<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. ___)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
OSHMAN'S SPORTING GOODS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------------
5) Total Fee Paid:
---------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
OSHMAN'S SPORTING GOODS, INC.
2302 MAXWELL LANE
HOUSTON, TEXAS 77023
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 16, 1995
To the Stockholders of Oshman's Sporting Goods, Inc.
NOTICE IS HEREBY GIVEN that the 1995 Annual Meeting of Stockholders of
Oshman's Sporting Goods, Inc. will be held in the Oshman's SuperSports USA store
at 2131 South Post Oak Road, Houston, Texas on Friday, June 16, 1995, 9:15 a.m.,
local time, for the following purposes:
1. To elect seven directors to serve as the Board of Directors until the
next annual meeting of stockholders and until their respective
successors are elected.
2. To approve the proposed amendments to the Company's 1994 Omnibus Plan
to increase from 500,000 to 750,000 the number of shares available for
granting Incentive Awards thereunder, and to increase from 200,000 to
250,000 the maximum aggregate number of shares of common stock
underlying certain options and any Stock Appreciation Rights that may
be granted to a single individual under the 1994 Omnibus Plan.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on April 21, 1995 as
the record date for the determination of stockholders entitled to notice of and
to vote at the meeting.
Stockholders who do not expect to attend the meeting in person are
requested to fill in, date and sign the enclosed proxy and return it promptly in
the enclosed postage-paid return envelope so that their shares may be
represented and voted at the meeting.
By Order of the Board of Directors,
R. L. BOCKART
Vice President
Dated: May 12, 1995
<PAGE>
OSHMAN'S SPORTING GOODS, INC.
2302 MAXWELL LANE
HOUSTON, TEXAS 77023
-------------------
PROXY STATEMENT
-------------------
ANNUAL MEETING OF STOCKHOLDERS
JUNE 16, 1995
The accompanying proxy is solicited by the Board of Directors of Oshman's
Sporting Goods, Inc. (the "Company"), to be voted at the 1995 Annual Meeting of
Stockholders, which will be held at the time and place and for the purposes
expressed in the accompanying Notice of Annual Meeting. All shares represented
by a properly completed and executed proxy will be voted at the meeting in
accordance with the specifications set forth therein. If no contrary
specification is made, all shares represented by an executed proxy will be voted
for the nominees for the Board of Directors named therein and for the approval
of the proposed amendments to the Company's 1994 Omnibus Plan. If the enclosed
form of proxy is executed and returned, it may nevertheless be revoked by you at
any time before it is exercised by giving notice to the Secretary of the
Company, or by giving a later proxy or voting in person at the meeting.
In addition to the solicitation of proxies by use of the mail, officers and
regular employees of the Company may aid in such solicitation by personal
contact, telephone and telegraph. Brokerage firms will be requested to forward
proxy materials to beneficial owners of shares registered in the names of such
firms and will be reimbursed for their expenses. The cost of solicitation will
be borne by the Company.
The Company's Annual Report to Stockholders for the year ended January 28,
1995, including financial statements, is enclosed with this proxy statement,
which is being mailed to stockholders on or about May 12, 1995. The Annual
Report to Stockholders does not constitute a part of the proxy soliciting
material.
VOTING RIGHTS AND PRINCIPAL STOCKHOLDERS
The record date for the determination of stockholders entitled to notice of
and to vote at the Annual Meeting of Stockholders is the close of business on
April 21, 1995. As of April 21, 1995, there were 5,808,049 shares of common
stock, $1.00 par value, of the Company ("Common Stock") issued and outstanding.
In accordance with Delaware law and the Company's charter and bylaws, each of
such shares of Common Stock is entitled to one vote on each matter to be acted
upon at the meeting. In establishing the presence of a quorum, abstentions and
broker non-votes will be included in the determination of the number of shares
represented at the meeting. Abstentions will have the same effect as a vote
against a proposal; broker non-votes, however, are not included in the tally of
votes present and will not affect the outcome of a proposal. During the ten
days prior to the annual meeting, a list of the stockholders entitled to vote at
the annual meeting will be available at the principal offices of the Company
during ordinary business hours for examination by any stockholder for any
purpose germane to the meeting.
<PAGE>
Based on the records of the Company as of April 21, 1995, the following
persons were known by the Company to own beneficially more than 5% of the Common
Stock of the Company then outstanding.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENTAGE
OWNERSHIP (1) OF CLASS
-------------------- -----------
<S> <C> <C>
Marilyn Oshman...................... 1,222,547(2) 21.0%
2302 Maxwell Lane
Houston, Texas 77023
Judy O. Margolis.................... 877,315(3) 15.1%
2302 Maxwell Lane
Houston, Texas 77023
Edward C. Stanton III, Trustee...... 427,353(4) 7.4%
6363 Woodway, Suite 300
Houston, Texas 77057
Jeanette Oshman Efron............... 409,079(5) 7.0%
2302 Maxwell Lane
Houston, Texas 77023
Vendamerica B.V..................... 300,000 5.2%
De Klencke 6 1083 HH
Amsterdam, Netherlands
Barry M. Lewis, Trustee............. 298,432(6) 5.1%
3731 Briar Park Drive, Suite 200
Houston, Texas 77042
Dimensional Fund Advisors, Inc...... 292,000 5.0%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
</TABLE>
- ---------------
(1) The persons listed have the sole power to vote and to dispose of the shares
beneficially owned by them except as otherwise indicated. Does not include
11,802 shares owned by the Oshman Foundation. Jeanette Oshman Efron,
Marilyn Oshman and Judy O. Margolis are three of six trustees of the Oshman
Foundation. Such trustees are vested with the power to vote and dispose of
all assets of the Foundation, including such shares. These persons
disclaim all beneficial ownership of shares owned by the Foundation.
(2) Includes 251,800 shares held by Ms. Oshman as trustee for the benefit of
her children. Does not include 427,353 shares held in trust for the
benefit of Ms. Oshman and her children.
(3) Includes 257,800 shares held by Ms. Margolis as trustee for the benefit of
her children and 11,527 shares held by the husband of Ms. Margolis as
trustee for Ms. Margolis' son. Does not include 298,432 shares held in
trust for the benefit of Ms. Margolis and her children.
(4) These shares are held by Edward C. Stanton III as trustee for the benefit
of Marilyn Oshman and her children.
(5) Includes 10,250 shares held by the husband of Jeanette Oshman Efron.
(6) These shares are held by Barry M. Lewis as trustee for the benefit of Judy
O. Margolis and her children.
2
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
OF DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
The following table shows, as of April 21, 1995, the number of shares of
Common Stock beneficially owned by each of the directors, nominees for director,
the executive officers named below in the Summary Compensation Table, and all
executive officers and directors as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENTAGE
NAME OF BENEFICIAL OWNERS OWNERSHIP (1) OF CLASS
- ------------------------- --------------------- -----------
<S> <C> <C>
Marilyn Oshman........................... 1,222,547(2) 21.0%
Alvin N. Lubetkin........................ 272,600(3)(4) 4.5%
Fred M. Gerson........................... 58,699(5) 1.0%
William N. Anderson...................... 43,750(6) *
Marvin Aronowitz......................... 28,441(7) *
Dolph B.H. Simon......................... 4,000(5) *
Stewart Orton............................ 4,000(5) *
Lindsay J. Rice.......................... 100(3) *
Will A. Clark............................ 0(3) *
Morrie K. Abramson....................... 0 *
All executive officers and directors
as a group.............................. 1,660,738(3)(8) 27.1%
</TABLE>
- ---------------
*Less than 1%
(1) The persons listed above have the sole power to vote and to dispose of the
shares beneficially owned by them except as otherwise indicated. The
11,802 shares owned by the Oshman Foundation, of which Fred M. Gerson,
Marvin Aronowitz, Marilyn Oshman and Alvin N. Lubetkin are four of six
trustees, are not included. Such trustees are vested with the power to
vote and dispose of all assets of the Foundation, including such shares.
These persons disclaim all beneficial ownership of shares owned by the
Foundation.
(2) Includes 251,800 shares held by Ms. Oshman as trustee for the benefit of
her children. Does not include 427,353 shares held in trust for the
benefit of Ms. Oshman and her children.
(3) Excludes 150,280 shares owned by the Company's Profit Sharing Plan of which
Messrs. Lubetkin, Rice, Clark, Richard Bockart, Vice President and
Treasurer, and Steven Rath, Vice President, are trustees and share voting
and dispositive power over such shares. These persons disclaim all
beneficial ownership of shares owned by the Profit Sharing Plan.
(4) Includes vested options to purchase 250,000 shares of Common Stock pursuant
to the Company's 1986 Stock Option Plan. The Company has granted Mr.
Lubetkin options to purchase an equal number of shares under the 1994
Omnibus Plan, subject to stockholder approval of the amendments to the 1994
Omnibus Plan proposed herein and surrender and cancellation of the options
granted to Mr. Lubetkin under the 1986 Stock Option Plan. The options
granted to Mr. Lubetkin under the 1994 Omnibus Plan will vest upon
surrender and cancellation of his options under the 1986 Stock Option Plan,
but in no event prior to October 20, 1995 except in the case of Mr.
Lubetkin's earlier retirement, termination, disability or death. See
"Approval of Amendments to the Company's 1994 Omnibus Plan--Description of
Proposed Amendments". Excludes 100,000 shares of restricted Common Stock
that are subject to vesting requirements.
(5) Includes vested options to purchase 4,000 shares of Common Stock pursuant
to the Company's 1993 Non-Employee Director Stock Option Plan.
(6) Includes vested options to purchase 25,000 shares of Common Stock pursuant
to the Company's 1994 Omnibus Plan and options to purchase an additional
18,750 shares of Common Stock that will vest within sixty days.
(7) Includes vested options to purchase 10,000 shares of Common Stock pursuant
to the Company's 1986 Stock Option Plan.
(8) Includes vested options to purchase 317,750 shares of Common Stock held by
officers and directors pursuant to the Company's 1986 Stock Option Plan,
1993 Non-Employee Director Stock Option Plan and 1994 Omnibus Plan.
The Company is not aware of any contractual arrangement, the operation of
which may at a subsequent date result in a change in control of the Company.
3
<PAGE>
ELECTION OF DIRECTORS
At the annual meeting, the stockholders will elect the seven individuals
who are to serve as directors during the coming year. Directors will be elected
by the plurality vote of the shares of Common Stock represented at the annual
meeting and entitled to vote. The persons named as proxies in the enclosed
proxy, unless otherwise directed, intend to vote the shares represented by such
proxy for the election of the nominees listed below.
The following table sets forth the names of the nominees for election to
the Board of Directors, the period during which each nominee has served as a
director, if applicable, the age of each nominee and the principal occupation or
employment of each nominee. The nominees elected as directors of the Company
will serve until the next annual meeting of stockholders or until their
respective successors are elected.
<TABLE>
<CAPTION>
DIRECTOR POSITION WITH THE COMPANY,
NAME SINCE AGE PRINCIPAL OCCUPATION IF DIFFERENT(1)
---- -------- --- ------------------------------------
<S> <C> <C> <C>
Morrie K. Abramson.................... N/A 60 Chairman, President and Chief Executive Officer of Kent
Electronics Corporation
William N. Anderson(2)(3)............. 1994 48 President, Chief Operating Officer and Director
Marvin Aronowitz(3)(4)................ 1962 70 Director, employee
Fred M. Gerson(5)(6).................. 1962 56 Director. Personal investments, previously the Chairman of
the Board of Gerson Brothers, Incorporated (office supply
and stationery business)
Alvin N. Lubetkin(3).................. 1962 61 Vice Chairman of the Board, Chief Executive Officer and
Director
Marilyn Oshman(3)(7).................. 1979 55 Chairman of the Board, Director
Dolph B. H. Simon(5)(6)............... 1987 62 Director. Vice President and General Counsel of Zale
Corporation
</TABLE>
- ---------------
(1) The principal occupation during the past five years of each nominee for
director is as indicated in this table except as otherwise specified.
(2) Mr. Anderson was elected President, Chief Operating Officer and Director in
June 1994. Prior to that time Mr. Anderson served as Senior Vice President,
General Manager of Ames Department Stores, Inc. (1992-1994), Chief Executive
Officer of Reality Technologies, Ltd., a computer software developer in the
financial planning/services sector (1991-1992) and President and Chief
Operating Officer of Domain, Inc., a specialty home furnishings retailer
(1985-1991).
(3) Member of Executive Committee.
(4) Mr. Aronowitz also served as President and Chief Operating Officer prior to
June 15, 1989, at which time he resigned those positions and Mr. Lubetkin
was elected President. Mr. Aronowitz is the cousin of Marilyn Oshman.
(5) Member of Audit Committee.
(6) Member of Compensation Committee.
(7) Marilyn Oshman was elected Chairman of the Board in April 1993 and has been
a director of the Company since 1979. Prior to becoming an employee of the
Company in 1990, Ms. Oshman was involved in civic and charitable activities
and management of her personal investments. Ms. Oshman is the daughter of
Jeanette Oshman Efron and the sister of Judy O. Margolis, each a significant
stockholder of the Company. Such persons, individually or as a group, may
constitute a control person under the rules of the Securities and Exchange
Commission (the "Commission").
4
<PAGE>
Management of the Company has no reason to believe that any of the above
nominees will be unavailable or unwilling to serve as director; however, in the
event any of the above nominees should become unavailable or unwilling to serve
if elected, proxies will be voted for the election of substitute nominees
selected by the Board of Directors.
The Company does not have a standing nominating committee of the Board of
Directors or any committee performing similar functions. The Company has an
Executive Committee which held no meetings during the fiscal year ended January
28, 1995, but met informally on several occasions during the year. The
Executive Committee exercises limited powers of the Board of Directors between
meetings of the Board. The Company's Compensation Committee held six meetings
during the last fiscal year. The Compensation Committee has authority to
consider and make recommendations to the Board of Directors regarding
compensation of officers of the Company. The Company's Audit Committee, which
held four meetings during the last fiscal year, considers the audit services
performed by the Company's independent auditors and the possible effect on the
independence of the auditors of the performance of non-audit services. The
Audit Committee makes recommendations to the Board of Directors as to the
selection of independent auditors and reviews with such independent auditors
their reports of audit, the adequacy of internal controls and the accompanying
management letters. During the fiscal year ended January 28, 1995, the Board of
the Directors held five meetings. Each director attended 75% or more of the
aggregate number of meetings of the Board of Directors and committees of the
Board on which he or she served.
