DEF 14A
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d88714ddef14a.txt
DEFINITIVE PROXY STATEMENT
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
Helen of Troy Limited
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(Name of Registrant as Specified In Its Charter)
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[HELEN OF TROY LOGO]
HELEN OF TROY LIMITED
ONE HELEN OF TROY PLAZA
EL PASO, TEXAS 79912
July 13, 2001
Dear Shareholders:
It is my pleasure to invite you to the 2001 Annual Meeting of the
Shareholders of Helen of Troy Limited. The meeting will be held at 1:00 p.m.
Mountain Daylight Time, on Tuesday, August 28, 2001, at the Hilton Camino Real
Hotel, 101 S. El Paso Street, El Paso, Texas. In addition to the business to be
transacted at the meeting, members of management will present information about
the Company's operations and will answer your questions.
At our Annual Meeting, we will elect six directors and vote on a
proposal that would increase the number of shares available to be issued to our
employees under the Company's 1998 Stock Option and Restricted Stock Plan. The
accompanying Notice of Annual Meeting of Stockholders and Proxy Statement
contain information that you should consider when you vote your shares. It is
important that you vote your shares whether or not you plan to attend the
meeting. Please sign, date and return the enclosed proxy card in the
accompanying envelope as soon as possible. If you plan to attend the meeting and
wish to vote in person, you may vote your proxy at that time.
I look forward to seeing you at the meeting. On behalf of the
management and directors of Helen of Troy Limited, I want to thank you for your
continued support and confidence.
Sincerely,
Gerald J. Rubin
Chairman of the Board,
Chief Executive Officer
and President
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HELEN OF TROY LIMITED
ONE HELEN OF TROY PLAZA
EL PASO, TEXAS 79912
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 28, 2001
Notice is hereby given that the Annual Meeting of the Shareholders (the
"Annual Meeting") of Helen of Troy Limited, a Bermuda company (the "Company"),
will be held at the Hilton Camino Real Hotel, 101 S. El Paso Street, El Paso,
Texas on Tuesday, August 28, 2001 at 1:00 p.m., Mountain Daylight Time, for the
following purposes:
1. To elect a board of six directors;
2. To consider an amendment to the Helen of Troy Limited 1998
Stock Option and Restricted Stock Plan to increase the number
of shares of the Company's common stock available under such
Plan; and
3. To transact such other business as may properly come before
the Annual Meeting or any adjournment thereof.
The record date for determining Shareholders entitled to receive notice
of and vote at the Annual Meeting is July 10, 2001. You are urged to read
carefully the attached Proxy Statement for additional information concerning the
matters to be considered at the Annual Meeting.
If you do not expect to be present in person at the Annual Meeting,
please sign and date the enclosed proxy and return it promptly in the enclosed
postage-paid envelope that has been provided for your convenience. The prompt
return of proxies will help ensure the presence of a quorum and save the Company
the expense of further solicitation.
You are cordially invited and encouraged to attend the Annual Meeting
in person.
John R. Boomer
Vice President,
General Counsel
and Secretary
El Paso, Texas
July 13, 2001
IMPORTANT
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE MARK, DATE AND
SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENVELOPE PROVIDED. IF YOU DO ATTEND
THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON.
HELEN OF TROY(R)
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HELEN OF TROY LIMITED
ONE HELEN OF TROY PLAZA
EL PASO, TEXAS 79912
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
AUGUST 28, 2001
SOLICITATION OF PROXIES
The accompanying proxy is solicited by the Board of Directors of Helen
of Troy Limited (the "Company") for use at its Annual Meeting of Shareholders
(the "Annual Meeting") to be held at the Hilton Camino Real Hotel, 101 S. El
Paso Street, El Paso, Texas, on Tuesday, August 28, 2001, at 1:00 p.m., Mountain
Daylight Time, and at any adjournment thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Shareholders. A proxy may be revoked by
filing written notice of revocation or an executed proxy bearing a later date
with the Secretary of the Company any time before exercise of the proxy. A
shareholder giving a proxy may attend the Annual Meeting and vote in person.
Forms of proxy and proxy statements are to be mailed on or about July 13, 2001.
The Annual Report to Shareholders for the year ended February 28, 2001
("fiscal 2001"), including financial statements, is enclosed. It does not form
any part of the material provided for the solicitation of proxies.
The cost of solicitation of proxies will be borne by the Company. In
addition to solicitation by mail, officers and employees of the Company may
solicit the return of proxies by telephone and personal interview. Forms of
proxy and proxy material may also be distributed through brokers, custodians and
like parties to beneficial owners of the Company's common shares, par value $.10
per share (the "Common Stock") for which the Company will, upon request,
reimburse the forwarding expense.
VOTING SECURITIES
The close of business on July 10, 2001 is the record date for
determination of shareholders entitled to notice of, and to vote at, the Annual
Meeting. As of June 27, 2001, there were 28,065,726 issued and outstanding
shares of Common Stock, entitled to one vote per share.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of June 22, 2001, the beneficial
ownership of the Common Stock of the Directors, the executive officers of the
Company, the executive officers and the Directors of the Company as a group, and
each person known to the Company to be the beneficial owner of more than 5% of
the Common Stock:
NAME NUMBER OF SHARES PERCENT
Gerald J. Rubin (1)(2)(3)(4)(5) 7,354,922 22.7%
One Helen of Troy Plaza
El Paso, Texas 79912
Byron H. Rubin (6) 63,000 *
Daniel C. Montano (6) 44,000 *
Gary B. Abromovitz (6) 56,000 *
Stanlee N. Rubin (1)(2)(3)(4)(5) 7,354,922 22.7%
One Helen of Troy Plaza
El Paso, Texas 79912
Christopher L. Carameros (6)(7) 54,000 *
Russell G. Gibson -- *
All directors and executive officers as a group 7,571,922 23.3%
(7 persons) (8)(9)
FMR Corp. (10) 3,634,540 11.2%
82 Devonshire Street
Boston, Massachusetts 02109
Liberty Wanger Asset Management, LP (11) 2,700,000 8.3%
227 West Monroe Street
Suite 3000
Chicago, IL 60606
*ownership of less than 1% of the outstanding Common Stock
(1) Does not include 144,000 shares in a trust for the children of Gerald
J. Rubin and Stanlee N. Rubin in which they disclaim any beneficial
ownership.
(2) Includes 276,980 shares held beneficially through a partnership in
which Gerald J. Rubin and Stanlee N. Rubin are partners.
(3) Includes 4,150,000 shares in the case of Gerald J. Rubin, subject to
stock options that are exercisable within sixty days of June 22, 2001.
Gerald J. Rubin's stock options are subject to a one-half undivided
community property interest with Stanlee N. Rubin.
(4) Includes 2,875,942 shares owned directly by Gerald Rubin, all of which
are subject to a one-half undivided community property interest with
Stanlee N. Rubin.
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(5) Includes 52,000 stock options, issued under the 1995 Non-Employee
Director Stock Option Plan and exercisable within sixty days of June
22, 2001, held by Stanlee N. Rubin and subject to a one-half undivided
community property interest with Gerald J. Rubin.
(6) Includes 44,000, 44,000, 52,000, and 44,000 shares subject to stock
options that are exercisable within sixty days as of June 20, 2001 for
Byron H. Rubin, Daniel C. Montano, Gary B. Abromovitz, and
Christopher L. Carameros, respectively.
(7) Includes 10,000 shares held in a trust, of which Mr. Carameros is the
trustee, for Mr. Carameros' family.
(8) Includes shares discussed in notes 2-7 above.
(9) Includes 4,386,000 shares subject to stock options that are exercisable
within sixty days of June 22, 2001.
(10) According to correspondence dated June 25, 2001 and received by Helen
of Troy Limited from FMR Corp., FMR Corp. has sole dispositive power
for 3,634,540 shares and sole voting power for 223,440 shares.
(11) According to Schedule 13G filed on February 14, 2001, Liberty Wanger
Asset Management, LP has sole dispositive and voting power for
2,700,000 shares.
ELECTION OF DIRECTORS
(PROPOSAL 1)
The Bye-laws of the Company state that the number of Directors of the
Company shall be established by the Board of Directors from time to time but
shall not be less than two. The Board of Directors has set the number of
Director positions at six. The Nominating Committee has identified six
candidates for election to the Board of Directors. Each Director elected shall
serve as a Director until the next annual meeting of shareholders, or until his
or her successor is elected and qualified.
The six persons named below are the Nominating Committee's nominees for
election as Directors. Gerald J. Rubin and Stanlee N. Rubin are married. Gerald
J. Rubin and Byron H. Rubin are brothers. Set forth below are descriptions of
the principal occupations during at least the past five years of the nominees
for membership on the Company's Board of Directors.
