<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Bullet Sports International, Inc.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
Joseph J. McCann, Jr., Secretary
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
BULLET SPORTS INTERNATIONAL, INC.
2803 South Yale Street
Santa Ana, California 92704
(714)966-0310
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
N/A
- - --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
N/A
- - --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
N/A
- - --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
N/A
- - --------------------------------------------------------------------------------
(5) Total fee paid:
N/A
- - --------------------------------------------------------------------------------
/X/ 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:
- - --------------------------------------------------------------------------------
<PAGE> 2
September 20, 1996
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders at
10:00 A.M. Pacific Time on Thursday morning, October 17, 1996, at the principal
offices of the Company, 2803 South Yale, Santa Ana, California 92704.
A Proxy Card is enclosed with the Notice of Annual Meeting and Proxy
Statement. Whether or not you now plan to attend the Annual Meeting, we urge you
to sign, date and mail the enclosed card and return it in the enclosed envelope
at your earliest convenience. Regardless of the size of your holding, it is
important that your shares be represented. If you attend the Annual Meeting, you
may withdraw your proxy and vote in person.
We look forward with pleasure to seeing you on October 17.
Sincerely,
/s/ RICHARD P. CRANE, JR.
Richard P. Crane, Jr.
Chairman of the Board
<PAGE> 3
BULLET SPORTS INTERNATIONAL, INC.
2803 SOUTH YALE STREET, SANTA ANA, CALIFORNIA 92704
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 17, 1996
TO THE STOCKHOLDERS OF
BULLET SPORTS INTERNATIONAL, INC.
You are cordially invited to attend the 1996 Annual Meeting of Stockholders
of Bullet Sports International, Inc. (the "Company"), which will be held at the
principal offices of the Company, 2803 South Yale, Santa Ana, California 92704,
on October 17, 1996, at 10:00 a.m. Pacific Time, for the following purposes:
Proposal 1. To elect seven (7) directors of the Company to serve until
their respective successors have been elected and qualified.
Proposal 2. To consider and vote upon a proposed amendment to the Company's
Certificate of Incorporation to increase the amount of
authorized shares of the Company's $.001 par value Common Stock
from 10,000,000 shares to 25,000,000 shares.
Proposal 3. To consider and vote upon certain additional proposed
amendments to the Company's Certificate of Incorporation to:
(a) provide for the classification of the Board of Directors
into three classes of Directors, each with three-year
staggered terms of office;
(b) provide that Directors may be removed only for cause; and
(c) provide that any stockholder amendments to the Company's
Bylaws, and any amendments to either of the above two
provisions of the Certificate of Incorporation, if
adopted, may be made only pursuant to a two-thirds vote of
the stockholders.
Proposal 4. To consider and vote upon the Company's 1996 Long-Term
Incentive Stock Plan.
Proposal 5. To ratify the selection of Arthur Andersen LLP as independent
public accountants for the Company for its 1997 fiscal year.
Proposal 6. To transact such other business as may properly come before the
Annual Meeting.
Only holders of record of shares of the Company's common stock ("Common
Stock") at the close of business on September 17, 1996, are entitled to notice
of and to vote at the Meeting and at any and all postponements, continuations or
adjournments thereof.
By Order of the Board of Directors
JOSEPH J. McCANN, JR.
Secretary
Santa Ana, California
September 20, 1996
***************************************************************************
* *
* YOUR VOTE IS IMPORTANT. YOU ARE REQUESTED TO COMPLETE, SIGN, DATE AND *
* RETURN THE PROXY CARD SUBMITTED HEREWITH IN THE RETURN ENVELOPE *
* PROVIDED FOR YOUR USE. THE GIVING OF SUCH PROXY WILL NOT AFFECT YOUR *
* RIGHT TO REVOKE THE PROXY OR TO VOTE IN PERSON SHOULD YOU LATER *
* DECIDE TO ATTEND THE MEETING. *
* *
***************************************************************************
<PAGE> 4
BULLET SPORTS INTERNATIONAL, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 17, 1996
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Bullet Sports International, Inc., a
Delaware corporation (the "Company"), to be used in voting at the Annual Meeting
of Stockholders of the Company to be held October 17, 1996 (the "Meeting"), and
at any and all postponements, continuations or adjournments thereof. This Proxy
Statement, the accompanying Form of Proxy and the Notice of Annual Meeting are
first being mailed or given to Stockholders of the Company on or about September
23, 1996. The principal executive offices of the Company are located at 2803
South Yale Street, Santa Ana, California 92704.
Stockholders of the Company's common stock (the "Stockholders"), whose
names appeared of record on the books of the Company at the close of business on
September 17, 1996 (the "Record Date"), will be entitled to vote at the Meeting
and any postponements, continuations or adjournments thereof. On the Record
Date, there were 4,378,457 shares of the Company's $.001 par value common stock
(the "Common Stock") issued, outstanding and entitled to vote. Each share of
Common Stock is entitled to one vote on each matter submitted at the Meeting.
The presence at the Meeting, in person or by proxy, of the holders of a
majority of the shares of the Company entitled to vote at the Meeting will
constitute a quorum. Votes cast by proxy or in person will be tabulated by the
inspectors of election appointed by the Board of Directors of the Company (the
"Board of Directors" or, the "Board") for the Meeting. Except with respect to
the election of Directors, the affirmative vote of a majority of the shares of
Common Stock cast at the Meeting by the holders of the shares entitled to vote
thereon, voting as a single class, is required to approve the proposals to be
considered at the Meeting. In connection with the election of Directors,
cumulative voting is not permitted, and accordingly, those persons receiving the
largest plurality of votes will be elected as Directors. Abstentions and votes
withheld in the absence of instructions from street name holders (broker
non-votes) are included in the determination of those shares present and voting
as to "routine" matters and may be voted in the discretion of brokers with
respect to such "routine" matters. Abstentions are also counted in voting as to
"non-routine" matters and thus, have the effect of a negative vote on
"non-routine" matters. Broker non-votes are not counted in voting as to
"non-routine" matters.
If the accompanying proxy card is properly signed and returned to the
Company and not revoked, it will be voted in accordance with the instructions
contained therein. Unless contrary instructions are given, the persons
designated as proxy holders on the proxy card will vote for the approval of all
of the proposals to be considered at the Meeting, and as recommended by the
Board of Directors with regard to all other matters or, if no such
recommendation is given, in their own discretion. Each Stockholder may revoke a
previously granted proxy at any time before it is exercised by executing another
proxy bearing a later date, by written notice to the Company's Secretary or by
oral or written statement at the Meeting. The powers of the proxy holders will
be suspended if the person executing the proxy attends the Annual Meeting in
person and so requests. Attendance at the Annual Meeting will not, in itself,
constitute a revocation of a previously granted proxy.
ELECTION OF DIRECTORS
Directors are to be elected at the Annual Meeting to hold office until the
next annual meeting of Stockholders, and until their respective successors are
elected and qualified. If any of the nominees becomes unavailable for any reason
or if a vacancy should occur before the election, the shares represented by the
<PAGE> 5
enclosed proxy may be voted for such other person or persons as may be
determined by the holders of such proxy.
As authorized by the Company's Bylaws, the number of directors constituting
the Board shall be not less than three nor more than nine. By resolution of the
Board of Directors of the Company, the seven persons named below have been
designated by the Board as nominees for election to fill director positions for
terms presently set to expire at the Company's Annual Meeting of Stockholders in
1997. The Company's Bylaws provide that the Board may fill any vacancies.
Therefore, the Board may appoint up to two (2) additional directors following
the Annual Meeting for terms ending at the 1997 Annual Meeting. The Board of
Directors currently has no plans to fill any such vacancies. The election of
Directors as set forth in this proposal will not be affected by the outcome of
the Stockholders' vote in connection with the proposal elsewhere in this Proxy
Statement regarding the classification of the Board of Directors. In the event
the proposal is approved by Stockholders, the Board of Directors at the 1997
Annual Meeting would be divided into three classes of directors serving
staggered three-year terms. As a result, at the 1997 Annual Meeting of
Stockholders the entire Board would be elected, as is the case this year, but
such Directors would be assigned to specific classes, and thereafter
approximately one-third of the Board of Directors would be elected each year.
All nominees for Director positions are currently serving as Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF EACH NAMED NOMINEE.
<TABLE>
<CAPTION>
NAME AGE POSITION
- - ---------------------- --- ----------------------------------------
<S> <C> <C>
Richard P. Crane, Jr. 56 Chairman of the Board
John A. Haas 49 Director, President and Chief Executive
Officer
Mark Green 65 Director, Senior Executive Vice
President, Chief Operating
Officer and Chief Financial Officer
Daniel Chandler 62 Director and Senior Vice President
Robert E. Courtney 61 Director
Douglas L. Hawthorne 54 Director
Leonard K. Nave 61 Director
</TABLE>
RICHARD P. CRANE, JR., CHAIRMAN OF THE BOARD. Mr. Crane was appointed to
the Board of Directors by the then existing Board of Directors, and has been
Chairman of the Board since March 1996. He also served as Secretary of the
Company from March, 1996 to August, 1996. Mr. Crane is an attorney and has been
engaged in the practice of law since 1964, and currently is a senior partner in
the firm of Crane & McCann. Mr. Crane is a member of the Board of Directors of
Service Merchandise, Inc. (NYSE), 3 Day Blinds, Inc. and North American Gaming
Corp. He is a past president and past member of the Board of Directors of the
Bel-Air Country Club (1992-1995). Since 1976 he has served as a Management
Trustee and Chairman of the Southern Nevada Culinary and Bartenders Pension
Trust.
JOHN A. HAAS, PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR. Mr. Haas has
been the President, Chief Executive Officer and a Director of the Company since
March 1996. From December 1995 to March 1996, he served as an outside consultant
to the Company. Mr. Haas has been involved in various endeavors in the golf
industry since 1969. He has also been an independent consultant specializing in
real estate developments built around recreational amenities. In 1990 he formed
Deju, Inc., a management company which provides consulting and management
services to golf courses in California.
MARK GREEN, SENIOR EXECUTIVE VICE PRESIDENT, CHIEF OPERATING OFFICER, CHIEF
FINANCIAL OFFICER AND DIRECTOR. Mr. Green has been Senior Executive Vice
President, Chief Operating Officer, Chief Financial Officer and a Director of
the Company since March 1996. From December 1995 to March 1996, he served as an
outside consultant to the Company. Mr. Green is an attorney and has been engaged
in the practice of law and has been a principal of the Identity Group, a
marketing and management consulting firm, for more than the past five years.
Since 1994 he has served as President of Devereaux Creek Properties, Inc., the
owner-
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operator of Ocean Meadows Golf Course, located near Santa Barbara, California.
In December 1995, Devereaux Creek Properties, Inc. filed for protection under
Chapter 11 of the U.S. Bankruptcy Code.
DANIEL CHANDLER, SENIOR VICE PRESIDENT AND DIRECTOR. Mr. Chandler has been
Senior Vice President and a Director of the Company since March 1996. He has
been a consultant to the gaming industry for more than the past five years. From
1990 to 1992 and in 1994 and 1995 he was a consultant to the gaming expansion
division of Caesar's World. In 1993 he was Vice President of casino customer
development for the Paradise Island Casino.
ROBERT E. COURTNEY, DIRECTOR. Mr. Courtney has been a Director of the
Company since August 1996. He has been engaged in the private practice of law
since 1961.
DOUGLAS L. HAWTHORNE, DIRECTOR. Mr. Hawthorne has been a Director of the
Company since February 1995, and until March 1996 had been Chairman of the
Board. He has also served as an outside consultant to the Company since December
1991. Since 1992 he has served as a principal in Carillon Capital, Inc., an
investment banking firm. Since March 1993, he has served as the Chairman of the
Board of American Resources of Delaware, Inc., a public oil and gas company.
From 1991 to 1994, Mr. Hawthorne was a principal in SPECTRA Group, Inc., a
management consulting firm. From 1986 to 1991, Mr. Hawthorne served as Chairman
of the Board, President and Chief Executive Officer of Society Bank, N.A.,
Dayton, Ohio. He presently serves as Vice Chairman of the Board of MedAmerica
Health Systems Corporation, and Chairman of the Board of MedAmerica
International Insurance, Ltd. From 1992 to March 1995, Mr. Hawthorne served as a
Trustee of Wright State University and is currently a Trustee of the Dayton
Foundation.
