AMERICAN BILTRITE
INC.
57 River Street
Wellesley Hills, Massachusetts 02481
__________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
MAY 6, 2008
__________________
To the Stockholders of American Biltrite
Inc.:
Notice is hereby given that the Annual
Meeting of the Stockholders of American Biltrite Inc., (the “Company”) will be
held at the Bank of America, America Room, Second Floor, 100 Federal Street, Boston, Massachusetts, on Tuesday May 6, 2008 at 8:30 A.M. local time, for the
following purposes:
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1.
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To elect four directors who will
hold office until the Annual Meeting of Stockholders in 2011 and until
their successors are duly elected and
qualified.
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2.
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To consider and act upon a
proposal to approve the Amended and Restated 1999 Stock Option Plan for
Non-Employee Directors which amends and restates the Company’s existing
1999 Stock Option Plan for Non-Employee Directors, to increase by 50,000
the number of shares of common stock reserved and available for issuance
under the plan and extend the term of the plan to July 1, 2019.
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3.
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To consider and act upon a
proposal to amend the Company’s 1993 Stock Award and Incentive Plan, as
amended and restated as of March 4, 1997, to increase by 250,000 the
number of shares of common stock reserved for the
grant of awards and reapprove the performance factors in the
plan.
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4.
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To transact any other business
that may properly come before the meeting or any adjournment
thereof.
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The close of business on March 10, 2008 has been fixed as the record date for
determining the stockholders entitled to notice of, and to vote at, the Annual
Meeting and any adjournment thereof.
A copy of the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2007 is enclosed with this proxy
statement.
It is desirable that the stock of the
Company should be represented as fully as possible at the Annual
Meeting. Please sign, date and return the accompanying proxy card in
the enclosed envelope, which requires no postage if mailed in the United States. If you should attend the Annual
Meeting, you may vote in person, if you wish, whether or not you have sent in
your proxy, and your vote at the meeting will revoke any prior proxy you may
have submitted.
By Order of the Board of
Directors
AMERICAN BILTRITE
INC.
Henry W. Winkleman
Secretary
Wellesley Hills,
Massachusetts
April 10, 2008
PROXY STATEMENT
This proxy statement is furnished in
connection with the solicitation, by and on behalf of the Board of Directors
(the "Board") of American Biltrite Inc. (the "Company" or "ABI") of proxies to
be used in voting at the Annual Meeting of Stockholders (the "Meeting") to be
held on May 6,
2008 at the Bank of
America, America Room, Second Floor, 100 Federal Street, Boston,
Massachusetts at 8:30 A.M. local time, and at any adjournments thereof. The
principal executive offices of the Company are located at 57
River Street, Wellesley
Hills, Massachusetts 02481. The cost of preparing and
mailing the notice, proxy statement and proxy card will be paid by the Company.
It is expected that the solicitation of proxies will be by the Company by mail
only, but may also be made by overnight delivery service, facsimile, personal
interview, e-mail or telephone by directors, officers or employees of the
Company. The Company will request banks and brokers holding stock in
their names or custody, or in the names of nominees for others, to forward
copies of the proxy material to those persons for whom they hold such stock and,
upon request, will reimburse such banks and brokers for their out-of-pocket
expenses incurred in connection therewith. This proxy statement and
the accompanying proxy card were first mailed to stockholders on or about
April 10, 2008.
Proxies in the accompanying form,
properly executed, duly returned to the Company and not validly revoked, will be
voted at the Meeting (including adjournments) in accordance with your
instructions, or if no instruction is given in the proxy as to how to vote the
shares with respect to one or more proposals, the shares will be voted
FOR any proposal as to which you have given
no instructions how to vote. If your shares are held in “street name” through a
broker, bank or other nominee, you should provide your broker, bank or nominee
instructions on how to vote those shares on a proposal if you wish to direct how
those shares will be voted on that proposal. To ensure that your
broker, bank or nominee receives your instructions, you should promptly
complete, sign and send to your broker, bank or nominee in the envelope enclosed
with this proxy statement the voting instruction form which is also
enclosed.
Any stockholder giving a proxy in the
accompanying form retains the power to revoke it at any time prior to the
exercise of the powers conferred thereby by filing a later dated proxy, by
written notice of revocation delivered to the Secretary of the Company before
the Meeting or by voting the shares subject to such proxy in person at the
Meeting. If you hold your shares through a broker, bank or other
nominee, you will need to contact them to revoke any proxy granted by them with
respect to your shares. Attendance at the Meeting in person will not be deemed
to revoke a proxy unless the stockholder votes the shares which are subject to
the proxy in person at the Meeting. If you plan to attend the Meeting
and wish to vote in person, the Company will give you a ballot at the Meeting;
however, if your shares are held in the name of your broker, bank or other
nominee, you must obtain from your broker, bank or other nominee and bring to
the Meeting a “legal proxy” authorizing you to vote your “street name” shares
held at the close of business on March 10, 2008.
On March 10, 2008, there were issued and outstanding
3,441,551 shares of the Company's Common Stock, par value $.01 per share (the
"Common Stock"). Only stockholders of record at the close of business
on that date are entitled to notice of and to vote at the Meeting or any
adjournment thereof, and those entitled to vote will have one vote for each
share held.
A quorum for the consideration of
election of directors or any question at the Meeting will consist of a majority
in interest of all stock issued and outstanding and entitled to vote upon that
question. A plurality of the shares represented and voting at the
Meeting at which a quorum is present is required to elect
directors. On all other matters, a majority of the votes properly
cast upon the question at the Meeting is required to decide the
question.
Shares represented by proxies marked
“WITHHELD” with regard to the election of directors will be counted for purposes
of determining whether there is a quorum at the Meeting, but will not be voted
in the election of directors, and therefore, will have no effect on the
determination of the outcome of the votes for the election of directors.
Abstentions and broker non-votes will be counted for purposes of
determining whether there is a quorum at the Meeting but they will have no
effect on the outcome of the votes on proposals 2 and 3.
A “broker non-vote” occurs with respect
to shares as to a proposal when a broker, bank or intermediary who holds shares
of record in its name is not permitted to vote on that proposal without
instruction from the beneficial owner of the shares and no instruction is
given. A broker bank or intermediary holding your shares in its name
will be permitted to vote such shares with respect to the proposal to elect four
directors to be voted on at the Meeting without instruction from you but
will not be able to vote such shares with respect to proposals 2 and 3 to be
voted on at the Meeting without instruction from you. As such,
there may be broker non-votes with respect to proposals 2 and 3.
DELIVERY OF PROXY MATERIAL AND ANNUAL
REPORTS TO HOUSEHOLDS
The Securities and Exchange Commission
has implemented a rule permitting companies and brokers, banks or other
intermediaries to deliver a single copy of an annual report and proxy statement
to households at which two or more beneficial owners reside. This
method of delivery, which eliminates duplicate mailings, is referred to as
"householding." Beneficial owners sharing an address who have been
previously notified by their broker, bank or other intermediary and have
consented to householding, either affirmatively or implicitly by not objecting
to householding, will receive only one copy of the Company's Annual Report on
Form 10-K for the year ended December 31, 2007 and this proxy
statement.
If you hold your shares in your own name
as a holder of record, householding will not apply to your
shares.
Beneficial owners who reside at a shared
address at which a single copy of the Company's Annual Report on Form 10-K for
the year ended December 31,
2007 and this proxy statement is delivered
may obtain a separate Annual Report on Form 10-K for the year ended December 31, 2007 and/or proxy statement without charge
by sending a written request to: American Biltrite Inc., 57 River
Street, Wellesley Hills, Massachusetts 02481, attention Henry W.
Winkleman, or by calling the company at 781-237-6655. The Company
will promptly deliver an Annual Report on Form 10-K for the year ended
December 31, 2007 and/or proxy statement upon
request.
Not all brokers, banks or other
intermediaries may offer the opportunity to permit beneficial owners to
participate in householding. If you want to participate in
householding and eliminate duplicate mailings in the future, you must contact
your broker, bank or other intermediary directly. Alternatively, if
you want to revoke your consent to householding and receive separate annual
reports and proxy statements, you must contact your broker, bank or other
intermediary to revoke your consent to householding.
PROPOSAL 1
ELECTION OF
DIRECTORS
The Board is divided into three classes.
The term for each class is three years with the term for one class expiring at
successive Annual Meetings of Stockholders. Stockholders are being
asked to elect four Class III directors at the Meeting. The
accompanying proxy will be voted for the election of the nominees named in Class
III below unless otherwise instructed. The term of those Class III
directors elected at the Meeting will expire at the Annual Meeting of
Stockholders held in 2011 upon the election and qualification of their
successors. Should any person named below be unable or unwilling to
serve as a director, persons named as proxies intend to vote for such other
person as management may recommend. Each nominee is currently a
director of the Company.
The following table sets forth the name,
age and principal occupation of each of the nominees for election as director
and each current director in the classes continuing in office following the
Meeting, together with a statement as to the period during which he or she has
served as a director of the Company.
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Name
(Age)
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Business
Experience
and
Other Directorships
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Expiration of
Present
Term
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Nominee
Directors
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CLASS III
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Mark N. Kaplan, Esq.
(78)
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Of Counsel, Skadden, Arps, Slate,
Meagher & Flom LLP, law firm. Director of the Company since
1982. Director of: DRS Technologies Inc.; Autobytel
Inc.; Volt Information Sciences, Inc.; and Congoleum Corporation, a
majority-owned
subsidiary of the Company ( “Congoleum”).
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2008
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Natalie S. Marcus
(91)
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Investor. Director of
the Company since 1992.
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2008
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William M. Marcus (70)
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Executive Vice President and
Treasurer of the Company. Director of the Company since
1966. Director of Aqua Bounty Technologies, Inc. and
Congoleum.
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2008
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Kenneth I. Watchmaker (65)
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Former Executive Vice President
and Chief Financial Officer of Reebok International
Ltd. Director of the Company since 1995. Director of Global
Partners L.P.
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2008
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Incumbent
Directors
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CLASS I
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Gilbert K. Gailius
(76)
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Former Vice President-Finance and
Chief Financial Officer of the Company. Director of the Company
since 1983.
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2009
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Richard G. Marcus (60)
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President and Chief Operating
Officer of the Company. Director of the Company since
1982. Vice Chairman of the Board of Directors of Congoleum
Corporation since 1994.
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2009
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Frederick H. Joseph
(71)
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Managing Director, Morgan Joseph
& Co., investment banking firm since 2001. Director of the
Company since 1997. Director of Watsco
Inc.
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2009
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CLASS II
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Leo R. Breitman
(67)
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Former Chairman and CEO, Fleet
Bank – Massachusetts. Director of the
Company since 2004.
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2010
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John C. Garrels III
(68)
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Former Director, Global Banking,
The First National Bank of Boston, a national banking association.
Director of the Company since 1977.
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2010
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James S. Marcus
(78)
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Former General Partner, Goldman,
Sachs & Co., investment bankers. Director of the Company
since 1971.
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2010
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Roger S. Marcus (62)
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Chairman of the Board and Chief
Executive Officer of the Company. Director of the Company since
1981. Chairman of the Board of Directors and Chief Executive
Officer of Congoleum since 1993.
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2010
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Note: Natalie S. Marcus is the mother of
Roger S. Marcus and Richard G. Marcus and the aunt of William M. Marcus. James S. Marcus is not
related to Natalie, Roger, Richard or William Marcus.
Individuals who together beneficially
own approximately 55.9% of the outstanding Common Stock as of March 9, 2008 have identified themselves as persons
who have in the past taken, and may in the future take, actions which direct or
cause the direction of the management of the Company, and their voting of shares
of Common Stock in a manner consistent with each other. Accordingly,
these individuals may be deemed to constitute a “group” within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), and Rule 13d-5 thereunder. In light of
the existence of this “group,” the Company is a “controlled company,” as that
term is defined in Section 801 of the American Stock Exchange (“AMEX”) Company
Guide. As a result of the Company’s status as a “controlled company,”
it may avail itself of exceptions to the AMEX’s corporate governance standards
that generally require a company whose stock is listed for trading on the AMEX
to have a majority of its board of directors consist of independent directors,
to have director nominations selected or recommended for the board’s selection
by either a nominating committee comprised solely of independent directors or by
a majority of the independent directors and to have officer compensation
determined or recommended to the board for determination either by a
compensation committee comprised of independent directors or by a majority of
the independent directors. Pursuant to the AMEX’s independence
standards, the Company’s Board of Directors has determined that the following
seven of its eleven directors are independent: Leo R. Breitman, Gilbert K.
Gailius, John C. Garrels III, Frederick H. Joseph, Mark N. Kaplan, James S.
Marcus, and Kenneth I.
Watchmaker. In
determining Mr. Kaplan's independence, the Company's Board of Directors
considered Mr. Kaplan's Of Counsel status with the law firm Skadden, Arps,
Slate, Meagher & Flom LLP, which firm the Company retained for a variety of
legal matters in 2007 and 2008 and proposes to retain during the remainder of
2008
THE BOARD OF DIRECTORS RECOMMENDS THAT
STOCKHOLDERS VOTE FOR THE ELECTION OF EACH OF THE NOMINEES FOR CLASS III
DIRECTOR.
EXECUTIVE OFFICERS
The following table sets forth certain
information relating to the executive officers of the
Company.
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Executive
Officer (Age)
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Position
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Executive
Officer
Since
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Roger S. Marcus (62)
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Chief Executive Officer of the
Company. Chief Executive Officer of
Congoleum since 1993.
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1981
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Richard G. Marcus (60)
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President and Chief Operating
Officer of the Company. Vice Chairman of Congoleum since
1994.
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1982
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William M. Marcus (70)
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Executive Vice President and
Treasurer of the Company.
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1966
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Howard N. Feist III
(51)
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Vice President-Finance and Chief
Financial Officer of the Company. Chief Financial Officer and
Secretary of Congoleum since 1988.
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2000
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J. Dennis Burns (67)
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Vice President and General
Manager, Tape Products Division.
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1985
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Jean Richard (63)
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Vice President and General
Manager, American Biltrite (Canada) Ltd.
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2000
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Henry W. Winkleman
(63)
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Vice President, Corporate Counsel,
and Secretary of the Company.
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1989
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table, together with the
accompanying text and footnotes, sets forth, as of March 10, 2008, (a) the holdings of Common Stock of
each director of the Company and of each person nominated for election as a
director of the Company at the Meeting, (b) the holdings of Common Stock of each
person named in the Summary Compensation Table that appears later in this proxy
statement and of all executive officers and directors of the Company as a group
and (c) the names, addresses and holdings of Common Stock of each
person who, to the Company's knowledge, beneficially owns 5% or more of the
Common Stock. The information set forth in the footnotes to the following table
with respect to Congoleum stock is as of March 10, 2008.
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Name and
Address
of Beneficial Owner(1)
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Amount and Nature of
Beneficial Ownership(2)
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Percent of
Common
Stock
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Directors and Executive
Officers
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Natalie S.
Marcus
c/o American Biltrite
Inc.
57 River
Street
Wellesley Hills, MA 02481
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927,623(3)(4)
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26.9%
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Richard G.
Marcus
c/o American Biltrite
Inc.
57 River
Street
Wellesley Hills, MA 02481
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511,838(3)(5)
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14.7
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Roger S.
Marcus
c/o American Biltrite
Inc.
57 River
Street
Wellesley Hills, MA 02481
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497,237(3)(6)
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14.2
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William M.
Marcus
c/o American Biltrite
Inc.
57 River
Street
Wellesley Hills, MA 02481
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345,734(3)(7)
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9.9
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Mark N.
Kaplan
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7,000(8)
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*
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Gilbert K.
Gailius
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15,000(9)
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*
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John C. Garrels
III
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5,800(9)
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*
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Kenneth I.
Watchmaker
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5,000(9)
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*
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James S.
Marcus
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5,200(9)
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*
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Frederick H.
Joseph
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5,000(10)
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*
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Leo R.
Breitman
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2,500(9)
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*
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All directors and executive officers as a group
(15 persons)
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2,095,036(11)
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57.1
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5% Beneficial
Owners, other than persons listed
above
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Dimensional Fund Advisors,
LP
1299 Ocean
Avenue
Santa Monica, CA 90491
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218,974(12)
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6.4
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Wilen Management Company,
Inc.
2360 West Joppe Road, Suite
226
Lutherville, MD 21093.
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180,202(13)
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5.2
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_______________
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*Represents beneficial ownership of
less than 1% of Common Stock outstanding.
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(1)
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Addresses are given only for
beneficial owners of more than 5% of the Common Stock
outstanding.
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(2)
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Unless otherwise noted, the nature
of beneficial ownership is sole voting and/or investment
power.
