UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-12
JACLYN, INC
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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 paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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JACLYN, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of
JACLYN, INC.
PLEASE TAKE NOTICE that the 2007 Annual Meeting of Stockholders of
JACLYN, INC., a Delaware corporation (the "Company"), will be held at the
Company's offices, 197 West Spring Valley Avenue, Maywood, New Jersey 07607, on
Wednesday, November 28, 2007, at 9:00 A.M., prevailing local time, for the
following purposes:
1. To elect nine directors to serve until the next
annual meeting of stockholders and until their respective successors
are duly elected and qualified;
2. To ratify the appointment of Deloitte & Touche LLP to
serve as the independent registered public accounting firm of the
Company for the fiscal year ending June 30, 2008;
3. To approve the 2007 Jaclyn, Inc. Stock Incentive
Plan; and
4. To transact such other business as may be properly
brought before the Annual Meeting and any adjournments thereof.
Only stockholders of record at the close of business on October 19,
2007 are entitled to notice of and to vote at the Annual Meeting and at any
adjournment thereof.
Your attention is called to the proxy statement on the following pages.
We hope that you will attend the Annual Meeting. If you do not plan to attend,
please complete, sign, date and mail the enclosed proxy in the envelope
provided, which requires no postage if mailed in the United States.
By Order of the Board of Directors
Jaclyn Hartstein
Secretary
October 29, 2007
THE BOARD OF DIRECTORS REQUESTS ALL STOCKHOLDERS TO PROMPTLY COMPLETE,
DATE, SIGN AND MAIL THE ENCLOSED PROXY IN THE POSTAGE PREPAID ENVELOPE PROVIDED.
JACLYN, INC.
197 West Spring Valley Avenue
Maywood, New Jersey 07607
PROXY STATEMENT
This proxy statement is being furnished to stockholders on or about
October 29, 2007 in connection with the solicitation by the Board of Directors
of Jaclyn, Inc. (which we refer to as the "Board of Directors" or the "Board")
of proxies in the enclosed form for use at the Annual Meeting of Stockholders to
be held on November 28, 2007 and at any postponements and adjournments thereof.
In this proxy statement, we refer to Jaclyn, Inc. as "we," "us," "our," or the
"Company" and we refer to the 2007 Annual Meeting of Stockholders, as it may be
adjourned or postponed, as the "Annual Meeting." Any proxy given pursuant to
such solicitation and received in time for the Annual Meeting will be voted with
respect to all shares represented by it in accordance with the instructions, if
any, given in such proxy or, in the absence of any instruction, for the election
of all of the nominees named herein to serve as directors, for ratification of
the appointment of Deloitte & Touche LLP as our independent auditors and for
approval of the 2007 Jaclyn, Inc. Stock Incentive Plan. Any proxy may be revoked
by the person giving the proxy by written notice received by the Secretary of
the Company at any time prior to its use or by voting in person at the Annual
Meeting.
Only stockholders of record at the close of business on October 19,
2007 will be entitled to notice of and to vote at the Annual Meeting. We refer
to that time and date as the "record date." On the record date, there were
outstanding 2,468,614 shares of our common stock. Each share of common stock
entitles the record holder thereof to one vote. The presence, in person or by
proxy, of a majority of the shares of common stock entitled to vote at the
Annual Meeting will constitute a quorum for the transaction of business.
The affirmative vote of a plurality of votes cast at the Annual Meeting
is required to elect directors. The affirmative vote of a majority of shares of
common stock present, in person or by proxy, and entitled to vote at the Annual
Meeting will be required to ratify the appointment of Deloitte & Touche LLP as
the Company's independent registered public accounting firm for the fiscal year
ending June 30, 2008 and to approve the 2007 Jaclyn, Inc. Stock Incentive Plan.
SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS
The following table sets forth information on the record date with
respect to each person (including any "group" as that term is used in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended, or the "Exchange
Act"), who is known to us to be the beneficial owner of more than 5% of our
common stock, our only outstanding class of voting securities:
Name and Address of Amount and Nature of Percent
Beneficial Ownership Beneficial Ownership* of Class
-------------------- --------------------- --------
Allan Ginsburg.................... 196,861(1)(2) 7.9%
197 West Spring Valley Avenue
Maywood, New Jersey 07607
Robert Chestnov................... 176,654(1)(3) 7.2%
197 West Spring Valley Avenue
Maywood, New Jersey 07607
Howard Ginsburg................... 175,047(1)(4) 7.0%
197 West Spring Valley Avenue
Maywood, New Jersey 07607
Bonnie Sue Levy................... 213,968(1)(5) 8.7%
197 West Spring Valley Avenue
Maywood, New Jersey 07607
----------------------
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* Except as otherwise indicated, each person listed above has sole voting and
dispositive power with respect to the shares indicated as beneficially
owned by such person.
(1) Such stockholder, along with certain of his or her family members, trusts
and custodianships for the benefit of such stockholder and his or her
family members, unrelated individuals, and the Company are parties to a
stockholders agreement, described below under the caption "Stockholders
Agreement," which provides, among other things, that a committee of four of
the signatory stockholders may direct the vote of the shares as to which
such stockholder may have or share voting power. On the record date,
1,257,643 shares of our common stock (50.9%) were subject to this
stockholders agreement.
(2) Includes 8,470 shares of our common stock held by Mr. Ginsburg in an
individual retirement account and 17,500 shares Mr. Ginsburg has the right
to acquire pursuant to presently exercisable stock options. Also includes
29,884 shares held of record by Mr. Ginsburg as custodian for his children,
10,769 shares owned by Mr. Ginsburg's wife, and 1,984 shares owned by a
charitable foundation of which Mr. Ginsburg serves as an officer and
trustee, with respect to which Mr. Ginsburg shares voting and dispositive
power. Mr. Ginsburg disclaims beneficial ownership of all of such shares.
(3) Includes 10,953 shares held by Mr. Chestnov in an individual retirement
account. Also includes 27,423 shares held of record by Mr. Chestnov as
co-trustee of a trust with respect to which he shares voting and
dispositive power, 3,500 shares owned by a charitable foundation of which
Mr. Chestnov serves as an officer and director, 372 shares of our common
stock owned by Mr. Chestnov's wife and 6,906 shares held of record by her
as custodian for their children, with respect to all of which shares Mr.
Chestnov disclaims beneficial ownership.
(4) Includes 8,470 shares held by Mr. Ginsburg in an individual retirement
account and 17,500 shares Mr. Ginsburg has the right to acquire pursuant to
presently exercisable stock options. Also includes 55,114 shares of our
common stock held of record by Mr. Ginsburg as custodian for his children
and 1,800 shares owned by his wife, with respect to all of which shares Mr.
Ginsburg disclaims beneficial ownership.
(5) Includes 6,164 shares held by Mrs. Levy in an individual retirement
account.
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SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information on the record date as to the
ownership of shares of our common stock, which is our only outstanding class of
equity securities, with respect to (a) each director and nominee for director,
(b) each executive officer named in the Summary Compensation Table under the
caption "EXECUTIVE COMPENSATION" below (who we refer to as our "Named
Officers"), and (c) all directors and executive officers of the Company as a
group (10 persons):
Amount and Nature of Percent
Name of Beneficial Owner Beneficial Ownership(1) of Class
------------------------ ----------------------- --------
Abe Ginsburg......................... 69,223(2) 2.8%
Allan Ginsburg....................... 196,861(3) 7.9%
Robert Chestnov...................... 176,654(4) 7.2%
Howard Ginsburg...................... 175,047(5) 7.0%
Martin Brody......................... 16,387(6) *
Richard Chestnov..................... 64,273(7) 2.6%
Albert Safer......................... 0 --
Norman Axelrod....................... 12,000(8) *
Harold Schechter..................... 6,000(9) *
Anthony Christon..................... 7,500 *
All directors and executive
officers as a group (10 persons)..... 693,022(10) 27.3%
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* Less than one (1%) percent.
(1) Except as otherwise indicated below, each person named above and each
person in the group referred to above has sole voting and dispositive power
with respect to shares indicated as beneficially owned by such person or
group.
(2) Includes 65,769 shares of our common stock owned by a charitable foundation
in which Abe Ginsburg serves as an officer and director and with respect to
which Mr. Ginsburg shares voting and dispositive power, and 2,581 shares
owned by a charitable foundation of which Mr. Ginsburg serves as an officer
and director, and with respect to which shares Mr. Ginsburg has sole voting
and dispositive power. Mr. Ginsburg disclaims beneficial ownership of all
such shares.
(3) See footnotes (1) and (2) to the table above under the caption "SECURITY
OWNERSHIP BY CERTAIN BENEFICIAL OWNERS" for certain information concerning
the beneficial ownership by Allan Ginsburg of our common stock.
(4) See footnotes (1) and (3) to the table above under the caption "SECURITY
OWNERSHIP BY CERTAIN BENEFICIAL OWNERS" for certain information concerning
the beneficial ownership by Robert Chestnov of our common stock.
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(5) See footnotes (1) and (4) to the table above under the caption "SECURITY
OWNERSHIP BY CERTAIN BENEFICIAL OWNERS" for certain information concerning
the beneficial ownership by Howard Ginsburg of our common stock.
(6) Includes 16,000 shares of our common stock which Mr. Brody has the right to
acquire pursuant to presently exercisable stock options.
(7) Richard Chestnov holds 27,423 of the shares set opposite his name as
co-trustee of a trust, 3,500 of the shares set opposite his name as an
officer and director of a charitable foundation, with respect to which, in
each case, he shares voting and dispositive power, and 200 shares as
custodian for his child. Mr. Chestnov disclaims beneficial ownership of
such shares.
(8) Includes 12,000 shares of our common stock which Mr. Axelrod has the right
to acquire pursuant to presently exercisable stock options.
(9) Includes 6,000 shares of our common stock which Mr. Schechter has the right
to acquire pursuant to presently exercisable stock options.
(10) Reference is made to footnotes (1) through (9) above. Includes an aggregate
of 69,000 shares of our common stock which our directors and executive
officers have the right to acquire pursuant to presently exercisable stock
options.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our executive officers and
directors, and persons who beneficially own more than 10% of our common stock,
to file initial reports of ownership, and reports of changes of ownership, of
our equity securities with the Securities and Exchange Commission and furnish
copies of those reports to us. Based solely on a review of the copies of the
reports furnished to us to date, or written representations that no statements
were required, we believe that all statements required to be filed by our
executive officers and directors with respect to our fiscal year ended June 30,
2007 were timely filed.
Stockholders Agreement
Abe Ginsburg, Allan Ginsburg, Robert Chestnov and Howard Ginsburg,
certain other family members, trusts and custodianships for the benefit of such
individuals and family members, unrelated individuals, and the Company are
parties to a second amended and restated stockholders agreement dated as of May
12, 2003 (we refer to this stockholders agreement, as amended to date, as the
"Stockholders Agreement"). The Stockholders Agreement, among other things,
entitles Abe Ginsburg, Allan Ginsburg, Robert Chestnov and Howard Ginsburg, in
their capacity as a stockholders' committee, acting by the vote of at least
two-thirds, or by the unanimous written consent, of the members of the
stockholders committee, for a period of fifteen years from the date of the
Stockholders Agreement, to direct the voting of the shares of common stock with
respect to which the signatory stockholders have or share, or may hereafter have
or share, voting power with respect to all matters submitted to our stockholders
at any annual or special meeting of stockholders or pursuant to a written
consent in lieu thereof. On the record date, the stockholders committee was
entitled under the Stockholders Agreement to direct the vote as to 1,257,643
shares of our common stock (50.9%).
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Controlled Company
As described above, under the Stockholders Agreement the members of the
stockholders committee share the power to direct the vote of 50.9% of the issued
and outstanding shares of our common stock (1,257,643 shares). Accordingly, the
Company is a "controlled company" within the meaning of the corporate governance
rules of the American Stock Exchange, or "Amex."
ITEM 1: ELECTION OF DIRECTORS
Nominees for Election
A board of directors consisting of nine directors is to be elected by
stockholders at the Annual Meeting to hold office until the next annual meeting
of stockholders and until their respective successors are duly elected and
qualified. Unless otherwise specified in the proxies, the shares represented by
all proxies received will be voted for the election of the nominees named in the
following table, all of whom are now directors. All nominees have consented to
being named in this proxy statement and to serve if elected. While our Board of
Directors has no reason to believe that any of those named will not be available
as a candidate for election as a director, should such a situation arise,
proxies may be voted for the election of the remaining named nominees and for
such substitute nominee or nominees as the holders of the proxies may determine.
Certain information with respect to each director is set forth in the
following table:
Director
Name Age Since Principal Occupation
---- --- ----- --------------------
Abe Ginsburg ................ 90 1968 Chairman of the Executive
Committee of the Company
Allan Ginsburg .............. 65 1968 Chairman of the Board of the
Company
Robert Chestnov ............. 59 1981 President and Chief Executive
Officer of the Company
Howard Ginsburg ............. 65 1981 Vice Chairman of the Board of the
Company
Martin Brody ................ 86 1980 Private Investor
Richard Chestnov ............ 62 1988 Private Investor
Albert Safer ................ 59 1997 President of Safer Textile Processing and
Kuttner Prints, textile mills
Norman Axelrod .............. 55 2000 Chairman of the Board of Directors of
General Nutrition Centers, Inc. and
affiliated companies
Harold Schechter ............ 63 2003 Chief Financial Officer of Global
Design Concepts, Inc., a
manufacturer and distributor of
handbags and related products
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Information Concerning the Board of Directors
The business experience during the last five years of the directors of
the Company is as follows:
Abe Ginsburg has been Chairman of the Executive Committee of the
Company since November 29, 1988.