LEONARD K. NAVE, DIRECTOR. Mr. Nave has been a Director of the Company
since February 1995. He has been engaged in energy and related activities for
more than 20 years. Mr. Nave served as the President, Chief Executive Officer
and a director of Southern Gas Company, Inc. ("SGC") from its inception in March
1983 until its dissolution in February 1995. Since October 1988, Mr. Nave has
served as the President and a director of Southern Gas Holding Co., Inc., the
parent company of SGC. Since September 1994, he has served as a director of
American Resources of Delaware, Inc., a public oil and gas company. In May 1996,
Mr. Nave filed for protection under Chapter 11 of the U.S. Bankruptcy Code. He
is an active member of the Kentucky Bar Association.
PROPOSAL TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK
INTRODUCTION
Currently, the Company's Certificate of Incorporation authorizes the
issuance of 10,000,000 shares of the Company's Common Stock. The Board of
Directors propose to amend the Company's Certificate of Incorporation to
increase the number of authorized shares of Common Stock for issuance by the
Company to 25,000,000 shares. The proposed increase in the amount of authorized
shares of Common Stock will enable the Company to:
- Issue Common Stock in connection with stock splits or stock dividends.
- Issue Common Stock with respect to the granting of securities under
employee benefit plans or pursuant to management compensation
arrangements.
- Issue Common Stock in connection with raising additional equity capital,
or in connection with acquisitions, mergers and other financing
transactions involving the issuance of securities.
- Pursue other business opportunities involving the issuance of Common
Stock without the delay and expenses of obtaining prior Stockholder
approval.
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REASONS FOR THE INCREASED COMMON STOCK AUTHORIZATION
The Board of Directors of the Company believes that it is in the best
interests of the Company to have authorized and available 25,000,000 shares of
Common Stock, in order to have sufficient authorized but unissued and unreserved
shares for future issuance during the foreseeable future to meet the possible
needs described above. As of September 17, 1996, the record date for
Stockholders entitled to notice and voting with respect to the 1996 Annual
Meeting there were 4,378,457 shares issued and outstanding. In addition, (i)
7,961 shares are reserved for issuance upon conversion of the outstanding Series
A Preferred Stock, (ii) 2,244,923 shares are reserved for issuance upon
conversion of the outstanding Series B Preferred Stock, (iii) 646,544 shares are
reserved for issuance upon conversion of the outstanding Series C Preferred
Stock, (iv) 302,971 shares are reserved for issuance upon conversion of the
outstanding Series D Preferred Stock, (v) 499,372 shares of Common Stock are
reserved for issuance under outstanding warrants to purchase Common Stock, (vi)
100,000 shares of Common Stock are reserved for issuance under outstanding
grants of options under the 1994 Stock Option Plan, and (vii) 945,000 shares of
Common Stock are reserved for issuance under outstanding grants of options under
the 1995 Stock Option Plan.
Taking into account the foregoing reserved shares, as of September 17, 1996
a total of 9,125,228 shares of Common Stock are issued and outstanding and
reserved for future issuance upon conversion or exercise of outstanding
preferred stock and outstanding options or warrants to purchase Common Stock,
leaving available for future issuance a total of 874,772 shares of the presently
authorized but unissued shares of Common Stock. The authorization of the
additional 15,000,000 shares of Common Stock is believed appropriate and
desirable by the Board of Directors to serve the Company's possible needs in the
foreseeable future.
The golf equipment industry is a growing and highly competitive industry.
The Company is relatively new in the industry, and seeks to expand its business
in order to meet such competitive conditions and opportunities. In order for the
Company to be able to react to such opportunities as they arise, and to allow
the Company to expand its revenue base, the Board believes that it is in the
best interest of the Company to have equity securities readily available for
issuance in connection with future potential business acquisitions, financings
and other transactions of the type described below. The authorized shares of
Common Stock will be available for issuance from time to time in connection with
such transactions for such consideration as the Board may approve without
further vote of the Stockholders, except as may be required under applicable
law. The Company presently has no specific commitments or understandings
involving the issuance of any such shares of Common Stock.
Shares of the authorized but unissued Common Stock may be used in
connection with a number of corporate activities and transactions, including but
not limited to stock splits, stock dividends, employee benefit plans, employee
stock purchase plans, management compensation arrangements, acquisitions,
mergers, financings involving the issuance of shares of Common Stock or
securities convertible into Common Stock, stock exchanges and other corporate
purposes.
Occasionally, authorized but unissued shares of equity securities may be
used by public corporations for purposes which might be deemed to be defenses to
a takeover attempt. While the development of such defensive measures is not a
reason why the Board believes the authorization of additional shares of Common
Stock is advisable, the additional shares of Common Stock could theoretically be
issued by the Board as a defensive measure to prevent a change in control.
DESCRIPTION OF COMMON STOCK
The Company currently has 10,000,000 shares of Common Stock authorized for
issuance. Holders of shares of Common Stock are entitled to one vote per share
on all matters to be voted upon by the Stockholders. Subject to any prior rights
of the holders of Preferred Stock, holders of Common Stock are entitled to
receive dividends when, as and if declared by the Board of Directors from funds
legally available therefor, and to share ratably in the assets of the Company
legally available for distribution to the Stockholders in the event of
liquidation or dissolution. The Common Stock has no preemptive rights and no
subscription or redemption privileges. The Common Stock does not have cumulative
voting rights, which means the holder or holders of more than half of the shares
voting for the election of Directors can elect all the
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Directors then being elected. All of the Company's outstanding shares of Common
Stock are fully paid and non-assessable.
PROPOSAL TO AMEND THE COMPANY'S
CERTIFICATE OF INCORPORATION TO PROVIDE
CERTAIN ANTI-TAKEOVER DEFENSES
SUMMARY OF PURPOSE AND EFFECTS OF THE PROPOSED CHANGES
Apart from the proposed increase in the number of shares of authorized
Common Stock, described above, the Board of Directors of the Company has
unanimously adopted and recommends for Stockholder approval certain other
amendments to the Company's present Certificate of Incorporation, as amended
(the "Certificate").
The purpose of the other amendments to the Certificate, as hereinafter
described in this Proxy Statement, is to help assure the continuity and
stability of the Company's business and affairs by making it more difficult and
time-consuming to change majority control of the Board of Directors, and to
require a greater than majority vote to take certain corporate actions. Such
amendments, if adopted by Stockholders, could make it more time-consuming for a
dissident or other Stockholder to gain control of the Company without the
consent of the then incumbent Board of Directors, and would thereby promote
continuity in the affairs and business strategy of the then incumbent management
of the Company. In addition, the Board of Directors believes that these
amendments would assist in providing the Board with sufficient time to review
any unsolicited proposal for an extraordinary corporate transaction (such as a
merger or liquidation), and appropriate alternatives thereto, in a manner which
assures fair treatment to all the Company's Stockholders.
While none of the proposals would prohibit a takeover or other corporate
transaction, the proposals would, however, have the overall effect of making it
more difficult and time-consuming to acquire and exercise control over the
Company and to remove incumbent directors, and thus could, for example,
discourage a proxy contest. Provisions having such effect could, in some
circumstances, tend to limit or preclude certain transactions that are favored
by the holders of a majority but less than two-thirds of the Company's shares.
Therefore, possible premiums associated with any potential takeover might not be
realized by Stockholders due to the proposed amendments if these provisions
result in discouraging such a transaction.
The Board of Directors recognizes that a proposal for a restructuring or
change in control proposed by a third party might in some circumstances be
beneficial to Stockholders. However, the Board of Directors believes that the
benefits of continuity in the governance of the business and affairs of the
Company and enhancing the Board's ability to negotiate with the proponent of any
unsolicited proposal to take over or restructure the Company or effect a change
in the Board of Directors outweighs the disadvantages of discouraging such
proposals. The proposals are intended to enhance the negotiating position of the
Board on behalf of all the Stockholders with any potential acquiror or proponent
of an extraordinary corporate transaction from the strongest practical position,
thereby enabling the Board to seek to maximize any value to be realized by all
Stockholders.
The Amendments are permitted by Delaware law. The Board of Directors is not
aware of any existing or planned effort on the part of any person to accumulate
material amounts of the Company's Common Stock, to acquire control of the
Company by means of a merger, tender offer, solicitation in opposition to
management or otherwise, or to change the Company's management. At the present
time, the Board of Directors has no plans to recommend that the Stockholders
approve any other amendments or changes to the Certificate that could have
anti-takeover effects. However, the Board of Directors may wish in the future to
review the advisability of adopting other measures that may affect takeovers in
the context of applicable law and judicial decisions.
For information about the stock ownership of officers and directors and
Stockholders holding 5% or more of the shares of Common Stock, as well as
certain agreements with respect to the voting of shares of capital
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<PAGE> 9
stock of the Company, see "Security Ownership of Certain Beneficial Owners and
Management" and "Certain Relationship and Related Transactions" in this Proxy
Statement.
PROPOSAL REGARDING A CLASSIFIED BOARD OF DIRECTORS
The Company's Board of Directors has unanimously approved and recommended
that the Stockholders approve an amendment to the Certificate to provide for the
classification of the Board of Directors into three classes of directors with
staggered three-year terms of office.
The Company's Bylaws now provide that all directors are to be elected
annually, to serve until their successors shall have been elected and qualified.
The Delaware General Corporation Law (the "Delaware GCL") permits provisions in
a certificate of incorporation or bylaw approved by Stockholders that provide
for a classified board of directors. The proposed classified board amendment to
the Certificate would provide that directors shall be classified into three
classes, as nearly equal in number as possible. If the amendment is approved,
each director proposed for election at the 1997 Annual Meeting will be nominated
for election to a specific class at the 1997 Annual Meeting, with Class I
directors holding office initially for a term expiring at the 1998 Annual
Meeting; Class II directors holding office initially for a term expiring at the
1999 Annual Meeting; and Class III directors holding office initially for a term
expiring at the 2000 Annual Meeting. At each Annual Meeting following this
initial classification and election, the successors to the class of directors
whose terms expire at that meeting would be elected for a term of office to
expire at the third succeeding Annual Meeting after their election and until
their successors shall have been duly elected and qualified.
The Board of Directors believes that a classified Board of Directors will
help to assure the continuity and stability of the Board of Directors and the
business strategies and policies of the Company as determined and implemented by
the Board of Directors, because the likelihood of continuity and stability in
the composition of the Company's Board of Directors and in the policies
formulated by the Board will be enhanced by staggered three-year terms.
The classified board provisions could have the effect of discouraging a
third party from making a tender offer or otherwise attempting to obtain control
of the Company, even though such an attempt might be beneficial to the Company
and its Stockholders. In addition, the classified board provision could delay
Stockholders who do not agree with the policies of the Board of Directors from
removing a majority of the Board for two years, unless they can show cause and
obtain the requisite vote. Directors serving on a classified Board may be
removed by Stockholders only for cause pursuant to the Delaware GCL.
PROPOSAL REGARDING REMOVAL OF DIRECTORS ONLY FOR CAUSE
The Company's Board of Directors has unanimously approved and recommends
that the Stockholders approve an amendment to the Certificate which provides
that directors of the Company may be removed from office by the Stockholders
only for cause at a meeting of the Stockholders whereby the notice of such
meeting states that removal of a director or directors is among the purposes of
the meeting.
The Bylaws of the Company currently provide that directors may be removed
for cause. The proposed amendment places this provision in the Certificate of
Incorporation, and reserves the power to remove directors solely to the
Stockholders. The provision could then be changed only by Stockholder action. If
the provision were included only in the Bylaws, it would be subject to amendment
by the Board of Directors alone. Thus, under this amendment the decision
regarding termination of a director for cause would be reserved exclusively to
the Stockholders.
While the acts or omissions which constitute "cause" have not been
conclusively established by the Delaware courts, actions such as embezzlement,
disclosure of trade secrets, or other violations of fiduciary duty have been
found to constitute cause for removal. Courts have also indicated that a
stockholder's desire to take over management of a company or a director's
failure to cooperate in management's plans for a company do not constitute cause
for removal.
