<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only
[X] Definitive Proxy Statement only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
SLI, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials:
----------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
SLI, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 22, 2000
To the Shareholders of SLI, Inc.:
The Annual Meeting of Shareholders of SLI, Inc. (the "Company") will be
held at the offices of BankBoston, 100 Federal Street, Boston, Massachusetts on
May 22, 2000, at 11:00 a.m. (the "Meeting") for the following purposes:
1. To elect six directors to hold office until the 2001 Annual Meeting of
Shareholders and until their successors have been elected and qualified;
2. To approve the adoption of an Employee Stock Purchase Plan.
3. To transact such other business as may properly come before the Meeting
or any adjournment thereof.
Shareholders of record as of the close of business on April 13, 2000, will
be entitled to vote at the Meeting or any adjournment thereof. Information
relating to the matters to be considered and voted on at the Annual Meeting is
set forth in the proxy statement accompanying this Notice.
By Order of the Board of Directors,
/s/ Richard F. Parenti
-----------------------------------
Richard F. Parenti
Secretary
April 19, 2000
THE BOARD OF DIRECTORS IS SOLICITING THE ENCLOSED PROXY. WHETHER OR NOT YOU
EXPECT TO BE PRESENT AT THE MEETING, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED
PROXY AND RETURN IT IN THE PRE-ADDRESSED ENVELOPE PROVIDED FOR THAT PURPOSE. IF
YOU ATTEND THE MEETING, YOU MAY WITHDRAW THE ENCLOSED PROXY GIVEN BY YOU AND
VOTE YOUR SHARES IN PERSON.
<PAGE> 3
SLI, INC.
500 CHAPMAN STREET
CANTON, MASSACHUSETTS 02021
------------------------
PROXY STATEMENT
Introduction. This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of SLI, Inc. (the "Company"), of proxies
for use at the Annual Meeting of Shareholders to be held at the offices of
BankBoston, 100 Federal Street, Boston, Massachusetts, on May 22, 2000, at 11:00
a.m., or any adjournment thereof (the "Meeting"). This Proxy Statement and the
enclosed Annual Report to Shareholders for the Company's fiscal year ended
January 2, 2000 are being mailed to shareholders on or about April 19, 2000.
Solicitation. The entire cost of preparing, assembling, and mailing this
proxy material will be borne by the Company. In addition, the Company may
reimburse brokerage firms and other persons representing certain beneficial
owners of shares for their reasonable expenses in sending proxy material to and
obtaining proxies from such beneficial owners.
Revocation. A proxy may be revoked by a shareholder at any time prior to
its use by giving written notice of such revocation to the Secretary of the
Company, by appearing at the Meeting and voting in person, or by returning a
later dated proxy in the form enclosed.
Quorum and Voting. Shareholders of record as of the close of business on
April 13, 2000 will be entitled to vote at the Meeting. As of such record date,
there were issued and outstanding and entitled to vote 33,845,888 shares of the
common stock, $.01 par value per share, of the Company (the "Common Stock").
Holders of shares of Common Stock are entitled to one vote for each share owned
at the record date on all matters to come before the Meeting and any
adjournments thereof. The presence in person or by proxy of holders of a
majority of the shares of Common Stock entitled to vote at the Meeting
constitutes a quorum for the transaction of business.
Tabulation of Votes. Election of each director nominee and approval of the
Company's Employee Stock Purchase Plan will be by the affirmative vote of a
majority of the shares of Common Stock present or represented at the Meeting.
The Company will appoint an inspector of election to tabulate all votes and to
certify the results of all matters voted upon at the Meeting.
If the enclosed proxy is properly executed and returned prior to or at the
Meeting, and is not revoked prior to or at the Meeting, all shares represented
thereby will be voted at the Meeting as specified in the proxy by the persons
designated therein. If a signed proxy card is returned and the stockholder has
made no specifications with respect to voting matters, the shares will be voted
"FOR" the election of the nominees as directors and for the adoption of the
Employee Stock Purchase Plan, and in accordance with the judgment of the person
or persons voting such proxies with respect to such other matters, if any, as
may properly come before the Meeting.
The Board of Directors does not know of any matters that will be brought
before the Meeting other than those matters specifically set forth in the Notice
of Annual Meeting of Shareholders. However, if any other matter properly comes
before the Meeting, it is intended that the persons named in the enclosed form
of proxy, or their substitute acting thereunder, will vote on such matter in
accordance with their best judgment.
ELECTION OF DIRECTORS
The Board of Directors currently consists of six members. It is proposed
that the shareholders re-elect the present six directors, each of whom is a
nominee: Frank M. Ward, Andy Smith, Donald S. Dewsnap, Frederick B. Howard,
Richard E. Ingram and M. Barrington Hare. The term of each director elected will
be until the next Annual Meeting of Shareholders or until his successor is duly
elected and qualified. It is intended that the proxies will be voted for the
nominees listed above and cannot be voted for more than six
<PAGE> 4
nominees. Each nominee is at present available for election, but if any nominee
should become unavailable, the persons voting the accompanying proxy may, at
their discretion, vote for a substitute.
Unless authority is withheld, it is the intention of the persons voting
under the enclosed proxy to vote such proxy in favor of the election of these
six nominees to be directors of the Company until the 2001 Annual Meeting of
Shareholders and until their successors are elected and qualified. The
affirmative vote of a majority of the shares of Common Stock present or
represented at the Meeting by proxy is required for the election of these
nominees as directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR EACH OF THE NOMINEES.
INFORMATION REGARDING DIRECTORS
<TABLE>
<CAPTION>
YEAR FIRST
BECAME POSITIONS AND OFFICES
NAME AGE DIRECTOR WITH THE COMPANY
- ---- --- ---------- --------------------------------------
<S> <C> <C> <C>
Frank M. Ward(a)...................... 56 1992 President, Chief Executive Officer
Director and Chairman of the Board
Frederick B. Howard................... 64 1998 Executive Vice President and Director
M. Barrington Hare.................... 61 1998 President of SLI Miniature Lighting --
Europe and Director
Andy Smith............................ 52 1999 President of Sylvania Lighting
International B.V. and Director
Donald S. Dewsnap(b).................. 65 1995 Director
Richard E. Ingram(b).................. 58 1996 Director
</TABLE>
- ---------------
(a) Member of the Special Option Committee.
(b) Member of the Compensation Committee, Audit Committee and Stock Option
Committee.
BACKGROUND OF DIRECTORS
FRANK M. WARD has served as President, Chief Executive Officer and Director
of the Company and its predecessor, Xenell Corporation, since 1985. Prior to
1985, Mr. Ward was President of Xenell Marketing Corporation, an organization
formed to manage the product development, marketing and distribution of the
products of Xenell. Mr. Ward received a Bachelor of Science degree in Electrical
Engineering from Northeastern University and has completed post graduate studies
in physics and metallurgy.