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(3)
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As of the date shown, these shares
were among the 2,003,832 shares, or approximately 55.9%, of the
outstanding Common Stock beneficially owned by the following persons, who
have in the past taken, and may in the future take, actions which direct
or cause the direction of the management of the Company and the voting of
their shares of Common Stock in a manner consistent with each other, and
who therefore may be deemed to constitute a "group" within the meaning of
Section 13(d)(3) of the Exchange Act and Rule 13d-5 thereunder: Natalie S.
Marcus, Richard G.
Marcus, Roger S. Marcus, William M. Marcus and Cynthia S. Marcus (c/o
American Biltrite Inc., 57 River Street, Wellesley Hills, MA
02481). The Company owns 4,395,605 shares of the Class B Common
Stock of Congoleum and 151,100 shares of the Class A Common Stock of
Congoleum. These shares on a combined basis represent
approximately 69.4% of the voting power of the outstanding capital stock
of Congoleum. Each of the named individuals may be deemed a
beneficial owner of these Congoleum
shares.
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(4)
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Natalie S. Marcus has sole voting
and investment power over 774,623 shares. Mrs. Marcus is also a
co-trustee with Richard G. Marcus and Roger S. Marcus over 144,000 shares and trustee
of a charitable trust, which holds 4,000 shares. Mrs. Marcus
also has the right to acquire 5,000 shares, which are issuable upon
exercise of options exercisable within 60 days of the date of this proxy
statement.
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(5)
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Richard G. Marcus has sole voting
and investment power over 317,838 shares. Mr. Marcus is also a
co-trustee with Natalie S. Marcus and Roger S. Marcus over 144,000
shares. Mr. Marcus also has the right to acquire 50,000 shares,
which are issuable upon exercise of options exercisable within 60 days of
the date of this proxy statement. Richard G. Marcus's wife, Beth A. Marcus, owns
10,951 shares, of which shares Mr. Marcus disclaims beneficial ownership.
Mr. Marcus also has the right to acquire 200,000 shares of Class A common
stock of Congoleum, which are issuable upon exercise of options
exercisable within 60 days of the date of this proxy
statement.
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(6)
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Roger S. Marcus has sole voting
and investment power over 303,237 shares. Mr. Marcus is also a
co-trustee with Natalie S. Marcus and Richard G. Marcus over 144,000
shares. Mr. Marcus also has the right to acquire 50,000 shares,
which are issuable upon exercise of options exercisable within 60 days of
the date of this proxy statement. Mr. Marcus also has the right
to acquire 200,000 shares of Class A common stock of Congoleum which are
issuable upon exercise of options exercisable within 60 days of the date
of this proxy statement.
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(7)
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William M. Marcus has sole voting
and investment power over 305,734 shares. Mr. Marcus also has
the right to acquire 40,000 shares, which are issuable upon exercise of
options exercisable within 60 days of the date of this proxy
statement. William M. Marcus's wife, Cynthia S. Marcus, owns
9,400 shares. Mr. Marcus also has the right to acquire 5,000
shares of common stock of Congoleum which are issuable upon exercise of
options exercisable within 60 days of the date of this proxy
statement.
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(8)
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Mark N. Kaplan has sole voting and
investment power over 2,000 shares. Mark N. Kaplan has the
right to acquire 5,000, shares which are issuable upon exercise of options
exercisable within 60 days of the date of this proxy
statement. Mr. Kaplan also owns 16,000 shares of Class A Common
Stock of Congoleum, and has the right to acquire 5,000 shares of Class A
Common Stock of Congoleum which are issuable upon exercise of options
exercisable within 60 days of the date of this proxy statement, which
shares represent less than 1% of the voting power of the outstanding
capital stock of Congoleum.
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(9)
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Messrs. John C. Garrels III, James
S. Marcus and Gilbert K. Gailius have sole voting and investment power
over 800, 200 and 12,000 shares respectively. Messrs. John C. Garrels III,
James S. Marcus and Kenneth I. Watchmaker each have the right to acquire
5,000 shares, which are issuable upon exercise of options exercisable
within 60 days of the date of this proxy statement. Mr. Gilbert
K. Gailius has the right to acquire 3,000 shares which are issuable upon
exercise of options exercisable within 60 days of the date of this proxy
statement. Mr. Leo R. Breitman has the right to acquire 2,500 shares which
are issuable upon exercise of options exercisable within 60 days of the
date of this proxy
statement.
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(10)
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Frederick H. Joseph has the right
to acquire 5,000 shares which are issuable upon exercise of options
exercisable within 60 days of this proxy statement. Mr. Joseph
also owns 8,000 shares of Class A Common Stock of Congoleum, which shares
represent less than 1% of the voting power of the outstanding capital
stock of Congoleum.
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(11)
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All directors and executive
officers as a group may be considered beneficial owners of
602,777 shares
of Class A Common Stock of Congoleum and
4,395,605 shares of Class B Common Stock of Congoleum, which combined as a
group, represent 70.6% of the voting power of the outstanding capital
stock of Congoleum.
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(12)
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Based on information contained in
a Schedule 13G/A filed with the Securities and Exchange Commission on
February 6,
2008.
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(13)
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Based on information contained in
a Schedule 13G/A filed with the Securities and Exchange Commission on
January 30,
2008.
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SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Exchange Act
requires the Company's directors, officers and beneficial owners of more than
10% of the Common Stock to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of Common
Stock. Based solely upon a review of Forms 3, 4, and 5 furnished to
the Company during or in respect of the fiscal year ended December 31, 2007, the Company is not aware of any
director or officer of the Company or any beneficial owner of more than 10% of
Common Stock who has not timely filed reports required by Section 16(a) of the
Exchange Act during or in respect of such fiscal year, except that Natalie S.
Marcus had a late filing of a Form 4 pursuant to which she reported a gift of
Company stock.
DIRECTOR COMPENSATION AND
COMMITTEES
During 2007, the Board held seven
meetings. Each director who was not an officer and employee of the
Company received a director's fee of $15,000 and $2,000 for each of the four
regular Board meetings attended, and each member of the Audit Committee received
$3,000 for each Audit Committee meeting attended during 2007. The
directors do not receive a fee for telephonic meetings. In 2007, each
director attended at least 75% of the total number of meetings of the Board of
Directors, except John C. Garrels III, and 75% of the total number of meetings
of the committees of the Board on which each director
serves.
Directors may elect to defer the receipt
of all or a part of their fees. Amounts so deferred earn interest,
compounded quarterly, at a rate equal to the prime rate quoted by Bank of
America, Boston at the end of each
quarter.
Directors are also eligible to have
their contributions to qualified charitable organizations matched by the Company
in an aggregate amount up to $5,000 per director per year.
Pursuant
to the Company's 1999 Stock Option Plan for Non-Employee Directors, on July 1,
2007, each director of the Company was granted an option to
purchase 500 shares of Common Stock, which options then became fully exercisable
on January 1, 2008 in accordance with the terms of that plan.
In 2007,
Mark N. Kaplan also served as a director of Congoleum and as a member of
Congoleum's Compensation Committee. In that capacity, Mr. Kaplan
received an annual director's fee of $15,000 and $2,000 for each of the four
regular meetings of the Board of Directors of Congoleum that he attended in
2007. In addition, Congoleum directors are eligible to have their
contributions to qualified charitable organizations matched by Congoleum in an
aggregate amount up to $5,000 per director per year. In 2007, pursuant to
Congoleum's 1999 Stock Option Plan for Non-Employee Directors, Mr. Kaplan was
granted an option to purchase 500 shares of Congoleum Class A common stock,
which option then became fully exercisable on January 1, 2008 in accordance with
the terms of that plan.
The Board
periodically evaluates the appropriate level and form of compensation for board
and committee service
by non-employee directors and adopts changes to the level and form of
compensation for the provision of these
services when appropriate. Historically, the Company has not retained
compensation consultants (and did not
do so in 2007) to help the directors determine the amount and form of director
and committee member compensation.
The Company's Compensation Committee
consists of three members, each of whom is an independent director as determined
under the AMEX listing standards. The Compensation Committee met once
during 2007. The members of the Compensation Committee are Messrs.
Mark N. Kaplan (Chairman), John C. Garrels III, and
Kenneth I. Watchmaker. The Compensation Committee is
responsible for the review and establishment of executive compensation,
including base salaries, bonuses and criteria for their award, personnel
policies, particularly as they relate to fringe benefits, savings and investment
plans, pension and retirement plans, and other benefits.
In
certain instances, the Compensation Committee may delegate limited authority to
the President of the Company to determine the compensation for certain officers
of the Company who are not named executive officers. Historically,
the Compensation Committee has not retained compensation consultants (and did
not do so in 2007) to help it determine the amount and form of executive
compensation. The Compensation
Committee does not have a charter.
The Company has an Audit Committee
composed of independent directors as determined under AMEX’s listing standards
and the applicable rules of the Securities and Exchange Commission. The members
of the Audit Committee are Messrs. Kenneth I. Watchmaker (Chairman), John C. Garrels III, and
James S. Marcus. Information regarding the functions performed by the
Audit Committee, and the number of meetings held during 2007, is set forth in
the Audit Committee Report included in this proxy statement. The Board of
Directors has determined that the Company has at least one audit committee
financial expert serving on its Audit Committee as determined under the
applicable rules of the Securities and Exchange Commission.
The Audit Committee financial expert is
Kenneth I.
Watchmaker who is an
independent director as defined in AMEX’s listing standards. A copy
of the Charter of the Audit Committee of the Board of Directors of American
Biltrite Inc. as Amended and Restated by the Board of Directors on March 13, 2008 is available on the Company’s website
at www.ambilt.com.
The Company does not have a standing
nominating committee or formal procedure for nomination of directors. The Board
of Directors believes that this is appropriate in light of the Company’s
ownership structure, which includes individuals who together beneficially own
approximately 55.9% of the outstanding Common Stock as of March 9, 2008 and who
have identified themselves as persons who have in the past taken, and may in the
future take, actions which direct or may cause the direction of the
management of the Company, and their voting of shares of Common Stock in a
manner consistent with each other. Accordingly, these individuals may
be deemed to constitute a "group" within the meaning of Section 13(d) (3) of the
Exchange Act and Rule 13d-5 thereunder. In light of the existence of
this “group,” the Company is a “controlled company,” as that term is defined in
Section 801 of the AMEX Company Guide. As a result of the
Company’s status as a “controlled
company” it may avail itself of an exception to the AMEX rule that generally
requires a company whose stock is listed for trading on the AMEX to have
director nominations selected or recommended for the board’s selection by either
a nominating committee comprised of independent directors or by a majority of
the independent directors. All members of the Board of Directors
participate in the consideration of director nominees. The Board does not have a
policy with regard to the consideration of any director candidates recommended
by security holders. The Board of Directors believes that such a
policy is not necessary because the directors have access to a sufficient
number of excellent candidates from which to select a nominee when a vacancy
occurs on the Board and because the Board includes the controlling stockholders
of the Company. Individual directors will generally recommend
candidates to the controlling stockholders and, if acceptable, will submit that
person’s name for consideration by the Board. The Board
generally seeks candidates with a broad business background and who may also
have a specific expertise in such areas as law, accounting, banking, or
investment banking.
All members of the Board of Directors
are encouraged, but not required, to attend the Company’s annual meeting of
stockholders. All members of the Board of Directors attended the
annual meeting of stockholders held in 2007.
AUDIT COMMITTEE
REPORT
The Audit Committee oversees the
Company’s financial reporting process on behalf of the Board. Management has the
primary responsibility for the financial statements and the reporting process
including the systems of internal controls. In fulfilling its oversight
responsibilities, the Audit Committee reviewed and discussed the audited
financial statements in the Company's Annual Report on Form 10-K for the year
ended December 31,
2007 with management and
the independent auditors, including a discussion of the quality, not just the
acceptability, of the accounting principles, the reasonableness of significant
judgments, and the clarity of disclosures in the financial
statements.
The Audit Committee reviewed with the
independent auditors, who are responsible for expressing an opinion on the
conformity of those audited financial statements with U.S. generally accepted
accounting principles, their judgments as to the quality, not just the
acceptability, of the Company’s accounting principles and such other matters as
are required to be discussed with the Audit Committee under
generally accepted auditing standards. In addition,
the Audit Committee discussed with the independent auditors the auditors’
independence from management and the Company, including the matters required to
be discussed by Statement on Auditing Standards No. 61, as amended, has received
and reviewed written disclosures and the letter from the independent auditors
required by Independence Standards Board Standard No. 1 and considered the
compatibility of nonaudit services with the auditors’ independence.
The Audit Committee discussed with the
Company’s internal and independent auditors the overall scope and plans for
their respective audits. The Audit Committee met quarterly with the
internal and independent auditors, with and without management present, to
discuss the results of their examinations, their evaluations of the Company’s
internal controls, and the overall quality of the Company’s financial
reporting. The Audit Committee held four meetings during fiscal year
2007.
In reliance on the reviews and
discussions referred to above, the Audit Committee recommended to the Board (and
the Board has approved) that the Company’s 2007 audited financial statements be
included in the Company's Annual Report on Form 10-K for the year ended
December 31,
2007 for filing with the
Securities and Exchange Commission. The Audit Committee has also
appointed Ernst & Young LLP as the Company’s independent auditors for
2008.
AUDIT COMMITTEE
Kenneth I. Watchmaker,
Chairman
John C. Garrels III
James S. Marcus
COMPENSATION
COMMITTEE
Each year, the Compensation Committee
conducts a review of the Company's executive compensation. This
review includes consideration of the relationship between an executive's current
compensation and his/her current duties and responsibilities, and inflationary
trends. The annual compensation review permits an ongoing evaluation
of the relationships among the size and scope
of the Company's operations,
the Company's performance and its
executive compensation. The Compensation Committee also considers the
legal and tax effects (including the effects of Section 162(m) of the Internal
Revenue Code of 1986, as amended) of the Company's executive compensation
program in order to provide the most favorable legal and tax consequences for
the Company.
The Compensation Committee's process
also includes a review of the performance of each of the named executive
officers and certain other
executive officers for each
fiscal year, the results of which are taken into account in establishing salary
and bonus levels. In reviewing the individual performance of
the named executive officers and certain other executive officers
(other than the Chief
Executive Officer), the Compensation Committee takes into account the views of
Roger S. Marcus, the Chief Executive
Officer. In addition, the Compensation Committee takes into account
the full compensation package afforded by the Company (including its
subsidiaries) to the individual named executive officer and certain other executive
officers. The
Compensation Committee believes that this program balances both the mix of cash
and equity compensation, the mix of currently-paid and longer-term compensation,
and the security of pension or retirement benefits in a way that furthers the
compensation objectives discussed above.
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
Mark N.
Kaplan, John C. Garrels III, and Kenneth I. Watchmaker are the members of the Compensation
Committee of the Board during 2007, none of whom is or was at any time during
2007 or at any previous time an officer or employee of the
Company. Mark N. Kaplan is presently Of Counsel to Skadden, Arps,
Slate, Meagher & Flom LLP, a law firm. During 2007, the Company
retained Skadden, Arps, Slate, Meagher & Flom LLP for a variety of legal
matters. The Company has retained Skadden, Arps, Slate, Meagher &
Flom LLP during 2008 and proposes to retain the firm during the remainder of
2008. Mr. Kaplan is also a director of
Congoleum and serves on the Compensation Committee of
Congoleum.
EXECUTIVE
COMPENSATION
The following table sets forth
information concerning the compensation earned by or paid to the Chairman of the
Board and Chief Executive Office and the Company’s two other most highly
compensated executive officers for services rendered to the Company and its
subsidiaries in all capacities during 2007. The table also identifies
the principal capacity in which each of the named executive officers served the
Company at the end of 2007.
|
Summary Compensation
Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in
|
|
|
|
|
|
|
|
|
Pension
Value and
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
Deferred
|
|
|
|
|
|
|
|
Option
|
Compensation
|
All
Other
|
|
|
Name
and Principal
|
|
Salary
|
Bonus
|
Awards
|
Earnings(3)
|
Compensation
|
Total
|
|
Position
|
Year
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
|
__________________
|
_____
|
________
|
_____
|
_____
|
__________
|
___________
|
_______
|
| |
|
|
|
|
|
|
|
|
Roger
S. Marcus(1)
Chairman
of the Board and Chief Executive Officer
|
2007
2006
|
$625,000
605,000
|
—
—
|
—
—
|
$61,922
70,043
|
$61,522(2)
68,681
|
$746,066
742,042
|
|
Richard
G. Marcus(1)
President
and Chief Operating Officer
|
2007
2006
|
625,000
605,000
|
—
—
|
—
—
|
58,111
51,674
|
102,068(4)
96,865
|
778,742
754,976
|
|
William
M. Marcus(1)
Executive
Vice President and Treasurer
|
2007
2006
|
500,000
484,000
|
—
—
|
—
—
|
(2,100)
20,494
|
106,547
100,076
|
604,447
559,507
|
| |
|
|
(1)
|
Roger S. Marcus, Richard G. Marcus and William M. Marcus do not
receive any separately stated compensation for their services as directors of the
Company.
|
|
(2)
|
As an officer of Congoleum,
Roger S.
