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H O N  I N D U S T R I E S  I n c .  a n d  S U B S I D I A R I E S
In May 1997, the Company registered 400,000 shares of its common 
stock under its 1997 Equity Plan for Non-Employee Directors. This 
plan permits the Company to issue to its non-employee directors 
options to purchase shares of Company common stock, restricted 
stock of the Company, and awards of Company stock. The plan also 
permits non-employee directors to elect to receive all or a portion of 
their annual retainers and other compensation in the form of shares of 
Company common stock. During 2003, 2002, and 2001, 10,922; 
11,958; and 8,662 shares of Company common stock were issued 
under the plan, respectively.
Cash dividends declared and paid per share for each year are:
(In dollars) 2003 2002 2001 
Common shares $ .52 $ .50 $ .48
During 2002, shareholders approved the 2002 Members’ Stock 
Purchase Plan. Under the new plan, 800,000 shares of common stock 
were registered for issuance to participating members. Beginning on 
June 30, 2002, rights to purchase stock are granted on a quarterly 
basis to all members who have one year of employment eligibility and 
work a minimum of 20 hours a week. The price of the stock purchased 
under the plan is 85% of the closing price on the applicable purchase 
date. No member may purchase stock under the plan in an amount 
which exceeds the lesser of 20% of his/her gross earnings or a maxi -
mum fair value of $25,000 in any calendar year. During 2003, 79,237 
shares of common stock were issued under the plan at an average 
price of $29.25. During 2002, 47,419 shares of common stock were 
issued under the plan at an average price of $22.58. An additional 
673,344 shares were available for issuance under the plan at 
January 3, 2004. This plan replaced the 1994 Members’ Stock Purchase 
Plan. Under this plan, during 2002 and 2001, 43,388 shares at an aver-
age price of $23.63 and 85,385 shares at an average price of $20.51 
were issued, respectively.
The Company has a shareholders’ rights plan which will 
expire August 20, 2008. The plan becomes operative if certain events 
occur involving the acquisition of 20% or more of the Company’s common 
stock by any person or group in a transaction not approved by the 
Company’s Board of Directors. Upon the occurrence of such an event, 
each right entitles its holder to purchase an amount of common stock of 
the Company with a market value of $400 for $200, unless the Board 
authorizes the rights be redeemed. The rights may be redeemed for $0.01 
per right at any time before the rights become exercisable. In certain 
instances, the right to purchase applies to the capital stock of the acquirer 
instead of the common stock of the Company. The Company has reserved 
preferred shares necessary for issuance should the rights be exercised.
The Company has entered into change in control employ -
ment agreements with corporate officers and certain other key 
employees. According to the agreements, a change in control occurs 
when a third person or entity becomes the beneficial owner of 20% or 
more of the Company’s common stock or when more than one-third of 
the Company’s Board of Directors is composed of persons not recom -
mended by at least three-fourths of the incumbent Board of Directors. 
Upon a change in control, a key employee is deemed to have a two-year 
employment with the Company, and all his or her benefits are vested 
under Company plans. If, at any time within two years of the change in 
control, his or her position, salary, bonus, place of work, or Company-
provided benefits are modified, or employment is terminated by the 
Company for any reason other than cause or by the key employee for good 
reason, as such terms are defined in the agreement, then the key employee 
is entitled to receive a severance payment equal to two times annual salary 
and the average of the prior two years’ bonuses.
Stock-Based Compensation