Allan Ginsburg has been Chairman of the Board of the Company since
November 29, 1988.
Robert Chestnov has been the President and Chief Executive Officer of
the Company since November 29, 1988.
Howard Ginsburg has been Vice Chairman of the Board of the Company
since November 29, 1988.
Martin Brody has been a private investor since his retirement on
January 1, 1994. From April 1990 through December 1993, Mr. Brody was Vice
Chairman of the Board of Restaurant Associates Corporation, the owner and
operator of specialty restaurants, and was Chairman of its Board for more than
five years prior thereto. Mr. Brody also serves as a director of a number of
Salomon Smith Barney mutual funds and preferred income funds.
Richard Chestnov has been a private investor since 1992. Before then,
he was a partner of Chego International, an apparel importer.
Albert Safer has been President of Safer Textile Processing and Kuttner
Prints, textile mills, for more than the past five years. Mr. Safer has also
served as President of Safer Development and Management, which is engaged in
real estate development and management, for more than the past five years.
Norman Axelrod has been Chairman of the Board of Directors of General
Nutrition Centers, Inc., a specialty retailer of health and wellness products,
and certain affiliated companies, since March 2007. From March 2006 to March
2007, Mr. Axelrod was a private investor. From 1988 until March 2006, Mr.
Axelrod served as Chief Executive Officer of Linens 'n Things, Inc., a leading,
national large format retailer of home textiles, housewares and home
accessories, was Chairman of the Board of that company from 1997 until March
2006, and through 2000, he also held the additional post of President. Mr.
Axelrod also serves as a director of Maidenform Brands, Inc.
Harold Schechter has been Chief Financial Officer of Global Design
Concepts, Inc., a manufacturer and distributor of handbags and related products,
since January 2005. From October 2004 until January 2005, Mr. Schechter was the
Chief Financial Officer of Diamond Chemical Company Inc., a manufacturer of
cleaning chemicals. Mr. Schechter served as Vice President, Chief Operating
Officer and Chief Financial Officer of Creative Salon Products, an importer and
distributor of beauty products, from January 2003 to October 2004, and as Vice
President, Chief Operating Officer and Chief Financial Officer of William H.
Ranney Associates Inc., which was also an importer and distributor of beauty
products, from May 2001 to December 2002. From January 1999 to April 2001, Mr.
Schechter served as Vice President-Operations and Purchasing of Monarch Luggage
Inc., an importer and distributor of luggage and related items.
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Directors' Independence. Our common stock is listed for trading on the
Amex. The corporate governance rules of the Amex generally require that all
members of an Amex-listed issuer's board of directors and audit committee be
"independent directors," as defined under those rules, that nominees for its
board of directors be selected by a nominating committee comprised solely of
independent directors, or if there is no nominating committee, by a majority of
independent directors, and that the compensation of its chief executive officer
be determined or recommended by a compensation committee comprised solely of
independent directors, or if there is no compensation committee, by a majority
of independent directors. As noted above, however, the Company is a "controlled
company" within the meaning of the corporate governance rules of the Amex
(meaning that over 50% of the voting power of our common stock is held by the
group described above under the caption "Stockholders Agreement"). Accordingly,
we are exempt from these rules other than the requirement that the members of
our audit committee be independent directors. The Board of Directors has
determined that Messrs. Brody, Safer, Axelrod and Schechter meets the
independence requirements for members of the Board of Directors under the
listing standards of the Amex, and the other members of the Board do not meet
such requirements. The Board of Directors also has determined that each of the
members of our audit committee, which consists of Harold Schechter (Chairman),
Martin Brody and Albert Safer, meets the requirements for audit committee
membership under the Amex corporate governance rules for audit committee
eligibility.
Family Relationships. Abe Ginsburg, Chairman of the Executive Committee
and a director of the Company, is the father of Howard Ginsburg, Vice Chairman
of the Board and a director of the Company. Allan Ginsburg, Chairman of the
Board and a director of the Company, is a nephew of Abe Ginsburg and is a first
cousin of Howard Ginsburg. Robert Chestnov, President, Chief Executive Officer
and a director of the Company, and Richard Chestnov, a director of the Company,
are brothers.
Meetings and Committees. During the Company's fiscal year ended June
30, 2007 the Board of Directors held four meetings. Each director except Martin
Brody attended at least 75% of the meetings of the Board of Directors, and of
committees of the Board on which he served, during fiscal 2007. The Company's
policy is that directors should make every reasonable effort to attend each
annual meeting of stockholders. At the 2006 annual meeting of stockholders,
seven of the nine members of the Board were in attendance.
The Company does not have a compensation committee, the functions of
which are performed by the Company's Executive Committee and are described below
under the caption "Compensation Discussion and Analysis" and, with regard to
stock options, the Stock Option Committee. The Executive Committee, whose
members are Abe Ginsburg (Chairman), Allan Ginsburg, Robert Chestnov and Howard
Ginsburg, meets informally throughout the Company's fiscal year. The Stock
Option Committee, whose present members are Martin Brody and Richard Chestnov,
did not meet during fiscal 2007. The Company's Audit Committee, which consists
of Harold Schechter (Chairman), Martin Brody and Albert Safer, held four
meetings during the fiscal year ended June 30, 2007. The Board of Directors has
determined that Mr. Schechter is an audit committee financial expert within the
meaning of Securities and Exchange Commission regulations. The Audit Committee's
primary function is to assist the Company's Board of Directors in fulfilling the
Board's oversight responsibility 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 may be established from time to
time, and the Company's auditing, accounting and financial reporting processes
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generally. A copy of the Audit Committee's charter was included as an exhibit to
our proxy statement relating to our 2005 annual meeting of stockholders; it is
not available on our website.
Nominations Process. The Company does not have a nominating committee
or charter. Historically, the entire Board of Directors has selected nominees
for election as directors and the Board believes that this process works well.
As a "controlled company" under the corporate governance rules of the Amex, we
are not required to maintain either a standing nominating committee comprised
solely of independent directors, or to select nominees by a majority of
independent directors.
The Board will consider nominees that come to its attention from
present members of the Board, from employees and other persons, including our
stockholders. Consideration of potential nominees typically will involve a
series of internal discussions, review of information concerning the candidate,
and, if appropriate, interviews with selected candidates. While no single factor
is determinative in reviewing potential candidates for election to the Board,
and there are no specific, minimum qualifications that a nominee must possess,
the Board believes that the following factors generally should be considered in
the process of selecting nominees for election as directors, whether the
individual is recommended by the Board or by a stockholder: applicable laws,
rules, and regulations, as well as the listing standards of the Amex;
educational experience, work experience and business acumen generally; the then
current size and make-up of the Board; a willingness to work productively with
the other members of the Board; the ability of the prospective nominee to
represent the interests of our stockholders generally; professional experience
in the handbag, accessories, apparel, retail, licensing, importing,
manufacturing and/or related industries; the prospective nominee's ability to
dedicate sufficient time, energy and attention to the performance of his or her
duties as a director of the Company; the extent to which the prospective nominee
contributes to the range of talent, skill and expertise appropriate for
membership on the Board; and personal qualities of leadership, character,
integrity and judgment. A nominee to the Board of Directors may, under certain
circumstances, be required to be independent within the meaning of the corporate
governance rules of the Amex and applicable Securities and Exchange Commission
regulations. These factors, and any other qualifications considered useful by
the Board, are reviewed in the context of an assessment of our perceived needs
and those of the Board at a particular point in time. As a result, the
priorities and emphasis of the Board may change from time to time to consider,
among other things, changes in the financial position of the Company, business
trends, and the contributions and prospective contributions of members of, and
nominees for membership on, the Board. The Board will evaluate nominees of
stockholders using the same criteria as it uses in evaluating other nominees to
the Board. A stockholder seeking to recommend a prospective nominee for
consideration by the Board may submit the nominee's name and qualifications to
the Company by mailing it to Secretary, Jaclyn, Inc., 197 West Spring Valley
Avenue, Maywood, New Jersey 07607. The Board will not engage in an evaluation
process unless (i) there is a vacancy on the Board of Directors, (ii) a director
is not standing for re-election, or (iii) the Board does not intend to recommend
the nomination of a sitting director for re-election.
Stockholder Communications. Stockholders who desire to communicate with
the Board, or with a specific director, including on an anonymous or
confidential basis, may do so by delivering a written communication to the
Board, or to the specific director, c/o the Secretary of the Company, at Jaclyn,
Inc., 197 West Spring Valley Avenue, Maywood, New Jersey 07607. The envelope of
any communication which a stockholder wishes to be confidential should be
conspicuously marked "Confidential" and the Secretary will not open the
communication. The Secretary promptly will forward all stockholder
communications to the Board and any specified directors.
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Code of Ethics. The Company has adopted a code of ethics for its
principal executive officer, principal financial officer, principal accounting
officer or controller, and persons performing similar functions.
Audit Committee Report
Management has the primary responsibility for the Company's financial
reporting process, including its financial statements, while the Board is
responsible for overseeing our accounting, auditing and financial reporting
practices. The Company's independent registered public accounting firm has the
responsibility for the examination of our annual financial statements and
expressing an opinion on the conformity of those financial statements with
accounting principles generally accepted in the United States. In assisting the
Board in fulfilling its oversight responsibility with respect to the Company's
fiscal year ended June 30, 2007 the Audit Committee:
o Reviewed and discussed the audited financial statements for
the fiscal year ended June 30, 2007 with management and
Deloitte & Touche, LLP, our independent registered public
accounting firm;
o Discussed with Deloitte & Touche, LLP the matters required to
be discussed by Statement on Auditing Standards No. 61, as
amended, relating to the conduct of the audit; and
o Received the written disclosures and the letter from Deloitte
& Touche, LLP regarding its independence as required by
Independence Standards Board Standard No. 1. The Audit
Committee also discussed with Deloitte & Touche, LLP that
firm's independence.
Based on the foregoing review and discussions, the Audit Committee
recommended to the Board that the Company's audited financial statements for the
fiscal year ended June 30, 2007 be included in the Company's Annual Report on
Form 10-K filed with the Securities and Exchange Commission for that year.
Respectfully,
Harold Schechter, Chairman
Martin Brody
Albert Safer
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COMPENSATION DISCUSSION AND ANALYSIS
General Philosophy and Objectives
We have designed our executive compensation programs to attract,
motivate and retain key executives of superior ability. Our main objectives are
to reward individuals for their contributions to our performance and provide
them with a stake in our long-term success. Compensation programs for our
executives are constructed in an effort to reward them, in the short-term, for
individual performance and overall corporate performance through a combination
of base salary and discretionary bonuses, as well as with a longer term view of
enhancing shareholder value by tying a portion of their compensation directly to
the performance of our common stock.
General Executive Compensation Process
Our Board of Directors has designated the Executive Committee of the
Company, comprised of Abe Ginsburg (Chairman), Allan Ginsburg, Robert Chestnov
and Howard Ginsburg, to review and expressly approve the compensation of our
executive officers, including each of the Named Officers. No member of the
Executive Committee participates in the determination of his compensation. Since
we are a "controlled company" within the meaning of the rules of the American
Stock Exchange, we are not required to maintain a compensation committee
comprised of independent directors. The compensation of other executives are
initially determined by our Chief Executive Officer, and submitted to the
Executive Committee for review and approval. Our Stock Option Committee,
consisting of Martin Brody and Richard Chestnov, approves the grant of all stock
options to such individuals.
Elements of Compensation
The primary elements of our executive compensation are as follows:
o An annual base salary
o Bonus compensation, in the discretion of the Executive
Committee
o A long-term incentive component, generally consisting of the
grant of stock options
o Perquisites and other personal benefits
o Retirement benefits by virtue of a 401(k) plan which is
available generally to all of our employees
We do not objectively allocate compensation between currently paid and
long-term compensation, or among cash and non-cash compensation. Instead, the
Executive Committee and the Stock Option Committee believe that they should be
able to maintain our overall objective of attracting, motivating and retaining
our key executives while at the same time preserving discretion to increase or
decrease variable compensation on a year-to-year basis depending on individual
and corporation performance, or, in fact, not to pay any such compensation in
any particular year if the Executive Committee and/or the Stock Option Committee
considers that to be appropriate.
Base Salary. Base salary provides an executive with basic compensation,
and reflects, in part, the skill, experience, and overall value an individual
brings to our business, as well as the individual's length of service and
historic performance. The Executive Committee has retained the discretion to
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increase or decrease those base salary levels in its discretion. Annual reviews
are typically made of the base salary of each executive officer, and annual
adjustments made if the Executive Committee believes any adjustments are
necessary. However, when warranted by business considerations, such as
profitability, gross margin levels, and/or cash flow considerations, among
others, annual increases in base salary may not be made at all.
During its deliberations for fiscal 2007, the Executive Committee
considered, among other things, that under the leadership of Mr. Chestnov and
our other executive officers, we experienced our eighth consecutive year of
sales increases, including a significant increase of 22% in 2007 compared with
the prior year, and a 17.5% increase in gross profit dollars. While the
Executive Committee noted that earnings decreased in 2007 compared to the prior
year, it also was aware that the decrease was solely attributable to the final
settlement of our pension plan, which had been terminated and replaced with a
less expensive 401(k) plan that would benefit our financial results on a
comparative basis in future years. In that regard, the Executive Committee
considered that without the pension plan settlement, the Company's net earnings
for fiscal 2007 would have been $2,679,000, an increase of approximately 75%
compared to our last fiscal year, and net earnings per diluted share would have
been $1.06, compared to $.60 last year. However, despite the substantial gains
we realized in net sales, gross profit, and net earnings after excluding the
one-time pension settlement for 2007 when compared to 2006, the Executive
Committee decided to make a relatively modest adjustment in the base salaries of
our President, Chairman or Vice Chairman (an increase of approximately 6.1% for
each), and our Chief Financial Officer (an increase of 8.6%) and, instead, to
grant bonuses to our executive officers as noted below to reward them for their
performance during our last fiscal year.