Each non-employee director of the Company currently receives director's fees
at a rate of $10,000 per full year plus $1,000 per meeting attended and $500 for
meeting participation via telephone. Members of the Audit Committee receive
$1,000 per meeting attended and members of the Compensation Committee receive
$1,000 per meeting attended. These committee meeting fees are reduced to $500
for meetings held the same day as a Board of Directors meeting. The Chairman of
the Audit Committee and the Compensation Committee receives a fifty percent
premium fee for each meeting attended. The Company reimburses directors for
out-of-pocket expenses incurred in connection with their duties. In addition,
each non-employee director is granted options under the non-employee director
stock option plan upon his or her becoming a director.
COMPENSATION OF EXECUTIVE OFFICERS
The following tables set forth (i) the aggregate amount of remuneration paid
by the Company for the three fiscal years ended January 28, 1995 to the Chief
Executive Officer and the three other highest paid executive officers, (ii) the
number of shares of Common Stock that are subject to options granted to such
individuals during the last fiscal year and the hypothetical value thereof
assuming specified annual rates of Common Stock price appreciation, and (iii)
the value at the end of the last fiscal year of the stock options held by such
individuals. No stock options were exercised by any of such individuals during
the fiscal year ended January 28, 1995.
5
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
-----------------------------
Long-Term
Compensation Awards
----------------------------------
Restricted Securities
Fiscal Stock Underlying All Other
Name and Principal Position Year Salary Bonus Other Awards Options Compensation
- ------------------------------- ------ -------- ------- ---------- ------------- ------------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Alvin N. Lubetkin.............. 1994 $342,200 $ 0 $50,768(1) $825,000(2) 0 $30,139(3)
Vice Chairman of the Board, 1993 342,200 0 48,110(1) 0 0 27,571(3)
Chief Executive Officer and 1992 342,200 0 46,189(1) 0 0 30,465(3)
Director
William N. Anderson............ 1994 229,112 25,000 0 0 100,000 0
President, Chief Operating 1993 --- --- --- --- --- ---
Officer and Director 1992 --- --- --- --- --- ---
Lindsay J. Rice................ 1994 143,942 0 0 0 0 0
Executive Vice President 1993 133,077 0 0 0 20,000 0
1992 110,000 0 0 0 0 0
Will A. Clark.................. 1994 118,942 0 0 0 0 0
Vice President 1993 105,085 0 0 0 20,000 0
1992 90,000 10,000 0 0 0 0
</TABLE>
- ---------------
(1) Includes $43,863 in 1994, $41,560 in 1993 and $40,917 in 1992 as
incremental cost to the Company for a $700,000 non-interest bearing ten-
year loan made in October 1990 by the Company to Mr. Lubetkin. The loan is
being repaid in bi-weekly installments. The loan is secured by a $700,000
life insurance policy and certain stock option rights. At the commencement
of the last fiscal year, Mr. Lubetkin owed the Company $556,258. As of
March 1, 1995, $507,229 remained outstanding under the loan.
(2) Represents a grant of 100,000 shares of restricted stock of the Company
made on July 15, 1994 under the 1994 Omnibus Plan, calculated at a market
price of $8.25, the closing price of a share of Common Stock on the grant
date. As of January 28, 1995, Mr. Lubetkin had 100,000 restricted shares
that are scheduled to vest 25% if he should retire at age 62, 50% at age
63, 75% at age 64 and 100% at or after age 65. The shares would vest 100%
in the event of Mr. Lubetkin's death or disability (as defined) prior to
his retirement or upon certain terminations of his employment. To the
extent Mr. Lubetkin's loan from the Company (see note 1) has not been
repaid at the time vesting would occur, an appropriate number of shares
otherwise scheduled to vest would instead be cancelled to satisfy the
remaining loan obligation. Based on the closing price of the Common Stock
on January 27, 1995, such shares had a value of $712,500. Dividends are
not payable upon such shares until they have vested. None of the other
officers named in the table owns any shares of restricted Common Stock.
(3) The Company has a Deferred Compensation Agreement with Mr. Lubetkin under
which Mr. Lubetkin will receive annual lump-sum retirement benefits after
he attains age 65. Upon Mr. Lubetkin's death, whether prior to or after he
attains age 65, such payments will be made to his designated beneficiary.
It is anticipated that these payments will be provided through a $900,000
life insurance policy (owned by Texas Commerce Trust Company N.A., trustee
for the Deferred Compensation Agreement trust), which is subject to the
rights of the general creditors of the Company. The amount of payments is
currently estimated at $152,000 annually and $1,212,000 in the aggregate,
based on an assumed 6.25% annual rate of interest and other actuarial
assumptions included in such insurance policy. The amount shown in this
column reflects the value of this benefit under methodology required by the
Commission.
6
<PAGE>
OPTION GRANTS DURING YEAR ENDED JANUARY 28, 1995
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- ----------------------------------------------------------------------------------------------
% OF TOTAL POTENTIAL REALIZABLE VALUE
NUMBER OF OPTIONS AT ASSUMED ANNUAL RATES OF
SECURITIES GRANTED TO STOCK PRICE APPRECIATION
UNDERLYING EMPLOYEES EXERCISE MARKET FOR OPTION TERM
OPTIONS IN FISCAL PRICE PER PRICE ON EXPIRATION ------------------------------------
NAME GRANTED YEAR SHARE GRANT DATE DATE 0% 5% 10%
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alvin N. Lubetkin.......... 0 0 $ --- $ --- --- --- $ --- $ ---
William N. Anderson........ 100,000(1) 72.1% 7.13 7.00 6-20-04 0 427,500 1,103,500
Lindsay J. Rice............ 0 0 --- --- --- --- --- ---
Will A. Clark.............. 0 0 --- --- --- --- --- ---
- ------------------------------------------------------------------------------------------------------------------------------------
Total Outstanding Shares at January 1995: 5,808,049
Aggregate Assumed Appreciation of all currently outstanding shares at 10 Years........ $25,555,416 $64,817,827
</TABLE>
(1) The option became exercisable as to 25% on June 20, 1994 and will become
exercisable as to 18.75% on each of the next four anniversaries thereof.
JANUARY 28, 1995 FISCAL YEAR-END OPTION VALUE TABLE
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL YEAR END OPTIONS AT FISCAL YEAR END
-------------------------- --------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alvin N. Lubetkin....... 250,000 0 $0 $ 0
William N. Anderson..... 25,000 75,000 0 0
Lindsay J. Rice......... 1,000 20,000 0 5,050
Will A. Clark........... 333 20,000 0 5,050
</TABLE>
(1) Represents options granted to Mr. Lubetkin under the 1986 Stock Option Plan.
The Company has granted to Mr. Lubetkin options to purchase 250,000 shares
of Common Stock pursuant to the 1994 Omnibus Plan, subject to approval of
the amendments to the 1994 Omnibus Plan proposed herein and surrender and
cancellation of his options under the 1986 Stock Option Plan.
EMPLOYMENT AGREEMENTS AND OTHER ARRANGEMENTS
In October 1990, the Company entered into an employment agreement with Mr.
Lubetkin. The agreement provides that Mr. Lubetkin will serve as the Chief
Executive Officer of the Company for such salary and compensation as may be
fixed from time to time by the Board of Directors. The agreement limits the
ability of Mr. Lubetkin to compete with the Company for a period of 18 months
after he ceases to be an employee of the Company. The term of the agreement
commenced October 3, 1990 and continues until the loan to Mr. Lubetkin described
in note (1) to the Summary Compensation Table has been fully repaid.
7
<PAGE>
In June 1994, the Company entered into an employment agreement with Mr.
Anderson. The agreement provides that Mr. Anderson will serve as President and
Chief Operating Officer on an "at will" basis for such salary and compensation
as may be fixed from time to time by the Board of Directors. The agreement
provides that if the Company terminates Mr. Anderson's employment other than for
"cause," or Mr. Anderson terminates his employment for "good reason," each as
defined in the agreement, at any time, the Company will pay a lump sum severance
payment to Mr. Anderson in the amount of $300,000, provided, however, the
Company shall have no obligation under this agreement if, as of the date of such
termination, the aggregate value of all stock options exercised by Mr. Anderson
(valued as of the date of each such exercise), together with all vested but
unexercised stock options held by Mr. Anderson (valued as of the date of
termination of employment) is equal to or exceeds $1,000,000.
Marvin Aronowitz and the Company are parties to a split dollar insurance
agreement pursuant to which the Company paid for an insurance policy on the life
of Mr. Aronowitz in the amount of $260,000. Each year, that portion of the
annual premium cost equal to the one-year term cost of the insurance protection
is paid by Mr. Aronowitz. Upon the death of Mr. Aronowitz, the beneficiary
named by him is entitled to receive the benefits under the policy, less the
amount of the contributions made under the policy by the Company. The Company
funded its portion of the premiums through a policy loan. The interest incurred
on such loan during the fiscal year ended January 28, 1995 was $7,069.
The Company has also entered into an executive salary continuation agreement
with Mr. Aronowitz under which the Company agrees to pay to certain
beneficiaries of Mr. Aronowitz up to $51,000 upon his death. This payment is to
be funded by an insurance policy obtained by the Company on the life of Mr.
Aronowitz. The Company paid $2,103 for this policy during the fiscal year ended
January 28, 1995.
The Company maintains a severance pay and bonus policy for certain officers
and employees of the Company. The policy provides that the Company will be
required to make payments (in the form of bonuses or severance pay, depending on
the circumstances) to designated officers and employees of the Company on a date
that is six months following a "Change in Control" of the Company. A Change in
Control occurs when (i) certain persons or groups hold or acquire, directly or
indirectly, securities representing 50% or more of the voting power of the
Company's then outstanding voting stock or (ii) there is a change in the
ownership of 80% or more of the assets of the Company. Following a Change in
Control, the Company is obligated to make such payments whether the designated
persons continue in the employ of the Company or they resign or are terminated.
The amount payable to Mr. Lubetkin under the policy is equal to the lesser of
(i) 299% of his "base amount," as defined in the Internal Revenue Code of 1986,
as amended (the "Code"), which is generally the same as such person's average
annual compensation from the Company, or (ii) the maximum amount of additional
compensation that may be paid to such person without the Company losing any
Federal income tax deduction for such payments or the employee being subjected
to a Federal excise tax on such payments. The amounts payable to Messrs. Rice,
Clark and other officers or employees of the Company under the policy are
calculated using other formulas and are subject to different restrictions.
The Company maintains a non-contributory profit sharing plan (the "Plan") for
its employees which has been determined by the Internal Revenue Service to be
qualified under the Code. The payment of benefits under the Plan is made to
employees upon termination of employment. In addition, each employee may make
one life-time election to withdraw up to fifty percent of such employee's
account balance as of the date of such election. The Company's contributions to
the Plan are made at the discretion of the Company. The Company did not
contribute to the Plan for the fiscal year ended January 28, 1995.
8
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee ("the Committee") of the Company's Board of
Directors is pleased to present its annual report to stockholders on executive
compensation. This report summarizes the charter of the Committee, the
compensation policy for officers, the components of the executive compensation
program and the basis on which compensation was determined for the Chief
Executive Officer and other executive officers of the Company for the fiscal
year ended January 28, 1995.
During the fiscal year ended January 28, 1995, the Committee was comprised of
the following Board members, none of whom was employed by the Company: Dolph B.
H. Simon, Chairman, Stewart Orton and Fred M. Gerson.
Committee Charter. The Committee's charter provides that the Committee is to
oversee the development of all compensation plans that apply to officers of the
Company; administer all stock and incentive compensation plans requiring
administration by "disinterested directors"; evaluate the performance and set
the salary, bonus and stock awards for the Chairman of the Board, Chief
Executive Officer and Chief Operating Officer; and act on recommendations by the
Chief Executive Officer as to the salary, bonus and stock awards for all other
senior officers. The Committee also approves offers of employment to individuals
who would fill any senior officer position.
Compensation Policy for Officers. It is the goal of the Company to strive for
excellence in the selection and retention of highly qualified officers. To that
end, the Committee will annually review the total compensation paid to officers,
compared to the compensation paid by sporting goods and other specialty
retailers of similar size and complexity for similar positions. In any given
year, Oshman's total compensation for any officer may be above or below the
industry median based on the performance of the Company and the individual.
The principal components of the executive compensation program are base
salary, cash incentive compensation and stock-based, longer-term incentives:
BASE SALARY - levels are targeted at the industry median (sporting goods
and other specialty retailers of similar size and complexity). Variations
above and below this target should be based on the executive's background,
qualifications and job performance at Oshman's.
CASH INCENTIVES - should be given based upon achievement of pre-
determined, measurable Company and individual goals. Incentive plans
measure Company performance based primarily on pre-tax income. Because the
Company achieved only limited profitability during the fiscal year ended
January 28, 1995, no cash incentive payments were made to the executive
officers named in the Summary Compensation Table.
STOCK-BASED INCENTIVES - are used to reward officers and to motivate
them to achieve the Company's longer-term goals. In general, Oshman's will
place greater emphasis on stock-based incentives than on cash incentive
payments. Company and individual performance results are considered when
determining stock-based incentive awards, although no pre-determined
performance criteria are utilized. During the fiscal year ended January
28, 1995, stock options and restricted stock were awarded to selected
officers and key employees from the 1986 Stock Option Plan, the 1991 Stock
Option Plan, and the 1994 Omnibus Plan, including an option relating to
100,000 shares that was granted to Mr. Anderson in connection with his
hiring. Such award was not related to Company or individual performance.