FREDERICK B. HOWARD had been, until his retirement in June 1997, Vice
President and General Manager of Electronic Control Systems, a division of Osram
Sylvania Inc., since its formation in June 1996. From 1994 until 1996, he had
been Vice President and General Manager of Osram Sylvania Glass Technologies.
Other positions held during his 35 year tenure with GTE Sylvania include Vice
President of marketing for the Sylvania Lighting Division -- U.S., Vice
President of Lighting Special Products, Vice President, Latin America, for
International Lighting. Mr. Howard was appointed Executive Vice President of the
Company in September 1998. Mr. Howard holds a B.A. degree in economics from
Babson College, serves as a member of the Advisory Board of Directors, Mayer
Electric Supply Company, and is a member of the National Electric Manufacturers
Association.
M. BARRINGTON HARE is President of SLI Miniature Lighting-Europe, a
division formed by the amalgamation of Alba (Germany), Socop (France) and VCH
(United Kingdom), subsidiaries of the Company. Mr. Hare was a Director and Chief
Executive Officer of VCH at the date of acquisition, having headed the
management buy-out of the USA and UK lamp interests of General Instrument
Corporation in 1987. Prior to that date he served for 13 years as General
Manager and Vice President of the General Instrument Lamp Division responsible
for the USA and UK businesses. Prior thereto he was involved in
2
<PAGE> 5
various financial roles in diverse businesses both in Germany and the UK. Mr.
Hare is a Fellow of the UK Association of Certified Accountants and a past
member of the Institute of Taxation.
ANDY SMITH has been in the lighting business in excess of 30 years. He
joined Sylvania Lighting International B.V. ("SLI, B.V.") in 1994 and was
appointed President in October 1998. He is responsible for the Company's
European operations. Before joining SLI, B.V. he was Managing Director of Marlin
Lighting for five years and prior thereto served as managing director for
several engineering companies in the United Kingdom. He received a diploma in
management studies from the London Business School.
DONALD S. DEWSNAP has been Chairman of Norlico Corp., a supplier of
engineered chemical dispense systems to industrial users, since 1977. Prior
thereto he was involved in industrial research at Arthur D. Little Corp. and
spent fourteen years with GTE Sylvania Lighting Division in various product
marketing, management and sales engineering positions. Mr. Dewsnap holds a
Bachelor of Arts degree from Merrimack College.
RICHARD E. INGRAM has been the Chairman of the Board of Builder Marts of
America, Inc., a national distributor of lumber and building materials, since
November 1988, and he was its Chief Executive Officer until November 1993. He
was a founding director of Carolina First Corporation, the holding company for
Carolina First Bank, and Ingram Enterprises, Inc., a real estate development and
investment banking company. He is also a director of Synalloy Corporation,
Columbia Lumber, a retail lumber business, and Tel-Pan Communications, Inc., a
long distance provider in Panama. He has served on the Policy Advisory Board of
the Joint Center for Urban Studies at Harvard University. Mr. Ingram is a
graduate of the American Institute of Banking and the University of North
Carolina Executive Program.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors held 17 meetings during the year ended January 2,
2000. The current standing committees of the Board of Directors are the Audit
Committee, the Compensation Committee, the Stock Option Committee, and the
Special Option Committee. The Audit Committee met four times, the Compensation
Committee met once, the Stock Option Committee met once and the Special Option
Committee met once during the year ended January 2, 2000. All directors attended
at least 75% of the meetings held during the year ended January 2, 2000 (during
the period for which each was a director).
The members of the Audit Committee, Compensation Committee and the Stock
Option Committee are Donald S. Dewsnap and Richard E. Ingram. The Audit
Committee has general responsibility for accounting and audit activities of the
Company and its subsidiaries. The Audit Committee annually reviews the
qualifications of the independent certified public accountants, makes
recommendations to the Board as to their selection, reviews the scope, fees and
results of their audit and approves their non-audit services and related fees.
The Audit Committee meets periodically with management and with the Company's
independent auditors to determine the adequacy of internal controls and other
financial reporting matters. The Compensation Committee reviews general policy
matters relating to compensation and benefits of employees generally and has
responsibility for reviewing and approving compensation and benefits for all
executive officers of the Company. The Stock Option Committee administers the
Company's Incentive and Non-Statutory Stock Option Plan (the "Stock Option
Plan") and recommends grants of the specific options under the Stock Option
Plan. The Special 1997 Stock Option Plan (the "Special Option Plan", and
collectively with the Stock Option Plan, the "Option Plans") is administered by
a separate committee with the right to make grants of options under the Special
Option Plan (the "Special Option Committee"). Currently, the Special Option
Committee consists of Frank Ward only, with authority from the Board to grant
options only with respect to the employees of SLI, B.V. and its subsidiaries.
COMPENSATION OF DIRECTORS
The Company currently pays its non-employee and non-affiliated directors an
annual fee of $10,000 for attendance at meetings of the Board of Directors or
committees thereof. All directors are reimbursed for their reasonable expenses
in connection with the performance of their duties.
3
<PAGE> 6
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No person serving on the Compensation Committee at any time during fiscal
1999 was a present or former officer or employee of the Company or any of its
subsidiaries. During fiscal 1999, no executive officer of the Company served as
a member of the board of directors or compensation committee (or other board
committee performing equivalent functions) of another entity, one of whose
executive officers served on the Company's Board of Directors or Compensation
Committee.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
INTRODUCTION
Under rules of the Commission, the Company is required to provide certain
information concerning compensation provided to the Company's President and
Chief Executive Officer and the other executive officers of the Company. The
disclosure requirements for the executive officers include the use of tables and
a report of the Committee responsible for compensation decisions for the named
executive officers, explaining the rationale and considerations that led to
those compensation decisions. Therefore, the Compensation Committee of the Board
of Directors (the "Committee") has prepared the following report for inclusion
in this Proxy Statement.
COMPENSATION COMMITTEE ROLE
Since its formation, the Committee has been responsible for making
recommendations to the Board of Directors concerning the salaries of executive
officers. The Committee is also responsible for overseeing other forms of
compensation and benefits to other senior officers. The Committee's
responsibilities include reviewing salaries, benefits and other compensation of
senior officers and making recommendations to the full Board of Directors with
respect to these matters.
COMPENSATION PHILOSOPHY
The compensation philosophy for executive officers conforms to the
compensation philosophy of the Company generally for all employees. The
Company's compensation is designed to:
- provide compensation comparable to that offered by companies with similar
businesses, allowing the Company to successfully attract and retain the
employees necessary to its long-term success;
- provide compensation which relates to performance of the individual and
is based upon individual performance;
- provide incentive compensation that varies directly with both Company
performance and individual contribution to that performance; and
- provide an appropriate linkage between compensation and the creation of
shareholder value through awards tied to the Company's performance and
through facilitating employee stock ownership.
EXECUTIVE OFFICER COMPENSATION PROGRAM
The Company's executive officer compensation program is comprised of base
salary, cash bonuses based upon individual performance and long-term incentive
compensation in the form of stock options under the Stock Option Plan, which
options are recommended by the Stock Option Committee. In addition, the
Company's executive officers receive various other benefits, including medical
benefits, which are generally available to the employees of the Company.
