<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 1999
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
For the transition period from....................to....................
Commission file number 0-23312
HELEN OF TROY LIMITED
(Exact name of registrant as specified in its charter)
Bermuda 74-2692550
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Helen of Troy Plaza
El Paso, TX 79912
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (915) 225-8000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No___
As of September 30, 1999 there were 29,287,357 shares of Common Stock,
$.10 Par Value, outstanding.
<PAGE> 2
HELEN OF TROY LIMITED AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page No.
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1 Consolidated Condensed Balance
Sheets as of August 31, 1999 (unaudited) and
February 28, 1999..........................................3
Consolidated Condensed Statements
of Income (unaudited) for the Three and Six
Months Ended August 31, 1999 and
August 31, 1998............................................5
Consolidated Condensed Statements
of Cash Flows (unaudited) for the Six Months
Ended August 31, 1999 and
August 31, 1998............................................6
Notes to Consolidated Condensed
Financial Statements (unaudited)...........................7
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................................9
PART II. OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security Holders............14
Item 6 Exhibits and Reports on Form 8-K...............................15
SIGNATURES......................................................................16
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
HELEN OF TROY LIMITED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands, except shares)
<TABLE>
<CAPTION>
August 31, February 28,
1999 1999
------------ ------------
(unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 18,669 $ 33,691
Marketable securities, at market value 16,790 --
Receivables, principally trade, less allowance for
doubtful receivables of $465 at August 31, 1999 and $1,756
at February 28, 1999 67,076 59,799
Inventories 94,859 90,288
Prepaid expenses 2,549 2,048
Deferred income tax benefits 4,131 3,858
------------ ------------
Total current assets 204,074 189,684
Property and equipment, net of accumulated depreciation of $7,430 at August 31,
1999 and $6,905 at February 28, 1999
46,633 42,464
Goodwill, net of accumulated amortization of $3,150 at
August 31, 1999 and $2,224 at February 28, 1999 39,739 39,052
License agreements, at cost less accumulated amortization of $9,593 at August
31, 1999 and $9,085 at February 28, 1999
7,459 7,967
Other assets, net of accumulated amortization 16,936 14,869
------------ ------------
$ 314,841 $ 294,036
============ ============
</TABLE>
(Continued)
3
<PAGE> 4
HELEN OF TROY LIMITED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands, except shares)
<TABLE>
<CAPTION>
August 31, February 28,
1999 1999
------------ ------------
(unaudited)
<S> <C> <C>
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable to banks $ 10,000 $ 10,000
Accounts payable, principally trade 3,459 1,592
Accrued expenses:
Advertising and promotional 5,838 4,935
Other 10,677 8,563
Income taxes payable 15,371 13,654
------------ ------------
Total current liabilities 45,345 38,744
Long-term debt 55,450 55,450
------------ ------------
Total liabilities 100,795 94,194
Stockholders' equity:
Preference shares, non-voting, $1.00 par value. Authorized
2,000,000 shares; none issued -- --
Common stock, $.10 par value. Authorized 50,000,000 shares;
29,132,813 and 29,047,332 shares issued and outstanding at August
31, 1999 and February 28, 1999, respectively 2,913 2,905
Additional paid-in capital 53,959 53,750
Retained earnings 157,174 143,187
------------ ------------
Total stockholders' equity 214,046 199,842
------------ ------------
Commitments and contingencies
$ 314,841 $ 294,036
============ ============
</TABLE>
See accompanying notes to consolidated condensed financial statements.
4
<PAGE> 5
HELEN OF TROY LIMITED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(unaudited)
(in thousands, except shares and earnings per share)
<TABLE>
<CAPTION>
Three months ended Six months ended
August 31, August 31,
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 71,520 $ 72,162 $ 143,708 $ 136,298
Cost of sales 44,525 43,467 87,764 82,614
------------ ------------ ------------ ------------
Gross profit 26,995 28,695 55,944 53,684
Selling, general and administrative expenses 23,266 19,016 44,831 37,812
------------ ------------ ------------ ------------
Operating income 3,729 9,679 11,113 15,872
Other income (expense):
Interest expense (844) (852) (1,380) (1,764)
Other income (net) 5,944 603 6,403 1,367
------------ ------------ ------------ ------------
Total other income (expense) 5,100 (249) 5,023 (397)
------------ ------------ ------------ ------------
Earnings before income taxes 8,829 9,430 16,136 15,475
Income tax expense (benefit):
Current 733 2,136 2,220 3,534
Deferred (44) (250) (70) (439)
------------ ------------ ------------ ------------
Net earnings $ 8,140 $ 7,544 $ 13,986 $ 12,380
============ ============ ============ ============
Earnings per share:
Basic $ .28 $ .27 $ .48 $ .45
Diluted .27 .26 .46 .42
Weighted average number of shares used in
computing earnings per share:
Basic 29,082,717 27,880,371 29,065,592 27,713,194
Diluted 30,353,589 29,416,613 30,142,326 29,273,890
</TABLE>
See accompanying notes to consolidated condensed financial statements.
5
<PAGE> 6
HELEN OF TROY LIMITED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
<TABLE>
<CAPTION>
Six months ended August 31,
1999 1998
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 13,986 $ 12,380
Adjustments to reconcile net income to cash provided (used) by
operating activities
Depreciation and amortization 3,078 2,190
Provision for doubtful receivables 622 38
Deferred taxes, net (70) (439)
Realized gain - trading securities (1,183) --
Unrealized gain - trading securities (4,363) --
Changes in operating assets and liabilities:
Accounts receivable (8,405) (12,050)
Marketable securities (11,244) --
Inventory (5,100) (28,493)
Prepaid expenses (594) (4,033)
Accounts payable 1,867 (555)
Accrued expenses 1,738 3,957
Income taxes payable 1,717 4,565
---------- ----------
Net cash used by operating activities (7,951) (22,440)
Cash flows from investing activities:
Capital and license expenditures (5,501) (7,838)
Other assets (2,130) (5,144)
---------- ----------
Net cash used by investing activities (7,631) (12,982)
Cash flows from financing activities:
Net borrowings on revolving line of credit -- 10,000
Payment of payroll tax and income tax withholding
associated with stock options exercised -- (6,669)
Exercise of stock options 560 871
---------- ----------
Net cash provided by financing activities 560 4,202
Net (decrease) in cash equivalents (15,022) (31,220)
Cash equivalents, beginning of period 33,691 55,670
---------- ----------
Cash equivalents, end of period $ 18,669 $ 24,450
========== ==========
Supplemental cash flow disclosures:
Interest paid $ 2,036 $ 1,964
Income taxes paid, net of refunds 498 --
</TABLE>
See accompanying notes to consolidated condensed financial statements.
6
<PAGE> 7
HELEN OF TROY LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
August 31, 1999
Note 1 - In the opinion of the Company, the accompanying consolidated
condensed financial statements contain all adjustments
(consisting of only normal recurring adjustments) necessary to
present fairly its financial condition as of August 31, 1999
and February 28, 1999 and the results of its operations for
the three-month and six-month periods ended August 31, 1999
and 1998. While the Company believes that the disclosures
presented are adequate to make the information not misleading,
these statements should be read in conjunction with the
financial statements and the notes included in the Company's
latest annual report on Form 10-K.
Certain reclassifications were made to information for the
three months and the six months ended August 31, 1998 in order
to conform to the presentation for the three months and the
six months ended August 31, 1999.
Note 2 - The Company is involved in various claims and legal actions
arising in the ordinary course of business. In the opinion of
management, the ultimate disposition of such claims and legal
actions will not have a material adverse effect on the
financial position, results of operations, or liquidity of the
Company.
Note 3 - Basic earnings per share is computed based upon the weighted
average number of common shares outstanding during the period.
Diluted earnings per share is computed based upon the weighted
average number of common shares plus the effects of dilutive
securities. The number of dilutive securities was 1,270,872
and 1,536,242, respectively, for the three months ended August
31, 1999 and 1998, and 1,076,734 and 1,560,696, respectively,
for the six months ended August 31, 1999 and 1998. Dilutive
securities for the three months ended August 31, 1999
consisted of 1,129,644 dilutive stock options and 141,228
shares contingently issuable as part of an acquisition that
occurred in October 1998. Dilutive securities for the six
months ended August 31, 1999 consisted of 960,647 dilutive
stock options and 116,087 shares of common stock contingently
issuable as part of the acquisition that occurred in October
1998. All dilutive securities for the three- and six-month
periods ended August 31, 1998 were comprised of dilutive stock
options. All potentially dilutive securities are included in
the calculations of diluted earnings per share. For the six
and three months ended August 31, 1999 and 1998, options to
purchase 1,418,175 and 12,875 and 530,000 and 19,750 shares of
common stock, respectively, were outstanding, but were not
included in the computation of earnings per share because the
exercise prices of such options were greater than the average
market price of the common shares.
7
<PAGE> 8
Note 4 - Marketable securities consist of shares of common stock of
several publicly traded companies and are stated at market
value, as determined by the most recent trading price of each
security as of the balance sheet date. Management determines
the appropriate classification of the Company's investments
when those investments are purchased and reevaluates those
determinations at each balance sheet date. At August 31, 1999,
the Company held its investments in equity securities of
unaffiliated companies for the purpose of trading them in the
near term (see Management's Discussion and Analysis of
Financial Condition and Results of Operations - Information
relating to forward looking statements). Therefore, all
investments in equity securities are classified as trading
securities, with all unrealized gains and losses attributable
to such securities included in earnings. Included in the
heading "other income" on the Consolidated Condensed
Statements of Income for the three months and the six months
ended August 31, 1999 are $1,183,000 in net realized gains
from sales of trading securities. Net unrealized gains of
$4,363,000 were recognized on trading securities held by the
Company at the balance sheet date based on the differences
between the market values of such securities and the amounts
that the Company paid for them. The net unrealized gains on
marketable securities are also included in "other income" on
the Condensed Consolidated Statements of Income for the
periods ended August 31, 1999.
Note 5 - Helen of Troy Limited holds the consolidated group's
investments in trading securities and is not subject to any
capital gains tax or other tax on the sale of equity
securities. Therefore, no income tax expense was recognized on
$5,380,000 of the $5,546,000 of income reported on sales and
appreciation of trading securities during the three-month and
six-month periods ended August 31, 1999. The remaining
$166,000 of income from securities was recognized by a U.S.
subsidiary of Helen of Troy Limited.
Note 6 - On September 29, 1999, the Company's Board of Directors
approved a resolution authorizing the Company to purchase, in
open market or private transactions, up to 3,000,000 shares of
its common stock over a period extending to September 29,
2002.
8
<PAGE> 9
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Quarter ended August 31, 1999
Net second quarter sales decreased $642,000, or 0.9%, to $71,520,000 for the
three months ended August 31, 1999, compared to $72,162,000 for the three months
ended August 31, 1998. The sales decrease occurred, in part, because of lower
sales to some of the Company's largest retail customers. The Company believes
that some of these customers are attempting to carry lower levels of inventory
than in the past. Sales growth attributable to product lines acquired or
developed internally within the twelve months prior to August 31, 1999, combined
with higher international sales, partially offset the domestic sales decreases
in certain of the Company's product lines.
Gross profit as a percentage of sales decreased to 37.7% for the quarter ended
August 31, 1999, from 39.8% for the quarter ended August 31, 1998. Higher than
expected levels of customer returns contributed to the decrease in gross profit
as a percentage of sales. Changes in the mix of products sold also accounted for
some of that decrease.