Gerald J. Rubin, age, 57, founder of the Company, has been the Chairman
of the Board, Chief Executive Officer and President of the Company since June
2000. From 1984 to July 2000 Mr. Rubin was Chairman of the Board and Chief
Executive Officer of the Company. Mr. Rubin has been a Director of the Company
since 1969.
Gary B. Abromovitz, age 58, has been a Director of the Company since
1990. Mr. Abromovitz was a partner in the law firm of Bonn/Abromovitz from
January 1990 to September 1998. Since September 1998, Mr. Abromovitz has been
active in real estate, concentrating on historic properties and downtown
redevelopment.
Stanlee N. Rubin, age 57, has been a Director of the Company since
1990. Mrs. Rubin is active in civic and charitable organizations. She is a
member of the University of Texas at El Paso Board of Development. Mrs. Rubin is
also a Partner for the Susan G. Komen Breast Cancer Foundation.
Christopher L. Carameros, age 47, has been a Director of the Company
since June 1993. Mr. Carameros has been an officer of L & M Asset Management
Inc., a financial services and asset management company, from August 1997 to the
present. Mr. Carameros was an officer of Cactus Apparel Inc., an apparel
manufacturing company, from September 1993 to July 1997.
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Byron H. Rubin, age 51, has been a Director of the Company since 1981.
Mr. Rubin has been a partner in the firm Daniels & Rubin (formerly known as
Integrated Financial of Texas), an insurance and tax planning firm in Dallas,
Texas since 1979.
Daniel C. Montano, age 52, has been a Director of the Company since
1980. He has been the Managing Director of C&K Capital since January 1997. From
January 1995 to December 1996, he was Director of Investment Banking at
Brookstreet Securities. Mr. Montano was President and a director of Montano
Securities Corporation from 1979 to January 1995. In connection with matters
that occurred in 1994, Mr. Montano agreed in 1997 to a settlement with the
National Association of Securities Dealers, Inc. (the "NASD") pursuant to which
he was fined $102,500 and suspended by the NASD from associating with any NASD
members for a period of two years. Mr. Montano consented to the findings that he
had engaged in a course of conduct that resulted in the mishandling or misuse by
his firm, Montano Securities, of funds entrusted to it. Montano Securities was
also found to have carried out securities transactions without maintaining
sufficient net capital. In May 1998, the NASD suspended Mr. Montano's
registration as a registered securities broker for an unspecified time due to
his failure to pay an arbitration award. In July 1998, the Securities and
Exchange Commission entered an order affirming a decision by the NASD that Mr.
Montano was found to have violated certain rules of the NASD, including not
accurately and sufficiently discussing the mechanism of short-selling or the
risks associated with implementing the strategy using a particular stock, making
improper references to prior recommendations, making exaggerated and
inappropriate presentations of prior recommendations and making improper
projections. None of the matters discussed above with regard to Mr. Montano
involved any securities or transactions involving the Company or any of its
subsidiaries.
VOTE REQUIRED FOR ELECTION OF DIRECTORS
The nominees receiving a majority of the votes cast at the Annual
Meeting will be elected as Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR EACH OF
THE SIX NOMINEES NAMED ABOVE.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
During fiscal 2001 the Company's Executive Committee consisted of
Gerald J. Rubin, Byron H. Rubin and, prior to his resignation in June 2000, Mr.
H. McIntyre Gardner. The Executive Committee has the power to exercise all of
the authority of the Board of Directors in the management of the business and
affairs of the Company, except to the extent limited by the Company's Bye-laws
and by applicable law. All actions and resolutions of the Executive Committee
are reported to the Board of Directors at the next meeting of the Board for its
review, approval and ratification. The Executive Committee meets periodically
during the year; but no resolutions were adopted nor were any formal meetings
held during fiscal 2001.
The Company's Audit Committee consisted of Gary B. Abromovitz, Daniel
C. Montano and Christopher L. Carameros during fiscal 2001. The Audit Committee
is responsible for evaluating accounting and control procedures and practices of
the Company and for reporting on such matters to the Board of Directors. The
Audit Committee serves as a direct liaison with the Company's independent public
accountants and recommends the engagement or discharge of such accountants. The
Audit Committee meets periodically with the Chief Financial Officer, other
appropriate officers of the Company and the Company's independent public
accountants to review the Company's financial and accounting systems, accounting
and financial controls, reports by the independent public accountants, proposed
accounting changes and financial statements and opinions on such financial
statements. The Audit Committee met four times during fiscal 2001.
The Company's Nominating Committee consisted of Gerald J. Rubin and
Stanlee N. Rubin during fiscal 2001. The Nominating Committee receives
recommendations from its members or other members of the Board of Directors for
candidates to be appointed to the Board or Committee positions, reviews and
evaluates such candidates and makes
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recommendations to the Board of Directors for nominations to fill Board and
Committee positions. The Nominating Committee held one formal meeting and
periodic informal meetings during the year. The Nominating Committee will
consider candidates recommended by employees and shareholders. Written
suggestions for candidates, accompanied by a written consent of the proposed
candidate to serve as a Director if nominated and elected, a description of his
or her qualifications and other relevant biographical information, should be
sent by March 15, 2002 for consideration by the Nominating Committee prior to
the next annual meeting to the Secretary of the Company, One Helen of Troy
Plaza, El Paso, Texas 79912.
The Company's Stock Option and Compensation Committee consisted of Gary
B. Abromovitz and Daniel C. Montano during fiscal 2001. The Stock Option and
Compensation Committee generally oversees matters relating to compensation of
employees of the Company. In connection with this oversight, it reviews and
makes recommendations to the Board of Directors on officer and senior employee
compensation and on grants of stock options under the Company's stock option
plans. The Stock Option and Compensation Committee met or unanimously voted on
resolutions four times during fiscal 2001.
The full Board of Directors met or voted on resolutions five times
during fiscal 2001. One of the five Board of Directors meetings was held by
telephone. Each of the Directors attended or acted upon at least seventy-five
percent of the aggregate number of Board of Director meetings, consents, and
Committee meetings or consents held or acted upon during the period for which he
or she acted as a Director during fiscal 2001.
EXECUTIVE OFFICERS
The executive officers of the Company consist of Gerald J. Rubin and
Russell G. Gibson; Mr. Rubin is currently also a director of the Company. See
"Election of Directors."
Russell G. Gibson, age 48, has been the Senior Vice President of Finance and
Chief Financial Officer of the Company since August 2000. Mr. Gibson served as
Vice President and Chief Financial Officer of Lucchese, Inc., a footwear
manufacturer, from December 1998 to August 2000, and as Vice President and Chief
Financial Officer of Farah, Inc., a manufacturer of apparel, from November 1994
to December 1998. Prior to its acquisition by Tropical Sportswear Corp., Farah,
Inc. was listed on the New York Stock Exchange.
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EXECUTIVE COMPENSATION
The following table sets forth the summary of compensation earned by
the Company's Chief Executive Officer and its other Executive Officer during
fiscal years 1999 through 2001.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM
COMPENSATION
------------------------------------------ -----------------
OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL FISCAL COMPENSATION OPTIONS /SARS COMPENSATION
POSITION YEAR SALARY ($) BONUS ($) ($) (#) ($)
------------------------------------------------------------------------ ------------- -------------
Gerald J. Rubin 2001 600,000 766,094 1,000,000 18,995 (1)(2)(3)
Chairman, Chief 2000 600,000 - - 1,000,000 16,872 (1)(2)(3)
Executive Officer, 1999 600,000 1,250,000 - 1,000,000 17,052 (1)(2)(3)
and President
Russell Gibson 2001 (4) 100,208 8,835 - 10,000 -
Senior
Vice-President
Finance and Chief
Financial Officer
(1) Includes $1,000 consisting of the Company's contributions to the Helen
of Troy 401(k) Plan.
(2) Includes amounts representing the economic benefit of split-dollar life
insurance policies for which the Company paid the premiums. The
economic benefit of such policies totaled $10,904, $8,622, and $7,802
in fiscal 2001, 2000 and 1999, respectively
(3) Includes $7,250 for fiscal 1999 and 2000 and $8,091 for fiscal 2001
representing the annual lease value of a vehicle provided by the
Company.
(4) Mr. Gibson joined the Company in August 2000.