BASE SALARY AND BONUS AWARDS
The Committee reviews the salaries of the executive officers of the Company
annually. The Committee made salary decisions about the executive officers based
upon a variety of considerations in conformance with
4
<PAGE> 7
the compensation philosophy stated above. First, salaries are competitively set
relative to companies with similar businesses to that of the Company. Second,
the Committee considered the performance of the individual executive officer
with respect to the areas under his or her responsibility, including an
assessment of the value of each to the Company. Third, internal equity among
employees was factored into the decision. Finally, the Committee considered the
Company's financial performance and its ability to absorb any increases in
salaries.
The Company entered into a two year employment agreement with Mr. Ward
effective January 5, 1998 which provided for a base compensation of $500,000 for
each of the two years with a discretionary bonus of $500,000. On March 4, 1999,
the Board, upon the recommendation of the Compensation Committee, increased Mr.
Ward's base salary from $500,000 to $1,000,000, commencing April 5, 1999.
Subsequently, on April 3, 2000 by mutual agreement, Mr. Ward's salary was set at
$750,000 per year. Mr. Ward also receives employee health benefits and
automobile and expense allowances. On September 11, 1998, the Company entered
into an employment contract with Mr. Frederick Howard to serve as the Executive
Vice President of the Company at a salary of $175,000 per year. The Company, on
May 1, 1998, entered into a four year employment agreement with Mr. Richard
Parenti to serve as Vice President of Finance for a salary of $125,000 per year.
His salary was increased to $175,000 per year on October 22, 1999. See
"Employment Agreements" below. The Committee believes that the aggregate
compensation for each of Messrs. Ward, Howard and Parenti is reasonable based
upon each of their responsibilities, the revenue size of the Company,
profitability of the Company, growth and other factors when compared to
executive officers of similar companies having comparable positions.
STOCK OPTION AWARDS
The Company maintains the Stock Option Plan, which is designed to align
executive officers' and shareholders' interests in the enhancement of
shareholder value. Stock options are granted upon the recommendation of the
Stock Option Committee with the approval of the disinterested members of the
Board. Executive officers and others are eligible to receive options under the
Stock Option Plan. The Committee strongly believes that the interests of
shareholders and executives become more closely aligned when such executives are
provided an opportunity to acquire a proprietary interest in the Company through
ownership of the Company's Common Stock. Accordingly, key employees of the
Company, including executive officers, as part of their overall compensation
package, are eligible for participation in the Stock Option Plan, whereby they
are granted options generally exercisable at no less than fair market value on
the date of grant. Because no benefit is generally received unless the Company's
stock price performs favorably, awards under the Stock Option Plan are intended
to provide incentives for executive officers to enhance long-term Company
performance, as reflected in stock price appreciation, thereby increasing
shareholder value.
The stock option grants are principally based on overall consolidated
results of the Company, achievement of Company objectives, individual
performance, including managerial effectiveness, initiative and team work, and
are in such amounts that reflect what the Stock Option Committee believes are
necessary to attract, retain and motivate senior management and other key
employees. The members of the Stock Option Committee and the Compensation
Committee are the same, and stock option awards are considered in the package of
the key employees. The Committee believes that stock option awards are rewards
for past growth and the incentive for continued growth.
5
<PAGE> 8
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
The Committee has reviewed the potential consequences for the Company of
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
which imposes a limit on tax deductions for annual compensation in excess of $1
million for certain executives of public companies. The Company believes that
options granted under the Option Plans are exempt from the limitation, and other
compensation expected to be paid during fiscal year 2000 is at or below this
compensation limitation.
COMPENSATION COMMITTEE
Donald S. Dewsnap
Richard E. Ingram
The report of the Compensation Committee shall not be deemed incorporated
by reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 or under the
Securities Act of 1934 (together, the "Acts"), except to the extent that the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
COMPENSATION TABLES
The following tables set forth certain information relating to the
compensation earned by the Chief Executive Officer of the Company and each of
the four other most highly compensated executive officers of the Company whose
total cash compensation for the fiscal year indicated exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ---------------------
-------------------------- SECURITIES UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(A) OPTIONS
- --------------------------- ---- -------- -------- ---------------------
<S> <C> <C> <C> <C>
Frank M. Ward...................................... 1999 $875,000 $ -- 200,000
President and 1998 500,000 -- --
Chief Executive Officer 1997 250,000 -- --
Frederick B. Howard................................ 1999 175,000 -- --
Executive Vice President 1998 43,750 -- 100,000
1997 -- -- --
Richard F. Parenti................................. 1999 144,231 -- --
Vice President -- Finance 1998 125,000 88,039 75,000(b)
1997 109,299 -- 75,000(b)
M. Barrington Hare................................. 1999 193,548 -- --
President, SLI Miniature 1998 91,774 -- 100,000
Lighting -- Europe 1997 -- -- --
Andy Smith......................................... 1999 345,265 -- --
President of SLI, B.V.(c) 1998 224,884 67,097 125,000
1997 73,435 8,387 --
</TABLE>
- ---------------
(a) Represents bonus earned during the indicated fiscal year. In some instances,
all or a portion of the bonus was paid during the next fiscal year.
(b) The options granted in 1997 were canceled and reissued in 1998 as a result
of a repricing which occurred in September 1998.
(c) Mr. Andy Smith participates in a pension plan for a U.K. subsidiary, whereby
at normal retirement age (65) he will be entitled to receive 1/60 of his
final annual salary (limited, however, to approximately $137,500) for each
year of service. At age 65 he will have been employed for 18 years. Based
upon his current salary he will receive, upon retirement at age 65,
approximately $42,000 per year. In 1999, the Company's contribution to the
plan on behalf of Mr. Smith was $23,690.
6
<PAGE> 9
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERCENT OF
TOTAL POTENTIAL REALIZABLE VALUE AT
NUMBER OF OPTIONS ASSUMED ANNUAL RATES OF
SECURITIES GRANTED TO STOCK PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES OPTION TERM(A)
OPTIONS IN EXERCISE EXPIRATION -----------------------------
NAME GRANTED(B) FISCAL YEAR PRICE/SH DATE 5% 10%
- ---- ---------- ----------- -------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Frank M. Ward................. 200,000 22.9% $9.9375 10/25/09 $1,250,138 $3,168,075
President and CEO
</TABLE>
- ---------------
(a) The assumed annual rates of appreciation of 5% and 10% would result in the
price of the Company's stock increasing 62.9% and 159.4%, respectively over
the term of the option.
(b) All options were granted at an exercise price equal to the fair market
value of the Company's Common Stock on the date of grant. Options granted
to Mr. Ward terminate ten years from the date of grant.
OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT 1/2/00 OPTIONS AT 1/2/00(B)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED(A) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Frank M. Ward............... -- $ -- -- 200,000 $ -- $712,500
Frederick B. Howard......... -- -- 50,000 50,000 178,125 178,125
Richard F. Parenti.......... -- -- 46,050 45,000 221,010 160,313
Andy Smith.................. 25,000 321,875 25,000 75,000 89,063 267,187
M. Barrington Hare.......... -- -- 20,000 80,000 65,000 260,000
</TABLE>
- ---------------
(a) Value realized is based on the fair market value of the Common Stock as of
the date of exercise, minus the exercise price, multiplied by the number of
shares to which the exercise relates.
(b) Value is based on the closing price of the Common Stock as reported on the
New York Stock Exchange as of the last business day prior to the end of
Fiscal 1999, $13.50, minus the exercise price, multiplied by the number of
shares to which the exercise relates.
EMPLOYMENT AGREEMENTS
On September 11, 1998, the Company entered into a two year employment
agreement with Mr. Fred Howard pursuant to which Mr. Howard receives an annual
salary of $175,000 per year. In the event of death or termination of employment
the agreement will terminate without recourse to either the Company or Mr.
Howard. Mr. Howard is also entitled to a bonus of $50,000 each year based on
certain pre-determined objectives. Mr. Howard also received options to purchase
80,000 shares of the Company's Common Stock, exercisable at $9.9375 per share,
of which 40,000 vested on October 1, 1999 and 40,000 will vest on October 1,
2000. The agreement also provides (i) for the Company to furnish Mr. Howard with
an automobile during the term of the agreement and (ii) in the event of the
death of Mr. Ward or a change in control of the Company, the option granted to
Mr. Howard will immediately vest and terminate within two years of the immediate
vesting.
The Company has also entered into a four year employment agreement with Mr.
Richard Parenti, the Company's vice president of finance and chief accounting
officer, commencing as of May 1, 1998. The agreement was amended on October 22,
1999, at which time his annual salary was increased from $125,000 to $175,000.
Mr. Parenti is entitled to participate in all employee benefits. In the event of
disability that renders the employee incapable of performing his normal duties
that continues for a period of 90 days, the Company may terminate the employee's
employment. The employment agreement is also terminable by either party for
cause.
7
<PAGE> 10
CERTAIN TRANSACTIONS
The Company leases on a month-to-month basis approximately 6,120 square
feet of office space in Canton, Massachusetts from Frank M. Ward, the President,
Chief Executive Officer and a director of the Company. Rent expense on this
facility was $60,000 for the fiscal 1997, $95,000 for fiscal 1998 and $102,000
for fiscal 1999. Management believes the rent to be comparable to the rent that
would be paid to an unrelated party.
Based solely on its review of the copies of forms received by it, or
representations from certain reporting persons, the Company believes that the
directors and officers of the Company filed timely Form 3 and 4 Reports with the
Securities and Exchange Commission during the fiscal year ended January 2, 2000,
except for Mr. Andy Smith, who filed a late Form 3 Report and one late Form 4
Report relating to one transaction.
INDEPENDENT PUBLIC ACCOUNTANTS
On the recommendation of the Audit Committee, the Certified Public
Accounting firm of Ernst & Young LLP, the Company's independent accountants for
the fiscal year ended January 2, 2000, has been selected as the Company's
independent accountants for the fiscal year ending December 31, 2000. The
Company does not expect that a representative of that accounting firm will be
present at the Meeting.
8
<PAGE> 11
STOCK PRICE PERFORMANCE GRAPH
The following graph presents a comparison of the cumulative total
shareholder return on the Company's Common Stock with the Standard & Poors 500
Index and a Market Cap-Weighted Comparables Composite Index. This graph assumes
that $100 was invested as of the close of markets on June 16, 1995, the date of
the Company's initial public offering, in the Company's Common Stock and in the
indices, and that all dividends were reinvested. The stock price performance
shown below is not necessarily indicative of future price performance.
<TABLE>
<CAPTION>
SLI S&P 500 COMPOSITE INDEX(A)
--- ------- ------------------
<S> <C> <C> <C>
6/16/95 100.00 100.00 100.00
12/3/95 136.67 116.14 103.50
12/1/96 335.00 142.26 131.34
11/30/97 342.50 179.47 156.85
1/3/99 394.69 227.50 145.34
1/2/00 195.00 269.57 205.23
</TABLE>
- ---------------
(a) Market Cap-Weighted Comparables Composite Index includes the stock of nine
companies selected for comparison purposes.
The stock price performance graph shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Acts except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under the Acts.
APPROVAL OF THE SLI, INC.
2000 EMPLOYEE STOCK PURCHASE PLAN
GENERAL
On April 14, 2000, the Board of Directors adopted the SLI, Inc. 2000
Employee Stock Purchase Plan (the "Stock Purchase Plan"). The Stock Purchase
Plan will be effective on July 1, 2000, subject to approval by the shareholders
of the Company at the Annual Meeting. The Company believes that the Stock
Purchase Plan is important to provide incentives to present and future employees
of the Company and its subsidiaries to share in the growth of the Company by
acquiring or increasing their proprietary interest in the Company. The
9
<PAGE> 12
purpose of the Stock Purchase Plan is to encourage and facilitate the purchase
by eligible employees of the Company's Common Stock. A copy of the Stock
Purchase Plan is attached to this Proxy Statement as Exhibit A and is
incorporated herein by reference.
The Stock Purchase Plan is intended to qualify as an "employee stock
purchase plan" under Section 423 of the Code. A maximum of 1,000,000 shares
(subject to certain anti-dilution provisions) of Common Stock are available for
issuance under the Stock Purchase Plan. The Stock Purchase Plan has a term of
five years.
The Stock Purchase Plan will be approved upon receiving the affirmative
vote of holders of a majority of the shares present or represented by proxy at
the meeting. Proxies will be voted in accordance with the specifications marked
thereon, and, if no specification is made, will be voted FOR approval of the
Stock Purchase Plan.
ADMINISTRATION
The Stock Purchase Plan is to be interpreted and administered by an
Employee Stock Purchase Plan Committee, composed of such persons as the Board
shall from time to time determine to administer the Stock Purchase Plan subject
to the control and direction of the Board.
ELIGIBILITY
Participation in the Stock Purchase Plan is limited to employees of the
Company and its subsidiaries who have completed ninety (90) days of employment
with the Company and whose customary employment is more than twenty (20) hours
per week and more than five (5) months in any calendar year. Employees who own
five percent (5%) or more of the voting stock of the Company may not participate
in the Stock Purchase Plan.
TERMS OF OFFERING
There will be a series of annual offerings under the Stock Purchase Plan,
commencing on July 1, 2000. The exercise date for each offering will be the last
business day of June. Each offering will commence on the first business day
following the preceding exercise date. On the exercise date, the balance in each
participant's stock purchase account will be used (without further action by the
participant) to purchase the number of shares, including fractional shares to
the fourth decimal, available for purchase at the exercise price on such date.
