SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. _)
______________________
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
CHECK THE APPROPRIATE BOX:
[ ]Preliminary Proxy Statement
[ ]Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ]Definitive Proxy Statement
[ ]Definitive Additional Materials
[ ]Soliciting Materials Pursuant to ss.ss 240.14a-11(c) or ss.ss 240.14a-12
French Fragrances, Inc.
(Name of Registrant as specified in its Charter)
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
____________________________________________________________________
(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 previously paid 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 No.: ____________________________
(3) Filing Party: __________________________________________________
(4) Date Filed: ____________________________________________________
<PAGE>
FRENCH FRAGRANCES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be Held on June 23, 1999
Notice is hereby given that the Annual Meeting of Shareholders (the
"Annual Meeting") of French Fragrances, Inc. (the "Company") will be held on
Wednesday, June 23, 1999 at 10:00 a.m., Eastern Standard Time, at the
Company's principal executive offices at 14100 N.W. 60th Avenue, Miami Lakes,
Florida 33014, for the following purposes, as described in the attached proxy
statement:
1. To elect a board of six directors to serve until the next annual
meeting of shareholders or until their successors are duly elected
and qualified.
2. To approve an amendment to the Company's 1995 Stock Option Plan (the
"1995 Plan") to increase the number of shares of Common Stock, $.01
par value ("Common Stock"), which may be issued pursuant to stock
options granted under the 1995 Plan from 1,500,000 to 2,200,000.
3. To ratify the appointment of Deloitte & Touche LLP as the independent
auditors of the Company for the fiscal year ending January 31, 2000.
4. To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on April 27, 1999
as the record date for the determination of shareholders entitled to notice of
and to vote at the Annual Meeting and at any adjournment thereof. Accordingly,
only shareholders of record at the close of business on that date will be
entitled to vote at the Annual Meeting.
It is important that your shares be represented at the Annual Meeting
regardless of the size of your holdings. Whether or not you intend to be
present at the Annual Meeting in person, we urge you to please complete, date
and sign the enclosed proxy card and return it in the envelope provided for
that purpose.
By Order of the Board of Directors,
OSCAR E. MARINA
Secretary
Miami, Florida
May 17, 1999
YOU ARE URGED TO COMPLETE, DATE, SIGN AND PROMPTLY MAIL THE ENCLOSED
PROXY IN THE ACCOMPANYING POSTAGE-FREE ENVELOPE. THE PROXY IS
REVOCABLE AT ANY TIME PRIOR TO ITS USE.
<PAGE>
FRENCH FRAGRANCES, INC.
_________________________
PROXY STATEMENT
_________________________
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 23, 1999
GENERAL
This Proxy Statement has been prepared and is furnished by the Board of
Directors of French Fragrances, Inc. (the "Company"), in connection with the
solicitation of proxies for use at the Annual Meeting of Shareholders of the
Company (the "Annual Meeting") to be held at the Company's principal executive
offices at 14100 N.W. 60th Avenue, Miami Lakes, Florida 33014, at 10:00 a.m.,
Eastern Standard Time, on June 23, 1999, and at any adjournment thereof,
for the purposes set forth in the accompanying notice of meeting.
It is anticipated that the Company's Annual Report on Form 10-K for the
fiscal year ended January 31, 1999, this Proxy Statement and the accompanying
form of proxy card will be mailed to shareholders on or about May 24, 1999.
The Annual Report is not to be regarded as proxy soliciting material.
The Company was incorporated in Florida in 1960 and was known as Suave
Shoe Corporation until the November 30, 1995 merger (the "Merger") of a
privately-held Florida corporation named French Fragrances, Inc. ("FFI") with
and into the Company. Following the Merger, the Company, as the surviving
corporation, changed its name to "French Fragrances, Inc." and management of
FFI became the management of the Company. Since the Merger, the Company's
principal business operations consist of the business operations previously
conducted by FFI, which is the manufacture, distribution and marketing of
prestige fragrances and related cosmetic products.
OUTSTANDING SHARES AND VOTING RIGHTS
Only shareholders of record of the Common Stock, $.01 par value (the
"Common Stock"), on the books of the Company at the close of business on April
27, 1999 (the "Record Date"), are entitled to notice of and to vote at the
Annual Meeting. On the Record Date, there were 13,812,704 shares of Common
Stock entitled to vote on each matter to be presented at the Annual Meeting.
Holders of the Common Stock have one vote per share on all matters. No other
class of stock of the Company has voting rights.
A majority of the shares of Common Stock entitled to vote on a matter,
represented in person or by proxy, shall constitute a quorum for action on a
matter at the Annual Meeting. In determining the presence of a quorum at the
Annual Meeting, abstentions are counted and broker non-votes are not. The
Company's By-laws provide that the affirmative vote of a majority of the
shares of the voting stock represented, in person or by proxy, and entitled to
vote on a matter at a meeting in which a quorum is present shall be the act of
the shareholders, except as otherwise provided by law. The Florida Business
Corporation Act provides that directors are elected by a plurality of the
votes cast. Abstentions and broker non-votes have no legal effect on whether a
nominee for director is elected, but will have the same effect as votes
against the amendment to the 1995 Stock Option Plan (the "1995 Plan") and the
ratification of the appointment of Deloitte & Touche, LLP as the independent
auditors of the Company for the fiscal year ending January 31, 2000.
As of May 13, 1999, the directors and executive officers of the Company
(including companies under their control) beneficially owned approximately 41%
of the Common Stock. The aggregate beneficial ownership of such persons
permits them to have effective control of the Company and to direct the
management and affairs of the Company.
Shares represented by a properly executed proxy received in time to permit
its use at the Annual Meeting or at any adjournment thereof will be voted in
accordance with the instructions indicated therein. If no instructions are
indicated, the shares represented by the proxy will be voted FOR the election
of all of the nominees for director, FOR the approval of the amendment to the
1995 Plan, FOR the ratification of the appointment of Deloitte & Touche LLP as
the independent auditors of the Company for the fiscal year ending January 31,
2000, and in the discretion of the proxy holders as to any other matter which
may properly come before the Annual Meeting.
You are requested, regardless of the number of shares you hold, to sign
the proxy and return it promptly in the enclosed envelope. Each shareholder
giving a proxy has the power to revoke it at any time before it is voted,
either in person at the Annual Meeting, by written notice to the Secretary of
the Company or by delivery of a later-dated proxy.
<PAGE>
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth, as of May 13, 1999: (i) the ownership of
Common Stock by all persons known by the Company to own beneficially more than
5% of the outstanding shares of Common Stock; and (ii) the beneficial
ownership of Common Stock, Series B Convertible Preferred Stock of the
Company, $.01 par value ("Series B Convertible Preferred"), and Series C
Convertible Preferred Stock of the Company, $.01 par value ("Series C
Convertible Preferred"), by (a) directors and nominees (listed by name) of
the Company, (b) the Company's chief executive officer and its four other most
highly compensated executive officers for the fiscal year ended January 31,
1999, and (c) all directors and executive officers of the Company as a group,
without naming them.
<TABLE>
<CAPTION>
COMMON STOCK SERIES B CONVERTIBLE PREFERRED
------------------------------ ------------------------------
AMOUNT AND NATURE PERCENTAGE AMOUNT AND NATURE PERCENTAGE
NAME AND ADDRESS OF OF BENEFICIAL OF THE OF BENEFICIAL OF THE
BENEFICIAL OWNER (1) OWNERSHIP (2) CLASS OWNERSHIP CLASS
<S> <C> <C> <C> <C>
Rafael Kravec(3)(5) 2,601,551 18.2% 5,419 2.0%
E. Scott Beattie(4)(5) 861,378 5.9 5,961 2.2
Gretchen Goslin(6) 77,034 * -- --
William J. Mueller(7) 79,287 * -- --
Oscar E. Marina(8) 43,189 * -- --
J.W. Nevil Thomas(9) 146,393 1.0 7,874 2.9
Fred Berens(10) 835,253 6.0 -- --
Richard C.W. Mauran(11) 2,139,964 14.4 100,279 36.9
George Dooley(12) 38,500 * -- --
Fragrance Marketing
Group, Inc.(13) 1,089,393 7.3
Putnam Investments,
Inc.(14) 825,942 6.0
Dresdner RCM Global
Investors LLC(15) 1,379,725 10.0
SAFECO Corporation(16) 1,392,700 10.1
All directors and
executive officers
as a group
(10 persons)(17) 6,702,814 40.8 119,533 44.0
<PAGE>
(RESTUBBED TABLE FROM ABOVE)
SERIES C CONVERTIBLE PREFERRED
------------------------------
AMOUNT AND NATURE PERCENTAGE
NAME AND ADDRESS OF OF BENEFICIAL OF THE
BENEFICIAL OWNER (1) OWNERSHIP (2) CLASS
<S> <C> <C>
Rafael Kravec(3)(5) 8,835 1.7%
E. Scott Beattie(4)(5) 9,185 1.8
Gretchen Goslin(6) 3,220 *
William J. Mueller(7) 3,220 *
Oscar E. Marina(8) 3,222 *
J.W. Nevil Thomas(9) 11,682 2.3
Fred Berens(10) -- --
Richard C.W. Mauran(11) 131,518 25.7
George Dooley(12) -- --
Fragrance Marketing
Group, Inc.(13)
Putnam Investments,
Inc.(14)
Dresdner RCM Global
Investors LLC(15)
SAFECO Corporation(16)
All directors and
executive officers
as a group
(10 persons)(17) 173,647 34.0
- ----------------
* Less than one percent of the class.
(1) The address of each of the persons shown in the above table other than Messrs.
