2
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11 (c) or 240.14a-12
HAROLD'S STORES, INC.
(Name of Registrant as Specified in its Charter)
NOT APPLICABLE
(Name of Person(s) Filing Proxy Statement if Other Than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)1) and 0-
11.
1) Title of each class securities to which transaction
applies:_________________.
2) Aggregate number of securities to which transaction
applies:________________.
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule
0-11:______________.
4) Proposed maximum aggregate value of
transaction:_______________.
5) Total fee paid:________________.
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
form or Schedule and the date of its filing.
1) Amount Previously Paid:____________.
2) Form, Schedule or Registration Statement No:_________________.
3) Filing Party:_____________________.
4) Date filed:_______________________.
NOTICE OF 2000
ANNUAL MEETING OF
SHAREHOLDERS AND
PROXY STATEMENT
Dear Harold's Shareholder:
On behalf of the Board of Directors and management of Harold's Stores,
Inc., I am pleased to invite you to attend the 2000 Annual Meeting of
Shareholders. The meeting will be held at the Harold's Buying Office in
Dallas, at 5919 Maple Avenue, Dallas, Texas at 11:00 a.m., local time,
on Thursday, June 22, 2000. A copy of our Annual Report to Shareholders
for the fiscal year ended January 29, 2000 is enclosed.
The attached Notice of Annual Meeting and Proxy Statement describe the
business to be conducted at the meeting, including the election of ten
directors. During the meeting, there will also be a report by
management on the Company's business, as well as a discussion period
during which you will be able to ask questions.
Whether or not you plan to attend in person, please mark your proxy in
the space provided. It is important that your shares be represented by
a proxy, even if you cannot be present. Take a moment now to sign, date
and return your proxy in the envelope provided. If you have multiple
accounts and received more than one set of this material, please be sure
to return each proxy.
I look forward to greeting you at this year's Annual Meeting.
Sincerely,
Rebecca P. Casey
Chairman of the Board
HAROLD'S STORES, INC., 765 ASP, POST OFFICE DRAWER 2970
NORMAN, OKLAHOMA 73070 (405) 329-4045
HAROLD'S STORES, INC.
765 Asp
Norman, Oklahoma 73069
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 22, 2000
TO OUR SHAREHOLDERS:
The 2000 Annual Meeting of Shareholders of Harold's Stores, Inc. ("the
Company") will be held at the Harold's Buying Office in Dallas, at 5919
Maple Avenue, Dallas, Texas on Friday, June 22, 2000, at 11:00 a.m.,
local time, for the following purposes:
1. To elect ten (10) directors to hold office until the next annual
meeting of the shareholders and until their respective successors shall
have been elected and qualified.
2. To act upon a proposal to amend the Harold's Stores, Inc. 1993
Performance and Equity Incentive Plan.
3. To transact such other business as may properly be brought before
the Annual Meeting or any adjournment thereof.
The Annual Meeting may be adjourned from time to time and, at any
reconvened meeting, action with respect to the matters specified in the
notice may be taken without further notice to the shareholders unless
required by the Bylaws.
Shareholders of record of Common Stock at the close of business on April
28, 2000 are entitled to notice of, and to vote on all matters at, the
Annual Meeting. A list of such shareholders will be available for
examination by any shareholder for any purpose germane to the Annual
Meeting, during normal business hours, at the principal office of the
Company, 765 Asp, Norman, Oklahoma, for a period of ten days prior to
the Annual Meeting and at the Annual Meeting.
BY THE ORDER OF THE BOARD OF DIRECTORS
H. RAINEY POWELL
Secretary
DATED: May 12, 2000
HAROLD'S STORES, INC.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
JUNE 22, 2000
The following information is furnished in connection with the 2000
Annual Meeting of Shareholders of Harold's Stores, Inc., an Oklahoma
corporation (the "Company"), which will be held on Thursday, June 22,
2000, at 11:00 a.m., local time, at the Harold's Buying Office, 5919
Maple Avenue, Dallas, Texas and at any adjournment or adjournments
thereof, and will be mailed on or about May 12, 2000 to the holders of
record of Common Stock as of the record date.
The record date for determining shareholders entitled to notice of, and
to vote at, the Annual Meeting has been fixed as the close of business
on April 28, 2000. On that date, the Company had 6,075,272 shares of
Common Stock outstanding. Each outstanding share of Common Stock is
entitled to one vote on all matters presented at the Annual Meeting.
The enclosed proxy for the Annual Meeting is being solicited by the
Company's Board of Directors and is revocable at any time prior to the
exercise of the powers conferred thereby. The cost of the solicitation
of proxies in the enclosed form will be borne by the Company. In
addition to the use of the mail, proxies may be solicited by personal
interview, telephone, or facsimile, and by banks, brokerage houses and
other institutions. Nominees or fiduciaries will be requested to
forward the solicitation material to their principals and to obtain
authorization for the execution of proxies. The Company will, upon
request, reimburse banks, brokerage houses and other institutions,
nominees and fiduciaries for their reasonable expenses in forwarding
proxy material to their principals.
Unless otherwise directed in the accompanying form of proxy, the persons
named therein will vote FOR the election of the ten director nominees
and FOR the proposal to approve amendments to the to the 1993
Performance and Equity Incentive Plan. As to any other matters which
may properly come before the Annual Meeting, the shares represented by
proxies will be voted in accordance with the recommendations of the
Board of Directors, although the Company does not presently know of any
other such matters. Any shareholder returning the accompanying proxy may
revoke such proxy at any time prior to its exercise by (a) giving
written notice to the Company of such revocation, (b) voting in person
at the Annual Meeting or (c) executing and delivering to the Company a
later dated proxy. Written revocations and later dated proxies should
be sent to Harold's Stores, Inc., Post Office Drawer 2970, Norman,
Oklahoma 73070.
ANNUAL REPORT
The Company's Annual Report to Shareholders covering the fiscal year
ended January 29, 2000 ("fiscal 2000"), including audited financial
statements, is enclosed. No part of the Annual Report is incorporated
in this Proxy Statement or is deemed to be a part of the material for
the solicitation of proxies.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of April 28, 2000
by (i) each nominee for election as a director, (ii) the Company's chief
executive officer and its four other most highly compensated executive
officers, (iii ) all executive officers and directors of the Company as
a group, and (iv) all those known by the Company to be beneficial owners
of more than five percent of the Company's Common Stock.
Beneficial Ownership (1)
Number Percentage
Beneficial Owner of of Class
Shares
Directors and Certain Executive
Officers:
Harold G. Powell
765 Asp., Norman, OK 73069 315,849 (2)(3) 5.2%
Rebecca Powell Casey
5919 Maple Avenue, Dallas, TX
75235 851,043 (3)(4)(5) 14.0%
H. Rainey Powell
765 Asp., Norman, OK 73069 540,169 (3)(6) 8.9%
Kenneth C. Row 63,874 (3) 1.0%
Jodi L. Taylor 55,140 (3) *
Curtis E. Elliott 5,271 (3) *
Robert L. Anderson 200 *
Michael T. Casey
5919 Maple Avenue, Dallas, TX
75235 398,720 (3)(4)(7) 6.6%
Robert B. Cullum, Jr. 18,827 (3) *
Margaret A. Gilliam - *
W. Howard Lester 15,962 (3) *
Leonard M. Snyder - *
William F. Weitzel 16,986 (3) *
All directors and Executive Officers
as a Group (19 persons) 2,710,479 (9) 44.6%
Other Beneficial Owners Of More than
5% of the Common Stock;
The Security National Bank and Trust
Company of Norman,
as Trustee
200 East Main, Norman, OK 73069 488,271 (10) 8.0%
Lisa Powell Hunt
3940 Marquette, Dallas, TX 75225 398,191 (3)(8) 6.6%
Inter-Him N.V.
Prof. Kernkampweg 8a, Post Office
Box 3361
Curacao, Netherlands Antilles 545,578 9.0%
Laifer Capital Management, Inc.
Hilltop Partners, L.P.
45 West 45th Street
New York, NY 10036 311,441 5.1%
SAFECO Asset Management Company
SAFECO Plaza
Seattle, Washington 98185 761,284 12.5%
_____________________
* Less than one percent.
(1) This table is based upon information supplied by officers,
directors and principal shareholders and applicable Schedules 13D and
13G filed with the Securities and Exchange Commission. Unless otherwise
indicated in the footnotes to this table and subject to community
property laws where applicable, the Company believes that each of the
shareholders named in this table has sole voting and investment power
with respect to the shares indicated as beneficially owned. The
percentage of ownership for each person is calculated in accordance with
rules of Securities and Exchange Commission without regard to shares of
Common Stock issuable upon exercise of outstanding stock options, except
that any shares a person is deemed to own by having a right to acquire
by exercise of an option are considered outstanding solely for purposes
of calculating such person's percentage ownership.
(2) Included in this amount are 85,774 shares held by The Security
National Bank and Trust Company of Norman ("Security"), as Trustee of
the Elizabeth M. Powell Trust A, over which Harold G. Powell possesses a
general power of appointment exercisable at his death. Such shares are
also included in the beneficial ownership of Security. See footnote
(10) below. Mr. Powell may also be deemed to have shared voting power
over 402,497 shares held by Security, as trustee of Elizabeth M. Powell
Trust B, which are not included in the number of shares indicated as
beneficially owner by Mr. Powell.
(3) Includes shares that the named individuals have the right to acquire
by exercise of stock options granted under the Company's 1993
Performance and Equity Incentive Plan, which are currently exercisable
as follows: Harold G. Powell - 68,700; Rebecca Powell Casey - 79,178;
H. Rainey Powell - 63,087; Kenneth C. Row - 57,198; Jodi L. Taylor -
48,200; Curtis E. Elliott - 5,040; Michael T. Casey - 11,438; Robert B.
Cullum, Jr. - 11,438; Lisa Powell Hunt - 11,438; W. Howard Lester -
11,438; and William F. Weitzel - 11,438.
(4) Michael T. Casey and Rebecca Powell Casey are husband and wife. The
beneficial ownership of each spouse excludes the shares held by the
other. Mr. and Mrs. Casey disclaim beneficial ownership of the other's
shares.
(5) Included in this amount are 105,123 shares which are held by Ms.
Casey as custodian for the benefit of her minor children.
(6) Included in this amount are 72,182 shares which are held by Mr.
Rainey Powell as custodian for the benefit of his minor children. Not
included are 66,875 shares of Common Stock held by Mr. Rainey Powell's
wife, over which Mr. Rainey Powell disclaims beneficial ownership.
(7) Included in this amount are 42,000 shares held by Michael T. Casey
as Trustee of the H. Rainey and Mary U. Powell Family 1997 Irrevocable
Trust Agreement.
(8) Included in this amount are 85,656 shares which are held by Ms. Hunt
as custodian for the benefit of her minor children. Not included are
35,041 shares of Common Stock held by Ms. Hunt's husband, over which Ms.
Hunt disclaims beneficial ownership.
(9) Includes 405,111 shares which the directors and the executive
officers as a group have the right to acquire by exercise of stock
options granted under the Company's 1993 Performance and Equity
Incentive Plan which are currently exercisable.
(10) All shares are held in its capacity as trustee. Of such total,
85,774 shares are also included in Harold G. Powell's beneficial
ownership. See footnote (2) above.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, officers and persons who beneficially own more than
10% of the Company's Common Stock to file with the Securities and
Exchange Commission and the American Stock Exchange initial reports of
ownership and reports of changes in ownership of Common Stock of the
Company. Officers, directors and greater than 10% beneficial owners are
required by regulation to furnish to the Company copies of all Section
16(a) reports they file. Based solely on review of the copies of such
reports furnished to the Company and written representations that no
other reports were required during fiscal 2000, to the Company's
knowledge all Section 16(a) filing requirements applicable to its
officers, directors and greater than 10% beneficial owners during fiscal
2000 were complied with on a timely basis.
PROPOSAL 1:
ELECTION OF DIRECTORS
The Board of Directors of the Company, pursuant to the provisions of the
Company's Certificate of Incorporation and Bylaws, has established a ten-
member Board of Directors, and has nominated seven of the current ten
directors for re-election by the shareholders at the Annual Meeting, as
well as three new outside directors. If elected, the director nominees
will hold office until the next annual shareholders' meeting and until
their successors are duly elected and qualified.
The Company's Board of Directors meets quarterly. During fiscal 2000,
all directors attended at least 75% of the meetings of the Board of
Directors and the committees on which they served, other than W. Howard
Lester, who due to other commitments attended 50% of the meetings. All
of the nominees for re-election named below have indicated their intent
to serve if elected. If any nominee for a position on the Board of
Directors of the Company is unable to stand for election for any reason,
the proxy holders named in the proxy are expected to vote for the
substitute nominee in that position designated by the Board of Directors
or, if one is not so designated, are expected to consult with the Board
of Directors of the Company in determining how to vote the shares they
represent. Proxies cannot be voted for a greater number of nominees
than the number of nominees named herein.
Nominees
The nominees for election as directors of the Company are as follows:
Name Age Director
Since
Harold G.
Powell 76 1987
Rebecca Powell
Casey 48 1987
H. Rainey
Powell 46 1987
Robert L.
Anderson 57 *
Michael T.
Casey 51 1988
Robert B.
Cullum, Jr. 51 1993
Margaret A.
Gilliam 61 *
W. Howard
Lester 64 1995
Leonard M.
Snyder 52 *
William F.
Weitzel, Ph.D. 63 1989
*Mr. Anderson, Ms. Gilliam and Mr. Snyder have not
previously served on the Board of Directors.
The following is certain biographical information relating to each
nominee-director:
Harold G. Powell founded the Company in 1948 and was named Chairman
Emeritus in 1998. Mr. Powell was Chairman of the Board since its
reorganization in 1987 and was Chairman and Chief Executive Officer from
1987 to 1992. Mr. Powell opened the first Harold's clothing store at
the Norman, Oklahoma location in 1948.