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OPTION/SAR GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
------------------------------------------------------------------------------------------ ----------------------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS / SARS
OPTIONS / SARS GRANTED TO
GRANTED EMPLOYEES IN EXERCISE OR BASE EXPIRATION
NAME (#) FISCAL YEAR PRICE ($/SH) DATE 5% ($) 10% ($)
---- --- ----------- ------------ ---- ------ -------
G. Rubin 250,000 20% 6.5315 5/31/2010 1,026,906 2,602,382
G. Rubin 250,000 20% 5.6875 8/31/2010 894,210 2,266,103
G. Rubin 250,000 20% 4.4063 11/30/2010 692,775 1,755,627
G. Rubin 250,000 20% 6.4063 2/28/2011 1,007,222 2,552,498
R. Gibson 10,000 1% 6.3130 8/16/2010 39,702 100,613
AGGREGATED OPTION / SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
/ SAR VALUES
SHARES
ACQUIRED VALUE OF UNEXERCISED IN-THE-MONEY
NAME ON VALUE REALIZED NUMBER OF UNEXERCISED OPTIONS OPTIONS / SARS AT YEAR-END ($)(1)
EXERCISE ($) / SARS AT YEAR-END (#)
(#)
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
-------------------- ------------ ---------------- ---------------------------------- ----------- -------------
G. Rubin - - 3,900,000 1,300,000 3,149,975 -
R. Gibson - - - 10,000 - 1,870
(1) Represents the difference between the last sale price of the Common
Stock on February 28, 2001 ($6.50) and the exercise price of the
option, multiplied by the applicable number of options.
EMPLOYMENT CONTRACT
Mr. Rubin's employment contract was amended and restated effective
March 1999. Mr. Rubin's employment contract has a term of five years, renews
itself daily and provides for a base salary of $600,000, a bonus equal to five
percent of adjusted earnings from continuing operations less Mr. Rubin's base
salary, in accordance with the Company's 1997 Cash Bonus Performance Plan, which
was approved by the Company's shareholders, and reimbursement of certain
expenses and taxes. Mr. Rubin also received options to purchase Common Stock
that are immediately vested in the amount of 250,000 shares on the last business
day of each of the Company's fiscal quarters. Under the contract and subject to
options being available under the Company's stock option plans, he will continue
to receive options in such amount on the last business day of each August,
November, February and May during the term of the agreement. In the event there
are not a sufficient number of shares under the stock option plans to cause the
grant of stock options to Mr. Rubin, the Company agrees to use its reasonable
efforts to cause the Company's shareholders to approve additional shares of
Common Stock to be subject to such stock option plans to enable such grants. In
the event the Company's shareholders do not approve additional shares to be
issued under such stock option plans, the Company is not obligated to Mr. Rubin
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to grant such options. The Company proposes to increase the number of shares
subject to the Company's 1998 Stock Option and Restricted Stock Plan. See
"Proposal to Increase the Number of Shares of Common Stock Available Under
the Helen of Troy Limited 1998 Stock Option and Restricted Stock Plan."
Should Mr. Rubin's employment with the Company be terminated by an
occurrence other than death, disability, or good cause, Mr. Rubin will receive
payments, each in an amount equal to his monthly rate of basic compensation,
which shall commence on the date of termination and shall continue until the
date the employment contract would have expired but for said occurrence. Mr.
Rubin would also receive payments, payable annually after the close of each
fiscal year of the Company, each in an amount of incentive compensation and
bonuses that would otherwise have been payable to him if he had continued in the
employ of the Company for the same period.
Upon the occurrence of a change in control of the Company, Mr. Rubin
may elect to terminate his employment with the Company, and upon such
termination will receive a present-value lump sum payment of that amount due to
him as basic compensation if his employment contract had continued until the
date the employment contract would have expired but for said occurrence. In the
event of a change in control, Mr. Rubin will also receive a lump sum payment in
an amount equal to the amount of incentive compensation and bonuses that would
otherwise have been payable to him under the employment agreement. Such lump sum
payment shall be calculated using Mr. Rubin's highest incentive compensation and
bonuses payable with respect to the Company's most recent three fiscal years
ending prior to the date of the termination, with present value calculated using
the applicable federal rate for the date of the termination of employment. Mr.
Rubin's contract also provides for a gross-up for the excise tax on any amounts
that are treated as excess parachute payments under the Internal Revenue Code of
1986, as amended.
If Mr. Rubin's employment is terminated by an occurrence other than by
death, disability, or good cause, including upon a change in control, Mr. Rubin
will also receive: (1) all amounts earned, accrued or owing but not yet paid to
him, (2) immediate vesting of all options granted to him, (3) removal of all
restrictions on restricted stock awarded to him and immediate vesting of the
rights to such stock, (4) medical benefits for him and his wife for life, and
(5) paid premiums of his life insurance policy, required under his employment
contract. Mr. Rubin will continue to participate in all employee benefits plans,
programs or arrangements available to Company executives in which he was
participating on the date of termination until the date the employment contract
would have expired but for said occurrence or, if earlier, until he receives
equivalent benefits and coverage by another employer.
In the event of the death of Gerald J. Rubin, all unpaid benefits under
these agreements are payable to his estate. Gerald J. Rubin's contracts grant
him the right to elect a cash payment of the remainder of his contracts in the
event of a merger, consolidation or transfer of all or substantially all of the
Company's assets to any unaffiliated company or other person.
DIRECTOR COMPENSATION
During fiscal 2001, each member of the Board of Directors of the
Company who is not an employee of the Company received a fee of $3,000 for each
meeting of the Board of Directors attended and $3,000 for each Audit Committee
meeting attended, together with travel and lodging expenses incurred in
connection therewith. Additional retainer payments of $4,000 were made quarterly
to each such director. Members of the Board of Directors were not compensated
for their participation in telephonic meetings of the Board of Directors during
fiscal 2001.
Under the Helen of Troy Limited 1995 Non-Employee Director Stock Option
Plan, each non-employee director receives stock options to acquire 4,000 shares
of the Common Stock at the beginning of each fiscal quarter of the Company.
Stock options granted to non-employee directors have an exercise price equal to
the median of the high and low market prices of the Common Stock on the last
trading date preceding the date on which the stock options are granted. Such
stock options vest after one year.
STOCK OPTION AND COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None.
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STOCK OPTION AND COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Stock Option and Compensation Committee has submitted the following
report:
The Stock Option and Compensation Committee is responsible for
developing the Company's executive compensation strategy and for administering
the policies and programs that implement this strategy. The Committee is
comprised entirely of independent, Non-Employee directors.
The executive compensation strategy reflects the Company's fundamental
philosophy of aligning the interests of management with the long-term
performance of the Company and offering competitive compensation opportunities
based on each individual's contribution to the achievement of shareholder value.
This strategy is designed to attract and retain employees with outstanding
qualifications and experience.
The three elements of the Company's executive compensation strategy,
all determined by corporate and individual performance, are:
Base salary
Annual incentive compensation
Long-term incentive compensation
Total compensation opportunities are competitive with those offered by
a range of comparable companies and are intended to align management interests
with shareholder interests. The Stock Option and Compensation Committee has
reviewed the Company's primary competitors in determining competitive
compensation. Some of these competitors are privately held and are therefore not
included in the stock performance graph.
The base salary for Gerald J. Rubin (Chief Executive Officer) for
fiscal 2001 was based on his employment contract. See "Executive Compensation -
Employment Contract."
The base salary for the Senior Vice President, Finance and Chief
Financial Officer is determined by the Chief Executive Officer of the Company
based on the skills and experience required by the position, the effect of the
individual's performance on the Company and the potential of the individual and
is ratified by the Board of Directors.
Annual incentive compensation consists of cash bonuses. The amount of
the cash bonus for Gerald J. Rubin is based upon the 1997 Cash Bonus Performance
Plan, which was approved by the Company's shareholders, plus a discretionary
bonus pursuant to his employment contract. During fiscal 2001, the Company
awarded a bonus of $766,094 to Gerald J. Rubin, with the bonus being paid in
fiscal 2002. Such bonus consisted of $402,965 payable under the 1997 Cash Bonus
Performance Plan and a discretionary bonus of $363,129 primarily attributable to
Mr. Rubin's assumption of additional duties during fiscal 2001.
The bonus for the Senior Vice President, Finance and Chief Financial
Officer is determined based upon performance objectives set by the Company's
Chief Executive Officer.
Long-term incentive compensation consists of the Company's stock option
plans. Stock options are granted based on the performance and position of the
executive officer, as well as the Company's performance. Executive officers are
provided with opportunities for ownership positions in the Common Stock through
the Company's stock option plans. This opportunity for ownership, combined with
a significant performance-based incentive compensation opportunity, forges a
strong link between the Company's management and shareholders. During fiscal
2001 the Company's Board of Directors granted to Gerald J. Rubin and Russell G.
Gibson stock options to purchase 1,000,000 and 10,000, respectively, shares of
the Common Stock.