Thomas and Mauran, Fragrance Marketing Group, Inc. ("FMG"), Putnam Investments,
Inc. ("Putnam"), Dresdner RCM Global Investors LLC ("Dresdner") and SAFECO
Corporation ("SAFECO") is c/o French Fragrances, Inc., 14100 N.W. 60th Avenue,
Miami Lakes, Florida 33014. The address of Mr. Thomas is Scotia Plaza, Suite
4712, Toronto, Canada M5H 3Y2. The address of Mr. Mauran is 31 Burton Court,
Franklins Row, London SW3 England. The address of FMG is 7445 N.W. 12th Street,
Miami, Florida 33126. The address of Putnam is One Post Office Square, Boston,
Massachusetts 02109. The address of Dresdner is Four Embarcadero Center, San
Francisco, California 94111. The address of SAFECO is SAFECO Plaza, Seattle,
Washington 98185.
<PAGE>
(2) Includes, where applicable, shares of Common Stock issuable upon the conversion
of Series B Convertible Preferred, Series C Convertible Preferred and 7.5%
Convertible Debentures due 2006 ("7.5% Convertible Debentures"), and upon the
exercise of warrants and of options to acquire Common Stock ("Options"), held by
such persons which may be converted or exercised within 60 days after May 13,
1999. A total of 7.12 shares of Common Stock are issuable upon the conversion of
one share of Series B Convertible Preferred at a conversion price of $3.30 per
Common Stock share. One share of Common Stock is issuable upon the conversion of
one share of Series C Convertible Preferred at a conversion price of $5.25 per
Common Stock share. The 7.5% Convertible Debentures are convertible into shares
of Common Stock at $7.20 per share. Unless otherwise indicated, the Company
believes that all persons named in the table above have sole voting power and
investment power with respect to all shares of Common Stock, Series B Convertible
Preferred and Series C Convertible Preferred beneficially owned by them.
(3) The Common Stock includes (i) 2,144,000 shares of Common Stock, including 1,000
shares which are owned by Mr. Kravec's daughter and as to which he disclaims
beneficial ownership, (ii) 38,583 shares of Common Stock issuable upon the
conversion of Series B Convertible Preferred owned by National Trading
Manufacturing, Inc. ("National Trading"), a corporation which is controlled by
Mr. Kravec, (iii) 8,835 shares of Common Stock issuable upon the conversion of
Series C Convertible Preferred owned by National Trading, (iv) 68,750 shares of
Common Stock issuable upon the conversion of 7.5% Convertible Debentures owned by
Mr. Kravec, (v) 234,583 shares of Common Stock issuable upon the conversion of
7.5% Convertible Debentures owned by National Trading, and (vi) 106,800 shares of
Common Stock issuable upon the exercise of Options owned by Mr. Kravec.
(4) The Common Stock includes (i) 8,487 shares of Common Stock, (ii) 42,442 shares of
Common Stock issuable upon the conversion of Series B Convertible Preferred,
(iii) 9,185 shares of Common Stock issuable upon the conversion of Series C
Convertible Preferred, (iv) 1,163 shares of Common Stock issuable upon the
conversion of 7.5% Convertible Debentures, (v) 610,900 shares of Common Stock
issuable upon the exercise of Options, and (vi) the shares of Common Stock
referred to in Note (5). The Common Stock also includes 64,201 shares of Common
Stock owned by E.S.B. Consultants, Inc. ("ESB"), a company that until September
1997 was controlled by Mr. Beattie, and as to which he disclaims beneficial
ownership.
(5) The Common Stock includes 125,000 shares of Common Stock which Mr. Beattie has an
option to purchase.
(6) The Common Stock includes (i) 3,747 shares of Common Stock, (ii) 3,220 shares of
Common Stock issuable upon the conversion of Series C Convertible Preferred, and
(iii) 70,067 shares of Common Stock issuable upon the exercise of Options.
(7) The Common Stock includes (i) 6,000 shares of Common Stock, (ii) 3,220 shares of
Common Stock issuable upon the conversion of Series C Convertible Preferred, and
(iii) 70,067 shares of Common Stock issuable upon the exercise of Options.
(8) The Common Stock includes (i) 3,222 shares of Common Stock issuable upon the
conversion of Series C Convertible Preferred, and (ii) 36,667 shares of Common
Stock issuable upon the exercise of Options. The remaining 3,300 shares of
Common Stock are owned together with Mr. Marina's spouse as joint tenants with
right of survivorship.
<PAGE>
(9) The Common Stock includes (i) 54,019 shares of Common Stock issuable upon the
conversion of Series B Convertible Preferred owned by Nevcorp, Inc. ("Nevcorp"),
a corporation controlled by Mr. Thomas, (ii) 11,682 shares of Common Stock
issuable upon the conversion of Series C Convertible Preferred owned by Nevcorp,
and (iii) 75,900 shares of Common Stock issuable upon the exercise of Options
owned by Mr. Thomas. The Common Stock also includes 2,748 shares of Common Stock
which are held equally by four trusts for the benefit of Mr. Thomas' children
(the "Thomas Trusts") and for which Mr. Thomas serves as a co-trustee with his
wife, and 2,044 shares of Common Stock issuable upon the conversion of Series B
Preferred which are held equally by the Thomas Trusts.
(10) The Common Stock includes (i) 712,000 shares of Common Stock, (ii) 75,833 shares
of Common Stock issuable upon the conversion of 7.5% Convertible Debentures, and
(iii) 47,420 shares of Common Stock issuable upon the exercise of Options.
(11) The Common Stock includes (i) 127,768 shares of Common Stock owned by Bed B.V.I.
Corp. ("Bed BVI"), a company controlled by Mr. Mauran, (ii) 886,659 shares of
Common Stock owned by Euro Credit Investments Limited ("Euro Credit"), a company
controlled by Mr. Mauran, (iii) 115,441 shares of Common Stock owned by
Devonshire Trust ("Devonshire Trust"), a trust of which Mr. Mauran is a
beneficiary, (iv) 6,210 shares of Common Stock owned by Devonshire Holdings
("Devonshire Holdings"), a trust of which Mr. Mauran is a beneficiary, (v) 95,014
shares of Common Stock issuable upon the conversion of Series B Preferred owned
by Bed BVI, (vi) 489,051 shares of Common Stock issuable upon the conversion of
Series B Convertible Preferred owned by Euro Credit, (vii) 125,329 shares of
Common Stock issuable upon the conversion of Series B Convertible Preferred
owned by Devonshire Trust, (viii) 4,590 shares of Common Stock issuable upon the
conversion of Series B Preferred owned by Devonshire Holdings, (ix) 108,254
shares of Common Stock issuable upon the conversion of Series C Convertible
Preferred owned by Euro Credit, (x) 23,264 shares of Common Stock issuable upon
the conversion of Series C Convertible Preferred owned by Devonshire Trust, (xi)
109,114 shares of Common Stock issuable upon the conversion of 7.5% Convertible
Debentures owned by Mr. Mauran, (xii) 1,850 shares of Common Stock issuable upon
the conversion of 7.5% Convertible Debentures owned by Devonshire Trust, and
(xiii) 47,420 shares of Common Stock issuable upon the exercise of Options owned
by Mr. Mauran.
(12) The Common Stock includes 29,500 shares of Common Stock issuable upon the
exercise of Options. The remaining 9,000 shares of Common Stock are owned
together with Mr. Dooley's spouse as joint tenants with right of survivorship.
(13) Represents shares of Common Stock issuable upon the exercise of warrants which
were issued to FMG in connection with the Company's acquisition of the principal
assets of FMG in May 1996.
(14) Based on a Schedule 13G dated February 18, 1999. Putnam has shared voting power
over 331,517 shares of Common Stock through its wholly-owned subsidiary, The
Putnam Advisory Company, Inc., and shared investment power over 825,942 shares of
Common Stock through its wholly-owned subsidiaries, The Putnam Advisory Company,
Inc. and Putnam Investment Management, Inc.
(15) Based on a Schedule 13G dated February 12, 1999. Dresdner has sole voting and
investment power over these shares of Common Stock.
<PAGE>
(16) Based on a Schedule 13G dated February 10, 1999. SAFECO has shared voting and
dispositive power over 1,392,700 shares of Common Stock, including 1,216,900
shares which are owned beneficially by registered investment companies for which
SAFECO's subsidiary, SAFECO Asset Management Company, is an advisor.
(17) The Common Stock includes (i) 851,072 shares of Common Stock issuable upon the
conversion of Series B Convertible Preferred, (ii) 173,647 shares of Common Stock
issuable upon the conversion of Series C Convertible Preferred, (iii) 491,293
shares of Common Stock issuable upon the conversion of the 7.5% Convertible
Debentures, and (iv) 1,094,741 shares of Common Stock issuable upon the exercise
of Options.
<PAGE>
PROPOSAL 1 - ELECTION OF DIRECTORS
Nominees
Six directors are to be elected at the Annual Meeting. The six nominees
named below are currently serving as the directors of the Company and have
been designated by the Board of Directors (the "Board") as nominees for
election as directors, to serve until the next annual meeting of shareholders
and until their successors are duly elected and qualified. In the event that
any nominee is unable or unwilling to serve, discretionary authority is
reserved to the persons named in the accompanying form of proxy to vote for
substitute nominees. The Board does not anticipate that such an event will
occur. Each director must be elected by a plurality of the votes cast.
The names of the nominees and information about them are set forth below.