Selling, general and administrative expenses as a percentage of sales increased
to 32.5% for the three months ended August 31, 1999, compared to 26.4% for the
three months ended August 31, 1998. The increase in selling, general and
administrative expenses as a percentage of sales was partially attributable to
$1,320,000 in customer chargebacks. Some of the additional expenses associated
with the chargebacks are related to warehousing issues that occurred in
connection with the Company's assumption of warehouse operations at its El Paso,
Texas distribution center. In January 1999 the Company assumed operation of that
distribution center from a third party contractor. The Company will initiate
measures that it expects to correct the issues at the El Paso facility.
Increased cooperative advertising expenses of $1,400,000 also contributed to the
increase in selling, general and administrative expenses as a percentage of
sales.
During the three months ended August 31, 1999, the Company recorded $1,183,000
in net realized gains from the sale of trading securities and net unrealized
gains of $4,363,000 on equity securities held by the Company at August 31, 1999.
These gains are included in "other income" on the Condensed Consolidated
Statements of Income. The unrealized gains were based on the differences between
the market values of the marketable securities at August 31, 1999 and the
Company's original costs. The Company's marketable securities consist of shares
of common stock of several publicly traded companies and are stated at market
value, as determined by the most recent trading price of each security as of the
balance sheet date. Management determines the appropriate classification of the
Company's investments when those investments are purchased and reevaluates those
determinations at each balance sheet date. At August 31, 1999, the Company held
all of its investments in equity securities of unaffiliated companies for the
purpose of trading them in the near term. Therefore, all investments in equity
securities are classified as trading securities, with all unrealized gains and
losses attributable to such securities included in earnings. The market risk
associated with investments in equity securities is summarized below in the
"Liquidity and Capital
9
<PAGE> 10
Resources" section.
The Company recorded income tax expense equal to 7.8% of pre-tax income for the
quarter ended August 31, 1999, compared to 20.0% for the quarter ended August
31, 1998. The lower tax rate for the three months ended August 31, 1999 is due
to the fact that no income tax expense was provided for most of the Company's
gains on its marketable securities. Helen of Troy Limited holds the consolidated
group's investments in marketable securities and is not subject to any capital
gains tax or other income tax on the sale of equity securities. Therefore, no
income tax expense was recognized on $5,380,000 of the $5,546,000 of income
reported on sales and appreciation of equity securities during the three-month
period ended August 31, 1999. The remaining $166,000 of income from securities
was recognized by a U.S. subsidiary of Helen of Troy Limited.
Six Months Ended August 31, 1999
Net sales for the six months ended August 31, 1999 increased $7,410,000, or
5.4%, when compared to the six months ended August 31, 1998. Increased
international sales and sales of hair brush, comb and hair care accessory
products that were added to the Company's product mix in the last year through
acquisition or internal development provided most of the sales increase for the
six-month period.
Gross profit as a percentage of sales decreased from 39.4% for the six months
ended August 31, 1998 to 38.9% for the six months ended August 31, 1999. Higher
than expected rates of customer returns lowered gross profit as a percentage of
sales in the six months ended August 31, 1999, as discussed in the section above
covering gross profit as a percentage of sales for the three-month period ended
August 31, 1999. A shift in the mix of products sold also negatively affected
gross profit.
Selling, general and administrative expenses as a percentage of sales increased
to 31.2% for the six months ended August 31, 1999, versus 27.7% for the six
months ended August 31, 1998, due in part to increased customer chargebacks and
cooperative advertising. Those increases are discussed above in the analysis of
selling, general and administrative expenses as a percentage of sales for the
three months ended August 31, 1999.
Interest expense decreased $384,000, or 21.8% for the six months ended August
31, 1999, compared to the same period the previous year. The decrease is
primarily due to higher levels of capitalized interest on the construction of
the Company's new headquarters during the six months ended August 31, 1999. As
the corporate headquarters construction progressed, the dollar amount of
construction in progress grew; thereby increasing capitalized interest for the
period. The Company discontinued the capitalization of interest when the new
headquarters building was placed in service.
For the six months ended August 31, 1999, the Company recorded $1,183,000 in
realized investment income and $4,363,000 in unrealized investment income. These
gains are included in "other income" on the Condensed Consolidated Statements of
Income. The Company's investments and investment income are discussed more fully
in the above section covering the results of operations for the three
10
<PAGE> 11
months ended August 31, 1999. The fact that most of this income was recognized
on investments held by Helen of Troy Limited, which is not subject to income tax
on such income, resulted in the decrease in the Company's effective tax rate
from 20.0% for the six-month period ending August 31, 1998, to 13.3% for the six
months ended August 31, 1999.
Liquidity and Capital Resources
The Company's working capital and current ratio were $158,729,000 and 4.5,
respectively, at August 31, 1999, compared to $150,940,000 and 4.9,
respectively, at February 28, 1999. The Company's cash balance decreased to
$18,669,000 at August 31, 1999, from $33,691,000 at February 28, 1999, due to
purchases of investment securities, increased accounts receivable and a slight
increase in inventory. The increase in accounts receivable is caused by seasonal
fluctuations and by slower payment patterns on the part of some of the Company's
customers. The Company's allowance for doubtful accounts receivable decreased
from $1,756,000 at February 28, 1999 to $465,000 at August 31, 1999, as the
Company wrote off the accounts of three customers who had financial difficulties
in late 1998 and early 1999. The $465,000 allowance at August 31, 1999 is
comparable to the Company's allowance for doubtful accounts receivable in the
recent past, while the $1,765,000 allowance at February 28, 1999 was unusually
high compared to the recent past. The increase in inventory is primarily
seasonal in nature.
The Company periodically invests or may invest in the certain equity securities.
Investing in equity securities entails certain market risks. Should the stock
price of any entity in which the Company has invested decline, the Company could
lose part or all of its investment in marketable equity securities.
The Company believes its capital resources are adequate to finance its short-
and long-term liquidity requirements.
Year 2000
The Company is continuing to assess its Year 2000 ("Y2K") readiness through
examining and updating its critical information technology ("IT") systems,
monitoring the Y2K readiness of its business partners and formulating
contingency plans. Management believes that the Company's non-IT systems are Y2K
compliant.
The Company's sales, accounts receivable, warehouse management, accounts
payable, general ledger, payroll and Electronic Data Interchange systems
comprise its critical information technology systems. The Company has assessed
its Y2K readiness with regard to critical IT systems. Based on internal
assessments and upon vendor representations, the Company believes that it will
complete all of the necessary actions to bring all of its critical IT systems
into Y2K compliance by November 1999.
Security, telephone and other systems that facilitate the operations of its
warehouses and corporate headquarters, as well as computer chips embedded in its
products comprise the Company's primary non-IT systems. The Company has
completed the updates necessary to bring these systems into Y2K compliance. The
computer chips embedded in the products sold by the Company are not date-
11
<PAGE> 12
sensitive and therefore pose no Y2K risk.
The Company has not incurred, nor does it expect to incur, any material expenses
in readying its computer applications for the Year 2000. The IT and non-IT
systems currently in place or expected to be in place on January 1, 2000 were
not purchased specifically, nor was their installation accelerated, because of
the Y2K issue.
The Company has substantially completed its analysis of its relationships with
its business partners. The Company has inquired with major customers as to their
Y2K compliance. Based on its assessment of customers' representations in their
reports to the Securities and Exchange Commission and their answers to the
Company's inquiries, the Company's management believes that its major customers
will be Y2K compliant. The Company has made inquiries of key suppliers and has
tested its computer links with key suppliers in the Far East for Y2K compliance.
Based on written responses to these inquiries and the results of its tests,
management does not believe that the Y2K issue will cause the Company to
experience any significant difficulties in obtaining products. The Company has
received communications from its key financial service providers indicating that
they are actively working to resolve their Y2K service issues. The Company has
made inquiries of its primary domestic utility service providers as to their Y2K
readiness. The responses received to date have not indicated that any of the
Company's primary domestic utility service providers expect any service
disruptions due to the Y2K issue, although the utilities have indicated that
they cannot provide complete assurance that no interruptions will occur. The
Company continues to monitor these service providers' Y2K readiness through
additional inquiries.
The Company believes that the remaining updates to its IT systems, the Y2K
readiness of its non-IT systems and its efforts to assess the Y2K compliance of
its trading partners should minimize the business difficulties encountered as a
result of the Y2K issue. However, the Company is in the process of formulating
contingency plans. Management expects that these contingency plans, when
formulated, will entail routine back-ups of files, printing hard copies of
reports from key systems prior to January 1, 2000, and completing key cash
payments that are due in early January 2000 on or before December 31, 1999.
There can be no guarantee that the Company or its trading and business partners
will not experience Y2K compliance difficulties. If the Company or its
significant trading and business partners experience Y2K compliance problems,
adverse business consequences could result. The Company believes that the most
likely negative effects, if any, could include disruptions in both shipments and
receipts of products, delays in the Company's receipt of payments from customers
and delays in the ability to pay certain suppliers.
Subsequent events
On September 29, 1999, the Company's Board of Directors approved a resolution
authorizing the Company to purchase, in open market or private transactions, up
to 3,000,000 shares of its common stock over the three-year period ending
September 29, 2002, if management determines that such actions would increase
shareholder value.
12
<PAGE> 13
Information relating to forward-looking statements
This report, some of the Company's press releases and some of the Company's
comments to the news media, contain certain forward-looking statements that are
based on management's current expectations with respect to future events or
financial performance. A number of risks or uncertainties could cause actual
results to differ materially from historical or anticipated results. Generally,
the words "anticipates," "believes," "expects" and other similar words identify
forward-looking statements. The Company cautions readers not to place undue
reliance on forward-looking statements. Forward-looking statements are subject
to risks that could cause such statements to differ materially from actual
results. Factors that could cause actual results to differ from those
anticipated include: (1) general industry conditions and competition, (2) credit
risks, (3) the Company's material reliance on individual customers or small
numbers of customers, (4) the Company's material reliance on certain trademarks,
(5) risks associated with inventory, including potential obsolescence, (6) risks
associated with operating in foreign jurisdictions, (7) worldwide and domestic
economic conditions, (8) the impact of current and future laws, including tax
laws and litigation, (9) uninsured losses, (10) reliance on computer systems,
(11) management's reliance on the representations of third parties, (12) risks
associated with newly acquired product lines and subsidiaries, (13) risks
associated with investments in equity securities, (14) risks associated with
management's strategies designed to remedy certain operational issues, (15)
technological issues associated with Year 2000 compliance efforts and (16) the
risks described from time to time in the Company's reports to the Securities and
Exchange Commission, including the Company's Annual Report on Form 10-K for the
year ended February 28, 1999.
13
<PAGE> 14
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting of Shareholders was held August 24, 1999, in El
Paso, Texas. At that meeting, the shareholders voted on the following proposals:
o Proposal 1. Election of Directors;
o Proposal 2. To consider approval of amendments to the Helen of Troy
Limited 1995 Non-Employee Director Stock Option Plan;
Proposal 1 was a proposal to elect the Nominating Committee's seven nominees for
the Board of Directors. Those nominees are each listed below in the summary of
the vote on Proposal 1. Proposal 2 was a proposal to amend the Helen of Troy
Limited 1995 Non-Employee Director Stock Option Plan to increase the number of
stock options granted to non-employee Directors from 4,000 annually to 4,000
quarterly and to allow any non-employee Director to transfer his or her stock
options to family members or to certain types of entities controlled by the
non-employee Director or by his or her family members.