As stated above, the compensation to the Company's Chief Executive
Officer, Gerald J. Rubin, during fiscal 2001 consisted of base salary, annual
incentive compensation and long-term incentive compensation. All of the factors
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discussed above in this report were taken into consideration by the Stock Option
and Compensation Committee in determining the total compensation for Mr. Rubin
for fiscal 2001.
Gary B. Abromovitz (Chairman)
Daniel C. Montano
The foregoing report of the Stock Option and Compensation Committee
shall not be deemed incorporated by reference by any general statement
incorporating by reference the Proxy Statement into any filing under the
Securities Act of 1933 or the Securities Exchange Act of 1934, except to the
extent that the Company specifically incorporates this information by reference,
and shall not otherwise be deemed filed under such Acts.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Company's Audit Committee of the Board of Directors consists of
directors who satisfy the requirements of independence under the National
Association of Securities Dealers listing standards. In addition, in the
business judgement of the Board of Directors, at least one of us has accounting
or related financial management experience required under the listing standards.
We operate under a written charter, a copy of which is included as Appendix A to
this proxy statement. As required by the charter, we review and reassess the
charter annually and recommend any changes to the Board of Directors for
approval.
Under the charter, the Company's management is responsible for
preparing the Company's financial statements and the independent auditors are
responsible for auditing those financial statements. The Audit Committee's role
under the charter is to provide oversight of management's responsibility. The
Audit Committee is not providing any expert or special assurance as to the
Company's financial statements or any professional certification to the
independent auditor's work.
In fulfilling our oversight role for the year ended February 28, 2001,
we:
- reviewed and discussed the Company's audited financial statements with
management;
- discussed with KPMG LLP, the Company's independent auditors, the
matters required by Statement on Auditing Standards No. 61 relating to
the conduct of the audit;
- received from KPMG LLP the written disclosures and letter required by
Independence Standards Board Standard No.1; and
- discussed with KPMG LLP its independence and considered the
compatibility of the provision of non-audit services with the auditors'
independence.
Based on our:
- review of the audited financial statements,
- discussions with and reliance upon management,
- discussions with and reliance upon KPMG LLP, and
- review of KPMG LLP's written disclosures and letter as described above,
we recommended to the Board of Directors that the audited financial statements
be included in the Company's Annual Report on Form 10-K for the fiscal year
ended February 28, 2001 filed with the Securities and Exchange Commission.
Respectfully submitted,
THE AUDIT COMMITTEE OF DIRECTORS
Christopher L. Carameros (Chairman)
Daniel C. Montano
Gary B. Abromovitz
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AUDIT FEES
The aggregate fees billed for professional services rendered by KPMG
LLP for the audit of Helen of Troy Limited and its subsidiaries' annual
financial statements for the fiscal year 2001 and the reviews of Helen of Troy
Limited's financial statements included in Helen of Troy Limited's Forms 10-Q
for fiscal 2001 totaled $207,056.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
None.
ALL OTHER FEES
The aggregate fees billed by KPMG LLP for services rendered in fiscal
2001, other than Audit Fees, totaled $370,066, which consisted primarily of tax
services, services rendered in connection with an acquisition, the audit of the
Company's 401(k) plan, and other projects and services.
HELEN OF TROY FIVE-YEAR
PERFORMANCE GRAPH
The graph below compares the cumulative total return of the Company to
the NASDAQ Market Index and a peer group index, assuming $100 invested March 1,
1996. The Peer Group Index was the Dow Jones Industry Group - Cosmetics.
[LINE GRAPH]
Assumes $100 invested on March 1, 1996.
Assumes dividend reinvested.
Fiscal Year Ending February 28, 2001
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The graph is comprised of the following data:
Fiscal Year Helen of Troy Limited NASDAQ Market Index Peer Group Index
---------------- --------------------- --------------------- ------------------
1996 100.00 100.00 100.00
1997 215.22 120.03 138.23
1998 266.30 163.24 179.50
1999 242.39 210.94 183.69
2000 121.74 409.77 131.90
2001 113.04 191.78 134.67
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During fiscal 2001 the Company continued an agreement (the "Lease")
under which it leases a 108,000 square foot warehouse facility in El Paso, Texas
from a real estate partnership (the "Landlord") in which Gerald J. Rubin and
Stanlee N. Rubin are the partners. The Company entered into the Lease in order
to expand its inventory storage capacity in El Paso, Texas. Under the terms of
the Lease, the Company pays $29,250 in monthly rent. The Company also pays
certain expenses associated with the operation of the facility. The Company
leased the warehouse facility for the entire fiscal year and made a total of
$432,600 in payments for associated rent and operating expenses during fiscal
2001. The amount of rent under the Lease is comparable to that being paid by
other companies for similar facilities in El Paso. The Company obtained
comparable rental information on similar properties from an unaffiliated real
estate company. This information was used to establish the rental rate for this
facility. The Lease is a month-to-month agreement. Either the Company or the
Landlord may cancel the Lease by providing the other party with notice 30 days
in advance of exiting the Lease.
During fiscal 2001, the Company was the sublessee of offices in Troy,
Michigan, Bentonville, Arkansas and Minneapolis, Minnesota under three separate
agreements (collectively, the "Subleases") with the Landlord. The Company
entered into the Subleases in order to facilitate contact with customers. Under
the Subleases, the Company pays rent and certain operating expenses in amounts
equal to the rent and operating expenses paid by the Landlord under its leases
of these facilities. During fiscal 2001, the Company paid $77,940 under the
Subleases.
During fiscal 2000 the Company entered into an agreement under which it
leases 3,325 square feet of office space in El Paso, Texas to the same real
estate partnership noted above. The agreement began in July, 1999 and calls for
the Company to receive $3,879 in monthly rent. During fiscal 2001 the Company
recorded $46,550 in rental income associated with this agreement.
Byron H. Rubin, a member of the Company's Board of Directors, earned
ordinary insurance agent's commissions in connection with the Company's group
health, life and disability insurance as well as in connection with certain life
insurance policies on its officers. During fiscal 2001 his commissions received
from policies sold to the Company approximated $25,000.
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PROPOSAL TO INCREASE THE NUMBER OF SHARES OF
COMMON STOCK AVAILABLE UNDER THE HELEN OF TROY LIMITED
1998 STOCK OPTION AND RESTRICTED STOCK PLAN
(PROPOSAL 2)
The Board of Directors and the Stock Option and Compensation Committee have
determined that it is in the best interest of the Company and its shareholders
to amend the Helen of Troy Limited 1998 Stock Option and Restricted Stock Plan
(the "1998 Plan") to add 3,000,000 shares of Common Stock to the 1998 Plan.
There are currently 3,000,000 shares of Common Stock subject to the 1998 Plan,
of which 2,500,000 shares of Common Stock were issued or are currently subject
to Options under the 1998 Plan at June 22, 2001. The Board of Directors and the
Stock Option and Compensation Committee have approved this proposed amendment to
the 1998 Plan, to be effective as of the date of approval thereof by the
Company's shareholders.
The purpose of the 1998 Plan is (i) to offer selected employees of the
Company or its subsidiaries an equity ownership interest in the financial
success of the Company, (ii) to provide the Company an opportunity to attract
and retain the best available personnel for positions of substantial
responsibility and (iii) to encourage equity participation in the Company by
eligible Participants (as hereinafter defined). The 1998 Plan provides for the
grant by the Company of (i) options ("Options") to purchase shares of Common
Stock, and (ii) awards of shares of Common Stock containing certain restrictions
("Restricted Stock"). Options granted under the Plan may include nonstatutory
options ("Nonstatutory Options") as well as incentive stock options ("Incentive
Stock Options") intended to qualify under Section 422 of the Internal Revenue
Code of 1986, as amended, and as interpreted by the regulations thereunder (the
"Code").
The closing sale price of the Common Stock on June 22, 2001, as
reported by the NASDAQ Stock Market, was $8.33 per share.
AMOUNT OF STOCK SUBJECT TO THE 1998 PLAN
Under the terms of the 1998 Plan, the Company has been authorized to
grant (i) Options, and (ii) awards of Restricted Stock (collectively, grants of
Options and Restricted Stock are referred to in this Proxy Statement as "Plan
Awards") with respect to an aggregate of 3,000,000 shares of Common Stock (the
"Shares"). The proposed amendment to the 1998 Plan will increase the number of
authorized shares issuable under the 1998 Plan by 3,000,000 Shares. No more than
600,000 of the aggregate number of Shares available under the 1998 Plan may be
issued in connection with grants of Restricted Stock.
As of June 22, 2001, there were 500,000 Shares available for the grant
of stock options and restricted stock awards under the 1998 Plan. The Board of
Directors believes that this is not a sufficient number of Shares to accomplish
the objectives described above. The inclusion of 3,000,000 additional Shares
subject to the 1998 Plan will enable the Company to further promote these
objectives.