Rafael Kravec, age 67, has served as Chairman of the Board since April
1997 and as a director of the Company since the Merger. Mr. Kravec served as
Chief Executive Officer of the Company from the date of the Merger in November
1995 until March 1998 and as President and Chief Executive Officer and a
director of FFI from its formation in July 1992 until the consummation of the
Merger. Mr. Kravec has also served as President and Chief Executive Officer
and a director of the following wholly-owned subsidiaries of the Company: (i)
G.B. Parfums, Inc. from March 1995 until June 1998, (ii) Halston Parfums, Inc.
from March 1996 until June 1998, (iii) Fine Fragrances, Inc. ("Fine
Fragrances") from March 1990 until June 1998, and (iv) FRM Services, Inc. from
December 1996 until December 1998. Mr. Kravec has also served as President
and Chief Executive Officer and a director of National Trading since 1981.
J.W. Nevil Thomas, age 61, has served as Vice Chairman of the Board of
the Company since April 1997 and previously served as Chairman of the Board of
the Company from the consummation of the Merger until April 1997. Mr. Thomas
served as Chairman of the Board of FFI from its formation in July 1992 until
the consummation of the Merger. Since 1970, Mr. Thomas has served as
President of Nevcorp, a financial and management consulting firm which is
controlled by Mr. Thomas. Mr. Thomas is Chairman of the Board of Bedford
Capital Corporation ("Bedford"), a Toronto, Canada-based firm that is engaged
in the business of providing investment banking services and equity through
two private pools of capital to middle-market companies in North America, and
is a director of Cash Converters, Inc., a specialty retailer, and Pet Valu,
Inc. ("Pet Valu"), a pet food retailer.
E. Scott Beattie, age 40, has served as President and Chief Executive
Officer of the Company since March 1998 and has been a director of the Company
since the Merger. From April 1997 to March 1998, Mr. Beattie served as
President and Chief Operating Officer of the Company, and from November 1995
until April 1997, Mr. Beattie served as Vice Chairman of the Board and
Assistant Secretary of the Company (positions he held with FFI from January
1995 until the consummation of the Merger). From September 1989 to September
1997, Mr. Beattie served as President of ESB, a financial and management
consulting firm that until September 1997 was controlled by Mr. Beattie. ESB
provided consulting services to the Company from 1992 until 1997. Mr. Beattie
has also served as Executive Vice President of Bedford since March 1995 and as
Vice President of Bedford from September 1989 to March 1995. Prior
to his employment with Bedford, Mr. Beattie served as a Vice President and
Director of Mergers & Acquisitions of Merrill Lynch, Inc. and as a manager of
Andersen Consulting, specializing in the implementation of information
systems. Mr. Beattie is a director of Bedford and Janna Systems Inc., an
applications software company.
Fred Berens, age 56, has served as a director of the Company since the
Merger. Mr. Berens served as a director of FFI from its formation in July
1992 until the consummation of the Merger. Mr. Berens has served as Senior
Vice President - Investments of Prudential Securities, Inc., an investment
banking firm, since March 1965. Mr. Berens previously served as a director of
the Company, when it was known as Suave Shoe Corporation, until December 1994.
Richard C.W. Mauran, age 65, has served as a director of the Company
since the Merger. Mr. Mauran served as a director of FFI from its formation
in July 1992 until the consummation of the Merger. Mr. Mauran is a private
investor and serves as a director of Bedford, Microbix Biosystems, Inc., a
biotechnology company, Pet Valu and US Physical Therapy, Inc., which owns and
operates physiotherapy centers.
George Dooley, age 66, has served as a director of the Company since
March 1996. Mr. Dooley has served as President and Chief Executive Officer of
(i) Community Television Foundation of South Florida, Inc., a not-for-profit
corporation supporting, and a licensee of, public television station WPBT
Channel 2, since 1955, (ii) WPBT Communications Foundation, Inc., a
not-for-profit corporation supporting public television station WPBT Channel
2, since 1981, and (iii) Comtel, Inc., a company providing television
facilities to television producers, since 1981.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" EACH NOMINEE
FOR DIRECTOR.
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Federal securities laws require the Company's directors, executive
officers, and persons who beneficially own more than 10 percent of the Common
Stock to file reports of initial ownership and reports of subsequent changes
in ownership with the Securities and Exchange Commission (the "Commission")
and to provide copies of these reports to the Company. Specific due dates
have been established and the Company is required to disclose in this Proxy
Statement any failure of the foregoing persons to file timely those reports
during its fiscal year ended January 31, 1999. To the best of the Company's
knowledge, based solely upon a review of copies of reports furnished to it and
written representations that no other reports were required, all of the
Company's directors, executive officers and beneficial owners of more than 10
percent of the Common Stock made all such filings timely, with the exception
of one report detailing one transaction for director and executive officer E.
Scott Beattie, which was inadvertently filed late.
MEETINGS AND COMMITTEES OF THE BOARD
GENERAL
During the fiscal year ended January 31, 1999, the Board held seven
meetings and each director attended at least 75% of the total meetings of the
Board and at least 75% of the total meetings of the committees of the Board in
which he served, with the exception of Mr. Kravec, who was unable to attend
three Board meetings. The Board has an Audit Committee and a Compensation
Committee.
The Audit Committee consists of Messrs. Berens, Dooley and Thomas, none
of whom are presently or formerly employees of the Company. The Audit
Committee oversees the procedures, scope and results of the annual audit and
reviews the services provided by the Company's independent auditors. The
Audit Committee met once during the fiscal year ended January 31, 1999.
The Compensation Committee consists of Messrs. Berens and Dooley. The
Compensation Committee administers the Company's stock option plans and
determines the compensation of the Company's executive officers. The
Compensation Committee met once during the fiscal year ended January 31, 1999.
The Board does not have a standing nominating committee. The Board
performs this function.
DIRECTOR COMPENSATION
Directors who are employees of the Company do not receive any monetary
compensation for serving on the Board or any of its committees. Directors who
are not employees of the Company (currently Messrs. Thomas, Berens, Dooley and
Mauran) receive an annual retainer of $3,000 and a fee of $500 for each
meeting of the Board or a committee of the Board attended. The Board also
reimburses all directors for all expenses incurred in connection with
their activities as directors. Under the terms of the Non-Employee Director
Stock Option Plan (the "Directors' Plan"), non-employee directors receive
stock options for 7,000 shares of Common Stock upon their initial election to
the Board and stock options for 7,500 shares of Common Stock annually upon
reelection to the Board at the annual meeting of shareholders. All options
granted under the Directors' Plan are exercisable one year from the date of
grant. During the fiscal year ended January 31, 1999, upon their reelection
to the Board at the annual meeting of shareholders in June 1998, each of
Messrs. Thomas, Berens, Dooley and Mauran were granted stock options under the
Directors' Plan for 7,500 shares of Common Stock exercisable at $16.38 per
share. Directors who are not on the Compensation Committee may also be
granted stock options under the 1995 Plan. During the fiscal year ended
January 31, 1999, in consideration of his services as President and Chief
Executive Officer of the Company, Mr. Beattie was granted options for 400,000
shares of Common Stock under the 1995 Plan, all of which are currently
exercisable at $12.50 per share.
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation
paid by the Company for the fiscal years ended January 31, 1999, 1998 and 1997
to the Company's Chief Executive Officer and the four other most highly
compensated executive officers of the Company during the fiscal year ended
January 31, 1999 whose compensation exceeded $100,000 (the "Named
Executives").
</TABLE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------------------- ------------
COMMON STOCK
NAME AND OTHER ANNUAL UNDERLYING
PRINCIPAL POSITION YEAR (1) SALARY BONUS (2) COMPENSATION (3) OPTIONS (#)
<S> <C> <C> <C> <C> <C>
Rafael Kravec 1/31/99 $300,000 -- $6,263 --
Chairman of the 1/31/98 $300,000 $100,000 $4,803 --
Board 1/31/97 $296,624 $120,000 $3,256 --
E. Scott Beattie 1/31/99 $367,790 $100,000 $5,712 400,000
President and Chief 1/31/98 $257,405 $175,000 -- 7,500
Executive 1/31/97 $ 96,000 $120,000 -- 100,000
Officer (4)
Gretchen Goslin 1/31/99 $175,000 $ 80,000 -- 10,000
Senior Vice 1/31/98 $175,000 $ 88,000 -- --
President-Marketing 1/31/97 $165,384 $ 70,000 -- 10,000
William J. Mueller 1/31/99 $170,000 $ 80,000 $5,855 10,000
Vice President, 1/31/98 $170,000 $ 88,000 $4,585 --
Chief Financial 1/31/97 $166,502 $ 70,000 $3,629 10,000
Officer and Treasurer
Oscar E. Marina 1/31/99 $168,077 $ 70,000 -- 10,000
Vice President, 1/31/98 $150,000 $ 75,000 -- 10,000
General Counsel 1/31/97 $129,328 $ 35,000 -- 20,000
and Secretary
- -------------
(1) The amounts shown for "1/31/99," "1/31/98," and "1/31/97" are for the fiscal years
ended January 31, 1999, 1998 and 1997, respectively.
(2) The Company creates an annual bonus pool for members of its management and other
key personnel equal to 6% of the pre-tax profit of the Company (the "Bonus Pool").
On an annual basis, the Compensation Committee approves the allocation of the
Bonus Pool among the members of the Company's management and other key personnel.
(3) The amounts shown represent the amount the Company reimbursed the Named Executive
for the payment of taxes on the value received by the Named Executive from a
Company-provided automobile. The amounts reflected in the above table do not
include any amounts for perquisites and other personal benefits. The aggregate
amount of such compensation for each Named Executive did not exceed 10% of the
total annual salary and bonus of such Named Executive and, accordingly, has been
omitted from the table as permitted by the rules of the Securities and
Exchange Commission (the "Commission").