Rebecca Powell Casey was appointed Chairman of the Board in 1998 and has
been Chief Executive Officer of the Company since 1992, and prior to
that time had been President from 1987 to 1988, and Executive Vice
President - Merchandise and Product Development from 1989 to 1991. Ms.
Casey has been employed by the Company in various managerial positions
since 1977. Ms. Casey is a daughter of Harold G. Powell and the wife of
Michael T. Casey.
H. Rainey Powell was appointed President and Chief Operating Officer in
1992. Mr. Powell has previously served as Chief Financial Officer. Mr.
Powell has been employed by the Company and its predecessors in various
managerial positions since 1978. Mr. Powell is the son of Harold G.
Powell.
Robert L. Anderson has served as President of Ronus, Inc., a privately
owned real estate investment firm, since 1997. In addition, since 1997
he has served as Owner of Robert Anderson Consulting, a firm
specializing in investment and structuring advice. From 1982 to 1997,
Mr. Anderson was a Partner at Price Waterhouse, serving as Partner-in-
Charge of the Real Estate Practice. From 1964 to 1981, Mr. Anderson
was with Arthur Andersen, his last capacity served being Partner-in-
Charge of the Tax Specialty Group specializing in foreign real estate
investments in the United States. Mr. Anderson will serve as Chairman
of the Audit Committee.
Michael T. Casey has served as Chairman of the Board of Grand Prairie
State Bank, Texas, a privately owned bank, since 1989, and is President
of Casey Bancorp, Inc., a privately owned bank holding company. Prior
to and since that time, Mr. Casey has been engaged in investments and
banking. He previously served as a Senior Vice President of the Company
from 1989 until 1991. Mr. Casey currently serves on the board of
directors of several other privately held banking organizations in
metropolitan Dallas, Texas, including, North American Bancshares and
American Bank of Texas. Mr. Casey is the husband of Rebecca Powell
Casey. He serves on the CEO Search Committee.
Robert B. Cullum, Jr. is a Partner of Fairway Capital Partners, Ltd. and
Wayfair Capital Partners, Ltd., both of which are privately held real
estate investment partnerships based in Dallas, Texas. Mr. Cullum was
involved for 30 years in the supermarket industry with Cullum Co., Inc.
Presently, he is actively engaged in real estate development with
Wayfair Capital Partners, Ltd. and Fairway Capital Partners, Ltd. He
serves on the Special Real Estate Committee, Compensation Committee,
Audit Committee and the CEO Search Committee.
Margaret A. Gilliam has been President of Gilliam & Co., business
advisors, a company she founded in 1997. She is also publisher of
Gilliam Viewpoint, a monthly publication devoted to developments in the
retail industry. Prior to that time, she spent 21 years with Credit
Suisse First Boston and its predecessors, where her last position was
Director, Equity Research and Senior Analyst for retail trade and soft
goods. Before joining CS First Boston, Ms. Gilliam spent ten years with
Goldman Sachs and five years with three small institutional brokerage
firms in succession. Ms. Gilliam currently serves on the board of
directors at Oshman's Sporting Goods, Inc., a sporting goods retailer;
Horizon Group Properties, a real estate company specializing in outlet
malls; and Jan Bell Marketing, Inc., a retail jewelry concern.
W. Howard Lester has been Chairman and Chief Executive Officer of
Williams-Sonoma, Inc., a retailer of specialty cooking equipment and
home furnishings and accessories since 1978 and is a director of The
Good Guys, Inc., an electronics retailer, and Il Fornaio, U.S.A., a
restaurant/bakery company which he brought to the U.S. from Italy. He
serves on the Strategic Planning Committee.
Leonard M. Snyder has served as Non-Executive Chairman of the Board of
One Price Clothing Stores, Inc. since 1998. In addition, he has been a
marketing and management consultant since January 1995. From 1984 to
1994, Mr. Snyder served as Chairman and Chief Executive Officer of
Lamonts Apparel, Inc. Prior to his tenure at Lamonts, Mr. Snyder held
executive positions with Allied Stores. Mr. Snyder is also a member of
the board of directors of Paper Calmenson & Company, a diversified steel
company as well as Henry's, a chain of photo and digital camera stores
in Canada. He will serve on the Audit Committee.
William F. Weitzel, Ph.D. is Professor Emeritus of Business
Administration at the University of Oklahoma, having served there from
1978 to 1996. Mr. Weitzel is President of WISE Corporation, a
management consulting organization. Mr. Weitzel serves as Chairman of
the Compensation Committee, Strategic Planning Committee and the CEO
Search Committee, and serves on the Special Real Estate Committee.
Committees
The Company's Board of Directors has an Audit Committee, Compensation
Committee, Strategic Planning Committee, Special Real Estate Committee
and a CEO Search Committee. During fiscal 2000, the Audit, Compensation
and CEO Search Committees were comprised of three outside directors,
while the Strategic Planning and Special Real Estate Committees were
comprised of two outside directors.
The Audit Committee's functions include reviewing internal controls and
recommending to the Board of Directors the engagement of the Company's
independent certified public accountants, reviewing with such
accountants the plan for and results of their audit of the Company's
consolidated financial statements and determining the independence of
such accountants. The Audit Committee met three times during fiscal
2000.
The Compensation Committee's function is to evaluate and recommend
changes in compensation for all executive officers and certain other key
personnel, and the creation and implementation of employee benefit plans
and special employment and consulting agreements. The Compensation
Committee met three times during fiscal 2000.
The Strategic Planning Committee's function is to review the
comprehensive plan developed by management stating how the Company will
accomplish its mission and objectives. The Strategic Planning Committee
met once during fiscal 2000.
The Special Real Estate Committee's functions include the review and
analysis of any related party real estate leasing or purchase
transactions. The Special Real Estate Committee did not meet during
fiscal 2000.
During fiscal 2000, the Company announced the beginning of a search for
a new outside Chief Executive Officer. In conjunction with this search,
a CEO Search Committee was established and will be in existence while
the Company is pursuing the search for an outside CEO. The CEO Search
Committee met twice during fiscal 2000.
The Board of Directors does not have a nominating committee. The entire
Board performs this function and evaluates and recommends nominees for
election to the Board of Directors.
Director Compensation
During fiscal 2000, non-employee directors of the Company received
$1,000 for each full Board meeting attended and $500 for each standing
committee meeting attended. In addition, under the Company's 1993
Performance and Equity Incentive Plan, each incumbent non-employee
director was entitled to receive an option grant to purchase 1,500
shares of Common Stock upon reelection at each annual meeting of
shareholders. Any newly elected non-employee directors were entitled to
receive an initial option grant to purchase 4,500 shares upon election
and, while serving as a director, to receive additional option grants to
purchase 1,500 shares upon reelection at each annual meeting of
shareholders.
In order to enhance the Company's ability to attract and retain suitable
outside directors, the Board has approved certain modifications to the
Company's compensation policies for non-employee directors. Under these
policies, non-employee directors of the Company will receive $1,000 for
each full Board meeting attended ($500 if telephonic), $1,000 for each
meeting of the Audit Committee or Compensation Committee attended ($500
if telephonic) and $500 ($250 if telephonic) for all other committee
meetings attended. In addition, each non-employee director will receive
an annual retainer upon election or reelection to the Board in the
amount of $5,000. If the proposed amendments to the 1993 Performance
and Equity Incentive Plan described elsewhere herein are approved by the
shareholders, 50% of the annual retainer fee will be paid in Common
Stock of the Company based on the market value of the Common Stock on
the date of election. In addition, the proposed amendments would
increase the number of shares covered by the initial option grants to
newly elected non-employee directors to 10,000 shares and the subsequent
annual grants to all non-employee directors to 2,000 shares.
All directors of the Company are entitled to a discount on their
clothing purchases off the retail price before markdowns and promotional
discounts.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
NAMED NOMINEES
PROPOSAL 2:
PROPOSAL TO APPROVE THE AMENDMENTS TO THE 1993 PERFORMANCE AND EQUITY
INCENTIVE PLAN OF THE COMPANY
The Harold's Stores, Inc. 1993 Performance and Equity Incentive Plan
(the "Plan") is designed to promote and advance the interests of the
Company and its shareholders by enabling the Company to attract, retain
and reward directors, officers and other managerial and key employees
and to strengthen the mutuality of interests between participants and
the shareholders of the Company in the Company's long-term growth,
profitability and financial success by offering a comprehensive
incentive compensation program, including stock and cash incentive
awards based on performance and other equity-based awards.
Summary of Proposed Amendments
The Board of Directors has approved amendments to the Plan (i) to
increase the total number of shares of Common Stock authorized for
issuance pursuant to awards under the Plan from 1,157,625 shares
(reflecting adjustments resulting from prior stock dividends) to
3,000,000 shares and (ii) to increase the number of options to be
granted to non-employee directors under the automatic grant provisions
of the Plan described below relating to non-employee directors and to
permit non-employee directors to receive shares of Common Stock under
the Plan in lieu of fees.
Increase In Number of Shares. As of April 28, 2000, there were a total
of 229,746 shares available for future awards under the Plan. In order
to ensure that the Company remains able to offer under the Plan
appropriate equity incentives and competitive compensation opportunities
for its directors, officers and key employees, the Board of Directors
adopted, subject to shareholder approval, an amendment to the Plan to
increase the total number of shares of Common Stock that are authorized
for issuance pursuant to awards under the Plan from 1,157,625 shares
(reflecting adjustments resulting from prior stock dividends) to
3,000,000 shares. Such increased number of shares will be available for
all authorized purposes under the Plan. Except as described elsewhere
herein in connection with compensation of non-employee directors, the
Compensation Committee has not at this time considered or approved any
future awards under the Plan, and, as a result, the identity of future
award recipients and the size and terms of future awards are not known
at this time. However, as previously announced, the Company has
commenced a search for a new outside Chief Executive Officer, and it is
anticipated that a portion of the increased number of shares under the
Plan will be required in connection with option or other incentive
awards in order to attract and retain a new Chief Executive Officer.
Amendments Relating to Awards to Non-Employee Directors. The Board of
Directors believes that option and stock ownership by non-employee
directors, by strengthening the mutuality of interests between non-
employee directors and the shareholders, is desirable and in the best
interests of the Company. In addition, the Board believes that
attractive equity-based compensation practices enhance the Company's
ability to attract and retain non-employee directors. In furtherance of
these goals, the Board of Directors has also approved amendments to the
Plan that will increase the number of options to be granted to non-
employee directors under the automatic grant provisions of the Plan and
that will permit non-employee directors to receive shares of Common
Stock under the Plan in lieu of fees.
Under the existing terms of the Plan, each incumbent non-employee
director receives, while serving as a director, an option grant to
purchase 1,500 shares of Common Stock upon reelection at each annual
meeting of shareholders. Any newly elected non-employee director will
receive an initial option grant to purchase 4,500 shares upon election
and, while serving as a director, will receive additional option grants
to purchase 1,500 shares upon reelection at each annual meeting of
shareholders. The proposed amendments would increase the number of
shares covered by the initial option grant to newly elected non-employee
directors to 10,000 shares and the subsequent annual grants to all non-
employee directors to 2,000 shares. If approved by the shareholders,
such changes will be effective in connection with the election of
directors at the 2000 Annual Meeting.
The proposed amendments will also permit non-employee directors to
receive shares of Common Stock under the Plan in lieu of fees.
Description of the Plan
Eligibility. The Plan empowers the Company from time to time until
November 30, 2002, to award to officers and other key managerial,
administrative and professional employees of the Company and its
subsidiaries Incentive, Non-Qualified and Deferred Compensation Stock
Options, Stock Appreciation Rights, Restricted Stock and Restricted Unit
Grants, Performance Equity and Performance Unit Grants, any other Stock-
Based Awards (collectively, the "Awards") authorized by the Compensation
Committee, and any combination of any or all of such Awards, whether in
tandem with each other or otherwise. Non-employee directors of the
Company are also eligible to receive Awards under the Plan as described
herein. On April 28, 2000, the number of persons eligible to participate
in the Plan was approximately 140. Except with respect to grants to non-
employee directors, the selection of recipients of, and the nature and
the size of, Awards granted under the Plan is wholly within the
discretion of the Compensation Committee, and there is no limit on the
number of shares of Common Stock in respect to which Awards may be
granted to, or exercised by, any person.
Administration. The Plan is administered by the Compensation Committee.
The Compensation Committee has the sole authority to construe and to
interpret the Plan, to make rules and regulations relating to the
implementation of the Plan, to select participants, to establish the
terms and the conditions of Awards and to grant Awards.
Shares Subject to Plan. The number of shares of Common Stock reserved
for issuance, and in respect of which Awards may be granted, pursuant to
the respective components of the Plan is 1,157,625 shares (reflecting
adjustments resulting from prior stock dividends). The proposed
amendment would increase this number to 3,000,000 shares. Such maximum
number of shares in payment of Awards granted or which may be subject to
Awards is subject to appropriate equitable adjustment in the event of a
reorganization, stock spilt, stock dividend, combination of shares,
merger, consolidation or other recapitalization of the Company. If any
Awards are forfeited, terminated, settled in cash or exchanged for other
Awards or expire unexercised, the shares of Common Stock theretofore
subject to such awards will again be available for further awards. In
addition, shares which are subject to Stock Appreciation Rights which
expire unexercised or were not issued upon the exercise thereof and
shares received in payment of the purchase price of a stock option in
the exercise thereof will again be available for Awards under the Plan.
No fractional shares may be issued under the Plan.
Incentive Stock Options. Options designated as Incentive Stock Options
within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"), may be granted under the Plan. The number of
shares of Common Stock in respect of which Incentive Stock Options are
first exercisable by any optionee during any calendar year may not have
a fair market value (determined at the date of grant) in excess of
$100,000 (or such other limit as may be imposed by the Code). Incentive
Stock Options may be exercisable for such period or periods not in
excess of 10 years after the date of grant as shall be determined by the
Compensation Committee.