Bonuses. Cash bonuses are awarded on a discretionary basis. Bonuses are
not based on any particular performance metric and are discretionary based on a
review of each executive officer's performance during the year. The Executive
Committee believes that retaining flexibility allows them to consider a number
of factors that an objective performance metric may not allow.
After having considered the factors noted above under the caption "Base
Salary," the Executive Committee determined to award Mr. Chestnov an increase in
bonus compensation for 2007 compared to 2006, while the bonus compensation of
our Chairman and Vice Chairman did not change. In addition, due to Mr.
Christon's substantial contributions to our success as our chief financial
officer, he received a modest increase in his bonus compensation compared to
2006.
Equity Compensation. We designed the long-term component of our
executive compensation to ensure a certain commonality between our executives
and our investors. We have in the past utilized stock options as the primary
method of providing long-term and equity-based compensation. Grants under our
2000 Stock Option Plan, or the 2000 Plan, along with annual bonuses, have been,
and continue to be, the primary methods used by us to motivate our executives,
and to allow them to participate in the growth of stockholder value through
increases in the price of our shares of common stock, and to link their
interests with those of our stockholders. The 2000 Plan provides for the grant,
in the discretion of the Stock Option Committee, of stock options, stock
appreciation rights, restricted stock awards, restricted stock unit awards, and
performance and other awards. The Stock Option Committee may, in connection with
the grant of each option or award, establish one or more objective criteria
(which may include reference to revenues, margin, profits or other goals) to
determine whether the options or awards vest or otherwise will become
exercisable, and/or whether any amounts will become payable.
-11-
No options or other awards were granted in fiscal 2007. The Stock
Option Committee noted that the Executive Committee granted bonus compensation
to the Named Officers and determined that the grant of stock options as
additional compensation was not warranted for fiscal 2007. Nevertheless, we
consider the grant of options and awards from time to time during the year, and
also on an annual basis in connection with the determinations made by the
Executive Committee and the Stock Option Committee on overall compensation of
our executives.
To provide the Company with some additional flexibility in determining
the mix of cash and non-cash compensation to be paid to its executive officers,
the Board of Directors has adopted, subject to approval by stockholders at the
annual meeting, the 2007 Incentive Stock Plan. The 2007 Incentive Stock Plan, if
approved by stockholders, would permit the grant of a broader group of
stock-based grants, including incentive stock options, non-qualified stock
options, stock appreciation rights, restricted stock and restricted stock units,
and stock awards to employees and, except for incentive stock options, similar
grants and awards to non-employee directors.
Perquisites and Other Benefits. We structure our other compensation to
provide competitive benefit packages to all our employees, including our
executives. We often offer certain perquisites to certain of our executives,
primarily automobiles and related allowances, supplemental health and life
insurance, and club memberships. We have used these perquisites as a retention
tool and as a relatively inexpensive method of rewarding our executives,
particularly when it is viewed as a part of our overall compensation programs
that do not presently include employment agreements for any of our executive
officers and that, accordingly, rely in large part on the discretion of the
Executive Committee and the Stock Option Committee.
The only other benefits in which our executives may participate are
plans that are generally available to our employees, including health insurance
and a 401(k) plan, and do not discriminate in scope, term or operation in favor
of our executive officers. We do not offer any of our executives any pension or
retirement benefits that are not otherwise enjoyed by our employees in general,
including the annual Company contribution to participants' accounts under our
401(k) plan.
Certain Accounting and Tax Considerations. We are aware that base
salary, cash bonuses, stock-based awards, and other elements of our compensation
programs generate charges to earnings under generally accepted accounting
principles (including as provided in SFAS 123R). We generally do not adjust
compensation components based on accounting factors. With respect to tax
treatment, we will consider the tax effect of types of compensation, including
whether we should structure incentive compensation to secure the deduction for
the performance-based compensation under Section 162(m) of the Internal Revenue
Code of 1986, as amended, or the "Internal Revenue Code." Section 162(m) denies
a deduction for compensation paid to a named executive officer in a taxable year
for compensation in excess of $1,000,000 unless such excess amount meets the
definition of "performance-based compensation." It is possible, however, that
portions of any future grants or awards may not qualify as "performance-based
compensation," and, when combined with salary and other compensation to a named
executive officer, may exceed this limitation in any particular year.
-12-
Stock Ownership Guidelines
We do not have formal stock ownership guidelines for our executive
officers or directors. Most of our executive officers have substantial holdings
in our common stock, and have held their shares of common stock for many years.
We do not have a policy that specifically prohibits our executive officers from
hedging the risk of stock ownership in our company; however, based on historical
experience, we do not believe that to be a significant risk for our company.
Report of Executive Committee and Stock Option Committee
The members of the Executive Committee and the Stock Option Committee
have reviewed and discussed the Compensation Discussion and Analysis section of
this proxy statement with management. Based on such review and discussion, the
members of the Executive Committee and the Stock Option Committee recommended
that the Compensation Discussion and Analysis section be included proxy
statement.
Respectfully,
Executive Committee Stock Option Committee
Abe Ginsburg, Chairman Martin Brody
Allan Ginsburg Richard Chestnov
Robert Chestnov
Howard Ginsburg
|
-13-
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table presents certain information concerning the
compensation of our Named Officers for the fiscal year ended June 30, 2007:
All Other
Name and Salary Bonus Compensation Total
Principal Position Year ($) ($) ($) ($)
(a) (b) (c) (d) (i) (j)
--------------------------------------------------------------------------------------
Robert Chestnov, 2007 $424,000 $650,000 $98,042(1) $1,172,042
President and Chief
Executive Officer
Anthony Christon, Vice 2007 $323,450 $235,000 $28,657(2) $ 587,107
President and Chief
Financial Officer
Allan Ginsburg, Chairman 2007 $424,000 $325,000 $94,692(3) $ 843,692
of the Board
Howard Ginsburg, Vice 2007 $424,000 $325,000 $81,707(4) $ 830,707
Chairman of the Board
|
(1) Includes amounts paid by the Company for club membership expenses of
$32,297 and automobile lease payments and other automobile expenses of
$32,478. This amount also includes the reimbursement of medical expenses
under our supplemental medical and dental insurance program, life insurance
premiums, tax preparation expenses and a Company contribution under our
401(k) plan.
(2) Includes amounts paid by the Company for the reimbursement of medical
expenses under our supplemental medical and dental insurance program, a
Company contribution under our 401(k) plan and life insurance premiums.
(3) Includes amounts paid by the Company for automobile lease payments and
other automobile expenses of $33,736 and the reimbursement of medical
expenses under our supplemental medical and dental insurance program of
$28,841. This amount also includes life insurance premiums, tax preparation
expenses and a Company contribution under our 401(k) plan.
(4) Includes amounts paid by the Company for automobile lease payments and
other automobile expenses of $25,077. This amount also includes the
reimbursement of medical expenses under our supplemental medical and dental
insurance program, life insurance premiums, club membership dues, tax
preparation expenses, and a Company contribution under our 401(k) plan.
-14-
Grant of Plan-Based Awards
Our 2000 Stock Option Plan, or "2000 Plan," provides for the grant, in
the discretion of the Board of Directors, of incentive stock options and
non-qualified stock options. There were no grants under the 2000 Plan to any of
the Named Officers during the fiscal year ended June 30, 2007.
Outstanding Equity Awards at Fiscal Year-End
The following table presents information concerning outstanding stock
options (our only present form of equity awards) held by the Named Officers at
June 30, 2007.
OUTSTANDING EQUITY AWARDS AT FISCAL 2007 YEAR-END
Option Awards
--------------------------------------------------------------
Number of Number of
Securities Securities
Underlying Underlying
Unexercised Unexercised Option
Options Options Exercise Option
(#) (#) Price Expiration
Name Exercisable Unexercisable ($) Date
-------------------------------------------------------------------------------------------
Robert Chestnov -- -- -- --
Anthony Christon -- -- -- --
Allan Ginsburg 17,500 -- $8.47 5/22/11
Howard Ginsburg 17,500 -- $8.47 5/22/11
|
Option Exercises and Stock Vested
The following table presents information concerning the exercise of
stock options for the Named Officers during the fiscal year ended June 30, 2007.
FISCAL 2007 OPTION EXERCISES AND STOCK VESTED
Option Awards
---------------------------------------------
Number of Shares
Acquired Value Realized
on Exercise on Exercise (1)
Name (#) ($)
-------------------------- --------------------- -------------------
Robert Chestnov 17,500 $28,000
Anthony Christon -- --
Allan Ginsburg -- --
Howard Ginsburg -- --
|
(1) Based on the closing price on the Amex on the date of exercise less the
exercise price of the option exercised.
-15-
Equity Compensation Plan Information
The following sets forth certain information as of June 30, 2007
concerning each of the Company's equity compensation plans:
Number of securities
Number of securities remaining available for
to be issued Weighted-average future issuance under
upon exercise of exercise price of equity compensation plans
outstanding options, outstanding options (excluding securities
Plan category warrants and rights warrants and rights reflected in column (a))
------------- ------------------- ------------------- ------------------------
(a) (b) (c)
Equity compensation plans
approved by security
holders ................... 97,500 $5.39 185,000
Equity compensation plans
not approved by security
holders ................... -- -- --
Total ........................ 97,500 $5.39 185,000
|
Terminated Pension Plan
The Company had maintained a defined benefit pension plan entitled the
"Jaclyn, Inc. Employees Pension Trust,", which covered all non-union employees
of the Company and certain of its subsidiaries who attained age 21 and completed
at least twelve months of service to the Company. The pension plan provided
pension benefits to its participants that were based on levels of compensation
and years of service to the Company. However, the Company terminated the pension
plan, effective on January 31, 2006, and replaced the pension plan with a less
expensive 401(k) plan. Benefits ceased to accrue under the pension plan on
January 31, 2006. Upon the determination by the Internal Revenue Service during
fiscal 2007 that termination of the pension plan would not affect the
qualification of the pension plan, the Company made a final settlement
distribution to all participants. Individual participants were given a choice to
receive a lump sum payment or to defer the payment of benefits. Individuals who
chose a lump sum payment received the present value of their respective accrued
benefits based on actuarial assumptions set forth in the pension plan and in the
Internal Revenue Code. Deferred payments of accrued benefits were funded by the
purchase by the Company of deferred annuity contracts. Lump sum payments made to
the Named Officers, and their years of credited service at the time the pension
plan was terminated, were as follows: Robert Chestnov, 36 years of
service--$469,014; Allan Ginsburg, 45 years of service--$724,262; Howard
Ginsburg, 45 years of service--$715,127; and Anthony Christon, 11 years of
credited service--$199,545.
Director Compensation
The Chairman of the Audit Committee of the Company receives an annual
fee of $26,000 for serving as a director and Chairman of the Audit Committee.
Each other non-employee director receives an annual fee of $20,000 for serving
-16-
as a director. Except as may otherwise be determined by the Board in particular
instances, non-employee directors generally do not receive a separate fee for
attendance at meetings of the Board or meetings of any committee on which they
serve. Members of the Board who are also employees of the Company are not
separately compensated for their service on the Board.
The following table presents information relating to total compensation
of our non-employee directors for the fiscal year ended June 30, 2007:
---------------------- ---------------- ------------------- ---------------
Fees
Earned or
Paid in All Other
Cash Compensation Total
Name ($) ($) ($)
(a) (b) (g) (j)
---------------------- ---------------- ------------------- ---------------
Martin Brody $20,500 -- $20,500
---------------------- ---------------- ------------------- ---------------
Richard Chestnov $20,000 -- $20,000
---------------------- ---------------- ------------------- ---------------
Albert Safer $20,000 -- $20,000
---------------------- ---------------- ------------------- ---------------
Norman Axelrod $20,500 -- $20,500
---------------------- ---------------- ------------------- ---------------
Harold Schechter $26,000 -- $26,000
---------------------- ---------------- ------------------- ---------------
|
Compensation Committee Interlocks and Insider Participation
The members of our Executive Committee are Abe Ginsburg, Allan
Ginsburg, Robert Chestnov and Howard Ginsburg and the members of our Stock
Option Committee are Martin Brody and Richard Chestnov. During the fiscal year
ended June 30, 2007 Bonnie Sue Levy, a Vice President of the Company, who is a
sister of Allan Ginsburg, was paid $150,000 for services rendered in fiscal
2007, and the Company paid $32,978 for the reimbursement of dental and medical
expenses, life insurance premiums, automobile lease payments and other
automobile expenses, and a Company-match under our 401(k) plan. Ms. Levy, who
had 31 years of credited service under our terminated pension plan, also
received a final distribution payment upon final settlement of the pension plan,
of $547,992. Jaclyn Hartstein, Secretary of the Company, who is a daughter of
Abe Ginsburg and a sister of Howard Ginsburg, was paid $232,140 in base salary
and a bonus of $180,000 for services rendered in fiscal 2007, and the Company
paid $41,274 for the reimbursement of dental and medical expenses, life
insurance premiums, automobile lease payments and other automobile expenses, and
a Company-match under our 401(k) plan.. Ms. Hartstein, who had 17 years of
credited service under our terminated pension plan, also received a final
distribution payment upon final settlement of the pension plan, of $289,092.