(4) Mr. Beattie was appointed to the position of President and Chief Executive Officer
of the Company in March 1998. Mr. Beattie was appointed to the position of
President and Chief Operating Officer of the Company in April 1997. Mr. Beattie
served as Vice Chairman and Assistant Secretary of the Company during the fiscal
year ended January 31, 1997. Salary for 1/31/98 represents $71,155 in salary paid
to Mr. Beattie following his becoming an employee of the Company in September
1997, and $186,250 in consulting fees paid to ESB under the terms of certain
consulting or monitoring agreements pursuant to which ESB, through Mr. Beattie,
provided financial advisory and management services to the Company. Salary for
1/31/97 represents consulting fees paid to ESB under the terms of the monitoring
agreements described above. All consulting and monitoring agreements between the
Company and ESB were terminated during the fiscal year ended January 31, 1998.
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information regarding Options granted during the
fiscal year ended January 31, 1999 by the Company to the Named Executives.
</TABLE>
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
COMMON RATES OF STOCK PRICE
STOCK PERCENT OF TOTAL EXERCISE APPRECIATION FOR OPTION
UNDERLYING OPTIONS GRANTED OR TERM (1)
OPTIONS TO EMPLOYEES BASE EXPIRATION -----------------------
NAME GRANTED IN FISCAL YEAR PRICE(2) DATE 5%($) 10%($)
---------- ---------------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Rafael Kravec . . . -- -- $ -- -- $ -- $ --
E. Scott Beattie. . 400,000 80.0% 12.50 2/28/08 3,144,473 7,968,712
Gretchen Goslin . . 10,000 2.0% 12.50 2/28/03 34,535 76,314
William J. Mueller. 10,000 2.0% 12.50 2/28/03 34,535 76,314
Oscar E. Marina . . 10,000 2.0% 12.50 2/28/03 34,535 76,314
- ------------------
(1) Amounts represent hypothetical gains that could be achieved for the respective Options if
exercised at the end of the Option term. These gains are based on assumed rates of stock
price appreciation of 5% and 10% compounded annually from the date the respective Options
were granted to their expiration dates. Hypothetical gains are calculated based on rules
promulgated by the Commission and do not represent an estimate by the Company of its
future stock price growth. This table does not take into account any appreciation in the
price of the Common Stock to date. Actual gains, if any, on Option exercises and Common
Stock holdings are dependent on the timing of such exercises and the future performance of
the Common Stock. There can be no assurances that the rates of appreciation assumed in this
table can be achieved or that the amounts reflected will be received by the Named
Executives.
(2) The exercise price for the Options granted was based upon the market price of the Common
Stock on the date of grant.
</TABLE>
<PAGE>
AGGREGATED FISCAL YEAR END OPTION VALUE TABLE
The following table sets forth certain information concerning unexercised
Options held by the Named Executives at January 31, 1999. There were no
exercises of Options by the Named Executives during the fiscal year ended
January 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF COMMON STOCK VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
AT JANUARY 31, 1999(#) JANUARY 31, 1999($)(1)
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Rafael Kravec. . . . . 106,800 -- $498,756 $ --
E. Scott Beattie . . . 610,900 528,628 --
Gretchen Goslin. . . . 66,734 6,666 264,078 --
William J. Mueller . . 66,734 6,666 264,078 --
Oscar E. Marina. . . . 29,634 10,366 54,400 --
- ------------------
(1) Value is based on the difference between the Option exercise price and the fair
market value per share of Common Stock on January 29, 1999 ($7.97 per share, which
represents the closing sales price of the Common Stock on The Nasdaq National
Market) multiplied by the number of shares underlying the Option.
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Fred Berens served as a member of the Compensation Committee of the
Board for the fiscal year ended January 31, 1999. Mr. Berens owns $546,000
principal amount of the Company's 7.5% Convertible Debentures. See "Certain
Relationships and Related Transactions."
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee submits the following report for fiscal 1999:
The function of the Compensation Committee is to determine the
compensation of the Company's senior management and other key personnel who
have contributed to the performance of the Company, including bonuses, and
to administer the Company's 1995 Plan. The Company's executive compensation
program consists of three primary components: base salaries, bonuses and
grants of stock options. Bonuses for senior management and other key
personnel are allocated from the Company's Bonus Pool pursuant to which 6% of
the pre-tax profit of the Company is available as a bonus pool for the members
of management and key personnel of the Company. The Compensation Committee
may also, in its discretion, supplement monetary compensation with incentive
compensation in the form of the grant of stock options under the 1995 Plan.
All of the components of executive compensation are designed to facilitate
fulfillment of the compensation objectives of the Board and the Compensation
Committee, which objectives include: (i) providing market competitive
compensation to attract and retain key management personnel; (ii) relating
management compensation to the achievement of Company goals and the Company's
performance; and (iii) aligning the interests of management with those of the
Company's shareholders.
The determination of the total compensation package for the Company's
senior management and other key personnel of the Company was made after
reviewing and considering a number of factors, including job responsibility,
level of individual performance, achievement of Company goals and the
individual's contribution to the achievement of Company goals, Company
performance, compensation levels at competitive companies, as well as
companies of similar size to the Company, and the Company's historical
compensation levels. Following the completion of the fiscal year, the
Compensation Committee met with the President and Chief Executive Officer to
review his recommendations with respect to the compensation package for
members of senior management and other key personnel of the Company. The
Compensation Committee then determined the allocation of bonuses from the
Bonus Pool and whether to grant stock options. Other than the Bonus Pool,
which is specifically tied to Company performance, the compensation
decisions were based upon an overall review of all of the relevant factors
without giving specific weight to any one factor.
In its allocation of the Bonus Pool and decision on the individuals who
should receive, and the amounts of, stock option grants for fiscal 1999
performance, the Compensation Committee considered additional factors,
including that for fiscal 1999: (i) the Company did not accomplish all of its
financial performance goals; (ii) the Bonus Pool was essentially the same as
in fiscal 1998; (iii) commensurate with the Company's significant growth in
sales and operations, a greater number of management personnel and key
employees made significant contributions to the Company; and (iv) the
President and Chief Executive Officer's recommendations on the form of
incentive compensation most appropriate for a specific individual. Based on
all of these factors, the Compensation Committee allocated the Bonus Pool and
granted stock options to a greater number of individuals than in past years.
The Compensation Committee's stock option grants reflected in the Summary
Compensation Table for the Named Executives were granted in February 1998 and
were grants based primarily on fiscal 1998 performance. For fiscal 1999
performance, the Compensation Committee granted options for a total of 235,000
shares of Common Stock, including an aggregate of 130,000 to the Named
Executives.
The compensation of the Company's President and Chief Executive Officer
was determined based on the above-described factors. Based on his long-term
commitment to the Company and his significant contributions during fiscal
1999, including, among other things, with respect to the acquisition of new
fragrance brands, the development of relationships with fragrance suppliers,
the Company's sales growth with its top retailers, operational and management
initiatives, and the Company's financings, the Compensation Committee
allocated a bonus of $100,000 and granted a stock option for 100,000 shares of
Common Stock to Mr. Beattie in March 1999, exercisable as follows: 33,334
shares on September 3, 1999, 33,333 shares on March 3, 2000, and 33,333 shares
on March 3, 2001.
Fred Berens
George Dooley
<PAGE>
PERFORMANCE GRAPH
Note: Prior to the November 1995 Merger, the Company (which was then known as
Suave Shoe Corporation) had discontinued its shoe manufacturing and
distribution operations. Management of the Company believes that reflecting
total return data for the Company relating to the shoe operations prior to the
Merger would be of no relevance to its shareholders and potentially
misleading. Accordingly, management of the Company has omitted all historical
data which does not relate to the Company's fragrance operations following the
Merger and has begun the performance graph comparison as of the effective date
of the Merger.
The performance graph data set forth below compares the cumulative total
returns, including the reinvestment of dividends, of the Common Stock with the
companies in The Nasdaq Stock Market (U.S.) Index and with four peer group
companies (the "Peer Group"), which include: Allou Health & Beauty Care,
Inc.; Jean Philippe Fragrances, Inc.; Parlux Fragrances, Inc.; and Perfumania,
Inc. The Peer Group consists of companies engaged in fragrance manufacturing,
distribution and sales that had similar market capitalizations to the Company
at the beginning of the comparative period. The comparison covers a period
from the November 30, 1995 effective date of the Merger in which the Company's
operations became the fragrance operations of FFI until January 31, 1999, and
is based on an assumed $100 investment on November 30, 1995 in The Nasdaq
Stock Market (U.S.) Index, in the Peer Group and in the Common Stock. The
Common Stock is listed on The Nasdaq National Market under the symbol "FRAG."
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
Cumulative Total Return
11/30/95 1/31/96 1/31/97 1/31/98 1/31/99
-------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
French Fragrances, Inc. 100 141 168 235 170
Peer Group 100 99 66 54 87
NASDAQ National Market (U.S.) 100 100 131 155 242
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RELATIONSHIPS
Rafael Kravec, the Chairman of the Board of the Company, is the
controlling shareholder of National Trading. E. Scott Beattie, the President
and Chief Executive Officer and a director of the Company, was, until
September 1997, the controlling shareholder of ESB. Richard C.W. Mauran, a
director of the Company, is the co-trustee and a beneficiary of Devonshire
Trust. Fred Berens is a director of the Company.
<PAGE>
RELATED TRANSACTIONS
At January 31, 1999, the Company had outstanding approximately $4,779,000
aggregate principal amount of 7.5% Convertible Debentures, of which (i)
$2,184,000 aggregate principal amount are owned by Mr. Kravec and
National Trading, (ii) $546,000 aggregate principal amount are owned by Mr.