Non-Qualified Stock Options. Non-Qualified Stock Options may be granted
under the Plan for such number of shares of Common Stock and will be
exercisable for such period or periods as the Compensation Committee may
determine.
Deferred Compensation Stock Options. Deferred Compensation Stock
Options are designed to provide a means by which compensation payments
can be deferred to future dates. The number of shares subject to a
Deferred Compensation Stock Option is determined by the Compensation
Committee using the following formula:
Amount of Compensation Deferred = Number of Optioned Shares (FMV -
Exercise Price)
where, "FMV" means the fair market value of a share of Common Stock at
the date such option is granted and the "Exercise Price" means the price
at which such option may be exercised, as determined by the Compensation
Committee. Deferred Compensation Stock Options will be exercisable for
such period or periods as the Compensation Committee shall determine.
Option Exercise Prices. In general, the exercise price of an Incentive
Stock Option must be at least 100% of the fair market value of the
Common Stock on the date of grant. Non-Qualified Stock Options and
Deferred Compensation Stock Options may be issued at such option
exercise price as the Compensation Committee may determine, except that
the Compensation Committee will not issue such options at less than 100%
of the fair market value of the Common Stock of the Company at the date
of grant unless it has been determined that such "discount" option price
will not result in taxable income under the Code to the optionee at the
date of grant or the date such option becomes first exercisable rather
than at the date of exercise.
Exercise of Options. No stock option may be exercised, except as
provided below, unless the holder thereof remains in the continuous
employ of the Company. Stock options shall be exercisable only upon the
payment in full of the applicable option exercise price in cash or, if
approved by the Compensation Committee, in shares of Common Stock (at
the fair market value thereof at exercise date) or by surrendering
outstanding Awards denominated in stock or stock units. No Incentive,
Non-Qualified or Deferred Compensation Stock Option may be exercised
after the optionee ceases to be an employee of the Company, except where
the Compensation Committee adopts terms and conditions relating to such
Option which permit its exercise.
Stock Appreciation Rights. Under the Plan, a Stock Appreciation Right
("SAR") may be granted in tandem with, or independent of, any other
Award granted under the Plan. An SAR is an Award which will entitle the
holder to receive an amount equal to all, or some portion (as determined
by the Compensation Committee in respect of each SAR granted), of the
excess of the fair market value of a share of Common Stock on the date
of exercise over the fair market value of such share at the date of
grant, multiplied by the number of shares as to which the holder is
exercising the SAR. The Company will pay such amount to the holder in
cash or in shares of Common Stock (at fair market value on the date of
exercise) or in Deferred Compensation Stock Options, or combination
thereof, as the Compensation Committee may in its sole discretion
determine, except that any SAR exercised upon or after a Change in
Control (as defined in the Plan) must be paid in cash. An SAR may be
exercised according to such procedures as are determined by the
Compensation Committee.
When an SAR granted in tandem with an option is exercised, such option
is canceled to the extent that the SAR is exercised. Conversely, if the
optionee elects to exercise the option, the tandem SAR is canceled. The
exercise of an SAR granted in respect of (but not in tandem with) an
option, either at the time the option is granted or subsequent to the
grant of the option, will not result in the cancellation of such related
option and the exercise of such option will not result in the
cancellation of the related SAR. The exercise of an SAR paid in cash
will not be included as an Award for the purpose of determining the
number of shares of Common Stock which may be issued under the Plan.
Restricted Stock. An Award of Restricted Stock consists of a specified
number of shares of Common Stock which are transferred to a participant
selected by, and for such consideration as determined by, the
Compensation Committee and are subject to forfeiture to the Company
under such conditions and for such periods of time as the Compensation
Committee may determine. A participant may vote and receive cash
dividends on the shares of Restricted Stock awarded, but may not sell,
assign, transfer, pledge or otherwise encumber such shares of Restricted
Stock during the restriction period. Certificates for Restricted Stock
will be held by the Company until all conditions have been satisfied.
Restricted Units. An Award of Restricted Units (each unit having a
value equivalent to one share of Common stock) may be granted to a
participant on such terms and subject to conditions as the Compensation
Committee may deem appropriate. Restricted Units may be paid upon the
expiration of the relevant restriction period in cash, in shares of
Common Stock equal to the number Restricted Units granted, in Deferred
Compensation Stock Options, or in any combination thereof, as determined
by the Compensation Committee.
Performance Equity and Performance Unit Grants. Performance Equity
grants (with each unit equal in value to one share of Common Stock at
the date of grant) and Performance Unit grants (with each unit
representing such monetary value as assigned by the Compensation
Committee) entitle the participant to receive cash, shares of Common
Stock, Deferred Compensation Stock Options or any combination thereof,
as determined by the Compensation Committee, based upon the degree of
achievement of pre-established performance goals over a pre-established
performance period as determined by the Compensation Committee in its
discretion. Performance goals are fixed by the Compensation Committee on
the basis of such criteria and to accomplish such goals as the
Compensation Committee may select. The Compensation Committee has sole
discretion to determine the employees eligible for Awards of Performance
Equity or Performance Units, the duration of each performance
measurement period, the value of each Performance Unit and the number of
shares of units earned on the basis of the Company's and/or the
participant's performance relative to the established goals. During a
performance measurement period, the Compensation Committee may adjust
the performance goals upward or downward. At the end of any performance
measurement period, the Compensation Committee will determine the number
of performance shares and performance units which have been earned on
the basis of the actual performance in relation to the performance
goals. A participant must be an employee at the end of the performance
period to receive the proceeds of a Performance Equity or Performance
Unit Grant; provided, however, that if such participant dies, retires,
becomes disabled or ceases to be an employee with the Compensation
Committee's consent prior to the end of the performance measurement
period, the Compensation Committee may authorize total or partial
payment to such participant or his or her legal representative.
Performance Equity grantees shall be entitled to receive payment for
each unit earned in an amount equal to the fair market value of shares
of Common Stock at the date of the vesting of the Performance Equity
Award. Performance Unit grantees shall be entitled to receive payment
for each unit earned in an amount equal to the dollar value of such
unit.
Other Stock-Based Grants; Deferrals. The Compensation Committee has
authority under the Plan to grant other Awards of Common Stock or Awards
denominated as stock units. The Compensation Committee may also permit a
participant to elect to defer receipt of the proceeds of any Award
granted under the Plan.
Grants to Non-Employee Directors. In order to retain, motivate and
reward non-employee directors of the Company, the Plan extends
participation to non-employee directors on the terms and conditions
described below.
Each non-employee director of the Company receives, while serving as a
director, Non-Qualified Stock Option grants to purchase 1,500 shares of
Common Stock immediately following each annual meeting of shareholders.
Any new non-employee director will also receive an initial Non-Qualified
Stock Option grant to purchase 4,500 shares of Common Stock immediately
following his or her election to the Board of Directors and, while
continuing to serve as a director, will be granted additional Non-
Qualified Stock Options to purchase 1,500 shares of Common Stock
immediately following each annual meeting of shareholders after the
initial grant. The proposed amendments would increase the number of
shares covered by the initial option grant to newly elected non-employee
directors to 10,000 shares and the subsequent annual grants to all non-
employee directors to 2,000 shares.
The option price for options granted to non-employee directors is equal
to 100% of the fair market value per share of Common Stock on the date
the option is granted. Non-Qualified Stock Options granted to non-
employee directors are immediately vested and fully exercisable
beginning six (6) months after the date of grant, and will remain
exercisable for a period of ten (10) years from the date of grant,
subject to earlier termination in the event of earlier termination of
service as a director. Other than as described above, all Non-Qualified
Stock Options granted to non-employee directors are subject to the same
terms and subject to the same conditions as Non-Qualified Stock Options
granted to employees under the Plan.
The proposed amendments will also permit non-employee directors to
receive shares of Common Stock under the Plan in lieu of fees.
Transferability. No Award granted under the Plan, and no right or
interest therein, is assignable or transferable by a participant except
by will or the laws of descent and distribution.
Term, Amendment and Termination. The Plan will terminate on November
30, 2002, except with respect to Awards then outstanding. The Board of
Directors may amend or terminate the Plan at any time, except that the
Board of Directors may not, without approval of the shareholders of the
Company, make any amendment which would increase the total number of
shares available for issuance (except as permitted by the Plan to
reflect changes in capitalization), materially change the eligibility
requirements or materially increase the benefits accruing to
participants under the Plan.
Change in Control. In the event of a Change in Control of the Company
(defined in the Plan to mean the acquisition of 35% or more of the
Common Stock of the Company by any "Acquiring Person" coupled with any
change in the composition of the Board of Directors with the effect that
a majority of the directors are not "Continuing Directors"), unless the
Board of Directors expressly provides otherwise as of the date of any
such Change in Control, (i) all Incentive, Non-Qualified and Deferred
Compensation Stock Options and Stock Appreciation rights then
outstanding shall be fully exercisable, (ii) all restrictions on and
conditions on and conditions of all Restricted Stock Grants and
Restricted Unit Grants then outstanding shall be deemed satisfied, and
(iii) all Performance Equity Grants and Performance Unit Grants shall be
deemed to have been fully earned.
Federal Income Tax Consequences
Based on current provisions of the Code, and the existing regulations
thereunder, the federal income tax consequences in respect of the
several types of Awards under the Plan are as described below.
At Grant of Options and SARs. An optionee will not recognize any
taxable income at the time an Incentive Stock Option or an SAR is
granted and the Company will not be entitled to a federal income tax
deduction at that time. The same rules should apply to Non-Qualified and
Deferred Compensation Stock Options. However, because Non-Qualified
Stock Options (with the exception of the non-employee director options)
and Deferred Compensation Stock Options may be granted at option
exercise prices substantially below the fair market value of the Common
Stock of the Company on the date the option is granted, the Internal
Revenue Service ("IRS") might take the position that under certain
circumstances income is recognized at the time granted equal to the
amount of the "discount" at which a Non-Qualified Stock Option or a
Deferred Compensation Stock Option was granted.
Incentive Stock Options. No ordinary income will be recognized by the
holder of an Incentive Stock Option at the time of exercise. The excess
of the fair market value of the shares at the time of exercise over the
aggregate option price will be an adjustment to alternative minimum
taxable income for purposes of the federal "alternative minimum tax" at
the date of exercise.
If the optionee holds the shares until the later of two years after the
date the option was granted or one year after the acquisition of such
shares, the difference between the aggregate option price and the amount
realized upon disposition of the shares will constitute capital gain or
loss, as the case may be, and the Company will not be entitled to a
federal income tax deduction. If the shares are disposed of in a sale,
exchange or other "disqualifying disposition" prior to either of such
holding periods, the optionee will recognize ordinary income in an
amount equal to the lesser of (i) the excess of the fair market value of
the shares purchased at the time of exercise over the aggregate option
price; and (ii) the amount of gain recognized on disposition. The
Company will usually be entitled to a federal income tax deduction equal
to such amount.
Non-Qualified and Deferred Compensation Stock Options. If Non-
Qualified Stock Options are issued at an exercise price of at least 100%
of the fair market value of the Common Stock at the date granted,
ordinary income will be recognized by the holder at the time of exercise
of the option in an amount equal to the excess of the fair market value
of the shares purchased at the time of such exercise over the aggregate
option price. The Company will usually be entitled to a corresponding
federal income tax deduction for the year of the exercise. At the time
of sale of the shares, the optionee will generally recognize a capital
gain or loss based upon the difference between the per share fair market
value at the time of exercise and the per share selling price at the
time of such sale of the shares.
In the case of Non-Qualified Stock Options which may be, and Deferred
Compensation Stock Options which are intended to be, issued at an option
exercise price which is substantially less than 100% of fair market
value, the same rules should apply, unless the IRS takes the position
that such "discount" options are subject to tax on the grant date or at
the time they first become exercisable. In such event, the Company would
be entitled to a corresponding federal income tax deduction at such
time.
Stock Appreciation Rights. Upon the exercise of an SAR, the holder will
recognize taxable ordinary income on the amount of cash received and/or
the then current fair market value of the shares of Common Stock
acquired and the Company will be entitled to a corresponding federal
income tax deduction. The holder's basis in any shares of Common Stock
acquired will be equal to the amount of ordinary income upon which he or
she was taxed. Upon any subsequent disposition, any gain or loss
realized will be a capital gain or loss.
Restricted Stock. Unless a participant makes the election described
below, a participant receiving a Restricted Stock Award will not
recognize income and the Company will not be allowed a deduction at the
time such shares of Restricted Stock are granted. While the restrictions
on the shares are in effect, a participant will recognize compensation
income equal to the amount of any dividends received and the Company
will be allowed a deduction in a like amount. When the restrictions on
the shares are removed or lapse, the excess of fair market value of the
shares on the date the restrictions are removed or lapse over the amount
paid, if any, by the participant for the shares will be treated as
ordinary compensation income to the participant and allowed as a
deduction for federal income tax purposes to the Company. Upon
disposition of the shares, any gain or loss recognized by the
participant will be treated as capital gain or loss, and the capital
gain or loss will be short term or long term depending upon the period
of time the shares are held by the participant following the removal or
lapse of the restrictions. However, by filing a Section 83(b) election
with the IRS within 30 days after the date of grant, a participant's
ordinary income and commencement of holding period and the Company's
deduction will be determined as of the date of grant. In such a case,
the amount of ordinary income recognized by such a participant and
deductible by the Company will be equal to the excess of the fair market
value of the shares as of the date of grant over the amount paid, if
any, by the participant for the shares. If such election is made and a
participant thereafter forfeits his or her stock, no refund or deduction
will be allowed for the amount previously included in such participant's
income
Performance Equity, Performance Units and Restricted Units. A
participant receiving any Performance Award or any Restricted Units will
not recognize income, and the Company will not be allowed a deduction,
at the time such Award is granted. When a participant receives payment
in cash or shares of Common Stock, the amount of cash and the fair
market value of the shares of Common Stock received will be ordinary
income to the participant and will be allowed as a deduction for federal
income tax purposes to the Company.