The price per share to be paid by participants under the Stock Purchase
Plan will be the lesser of 85% of the fair market value of the Common Stock on
the grant date of the option or the exercise date. The exercise price is payable
through payroll deductions from the participant's compensation. No participant
will be granted an option which permits him to purchase in excess of $25,000 of
fair market value of Common Stock per calendar year. The closing price of the
Company's Common Stock, as reported by the New York Stock Exchange on April 12,
2000 was $15.00.
No participant or his legal representatives, legatees or distributees will
be deemed to be the holder of any shares of Common Stock subject to an offering
until the purchase price for the shares has been paid. No payroll deductions
credited to a participant's stock purchase account nor any rights with regard to
the exercise of rights to receive shares of Common Stock under the Stock
Purchase Plan may be assigned, transferred, pledged or otherwise disposed of in
any way by a participant other than by will or the laws of descent and
distribution. Options under the Stock Purchase Plan will be exercisable during a
participant's lifetime only by him, his guardian or legal representative.
TERMINATION OF EMPLOYMENT
In the event of a participant's retirement, death or termination of
employment, no payroll deduction will be taken from any compensation due to the
participant at such time, and only the deductions made prior to such date of
retirement, death or termination will be used to purchase shares of Common
Stock. The full
10
<PAGE> 13
shares of Common Stock and cash in lieu of fractional shares, if any, in his
stock purchase account will be paid to the former employee (or his legatees and
distributees, in the event of death).
AMENDMENT AND TERMINATION
The Board of Directors may amend, suspend or terminate the Stock Purchase
Plan or any portion thereof at any time; provided, however that (a) no amendment
may be made without shareholder approval to the extent such amendment would
cause the Stock Purchase Plan to fail to meet the requirements of Section 423 of
the Code, and (b) to the extent required by Rule 16b-3 and the Securities and
Exchange Commission's interpretations and releases under Rule 16b-3, no
amendment may be made without shareholder approval that would (i) materially
increase the number of shares that may be issued under the Stock Purchase Plan,
(ii) materially modify the requirements as to eligibility for participation in
the Stock Purchase Plan or (iii) materially increase the benefits accruing to
participants under the Stock Purchase Plan.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
In the opinion of the Company, the Stock Purchase Plan qualifies as an
"employee stock purchase plan" within the meaning of Section 423 of the Internal
Revenue Code (the "Code"). As such, neither the grant of an option to a
participant to purchase shares under the Stock Purchase Plan nor his subsequent
purchase of shares will result in the recognition of income to him provided that
(i) he is an employee of the Company or a subsidiary on the exercise date and
(ii) no disposition of the shares is made within two years after the exercise
date.
Upon a sale or other disposition by the participant of shares after
satisfying the holding period requirement (the later of two years after the
granting of an option or one year from the date of exercise), or upon a
participant's death while owning shares (whether before or after satisfying the
holding period requirement), the participant will recognize ordinary income in
an amount equal to the lesser of (i) the excess of the fair market value of the
shares at the time of the disposition or death over the price paid for the
shares or (ii) the excess of the fair market value on the exercise date over the
option price on such exercise date. Any amount realized by the participant in
excess of the option price paid for the shares and the ordinary income amount,
if any, would be taxable as long-term capital gain.
If a participant satisfies the holding period and employment requirements,
no amount is deductible by the Company by reason of the grant or exercise of
options or the disposition of shares.
If the participant sells or disposes of shares before satisfying the
holding period requirement, the participant will recognize ordinary income in an
amount equal to the excess of the fair market value of the shares on the
exercise date over the price paid for the shares. In that event, the Company may
claim a deduction for compensation paid in the same amount and at the same time
as the income is taxable to the participant. Any difference between the fair
market value of the shares on the exercise date and the amount realized on such
sale would be subject to long-term or short-term capital gain or loss treatment,
depending on the length of time the shares were held.
The Company is unable to determine the amount of benefits that may be
received by participants under the Stock Purchase Plan as participation is
discretionary with each employee.
The Board of Directors recommends that the shareholders vote FOR approval
of the Stock Purchase Plan.
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<PAGE> 14
PRINCIPAL SHAREHOLDERS
The following table sets forth as of April 1, 2000, information with
respect to the beneficial ownership of the Common Stock by (i) each person who
is known by the Company to be the beneficial owner of more than 5% of the
Company's outstanding shares of Common Stock, (ii) each director and executive
officer of the Company, and (iii) all directors and executive officers of the
Company as a group. Unless otherwise indicated, each of the shareholders listed
below has sole voting and investment power with respect to the shares of Common
Stock beneficially owned.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED
----------------------
NAME AND ADDRESS(A) NUMBER PERCENT
- ------------------- ---------- -------
<S> <C> <C>
Frank M. Ward............................................... 10,159,954(b) 30.0%
Patrick J. Cox and Marianne Connaughton, Trustees of Trusts
established for the children of Frank M. Ward(c).......... 2,096,395 6.2
Richard F. Parenti(d)....................................... 54,550 *
Robert Mancini(e)........................................... 33,500 *
Andy Smith(f)............................................... 31,396 *
Donald S. Dewsnap(g)........................................ 36,925 *
Frederick B. Howard(h)...................................... 52,600 *
Richard E. Ingram(i)........................................ 47,250 *
M. Barrington Hare(j)....................................... 20,000 *
All directors and executive officers as a group (8
persons).................................................. 10,436,175 30.8%
</TABLE>
- ---------------
* Less than 1%
(a) The address of the Company's directors and officers is SLI, Inc., 500
Chapman Street, Canton, Massachusetts 02021.
(b) Includes 268,784 shares owned by the Frank M. Ward Family Trust, of which
Mrs. Ward is one of two Trustees.
(c) Ms. Connaughton is the sister of Mr. Frank Ward. The address of the Trusts
is c/o Veritas Advisers, Inc., 84 State Street, Boston, Massachusetts
02109.
(d) Includes 46,050 shares subject to options exercisable within 60 days of the
date of this Proxy Statement.
(e) Includes 33,500 shares subject to options exercisable within 60 days of the
date of this Proxy Statement.
(f) Includes 25,000 shares subject to options exercisable within 60 days of the
date of this Proxy Statement.
(g) Includes 6,000 shares subject to options exercisable within 60 days of the
date of this Proxy Statement.
(h) Includes 52,500 shares subject to options exercisable within 60 days of the
date of this Proxy Statement.
(i) Includes 37,800 shares owned by Richard E. Ingram as trustee of the Donna
C. Ingram Trust and 6,000 shares subject to options exercisable within 60
days of the date of this Proxy Statement.
(j) Includes 20,000 shares subject to options exercisable within 60 days of the
date of this Proxy Statement.
OTHER MATTERS
The management has no information that any other matters will be brought
before the Meeting. If, however, other matters do come before the Meeting, it is
the intention of the persons named in the Proxy to vote the shares to which the
proxy relates on such matters in accordance with their best judgment,
discretionary authority to do so being included in the Proxy.