The Board of Directors has designated the Executive Committee to
review, approve or ratify the compensation (other than the grant of stock
options) of our executive officers and each other employee who is a related
person (as that term is defined in Securities and Exchange Commission
regulations), or any member of the related person's immediate family sharing the
same household, in each case without the participation of the related person or
family member. The Stock Option Committee approves the grant of all stock
options to all executive officers and each other employee of the Company. The
Board of Directors also has adopted procedures described below to review,
approve and ratify each other transaction to which any related person or a
member of his immediate family sharing the same household is involved and as to
-17-
which the amount involved exceeds relevant thresholds (presently $120,000) as
set forth in Securities and Exchange Commission regulations. The Executive
Committee initially will consider the proposed transaction. If the proposed
transaction is rejected by the Executive Committee, then that determination will
be final, but if the proposed transaction is approved by the Executive
Committee, it then will be forwarded to the entire Board of Directors for
consideration. If any member of the Executive Committee or the Board of
Directors, or any member of his immediate family (as that term is defined in
Securities and Exchange Commission regulations) sharing the same household, is a
party to the transaction being considered, or if any of them have any direct or
indirect material interest in the transaction, then the member will not
participate in the consideration of the proposed transaction. The authority of
the Executive Committee and the Stock Option Committee is evidenced by
resolutions of the Board of Directors. The Board of Directors and the Executive
Committee intend that each such transaction will be on terms and conditions that
are no less favorable to us than we could have obtained from unaffiliated third
parties.
ITEM 2: SELECTION OF AUDITORS
General
The Audit Committee has appointed Deloitte & Touche LLP, an independent
registered public accounting firm, to audit the books and accounts of the
Company for the fiscal year ending June 30, 2008. This firm is the successor to
the firm of auditors which has audited the books of the Company or its
predecessor since 1965. A representative of Deloitte & Touche LLP is expected to
be present at the Annual Meeting to respond to appropriate questions and will be
given an opportunity to make a statement if such representative desires to do
so.
Audit Fees
Audit fees billed and expected to be billed by Deloitte & Touche LLP
for its audit of our consolidated financial statements for the years ended June
30, 2007 and June 30, 2006 and for its review of the consolidated financial
statements included in our Quarterly Reports on Form 10-Q filed with the
Securities and Exchange Commission for fiscal 2007 and fiscal 2006 totaled
$235,000 and $215,000, respectively.
Audit Related Fees
Fees billed and expected to be billed by Deloitte & Touche LLP for
assurance and related services performed by Deloitte & Touche LLP and reasonably
related to the audit and review services performed by Deloitte & Touche LLP and
described above under the caption "Audit Fees" totaled $27,000 and $36,000 for
fiscal 2007 and fiscal 2006, respectively.
Tax Fees
Fees billed and expected to be billed by Deloitte & Touche LLP for tax
compliance, tax advice and tax planning, primarily income tax compliance,
totaled $100,000 and $85,000 for fiscal 2007 and fiscal 2006, respectively.
-18-
All Other Fees
No other fees were billed or are expected to be billed by Deloitte &
Touche LLP for any other services to us for the fiscal years ended June 30, 2007
and June 30, 2006.
All audit, audit-related, tax and other services were pre-approved by
the Audit Committee of the Board of Directors. The Audit Committee's
pre-approval policies and procedures are to pre-approve, on a case-by-case
basis, all audit, audit-related, tax and other services to be performed by our
independent registered public accounting firm.
Required Vote
The appointment of Deloitte & Touche LLP is subject to ratification by
a majority of the shares of common stock present, in person or by proxy, and
entitled to vote at the Annual Meeting. If the appointment of Deloitte & Touche
LLP is not ratified by such stockholder vote, the Audit Committee will
reconsider its action and select an independent registered public accounting
firm without further stockholder action. The Board of Directors recommends a
vote "FOR" ratification of the appointment of Deloitte & Touche LLP as the
independent registered public accounting firm of the Company. Unless otherwise
specified in the proxies, the shares represented by all proxies received will be
voted "FOR" the appointment of Deloitte & Touche LLP.
ITEM 3: APPROVAL OF JACLYN, INC. 2007 STOCK INCENTIVE STOCK PLAN
The Board of Directors is requesting that stockholders approve the
Jaclyn, Inc. 2007 Stock Incentive Plan, or the "2007 Plan," which will replace
our 2000 Stock Option Plan, or the "2000 Plan." The 2007 Plan is designed to
provide expanded equity compensation opportunities for those of our and our
subsidiaries' employees and non-employee directors who may in the future be
selected to receive awards. We sometimes refer to those employees and
non-employee directors as "participants" below.
On the record date, there were 56,500 shares subject to stock options
outstanding under the 2000 Plan, and 185,000 shares remained available for
future grant. On that date, the closing sale price of common stock on the Amex
was $6.35 per share. If the 2007 Plan is approved by stockholders, no additional
options will be granted under the 2000 Plan, which will be replaced by the 2007
Plan, although all options outstanding under the 2000 Plan would remain
outstanding in accordance with their terms.
The following description of certain principal features of the 2007
Plan is qualified in its entirety by reference to the full text of the 2007
Plan, which is attached as Exhibit A to this proxy statement.
Purpose of the 2007 Plan
If approved by stockholders, the 2007 Plan will allow us to make grants
of stock options, stock appreciation rights (SARs), restricted stock, restricted
stock units, and stock awards to employees, as well as stock options, SARs,
restricted stock, and restricted stock units to our non-employee directors. The
purpose of these awards is to promote a greater identity of interest between
employees and non-employee directors, on the one hand, and our stockholders at
large, on the other hand, by increasing the participants' proprietary interests
in the Company. The 2007 Plan is also designed to provide us with flexibility in
-19-
order to motivate, attract and retain the services of our employees and
non-employee directors upon whose judgment, interest and effort the successful
conduct of our operations are largely dependent.
As noted above, if stockholders approve the 2007 Plan, we will make no
further grants of options under the 2000 Plan, although outstanding options will
not be affected and will remain outstanding in accordance with their respective
terms.
Description of the 2007 Plan
Plan Term. The 2007 Plan will become effective on the date it is
approved by our stockholders and, subject to earlier termination by the Board of
Directors, will terminate on September 25, 2017. No awards may be granted under
the 2007 Plan prior to stockholder approval. If stockholders do not approve the
2007, then the Board will terminate the Plan and the 2000 Plan will remain in
effect in accordance with its terms.
Administration. The 2007 Plan initially will be administered by a
committee, which we refer to as the "2007 Plan Committee." As long as we are
subject to the periodic reporting requirements of the Exchange Act, the 2007
Plan Committee will consist of non-employee directors, as defined in Rule 16b-3
under the Exchange Act, and "outside directors" as defined by Section 162(m)
under the Internal Revenue Code. Subject to the terms of the 2007 Plan, the 2007
Plan Committee will have, among other powers, the power to determine the
employees and non-employee directors to whom awards are made; the nature and
extent of any such awards; and the terms and conditions upon which awards may be
made, exercised, and modified; and to make all other determinations and take all
other actions necessary or advisable for the administration of the 2007 Plan.
Eligibility. Only employees and non-employee directors of the Company
are eligible to receive awards under the 2007 Plan. The 2007 Plan Committee will
determine which employees will participate in the 2007 Plan and will determine
the terms of any grants to non-employee directors. As of the record date, there
were approximately 161 employees and 5 non-employee directors who would be
eligible to participate in the 2007 Plan.
Shares Available For Grants. The maximum number of shares of our common
stock available for issuance under the 2007 Plan is 185,000, which is the same
number of shares that is subject to the 2000 Plan as previously approved by
stockholders. Approval is not being sought for an increase in the number of
shares that may be subject to awards to participants. If any award granted
terminates, expires, lapses, or is forfeited for any reason, the shares of
common stock subject to the award will be available for future awards. In
addition, if the exercise price for a stock option is paid using previously
acquired shares of common stock, the number of shares of our common stock
available for future awards under the 2007 Plan will be reduced only by the net
number of new shares of common stock issued upon the exercise of the option.
Similarly, if shares of common stock are surrendered by a participant as full or
partial payment of withholding taxes, or if the number of shares of common stock
otherwise deliverable is reduced for payment of withholding taxes, the number of
shares of common stock surrendered or withheld shall again be available for
future awards under the 2007 Plan. The number of shares subject to each
outstanding award, the exercise price, and the annual limits on and aggregate
number of shares for which or from which awards may be made may be adjusted in
the 2007 Plan Committee's discretion for such events as stock dividends, stock
splits, recapitalizations, mergers, consolidations, or reorganizations.
-20-
Annual Limits on Awards. Under the 2007 Plan, no participant may be
granted an award in any calendar year for more than 150,000 Shares.
Section 162(m) Performance-Based Awards. Awards may be granted that do
or do not qualify as "performance-based compensation" under section 162(m) of
the Code, all in the discretion of the 2007 Plan Committee. Under Section
162(m), compensation paid to any Named Officer is not deductible if it exceeds
$1,000,000 unless it is "performance-based" compensation. Stock options and SARs
are considered to be performance-based compensation if the exercise price or
base value of the shares to which the award relates is at least equal to fair
market value of those shares on the date of the award and if the maximum number
of shares available for awards is disclosed to and approved by stockholders.
Other awards may be performance-based compensation if based on achievement of
objective performance goals set by a committee and the material terms of the
compensation or benefit to be paid, including the performance goals that may be
used and the maximum that may be paid to any employee, must be disclosed to and
approved by stockholders before payment. The performance goals for Section
162(m) performance-based compensation with respect to the 2007 Plan, if any,
will be determined by the 2007 Plan Committee, may be equal to, less than, or
more than one year and may not be the same for all participants, may relate to
performance of a subsidiary, division, strategic business unit or line of
business, or may be based on the performance of the Company generally. Under the
2007 Plan, performance goals may be based on, among other things, the following:
our stock value or increases therein, net earnings, earnings, or earnings growth
(before or after one or more of taxes, interest, depreciation, and/or
amortization), earnings per share or earnings per share growth, operating
profit, operating cash flow, and operating or other expenses. Performance goals
may include a threshold level of performance below which no payment or vesting
may occur, levels of performance at which specified payments or specified
vesting will occur, and a maximum level of performance above which no additional
payment or vesting will occur. Performance goals may be absolute in their terms
or measured against or in relationship to a market index, a group of other
companies comparably, similarly, or otherwise situated, or a combination
thereof. Each of the performance goals will be determined, where applicable and
except as provided above, in accordance with generally accepted accounting
principles. Generally, all awards of stock options and all SARs qualify as
performance-based compensation. In addition, the 2007 Plan has been designed to
enable any other award granted by the 2007 Plan Committee to qualify as
performance-based compensation if the 2007 Plan Committee so elects.
Option Awards. The 2007 Plan Committee may grant an employee either an
incentive stock option, or a non-qualified stock option, and a non-employee
director a non-qualified stock option. Option terms will be determined by the
2007 Plan Committee in its discretion, but the exercise price for an option will
not be less than 100 percent of the fair market value of a share of common stock
at the date the option is awarded (or less than 110 percent of fair market value
with respect to incentive stock options granted to an employee possessing more
than 10 percent of the Company's combined voting power). Fair market value for
purposes of the 2007 Plan means the closing sales price per share of common
stock on the Amex on the date of grant or award, or, if this value is
inappropriate in the opinion of the 2007 Plan Committee, the value determined by
the 2007 Plan Committee. In addition, the aggregate fair market value of shares
of common stock with respect to which any employee may first exercise incentive
stock options granted under the 2007 Plan during any calendar year may not
exceed $100,000 or such amount specified in the Code and rules and regulations
thereunder. Subject to the 2007 Plan Committee's determination, the exercise
price of any option may be paid in cash, by delivery of shares of common stock
valued at fair market value at the time of exercise, or by a combination of
these methods.
-21-
SAR Awards. The 2007 Plan authorizes the grant of stock appreciation
rights, or SARs, to employees and non-employee directors. Upon exercise, the
holder is entitled to receive, without any payment, cash, shares or a
combination thereof equivalent in value to (1) an amount equal to the excess of
the fair market value per share of common stock on the exercise date of the SAR
over (2) the fair market value per share of common stock on the award date or
any amount greater than the fair market value stated as the "base value" in the
award agreement, multiplied by the number of shares subject to the SAR. SAR
terms will be determined by the 2007 Plan Committee in its discretion, but a SAR
will not be exercisable more than 10 years from its grant date, and a SAR may
only be exercised when fair market value per share of common stock exceeds the
base value. A SAR may be exercised with respect to all or part of the shares of
common stock upon whatever terms and conditions the 2007 Plan Committee imposes
upon the SAR. The 2007 Plan Committee has sole discretion to approve or
disapprove a participant's election to receive cash to the extent required by
Rule 16b-3 under the Exchange Act, or the terms of the particular award
agreement.
Restricted Stock Awards. Restricted stock is stock that may not be
disposed of by a participant until the restrictions established by the 2007 Plan
Committee lapse. The restrictions may take the form of a period during which the
participant must remain employed or in service as a non-employee director, or
may require the achievement of one or more pre-established performance criteria.
Unless otherwise provided by the 2007 Plan Committee, holders of restricted
stock will have voting and dividend rights with respect to the restricted
shares. Shares of restricted stock will be forfeited in the event that specified
service or performance goals are not achieved within the required time period.