In conjunction with the Company's proposed classified Board of Directors
(assuming such proposal is approved), the proposed amendment should render more
difficult and could discourage an attempt by a
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stockholder or group of stockholders to acquire control of the Company without
the approval of the Company's management. The proposed amendment would make it
impossible for someone who acquires voting control of the Company to immediately
remove the incumbent directors who may oppose such person simply for purposes of
replacing them with more friendly directors, and would instead require such a
person, in the absence of proving "cause," to replace incumbent directors as
their terms expire over a period of up to three years. The proposed amendment
could have the effect of delaying an ultimate change in existing management
which might be desired by a majority of the Stockholders.
The proposed amendment is in accordance with the Delaware GCL, which
provides that when a corporation has a classified Board of Directors, directors
may be removed by Stockholders only for cause unless the Certificate provides
otherwise. However, if the Stockholders approve this amendment, then directors
could be removed only for cause, regardless of whether Stockholders separately
approve the proposal to classify the Board of Directors.
PROPOSAL REGARDING SUPERMAJORITY VOTE REQUIRED FOR AMENDMENT OR REPEAL OF THE
BYLAWS OR CERTAIN PROVISIONS OF THE CERTIFICATE OF INCORPORATION
The Company's Board of Directors has unanimously approved and recommends
that the Stockholders approve an amendment to the Certificate which would
require a two-thirds ( 2/3) vote to amend or repeal the Bylaws or certain
provisions of the Certificate.
Currently, the Certificate may be amended or repealed by the vote of
Stockholders holding a majority of the voting power of the Company. As permitted
by the Delaware GCL, the current proposal to amend the Certificate would require
that the affirmative vote of the holders of at least two-thirds ( 2/3) of the
voting power of all of the then outstanding shares of stock entitled to vote,
voting together as a single class, would be necessary to effect any amendment by
Stockholders to the Company's Bylaws or to approve the amendment or repeal of
the provisions of the Certificate (if approved at the Annual Meeting) regarding:
(i) the classified Board and (ii) the removal of Directors, as applicable.
Currently, the Bylaws may be amended or repealed and new bylaws adopted by
the Board of Directors or by a majority of the Company's Stockholders entitled
to vote on such matters. This proposal would require amendments to the Company's
Bylaws by the Company's Stockholders to be approved by the affirmative vote of
the holders of two-thirds ( 2/3) of the voting power of all of the then
outstanding shares of stock entitled to vote.
The requirements of this proposal will prevent a Stockholder with a
majority of the voting power of the Company from avoiding the requirements of
the Bylaws or the protected provisions of the Certificate by simply repealing
them, unless a two-thirds ( 2/3) vote of Stockholders approves such action.
REQUIRED VOTE ON ALL PROPOSALS
Under Delaware law, and pursuant to the Company's present Certificate of
Incorporation, the proposals to amend the Certificate of Incorporation require
the approval of the holders of at least a majority of the outstanding shares of
the Common Stock, voting as a single class, cast by the holders of the shares
entitled to vote thereon at the Meeting.
The complete text of the proposed amendments to the Company's Certificate
of Incorporation is attached as Exhibit A to this Proxy Statement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL OF THE ABOVE DESCRIBED
PROPOSALS.
7
<PAGE> 11
PROPOSAL TO APPROVE
THE 1996 LONG-TERM INCENTIVE STOCK PLAN
The Board of Directors, in an effort to promote the success of the Company
and its Subsidiaries, has unanimously adopted and recommends, for stockholder
approval, the 1996 Long-Term Incentive Stock Plan (hereinafter the "1996 Plan").
The Plan is designed to align the interests of stockholders and management and
to provide incentives and rewards for officers, directors, other key employees
and specified non-employee associates or consultants to achieve the Company's
long-term goals and objectives. The 1996 Plan provides flexibility to the
Company in motivating, attracting and retaining key persons who are directly
responsible for the Company's success, by encouraging the ownership of Common
Stock and by providing incentives for continued service to the Company. The
major provisions of the 1996 Plan are described below, and such description is
qualified in its entirety by reference to the full text of the 1996 Plan, which
is attached as Exhibit B hereto. Unless otherwise defined herein, all
capitalized terms shall have the meanings set forth in the full text of the 1996
Plan.
DESCRIPTION OF THE 1996 PLAN
Duration of the 1996 Plan; Administration. The 1996 Plan shall commence on
August 30, 1996, and remain in effect until its termination on August 30, 2006;
provided, however, that subject to Stockholder approval of the 1996 Plan, all
awards made prior to, or outstanding on the date of termination, shall remain
valid in accordance with their terms. The 1996 Plan shall be administered by the
Compensation Committee which shall consist of two or more "outside directors" as
that term is defined for purposes of Section 162(m) of the Internal Revenue Code
of 1986, as amended (the "Code"), and who also qualify as disinterested
administrators for purposes of Rule 16b-3 as promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). The 1996 Plan allows for
Awards to be granted prior to stockholder approval of the 1996 Plan, but each
such Award shall be subject to the approval of the 1996 Plan by stockholders on
or before the next annual meeting of stockholders, and in the event that
stockholders do not approve the 1996 Plan, such Awards shall be null and void
and of no legal effect.
Terms and Conditions.
The 1996 Plan authorizes the award of Incentive Stock Options, Restricted
Stock, Nonqualified Stock Options, Performance Units, Performance Shares or
Other Stock Unit Awards (collectively the "Awards"). The Compensation Committee
grants all Awards under the 1996 Plan in its sole discretion. Participants in
the 1996 Plan may include all officers, directors and other employees of the
Company or its Subsidiaries, and any person associated with the Company as an
outside consultant, agent or advisor, who, in the opinion of the Compensation
Committee, can contribute significantly to the growth and profitability of, or
perform services of major importance to, the Company and its Subsidiaries.
The maximum aggregate number of Shares available for issuance under the
1996 Plan is 3,000,000, provided that no more than one-half of such aggregate
number of Shares will be issued in connection with Restricted Stock Awards,
Performance Awards, or other Stock Unit Awards. The Compensation Committee may
adjust the aggregate number of Shares available for issuance under the 1996
Plan, and the Option Price, number and class of Shares subject to each Award, in
the case of certain capital adjustments, including stock dividends, stock
splits, or recapitalizations. In accordance with Section 162(m) of the Code, the
maximum aggregate amount of Awards granted under the Plan to any individual is
limited.
Stock Options.
Options may be granted under the 1996 Plan, in the sole discretion of the
Compensation Committee, and shall be evidenced by an Agreement between the
Company and the Participant. Each Option shall expire at such time as specified
by the Compensation Committee, provided, however, no Option shall be exercisable
later than the tenth (10th) anniversary of its Award Date. The Option Price
shall be determined by the Compensation Committee, provided that the Option
Price may not be less than 100% of the Fair Market Value of the Stock on the
Grant Date except where the Option is a Non-Qualified Stock Option, in which
8
<PAGE> 12
case it shall not be less than 85% of the Fair Market Value of the Stock on the
Grant Date if the Compensation Committee grants the amount of the discount from
100% of the Fair Market Value of such Stock in lieu of a cash payment.
The 1996 Plan also provides for automatic grants of Options to all
Non-employee Directors (as defined by the 1996 Plan) promptly after each annual
meeting of stockholders of the Company, beginning with the 1996 Annual Meeting
to be held October 17, 1996. Each such Option granted will be a Nonqualified
Stock Option covering 2,000 shares of the Company's Common Stock, with an
exercise price equal to the Fair Market Value (as defined by the 1996 Plan) of
the Common Stock on the date of the grant. The Options will fully vest and
become exercisable six months after the date of grant and will remain
exercisable for five years, provided that the Options will immediately terminate
in the event that the Non-employee Director ceases to be a Director of the
Company for any reason.
Apart from the Non-employee Director Options, which are fixed, the period
within which the right to exercise an option in whole or in part vests shall be
set by the Compensation Committee. The Option Price shall be payable to the
Company in full either in cash, by delivery of Shares valued at the time of the
exercise, or a combination thereof. To the extent allowed under applicable law,
Participants may be able to obtain a cashless exercise of their Options at the
Company's election.
Restricted Stock.
The Compensation Committee may, at its sole discretion, grant shares of
Restricted Stock under the 1996 Plan, and shall be evidenced by an Agreement
between the Company and the Participant. Participants receiving Restricted Stock
are not required to pay the Company for such stock except for the rendering of
services and/or until certain other conditions, as determined by the
Compensation Committee, are satisfied. The Shares of Restricted Stock may not be
sold or otherwise transferred or hypothecated until the restrictions are removed
or expire. All rights associated with the Restricted Stock shall be exercisable
during such Participant's lifetime only by such Participant or his guardian or
legal representative.
The Compensation Committee shall impose such restrictions on any Restricted
Stock as it, in its sole discretion, deems advisable, including but not limited
to applicable federal or state securities laws restrictions. Restricted Stock
granted under the 1996 Plan shall become freely transferable by the Participant
upon the expiration of the Period of Restriction and/or upon the satisfaction of
all other conditions set forth by the Compensation Committee. The Compensation
Committee has the authority, unless specifically provided for otherwise under
the 1996 Plan, to remove or reduce the restrictions or the Period of Restriction
on the Restricted Stock without the express consent of the Stockholders of the
Company. In accordance with the 1996 Plan, the minimum Period of Restriction for
shares of Restricted Stock shall be three (3) years with the removal of the
restrictions on no more than one-third ( 1/3) of the shares of Restricted Stock
at the end of the first year following the Grant Date and each subsequent year
thereafter. The Restriction Period in the grant of Restricted Stock based upon
performance, however, shall not be less than one (1) year. The Period of
Restriction on the Restricted Stock shall automatically terminate, unless
specified otherwise by the Compensation Committee, as a result of the
Participant's termination of employment with the Company upon the earlier of
normal retirement (as defined by the rules of the Company in effect at that
time) or upon reaching age 65.
Performance Awards.
Performance Units or Performance Shares may be granted under the 1996 Plan
by the Compensation Committee in its complete discretion and shall be evidenced
by an Agreement. The Participants receiving Performance Awards are not required
to pay the Company other than through the rendering of services. The
Compensation Committee shall set forth the performance goals required for the
grant of each Performance Award. The performance goals may be based upon the
performance of the Company, a subsidiary, or a combination thereof, may be based
upon financial results, or upon any other objectives established by the
Compensation Committee during a Performance Period of not less than twelve
months.
9
<PAGE> 13
The payment for the Performance Award for which the Participant is entitled
to may be in the form of cash or in Stock, or any combination thereof, and made
in a lump sum or in installments as determined by the Compensation Committee.
The Performance Award granted under the 1996 Plan may not be sold or otherwise
transferred or hypothecated other than by will or the laws of descent and
distribution. The Performance Award shall not be exercisable until after the
expiration of twelve months from the Award Date and thereafter during the
Participant's lifetime only by such Participant or his guardian or personal
representative.
Other Stock Unit Awards.
The 1996 Plan authorizes the Compensation Committee to grant to
Participants Other Stock Unit Awards, in lieu of cash payments upon such terms
and conditions as the Compensation Committee deems appropriate as specified
under an Agreement. The Other Stock Unit Awards may be granted for minimum or no
cash consideration as allowed under the applicable law. The purchase price for
Stock granted pursuant to Other Stock Unit Awards shall be set by the
Compensation Committee but in no event be less than 75% of the Fair Market Value
of the Stock or other securities on the Award Date.
The Other Stock Unit Awards which qualify as derivative securities pursuant
to Rule 16b-3 under the Exchange Act shall not vest until the expiration of at
least twelve months from the Award Date and may not be sold or otherwise
transferred or hypothecated other than through the laws of descent and
distribution or by will. The rights provided pursuant to the Other Stock Unit
Awards shall be exercisable during the Participant's lifetime only by such
Participant or by his guardian or personal representative.
Change of Control Provision. The Compensation Committee shall ensure that
upon a Change of Control of the Company all options then outstanding under the
1996 Plan shall become fully exercisable and all restrictions and conditions
related to the Restricted Stock be deemed immediately and fully satisfied and
all Restricted Stock shall thereby become freely transferable.
Modification. The Compensation Committee, subject to the terms of the 1996
Plan and applicable law, may modify, extend, renew, substitute, or grant new
Awards, provided that new or modified Awards may not specify a lower Exercise
Price and no modification of Awards may, without the consent of the Participant,
adversely affect his rights or obligations thereunder.