Special Rules. To the extent an optionee pays all or part of the option
price of a stock option by tendering shares of Common Stock owned by the
optionee, the tax consequences described above apply except that the
number of shares received upon such exercise which is equal to the
number of shares surrendered in payment of the option price shall have
the same basis and tax holding period as the shares surrendered. If the
shares surrendered had previously been acquired upon the exercise of an
Incentive Stock Option, the surrender of such shares may be a
disqualifying disposition of such shares. The additional shares received
upon such exercise have a tax basis equal to the amount of ordinary
income recognized on such exercise and a holding period which commences
on the date of exercise.
Withholding Taxes. Withholding taxes must be paid at the time of
exercise of any Non-Qualified or Deferred Compensation Stock Option or
SAR. Withholding taxes must be paid in respect of any Restricted Stock
or Restricted Unit when the restrictions thereon lapse. In respect of
all other Awards, withholding taxes must be paid whenever income to the
Plan participant is recognized for tax purposes.
Future Awards and Additional Information. Except with respect to the
automatic option grant provisions of the Plan applicable to non-employee
directors, the future grant of Awards under the Plan will be made at the
discretion of the Compensation Committee, and, accordingly, the specific
amount and recipients of any such Awards are not determinable at this
time. The numbers of shares of Common Stock subject to options granted
under the Plan to certain persons or groups during fiscal 2000 are as
follows: all current executive officers as a group were granted options
to purchase an aggregate of 118,531 shares (for information concerning
specific grants to the named executive officers, see "Officer
Compensation and Other Information"); all current employees, other than
executive officers, as a group were granted options to purchase an
aggregate of 30,398 shares; and all non-employee directors as a group
were granted options to purchase an aggregate of 9,000 shares. If the
proposed amendments are approved, the Company anticipates that the non-
employee directors and nominees will receive for fiscal 2001 in
connection with their election at the Annual Meeting options to purchase
an aggregate of 38,000 shares and grants of shares having a market value
on the date of grant of $17,500, representing 50% of the annual
retainers payable to the non-employee directors described elsewhere
herein. Based on the closing sale price of the Common Stock on April
28, 2000 as reported by the American Stock Exchange, such grant of
shares in lieu of fees would result in the issuance of an aggregate of
5,833 shares.
Provided that the shareholders approve the proposed amendment to the
Plan, the increased number of shares will be available for any Awards
authorized under the Plan. Except as described elsewhere in connection
with the issuance of Non-Qualified Stock Options and Common Stock in
lieu of fees to non-employee directors of the Company, the Compensation
Committee has not considered or approved any future Awards under the
Plan, and, as a result, the identity of future Award recipients and the
size and term of future Awards are not known at this time.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR"
APPROVAL OF THE AMENDMENTS TO THE PLAN.
OFFICER COMPENSATION AND OTHER INFORMATION
Officers
The officers of the Company are as follows:
Name Principal Position
Harold G. Powell Chairman Emeritus
Rebecca Powell Casey Chairman of the Board and Chief
Executive Officer
H. Rainey Powell President and Chief Operating
Officer
Kenneth C. Row Executive Vice President
Jodi L. Taylor Chief Financial Officer
Sheri L. Bennett Vice President and General
Merchandise Manager
Curtis E. Elliott Vice President - Planning and
Merchandise
Henry F. James Vice President - Outlet Division
Jeffrey T. Morrell Vice President - Human Resources
The officers of the Company are elected by the Board of Directors and
serve at its discretion. The following is a brief description of the
business background of each of the officers who are not also directors
of the Company. For biographical information concerning Harold G.
Powell, Rebecca Powell Casey and H. Rainey Powell, see "Election of
Directors - Nominees."
Kenneth C. Row was appointed Executive Vice President of the Company in
1992. Prior to that time and since 1988, Mr. Row was Vice President -
Marketing of the Company. Mr. Row has been employed by the Company and
its predecessors in various managerial positions since 1986. His
primary responsibilities include store operations, marketing and store
construction and design.
Jodi L. Taylor was appointed as Chief Financial Officer in March 1998.
Prior to that time, she served as Chief Financial Officer, Secretary and
Treasurer of Baby Superstore, Inc. In 1997, Baby Superstore was
acquired by Toys "R" Us, Inc., and Ms.Taylor remained as an executive
involved with the merger and transition until joining Harold's Stores,
Inc. in 1998. Ms. Taylor is a CPA who worked for Deloitte Haskins and
Sells (now Deloitte & Touche) for 2 1/2 years, before joining Baby
Superstore in 1986.
Sheri L. Bennett has served as Vice President and General Merchandise
Manager of the Company since October, 1999. Prior to that time, Ms.
Bennett was employed by Nordstrom's in various managerial capacities
since 1980.
Curtis E. Elliott has served as Vice President - Planning and
Merchandise since 1997. Prior to that time, he worked for Comshare
Retail, Incorporated as Project Manager and Senior Retail Consultant
before joining Charming Shoppes, Inc. as the Division Director of
Planning for the Men's and Kids Division in 1995.
Henry F. James has served as Vice President - Outlet Division since
1999. Prior to that time, Mr. James was Vice President - Men's Division
from 1997 to 1999 and Men's Merchandise Manager from 1996 to 1997. He
was a sportswear buyer for the Company from 1992 to 1996.
Jeffrey T. Morrell has served as Vice President - Human Resources of the
Company since 1996. Mr. Morrell served as Vice President - Stores from
1993 to 1996, and prior to that time was employed in various managerial
capacities since 1990.
Executive Compensation
The following table sets forth information with respect to the chief
executive officer and the other four most highly compensated executive
officers of the Company as to whom the total annual salary and bonuses
for fiscal 2000 exceeded $100,000 ("named executive officers").
Summary Compensation Table
Annual Long-Term
Compensation Compensation
Name and Fiscal Securities
Principal Year Underlying All Other
Position Ended Salary(1) Bonus(2) Options (#) Compensation
Rebecca Powell 2000 $265,000 - 11,000 $2,775
Casey 1999 220,000 $55,000 - 2,250
Chairman of the 1998 220,000 - 10,500 2,462
Board
Chief Executive
Officer
H. Rainey Powell 2000 $206,000 - 9,000 $1,900
President, Chief 1999 180,000 $45,000 - 2,000
Operating 1998 160,000 - 10,500 2,375
Officer and
Secretary
Kenneth C. Row 2000 $193,000 - 49,000 -
Executive Vice 1999 165,000 $47,250(3) 40,000 -
President 1998 145,000 6,000(3) 5,775 $779
Jodi L. Taylor 2000 $176,000 - 8,000 -
Chief Financial 1999 148,000 $38,375 75,000 $740
Officer 1998 - - - -
Curtis E. Elliott 2000 $133,000 - 7,000 -
Vice President- 1999 123,000 $31,200 - -
Planning 1998 94,000 15,000 2,100 -
And Merchandise
(1) Personal benefits provided by the Company to each of the named
executive officers do not exceed 10% of total annual salary and bonus
reported for the named executive officer and are not included in this
total.
(2) The bonus compensation earned is based upon the results of
operations of the Company during the fiscal year.
(3) Includes bonus awards of Common Stock granted to the named executive
officer pursuant to the Company's 1993 Performance and Equity Incentive
Plan. The stock bonuses paid to Kenneth C. Row in fiscal 1998 and 1999
consisted of shares having a market value on the date of the award of
$6,000 and $6,000, respectively.
Options Granted In Fiscal 2000
The following table provides information with respect to the named
executive officers who received grants of options in fiscal 2000.
Individual Options Granted In Last Fiscal Year (1)
Percent of
Total Potential
Number of Options Realizable Value
Securities Granted at Assumed Annual
Underlying to Employees Rates of Stock
Options in Fiscal Exercise Expiration Price Appreciation
Granted(#) Year 2000 Price Date for Option Term (2)
5% 10%
Rebecca P.
Casey 11,000 6.4% $6.75 April 26, 2009 $46,695 $118,335
H. Rainey
Powell 9,000 5.3% 6.75 April 26, 2009 38,205 96,820
Kenneth C. 9,000 5.3% 6.75 April 26, 2009 38,205 96,820
Row 40,000 23.3% 4.0625 December 17, 2009 102,195 258,983
Jodi L.
Taylor 8,000 4.7% 6.75 April 26, 2009 33,960 86,062
Curtis E.
Elliott 7,000 4.1% 6.75 April 26, 2009 29,715 75,304
(1) All options granted to the named executive officers during fiscal
2000 are non-qualified, have a ten-year term, and become vested and
exercisable in annual installments of 20% of the total number of shares
covered by the option, beginning on the grant date.
(2) These amounts are calculated based on certain assumed rates of
appreciation and annual compounding from the date of grant to the end of
the option term. Actual gains, if any, are dependent on the future
performance of the common stock and overall stock market condition.
There can be no assurance that the amounts reflected in this table will
be achieved.
Option Expenses and Year-End Option Values
The following table provides information with respect to the named
executive officers concerning the exercise of options during fiscal 2000
and unexercised options held as of January 29, 2000.
Option Exercises And Year-End Valuation Table
Number of Securities Value of
Underlying Unexercised In-
Unexercised Options The-Money Options at
Shares Value at Fiscal Year End(#) Fiscal Year End ($)
Aquired on Realized Exercis- Unexercis- Exercis- Unexercis-
Name Exercise(#) ($) able able able able
Rebecca P.
Casey - - 76,978 16,542 $ 0 $ 0
Harold G.
Powell - - 68,700 6,626 0 0
H. Rainey
Powell - - 61,287 13,881 0 0
Kenneth C.
Row - - 55,398 79,335 0 0
Jodi L.
Taylor - - 31,600 51,400 0 0
Curtis E.
Elliott - - 2,660 6,440 0 0
Employment Agreements
The Company has an employment agreement with Harold G. Powell, Chairman
Emeritus of the Company, which continues until January 31, 2001.
Pursuant to this agreement, Mr. Powell is paid an annual salary of
$125,000, deferred annual compensation of $25,000 and a performance
bonus in an annual amount to be determined by the Compensation Committee
after the results of operations covered by the employment contract have
been calculated. Subject to certain terms, at the end of the agreement,
Mr. Powell's employment will be converted to that of part-time
consultant for a period of ten years at an annual salary of $50,000.
The Company also has employment agreements with Rebecca Powell Casey,
the Chairman of the Board and Chief Executive Officer of the Company,
and H. Rainey Powell, the President and Chief Operating Officer of the
Company. These agreements were entered into effective as of the
beginning of fiscal 1999, and amended May 1, 1999, and establish their
base salaries as constant through the duration of the agreements, which
terminate on January 31, 2003. Rebecca Powell Casey's agreement
provides annual compensation of $220,000 plus an annual performance
bonus. H. Rainey Powell's agreement provides for annual compensation of
$180,000 plus an annual performance bonus. The base salaries of Ms.
Casey and Mr. Powell were revised to be $300,000 and $220,000,
respectively, on May 1, 1999. The annual performance bonus is
determined by the Compensation Committee after the results of operations
covered by the employment contract have been calculated. Neither of
these contracts provide for deferred compensation or part-time
consultant positions after the termination dates of such contracts.
Base compensation may be adjusted by the Compensation Committee to
ensure that it is consistent with peer group public companies within the
apparel and accessories stores industry.
Compensation Committee Interlocks and Insider Participation
During fiscal 2000, the Compensation Committee of the Board of Directors
was composed of three non-employee directors: Robert B. Cullum, Jr.,
Gary C. Rawlinson and William F. Weitzel. None of the members of the
Compensation Committee have ever been an officer of the Company or its
subsidiaries. During fiscal 2000, none of the Company's executive
officers served as a director or member of the compensation committee of
another entity in which any member of the Company's Compensation
Committee or any other director of the Company was an executive officer.
Mr. Rawlinson is a shareholder-director of the law firm of Crowe &
Dunlevy, a Professional Corporation, which firm serves as general
counsel to the Company, and is not standing for re-election to the
Board.
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors establishes the
general compensation policies of the Company, including specific
compensation levels for the Company's executive officers, and
administers the Company's 1993 Performance and Equity Incentive Plan and
other employee incentive plans. The components of the Company's
executive officer compensation program and the basis on which fiscal
2000 compensation determinations were made by the Compensation Committee
with respect to the executive officers of the Company, including the
named executive officers, are discussed below.
The Compensation Committee generally believes that the total cash
compensation of its executive officers should be similar to the total
cash compensation of similarly situated executives of peer group public
companies within the apparel and accessories stores industry. Further,
a significant portion of the complete compensation package should be
tied to the Company's success in achieving profit, cash flow, and
Company growth.
A competitive base salary is considered vital to support the continuity
of management. The Compensation Committee has established the base
salaries of the Company's executive officers based in part on a survey
of executive compensation paid by local and national retail companies.
This survey was compiled for the Compensation Committee by the Wyatt
Company and others in fiscal 1995 and has been updated based on data
provided by the National Retail Federation. The Compensation Committee
also considers the experience, capability and overall performance of
each executive officer, as well as the competitive marketplace for
executive talent in establishing base salaries.
As discussed elsewhere herein, the Company has employment agreements
with three of its primary executive officers, Harold G. Powell, Rebecca
Powell Casey and H. Rainey Powell. The base salary of the other named
executive officers was established based primarily upon analysis of the
surveys described above and the Company's historical profitability. The
Company believes that the officers' cash bonuses should be tied to the
Company's success in achieving near-term results. Cash bonuses are
based on a bonus pool determined by the Compensation Committee. The
Compensation Committee's primary goal is to tie bonus awards to the
performance of the Company.
Due to the Company's poor performance during fiscal 2000, the
Compensation Committee did not pay performance-based bonuses to
executive officers. To assure that executives were retained, the base
salaries of certain executive officers, including Chairman and Chief
Executive Officer Rebecca P. Casey, were adjusted to keep them in line
with comparable executives in the industry. These increases in base
salary for executive officers ranged from approximately 8% to 36% of
their base salary from the prior fiscal year. Aggregate bonuses to
executive officers for fiscal 2000, 1999 and 1998 approximated 0%, 4%
and 0%, respectively, of the Company's net earnings before taxes during
each of such years.