Restricted Stock Unit Awards. A restricted stock unit is an award that
is valued by reference to a share of common stock. Upon lapse of restrictions
with respect to a restricted stock unit, a participant is entitled to receive,
without any payment to the Company, an amount of cash or shares equal to the
aggregate fair market value of the shares subject to the restricted stock unit
on the date the restrictions lapse. The restrictions may take the form of a
period during which the participant must remain employed or in service as a
non-employee director, or may require the achievement of one or more
pre-established performance criteria. Holders of restricted stock units will
have no right to vote the shares represented by the units. In addition, unless
otherwise provided by the 2007 Plan Committee, holders of restricted stock units
will have no rights to dividends and other distributions paid in cash or
property other than shares of common stock, any dividends or other distributions
paid in shares of common stock will increase the number of restricted stock
units, and if an award provides for crediting dividends and other distributions
paid in cash or property other than shares of common stock, these amounts will
entitle the participant to an equivalent number of units represented by the
value of those dividends or other distributions. Restricted stock units will be
forfeited in the event that specified service or performance goals are not
achieved within the required time period. Payment for vested restricted stock
units may be made when the restrictions lapse, if provided for in the award
agreement, on a delayed basis either on an elective or non-elective basis.
Stock Awards. The 2007 Plan Committee may grant unrestricted stock
awards to employees and non-employee directors. The shares subject to these
awards would not be subject to any restrictions and would be immediately
transferable by the participant.
Termination of Employment or Service. Except as provided in the award
agreement, in the event that a participant terminates his employment or service
with us or our subsidiaries for any reason, then the unvested or restricted
portion of an award under the 2007 Plan will be forfeited.
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Change in Control. The 2007 Plan Committee may, at the time an award is
made or thereafter, take any one or more of the following actions in connection
with a change in control: (1) provide for the acceleration of any vesting
periods; (2) provide for the purchase or settlement of any such award for cash;
(3) make an adjustment to the award as the 2007 Plan Committee deems appropriate
to reflect the change in control; or (4) cause any award to be assumed by the
acquiring or surviving corporation.
Non-Transferability. Awards granted under the 2007 Plan generally may
not be assigned, transferred, pledged, or otherwise encumbered by a participant,
other than by will or the laws of descent and distribution.
Amendment and Termination of the Plan. The Board of Directors may
terminate, amend, or modify the 2007 Plan from time to time in any respect
without stockholder approval, unless the particular amendment or modification
requires stockholder approval under the Code, the rules and regulations under
Section 16 of the Exchange Act, the rules and regulations of Amex or other
securities exchange, if any, on which our shares are then listed, or pursuant to
any other applicable laws, rules, or regulations. It is anticipated that
stockholder approval of any amendments will normally be required if an amendment
would materially increase the benefits that can be provided, materially increase
the number of shares that may be issued or the compensation that may be
provided, or materially modify the requirements as to eligibility for
participation. No amendment or modification of the 2007 Plan, other than capital
adjustments due to the events noted above under the caption "Shares Available
for Grant," may adversely affect any awards previously granted under the 2007
Plan without the participant's written consent.
Federal Income Tax Consequences of Awards Granted under the 2007 Plan
The following is a summary of the principal federal income tax
consequences of awards that may be granted under the 2007 Plan. The summary is
not intended to be exhaustive; it does not purport to cover all of the special
rules relating thereto, including special rules relating to holders of options
subject to Section 16(b) of the Exchange Act, the exercise of stock options with
previously-acquired shares of our common stock, or the state, local or foreign
income or other tax consequences or considerations in connection with awards.
Participants are urged to consult their own tax advisors with respect to the
consequences of their participation in the 2007 Plan.
Stock Options and SARs. A participant will not recognize taxable income
for federal income tax purposes upon the grant of a non-qualified stock option,
an incentive stock option or a SAR. Upon the exercise of a non-qualified stock
option, or a SAR where the participant shall receive shares of common stock upon
exercise, the participant will recognize ordinary income in an amount equal to
the excess, if any, of the aggregate fair market value of the shares of common
stock acquired on the date of exercise over the aggregate exercise price of the
non-qualified stock option or the aggregate base price of the SAR, as the case
may be. The participant's basis in the shares of common stock acquired is equal
to the amount, if any, paid upon exercise, increased by the amount of ordinary
income required to be recognized, and the Company is generally entitled to a tax
deduction for such amount at that time. If a participant later sells shares of
common stock acquired pursuant to the exercise of a non-qualified stock option
or an SAR, he or she will recognize long-term or short-term capital gain or
loss, depending on the period for which the shares of common stock were held.
Long-term capital gain is generally subject to more favorable tax treatment than
ordinary income or short-term capital gain. In the event that cash or other
property is received upon the exercise of a SAR, the amount of such cash or the
fair market value of such property will be ordinary income to the participant
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and the Company will generally be allowed a tax deduction for such amount. The
participant's basis in such property will be equal to its fair market value.
Upon the exercise of an incentive stock option (provided the participant
exercises it during employment or within three months thereafter (or one year
thereafter if termination of employment is due to the participant's
disability)), a participant will not recognize ordinary income. If a participant
disposes of the shares acquired pursuant to the exercise of an incentive stock
option more than two years after the date of grant and more than one year after
the transfer of the shares to the participant, the optionee will recognize
long-term capital gain or loss and the Company will not be entitled to a tax
deduction. However, if a participant disposes of such shares prior to the end of
the requisite holding periods, all or a portion of the gain will be treated as
ordinary income and the Company will generally be entitled to deduct such
amount. In addition to the federal income tax consequences described above, a
participant may be subject to the alternative minimum tax upon the exercise of
the option, which is payable to the extent it exceeds the participant's regular
tax. For this purpose, upon the exercise of an incentive stock option, the
excess of the fair market value of the shares of common stock over the exercise
price therefor is an adjustment which increases alternative minimum taxable
income upon which the alternative minimum tax is calculated. The participant's
basis in such shares is increased by this excess for purposes of computing the
gain or loss on the disposition of the shares for alternative minimum tax
purposes only. If a participant is required to pay an alternative minimum tax,
the amount of such tax which is attributable to deferral preferences (including
the incentive stock option adjustment) is allowed as a credit against the
participant's regular tax liability in subsequent years. To the extent the
credit is not used, it is carried forward.
Restricted Stock. Generally, the grant of restricted stock will not
result in taxable income to the participant or a deduction for the Company in
the year of grant if the restricted stock is subject to a substantial risk of
forfeiture and is nontransferable within the meaning of section 83 of the Code.
In such case, the value of such restricted stock will be taxable to a
participant when the risk of forfeiture lapses or the restricted stock becomes
transferable. Alternatively, a participant may elect to treat as income the fair
market value of the restricted stock on the date of grant by making an election
under section 83(b) of the Code within 30 days after the date of such grant. The
Company will generally be entitled to a tax deduction equal to the amount of
ordinary income recognized by a participant in the year the income is
recognized. The grant of restricted stock that is not subject to a substantial
risk of forfeiture or is transferable will be taxable to a participant at the
time of grant.
Other Awards. Generally, when a participant receives payment with
respect to restricted stock units or stock awards, the amount of cash and the
fair market value of the shares of common stock, or other securities or property
received, net of any amount paid by the participant, will be ordinary income to
such participant and will generally be allowed as a tax deduction to the
Company.
Withholding Taxes. Whenever the grant of an award, the exercise of a
stock option, the lapse of restrictions or the disposition of shares of common
stock, or any other taxable event results in the recognition of ordinary income
as described above, the Company will be required to withhold applicable
employment taxes (including any amount required to be withheld under the Federal
Insurance Contributions Act). The 2007 Plan allows the Company to deduct and
withhold, or require a participant to remit to the Company, an amount sufficient
to satisfy taxes that are required by law to be withheld. At the request of a
participant and with the approval of the 2007 Plan Committee, the 2007 Plan
Committee may withhold shares of common stock otherwise payable to the
participant in satisfaction of the amount to be withheld. The value of the
withheld shares will be based on the fair market value of the share on the date
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the amount of the tax to be withheld is to be determined. The 2007 Plan
Committee has the power under the 2007 Plan to condition any award transaction
upon the payment or satisfaction of all applicable withholding taxes and
amounts.
Other Federal Income Tax Aspects. On October 22, 2004, the American
Jobs Creation Act of 2004 was enacted and included a new tax provision (Section
409A of the Code) affecting "nonqualified deferred compensation." Any such
compensation must, among other things, meet election timing and payment timing
requirements. Failure to meet these requirements causes the nonqualified
deferred compensation to be taxed when vested, to be subject to an additional 20
percent federal income tax, and to be subject to interest on federal
underpayments from the year the compensation vests. Under current IRS guidance,
certain awards under the 2007 Plan are excluded from nonqualified deferred
compensation to which Section 409A applies. These excluded awards are stock
options under which shares of common stock are issued, SARs under which shares
of common stock are issued, restricted stock, restricted stock units that are
paid at or shortly after vesting, and stock awards. Other awards under the 2007
Plan may be treated as nonqualified deferred compensation to which Section 409A
applies, and in such case it is generally our intent that such awards be
designed to comply with the election timing, payment timing and other
requirements of Section 409A.
New Plan Benefits
The 2007 Plan Committee has the power and discretion to administer the
2007 Plan, including, without limitation, to determine if and when to grant
awards, the employees and non-employee directors to whom awards, if any, will be
made, the nature and extent of any such awards, and all other terms and
conditions upon which awards may be made. Accordingly, benefits or amounts to be
granted or allocated to, or received by, participants in the 2007 Plan are not
yet determinable.
Required Vote
The 2007 Plan is subject to approval by a majority of the shares of
common stock present, in person or by proxy, and entitled to vote at the Annual
Meeting. The Board of Directors recommends a vote "FOR" approval of the 2007
Plan. Unless otherwise specified in the proxies, the shares represented by all
proxies received will be voted "FOR" approval of the 2007 Plan.
OTHER INFORMATION
Other Action at the Meeting
The Board of Directors has not received notice of and is not aware of
any other matters that are to be presented for action at the Annual Meeting. If,
however, any other matters properly come before the meeting or any adjournment
thereof, it is the intention of the persons named in the enclosed form of proxy
to vote such proxies in their discretion on such matters, including any matters
relating to or dealing with the conduct of the Annual Meeting.
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Proposals for 2008 Annual Meeting
Consistent with Securities and Exchange Commission regulations,
stockholder proposals intended to be included in the proxy statement and form of
proxy for the 2008 Annual Meeting of Stockholders must be received at the
principal executive offices of the Company, 197 West Spring Valley Avenue,
Maywood, New Jersey 07607, no later than July 1, 2008. Any such proposals, as
well as any questions relating thereto, should be directed to the Secretary of
the Company. As to any proposals intended to be presented by a stockholder
without inclusion in the Company's proxy statement and form of proxy for the
2008 Annual Meeting, the proxies named in the Company's form of proxy for that
meeting will be entitled to exercise discretionary authority on that proposal
unless the Company receives notice of the matter on or before September 14,
2008. However, even if such notice is timely received, such proxies may
nevertheless be entitled to exercise discretionary authority on that matter to
the extent permitted by Securities and Exchange Commission regulations.
General
The solicitation of proxies in the accompanying form will be made, at
the Company's expense, primarily by mail and through brokerage and banking
institutions. In addition, proxies may be solicited in person or by telephone,
facsimile or other electronic transmission, by officers, directors and regular
employees of the Company. The Company will reimburse brokerage firms, nominees,
fiduciaries and other custodians their reasonable expenses for forwarding the
proxy material to beneficial owners and obtaining their instructions.
Proxies submitted which contain abstentions or broker non-votes will be
deemed present at the Annual Meeting in determining the presence of a quorum.
Shares of common stock that are voted to abstain with respect to any matter are
considered shares entitled to vote, and cast, with respect to that matter.
Shares of common stock subject to broker non-votes with respect to any matter
will not be considered as shares entitled to vote with respect to that matter.
By Order of the Board of Directors
Jaclyn Hartstein
Secretary
October 29, 2007
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Exhibit A
JACLYN, INC.
2007 INCENTIVE STOCK PLAN
ARTICLE I
Establishment, Purpose, and Duration
1.1 Establishment of the Plan. Jaclyn, Inc., a Delaware
corporation (the "Company"), hereby establishes an incentive stock plan for the
Company and its Subsidiaries to be known as the "Jaclyn, Inc. 2007 Incentive
Stock Plan." The Plan permits the grant of Incentive Stock Options,
Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock,
Restricted Stock Units, and Stock Awards to Employees; and Non-Qualified Stock
Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units,
and Stock Awards to Non-Employee Directors.
The Plan was adopted by the Board of Directors of the Company on
September 26, 2007 subject to, and the Plan shall become effective upon,
approval of the Plan by the stockholders of the Company in accordance with
applicable laws (the "Effective Date"). Awards under the Plan may not be granted
prior to the Effective Date of the Plan.
1.2 Purpose of the Plan. The purpose of the Plan is to promote the
success of the Company and its Subsidiaries by providing incentives to Employees
and Non-Employee Directors that will promote the identification of their
personal interest with the long-term financial success of the Company and with
growth in stockholder value. The Plan is designed to provide flexibility to the
Company and its Subsidiaries in their ability to motivate, attract, and retain
the services of Employees and Non-Employee Directors upon whose judgment,
interest, and effort the successful conduct of its operation is largely
dependent.
1.3 Duration of the Plan. The Plan shall commence on the Effective
Date, as described in Section 1.1 herein, and shall remain in effect, subject to
the right of the Board of Directors to terminate the Plan at any time pursuant
to Article XIII herein, until September 25, 2017 (the "Term"), at which time it
shall terminate, except that Awards made prior to, and which are outstanding on,
that date shall remain valid in accordance with their terms.
ARTICLE II
Definitions
2.1 Definitions. Except as otherwise defined in the Plan, the
following terms shall have the meanings set forth below:
(a) "Agreement" means a written agreement implementing
the grant of each Award signed by an authorized officer or director of
the Company and by the Participant.