Compensation of the Chief Executive Officer. No base salary increase was
granted and no incentive awards were made to the Chief Executive Officer during
the fiscal year ended January 28, 1995. The Committee recognized, however, the
significant accomplishments of the Chief Executive Officer in leading the
Company to
9
<PAGE>
profitability during a difficult year in the retail sporting goods
industry. The Committee also noted the successful implementation to date of the
Company's previously adopted restructuring plan in closing unprofitable
locations while at the same time opening four new SuperSports USA stores during
the fiscal year. The Committee awarded 100,000 restricted shares of Common
Stock to Mr. Lubetkin in fiscal 1994 as a part of his future retirement
compensation. Such shares are scheduled to vest as to 25% if he should retire
at age 62, 50% at age 63, 75% at age 64 and 100% at or after age 65, subject to
acceleration or forfeiture in certain instances. (See note 2 to the Summary
Compensation Table.) Such award was not related to Company or individual
performance.
Omnibus Budget Reconciliation Act of 1993. The Omnibus Budget Reconciliation
Act of 1993 (the "Budget Act") imposes a limit of $1,000,000, with certain
exceptions, that a publicly held corporation may deduct in any year for the
compensation paid with respect to each of its five most highly compensated
officers. The Committee does not expect the compensation levels of Oshman's
executives to exceed this limit and intends to try to comply with the provisions
of the Budget Act that would preserve the deductibility of executive
compensation payments to the greatest extent possible.
Dolph B. H. Simon, Chairman
Stewart Orton
Fred M. Gerson
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Gerson, who is a member of the Compensation Committee, served as a Vice
President of the Company from 1966 to 1981.
In January 1981, the Company entered into numerous agreements for the lease of
improvements to retail locations which the Company had acquired from Zale
Corporation. During the fiscal year ended January 28, 1995, the Company made
payments of $59,000 to Zale Corporation pursuant to the terms of such
agreements. As of January 28, 1995, the Company's obligations for future
payments under such agreements were approximately $37,000. Dolph B. H. Simon,
who chairs the Compensation Committee, is Vice President and General Counsel of
Zale Corporation.
PERFORMANCE GRAPH
The following graph compares the performance of the Company's Common Stock to
the S&P 500 Index and to the S&P Retail Stores Composite Index. The graph
assumes that the value of the investment in the Company's Common Stock and each
index was $100 at February 2, 1990, the last trading day in fiscal year 1989
which ended February 3, 1990. (The Company's fiscal year ends on the Saturday
closest to the end of January.) Thereafter, points on the graph are plotted as
of the last trading day in January for each successive year.
10
<PAGE>
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN
[IN THE PROXY STATEMENT SENT TO SECURITY HOLDERS, A LINEAR GRAPH
PLOTTED FROM THE POINTS IN THE TABLE BELOW APPEARS HERE]
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JANUARY,
KEY 1990 1991 1992 1993 1994 1995
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Oshman's _______ 100 66.46 45.31 108.75 96.66 81.56
S&P 500 ------- 100 108.39 132.99 147.06 166.00 166.88
S&P Retail Stores ....... 100 117.33 163.95 195.70 188.61 174.65
- ------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
APPROVAL OF AMENDMENTS TO THE COMPANY'S 1994 OMNIBUS PLAN
DESCRIPTION OF PROPOSED AMENDMENTS
On April 21, 1995, the Board of Directors of the Company adopted, subject to
stockholder approval, two amendments (the "Amendments") to the Company's 1994
Omnibus Plan (the "Omnibus Plan"). If approved by the stockholders, the
Amendments will increase the number of shares of Common Stock available for
granting Incentive Awards (as defined below) under the Omnibus Plan from 500,000
to 750,000 and increase from 200,000 to 250,000 the maximum number of shares of
Common Stock subject to options granted with an exercise price at least equal to
the underlying shares of Common Stock on the date of grant and underlying stock
appreciation rights that may be granted to a single individual under the Omnibus
Plan.
The increase from 500,000 to 750,000 in the number of shares of Common Stock
available for Incentive Awards under the Omnibus Plan is necessary to make
available sufficient shares of Common Stock for issuance to the Company's
officers and employees to reward these individuals for their roles in the
accomplishment of the Company's goals. The Omnibus Plan is an essential part of
the Company's compensation and reward program for its officers and employees
because Incentive Awards under the Omnibus Plan permit officers and employees to
benefit from the Company's continued growth and financial performance. Including
the options to Mr. Lubetkin described below, the Company has granted options to
purchase, and made restricted stock awards of, an aggregate of 460,000 shares of
Common Stock under the Omnibus Plan. The Board of Directors believes that it is
in the best interest of the Company to increase the number of shares available
for Incentive Awards under the Omnibus Plan to continue to provide officers and
employees compensation and reward for their service to the Company.
The increase in the maximum number of shares which may underlie awards to a
single individual is necessary in order to allow the Company to replace
Mr. Lubetkin's existing options with options under the Omnibus Plan, as
described below, and to continue to implement the purposes of the Omnibus Plan.
The Board of Directors believes such increase is in the best interest of the
Company.
In order to extend the term of Mr. Lubetkin's options to purchase Common
Stock, the Company recently granted to Mr. Lubetkin an option to purchase
250,000 shares of Common Stock pursuant to the Omnibus Plan, subject to
stockholder approval of the Amendments and surrender and cancellation of
outstanding options to purchase 250,000 shares of Common Stock which were
granted to Mr. Lubetkin under the 1986 Stock Option Plan and which will expire
at the end of 1996. Mr. Lubetkin's options under the 1986 Stock Option Plan
have an exercise price of $8.40 per share and the options granted under the
Omnibus Plan have an exercise price of $7.13 per share, which was greater than
the Fair Market Value of the Common Stock on the date of grant. The options
granted pursuant to the Omnibus Plan will vest upon the surrender and
cancellation of the options granted under the 1986 Stock Option Plan, but in no
event earlier than October 20, 1995 except in the case of Mr. Lubetkin's
earlier retirement, termination, death or disability. The options will expire,
if not previously exercised, on April 20, 2005.
SUMMARY OF THE OMNIBUS PLAN
The Omnibus Plan, as amended, will authorize the grant of Incentive Awards
for up to 750,000 shares of Common Stock subject to adjustment as
described below. The shares available for Incentive Awards will be made
available from either authorized and unissued shares, treasury shares, if any,
or shares to be purchased or acquired by the Company. Unless terminated
earlier, the Omnibus Plan will terminate on January 31, 2004. Select executive
officers and other key management personnel of the Company and any parent or
subsidiary of the Company, including directors of the Company who are also
employees, who are in a position to contribute materially to the growth,
development and financial success of the Company will be eligible to receive
Incentive Awards. Directors who are not employees of the Company (or of a parent
or subsidiary) are not eligible to participate in the Omnibus Plan. Awards under
the Omnibus Plan may be in the form of stock options (including incentive stock
options), stock appreciation rights, restricted stock, performance units,
performance shares or other stock-based awards and
12
<PAGE>
certain additional payments in the amount of Federal income taxes payable by a
grantee and relating to an award under the Omnibus Plan (all such options,
awards and rights are collectively referred to as "Incentive Awards").
The purposes of the Omnibus Plan are to: (i) encourage the long-term
commitment of selected key employees as defined, (ii) motivate superior
performance of key employees by means of long-term, performance-related
incentives, (iii) encourage and provide key employees with a formal program for
obtaining an ownership interest in the Company, (iv) attract and retain
outstanding key employees by providing incentive compensation opportunities
competitive with other major companies and (v) enable participation by key
employees in the long-term growth and financial success of the Company. The
Plan provides for payment of various forms of incentive compensation and is not
intended to be a plan that is subject to the Employee Retirement Income Security
Act of 1974, as amended.
The Omnibus Plan is administered by a committee ("Committee") consisting of
three persons, all of whom are "disinterested persons" as defined by Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended ("Exchange
Act"), and "outside directors" as defined in Section 162(m) of the Code and the
regulations adopted thereunder. Subject to the provisions of the Omnibus Plan,
the Committee determines the employees and individuals to whom awards are
granted, the number and type of awards to be granted, the combination of awards
to be granted and the specific terms of each grant. It is impracticable to
estimate the total number of employees eligible to receive grants under the
Omnibus Plan. Except under certain circumstances, no Incentive Award may vest
or be exercised under the Omnibus Plan prior to the expiration of six months
from the date of award.
INCENTIVE AND NONQUALIFIED OPTIONS
Stock options granted under the Omnibus Plan may be either nonqualified
options ("Nonqualified Options") or incentive stock options ("Incentive Stock
Options") (within the meaning of the Code) and may include "reload" options
("Reload Options"), which permit the holder to purchase a number of shares equal
to the number of shares delivered in payment of the exercise price of
Nonqualified Options or Incentive Stock Options. Pursuant to the Omnibus Plan,
the Committee determines the exercise price for each share issued in connection
with an Incentive Stock Option, a Nonqualified Option or a Reload Option
(collectively referred to as "Options"), but in the case of Incentive Stock
Options, the exercise price may not be less than the closing sales price per
share of Common Stock (the "Fair Market Value") on the date the Incentive Stock
Option is granted. The exercise price must be paid in full at the time of
exercise, either in cash or, at the discretion of the Committee, in Common Stock
owned by the grantee or an equivalent consideration acceptable to the Committee.
The Committee determines when Options may be exercised, which may not be more
than 10 years from the date of grant, and the manner in which each Option will
become exercisable.
STOCK APPRECIATION RIGHTS
Stock appreciation rights ("SARs") may be granted under the Omnibus Plan in
tandem with Options ("Tandem SARs") or independent of Options ("Independent
SARs"). An SAR may be awarded with an exercise price at least equal to the Fair
Market Value of a share of Common Stock on the date of grant, if an Independent
SAR, or on the date of grant of the applicable Option if a Tandem SAR. Upon
exercise, the holder is entitled to receive the difference (in cash, Common
Stock or a combination thereof, at the option of the Committee) between the
exercise price and the Fair Market Value on the date of exercise. Tandem SARs
may be exercised in lieu of the Option to which they relate at any time such
Option is exercisable, terminate upon the exercise of such Option and are
automatically exercised on the last day of the term of such Option if they have
not been exercised or terminated prior to such date. Independent SARs are
subject to their own terms, as established by the Committee; they do not affect,
and are not affected by, the existence or exercise of other Incentive Awards.
The number of shares of Common Stock actually issued in connection with the
exercise of an SAR will reduce the shares of Common Stock available for
distribution under the Omnibus Plan.
13
<PAGE>
Under the Omnibus Plan, as amended, the total number of shares of Common Stock
subject to Options exercisable at a price at least equal to the Fair Market
Value at the date of grant of underlying shares of Common Stock, plus the number
of shares underlying SARs awarded to any Covered Employee may not exceed
250,000.
RESTRICTED STOCK AWARDS
The Omnibus Plan authorizes the Committee to award shares of restricted stock
("Restricted Stock"). Restricted Stock is Common Stock that may not be sold,
pledged or otherwise disposed of until the restrictions set by the Committee
have been satisfied. At the time of an award to a grantee, the Committee will
determine a "Restriction Period" for all shares awarded to the grantee or if the
total of such shares is divided into separate parts, for each part of the total
shares awarded. At the expiration of the applicable Restriction Period, a stock
certificate, evidencing the Restricted Stock with respect to which the
Restriction Period has expired, will be delivered to the grantee, free of all
restrictions. Unless otherwise approved by the Committee, until such time as a
stock certificate is issued to a grantee, the grantee will not have any rights
as a stockholder of the Company.
PERFORMANCE UNITS AND PERFORMANCE SHARES
The Omnibus Plan also provides for the grant by the Committee of performance
units ("Performance Units") and performance shares ("Performance Shares").
Vesting in awards of Performance Units and Performance Shares will be contingent
upon the attainment of performance goals and measured over a period of time as
determined by the Committee. Such performance goals may include individual
goals and overall business objectives, including earnings per share from
continuing operations, total stockholder return, Common Stock price per share
and sales or market share, each as specified by the Committee. An award of
Performance Units or Performance Shares will be payable when, and measured by
the degree to which, the specified goals are attained. Upon attainment of the
goals, the Incentive Award will be paid in cash or by delivery of shares of
Common Stock (which may include Restricted Stock), or a combination thereof, as
determined by the Committee. The Committee plans to establish performance goals
relating to any Performance Units or Performance Shares held by individuals
covered by the Budget Act, which goals are intended to preserve the tax
deduction for any amounts paid thereunder in the event such amounts, together
with other amounts required to be taken into account for this purpose, exceed
$1,000,000.
OTHER STOCK-BASED AWARDS AND SUPPLEMENTAL PAYMENTS
The Omnibus Plan also authorizes the Committee to grant other forms of stock-
based incentive awards ("other stock-based awards"). The Committee has the
discretion to determine the terms and conditions of such other stock-based
awards, which may be paid in shares of Common Stock or such other consideration
relating to the Common Stock as the Committee deems appropriate. In addition,
the Omnibus Plan authorizes the Committee to provide for a supplemental payment
of all or any portion of Federal income taxes payable in connection with various
Incentive Awards and receipt of the supplemental payment, assuming that the
Grantee is taxable at the maximum Federal income tax rate. Any such
supplemental payment may be made in cash, Common Stock or any combination, as
determined by the Committee.
OTHER TERMS AND CONDITIONS
Termination of Employment. Upon termination of employment, unless otherwise
determined by the Committee, Incentive Awards will be exercisable (to the extent
otherwise exercisable as of the date of termination), subject to their earlier
expiration pursuant to their terms, as follows: (i) for 31 days in the event of
termination for any reason other than death, disability or retirement; (ii) for
six months (three months in the case of Incentive Stock Options) in the event of
retirement; and (iii) one year in the event of termination for disability or
death. If the grantee is terminated for cause (as defined in the Omnibus Plan),
all Incentive Awards will expire on the termination date of such grantee.
14
<PAGE>
Change in Control. Except as the Board of Directors may otherwise provide
prior to any Change in Control (as defined in Section 5.7 of the Omnibus Plan)
of the Company, in the event of a Change in Control, all Incentive Awards
outstanding will become immediately and fully exercisable, all restrictions
applicable to Restricted Stock will be deemed satisfied, and all Performance
Units, Performance Shares and other stock-based awards will be vested and deemed
earned in full and promptly paid to grantees without regard to payment
schedules. Should this occur prior to attainment of performance goals
applicable to Performance Units or Performance Shares, compensation earned and
paid with respect to such Performance Units or Performance Shares would be taken
into account in determining any amount of compensation that is paid to an
individual in a taxable year in excess of $1,000,000, which excess amount, if
any, would not be deductible by the Company.