With respect to Proposal 1, the Directors received the following votes:
<TABLE>
<CAPTION>
Broker
For Against Non-Votes
<S> <C> <C> <C>
Gerald J. Rubin 22,298,517 3,104,901 0
Gary B. Abromovitz 22,424,602 2,978,816 0
Stanlee N. Rubin 22,254,449 3,148,969 0
Christopher L. Carameros 22,296,104 3,107,314 0
Byron H. Rubin 22,274,854 3,128,564 0
Daniel C. Montano 21,941,136 3,462,282 0
H. McIntyre Gardner 22,298,987 3,104,431 0
</TABLE>
Proposal 2 received the following votes:
Proposal 2
<TABLE>
<CAPTION>
Broker
For Against Abstentions Non-Votes
<S> <C> <C> <C>
23,583,327 1,697,782 122,309 0
</TABLE>
14
<PAGE> 15
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.29 Form of Amended and Restated Employment Agreement Between
Helen of Troy Limited and Gerald J. Rubin, dated March 1, 1999
10.30 Amended and Restated Helen of Troy Limited 1995 Non-Employee
Director Stock Option Plan
27 Financial Data Schedule
15
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HELEN OF TROY LIMITED
(Registrant)
Date October 15, 1999 /s/ Gerald J. Rubin
---------------- -----------------------------------
Gerald J. Rubin
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)
Date October 15, 1999 /s/ Dona Fisher
---------------- -----------------------------------
Dona Fisher
Senior Vice-President, Finance,
and Chief Financial Officer
(Principal Financial Officer)
16
<PAGE> 17
INDEX TO EXHIBIT
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
10.29 Form of Amended and Restated Employment Agreement Between Helen of Troy
Limited and Gerald J. Rubin, dated March 1, 1999
10.30 Amended and Restated Helen of Troy Limited 1995 Non-Employee Director
Stock Option Plan
27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 10.29
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
BETWEEN
HELEN OF TROY LIMITED
AND
GERALD J. RUBIN
DATED MARCH 1, 1999
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Section 1. EMPLOYMENT.....................................................................................1
1.1 Employment.....................................................................................1
1.2 Duties.........................................................................................1
1.3 Term...........................................................................................2
Section 2. COMPENSATION...................................................................................2
2.1 Basic Compensation.............................................................................2
2.2 Incentive Compensation.........................................................................2
2.3 Reimbursement of Expenses......................................................................2
2.4 Vacation and Sick Leave........................................................................3
2.5 Election With Respect to Compensation..........................................................3
2.6 Automobile.....................................................................................4
2.7 Stock Options..................................................................................4
2.8 Other Perquisites..............................................................................4
2.9 Medical Care Reimbursement.....................................................................4
2.10 Life Insurance.................................................................................4
2.11 Disability Insurance...........................................................................5
2.12 Other Benefits.................................................................................5
Section 3. TERMINATION....................................................................................5
3.1 Termination....................................................................................5
3.2 Change in Control..............................................................................9
Section 4. PAYMENTS TO EXECUTIVE UPON TERMINATION........................................................11
4.1 Payments Upon Termination.....................................................................11
4.2 Certain Additional Payments by the Company....................................................15
4.3 No Mitigation; No Offset......................................................................16
4.4 Nature of Payments............................................................................16
Section 5. CONFIDENTIALITY...............................................................................16
5.1 Confidentiality and Disclosure................................................................16
5.2 Acknowledgement of Confidential Information...................................................16
Section 6. SOURCE OF PAYMENTS............................................................................17
Section 7. DECISIONS BY COMPANY..........................................................................17
Section 8. CONSOLIDATION, MERGER, SALE OF ASSETS.........................................................17
Section 9. NON-COMPETITION...............................................................................17
Section 10. COUNSEL FEES, INDEMNIFICATION AND INSURANCE...................................................18
10.1 Counsel Fees and Expenses.....................................................................18
10.2 Indemnification...............................................................................18
10.3 Insurance.....................................................................................19
10.4 Consistency with Charter Documents............................................................19
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Section 11. GENERAL.......................................................................................19
11.1 Effect of Prior Agreements....................................................................19
11.2 Nonassignability..............................................................................19
11.3 No Attachment.................................................................................19
11.4 Binding Agreement.............................................................................19
11.5 Amendment of Agreement........................................................................19
11.6 Waiver........................................................................................19
11.7 Severability..................................................................................20
11.8 Headings......................................................................................20
11.9 Governing Law.................................................................................20
11.10 No Right of Set Off...........................................................................20
11.11 Counterparts..................................................................................20
11.12 Survivorship..................................................................................20
11.13 Withholding...................................................................................20
11.14 Notices.......................................................................................20
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AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
BETWEEN
HELEN OF TROY LIMITED
AND
GERALD J. RUBIN
This Amended and Restated Employment Agreement is entered into this 1st
day of March, 1999 by and between Helen of Troy Limited, a Bermuda company (the
"Company"), and Gerald J. Rubin ("Executive").
Whereas, Executive presently serves as a Director and as Chairman of
the Board and Chief Executive Officer of the Company; and
Whereas, the Company and Executive previously entered into an
employment agreement dated as of March 1, 1995 (the "Prior Agreement"); and
Whereas, the Company and Executive desire to amend and restate the
Prior Agreement as hereinafter provided; and
Whereas, the Company wishes to assure itself of the services of
Executive for the period provided in this Agreement, and Executive is willing to
serve in the employ of the Company for such period, upon the terms and
conditions hereinafter provided.
Now, therefore, in consideration of the mutual covenants herein
contained, the parties hereto hereby agree as follows:
SECTION 1. EMPLOYMENT
1.1 EMPLOYMENT. The Company shall employ Executive, and Executive shall
serve, as the Chairman of the Board and Chief Executive Officer of the Company
during the term of employment set forth in Section 1.3 of this Agreement. The
Company shall use its best efforts to cause Executive to be included among
management's nominees for election to its Board of Directors and to have him
elected by its Board of Directors as the Chairman of the Board and Chief
Executive Officer of the Company.
1.2 DUTIES. Executive shall during the term of his employment
hereunder, subject to the control of the Board of Directors of the Company, have
the executive powers of the Chief Executive Officer and shall chair the meetings
of the Board of Directors and exercise active management and supervision over
the business and affairs of the Company and its several officers and shall
perform such executive and/or administrative duties consistent with the office
of Chairman of the Board and Chief Executive Officer as from time to time may be
assigned to him by the Board of Directors. His powers and authority shall be
superior to those of any other officer or employee of the Company.
During the period of his employment hereunder and except for illness,
reasonable vacation periods and reasonable leaves of absence, Executive shall
devote such of his business time, attention, skill and efforts as is necessary
to the faithful performance of his duties hereunder; provided, however,
Executive may continue to pursue his personal investments and serve as General
Partner of River Oaks Properties, Limited and serve as a general partner,
officer or director of any other personally or family owned or controlled
partnerships or corporations.
All duties of Executive under this Agreement shall be performable in El
Paso, Texas, subject however to reasonable travel requirements in connection
therewith, not in excess of the business travel heretofore customarily required
of Executive in his capacity as Chief Executive Officer of the Company.
1.3 TERM. The term of this Agreement shall commence on March 1, 1999
and shall continue for a period of five (5) years. On a daily basis, the term of
this Agreement shall be automatically extended by one additional day unless
Executive's employment hereunder shall have terminated pursuant to Section 3.
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SECTION 2. COMPENSATION
2.1 BASIC COMPENSATION.
The Company shall pay to Executive $600,000 as basic compensation for
the Company's fiscal year commencing March 1, 1999. For all future fiscal years
during the term of this Agreement as provided by Section 1.3, Executive's basic
compensation shall be as set by the Board of Directors of the Company (the
"Board") on the recommendation of the Stock Option and Compensation Committee of
the Company (or such other committee as may be appointed by such Board of
Directors from time to time) (the "Committee"), but in no event to be less than
$600,000. Executive's basic compensation shall be payable in accordance with the
Company's customary payroll practices but in no event less often than monthly.
The basic compensation determined in accordance with this Section 2.1 is
hereinafter referred to as the "Basic Compensation."
2.2 INCENTIVE COMPENSATION. The Company shall pay to Executive, in
addition to his Basic Compensation, (i) incentive compensation subject to and in
accordance with the Helen of Troy 1997 Cash Bonus Performance Plan and (ii) such
other bonus and incentive compensation as the Board, in its sole discretion,
shall from time to time determine.
2.3 REIMBURSEMENT OF EXPENSES. The Company shall pay or reimburse
Executive for all reasonable travel and other expenses incurred by Executive in
performing his obligations under this Agreement, including travel expenses
incurred by his spouse if she travels with him while he performs his obligations
under this Agreement. The Company further agrees to furnish Executive with such
other assistance and accommodations as shall be suitable to the character of
Executive's position with the Company and adequate for the performance of his
duties hereunder, including paying or reimbursing Executive for expenses
incurred for conducting business at his personal residence.
The Company shall also reimburse Executive for any taxes (including
federal and state income taxes) incurred by Executive with respect to payments
made to him or on his behalf pursuant to this Section 2.3 or pursuant to Section
2.6, 2.7, 2.9, 2.10, 2.11, 10.1 or 10.2 in an amount that puts Executive in the
same after-tax position as he would be in if he did not incur any taxes on such
payments.
2.4 VACATION AND SICK LEAVE. Executive shall be entitled to reasonable
periods of vacation with pay in each year and reasonable periods of sick leave
with pay commensurate with his position.
2.5 ELECTION WITH RESPECT TO COMPENSATION. By written notice to the
Board or to the Committee given by Executive prior to the last day of any
calendar year during the term hereof, Executive may, with respect to the
calendar year or years during the term hereof next succeeding the calendar year
in which such notice is given, elect thereby to defer payment to him of such
portion of his Basic Compensation for such succeeding year or years as may be
designated by Executive. Similarly, by written notice to the Board of Directors
or to the Committee given by Executive prior to the last day of any fiscal year
during the term hereof, Executive may, with respect to the fiscal year or years
during the term hereof next succeeding the fiscal year in which such notice is
given, elect thereby to defer payment to him of such portion of his incentive
compensation for such succeeding fiscal year or years as may be designated by
Executive which compensation has not at the date of giving such notice been
fully earned by, or allocated to, Executive. Any amounts so deferred by
Executive shall bear interest thereon (compounded annually at the end of each
calendar year) from the date on which the deferred compensation is finally
determined until paid at the published prime rate charged by Chase Bank of
Texas, National Association, El Paso, Texas (determined with respect to each
calendar year on the first business day of such Bank during such calendar year)
and shall be credited to a separate bookkeeping account established and
maintained on behalf of Executive by the Company hereinafter called the
"Deferred Compensation Account". Executive's Deferred Compensation Account shall
reflect his deferred compensation hereunder and the interest, earnings and
losses attributable thereto. Notwithstanding the preceding, Executive may select
one or more publicly traded mutual funds for the deemed investment of all or any
portion (in ten percent increments) of his Deferred Compensation Account. Such
selection, or any change thereof, shall be made by written notice to the
Committee, with a copy to the chief financial officer of the Company, and shall
be effective as of the first day of the next succeeding month. Any investment
selection timely and properly made by Executive shall remain in effect until
changed by Executive. Executive's Deferred Compensation Account balance shall be
paid to Executive or, in the event of his death, to his designated beneficiary,
or if there is no such
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designation, to Executive's wife, if she is then living, or if not, to his
estate, in substantially equal monthly installments for a period of ten years.