Federal Income Tax Consequences.
Under current federal income tax laws, neither the grant nor the exercise
of an option that qualifies for treatment as an incentive stock option will
result in the recognition of income by the Participant. To qualify for the
foregoing treatment, the Participant must hold Shares acquired through the
exercise of an Incentive Stock Option for at least two years from the date of
the grant of the option and at least one year from the date of its exercise. If
a Participant satisfies the holding period requirements, the sale of the shares
acquired through the exercise of the Incentive Stock Option will result in
long-term capital gain (or loss) to the Participant. If a Participant does not
satisfy the holding period requirements, the Participant will recognize, at the
time of the disposition of the shares, ordinary income equal to the amount by
which the lesser of: (i) the fair market value of the shares on the date of the
exercise; and (ii) the fair market value of the shares on the date of
disposition exceeds the exercise price of the Incentive Stock Option. Any gain
realized in excess of such ordinary income will be either long-term or
short-term capital gain depending on the Participant's holding period for the
shares.
As a general matter, no deduction is permitted to the Company as a result
of the grant or exercise of an Incentive Stock Option. However, in the event a
Participant recognizes ordinary income for federal tax purposes in connection
with the disposition of shares acquired though exercise of an Incentive Stock
Option under the circumstances discussed above, the Company will generally be
entitled to a deduction for federal income tax purposes equal to the amount of
ordinary income recognized by the Participant.
A grantee of a Non-Qualified Stock Option will not recognize taxable income
and the Company will not receive a deduction upon the grant of such option. Upon
a Participant's exercise of a Non-Qualified Stock Option: (i) the Participant
will recognize ordinary income in an amount equal to the difference between the
10
<PAGE> 14
fair market value on the exercise date and the exercise price of the shares; and
(ii) if certain conditions are satisfied, the Company will be entitled to a tax
deduction in an amount equal to the amount of income realized by the
Participant. Following exercise, the Participant will realize gain or loss at
disposition in an amount equal to the difference between the disposition price
and the basis of the shares.
The federal tax law is subject to changes in the Code and in the
regulations promulgated by the Internal Revenue Service, as well as in court and
administrative interpretations thereof.
In 1993, Section 162 of the Code was amended by adding Section 162(m)
thereto ("Section 162(m)"). Section 162(m) places limitations on the
deductibility of compensation paid to employees to the extent such compensation
exceeds $1,000,000 for any employee during any taxable year. An exception to
such treatment exists where certain requirements are met which qualify
compensation by the attainment of certain performance-based criteria.
The Board believes that the 1996 Plan is valuable in attracting and
retaining key personnel. Approval of the 1996 Plan requires the affirmative vote
of a majority of votes cast at the Annual Meeting by the holders of the shares
entitled to vote thereon.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE 1996
PLAN.
INFORMATION CONCERNING BOARD OF DIRECTORS
During the Company's fiscal year ended February 29, 1996, the Board of
Directors held two (2) meetings. Each member of the Board of Directors incumbent
at such fiscal year end attended all of said meetings of the Board.
During the Company's fiscal year ended February 29, 1996, no Compensation
Committee meetings were held. The current members of the Compensation Committee
are Messrs. Nave and Courtney. The Compensation Committee reviews and approves
annual salaries and bonuses for all corporate officers and management personnel
and reviews and recommends to the Board of Directors the terms and conditions of
the employee benefit plans and/or changes thereto.
During the Company's fiscal year ended February 29, 1996, no Audit
Committee meetings were held. The current members of the Audit Committee are
Messrs. Nave and Courtney. The Audit Committee makes recommendations regarding
the selection of independent public accountants and reviews the scope and
results of the audit in addition to the adequacy of the Company's financial and
accounting controls.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than ten percent of a registered class of
the Common Stock, to file reports of beneficial ownership and changes in
beneficial ownership with the Securities and Exchange Commission and to furnish
copies of all filed Section 16(a) forms to the Company.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Form 5 filings
were required for those persons, the Company believes that all such filings
required under the Exchange Act in the fiscal year ended February 29, 1996 were
filed in a timely fashion, except that Douglas L. Hawthorne made a late filing
on Form 5 relating to four (4) Form 4 transactions.
11
<PAGE> 15
PRINCIPAL STOCKHOLDERS
The following information sets forth certain information with respect to
the beneficial ownership of the Company's voting shares as of August 31, 1996 by
(i) each person or entity known to the Company to be the beneficial owner of
more than 5% of each class of the Company's voting shares, (ii) each of the
Company's directors and executive officers and (iii) all of the Company's
directors and executive officers as a group.
<TABLE>
<CAPTION>
AMOUNT & NATURE OF
BENEFICIAL OWNERSHIP PERCENT
NAME AND ADDRESS(1) OF COMMON STOCK(2)(3) OF CLASS
------------------------------------------------------- --------------------- --------
<S> <C> <C>
Richard P. Crane, Jr................................... --(4) --
John A. Haas........................................... 50,000(4) 0.9%
Mark Green............................................. 50,000(4) 0.9%
Daniel Chandler........................................ 20,000(4) 0.4%
Douglas L. Hawthorne................................... 151,200(5) 2.7%
Leonard K. Nave........................................ 50,000(6) 0.9%
*All officers and directors as a group (6 persons)..... 225,000 4.0%
</TABLE>
- - ---------------
(1) The address of Messrs. Crane, Haas, Green and Chandler is c/o Bullet Sports
International, Inc. 2803 South Yale Street, Santa Ana, California 92704. The
address of Mr. Hawthorne is 4325 Delco-Dell, Kettering, Ohio 45429 and Mr.
Nave's address is 160 Morgan Street, Versailles, Kentucky 40383.
(2) Unless otherwise noted the Company believes that all persons named in the
table have sole voting and investment power with respect to the shares of
Common Stock reflected in the table.
(3) GFL Ultra Fund Limited ("Ultra"), whose address is c/o CITCO Kaya Flamoyan
9, Curacao, Netherlands Antilles, owns 2,500 shares (100%) of Series A, 6.0%
Non-Voting Cumulative Convertible Preferred Stock. GFL Performance Fund
Limited ("Performance"), whose address is the same as that of Ultra, owns
4,700 shares (67.6%) of Series B, 8.75% Non-Voting Cumulative Convertible
Preferred Stock. Givigest Finance (Overseas) N.V. ("Givigest"), whose
address is Via Zurigo, 46, 6900 Lugano, Switzerland, owns (i) 1,000 shares
(14.4%) of Series B, 8.75% Non-Voting Cumulative Convertible Preferred Stock
and (ii) 850 shares (42.5%) of Series C, 8.75% Non-Voting Cumulative
Convertible Preferred Stock. Bank Lombard Odier & Cie ("Lombard"), whose
address is Rue Corraterie 11, 1211 Geneve, 11 Switzerland, owns 500 shares
(7.2%) of Series B, 8.75% Non-Voting Cumulative Convertible Preferred Stock.
Societe Financiere Privee S.A. ("SFP"), whose address is Rue Maruice 3 CP
3668, 1211 Geneve, 11 Switzerland, owns 500 shares (7.2%) of Series B, 8.75%
Non-Voting Cumulative Convertible Preferred Stock. Gotthard Bank -- Nassau
(Bahamas) ("Gotthard"), whose address is Post Office Box SS-6312, Nassau,
Bahamas, owns 600 shares (30.0%) of Series C, 8.75% Non-Voting Cumulative
Convertible Preferred Stock. Coutts & Co. (Bahamas) Ltd. ("Coutts"), whose
address is Post Office Box N-7788, Nassau, Bahamas, owns 500 shares (25.0%)
of Series C, 8.75% Non-Voting Cumulative Convertible Preferred Stock.
Assuming all shares of all series of Preferred Stock were converted based
upon an assumed average trading price of the Common Stock of $3.75 per share
as of the record date for Stockholders entitled to notice and vote at the
1996 Annual Meeting, the above-referenced holders would receive shares of
Common Stock upon conversion as follows: Ultra -- 8,889 shares;
Performance -- 1,716,895 shares; Givigest -- 675,800 shares;
Lombard -- 182,649 shares; SFP -- 182,649 shares; Gotthard -- 219,179
shares; and Coutts -- 182,649 shares.
(4) Does not include any options awarded to the indicated person under the 1994
Stock Option Plan and the 1995 Stock Option Plan, each as defined below,
which will become exercisable pursuant to their terms beginning August 31,
1997. With reference to Mr. Chandler, the figure includes options to
purchase 20,000 shares of Common Stock which are currently exercisable at a
price of $5.75 per share.
(5) Includes 50,000 restricted shares awarded to the named person and an
additional 100,000 shares subject to unexercised options which are
immediately exercisable. These non-plan options are exercisable until
December 31, 1997, half at a price of $1.00 per share and half at a price of
$2.00 per share.
(6) Consists solely of shares subject to unexercised options which are currently
exercisable. These non-plan options are exercisable until December 31, 1997,
half at a price of $1.00 per share and half at a price of $2.00 per share.
12
<PAGE> 16
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
The Bylaws of the Company state that the directors shall not receive any
stated salary for their services as directors or as members of committees, but
by resolution of the Board, a fixed fee and expenses of attendance may be
allowed for attendance at each Board of Directors meeting. Currently, only
outside members of the Board of Directors are reimbursed for actual expenses
incurred in connection with their attendance at Board or committee meetings.
Pursuant to the Bylaws, any director may serve the Company in any other capacity
as an officer, agent or otherwise, and may receive compensation therefor.
Reference is made to the information set forth elsewhere in this Proxy
Statement under the caption "Proposal to Approve the Company's 1996 Long-Term
Incentive Stock Plan," in connection with to certain fixed option grants
authorized to be periodically awarded to Non-employee Directors under that Plan
if approved by Stockholders. No options have yet been made granted to
non-employee Directors, although it is contemplated that if the 1996 Plan is
approved by Stockholders, then pursuant to its terms, options to purchase 2,000
shares would be granted to those Directors (presently Messrs. Courtney,
Hawthorne and Nave) on the third business day after the 1996 Annual Meeting, at
an option price equal to 100% of the then fair market value (as defined under
the 1996 Plan) of the shares of Common Stock of the Company.
The Company granted to Mr. Hawthorne 50,000 restricted shares of the
Company's Common Stock and an option to purchase 100,000 shares of Common Stock
on December 20, 1994, as compensation for his services as Chairman of the
Company's Board of Directors for the twelve months ended February 28, 1995. He
also was paid $5,000 in cash. Mr. Hawthorne forfeited his option to purchase
100,000 shares of Common Stock on February 29, 1996. In fiscal year ended
February 28, 1995, the Company granted Mr. Nave an option to purchase 50,000
shares of Common Stock as compensation for his services as a director of the
Company. 25,000 shares under such option are currently exercisable and have an
exercise price of $1.00. The other 25,000 shares are also currently exercisable
and have an exercise price of $2.00. These compensation grants to Messrs.
Hawthorne and Nave were in consideration for their services in assisting the
Company in completing a business transaction and for their agreement to serve as
directors of the Company. Such grants are not intended to be an annual event.
On August 31, 1996, the Compensation Committee awarded options to purchase
25,000 shares and 225,000 shares of Common stock under the Company's 1994 Stock
Option Plan and 1995 Stock Option Plan (as hereinafter defined), respectively,
to each of Messrs. Crane, Haas, Green and Chandler. Each option was granted for
a term of 10 years, is exercisable at a rate of 20% per year beginning on the
first anniversary of the date of grant and has an exercise price of $4.813 per
share (being the fair market value of the Common Stock on the date of grant,
determined pursuant to such plans).