Non-Assignability of Incentive Awards. No Incentive Award granted under the
Omnibus Plan may be assigned, transferred, pledged or otherwise encumbered by a
grantee, other than by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order.
Adjustments. In the event of any change in applicable laws or any change in
circumstances that results or would result in any dilution of the rights under
the Omnibus Plan, the Committee is authorized to make such adjustments as it
believes are required in order to carry out the intended operation of the
Omnibus Plan. Subject to the provisions of the Omnibus Plan, such adjustments
may include changes with respect to (i) the aggregate number of shares of Common
Stock that may be issued under the Omnibus Plan, (ii) the number of shares of
Common Stock subject to Incentive Awards and (iii) the price per share of Common
Stock for outstanding Incentive Awards.
Modifications to Incentive Awards. The Committee is authorized, with the
approval of the grantee, to make such changes to any previously granted
Incentive Award as it deems reasonable, including without limitation,
adjustments in the vesting period of any Incentive Award, the exercise price or
number of shares of Common Stock subject to or the terms of any Incentive Award,
the termination of the Restriction Period with respect to Restricted Stock and
modifications to the performance goals with respect to Performance Units or
Performance Shares. The Committee has no authority, however, to take any such
action that would result in the failure of payments under an Incentive Award to
qualify as performance-based compensation under the Budget Act, if such payments
would otherwise have qualified as performance-based compensation with respect to
an individual whose compensation is subject to the Budget Act.
Amendment of Plan. The Omnibus Plan may be amended by the Board of Directors,
provided that stockholder approval will be necessary for any change that would
materially increase the benefits accruing to participants under the Omnibus
Plan, materially increase the number of shares issuable thereunder, materially
modify the class of persons eligible to participate in the Omnibus Plan or cause
such plan not to comply with the rules and regulations promulgated under Section
16(b) of the Exchange Act.
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of the principal United States Federal income
tax consequences under current Federal income tax laws related to Incentive
Awards under the Omnibus Plan. This summary is not intended to be exhaustive
and among other things, does not describe state or local tax consequences.
Budget Act. As described above, the performance goals established for awards
of Performance Units and Performance Shares, plus a maximum limit of $1 million
in compensation that may be paid under Performance Units or Performance Shares
to any one Grantee with respect to any one year, are intended to qualify such
awards as "performance-based compensation" as defined in Section 162 of the Code
in order to preserve Federal income tax deductions by the Company with respect
to any compensation required to be taken into account under Section 162 of the
Code that is in excess of $1,000,000 and paid to a "Covered Employee" (as
defined in the Omnibus Plan and the Budget Act). To qualify Options (that are
granted with an exercise price at least equal to the Fair Market Value
15
<PAGE>
of the underlying shares of Common Stock on the date of grant) and SARs as
"performance-based compensation," the Omnibus Plan as amended would limit the
total number of shares of Common Stock subject to Options and SARs awarded to
any one participant who is a Covered Employee during the period from April 22,
1994 through January 31, 2004 to 250,000 shares. Awards of Restricted Stock, or
Options (that are granted with an exercise price that is less than the Fair
Market Value of the underlying shares of Common Stock on the date of grant), to
Covered Employees will not qualify as "performance-based compensation" and will
be subject to the limitation on deductibility under Section 162 of the Code.
Nonqualified Options. The grantee of a Nonqualified Option does not recognize
income at the time the option is granted. When the Nonqualified Option is
exercised, the grantee recognizes ordinary income equal to the difference
between the Fair Market Value of Common Stock on the exercise date and the
exercise price. The Company receives a deduction equal to the amount of ordinary
income recognized by the grantee. The grantee's basis in the shares acquired is
equal to the option price plus the ordinary income recognized upon exercise.
Upon subsequent disposition of the shares, the grantee will recognize capital
gain or loss, which will be short-term or long-term, depending upon the length
of time the shares were held since the date the Nonqualified Option was
exercised.
If the grantee pays the exercise price, in full or part, with previously
acquired shares, the exchange will not affect the tax treatment of the exercise.
Upon such exchange, no gain or loss is recognized upon delivery of the
previously acquired shares to the Company, and the shares received by the
grantee, equal in number to the previously acquired shares exchanged therefor,
will have the same basis and holding period for long-term and short-term capital
gain purposes as the previously acquired shares. The Fair Market Value of
shares received by the grantee in excess of the number of previously acquired
shares will be taxable as ordinary income and such shares will have a basis
equal to the fair market value of such additional shares as of the date the
Nonqualified Option is exercised and a holding period which commences as of such
date.
Incentive Options. In general, a grantee will not be subject to tax at the
time an Incentive Option is granted or exercised. However, the excess of the
fair market value of the shares received upon exercise of Incentive Option over
the exercise price is potentially subject to the alternative minimum tax. Upon
disposition of the shares acquired upon exercise of an Incentive Option, long-
term capital gain or loss will be recognized in an amount equal to the
difference between the sales price and the exercise price provided that the
grantee has not disposed of the shares within two years of the date of grant or
within one year from the date of exercise. If the grantee disposes of the
shares without satisfying both holding period requirements (a "Disqualifying
Disposition"), the grantee will recognize ordinary income at the time of such
Disqualifying Disposition to the extent of the difference between the exercise
price and the lesser of the fair market value of the shares on the date the
Incentive Option is exercised or the amount realized on such Disqualifying
Disposition. Any remaining gain or loss is treated as a short-term or long-term
capital gain or loss, depending upon how long the shares have been held. The
Company is not entitled to a tax deduction upon either the exercise of an
Incentive Option or upon disposition of the shares acquired pursuant to such
exercise, except to the extent that the grantee recognizes ordinary income in a
Disqualifying Disposition.
Pursuant to proposed regulations issued by the Internal Revenue Service, if
the grantee pays the exercise price in full or in part, with previously acquired
shares, the exchange will not affect the tax treatment of the exercise. Upon
such exchange, and except for Disqualifying Dispositions, no gain or loss is
recognized upon the delivery of the previously acquired shares to the Company
and the shares received by the grantee, equal in number to the previously
acquired shares exchanged therefor, will have the same basis and holding period
for long-term capital gain or loss, depending upon how long the shares have been
held. Shares received by the grantee in excess of the number of previously
acquired shares will have a basis of zero and a holding period that commences as
of the date the shares are issued to the grantee upon exercise of the Incentive
Option. If such an exercise is effected using shares previously acquired
through the exercise of an Incentive Option, the exchange of the previously
acquired shares will be considered a disposition of such shares for the purpose
of determining whether a Disqualifying Disposition has occurred.
16
<PAGE>
Reload Options. Reload Options are treated the same as other Nonqualified
Options for Federal income tax purposes.
Stock Appreciation Rights. The recipient of an SAR, realizes no taxable
income and the Company receives no deduction at the time of grant. The grantee
realizes income at the time of exercise, if the award becomes vested and is no
longer subject to forfeiture and the grantee is entitled to receive the value of
the award. The Company receives a deduction of the same amount in the same year
the grantee recognizes income.
Restricted Stock, Performance Units, Performance Shares and Other Stock-Based
Awards. Except as described below, a grantee will recognize ordinary income on
the date of payment of cash or transfer of shares pursuant to an award of
Performance Units, Performance Shares or other stock-based awards in an amount
equal to the cash (if any) and the fair market value of the shares transferred
and the Company will be entitled to a deduction in the same amount. In the
event the shares received pursuant to such an award are subject to certain
restrictions, the Federal income tax consequences associated with the transfer
of such shares will be the same as those described below with respect to a grant
of Restricted Stock.
If the restrictions placed upon an award of Restricted Stock are of a nature
that such shares are both subject to a substantial risk of forfeiture and are
not freely transferable, within the meaning of Section 83 of the Code, the
grantee of such award will not recognize income for Federal income tax purposes
at the time of the award unless such grantee affirmatively elects to include the
fair market value of the shares of Restricted Stock on the date of the award,
less any amount paid for such shares, in gross income for the year of the award
pursuant to Section 83(b) of the Code. In the absence of such an election, the
grantee will be required to include in income for Federal income tax purposes in
the year the shares either become freely transferable or are no longer subject
to a substantial risk of forfeiture within the meaning of Section 83 of the
Code, the fair market value of the shares of Restricted Stock on the date such
shares either become freely transferable or are no longer subject to a
substantial risk of forfeiture, less any amount paid. The Company will be
entitled to a deduction at such time in an amount equal to the amount the
grantee is required to include in income with respect to the shares.
17
<PAGE>
NEW PLAN BENEFITS TABLE
Although the benefits or amounts that will be awarded to the individuals in
the table below under the Omnibus Plan are not currently determinable, the
following table sets forth the benefits and amounts during its term received by
certain individuals pursuant to the Omnibus Plan for the fiscal year ended
January 28, 1995. Subsequent to January 28, 1995, Mr. Lubetkin was granted
options to purchase 250,000 shares of Common Stock under the Omnibus Plan,
subject to stockholder approval of the amendments and surrender and cancellation
of his existing options to purchase an equal number of shares that were granted
under the 1986 Stock Option Plan. All outstanding Options under the Omnibus Plan
are exercisable at a price equal to or above the market price of the Common
Stock on the date of grant.
ASSUMED OMNIBUS PLAN AWARDS
FOR THE FISCAL YEAR ENDED
JANUARY 28, 1995
<TABLE>
<CAPTION>
NUMBER OF SHARES OF COMMON STOCK DOLLAR
NAME AND POSITION UNDERLYING AWARD VALUE
----------------- ----------------------------------- --------
<S> <C> <C>
Alvin N. Lubetkin
Vice Chairman of the Board,
Chief Executive
Officer and Director............... 100,000(1) $825,000
William N. Anderson
President, Chief Operating
Officer and Director............... 100,000(2) 0
Lindsay J. Rice
Executive Vice President........... 0 0
Will A. Clark
Vice President..................... 0 0
Executive Group......................... 200,000 825,000
Non-Executive Director Group............ 0 0
Non-Executive Officer Employee Group.... 10,000(3) 0
</TABLE>
- ---------------
(1) Represents a grant of 100,000 shares of restricted stock of the Company made
on July 15, 1994 under the 1994 Omnibus Plan, calculated at a market price
of $8.25, the closing price of a share of Common Stock on the grant date.
As of January 28, 1995, Mr. Lubetkin had 100,000 restricted shares that are
scheduled to vest 25% if he should retire at age 62, 50% at age 63, 75% at
age 64 and 100% at or after age 65. The shares would vest 100% in the event
of Mr. Lubetkin's death or disability (as defined) prior to his retirement
or upon certain terminations of his employment. To the extent Mr.
Lubetkin's loan from the Company (see note 1 to the Summary Compensation
Table) has not been repaid at the time vesting would occur, an appropriate
number of shares otherwise scheduled to vest would instead be cancelled to
satisfy the remaining loan obligation. Based on the closing price of the
Common Stock on January 27, 1995, such shares had a value of $712,500.
Dividends are not payable upon such shares until they have vested.
(2) Represents a grant of 100,000 options with an exercise price of $7.125 per
share granted on a date when the Fair Market Value was $7.00 per share. The
Fair Market Value of the Common Stock as of May 3, 1995 was $6.50 per share.
(3) Represents stock options granted with an exercise price equal to the Fair
Market Value at the date of grant.
The text of the Amendments is attached to this Proxy Statement as Appendix A,
and the foregoing discussion is qualified in its entirety by reference to
Appendix A. The affirmative vote of the holders of a majority of the shares of
Common Stock present in person or by proxy and entitled to vote at the annual
meeting is required to approve the adoption of the Amendments. An adverse vote
will cause the Amendments not to be adopted. Unless otherwise specified, all
properly executed proxies received by the Company will be voted in favor of the
Plan.
The Board of Directors recommends voting "FOR" the adoption of the Amendments.
18
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CERTAIN TRANSACTIONS
In numerous transactions since 1959, the Company has leased both land and
buildings for its executive offices, warehouses and one store in Houston, Texas
from two trusts (the "Warehouse Trusts") of which Marilyn Oshman and Judy O.
Margolis are the respective beneficiaries. Many of these leases are in effect
at the present time, and some of the leases extend up to 1998. The aggregate
rental payments from the Company to the Warehouse Trusts were approximately
$362,600 during the fiscal year ended January 28, 1995. The Company believes
that the terms of all of these leases with the Warehouse Trusts are as favorable
to the Company as the terms under which it could lease comparable facilities
from an unaffiliated lessor in arm's length transactions. If the Company needs
to further expand its offices or warehouse facilities, it may enter into other
leases with the Warehouse Trusts. However, no lease will be entered into unless
its terms are as favorable to the Company as those which could be obtained in
arm's length negotiations for comparable premises. Marvin Aronowitz was a
trustee of both Warehouse Trusts during a portion of the fiscal year ended
January 28, 1995 and resigned both trusteeships prior to January 28, 1995. Fred
M. Gerson is a trustee under one Warehouse Trust.
In March 1988, the Company entered into an agreement with Flagship Associates
providing for the lease by the Company of the land and building in Union, New
Jersey where one of the Company's stores was operated from March 1990 to
September 1993. Charles Lubetkin, Alvin Lubetkin's brother, is a general
partner of Flagship Associates and has a 19.75% interest in such partnership.
The lease is for a term of twenty years, provides for annual rental payments of
$600,000 and is otherwise on terms the Company believes to be no less favorable
than could be obtained from an unrelated third party. This lease was amended
and assigned to an unrelated third party in September 1993, and the Company
remains liable on the lease.
The daughter of Marilyn Oshman and Alvin Lubetkin, Karen Desenberg, is
employed by the Company as a Divisional Vice President-Merchandise Manager.
During the fiscal year ended January 28, 1995, Ms. Desenberg received
compensation of $91,057. In addition, Ms. Desenberg is entitled to the benefits
available to other Company employees of similar position. Although the specific
value of such benefits cannot be determined by the Company, such value does not
exceed 10% of her reported compensation.
INDEPENDENT AUDITORS
Grant Thornton LLP has served as auditors of the Company for a number of
years. Representatives of such firm are expected to be present at the annual
meeting and will have the opportunity to make a statement if they desire to do
so. Such representative will be available to respond to appropriate questions.