Notwithstanding the foregoing, Executive may elect, by written notice to the
Committee, with a copy to the chief financial officer of the Company, at any
time that is at least one year before his employment termination date, to have
his Deferred Compensation Account balance paid in the form of substantially
equal monthly installments over a specified period of less than ten years. Said
payments shall commence on the first day of the month next succeeding the
termination of Executive's full-time employment with the Company for any reason
whatsoever. Executive's right to his Deferred Compensation Account balance shall
be nonforfeitable and termination of his employment with the Company for any
reason whatsoever (including for Cause pursuant to Section 3.1(c)) or
Executive's failure to comply with the provisions of Section 5 shall not reduce
his Deferred Compensation Account balance (as subsequently adjusted for
interest, earnings and losses attributable thereto) or alter the method and the
time for payment thereof or the persons to whom same shall be paid.
By written notice to Executive prior to the last day of any calendar
year during the term hereof, Company may, with respect to the calendar year
during the term hereof in which such notice is given, elect to defer payment to
Executive of such portion of his Basic Compensation or incentive compensation as
would, were it paid to Executive during the calendar year in which such notice
is given, cause the total compensation paid to Executive during the calendar
year to exceed the limits on compensation to Executive deductible by the Company
under Internal Revenue Code Section 162(m). Any such deferred payment shall be
made before the end of the fiscal year of the Company which includes the end of
the calendar year in which such notice was given by Company. Any amount so
deferred by Company shall bear interest from the date when it would otherwise
have been payable until paid at the published prime rate charged by Chase Bank
of Texas, National Association, El Paso, Texas, on the date such amount would
otherwise have been payable. Executive's right to the amounts so deferred shall
be nonforfeitable as provided above in this Section with respect to his Deferred
Compensation Account.
2.6 AUTOMOBILE. In order to enable Executive to perform his duties
hereunder, the Company shall furnish Executive with an automobile for use in the
performance of such duties as shall be suitable to the character of Executive's
position with the Company and adequate for the performance of such duties. The
Company shall pay all of the expenses of operating, maintaining and insuring
such automobile. If so desired by Executive, the Company shall also provide
Executive with a driver at Company cost.
2.7 STOCK OPTIONS. Commencing on May 31, 1999 and on each August 31,
November 30, February 28 (or, in the event of a leap year, February 29) and May
31 (if any such dates is not a date that the securities markets are open for
trading in the United States, then such dates shall be the immediately preceding
date which is a date the markets are open for trading) thereafter during the
term of this Agreement, Executive shall be granted under and in accordance with
the terms of the applicable Securities Plans (as defined below) stock option(s)
to purchase an additional 250,000 shares of the common stock of the Company,
which stock option(s) shall be immediately and fully exercisable for securities
which are freely transferable. The number of shares of the common stock of the
Company granted to the Executive pursuant to the preceding sentence shall be
adjusted to reflect any change in capitalization of the Company pursuant to and
in accordance with the terms of the applicable Securities Plans. In the event
there are not a sufficient number of shares under the Securities Plans to cause
the grant of stock options pursuant to this Section 2.7, the Company shall use
its reasonable efforts to cause the Company's shareholders to approve additional
shares of Common Stock to be subject to such Securities Plans to enable such
grants. In the event the Company's shareholders do not approve additional shares
to be issued under such Securities Plans, the Company shall not be obligated to
Executive to grant such options under this Section 2.7. As used herein, the term
"Securities Plans" shall mean any plan or arrangement to receive securities of
the Company (including, without limitation, the Helen of Troy Limited 1998 Stock
Option and Restricted Stock Plan and the Helen of Troy Limited 1998 Employee
Stock Purchase Plan and any other plan or arrangement to receive and exercise
stock options, stock appreciation rights or securities awards) in which
Executive is participating at the time of a Change in Control, or any other plan
or arrangement providing him with substantially similar benefits.
2.8 OTHER PERQUISITES. During the term of this Agreement, Executive
shall be entitled to payment of or reimbursement from the Company for expenses
incurred by Executive in connection with routine legal assistance, financial
planning and tax return preparation assistance not in excess of $10,000 on an
annual basis. Reimbursement of Executive for such expenses will be made upon
presentation of expense vouchers that are in sufficient detail to identify the
nature of the expense, the amount of the expense, the date the expense was
incurred and to whom payment was made to incur the expense.
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2.9 MEDICAL CARE REIMBURSEMENT. The Company shall provide Executive
with full reimbursement of any expenses incurred by Executive that are not
reimbursed by insurance or otherwise for "medical care" (as such term is defined
in Section 213 of the Internal Revenue Code) for Executive, his wife and his
children who have not attained age 23. Reimbursement of Executive for such
expenses will be made upon presentation of expense vouchers that are in
sufficient detail to identify the nature of the expense, the amount of the
expense, the date the expense was incurred and to whom payment was made to incur
the expense.
2.10 LIFE INSURANCE. In addition to any other insurance which may now
or hereafter be provided by Company on the life of Executive under any group
contract or otherwise, the Company shall provide and pay premiums for an
insurance policy or policies (hereinafter for convenience called the "Policy")
on the life of Executive in an amount such that the total life insurance
coverage on the life of Executive will equal Five Million Dollars ($5,000,000)
in face value at all times during the term of this Agreement The Policy shall be
owned by Executive, or by a member of Executive's immediate family, or by a
fiduciary holding the Policy for the benefit of a member of Executive's
immediate family. The Company has been paying and shall be obligated to pay the
full annual premiums thereon, and the Company shall be entitled to all
dividends, if any, which may be paid under the Policy. The Company shall not be
permitted to borrow against the cash value of the Policy or otherwise diminish
the amount payable pursuant to the Policy below the amount of coverage provided
for herein. To the extent of the coverage provided thereby, the Company may
discharge its obligations hereunder by its performance under the Split Dollar
Insurance Agreement approved by the Board of Directors of Helen of Troy
Corporation on August 3, 1988.
2.11 DISABILITY INSURANCE. During the term of this Agreement, the
Company shall maintain at least the same insurance coverage for disability
benefits for Executive currently maintained by the Company on the date of this
Agreement. The failure on the part of the Company or its subsidiaries to
maintain such insurance shall be a material breach of this Agreement. During any
period of Disability (as defined in Section 3.1(b)) while his employment
continues with Company, disability benefits provided by insurance, although
payable to Executive, shall be endorsed over to the Company so long as Executive
continues to receive his full Basic Compensation, incentive compensation and
other benefits under this Section 2.
2.12 OTHER BENEFITS. Executive shall be entitled to participate in any
other group hospitalization, health, dental care or sick-leave plan, life or
other insurance or death benefit plan, travel or accident insurance, auto
allowance or auto lease plan, or executive contingent compensation plan,
including, without limitation, stock option plan, retirement, income or pension
plans, or other present or future group employee benefit plans, programs or
arrangements of the Company for which executives are or shall become eligible,
and Executive shall be eligible to receive during the term of this Agreement all
benefits and emoluments for which executives are eligible under every such plan,
program or arrangement to the extent permissible under the general terms and
provisions of such plans, programs or arrangements and in accordance with the
provisions thereof.
SECTION 3. TERMINATION
3.1 TERMINATION.
(a) Death. Executive's employment hereunder shall terminate upon
his death.
(b) Disability. In the event Executive incurs a Disability for a
continuous period exceeding 24 calendar months, the Company may, at its election
and provided that all disability insurance required by Section 2.11 is then in
force, terminate Executive's employment by giving Executive a Notice of
Termination (as defined in Section 3.1(f)) with 20 days advance notice of the
date of termination. If the disability insurance required by Section 2.11 is
then in force, then the term "Disability" as used in this Agreement shall have
the meaning given that term by such disability insurance; otherwise, the term
"Disability" shall mean the complete inability of Executive to perform his
duties under this Agreement, as a result of a physical or mental illness or
personal injury he has incurred, as determined by an independent physician
selected with the approval of the Company and Executive.
(c) Cause. The Company may discharge Executive for Cause by giving
Executive a Notice of Termination (as defined in Section 3.1(f)). "Cause" shall
mean:
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(i) Executive's final conviction by a court of competent
jurisdiction for fraud, misappropriation or embezzlement; or
(ii) Executive's material breach of this Agreement or serious,
willful gross misconduct or willful gross neglect of duties (other than any such
neglect resulting from Executive's incapacity due to physical or mental illness
or Disability or any such neglect after the issuance of a notice of termination
by Executive for Good Reason) which, in any case, has resulted, or in all
probability is likely to result, in material economic damage to the Company;
provided that no action or failure to act by Executive will constitute "Cause"
under this clause (ii) if Executive believed in good faith that such action or
failure to act was in the best interest of the Company.
Any termination of Executive's employment by the Company for Cause
shall be authorized by a vote of at least a majority of the non-employee members
of the Board within 12 months of a majority of such non-employee members of the
Board having actual knowledge of the event or circumstances providing a basis
for such termination. Except where Cause is the final conviction of Executive,
Executive shall be given written notice by the Board specifying in detail the
particular act or failure to act on which the Board is relying in proposing to
terminate him for Cause and offering Executive an opportunity, on a date at
least 14 days after receipt of such notice, to have a hearing, with counsel,
before a majority of the non-employee members of the Board, including each of
the members of the Board who authorized the termination for Cause. Executive
shall not be terminated for Cause if, within 30 days after the date of
Executive's hearing before the Board (or if Executive waives a hearing, within
30 days after receiving notice of the proposed termination), he has corrected
the particular act or failure to act specified in the notice and by so
correcting such act or failure to act he has reduced the economic damage his act
or failure to act allegedly caused the Company to a level which is no longer
material or has eliminated the probability that such act or failure to act is
likely to result in material economic damage to the Company. No termination for
Cause shall take effect until the expiration of the correction period described
in the preceding sentence and the determination by a majority of the
non-employee members of the Board that Executive has failed to correct the act
or failure to act in accordance with the terms of the preceding sentence.
(d) Good Reason. Executive may terminate his employment at any
time during the term of this Agreement for Good Reason by giving written notice
as provided below in this subsection (d) which shall set forth in reasonable
detail the facts and circumstances constituting Good Reason. "Good Reason" shall
mean any of the following:
(i) without the consent of Executive, if Executive fails to be
elected or reelected or is removed as a Director of the Company, or if at any
time during the term of employment Executive shall fail to be vested by the
Company with the powers and authority of the Chairman of the Board and Chief
Executive Officer of the Company, or if the provision of the by-laws of the
Company describing the relative duties and responsibilities of the Chairman of
the Board and Chief Executive Officer, as in effect on the date of this
Agreement, are changed in any material respect without Executive's consent;
(ii) significant change by the Company in Executive's
functions, duties or responsibilities which change would cause Executive's
position with the Company to become of less dignity, responsibility, importance
or scope from the position and attributes thereof described in Sections 1.1 and
1.2 above, and any such significant change shall be deemed a continuing breach
of this Agreement;
(iii) other material breach of this Agreement by the Company;
(iv) removal or relocation of the Company's or Executive's
principal office from El Paso, Texas without Executive's consent;
(v) either (1) the failure by the Company to continue in
effect any material incentive or other compensation or benefit plan, program or
arrangement in which Executive was participating on the date of this Agreement,
or any other plan, program or arrangement providing Executive with benefits that
are no less favorable or (2) the taking of any action by the Company that would
adversely affect Executive's participation in, or materially reduce his benefits
under, any such plan, program or arrangement or deprive Executive of any
material fringe benefit or perquisite of office enjoyed by Executive on the date
of this Agreement, unless in the case of either
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subclause (1) or (2) above, there is substituted a comparable plan, program or
arrangement that is substantially economically equivalent, in terms of the
benefit offered to Executive, to the plan, program or arrangement being altered,
reduced, affected or ended;
(vi) the occurrence of a Change in Control provided Executive
gives written notice as provided below in this subsection (d) within six months
of the consummation of the Change in Control of his election to terminate his
employment for Good Reason; and
(vii) any failure by the Company to obtain the assumption of
this Agreement by any successor or assign of the Company.