Berens, (iii) $798,942 aggregate principal amount are owned by Mr. Mauran and
Devonshire Trust, and (iv) $8,374 aggregate principal amount are owned by Mr.
Beattie.
Prior to August 1998, the Company leased from National Trading a 59,000
square foot facility at 15595 N.W. 15th Avenue, Miami (the "National Trading
Facility"), which had housed the Company's offices prior to May 1997 and
which the Company had an option to purchase. In connection with National
Trading's sale of the National Trading Facility in August 1998, the Company
agreed to terminate the lease and its option to purchase the National Trading
Facility. The consideration received by the Company included: (i)
cancellation of an outstanding loan to the Company in the principal amount of
$294,000; (ii) a cash payment of $416,000, and (iii) the issuance by National
Trading to the Company of a promissory note payable upon demand in the
principal amount of $300,000 and bearing interest at 8.5% per annum. At
January 31, 1999, the principal amount of the demand note due the Company was
$100,000. The Company made lease payments to National Trading during the
fiscal year ended January 31, 1999 totaling $144,500.
During the fiscal year ended January 31, 1999, the Company provided loans
to E. Scott Beattie, the President and Chief Executive Officer of the Company,
in the aggregate principal amount of $500,000 for payment of certain costs
associated with his relocation to Florida. The loans accrue interest at 8.5%
per annum and mature in August and November 2000. As of January 31, 1999, the
entire principal amount of $500,000 was outstanding.
PROPOSAL 2 - APPROVAL OF AMENDMENT TO THE 1995 STOCK OPTION PLAN
The 1995 Plan was adopted by FFI's Board in January 1995 and approved by
FFI's shareholders in April 1995. In connection with the Merger in November
1995, the Company assumed the 1995 Plan. Currently, options to purchase
in the aggregate 1,500,000 shares of Common Stock of the Company are
authorized under the 1995 Plan. As of May 13, 1999, options to purchase in
the aggregate 1,387,040 shares of Common Stock are either outstanding or have
been exercised, limiting additional option grants under the 1995 Plan to an
aggregate of 112,960 shares. The Board and the Compensation Committee both
believe that it is in the Company's best interest to increase the maximum
number of shares of Common Stock available for grant under the 1995 Plan so as
to maintain the purposes of the 1995 Plan, which is the promotion of the
long-term financial interests and growth of the Company by attracting and
retaining key employees, officers, directors and other persons who provide
services for the Company or its subsidiaries and who will be instrumental to
the success of the Company, and motivating such persons by means of
growth-related incentives. On March 3, 1999, the Board adopted, subject to
shareholder approval, an amendment to the 1995 Plan increasing the
number of shares of Common Stock which may be issued pursuant to stock options
granted under the 1995 Plan from 1,500,000 to 2,200,000 (the "1995 Plan
Amendment").
In connection with the Company's recent acquisitions of fragrance brands
and exclusive licensing and distribution agreements in the United States and
general expansion of its operations and business, the Company has added
several new key employees. The Board believes that it has been able to
attract these persons, as well as maintain the existing core of management,
without significantly altering its executive salary structure, through the
direct grant of, or through the opportunity for such persons to obtain,
long-term incentive compensation through stock options. The grant of stock
options is an integral part of the compensation formula of the Company and the
ability to continue to provide stock options is essential to the Company's
ability to continue its growth.
The following summary of the 1995 Plan is qualified in its entirety by
reference to the full text of the 1995 Plan, as amended and restated, attached
to this Proxy Statement as Exhibit A.
The 1995 Plan is administered by the Compensation Committee of the Board.
The 1995 Plan provides that any individual who performs services for the
Company or a subsidiary, including any individual who is an employee,
officer or director of the Company or a subsidiary shall be eligible to
receive stock options under the 1995 Plan. As of May 13, 1999, the class of
eligible participants consists of approximately 315 persons, including six
executive officers and two non-employee directors. Following the Merger,
non-employee directors who are members of the Compensation Committee are not
eligible to receive stock options under the 1995 Plan. The Compensation
Committee will determine the persons to be granted stock options, the number
of shares of Common Stock to which the options relate and the terms and
conditions of such stock options. The number of shares of Common Stock
subject to each outstanding stock option, the option price with respect to
outstanding stock options and the aggregate number of shares of Common Stock
under the 1995 Plan shall be subject to such adjustment as the Compensation
Committee deems appropriate to reflect stock splits, stock dividends,
recapitalizations, mergers, consolidations and reorganizations of or by the
Company.
Two types of stock options may be granted under the 1995 Plan: incentive
stock options ("Incentive Options"), which are intended to qualify under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), and
nonqualified stock options ("Nonqualified Options"). The exercise price per
share for Incentive Options may not be less than the fair market value of the
Common Stock at the time the option is granted (as determined in good faith by
the Compensation Committee) and, for Nonqualified Options, the exercise price
may not be less than the par value of the Common Stock. In the event of the
grant of an Incentive Option to an optionee who is the owner (directly or by
attribution under Section 424(d) of the Code) of more than 10% of the total
combined voting power of all classes of the stock of the Company, the option
price may not be less than 110% of the fair market value of the Common Stock
at the time of the grant. For each Incentive Option, the fair market value of
the shares with respect to which options first become exercisable by the
optionee during any calendar year, determined as of the date of the grant, may
not exceed $100,000. The purchase price for any option under the 1995 Plan
may be paid in cash, by check or such other manner as the Compensation
Committee deems appropriate, or with the consent of the Compensation
Committee, in shares of Common Stock or by the Company retaining shares of
Common Stock to be delivered upon exercise of the stock option corresponding
to the number of shares having a fair market value on the date of exercise
equal to the option price of the number of shares with respect to which the
participant desires to exercise the stock option.
Options under the 1995 Plan may be granted with terms of no more than ten
years from the date of grant. Incentive Options may only be granted to key
employees of the Company or its subsidiaries. If an Incentive Option is
granted to an optionee who is the owner (directly or by attribution under
Section 424(d) of the Code) of more than 10% of the total combined voting
power of all classes of the stock of the Company, the term of such option may
not exceed five years from the date of grant. Options under the 1995 Plan are
generally exercisable during the periods and to the extent set forth in the
option agreement between the optionee and the Company as determined by the
Compensation Committee, but no option may be exercisable prior to the
expiration of six months from the date of grant or after the expiration of ten
years from the date of grant. Generally stock options under the 1995 Plan may
be exercised only while the participant is an employee of, or performing
services for, the Company or a subsidiary, provided that with the consent of
the Compensation Committee, options may be exercised subject to certain time
limitations in the event a participant's employment by, or provision of
services to, the Company or a subsidiary is terminated. Stock options
under the 1995 Plan are not transferable other than by will or the laws of
descent and distribution and may be exercised only by the participant during
the participant's lifetime.
Subject to certain legal restrictions, stock options granted under the
1995 Plan become fully exercisable and vested on the date of a "change in
control," which includes a change in the composition of a majority of the
Board, reorganization, merger, consolidation or sale of substantially all of
the assets of the Company where the beneficial owners of the outstanding
Common Stock and the outstanding voting securities fail to own more than 51%
of the then outstanding shares of Common Stock and the combined voting power
of the corporation resulting from such transaction or of the corporation
acquiring the Company's assets, as the case may be; and the liquidation or
dissolution of the Company.
The 1995 Plan will terminate on, and no options may be granted thereunder
after, January 26, 2005, subject to the right of the Board to terminate the
1995 Plan earlier. The Board may amend the 1995 Plan at any time, except
that it must have the approval of the Company's shareholders to (i) increase
the maximum number of shares of Common Stock in the aggregate for which
options may be granted under the 1995 Plan, except in the case of certain
events as summarized above, (ii) change the class of persons eligible to
participate in the 1995 Plan, or (iii) increase the benefits accruing to
participants under the 1995 Plan. No termination or amendment to the 1995
Plan may adversely affect the rights of a participant under an outstanding
option without the consent of the participant.
In general, the grant of an option creates no tax consequences for a
participant or the Company. A participant will not have taxable income upon
exercising an Incentive Option and the Company will receive no deduction at
that time. Upon exercising a Nonqualified Option, the participant will
generally recognize ordinary income equal to the difference between the
exercise price and the fair market value of the freely transferable and
nonforfeitable stock acquired on the date of exercise and the Company will be
entitled to a deduction in an equal amount. Upon such exercise, the
participant must make such arrangements with the Company with respect to
withholding taxes as the Compensation Committee may determine. A
participant's disposition of shares of Common Stock acquired upon the exercise
of an option generally will result in short-term or long-term capital gain or
loss (unless shares issued pursuant to the exercise of an Incentive Option are
disposed of within two years after the date of grant of the Incentive Option
or within one year after the transfer of the shares to the participant)
measured by the difference between the sales price and the participant's tax
basis in such shares. Generally, there will be no tax consequences to the
Company in connection with the disposition of shares acquired under an option,
except that the Company will be entitled to a deduction (and the participant
will recognize ordinary taxable income) if shares acquired upon exercise of an
Incentive Option are disposed of before the applicable Incentive Option
holding periods have been satisfied. Different tax rules may apply with
respect to participants who are subject to Section 16 under the Securities
Exchange Act of 1934, as amended, when they acquire stock in a transaction
deemed to be a non-exempt purchase under that statute or within six months of
an exempt grant of an option under the 1995 Plan. A participant who is not a
United States citizen and is not deemed to be a resident of the United States
for U.S. federal income taxation generally will not be subject to U.S.
taxation upon the grant or exercise of an option or upon the sale of the
shares received upon exercise of an option, provided that the option was
granted solely for services rendered outside of the United States. A
nonresident alien participant who performs services in the U.S. may be subject
to taxation with respect to options granted for such services.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE APPROVAL OF THE 1995
PLAN AMENDMENT.