13
<PAGE> 17
COMPENSATION OF EXECUTIVE OFFICERS
The following table shows the compensation for each of the last three years
of the Company's Chief Executive Officer and the other four most highly
compensated executive officers of the Company:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION AWARDS
---------------------------------- ------------------------- PAYOUTS
OTHER RESTRICTED SECURITIES -------
ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPEN- AWARDS OPTIONS(1)/ PAYOUTS COMPEN-
POSITION YEAR ($) ($) SATION ($) ($) SARS ($) SATION ($)
- - ------------------------- ---- ------- ------- ---------- ---------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
JOHN A. HAAS 1996 -0- -- -0- -0- -0- -0- 151,250(2)
President and Chief 1995 -0- -- -0- -0- -0- -0- --
Executive Officer 1994 -0- -- -0- -0- -0- -0- --
MARK GREEN 1996 -0- -0- -0- -0- -0- -0- 151,250(2)
Senior Executive 1995 -0- -0- -0- -0- -0- -0- -0-
Vice President, 1994 -0- -0- -0- -0- -0- -0- -0-
Chief Operating
Officer and Chief
Financial Officer
JEFF BENNETT 1996 126,397 -0- -0- -0- -0- -0- -0-
Former Vice 1995 167,538 30,000 -0- -0- -0- -0- -0-
President of Sales 1994 197,750 206,250 -0- -0- -0- -0- -0-
and Marketing
DOUGLAS HAWTHORNE 1996 -0- -0- -0- -0- 100,000/0 (3) -0- 30,000(4)
Director 1995 -0- -0- -0- 25,000 100,000/0 -0- 5,000(5)
1994 -0- -0- -0- -0- -0- -0- -0-
ANDREW J. KACIC 1996 100,000 -0- -0- -0- 300,000/0 (6) -0- -0-
Former Vice 1995 10,000 -0- -0- 50,000 200,000/0 -0- -0-
President and Chief 1994 -0- -0- -0- -0- -0- -0- -0-
Executive Officer
RONALD RANGEL 1996 155,731 -0- -0- -0- -0- -0- -0-
Former Chief 1995 138,738 -0- -0- -0- -0- -0- -0-
Accounting Officer 1994 138,900 20,000 -0- -0- -0- -0- -0-
</TABLE>
- - ---------------
(1) This number refers to the number of shares of the underlying securities, and
not the value thereof.
(2) During the fiscal year ended February 29, 1996, Mr. Haas and Mr. Green each
performed consulting services for the Company for which they each earned
compensation of $151,250, with $45,000 payable in cash and $106,250 to be
paid through the future issuance of 50,000 shares of Common Stock valued at
$2.125 per share, the closing price of the Company's Common Stock as
reported on Nasdaq on March 11, 1996, the date the Company's Board of
Directors authorized such issuance.
(3) On February 29, 1996 Mr. Hawthorne forfeited an option to purchase 100,000
shares of Common Stock received on August 8, 1995 as compensation for
consulting series performance for the Company.
(4) Mr. Hawthorne received $30,000 for consulting services.
(5) This figure represents outside consulting fees paid to Mr. Hawthorne.
(6) Mr. Kacic forfeited the option to purchase 300,000 shares of Common Stock on
April 29, 1996.
EMPLOYMENT AGREEMENTS
The Company entered into an employment agreement with Mr. Kacic, the
President and Chief Executive Officer of the Company, on August 8, 1995. The
term of the agreement was five years, and provided for a base annual salary of
$120,000. Mr. Kacic resigned from the Company and his agreement was terminated
on
14
<PAGE> 18
December 4, 1995. In addition, the Company granted to Mr. Kacic the option to
purchase 300,000 shares of Common Stock of the Company at an exercise price of
$5.75 per share, which option was forfeited on April 29, 1996, by Mr. Kacic.
The Company entered into a consulting agreement with Mr. Hawthorne, a
director and former Chairman of the Board of the Company, on August 8, 1995.
Such agreement, which has since terminated, provided for Mr. Hawthorne to
receive compensation in the amount of $60,000 per year. In addition, the Company
granted to Mr. Hawthorne the option to purchase 100,000 shares of Common Stock
of the Company at an exercise price of $5.75 per share, which option was
forfeited on February 29, 1996, by Mr. Hawthorne.
The Company entered into a consulting agreement with Mr. Chandler, a
director of the Company, on August 31, 1995. Under this agreement, the Company
granted to Mr. Chandler the option to purchase 20,000 shares of Common Stock of
the Company at an exercise price of $5.75 per share. The option will expire on
August 30, 2000. This agreement is no longer in effect and Mr. Chandler is
currently an employee of the Company, but no employment agreement exists between
Mr. Chandler and the Company.
The table below contains information pertaining to grants of stock options
during the year ended February 29, 1996, to the named officers. No stock
appreciation rights were granted during the fiscal year 1995.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
(INDIVIDUAL GRANTS)
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE
OPTIONS/SARS EMPLOYEES IN OR BASE EXPIRATION
NAME GRANTED (#) FISCAL YEAR PRICE ($/SH) DATE
- - ------------------------------------------------------ ------------ ------------ ----------
<S> <C> <C> <C> <C>
John A. Haas.............................. None
Mark Green................................ None
Douglas L. Hawthorne...................... 100,000(1) 23.8% 5.75 8-07-2000
Daniel Chandler........................... 20,000 4.8% 5.75 8-07-2000
Andrew J. Kacic........................... 300,000(1) 71.4% 5.75 8-07-2000
</TABLE>
- - ---------------
(1) Mr. Hawthorne forfeited his options for 100,000 shares of Common Stock on
February 29, 1996, and Mr. Kacic forfeited his options for 300,000 shares of
Common Stock on April 29, 1996.
The following table sets forth certain information regarding exercises of
stock options by the named officers during the twelve months ended February 29,
1996, and the value of unexercised options at February 29, 1996. No stock
appreciation rights have been granted.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
SHARES FY END (#) FY END ($)
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
- - ----------------------------------------------------- -------- --------------- ---------------
<S> <C> <C> <C> <C>
John A. Haas.............................. -- -- None
Mark Green................................ -- -- None
Daniel Chandler........................... -- -- 20,000
Douglas L. Hawthorne...................... -- -- 100,000(1) $ 62,500
Andrew J. Kacic........................... -- -- 200,000/ $ 125,000/0
300,000(1)
</TABLE>
15
<PAGE> 19
- - ---------------
(1) Mr. Hawthorne forfeited his options for 100,000 shares of Common Stock on
February 29, 1996, and Mr. Kacic forfeited his options for 300,000 shares of
Common Stock on April 29, 1996.
COMPENSATION PURSUANT TO PLANS
On March 31, 1995 the Stockholders approved the following benefit plans:
(i) the 1994 Compensatory Stock Option Plan (the "1994 Stock Option Plan") and
(ii) the 1994 Employee Stock Compensation Plan (the "1994 Stock Compensation
Plan"). On January 3, 1996 the Stockholders approved the 1995 Compensatory Stock
Option Plan (the "1995 Stock Option Plan").
1994 Stock Option Plan. The 1994 Stock Option Plan is a compensatory
(non-statutory) stock option plan covering 1,000,000 shares of the Company's
Common Stock. The 1994 Stock Option Plan is not a qualified plan under section
422 of the Internal Revenue Code of 1986. The Board of Directors adopted the
1994 Stock Option Plan in order to induce persons of ability and potential to
join and remain with the Company and to promote its future growth and success.
The reason for adopting the 1994 Stock Option Plan was to provide a compensation
scheme for officers, directors and employees of and advisers and consultants to
the Company which will allow the Company to attract and retain persons the
Company may not be able to fairly compensate on a regular basis (e.g., salary or
other compensation commensurate with experience and value to the Company, health
and other benefits). The 1994 Stock Option Plan provides for its administration
by the Board of Directors or by a compensation committee (the "Committee"). The
Board of Directors or the Committee, as appropriate, has discretionary authority
(subject to certain restrictions) to determine the individuals to whom and the
times and prices at which Compensatory Stock Options ("1994 Stock Option's" or
"options') will be granted under the 1994 Stock Option Plan and the number of
shares subject to such options. The Board of Directors or the Committee may
interpret the 1994 Stock Option Plan and may prescribe, amend and rescind rules
and regulations relating thereto. The 1994 Stock Option Plan generally is open
to participation by full-time and part-time employees (including officers) of
the Company or of a parent or subsidiary thereof, to directors (including
advisory and other directors) who are not employees thereof, and to consultants,
advisers, certain agents and others who render services to the Company, or a
parent or subsidiary thereof, to provide an incentive for service. The option
price of the shares of Common Stock subject to a 1994 Stock Option may be
determined by the Board of Directors or the Committee on the date the 1994 Stock
Option is granted. The Board of Directors or Committee may use its discretion in
selecting the option price. No 1994 Stock Options may be granted under the 1994
Stock Option Plan after June 24, 2004. 1994 Stock Options granted under the 1994
Stock Option Plan may be of such duration and be subject to exercise as shall be
determined by the Board of Directors or the Committee, but no option granted
under the 1994 Stock Option Plan may be exercised more than 10 years after the
date of grant. In the event of the termination of employment of an optionee for
cause (defined generally as termination for reasons other than lack of work or
layoff due to illness, disability, injury or for economic reasons unrelated to
the optionee's job performance), all 1994 Stock Options previously granted to
that employee shall expire as of the date of termination. In the event of the
termination of employment of an employee optionee for other than cause, the 1994
Stock Option Plan generally affords the optionee a period of 12 months in which
to exercise 1994 Stock Options to the extent such 1994 Stock Options were
exercisable at the date of termination. In the event of death of an optionee
while in the employ of the Company or a parent or subsidiary thereof, the
decedent's estate will have a period of 15 months from the date of death in
which to exercise all 1994 Stock Options under the 1994 Stock Option Plan during
the life of the 1994 Stock Options. In the event of the death of an optionee
within 12 months after termination of employment without cause, his estate or
personal representative will have 15 months from the date of death in which to
exercise 1994 Stock Options outstanding at the time of death which would at that
time have been exercisable by the deceased optionee. In no event may any 1994
Stock Option granted under the 1994 Stock Option Plan be exercised after its
expiration date.
1994 Stock Compensation Plan. The 1994 Stock Compensation Plan is an
employee stock compensation plan covering 1,000,000 shares of the Company's
Common Stock. The Board of Directors adopted the 1994 Stock Compensation Plan in
order to provide a further means to support and increase the Company's ability
to
16
<PAGE> 20
attract, retain and compensate persons of experience and ability and whose
services are considered valuable, to encourage the sense of proprietorship in
such persons, and to stimulate the active interest of such persons in the
development and success of the Company. The 1994 Stock Compensation Plan
provides for compensation to certain classes of persons through the award of
common stock in payment for services rendered or in recognition of past services
or performance rendered to the Company or an affiliate of the Company or as a
bonus. The 1994 Stock Compensation Plan provides for its administration by the
Board of Directors, unless and until a compensation committee is appointed to
administer the 1994 Stock Compensation Plan. The Board of Directors or the
Compensation Committee, as appropriate, has discretionary authority (subject to
certain restrictions) to determine the individuals to whom and the times at
which common stock may be granted under the 1994 Stock Compensation Plan and the
number of shares granted. The Board of Directors or the Compensation Committee
may interpret the 1994 Stock Compensation Plan and may prescribe, amend and
rescind rules and regulation's relating thereto. The 1994 Stock Compensation
Plan is open to participation by any person or entity that renders bona fide
services to the Company, including, without limitation, (i) a person employed by
the Company or an affiliated corporation in a key capacity, (ii) an officer or
director (including advisory or other directors) of the Company or an affiliated
corporation; (iii) a person or company engaged by the Company or an affiliated
Corporation as a consultant or advisor; and (iv) a lawyer, law firm, accountant
or accounting firm (other than an accountant or accounting firm which then acts
as independent auditor for the Company or affiliated corporation), or other
professionals or professional firms engaged by the Company or an affiliated
Corporation. Without amending the 1994 Stock Compensation Plan, the Board of
Directors may grant shares under the 1994 Stock Compensation Plan to employees
of the Company or an affiliated corporation who are foreign nationals or
employed outside the United States, or both, on such terms and conditions
different from those specified in the 1994 Stock Compensation Plan but
consistent with the purpose of the 1994 Stock Compensation Plan, as it deems
necessary and desirable to create equitable opportunities given differences in
tax laws of other countries. No common stock may be awarded under the 1994 Stock
Compensation Plan after June 24, 2004.