For purposes of this subsection (d), an isolated, immaterial and
inadvertent action not taken in bad faith by the Company in violation of clause
(v) above that is remedied by the Company promptly after receipt of notice
thereof given by Executive shall not be considered Good Reason for Executive's
termination of employment with the Company. In the event Executive terminates
his employment for Good Reason, then notwithstanding that Executive may also
retire for purposes of the Benefit Plans, Incentive Plans or Securities Plans,
Executive shall be deemed to have terminated his employment for Good Reason for
purposes of this Agreement. As used herein, the term "Benefit Plans" shall mean
any benefit plan or arrangement (including, without limitation, the Helen of
Troy Corporation 401(k) Profit Sharing Plan and any life insurance, medical,
dental, accident and disability plans) in which Executive is participating at
the time of a Change in Control, or any other plan or arrangement providing
Executive with benefits that are no less favorable. As used herein, the term
"Incentive Plans" shall mean any incentive plan or arrangement (including,
without limitation, the Helen of Troy 1997 Cash Bonus Performance Plan, the
Company's other bonus and contingent bonus arrangements, and credits and the
right to receive performance awards and similar long and short-term incentive
compensation benefits) in which Executive is participating at the time of a
Change in Control, or any other plans or arrangements providing him with
substantially similar benefits.
Upon the occurrence of any Good Reason, Executive shall have the right
to elect to terminate his employment under this Agreement upon not less than 60
days' prior written notice given to the Board within a reasonable period of time
not to exceed, except in case of a continuing breach, six calendar months after
the event giving rise to said right to elect or, with respect to Good Reason due
to the occurrence of a Change in Control pursuant to clause (vi) of the
definition of "Good Reason" above, six calendar months after the consummation of
the Change in Control. The failure of Executive to resign from the Company's
employ for Good Reason shall not affect his entitlement to resign from the
Company's employ for Good Reason as to any other such event of Good Reason.
(e) Voluntary Termination. Upon 30 days' prior written notice to
the Company, Executive may voluntarily terminate his employment with the
Company. Such voluntary termination shall not be deemed a breach of this
Agreement by Executive.
(f) Notice of Termination. Any termination by the Company pursuant
to Section 3.1(b) or (c) above shall be communicated by written Notice of
Termination to the Executive. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific termination
provision of this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for such termination. The
date of termination specified in the Notice of Termination shall not be earlier
that the date such Notice is delivered or mailed to Executive.
3.2 CHANGE IN CONTROL. "Change in Control" shall mean:
(a) the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")), (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then-outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power of the
then-outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that the following acquisitions shall not constitute a Change
in Control: (A) any acquisition directly from the Company (excluding an
acquisition by virtue of the exercise of a conversion privilege), (B) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company, (C) any
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acquisition by Executive, by any group of persons consisting of relatives within
the second degree of consanguinity or affinity of Executive or by any affiliate
of Executive or (D) any acquisition by any corporation pursuant to a
reorganization, merger or consolidation, if, following such reorganization,
merger or consolidation, the conditions described in subclauses (i), (ii) and
(iii) of clause (c) of this sentence are satisfied; or
(b) if individuals who, as of March 1, 1999, constitute the Board
of Directors of the Company (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company's stockholders, was approved by a vote of
at least two-thirds of the directors then constituting the Incumbent Board shall
be considered as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of either an actual or threatened election contest
subject to Rule 14a-11 of Regulation 14A promulgated under the Exchange Act or
other actual or threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board; or
(c) approval by the stockholders of the Company of a
reorganization, merger or consolidation, unless following such reorganization,
merger or consolidation (i) more than 60% of, respectively, the then-outstanding
shares of common stock of the corporation resulting from such reorganization,
merger or consolidation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in the election
of directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such reorganization, merger, or
consolidation in substantially the same proportions as their ownership,
immediately prior to such reorganization, merger or consolidation, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities, as
the case may be (for purposes of determining whether such percentage test is
satisfied, there shall be excluded from the number of shares and voting
securities of the resulting corporation owned by the Company's stockholders, but
not from the total number of outstanding shares and voting securities of the
resulting corporation, any shares or voting securities received by any such
stockholder in respect of any consideration other than shares or voting
securities of the Company); (ii) no Person (excluding the Company, any employee
benefit plan (or related trust) of the Company, any qualified employee benefit
plan of such corporation resulting from such reorganization, merger or
consolidation and any Person beneficially owning, immediately prior to such
reorganization, merger or consolidation, directly or indirectly, 20% or more of
the Outstanding Company Common Stock or Outstanding Company Voting Securities,
as the case may be) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then-outstanding shares of common stock of the corporation
resulting from such reorganization, merger or consolidation or the combined
voting power of the then-outstanding voting securities of such corporation
entitled to vote generally in the election of directors and (iii) at least a
majority of the members of the board of directors of the corporation resulting
from such reorganization, merger or consolidation were members of the Incumbent
Board at the time of the execution of the initial agreement providing for such
reorganization, merger or consolidation; or
(d) (i) approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company or (ii) the first to occur of (A) the
sale or other disposition (in one transaction or a series of related
transactions) of all or substantially all of the assets of the Company, or (B)
the approval by the stockholders of the Company of any such sale or disposition,
other than, in each case, any such sale or disposition to a corporation, with
respect to which immediately thereafter, (1) more than 60% of, respectively, the
then-outstanding shares of common stock of such corporation and the combined
voting power of the then-outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then beneficially
owned, directly or indirectly, by all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately prior
to such sale or other disposition in substantially the same proportion as their
ownership, immediately prior to such sale or other disposition, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities, as
the case may be (for purposes of determining whether such percentage test is
satisfied, there shall be excluded from the number of shares and voting
securities of the transferee corporation owned by the Company's stock holders,
but not from the total number of outstanding shares and voting securities of the
transferee corporation, any shares or voting securities received by any such
stockholder in respect of any consideration other than shares or voting
securities of the Company), (2) no Person (excluding the Company and any
employee benefit plan (or related trust) of the Company, any qualified employee
benefit plan of such transferee corporation and any Person beneficially owning,
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immediately prior to such sale or other disposition, directly or indirectly, 20%
or more of the Outstanding Company Common Stock or Outstanding Company Voting
Securities, as the case may be) beneficially owns, directly or indirectly, 20%
or more of, respectively, the then-outstanding shares of common stock of such
transferee corporation and the combined voting power of the then-outstanding
voting securities of such transferee corporation entitled to vote generally in
the election of directors and (3) at least a majority of the member of the board
of directors of such transferee corporation were members of the Incumbent Board
at the time of the execution of the initial agreement or action of the board
providing for such sale or other disposition of assets of the Company.
SECTION 4. PAYMENTS TO EXECUTIVE UPON
TERMINATION
4.1 PAYMENTS UPON TERMINATION.
(a) Death. If Executive's employment shall be terminated by reason
of death:
(i) The Company shall pay Executive's estate the portion of
the Basic Compensation which would have been payable to Executive through the
end of the month in which his death occurred; plus, the incentive compensation
and bonuses otherwise payable pursuant to Section 2.2 for the fiscal year of
Executive's death, prorated on the basis of the number of days during such
fiscal year during which Executive was employed under this Agreement; plus, any
other amounts earned, accrued or owing as of the date of death of Executive but
not yet paid to Executive under Section 2, with all such amounts to be paid as
soon as reasonably practicable but in no event later than six months after the
close of the fiscal year of Executive's death.
(ii) The Company shall continue to provide the medical
benefits described in Section 2.9 above to Executive's wife for life and to his
children until their attainment of age 23.
(iii) All options granted to Executive prior to the date of
death of Executive shall become immediately fully vested and exercisable for
securities that are freely transferable.
(iv) All restrictions on restricted stock awarded to Executive
shall be removed and the rights to such stock shall immediately vest.
(b) Disability. If Executive's employment is terminated by the
Company by reason of Disability:
(i) The Company shall pay Executive the portion of the Basic
Compensation which would have been payable to Executive through the end of the
month in which his employment terminated; plus, the incentive compensation and
bonuses otherwise payable pursuant to Section 2.2 for the fiscal year of
Executive's termination of employment, prorated on the basis of the number of
days during such fiscal year during which Executive was employed under this
Agreement; plus, any other amounts earned, accrued or owing as of the date of
termination but not yet paid to Executive under Section 2, with all such amounts
to be paid as soon as reasonably practicable but in no event later than six
months after the close of the fiscal year of Executive's termination of
employment.
(ii) The Company shall continue to provide the medical
benefits described in Section 2.9 above to Executive and Executive's wife for
life and to Executive's children until their attainment of age 23.
(iii) All options granted to Executive prior to the date of
termination shall become immediately fully vested and exercisable for securities
that are freely transferable.
(iv) All restrictions on restricted stock awarded to Executive
shall be removed and the rights to such stock shall immediately vest.
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(v) The Company shall continue to pay the premiums on the
Policy during the life of Executive.
(vi) The Executive shall be entitled to continued
participation in all employee benefit plans, programs or arrangements available
to Company executives in which Executive was participating on the date of
Executive's termination of employment until the end of the fiscal year in which
his termination of employment occurs provided that (A) if Executive is precluded
from continuing his participation in any employee benefit plan, program or
arrangement as provided in this clause (vi), he shall be provided with the
after-tax economic equivalent of the benefits provided under the plan, program
or arrangement in which he is unable to participate for the period specified in
this clause (vi), and (B) the economic equivalent of any benefit foregone shall
be deemed to be the lowest cost that would be incurred by Executive in obtaining
such benefit himself on an individual basis.
(c) Cause. If Executive's employment shall be terminated for Cause:
(i) The Company shall pay Executive his Basic Compensation and
all amounts earned, accrued or owing but not yet paid to Executive under Section
2 through the date of termination specified in the Notice of Termination.
(ii) The owner of the Policy shall have the right to continue
the Policy by the payment of any future premiums.
(iii) Except as otherwise provided in this subsection (c), the
Company shall have no further obligations to Executive under this Agreement
except for Section 2.5.