PROPOSALS OF SECURITY HOLDERS
Proposals which stockholders of the Company intend to present for inclusion in
the proxy statement with respect to the 1996 Annual Meeting of Stockholders must
be received by the Company at its principal executive offices no later than
January 13, 1996.
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GENERAL
As of the date of this statement, the Board of Directors has no knowledge of
any business that will be presented for consideration at the meeting other than
the election of directors and the approval of the proposed Amendments to the
Company's 1994 Omnibus Plan. With respect to any other business that may
properly come before the meeting or any adjournment thereof, it is intended that
proxies will be voted in accordance with the judgment of the person or persons
voting them.
By Order of the Board of Directors,
ALVIN N. LUBETKIN
Vice Chairman of the Board and
Chief Executive Officer
Dated: May 12, 1995
THE COMPANY'S ANNUAL REPORT TO SECURITY HOLDERS SENT WITH THIS PROXY STATEMENT
INCLUDES A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED JANUARY 28, 1995, INCLUDING THE FINANCIAL STATEMENTS AND FINANCIAL
STATEMENT SCHEDULES. THE COMPANY WILL FURNISH TO ANY SECURITY HOLDER ON REQUEST
ANY EXHIBIT DESCRIBED IN THE LIST ACCOMPANYING SUCH REPORT, INCLUDING THE 1994
OMNIBUS PLAN, UPON PAYMENT OF REASONABLE FEES RELATING TO THE COMPANY'S
FURNISHING SUCH EXHIBITS. REQUESTS FOR COPIES SHOULD BE DIRECTED TO R. L.
BOCKART, VICE PRESIDENT, OSHMAN'S SPORTING GOODS, INC., 2302 MAXWELL LANE,
HOUSTON, TEXAS 77023.
20
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APPENDIX A
AMENDMENT TO THE 1994 OMNIBUS PLAN
The Board of Directors (the "Board") of Oshman's Sporting Goods, Inc. (the
"Company") adopted the 1994 Omnibus Plan (the "Omnibus Plan") on April 22, 1994,
subject to approval by the Stockholders of the Company, which was obtained at
the annual meeting held June 17, 1994. Subject to the requirements of Section
6.8 of the Omnibus Plan, the Board retained the right to amend the Omnibus Plan.
The Board has determined by resolutions dated April 21, 1995, that the Omnibus
Plan be amended as follows. Capitalized terms not otherwise defined in this
Amendment to the Omnibus Plan have the meanings ascribed thereto in the Omnibus
Plan;
The Plan is hereby amended as follows:
1. Section 1.4(a) of the Omnibus Plan is hereby amended to read in its
entirety as follows:
"(a) Common Stock Authorized. Subject to adjustment under Section 5.5, the
aggregate number of shares of Common Stock available for granting Incentive
Awards under the Plan shall be equal to 750,000 shares of Common Stock. If
any Incentive Award shall expire or terminate for any reason, without being
exercised or paid, shares of Common Stock subject to such Incentive Award
shall again be available for grant in connection with grants of subsequent
Incentive Awards."
2. Section 1.4(d) of the Omnibus Plan is hereby amended to read in its
entirety as follows:
"(d) Special Limitation. In no event shall the number of shares of Common
Stock subject to Options granted with an exercise price at least equal to the
Fair Market Value of the underlying shares of Common Stock on the date of
grant, plus the number of shares underlying Stock Appreciation Rights awarded
to any one Grantee who is a Covered Employee during the period from April 22,
1994 through January 31, 2004, exceed two hundred and fifty thousand (250,000)
shares of the Common Stock authorized under Section 1.4(a). In all events,
determinations under the preceding sentence shall be made in a manner that is
consistent with Section 162(m) of the Code and regulations promulgated
thereunder. Except as otherwise provided in the two immediately preceding
sentences, the provisions of this Section 1.4(d) shall not limit the number of
shares of Common Stock that otherwise may be awarded to any one Grantee who is
a Covered Employee under any form of Incentive Award authorized under the
Plan."
The foregoing Amendments to the Omnibus Plan are effective only upon approval
thereof by the stockholders of the Company.
<PAGE>
Appendix B
[This document is being filed with the Commission as an appendix to this proxy
statement pursuant to Instruction number 3 to Item 10(b)(2) of Schedule 14A
promulgated under the Exchange Act of 1934. It is not part of the proxy
statement.]
OSHMAN'S SPORTING GOODS, INC.
1994 OMNIBUS PLAN
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
SECTION 1. GENERAL PROVISIONS RELATING TO PLAN GOVERNANCE,
COVERAGE AND BENEFITS........................................ 1
1.1 Purpose...................................................... 1
1.2 Definitions.................................................. 1
1.3 Administration............................................... 4
1.4 Shares of Common Stock Subject to the Plan................... 5
1.5 Participation................................................ 6
1.6 Incentive Awards............................................. 6
SECTION 2. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS..................... 7
2.1 Grant of Options............................................. 7
2.2 Option Terms................................................. 7
2.3 Option Exercises............................................. 8
2.4 Stock Appreciation Rights in Tandem with Options............. 8
2.5 Stock Appreciation Rights Independent of Options............. 9
2.6 Reload Options............................................... 9
2.7 Supplemental Payment on Exercise of Nonqualified
Stock Options or Stock Appreciation Rights................... 10
SECTION 3. RESTRICTED STOCK................................................ 10
3.1 Award of Restricted Stock.................................... 10
3.2 Restrictions................................................. 10
3.3 Restriction Period........................................... 11
3.4 Delivery of Shares of Common Stock........................... 11
3.5 Supplemental Payment on Vesting of Restricted Stock.......... 11
SECTION 4. PERFORMANCE UNITS AND PERFORMANCE SHARES........................ 12
4.1 Performance Based Awards..................................... 12
4.2 Supplemental Payment on Vesting of Performance
Units or Performance Shares.................................. 13
SECTION 5. PROVISIONS RELATING TO PLAN PARTICIPATION....................... 13
5.1 Plan Conditions.............................................. 13
5.2 Transferability.............................................. 14
5.3 Rights as a Stockholder...................................... 14
5.4 Listing and Registration of Shares of Common Stock........... 15
5.5 Change in Stock and Adjustments.............................. 15
5.6 Termination of Employment, Death, Disability and Retirement.. 16
5.7 Changes in Control........................................... 17
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
5.8 Amendments to Incentive Awards............................... 18
5.9 Exchange of Incentive Awards................................. 18
5.10 Financing.................................................... 19
SECTION 6. MISCELLANEOUS................................................... 19
6.1 Effective Date and Grant Period.............................. 19
6.2 Funding...................................................... 19
6.3 Withholding Taxes............................................ 19
6.4 Conflicts with Plan.......................................... 20
6.5 No Guarantee of Tax Consequences............................. 20
6.6 Severability................................................. 20
6.7 Gender, Tense and Headings................................... 20
6.8 Amendment and Termination.................................... 21
6.9 Governing Law................................................ 21
6.10 Section 16 Compliance........................................ 21
</TABLE>
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OSHMAN'S SPORTING GOODS, INC.
1994 OMNIBUS PLAN
SECTION 1. GENERAL PROVISIONS
RELATING TO PLAN GOVERNANCE, COVERAGE AND BENEFITS
1.1 PURPOSE
The purpose of the Oshman's Sporting Goods, Inc. 1994 Omnibus Plan (the
"Plan") is to foster and promote the long-term financial success of Oshman's
Sporting Goods, Inc. (the "Company") and materially increase stockholder value
by: (a) encouraging the long-term commitment of selected key employees (defined
in Section 1.2(j) below), (b) motivating superior performance of key employees
by means of long-term performance related incentives, (c) encouraging and
providing key employees with a formal program for obtaining an ownership
interest in the Company, (d) attracting and retaining outstanding key employees
by providing incentive compensation opportunities competitive with other major
companies and (e) enabling participation by key employees in the long-term
growth and financial success of the Company. The Plan provides for payment of
various forms of incentive compensation and accordingly is not intended to be a
plan that is subject to Parts 1 through 4 of Subtitle B of Title I of the
Employee Retirement Income Security Act of 1974, as amended, and shall be
administered accordingly.
1.2 DEFINITIONS
The following terms shall have the meanings set forth below:
(a) Appreciation. The difference between the option exercise price
per share of the Option to which a Tandem SAR relates and the Fair Market
Value of a share of Common Stock on the date of exercise of the Tandem SAR.
(b) Board. The Board of Directors of the Company.
(c) Change in Control. Any of the events described in and subject to
Section 5.7.
(d) Code. The Internal Revenue Code of 1986, as amended.
(e) Committee. The committee, which shall be comprised of three or
more members of the Board who are disinterested persons as defined under
rules and regulations promulgated under Section 16(b) of the Exchange Act
and who are outside directors as defined in Section 162(m) of the Code and
the regulations promulgated thereunder, appointed by the Board to
administer the Plan, which Board shall have the power to fill vacancies on
the Committee arising by resignation, death, removal or otherwise.
<PAGE>
(f) Common Stock. The common stock of Oshman's Sporting Goods, Inc.,
$1.00 par value, per share.
(g) Company. Oshman's Sporting Goods, Inc.
(h) Covered Employee. Any Employee of the Company, any Parent or
Subsidiary if, as of the close of the taxable year, such Employee is the
chief executive officer of such entity or an individual acting in such
capacity, or the total compensation of such Employee for the taxable year
is required to be reported to stockholders under the Exchange Act by reason
of such Employee being among the four (4) highest compensated officers for
the taxable year (other than the chief executive officer).
(i) Disability. Any complete and permanent disability as defined in
Section 22(e)(3) of the Code.
(j) Employee. Any common-law employee of the Company or any Parent or
Subsidiary, who, in the opinion of the Committee, is one of a select group
of executive officers, other officers or other key management personnel of
the Company or any Parent or Subsidiary who is in a position to contribute
materially to the continued growth and development and to the continued
financial success of the Company or any Parent or Subsidiary, including
executive officers and officers who are members of the Board.
(k) Exchange Act. The Securities Exchange Act of 1934, as amended.
(l) Fair Market Value. The closing sales price of Common Stock as
reported on the NASDAQ National Market System or if the Common Stock is
listed on a national securities exchange, the closing sales price as
reported by such exchange on any relevant date for valuation, or, if there
is no such sale on such date, the applicable prices as so reported on the
nearest preceding date upon which such sale took place. In the event the
shares of Common Stock are no longer listed on a national securities
exchange, the Fair Market Value of such shares shall be determined by the
Committee in its sole discretion.
(m) Grantee. Any Employee who in the opinion of the Committee
performs significant services for the benefit of the Company and who is
granted an Incentive Award under the Plan.
(n) Incentive Award. Any incentive award, individually or
collectively, as the case may be, including any Nonqualified Stock Option,
Incentive Stock Option, Stock Appreciation Right, Restricted Stock Award,
Performance Unit, Performance Share or other stock-based award, as well as
any Supplemental Payment, granted under the Plan.
(o) Incentive Plan Agreement. The written agreement entered into
between the Company and the Grantee pursuant to which an Incentive Award
shall be made under the Plan.
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(p) Incentive Stock Option. A stock option granted by the Committee to
a Grantee under the Plan which is designated by the Committee as an
Incentive Stock Option and intended to qualify as an Incentive Stock Option
under Section 422 of the Code.
(q) Independent SAR. A Stock Appreciation Right described in Section
2.5.
(r) Nonqualified Stock Option. A stock option granted by the
Committee to a Grantee under the Plan, which is not designated by the
Committee as an Incentive Stock Option.
(s) Option. An Incentive Stock Option or Nonqualified Stock Option
(including reload Options described in Section 2.6) granted by the
Committee to a Grantee under the Plan.
(t) Parent Corporation. Any corporation (whether now or hereafter
existing) which constitutes a "parent" of the Company, as defined in
Section 424(e) of the Code.
(u) Performance Period. A period of time determined by the Committee
over which performance is measured for the purpose of determining a
Grantee's right to and the payment value of any Performance Units,
Performance Shares or other stock-based awards.
(v) Performance Share or Performance Unit. An Incentive Award
representing a contingent right to receive cash or shares of Common Stock
(which may be Restricted Stock) at the end of a Performance Period and
which, in the case of Performance Shares, is denominated in Common Stock,
and, in the case of Performance Units, is denominated in cash values.
(w) Plan. The Oshman's Sporting Goods, Inc. 1994 Omnibus Plan.
(x) Restricted Stock. Shares of Common Stock issued or transferred to
a Grantee subject to the Restrictions set forth in Section 3.2 hereof.
(y) Restricted Stock Award. An authorization by the Committee to
issue or transfer Restricted Stock to a Grantee.
(z) Restriction Period. The period of time determined by the
Committee during which Restricted Stock is subject to the restrictions
under the Plan.
(aa) Retirement. The termination of employment from the Company or
any Parent or Subsidiary constituting retirement as determined by the
Committee.
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(bb) Spread. The difference between the exercise price per share
specified in any Independent SAR grant and the Fair Market Value of a share
of Common Stock on the date of exercise of the Independent SAR.
(cc) Stock Appreciation Right. A Tandem SAR described in Section 2.4
or an Independent SAR described in Section 2.5.
(dd) Subsidiary. Any corporation (whether now or hereafter existing)
which constitutes a "subsidiary" of the Company, as defined in Section
424(f) of the Code.
(ee) Supplemental Payment. Any amounts described in Sections 1.6,
2.7, 3.5 and/or 4.2 dedicated to payment of any federal income taxes that
are payable on an Incentive Award as determined by the Committee.
(ff) Tandem SAR. A Stock Appreciation Right described in Section 2.4.
(gg) Termination for Cause. An employee shall be deemed Terminated
for Cause if he or she is terminated as a result of a breach of his or her
written employment agreement, in the event of a written employment
agreement, or if the Committee determines that such Employee is being
terminated as a result of misconduct, dishonesty, disloyalty, disobedience
or action that might reasonably injure the Company or its Subsidiaries or
their business interests or reputation.
