applicable federal and state laws, rules and
regulations (including but not limited to state and federal securities law and
federal margin requirements) and to such approvals by any listing, regulatory or
governmental authority as may, in the opinion of counsel for the Company, be
necessary or advisable in connection therewith. Any securities delivered under
the Plan shall be subject to such restrictions, and the person acquiring such
securities shall, if requested by the Company, provide such assurances and
representations to the Company as the Company may deem necessary or desirable to
assure compliance with all applicable legal requirements. To the extent
permitted by applicable law, the Plan and Awards granted or awarded hereunder
shall be deemed amended to the extent necessary to conform to such laws, rules
and regulations.
11.10. Titles. Titles are provided herein for convenience only and are not
to serve as a basis for interpretation or construction of the Plan.
11.11. Governing Law. The Plan and any agreements hereunder shall be
administered, interpreted and enforced under the internal laws of the State of
Delaware without regard to conflicts of laws thereof.
* * *
I hereby certify that the foregoing Plan was duly adopted by the Board of
Directors of Libbey, Inc. on March 27, 1999.
Executed on this 31st day of March, 1999.
Arthur H. Smith
--------------------------------------
Secretary
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<TABLE>
<S> <C> <C> <C>
1. Election of Directors FOR all nominees [ ] WITHOLD AUTHORITY to vote [ ] EXCEPTIONS [ ]
listed below for all nominees listed below
The nominees for the board of directors are: William A. Foley and Terence P. Stewart
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark the "Exceptions" box and write that
nominee's name in the space provided below.)
*Exceptions _____________________________________________________________________________________________________
To vote your shares for all Director nominees, mark "For" box on Item 1. To
withhold voting for all nominees mark "Withhold" box. If you do not wish
your shares voted for a particular nominee, enter the name(s) of the
exception(s) in the space provided above.
2. Proposal to approve The 1999 Equity Participation Plan of Libbey Inc.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before
the meeting or any adjournment thereof.
Address Change and
or Comments Mark Here [ ]
The form must be signed exactly as name(s) appear
hereon. Attorneys-in-fact, executors, trustees,
guardians, corporate officers, etc. should give
full title.
Dated: _____________________________________, 1999
---------------------------------------------------
Signature
---------------------------------------------------
Signature
SIGN, DATE AND RETURN THE PROXY CARD IN THE ENCLOSED ENVELOPE. VOTES MUST BE INDICATED
(X) IN BLACK OR BLUE INK. [ ]
</TABLE>
- --------------------------------------------------------------------------------
LIBBEY INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints each of John F. Meier, Richard I.
Reynolds, Arthur H. Smith and Kenneth G. Wilkes, as proxy, with full power of
substitution, to vote all shares of Common Stock of Libbey Inc. held of record
by the undersigned on March 18, 1999, at the Annual Meeting of Stockholders to
be held on May 6, 1999, and at any adjournment thereof, upon the matters
referred to on the reverse side and described in the proxy statement furnished
herewith, and in their discretion, upon any other matters which may properly
come before the meeting. IF NO DIRECTIONS ARE GIVEN, THE PROXIES WILL VOTE FOR
THE ELECTION OF ALL LISTED DIRECTOR NOMINEES, FOR APPROVAL OF THE 1999 EQUITY
PARTICIPATION PLAN OF LIBBEY INC. AND IN THE PROXIES' DISCRETION ON ANY OTHER
MATTER THAT MAY PROPERLY COME BEFORE THE MEETING.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF ALL LISTED
DIRECTOR NOMINEES AND FOR APPROVAL OF THE 1999 EQUITY PARTICIPATION PLAN OF
LIBBEY INC.
Please sign on the reverse side of this card and return it promptly in
the enclosed return envelope.
(Continued, and please sign on reverse side)
LIBBEY INC.
P.O. Box 11035
NEW YORK, NY 10203-0035