(b) "Award" or "Grant" means, individually or
collectively, a grant under the Plan of Incentive Stock Options,
Non-Qualified Stock Options, Stock Appreciation Rights, Restricted
Stock, Restricted Stock Units, or Stock Awards.
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(c) "Award Date" or "Grant Date" means the date on which
an Award is made by the Committee under the Plan.
(d) "Board" or "Board of Directors" means the Board of
Directors of the Company, unless such term is used with respect to a
Subsidiary, in which event it shall mean the Board of Directors of that
Subsidiary.
(e) "Change in Control" means the occurrence, on or after
the Effective Date, of any of the following:
(i) the closing of a corporate reorganization in
which the Company (or its successor) becomes a subsidiary of a
holding company, the majority of the common stock of which is
owned by persons who did not own the majority of the common
stock of the Company (or its successor) immediately prior to
the reorganization;
(ii) individuals who constitute the Board on the
Effective Date (the "Incumbent Board") cease for any reason to
constitute at least a majority thereof; provided that any
person becoming a director subsequent to the date hereof whose
nomination for election was approved by a vote of at least
three-quarters (3/4) of the directors comprising the Incumbent
Board shall be considered as though such person were a member
of the Incumbent Board for purposes of this paragraph;
(iii) the closing of the merger of the Company (or
its successor) with or into another person; or
(iv) the closing of the sale, conveyance, or
other transfer of substantially all of the assets of the
Company (or its successor) to another person.
For purposes hereof, the term "person" shall include any individual,
corporation, partnership, group, association, or other "person," as
such term is used in Section 14(d) of the Exchange Act, other than the
Company (or its successor), any entity in which the Company (or its
successor) owns a majority of the voting interest, or any employee
benefit plan(s) sponsored by the Company (or its successor).
(f) "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
(g) "Committee" means the committee of the Board
appointed to administer the Plan pursuant to Article III herein. As
long as the Company shall be subject to the periodic reporting
requirements under the Exchange Act, all of the members of the
Committee shall be "non-employee directors" as defined in Rule 16b-3,
as amended, under the Exchange Act, or any similar or successor rule,
and "outside directors" within the meaning of Section 162(m)(4)(C)(i)
of the Code, as amended.
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(h) "Company" means Jaclyn, Inc., or any successor
thereto as provided in Article XV herein.
(i) "Employee" means an officer or other employee of the
Company or its Subsidiaries (including any corporation, partnership,
limited liability company, or joint venture, which becomes a Subsidiary
after the adoption of the Plan by the Board).
(j) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(k) "Fair Market Value" of a Share means the closing
sales price per share of the Stock as reported by the American Stock
Exchange on the applicable date of determination; provided, that if, in
the opinion of the Committee, this method is inapplicable or
inappropriate for any reason, the fair market value as determined
pursuant to a reasonable method adopted by the Committee in good faith
for such purpose.
(l) "Incentive Stock Option" or "ISO" means an option to
purchase Stock, granted under Article VI herein, which is designated as
an incentive stock option and is intended to meet the requirements of
Section 422 of the Code.
(m) "Non-Employee Director" means an individual who is a
member of the Board of the Company or a Subsidiary and who is not an
employee of the Company or a Subsidiary (including any corporation,
partnership, limited liability company, or joint venture, which becomes
a Subsidiary after the adoption of the Plan by the Board).
(n) "Non-Qualified Stock Option" or "NQSO" means an
option to purchase Stock, granted under Article VI, which is not
intended to be an Incentive Stock Option.
(o) "Option" means an Incentive Stock Option or a
Non-Qualified Stock Option.
(p) "Participant" means an Employee or Non-Employee
Director who is granted or receives an Award under the Plan.
(q) "Performance Goal" means one or more performance
measures or goals set by the Committee in its discretion for each grant
of a performance-based compensation Award. The extent to which such
performance measures or goals are met will determine the amount or
value of the performance-based compensation Award that a Participant is
entitled to exercise, receive, or retain. Performance Goals may be
particular to a Participant, may relate to the performance of the
Subsidiary, division, strategic business unit, or line of business,
which employs him, or may be based on the performance of the Company
generally. Performance Goals may be based on, among other things in the
discretion of the Committee, Stock value or increases therein, earnings
per share or earnings per share growth, net earnings, earnings, or
earnings growth (before or after one or more of taxes, interest,
depreciation, and/or amortization), operating profit, operating cash
flow, operating or other expenses, operating efficiency, return on
equity, assets, capital, or investment, sales or revenues or growth
thereof, gross, operating, or other margins, efficiency ratio (as
generally recognized and used for bank financial reporting and
analysis), or implementation, management, or completion of critical
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projects or processes. Performance Goals may include a threshold level
of performance below which no payment or vesting may occur, levels of
performance at which specified payments or specified vesting will
occur, and a maximum level of performance above which no additional
payment or vesting will occur. Performance Goals may be absolute in
their terms or measured against or in relationship to a market index, a
group of other companies comparably, similarly, or otherwise situated,
or a combination thereof. Each of the Performance Goals shall be
determined, where applicable and except as provided above, in
accordance with generally accepted accounting principles.
The Committee, in its sole discretion but subject to any limitations
under Section 162(m) of the Code, if applicable, in the case of an
Award intended to qualify as "performance-based compensation" under
Section 162(m) of the Code, may adjust any evaluation of performance
under a Performance Goal to take into account any of the following
events that occurs during a performance period: (i) asset write-downs,
(ii) litigation or claim judgments or settlements, (iii) the effect of
changes in tax law, accounting principles or other such laws or
provisions affecting reported results, (iv) accruals for reorganization
and restructuring programs, and (v) any extraordinary non-recurring
items as described in Accounting Principles Board Opinion No. 30 (or in
any replacement thereof) and/or in management's discussion and analysis
of financial condition and results of operations appearing in the
Company's annual report to stockholders for the applicable year.
To the extent required by the Code, prior to the payment of any
compensation under an Award intended to qualify as "performance-based
compensation" under Section 162(m) of the Code, the Committee shall
certify the extent to which any Performance Goal and any other material
terms under such Award have been satisfied (other than in cases where
such relate solely to the increase in the value of Stock).
(r) "Period of Restriction" means the period during which
Restricted Stock or Restricted Stock Units are restricted, pursuant to
Article VIII or IX herein.
(s) "Plan" means the Jaclyn, Inc. 2007 Incentive Stock
Plan, as described and as hereafter from time to time amended.
(t) "Restricted Stock" means an Award of Stock granted to
a Participant pursuant to Article VIII herein.
(u) "Restricted Stock Unit" means an Award, designated as
a Restricted Stock Unit, which is a bookkeeping entry granted to a
Participant pursuant to Article IX herein and valued by reference to
the Fair Market Value of a Share, which is subject to restrictions and
forfeiture until the designated conditions for the lapse of the
restrictions are satisfied. A Restricted Stock Unit is sometimes
referred to as a "Restricted Unit." Restricted Stock Units represent an
unfunded and unsecured obligation of the Company, except as otherwise
provided for by the Committee.
(v) "Stock" or "Shares" means the common stock of the
Company.
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(w) "Stock Appreciation Right" or "SAR" means an Award,
designated as a stock appreciation right, granted to a Participant
pursuant to Article VII herein.
(x) "Stock Award" means an award of Stock granted to a
Participant pursuant to Article X herein.
(y) "Subsidiary" means any subsidiary corporation of the
Company within the meaning of Section 424(f) of the Code ("Section
424(f) Corporation") and any partnership, limited liability company or
joint venture in which either the Company or a Section 424(f)
Corporation is at least a fifty percent (50%) equity participant.
ARTICLE III
Administration
3.1 The Committee. The Plan shall be administered by the
Committee, which shall have all powers necessary or desirable for such
administration. The express grant in the Plan of any specific power to the
Committee shall not be construed as limiting any power or authority of the
Committee. In addition to any other powers and subject to the provisions of the
Plan, the Committee shall have the following specific powers: (i) to determine
the terms and conditions upon which the Awards may be made and exercised, (ii)
to determine all terms and provisions of each Agreement, which need not be
identical, (iii) to construe and interpret the Agreements and the Plan, (iv) to
establish, amend, or waive rules or regulations for the Plan's administration,
(v) to accelerate the exercisability of any Award or the termination of any
Period of Restriction or other restrictions imposed under the Plan, and (vi) to
make all other determinations and take all other actions necessary or advisable
for the administration of the Plan.
The Chairman of the Committee, the Chief Executive Officer of the
Company, and such other directors and officers of the Company as shall be
designated by the Committee are hereby authorized to execute Agreements on
behalf of the Company and to cause them to be delivered to the recipients of
Awards.
For purposes of determining the applicability of Section 422 of the
Code (relating to Incentive Stock Options), or in the event that the terms of
any Award provide that it may be exercised only during employment or service or
within a specified period of time after termination of employment or service,
the Committee may decide to what extent leaves of absence for governmental or
military service, illness, temporary disability, or other reasons shall not be
deemed interruptions of employment or service or continuous employment or
service.
Subject to limitations under applicable law, the Committee is
authorized in its discretion to issue Awards and/or accept notices, elections,
consents, and/or other forms or communications by Participants by electronic or
similar means, including, without limitation, transmissions through e-mail,
voice mail, recorded messages on electronic telephone systems, and other
permissible methods, on such basis and for such purposes as it determines from
time to time.
A majority of the entire Committee shall constitute a quorum and the
action of a majority of the members present at any meeting at which a quorum is
present (in person or as otherwise permitted by applicable law), or acts
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approved in writing by a majority of the Committee without a meeting, shall be
deemed the action of the Committee.
3.2 Selection of Participants. The Committee shall have the
authority to grant Awards under the Plan, from time to time, to such Employees
and/or Non-Employee Directors as may be selected by it to be Participants. Each
Award shall be evidenced by an Agreement.
3.3 Decisions Binding. All determinations and decisions made by
the Board or the Committee pursuant to the provisions of the Plan shall be
final, conclusive, and binding.
3.4 Requirements of Rule 16b-3 and Section 162(m) of the Code.
Notwithstanding any other provision of the Plan, the Board or the Committee may
impose such conditions on any Award, and amend the Plan in any such respects, as
may be required to satisfy the requirements of Rule 16b-3, as amended (or any
successor or similar rule), under the Exchange Act.
Any provision of the Plan to the contrary notwithstanding, but except
to the extent that the Committee determines otherwise: (i) transactions by and
with respect to officers and directors of the Company who are subject to Section
16(b) of the Exchange Act shall comply with any applicable conditions of Rule
16b-3, (ii) transactions with respect to persons whose remuneration is subject
to the provisions of Section 162(m) of the Code shall conform to the
requirements of Section 162(m)(4)(C) of the Code, and (iii) every provision of
the Plan shall be administered, interpreted, and construed to carry out the
foregoing provisions of this sentence.
Notwithstanding any provision of the Plan to the contrary, as long as
Section 162 of the Code shall be applicable, the Plan is intended to give the
Committee the authority to grant Awards that qualify as performance-based
compensation under Section 162(m)(4)(C) of the Code as well as Awards that do
not so qualify. Every provision of the Plan shall be administered, interpreted,
and construed to carry out such intention, and any provision that cannot be so
administered, interpreted, and construed shall to that extent be disregarded,
and any provision of the Plan that would prevent an Award that the Committee
intends to qualify as performance-based compensation under Section 162(m)(4)(C)
of the Code from so qualifying shall be administered, interpreted, and construed
to carry out such intention, and any provision that cannot be so administered,
interpreted, and construed shall to that extent be disregarded.
ARTICLE IV
Stock Subject to the Plan
4.1 Number of Shares. Subject to adjustment as provided in Section
4.3 herein, the maximum aggregate number of Shares that may be issued pursuant
to Awards made under the Plan shall not exceed 185,000. Except as provided in
Section 4.2 herein, only Shares actually issued in connection with the exercise
of, or as other payment for, Awards under the Plan shall reduce the number of
Shares available for future Awards under the Plan.
4.2 Lapsed Awards or Forfeited Shares; Shares Used as Payment of
Exercise Price or for Taxes.
4.2(a) If any Award granted under the Plan terminates, expires, or
lapses for any reason other than by virtue of exercise of the Award, or if
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Shares issued pursuant to Awards are forfeited, any Stock subject to such Award
again shall be available for the grant of an Award under the Plan.
4.2(b) In the event a Participant pays the Option Price for Shares
pursuant to the exercise of an Option with previously acquired Shares, the
number of Shares available for future Awards under the Plan shall be reduced
only by the net number of new Shares issued upon the exercise of the Option. In
addition, in determining the number of shares of Stock available for Awards, if
Stock has been delivered or exchanged by, or withheld from, a Participant as
full or partial payment to the Company for payment of withholding taxes, or if
the number of shares of Stock otherwise deliverable by the Company has been
reduced for payment of withholding taxes, the number of shares of Stock
exchanged by or withheld from a Participant as payment in connection with the
withholding tax or so reduced by the Company shall again be available for the
grant of an Award under the Plan.
4.3 Capital Adjustments. The number and class of Shares subject to
each outstanding Award, the Option Price, and the annual limits on and the
aggregate number and class of Shares for which Awards thereafter may be made
shall be subject to such adjustment, if any, as the Committee in its sole
discretion deems appropriate to reflect events such as stock dividends, stock
splits, recapitalizations, mergers, consolidations, or reorganizations of or by
the Company.
4.4 Maximum Number of Shares Subject to Grant. No Participant may
be granted an Award in any calendar year for more than 150,000 Shares.
ARTICLE V
Eligibility
Persons eligible to participate in the Plan and receive Awards are all
Employees and all Non-Employee Directors who, in the opinion of the Committee,
merit becoming Participants.