1.3 ADMINISTRATION
(a) Committee Powers. The Plan shall be administered by the Committee which
shall have full power and authority to: (i) designate Grantees; (ii) determine
the Incentive Awards to be granted to Grantees; (iii) subject to Section 1.4 of
the Plan, determine the Common Stock (or securities convertible into Common
Stock) to be covered by Incentive Awards and in connection therewith, to reserve
shares of Common Stock as needed in order to cover grants of Incentive Awards;
(iv) determine the terms and conditions of any Incentive Award; (v) determine
whether, to what extent, and under what circumstances Incentive Awards may be
settled or exercised in cash, Common Stock, other securities, or other property,
or canceled, substituted, forfeited or suspended, and the method or methods by
which Incentive Awards may be settled, exercised, canceled, substituted,
forfeited or suspended; (vi) interpret and administer the Plan and any
instrument or agreement relating to, or Incentive Award made under, the Plan;
(vii) establish, amend, suspend or waive such rules and guidelines; (viii)
appoint such agents as it shall deem appropriate for the administration of the
Plan; provided, however that the Committee shall not delegate any of the power
or authority set forth in (i) through (vii) above; and (ix) make any other
determination and take any other action that it deems necessary or desirable for
such administration. All designations, determinations, interpretations and other
decisions with respect to the Plan or any Incentive Award shall be within the
sole discretion of the Committee and shall be final, conclusive and binding upon
all persons, including the Company or any
4
<PAGE>
Parent or Subsidiary, any Grantee, any holder or beneficiary of any Incentive
Award, any stockholder and any Employee.
(b) No Liability. No member of the Committee shall be liable for any action
or determination made in good faith by the Committee with respect to this Plan
or any Incentive Award under this Plan, and to the fullest extent permitted by
the Company's Bylaws, the Company shall indemnify each member of the Committee.
(c) Meetings. The Committee shall designate a chairman from among its
members, who shall preside at all of its meetings, and shall designate a
secretary, without regard to whether that person is a member of the Committee,
who shall keep the minutes of the proceedings and all records, documents, and
data pertaining to its administration of the Plan. Meetings shall be held at
such times and places as shall be determined by the Committee. The Committee may
take any action otherwise proper under the Plan by the affirmative vote, taken
with or without a meeting, of a majority of its members.
1.4 SHARES OF COMMON STOCK SUBJECT TO THE PLAN
(a) Common Stock Authorized. Subject to adjustment under Section 5.5, the
aggregate number of shares of Common Stock available for granting Incentive
Awards under the Plan shall be equal to 500,000 shares of Common Stock. If any
Incentive Award shall expire or terminate for any reason, without being
exercised or paid, shares of Common Stock subject to such Incentive Award shall
again be available for grant in connection with grants of subsequent Incentive
Awards.
(b) Common Stock Available. The Common Stock available for issuance or
transfer under the Plan shall be made available from shares now or hereafter
held in the treasury of the Company or from authorized but unissued shares or
from shares to be purchased or acquired by the Company. No fractional shares
shall be issued under the Plan; payment for fractional shares shall be made in
cash.
(c) Incentive Award Adjustments. Subject to the limitations set forth in
Sections 5.8 and 6.8, the Committee may make any adjustment in the exercise
price or the number of shares subject to, or the terms of, any Incentive Award
other than an Incentive Stock Option. Such adjustment shall be made by amending,
substituting or canceling and regranting such Incentive Award with the inclusion
of terms and conditions that may differ from the terms and conditions of the
original Incentive Award. If such action is effected by amendment, the effective
date of such amendment shall be the date of the original grant. In addition, any
such action shall be effective only to the extent that such action would not
cause (i) the holder of the Incentive Award to lose the protection of Section
16(b) of the Exchange Act and the rules and regulations promulgated thereunder,
or (ii) an Incentive Award that is designed to qualify payments thereunder as
performance based compensation as defined in Section 162(m) of the Code to fail
to qualify as such performance based compensation.
5
<PAGE>
(d) Special Limitation. In no event shall the number of shares of Common
Stock subject to Options granted with an exercise price at least equal to the
Fair Market Value of the underlying shares of Common Stock on the date of grant,
plus the number of shares underlying Stock Appreciation Rights awarded to any
one Grantee who is a Covered Employee during the period from April 22, 1994
through January 31, 2004, exceed two hundred thousand (200,000) shares of the
Common Stock authorized under Section 1.4(a). In all events, determinations
under the preceding sentence shall be made in a manner that is consistent with
Section 162(m) of the Code and regulations promulgated thereunder. Except as
otherwise provided in the two immediately preceding sentences, the provisions of
this Section 1.4(d) shall not limit the number of shares of Common Stock that
otherwise may be awarded to any one Grantee who is a Covered Employee under any
form of Incentive Award authorized under the Plan.
1.5 PARTICIPATION
(a) Eligibility. The Committee shall from time to time designate those
Employees, if any, to be granted Incentive Awards under the Plan, the type of
awards granted, the number of shares, options, rights or units, as the case may
be, which shall be granted to each such Employee, and any other terms or
conditions relating to the awards as it may deem appropriate, consistent with
the provisions of the Plan. An Employee who has been granted an Incentive Award
may, if otherwise eligible, be granted additional Incentive Awards at any time.
(b) Incentive Stock Option Eligibility. No Employee will be eligible for
the grant of any Incentive Stock Option who owns or would own immediately before
the grant of such Incentive Stock Option, directly or indirectly, stock
possessing more than ten percent of the total combined voting power of all
classes of stock of the Company, a Subsidiary or a Parent Corporation. This
restriction does not apply if, at the time such Incentive Stock Option is
granted, the Incentive Stock Option exercise price is at least 110% of the Fair
Market Value on the date of grant and the Incentive Stock Option by its terms is
not exercisable after the expiration of five years from the date of grant. For
the purpose of the immediately preceding sentence, the attribution rules of
Section 424(d) of the Code shall apply for the purpose of determining an
Employee's percentage ownership.
(c) No Non-Employee Board Participation. In no event may any member of the
Board who is not an Employee be granted an Incentive Award under the Plan.
1.6 INCENTIVE AWARDS
(a) General Rules. The forms of Incentive Awards under this Plan are Stock
Options, Stock Appreciation Rights and Supplement Payments as described in
Section 2, Restricted Stock and Supplement Payments as described in Section 3,
Performance Units or Performance Shares and Supplement Payments as described in
Section 4, and other stock-based grants as described in this Section 1.6. Such
other stock-based grants will either be issued (a) for no consideration other
than services actually rendered (in the case of authorized and unissued shares)
or to be rendered, (b) for consideration equal to the amount (such as the par
value of such shares)
6
<PAGE>
required by applicable law to be received by the Company in order to assure
compliance with applicable state law or (c) for consideration (other than
services rendered or to be rendered) equal to the Fair Market Value of the
Common Stock covered by such grant on the date of grant. The Committee may
specify such criteria or periods or goals for payment to the Grantee as it shall
determine, and the extent to which such criteria or periods or goals have been
met shall be conclusively determined by the Committee. Other stock-based grants
may be paid in shares of Common Stock or other consideration related to such
shares or in a single payment or in installments as specified by the grant and
may be payable on such dates as determined by the Committee and specified by the
grant. The other terms and conditions of other stock-based grants shall be
determined by the Committee, including provision for a Supplemental Payment.
(b) Special Rule. Except as may otherwise be provided under an Incentive
Plan Agreement authorized by the Committee under Section 5.6, no Incentive Award
granted pursuant to this Plan shall vest in less than six (6) months after the
date the Incentive Award is granted.
SECTION 2. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
2.1 GRANT OF OPTIONS
Subject to Section 1.4(d), the Committee is authorized to grant Options to
Grantees in accordance with the terms and conditions required pursuant to this
Plan and with such additional terms and conditions, not inconsistent with the
provisions of the Plan, as the Committee shall determine.
2.2 OPTION TERMS
(a) Exercise Price. The exercise price per share of Common Stock under each
Option shall be determined by the Committee; provided, however, that in the case
of Incentive Stock Options such purchase price shall not be less than one
hundred percent (100%) of the Fair Market Value per share of such stock on the
date the Incentive Stock Option is granted, as determined by the Committee.
(b) Term. The Committee shall fix the term of each Option which shall be
not more than ten years from the date of grant. In the event no term is fixed,
such term shall be ten years from the date of grant.
(c) Exercise. The Committee shall determine the time or times at which an
Option may be exercised in whole or in part.
(d) Incentive Stock Options. Anything in the Plan notwithstanding, the
aggregate Fair Market Value (determined as of the time the Incentive Stock
Option is granted) of the shares of Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by any Grantee during any
single calendar year (under the Plan and any other Incentive Stock
7
<PAGE>
Option plans of the Company and its Subsidiaries or any Parent Corporation)
shall not exceed the sum of $100,000 (or such other limit as may be required by
the Code).
2.3 OPTION EXERCISES
(a) Method of Exercise. To purchase shares under any Option granted under
the Plan, Grantees must give notice in writing to the Company of their intention
to purchase and specify the number of shares as to which they intend to exercise
their Option. Upon the date or dates specified for the completion of the
purchase of the shares, the purchase price will be payable in full. The purchase
price may be paid in cash or an equivalent acceptable to the Committee. At the
discretion of the Committee and provided such payment can be effected without
causing the Grantee to incur liability under Section 16(b) of the Exchange Act,
the exercise price may be paid by the assignment and delivery to the Company of
shares of Common Stock owned by the Grantee or a combination of cash and such
shares equal in value to the exercise price. Any shares so assigned and
delivered to the Company in payment or partial payment of the purchase price
shall be valued at their Fair Market Value on the exercise date. In addition, at
the request of the Grantee and to the extent permitted by applicable law, the
Company in its discretion may selectively approve "cashless exercise"
arrangements with a brokerage firm under which such brokerage firm, on behalf of
the Grantee, shall pay to the Company the exercise price of the Options being
exercised, and the Company, pursuant to an irrevocable notice from the Grantee,
shall promptly deliver the shares being purchased to such firm.
(b) Notification with Respect to Incentive Stock Options. Notwithstanding
any other provision of the Plan, Grantees who dispose of shares of Common Stock
acquired on the exercise of an Incentive Stock Option by sale or exchange either
(i) within two years after the date of the grant of the Incentive Stock Option
under which the stock was acquired or (ii) within one year after the transfer of
such shares to them pursuant to exercise shall notify the Company of such
disposition and of the amount realized and of their adjusted basis in such
shares.
(c) Proceeds. The proceeds received by the Company from the sale of shares
of Common Stock pursuant to Options exercised under the Plan will be used for
general corporate purposes.
2.4 STOCK APPRECIATION RIGHTS IN TANDEM WITH OPTIONS
(a) General Provisions. Subject to Section 1.4(d), the Committee may, at
the time of grant of an Option, grant Stock Appreciation Rights ("Tandem SARs")
with respect to all or any portion of the shares of Common Stock covered by such
Option. The exercise price per share of Common Stock of a Tandem SAR shall be
fixed in the Incentive Plan Agreement and shall not be less than one hundred
percent (100%) of the Fair Market Value of a share of Common Stock on the date
of the grant of the Option to which it relates. A Tandem SAR may be exercised at
any time the Option to which it relates is then exercisable, but only to the
extent the Option to which it relates is exercisable, and shall be subject to
the conditions applicable to
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such Option. When a Tandem SAR is exercised, the Option to which it relates
shall terminate to the extent of the number of shares with respect to which the
Tandem SAR is exercised. Similarly, when an Option is exercised, the Tandem SARs
relating to the shares covered by such Option exercise shall terminate. Any
Tandem SAR which is outstanding on the last day of the term of the related
Option shall be automatically exercised on such date for cash without any action
by the Grantee.
(b) Exercise. Upon exercise of a Tandem SAR, the holder shall receive, for
each share with respect to which the Tandem SAR is exercised, an amount equal to
the Appreciation. The Appreciation shall be payable in cash, Common Stock, or a
combination of both, at the option of the Committee, and shall be paid within 30
calendar days of the exercise of the Tandem SAR.
2.5 STOCK APPRECIATION RIGHTS INDEPENDENT OF OPTIONS
(a) Grant. Subject to Section 1.4(d) and the following provisions, all
Stock Appreciation Rights granted independent of Options ("Independent SARs")
under the Plan to Grantees shall be in such form and shall have such terms and
conditions as the Committee, in its discretion, may from time to time determine
consistent with the Plan.
(b) Exercise Price. The exercise price per share of Common Stock shall be
not less than one hundred percent (100%) of the Fair Market Value of a share of
Common Stock on the date of the grant.
(c) Term. The term of an Independent SAR shall be determined by the
Committee, and, notwithstanding any other provision of this Plan, no Independent
SAR shall be exercised after the expiration of its term.
(d) Exercise. Independent SARs shall be exercisable at such time or times
and subject to such terms and conditions as the Committee shall specify in the
Independent SAR grant. Unless the Independent SAR grant specifies otherwise, the
Committee shall have discretion at any time to accelerate such time or times and
otherwise waive or amend any conditions in respect of all or any portion of the
Independent SARs held by any Grantee. Upon exercise of an Independent SAR, the
holder shall receive, for each share specified in the Independent SAR grant, an
amount equal to the Spread. The Spread shall be payable in cash, Common Stock,
or a combination of both, at the option of the Committee, and shall be paid
within 30 calendar days of the exercise of the Independent SAR.
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2.6 RELOAD OPTIONS
Subject to Section 1.4(d), at the discretion of the Committee, the Grantee
may be granted by agreement that contains such terms and conditions to be
determined by the Committee, Options that permit the Grantee to purchase an
additional number of shares equal to the number of shares already owned and
surrendered by the Grantee to pay all or a portion of the exercise price of
Options.
2.7 SUPPLEMENTAL PAYMENT ON EXERCISE OF NONQUALIFIED STOCK OPTIONS OR STOCK
APPRECIATION RIGHTS.
The Committee, either at the time of grant or at the time of exercise of
any Nonqualified Stock Option or Stock Appreciation Right, may provide for a
supplemental payment (the "Supplemental Payment") by the Company to the Grantee
with respect to the exercise of any Nonqualified Stock Option or Stock
Appreciation Right. The Supplemental Payment shall be in the amount specified
by the Committee, which shall not exceed the amount necessary to pay the federal
income tax payable with respect to both the exercise of the Nonqualified Stock
Option and/or Stock Appreciation Right and the receipt of the Supplemental
Payment, assuming the holder is taxed at the maximum effective federal income
tax rate applicable thereto. The Committee shall have the discretion to grant
Supplemental Payments that are payable solely in cash or Supplemental Payments
that are payable in cash, Common Stock, or a combination of both, as determined
by the Committee at the time of payment. The Supplemental Payment shall be paid
within 30 calendar days of the date of exercise of a Nonqualified Stock Option
or Stock Appreciation Right (or, if later, within 30 calendar days of the date
on which income is recognized for federal income tax purposes with respect to
such exercise).