The 1995 Stock Option Plan. The 1995 Stock Option Plan does not qualify as
an "incentive stock option" plan under the Internal Revenue Code of 1986, as
amended. The 1995 Stock Option Plan provides for its administration by the Board
of Directors or a Committee which has exclusive authority (subject to certain
restrictions) to determine the individuals to whom and the times at which
compensatory stock options (the "1995 Stock Options" or "options") will be
granted and the number of shares subject to such options. The Board of Directors
or a Committee may interpret the 1995 Stock Option Plan and may prescribe,
amend, and rescind rules and regulations relating thereto. The 1995 Stock Option
Plan is open to participation by full-time and part-time key employees
(including employees who also are directors or officers) of the Company or of a
parent or subsidiary thereof and to consultants, advisors and others who render
services to the Company, or subsidiary thereof, to provide an incentive for
service. The 1995 Stock Option Plan is available to key employees, in addition
to consultants and advisors, including attorneys and financial advisors. The
final determination as to eligibility will be made by the Committee or the Board
of Directors. Participants are selected based on their significant contribution
to the Company. The exercise price per share of Common Stock underlying an
option granted pursuant to the 1995 Stock Option Plan shall be determined by the
Committee or by the Board of Directors. The exercise price generally will be the
market value at the date of the option grant, but in some circumstances, it may
exceed the market value at that date, and in some circumstances, it may be
granted a price below market value. If the Common Stock is not then listed on
any exchange or quoted in any quotation medium at the time the option is
granted, then the Board of Directors or the Committee will use its discretion in
selecting a good faith value believed to represent fair market value. 1995 Stock
Options granted under the 1995 Stock Option Plan may be of such duration as
shall be determined by the Board of Directors or the Committee. The 1995 Stock
Option Plan does not specify a maximum duration for an option granted
thereunder. In no event may any option granted under the 1995 Stock Option Plan
be exercised subsequent to its expiration date, which shall be set by the Board
of Directors or the Committee at the time of the grant. If options granted under
the 1995 Stock Option Plan expire for any reason without having been exercised
in full, the unpurchased shares underlying such options will be added to the
other shares available for grant of options under the 1995 Stock Option Plan.
Options granted under the 1995
17
<PAGE> 21
Stock Option Plan are non-transferrable except by will or the laws of descent
and distribution or pursuant to a qualified domestic relations order, so that
during an optionee's life only he or she may exercise an option.
No Plan awards were made to any named officer in the fiscal year ended
February 29, 1996 pursuant to the 1994 Stock Option Plan, the 1994 Stock
Compensation Plan or the 1995 Stock Option Plan.
CERTAIN TRANSACTIONS
For the fiscal years ended February 28, 1995, and February 29, 1996, the
Company was not a party to any transaction in which any director, executive
officer, nominee for election as a director, security holder or immediate family
member of any of those persons had a direct or indirect interest, except as
described below.
During the fiscal year ended February 29, 1996, Crane & McCann performed
$100,000 in legal services for the Company. Mr. Crane, who is the Chairman of
the Board of the Company, is a senior partner of Crane & McCann.
Mr. Kacic, the former President and Chief Executive Officer of the Company,
is also the President of Advisory Services, Inc., an investment banking and
consulting firm based in Scottsdale, Arizona. For the fiscal years ended
February 28, 1995, and February 29, 1996, Advisory Services, Inc. received
$17,110 and $36,446, respectively, in consulting fees and administrative fees
from the Company.
During the fiscal years ended February 28, 1995, and February 29, 1996, the
Company leased its corporate headquarters from American Resources of Delaware,
Inc. Mr. Kacic was the President and Chief Executive Officer of American
Resources of Delaware, Inc. The Company terminated the lease on December 31,
1995.
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed the firm of Arthur Andersen LLP as the
Company's independent public accountants for the fiscal year ended February 28,
1997, subject to ratification by the Stockholders. Arthur Andersen LLP, which
has audited the Company's financial statements since March 1995, has advised the
Company that neither the accounting firm nor any of its members or associates
has any direct financial interest in or any connection with the Company or any
of its subsidiaries other than as independent public accountants.
Representatives of Arthur Andersen LLP are expected to be present at the
Company's Annual Meeting. They will have an opportunity to make a statement, if
they desire to do so, and will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY THE
SELECTION OF ARTHUR ANDERSEN LLP AS THE COMPANY'S INDEPENDENT PUBLIC
ACCOUNTANTS.
PROXY SOLICITATION
The expense of the Board's solicitation of proxies will be borne by the
Company. In addition to the use of the mails, proxies may be solicited by
personal interview, by telephone or telegraph. Banks, brokerage houses, and
other institutions, nominees and fiduciaries will be requested to forward the
soliciting materials to beneficial owners of the Common Stock and to obtain
authorizations for the execution of proxies and if they in turn so request, the
Company will reimburse such banks, brokerage houses and other institutions,
nominees and fiduciaries for their expenses in forwarding such materials.
Directors, officers and regular employees of the Company and its subsidiaries
may also solicit proxies without additional remuneration therefor.
Stockholders are urged to sign the accompanying proxy, solicited on behalf
of the Board of Directors of the Company, and return it at once in the envelope
provided for that purpose. Proxies will be voted in accordance with the
Stockholders' directions. If no directions are given, the proxies will be voted
FOR all proposals. A Stockholder giving a proxy has the power to revoke it any
time prior to its exercise by executing
18
<PAGE> 22
another proxy bearing a later date, by written notice to the Company's Secretary
or by oral or written statement at the Meeting.
STOCKHOLDER PROPOSALS
Proposals by Stockholders intended to be presented at the 1997 Annual
Meeting of Stockholders of the Company must be received by the Company no later
than May 20, 1997 in order to be included in the proxy statement and proxy
relating to such annual meeting.
OTHER MATTERS
The Board of Directors does not know of any matters which may be presented
at the Meeting other than those specifically set forth in the Notice of Annual
Meeting. If any other matter should come properly before the Meeting or any
postponements, continuations or adjournments thereof, the holders of the proxies
will vote in accordance with their best judgment with respect to such matter.
ADDITIONAL INFORMATION AVAILABLE
The Company will provide, without charge, to any person receiving a copy of
this Proxy Statement, upon written request of such person, a copy of the
Company's Annual Report on Form 10-KSB for the fiscal year ended February 29,
1996, including the financial statements thereto. Such requests should be
addressed to Bullet Sports International, Inc., 2803 South Yale Street, Santa
Ana, California 92704.
By Order of the Board of Directors
/s/ JOSEPH J. McCANN, JR.
------------------------------------
Joseph J. McCann, Jr., Secretary
September 20, 1996
19
<PAGE> 23
EXHIBIT A
FORM OF
STOCKHOLDERS RESOLUTION
AMENDING THE
CERTIFICATE OF INCORPORATION
OF
BULLET SPORTS INTERNATIONAL, INC.
(A DELAWARE CORPORATION)
"RESOLVED" Articles FOURTH, EIGHTH and ELEVENTH of the Certificate of
Incorporation of this corporation be amended in their entirety to henceforth
provide as follows:
* * * * *
"FOURTH: The total number of shares of all classes of capital stock
which the corporation is authorized to issue is Thirty Million (30,000,000)
shares, which shall consist of Twenty-Five Million (25,000,000) shares of
Common Stock all of a class, $.001 par value per share, and Five Million
(5,000,000) shares of Preferred Stock, $.001 par value per share.
The shares of Preferred Stock may be issued from time to time in one
or more series, with such designations, preferences and relative,
participating, optional or other rights, qualifications, limitations or
restrictions as shall be stated and expressed in the resolution or
resolutions providing for the issuance of such series adopted by the Board
of Directors from time to time, pursuant to the authority herein granted to
the Board, a copy of which resolution or resolutions shall have been set
forth in a Certificate made, executed, acknowledged, filed and recorded in
the manner required by the laws of the State of Delaware in order to make
the same effective. Each series shall consist of such number of shares as
shall be stated and expressed in such resolution or resolutions providing
for the issuance of the stock of such series. All shares of any one series
of Preferred Stock shall be alike in every particular.
* * * * *
EIGHTH: For the management of the business and for the conduct of the
affairs of the corporation, and in further definition, limitation, and
regulation of the powers of the corporation and of its directors and of its
stockholders or any class thereof, as the case may be, it is further
provided:
1. The management of the business and the conduct of the affairs of
the corporation shall be vested in its Board of Directors. The number of
directors which shall constitute the whole Board of Directors shall be
fixed by, or in the manner provided in, the Bylaws. The phrase "whole
Board" and the phrase "total number of directors" shall be deemed to
have the same meaning, to wit, the total number of directors which the
corporation would have if there were no vacancies. At the 1997 Annual
Meeting of Stockholders, the Board of Directors shall be divided into
three classes, as nearly equal in number as practicable, with the term
of office of the first class to expire at the next succeeding Annual
Meeting of Stockholders following such election, the term of office of
the second class to expire at the second following Annual Meeting of
Stockholders following such election and the term of office of the third
class to expire at the third following Annual Meeting of Stockholders
following such election (and, in each case, such elected Directors shall
serve until the Directors' respective successors shall be duly elected
and qualified). At each Annual Meeting of Stockholders following such
initial classification and election, Directors elected to succeed those
Directors whose initial terms expire as set forth above shall be elected
for a term of office to expire at the third succeeding Annual Meeting of
Stockholders after their election, and until their respective successors
shall be duly elected and qualified. A Director may be removed by the
stockholders only for cause at a meeting of the stockholders whereby the
notice of such meeting states that removal of a director or directors is
among the purposes of the meeting. No election of directors need be by
written ballot.
A-1
<PAGE> 24
2. The power to adopt, amend, or repeal the Bylaws of the
corporation may be exercised by a majority vote of the Board of
Directors of the corporation or by the holders of at least two-thirds
( 2/3) of all the shares of the corporation entitled to vote, voting
together as a single class.
3. Whenever the corporation shall be authorized to issue only one
class of stock, each outstanding share shall entitle the holder thereof
to notice of, and the right to vote at, any meeting of stockholders.
Whenever the corporation shall be authorized to issue more than one
class of stock, no outstanding share of any class of stock which is
denied voting power under the provisions of the Certificate of
Incorporation shall entitle the holder thereof to the right to vote at
any meeting of stockholders except as the provisions of paragraph (2) of
subsection (b) of sec. 242 of the General Corporation Law of the State
of Delaware shall otherwise require; provided, that no share of any such
class which is otherwise denied voting power shall entitle the holder
thereof to vote upon the increase or decrease in the number of
authorized shares of said class.
4. All meetings of stockholders shall be held in accordance with
the provisions of the Bylaws of the corporation and the General
Corporation Law of the State of Delaware.
* * * * *
ELEVENTH: From time to time any of the provisions of this Certificate
of Incorporation may be amended, altered, or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time conferred upon the
stockholders of the corporation by this Certificate of Incorporation
granted subject to the provisions of this Article ELEVENTH; provided,
however, that, notwithstanding any other provision of this Certificate of
Incorporation or any provision of law which might otherwise permit a lesser
vote, the affirmative vote of the holders of at least two-thirds (2/3) of
all the shares of the corporation entitled to vote, voting together as a
single class, shall be required to alter or repeal, or adopt any provision
inconsistent with Sections 1 and 2 of Article EIGHTH of this Certificate of
Incorporation."
====================================================
END OF TEXT OF AMENDMENTS TO THE CERTIFICATE OF INCORPORATION
====================================================
A-2
<PAGE> 25
EXHIBIT B
FORM OF
BULLET SPORTS INTERNATIONAL, INC.
1996 LONG-TERM INCENTIVE STOCK PLAN
ARTICLE I.
ESTABLISHMENT, PURPOSE AND DURATION
1.1 Establishment of the Plan. Bullet Sports International, Inc.
(hereinafter referred to as the "Company"), a Delaware corporation, hereby
establishes an incentive compensation plan to be known an the "1996 Long Term
Incentive Stock Plan" (hereinafter referred to as the "Plan"), as set forth in
this document. Unless otherwise defined herein, all capitalized terms shall have
the meanings set forth in Section 2.1 herein. The Plan permits the grant of
Nonqualified Stock Options, Incentive Stock Options, Restricted Stock,
Performance Awards in the form of Performance Units, or Performance Shares and
Other Stock Unit Awards.