PROPOSAL 3 - RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed the firm of Deloitte & Touche LLP to
continue as the independent auditors for the Company for the fiscal year
ending January 31, 2000. Deloitte & Touche LLP has been acting as the
independent auditors of the Company since February 22, 1996, and served as the
independent auditors of FFI, whose fragrance distribution operations became
the operations of the Company following the Merger, since FFI's inception
in 1992.
Representatives of Deloitte & Touche LLP are expected to be present at
the Annual Meeting, will be given an opportunity to make a statement if they
desire to do so, and are expected to be available to respond to appropriate
questions from shareholders.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE INDEPENDENT AUDITORS OF THE
COMPANY FOR THE FISCAL YEAR ENDING JANUARY 31, 2000.
<PAGE>
SHAREHOLDER PROPOSALS
Shareholder proposals to be considered for inclusion in the proxy
materials of the Company for its 2000 Annual Meeting of Shareholders must be
received by the Company on or before January 13, 2000.
OTHER MATTERS
The expense of soliciting proxies will be borne by the Company. Proxies
will be solicited principally by mail, but directors, officers and regular
employees of the Company may solicit proxies personally, by telephone or by
facsimile transmission. The Company will reimburse custodians, nominees or
other persons for their out-of-pocket expenses in sending proxy materials to
beneficial owners.
The Board of Directors is not aware of any matters to be presented at the
Annual Meeting other than the matters described herein and does not intend to
bring any other matters before the Annual Meeting. If any other matters
should, however, come before the Annual Meeting, or any adjournment thereof,
the persons named in the enclosed proxy will have discretionary authority to
vote all proxies in accordance with their best judgment.
By Order of the Board of Directors,
OSCAR E. MARINA
Secretary
Miami, Florida
May 17, 1999.
<PAGE>
EXHIBIT A
FRENCH FRAGRANCES, INC.
1995 Stock Option Plan
1. Definitions: As used herein, the following definitions shall apply:
(a) "Compensation Committee" shall mean a committee appointed from time
to time by the Board to administer the plan and consisting of not fewer than
two members. Upon the registration by the Company of the Common Stock
pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), all members of the Compensation Committee shall be
"disinterested persons" as defined by Rule 16b-3.
(b) "Common Stock" means the Common Stock, par value $.01 per share, of
the Company.
(c) "Company" shall mean French Fragrances, Inc., a Florida corporation,
or any successor thereof.
(d) "Eligible Person" means any individual who performs services for the
Company or a Subsidiary, including any individual who is an employee, officer
or director of the Company or a Subsidiary, regardless of whether such
individual is included on the regular payroll of the Company or a Subsidiary,
or is a full or part time employee.
(e) "Incentive Option" shall mean an option to purchase Common Stock
which meets the requirements set forth in the Plan and also meets the
definition of an incentive stock option set forth in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"). The stock option
agreement for an Incentive Option shall state that the option is intended to
be an Incentive Option.
(f) "Nonqualified Option" shall mean an option to purchase Common Stock
which meets the requirements set forth in the Plan but does not meet the
definition of an incentive stock option set forth in Section 422 of the Code.
The stock option agreement for a Nonqualified Option shall state that the
option is intended to be a Nonqualified Option.
(g) "Participant" shall mean any Eligible Person designated by the
Compensation Committee under Paragraph 6 for participation in the Plan.
(h) "Plan" shall mean this Stock Option Plan for the Company.
(i) "Rule 16b-3" shall mean Rule 16b-3 promulgated under the Securities
Exchange Act, or any successor thereto.
(j) "Subsidiary" shall mean any Company in which the Company owns,
directly or indirectly, stock possessing more than fifty percent of the total
combined voting power of all classes of stock.
<PAGE>
2. Purpose of Plan: The purpose of the Plan is to provide key employees,
officers and directors of the Company and its Subsidiaries with incentives to
make significant and extraordinary contributions to the long-term performance
and growth of the Company and its Subsidiaries, to join the interests of such
persons with the interests of the shareholders of the Company, and to increase
their personal interest in the continued success and progress of the Company.
3. Administration: The Plan shall be administered by the Compensation
Committee. Subject to the provisions of the Plan, the Compensation Committee
shall determine, from those eligible to be Participants under the Plan, the
persons to be granted stock options, the amount of stock options to be granted
to each such person, and the terms and conditions of such stock options.
Subject to the provisions of the Plan, the Compensation Committee is
authorized to interpret the Plan, to promulgate, amend and rescind rules and
regulations relating to the Plan and to make all other determinations
necessary or advisable for its administration. Interpretation and
construction of any provision of the Plan by the Compensation Committee shall
be final, conclusive and binding. Acts approved by either a majority of the
members present at any meeting at which a quorum is present, or without a
meeting by the unanimous written approval of the members of the Compensation
Committee, shall be the acts of the Compensation Committee.
4. Indemnification of Compensation Committee Members: In addition to such
other rights of indemnification as they may have, the members of the
Compensation Committee shall be indemnified by the Company against the
reasonable expenses, including attorneys' fees, actually and necessarily
incurred in connection with the defense of any action, suit or proceeding, or
in connection with any appeal therein, to which they or any of them may be a
party by reason of any action taken or failure to act under or in connection
with the Plan or any stock option granted hereunder, and against all amounts
paid by them in settlement thereof (provided such settlement is approved by
the Board of Directors of the Company) or paid by them in satisfaction of a
judgment in any such action, suit or proceeding, except in relation to matters
as to which it shall be adjudged in such action, suit or proceeding that such
Compensation Committee member has acted in bad faith; provided, however, that
within 60 days after receipt of notice of institution of any such action, suit
or proceeding a Compensation Committee member shall offer the Company in
writing the opportunity, at its own cost, to handle and defend the same.
5. Maximum Number of Shares Subject to Plan: The maximum number of shares of
Common Stock which may be issued pursuant to stock options granted under the
Plan shall be 2,200,000 shares. Shares of Common Stock shall be made
available for issuance pursuant to the Plan either from shares of Common Stock
reacquired by the Company (either directly or indirectly through an agent,
trustee or other person or entity) or from authorized but unissued shares.
Any shares of Common Stock with respect to which stock options have expired or
terminated for any reason other than exercise of such stock options, shall
again be available for issuance pursuant to the Plan to the extent permitted
under Rule 16b-3.
The number of shares of Common Stock subject to each outstanding stock
option, the option price with respect to outstanding stock options, and the
aggregate number of shares available at any time under the Plan shall be
subject to such adjustment as the Compensation Committee, in its discretion,
deems appropriate to reflect such events as stock dividends, stock splits,
recapitalizations, mergers, consolidations or reorganizations of or by the
Company; provided, however, that no fractional shares shall be issued pursuant
to the Plan, no rights may be granted under the Plan with respect to
fractional shares, and any fractional shares resulting from such adjustments
shall be eliminated from any outstanding stock option; and provided further,
with respect to Incentive Stock Options, no such adjustment shall be
authorized to the extent that such authority would cause the Plan to violate
Section 422(b)(l) of the Code. Without limiting the generality of the
foregoing, the existence of outstanding options granted under the Plan shall
not affect in any manner the right or power of the Company to make, authorize
or consummate (i) any or all adjustments, recapitalizations, reorganizations
or other changes in the Company's capital structure or its business; (ii) any
merger or consolidation of the Company; (iii) any issue by the Company of debt
securities, or preferred or preference stock that would rank above the shares
of Common Stock subject to outstanding options; (iv) the dissolution or
liquidation of the Company; (v) any sale, transfer or assignment of all or any
part of the assets or business of the Company; or (vi) any other corporate act
or proceedings, whether of a similar character or otherwise.
6. Participants: The Compensation Committee shall determine and designate
from time to time, in its sole discretion, those Eligible Persons to whom
stock options are to be granted or awarded and who thereby become Participants
under the Plan. Notwithstanding the foregoing, Incentive Options may be
granted only to key employees eligible to receive Incentive Options pursuant
to Section 422 of the Code.
7. Written Agreement: Each stock option, shall be evidenced by a written
agreement between the Company and the Participant and shall contain such
provisions as may be approved by the Compensation Committee. Such agreements
shall constitute binding contracts between the Company and the Participant,
and every Participant, upon acceptance of such agreement, shall be bound by
the terms and restrictions of the Plan and of such agreement. The terms of
each such agreement shall be in accordance with the Plan, but the agreements
may include such additional provisions and restrictions determined by the
Compensation Committee, provided that such additional provisions and
restrictions are not forbidden by the terms of the Plan.
8. Allotment of Shares: The Compensation Committee shall determine and fix
the number of shares of Common Stock with respect to which each Participant
may be granted stock options provided, however, that no Incentive Option may
be granted under the Plan to any one Participant which would result in an
aggregate fair market value, determined as of the date the option is granted,
of Common Stock with respect to which Incentive Options are exercisable for
the first time by such Participant during any calendar year in excess of
$100,000.
9. Stock Options: Subject to the terms of the Plan, the Compensation
Committee may grant to Participants either Incentive Options, Nonqualified
Options or any combination thereof. Each option granted under the Plan shall
designate the number of shares covered thereby, with respect to which the
option is an Incentive Option, and the number of shares of Common Stock
covered thereby, with respect to which the option is a Nonqualified Option.