Marcus also received
Other Compensation from Congoleum in the amount of $16,630 and $11,329 in
2007 and 2006 respectively, which is included in the amount
shown.
|
|
(3)
|
None of the named executive
officers received Non-qualified Deferred Compensation Earnings in
2007.
|
|
(4)
|
Included in Richard G. Marcus’ All
Other Compensation is $28,992 in 2007 and 2006 of imputed interest related
to a loan associated with split-dollar life insurance policies. The
split-dollar life insurance agreements remain in effect but the Company is
no longer paying premiums under those
agreements.
|
|
(5)
|
Company
contributions of $3,375 in 2007 and $3,300 in 2006, under the Company’s
401(k) Savings and Investment Plan, on behalf of each individual
listed.
|
The All Other Compensation is composed
of the following items: company paid group term life insurance premiums, imputed
interest on the split-dollar life insurance policies, life insurance premiums,
personal tax preparation fees, personal use of Company automobiles, country club
and club dues, executive medical reimbursement payments, matching gifts from the
Company and Congoleum, and spousal travel. No item of All Other
Compensation which is a perquisite or personal benefit exceeds the greater of
$25,000 or ten percent of the total perquisites for any of the named executive
officer other than reported above.
Pursuant to the terms of a personal
services agreement between the Company and Congoleum, Mr. Roger Marcus serves as
the Chairman, President and Chief Executive
Officer of Congoleum and, pursuant to that
agreement, devotes substantially all of his time to his
duties in those capacities during normal working hours. The agreement
specifically permits Mr. Roger Marcus to remain as a director and chief
executive officer of the Company. The agreement also provides that Mr. Richard
Marcus serve as Vice Chairman of Congoleum. The agreement further provides that
in exchange for the services of Messrs. Roger and Richard Marcus, Congoleum
shall pay the Company annually: (i) a personal services fee of $500,000 (which
shall be reduced to $300,000 in the event of termination of Mr.
Richard Marcus or reduced to $200,000 in the event of termination
of Mr. Roger Marcus) payable in equal monthly installments
and subject to annual increase; (ii) an annual incentive fee,
subject to Congoleum's attainment of certain business and financial goals, as
determined by a majority of
Congoleum's disinterested directors and which may not exceed $500,000; and (iii)
reimbursement for authorized business expenses. For the year ended December 31, 2007, Congoleum paid $696,000 in personal
services fees to the Company. Except as set forth in the above
Summary Compensation Table or in the footnotes to that table, neither Mr. Roger
Marcus nor Mr. Richard Marcus received any compensation directly from Congoleum
in those capacities during 2007.
The
following table sets forth information relating to the outstanding equity awards
of the Company and Congoleum December 31, 2007, held by each named executive
officer. No named executive officer exercised any Company or Congoleum stock
option or other equity award during 2007 and 2006. The named
executive officers do not currently hold any non-option equity awards of the
Company or Congoleum.
Outstanding Equity Awards at
Year-End
|
|
|
|
|
Number of
Securities
Underlying
Unexercised
Options/SARS at
12/31/07
|
|
|
|
|
|
Name
|
|
Company
Granting
Options
|
|
Exercisable
(#)
|
|
Unexercisable
(#)
|
|
Option
Exercise
Price ($)
|
|
Option
Expiration
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roger S.
Marcus
|
|
ABI
Congoleum(1)
|
|
50,000
200,000
|
|
—
—
|
|
$ 9.650
2.050
|
|
05/23/13
07/11/12
|
|
Richard G.
Marcus
|
|
ABI
Congoleum(1)
|
|
50,000
200,000
|
|
—
—
|
|
9.650
2.050
|
|
05/23/13
07/11/12
|
|
William M.
Marcus
|
|
ABI
Congoleum(1)
|
|
40,000
5,000
|
|
—
—
|
|
9.650
2.050
|
|
05/23/13
07/11/12
|
|
(1)
|
These named executive officers are
executive officers or directors of
Congoleum. Congoleum granted these executive officers, in those
capacities, the options to purchase Congoleum stock set forth in the above
table.
|
DEFINED
BENEFIT PENSION AND PROFIT SHARING PLANS
PENSION
PLAN
In addition to the remuneration set
forth above, the Company maintains a tax-qualified defined benefit
pension plan (the "Pension Plan") for all salaried (non-hourly)
employees including the named executive officers. The Pension
Plan provides non-contributory benefits based upon years of service and average
annual earnings for the 60 consecutive calendar months in which the
participating employee had the highest level of earnings during the 120
consecutive calendar months preceding retirement. Employees
compensated on a salaried basis are eligible to participate in the Pension Plan
after they complete one year of service.
The
compensation used to determine a participant's benefits under the Pension Plan
includes such participant's salary (including amounts deferred as salary
reduction contributions to any applicable tax-qualified plans maintained under
Sections 401(k) or 125 of the Internal Revenue Code of 1986, as
amended). The Internal Revenue Service has limited the maximum
compensation for benefit purposes to $225,000 in 2007. Salary amounts
listed in the Summary Compensation Table are items of compensation covered by
the period in the 120-month period ending with the month immediately prior to
termination. The pension benefits payable under the Pension Plan are subject to
an offset for Social Security covered compensation. Social
Security covered compensation is the average of the Social Security taxable wage
base for the 35-year period ending with the year in which the participant
attains Social Security retirement age.
The
annual amount of pension payable at the normal retirement date (the first day of
the month following attaining age 65 with the completion of five years of
service) is 0.5% of the employee's final five year average pensionable earnings
up to his Social Security covered compensation, plus .9% of any excess over his
Social Security covered compensation, multiplied by years of credited service,
up to a maximum of 43.75 years. Employees attaining age 55 and 15 years of
service may elect early retirement and receive the benefit that would otherwise
be payable at his/her normal retirement date, reduced 0.4% for each month that
benefit commencement precedes such date.
401(K)
PLAN DEFERRED COMPENSATION
The
Company maintains the 401(k) Savings Investment Plan (the “401(k) Plan”), a
qualified 401(k) plan, to provide tax-advantaged savings vehicles to all
employees, including named executive officers. The Company makes
matching contributions to the 401(k) Plan to encourage employees to save money
for their retirement. This plan, and the Company's contributions to
it, enhances the range of benefits that the Company offers all employees and the
Company's ability to attract and retain employees. Under the terms of
the 401(k) Plan, qualified employees may defer up to 15% (changing to 75% for
years after 2007) of their eligible pay. The Company's matching
contributions to named executive officers under the 401(k) Plan is determined by
the level of participation and contribution of each named executive officer and
is described in the Summary Compensation Table.
DIRECTORS’
COMPENSATION
The following table sets forth
information concerning the fees earned or paid-in cash, the aggregate grant date
fair value of awarded stock options computed in accordance with FAS 123R and all
other compensation paid or granted to the directors of the Company who are not
named executive officers for the year ended December 31, 2007. For additional information
regarding compensation of the Company’s directors in 2007, see “Director
Compensation and Committees” which appears earlier in this proxy
statement.
|
Name
|
|
Fees
Earned or
Paid
in Cash
($)
|
|
Option
Awards
($)
|
|
Nonqualified
Deferred
Compensation
($)
|
|
All
Other
Compensation(5)
($)
|
|
Total
($)
|
| |
|
|
|
|
|
|
|
|
|
|
|
Kenneth
I. Watchmaker
|
|
$35,000
|
|
$2,055(1)
|
|
—
|
|
$2,500
|
|
$39,555
|
|
James
S. Marcus
|
|
35,000
|
|
2,055(1)
|
|
—
|
|
5,000
|
|
42,055
|
|
John C.
Garrels III
|
|
30,000
|
|
2,055(1)
|
|
$12,164(4)
|
|
—
|
|
42,220
|
|
Frederick
H. Joseph
|
|
23,000
|
|
2,055(1)
|
|
—
|
|
5,000
|
|
30,055
|
|
Mark
N. Kaplan
|
|
23,000
|
|
2,055(1)
|
|
19,268(4)
|
|
—
|
|
44,323
|
|
Natalie
S. Marcus
|
|
23,000
|
|
2,055(1)
|
|
—
|
|
—
|
|
25,055
|
|
Gilbert
K. Gailius
|
|
23,000
|
|
2,055(2)
|
|
—
|
|
5,000
|
|
30,055
|
|
Leo
R. Breitman
|
|
23,000
|
|
2,055(3)
|
|
—
|
|
5,000
|
|
30,055
|
|
(1)
|
Messrs. Kenneth I. Watchmaker, James S. Marcus, John C. Garrels
III, Frederick H. Joseph, Mark N. Kaplan and Mrs. Natalie S. Marcus have
the right to acquire 5,000 shares of Common Stock, which are issuable upon
exercise of options exercisable within 60 days of the date of this
proxy statement.
|
|
(2)
|
Mr. Gilbert K. Gailius has the
right to acquire 3,000 shares of Common Stock, which are issuable upon
exercise of options exercisable within 60 days of the date of this
proxy statement.
|
|
(3)
|
Mr. Leo R. Breitman has the right
to acquire 2,500 shares of Common Stock, which are issuable upon exercise
of options exercisable within 60 days of the date of this proxy
statement.
|
|
(4)
|
The Company accrued interest for
Messrs. John C. Garrels III and Mark N. Kaplan on their deferred
directors’ compensation at the prime rate at the Bank of America, Boston
on a quarterly basis. The prime rate exceeded the applicable federal
long-term rate by more than 120% in each quarter. The above market portion
of the interest accrued in 2007 for Messrs. Garrels and Kaplan was $9,664
and $14,268, respectively.
|
|
(5)
|
All Other Compensation includes
donations by the Company to qualified charitable organizations pursuant to
the Directors Matching Gift
Program.
|
PROPOSAL
2
APPROVAL
OF THE COMPANY’S AMENDED AND RESTATED
1999
STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
Stockholders
are being asked to approve the Amended and Restated 1999 Stock Option Plan for
Non-Employee Directors (the "Amended and Restated 1999 Plan"), which amends and
restates the 1999 Stock Option Plan for Non-Employee Directors (the "1999
Plan"), to increase by 50,000 the number of shares of Common Stock reserved and
available for issuance under the plan and to extend the term of the plan to July
1, 2019.
Amendment
and Restatement of the 1999 Plan
Increase
in Shares
On July
1, 1999, the Company established its 1999 Plan under which non-employee
directors may be granted non-qualified options (the "Options") to purchase
shares of Common Stock. The maximum number of shares of
Common Stock that may currently be issued pursuant to the 1999 Plan
is 50,000 shares. Pursuant to the 1999 Plan, on July 1, 1999,
each non-employee member of the Board was granted an Option to purchase 1,000
shares of Common Stock. On each July 1 thereafter, each non-employee
member of the Board receives an automatic grant of an Option with
respect to 500 shares of Common Stock. Each new non-employee member
of the Board who has not previously been a non-employee member of the Board
during the term of the 1999 Plan is granted, on the date he or she is elected to
the Board during the term of the 1999 Plan, an Option to purchase 1,000 shares
of Common Stock. No Options may be granted under the 1999 Plan on or
after July 1, 2009. As of March 14, 2008, 35,500 shares of Common
Stock were issuable upon the exercise of outstanding Options and an aggregate of
14,500 shares of Common Stock remained available for future
issuance.
The Board
believes that increasing the number of shares of Common Stock reserved and
available for issuance under the 1999 Plan will enhance the Company’s
flexibility in connection with providing long−term equity incentives and enable
the Company to compensate non-employee members of the Board and to provide
incentives to such members that are linked directly to stockholder value and
will therefore inure to the benefit of all stockholders of the
Company. Accordingly the Board approved the Amended and Restated 1999
Plan, subject to stockholder approval of this proposal 2, to increase the
aggregate number of available shares by 50,000, for a total of 100,000 shares of
Common Stock reserved and available for issuance under the Amended and Restated
1999 Plan.
Extension
of Term
As stated
above, no Options may be granted under the 1999 Plan on or after July 1,
2009. The Board believes that extending the term of the 1999 Plan
will further enhance the Company’s flexibility in connection with providing
long−term equity incentives and enable the Company to compensate non-employee
members of the Board and to provide incentives to such
members. Accordingly, the Amended and Restated 1999 Plan approved by
the Board, subject to stockholder approval of this proposal 2, extends the
period during which Options may be granted under the plan to July 1,
2019.
Material
Features of the Amended and Restated 1999 Plan
The text
of the Amended and Restated 1999 Plan is set forth as Appendix A to this proxy
statement. In addition, the material features of the Amended and
Restated 1999 Plan are described below. The following description is
intended to be a summary, and does not purport to be a complete statement, of
the principal terms of the Amended and Restated 1999
Plan. Accordingly, this summary is qualified in its entirety by
reference to Appendix A.
General;
Purpose
The
purpose of the Amended and Restated 1999 Plan is to enable the Company to
compensate non-employee members of the Board and to provide incentives to such
members, which incentives are linked directly to increases in stockholder value
and will therefore inure to the benefit of all stockholders of the
Company. The Compensation Committee of the Board, or any other
committee the Board may subsequently appoint, administers the 1999 Plan and will
administer the Amended and Restated 1999 Plan, which, if it is approved by
stockholders, will supersede the 1999 Plan.
Eligibility
As of
March 14, 2008, there were seven non-employee directors who were participants
under the 1999 Plan and who will also be participants under the Amended and
Restated 1999 Plan. Like the 1999 Plan, the Amended and Restated 1999
Plan provides that non-employee members of the Board are eligible to receive
Options. Each participant receiving an Option shall enter into a
stock option agreement with the Company, which agreement shall set forth, among
other things, the exercise price of the Option (which will be the fair market
value of the Common Stock on the date of grant, as determined under the Amended
and Restated 1999 Plan), the term of the Option and provisions regarding
exercisability of the Option granted thereunder, which provisions shall not be
inconsistent with the terms of the Amended and Restated 1999
Plan. Under the Amended and Restated 1999 Plan, each new non-employee
member of the Board who has not previously been a non-employee member of the
Board during the term of the plan will be granted on the date he or she is
elected to the Board during such term, an Option to purchase 1,000 shares of
Common Stock. In addition, under the Amended and Restated 1999 Plan,
each non-employee member of the Board receives each year on July 1 during the
term of the plan an Option to purchase 500 shares of Common Stock.
Exercise
Price of Options
Under the
Amended and Restated 1999 Plan, the exercise price per share of Common Stock
purchasable under the Options granted shall be 100% of the fair market value
of the Common Stock on the date of grant, as determined
under the plan. Unless otherwise determined by the Company's
Compensation Committee, or other committee the Board may subsequently appoint,
and based on the Company's current listing of shares of Common Stock on the
AMEX, the closing sale price per share of Common Stock on the AMEX on the last
preceding date on which there was a sale of Common Stock will constitute the
fair market value of the Common Stock on the date of grant of an
Option.
Term
of Options; Vesting
Options
granted under the Amended and Restated 1999 Plan will each have ten-year terms
measured from the grant date and fully vest six months from the grant
date.
Expiration;
Amendment
Under the
Amended and Restated 1999 Plan, each Option shall cease to be exercisable on the
tenth anniversary of the date of grant. Options may not be granted on
or after July 1, 2019, but Options previously granted may extend beyond that
date. The Board may amend, alter, modify or discontinue the Amended
and Restated 1999 Plan at any time, provided that the Board may not amend or
alter the provisions of the plan relating to the amount, price and timing of
awards more than once every six months, other than to comport with the Internal
Revenue Code of 1986, as amended (the "Code"), or the rules thereunder, or the
Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder. AMEX rules currently require the Company to obtain
stockholder approval of any material amendment to the Amended and Restated 1999
Plan, as determined under those rules.
Adjustments
The
Amended and Restated 1999 Plan contains provisions providing for the
substitution or adjustment of the aggregate number and kind of shares reserved
and available for issuance under the plan and the number and option price of
shares subject to outstanding Options granted under the plan in the event of any
merger, reorganization, consolidation recapitalization, Common Stock dividend or
other change in corporate structure affecting the Common Stock.
New
Plan Benefits
The
future benefits or amounts that would be received under the Amended and Restated
1999 Plan are based on the number of non-employee directors from time to time on
the Board, the extent of turnover among non-employee directors on the Board and
the terms of the non-employee directors. Since the inception of the
1999 Plan, the non-employee directors have received a total of 35,500 shares of
Common Stock subject to option grants received under the 1999 Plan.