ADMINISTRATION OF THE 1998 PLAN
The Company's Stock Option and Compensation Committee (the "Committee")
administers the 1998 Plan. The Committee must consist of at least two persons
and each Committee member must be a member of the Board of Directors who is both
(a) a Non-Employee Director within the meaning of Rule 16b-3 promulgated under
the Securities Exchange Act of 1934, as amended from time to time (the "Exchange
Act"), and (b) an Outside Director, within the meaning of Section 162(m) of the
Code.
ELIGIBILITY FOR PLAN AWARDS
Plan Awards may be granted to selected employees of the Company or its
subsidiaries (the "Participants") in consideration for services provided to the
Company or its subsidiaries; provided, however, that no Incentive Stock Option
may be granted to any individual who is not an employee of the Company or one of
its subsidiaries on the date of grant.
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Actual participation in the 1998 Plan will be determined by the Committee.
Therefore, the number of Participants who will participate in the 1998 Plan
cannot be determined precisely. The employment contract of Mr. Rubin, the Chief
Executive Officer of the Company, specifies that he is entitled to receive
options to purchase Common Stock that are immediately vested in the aggregate
amount of 250,000 shares on the last business day of each fiscal quarter of the
Company. Under the employment contract, the grant of these options may be made
under the 1998 Plan or the Company's other stock option plans, subject to
options being available under those plans. See "Executive Compensation -
Employment Contracts." Other than the grant of options to Mr. Rubin, neither the
benefits nor the amounts that will be received by or allocated to each of the
Participants or other executive officers can be determined precisely at this
time. At June 22, 2001, the Company had approximately 558 employees who were
eligible to participate in the 1998 Plan.
LIMITATIONS WITH RESPECT TO COVERED EMPLOYEES
The total number of Shares for which Options may be granted and which
may be awarded as Restricted Stock (under the 1998 Plan and any other plan of
the Company) to any "covered employee" within the meaning of Section 162(m) of
the Code during any one-year period shall not exceed 1,000,000 in the aggregate.
OPTIONS UNDER THE 1998 PLAN
The exercise price for any Option granted under the 1998 Plan shall be
such price as the Committee may determine in its sole discretion, but shall be
not less than 100% of the fair market value per share on the date of grant of
such Option. In the event that an Incentive Stock Option is granted to any
person who, at the time such Incentive Stock Option is granted, owns more than
10% of the total combined voting power of classes of shares of the Company or of
any subsidiary corporation of the Company (a "Ten Percent Shareholder"), then
the exercise price for the Option shall not be less than 110% of the fair market
value of the shares on the date the Option is granted.
Any Option granted under the 1998 Plan is exercisable at such times,
under such conditions (including without limitation, performance criteria with
respect to the Company and/or the optionee), in such amounts and during such
period or periods as the Committee determines on the date such Option is
granted. Such Options, however, shall not be exercisable after the expiration of
ten years from the date such Option is granted. In the case of an Incentive
Stock Option granted to a Ten Percent Shareholder, the Option shall not be
exercisable after the expiration of five years from the date such Option is
granted.
Payment for the Shares upon exercise of an Option shall be made in
cash, by certified check or, if authorized by the Committee, by delivery of
other Shares having a fair market value on the date of delivery equal to the
aggregate exercise price of the Shares as to which such Option is being
exercised, or by any combination of such methods or by any other method of
payment as may be permitted by applicable law and authorized by the Committee.
With respect to Incentive Stock Options, Options that are granted to
Participants in the 1998 Plan, which allow such Participants to purchase in
excess of $100,000 (calculated as of the time the Option is granted) of the
Company's Common Stock in any one calendar year under the 1998 Plan and all of
the Company's other plans, are considered Nonstatutory Options that are not
entitled to the favorable tax treatment provided under Section 422 of the Code.
In general, if an optionee ceases to be an employee of the Company for
reasons other than Permanent and Total Disability (as defined in the 1998 Plan)
or death, the optionee will have until the earlier of 30 days or the date the
Option expires to exercise the Option, to the extent the optionee was entitled
to exercise the Option on the date of termination. If, however, the optionee is
an employee and is terminated without cause, the 30-day period described above
will be increased to 90 days, in the case of an Incentive Stock Option, and 6
months, in the case of a Nonstatutory Option, to the extent the optionee was
entitled to exercise the Option on the date of termination.
If an optionee is unable to continue to perform services for the
Company or any of its subsidiaries as a result of Permanent and Total Disability
the optionee will have until the earlier of 12 months from the date of such
disability or the date the Option expires to exercise the Option, in whole or in
part, notwithstanding that such Option may not be fully exercisable on such
date. In the case of an Incentive Stock Option, the optionee must have been an
employee since the
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date of grant and must be an employee on the date of Permanent and Total
Disability, to take advantage of this provision.
In general, upon the death of an optionee, any Option held by such
optionee will terminate; provided that if the optionee's death occurs during the
term of an Option and at the time of death such optionee was an employee the
optionee's estate or person who acquired the right to exercise the Option by
bequest or inheritance will have until the earlier of 12 months from the date of
such optionee's death or the date the Option expires to exercise the Option, in
whole or in part, notwithstanding that such Option may not be fully exercisable
on such date. In the case of an Incentive Stock Option, the optionee must have
been an employee since the date of grant and must be an employee on the date of
death, to take advantage of this provision.
Except as may be permitted by the Committee, an Option granted under
the 1998 Plan may not be sold, pledged, assigned, hypothecated, transferred or
disposed of in any manner other than by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined by
the Code or Title I of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or the rules thereunder, and is not assignable by operation
of law or subject to execution, attachment or similar process.
The Stock Option Agreement (as defined in the 1998 Plan) evidencing any
Incentive Stock Option granted under the 1998 Plan shall provide that if the
optionee makes a disposition, within the meaning of Section 424(c) of the Code,
of any share or shares issued to him pursuant to the exercise of the Incentive
Stock Option within the two-year period commencing on the day after the date
such Option is granted or within a one-year period commencing on the day after
the date of transfer of the share or shares to him pursuant to the exercise of
such Option, he shall, within ten days of such disposition, notify the Company
and immediately deliver to the Company any amount of federal income tax
withholding required by law.
RESTRICTED STOCK UNDER THE 1998 PLAN
The Committee may grant awards of Restricted Stock under the 1998 Plan
in accordance with the terms and conditions set forth in an agreement between
the Company and the Participant. Restricted Stock may be granted by the
Committee either separately or in combination with Options. Each grant of
Restricted Stock shall require a Participant to remain an employee of the
Company or any of its subsidiaries for at least six months from the date of
grant. Restricted Stock shall be granted to Participants for services rendered
to the Company, and at no additional cost to the Participant; provided, however,
that the value of such services must equal or exceed the par value of the
Restricted Stock granted to the Participant. The Committee must require as a
condition to awarding any Restricted Stock, that a Participant hold the
Restricted Stock for a period of (i) one year following the date of such
acquisition in the event such Restricted Stock award vests upon the achievement
of performance goals or (ii) three years following the date of such acquisition
in the event such Restricted Stock award does not vest upon the achievement of
performance goals.
The Company must establish a restricted stock account for each
Participant, to which Restricted Stock granted to the Participant is credited.
Every credit of Restricted Stock shall be merely a bookkeeping entry and every
grant of Restricted Stock shall be considered contingent and unfunded until the
restrictions lapse. During the period of restriction such accounts shall be
subject to the claims of the Company's creditors. The Participant's rights to
the restricted stock account are no greater than that of a general creditor of
the Company. On the date the restrictions lapse, the Restricted Stock shall vest
in the Participant.
The terms, conditions and restrictions of the Restricted Stock are
determined by the Committee on the date of grant. The restrictions shall lapse
based upon performance measures, targets, holding period requirements and other
criteria established by the Committee. Such criteria may vary among the grants
of Restricted Stock; provided, however, that once the Restricted Stock has been
granted and the criteria are established, such criteria may not be further
modified with respect to such grant. The Restricted Stock may not be sold,
assigned, transferred, redeemed, pledged or otherwise encumbered during the
period that the restrictions apply.
The Committee, in its sole discretion, may establish procedures by
which a Participant may defer the transfer
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of Restricted Stock to the Participant.
The Committee may provide from time to time that amounts equivalent to
dividends paid with respect to Common Stock be payable with respect to the
Restricted Stock held in the restricted stock account. Such amounts shall be
credited to the restricted stock account but shall be payable to the Participant
only when the restrictions lapse.