<PAGE>
10. Stock Option Price: Subject to the rules set forth in this Paragraph 10,
at the time any stock option is granted, the Compensation Committee shall
establish the price per share for which the shares of Common Stock covered by
the option may be purchased. With respect to an Incentive Option, such option
price shall not be less than 100% of the fair market value of a share of
Common Stock on the date on which such option is granted; provided, however,
that with respect to an Incentive Option granted to an employee who at the
time of the grant owns (after applying the attribution rules of Section 424(d)
of the Code) more than 10% of the total combined voting power of all classes
of the stock of the Company or of any parent or subsidiary, the option price
shall not be less than 110% of the fair market value of a share of Common
Stock on the date such Incentive Option is granted. With respect to a
Nonqualified Option, the option price shall not be less than the par value of
a share of Common Stock. For purposes of the Plan, the "fair market value"
of a share of Common Stock shall be determined in good faith by the
Compensation Committee and may, among other methods, be the Closing Price of
the Common Stock preceding the grant date or the average of the Closing Prices
of the Common Stock on each of the 30 business days immediately preceding such
date. For this purpose, the Closing Price of the Common Stock on any business
day shall be (i) if such Common Stock is listed or admitted for trading on
any United States national securities exchange, or if actual transactions are
otherwise reported on a consolidated transaction reporting system, the last
reported sale price of Common Stock on such exchange or reporting system, as
reported in any newspaper of general circulation; (ii) if the Common Stock is
quoted on the National Association of Securities Dealers Automated Quotations
System ("Nasdaq"), or any similar system of automated dissemination of
quotations of securities prices in common use, the closing bid quotation for
such a day of the Common Stock on such system; or (iii) if neither clause (i)
or (ii) is applicable, the mean between the high bid and low ask quotations
for the Common Stock as reported by the National Quotation Bureau,
Incorporated if at least two securities dealers have inserted both bid and ask
quotations for the Common Stock on at least 5 of the 10 preceding days; or,
(iv) if none of clause (i), (ii), or (iii) is applicable, the fair market
value on a specified date of a share as determined by the Compensation
Committee in good faith. The option price shall be subject to adjustment in
accordance with the provisions of Paragraph 5 of the Plan.
11. Payment of Stock Option Price: At the time of the exercise in whole or
in part of any stock option granted hereunder, payment of the option price in
full in cash or by certified or official bank check, personal check or money
order, or, with the consent of the Compensation Committee, in Common Stock,
shall be made by the Participant for all shares so purchased. In the sole
discretion of and subject to such conditions as may be established by the
Compensation Committee, payment of the option price may also be made by the
Company retaining from the shares of Common Stock to be delivered upon
exercise of the stock option that number of shares having a fair market value
on the date of exercise equal to the option price of the number of shares with
respect to which the Participant exercises the stock option. If payment is
made by the tender of shares of Common Stock or retention by the Company of
shares of Common Stock to be delivered upon the exercise of the stock option,
the fair market value of each share of Common Stock tendered or retained, as
the case may be, shall be determined as of the day such shares are tendered or
such option is exercised, or if no sale or bid has been made on such date,
then on the last preceding day on which such sale or bid shall have been made.
Any excess of the value of the tendered or retained shares over the option
price will be returned to the Participant as follows:
(i) any whole shares of Common Stock remaining in excess of the purchase
price will be returned to the Participant in kind, and may be
represented by one or more certificates as determined by the Company
in its sole discretion; and
(ii) any partial shares of Common Stock remaining in excess of the option
price will be returned to the Participant in cash.
Such payment may also be made in such other manner as the Compensation
Committee determines is appropriate, in its sole discretion. No Participant
shall have any of the rights of a shareholder of the Company under any stock
option until the actual issuance of shares to said Participant, and prior to
such issuance no adjustment shall be made for dividends, distributions or
other rights in respect of such shares, except as provided in Paragraph 5.
12. Granting and Exercise of Stock Options: Each stock option granted
hereunder shall be exercisable at any such time or times or in any such
installments as may be determined by the Compensation Committee at the time of
the grant; provided, however, that no stock option granted hereunder may be
exercisable prior to the expiration of six months from the date of grant. The
aggregate fair market value (determined at the time the option is granted) of
Common Stock with respect to which Incentive Options are exercisable for the
first time by a Participant during any calendar year shall not exceed
$100,000.
A Participant may exercise a stock option, if then exercisable, in whole
or in part by delivery to the Company of written notice of the exercise, in
such form as the Compensation Committee may prescribe, accompanied by (i) full
payment for the shares with respect to which the stock option is exercised, or
(ii) in the sole discretion of the Compensation Committee and subject to the
requirements of Regulation T (as in effect from time to time) under the
Exchange Act, irrevocable instructions to a stockbroker to promptly deliver to
the Company full payment for the shares with respect to which the stock option
is exercised from the proceeds of the stockbroker's sale of or loan against
the shares. Except as provided in Paragraph 17, stock options may be
exercised only while the Participant is an employee of, or performing service
to, the Company or a Subsidiary.
Successor stock options may be granted to the same Participant, whether
or not the stock option(s) previously granted to such Participant remain
unexercised. A Participant may exercise a stock option, if then exercisable,
notwithstanding that stock options previously granted to such Participant
remain unexercised.
13. Change of Control Provisions. Notwithstanding any other provision of the
Plan, the following acceleration provisions shall apply in the event of a
"Change of Control" as defined in this Section 13:
13.1 Any Option previously granted under the Plan to a Participant who
is an Eligible Person on the date of a "Change in Control" (as defined in
Section 13.2) shall become fully exercisable and vested, automatically in the
case of Participants subject to Section 16 of the Exchange Act, and unless
otherwise determined by the Board of Directors in writing at or after the
grant but prior to the occurrence of the Change in Control in the case of
Participants not subject to Section 16 of the Exchange Act, subject only to
the legal restrictions on the issuance of shares of Common Stock upon
exercise of an Option set forth in Section 18 and the provisions of the next
sentence. In the case of participants subject to Section 16 of the Exchange
Act, unless a participant can transfer an Option without incurring liability
under Section 16(b) of the Exchange Act, at least six months shall elapse from
the date of acquisition of the Option to the date of disposition of the Option
(other than upon exercise) or its underlying Shares.
13.2 For purposes of Section 13.1, a "Change of Control" shall mean:
(a) Individuals who, as of the effective date of the Plan, constitute
the Board (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 shareholders, was approved by a vote of at least a
majority of the directors then comprising 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 solicitation to
which Rule 14a-11 of Regulation 14A promulgated under the Exchange Act applies
or other actual or threatened solicitation of proxies or consents; or
(b) Approval by the shareholders of the Company of a reorganization,
merger or consolidation, in each case, with respect to which 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 do not, following such reorganization, merger or consolidation
beneficially own, directly or indirectly, more than 51% of, respectively, the
then outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election
of directors, as the case may be, of the corporation resulting from such
organization, merger or consolidation; or
(c) Approval by the shareholders of the Company of (i) a complete
liquidation or dissolution of the Company; or (ii) the sale or other
disposition of all or substantially all of the assets of the Company, other
than to a corporation, with respect to which following such sale or other
disposition, more than 51% 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. The term "the sale or other disposition of all or
substantially all of the assets of the Company" shall mean a sale or other
disposition transaction or series of related transactions involving assets of
the Company or of any direct or indirect subsidiary of the Company (including
the stock of any direct or indirect subsidiary of the Company) in which the
value of the assets or stock being sold or otherwise disposed of (as measured
by the purchase price being paid therefor or by such other method as the Board
of Directors determines is appropriate in a case where there is no readily
ascertainable purchase price) constitutes more than two-thirds of the fair
market value of the Company (as hereinafter defined). The "fair market value
of the Company" shall be the aggregate market value of the then Outstanding
Company Common Stock (on a fully diluted basis) plus the aggregate market
value of the Company's other outstanding equity securities. The aggregate
market value of the shares of Outstanding Company Common Stock shall be
determined by multiplying the number of shares of Outstanding Company Common
Stock (on a fully diluted basis) outstanding on the date of the execution and
delivery of a definitive agreement with respect to the transaction or series
of related transactions (the "Transaction Date") by the average fair market
value (as defined in Section 10) per Share of Outstanding Company Common Stock
for the ten trading days immediately preceding the Transaction Date. The
aggregate market value of any other equity securities of the Company shall be
determined in a manner similar to that prescribed in the preceding sentence
for determining the aggregate market value of the shares of Outstanding
Company Common Stock or by such other method as the Board of Directors shall
determine is appropriate.
14. Non-Transferability of Stock Options: No stock option granted under the
Plan to a Participant shall be transferable by such Participant otherwise than
by will, or by the laws of descent and distribution, and such option shall
be exercisable, during the lifetime of the Participant, only by the
Participant.
15. Term of Stock Options: If not sooner terminated, each stock option stock
granted hereunder shall expire not more than 10 years from the date of the
granting thereof; provided, however, that with respect to an Incentive Option
granted to a Participant who, at the time of the grant, owns (after applying
the attribution rules of Section 424(d) of the Code) more than 10% of the
total combined voting power of all classes of stock of the Company or of any
parent or subsidiary, such option shall expire not more than 5 years after the
date of granting thereof.
16. Continuation of Employment: The Compensation Committee may require, in
its discretion, that any Participant under the Plan to whom a stock option
shall be granted shall agree in writing as a condition of the granting of such
stock option to remain in the employ of, or continue to provide services to,
the Company or a Subsidiary for a designated minimum period from the date of
the granting of such stock option as shall be fixed by the Compensation
Committee.