The Compensation Committee intends to reward long-term strategic
management practices and enhancement of shareholder value through the
award of stock options and other stock based awards under the Company's
1993 Performance and Equity Incentive Plan. The objective of equity
based compensation is to more closely align the interest of the
executive officers with those of the shareholders. The ultimate value
of the awards will depend on the continued success of the Company,
thereby creating a continuing incentive for executive officers to
perform long after the initial grant. During fiscal 2000, the
Compensation Committee granted options to purchase 40,000 shares to
Kenneth C. Row as indicated under "Officer Compensation and Other
Information-Option Grants in Fiscal 2000". All other option grants
reflected under "Officer Compensation and Other Information-Option
Grants in Fiscal 2000" were issued in fiscal 2000 based on fiscal 1999
performance. The Compensation Committee believes that total executive
compensation in future years will continue to include equity-based
incentive compensation, such as stock options and stock bonuses.
We believe that the Company has an appropriate compensation structure,
which properly rewards and motivates its executive officers to build
stockholder value.
William F. Weitzel, Chairman
Robert B. Cullum, Jr.
Gary C. Rawlinson
Shareholder Return Performance Graph
The following graph presented in accordance with the requirements of the
Securities and Exchange Commission shows the cumulative total
stockholder return on the Company's Common Stock over the last five
fiscal years as compared to the returns of the American Stock Exchange
Market Value Index (the "Broad Market Index") and the MG Industry Group
Index -Apparel and Accessories Stores ("the Industry Index"). The
Industry Index includes The Gap, Inc., The Limited, Inc., Talbot's and
other apparel and accessories stores.
The graph assumes an investment of $100 at the beginning of the five-
year period on January 28, 1995, and that any dividends were invested.
Fiscal Year Ending
Company 1995 1996 1997 1998 1999 2000
Harold's 100.00 121.30 136.61 71.06 81.41 44.15
Stores Inc.
Industry Index 100.00 100.95 133.76 206.64 349.48 314.76
Broad Market 100.00 128.18 137.96 157.36 163.03 192.14
RELATED PARTY TRANSACTIONS
The Company leases its original Norman, Oklahoma store and certain
related facilities from a corporation, the shareholders of which consist
of Harold G. Powell and his spouse. The lease has a term of 12 years
ending on April 30, 2008 and provides for annual rental equal to 4% of
gross sales with no fixed minimum rental, plus utilities and property
taxes. During fiscal 2000, the Company made aggregate rental payments of
approximately $73,000, pursuant to the prior leases and the master
lease.
The Company leases a 50,000 square foot building used primarily as a
men's and ladies' buying office in Dallas, Texas (the "Dallas Buying
Office II"), a 10,000 square foot building ("The Dallas Buying Office
I") and an 85,000 square foot warehouse distribution center facility
located in Norman, Oklahoma.
The lessor of the Dallas locations and the distribution center is a
limited partnership whose partners include Rebecca Powell Casey, Michael
T. Casey, H. Rainey Powell and Lisa Powell Hunt, all of whom are
stockholders and directors of the Company, except in the case of Ms.
Hunt who is a stockholder and not a director of the Company. The term
of the Dallas Buying Office I lease expires March 2012, with annual rent
payments of $158,000 plus insurance, utilities and property taxes until
April 2000, at which time the annual rent will be $180,000, plus
insurance utilities and property taxes, increasing $2,500 each year
thereafter until expiration of the lease. The Company relocated its
office space during fiscal 1999 to a new facility owned by the same
limited partnership. This former facility has been sublet by the
Company under favorable terms.
The term of the Dallas Buying Office II lease expires September 2010
with annual rent payments of $453,204 plus insurance and property taxes
until August 2001 at which time the annual rent will be $478,382, plus
insurance, utilities and property taxes until August 2004 at which time
the annual rent will be $503,560, plus insurance, utilities and property
taxes until August 2007 at which time annual rent will be $528,728, plus
insurance, utilities and property taxes until expiration of the lease.
The term of the distribution center lease expires in June 2012, with
annual rental payments of $338,438 plus insurance, utilities and
property taxes until July 2001, at which time the annual rent will
increase annually on a fixed scale up to a maximum of $419,951 during
the final year of the lease.
Michael T. Casey, a director of the Company, provided real estate
consulting services to the Company during fiscal 2000 for which he was
paid $70,000. Consulting services included the evaluation of
prospective new retail store locations and lease negotiations.
Gary C. Rawlinson is a shareholder-director of the law firm of Crowe &
Dunlevy, A Professional Corporation, which firm serves as general
counsel to the Company. Mr. Rawlinson is not standing for re-election
to the Board.
VOTING
The election of each director at the Annual Meeting will be by plurality
vote. The affirmative vote of the holders of a majority of the shares
of Common Stock which are present in person or represented by proxy at
the Annual Meeting is required to approve the amendments to the 1993
Performance and Equity Incentive Plan. Any other matters properly
brought before the Annual Meeting will be decided by a majority of the
votes cast on the matter, unless otherwise required by law.
The office of the Company's Secretary appoints an inspector of election
to tabulate all votes and to certify the results of all matters voted
upon at the Annual Meeting. Neither the corporate law of the State of
Oklahoma, the state in which the Company is incorporated, nor the
Company's Certificate of Incorporation or Bylaws, has any specific
provisions regarding the treatment of abstentions and broker non-votes.
It is the Company's policy to count abstentions or broker non-votes for
the purpose of determining the presence of a quorum at the meeting.
Abstentions will be treated as shares represented at the Annual Meeting
for determining results on actions requiring a majority vote but will
not be considered in determining results of plurality votes. Shares
represented by proxies returned by brokers where the broker's
discretionary authority is limited by stock exchange rules will be
treated as represented at the Annual Meeting only as to such matter or
matters voted on in the proxy. Shares represented by limited proxies
will be treated as represented at the meeting only as to such matter or
matters for which authority is granted in the limited proxy.
Because directors are elected by a plurality vote rather than a majority
of the shares entitled to vote or a majority of the shares present in
person or represented by proxy at the Annual Meeting, proxies marked
"withhold authority" with respect to any one or more nominees will not
affect the outcome of the nominee's election unless the nominee receives
no affirmative votes or unless other candidates are nominated for
election as directors. However, because shares represented by proxies
which are marked "abstain" with regard to the proposal to approve the
amendments to the 1993 Performance and Equity Incentive Plan will be
counted for the purpose of determining the number of shares represented
by proxy at the Annual Meeting, such proxies marked "abstain" will have
the same effect as if the shares represented thereby were voted against
the proposal.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors, as recommended by the Audit Committee, has
selected Arthur Andersen LLP to serve as the Company's independent
certified public accountants for the fiscal year ending February 3,
2001. Arthur Andersen LLP has been the auditor of the Company's
financial Statements since 1999. Representatives of Arthur Andersen LLP
are expected to be present at the Annual Meeting, with the opportunity
to make a statement if they desire to do so, and will be available to
respond to appropriate questions.
In September 1999, the Company dismissed KPMG LLP as its independent
public accountants and subsequently retained Arthur Andersen LLP as its
new independent public accountants. The Audit Committee recommended such
change in independent public accountants. During the two preceding
fiscal years and the interim period through September 1999, there were
no disagreements with KPMG LLP on matters of accounting principles or
practices, financial statement disclosure, or auditing scope or
procedure which disagreement, if not resolved to the satisfaction of
KPMG LLP, would have caused them to make reference to the subject matter
of the disagreement in connection with their reports. In addition,
during such period, there were no "reportable events" with KPMG LLP as
described in Item 304 (a) (1) (v) of Regulation S-K. KPMG LLP's report
on the financial statements of the Company for the two fiscal years
prior to September 1999 contain unqualified opinions. During the two
preceding calendar years and through September 1999, the Company did not
consult Arthur Andersen LLP on either the application of accounting
principles to a completed or proposed specific transaction, or on the
type of audit opinion that might be rendered on the Company's financial
statements.
PROPOSALS OF SHAREHOLDERS
The Board of Directors will consider proposals of shareholders intended
to be presented for action at annual meetings of shareholders. According
to the rules of the Securities and Exchange Commission, such proposals
shall be included in the Company's Proxy Statement if they are received
in a timely manner and if certain requirements are met. For a
shareholder proposal to be included in the Company's Proxy Statement
relating to the 2001 Annual Meeting of Shareholders, a written proposal
complying with the requirements established by the Securities and
Exchange Commission, including Rule 14a-8 under the Securities Exchange
Act of 1934, must be received no later than January 13, 2001. In
addition, shareholders are notified that the deadline for providing the
Company timely notice of any shareholder proposal to be submitted
outside of the Rule 14a-8 process for consideration at the 2001 Annual
Meeting of Shareholders is March 24, 2001. As to all such matters of
which the Company does not have notice as of March 24, 2001,
discretionary authority to vote on such matters will be granted to the
persons designated in the proxies solicited by the Company relating to
the 2001 Annual Meeting. All shareholder proposals should be delivered
to the Company's principal executive offices located at 765 Asp, Norman,
Oklahoma 73069.
OTHER MATTERS
The Company does not know of any matters to be presented for action at
the Annual Meeting other than those listed in the Notice of Meeting and
referred to herein. If any other matters properly come before the
Annual Meeting, it is intended that the proxy solicited hereby will be
voted in accordance with the recommendation of the Board of Directors.
Copies of the Annual Report of Harold's Stores, Inc. to the Securities
and Exchange Commission on Form 10-K may be obtained, without charge to
shareholders, by writing Harold's Stores, Inc., Shareholder Relations,
Post Office Drawer 2970, Norman, Oklahoma 73070-2970.
PROXY
HAROLD'S STORES, INC.
765 Asp Avenue, Norman, Oklahoma 73069
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF HAROLD'S
STORES, INC.
The undersigned hereby appoints H. Rainey Powell and Jodi L. Taylor, or
any one of them, each with the power to appoint his or her substitute,
as proxies, and hereby appoints and authorizes them to represent and
vote as designated below, all the shares of Common Stock, held of record
by the undersigned on April 28, 2000, at the Annual Meeting of
Shareholders of Harold's Stores, Inc. (the "Company") to be held at the
Harold's Buying Office, 5919 Maple Avenue, Dallas, Texas, at 11:00 a.m.
on Friday, June 22, 2000, and at any adjournment thereof.
1. ELECTION OF DIRECTORS
________FOR all nominees listed below
_____WITHHOLD AUTHORITY
(except for the nominee(s) lined out below)
to vote for all nominees below
Harold G. Powell, Rebecca Powell Casey, H. Rainey Powell, Robert L.
Anderson,
Michael T. Casey, Robert B. Cullum, Jr., Margaret A. Gilliam, W. Howard
Lester, Leonard M. Snyder, William F. Weitzel
2. ________FOR _______AGAINST ______ABSTAIN
Proposal to amend the 1993 Performance and Equity Plan.
3. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting or any
adjournment thereof.
IF ANY OTHER BUSINESS IS PRESENTED AT THE ANNUAL MEETING, THIS PROXY
SHALL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATION OF THE BOARD OF
DIRECTORS. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION
IS MADE, THIS PROXY WILL BE VOTED FOR THE NOMINEES LISTED IN ITEM 1 AND
FOR ITEM 2.
Please sign exactly as name appears below. When
shares are held as joint tenants, both should
sign. When signing as attorney, as executor,
administrator, trustee, or guardian, please give
full titles as such. If a corporation, please
sign full corporate name by President or other
authorized officer. If a partnership, please
sign partnership name by authorized person. If
a Limited Liability Company please sign name by
authorized person.
Date:__________________________, 2000
___________________________Signature
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
APPENDIX TO PROXY STATEMENT OF HAROLD'S STORES, INC.
CONTAINING SUPPLEMENTAL INFORMATION REQUIRED TO BE
PROVIDED TO THE SECURITIES AND EXCHANGE COMMISSION
The following is information required to be provided to the
Securities and Exchange Commission in connection with the Definitive
Proxy Materials of Harold's Stores, Inc. (the "Company") in connection
with the 2000 Annual Meeting of Shareholders of the Company. This
information is not deemed to be a part of the Proxy Statement and will
not be provided to shareholders in connection with the Proxy Statement.
1. The Company anticipates that the Definitive Proxy Materials will
be mailed to the shareholders on or about May 12, 2000.
2. The following information is provided pursuant to Instruction 5,
Item 10 of Schedule 14A: The shares of Common Stock issuable by the
Company pursuant to the Company's 1993 Performance and Equity Incentive
Plan (the "Plan") are covered by the Company's Registration Statements
on Form S-8 (File Nos. 33-68604 and 33-63773). In connection with the
increase in the number of shares authorized for issuance pursuant to the
Plan discussed in the Proxy Statement, the Company intends to file an
additional Registration Statement on Form S-8 to register such increased
number of shares.
3. The complete text of the Plan is set forth below as required by
Instruction 3, Item 9 of Schedule 14A.
AMENDMENT TO
1993 PERFORMANCE AND EQUITY INCENTIVE PLAN
OF
HAROLD'S STORES, INC.
Pursuant to resolutions adopted by the Board of Directors of
Harold's Stores, Inc. (the "Company") on January 26, 2000 and April 28,
2000, and as permitted by Section 17 of the Corporation's 1993
Performance and Equity Incentive Plan (the "Plan") relating to
amendments to the Plan, the Plan is amended as follows:
1. The last sentence of Section 1 of the Plan is hereby amended
to read in its entirety as follows:
"In addition, the Plan is intended to secure, retain, motivate
and reward Nonemployee Directors of Company through the grant
of Stock Options and shares of Common Stock to Nonemployee
Directors."