SHAREHOLDER PROPOSALS FOR THE 2001 ANNUAL MEETING
In order to be included in the proxy materials for the 2001 Annual Meeting
of Shareholders of the Company, shareholder proposals must be received by the
Company not later than December 15, 2000.
12
<PAGE> 15
GENERAL
THE COMPANY WILL PROVIDE FREE OF CHARGE TO ANY SHAREHOLDER FROM WHOM A
PROXY IS SOLICITED PURSUANT TO THIS PROXY STATEMENT, UPON WRITTEN REQUEST FROM
SUCH SHAREHOLDER, A COPY OF THE COMPANY'S ANNUAL REPORT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION ON FORM 10-K FOR THE COMPANY'S FISCAL YEAR
ENDED JANUARY 2, 2000. REQUESTS FOR SUCH REPORT SHOULD BE DIRECTED TO INVESTOR
RELATIONS AT SLI, INC., 500 CHAPMAN STREET, CANTON, MA 02021.
The Company expects to hold its next shareholder meeting on or about May
22, 2001 and proxy materials in connection with that meeting are expected to be
mailed approximately 30 days prior to the meeting.
SLI, Inc.
/s/ Richard F. Parenti
--------------------------------
Richard F. Parenti
Secretary
Date: April 19, 2000
13
<PAGE> 16
EXHIBIT A
SLI, INC.
2000 EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I
NAME AND PURPOSE
1.1 Name. The name of this Plan is the "SLI, Inc. 2000 Employee Stock
Purchase Plan."
1.2 Purpose and Construction. The Plan is intended to provide a method
whereby employees of SLI, Inc. and certain other related corporations will have
an opportunity to acquire a proprietary interest in SLI, Inc. through the
purchase of shares of its common stock. It is intended for this Plan to qualify
as an "employee stock purchase plan" under Section 423 of the Internal Revenue
Code of 1986, as amended (the "Code"). The provisions of the Plan shall be
construed so as to extend and limit participation in a manner consistent with
the requirements of the Code.
ARTICLE II
DEFINITIONS OF TERMS
2.1 General Definitions. The following words and phrases, when used in the
Plan, unless otherwise specifically defined or unless the context clearly
otherwise requires, shall have the following respective meanings:
(a) Accumulation Period. The period beginning on the first day
following an Exercise Date and ending upon the immediately succeeding
Exercise Date. The initial Accumulation Period under the Plan shall begin
on July 1, 2000 and end on June 30, 2001.
(b) Board. The Board of Directors of SLI, Inc.
(c) Business Day. Any day that the exchange upon which the Common
Stock is then traded is open for business.
(d) Committee. The Employee Stock Purchase Plan Committee as
appointed by the Board.
(e) Common Stock. The Company's common stock, $.01 par value.
(f) Company. SLI, Inc.
(g) Designated Subsidiary. Subsidiaries which have been designated by
the Board from time to time in its sole discretion as eligible to
participate in the Plan.
(h) Effective Date. July 1, 2000.
(i) Employee. Any person who is regularly and actively employed by
the Employer or one of its Designated Subsidiaries; provided, however, that
the term "Employee" does not include any person whose customary employment
is 20 hours or less per week or whose customary employment is for not more
than five months in any calendar year.
(j) Employer. The Committee may from time to time designate the
corporations whose employees may be offered Options under the Plan.
Designations of participating corporations shall be made from time to time
by the Committee from among a group of corporations consisting of the
Company and its Parents or Subsidiaries. The group of corporations from
among which such designations shall be permitted shall include those
corporations which may become Parents or Subsidiaries after the adoption
and approval of this Plan.
(k) Entry Date. The Entry Date shall be the first day of July of each
year. The initial Entry Date shall be July 1, 2000, in connection with the
initial commencement of the Plan.
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<PAGE> 17
(l) Exercise Date. The last Business Day of June of each year of the
Plan. The initial Exercise Date under the Plan shall be June 30, 2001.
(m) Fair Market Value. The last reported sales price at which shares
of the Common Stock were traded or, if the Common Stock was not traded on a
specified date, the last reported sales price on the date nearest preceding
such date.
(n) Officer. The president, principal financial officer, principal
accounting officer (or, if there is no such accounting officer, the
controller), any vice-president in charge of a principal business unit,
division or function (such as sales, administration or finance), any other
officer who performs a policy-making function, or any other person who
performs similar policy-making functions for the Company, its Parents or
Subsidiaries, or as otherwise defined in Rule 16a-1(f), promulgated under
the Securities and Exchange Act of 1934, as amended (the "Exchange Act").
(o) Option. An option granted under the Plan to purchase Shares.
(p) Option Date. The last Business Day of June of each year on which
the Board grants Options under the Plan. The initial Option Date under the
Plan shall be June 30, 2001.
(q) Parent. Any corporation (other than the Company) in an unbroken
chain of corporations ending with the Company if, at the time of the grant
of an Option, 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.
(r) Participant. An eligible Employee who has elected to participate
in the Plan.
(s) Plan. The SLI, Inc. 2000 Employee Stock Purchase Plan, including
all amendments and supplements thereto.
(t) Share. A share of Common Stock.
(u) Subsidiary. Any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the time
of the grant of an Option, 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.
2.2 Other Definitions. In addition to the above definitions, certain words
and phrases used in the Plan may be defined in other portions of the Plan.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 Initial Eligibility. An Employee who has completed ninety (90) days of
employment shall be eligible to participate under the Plan on or after the first
Entry Date following the completion of the Employee's initial ninety (90) days
of employment. For purposes of determining eligibility, employment by an entity
which is acquired by the Employer or whose assets are acquired by the Employer
shall not be treated as employment by the Employer unless the Board shall make a
determination otherwise.
3.2 Leave of Absence. For purposes of participation in the Plan, a person
on leave of absence shall be deemed to be an Employee for the first 90 days of
such leave of absence and such person's employment shall be deemed to have
terminated at the close of business on the 90th day of such leave of absence
unless such person shall have returned to active employment prior to the close
of business on such 90th day. Termination by the Employer of any person's leave
of absence, other than termination of such leave of absence on return to active
employment shall terminate a person's employment for all purposes of the Plan
and shall terminate such person's participation in the Plan and right to
exercise any option.
3.3 Restriction on Participation. Notwithstanding any provision of the
Plan to the contrary, no Employee shall be eligible to participate in the Plan
(i) if, immediately after the grant, such person would own
A-2
<PAGE> 18
stock, and/or hold outstanding options to purchase stock, possessing five
percent (5%) or more of the total combined voting power or value of all classes
of stock of the Company or of any Parent or Subsidiary (for purposes of this
paragraph, the rules of Section 424(d) of the Code shall apply in determining
stock ownership of any person) or (ii) if such option would permit his or her
rights to purchase stock under all employee stock purchase plans (described in
Section 423 of the Code) of the Company and its Subsidiaries to accrue at a rate
which exceeds Twenty-Five Thousand Dollars ($25,000) of fair market value of
such stock (determined at the time such option is granted) for each calendar
year in which such option is outstanding at any time.