17. Termination of Employment: If a Participant's employment by, or
provision of services to, the Company or a Subsidiary shall be terminated, the
Compensation Committee may, in its discretion, permit the exercise of stock
options granted to such Participant and then exercisable (i) for a period not
to exceed one year following such termination of employment with respect to
Incentive Options, and (ii) for a period not to extend beyond the expiration
date with respect to Nonqualified Options; provided, however, that no
Incentive Option may be exercised after three months following a Participant's
termination of employment, unless such termination of employment is due to the
Participant's death or permanent disability, in which event the Incentive
Option may be permitted to be exercised for up to one year following the
Participant's termination of employment for such reason. In no event,
however, shall a stock option be exercisable subsequent to its expiration date
and, furthermore, unless the Compensation Committee otherwise determines, a
stock option may only be exercised after termination of a Participant's
employment or service to the extent exercisable on the date of termination of
employment or as a result of termination of employment.
18. Investment Purpose: If the Compensation Committee in its discretion
determines that as a matter of law such procedure is or may be desirable, it
may require a Participant, upon any acquisition of Common Stock hereunder and
as a condition to the Company's obligation to deliver certificates
representing such shares, to execute and deliver to the Company a written
statement, in form satisfactory to the Compensation Committee, representing
and warranting that the Participant's acquisition of shares of Common Stock
shall be for such person's own account, for investment and not with a view to
the resale or distribution thereof and that any subsequent offer for sale or
sale of any such shares shall be made either pursuant to (a) a Registration
Statement on an appropriate form under the Securities Act of 1933, as
amended (the "Securities Act"), which Registration Statement has become
effective and is current with respect to the shares being offered and sold, or
(b) a specific exemption from the registration requirements of the Securities
Act, but in claiming such exemption the Participant shall, prior to any offer
for sale or sale of such shares, obtain a favorable written opinion from
counsel for or approved by the Company as to the availability of such
exemption. The Company may endorse an appropriate legend referring to the
foregoing restriction upon the certificate or certificates representing any
shares issued or transferred to the Participant under this Plan.
19. Rights to Continued Employment: Nothing contained in the Plan or in any
stock option granted pursuant to the Plan, nor any action taken by the
Compensation Committee hereunder, shall confer upon any Participant any right
with respect to continuation of employment by, or the provision of services
to, the Company or a Subsidiary nor interfere in any way with the right of the
Company or a Subsidiary to terminate such person's employment or service at
any time with or without cause.
20. Withholding Payments: If upon the exercise of a Nonqualified Option or
upon a disqualifying disposition (within the meaning of Section 422 of the
Code) of shares acquired upon exercise of an Incentive Option, there shall be
payable by the Company or a Subsidiary any amount of income tax withholding,
in the Compensation Committee's sole discretion, either the Company shall
appropriately reduce the amount of Common Stock to be issued to the
Participant or the Participant shall pay such amount to the Company or
Subsidiary to reimburse it for such income tax withholding. The Compensation
Committee may, in its sole discretion, permit Participants to satisfy such
withholding obligations, in whole or in part, by electing to have the amount
of Common Stock delivered or deliverable by the Company upon exercise of a
stock option appropriately reduced or by electing to tender Common Stock back
to the Company subsequent to exercise of a stock option to reimburse the
Company for such income tax withholding, subject to such rules and regulations
as the Compensation Committee may adopt. The Compensation Committee may make
such other arrangements with respect to income tax withholding as it shall
determine.
21. Effectiveness of Plan: This Plan is effective as of January 26, 1995;
provided, however, that within one year after such date, the Plan shall have
been approved by the affirmative vote of the holders of a majority of the
shares of Common Stock present or represented and entitled to vote at a
meeting of the Company's shareholders, of any adjournment thereof. Any stock
option granted under this Plan prior to the date that shareholder approval is
obtained pursuant to this Section 21 shall, for purposes of Section 12 hereof,
be deemed to have been granted as of the date of such shareholder approval is
obtained.
22. Termination, Duration and Amendments of Plan: The Plan may be abandoned
or terminated at any time by the Board of Directors of the Company. Unless
sooner terminated, the Plan shall terminate on ten years from effective date,
and no stock options may be granted or awarded thereafter. The termination of
the Plan shall not affect the validity of any stock option outstanding on the
date of termination, and any such options shall be interpreted pursuant to the
terms of this Plan, notwithstanding the termination of the Plan.
For the purpose of conforming to any changes in applicable law or
governmental regulations, or for any other lawful purpose, the Board of
Directors shall have the right, with or without approval of the shareholders
of the Company, to amend or revise the terms of the Plan at any time;
provided, however, that no such amendment or revisions shall (i) increase the
maximum number of shares of Common Stock in the aggregate which are subject to
the Plan (except as provided under the provisions of Paragraph 5), change the
class of persons eligible to be Participants under the Plan or materially
increase the benefits accruing to Participants under the Plan, without
approval or ratification of the shareholders of the Company; or (ii) change
the stock option price (except as contemplated by Paragraph 5) or alter or
impair any stock option, which shall have been previously granted or awarded
under the Plan, without the consent of the holder thereof.
23. Interpretation: If any provision of the Plan should be held invalid or
illegal for any reason, such determination shall not affect the remaining
provisions hereof, but instead the Plan shall be construed and enforced as if
such provision had never been included in the Plan. Without limiting the
generality of the foregoing, transactions under the Plan are intended to
comply with all applicable conditions of Rule 16b-3 or its successors
promulgated under the Exchange Act. To the extent any provision of the Plan
or any action by the Compensation Committee or the Board of Directors
hereunder is inconsistent with the foregoing requirements, it shall be deemed
null and void, to the extent permitted by law and deemed advisable by the
Compensation Committee or the Board of Directors. This Plan shall be governed
by the laws of the State of Florida. Headings contained in the Plan are for
convenience only and shall in no manner be construed as part of the Plan. Any
reference to the masculine, feminine, or neuter gender shall be a reference to
such other gender as is appropriate.
As adopted by the Board of Directors on January 26, 1995, and as amended
on November 30, 1995, March 29, 1996 and March 3, 1999.
<PAGE>
REVOCABLE PROXY - COMMON STOCK
FRENCH FRAGRANCES, INC.
ANNUAL MEETING OF SHAREHOLDERS
June 23, 1999
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Oscar E. Marina and William J.
Mueller as proxies each with full powers of substitution to act, as
attorneys and proxies for the undersigned, to vote all shares of
Common Stock of French Fragrances, Inc., which the undersigned is
entitled to vote at the Annual Meeting of Shareholders, to be held at
the Company's executive offices at 14100 N.W. 60th Avenue, Miami
Lakes, Florida 33014, on Wednesday, June 23, 1999 at 10:00 a.m.,
Eastern Standard Time, and at any postponement or adjournment thereof,
as stated on the reverse side.
THIS PROXY WHEN PROPERLY EXECUTED AND RETURNED IN A TIMELY MANNER
WILL BE VOTED AT THE ANNUAL MEETING AND AT ANY POSTPONEMENT OR
ADJOURNMENT THEREOF IN ACCORDANCE WITH THE DIRECTIONS SPECIFIED
HEREIN. IF NO DIRECTIONS ARE INDICATED, THIS PROXY WILL BE VOTED FOR
THE ELECTION OF ALL NOMINEES FOR DIRECTORS LISTED IN PROPOSAL 1, FOR
THE APPROVAL OF THE AMENDMENT TO THE 1995 STOCK OPTION PLAN SET FORTH
IN PROPOSAL 2 AND FOR THE RATIFICATION OF THE APPOINTMENT OF THE
INDEPENDENT AUDITORS SET FORTH IN PROPOSAL 3, AND ON OTHER MATTERS
PRESENTED FOR A VOTE, IN ACCORDANCE WITH THE JUDGMENT OF THE PERSONS
ACTING UNDER THIS PROXY. IN THE EVENT ANY NOMINEE FOR ELECTION AS
DIRECTOR BECOMES UNAVAILABLE TO SERVE, THIS PROXY WILL BE VOTED FOR
THE ELECTION OF THE BALANCE OF THOSE NAMED AND A SUBSTITUTE SELECTED
BY THE PERSONS NAMED IN THE PROXY.
Each shareholder giving a proxy has the power to revoke it any
time before it is voted, either in person at the Annual Meeting, by
written notice to the Secretary of French Fragrances, Inc. or by
delivery of a later-dated proxy. Attendance at the Annual Meeting
without further action will not automatically revoke a proxy.
[CONTINUED AND TO BE MARKED, DATED AND SIGNED ON REVERSE SIDE]
<PAGE>
[REVERSE SIDE OF CARD]
<TABLE>
<S> <C>
The Board of Directors recommends a vote FOR Please mark your votes as indicated in
Items 1, 2 and 3. this example [X]
Item 1- ELECTION OF DIRECTORS Item 2- APPROVAL OF THE AMENDMENT
TO THE 1995 STOCK OPTION PLAN
Rafael Kravec J.W. Nevil Thomas
E. Scott Beattie Fred Berens FOR AGAINST ABSTAIN
Richard C.W. Mauran George Dooley [ ] [ ] [ ]
FOR WITHHOLD AUTHORITY Item 3- RATIFICATION OF APPOINTMENT
[ ] [ ] OF DELOITTE & TOUCHE LLP AS
INDEPENDENT AUDITORS FOR THE
Instruction: To withhold authority to vote FISCAL YEAR ENDED JANUARY 31,
for any individual nominee, write that 2000
nominee's name in the space provided
below: FOR AGAINST ABSTAIN
__________________________________________ [ ] [ ] [ ]
__________________________________________
__________________________________________ Other Business
--------------
In their judgment, the proxies are
authorized to vote upon such other
business as may properly come before
the Annual Meeting and any adjournment
or postponement thereof.
Signature: ____________________ Signature: ____________________ Date: _____________
NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing
as attorney, executor, administrator, trustee or guardian, please give full title
as such.
</TABLE>