Certain
Federal Income Tax Consequences in respect of the Amended and Restated 1999
Plan
Certain
relevant federal income tax effects applicable to Options which have been
granted under the 1999 Plan, or may be granted under the Amended and Restated
1999 Plan if proposal 2 is approved by stockholders, are described
below. The following description is only a summary, and reference is
made to the Code, and the regulations promulgated thereunder for a complete
statement of all relevant federal income tax provisions.
A
recipient of an Option granted by the Company under the Amended and Restated
1999 Plan generally will not be taxed upon the grant of an Option. Rather, at
the time of exercise of an Option, the optionee will recognize ordinary income
for federal income tax purposes in an amount equal to the excess of the fair
market value of the shares purchased as a result of such exercise over the
aggregate option exercise price paid with respect to such
exercise. The Company will generally be entitled to a tax deduction
at the time of exercise of such Option by the optionee and in the same amount
that the optionee is required to recognize as ordinary income. If
shares of Common Stock acquired upon exercise of an Option are later sold or
exchanged, then the difference between the aggregate sales price and fair market
value of such shares on the date that ordinary income was recognized with
respect thereto will generally be taxable as long−term or short−term capital
gain or loss, depending upon the length of time such shares were held by the
optionee.
State
income tax consequences may in some cases differ from the federal income tax
consequences. In addition, Option grants under the Amended and
Restated 1999 Plan may in some instances be made to non-employee directors who
are subject to tax in jurisdictions other than the United States and may result
in consequences different from those described above.
The
foregoing summary of the federal income tax consequences in respect of the
Amended and Restated 1999 Plan is for general information
only. Interested parties should consult their own advisors as to
specific tax consequences, including the application and effect of foreign,
state and local tax laws.
Effect
of Amended and Restated 1999 Plan
Except as
described above, the Amended and Restated 1999 Plan will not materially alter
any other terms of the 1999 Plan. The proceeds received from the
Company from the exercise of Options to purchase Common Stock under the Amended
and Restated 1999 Plan will be used for general corporate
purposes. If the Amended and Restated 1999 Plan is not approved by
stockholders, Option grants will continue to be granted in accordance with the
terms of the 1999 Plan, to the extent shares of Common Stock reserved under the
plan remain available, until July 1, 2009, at which time the 1999 Plan will
expire, except as to Options which remain outstanding at that time.
Approval
of the Amended and Restated 1999 Plan
The Board
believes that stockholder approval, and thus the effectiveness, of the Amended
and Restated 1999 Plan will better enable the Company to compensate non-employee
members of the Board and to provide incentives to such members.
THE
BOARD OF DIRECTORS RECOMMENDS THAT
STOCKHOLDERS VOTE FOR PROPOSAL 2 TO APPROVE THE AMENDED AND RESTATED 1999
PLAN.
PROPOSAL
3
APPROVAL
OF AN AMENDMENT TO THE COMPANY’S 1993 STOCK AWARD
AND
INCENTIVE PLAN, AS AMENDED AND RESTATED AS OF MARCH 4, 1997,
INCLUDING
RE-APPROVAL OF THE PERFORMANCE FACTORS WHICH MAY BE
APPLIED
TO AWARDS UNDER THE 1993 PLAN
Stockholders
are being asked to approve an amendment to the American Biltrite Inc. 1993 Stock
Award and Incentive Plan, as amended and restated as of March 4, 1997 (the "1993
Plan"), to increase by 250,000 (from 550,000 to 800,000) the number of shares of
Common Stock reserved for the grant of awards under the 1993 Plan.
In
addition, in connection with the amendment, the Company's stockholders are being
asked to re-approve the Performance Factors (as defined below) included in the
1993 Plan, the attainment of which may be made a condition to the vesting of
awards made under the 1993 Plan. The amendment also includes a
technical fix to correct an administrative error included in the Performance
Factors.
Amendment
of the 1993 Plan
As of
March 14, 2008, 266,500 shares of Common Stock were issuable upon the exercise
of outstanding awards, and 266,520 shares of Common Stock remained available for
the grant of awards under the 1993 Plan. The Board believes that
increasing the number of shares of Common Stock reserved for the grant of awards
under the 1993 Plan will better help the Company and its subsidiaries and
affiliates to afford an incentive to selected employees and independent
contractors of the Company to acquire a proprietary interest in the Company, to
continue as employees or independent contractors of the Company, as the case may
be, to increase their efforts on behalf of the Company and to promote the
success of the Company's business. Accordingly, the Board approved,
subject to stockholder approval of this proposal 3, an amendment to the 1993
Plan to increase the aggregate number of shares of Common Stock reserved for the
grant of awards under the 1993 Plan by 250,000 shares (from 550,000 to
800,000).
Re-Approval
of Performance Factors
Section
162(m) of the Code generally disallows deductions for publicly-held corporations
with respect to compensation in excess of $1 million paid to the Chief Executive
Officer and the corporation's other applicable executive
officers. However, compensation payable solely on account of
attainment of one or more performance goals, or Performance Factors, is not
subject to the deduction limitation if, among other things, the material terms
of the performance goals under which the compensation is to be paid
are disclosed to and approved by the stockholders of the
Company. This is known as the performance-based compensation
exception to Section 162(m). Awards under the 1993 Plan may be made
subject to the attainment of Performance Factors in order to qualify for this
performance-based compensation exception.
A
committee established by the Board shall determine the Performance Factors, if
any, relating to each award granted by the Committee. Performance
Factors shall mean the criteria and objectives, determined by the Committee
granting the award, which must be met as a condition of the employee's receipt
of benefits with respect to any award granted by that
Committee. "Performance Factors" may include any or all of the
following: (i) revenue growth; (ii) EBITDA; (iii) operating cash flow; (iv)
operating income growth or level; (v) market share; (vi) working capital; (vii)
net customer sales per product line; (viii) net income; (ix) earnings or
earnings per share; (x) earnings from operations; (xi) return on equity or
return on assets; or (xii) the extent of the increase or decrease of any one or
more of the foregoing during the specified period. Performance
Factors may relate to the performance of the Company, a
business
unit thereof or any combination of the two. With respect to
participants who are not Covered Employees (as defined in the 1993 Plan),
Performance Factors may also include such subjective performance goals as each
committee may, from time to time, establish.
The
stockholders of the Company are being ask to re-approve these factors so that
the Company will continue to have the ability to make awards under the 1993 Plan
subject to the attainment of Performance Factors and so be eligible to qualify
as performance-based compensation not subject to the $1 million limit on
deductible compensation that might otherwise be imposed pursuant to Section
162(m) of the Code.
Material
Features of the 1993 Plan
The text
of the 1993 Plan, including the amendment to increase the number of shares of
Common Stock reserved for the grant of awards under the 1993 Plan by 250,000 and
the re-approval of the Performance Factors included in the 1993 Plan, is set
forth as Appendix B to this proxy statement. In addition, the
material features of the 1993 Plan are described below. The following
description is intended to be a summary, and does not purport to be a complete
statement, of the principal terms of the 1993 Plan. Accordingly, this
summary is qualified in its entirety by reference to Appendix B.
General;
Purpose
On August
12, 1993, the Board adopted, subject to stockholder approval, the American
Biltrite Inc. 1993 Stock Award and Incentive Plan, authorizing certain awards of
options, stock appreciation rights, limited stock appreciation rights,
restricted stock, restricted stock units, dividend equivalents and other
stock-based and cash-based awards (each, an "Award" and collectively, the
"Awards"). The American Biltrite Inc. 1993 Stock Award and Incentive
Plan was approved by stockholders on May 4, 1994. On March 4, 1997,
the Board adopted, subject to stockholder approval, amendments to the American
Biltrite Inc. 1993 Stock Award and Incentive Plan and approved a restatement of
it. Those amendments (i) increased from 400,000 to 550,000 the number
of shares available for Awards granted under the amended and restated plan; (ii)
limited the number of shares subject to award in each year as stock appreciation
rights, limited stock appreciation rights, restricted stock and restricted stock
units to 100,000 per employee to enable such stock appreciation rights, limited
stock appreciation rights, restricted stock and restricted stock units granted
under the amended and restated plan to qualify as performance-based compensation
within the meaning of Section 162(m) of the Code; (iii) limited the number of
shares subject to award in each year as any other type of stock-based Award to
100,000 per employee and limited the value of any cash-based Award granted in
any year to $100,000 per employee to enable such other stock-based and
cash-based Awards to qualify as performance-based compensation within the
meaning of Section 162(m) of the Code; (iv) established objective performance
goals for the vesting of certain Awards granted under the amended and restated
plan to enable such Awards to qualify as performance-based compensation within
the meaning of Section 162(m) of the Code; and (v) permitted the administration
of the amended and restated plan by both the Company’s Compensation Committee
and the Stock Award Committee. The amended and restated plan was
approved by stockholders on May 12, 1997.
The
purpose of the 1993 Plan is to afford an incentive to selected employees and
independent contractors of the Company to acquire a proprietary interest in the
Company, to continue as employees or independent contractors of the Company, as
the case may be, to increase their efforts on behalf of the Company and to
promote the success of the Company's business. The 1993
Plan provides that it shall be administered by
a committee or committees of the Board (or a subcommittee
thereof) established for that purpose (the "Committee" or
"Committees"). To the extent it is desirable for Awards made under
the 1993 Plan to qualify as performance-based compensation within the
meaning of Section 162(m) of the Code or to obtain exemptive relief under the
provisions of Rule 16b-3 under the Exchange Act, the Committee shall be
constituted so as to comply with applicable requirements. The 1993
Plan is currently administered by two committees of the Board, the Compensation
Committee and the Stock Award Committee. The Stock Award Committee
was specifically established by the Board to grant Awards to the executive
officers of the Company (including the Chief Executive Officer and the other
four most highly compensated executive officers). Each Committee has
the authority to determine the terms and provisions of the agreements entered
into with respect to Awards and such agreements need not be identical for each
Award recipient. The 1993 Plan contains provisions regarding equitable
adjustment in the terms of Awards in the event of certain corporate events, such
as reorganizations, mergers, recapitalizations and stock
splits. Except as otherwise specified in the 1993 Plan, the term of
each Award is as determined by the committee granting the
Award.
Eligibility
The
respective Committee designates in its discretion the employees and independent
contractors to be granted Awards under the 1993 Plan and determine the type and
amount of each Award. The respective Committees also determine the
timing of Awards granted under the 1993 Plan. Accordingly, the amount
of any such future Awards and the recipients thereof are not determinable at
this time. As of March, 2008, there were approximately 346 employees
and no independent contractors eligible to receive Awards under the 1993
Plan. Awards made in or based upon shares of Common Stock to any
individual may not exceed 100,000 shares in any one calendar
year. Additionally, Awards consisting of cash, including cash awarded
as a bonus or upon the attainment of specified performance criteria, shall not
exceed $100,000 in any calendar year.
Amendment
The Board
may at any time and from time to time alter, amend, suspend or terminate the
1993 Plan in whole or in part. In order to satisfy the requirements
of Section 162(m) of the Code, certain amendments to the 1993 Plan for such
amendments must be approved by the Company's stockholders. Under the
1993 Plan, no amendment shall affect adversely any of the rights under any Award
theretofore granted under the 1993 Plan of any recipient, without such
recipient's consent.
Stock
Options
Each
committee is authorized to grant options for the purchase of shares of Common
Stock under the 1993 Plan and each option granted under the 1993 Plan will be
designated as a nonqualified stock option ("NQSO") or as an incentive stock
option ("ISO").
The per
share exercise price of an option is determined by the Committee granting the
option but may not be less than the fair market value of a share of the Common
Stock on the date of grant of such option (or, under current law, 110% of the
fair market value of a share of Common Stock on the date of grant of an ISO if
the recipient of the ISO owns more than 10% of the total combined voting power
of all classes of stock of the Company or any of its subsidiaries or
affiliates), as determined under the 1993 Plan. Unless otherwise
determined by the applicable Committee and based on the Company's current
listing of shares of Common Stock on the AMEX, the closing sale price per share
of Common Stock on the AMEX on the last preceding date on which there was a sale
of Common Stock will constitute the fair market value of the Common Stock on the
date of grant of an option under the 1993 Plan. The per share
exercise price of an option may be paid in cash or by an exchange of Common
Stock owned by the grantee, or a combination of both, in an amount having a
combined fair market value equal to such exercise price.
An option
may not be exercised unless the grantee is then in the employ of, or then
maintains an independent contractor relationship with, the Company, subject to
extensions of exercisability contained in applicable award
agreements. Any ISO may only be granted under the 1993 Plan to an
employee. Unless otherwise determined by the Committee granting the
options, an Option may not be exercised unless the optionee is then in the
employ of, or then maintains an independent contractor relationship with, the
Company or one of its subsidiaries or affiliates and unless the optionee has
remained continuously so employed or has continuously maintained such
relationship since the date of grant of the Option. Options may be
subject to such other conditions as the Committee granting the options may
determine, including restrictions on transferability of the shares acquired upon
exercise of such options and restrictions pertaining to ISOs under Section 422
of the Code.
Stock
Appreciation Rights and Limited Stock Appreciation Rights
A stock
appreciation right ("SAR") is a right to be paid an amount measured by the
appreciation in the fair market value of the Common Stock from the
date of the grant to the date of exercise of
the right. A limited stock appreciation right ("LSAR") is a right to
receive with respect to each share subject thereto, automatically upon the
occurrence of a Change in Control (as defined in the 1993 Plan) of the Company,
an amount equal to the excess of (i) the Change in Control Price (as defined in
the 1993 Plan) (in the case of an LSAR granted in tandem with an ISO, the fair
market value of one share on the date of such Change in Control) over (ii) the
grant price of the LSAR (which in the case of a LSAR granted in tandem with an
option shall be equal to the exercise price of the underlying option and which
in the case of any other LSAR shall be such price as the Committees granting the
LSAR determine), subject to certain specified conditions.
Unless
the Committee with authority to grant the relevant Award determines otherwise, a
SAR or a LSAR (i) granted in tandem with a NQSO may be granted at the time of
grant of the related NQSO or at any time thereafter or (ii) granted in tandem
with an ISO may only be granted at the time of the grant of the related
ISO. A SAR or LSAR granted in tandem with an option shall be
exercisable only to the extent the underlying option is
exercisable.
Restricted
Stock and Restricted Stock Units
Restricted
stock is stock that may be subject to certain restrictions and to a substantial
risk of forfeiture. Restricted stock granted under the 1993 Plan
shall be subject to such restrictions on transferability and other restrictions,
if any, as the Committee granting the Award may impose at the date of grant or
thereafter, which restrictions may lapse separately or in combination at such
times, under such circumstances and in such installments, or otherwise, as the
Committee granting the Award may determine. Upon termination of a
grantee's employment or independent contractor relationship with the Company
during the applicable restriction period, restricted stock and any accrued but
unpaid dividends or Dividend Equivalents (as defined below under "– Other
Awards") that are at that time subject to restrictions shall be forfeited,
subject to certain specified conditions.
Restricted
stock units represent the right to receive Common Stock or cash at the end of a
specified deferral period, which right may be conditioned on the satisfaction of
specified performance or other criteria. Delivery of Common Stock or
cash, as determined by the Committee granting the restricted stock unit, will
occur upon expiration of the deferral period specified for restricted stock
units by the Committee granting the restricted stock unit.
Restricted
stock units shall also be subject to such restrictions as the Committee granting
the restricted stock unit may impose, at the date of grant or thereafter, which
restrictions may lapse at the expiration of the deferral period or at earlier or
later specified times, separately or in combination, in installments or
otherwise, as the Committee granting the restricted stock units may
determine. Upon termination of a grantee's employment or termination
of a grantee's independent contractor relationship during the applicable
deferral period or portion thereof to which forfeiture conditions apply, or upon
failure to satisfy any other conditions precedent to the delivery of Common
Stock or cash to which such restricted stock units relate, all restricted stock
units held by the grantee that are then subject to deferral or restriction shall
be forfeited, subject to certain specified conditions.
Other
Awards
The
Committees are authorized to grant Common Stock as a bonus, or to grant other
Awards in lieu of Company commitments to pay cash under other plans or
compensatory arrangements, as set forth in the 1993 Plan. The
Committees are also authorized to grant cash, Common Stock or other property
equal in value to dividends paid with respect to a specified number of shares of
Common Stock ("Dividend Equivalents") under specified terms and
conditions. In addition, the Committees are authorized to grant other
stock-based Awards as an element of or supplement to any other Award under the
1993 Plan as deemed by the Committee granting the Award to be consistent with
the purposes of the 1993 Plan.