(d) Good Reason or Other Than Cause. If Executive's employment is
terminated (i) by the Company other than as a result of death, Disability or
Cause as specified in Section 3.1(a), (b) or (c) above, or (ii) by Executive for
Good Reason pursuant to Section 3.1(d) above, Executive shall be entitled to the
following:
(i) Payments, each in an amount equal to the monthly rate of
Basic Compensation then being paid to Executive under this Agreement, which
shall commence on the date of termination and shall continue until the date this
Agreement would have expired but for said occurrence (without regard to the
second sentence of Section 1.3); except if Executive's termination of employment
is for Good Reason due to the occurrence of a Change in Control pursuant to
clause (vi) of the definition of "Good Reason" in Section 3.1(d) above, such
payments shall be paid in a single lump sum payment on the date Executive elects
to terminate his employment;
(ii) Payments, payable annually after the close of each fiscal
year of the Company, each in an amount equal to the amount of incentive
compensation and bonuses that would otherwise have been payable to Executive
under Section 2.2 if Executive had continued in the employ of the Company for
the same period as that determined for the payments made under clause (i) above
and payable at the same time and in the same manner as the incentive
compensation and bonuses would have been paid to Executive under Section 2.2 if
Executive had continued in the employ of the Company; provided, however, the
incentive compensation and bonuses payable with respect to any fiscal year shall
not be less than the highest annual incentive compensation and bonus award made
to Executive with respect to the Company's most recent three fiscal years ending
prior to the date of termination; except if Executive's termination of
employment is for Good Reason due to the occurrence of a Change in Control
pursuant to clause (vi) of the definition of "Good Reason" in Section 3.1(d)
above, then, in lieu of payments payable annually, the present value of such
payments shall be paid in a single lump sum payment on the date Executive elects
to terminate his employment. For purposes of calculating the single lump sum
payment described in the preceding sentence, Executive's incentive compensation
and bonuses payable with respect to each fiscal year shall be the highest annual
incentive compensation and bonus award made to Executive with respect to the
Company's most recent three fiscal years ending prior to the date of
termination, and present value shall be calculated using the applicable federal
rate (as defined pursuant to Section 1274(d) of the Internal Revenue Code) for
the date of Executive's termination of employment;
(iii) All amounts earned, accrued or owing but not yet paid to
Executive under Section 2 to the date of termination, except to the extent that
any such amounts are included in the payments to be made to Executive pursuant
to clauses (i) and (ii) above;
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(iv) Continuation of the medical benefits described in Section
2.9 above to Executive and his wife for life and to Executive's children until
their attainment of age 23;
(v) Payment by the Company of the premiums on the Policy
during the life of Executive;
(vi) Continued participation in all employee benefit plans,
programs or arrangements available to Company executives in which Executive was
participating on the date of termination until the earlier of:
(A) the date this Agreement would have expired but for
the occurrence of the date of termination, or
(B) the date, or dates, he receives equivalent coverage
and benefits under the plans, programs and arrangements of a subsequent employer
(such coverages and benefits to be determined on a coverage-by-coverage, or
benefit-by-benefit, basis); provided that (1) if Executive is precluded from
continuing his participation in any employee benefit plan, program or
arrangement as provided in this clause(vi), he shall be provided with the
after-tax economic equivalent of the benefits provided under the plan, program
or arrangement in which he is unable to participate for the period specified in
this clause(vi), and (2) the economic equivalent of any benefit foregone shall
be deemed to be the lowest cost that would be incurred by Executive in obtaining
such benefit himself on an individual basis;
(vii) All options granted to Executive shall be immediately
and fully vested and exercisable for securities that are freely transferable and
thereafter the Company shall have no further obligations to grant options to
Executive under Section 2.7;
(viii) Removal of all restrictions on restricted stock awarded
to Executive and immediate vesting of the rights to such stock.
(e) Voluntary Termination. In the event Executive voluntarily
terminates his employment pursuant to Section 3.1(e):
(i) The Company shall pay him all amounts earned, accrued, or
owing to the date of termination but not yet paid to Executive under Section 2.
(ii) The Company shall continue to provide the medical
benefits described in Section 2.9 above to Executive and his wife for life and
to Executive's children until their attainment of age 23.
(iii) The owner of the Policy shall have the right to continue
the Policy by the payment of any future premiums.
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<PAGE> 14
4.2 CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary notwithstanding, in
the event it shall be determined that any payment or distribution by the Company
to or for the benefit of Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this Section
4.2) (a "Payment") would be subject to the excise tax imposed by Section 4999 of
the Internal Revenue Code or any interest or penalties are incurred by Executive
with respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as the "Excise
Tax"), then Executive shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that after payment by Executive of all
taxes (including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
(b) All determinations required to be made under this Section 4.2,
including whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such
determination, shall be made by the Company's independent auditors (the
"Accounting Firm") which shall provide detailed supporting calculations both to
the Company and Executive within 15 business days after the receipt of notice
from Executive that there has been a Payment, or such earlier time as is
requested by the Company. The determination of tax liability made by the
Accounting Firm shall be subject to review by Executive's tax advisor, and, if
Executive's tax advisor does not agree with the determination reached by the
Accounting Firm, then the Accounting Firm and Executive's tax advisor shall
jointly designate a nationally recognized public accounting firm which shall
make the designation. All fees and expenses of the accountants and tax advisors
retained by both Executive and the Company shall be borne solely by the Company.
Any Gross-Up Payment, as determined pursuant to this Section 4.2, shall be paid
by the Company to Executive within five days after the receipt of the
determination. Any determination by such jointly designated public accounting
firm shall be binding upon the Company and Executive. As a result of the
uncertainty in the application of Section 4999 of the Internal Revenue Code at
the time of the initial determination hereunder, it is possible that Gross-Up
Payments will not have been made by the Company that should have been made
("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that Executive hereafter is required to make a payment
of any Excise Tax, any such Underpayment shall be promptly paid by the Company
to or for the benefit of Executive. Upon notice by Executive of any audit or
other proceeding that may result in a liability to the Company hereunder,
Executive shall promptly notify the Company of such audit or other proceeding;
and the Company may, at its option, but solely with respect to the item or items
that relate to such potential liability, choose to assume the defense of such
audit or other proceeding at its own cost, provided that (i) Executive shall
cooperate with the Company in such defense and (ii) the Company will not settle
such audit or other proceeding without the consent of Executive (such consent
not to be unreasonably withheld). The highest effective marginal tax rate
(determined by taking into account any reduction in itemized deductions and/or
exemptions attributable to the inclusion of the additional amounts payable under
this Section 4.2 in Executive's adjusted gross taxable income) based upon the
state and locality where Executive is resident at the time of payment of such
amounts will be used for purposes of determining the federal and state income
and other taxes with respect thereto.
4.3 NO MITIGATION; NO OFFSET. In the event of any termination of
employment under Section 3 of this Agreement, Executive shall be under no
obligation to seek other employment and there shall be no offset against amounts
due Executive under this Agreement on account of any remuneration attributable
to any subsequent employment or self-employment that he may obtain.
4.4 NATURE OF PAYMENTS. Any amounts due under Section 4 of this
Agreement are in the nature of severance payments, liquidated damages, or both,
and shall fully compensate Executive, his dependents and beneficiaries and the
estate of Executive for any and all direct damages and consequential damages
that they may suffer as a result of the termination of Executive's employment,
or both, and are not in the nature of a penalty.
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<PAGE> 15
SECTION 5. CONFIDENTIALITY
5.1 CONFIDENTIALITY AND DISCLOSURE. Both during the term of this
Agreement and thereafter, and without regard to when or for what reason, if any,
Executive's employment shall terminate:
(a) Executive agrees to regard and preserve as confidential all
knowledge and information pertaining to the business of the Company obtained by
him from any source whatever as a result of his employment with the Company and
which is not a matter of public knowledge.
(b) Executive shall not, except on behalf of the Company, make use
of or divulge any of the Company's records, documents, contracts, customer
lists, writings, data or other information, whether or not the same is in
written or other recorded form.
Without limiting the generality of the foregoing, it is hereby agreed
that the prohibitions contained hereinabove shall be operative with respect to
any information or knowledge which may now or hereafter be deemed a trade secret
of the Company or information which relates to the Company's personnel; present
operations or future planning with respect to suppliers or customers; the
contents of any Company manual, practice or procedure, operating, revenue,
expense or other statistics; private or public debt or equity financing or
concerning any banking, accounting or financial matters; current or future
advertising or promotion plans or programs; applications to or matters pending
or under the jurisdiction of any regulatory agency or court, including those
that are only threatened; any system, program, procedure or administrative
operations, including those pertaining to any matter relative to computer
operations of any type; information of the type mentioned above or of any other
type regarding subsidiaries of the Company; present or future plans for the
extension of the present business or the commencement of new business by the
Company.
5.2 ACKNOWLEDGEMENT OF CONFIDENTIAL INFORMATION. Executive hereby
acknowledges that he possesses information and knowledge of the type described
in Section 5.1 concerning the Company which is not a matter of public knowledge,
the release or dissemination of which would cause irreparable harm to the
Company, and that the performance of his obligations under this Section 5 are
required for the reasonable protection of the Company.
SECTION 6. SOURCE OF PAYMENTS
All payments provided in Section 2 and Section 4 (other than payments
made by insurers or third-party payors) shall be paid in cash from the general
funds of the Company and its subsidiaries, and no special or separate fund shall
be established and no other segregation of assets shall be made to assure
payment. Executive shall have no right, title or interest whatever in or to any
investments which the Company may make. Nothing contained in this Agreement, and
no action taken pursuant to its provisions, shall create or be construed to
create a trust of any kind, or a fiduciary relationship between the Company and
Executive or any other person. To the extent that any person acquires a right to
receive payment from the Company hereunder, such right shall be no greater than
the right of an unsecured creditor of the Company.
SECTION 7. DECISIONS BY COMPANY
Any powers granted to the Board hereunder may be exercised by a
committee, appointed by the Board, and such committee, if appointed, shall have
general responsibility for the administration and interpretation of this
Agreement.
SECTION 8. CONSOLIDATION, MERGER, SALE OF ASSETS
Nothing in this Agreement shall preclude the Company from consolidating
or merging into or with, or transferring all or substantially all of its assets
to, another corporation or party which assumes this Agreement and all
obligations and undertakings of the Company hereunder. Upon such consolidation,
merger or transfer of assets and assumption, the term the "Company" as used
herein, shall mean such other corporation or party, and this Agreement shall
continue in full force and effect.
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SECTION 9. NON-COMPETITION
During the term of Executive's employment hereunder and, in the event
of termination of Executive's employment for Cause pursuant to Section 3.1(c) or
Executive's voluntary termination of employment pursuant to Section 3.1(e), for
the twenty-four month period following termination for Cause or Executive's
voluntary termination, Executive shall not without the prior written approval of
the Board, directly or indirectly, own, manage, operate, join, control or
participate in or be connected with, in any countries in which the Company and
its subsidiaries currently conduct their business, as an officer, employee,
agent, consultant, sales representative, partner, stockholder, or director of
any business enterprise which is, directly or indirectly, in competition with
the business of the Company or any subsidiary of the Company, as the business of
the Company or any said subsidiary may be constituted during the term of
employment or at the termination thereof, provided, however, that in no event
shall this provision be construed to prevent Executive from engaging in the
acquisition, development and sale of real estate. If Executive terminates
employment for Good Reason pursuant to clause (vi) of the definition of "Good
Reason" in Section 3.1(d) above, Executive shall be bound by the covenant in
this Section for the twenty-four month period following Executive's termination
of employment for Good Reason.
Executive recognizes and admits that the Company engages worldwide in
the conduct of its business and that the covenant encompassing the countries in
which the Company and its subsidiaries currently conduct their business as well
as the time limitations contained herein, are reasonably necessary for the
protection of the Company's business. Executive further recognizes that the
Company's remedy at law for a breach by him of the provisions of this Section
will be inadequate. Accordingly, in the event of a breach or threatened breach
by Executive of this Section, the Company shall be entitled to injunctive relief
in addition to any other remedy it may have.
SECTION 10. COUNSEL FEES, INDEMNIFICATION AND INSURANCE
10.1 COUNSEL FEES AND EXPENSES. The Company shall pay, or reimburse
Executive, the fees and expenses of Executive's counsel, accountants and
consultants for their professional services rendered to Executive in connection
with this Agreement and matters related thereto.