SECTION 3. RESTRICTED STOCK
3.1 AWARD OF RESTRICTED STOCK
(a) Grant. Shares of Restricted Stock may be awarded under this Plan by
the Committee on such terms and conditions and with such restrictions as the
Committee may from time to time approve, all of which may differ with respect to
each Grantee. Such Restricted Stock shall be awarded for no cash or such cash
as the Committee shall determine.
(b) Delivery of Restricted Stock. Grantees receiving Restricted Stock
Awards shall not be issued stock certificates in respect of such shares of
Common Stock until such time as the Restriction Period with respect to each
Restricted Stock Award has expired.
3.2 RESTRICTIONS
(a) Restrictive Conditions. Restricted Stock awarded to a Grantee shall be
subject to the following restrictions until the expiration of the Restriction
Period: (i) the shares of Common Stock of the Company included in the
Restricted Stock Award shall be subject to the
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restrictions on transferability set forth in Section 5.2; (ii) unless otherwise
approved by the Committee, the shares of Common Stock included in the Restricted
Stock Award that are subject to restrictions which are not satisfied at such
time as the Grantee ceases to be employed by the Company shall be forfeited and
all rights of the Grantee to such shares shall terminate without further
obligation on the part of the Company when an Employee leaves the employ of the
Company; and (iii) any other restrictions that the Committee may determine in
advance are necessary or appropriate.
(b) Forfeiture of Restricted Stock. If for any reason, the restrictions
imposed by the Committee upon Restricted Stock are not satisfied at the end of
the Restriction Period, any Restricted Stock remaining subject to such
restrictions shall thereupon be forfeited by the Grantee and reacquired by the
Company.
(c) Removal of Restrictions. The Committee shall have the authority to
remove any or all of the restrictions on the Restricted Stock, including the
restrictions under the Restriction Period, whenever it may determine that, by
reason of changes in applicable laws or other changes in circumstances arising
after the date of the Restricted Stock Award, such action is appropriate.
3.3 RESTRICTION PERIOD
The Restriction Period of Restricted Stock shall commence on the date of
grant and shall be established by the Committee in the Incentive Plan Agreement
setting forth the terms of the award of Restricted Stock.
3.4 DELIVERY OF SHARES OF COMMON STOCK
Subject to Section 6.4, at the expiration of the Restriction Period, a
stock certificate evidencing the Restricted Stock with respect to which the
Restriction Period has expired (to the nearest full share) shall be delivered
without charge to the Grantee, or his personal representative, free of all
restrictions under the Plan.
3.5 SUPPLEMENTAL PAYMENT ON VESTING OF RESTRICTED STOCK
The Committee, either at the time of grant or at the time of vesting of
Restricted Stock, may provide for a Supplemental Payment by the Company to the
holder in an amount specified by the Committee which shall not exceed the amount
necessary to pay the federal income tax payable with respect to both the vesting
of the Restricted Stock and receipt of the Supplemental Payment, assuming the
Grantee is taxed at the maximum effective federal income tax rate applicable
thereto. The Supplemental Payment shall be paid within 30 calendar days of each
date that Restricted Stock vests. The Committee shall have the discretion to
grant Supplemental Payments that are payable solely in cash or Supplemental
Payments that are payable in cash, Common Stock, or a combination of both, as
determined by the Committee at the time of payment.
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SECTION 4. PERFORMANCE UNITS AND PERFORMANCE SHARES
4.1 PERFORMANCE BASED AWARDS
(a) Grant. The Committee is authorized to grant Performance Units and
Performance Shares to Grantees. The Committee may make grants of Performance
Units or Performance Shares in such a manner that more than one Performance
Period is in progress concurrently. For each Performance Period, the Committee
shall establish the number of Performance Units or Performance Shares and the
contingent value of any Performance Units or Performance Shares, which may vary
depending on the degree to which performance objectives established by the
Committee are met.
(b) Performance Criteria. At the beginning of each Performance Period, the
Committee shall (i) establish for such Performance Period specific financial or
non-financial performance objectives as the Committee believes are relevant to
the Company's overall business objectives; (ii) determine the value of a
Performance Unit or the number of shares under a Performance Share grant
relative to performance objectives; and (iii) notify each Participant in writing
of the established performance objectives and minimum, target, and maximum
Performance Unit or Share value for such Performance Period.
(c) Modification. If the Committee determines in its sole discretion that
the established performance measures or objectives are no longer suitable to
Company objectives because of a change in the Company's business, operations,
corporate structure, capital structure, or other conditions the Committee deems
to be appropriate, the Committee may modify the performance measures and
objectives as considered appropriate.
(d) Payment. The basis for payment of Performance Units or Performance
Shares for a given Performance Period shall be the achievement of those
financial and non-financial performance objectives determined by the Committee
at the beginning of the Performance Period. If minimum performance is not
achieved for a Performance Period, no payment shall be made and all contingent
rights shall cease. If minimum performance is achieved or exceeded, the value
of a Performance Unit or Performance Share shall be based on the degree to which
actual performance exceeded the preestablished minimum performance standards, as
determined by the Committee. The amount of payment shall be determined by
multiplying the number of Performance Units or Performance Shares granted at the
beginning of the Performance Period times the final Performance Unit or
Performance Share value. Payments shall be made, in the discretion of the
Committee, solely in cash or Common Stock, or a combination of cash and Common
Stock, following the close of the applicable Performance Period, in such manner
as may be permissible without causing the Grantee to incur liability under
Section 16(b) of the Exchange Act.
(e) Special Rule for Covered Employees. Without limiting the generality of
the foregoing, it is intended that the Committee shall establish performance
goals applicable to Performance Units or Performance Shares awarded to Grantees
who, in the judgment of the
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Committee, may be Covered Employees in such a manner as shall permit payments
with respect thereto to qualify as "performance-based compensation" as described
in Section 162(m)(4)(C) of the Code. It is specifically provided that the
material terms of such performance goals for Grantees who, in the judgment of
the Committee, may be Covered Employees, shall, until changed by the Committee
with the approval of the stockholders, be as follows: (i) the business criteria
on which the performance goals shall be based shall be the attainment of such
target levels of earnings per share from continuing operations, total
stockholder return, Common Stock price per share, sales or market share as may
be specified by the Committee; and (ii) the maximum amount of compensation that
may be paid under Performance Units and Performance Shares to any one Grantee
with respect to any one year shall be $1,000,000.
4.2 SUPPLEMENTAL PAYMENT ON VESTING OF PERFORMANCE UNITS OR PERFORMANCE SHARES
The Committee, either at the time of grant or at the time of vesting of
Performance Units or Performance Shares (other than Restricted Stock), may
provide for a Supplemental Payment by the Company to the holder in an amount
specified by the Committee which shall not exceed the amount necessary to pay
the federal income tax payable with respect to both the vesting of such
Performance Units or Performance Shares and receipt of the Supplemental Payment,
assuming the Grantee is taxed at the maximum effective federal income tax rate
applicable thereto. The Supplemental Payment shall be paid within 30 days of
each date that such Performance Units or Performance Shares vest. The Committee
shall have the discretion to grant Supplemental Payments that are payable in
cash, Common Stock, or a combination of both, as determined by the Committee at
the time of payment.
SECTION 5. PROVISIONS RELATING TO PLAN PARTICIPATION
5.1 PLAN CONDITIONS
(a) Incentive Plan Agreement. Each Grantee to whom an Incentive Award is
granted under the Plan shall be required to enter into an Incentive Plan
Agreement with the Company in a form provided by the Committee, which shall
contain certain specific terms, as determined by the Committee, with respect to
the Incentive Award and shall include provisions that the Grantee (i) shall not
disclose any trade or secret data or any other confidential information of the
Company acquired during employment by the Company or a Subsidiary, or after the
termination of employment or Retirement, (ii) shall abide by all the terms and
conditions of the Plan and such other terms and conditions as may be imposed by
the Committee, and (iii) shall not interfere with the employment of any other
Company employee. An Incentive Award may include a noncompetition agreement
with respect to the Grantee and/or such other terms and conditions, not
inconsistent with the Plan, as shall be determined from time to time by the
Committee.
(b) No Right to Employment. Nothing in the Plan or any instrument executed
pursuant to the Plan shall create any employment rights (including without
limitation, rights to continued employment) in any Grantee or affect the right
of the Company to terminate the
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employment of any Grantee at any time for any reason whether before the exercise
date of any Option or during the Restriction Period of any Restricted Stock or
during the Performance Period of any Performance Unit or Performance Share.
(c) Securities Requirements. No shares of Common Stock will be issued or
transferred pursuant to an Incentive Award unless and until all then-applicable
requirements imposed by federal and state securities and other laws, rules and
regulations and by any regulatory agencies having jurisdiction and by any stock
market or exchange upon which the Common Stock may be listed, have been fully
met. As a condition precedent to the issuance of shares pursuant to the grant
or exercise of an Incentive Award, the Company may require the Grantee to take
any reasonable action to meet such requirements. The Company shall not be
obligated to take any affirmative action in order to cause the issuance or
transfer of shares pursuant to an Incentive Award to comply with any law or
regulation described in the second preceding sentence.
5.2 TRANSFERABILITY
(a) Non-Transferable Awards. No Incentive Award and no right under the
Plan, contingent or otherwise, other than Restricted Stock as to which
restrictions have lapsed, will be (i) assignable, saleable, or otherwise
transferable by a Grantee except by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order, or (ii)
subject to any encumbrance, pledge or charge of any nature. No transfer by will
or by the laws of descent and distribution shall be effective to bind the
Company unless the Committee shall have been furnished with a copy of the
deceased Grantee's will or such other evidence as the Committee may deem
necessary to establish the validity of the transfer. Any attempted transfer in
violation of this Section 5.2 shall be void and ineffective for all purposes.
(b) Ability to Exercise Rights. Only the Grantee or his guardian (if the
Grantee becomes Disabled), or in the event of his death, his legal
representative or beneficiary, may exercise Options, receive cash payments and
deliveries of shares, or otherwise exercise rights under the Plan. The executor
or administrator of the Grantee's estate, or the person or persons to whom the
Grantee's rights under any Incentive Award will pass by will or the laws of
descent and distribution, shall be deemed to be the Grantee's beneficiary or
beneficiaries of the rights of the Grantee hereunder and shall be entitled to
exercise such rights as are provided hereunder.
5.3 RIGHTS AS A STOCKHOLDER
(a) No Stockholder Rights. Except as otherwise provided in Section 5.3(b),
a Grantee of an Incentive Award or a transferee of such Grantee shall have no
rights as a stockholder with respect to any shares of Common Stock until the
issuance of a stock certificate for such shares. Except as otherwise provided
in Section 5.3(b) and Section 5.5, no adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities, or other property) or
distributions or other rights for which the record date is prior to the date
such stock certificate is issued.
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(b) Holder of Restricted Stock. Unless otherwise approved by the Committee
prior to the grant of a Restricted Stock Award, a Grantee of Restricted Stock or
a permitted transferee of such Grantee shall not have any rights of a
stockholder until such time as a stock certificate has been issued with respect
to all, or a portion of, such Restricted Stock Award.
5.4 LISTING AND REGISTRATION OF SHARES OF COMMON STOCK
The Company, in its discretion, may postpone the issuance and/or delivery
of shares of Common Stock upon any exercise of an Incentive Award until
completion of such stock exchange listing, registration, or other qualification
of such shares under any state and/or federal 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 the shares in compliance with
applicable laws, rules and regulations.
5.5 CHANGE IN STOCK AND ADJUSTMENTS
(a) Changes in Capitalization. Except as provided in Section 5.7, in the
event the outstanding shares of the Common Stock, as constituted from time to
time, shall be changed as a result of a change in capitalization of the Company
or a combination, merger, or reorganization of the Company into or with any
other corporation or any other transaction with similar effects, there then
shall be substituted (at no additional cost to any Grantee) for each share of
Common Stock theretofore subject, or which may become subject, to issuance or
transfer under the Plan, the number and kind of shares of Common Stock or other
securities or other property into which each outstanding share of Common Stock
shall be changed or for which each such share shall be exchanged and the
Committee may make other equitable adjustments which it deems to be warranted at
no additional cost to any Grantee but subject to any required stockholder
approval.
(b) Changes in Law or Circumstances. In the event of any change in
applicable laws or any change in circumstances which results in or would result
in any dilution of the rights granted under the Plan, or which otherwise
warrants equitable adjustment because it interferes with the intended operation
of the Plan, then, if the Committee shall, in its sole discretion, determine
that such change equitably requires an adjustment in the number or kind of
shares of stock or other securities or property theretofore subject, or which
may become subject, to issuance or transfer under the Plan or in the terms and
conditions of outstanding Incentive Awards, such adjustment shall be made in
accordance with such determination. Such adjustments may include changes with
respect to (i) the aggregate number of shares that may be issued under the Plan,
(ii) the number of shares subject to Incentive Awards and (iii) the price per
share for outstanding Incentive Awards. Any adjustment of an Incentive Stock
Option under this paragraph shall be made only to the extent not constituting a
"modification" within the meaning of Section 424(h)(3) of the Code. The
Committee shall give notice to each Grantee, and upon notice such adjustment
shall be effective and binding for all purposes of the Plan.
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5.6 TERMINATION OF EMPLOYMENT, DEATH, DISABILITY AND RETIREMENT
(a) Termination of Employment. Subject to Section 3.2, if an Employee's
employment is terminated for any reason whatsoever other than death, Disability
or Retirement, any Incentive Award granted pursuant to the Plan outstanding at
the time and all rights thereunder shall wholly and completely terminate, and
unless otherwise established by the Committee, no further vesting shall occur
and the Employee shall be entitled to exercise his or her rights with respect to
the portion of the Incentive Award vested as of the date of termination for a
period of thirty-one (31) calendar days after such termination date; provided,
however, that if an Employee is Terminated for Cause, such Employee's right to
exercise the vested portion of his or her Incentive Award shall terminate as of
the date of termination of employment.