Change
of Control
All
outstanding Awards granted under the 1993 Plan that were not previously
exercisable and vested will become fully vested and exercisable upon a change of
control of the Company, as determined under the 1993 Plan. See
"Change of Control Arrangements."
New
Plan Benefits
The
future benefits or amounts that would be received under the 1993 Plan are
discretionary and are therefore not determinable at this time. In
addition, the benefits or amounts which would have been received by or allocated
to employees and independent contractors of the Company for 2007 if this
amendment to the 1993 Plan had been in effect cannot be determined.
The table
below shows, as to the named executive officers and the other individuals and
groups indicated, the number of shares of Common Stock underlying options
granted under the 1993 Plan that are outstanding as of March 18,
2008.
|
|
|
Number
of Shares of
Common Stock
Underlying Options
|
|
|
|
|
|
|
|
Roger
S. Marcus,
Chairman
of the Board and Chief Executive Officer
|
|
|
100,000
|
|
|
|
|
|
|
|
|
Richard
G. Marcus,
President
and Chief Operating Officer
|
|
|
100,000
|
|
|
|
|
|
|
|
|
William
M. Marcus,
Executive
Vice President and Treasurer
|
|
|
80,000
|
|
|
|
|
|
|
|
|
All
current executive officers as a group
|
|
|
88,000
|
|
|
|
|
|
|
|
|
All
current directors who are not executive officers as a
group
|
|
|
—
|
|
|
|
|
|
|
|
|
Mark N. Kaplan, nominee for
director
|
|
|
—
|
|
|
|
|
|
|
|
|
Natalie S. Marcus, nominee for
director
|
|
|
—
|
|
|
|
|
|
|
|
|
William M. Marcus, nominee for
director
|
|
|
80,000
|
|
|
|
|
|
|
|
|
Kenneth I. Watchmaker, nominee for
director
|
|
|
—
|
|
|
|
|
|
|
|
|
Each
associate of any non-employee directors, executive officer or
nominees
|
|
|
—
|
|
|
|
|
|
|
|
|
Each
other person who received or is to receive five percent of awards under
the 1993 Plan
|
|
|
—
|
|
|
|
|
|
|
|
|
All
employees, including all current officers who are not executive officers,
as a group
|
|
|
148,500
|
|
Certain Federal Income Tax
Consequences in respect of the 1993 Plan
Certain
relevant federal income tax effects applicable to Awards which have been made
under the 1993 Plan, or may be made under the 1993 Plan if proposal 3 is
approved by stockholders, are described below. The following
description is only a summary, and reference is made to the Code and the
regulations promulgated thereunder for a complete statement of all relevant
federal income tax provisions.
Non-Qualified
Stock Options
An
optionee generally will not be taxed upon the grant of a NQSO. Rather, at the
time of exercise of such NQSO, the optionee will recognize ordinary income for
federal income tax purposes in an amount equal to the excess of the fair market
value of the shares purchased as a result of such exercise over the option
exercise price paid with respect to such exercise. The Company will
generally be entitled to a tax deduction at the time of the exercise of such
NQSO by the optionee and in the same amount that the optionee is required to
recognize as ordinary income. If shares of Common Stock acquired upon exercise
of a NQSO are later sold or exchanged, then the difference between the aggregate
sales price and fair market value of such shares on the date that ordinary
income was recognized with respect thereto will generally be taxable as
long−term or short−term capital gain or loss, depending upon the length of time
such shares were held by the optionee.
Incentive
Stock Options
An
optionee will not recognize any taxable income at the time of grant or timely
exercise of an ISO and the Company will not be entitled to a tax deduction with
respect to such grant or exercise. Exercise of an ISO may, however,
give rise to taxable compensation income subject to applicable withholding
taxes, and a tax deduction to the Company, if the ISO is not exercised on a
timely basis (generally, while the optionee is employed by the Company or within
90 days after termination of employment) or if the optionee subsequently engages
in a "disqualifying disposition," as described below. The amount by
which the fair market value of the Common Stock on the exercise date of an ISO
exceeds the exercise price generally will increase the optionee's "alternative
minimum taxable income."
A sale or
exchange by an optionee of shares acquired upon the exercise of an ISO more than
one year after the shares were acquired by such optionee pursuant to the
exercise of an ISO and more than two years after the date of grant of the ISO
will result in any difference between the net sale proceeds and the exercise
price being treated as long-term capital gain (or loss) to the
optionee. If such sale or exchange takes place within two years after
the date of grant of the ISO or within one year from the date the shares were
acquired by the optionee pursuant to the exercise of an ISO, such sale or
exchange will generally constitute a "disqualifying disposition" of such shares
that will have the following results: any excess of (i) the lesser of (a) the
fair market value of the shares at the time of exercise of the ISO and (b) the
amount realized on such disqualifying disposition of the shares over (ii) the
ISO exercise price for such shares, will be ordinary income to the optionee,
subject to applicable withholding taxes, and the Company will be entitled to a
tax deduction in the amount of such income, and any further gain or loss after
the date of exercise generally will qualify as capital gain or loss and will not
result in any deduction by the Company.
State
income tax consequences may in some cases differ from the federal income tax
consequences. In addition, Awards under the 1993 Plan may in some
instances be made to employees and independent contractors of the Company who
are subject to tax in jurisdictions other than the United States and may result
in consequences different from those described above. The foregoing
summary of the income tax consequences in respect of the 1993 Plan is for
general information only. Interested parties should consult their own
advisors as to specific tax consequences, including the application and effect
of foreign, state and local tax laws.
Effect of the 1993 Plan
Except as
described above, the proposed amendment of the 1993 Plan will not alter any
other terms of the 1993 Plan. The proceeds received from the Company
from the exercise of certain Awards to purchase Common Stock under the 1993 Plan
will be used for general corporate purposes. If the amendment to the
1993 Plan is not approved by stockholders, the Committees will continue to grant
Awards under the 1993 Plan until such time as there are no longer any shares of
Common Stock reserved for the grant of Awards.
Approval
of the 1993 Plan
The Board
believes that stockholder approval, and thus the effectiveness, of the proposed
amendment of the 1993 Plan will better enable the Company to afford an incentive
to selected employees and independent contractors of the Company to acquire a
proprietary interest in the Company, to continue as employees or independent
contractors of the Company, as the case may be, to increase their efforts on
behalf of the Company and to promote the success of the Company's
business.
THE
BOARD OF DIRECTORS RECOMMENDS THAT
STOCKHOLDERS VOTE FOR PROPOSAL 3 TO APPROVE THE AMENDMENT TO THE 1993
PLAN AND RE-APPROVE THE PERFORMANCE FACTORS WHICH MAY BE APPLIED TO AWARDS UNDER
THE 1993 PLAN.
On March
14, 2008, the last reported sale price of the Common Stock on the AMEX was
$6.50.
The
following table sets forth information regarding the Company's equity
compensation plans as of December 31, 2007.
|
Plan
Category
|
|
Number
of
Securities
to Be
Issued
Upon
Exercise
of
Outstanding
Options,
Warrants
and
Rights
|
|
Weighted-Average
Exercise
Price of
Outstanding
Options,
Warrants
and
Rights
|
|
Number
of
Securities
Remaining
Available
for
Future
Issuance
Under
Equity
Compensation
Plans
(excluding
securities
reflected
in
Column (a))
|
|
|
|
|
(a)
|
|
|
|
(b)
|
|
|
|
(c)
|
|
|
Equity
Compensation Plans Approved by Security Holders
|
|
|
266,500
|
|
|
|
$10.06
|
|
|
|
266,520
|
|
|
Equity
Compensation Plans Not Approved by Security Holders
|
|
|
35,500
|
|
|
|
12.19
|
|
|
|
14,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
302,000
|
|
|
|
10.31
|
|
|
|
281,020(1)
|
|
|
(1)
|
Includes
266,520 shares of Common Stock available for issuance under the 1993
Plan. In addition to stock options, awards under the 1993 Plan
may take the form of SARs, LSARs, restricted stock, restricted
stock units and other stock awards specified in the 1993
Plan. If such awards are granted, they will reduce the number
of shares of Common Stock available for issuance pursuant to future stock
option awards.
|
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
During
2007, the Company retained the services of the law firm Skadden, Arps, Slate,
Meagher & Flom LLP for a variety of legal matters. The Company
has retained Skadden, Arps, Slate, Meagher & Flom LLP during 2008 and
proposes to retain that firm during the remainder of 2008. Mr. Mark
N. Kaplan is Of Counsel to Skadden, Arps, Slate, Meagher & Flom
LLP. The Company and Congoleum employ certain immediate family
members of the Company's executive officers. In no case did compensation
paid to any of these individuals exceed $120,000 in 2007.
On
December 31, 2003, the Congoleum filed a voluntary petition with the United
States Bankruptcy Court for the District of New Jersey (Case No. 03-51524)
seeking relief under Chapter 11 of the United States Bankruptcy Code as a means
to resolve claims asserted against it related to the use of asbestos in its
products decades ago.
Pursuant
to the terms of a personal services agreement, the Company's Chairman and Chief
Executive Officer, Mr. Roger Marcus, serves as the Chairman,
President and Chief Executive Officer of
Congoleum and the Company's President and Chief Operating Officer, Mr. Richard
Marcus, serves as Vice Chairman of Congoleum, in consideration for certain
payments from Congoleum to the Company. See "Proposal 1 – Executive
Compensation." The personal services agreement expires on the earlier of (a) the
effective date of a plan of reorganization for Congoleum, following a final
order of confirmation, or (b) September 30, 2008. The Company's Vice
President-Finance and Chief Financial Officer, Mr. Howard Feist III, is also
Congoleum's Chief Financial Officer. In addition, Mr. Mark Kaplan, a
director of the Company, also serves as a director of Congoleum.
Pursuant
to the terms of a business relations agreement between the Company and Congoleum
(i) Congoleum granted the Company the right to purchase Congoleum's vinyl and
vinyl composition tile at a price equal to the lower of 120% of Congoleum's
fully absorbed manufacturing costs for such tile and the lowest price paid by
any of Congoleum's other customers and the exclusive right and license
(including the right to sublicense) to distribute such tile in Canada,
subject to Congoleum's right to make
direct sales in Canada, and (ii) the Company granted
Congoleum the non-exclusive right to purchase floor tile and urethane from the
Company at a price equal to the lower of 120% of the Company's fully absorbed
manufacturing costs for such products and the lowest price charged by the
Company to any of its other customers. For the year ended December
31, 2007, the Company had purchases of $1.2 million from and sales of $4.7
million to Congoleum pursuant to the business relations
agreement. Also, under the business relations agreement, Congoleum
may distribute tile in Canada in exchange for a royalty payable to the Company
by Congoleum of 50% of Congoleum's gross profit on such sales. For
2007, Congoleum paid $865 thousand in royalties to the Company pursuant that
right to distribute tile in Canada. The business relations agreement
expires on the earlier of (a) the effective date of a plan of reorganization for
Congoleum, following a final order of confirmation, or (b) September 30,
2008.
Pursuant
to terms of a licensing agreement between the Company's subsidiary, American
Biltrite (Canada) Ltd. ("ABI (Canada)"), and Congoleum, Congoleum granted a
license to ABI (Canada) for use of Congoleum's technology to manufacture non-PVC
flooring products. The licensing fee ranges from 3% to 5% of
sales. Based on development costs incurred by ABI (Canada), royalties
will not become due and payable until royalties owed Congoleum exceed
$100,000. There were no payments made by ABI (Canada) to Congoleum
under this arrangement for 2007.
The
Company, Congoleum and certain other parties are parties to a joint venture
agreement pursuant to which the Company contributed the assets and certain
liabilities of its United States flooring business to Congoleum in 1993 in
return for cash and an equity interest in Congoleum. Pursuant to the joint
venture agreement, the Company is obligated to indemnify Congoleum for
liabilities incurred by Congoleum which were not assumed by Congoleum pursuant
to the joint venture agreement, and Congoleum is obligated to indemnify the
Company for, among other things, all liabilities relating to the Company's
former United States tile flooring operations. Unpaid amounts
owed by Congoleum to the Company pursuant to Congoleum's indemnification
obligations under the joint venture agreement as of December,31 2007 totaled
approximately $3 million, which remain unpaid due to Congoleum's current Chapter
11 case and are expected to be eliminated without payment as part of any
confirmed plan of reorganization for Congoleum.
The
proposed joint plan of reorganization for Congoleum currently pending in the
Bankruptcy Court includes certain terms that would govern an intercompany
settlement and ongoing intercompany arrangements among the Company and its
subsidiaries and reorganized Congoleum which would be effective when the joint
plan takes effect and would have a term of two years. Those
intercompany arrangements include the provision of management services by the
Company to reorganized Congoleum and other business relationships substantially
consistent with their traditional relationships. The joint plan
provides that the final terms of the intercompany arrangements among the Company
and its subsidiaries and reorganized Congoleum will be memorialized in a new
agreement to be entered into by reorganized Congoleum and American Biltrite in
form and substance mutually agreeable to the future claimants' representative,
the official committee of bondholders, the official asbestos claimants'
committee and the Company.
There can
be no assurance that a plan of reorganization for Congoleum will be confirmed in
a timely manner or at all. In addition, there can be no assurance
that the Company, Congoleum and other applicable Congoleum constituencies will
be able to reach agreement on the terms of any management services proposed to
be provided by the Company to reorganized Congoleum or any other proposed
business relationships among the Company and its affiliates and reorganized
Congoleum. Any plan of reorganization for Congoleum that may be
confirmed may have terms that differ significantly from the terms contemplated
by the version of the plan referred to in this report, including with respect to
any management services that may be provided by American Biltrite to reorganized
Congoleum and the Company's claims and interests and other business
relationships with reorganized Congoleum.
The
Company has policies and procedures for the review, approval and ratification of
related person transactions that are required to be reported under Regulation
S-K, Item 404(a) under the Exchange Act. As part of these policies
and procedures and pursuant to the charter for the Company's Audit Committee,
the Audit Committee is responsible for reviewing and providing oversight of
related person transactions. In addition, the Company's written
corporate policies provide policies and procedures regarding conflicts of
interests that the officers or employees may have with regard to the
Company. Other aspects of the Company's policies and procedures for
the review, approval and ratification of related person transactions are not
contained in a formal writing but have been communicated to, and are
periodically reviewed with, the Company's directors and executive
officers.
Generally,
prior to a director or executive officer entering into a related person
transaction with the Company, the facts and circumstances pertaining to the
transaction, including any direct or indirect material interest the director or
executive officer or his or her immediate family members may have in the
transaction, must be disclosed to the Audit Committee members and the
Board. When a proposed related person transaction is submitted to the
Board, the Board will decide whether to authorize the Company to enter into the
proposed transaction. If a director has a personal interest in the
proposed transaction, he or she may not participate in any review, approval or
ratification of the proposed transaction. In their review of the
proposed related person transaction, the Audit Committee and Board consider
relevant facts and circumstances, including (if applicable): the
benefits to the Company; the impact on a director's independence in the event
the person in question is a director, an immediate family member of a director
or an entity in which a director is a partner, shareholder or executive officer;
the availability of other sources for comparable products or services; the terms
of the transaction; and the terms available to unrelated third
parties. Related person transactions are approved only if, based on
the facts and circumstances, they are in, or not inconsistent with, the best
interests of the Company and its shareholders, as the Board determines in good
faith.
The
Company monitors and periodically inquires of its directors and executive
officers as to whether they may have any direct or indirect material interest in
a related person transaction with the Company, and the Company's written
corporate policies require its employees and officers to report to the Company's
management conflicts of interest they may have with regard to the
Company.
Natalie
S. Marcus, Richard G. Marcus, Roger S. Marcus, William M. Marcus and Cynthia S.
Marcus together beneficially own approximately 55.9% of the outstanding Common
Stock as of March 10, 2008. These individuals have identified
themselves as persons who have in the past taken, and may in the future take,
actions which direct or cause the direction of the management of the Company,
and their voting of shares of Common Stock in a manner consistent with each
other. Accordingly, these individuals may be deemed to constitute a
“group” within the meaning of Section 13(d)(3) of the Exchange Act
and Rule 13d-5 thereunder.