If a Participant, with the consent of the Committee, ceases to be an
employee or ceases to provide services to the Company or any of its
subsidiaries, or dies or suffers from Permanent and Total Disability, the
restrictions applicable to the Participant's Restricted Stock shall lapse in
accordance with such determination as the Committee, in its sole discretion,
shall make. A Participant who ceases to be an employee or to perform services
for the Company or any of its subsidiaries for any other reason shall forfeit
all of his grants of Restricted Stock which are still under restriction.
TAX WITHHOLDING
No later than the date as of which the value of any Plan Award or any
Shares or other amount received thereunder first becomes includable in the gross
income of a Participant for federal income tax purposes, such Participant must
pay to the Company, or make arrangements satisfactory to the Committee regarding
payment of, any federal, state or local taxes of any kind required to be
withheld with respect to such income. The Company and its subsidiaries have the
right to deduct any such taxes from any payment of any kind otherwise due to the
Participant to the extent permitted by law. Subject to approval by the
Committee, a Participant may elect to have such withholding obligation
satisfied, in whole or in part, by (i) authorizing the Company to withhold from
Shares to be issued pursuant to any award, a number of Shares with an aggregate
fair market value (as of the date the withholding is effected) that would
satisfy the withholding amount due, or (ii) transferring to the Company Shares
owned by the Participant with an aggregate fair market value (as of the date the
withholding is effected) that would satisfy the withholding amount due.
CAPITALIZATION ADJUSTMENTS; MERGER; CHANGE IN CONTROL
Subject to any required action by the shareholders of the Company, the
number of Shares covered by each outstanding Option (as well as the exercise
price covered by any outstanding Option), the number of Shares of Restricted
Stock credited to a Participant's restricted stock account and the aggregate
number of Shares that have been authorized for issuance under the 1998 Plan will
be proportionately adjusted for any increase or decrease in the number of issued
Shares resulting from a stock split, payment of a stock dividend with respect to
the Common Stock or any other increase or decrease in the number of issued
Shares effected without receipt of consideration by the Company.
In the event of the dissolution or liquidation of the Company, other
than pursuant to a Reorganization (as defined below), any Option granted under
the 1998 Plan shall terminate as of a date to be fixed by the Committee,
provided that not less than 30 days written notice of the date so fixed shall be
given to each optionee and each such optionee shall have the right during such
period to exercise his Options as to all or any part of the Shares covered
thereby including Shares as to which such Options would not otherwise be
exercisable by reason of an insufficient lapse of time.
In the event of a Reorganization in which the Company is not the
surviving or acquiring company, or in which the Company is or becomes a
wholly-owned subsidiary of another company after the effective date of the
Reorganization, then (i) if there is no plan or agreement respecting the
Reorganization ("Reorganization Agreement") or if the Reorganization Agreement
does not specifically provide for the change, conversion or exchange of the
Shares under outstanding unexercised Options for securities of another
corporation, then the Committee shall take such action, and the Options shall
terminate, as provided above; or (ii) if there is a Reorganization Agreement and
if the Reorganization Agreement specifically provides for the change, conversion
or exchange of the Shares under outstanding or unexercised options for
securities of another corporation, then the Committee shall adjust the Shares
under such outstanding unexercised Options (and shall adjust the Shares which
are then available to be optioned, if the Reorganization Agreement makes
specific provisions therefor) in a manner not inconsistent with the provisions
of the Reorganization Agreement for the adjustment, change, conversion or
exchange of such stock and such options.
For these purposes, the term "Reorganization" shall mean any statutory
merger, statutory consolidation, sale
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of all or substantially all of the assets of the Company, or sale, pursuant to
an agreement with the Company, of securities of the Company pursuant to which
the Company is or becomes a wholly-owned subsidiary of another company after the
effective date of the Reorganization.
Except as provided in the 1998 Plan and except as otherwise provided by
the Committee in its sole discretion, any Options shall terminate immediately
prior to the consummation of such proposed action.
Subject to the above, upon a Change in Control (as defined below) of
the Company, (i) all the outstanding Options shall immediately become fully
exercisable, and (ii) any restrictions on the Restricted Stock will lapse and
such Restricted Stock shall immediately vest in the Participant. For these
purposes, a "Change in Control" shall have occurred if: (i) any person other
than the Company or its subsidiaries, or an employee benefit plan of the Company
or its subsidiaries, is or becomes the beneficial owner of 50% or more of the
Common Stock; or (ii) a majority of the present members of the Company's Board
of Directors cease to be members of the Board of Directors.
AMENDMENT TO THE 1998 PLAN
The Board of Directors in its sole discretion may, from time to time,
amend the Plan; provided that no amendment will be made without the requisite
approval of the shareholders of the Company that will materially increase the
benefits accruing to Participants under the 1998 Plan or will change the
aggregate number of Shares that may be issued under the 1998 Plan, other than
any increase or decrease in the number of issued Shares resulting from a stock
split, payment of a stock dividend or any other increase or decrease in the
number of issued Shares effected without receipt of consideration by the
Company.
TERM AND TERMINATION OF THE 1998 PLAN
The 1998 Plan will continue in effect for a term of ten years, unless
sooner terminated. The Board of Directors may terminate the 1998 Plan at any
time in its sole discretion. Neither Restricted Stock nor Options may be granted
after the 1998 Plan is terminated. The termination of the 1998 Plan, or any
amendment thereto, shall not affect any Shares previously issued to a
Participant, any Option previously granted under the 1998 Plan or any Shares of
Restricted Stock previously granted to a Participant.
MISCELLANEOUS
The 1998 Plan is not qualified under the provisions of Section 401(a)
of the Code, and is not subject to any of the provisions of ERISA.
FEDERAL INCOME TAX CONSEQUENCES
The following general summary is based upon the Code and does not
include a discussion of any state or local tax consequences.
Incentive Stock Options. An optionee does not realize taxable income
upon the grant or exercise of an Incentive Stock Option.
The income tax treatment of any gain or loss realized upon an
optionee's disposition of Shares received upon exercise of an Incentive Stock
Option depends on the timing of the disposition. If the optionee does not
dispose of the Shares received upon exercise of an Incentive Stock Option within
two years from the date such Incentive Stock Option was granted, and does not
dispose of such shares within one year from the date of exercise, the difference
(if any) between the amount realized from the sale of such Shares and the
exercise price, will be taxed as capital gain or loss.
If an optionee disposes of the Shares before the end of the applicable
holding periods described above (i.e., he makes a "disqualifying disposition"),
the excess of the fair market value of the shares on the date of exercise, over
the exercise price is taxable to the optionee as ordinary income, and the excess
of the selling price over the fair market value
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of the shares on the date of exercise is taxable to the optionee as capital
gain. If the selling price exceeds the exercise price but not the fair market
value on the date of exercise, the excess of the selling price over the exercise
price is taxable to the optionee as ordinary income. If the selling price is
less than the exercise price, the difference is treated as capital loss.
The Company is not entitled to a deduction for federal income tax
purposes with respect to the grant or exercise of an Incentive Stock Option or
the disposition of Shares acquired upon exercise (if the applicable holding
periods have been met). In the event of a disqualifying disposition, however,
the Company is entitled to a federal income tax deduction in an amount equal to
the ordinary income recognized by the optionee.
Certain optionees may be subject to the alternative minimum tax which
in individual cases could reduce or eliminate any tax benefits to them under the
1998 Plan.
If an optionee exercises an Incentive Stock Option by delivering other
Shares of the Company that are substantially vested or with respect to which a
Section 83(b) election has been filed, under proposed regulations, the optionee
will not recognize any compensation income or gain with respect to the Shares
surrendered. The portion of the Shares received equal in number to the Shares
surrendered will have a basis equal to the basis of the Shares surrendered in
payment (which generally will be the exercise price). The holding period of such
Shares will be determined in accordance with proposed regulations. The optionee
will recognize no gain with respect to the remaining portion of Shares received,
the basis of such Shares will be zero, and the holding period of such Shares
will begin on the date of receipt thereof by the optionee.
If an optionee exercises an Incentive Stock Option using Shares
received upon the prior exercise of an Incentive Stock Option (whether granted
under the Plan or under another plan of the Company) and the participant has not
held such stock for the applicable holding periods, under proposed regulations,
the participant will have made a disqualifying disposition of the number of
Shares of prior Incentive Stock Option stock used as payment for the exercise
price of the Incentive Stock Option. Generally, the optionee will recognize
ordinary compensation income with respect to the surrender of such Shares to the
extent of the excess of the fair market value of the Shares surrendered
(determined as of the date the Option relating to such Shares was exercised)
over the exercise price. The basis of the portion of the Shares received equal
in number to the Shares surrendered will equal the amount of ordinary
compensation income recognized by the optionee plus the optionee's basis in the
Shares surrendered. The basis of the remaining portion of Shares received will
be zero.