ARTICLE VI
Stock Options
6.1 Grant of Options. Subject to the terms and provisions of the
Plan, Options may be granted to Employees and Non-Employee Directors at any time
and from time to time as shall be determined by the Committee. The Committee
shall have complete discretion in determining the number of Shares subject to
Options granted to each Participant; provided, however, that the aggregate Fair
Market Value (determined at the time the Award is made) of Shares with respect
to which any Participant may first exercise ISOs granted under the Plan during
any calendar year may not exceed $100,000 or such amount as shall be specified
in Section 422 of the Code and rules and regulations thereunder, (iii) no ISO
may be granted on or following the tenth anniversary of the Effective Date, and
(iv) no ISO may be granted to a Non-Employee Director.
6.2 Option Agreement. Each Option grant shall be evidenced by an
Agreement that shall specify the type of Option granted, the Option Price (as
defined in Section 6.3 herein), the duration of the Option, the number of Shares
to which the Option pertains, and such other provisions as the Committee shall
determine. The Agreement shall specify whether the Option is intended to be an
Incentive Stock Option within the meaning of Section 422 of the Code, or a
Non-Qualified Stock Option not intended to be an Incentive Stock Option within
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the meaning of Section 422 of the Code, provided, however, that if an Option is
intended to be an Incentive Stock Option but fails to be such for any reason, it
shall continue in full force and effect as a Non-Qualified Stock Option.
6.3 Option Price. The exercise price per Share of Stock covered by
an Option ("Option Price") shall be determined by the Committee subject to the
following limitations. The Option Price shall not be less than 100% of the Fair
Market Value of such Stock on the Grant Date. In addition, in order for an
Option to be an ISO where an Option is granted to an Employee who, at the time
of grant, owns (within the meaning of Section 424(d) of the Code) stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company, the Option must have an Option Price which is at least
equal to 110% of the Fair Market Value of the Stock on the Grant Date.
6.4 Duration of Options. Each Option shall expire at such time as
the Committee shall determine at the time of grant; provided, however, that no
ISO shall be exercisable after the expiration of ten years from its Award Date.
In addition, in order for an Option to be an ISO where an Option is granted to
an Employee who, at the time of grant, owns (within the meaning of Section
424(d) of the Code) stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company, the Option must not be exercisable
after the expiration of five years from its Award Date.
6.5 Exercisability. Options granted under the Plan shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall determine, which need not be the same for all Participants.
6.6 Method of Exercise. Options shall be exercised by the delivery
of a written notice to the Company in the form prescribed by the Committee
setting forth the number of Shares with respect to which the Option is to be
exercised, accompanied by full payment for the Shares. The Option Price shall be
payable to the Company in full either in cash, by delivery of Shares of Stock
valued at Fair Market Value at the time of exercise, or by a combination of the
foregoing.
As soon as practicable, after receipt of written notice and payment of
the Option Price and completion of payment of (or an arrangement satisfactory to
the Company for the Participant to pay) any tax withholding required in
connection with the Option exercise, the Company shall cause the appropriate
number of Shares to be issued in the Participant's name.
6.7 Restrictions on Stock Transferability. The Committee shall
impose such restrictions on any Shares acquired pursuant to the exercise of an
Option under the Plan as it may deem advisable, including, without limitation,
restrictions under applicable Federal securities law, under any stock exchange
upon which such Shares are then listed, and under any blue sky or state
securities laws applicable to such Shares. In the event the Committee so
provides in an Agreement pertaining to an Option, Stock delivered on exercise of
the Option may be designated as Restricted Stock or Stock subject to a buyback
right by the Company in the amount of, or based on, the Option Price therefor or
otherwise in the event the Participant does not complete a specified service
period after exercise.
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ARTICLE VII
Stock Appreciation Rights
7.1 Grant of Stock Appreciation Rights. Subject to the terms and
conditions of the Plan, Stock Appreciation Rights may be granted to Employees
and Non-Employee Directors, at the discretion of the Committee.
7.2 SAR Agreement. Each SAR grant shall be evidenced by an
Agreement that shall specify the Base Value (as defined in Section 7.5), the
duration of the SAR, the number of Shares to which the SAR pertains, and such
other provisions as the Committee shall determine to be consistent with the
Plan. SARs granted under the Plan shall be exercisable at such times and be
subject to such restrictions and conditions as the Committee shall determine,
which need not be the same for all Participants.
7.3 Exercise of SARs. SARs may be exercised with respect to all or
part of the Shares upon whatever terms and conditions the Committee, in its sole
discretion, imposes upon such SARs. A SAR shall be exercised by delivery to the
Committee of a notice of exercise in the form prescribed by the Committee.
7.4 Other Conditions Applicable to SARs. In no event shall the
term of any SAR granted under the Plan exceed ten years from the Grant Date. A
SAR may be exercised only when the Fair Market Value of a Share exceeds the Base
Value (as defined in Section 7.5).
7.5 Payment Upon Exercise of SARs. Subject to the provisions of
the Agreement, upon the exercise of a SAR, the Participant is entitled to
receive, without any payment to the Company (other than required tax withholding
amounts), an amount (the "SAR Value") equal to the product of multiplying (i)
the number of Shares with respect to which the SAR is exercised by (ii) an
amount equal to the excess of (A) the Fair Market Value per Share on the date of
exercise of the SAR over (B) the "Base Value" of the SAR designated in the
Agreement (which "Base Value" shall be the Fair Market Value per Share on the
Award Date or any amount greater than such Fair Market Value stated as the Base
Value in the Agreement).
Payment of the SAR Value to the Participant shall be made (i) in
Shares, valued at the Fair Market Value on the date of exercise in the case of
an immediate payment after exercise, (ii) in cash, or (iii) in a combination
thereof, all as determined by the Committee, either at the time of the Award or,
unless otherwise provided in the applicable Agreement, thereafter, and as
provided in the Agreement.
To the extent required to satisfy the conditions of Rule 16b-3(e) under
the Exchange Act, or any successor or similar rule, or as otherwise provided in
the Agreement, the Committee shall have the sole discretion to consent to or
disapprove the election of any Participant to receive cash in full or partial
settlement of a SAR. In cases where an election of settlement in cash must be
consented to by the Committee, the Committee may consent to, or disapprove, such
election at any time after such election, or within such period for taking
action as is specified in the election, and failure to give consent shall be
disapproval. Consent may be given in whole or as to a portion of the SAR
surrendered by the Participant. If the election to receive cash is disapproved
in whole or in part, the SAR shall be deemed to have been exercised for Shares,
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or, if so specified in the notice of exercise and election, not to have been
exercised to the extent the election to receive cash is disapproved.
7.6 Restrictions on Stock Transferability. The Committee shall
impose such restrictions on any Shares acquired pursuant to the exercise of a
SAR under the Plan as it may deem advisable, including, without limitation,
restrictions under applicable Federal securities law, under any stock exchange
upon which such Shares are then listed, and under any blue sky or state
securities laws applicable to such Shares. In the event the Committee so
provides in an Agreement pertaining to a SAR, Stock delivered on exercise of the
SAR may be designated as Restricted Stock in the event the Participant does not
complete a specified service period after exercise.
ARTICLE VIII
Restricted Stock
8.1 Grant of Restricted Stock. Subject to the terms and conditions
of the Plan, the Committee, at any time and from time to time, may grant Shares
of Restricted Stock under the Plan to such Employees and Non-Employee Directors
and in such amounts as it shall determine. Participants receiving Restricted
Stock Awards are not required to pay the Company therefor (except for applicable
tax withholding) other than the rendering of services. As determined by the
Committee, Shares of Restricted Stock may be issued in book entry or electronic
form or in certificated form. Unless otherwise determined by the Committee,
custody of Shares of Restricted Stock in certificated form shall be retained by
the Company until the termination of the Period of Restriction pertaining
thereto.
8.2 Restricted Stock Agreement. Each Restricted Stock Award shall
be evidenced by an Agreement that shall specify the Period of Restriction, the
number of Shares of Restricted Stock granted, and the applicable restrictions
(whether service-based restrictions, with or without performance acceleration,
and/or performance-based restrictions) and such other provisions as the
Committee shall determine. If an Award of Restricted Stock is intended to be a
performance-based compensation Award, the terms and conditions of such Award,
including the Performance Goal(s) and Period of Restriction and, if different,
performance period, shall be set forth in an Agreement or in a subplan of the
Plan, which is incorporated by reference into an Agreement, and the requirements
to satisfy or achieve the Performance Goal(s) as so provided therein shall be
considered to be restrictions under the Plan.
8.3 Other Restrictions. The Committee may impose such other
restrictions under applicable law, including, without limitation, under Federal
or state securities laws, as it may deem advisable, and may legend the
certificates representing Restricted Stock to give appropriate notice of such
restrictions.
8.4 Certificate Legend. In addition to any legends placed on
certificates pursuant to Section 8.3 herein, each certificate representing
Shares of Restricted Stock granted pursuant to the Plan shall bear the following
legend:
"The sale or other transfer of the shares of stock represented by this
certificate, whether voluntary, involuntary, or by operation of law, is
subject to certain restrictions on transfer set forth in the Jaclyn,
Inc. 2007 Incentive Stock Plan, in the rules and administrative
procedures adopted pursuant to such Plan, and in an associated
Restricted Stock Agreement. A copy of the Plan, such rules and
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procedures, and the applicable Restricted Stock Agreement may be
obtained from the Secretary of Jaclyn, Inc."
8.5 Removal of Restrictions. Except as otherwise provided in this
Article, Shares of Restricted Stock covered by each Restricted Stock Award made
under the Plan shall become freely transferable by the Participant after the
last day of the Period of Restriction and, where applicable, after a
determination of the satisfaction or achievement on any applicable Performance
Goal(s) by the Committee. Once the Shares are released from the restrictions,
the legend required by Section 8.4 herein shall be removed, and the Company
shall cause the appropriate number of Shares to be issued in the Participant's
name.
8.6 Voting Rights. Unless otherwise provided in the Agreement,
during the Period of Restriction, Participants holding Shares of Restricted
Stock granted hereunder may exercise voting rights with respect to those Shares.
8.7 Dividends and Other Distributions. Unless otherwise provided
in the Agreement (which may or may not provide for the accumulation and payment
of dividends and other distributions made in cash or property other than Shares
until the Shares of Restricted Stock to which the dividends and other
distributions relates vest), during the Period of Restriction, Participants
entitled to or holding Shares of Restricted Stock granted hereunder shall be
entitled to receive all dividends and other distributions made in cash or
property other than Shares with respect to those Shares of Restricted Stock. If
any dividends or distributions are paid in Shares, such Shares shall be subject
to the same restrictions on transferability and the same rules for vesting,
forfeiture, and custody as the Shares of Restricted Stock with respect to which
they were distributed.
8.8 Failure to Satisfy Performance Goal(s). In the event that the
specified Performance Goal(s) are not satisfied within the time period
established by the Committee, the Shares of Restricted Stock which were awarded
subject to the satisfaction of such Performance Goal(s) shall be automatically
forfeited and returned to the Company.
ARTICLE IX
Restricted Stock Units
9.1 Grant of Restricted Stock Units. Subject to the terms and
conditions of the Plan, the Committee, at any time and from time to time, may
grant Restricted Stock Units under the Plan (with one Restricted Stock Unit
representing one Share) to such Employees and Non-Employee Directors and in such
amounts as it shall determine. Participants receiving Restricted Stock Unit
Awards are not required to pay the Company therefor (except for applicable tax
withholding) other than the rendering of services.
9.2 Restricted Stock Unit Agreement. Each Restricted Stock Unit
Award shall be evidenced by an Agreement that shall specify the Period of
Restriction, the number of Restricted Stock Units granted, and the applicable
restrictions (whether service-based restrictions, with or without performance
acceleration, and/or performance-based restrictions) and such other provisions
as the Committee shall determine. If a Restricted Stock Unit Award is intended
to be a performance-based compensation Award, the terms and conditions of such
Award, including the Performance Goal(s) and Period of Restriction and, if
different, performance period, shall be set forth in an Agreement or in a
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subplan of the Plan, which is incorporated by reference into an Agreement, and
the requirements to satisfy or achieve the Performance Goal(s) as so provided
therein shall be considered to be restrictions under the Plan.
9.3 Dividends and Other Distributions. Unless otherwise provided
in the Agreement (which may or may not provide for the current payment, or for
the accumulation subject to the same restrictions, vesting, forfeiture, and
payment as the Restricted Stock Units to which they are attributable, of
dividends and other distributions made in cash or property other than Shares),
during the Period of Restriction, Participants holding Restricted Stock Units
shall have no rights to dividends and other distributions made in cash or
property other than Shares which would have been paid with respect to the Shares
represented by those Restricted Stock Units if such Shares were outstanding.
Unless otherwise provided in the Agreement, if any deemed dividends or other
distributions would be paid in Shares, such Shares shall be considered to
increase the Participant's Restricted Stock Units with respect to which they
were declared based on one Share equaling one Restricted Stock Unit. In
addition, unless otherwise provided in the Agreement, during the Period of
Restriction, any such deemed dividends and other distributions for which rights
are provided but which are not paid currently shall be deemed converted to
additional Restricted Stock Units based on the Fair Market Value of a Share on
the date of payment or distribution of the deemed dividend or distribution.
9.4 Payment after Lapse of Restrictions. Subject to the provisions
of the Agreement, upon the lapse of restrictions with respect to a Restricted
Stock Unit, the Participant is entitled to receive, without any payment to the
Company (other than required tax withholding amounts), an amount equal to the
product of multiplying (i) the number of Shares with respect to which the
restrictions lapse by (ii) the Fair Market Value per Share on the date the
restrictions lapse (such amount, the "RSU Value").