(b) Retirement. Subject to Section 3.2, unless otherwise approved by the
Committee, upon the Retirement of an Employee:
(i) any nonvested portion of any outstanding Incentive Award shall
immediately terminate and no further vesting shall occur; and
(ii) any vested Incentive Award shall expire on the earlier of (A) the
expiration date set forth in the Incentive Plan Agreement with respect to
such Incentive Awards; or (B) the expiration of (1) six (6) months after
the date of Retirement in the case of any Incentive Award other than an
Incentive Stock Option or (2) three (3) months after the date of Retirement
in the case of an Incentive Stock Option.
(c) Disability or Death. Subject to Section 3.2, unless otherwise approved
by the Committee, upon termination of employment from the Company or any Parent
or Subsidiary as a result of Disability or death:
(i) any nonvested portion of any outstanding Incentive Award shall
immediately terminate and no further vesting shall occur; and
(ii) any vested Incentive Award shall expire upon the earlier of (A)
the expiration date set forth in the Incentive Plan Agreement with respect
to such Incentive Awards or (B) the first anniversary of such termination
of employment as a result of Disability or death.
(d) Continuation. Subject to the express provisions of the Plan and the
terms of any applicable Incentive Plan Agreement, the Committee, in its
discretion, may provide for the continuation of any Incentive Award for such
period and upon such terms and conditions as are determined by the Committee in
the event that a Grantee ceases to be an employee.
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5.7 CHANGES IN CONTROL
(a) Changes in Control. In the event of a Change in Control:
(i) all Options and Stock Appreciation Rights then outstanding
shall become vested and immediately and fully exercisable, notwithstanding
any provision therein for the exercise in installments;
(ii) all restrictions and conditions of all Restricted Stock then
outstanding shall be deemed satisfied, and the Restriction Period with
respect thereto shall be deemed to have expired, as of the date of the
Change in Control; and
(iii) all Performance Shares, Performance Units and any other
stock-based awards shall become vested, deemed earned in full and promptly
paid to the Grantees without regard to payment schedules and
notwithstanding that the applicable performance cycle or retention cycle
shall not have been completed.
For purposes of this Section 5.7, a "Change in Control" shall mean a change
in control of a nature that would be required to be reported in response to item
6(e) of Schedule 14A of Regulation 14A promulgated under the Exchange Act as
such Schedule, Regulation and Act were in effect on the date of adoption of this
Plan by the Board, provided that such a change in control shall be deemed to
have occurred at such time as:
(i) any "person" (as that term is used in Section 13(d) and
14(d)(2) of the Exchange Act) is or becomes, directly or indirectly, the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of
securities representing 30% or more of the combined voting power for
election of directors of the then outstanding voting securities of the
Company or any successor of the Company;
(ii) during any period of two (2) consecutive years or less,
individuals who at the beginning of such period constituted the Board of
the Company cease, for any reason, to constitute at least a majority of the
Board, unless the election or nomination for election of each new director
was approved by a vote of at least two-thirds of the directors then still
in office who were directors at the beginning of the period;
(iii) the stockholders of the Company approve any merger or
consolidation to which the Company is a party as a result of which the
persons who were stockholders of the Company immediately prior to the
effective date of the merger or consolidation (and excluding, however, any
shares held by any party to such merger or consolidation and their
affiliates) shall have beneficial ownership of less than 50% of the
combined voting power for election of directors of the surviving
corporation following the effective date of such merger or consolidation;
or
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(iv) the stockholders of the Company approve any merger or
consolidation as a result of which the Common Stock shall be changed,
converted or exchanged (other than a merger with a wholly-owned subsidiary
of the Company) or any liquidation of the Company or any sale or other
disposition of 50% or more of the assets or earning power of the Company;
provided, however, that no Change in Control shall be deemed to have occurred
if, prior to such time as a Change in Control would otherwise be deemed to have
occurred, the Board determines otherwise.
(b) Right of Cash-Out. If approved by the Board prior to or within thirty
(30) days after such time as a Change in Control shall be deemed to have
occurred, the Board shall have the right for a forty-five (45) day period
immediately following the date that the Change in Control is deemed to have
occurred to require all, but not less than all, Grantees to transfer and deliver
to the Company all Incentive Awards previously granted to Grantees in exchange
for an amount equal to the "cash value" (defined below) of the Incentive Awards.
Such right shall be exercised by written notice to all Grantees. For purposes
of this Section 5.7(b), the cash value of an Incentive Award shall equal the sum
of (i) all cash to which the Grantee would be entitled upon settlement or
exercise of such Incentive Award and (ii) the excess of the "market value"
(defined below) per share over the option price, if any, multiplied by the
number of shares subject to such Incentive Award. For purposes of the preceding
sentence, "market value" per share shall mean the higher of (i) the average of
the Fair Market Value per share on each of the five trading days immediately
following the date a Change in Control is deemed to have occurred or (ii) the
highest price, if any, offered in connection with the Change in Control. The
amount payable to each Grantee by the Company pursuant to this Section 5.7(b)
shall be in cash or by certified check and shall be reduced by any taxes
required to be withheld.
5.8 AMENDMENTS TO INCENTIVE AWARDS
Subject to the following sentence, the Committee may waive any conditions
or rights with respect to, or amend, alter, suspend, discontinue, or terminate,
any unexercised Incentive Award theretofore granted, prospectively or
retroactively, with the consent of any relevant Grantee. Provided, however, the
Committee shall have no authority or power to take any action described in the
immediately preceding sentence to the extent that such action could result in
failure of payments under an Incentive Award to qualify as performance based
compensation as defined in Section 162(m) of the Code where such payments
otherwise would have qualified as such performance based compensation with
respect to a Covered Employee.
5.9 EXCHANGE OF INCENTIVE AWARDS
The Committee may, in its discretion, permit Grantees under the Plan to
surrender outstanding Incentive Awards in order to exercise or realize the
rights under other Incentive Awards, or in exchange for the grant of new
Incentive Awards or require holders of Incentive
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Awards to surrender outstanding Incentive Awards as a condition precedent to the
grant of new Incentive Awards.
5.10 FINANCING
The Company may extend and maintain, or arrange for the extension and
maintenance of, financing to any Grantee (including a Grantee who is a director
of the Company) to purchase shares pursuant to exercise of an Incentive Award on
such terms as may be approved by the Committee in its sole discretion. In
considering the terms for extension or maintenance of credit by the Company, the
Committee shall, among other factors, consider the cost to the Company of any
financing extended by the Company.
SECTION 6. MISCELLANEOUS
6.1 EFFECTIVE DATE AND GRANT PERIOD
This Plan has been adopted by the Board on April 22, 1994, subject to
stockholder approval. The Plan shall become effective and shall be deemed to
have been adopted on June 17, 1994 if at the Company's 1994 Annual Meeting of
Stockholders it shall have been approved by holders of at least the majority of
the outstanding Common Stock present, in person or by proxy, and authorized to
vote. If the requisite stockholder approval is not obtained, then the Plan
shall become null and void and be of no force or effect. Unless sooner
terminated by the Board, the Plan shall terminate on January 31, 2004. After
the termination of the Plan, no Incentive Awards may be granted under the Plan
other than reload options described in Section 2.6 granted in accordance with
Incentive Plan Agreements existing as of the Plan termination date, but
previously granted awards shall remain outstanding in accordance with their
applicable terms and conditions.
6.2 FUNDING
Except as provided under Section 3, no provision of the Plan shall require
or permit the Company, for the purpose of satisfying any obligations under the
Plan, to purchase assets or place any assets in a trust or other entity to which
contributions are made or otherwise to segregate any assets, nor shall the
Company maintain separate bank accounts, books, records or other evidence of the
existence of a segregated or separately maintained or administered fund for such
purposes. Grantees shall have no rights under the Plan other than as unsecured
general creditors of the Company except that insofar as they may have become
entitled to payment of additional compensation by performance of services, they
shall have the same rights as other employees under general law.
6.3 WITHHOLDING TAXES
(a) Mandatory Withholding. The Company shall have the right to (i) make
deductions from any settlement of an Incentive Award made under the Plan,
including the
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delivery of shares, or require shares or cash or both be withheld from any
Incentive Award, in each case in an amount sufficient to satisfy withholding of
any federal, state or local taxes required by law, or (ii) take such other
action as may be necessary or appropriate to satisfy any such withholding
obligations. The Committee may determine the manner in which such tax
withholding may be satisfied, and may permit shares of Common Stock (rounded up
to the next whole number) to be used to satisfy required tax withholding based
on the Fair Market Value of any such shares of Common Stock, as of the delivery
of shares or payment of cash in satisfaction of the applicable Incentive Award.
(b) Incentive Stock Options. With respect to shares received by a Grantee
pursuant to the exercise of an Incentive Stock Option, if such Grantee disposes
of any such shares within two years from the date of grant of such option or
within one year after the transfer of such shares to the Grantee, the Company
shall have the right to withhold from any salary, wages or other compensation
payable by the Company to the Grantee an amount sufficient to satisfy federal,
state and local withholding tax requirements attributable to such disposition.
6.4 CONFLICTS WITH PLAN
In the event of any inconsistency or conflict between the terms of the Plan
and an Incentive Plan Agreement, the terms of the Plan shall govern.
6.5 NO GUARANTEE OF TAX CONSEQUENCES
Neither the Company nor the Committee makes any commitment or guarantee
that any federal, state or local tax treatment will apply or be available to any
person participating or eligible to participate hereunder.
6.6 SEVERABILITY
In the event that any provision of this Plan shall be held illegal, invalid
or unenforceable for any reason, such provision shall be fully severable, but
shall not affect the remaining provisions of the Plan, and the Plan shall be
construed and enforced as if the illegal, invalid, or unenforceable provision
had never been included herein.
6.7 GENDER, TENSE AND HEADINGS
Whenever the context requires such, words of the masculine gender used
herein shall include the feminine and neuter, and words used in the singular
shall include the plural. Section headings as used herein are inserted solely
for convenience and reference and constitute no part of the Plan.
20
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6.8 AMENDMENT AND TERMINATION
The Plan may be amended or terminated at any time by the Board by the
affirmative vote of a majority of the directors in office. The Plan, however,
shall not be amended, without prior approval of the stockholders, (a) to
materially increase the number of shares which may be issued or transferred to
Grantees or transferees under the Plan, (b) to materially modify the eligibility
requirements of the Plan, (c) to materially increase the benefits accruing to
participants under the Plan or (d) to cause the Plan to not comply with the
rules and regulations promulgated under Section 16(b) of the Exchange Act.
Notwithstanding anything to the contrary contained herein or in any Incentive
Plan Agreement entered into pursuant hereto relating to an Incentive Stock
Option, this Plan and any such Incentive Plan Agreement shall be subject to
amendment by action of the Committee to the extent necessary to comply with any
applicable requirements of the Code relating to favorable tax treatment of
Incentive Stock Options.
6.9 GOVERNING LAW
The Plan shall be construed in accordance with the laws of the State of
Texas, except as superseded by federal law, and in accordance with applicable
provisions of the Code and regulations or other authority issued thereunder by
the appropriate governmental authority.
6.10 SECTION 16 COMPLIANCE
The Plan, and transactions hereunder by persons subject to Section 16 of
the Exchange Act, are intended to comply with all applicable conditions of Rule
16b-3 or any successor provision under the Exchange Act. To the extent any
provision of the Plan or any action by the Committee or the Board fails, or is
deemed to fail, to so comply, such provision or action shall be null and void to
the extent permitted by law and deemed advisable by the Committee.
IN WITNESS WHEREOF, this Plan has been executed this ___ day of
____________, 1994.
OSHMAN'S SPORTING GOODS, INC.
By:________________________________
Printed Name:______________________
Title:_____________________________
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Appendix C
FRONT SIDE OF PROXY
OSHMAN'S SPORTING GOODS, INC. ANNUAL MEETING JUNE 16, 1995
The undersigned hereby appoints ALVIN N. LUBETKIN and RICHARD L. BOCKART, or
either of them, each with power to appoint his substitute, as proxies of the
undersigned and authorizes them to represent and vote, as designated below, all
the shares of the Common Stock of Oshman's Sporting Goods, Inc. which the
undersigned would be entitled to vote if personally present, and to act for the
undersigned at the annual meeting to be held Friday, June 16, 1995, or any
adjournment thereof.
Dated: , 1995
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Signature(s) of Stockholder(s)
(Please sign exactly as shown hereon.
Executors, administrators, guardians,
trustees, attorneys, and officers
signing for corporations should give
full title. If a partnership or jointly
PROXY NO. SHARES owned, each owner should sign.)
IN YOUR NAME
BACK SIDE OF PROXY
OSHMAN'S SPORTING GOODS, INC. ANNUAL MEETING
JUNE 16, 1995 CONTINUED FROM OTHER SIDE
THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED HEREIN AND IN ACCORDANCE WITH
THE ACCOMPANYING PROXY STATEMENT. RECEIPT OF THE PROXY STATEMENT AND THE ANNUAL
REPORT FOR THE FISCAL YEAR ENDED JANUARY 28, 1995, IS HEREBY ACKNOWLEDGED. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2, WHICH ARE
BEING PROPOSED BY THE BOARD OF DIRECTORS.
1. ELECTION OF SEVEN DIRECTORS:
Nominees: Morrie K. Abramson, William N. Anderson, Marvin Aronowitz, Fred M.
Gerson, Alvin N. Lubetkin, Marilyn Oshman, Dolph B.H. Simon.
(MARK ONLY ONE)
[ ] VOTE FOR all nominees listed, except as marked to the contrary above (if
any).
(TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE LIST ABOVE).
[ ] WITHHOLD AUTHORITY to vote for all nominees listed above.
2. APPROVAL OF AMENDMENTS TO 1994 OMNIBUS PLAN
[ ]FOR [ ] AGAINST [ ] ABSTAIN
3. In accordance with their discretion upon such other business as may properly
come before the meeting or any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
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PLEASE MARK, DATE AND SIGN THIS PROXY
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