Nonstatutory Stock Options. An optionee will not recognize any taxable
income upon the grant of a Nonstatutory Option. However, upon exercise of a
Nonstatutory Option, an optionee must recognize ordinary income in an amount
equal to the excess of the fair market value of the Shares at the time of
exercise over the exercise price. Upon the subsequent disposition of the Shares,
the optionee will realize a capital gain or loss, depending on whether the
selling price exceeds the fair market value of the Shares on the date of
exercise. The optionee's holding period in the Shares, for capital gains and
losses purposes, begins on the date of exercise.
Different rules may apply with respect to exercises by optionees
subject to the short-swing profit recapture provisions of Section 16(b) of the
Exchange Act (in general, executive officers, Directors and Ten Percent
Shareholders who have not yet held their options for at least six months).
Section 83 of the Code provides that such an optionee will not recognize
ordinary income upon exercise (and the capital gains holding period will not
begin) if the sale of Shares acquired by such optionee pursuant to an Option
could subject the optionee to suit under Section 16(b). Such an optionee would
then recognize ordinary income (and the capital gains holding period would
begin) when the optionee is no longer subject to suit under Section 16(b).
Persons acquiring Shares subject to such a restriction, however, may elect
(within 30 days of exercise of the Option) under Section 83(b) of the Code to be
taxed as of the date of exercise, thereby fixing the ordinary income recognized
from the exercise to the spread between the fair market value on the date of
exercise and the exercise price paid for the Shares. Any change in the value of
the Shares after the date of exercise would be recognized as capital gain or
loss only if and when the Shares are disposed of by the optionee. If the Section
83(b) election is made, the optionee's capital gains holding period begins on
the date of exercise.
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An optionee's tax basis in the Shares received on exercise of a
Nonstatutory Option will be equal to the amount of consideration paid by the
optionee on exercise, plus the amount of ordinary income recognized as a result
of the receipt of such Shares. The Company will be entitled to a deduction for
federal income tax purposes at the same time and in the same amount as the
optionee recognizes taxable income.
If an optionee exercises a Nonstatutory Option by delivering other
Shares of the Company, the optionee will not recognize gain or loss with respect
to the Shares delivered by the optionee, even if the then fair market value of
such Shares is different from the optionee's tax basis therein. The portion of
the Shares received equal in number to the Shares surrendered will have a basis
equal to the basis of the Shares surrendered, and the holding period for such
number of Shares received will include the holding period of the Shares
surrendered. The remaining portion of the Shares received will be taxable to the
employee as ordinary compensation income in an amount equal to the fair market
value of such Shares as of the exercise date, and the Company likewise generally
will be entitled to an equivalent tax deduction. The participant's tax basis in
the Shares received in excess of the number of Shares surrendered will equal the
amount of ordinary compensation income recognized by the employee, and the
holding period for such number of Shares received begins on the date such Shares
are acquired.
Restricted Stock. The Participant will not recognize taxable income
upon the grant of Restricted Stock because the Restricted Stock will be
nontransferable and subject to a substantial risk of forfeiture. The Participant
will recognize ordinary income at the time at which the restrictions that impose
a substantial risk of forfeiture of such Shares (the "Restrictions") lapse, in
an amount equal to the fair market value of such Shares at such time. The
ordinary income recognized by a Participant with respect to Shares awarded
pursuant to the 1998 Plan will be deemed compensation income subject to
applicable wage withholding.
A Participant may elect, pursuant to Section 83(b) of the Code, to
include in gross income the fair market value of the Restricted Stock upon
grant, notwithstanding that the Restricted Stock would otherwise not be
includable in gross income at that time. If such election is made within 30 days
of the date of grant, then the Participant would include in gross income the
fair market value of the Restricted Stock on the date of grant, and any change
in the value of the Shares after the date of grant would be capital gain or
capital loss only if and when the Shares are disposed of by the Participant. If
the Section 83(b) election is made, the Participant's capital gains holding
period begins on the date of grant.
If a Section 83(b) election is made and the Participant then forfeits
the Restricted Stock, the Participant may not deduct as a loss the amount
previously included in gross income.
Dividends received on the Shares when the Restrictions on such Shares
lapse will be treated as additional compensation, and not dividend income, for
federal income tax purposes and will be subject to applicable wage withholding.
A Participant's tax basis in Shares of Restricted Stock received
pursuant to the 1998 Plan will be equal to the ordinary income recognized by
such Participant. Unless a Section 83(b) election is made, the Participant's
holding period for such Shares for purposes of determining gain or loss on a
subsequent sale will begin on the date the Restrictions on such Shares lapse.
In general, the Company will be entitled to a deduction for federal
income tax purposes at the same time and in an amount equal to the ordinary
income recognized by a Participant with respect to Shares of Restricted Stock
awarded pursuant to the 1998 Plan.
If, subsequent to the lapse of Restrictions on Shares, the Participant
sells such Shares, the difference, if any, between the amount realized from such
sale and the tax basis of such Shares to the Participant will be taxed as
long-term or short-term capital gain or loss depending on whether the
Participant's holding period for such Shares exceeds the applicable holding
period at the time of sale.
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THE SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES SET FORTH ABOVE IS FOR
GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE TO ALL INDIVIDUALS.
PARTICIPANTS SHOULD CONSULT THEIR OWN TAX ADVISORS FOR A DETERMINATION AS TO THE
SPECIFIC TAX CONSEQUENCES APPLICABLE TO THEM.
SHAREHOLDER APPROVAL
The affirmative vote of the holders of a majority of the shares of Common
Stock entitled to vote at the Annual Meeting is required to approve the
amendment to the 1998 Plan described in this Proposal 2. If the amendment
described in this Proposal 2 is not approved by the Company's shareholders, the
1998 Plan, as previously approved, will continue in effect.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THIS PROPOSAL.
SHAREHOLDER PROPOSALS
Shareholders intending to present proposals at the 2002 Annual Meeting
of Shareholders and desiring to have those proposals included in the Company's
proxy statement and form of proxy relating to that meeting must submit such
proposals, in compliance with Rule 14a-8 of the Securities Exchange Act of 1934,
to be received at the executive offices of the Company no later than March 15,
2002. For proposals that shareholders intend to present at the 2002 Annual
Meeting of Shareholders outside the processes of Rule 14a-8 of the Securities
Exchange Act of 1934, unless the shareholder notifies the Company of such intent
by May 29, 2002, any proxy solicited by the Company for such Annual Meeting will
confer on the holder of the proxy discretionary authority to vote on the
proposal so long as such proposal is properly presented at the Annual Meeting.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
No action is to be taken with respect to the selection or approval of
the Company's independent public accountants. KPMG LLP has served as independent
public accountants for the Company since 1978. A representative of KPMG LLP is
expected to be present at the Annual Meeting with the opportunity to make a
statement if such representative desires to do so. The KPMG LLP representative
is also expected to be available to respond to appropriate questions.
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's Directors and executive officers, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file with
the Securities and Exchange Commission initial reports of ownership and reports
of changes in ownership of Common Stock and other equity securities of the
Company. Executive officers, Directors and greater than ten percent shareholders
are required by SEC Regulations to furnish the Company with copies of all
Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during fiscal 2001, all Section 16(a) filing requirements
applicable to the officers, Directors and greater than ten percent beneficial
owners were satisfied.
QUORUM; VOTING
The presence in person of two or more persons, representing throughout
the Annual Meeting, in person or by proxy, at least a majority of the issued
shares of Common Stock entitled to vote is necessary to constitute a quorum at
the Annual Meeting. Abstentions and broker non-votes are counted for purposes of
determining whether a quorum is present. If a quorum is present, the six
nominees for Directors receiving a majority of the votes cast at the Annual
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Meeting in person or by proxy shall be elected. The affirmative vote of the
majority of the votes cast at the Annual Meeting in person or by proxy shall be
the act of the shareholders with respect to Proposal 2. If within half an hour
from the time appointed for the Annual Meeting a quorum is not present or
represented by proxy, the Annual Meeting shall stand adjourned to the same day
one week later, at the same time and place or to such other day, time or place
the Board of Directors may determine, provided that at least two persons are
present at such adjourned meeting, representing throughout the meeting, in
person or by proxy, at least a majority of the issued shares of Common Stock
entitled to vote. At any such adjourned meeting at which a quorum is present or
represented, any business may be transacted that might have been transacted at
the Annual Meeting as originally called.
Broker non-votes are shares held by a broker or nominee that are
represented at the Annual Meeting, but with respect to which such broker or
nominee is not empowered to vote on a particular proposal. Such broker non-votes
will be counted towards a quorum. Abstentions and broker non-votes are not
counted in determining the total number of votes cast and will have no effect
with respect to Proposals 1 and 2.