CHANGE
OF CONTROL ARRANGEMENTS
Under the
terms of the Company's 1993 Plan, all outstanding awards granted under that plan
that were not previously exercisable and vested will become fully vested and
exercisable if: (i) any person (other than an exempt person (as
defined in the succeeding sentence)) is or becomes the beneficial owner,
directly or indirectly, of securities of the Company representing 50% or more of
the combined voting power of the Company's then outstanding securities; (ii)
during any period of two consecutive years, individuals who at the beginning of
that two-year period constitute the entire Board, and any new director (other
than a director designated by a person who has entered into an agreement with
the Company to effect a transaction of the type referred to in clauses (i),
(iii) or (iv) of this paragraph) whose election to the Board or
nomination for election by the Company's stockholders was approved by a vote of
at least two-thirds of the directors then in office who either were directors at
the beginning of that two-year period or whose election or nomination for
election was previously so approved, cease for any reason to constitute at least
a majority of the Board; (iii) the Company's stockholders approve a merger or
consolidation of the Company with any other corporation, other than (a) a merger
or consolidation which would result in the Company's voting securities
outstanding immediately prior to the consummation of that transaction
representing 50% or more of the combined voting power of the surviving or parent
entity outstanding immediately after the merger or consummation or (b) a merger
or consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no person (other than an exempt
person) acquires 50% or more of the combined voting power of the
Company's then outstanding voting securities; or (iv) the
Company's stockholders approve a plan of complete liquidation of the Company or
an agreement for the sale of all, or substantially all of, the Company's assets
(or any transaction having a similar effect). For purposes
of the 1993 Plan, an "exempt person" means (a) the Company, (b) any trustee
or other fiduciary holding securities under an employee benefit plan
of the Company, (c) any corporation owned, directly or indirectly, by the
Company's stockholders in substantially the same proportions as their ownership
of the Company, or (d) any person or group of persons who, immediately prior to
the adoption of the 1993 Plan owned more than 50% of the combined voting power
of the Company's then outstanding voting securities. Currently, no named
executive officer holds any unvested options granted under the 1993
Plan.
RELATIONSHIP WITH REGISTERED INDEPENDENT
PUBLIC ACCOUNTANTS
The Audit
Committee has selected Ernst & Young LLP as the Company’s registered
independent public accountants to audit the financial statements of the Company
for 2008. Information relating to the fees billed to the Company and
Congoleum by Ernst & Young LLP for 2006 and 2007 are as
follows:
Audit
Fees
The
aggregate fees and expenses billed by Ernst & Young LLP for professional
services rendered for the audit of the financial statements of the Company and
Congoleum for 2006 and 2007 and the reviews of the Company's and
Congoleum’s quarterly financial statements included in the Company's and
Congoleum’s respective Quarterly Reports on Form 10-Q for 2006 and 2007 were
$1,116,900 and $1,196,000, respectively ($393,000 in 2006 and $425,000 in 2007
of such fees were for services provided to Congoleum).
Audit
Related Fees
The
aggregate fees and expenses billed in 2006 and 2007 by Ernst & Young LLP for
professional services rendered to the Company and Congoleum for audit related
services which were primarily related to services with respect to the Company’s
and Congoleum’s internal controls in preparation for compliance with Section 404
of the Sarbanes Oxley Act of 2002 for 2006 and 2007 were $143,700 and $162,300,
respectively ($19,000 in 2006 and $54,000 in 2007 of such fees were for services
provided to Congoleum).
Tax
Fees
The aggregate fees billed in 2006 and
2007 by Ernst & Young LLP for tax services provided to the Company and
Congoleum related to tax compliance, tax advice, tax planning and tax
examination assistance were $109,700 and $53,000 respectively ($0 in 2006 and
$5,700 in 2007 of such fees were for services provided to
Congoleum).
All
Other Fees
The
aggregate fees billed in 2006 and 2007 by Ernst & Young LLP for all other
services rendered to the Company other than those mentioned above were $4,200
and $56,000, respectively ($0 in 2006 and $56,000 in 2007 of such fees were for
services provided to Congoleum.). The fees related to services
provided in connection with providing assistance with a subsidiary’s renewal of
its exporter status and with Congoleum in its response to a Securities and
Exchange Commission comment letter.
Fees for
services provided by Ernst & Young LLP to Congoleum are approved by
Congoleum’s audit committee. The Company’s Audit Committee does not pre-approve
Ernst & Young LLP’s fees for services it provides to Congoleum but considers
the amounts of such fees paid when making judgments regarding Ernst & Young
LLP’s independence. All audit related services, tax services and other services
provided by Ernst & Young LLP, other than those provided to Congoleum, were
pre-approved by the Audit Committee, which concluded that the provision of such
services by Ernst & Young LLP was compatible with the maintenance of that
firm's independence in the conduct of its auditing functions. The Audit
Committee’s pre-approval policies and procedures are to review proposed Ernst
& Young LLP audit, audit-related, tax and other services and pre-approve
such services specifically described by the Audit Committee on an annual basis.
In addition, individual engagements anticipated to exceed pre-established
thresholds must be separately approved by the Audit Committee. Pursuant to those
policies and procedures, the Audit Committee may delegate to one or more members
of the Audit Committee pre-approval authority with respect to permitted
services. The Audit Committee did not approve any services described above
pursuant to Rule 2-01(c)(7)(i)(C) of Regulation S-X of the regulations
promulgated by the Securities and Exchange Commission.
Representatives
of Ernst & Young LLP are expected to be present at the Meeting, will be
given an opportunity to make a statement if they desire to do so, and are
expected to be available to respond to appropriate questions.
SHAREHOLDER COMMUNICATION
POLICY
The Company has established procedures
for shareholders to communicate directly with the Board of Directors on a
confidential basis. Shareholders who wish to communicate with the
Board or with a particular director may send a letter to the Secretary of the
Corporation at 57 River
Street, Wellesley Hills, Massachusetts 02481 Attention: Henry W.
Winkleman. The mailing envelope must contain a clear notation
indicating that the enclosed letter is a "Shareholder-Board Communication" or
"Shareholder-Director Communication." All such letters must identify the author
as a shareholder and clearly state whether the intended recipients are all
members of the Board or just certain specified individual directors. The
Secretary will make copies of all such letters and circulate them to the Board
of Directors or individual Directors addressed, as applicable. To the extent
that a shareholder wishes the communication to be confidential, such shareholder
must clearly indicate on the envelope that the communication is
"confidential." The Secretary will then forward such communication,
unopened, to the Chairman of the Board of Directors.
SUPPLEMENTAL
INFORMATION
On December 31, 2003, Congoleum filed a petition for
reorganization under Chapter 11 of the United States Bankruptcy Code. Roger S.
Marcus, Richard G. Marcus and Howard N. Feist III were executive officers of
Congoleum at the time of such filing and continue to serve in those
capacities. Also, Roger S. Marcus, Richard G. Marcus, William M.
Marcus and Mark N. Kaplan were directors of Congoleum Corporation at the time of
such filing and continue to serve in those capacities.
STOCKHOLDER
PROPOSALS
Stockholder proposals intended to be
presented at the Company’s 2009 Annual Meeting of Stockholders pursuant to Rule
14a-8 under the Exchange Act must be received by the Company at the Company’s
principal executive offices by December 11, 2008. In order for stockholder
proposals made outside of Rule 14a-8 under the Exchange Act to be considered
“timely” within the meaning of Rule 14a-4(c) under the Exchange Act, such
proposals must be received by the Company at the Company’s principal executive
offices by February
24, 2009.
OTHER MATTERS
Management of the Company has no
knowledge of any other matters which may come before the Meeting and does
not itself intend to present any such other matters. However, if any
such other matters shall properly come before the Meeting or any adjournment
thereof, the persons named as proxies will have discretionary authority to vote
the shares represented by the accompanying proxy in accordance with their
best judgment.
By Order of the Board of
Directors
AMERICAN BILTRITE
INC.
Henry W. Winkleman
Secretary
Wellesley Hills, Massachusetts
April 10, 2008
APPENDIX
A
AMERICAN
BILTRITE INC.
AMENDED
AND RESTATED
1999
STOCK OPTION PLAN
FOR
NON-EMPLOYEE DIRECTORS
|
Section
1.
|
General
Purpose of Plan; Definitions.
|
The name
of this plan is the American Biltrite Inc. Amended and Restated 1999 Stock
Option Plan for Non-Employee Directors (the "Plan"). The purpose of the Plan is
to enable the Company (as defined below) to compensate non-employee members of
the Board (as defined below) and to provide incentives to such members, which
incentives are linked directly to increases in stockholder value and will
therefore inure to the benefit of all stockholders of the Company.
For
purposes of the Plan, the following terms shall be defined as set forth
below:
(a) "Board" means the Board of Directors of
the Company.
(b) "Code" means the Internal Revenue Code of
1986, as amended from time to time, or any successor
thereto.
(c) "Committee" means the Compensation
Committee of the Board, or any other committee the Board may subsequently
appoint to administer the Plan. The Committee shall be composed entirely of
directors who meet the qualifications referred to in Section 2 of the Plan. If
at any time no Committee shall be in office, then the functions of the Committee
specified in the Plan shall be exercised by the Board.
(d) "Company" means American Biltrite Inc., a
corporation organized under the laws of the State of Delaware, or any successor
corporation.
(e) "Fair Market Value" shall mean, with
respect to Stock or other property, the fair market value of such Stock or other
property determined by such
methods or procedures as shall be established from time to time by the
Committee. Unless otherwise determined by the Committee in good faith, the per
share Fair Market Value of Stock as of a particular date shall mean (i) the
closing sale price per share of Stock on the
national securities exchange on which the Stock is principally traded for the
last preceding date on which there was a sale of such Stock on such exchange, or
(ii) if the shares of Stock are then traded in an over-the-counter market, the average of the
closing bid and asked prices for the shares of Stock in such over-the-counter
market for the last preceding date on which there was a sale of such Stock in
such market, or (iii) if the shares of Stock are not then listed on a national securities exchange or
traded in an over-the-counter market, such value as the Committee, in its sole
discretion, shall determine.
(f) "Nonqualified Stock Option" means any
Stock Option that is not an "incentive stock option" within the meaning of Section 422 of the
Code.
(g) "Plan" has the meaning set forth in the
first paragraph hereof.
(h) "Securities Act" means the Securities
Act of 1933, as amended.
(i) "Stock" means the Company's presently
authorized Common Stock, par value $0.01 per share, except as this definition may
be modified pursuant to Section 3 hereunder to include shares which are
substituted for, or represent adjustments to, the Company's Common Stock, par
value $0.01 per share, or other Stock.
(j) "Stock Option" means any option to purchase shares of Stock
granted pursuant to Section 5.
|
Section 2.
|
Administration.
|
The Plan
shall be administered by a Committee of not less than two persons, who shall be
appointed by the Board and who shall serve at the pleasure of the
Board.
|
Section 3.
|
Stock
Subject to Plan; Substitutions and
Adjustments
|
The total
number of shares of Stock reserved and available for issuance under the Plan
shall be 100,000. Such shares may consist, in whole or in part, of authorized
and unissued shares or treasury shares.
In the
event of any merger, reorganization, consolidation, recapitalization, Stock
dividend or other change in corporate structure affecting the Stock, a
substitution or adjustment shall be made in (a) the aggregate number and kind of
shares reserved and available for issuance under the Plan and (b) the number and
option price of shares subject to outstanding Stock Options granted under the
Plan as may be determined by the Committee, provided that the number of shares
subject to any award shall always be a whole number.
Each
non-employee member of the Board shall receive Nonqualified Stock Options in
accordance with the provisions of Section 5.
|
Section 5.
|
Stock
Options.
|
(a) Stock Options shall be granted in the
following
manner:
(i) On July 1, 1999, each non-employee member of the Board
shall be granted a Nonqualified Stock Option to purchase 1,000 shares of
Stock;
(ii) On each July 1 thereafter during the
term of the Plan, each non-employee member of the Board shall be granted a Nonqualified Stock Option
to purchase 500 shares of Stock; and
(iii) Each new non-employee member of the
Board who has not previously been a non-employee member of the Board during the
term of the Plan shall be granted, on the date he or she is elected to the Board during the term
of the Plan, a Nonqualified Stock Option to purchase 1,000 shares of
Stock.
(b) Stock Options granted under the Plan
shall be subject to the terms and conditions set forth
below.
(i) The exercise price per share of Stock purchasable under such Stock
Options shall be 100% of the Fair Market Value of the Stock on the date of
grant.
(ii) Such options shall be exercisable
commencing on the date which is 6 months after the date of grant by payment in
full of the exercise price
in cash, certified or cashier's check or delivery of Stock certificates endorsed
in blank or accompanied by executed stock powers with signatures guaranteed by a
national bank or trust company or a member of a national securities exchange.
For these purposes, the Stock shall be valued at
the Fair Market Value on the date of exercise. Payment of the exercise price
with certificates evidencing shares of Stock as provided above shall not
increase the number of shares available for the grant of Stock Options under the Plan.
(iii) Each Stock Option shall cease to be
exercisable on the date that is ten years following the date of
grant.
(iv) The aggregate number of shares of Stock
that may be granted to any non-employee member of the Board pursuant to the
Plan may not exceed 50,000
shares.
(v) No Stock Options shall be transferable
by the recipient otherwise than by will or by the laws of descent and
distribution, and all Stock Options shall be exercisable, during the recipient's
lifetime, only by the recipient or the recipient's guardian or
legal representative.
(c) Each recipient of a Stock Option shall
enter into a stock option agreement with the Company, which agreement shall set
forth, among other things, the exercise price of the option, the term of
the option and provisions
regarding exercisability of the option granted thereunder, which provisions
shall not be inconsistent with the terms set forth herein.
|
Section 6.
|
Amendment
and Termination.
|
The Board
may amend, alter, modify or discontinue the Plan at any time, provided that the
Board may not amend or alter the provisions of the Plan relating to the amount,
price and timing of awards more than once every six months, other than to
comport with changes in the Code, or the rules thereunder, or the Employee
Retirement Income Security Act of 1974, as amended, or the rules
thereunder.
|
Section 7.
|
Unfunded
Status of Plan.
|
The Plan
is intended to constitute an "unfunded" plan for incentive compensation. With
respect to any payments not yet made to a recipient by the Company, nothing
contained herein shall give any such recipient any rights that are greater than
those of a general creditor of the Company.
|
Section 8.
|
General
Provisions.
|
(a) The Plan and the rights of all persons
claiming hereunder shall be construed and determined in accordance with
the laws of the State of Delaware without giving effect to the choice of laws
principles thereof.
(b) The obligation of the Company to sell or
deliver shares with respect to Stock Options granted under the Plan
shall be subject to all
applicable laws, rules and regulations, including all applicable federal and
state securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee. Moreover,
each Stock Option is subject to the
requirement that, if at any time the Committee determines, in its absolute
discretion, that the listing, registration or qualification of shares issuable
pursuant to a Stock Option is required by any securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the grant of a Stock Option,
or the issuance of shares thereunder, no Stock Options shall be granted or shares issued, in whole or
in part, unless such listing, registration, qualification, consent or approval
has been effected or obtained, free of any conditions, as acceptable to the
Committee. In the event
that the issuance or disposition of shares acquired pursuant to a Stock Option
is not covered by a then current registration statement under the Securities Act
and is not otherwise exempt from such registration, such shares shall be
restricted against transfer to the extent required by the Securities Act or regulations thereunder,
and the Committee may require the holder of a Stock Option receiving shares
pursuant to that Stock Option, as a condition precedent to receipt of such
shares, to make such representations as the Committee deems appropriate, including without limitation a
representation to the Company in writing that the shares acquired by such Stock
Option holder are acquired for investment only and not with a view to
distribution.
(c) Nothing contained in the Plan shall
prevent the Board from
adopting other or additional compensation arrangements, subject to stockholder
approval if such approval is required; and such arrangements may be either
generally applicable or applicable only in specific cases. The adoption of the
Plan shall not confer upon any member of the Board any
right to continued membership on such Board.
(d) Each recipient of a Stock Option shall,
no later than the date as of which the value of a Stock Option first becomes
includible in the gross income of such recipient for federal income tax purposes, pay to
the Company, or make arrangements satisfactory to the Committee regarding
payment of, any federal, state, or local taxes of any kind required by law to be
withheld with respect to the award. The obligations of the Company under the Plan shall be
conditional on such payment or arrangements and the Company shall, to the extent
permitted by law, have the right to deduct any such taxes from any payment of
any kind otherwise due to the recipient.
(e) No member of the Board or the Committee, nor any officer or
employee of the Company acting on behalf of the Board or the Committee, shall be
personally liable for any action, determination, or interpretation taken or made
in good faith with respect to the Plan, and all members of the Board or the Committee and each
and any officer or employee of the Company acting on their behalf shall, to the
extent permitted by law, be fully indemnified and protected by the Company in
respect of any such action, determination or interpretation.
|
Section 9.
|
Effective
Date of Plan.
|
The
effective date of the Plan is July 1, 1999.
|
Section 10.
|
Term
of Plan.
|
No Stock
Option shall be granted pursuant to the Plan on or after July 1, 2019, but Stock
Options previously granted may extend beyond that date.
APPENDIX
B
AMERICAN
BILTRITE INC.