2. Section 2(n) of the Plan is hereby amended to read in its
entirety as follows:
"Participant" means an employee of Company or a Subsidiary who
is granted an Award under the Plan, or a Nonemployee Director
who is granted a Stock Option or shares of Common Stock
pursuant to Section 6(h) of the Plan.
3. The first paragraph of Section 4(b) of the Plan is hereby
amended to read in its entirety as follows:
"(b) Shares of Common Stock Subject to Plan. The maximum
number of shares of Common Stock in respect of which Awards
may be granted under the Plan, subject to adjustment as
provided in Section 15 of the Plan, is 3,000,000."
4. The last sentence of Section 5 of the Plan is hereby amended
to read in its entirety as follows:
"In addition, all Nonemployee Directors of Company shall be
eligible for grant of Stock Options and shares of Common Stock
under the Plan in accordance solely with the provision of
Section 6(h) hereof."
5. Section 6(h) of the Plan is hereby amended to read in its
entirety as follows:
"(h) Nonemployee Director Awards. Notwithstanding
anything elsewhere in the Plan to the contrary, each
Nonemployee Director shall be eligible for grants of Stock
Options and shares of Common Stock under the Plan solely in
accordance with this provision. The following subparagraphs
of this paragraph shall apply to the granting of Stock Options
to Nonemployee Directors ("Nonemployee Director Options") and
the granting of shares of Common Stock to Nonemployee
Directors:
(i) Grant of Options. Each incumbent
Nonemployee Director shall receive, while serving as
a director, stock option grants to purchase 2,000
shares of Common Stock immediately following each
annual meeting of shareholders at which such
incumbent Nonemployee Director is re-elected to the
Board. Any new Nonemployee Director shall receive a
stock option grant to purchase 10,000 shares of
Common Stock upon his or her initial election to the
Board and, while continuing to serve as a director,
shall receive stock option grants to purchase 2,000
shares of Common Stock immediately following each
subsequent annual meeting of shareholders at which
such Nonemployee Director is re-elected to the
Board. All Stock Options granted to the Nonemployee
Directors shall constitute Non-Qualified Stock
Options.
(ii) Exercise Price. The purchase price for
each share placed under a Stock Option for a
Nonemployee Director shall be equal to 100% of the
Fair Market Value of such share on the date the
Stock Option is granted.
(iii) Vesting and Term. Each Nonemployee
Director Option shall become vested and exercisable
in full on the date six months after the date of
grant. The term of each Stock Option granted to a
Nonemployee Director shall be ten (10) years from
the date of grant, subject to earlier termination in
accordance with this subparagraph (iii) below.
Options may be exercised solely by the Nonemployee
Director during his lifetime, or in the event of his
legal incapacity, by his legal representative, or
after his death, by the person or persons entitled
thereto under his will or the laws of descent and
distribution. In the event of the death of a
Nonemployee Director while a member of the Board,
any unvested portion of the Stock Option as of the
date of death shall be vested as of the date of
death, and the option shall be exercisable in full
by the heirs or other legal representatives of the
Nonemployee Director within twelve months following
the date of death. In the event of termination of a
Nonemployee Director as a member of the Board for
any reason other than death or removal from the
Board for cause in accordance with applicable law
and the Certificate of Incorporation and By-laws of
Company, such option shall be exercisable by the
Nonemployee Director or his legal representative
within three months of the date of termination as to
all then vested portions. If a Nonemployee Director
is removed from the Board for cause, the Stock
Option shall terminate as of the effective date of
removal for cause and the optionee shall have no
further rights to exercise any portion of the Stock
Option. Notwithstanding the foregoing provisions of
this subparagraph (iii), in no event may a Stock
Option be exercised more than ten years after the
date of grant.
(iv) Method of Exercise. Nonemployee Director
Options may be exercised in the manner provided in
paragraph (e) of this Section 6 ("Method of
Exercise").
(v) Other Provisions. All Nonemployee
Director Options shall be subject to the other
provisions of the Plan that are not inconsistent
with the provisions of this paragraph (h); provided,
however, that the Committee shall not have
discretionary authority, as otherwise provided by
the provisions of this Plan, to make any
determination that would alter the effects of a
provision of the Plan as to a Nonemployee Director
Option.
(vi) Grants of Common Stock in Lieu of Fees.
NonemployeeDirectors of the Company shall be
eligible to receive Awards under the Plan consisting
of shares of Common Stock in lieu or replacement of
any retainer fees, meeting attendance fees or other
fees to which any Nonemployee Director may be
entitled under the Nonemployee Director compensation
policies of the Company as in effect from time to
time. Such Awards of Common Stock shall be subject
to such restrictions, if any, and shall be effected
upon such terms as the Board or Committee shall
determine."
6. All other terms and conditions of the Plan shall remain in
full force and effect.
7. The foregoing amendments shall be subject to approval by the
shareholders of the Company at the 2000 Annual Meeting of Shareholders.
If such approval is not obtained, this amendment shall be void and of no
force or effect.
HAROLD'S STORES, INC.
1993 PERFORMANCE AND EQUITY INCENTIVE PLAN
1. Purpose. The purpose of the 1993 Performance and Equity
Incentive Plan (herein referred to as the "Plan") is to promote and
advance the interest of Harold's Stores, Inc. (the "Company") and its
shareholders by enabling the Company to attract, retain and reward
managerial and other key employees and to strengthen the mutuality of
interests between such employees and the Company's shareholders. The
Plan is designed to meet this intent by offering performance-based stock
and cash incentives and other equity-based incentive awards thereby
providing a proprietary interest in pursuing the long-term growth,
profitability and financial success of the Company. In addition, the
Plan is intended to secure, retain, motivate and reward Nonemployee
Directors of Company through the grant of Stock Options to Nonemployee
Directors.
2. Definitions. For purposes of the Plan, the following
terms shall have the meanings set forth below:
(a) "Award" or "Awards" means an award or grant made to
a Participant under Sections 6 through 10, inclusive, of the Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as
in effect from time to time or any successor thereto, together with
rules, regulations and interpretations promulgated thereunder.
(d) "Committee" means the Committee of the Board
constituted as provided in Section 3 of the Plan.
(e) "Common Stock" means the Common Stock, par value
$0.01 per share, of the Company or any security of the Company
issued in substitution, exchange or lieu thereof.
(f) "Company" means Harold's Stores, Inc., an Oklahoma
corporation, or any successor corporation.
(g) "Deferred Compensation Stock Option" means any Stock
Option granted pursuant to the provisions of Section 6 of the Plan
that is specifically designated as such.
(h) "Disability" means disability as determined by the
Committee in accordance with standards and procedures similar to
those under the Company's long-term disability plan.
(i) "Exchange Act" means the Securities Exchange Act of
1934, as amended and in effect from time to time, or any successor
statute.
(j) "Fair Market Value" means, if the shares are traded
on a national securities exchange, the closing price of the shares
on such national securities exchange on the day on which such value
is to be determined or, if no shares were traded on such day, on
the next preceding day on which shares were traded, as reported by
National Quotation Bureau, Inc. or other national quotation
service. If the principal market for the shares is the
over-the-counter market, Fair Market Value means the closing
"asked" price of the shares in the over-the-counter market on the
date on which such value is to be determined or, if such asked
price is not available, the last sales price on such day or, if no
shares were traded on such day, on the next preceding day on which
the shares were traded, as reported by the National Association of
Securities Dealers Automatic Quotation System (NASDAQ) or other
national quotation service. If at any time shares of Common Stock
are not traded on an exchange or in the over-the-counter market,
Fair Market Value shall be the value determined by the Committee,
taking into consideration those factors affecting or reflecting
value which they deem appropriate. For purposes of determining the
exercise price of an Incentive Stock Option, Fair Market Value
shall not under any circumstances exceed the amount contemplated by
Section 422(b)(4) of the Code.
(k) "Incentive Stock Option" means any Stock Option
granted pursuant to the provisions of Section 6 of the Plan that is
intended to be and is specifically designated as an "incentive
stock option" within the meaning of Section 422 of the Code.
(l) "Nonemployee Director" means each person who is a
member of the Board of Directors of Company but who is not an
employee of Company or a Subsidiary.
(m) "Non-Qualified Stock Option" means any Stock Option
granted pursuant to the provisions of Section 6 of the Plan that is
not an Incentive Stock Option.
(n) "Participant" means an employee of Company or a
Subsidiary who is granted an Award under the Plan, or a Nonemployee
Director who is granted a Stock Option pursuant to Section 6(h) of
the Plan.
(o) "Performance Award" means an Award granted pursuant
to the provisions of Section 9 of the Plan the vesting of which is
contingent on performance attainment.
(p) "Performance Equity Grant" means an Award of units
representing shares of Common Stock granted pursuant to the
provisions of Section 9 of the Plan.
(q) "Performance Unit Grant" means an Award of monetary
units granted pursuant to the provisions of Section 9 of the Plan.
(r) "Plan" means this 1993 Performance and Equity
Incentive Plan of the Company, as set forth herein and as it may be
hereafter amended and from time to time in effect.
(s) "Restricted Award" means an Award granted pursuant
to the provisions of Section 8 of the Plan.
(t) "Restricted Stock Grant" means an Award of shares of
Common Stock granted pursuant to the provisions of Section 8 of the
Plan.
(u) "Restricted Unit Grant" means an Award of units
representing shares of Common Stock granted pursuant to the
provisions of Section 8 of the Plan.
(v) "Retirement" means retirement from active employment
with the Company and its Subsidiaries on or after the normal
retirement date specified in the Company's retirement plan for
salaried employees or such earlier retirement date as approved by
the Committee for purposes of this Plan.
(w) "Stock Appreciation Right" means an Award to benefit
from the appreciation of Common Stock granted pursuant to the
provisions of Section 7 of the Plan.
(x) "Stock Option" means an Award to purchase shares of
Common Stock granted pursuant to the provisions of Section 6 of the
Plan.
(y) "Subsidiary" means any corporation or entity in
which the Company directly or indirectly controls 50% or more of
the total voting power of all classes of its stock having voting
power.
3. Administration.
(a) The Plan shall be administered by the Committee to
be appointed from time to time by the Board. Members of the
Committee shall serve at the pleasure of the Board and the Board
may from time to time remove members from, or add members to, the
Committee. A majority of the members of the Committee shall
constitute a quorum for the transaction of business. Action
approved in writing by a majority of the members of the Committee
then serving shall be fully effective as if the action had been
taken by unanimous vote at a meeting duly called and held.
(b) The Committee is authorized to construe and
interpret the Plan to promulgate, amend and rescind rules and
regulations relating to the implementation of the Plan and to make
all other determinations necessary or advisable for the
administration of the Plan. The Committee may designate persons
other than members of the Committee to carry out its
responsibilities under such conditions and limitations as it may
prescribe. Any determination, decision or action of the Committee
in connection with the construction, interpretation,
administration, or application of the Plan shall be final,
conclusive and binding upon all persons participating in the Plan
and any person validly claiming under or through persons
participating in the Plan. The Committee's powers include, but are
not limited to, modifications, procedures and subplans as are
necessary to comply with provisions of federal and state securities
laws, including, but not limited to, provisions of federal
securities laws applicable to executive officers who receive Awards
under the Plan. The Company shall effect the granting of Awards
under the Plan in accordance with the determinations made by the
Committee, by execution of instruments in writing in such form as
approved by the Committee. Notwithstanding this paragraph (b), and
solely to the extent necessary to satisfy the requirements of Rule
16b-3 under the Exchange Act, the Committee shall have no
discretionary authority with respect to the eligibility, amount,
price or timing of any Stock Options granted under the Plan to a
Nonemployee Director of Company.
4. Plan Duration; Common Stock Subject to Plan.
(a) Term. The Plan shall terminate on November 30,
2002, except with respect to Awards then outstanding.
(b) Shares of Common Stock Subject to Plan. The maximum
number of shares of Common Stock in respect of which Awards may be
granted under the Plan, subject to adjustment as provided in
Section 15 of the Plan, is 1,000,000.
If any Awards are forfeited, terminated, expire
unexercised, settled in cash in lieu of stock or exchanged for
other Awards, the shares of Common Stock which were theretofor
subject to such Awards shall again be available for Awards under
the Plan to the extent of such forfeiture or expiration of such
Awards. Further, any shares of Common Stock which are used as full
or partial payment to the Company by a Participant of the purchase
price of shares of Common Stock upon exercise of a Stock Option
shall again be available for Awards under the Plan, as shall any
shares covered by Stock Appreciation Rights which are not issued as
payment upon exercise.
Common Stock which may be issued under the Plan may be
either authorized and unissued shares or issued shares which have
been reacquired by the Company. No fractional shares of Common
Stock shall be issued under the Plan.
5. Eligibility. Persons eligible for Awards under the Plan
shall consist of managerial and other key employees of the Company
and/or its Subsidiaries who hold positions of significant
responsibilities or whose performance or potential contribution, in the
sole judgment of the Committee, will benefit the future success of the
Company. In addition, all Nonemployee Directors of Company shall be
eligible for Stock Options under the Plan in accordance solely with the
provision of Section 6(h) hereof.
6. Stock Options. Stock Options granted under the Plan may
be in the form of Incentive Stock Options, Non-Qualified Stock Options,
Deferred Compensation Stock Options, Nonemployee Director Options and
such Stock Options shall be subject to the following terms and
conditions and shall contain such additional terms and conditions, not
inconsistent with the express provisions of the Plan, as the Committee
shall deem desirable:
(a) Grant. Stock Options may be granted under the Plan
on such terms and conditions not inconsistent with the provisions
of the Plan and in such form as the Committee may from time to time
approve. Stock Options may be granted alone, in addition to or in
tandem with other Awards under the Plan.
(b) Stock Option Price. The option exercise price per
share of Common Stock purchasable under a Stock Option shall be
determined by the Committee at the time of grant, but in no event
shall the exercise price of an Incentive Stock Option be less than
one hundred percent (100%) of the Fair Market Value of the Common
Stock on the date of the grant of such Stock Option.