3.4 Commencement of Participation. An eligible Employee may become a
participant by completing the forms provided by the Employer (including the
"Purchase Order Form" and the "Payroll Deduction Authorization Form,"
collectively referred to herein as "Participation Forms") and filing them with
the individual designated by the Committee as the Stock Purchase Plan
Coordinator (the "Coordinator") on or before the date set therefor by the
Committee.
3.5 Participation Forms. The Participation Forms which eligible Employees
must complete, sign and deliver to the Employer in order to participate in the
Plan shall include the following:
(a) A specification of the fixed dollar amount to be deducted from the
compensation payable to the Employee in each payroll period.
(b) A direction that the maximum possible number of Shares be purchased
on the Exercise Date, except to the extent the Employee shall have
notified the Employer in writing (in accordance with the
requirements of Section 7.4 of the Plan) to the contrary prior to
the Exercise Date.
(c) A specification of the exact name of the Employee to whom the Stock
purchased is to be registered.
(d) An agreement that the Employee will inform the Company of any
disposition of any Shares acquired under the Plan within one year
from the Exercise Date pertaining to such Shares.
(e) A designation of the Beneficiary(ies) to whom the balance in the
Employee's account is to be paid in the event of his/her death.
ARTICLE IV
SHARES TO BE OFFERED
4.1 Number of Shares. The number of Shares for which Options may be
granted under the Plan shall be 1,000,000. Such Shares may be authorized but
unissued Shares, Shares held in the treasury, or both.
4.2 Reusage. If an Option expires or is terminated, surrendered or
cancelled without having been fully exercised, the Shares covered by such Option
which were not purchased shall again be available for issuance under the Plan.
4.3 Adjustments. In the event that prior to the transfer of all of the
Shares which may be issued in accordance with this Plan, there shall be any
increases or reductions in the number of shares of Common Stock of the Company
outstanding by reason of any one or more stock dividends, stock splits, stock
constrictions or any other material change in the capital structure of the
Company by way of reclassification, reorganization or recapitalization, the
aggregate number of Shares which may be issued under this Plan and the number of
Shares which may be purchased under each Option then or thereafter in effect and
the purchase price paid therefor shall be proportionately and equitably
adjusted.
4.4 Ownership of Shares. No one shall, by any reason of this Plan or of
any Option granted or the exercise of rights under any such Option, have any
interest in Shares of the Company nor any rights of, or status as, a stockholder
of the Company unless and until (i) any such Option has been exercised, (ii)
shares of Common Stock shall have been paid for in full, and (iii) all of the
applicable provisions of this Plan and of the Option granted shall have been
complied with.
A-3
<PAGE> 19
4.5 Delivery. Purchased Shares shall be registered in the name of the
Plan, the Company or its designee and held on behalf of and in the name of the
Participants in an account established on Participant's behalf. Stock
certificates shall not be issued to Participants for the Shares held on their
behalf, but all rights accruing to an owner of record of such Shares, including,
without limitation, voting rights, shall belong to the Participant for whose
account such Shares are held. Notwithstanding the foregoing, a Participant may
elect, at Participant's expense, to receive a stock certificate for the account
established on behalf of the Participant, subject to the terms and conditions of
the Plan.
ARTICLE V
PAYROLL DEDUCTIONS
5.1 Payroll Deductions. At the time the Participant files the
Participation Forms, the Participant may designate a fixed dollar amount which
the Participant shall elect to have deducted by the Employer from compensation
otherwise payable to the Participant during an Accumulation Period. The minimum
fixed dollar payroll deduction amount per payroll period shall be $10.00.
5.2 Participant's Account. A stock purchase account shall be set up on the
books of the Company or its designee in the name of each Participant. The amount
of all payroll deductions shall be credited to the respective stock purchase
accounts of the Participants on such books.
5.3 Changes in Payroll Deductions. A Participant may discontinue his or
her participation in the Plan as provided in Section 7.4, or, on any one
occasion only during the Accumulation Period, may decrease the rate of his or
her contributions during the Accumulation Period by completing and filing with
the Company a new subscription agreement. The change in rate shall be effective
as of the beginning of the next calendar month following the date of filing of
the new subscription agreement, if the agreement is filed at least ten (10)
business days prior to such date and, if not, as of the beginning of the next
succeeding calendar month.
ARTICLE VI
GRANTING OF OPTIONS
6.1 Grant of Option. On the Entry Date of each Accumulation Period, each
eligible Employee participating in such Accumulation Period shall be granted an
option to purchase, on the Exercise Date, a number of shares of the Company's
Common Stock determined by dividing such Employee's contributions accumulated
prior to such Exercise Date and retained in the Participant's stock purchase
account as of the Exercise Date by the lower of (i) eighty-five percent (85%) of
the fair market value of a share of the Company's Common Stock on the Entry
Date, or (ii) eighty-five percent (85%) of the fair market value of a share of
the Company's Common Stock on the Exercise Date; provided however, that the
maximum number of shares an Employee may purchase during each Accumulation
Period shall not exceed the limitations set forth in Sections 3.3. The fair
market value of a share of the Company's Common Stock shall be determined as
provided in Section 6.2.
6.2 Option Price. The option price per share of the shares offered in a
given Accumulation Period shall be the lower of: (i) 85% of the fair market
value of a share of the Common Stock of the Company on the Entry Date; or (ii)
85% of the fair market value of the share of the Common Stock of the Company on
the Exercise Date. The fair market value of the Company's Common Stock on a
given date shall be the closing price of the Common Stock for such date (or, in
the event that the Common Stock is not traded on such date, on the immediately
preceding trading date), as reported by the New York Stock Exchange or if such
stock is not listed on an exchange by the closing price of the Common Stock for
such date (or in the event that the Common Stock is not traded on such date, on
the immediately preceding date), as reported by Nasdaq.
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<PAGE> 20
ARTICLE VII
EXERCISE OF OPTION
7.1 Automatic Exercise. Each Participant's Option to purchase Shares will
be automatically exercised for him/her on each Exercise Date for the number of
Shares, including fractional shares to the fourth decimal, which the accumulated
funds as of the Exercise Date will purchase at the applicable Option price,
subject to the limitations set forth in the Plan and subject to allotment in
accordance with Section 7.2. The Employer or its designee will report to each
Participant the number of Shares purchased by him/her and the cost of such
Shares on a periodic basis, at least annually.
7.2 Allotment of Shares. In the event that, on any Exercise Date, the
aggregate funds and Shares available for the purchase of Shares, pursuant to the
provisions of Section 7.1, would purchase a greater number of Shares than the
number of Shares then available for purchase under the Plan on such Exercise
Date, the Company shall issue to each Participant, on a pro rata basis, such
number of Shares as, when taken together with the Shares issued to all other
Participants, will result in the issuance of Shares totaling no more than the
number of Shares then remaining available for issuance under the Plan on such
Exercise Date.