1993
STOCK AWARD AND INCENTIVE PLAN
As
Amended and Restated as of March 4, 1997
|
|
1.
|
Purpose;
Types of Awards; Construction.
|
The
purpose of the American Biltrite Inc. 1993 Stock Award and Incentive Plan, as
amended and restated as of March 4, 1997, is to afford an incentive to selected
employees and independent contractors of the Company (as defined in Section 2),
or any Subsidiary (as defined in Section 2) or Affiliate (as defined in Section
2) which now exists or hereafter is organized or acquired, to acquire a
proprietary interest in the Company, to continue as employees or independent
contractors, as the case may be, to increase their efforts on behalf of the
Company and to promote the success of the Company's business. Pursuant to
Section 6 of the Plan (as defined in Section 2), there may be granted stock
options (including incentive stock options and nonqualified stock options),
stock appreciation rights and limited stock appreciation rights (either in
connection with options granted under the Plan or independently of options),
restricted stock, restricted stock units, dividend equivalents and other
stock-based or cash-based awards.
For
purposes of the Plan, the following terms shall be defined as set forth
below:
(a) "Affiliate" means any entity if, at the
time of granting of an Award, (i) the Company, directly or indirectly, owns at
least 20% of the combined voting power of all classes of stock of such entity or
at least 20% of the ownership interests in such entity or (ii) such entity,
directly or indirectly, owns at least 20% of the combined voting power of all
classes of stock of the Company.
(b) "Award" means any Option, SAR (including
a Limited SAR), Restricted Stock, Restricted Stock Unit, Dividend Equivalent or Other Stock-Based Award
or Cash-Based Award granted under the Plan.
(c) "Award Agreement" means any written
agreement, contract or other instrument or document evidencing an
Award.
(d) "Beneficiary" means the person, persons,
trust or trusts which have
been designated by a Grantee in his or her most recent written beneficiary
designation filed with the Company to receive the benefits specified under the
Plan upon his or her death, or, if there is no designated Beneficiary or
surviving designated Beneficiary, then the person,
persons, trust or trusts entitled by will or the laws of descent and
distribution to receive such benefits.
(e) "Board" means the Board of Directors of
the Company.
(f) "Cash-Based Award" means cash awarded
under Section 6(h),
including cash awarded as a bonus or upon the attainment of specified
performance criteria or otherwise as permitted under the
Plan.
(g) "Change in Control" means a change in
control of the Company which will be deemed to have occurred
if:
(i) any "person," as such term is used in
Sections 13(d) and 14(d) of the Exchange Act (other than an
Exempt Person), is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing 50% or more of
the combined voting power of the Company's then outstanding voting
securities;
(ii) during any period of two consecutive
years, individuals who at the beginning of such period constitute the Board, and
any new director (other than a director designated by a person who has
entered into an agreement with the Company to effect a transaction described in
clause (i), (iii), or (iv) of this Section 2(f)) whose election by the Board or
nomination for election by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a majority
thereof;
(iii) the stockholders of the Company approve
a merger or consolidation of the Company with any other corporation, other than
(1) a merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving or parent entity) 50% or more of the combined voting
power of the voting securities of the Company or such surviving or parent entity outstanding
immediately after such merger or consolidation or (2) a merger or consolidation
effected to implement a recapitalization of the Company (or similar transaction)
in which no "person" (as hereinabove defined), other than an Exempt Person, acquired 50% or more of
the combined voting power of the Company's then outstanding voting securities;
or
(iv) the stockholders of the Company approve
a plan of complete liquidation of the Company or an agreement for the sale or
disposition by the Company
of all or substantially all of the Company's assets (or any transaction having a
similar effect).
(h) "Change in Control Price" means the
higher of (i) the highest price per share paid in any transaction constituting a
Change in Control or (ii)
the highest Fair Market Value per share at any time during the 60-day period
preceding or following a Change in Control.
(i) "Code" means the Internal Revenue Code
of 1986, as amended from time to time.
(j) "Committee" means the committee or
committees established by
the Board to administer the Plan; provided, however, that to the extent desired
for Awards under the Plan to comply with the applicable provisions of Section
162(m) of the Code or to obtain exemptive relief under Rule 16b-3,
"Committee" means either such committee (or a
subcommittee thereof) or such other committee, as the case may be, which shall
be constituted to comply with the applicable requirements of Rule 16b-3 and
Section 162(m) of the Code and the regulations promulgated thereunder.
(k) "Company" means American Biltrite Inc.,
a corporation organized under the laws of the State of Delaware, or any
successor corporation.
(l) "Covered Employee" shall have the
meaning set forth in Section 162(m)(3) of the Code.
(m) "Dividend Equivalent" means a right, granted to a Grantee
under Section 6(g), to receive cash, Stock, or other property equal in value to
dividends paid with respect to a specified number of shares of Stock. Dividend
Equivalents may be awarded on a free-standing basis or in connection with another Award and may
be paid currently or on a deferred basis.
(n) "Exchange Act" means the Securities
Exchange Act of 1934, as amended from time to time, and as now or hereafter
construed, interpreted and applied by rules, regulations, interpretive releases, rulings and
cases.
(o) "Executive Officer" shall have the
meaning set forth in Rule 3b-7 under the Exchange Act.
(p) "Exempt Person" means (i) the Company,
(ii) any trustee or other fiduciary holding securities under an employee
benefit plan of the
Company, (iii) any corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of Stock or (iv) any person or group of persons who, immediately prior
to the adoption of this Plan, owned more than 50% of the
combined voting power of the Company's then outstanding voting
securities.
(q) "Fair Market Value" means, with respect
to Stock or other property, the fair market value of such Stock or other
property determined by such
methods or procedures as shall be established from time to time by the
Committee. Unless otherwise determined by the Committee in good faith, the per
share Fair Market Value of Stock as of a particular date shall mean (i) the
closing sales price per share of Stock on the national
securities exchange on which the Stock is principally traded, for the last
preceding date on which there was a sale of such Stock on such exchange, or (ii)
if the shares of Stock are then traded in an over-the-counter market, the average of the closing bid and
asked prices for the shares of Stock in such over-the-counter market for the
last preceding date on which there was a sale of such Stock in such market, or
(iii) if the shares of Stock are not then listed on a national securities exchange or traded in an
over-the-counter market, such value as the Committee, in its sole discretion,
shall determine.
(r) "Grantee" means a person who, as an
employee or independent contractor of the Company, a Subsidiary or an Affiliate,
has been granted an Award
under the Plan.
(s) "ISO" means any Option intended to be
and designated as an incentive stock option within the meaning of Section 422 of
the Code.
(t) "Limited SAR" means a right granted
pursuant to Section 6(c) which shall, in general, be automatically exercised for
cash upon a Change in Control.
(u) "NQSO" means any Option that is not an
ISO.
(v) "Option" means a right, granted to a
Grantee under Section 6(b), to purchase shares of Stock. An Option may be either
an ISO or an NQSO, provided
that ISO's may not be granted to independent contractors.
(w) "Other Stock-Based Award" means a right
or other interest granted to a Grantee under Section 6(h) that may be
denominated or payable in, valued in whole or in part by reference to,
or otherwise based on, or
related to, Stock, including, but not limited to (i) unrestricted Stock awarded
as a bonus or upon the attainment of specified performance criteria or otherwise
as permitted under the Plan and (ii) a right granted to a Grantee to
acquire Stock from the Company for cash
and/or a promissory note containing terms and conditions prescribed by the
Committee.
(x) "Plan" means this American Biltrite Inc.
1993 Stock Award and Incentive Plan, as amended from time to
time.
(y) "Restricted Stock" means an Award of shares of Stock to
a Grantee under Section 6(d) that may be subject to certain restrictions and to
a risk of forfeiture.
(z) "Restricted Stock Unit" means a right
granted to a Grantee under Section 6(e) to receive Stock or cash at
the end of a specified
deferral period, which right may be conditioned on the satisfaction of specified
performance or other criteria.
(aa) "Rule 16b-3" means Rule 16b-3, as from
time to time in effect promulgated by the Securities and Exchange Commission
under Section 16 of the
Exchange Act, including any successor to such Rule.
(ab) "Stock" means the common stock, par
value $.01 per share, of the Company.
(ac) "SAR" or "Stock Appreciation Right"
means the right, granted to a Grantee under Section 6(c), to be paid an amount measured by the
appreciation in the Fair Market Value of Stock from the date of grant to the
date of exercise of the right, with payment to be made in cash, Stock or
property as specified in the Award or determined by the
Committee.
(ad) "Subsidiary" means any corporation in an
unbroken chain of corporations beginning with the Company if, at the time of
granting of an Award, each of the corporations (other than the last corporation
in the unbroken chain) owns stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in the
chain.
The Plan
shall be administered by the Committee or Committees established for that
purpose. Each Committee administering the Plan shall have the authority in its
discretion, subject to and not inconsistent with the express provisions of the
Plan, to administer the Plan and to exercise all the powers and authorities
either specifically granted to it under the Plan or necessary or advisable in
the administration of the Plan, including without limitation the authority: to
grant Awards; to determine the persons to whom and the time or times at which
Awards shall be granted; to determine the type and number of Awards to be
granted, the number of shares of Stock to which an Award may relate and the
terms, conditions, restrictions and performance criteria relating to any Award;
and to determine whether, to what extent, and under what circumstances an Award
may be settled, cancelled, forfeited, exchanged, or surrendered; to make
adjustments in the terms and conditions of, and the criteria and performance
objectives included in, Awards in recognition of unusual or non-recurring events
affecting the Company or any Subsidiary or Affiliate or the financial statements
of the Company or any Subsidiary or Affiliate, or in response to changes in
applicable laws, regulations or accounting principles; to designate Affiliates;
to construe and interpret the Plan and any Award; to prescribe, amend and
rescind rules and regulations relating to the Plan; to determine the terms and
provisions of the Award Agreements (which need not be identical for each
Grantee); and to make all other determinations deemed necessary or advisable for
the administration of the Plan.
Each
Committee may appoint a chairperson and a secretary, may make such rules and
regulations for the conduct of its business as it shall deem advisable and shall
keep minutes of its meetings. All determinations of each Committee shall be made
by a majority of its members either present in person or participating by
conference telephone at a meeting or by written consent. Each Committee may
delegate to one or more of its members or to one or more agents such
administrative
duties as
it may deem advisable, and each Committee or any person to whom it has delegated
duties as aforesaid may employ one or more persons to render advice with respect
to any responsibility such Committee or such person may have under the Plan. All
decisions, determinations and interpretations of each Committee shall be final
and binding on all persons, including the Company, and any Subsidiary, Affiliate
or Grantee (or any person claiming any rights under the Plan from or through any
Grantee) and any stockholder.
No member
of the Board or any Committee shall be liable for any action taken or
determination made in good faith with respect to the Plan or any Award granted
hereunder.
Awards
may be granted to selected employees and independent contractors of the Company
and its present or future Subsidiaries and Affiliates, in the discretion of the
Committee authorized to make the Award. In determining the persons to whom
Awards shall be granted and the type of Award granted (including the number of
shares to be covered by such Award), each Committee shall take into account such
factors as it shall deem relevant in connection with accomplishing the purposes
of the Plan.
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5.
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Stock
Subject to the Plan.
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The
maximum number of shares of Stock reserved for the grant of Awards under the
Plan shall be 550,000 shares of Stock, subject to adjustment as provided herein.
Such shares may, in whole or in part, be authorized but unissued shares or
shares that shall have been or may be reacquired by the Company in the open
market, in private transactions or otherwise. Notwithstanding the foregoing,
Awards to any individual under the Plan which are made in or based upon shares
of Stock may not exceed 100,000 shares per calendar year. If any shares subject
to an Award are forfeited, cancelled, exchanged or surrendered or if an Award
otherwise terminates or expires without a distribution of shares to the Grantee,
the shares of Stock with respect to such Award shall, to the extent of any such
forfeiture, cancellation, exchange, surrender, termination or expiration, again
be available for Awards under the Plan; provided that, in the case of
forfeiture, cancellation, exchange or surrender of shares of Restricted Stock or
Restricted Stock Units with respect to which dividends or Dividend Equivalents
have been paid or accrued, the number of shares subject to such Awards shall not
be available for Awards hereunder unless, in the case of shares with respect to
which dividends or Dividend Equivalents were accrued but unpaid, such dividends
and Dividend Equivalents are also forfeited, cancelled, exchanged or
surrendered. Upon the exercise of any Award granted in tandem with any other
Award or Awards, such related Award or Awards shall be cancelled to the extent
of the number of shares of Stock as to which the Award is exercised and,
notwithstanding the foregoing, such number of shares shall no longer be
available for Awards under the Plan.
In the
event that either of the Committees shall determine that any dividend or other
distribution (whether in the form of cash, Stock or other property),
recapitalization, stock split, reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, or share exchange, or other
similar corporate transaction or event, affects the Stock such that an
adjustment is appropriate in order to prevent dilution or enlargement of the
rights of Grantees under the Plan, then that Committee shall make such equitable
changes or adjustments as it deems necessary or appropriate to any or all of (i)
the number and kind of shares of Stock which may thereafter be issued in
connection with Awards, (ii) the number and kind of shares of Stock issued or
issuable in respect of outstanding Awards and (iii) the exercise price, grant
price, or purchase price relating to any Award; provided that, with respect to
ISOs, such adjustment shall be made in accordance with Section 424(h) of the
Code.
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6.
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Specific
Terms of Awards.
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(a) GENERAL. The term of each Award shall be
for such period as may be determined by the Committee granting the Award. Subject to the terms of the
Plan and any applicable Award Agreement, payments or benefit distributions to be
made by the Company or a Subsidiary or Affiliate upon the grant, maturation or
exercise of an Award may be made in such forms as the Committee granting the Award shall determine
at the date of grant or thereafter, including without limitation cash, Stock or
other property, and may be made in a single payment or transfer, in installments
or on a deferred basis. Each Committee may make rules relating to installment or deferred
payments or distributions with respect to Awards, including the rate of interest
to be credited with respect to such payments. In addition to the foregoing, the
Committee granting the Award may impose on such Award or the exercise thereof, at the date of grant
or thereafter, such additional terms and conditions, not inconsistent with the
provisions of the Plan, as that Committee shall determine.
(b) OPTIONS. Each Committee is authorized to
grant Options to Grantees on the following terms and
conditions:
(i) TYPE OF AWARD. The Award Agreement
evidencing the grant of an Option under the Plan shall designate the Option as
an ISO or an NQSO.
(ii) EXERCISE PRICE. The exercise price per
share of Stock purchasable under an Option shall be determined by the Committee
granting the Award; provided that, in the case of an ISO, such exercise price
shall be not less than the Fair Market Value of a share of Stock on the date of
grant of such Option, and in no event shall the exercise price for the purchase or shares be less
than par value. The exercise price for Stock subject to an Option may be paid in
cash, by an exchange of Stock previously owned by the Grantee or in a
combination of both in an amount having a combined value equal to such exercise price. A Grantee may also
elect to pay all or a portion of the aggregate exercise price by having shares
of Stock with a Fair Market Value on the date of exercise equal to the aggregate
exercise price withheld by the Company or sold by a broker-dealer under circumstances meeting
the requirements of 12 C.F.R. ss.220 or any successor
thereto.
(iii) TERM AND EXERCISABILITY OF OPTIONS. The
date on which a Committee adopts a resolution expressly granting an Option shall
be considered the day on which such Option is granted; provided that
Option grants made prior to approval of the Plan by requisite vote of the
Company's stockholders shall be deemed to have been granted on the date of such
approval. Options shall be exercisable over the exercise period (which shall not exceed ten years
from the date of grant), at such times and upon such conditions as the Committee
granting the Award may determine, as reflected in the Award Agreement; provided
that the Committee granting the Award shall
have the authority to accelerate the
exercisability of any outstanding Option at such time and under such
circumstances as it, in its sole discretion, deems appropriate. An Option may be
exercised to the extent of any or all full shares of Stock as to which the
Option has become exercisable, by giving
written notice of such exercise to the Committee granting the Award or its
designated agent.
(iv) TERMINATION OF EMPLOYMENT, ETC. An
Option may not be exercised unless the Grantee is then in the employ of, or then
maintains an independent
contractor relationship with, the Company or a Subsidiary or an Affiliate (or a
company or a parent or subsidiary company of such company issuing or assuming
the Option in a transaction to which Section 424(a) of the Code applies)
and unless the Grantee has remained
continuously so employed or has continuously maintained such relationship since
the date of grant of the Option; provided that the Award Agreement may contain
provisions extending the exercisability of Options, in the event of specified terminations, to a date
not later than the expiration date of such Option.