(c) Option Term. The term of each Stock Option shall be
fixed by the Committee; except that the term of Incentive Stock
Options shall not exceed ten (10) years after the date the
Incentive Stock Option is granted.
(d) Exercisability. A Stock Option shall be exercisable
at such time or times and subject to such terms and conditions as
shall be determined by the Committee at the date of grant. Except
as provided in Section 13 of this Plan, no Stock Option may be
exercised unless the holder thereof is at the time of such exercise
in the employ of the Company or a Subsidiary and has been
continuously so employed since the date such Stock Option was
granted.
(e) Method of Exercise. A Stock Option may be
exercised, in whole or in part, by giving written notice of
exercise to the Company specifying the number of shares to be
purchased. Such notice shall be accompanied by payment in full of
the purchase price in cash or, if acceptable to the Committee in
its sole discretion, in shares of Common Stock already owned by the
Participant, or by surrendering outstanding Awards denominated in
stock or stock units. The Committee may also permit Participants,
either on a selective or aggregate basis, to simultaneously
exercise Options and sell the shares of Common Stock thereby
acquired, pursuant to a brokerage or similar arrangement, approved
in advance by the Committee, and use the proceeds from such sale as
payment of the purchase price of such shares.
(f) Special Rules for Incentive Stock Options. With
respect to Incentive Stock Options granted under the Plan, the
following additional provisions shall apply:
(i) The aggregate Fair Market Value (determined as
of the date the Incentive Stock Option is granted) of the
number of shares with respect to which Incentive Stock Options
are exercisable for the first time by a Participant during any
calendar year shall not exceed One Hundred Thousand Dollars
($100,000) or such other limit as may be required by the Code;
(ii) If at the time an Incentive Stock Option is
granted, the Participant owns stock possessing more than ten
percent (10%) of the total combined voting power of all
classes of stock of Company, then the terms of the Incentive
Stock Option shall specify that the exercise price shall be at
least 110% of the Fair Market Value of the Common Stock
subject to the Incentive Stock Option and such Incentive Stock
Option shall not be exercisable after the expiration of five
(5) years from the date granted; and
(iii) The Committee shall include any other terms and
conditions as may be required in order that the Incentive
Stock Options qualify under Section 422 of the Code or
successor provision.
(g) Deferred Compensation Stock Options. Deferred
Compensation Stock Options are intended to provide a means by which
compensation payments can be deferred to future dates. The number
of shares of Common Stock subject to a Deferred Compensation Stock
Option shall be determined by the Committee, in its sole
discretion, in accordance with the following formula:
Amount of Compensation to be Deferred = Number of
(Fair Market Value - Exercise Price) Optioned Shares
Amounts of compensation deferred may include amounts earned under
Awards granted under the Plan or under any other compensation plan,
program or arrangement of the Company as permitted by the
Committee.
Deferred Compensation Stock Options will be granted only
if the Committee has reasonably determined that a recipient of such
an option will not be deemed at the date of grant to be in receipt
of the amount of income being deferred for purposes of the Code.
(h) Nonemployee Director Options. Notwithstanding
anything elsewhere in the Plan to the contrary, each Nonemployee
Director shall be eligible for grants of Stock Options under the
Plan solely in accordance with this provision. The following
subparagraphs of this paragraph shall apply to the granting of
Stock Options to Nonemployee Directors ("Nonemployee Director
Options"):
(i) Grant of Options. Each individual who is a
Nonemployee Director on the date of the 1995 annual meeting of
shareholders of Company shall receive an initial option grant
to purchase 4,500 shares of the Common Stock of Company
immediately following such meeting. Each individual who
becomes a Nonemployee Director subsequent to the 1995 annual
meeting of shareholders of Company shall receive an initial
option grant to purchase 4,500 shares of the Common Stock
immediately following the date of his election to the Board.
Each Nonemployee Director also shall receive subsequent grants
of stock options to purchase 1,500 shares of the Common Stock
immediately following each annual meeting of shareholders of
Company at which such Nonemployee Director is re-elected to
the Board. All Stock Options granted to the Nonemployee
Directors shall constitute Non-Qualified Stock Options.
(ii) Exercise Price. The purchase price for each
share placed under a Stock Option for a Nonemployee Director
shall be equal to 100% of the Fair Market Value of such share
on the date the Stock Option is granted.
(iii) Vesting and Term. Each Nonemployee Director
Option shall become vested and exercisable in full on the date
six months after the date of grant. The term of each Stock
Option granted to a Nonemployee Director shall be ten (10)
years from the date of grant, subject to earlier termination
in accordance with this subparagraph (iii) below. Options may
be exercised solely by the Nonemployee Director during his
lifetime, or in the event of his legal incapacity, by his
legal representative, or after his death, by the person or
persons entitled thereto under his will or the laws of descent
and distribution. In the event of the death of a Nonemployee
Director while a member of the Board, any unvested portion of
the Stock Option as of the date of death shall be vested as of
the date of death, and the option shall be exercisable in full
by the heirs or other legal representatives of the Nonemployee
Director within twelve months following the date of death. In
the event of termination of a Nonemployee Director as a member
of the Board for any reason other than death or removal from
the Board for cause in accordance with applicable law and the
Certificate of Incorporation and By-laws of Company, such
option shall be exercisable by the Nonemployee Director or his
legal representative within three months of the date of
termination as to all then vested portions. If a Nonemployee
Director is removed from the Board for cause, the Stock Option
shall terminate as of the effective date of removal for cause
and the optionee shall have no further rights to exercise any
portion of the Stock Option. Notwithstanding the foregoing
provisions of this subparagraph (iii), in no event may a Stock
Option be exercised more than ten years after the date of
grant.
(iv) Method of Exercise. Nonemployee Director
Options may be exercised in the manner provided in paragraph
(e) of this Section 6 ("Method of Exercise").
(v) Other Provisions. All Nonemployee Director
Options shall be subject to the other provisions of the Plan
that are not inconsistent with the provisions of this
paragraph (h); provided, however, that the Committee shall not
have discretionary authority, as otherwise provided by the
provisions of this Plan, to make any determination that would
alter the effects of a provision of the Plan as to a
Nonemployee Director Option.
7. Stock Appreciation Rights. The grant of Stock
Appreciation Rights under the Plan shall be subject to the following
terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the express terms of the Plan, as the
Committee shall deem desirable:
(a) Stock Appreciation Rights. A Stock Appreciation
Right is an Award entitling a Participant to receive an amount
equal to (or if the Committee shall determine at the time of grant,
less than) the excess of the Fair Market Value of a share of Common
Stock on the date of exercise over the Fair Market Value of a share
of Common Stock on the date of grant of the Stock Appreciation
Right, or such other price as set by the Committee, multiplied by
the number of shares of Common Stock with respect to which the
Stock Appreciation Right shall have been exercised.
(b) Grant. A Stock Appreciation Right may be granted in
tandem with, in addition to or completely independent of a Stock
Option or any other Award under the Plan.
(c) Exercise. A Stock Appreciation Right may be
exercised by a Participant in accordance with procedures
established by the Committee.
(d) Form of Payment. Payment upon exercise of a Stock
Appreciation Right may be made in cash, in shares of Common Stock,
a Deferred Compensation Stock Option or any combination thereof, as
the Committee shall determine; provided, however, that any Stock
Appreciation Right exercised upon or subsequent to the occurrence
of a Change in Control (as defined in Section 16 hereof) shall be
paid in cash.
8. Restricted Awards. Restricted Awards granted under the
Plan may be in the form of either Restricted Stock Grants or Restricted
Unit Grants. Restricted Awards shall be subject to the following terms
and conditions and shall contain such additional terms and conditions,
not inconsistent with the express provisions of the Plan, as the
Committee shall deem desirable:
(a) Restricted Stock Grants. A Restricted Stock Grant
is an Award of shares of Common Stock transferred to a Participant
subject to such terms and conditions as the Committee deems
appropriate, including, without limitation, restrictions on the
sale, assignment, transfer or other disposition of such shares and
the requirement that the Participant forfeit such shares back to
the Company upon termination of employment for specified reasons
within a specified period of time.
(b) Restricted Unit Grants. A Restricted Unit Grant is
an Award of units (with each unit having a value equivalent to one
share of Common Stock) granted to a Participant subject to such
terms and conditions as the Committee deems appropriate, including,
without limitation, the requirement that the Participant forfeit
such units upon termination of employment for specified reasons
within a specified period of time.
(c) Grants of Awards. Restricted Awards may be granted
under the Plan in such form and on such terms and conditions as the
Committee may from time to time approve. Restricted Awards may be
granted alone, in addition to or in tandem with other Awards under
the Plan. Subject to the terms of the Plan, the Committee shall
determine the number of Restricted Awards to be granted to a
Participant and the Committee may impose different terms and
conditions on any particular Restricted Award made to any
Participant. Each Participant receiving a Restricted Stock Grant
shall be issued a stock certificate in respect of such shares of
Common Stock. Such certificate shall be registered in the name of
such Participant, shall be accompanied by a stock power duly
executed by such Participant, shall bear an appropriate legend
referring to the terms, conditions and restrictions applicable to
such Award, and shall be held in custody by the Company until the
restrictions thereon shall have lapsed.
(d) Restriction Period. Restricted Awards shall provide
that in order for a Participant to vest in such Awards, the
Participant must remain in the employment of the Company or its
Subsidiaries, subject to relief for specified reasons, for such
time period commencing on the date of the Award and ending on such
later date or dates as the Committee may designate at the time of
the Award ("Restriction Period"). During the Restriction period, a
Participant may not sell, assign, transfer, pledge, encumber or
otherwise dispose of shares of Common Stock received under a
Restricted Stock Grant. The Committee, in its sole discretion, may
provide for the lapse of restrictions in installments during the
Restriction Period. Upon expiration of the applicable Restriction
period (or lapse of restrictions during the Restriction Period
where the restrictions lapse in installments) the Participant shall
be entitled to receive his or her Restricted Award or portion
thereof, as the case may be.
(e) Payment of Awards. A Participant shall be entitled
to receive payment for a Restricted Unit Grant (or portion thereof)
in an amount equal to the aggregate Fair Market Value of the shares
of Common Stock covered by such Award upon expiration of the
applicable Restriction Period. Payment in settlement of a
Restricted Unit Grant shall be made as soon as practicable
following the conclusion of the respective Restriction Period in
cash, in shares of Common Stock equal to the number of units
granted under the Restricted Unit Grant with respect to which such
payment is made, a Deferred Compensation Stock Option or in any
combination thereof, as the Committee in its sole discretion shall
determine.
With respect to a Restricted Stock Grant, the Committee
may also, in its discretion, permit a Participant to elect to
receive, in lieu of shares of unrestricted stock at the conclusion
of a Restriction Period, a cash payment equal to the Fair Market
Value of the Restricted Stock vesting on the date the restrictions
lapse.
(f) Rights as a Shareholder. A Participant shall have,
with respect to the shares of Common Stock received under a
Restricted Stock Grant, all of the rights of a shareholder of the
Company, including the right to vote the shares, and the right to
receive any cash dividends. Stock dividends issued with respect to
the shares covered by a Restricted Stock Grant shall be treated as
additional shares under the Restricted Stock Grant and shall be
subject to the same restrictions and other terms and conditions
that apply to shares under the Restricted Stock Grant with respect
to which such dividends are issued.
9. Performance Awards. Performance Awards granted under the
Plan may be in the form of either Performance Equity Grants or
Performance Unit Grants. Performance Awards shall be subject to the
following terms and conditions and shall contain such additional terms
and conditions, not inconsistent with the express provisions of the
Plan, as the Committee shall deem desirable:
(a) Performance Equity Grants. A Performance Equity
Grant is an Award of units (with each unit equivalent in value to
one share of Common Stock) granted to a Participant subject to such
terms and conditions as the Committee deems appropriate, including,
without limitation, the requirement that the Participant forfeit
such units or a portion of such units in the event certain
performance criteria are not met within a designated period of
time.
(b) Performance Unit Grants. A Performance Unit Grant
is an Award of units (with each unit representing such monetary
amount as designated by the Committee) granted to a Participant
subject to such terms and conditions as the Committee deems
appropriate, including, without limitation, the requirement that
the Participant forfeit such units or a portion of such units in
the event certain performance criteria are not met within a
designated period of time.
(c) Grants of Awards. Performance Awards may be granted
under the Plan in such form as the Committee may from time to time
approve. Performance Awards may be granted alone, in addition to
or in tandem with other Awards under the Plan. Subject to the
terms of the Plan, the Committee shall determine the number of
Performance Awards to be granted to a Participant and the Committee
may impose different terms and conditions on any particular
Performance Award made to any Participant.
(d) Performance Goals and Performance Periods.
Performance Awards shall provide that in order for a Participant to
vest in such Awards the Company and/or the individual Participant,
or his or her division or unit, must achieve certain performance
goals ("Performance Goals") over a designated performance period
("Performance Period"). The Performance Goals and Performance
Period shall be established by the Committee, in its sole
discretion. The Committee shall establish Performance Goals for
each Performance Period before, or as soon as practicable after,
the commencement of the Performance Period. The Committee shall
also establish a schedule or schedules for such Performance Period
setting forth the portion of the Performance Award which will be
earned or forfeited based on the degree of achievement of the
Performance Goals actually achieved or exceeded. In setting
Performance Goals, the Committee may use such measures of
performance in such manner as it deems appropriate, such as, for
example, return on equity, earnings growth, revenue growth,
comparisons to peer companies or prior period performance of the
Participant or his or her division or unit. During the Performance
Period, the Committee shall have the authority to adjust upward or
downward the Performance Goals in such manner as it deems
appropriate.