If a claim or dispute arises concerning the rights of Executive under
this Agreement, regardless of the party by whom such claim or dispute is
initiated, the Company shall, upon presentation of appropriate vouchers, pay all
legal expenses, including reasonable attorneys' fees, court costs, and ordinary
and necessary out-of-pocket costs of attorneys, billed to and payable by
Executive or by anyone claiming under or through Executive, in connection with
the bringing, prosecuting, arbitrating, defending, litigating, negotiating, or
settling such claim or dispute. In no event shall Executive be required to
reimburse the Company for any of the costs or expenses incurred by the Company
relating to arbitration or litigation. Pending the outcome or resolution of any
claim or dispute, the Company shall continue payment of all amounts due
Executive without regard to any dispute.
10.2 INDEMNIFICATION. The Company shall indemnify and hold Executive
harmless to the maximum extent permitted by law against judgments, fines,
amounts paid in settlement and reasonable expenses, including attorneys fees
incurred by Executive, in connection with the defense of, or as a result of, any
action or proceeding (or any appeal from any action or proceeding) in which
Executive is made or is threatened to be made a party by reason of the fact that
Executive is or was an officer or Director of the Company, regardless of whether
such action or proceeding is one brought by or in the right of the Company, to
procure a judgment in its favor (or other than by or in the right of the
Company).
Notwithstanding anything in the Company's Certificate of Incorporation,
the by-laws or this Agreement to the contrary, if so requested by Executive, the
Company shall advance (within two business days of such request) any and all
Expenses, as hereinafter defined, to Executive ("Expense Advance"), upon the
receipt of a written undertaking by or on behalf of Executive to repay such
Expense Advance if a judgment or other final adjudication adverse to Executive
(as to which all rights of appeal therefrom have been exhausted or lapsed)
establishes that Executive, with respect to such Claim, is not eligible for
indemnification. A "Claim" shall include any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative or other, including without limitation, an action by or in the
right of any other corporation of any type or kind, domestic or foreign, or any
partnership, joint venture, trust, employee benefit plan or other enterprise,
whether predicated on foreign, federal, state or local law and whether formal or
informal. "Expenses" shall include attorneys' fees and all
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<PAGE> 17
other costs, charges and expenses paid or incurred in connection with
investigating, defending, being a witness in or participating in (including on
appeal), or preparing to defend, be a witness in or participate in any Claim
relating to any indemnifiable event.
The undertakings of this Section 10.2 are independent of, and shall not
be limited to or prejudiced by, the undertakings of Section 10.3.
10.3 INSURANCE. The Company further represents and warrants that: (i)
Executive shall be and continue to be covered and insured up to the maximum
limits provided by all insurance which the Company maintains to indemnify its
directors and officers (and to indemnify the corporation for any obligations
which it incurs as a result of its undertaking to indemnify its officers and
directors); and (ii) the Company will maintain such insurance, in not less than
its present limits, in effect throughout the term of Executive's employment.
10.4 CONSISTENCY WITH CHARTER DOCUMENTS. The Company hereby warrants
and represents that the undertakings of payment, indemnification and maintenance
of insurance set forth in Sections 10.1, 10.2 and 10.3 are not in conflict with
the Articles of Incorporation or by-laws of the Company or with any validly
existing agreement or other proper corporate action of the Company.
SECTION 11. GENERAL
11.1 EFFECT OF PRIOR AGREEMENTS. This Agreement contains the entire
understanding between the parties hereto and supersedes any prior employment
agreement between the Company or any predecessor of the Company and Executive,
including the Prior Agreement, except that this Agreement shall not affect or
operate to reduce any benefit or compensation inuring to Executive of a kind
elsewhere provided and not expressly provided for in this Agreement.
11.2 NONASSIGNABILITY; THIRD PARTY BENEFICIARIES. Neither this
Agreement nor any right or interest hereunder shall be assignable by Executive,
his beneficiaries, dependents or legal representatives without the Company's
prior written consent; provided, however, nothing in this Section 11.2 shall
preclude (i) Executive from designating a beneficiary to receive any benefit
payable hereunder upon his death, (ii) the executors, administrators or other
legal representatives of Executive or his estate from assigning any rights
hereunder to the person or persons entitled thereto, or (iii) the Company from
assigning or delegating any of its benefits or obligations under this Agreement
to Helen of Troy Nevada Corporation ("HoT-Nevada"). HoT-Nevada shall be an
express third party beneficiary under this Agreement.
11.3 NO ATTACHMENT. Except as required by law, no right to receive
payments under this Agreement shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge or hypothecation in
favor of any third party, or to execution, attachment, levy or similar process
or assignment by operation of law in favor of any third party, and any attempt,
voluntary or involuntary, to effect any such action shall be null, void and of
no effect.
11.4 BINDING AGREEMENT. This Agreement shall be binding upon and inure
to the benefit of Executive and the Company and their respective heirs, legal
representatives and permitted successors and assigns.
11.5 AMENDMENT OF AGREEMENT. Except for increases in Basic Compensation
made as provided in Section 2.1, this Agreement may not be modified or amended
except by an instrument in writing signed by the parties hereto.
11.6 WAIVER. No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.
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11.7 SEVERABILITY. If, for any reason, any provision of this Agreement
is held invalid, such invalidity shall not affect any other provision of this
Agreement not held so invalid, and each such other provision shall, to the full
extent consistent with law, continue in full force and effect. If any provision
of this Agreement shall be held invalid in part, such invalidity shall in no way
affect the rest of such provision not held so invalid, and the rest of such
provision, together with all other provisions of this Agreement, shall, to the
full extent consistent with law continue in full force and effect. If this
Agreement is held invalid or cannot be enforced, then to the full extent
provided by law any prior agreement or understanding between the Company (or any
predecessor thereof) and Executive shall be deemed restated as if this Agreement
had not been executed.
11.8 HEADINGS. The headings of Sections are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
11.9 GOVERNING LAW. This Agreement has been executed and delivered in
the State of Texas, and its validity, interpretation, performance and
enforcement shall be governed by the laws of Texas, without giving effect to any
principles of conflicts of law.
11.10 NO RIGHT OF SET OFF. In no event shall the Company be entitled to
set off or credit against sums payable to Executive under this Agreement any
amount due or claimed to be due by Executive to the Company.
11.11 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
11.12 SURVIVORSHIP. The respective rights and obligations of the
parties hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations and to the
extent that any performance is required following termination of this Agreement.
Without limiting the foregoing, Sections 2.5, 4.2, 5.1, 9, 10.1 and 10.2 shall
expressly survive the termination of this Agreement.
11.13 WITHHOLDING. All amounts paid pursuant to this Agreement shall be
subject to withholding for taxes (federal, state, local or otherwise) to the
extent required by applicable law.
11.14 NOTICES. For purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed in the United States
registered mail, return receipt requested, postage prepaid, as follows:
If to the Company:
Helen of Troy Limited
One Helen of Troy Plaza
El Paso, Texas 79912
Attention: Secretary
If to Executive:
Gerald J. Rubin
c/o Helen of Troy Limited
One Helen of Troy Plaza
El Paso, Texas 79912
Or to such other address as either party may have furnished to the
other in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
HELEN OF TROY LIMITED
By:
------------------------------------
Its:
-----------------------------------
GERALD J. RUBIN
--------------------------------------
Gerald J. Rubin
The obligations of Helen of Troy Limited to Executive hereunder are
hereby guaranteed by the undersigned subsidiaries of Helen of Troy Limited.
HELEN OF TROY NEVADA CORPORATION
By:
------------------------------------
Its:
-----------------------------------
HELEN OF TROY LIMITED (BARBADOS)
By:
------------------------------------
Its:
-----------------------------------
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EXHIBIT 10.30
AMENDED AND RESTATED
HELEN OF TROY LIMITED
1995 STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
SECTION 1. PURPOSE OF THE PLAN.
The purpose of this Helen of Troy Limited 1995 Stock Plan for
Non-Employee Directors (the "Plan") is to strengthen the ability of Helen of
Troy Limited (the "Company") to attract and to retain the services of
experienced and knowledgeable independent individuals as members of the Board of
the Company, to extend to them the opportunity to acquire a proprietary interest
in the Company so that they will apply their best efforts for the benefit of the
Company, and to provide those individuals with an additional incentive to
continue in their position, for the best interest of the Company and its
shareholders. In furtherance of such purpose, Directors (as defined below) shall
receive an Annual Grant (as defined below) of Stock Options for their services
as members of the Board.
All transactions under this Plan are intended to comply with all
applicable conditions of Rule 16b-3 under the Securities Exchange Act of 1934
(the "Act"). To the extent any provision of this Plan or any action by the
administrators of the Plan fails to so comply, it shall be deemed null and void
to the extent permitted by law unless otherwise expressly deemed advisable by
the administrators of the Plan.
<PAGE> 2
SECTION 2. DEFINITIONS.
(a) "Affiliates" shall mean (a) any corporation, other than the
Company, in an unbroken chain of corporations ending with the Company if each of
the corporations, other than the Company, owns stock possessing 50% or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain and (b) any corporation, other than the Company, in
an unbroken chain of corporations beginning with the Company if each of the
corporations, other than the last corporation in the unbroken chain, owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
(b) "Annual Grant" shall mean the Stock Option Grant made under Section
3(a) of this Agreement.
(c) "Board" shall mean the Board of Directors of the Company.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(e) "Common Stock" shall mean the Company's authorized common stock,
par value $.10 per share, together with any other securities with respect to
which Stock Options may become exercisable (subject to adjustment as provided in
Section 6 of this Plan).
(f) "Company" shall mean Helen of Troy Limited, a Bermuda company, or
any successor to the Company.
(g) "Date of Grant" shall mean the date on which a Stock Option is
granted to a Director, as provided in Section 3(a).
(h) "Director" shall mean those members of the Board who are not
employees of the Company or any of its Affiliates.
(i) "Exercise Price" shall mean the value per share of Common Stock
that is equal to 100% of the Fair Market Value of a share of Common Stock on the
last date preceding the Date of Grant on which sales of the Common Stock
occurred on the NASDAQ National Market System or other primary market or
exchange on which the Common Stock is traded.
(j) "Fair Market Value" shall be the average of the high and low prices
of Common Stock reported on the NASDAQ National Market System or other primary
market or exchange on which the Common Stock is traded as of the date on which
Fair Market Value is to be determined, provided that if no such sales were made
on such date, the mean of such prices as reported for the next preceding date on
which such sales occurred.
(k) "Ineligible Directors" shall mean all members of the Board who are
employees of the Company or any of its Affiliates.
<PAGE> 3
(l) "Plan" shall mean the Helen of Troy Limited 1995 Stock Option Plan
for Non-Employee Directors, as the same may be amended from time to time.
(m) "Stock Option Grant" shall mean a grant of a Stock Option made
pursuant to Section 3(a) of this Plan.
(n) "Stock Option" shall mean an option to purchase Common Stock, $.10
par value, of the Company. No Stock Option shall be an "incentive stock option"
(as defined in Section 422A of the Code).
SECTION 3. SHARES OF COMMON STOCK SUBJECT TO THE PLAN.
(a) The Company shall automatically grant to each Director, on the
first day of September, December, March and June following the Director's
appointment, election, reappointment, or reelection as a member of the Board,
Stock Option for 4,000 shares of Common Stock; provided, however, the aggregate
number of shares of Common Stock issued under Stock Options granted under the
Plan shall not exceed 480,000.