The Agreement may provide for payment of the RSU Value at the time of
vesting or, on an elective or non-elective basis, for payment of the RSU Value
at a later date, adjusted (if so provided in the Agreement) from the date of
exercise based on an interest, dividend equivalent, earnings, or other basis
(including deemed investment of the RSU Value in Shares) set out in the
Agreement (the "adjusted RSU Value"). The Committee is expressly authorized to
grant Restricted Stock Units which are deferred compensation covered by Section
409A of the Code, as well as Restricted Stock Units which are not deferred
compensation covered by Section 409A of the Code.
Payment of the RSU Value or adjusted RSU Value to the Participant shall
be made in cash or Shares as provided in the Agreement, valued at the Fair
Market Value on the date or dates the restrictions on the Award lapse in the
case of an immediate payment after vesting, or at the Fair Market Value on the
date of settlement in the event of an elective or non-elective delayed payment.
9.5 Restrictions on Stock Transferability. The Committee shall
impose such restrictions on any Shares issued in connection with a Restricted
Stock Unit under the Plan as it may deem advisable, including, without
limitation, restrictions under applicable Federal securities law, under any
stock exchange upon which such Shares are then listed, and under any blue sky or
state securities laws applicable to such Shares. In the event the Committee so
provides in an Agreement pertaining to a Restricted Stock Unit, Stock issued in
connection with a Restricted Stock Unit may be designated as Restricted Stock or
Stock subject to a buyback right by the Company in the amount of, or based on,
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the Fair Market Value thereof or otherwise in the event the Participant does not
complete a specified service period after issuance.
9.6 Failure to Satisfy Performance Goal(s). In the event that the
specified Performance Goal(s) are not satisfied within the time period
established by the Committee, the Restricted Stock Units which were awarded
subject to the satisfaction of such Performance Goal(s) shall be automatically
forfeited and returned to the Company.
ARTICLE X
Stock Awards
Subject to the terms and provisions of the Plan, the Committee, at any
time and from time to time, may grant unrestricted Stock Awards under the Plan
to one or more Employees and Non-Employee Directors in such amount or amounts as
it shall determine. Participants receiving Stock Awards are not required to pay
the Company therefor (except for applicable tax withholding). Payment of a Stock
Award shall be effected as soon as practicable after the Award Date.
ARTICLE XI
Change in Control
In the event of a Change in Control of the Company, the Committee, as
constituted before such Change in Control, in its sole discretion may, as to any
outstanding Award, either at the time the Award is made or any time thereafter,
take any one or more of the following actions: (i) provide for the acceleration
of any time periods relating to the exercise or realization of any such Award so
that such Award may be exercised or realized in full on or before a date
initially fixed by the Committee, (ii) provide for the purchase or settlement of
any such Award by the Company, with or without a Participant's request, for an
amount of cash equal to the amount which could have been obtained upon the
exercise of such Award or realization of such Participant's rights had such
Award been currently exercisable or payable, (iii) make such adjustment to any
such Award then outstanding as the Committee deems appropriate to reflect such
Change in Control, or (iv) cause any such Award then outstanding to be assumed,
or new rights substituted therefor, by the acquiring or surviving corporation in
such Change in Control.
ARTICLE XII
Modification, Extension, and Renewals of Awards
Subject to the terms and conditions and within the limitations of the
Plan, the Committee may modify, extend, or renew outstanding Awards and may
modify the terms of an outstanding Agreement, provided that the exercise price
of any Award may not be lowered other than pursuant to Section 4.3 herein. In
addition, the Committee may accept the surrender of outstanding Awards granted
under the Plan or outstanding awards granted under any other equity compensation
plan of the Company and authorize the granting of new Awards pursuant to the
Plan in substitution therefor so long as the new or substituted awards do not
specify a lower exercise price than the surrendered Awards or awards and are not
of a different type (with Options and SARs being one type and all other Awards
being a different type), and otherwise, the new Awards may specify a longer term
than the surrendered Awards or awards, may provide for more rapid vesting and
exercisability than the surrendered Awards or awards, and may contain any other
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provisions that are authorized by the Plan. Notwithstanding the foregoing,
however, no modification of an Award shall, without the consent of the
Participant, adversely affect the rights or obligations of the Participant.
ARTICLE XIII
Amendment, Modification, and Termination of the Plan
13.1 Amendment, Modification and Termination. At any time and from
time to time, the Board may terminate, amend, or modify the Plan. Such amendment
or modification may be without stockholder approval except to the extent that
such approval is required by the Code, pursuant to the rules under Section 16 of
the Exchange Act, by any national securities exchange or system on which the
Stock is then listed or reported, by any regulatory body having jurisdiction
with respect thereto, or under any other applicable laws, rules, or regulations.
13.2 Awards Previously Granted. No termination, amendment, or
modification of the Plan, other than pursuant to Section 4.3 or 16.10 herein,
shall in any manner adversely affect any Award theretofore granted under the
Plan, without the written consent of the Participant.
ARTICLE XIV
Withholding
14.1 Tax Withholding. The Company shall have the power and the
right to deduct or withhold, or require a Participant to remit to the Company,
an amount sufficient to satisfy Federal, State, and local taxes (including the
Participant's FICA obligation, if any) required by law to be withheld with
respect to any grant, exercise, or payment made under or as a result of the
Plan.
14.2 Stock Withholding. With respect to withholding required upon
the exercise of Non-Qualified Stock Options, or upon the lapse of restrictions
on Restricted Stock, or upon the occurrence of any other taxable event with
respect to any Award, Participants may elect, subject to the approval of the
Committee, or the Committee may require Participants, to satisfy the withholding
requirement, in whole or in part, by having the Company withhold Shares of Stock
having a Fair Market Value equal to the amount required to be withheld. The
value of the Shares to be withheld shall be based on the Fair Market Value of
the Shares on the date that the amount of tax to be withheld is to be
determined. All elections by Participants shall be irrevocable and be made in
writing and in such manner as determined by the Committee in advance of the day
that the transaction becomes taxable.
ARTICLE XV
Successors
All obligations of the Company under the Plan, with respect to Awards
granted hereunder, shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.
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ARTICLE XVI
General
16.1 Requirements of Law. The granting of Awards and the issuance
of Shares of Stock under the Plan shall be subject to all applicable laws,
rules, and regulations, and to such approvals by any governmental agencies or
self-regulatory organizations (i.e., exchanges) as may be required.
16.2 Effect of Plan. The establishment of the Plan shall not confer
upon any Employee or Non-Employee Director any legal or equitable right against
the Company, a Subsidiary, or the Committee, except as expressly provided in the
Plan. The Plan does not constitute an inducement or consideration for the
employment or service of any Employee or Non-Employee Director, nor is it a
contract between the Company or any of its Subsidiaries and any Employee or
Non-Employee Director. Participation in the Plan shall not give any Employee or
Non-Employee Director any right to be retained in the employment or service of
the Company or any of its Subsidiaries. Except as may be otherwise expressly
provided in the Plan or in an Agreement, no Employee or Non-Employee Director
who receives an Award shall have rights as a stockholder of the Company prior to
the date Shares are issued to the Participant pursuant to the Plan.
16.3 Creditors. The interests of any Participant under the Plan or
any Agreement are not subject to the claims of creditors and may not, in any
way, be assigned, alienated, or encumbered.
16.4 Governing Law. The Plan, and all Agreements hereunder, shall
be governed, construed, and administered in accordance with the laws of the
State of Delaware, and the intention of the Company is that ISOs granted under
the Plan qualify as such under Section 422 of the Code.
16.5 Severability. In the event any provision of the Plan shall be
held illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.
16.6 Unfunded Status of Plan. The Plan is intended to constitute an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments as to which a Participant has a fixed and vested interest but which are
not yet made to a Participant by the Company, nothing contained herein shall
give any such Participant any rights that are greater than those of a general
unsecured creditor of the Company.
16.7 Transferability. Unless the Agreement evidencing an Award (or
an amendment thereto authorized by the Committee) expressly states that it is
transferable as provided in this section, no Award granted under the Plan, nor
any interest in such Award, may be sold, assigned, conveyed, gifted, pledged,
hypothecated, or otherwise transferred in any manner, other than by will or the
laws of descent and distribution. The Committee may in its sole discretion grant
an Award (other than an ISO) or amend an outstanding Award (other than an ISO)
to provide that the Award is transferable or assignable to a member or members
of the Participant's "immediate family," as such term is defined under Exchange
Act Rule 16a-l(e), or to a trust for the benefit solely of a member or members
of the Participant's immediate family, or to a partnership or other entity whose
only owners are members of the Participant's family; provided that, following
any such transfer or assignment, the Award will remain subject to substantially
the same terms applicable to the Award while held by the Participant, as
modified as the Committee in its sole discretion shall determine appropriate,
and the Participant shall execute an agreement agreeing to be bound by such
terms.
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16.8 Termination of Employment or Service. Unless otherwise
provided in the Agreement pertaining to an Award, in the event that a
Participant terminates his employment or service with the Company and its
Subsidiaries for any reason, then the unvested portion of such Award shall
automatically be forfeited to the Company. Unless otherwise provided in the
Agreement pertaining to an Award, in determining cessation of employment or
service, transfers between the Company and/or any Subsidiary shall be
disregarded, and changes in status between that of an Employee and a
Non-Employee Director shall be disregarded. The Committee may provide in an
Agreement made under the Plan for vesting of Awards in connection with the
termination of a Participant's employment or service on such basis as it deems
appropriate, including, without limitation, any provisions for vesting at death,
disability, retirement, or in connection with a Change in Control, with or
without the further consent of the Committee. The Agreements evidencing Awards
may contain such provisions as the Committee may approve with reference to the
effect of approved leaves of absence.
16.9 Registration and Other Laws And Regulations. The Plan, the
grant and exercise of Awards hereunder, and the obligation of the Company to
sell, issue, or deliver Shares under such Awards, shall be subject to all
applicable federal, state, and foreign laws, rules, and regulations and to such
approvals by any governmental or regulatory agency as may be required. The
Company shall not be required to register in a Participant's name or deliver any
Shares prior to the completion of any registration or qualification of such
Shares under any federal, state, or foreign law or any ruling or regulation of
any government body which the Committee shall, in its sole discretion, determine
to be necessary or advisable.
16.10 Nonqualified Deferred Compensation Plan Omnibus Provision. It
is intended that any compensation, benefits, or other remuneration, which is
provided pursuant to or in connection with the Plan, which is considered to be
nonqualified deferred compensation subject to Section 409A of the Code, shall be
provided and paid in a manner, and at such time and in such form, as complies
with the applicable requirements of Section 409A of the Code to avoid the
unfavorable tax consequences provided therein for non-compliance. The Committee
is authorized to amend any Agreement and to amend or declare void any election
by a Participant as may be determined by it to be necessary or appropriate to
evidence or further evidence required compliance with Section 409A of the Code.
ARTICLE XVII
Substitution of Awards under Other Plans or Agreements
The Committee is hereby authorized to grant Awards on such basis as it
deems appropriate, and to effect the issuance of Shares of Stock under this Plan
in substitution for options, stock appreciation rights, or other forms of equity
compensation awarded and outstanding under any equity compensation plan of, or
agreement entered into with, a business entity which is acquired by the Company
or otherwise becomes a Subsidiary on such terms and conditions as it deems
appropriate. The Committee is expressly authorized to provide that the exercise
price of an assumed option or stock appreciation right may be higher or lower
than the Fair Market Value of the Stock to which a substitute Option or SAR
relates in order to approximate the inherent economic value of the assumed
option or stock appreciation right.
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Front of Card
JACLYN, INC. Proxy
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder hereby appoints JACLYN HARTSTEIN and LLOYD
FRANK, and any one of them, the proxies of the undersigned, with power of
substitution, hereby revoking any proxy heretofore given, to vote all shares
which the undersigned is entitled to vote at the 2007 Annual Meeting of
Stockholders of JACLYN, INC. (the "Company") to be held at the Company's
offices, 197 West Spring Valley Avenue, Maywood, New Jersey 07607 on November
28, 2007 at 9:00 a.m., and at any adjournments and postponements thereof, with
all powers the undersigned would possess if personally present upon the matters
set forth on the reverse side hereof.
Date_____________________________________
Signature________________________________
Signature________________________________
Note: Please date and sign exactly as your
name appears hereon. If acting as an
executor, administrator, trustee, guardian,
etc., you should so indicate. If the signer
is a corporation, please sign the full
corporate name by a duly authorized officer.
If shares are held jointly, each stockholder
should sign.
------------------------------------------------------------------------------------------------------------------
Back of Card
------------
The Board of Directors recommends a The Board of Directors recommends a
vote FOR item 1. vote FOR items 2 and 3.
---------------- -----------------------
Withhold
1. Election of Directors For All From All 2. Ratify For Against Abstain
[ ] [ ] Independent [ ] [ ] [ ]
Auditors
Nominees:
---------
Abe Ginsburg
Allan Ginsburg (To withhold authority to vote 3. Approve Stock For Against Abstain
Robert Chestnov for any individual nominee, strike Incentive Plan [ ] [ ] [ ]
Howard Ginsburg a line through the nominee's name.)
Martin Brody
Richard Chestnov
Albert Safer
Norman Axelrod
Harold Schechter
The proxies are authorized to vote upon such other matters as may properly come before the meeting. Each properly
executed proxy will be voted as directed by the stockholder(s). If no direction is given, such shares will be voted
FOR the election of all listed nominees for director, FOR items 2 and 3, and in the discretion of the proxies on
any other matters that may properly come before the meeting.
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