7.3 Non-transferability. No funds credited to a Participant's stock
purchase account nor any rights with regard to the exercise of an Option or to
receive Shares under the Plan may be assigned, transferred, pledged or otherwise
disposed of in any way by a Participant other than by will or the laws of
descent and distribution. Options under the Plan shall be exercisable during a
Participant's lifetime only by the Participant, his/her guardian or legal
representative. Each Participant shall agree in the Participation Forms to
notify the Company or its designee of any transfer of Shares within two years of
the Exercise Date on which such Shares were purchased.
7.4 Withdrawal from the Plan. A Participant may cease future contributions
to his/her stock purchase account, effective for the next payroll period, by
submitting a notice to the Company or its designee no later than five (5)
business days prior to the beginning date of such payroll period. Any
Participant who withdraws from the Plan may not thereafter participate for the
balance of the Plan year. Upon furnishing notice that future contributions will
cease, all deductions made prior to notice shall be refunded to the Participant.
7.5 Rights on Retirement, Death or Termination of Employment. In the event
of a Participant's retirement, death or termination of employment, no payroll
deduction shall be taken from any compensation due and owing to the Participant
at such time, and the deductions made prior to such date of retirement, death or
termination shall be refunded to the former Employee or, in the event of the
Participant's death, the person or persons to whom such rights pass by will or
the laws of descent and distribution including the Participant's estate during
the period of administration, within thirty (30) days following retirement,
death or termination of employment.
7.6 Reports. Individual accounts will be maintained for each participant
in the Plan. Statements of account will be given to participating Employees
promptly following the Exercise Date, which statements will set forth in detail
the stock transaction occurring on the Exercise Date.
7.7 Purchases and Sales by Officers. The terms and conditions of options
granted hereunder to, and the purchase of shares by, persons subject to Section
16 of the Exchange Act shall comply with the applicable provisions of Rule
16b-3. This Plan shall be deemed to contain, and such options shall contain, and
the shares issued upon exercise thereof shall be subject to, such additional
conditions and restrictions as may be required by Rule 16b-3 to qualify for the
maximum exemption from Section 16 of the Exchange Act with respect to Plan
transactions.
ARTICLE VIII
ADMINISTRATION
8.1 Committee. The Board may appoint an Employee Stock Purchase Plan
Committee, composed of such persons as the Board shall from time to time
determine to administer the Plan subject to the control and direction of the
Board. Subject to the action and control of the Board: (i) the Committee shall
have the power
A-5
<PAGE> 21
from time to time to establish suitable rules and procedures for administering
the Plan, (ii) adopt such modifications, procedures and subplans as may be
necessary or appropriate to comply with the laws of other countries with respect
to Participants or prospective Participants employed in such other countries,
and (iii) all decisions of the Committee pertaining to the interpretation,
construction or application of the Plan or any option granted or rules
promulgated by the Committee shall be final and conclusive. Neither any member
of the Committee nor of the Board shall be liable for any decision made or
action taken in good faith. The Committee shall from time to time designate an
individual who shall serve as the Employee Stock Purchase Plan Coordinator to
assist in the ongoing administration of the Plan.
ARTICLE IX
AMENDMENT AND TERMINATION
9.1 Power of Board. Except as hereinafter provided, the Board shall have
the sole right and power to amend the Plan at any time and from time to time.
9.2 Limitation. The Board may not amend the Plan, without approval of the
shareholders of the Company:
(a) in a manner which would cause the Plan to fail to meet the
requirements of Sections 423 of the Code;
(b) in a manner which materially increases the total number of shares
which may be issued pursuant to options granted under the Plan;
(c) in a manner which materially modifies the requirements as to
eligibility for participation in the Plan; or
(d) in a manner which materially increases the benefits accruing to
Participants under the Plan.
9.3 Term. The Plan shall commence as of the Effective Date and, subject to
the terms of the Plan including those requiring approval by the shareholders of
the Company, shall continue in full force and effect until June 30, 2005.
9.4 Termination. The Plan may be terminated at any time by the Board.
Subject to the Board's right to amend the Plan, with shareholder approval, to
increase the number of Shares available for purchase under the Plan, the Plan
shall automatically terminate when all of the Shares available for purchase have
been sold. Upon termination of the Plan, and the exercise or lapse of all
outstanding Options, any balances remaining in each Participant's stock purchase
account shall be refunded to the Participant.
9.5 Effect. The amendment or termination of the Plan shall not adversely
affect any Options granted prior to such amendment or termination.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Use of Funds. All payroll deductions received or held by the Company
under this Plan may be used by the Company for any corporate purpose and the
Company shall not be obligated to segregate such payroll deductions.
10.2 Headings. The headings contained in the Plan are included only for
convenience, and they shall not be construed as a part of the Plan or in any
respect affecting or modifying its provisions.
10.2 Number and Gender. The masculine and neuter, wherever used in the
Plan, shall refer to either the masculine, neuter or feminine; and, unless the
context otherwise requires, the singular shall include the plural and the plural
the singular.
A-6
<PAGE> 22
10.3 Governing Law. This Plan shall be construed and administered in
accordance with the laws of the State of Massachusetts.
10.4 No Employment Contract. The adoption of the Plan shall not confer
upon any Employee any right to continued employment nor shall it interfere in
any way with the right of the Company, a Parent to a Subsidiary to terminate the
employment of any of its employees at any time.
10.5 Payment of Interest. No interest will be paid or allowed on any money
paid into the Plan or credited to the account of any Participant.
A-7
<PAGE> 23
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Frank M. Ward or Richard F. Parenti, as
Proxy for the undersigned, to vote all shares of Common Stock of the undersigned
in SLI, Inc. with all the powers that the undersigned would have if personally
present, at the Annual Meeting of Shareholders to be held at the offices of
BankBoston, 100 Federal Street, Boston, Massachusetts on May 22, 2000, at 11:00
local time and at any postponement or adjournment thereof.
1. To elect six Directors to hold office until the next Annual Meeting of
Shareholders.
<TABLE>
<S> <C> <C> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote
(except as marked to the contrary below) for all nominees listed below
</TABLE>
<TABLE>
<S> <C> <C>
Frank M. Ward Donald S. Dewsnap Frederick B. Howard
M. Barrington Hare Andy Smith Richard E. Ingram
</TABLE>
INSTRUCTIONS: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided.
2. To approve the adoption of the SLI, Inc. 2000 Employee Stock Purchase
Plan
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the holders of this Proxy are authorized to vote
upon such other business as may properly come before the Meeting.
This Proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this Proxy will
be voted for the election of the nominees listed above.
(Continued, and to be signed on next page)
Please sign exactly as name
appears below. When shares are
held by joint tenants, both should
sign. When signing as attorney,
executor, administrator, trustee
or guardian, please give full
title as such. If a corporation,
please sign in full corporate name
by President or other authorized
officer. If a partnership, please
sign in partnership name by
authorized person.
Signature: ----------------
Signature,
if held jointly:----------------
Dated: ---------------- , 2000
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