The Plan was adopted by the Board of Directors on August 30, 1996, and
shall become effective as of August 30, 1996 (the "Effective Date"), subject to
the approval by vote of stockholders of the Company in accordance with
applicable laws. Awards may be granted prior to stockholder approval of the
Plan, but each such Award shall be subject to the approval of the Plan by the
stockholders on or before the next annual meeting of stockholders. In the event
that stockholders do not approve the Plan at the next annual meeting, all Awards
granted hereunder shall be null and void and have no legal effect.
1.2 Purpose of the Plan. The purpose of the Plan is to promote the success
of the Company and its Subsidiaries by providing incentives to Eligible
Participants that will promote the identification of their personal interest
with the long-term financial success of the Company and with growth in
stockholder value. The Plan is designed to provide flexibility to the Company in
its ability to motivate, attract and retain the services of Eligible
Participants upon whose judgment, interest, and special effort the successful
conduct of its operation is largely dependent.
1.3 Duration of the Plan. The Plan shall commence on the Effective Date, as
described in Section 1.1 herein, and shall remain in effect, subject to the
right of the Board of Directors to terminate the Plan at any time pursuant to
Article XII herein, until August 30, 2006 at which time it shall terminate
except with respect to Awards made prior to, and outstanding on, that date,
which shall remain valid in accordance with their terms.
ARTICLE II.
DEFINITIONS
2.1 Definitions. Except as otherwise defined in the Plan, the following
terms shall have the meanings set forth below:
(a) "Affiliate" shall have the meaning ascribed to such term in Rule 12b-2
under the Exchange Act.
(b) "Agreement" means a written agreement implementing the grant of each
Award signed by an authorized officer of the Company and by the
Participant.
(c) "Award" means individually or collectively, a grant under this Plan of
Nonqualified Stock Options, Incentive Stock Options, Restricted Stock,
Performance Units, Performance Shares or Other Stock Unit Awards.
(d) "Award Date" or "Grant Date" means the date on which an Award is made
by the Committee under this Plan.
B-1
<PAGE> 26
(e) "Beneficial Owner" shall have the meaning ascribed to such term in
Rule 13d-3 under the Exchange Act.
(f) "Board" or "Board of Directors" means the Board of Directors of the
Company.
(g) "Change in Control" shall be deemed to have occurred if the conditions
set forth in any one of the following paragraphs shall have been
satisfied:
(i) Any person, corporation or other entity or group including any
"group" as defined in Section 13(d)(3) of the Exchange Act,
becomes the beneficial owner of shares of the Company having
30% or more of the total number of votes that may be cast for
the election of directors of the Company; or
(ii) As the result of, or in connection with, any tender or exchange
offer, merger or other business combination, sale of assets or
contested election, or any combination of the foregoing (a
"Transaction"), the persons who were directors of the Company
before the Transaction shall cease to constitute a majority of
the Board of Directors of the Company or any successor to the
Company or its assets; or
(iii) If at any time, (w) the Company shall consolidate with or merge
with, any other Person and the Company shall not be the
continuing or surviving corporation, (x) any Person shall
consolidate with, or merge with, the Company, and the Company
shall be the continuing or surviving corporation and in
connection therewith, all or part of the outstanding Stock
shall be changed into or exchanged for stock or other
securities of any other Person or cash or any other property,
(y) the Company shall be a party to a statutory share exchange
with any other Person after which the Company is Subsidiary of
any other Person, or (z) the Company shall sell or otherwise
transfer 50% or more of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any Person
or Persons.
(h) "Code" means the Internal Revenue Code of 1986, as amended.
(i) "Committee" means the Compensation Committee of the Board which will
administer the Plan pursuant to Article III herein.
(j) "Company" means Bullet Sports International, Inc., including all
Affiliates and wholly-owned Subsidiaries, or any successor thereto as
provided in Article XIV herein.
(k) "Continuing Director" means an individual who was a member of the
Board of Directors on the Effective Date or whose subsequent
nomination for election or reelection to the Board of Directors was
approved by the affirmative vote of a plurality of the stockholders of
the Company.
(l) "Director" shall mean a member of the Board.
(m) "Eligible Participant" means any officer, director or other employee
(as defined in accordance with Section 3401(c) of the Code) of the
Company or its Subsidiaries, and any person associated with the
Company as an outside consultant, agent or advisor, who, in the
opinion of the Committee, can contribute significantly to the growth
and profitability of, or perform services of major importance to,
the Company and its Subsidiaries.
(n) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(o) "Fair Market Value" means, on any given date: (i) the closing price of
the Shares as reported on the NASDAQ-Small Cap Market on such day or,
if no Shares were traded on the NASDAQ-Small Cap Market on such day,
the average of the closing bid and asked prices on such day, (ii) if
the Shares are not listed or admitted to trading on the NASDAQ-Small
Cap Market or any securities exchange, the last reported sales price
on such day, or if no sale takes place on such day, the average of the
closing bid and asked prices on such day, as reported by a reliable
quotation source designated by the Committee, or (iii) if the Shares
are not listed or admitted to trading on the NASDAQ-Small Cap Market
or any securities exchange, and if no such last reported sales
B-2
<PAGE> 27
price or closing bid and asked prices are available as reported by a
reliable quotation source designated by the Committee, or if there
shall be no bid and asked prices on such day, the average of the high
bid and low asked prices, as so reported, on the most recent day (not
more than ten (10) days prior to the date in question) for which
prices have been so reported; provided that if there are no bid and
asked prices reported during the ten (10) days prior to the date in
question, the Fair Market Value of the Shares shall be determined by
the Committee acting in good faith on the basis of such quotations and
other information as it considers, in its reasonable judgment,
appropriate.
(p) "Incentive Stock Option" or "ISO" means an option to purchase Stock,
granted under Article VI herein which is designated as an incentive
stock option by the Committee and is intended to meet the requirements
of Section 422A of the Code.
(q) "Nonemployee Director" means any Director of the Company who is
neither an employee or an officer of the Company. For purposes of this
definition, an "officer" of the Company shall be defined to include
the Chairman of the Board of Directors, as well as the President, all
Vice-Presidents, the Secretary and the Treasurer of the Company, all
as defined in the Company's Bylaws as in effect on the date of this
Plan and as may be amended from time to time thereafter.
(r) "Nonqualified Stock Option" or "NSO" means an option to purchase
Stock, granted under Article VI herein, which is not intended to be an
Incentive Stock Option and which is designated as a Nonqualified Stock
Option by the Committee.
(s) "Option" means an Incentive Stock Option or a Nonqualified Stock
Option, as designated by the Committee.
(t) "Other Stock Unit Award" means awards of Stock or other awards that
are valued in whole or in part by reference to or are otherwise based
on, Shares or other securities of the Company.
(u) "Participant" means an Eligible Participant or Nonemployee Director
who has been granted an Award under the Plan.
(v) "Performance Award" means a performance-based Award, which may be in
the form of either Performance Shares or Performance Units.
(w) "Performance Share" means an Award, designated as a performance share,
granted to a Participant pursuant to Article VIII herein, the value of
which is determined, in whole or in part, by the value of Stock in a
manner deemed appropriate by the Committee and described in the
Agreement.
(x) "Performance Unit" means an Award, designated as a performance unit,
granted to a Participant pursuant to Article VIII herein, the value of
which is determined, in whole or in part, by the attainment of
preestablished goals relating to Company financial or operating
performance as deemed appropriate by the Committee and described in
the Agreement.
(y) "Period of Restriction" means the period during which the transfer of
Shares of Restricted Stock is restricted, pursuant to Article VII
herein.
(z) "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, including a "group" as defined in Section 13(d)(3).
(aa) "Plan" means the Bullet Sports International, Inc. 1996 Long-Term
Incentive Stock Plan as herein described and as hereafter from time to
time amended.
(bb) "Restricted Stock" means an Award of Stock granted to a Participant
pursuant to Article VII herein.
(cc) "Secretary" means the officer designated as the Secretary of the
Company.
(dd) "Stock" or "Shares" means the common stock, par value $.001, of the
Company.
B-3
<PAGE> 28
(ee) "Subsidiary" shall mean a corporation at least 50% of the total
combined voting power of all classes of stock of which is owned by the
Company, either directly or through one or more of its Subsidiaries,
or any partnership or limited liability company in which the Company
or a Subsidiary owns at least 50% of the capital or profits interest.
ARTICLE III.
ADMINISTRATION
3.1 The Committee. The Plan shall be administered by the Committee which
shall consist of two or more Directors who are "outside directors" as defined in
Section 162(m) of the Code and the regulations promulgated thereunder, appointed
by and holding office at the pleasure of the Board, and each of whom is a
"disinterested administrator" as defined by Rule 16b-3 under the Exchange Act.
The Committee shall have all powers necessary or desirable for such
administration. The express grant in this Plan of any specific power to the
Committee shall not be construed as limiting any power or authority of the
Committee. In addition to any other powers and, subject to the provisions of the
Plan, the Committee shall have the following specific powers: (i) to determine
the terms and conditions upon which the Awards may be made and exercised; (ii)
to determine all terms and provisions of each Agreement, which need not be
identical; (iii) to construe and interpret the Agreements and the Plan; (iv) to
establish, amend, or waive rules or regulations for the Plan's administration;
(v) to modify the terms of the exercisability of any Award, the end of a
Performance Period or termination of any Period of Restriction, all to the
extent consistent with applicable law including, but not limited to, the Code
and the Exchange Act; and (vi) to make all other determinations and take all
other actions necessary or advisable for the administration of the Plan.
3.2 Selection of Participants. The Committee shall have the authority to
grant Awards under the Plan, from time to time, to such Eligible Participants as
may be selected by it. Each Award shall be evidenced by an Agreement.
3.3 Decisions Binding. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan shall be final, conclusive, and
binding.
3.4 Rule 16b-3 Requirements. Notwithstanding any other provision of the
Plan, the Committee may impose such conditions on any Award, and the Board amend
the Plan in any such respects, as may be required to satisfy the requirements of
Rule 16b-3, an amended (or any successor or similar rule) under the Exchange
Act.
3.5 Indemnification of Committee. In addition to such other rights of
indemnification as they may have as a Director or as members of the Committee,
the members of the Committee shall be indemnified by the Company against all
reasonable expenses including attorneys' fees, actually and reasonably incurred
in connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with the
Plan or any Award granted or made hereunder, and against all amounts reasonably
paid by them in settlement thereof or paid by them in satisfaction of a judgment
in any such action, suit or proceeding, if such members acted in good faith and
in a manner which they believed to be in, and not opposed to, the best interests
of the Company and its Subsidiaries.
ARTICLE IV.
STOCK SUBJECT TO THE PLAN
4.1 Number of Shares. Subject to adjustment as provided in Section 4.4
herein, the maximum aggregate number of Shares that may be issued pursuant to
Awards made under the Plan shall not exceed 3,000,000. No more than one-half of
the aggregate number of such Shares shall be issued in connection with
Restricted Stock Awards, Performance Awards or Other Stock Unit Awards. Except
as provided in Sections 4.2 and 4.3 herein, the issuance of Shares in connection
with the exercise of, or as other payment for, Awards under the Plan shall
reduce the number of Shares available for future Awards under the Plan.
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4.2 Lapsed Awards or Forfeited Shares. If any Award granted under this Plan
terminates, expires or lapses for any reason other than by virtue of exercise of
the Awards or if Shares issued pursuant to Awards are forfeited any Stock
subject to such Award again shall be available for the grant of an Award under
the Plan.
4.3 Delivery of Shares as Payment. In the event a Participant pays the
Option Price for Shares pursuant to the exercise of an Option with previously
acquired Shares the number of Shares available for future Awards under the Plan
shall be reduced only by the net number of new Shares issued upon the exercise
of the Option.
4.4 Capital Adjustments. The number and class of Shares subject to each
outstanding Award, the Option Price and the aggregate number and class of Shares
for which Awards thereafter may be made shall be subject to such adjustment, if
any, as the Committee deems appropriate, such that:
(a) If the outstanding Shares are increased, decreased or exchanged,
through merger, consolidation, sale of all or substantially all of the
property of the Company, reorganization, recapitalization,
reclassification, stock dividend, stock split or other distribution in
respect of such Shares, for a different number or kind of Shares, or if
additional Shares or new or different Shares are distributed in respect
of such Shares, an appropriate and proportionate adjustment shall be
made in: (i) the maximum number of Shares as provided in Section 4.1
herein; (ii) the number of Shares subject to then outstanding Awards;
and (iii) the price for each Share subject to such Awards, but without
change in the aggregate purchase price as to which such options remain
exercisable or Restricted Stock releasable.