(v) OTHER PROVISIONS. Options may be subject
to such other conditions, including without limitation restrictions on
transferability of the shares acquired upon exercise of such Options, as the Committee
granting the Award may prescribe in its discretion.
(c) SARS AND LIMITED SARS. Each Committee is
authorized to grant SARs and Limited SARs to Grantees on the following terms and
conditions:
(i) IN GENERAL. Unless the Committee granting the Award determines
otherwise, an SAR or a Limited SAR (1) granted in tandem with an NQSO may be
granted at the time of grant of the related NQSO or at any time thereafter or
(2) granted in tandem with an ISO may only be granted at the time of grant of the related ISO. An SAR
or a Limited SAR granted in tandem with an Option shall be exercisable only to
the extent the underlying Option is exercisable.
(ii) SARS. An SAR shall confer on the Grantee
a right to receive with respect to each share subject thereto, upon exercise
thereof, the excess of (1) the Fair Market Value of one share of Stock on the
date of exercise over (2) the grant price of the SAR (which in the case of an
SAR granted in tandem with an Option shall be equal to the exercise price of the underlying Option, and
which in the case of any other SAR shall be such price as the Committee granting
the Award may determine).
(iii) LIMITED SARS. A Limited SAR shall confer
on the Grantee a right to receive with respect to each share subject thereto, automatically upon the
occurrence of a Change in Control, an amount equal to the excess of (1) the
Change in Control Price (or, in the case of a Limited SAR granted in tandem with
an ISO, the Fair Market Value of one share of Stock on the date of such Change in Control) over (2)
the grant price of the Limited SAR (which in the case of a Limited SAR granted
in tandem with an Option shall be equal to the exercise price of the underlying
Option, and which in the case of any other Limited SAR shall be such price as the Committee
granting the Award determines).
(d) RESTRICTED STOCK. Each Committee is
authorized to grant Restricted Stock to Grantees on the following terms and
conditions:
(i) ISSUANCE AND RESTRICTIONS. Restricted
Stock shall be subject to
such restrictions on transferability and other restrictions, if any, as the
Committee granting the Award may impose at the date of grant or thereafter,
which restrictions may lapse separately or in combination at such times, under
such circumstances, in such installments or otherwise, as
the Committee granting the Award may determine. Except to the extent restricted
under the Award Agreement relating to the Restricted Stock, a Grantee granted
Restricted Stock shall have all of the rights of a stockholder, including without limitation the
right to vote Restricted Stock and the right to receive dividends
thereon.
(ii) FORFEITURE. Upon termination of
employment or termination of the independent contractor relationship during the
applicable restriction period, Restricted Stock and any accrued
but unpaid dividends or Dividend Equivalents that are at that time subject to
restrictions shall be forfeited; provided, however, that the Committee granting
the Award may provide, by rule or regulation or in any Award Agreement, or may determine in any
individual case, that restrictions or forfeiture conditions relating to
Restricted Stock will be waived in whole or in part in the event of terminations
resulting from specified causes, and the Committee granting the Award may in other cases waive in whole
or in part the forfeiture of Restricted Stock.
(iii) CERTIFICATES FOR STOCK. Restricted Stock
granted under the Plan may be evidenced in such manner as the Committee granting
the Award shall determine. If certificates representing Restricted Stock are
registered in the name of the Grantee, such certificates shall bear an
appropriate legend referring to the terms, conditions and restrictions
applicable to such Restricted Stock, and the Company shall retain physical
possession of the
certificate.
(iv) DIVIDENDS. Dividends paid on Restricted
Stock shall be either paid at the dividend payment date, or deferred for payment
at such later date as determined by the Committee granting the Award, in cash or
in shares of unrestricted
Stock having a Fair Market Value equal to the amount of such dividends. Stock
distributed in connection with a stock split or stock dividend and other
property distributed as a dividend shall be subject to restrictions and a risk
of forfeiture to the same extent as the Restricted Stock with
respect to which such Stock or other property has been
distributed.
(e) RESTRICTED STOCK UNITS. Each Committee
is authorized to grant Restricted Stock Units to Grantees, subject to the
following terms and conditions:
(i) AWARD AND RESTRICTIONS. Delivery of
Stock or cash, as determined by the Committee granting the Award, will occur
upon expiration of the deferral period specified for Restricted Stock Units by
the Committee granting the Award. In addition, Restricted Stock Units shall be subject to such
restrictions as the Committee granting the Award may impose, at the date of
grant or thereafter, which restrictions may lapse at the expiration of the
deferral period or at earlier or later specified times, separately or in combination, in installments or
otherwise, as the Committee granting the Award may
determine.
(ii) FORFEITURE. Upon termination of
employment or termination of the independent contractor relationship during the
applicable deferral period or portion thereof to which forfeiture conditions
apply, or upon failure to satisfy any other conditions precedent to the delivery
of Stock or cash to which such Restricted Stock Units relate, all Restricted Stock Units that
are then subject to deferral or restriction shall be forfeited; provided, however,
that the Committee granting the Award may provide, by rule or regulation or in
any Award Agreement, or may determine in any individual case, that restrictions
or forfeiture conditions relating to Restricted Stock Units will be waived in whole or in part in
the event of termination resulting from specified causes, and the Committee may
in other cases waive in whole or in part the forfeiture of Restricted Stock
Units.
(f) STOCK AWARDS IN LIEU OF CASH AWARDS.
Each Committee is
authorized to grant Stock as a bonus, or to grant other Awards, in lieu of
Company commitments to pay cash under other plans or compensatory arrangements.
Stock or Awards granted hereunder shall have such other terms as shall be
determined by the Committee granting the
Award.
(g) DIVIDEND EQUIVALENTS. Each Committee is
authorized to grant Dividend Equivalents to Grantees. The Committee granting the
Award may provide, at the date of grant or thereafter, that Dividend Equivalents
shall be paid or distributed when accrued or shall be deemed
to have been reinvested in additional Stock or other investment vehicles as the
Committee granting the Award may specify; provided that Dividend Equivalents
(other than freestanding Dividend Equivalents) shall be subject to all conditions and restrictions
of the underlying Awards to which they relate.
(h) OTHER STOCK-BASED AWARDS AND CASH-BASED
AWARDS. Each Committee is authorized to grant to Grantees Other Stock-Based
Awards or Cash-Based Awards as an element of or supplement to any other Award under the
Plan, as deemed by the Committee granting the Award to be consistent with the
purposes of the Plan. Such Awards may be granted with value and payment
contingent upon performance of the Company or any other factors designated by the Committee granting the
Award, or valued by reference to the performance of specified Subsidiaries or
Affiliates. The Committee granting the Award shall
determine the terms and conditions of such Awards at the date of grant or
thereafter. Cash-Based
Awards made under the Plan to any individual shall not exceed $100,000 in any
calendar year.
(i) To the extent necessary to comply with
the provisions of Section 162(m) of the Code, each Committee may require that
Awards made under the Plan will be paid only on account of the attainment
of one or more preestablished Performance Factors. The Performance Factors shall
be the criteria and objectives, determined by the Committee granting the Award,
which must be met during a specified period as a condition of the Participant's receipt of
payment or a distribution with respect to an Award. Performance Factors may
include any or all of the following: (i) revenue growth, (ii) EBITA, (iii) operating cash flow, (iv)
operating income growth or level, (v) market share, (vi) working capital, (vii)
net customer sales per product line, (viii) net income, (ix) earnings or
earnings per share, (x) earnings from operations, (xi) return on equity or
return on assets or (xii) the extent of increase or decrease of any
one or more of the foregoing over the
specified period. Such Performance Factors may relate to the performance of the
Company, a business unit thereof or any combination of the two. With respect to
participants who are not Covered Employees, Performance Factors may also include such subjective
Performance Factors as each Committee may, from time to time, establish.
Each Committee shall have the sole
discretion to determine whether, or to what extent, Performance Factors are
achieved; provided, however, that payment of Awards conditioned upon the
attainment of each Performance Factors shall not be made to Covered Employees
until achievement of each Performance Factor has been certified by the Committee
granting the Award.
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7.
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Change in Control
Provisions. In the event of a Change of
Control:
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(a) any Award carrying a right to exercise
that was not previously exercisable and vested shall become fully exercisable
and vested; and
(b) the restrictions, deferral limitations,
payment conditions and forfeiture conditions applicable to any other Award
granted under the Plan shall lapse, such Awards shall be deemed fully vested and
any performance conditions imposed with respect to Awards shall be deemed fully
achieved.
(a) COMPLIANCE WITH LEGAL AND REGULATORY REQUIREMENTS. The Plan, the
granting and exercising of Awards thereunder and the other obligations of the
Company under the Plan and any Award Agreement shall be subject to all
applicable federal and state laws, rules and regulations and to such approvals by any regulatory or
governmental agency as may be required. The Company, in its discretion, may
postpone the issuance or delivery of Stock under any Award until completion of
any stock exchange listing or registration or qualification of such Stock or other required action under
any state, federal or foreign law, rule or regulation as the Company may
consider appropriate and may require any Grantee to make such representations
and furnish such information as it may consider appropriate in connection with the issuance or delivery of
Stock in compliance with applicable laws, rules and
regulations.
(b) NON-TRANSFERABILITY. Unless otherwise
provided in an Award Agreement, Awards shall not be transferable by a Grantee
except by will or the laws of descent and
distribution.
(c) NO RIGHT TO CONTINUED EMPLOYMENT, ETC.
Nothing in the Plan or in any Award granted or Award Agreement entered into
pursuant hereto shall confer upon any Grantee the right to continue in the
employ of, or as an independent contractor of, the Company, any Subsidiary
or any Affiliate, or to be entitled to any remuneration or benefits not set
forth in the Plan or such Award Agreement, or to interfere with or limit in any
way the right of the Company or any such Subsidiary or Affiliate to terminate such Grantee's
employment or independent contractor relationship.
(d) TAXES. The Company or any Subsidiary or
Affiliate is authorized to withhold from any Award, any payment or distribution
including a distribution of Stock relating to an Award, or any other payment or
distribution to a Grantee under this Plan, amounts for withholding taxes and
other taxes due in connection with any transaction involving an Award and to
take such other action as the Committee granting the Award may deem
advisable to enable the Company and
Grantees to satisfy obligations for the payment of withholding and other tax
obligations relating to any Award. This authority shall include without
limitation authority to withhold or receive Stock or other property and
to make cash payments in respect thereof
in satisfaction of a Grantee's tax obligations.
(e) AMENDMENT AND TERMINATION OF THE PLAN.
The Board may at any time and from time to time alter, amend, suspend or
terminate the Plan in whole or in part. Notwithstanding the foregoing, no amendment shall
affect adversely any of the rights of any Grantee, without such Grantee's
consent, under any Award theretofore granted under the Plan.
(f) NO RIGHTS TO AWARDS; NO STOCKHOLDER
RIGHTS. No Grantee shall have any claim to be granted any Award under the Plan, and
there is no obligation for uniformity of treatment of Grantees. Except as
provided specifically herein, a Grantee or a transferee of an Award shall have
no rights as a stockholder with respect to any shares covered by an Award until the date of the
issuance of a stock certificate to him, her or it for such
shares.
(g) UNFUNDED STATUS OF AWARDS. The Plan is
intended to constitute an "unfunded" plan for incentive and deferred
compensation. With respect to any payments or distributions not yet made to a
Grantee pursuant to an Award, nothing contained in the Plan or any Award shall
give any such Grantee any rights that are greater than those of a general
creditor of the Company.
(h) NO FRACTIONAL SHARES. No fractional
shares of Stock shall be
issued or delivered pursuant to the Plan or any Award. The Committee granting
the Award shall determine whether cash, other Awards or other property shall be
issued or paid in lieu of such fractional shares or whether such
fractional shares or any rights thereto shall be
forfeited or otherwise eliminated.
(i) GOVERNING LAW. The Plan and all
determinations made and actions taken pursuant hereto shall be governed by the
laws of the State of Delaware without giving effect to the conflicts of law principles thereof.
(j) EFFECTIVE DATE; PLAN TERMINATION. The
Plan shall take effect upon adoption by the Board (the "Effective Date"), but
the Plan, any grants of Awards made prior to the stockholder approval mentioned
herein and any amendments thereto requiring stockholder approval
shall be subject to the approval of the holders of a majority of the voting
power of all issued and outstanding voting securities of the Company entitled to
vote thereon, which approval must occur within twelve months of the date the Plan or amendment is
adopted by the Board. In the absence of such approval, such Awards shall be null
and void.
AMENDMENT
TO
THE
AMERICAN BILTRITE INC.
1993
STOCK AWARD AND INCENTIVE PLAN,
AS
AMENDED AND RESTATED AS OF MARCH 4, 1997
AMENDMENT dated as of March
31, 2008 to the AMERICAN BILTRITE INC. 1993 Stock Award and Incentive Plan, as
amended and restated as of March 4, 1997 (the “1993 Plan”).
By Unanimous Action by
Written Consent, the Board of Directors (the “Board”) of AMERICAN
BILTRITE INC. took action with respect to the 1993 Plan as follows:
The first sentence of section 5 of the
1993 Plan is amended, subject to stockholder approval, to read as
follows:
“The
maximum number of shares of Stock reserved for the grant of Awards under the
Plan shall be 800,000 shares of Stock, subject to adjustment as provided
herein.”
Clause (ii) in Section 6(i) of the 1993
Plan is amended, subject to stockholder approval, for technical purposes to read
as follows:
“(ii) EBITDA,”.
The Board also re-approved the
Performance Factors (as defined in the 1993 Plan) set forth in section 6(i) of
the 1993 Plan, and determined to seek stockholder approval of the
same.
The effectiveness of this Amendment is
conditioned upon the approval of the Company’s stockholders.
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PLEASE
MARK VOTES
AS
IN THIS EXAMPLE
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REVOCABLE
PROXY
AMERICAN
BILTRITE INC.
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ANNUAL
MEETING OF STOCKHOLDERS MAY 6, 2008
This
proxy is solicited on behalf of the Board of Directors
The
undersigned hereby appoints Roger S. Marcus, Richard G. Marcus and William
M. Marcus and each of them, as attorneys and proxies, with full power of
substitution, to represent and to vote, as designated below, at the Annual
Meeting of Stockholders of American Biltrite Inc. (the “Company”) to be
held at the Bank of America, America Room, Second Floor, 100 Federal
Street, Boston, Massachusetts on Tuesday, May 6, 2008, at 8:30 A.M., local
time, and at any adjournment thereof, all shares of Common Stock of the
Company which the undersigned could vote if present in such manner as such
proxies may determine on any matters which may properly come before the
meeting and to vote on the following as specified hereon.
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For
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With-
hold
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Except
All
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1. ELECTION OF CLASS III
DIRECTORS
(except as marked to the
contrary below):
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o
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o
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o
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Nominees:
Mark N. Kaplan Natalie
S. Marcus
William
M. Marcus Kenneth
I. Watchmaker
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INSTRUCTION:
To withhold authority to vote for any individual nominee, mark “For All
Except” and write that nominee’s name in the space provided
below.
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For
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Against
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Abstain
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2.
Proposal to
approve the Company’s Amended and Restated 1999 Stock Option Plan for
Non-Employee Directors, which amends and restates the 1999 Stock Option
Plan for Non-Employee Directors, to increase by 50,000 the number of
shares of common stock reserved and available for issuance under the plan
and extend the term of the plan to July 1,
2019.
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o
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o
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For
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Against
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Abstain
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3.
Proposal to
approve an amendment to the Company’s 1993 Stock Award and Incentive Plan,
as amended and restated as of March 4, 1997, to increase by 250,000 the
number of shares of common stock reserved for the grant of awards under
the plan and re-approve the performance factors included in the
plan.
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o
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o
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o
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Please be sure
to sign and date
this Proxy in
the box below.
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Date
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THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH NOMINEE AND “FOR”
PROPOSALS 2 AND 3.
THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE WITH RESPECT TO A
PROPOSAL, THIS PROXY WILL BE VOTED “FOR” THE PROPOSAL. IN THEIR
DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS
MAY PROPERLY COME BEFORE THE MEETING.
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Stockholder
sign above Co-holder (if any) sign
above
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Detach
above card, sign, date and mail in postage-paid envelope
provided.
AMERICAN
BILTRITE INC.
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Note:
Signature(s) should agree with name(s) as printed hereon. All joint owners
and fiduciaries should sign. When signing as attorney, executor,
administrator, trustee, guardian or custodian for a minor, please give
full title as such. If a corporation, please sign full corporate name and
indicate the signer’s office of authority. If a partner, sign in
partnership name by authorized person.
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PLEASE
FILL IN DATE, SIGN AND MAIL THIS PROXY IN
THE
ENCLOSED POSTAGE-PAID RETURN
ENVELOPE
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IF
YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED BELOW
AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.
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