OTHER MATTERS
The Board of Directors knows of no matters to be presented at the
Annual Meeting other than the election of Directors and consideration of the
amendment to the 1998 Stock Option and Restricted Stock Option Plan to increase
the number of shares reserved for granting under that plan. If other matters
properly come before the Annual Meeting or any adjournment thereof, the holders
of the proxies are authorized to vote on these matters in accordance with
management's discretion.
YOUR VOTE IS IMPORTANT
You are encouraged to let us know your preference by completing and
returning the enclosed proxy card.
Gerald J. Rubin
Chairman of the Board
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APPENDIX A
HELEN OF TROY LIMITED
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS CHARTER
I. PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing:
the financial reports and other financial information provided by the
Company to any governmental body or the public; the Company's systems
of internal controls regarding finance, accounting, legal compliance
and ethics that management and the Board have established; and the
Company's auditing, accounting and financial reporting processes
generally. Consistent with this function, the Audit Committee should
encourage continuous improvement of, and should foster adherence to,
the Company's policies, procedures and practices at all levels. The
Audit Committee's primary duties and responsibilities are to:
Serve as an independent and objective party to monitor the
Company's financial reporting process and internal control
system.
Review and appraise the audit efforts of the Company's
independent accountants.
Provide an open avenue of communication among the independent
accountants, financial and senior management, and the Board of
Directors.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV of this Charter.
The Committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities.
II. COMPOSITION
The Audit Committee shall be comprised of three or more directors as
determined by the Board, each of whom shall be independent directors,
and free from any relationship that, in the opinion of the Board, would
interfere with the exercise of his or her independent judgment as a
member of the Committee. "Independence" shall be as defined in Section
4200(a)(15) of the National Association of Securities Dealers, Inc's.
(the "NASD") listing standards, as applicable and as may be modified or
supplemented. All members of the Committee shall have a familiarity
with basic finance and accounting practices, and at least one member of
the Committee shall have accounting or related financial management
expertise. Committee members may enhance their familiarity with finance
and accounting by participating in educational programs conducted by
the Company or an outside consultant.
The members of the Committee shall be elected by the Board at the
annual organizational meeting of the Board or until their successors
shall be duly elected and qualified. Unless a Chair is elected by the
full Board, the members of the Committee may designate a Chair by
majority vote of the full Committee membership.
III. MEETINGS
The Committee shall meet at least four times annually, or more
frequently as circumstances dictate. The Audit Committee Chair shall
prepare and/or approve an agenda in advance of each meeting. As part of
its job to foster open communication, the Committee should meet at
least annually with management and the independent
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accountants in separate executive sessions to discuss any matters that
the Committee or each of these groups believe should be discussed
privately. In addition, the Committee or at least its Chair should meet
with the independent accountants and management quarterly to review the
Company's financials consistent with IV.3. below.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
DOCUMENTS/REPORTS REVIEW
1. Review and update this Charter periodically, at least
annually, as conditions dictate. Submit this Charter to the
Board of Directors for approval and have the document
published at least every three years in accordance with SEC
regulations.
2. Review the Company's annual financial statements and any
reports or other financial information submitted to any
governmental body, or the public, including any certification,
report, opinion, or review rendered by the independent
accountants, prior to filing or distribution. Review should
include discussion with management and independent accountants
of significant issues regarding accounting principles,
practices and judgments.
3. Review with financial management and the independent
accountants the 10-Q prior to its filing or prior to the
release of earnings. Discuss any items required to be
communicated by the independent accountants in accordance with
Generally Accepted Auditing Standards. The Chair of the
Committee may represent the entire Committee for purposes of
this review.
INDEPENDENT ACCOUNTANTS
4. Recommend to the Board of Directors the selection of the
independent accountants, considering independence and
effectiveness, and approve the fees and other compensation to
be paid to the independent accountants. On an annual basis,
the Committee should review and discuss with the accountants
all significant relationships the accountants have with the
Company to determine the accountants' independence.
5. Review the performance of the independent accountants and
approve any proposed discharge of the independent accountants
when circumstances warrant.
6. Review the independent accountants' audit plan - discuss
scope, staffing, location, reliance upon management and
general audit approach.
7. Periodically consult with the independent accountants out of
the presence of management about internal controls, the
quality and appropriateness of the Company's accounting
principles and the fullness and accuracy of the Company's
financial statements.
FINANCIAL REPORTING PROCESSES
8. In consultation with management and the independent
accountants, review the integrity of the Company's financial
reporting processes, both internal and external, and controls.
Discuss significant financial risk exposures and the steps
management has taken to monitor, control and report such
exposures. Review significant findings prepared by the
independent accountants together with management's responses.
9. Consider the independent accountants' judgments about the
quality and appropriateness of the Company's accounting
principles as applied in its financial reporting.
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10. Consider and approve, if appropriate, major changes to the
Company's auditing and accounting principles and practices as
suggested by the independent accountants or management.
11. Prior to releasing the year-end earnings, discuss the results
of the audit with the independent accountants. Discuss certain
matters required to be communicated to the Audit Committee in
accordance with Generally Accepted Auditing Standards.
PROCESS IMPROVEMENT
12. Establish regular and separate systems of reporting to the
Audit Committee by each of management and the independent
accountants regarding any significant judgments made in
management's preparation of the financial statements and the
view of each as to the appropriateness of such judgments.
13. Following completion of the annual audit, review separately
with each of management and the independent accountants any
significant difficulties encountered during the course of the
audit, including any restrictions on the scope of work or
access to required information.
14. Review any significant disagreement among management or the
independent accountants in connection with the preparation of
the financial statements.
15. Review with the independent accountants and management the
extent to which changes or improvements in financial or
accounting practices, as approved by the Audit Committee, have
been implemented.
ETHICAL AND LEGAL COMPLIANCE
16. Establish, review and update periodically a Code of Ethical
Conduct and ensure that management has established a system to
enforce this Code.
17. Review management's monitoring of the Company's compliance
with the Company's Ethical Code, and ensure that management
has the proper review system in place to ensure that the
Company's financial statements, reports and other financial
information disseminated to governmental organizations, and
the public, satisfy legal requirements.
18. Review, with the Company's counsel, legal compliance matters
including corporate securities trading policies and inquiries
received from regulators or governmental agencies.
19. On at least an annual basis, review with the Company's counsel
any legal matters that could have a significant impact on the
Company's financial statements.
20. Select and retain, at the Company's expense, independent
outside legal, accounting or other consultants or experts to
assist the Committee with any legal matters or other issues as
the Committee deems necessary or appropriate.
21. Annually prepare a report to shareholders as required by the
SEC. The report should be included in the Company's annual
proxy statement.
22. Perform any other activities consistent with this Charter, the
Company's By-laws and governing law, as the Committee or the
Board deems necessary or appropriate.
23. Maintain minutes of meetings and periodically report to the
Board of Directors on significant results of the foregoing
activities.
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HELEN OF TROY LIMITED
Annual Meeting of Shareholders
August 28, 2001
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PROXY
-----
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby authorizes Gerald J. Rubin as Proxy with power of
substitution, to represent the undersigned at the Annual Meeting of Shareholders
of the Company to be held on Tuesday, August 28, 2001 at 1:00 p.m. Mountain
Daylight Time, at the Hilton Camino Real Hotel, 101 S. El Paso Street, El Paso,
Texas and any adjournment thereof, and to vote all the shares of Common Stock of
the Company that the undersigned is entitled to vote on the following matters:
1. To elect a board of six directors
FOR ALL NOMINEES LISTED BELOW
(except as marked to the contrary below) [ ]
WITHOUT AUTHORITY
to vote for all nominees below [ ]
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL, STRIKE A LINE
THROUGH THE NOMINEE'S NAME ON THE LIST BELOW.)
Gerald J. Rubin Byron H. Rubin
Gary B. Abromovitz Daniel C. Montano
Stanlee N. Rubin Christopher L. Carameros
2. To consider approval of an amendment to the Helen of Troy Limited 1998
Stock Option and Restricted Stock Plan:
For [ ] Against [ ] Abstain [ ]
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. If no direction is given, this proxy will be
voted for Proposals 1 and 2 and in accordance with management's discretion as to
any other matters.
IMPORTANT: Please date this proxy and sign exactly as your name or names appear
thereon. If stock is held jointly, signature should include both names.
Executors, administrators, trustees, guardians, and others signing in the
representative capacity, please so indicate when signing.
DATE ______________________, 2001
SIGNATURE ___________________________
SIGNATURE IF HELD JOINTLY ____________________________
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PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ACCOMPANYING ENVELOPE.