(e) Payment of Awards. In the case of a Performance
Equity Grant, the Participant shall be entitled to receive payment
for each unit earned in an amount equal to the aggregate Fair
Market Value of the shares of Common Stock covered by such Award at
the time such Award is vested or otherwise required to be settled
in accordance with its terms. In the case of a Performance Unit
Grant, the Participant shall be entitled to receive payment for
each unit earned in an amount equal to the dollar value of each
unit times the number of units earned. Payment in settlement of a
Performance Award shall be made as soon as practicable following
the conclusion of the respective Performance Period in cash, in
shares of Common Stock, a Deferred Compensation Stock Option or in
any combination thereof, as the Committee in its sole discretion
shall determine.
10. Other Stock-Based and Combination Awards.
(a) The Committee may grant other Awards under the Plan
pursuant to which Common Stock is or may in the future be acquired,
or Awards denominated in stock units, including ones valued using
measures other than market value. Such Other Stock-Based Grants
may be granted either alone, in addition to or in tandem with any
other type of Award Granted under the Plan.
(b) The Committee may also grant Awards under the Plan
in tandem or combination with other Awards or in exchange of
Awards, or in tandem or combination with, or as alternatives to
grants or rights under any other employee plan of the Company,
including the plan of any acquired entity.
(c) Subject to the provisions of the Plan, the Committee
shall have authority to determine the individuals to whom and the
time or times at which such Awards shall be made, the number of
shares of Common Stock to be granted or covered pursuant to such
Awards, and any and all other conditions and/or terms of the
Awards.
11. Deferral Elections. The Committee may permit a
Participant to elect to defer his or her receipt of the payment of cash
or the delivery of shares of Common Stock that would otherwise be due to
such Participant by virtue of the earn out or exercise of an Award made
under the Plan. If any such election is permitted, the Committee shall
establish rules and procedures for such payment deferrals, including,
but not limited to, the possible (a) payment or crediting of reasonable
interest on such deferred amounts credited in cash, (b) the payment or
crediting of dividend equivalents in respect of deferrals credited in
units of Common Stock, and (c) granting of Deferred Compensation Stock
Options.
12. Dividend Equivalents. Awards of Stock Options, Stock
Appreciation Rights, Restricted Unit Grants, Performance Equity Grants,
and other stock-based Awards may, in the discretion of the Committee,
earn dividend equivalents. In respect of any such Award which is
outstanding on a dividend record date for Common Stock, the Participant
may be credited with an amount equal to the amount of cash or stock
dividends that would have been paid on the shares of Common Stock
covered by such Award had such covered shares been issued and
outstanding on such dividend record date. The Committee shall establish
such rules and procedures governing the crediting of dividend
equivalents, including the timing, form of payment and payment
contingencies of such dividend equivalents, as it deems are appropriate
or necessary.
13. Termination of Employment. The terms and conditions
under which an Award may be exercised after a Participant's termination
of employment shall be determined by the Committee.
In the case of an Incentive Stock Option, such Award shall
expire no later than the date three months after the termination of the
Participant's employment for any reason other than death or Disability.
In the event of termination of the Participant's employment by reason of
death or Disability, the Incentive Stock Option shall expire on the
earlier of the expiration of (i) the date specified in the Award which
in no event shall be later than 12 months after the date of such
termination, or (ii) the term specified in Section 6(c) of this Plan.
Notwithstanding any other provision to the contrary, in the
event a Participant's employment with the Company or a Subsidiary
terminates for any reason within six (6) months of the date of grant of
any Award held by the Participant, such Award shall expire as of the
date of such termination of employment and the Participant and the
Participant's legal representative or beneficiary shall forfeit any and
all rights pertaining to such Award.
14. Non-transferability of Awards. No Award under the Plan,
and no rights or interests therein, shall be assignable or transferable
by a Participant except by will or the laws of descent and distribution.
During the lifetime of a Participant, Stock Options and Stock
Appreciation Rights are exercisable only by, and payments in settlement
of Awards will be payable only to, the Participant or his legal
representative.
15. Adjustments Upon Changes in Capitalization, Etc.
(a) The existence of the Plan and the Awards granted
hereunder shall not affect or restrict in any way the right or
power of the Board or the shareholders of the Company to make or
authorize any adjustment, recapitalization, reorganization or other
change in the Company's capital structure or its business, any
merger or consolidation of the Company, any issue of bonds,
debentures, preferred or prior preference stocks ahead of or
affecting the Company's capital stock or the rights thereof, the
dissolution or liquidation of the Company or any sale or transfer
of all or any part of its assets or business, or any other
corporate act or proceeding.
(b) In the event of any change in capitalization
affecting the Common Stock of the Company, such as a stock
dividend, stock split, recapitalization, merger, consolidation,
split-up, combination or exchange of shares or other form of
reorganization, or any other change affecting the Common Stock,
such proportionate adjustments, if any, as the Board in its
discretion may deem appropriate to reflect such change shall be
made with respect to the aggregate number of shares of Common Stock
for which Awards in respect thereof may be granted under the Plan,
the maximum number of shares of Common Stock which may be sold or
awarded to any Participant, the number of shares of Common Stock
covered by each outstanding Award, and the price per share in
respect of outstanding Awards.
(c) The Committee may also make such adjustments in the
number of shares covered by, and the price or other value of any
outstanding Awards in the event of a spin-off or other distribution
(other than normal cash dividends) of Company assets to
shareholders. In the event that another corporation or business
entity is being acquired by the Company, and the Company agrees to
assume outstanding employee stock options and/or stock appreciation
rights and/or the obligation to make future grants of options or
rights to employees of the acquired entity, the aggregate number of
shares of Common Stock available for Awards under Section 4 of the
Plan may be increased accordingly.
16. Change in Control.
(a) In the event of a Change in Control (as defined
below) of the Company, and except as the Board may expressly
provide otherwise, (i) all Stock Options and Stock Appreciation
Rights then outstanding shall become fully exercisable as of the
date of the Change in Control, whether or not then exercisable,
(ii) all restrictions and conditions of all Restricted Stock Grants
and Restricted Unit Grants then outstanding shall be deemed
satisfied as of the date of the Change in Control, and (iii) all
Performance Equity Grants and Performance Unit Grants shall be
deemed to have been fully earned as of the date of the Change in
Control.
(b) A "Change in Control" of the Company shall have
occurred if any Acquiring Person (other than the Company, any
Subsidiary, any employee benefit plan of the Company or of any
Subsidiary, or any person or entity organized, appointed or
established by the Company or any Subsidiary for or pursuant to the
terms of any such plans), alone or together with its Affiliates and
Associates, shall become the beneficial owner of thirty-five
percent (35%) or more of the shares of Common Stock then
outstanding (except pursuant to an offer for all outstanding shares
of the Company's Common Stock at a price and upon such terms and
conditions as a majority of the Continuing Directors determine to
be in the best interests of the Company and its shareholders,
(other than the Acquiring Person or any Affiliate or Associate
thereof on whose behalf the offer is being made)), and the
Continuing Directors no longer constitute a majority of the Board.
(c) "Acquiring Person" means any person (any individual,
firm, corporation or other entity) who or which, together with all
Affiliates and Associates, shall be the beneficial owner of a
substantial block of the Company's Common Stock; provided, however,
that Acquiring Person shall not mean Harold G. Powell or any
Affiliate, Associate, spouse, or lineal descendant of Harold G.
Powell, including an adopted child of a lineal descendant.
(d) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act.
(e) "Continuing Director" means (i) any individual who
is a member of the Board, while such individual is a member of the
Board, who is not an Acquiring Person, or an Affiliate or Associate
of an Acquiring Person, or a representative or nominee of an
Acquiring Person or of any such Affiliate or Associate and was a
member of the Board prior to the occurrence of the Change in
Control date, or (ii) any successor of a Continuing Director, while
such successor is a member of the Board, and who is not an
Acquiring Person, or an Affiliate or Associate, and is recommended
or elected to succeed the Continuing Director by a majority of the
Continuing Directors.
17. Amendment and Termination. The Board may at any time at
its sole discretion submit the Plan for the approval of the shareholders
of the Company, terminate the Plan, or amend it from time to time in
such respects as the Board may deem advisable, including, without
limitation, amendments to the Plan to bring the Plan into compliance
with, to take advantage of exemptions or special treatment afforded
under or to take into account changes in applicable securities, federal
income tax laws and other applicable laws. To the extent permitted by
applicable law, the Board's ability to effect such amendments or
modifications to the Plan shall expressly extend to and include
corresponding amendments or modifications to the terms of existing
Awards.
Notwithstanding the foregoing, solely to the extent necessary
to satisfy the requirements of Rule 16b-3 under the Exchange Act, the
Board may not act more than once every six (6) months to amend the
provisions of the Plan relating to the eligibility, amount, price or
timing of grants of Stock Options to Nonemployee Directors.
18. Loans for Exercise of Options. The Committee may, in its
discretion, allow Participants to execute notes payable to the Company
in full or partial payment for the shares of Common Stock acquired in
connection with the exercise of Stock Options granted under the Plan.
In no event, however, may such loan exceed the amounts allowable to be
loaned by the Company to such individual for the purposes stated
hereunder as provided by any regulation of the United States Treasury or
other State or Federal statute. The terms of any such loan, including
the interest rate, security and repayment terms, will be subject to the
discretion of the Committee.
19. Miscellaneous.
(a) Tax Withholding. The Company shall have the right
to deduct from any settlement, including the delivery or vesting of
shares, made under the Plan any federal, state or local taxes of
any kind required by law to be withheld with respect to such
payments or to take such other action as may be necessary in the
opinion of the Company to satisfy all obligation for the payment of
such taxes. If Common Stock is used to satisfy tax withholding,
such stock shall be valued based on the Fair Market Value when the
tax withholding is required to be made.
(b) No Right to Employment. Neither the adoption of the
Plan nor the granting of any Award shall confer upon any employee
of the Company or any Subsidiary any right to continued employment
with the Company or any Subsidiary, as the case may be, nor shall
it interfere in any way with the right of the Company or a
Subsidiary to terminate the employment of any of its employees at
any time, with or without cause.
(c) Unfunded Plan. The Plan shall be unfunded and the
Company shall not be required to segregate any assets that may at
any time be represented by Awards under the Plan. Any liability of
the Company to any person with respect to any Award under the Plan
shall be based solely upon any contractual obligations that may be
effected pursuant to the Plan. No such obligation of the Company
shall be deemed to be secured by any pledge of, or other
encumbrance on, any property of the Company.
(d) Payments to Trust. The Committee is authorized to
cause to be established a trust agreement or several trust
agreements whereunder the Committee may make payments of amounts
due or to become due to Participants in the Plan.
(e) Annulment of Awards. The grant of any Award under
the Plan payable in cash is provisional until cash is paid in
settlement thereof. The grant of any Award payable in Common Stock
is provisional until the Participant becomes entitled to the
certificate in settlement thereof. In the event the employment of
a Participant is terminated for cause (as defined below), any Award
which is provisional shall be annulled as of the date of such
termination for cause. For the purpose of this Section 18(e), the
term "terminated for cause" means any discharge for violation of
the policies and procedures of the Company or for other job
performance or conduct which is detrimental to the best interests
of the Company, as determined by the Committee in its sole
discretion.
(f) Engaging in Competition With Company. In the event
a Participant terminates his or her employment with the Company or
a Subsidiary for any reason whatsoever (except after a Change in
Control), and within eighteen (18) months after the date thereof
accepts employment with any significant competitor of, or otherwise
engages in material competition with, the Company or a Subsidiary,
the Committee, in its sole discretion, may require such Participant
to return to the Company the economic value of any Award which is
realized or obtained (measured at the date of exercise, vesting or
payment) by such Participant at any time during the period
beginning on that date which is six months prior to the date of
such Participant's termination of employment with the Company or a
Subsidiary.
(g) Other Company Benefit and Compensation Programs.
Payments and other benefits received by a Participant under an
Award made pursuant to the Plan shall not be deemed a part of a
Participant's regular, recurring compensation for purposes of the
termination indemnity or severance pay law of any country and shall
not be included in, nor have any effect on, the determination of
benefits under any other employee benefit plan or similar
arrangement provided by the Company or a Subsidiary unless
expressly so provided by such other plan or arrangements, or except
where the Committee expressly determines that inclusion of an Award
or portion of an Award should be included to accurately reflect
competitive compensation practices or to recognize that an Award
has been made in lieu of a portion of competitive annual cash
compensation. Awards under the Plan may be made in combination
with or in tandem with, or as alternatives to, grants, awards or
payments under any other Company or Subsidiary plans. The Plan
notwithstanding, the Company or any Subsidiary may adopt such other
compensation programs and additional compensation arrangements as
it deems necessary to attract, retain and reward employees for
their service with the Company and its Subsidiaries.
(h) Securities Law Restrictions. No shares of Common
Stock shall be issued under the Plan unless counsel for the Company
shall be satisfied that such issuance will be in compliance with
applicable Federal and state securities laws. Certificates for
shares of Common Stock delivered under the Plan may be subject to
such stop-transfer orders and other restrictions as the Committee
may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock
exchange upon which the Common Stock is then listed, and any
applicable Federal or state securities law. The Committee may
cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions.
(i) Compliance With Rule 16b-3. With respect to persons
subject to Section 16(b) of the Exchange Act, transactions under
the Plan are intended to comply with all applicable conditions of
Rule 16b-3 or its successors under the Exchange Act. To the extent
any provision of the Plan or action by the Board of Directors or
the Committee fails to so comply, such provision or action shall be
deemed null and void, to the extent permitted by law and deemed
advisable by the Board of Directors or the Committee.
(j) Award Agreement. Each Participant receiving an
Award under the Plan shall enter into an agreement with the Company
in a form specified by the Committee agreeing to the terms and
conditions of the Award and such related matters as the Committee
shall, in its sole discretion, determine.
(k) Costs of Plan. The costs and expenses of
administering the Plan shall be borne by the Company.
(l) Governing Law. The Plan and all actions taken
thereunder shall be governed by and construed in accordance with
the laws of the State of Oklahoma.
(m) Effective Date. The Plan was adopted by the Board
of Directors on May 25, 1993, subject to approval of the
stockholders of the Company at the 1993 annual meeting or any
adjournment thereof.