(b) A Stock Option shall be exercisable during a Director's lifetime
only by him or her or by his or her guardian or legal representative. A Stock
Option may, with respect to any shares of the Common Stock covered thereby which
have become vested, be exercised at the Exercise Price at any time and from time
to time during the period beginning one (1) year after the Date of Grant and
ending ten (10) years after the Date of Grant, provided that 100% of the shares
of Common Stock covered by any such Stock Option shall vest one (1) year after
such Date of Grant and provided further that no option shall be exercisable
until after regulatory and shareholder approval as described in Section 9 is
obtained. Notwithstanding the foregoing, if a Director ceases to be a member of
the Board for any reason, any outstanding Stock Options held by that Director
may be exercised only in accordance with, and in the periods described in,
Section 8(d).
(c) The Exercise Price of a Stock Option shall be payable upon the
exercise of the Stock Option by either cash or check. Exercise of a Stock Option
shall not be effective until the Company has received written notice of
exercise. The notice must specify the number of whole shares to be purchased
(which may not be less than 100 whole shares) and be accompanied by payment in
full of the aggregate Exercise Price of the number of shares purchased.
(d) Where the Company determines, in its discretion, that the exercise
of a Stock Option may give rise to an obligation to withhold Federal, state or
local income or other taxes, the Company may, in its discretion, require, as a
condition to the exercise of the Stock Option, the payment to the Company of
funds in addition to the exercise price of the Stock Option sufficient to
satisfy any such withholding obligations.
(e) No fractional shares shall be issued pursuant to the exercise of a
Stock Option, and no payment shall be made in lieu of fractional shares.
<PAGE> 4
(f) The Common Stock issued upon the exercise of Stock Options may be
(i) authorized but unissued shares of Common Stock, (ii) Common Stock then held
in the treasury of the Company or (iii) issued and outstanding shares of Common
Stock repurchased by the Company for such purpose.
SECTION 4. ADMINISTRATION OF THE PLAN.
(a) The Ineligible Directors shall administer the Plan and shall have
such powers and authority as may be necessary for them to carry out their
functions as described in the Plan. The Ineligible Directors shall have the
authority and discretion to interpret the Plan and to make all other
determinations necessary for Plan administration and to prescribe, amend and
rescind any rules and regulations relating to the Plan, provided that the
Ineligible Directors shall not have the discretion or authority to disregard or
change any of the terms and conditions under which Stock Options are granted to
Directors or may be exercised under the Plan. Stock Option Grants shall be
automatic as described in Section 3. All Ineligible Director interpretations,
determinations and actions shall be final and binding on all parties.
(b) Stock Options shall be evidenced by a written instrument in such
form as the Ineligible Directors shall approve and shall not include any terms
and conditions that are inconsistent with the provisions of this Plan. Shares of
Common Stock issued pursuant to a Stock Option may be legended if deemed
necessary by the Ineligible Directors to comply with applicable Federal or state
securities laws.
(c) The Ineligible Directors shall not be liable for any action or
determination made in good faith with respect to the Plan or any Stock Option
granted hereunder.
SECTION 5. ELIGIBILITY.
All Directors (as defined herein) shall be eligible to participate in the Plan.
SECTION 6. ADJUSTMENT PROVISIONS.
(a) Notwithstanding any other provision hereof except to the extent
provided in this Section 6, in the event of any change in the number of
outstanding shares of Common Stock effected without receipt of consideration
therefor by the Company, by reason of a stock dividend, or split, combination,
exchange of shares or other recapitalization, merger, or otherwise, in which the
Company is the surviving corporation, the aggregate number and class of the
reserved shares, the number and class of shares subject to each outstanding
Stock Option and the Exercise Price of each outstanding Stock Option shall be
automatically adjusted to accurately and equitably reflect the effect thereon of
such change, provided that each Stock Option shall be subject only to such
adjustment as shall be necessary to maintain the proportionate interest of the
holder thereof and preserve, without exceeding, the value of such Stock Option,
and, provided further, that any fractional share resulting from such adjustment
may be eliminated. In the event of a dispute concerning such adjustment, the
decision of the Ineligible Directors shall be conclusive. The number of reserved
shares or the number of shares subject to any outstanding Stock Option shall
<PAGE> 5
be automatically reduced or increased by any fraction included therein which
results from any adjustment made pursuant to this Section 6.
(b) Adjustments under Section 6(a) shall be made by the Ineligible
Directors, and their determination as to what adjustments shall be made and the
extent thereof shall be final, binding and conclusive. No fractional shares of
Common Stock shall be issued under the Plan on account of any such adjustments.
SECTION 7. GENERAL PROVISIONS.
(a) Nothing in the Plan or in any instrument executed pursuant to the
Plan shall confer upon any Director any right to continue to serve as a member
of the Board or shall affect the right of the Company and its shareholders to
terminate the services of any Director as a member of the Board at any time,
with or without cause.
(b) No shares of Common Stock shall be issued or transferred upon the
exercise of a Stock Option unless all applicable requirements imposed by federal
and state securities laws, regulatory agencies and markets in which the Common
Stock may be traded have been fully complied with. As a condition precedent to
the issuance of shares pursuant to the exercise of any Stock Option, the Company
may require the Director to meet such requirements.
(c) No Director and no beneficiary or other person claiming under or
through such Director shall have any right, title or interest in any shares of
Common Stock allocated or reserved under the Plan or subject to any Stock Option
except as to such shares of Common Stock, if any, that have been issued or
transferred to such Director or beneficiary.
(d) No Stock Option or any other right under the Plan, contingent or
otherwise, shall be transferable, assignable or subject to any encumbrance,
pledge or charge of any nature, other than (i) by will or the laws of descent or
distribution, or (ii) by bona fide gift to a family member(s) of the Director, a
trust established for the benefit of a family member(s) of the Director, or an
entity controlled by the Director or a family member(s) of the Director. Upon
the death of the Director, if the beneficiary of any Stock Option is the
executor or administrator of the estate of the Director, any rights with respect
to the Stock Option may be transferred to the person or persons or entity
(including a trust) entitled thereto under the will of the holder of the Stock
Option. If no beneficiary is designated, the Director's legal representative
shall be the beneficiary, and any rights with respect to the Stock Option may be
transferred to the Director's legal representative. If the beneficiary is a
person or entity other than the executor or administrator of the estate of the
Director, any rights with respect to the Stock Option may be transferred to the
designated beneficiary.
SECTION 8. AMENDMENT
(a) Subject to shareholder approval where expressly required by law or
regulation, the Board shall have the power to amend, suspend or terminate the
Plan at any time. No amendment
<PAGE> 6
will, except to the extent permitted in Section 6, or unless approved by the
shareholders of the Company if such approval is required by law or regulation:
(i) Change the class of persons eligible to receive Stock Options
under the Plan,
(ii) Materially increase the benefits accruing to Directors under
the Plan, or
(iii) Increase the duration of the Plan.
(b) The Board may not, without the Director's written consent, modify
the terms and conditions of a Stock Option previously granted under the Plan.
(c) No amendment, suspension or termination of the Plan shall, without
the Director's written consent, alter, terminate or impair any right or
obligation under any Stock Option previously granted under the Plan.
Notwithstanding any provision to the contrary herein, an amendment revising the
price, date of exercisability, option term or amount of shares of Common Stock
covered by a Stock Option may not be made more frequently than every six months,
unless such an amendment is required to comply with the Code or the Employee
Retirement Income Security Act or the rules promulgated thereunder.
(d) Notwithstanding any provision to the contrary herein, Stock Options
held by a Director shall expire as follows:
(i) If a Director ceases, for any reason other than such Director's
death or disability (as defined in Section 22(e)(3) of the Code),
to be a director of at least one of the corporations in the group
of corporations consisting of the Company and its Affiliates and
the Director does not remain or thereupon become an employee of the
Company or one or more of its Affiliates, such Director shall have
the right, for a period of six (6) months after the date of the
Director's ceasing to be a director (or, if upon ceasing to be a
director the Director remained or became an employee of the Company
or one or more of its Affiliates, on the date of the Director's
ceasing to be an employee), to exercise a Stock Option to the
extent such Stock Option is exercisable on the date of his
cessation of directorship or employment, and the Stock Option shall
terminate and cease to be exercisable as of the end of such six (6)
month period.
(ii) If a Director ceases by reason of a disability (as defined in
Section 22(e)(3) of the Code) to be a director or employee of at
least one of the corporations in the group of corporations
consisting of the Company and its Affiliates, such Director shall
have the right, for a period of 90 days after the date of cessation
of directorship or employment, to exercise a Stock Option to the
extent such Stock Option is exercisable on the date of his
cessation of directorship or employment, and the Stock Option shall
terminate and cease to be exercisable as of the end of such 90 day
period.
<PAGE> 7
(iii) If a Director dies while a member of the Board of the Company
or an Affiliate or while an employee thereof, a Stock Option shall
be exercisable by such Director's legal representatives, legatees,
or distributees for one (1) year following the date of such
Director's death to the extent the Stock Option is exercisable on
such Director's date of death, and the Stock Option shall terminate
and cease to be exercisable as of the first anniversary of the
Director's death.
In the event that regulations and rules of the Securities and Exchange
Commission cease to require shareholder approval as a condition of exemption
under Rule 16b-3 or any successor rule or regulation, and shareholder approval
is not required as a condition of registration or listing with an applicable
national market system or stock exchange, this Plan shall cease to be subject to
shareholder approval, and any amendment, suspension or termination of the Plan
shall be deemed to be effective upon adoption by the Board.
SECTION 9. EFFECTIVE DATE OF PLAN AND DURATION OF PLAN.
The Plan shall become effective upon adoption by the Board; however,
the Plan and all Stock Options granted under the Plan shall be void ab initio
and without further force or effect unless prior to June 6, 1996 the holders of
a majority of the Common Stock present or represented at a meeting of
shareholders approve the Plan. Notwithstanding Section 3(a), no certificates for
shares shall be issued pursuant to section 3(a) prior to receiving the
shareholder approval referred to in the preceding sentence.
Unless previously terminated, the Plan shall terminate and no more
Stock Options may be granted on the expiration of 10 years after adoption of the
Plan by the Board. The Plan shall continue in effect with respect to Stock
Options granted before termination of the Plan until such Stock Options have
been settled, terminated, or forfeited.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF HELEN OF TROY LIMITED AND
SUBSIDIARIES AS OF, AND FOR THE SIX MONTHS ENDED AUGUST 31, 1999, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-28-2000
<PERIOD-END> AUG-31-1999
<CASH> 18,669,000
<SECURITIES> 16,790,000
<RECEIVABLES> 67,541,000
<ALLOWANCES> 465,000
<INVENTORY> 94,859,000
<CURRENT-ASSETS> 204,074,000
<PP&E> 54,063,000
<DEPRECIATION> 7,430,000
<TOTAL-ASSETS> 314,841,000
<CURRENT-LIABILITIES> 45,345,000
<BONDS> 55,450,000
0
0
<COMMON> 2,913,000
<OTHER-SE> 211,133,000
<TOTAL-LIABILITY-AND-EQUITY> 314,841,000
<SALES> 143,708,000
<TOTAL-REVENUES> 143,708,000
<CGS> 87,764,000
<TOTAL-COSTS> 87,764,000
<OTHER-EXPENSES> 44,831,000
<LOSS-PROVISION> 502,000
<INTEREST-EXPENSE> 1,380,000
<INCOME-PRETAX> 16,136,000
<INCOME-TAX> 2,150,000
<INCOME-CONTINUING> 13,986,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,986,000
<EPS-BASIC> .48
<EPS-DILUTED> .46
</TABLE>