(b) Adjustments under this Section 4.4 shall be made by the Committee,
subject to the approval of the Board of Directors, whose determination
as to what adjustments shall be made, and the extent thereof, shall be
final, binding and conclusive. No fractional interests shall be issued
under the Plan on account of such adjustments.
4.5 Individual Limitation. Notwithstanding any provision herein to the
contrary, the maximum number of shares of Common Stock which may be issued
through a combination of any Option, Performance Award, Restricted Stock, and
Other Stock Unit Award to any individual Participant shall not exceed 750,000
Shares.
ARTICLE V.
ELIGIBILITY
Persons eligible to participate in the Plan include all officers, directors
and other employees (as defined in accordance with Section 3401(c) of the Code)
of the Company and its Subsidiaries, and any person associated with the Company
as an outside consultant, agent or advisor, who, in the opinion of the
Committee, can contribute significantly to the growth and profitability of, or
perform services of major importance to, the Company and its Subsidiaries.
ARTICLE VI.
STOCK OPTIONS
6.1 Grant of Options to Eligible Participants. Subject to the terms and
provisions of the Plan, Options may be granted to Eligible Participants at any
time and from time to time, an shall be determined by all the Committee. The
Committee shall have complete discretion in determining the number of Shares
subject to Options granted to each Eligible Participant, provided, however, that
the aggregate Fair Market Value (determined at the time the Award is made) of
Shares with respect to which an Eligible Participant may first exercise ISOs
granted under the Plan during any calendar year may not exceed $100,000 or such
amount as shall be specified in Section 422A of the Code and rules and
regulation thereunder.
6.2 Grant of Options to Nonemployee Directors. Notwithstanding any other
provision of this Plan, a Nonqualified Stock Option will be granted
automatically to each Nonemployee Director three (3) business days after each
annual meeting of stockholders of the Company, commencing with the annual
meeting of
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stockholders to be held on October 17, 1996. Each Nonqualified Stock Option will
cover 2,000 shares of Stock and will have an exercise price equal to the Fair
Market Value of the Stock on the date of the grant. The Options shall fully vest
and become exercisable six (6) months after the Grant Date of the Nonqualified
Stock Option and shall remain exercisable for a period of five (5) years after
the Grant Date; provided, however, that the Nonqualified Stock Option will
terminate on the date on which the Nonemployee Director's service as a Director
terminates for any reason whatsoever. The Committee shall have no authority,
discretion or power to apply, administer or interpret the terms or conditions of
this Section 6.2 or the Nonqualified Stock Options granted hereunder.
Notwithstanding Article XI hereof, this Section 6.2 may not be amended, altered
or superseded more than once every six months, other than to comport with
changes in the Code, the Employee Retirement Income Security Act of 1974, as
amended, the Exchange Act, or any rules or regulations promulgated thereunder.
6.3 Option Agreement. Each Option grant shall be evidenced by an Agreement
that shall specify the type of Option granted, the Option Price (as hereinafter
defined), the duration of the Options the number of Shares to which the Option
pertains, any conditions imposed upon the exercisability of Options in the event
of retirement, death, disability, or other termination of employment and such
other provisions as the Committee shall determine. The Agreement shall specify
whether the option is intended to be an Incentive Stock Option within the
meaning of Section 422A of the Code, or a Nonqualified Stock Option not intended
to be within the provisions of Section 422A of the Code.
6.4 Option Price. The exercise price per share of Stock covered by an
Option ("Option Price") shall be determined by the Committee subject to the
following limitations. The Option Price shall be not less than 100% of the Fair
Market value of such Stock on the Grant Date, except that the Option Price for a
NSO may be set at not less than 85% of the Fair Market Value of the Stock on the
Grant Date if the Committee grants the amount of the discount from 100% of the
Fair Market Value of such Stock in lieu of a cash payment.
6.5 Duration of Options. Each Option shall expire at such time as the
Committee shall determine at the time of grant provided, however, that no Option
shall be exercisable later than the tenth (10th) anniversary of its Award Date.
6.6 Exercisability. Options granted under the Plan shall be exercisable at
such times and be subject to such restrictions and conditions as the Committee
shall determine, which need not be the same for all Participants. No Option,
however, shall be exercisable until the expiration of at least twelve months
after the Award Date, except that such limitation shall not apply in the case of
death or disability of the Participant.
6.7 Method of Exercise. Options shall be exercised by the delivery of a
written notice to the Company in the form prescribed by the Committee setting
forth the number of Shares with respect to which the Option is to be exercised,
accompanied by full payment for the Shares. The Option Price shall be payable to
the Company in full either in cash, by delivery of Shares of Stock valued at
Fair Market Value at the time of exercise or by a combination of the foregoing.
As soon as practicable, after receipt of written notice and payment, the Company
shall deliver to the Participant, stock certificates in an appropriate amount
based upon the number of Shares with respect to which the option is exercised,
issued in the Participant's name. No Participant who is awarded an option shall
have rights as a stockholder until the date of exercise of the Option.
6.8 Cashless Exercise. To the extent permitted under the applicable laws
and regulations, at the request of the Participant and in the sole discretion of
the Committee, the Company may cooperate in a "cashless exercise" of the Option
where: (i) the Option has been held at least six months; and (ii) a reputable
and knowledgable licensed broker is handling the sale of any shares acquired by
the Participant upon exercise of an Option.
6.9 Options Awarded Upon Stock Delivery Exercise. The Committee, in its
discretion, may provide in the Agreement that, in the event a Participant pays
the Option Price for an Option by delivery of previously acquired Shares, the
Participant will be granted a new option ("Replacement Option") for that number
of Shares delivered in payment of the Option Price of the original Option
("Original Option"). The Committee shall determine the terms and conditions of
the Replacement Option; provided, however, that the Option Price
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of the Replacement Option shall be the Fair Market Value of Shares on its Award
Date and the term of the Replacement Option shall expire upon the expiration
date of the Original Option.
6.10 Nontransferability of Options. No option granted under the Plan may be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
otherwise than by will or by the laws of descent and distribution. Further, all
options granted to a Participant under the Plan shall be exercisable during his
lifetime only by such Participant or his guardian or legal representative.
ARTICLE VII.
RESTRICTED STOCK
7.1 Grant of Restricted Stock. Subject to the terms and provisions of the
Plan, the Committee, at any time and from time to time, may grant shares of
Restricted Stock under the Plan to such Participants and in such amounts as it
shall determine. Participants receiving Restricted Stock Awards are not required
to pay the Company therefor (except for applicable tax withholding) other than
the rendering of services and/or until other conditions are satisfied as
determined by the Committee in its sole discretion.
7.2 Restricted Stock Agreement. Each Restricted Stock grant shall be
evidenced by an Agreement that shall specify the Period of Restriction; the
conditions which must be satisfied prior to removal of the restriction; the
number of Shares of Restricted Stock granted; and such other provisions as the
Committee shall determine.
7.3 Transferability. Except an provided in this Article VII and subject to
the limitation in the next sentence, the Shares of Restricted Stock granted
hereunder may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated until the termination of the applicable Period of
Restriction or upon earlier satisfaction of other conditions as specified by the
Committee in its sole discretion and set forth in the Agreement. No restriction
shall be removed until the expiration of at least twelve months after the Award
Date, except that such limitation shall not apply in the case of death or
disability of the Participant. All rights with respect to the Restricted Stock
granted to a Participant under the Plan shall be exercisable during his lifetime
only by such Participant or his guardian or legal representative.
7.4 Other Restrictions. The Committee shall impose such other restrictions
on any Restricted Stock granted pursuant to the Plan as it may deem advisable
including, without limitation, restrictions under applicable federal or state
securities laws, and may legend the certificates representing Restricted Stock
to give appropriate notice of such restrictions. Alternatively, the Committee,
in its sole discretion, may have Restricted Stock issued without legend and held
by the Secretary until such time all restrictions are satisfied.
7.5 Certificate Legend. In the event the Committee elects to legend the
certificates representing Restricted Stock, and in addition to any legends
placed on certificates pursuant to Section 7.4 herein, each certificate
representing shares of Restricted Stock granted pursuant to the Plan shall bear
the following legend:
The sale or other transfer of the shares of stock represented by
this certificate, whether voluntary, involuntary, or by
operation of law, is subject to certain restrictions on transfer
set forth in the Bullet Sports International, Inc. 1996 LongTerm
Incentive Stock Plan, in the rules and administrative procedures
adopted pursuant to such Plan, and in an Agreement dated
. A copy of the Plan, such rules and procedures, and
such Agreement may be obtained from the Secretary of Bullet
Sports International, Inc.
7.6 Removal of Restrictions. Except as otherwise provided in this Article
VII. Restricted Stock covered by each Award made under the Plan shall be
provided and become freely transferable by the Participant after the last day of
the Period of Restriction and/or upon the satisfaction of other conditions as
determined by the Committee. Once the Shares are released from the restrictions,
the Participant shall be entitled to have removed any legend that may have been
placed on certificates pursuant to Section 7.4 and 7.5 herein. Except as
specifically provided in this Article VII, the Committee shall have no authority
to reduce or remove the restrictions or to reduce or remove the Period of
Restriction without the express consent of the stockholders of the Company. Any
shares of Restricted Stock issued pursuant to this Article VII shall provide
that the
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minimum Period of Restriction shall be three (3) years, which Period of
Restriction would permit the removal of restrictions on no more than one-third
( 1/3) of the shares of Restricted Stock at the end of the first year following
the Grant Date, and the removal of the restrictions on an additional one-third
( 1/3) of the shares of Restricted Stock at the end of each subsequent year. In
no event shall any restrictions be removed from shares of Restricted Stock
during the first year following the Grant Date. If the grant of Restricted Stock
is performance based, the total Period of Restriction for any or all shares of
Restricted Stock so granted shall be no less than one (1) year.
7.7 Voting Rights. During the Period of Restriction, Participants in whose
name Restricted Stock is granted hereunder may exercise full voting rights with
respect to those Shares.
7.8 Dividends and Other Distributions. During the Period of Restriction,
Participants in whose name Restricted Stock is granted hereunder shall be
entitled to receive all dividends and other distributions paid with respect to
those Shares. If any such dividends or distributions are paid in Shares, the
Shares shall be subject to the same restrictions on transferability as the
Restricted Stock with respect to which they were distributed.
7.9 Termination of Employment due to Retirement. Unless otherwise provided
in the Agreement, in the event that a Participant terminates his employment with
the Company or one of its Subsidiaries due to the earlier of attaining age 65 or
normal retirement (as defined in the rules of the Company in effect at the
time), any remaining Period of Restriction applicable to the Restricted Stock
pursuant to Section 7.3 herein shall automatically terminate and, except as
otherwise provided in Section 7.4 herein, the Restricted Stock shall thereby be
delivered to such Participant and be free of restrictions.
7.10 Termination of Employment due to Death or Disability. In the event a
Participant's employment is terminated because of death or disability during the
Period of Restriction, any remaining Period of Restriction applicable to the
Restricted Stock pursuant to Section 7.3 herein shall automatically terminate
and, except as otherwise provided in Section 7.4 herein, the Restricted Stock
shall thereby be released and free of restrictions.
7.11 Termination of Employment for Other Reasons. Unless otherwise provided
in the Agreement, in the event that a Participant terminates his employment with
the Company for any reason other than for death, disability, or retirement, as
set forth in Section 7.9 and 7.10 herein, during the Period of Restriction, then
any Restricted Stock still subject to restrictions as of the date of such
termination shall automatically be forfeited and, if held by the Participant,
returned to the Company.
ARTICLE VIII.
PERFORMANCE AWARDS
8.1 Grant of Performance Awards. Subject to the terms and provisions of the
Plan, Performance Awards in the form of either Performance Units or Performance
Shares may be granted to Participants at any time and from time to time as shall
be determined by the Committee. The Committee shall have complete discretion in
determining the number of Performance Units or Performance Shares granted to
each Participant. Participants receiving Performance Awards are not required to
pay the Company therefor (except for applicable tax withholding) other than the
rendering of services.
8.2 Value of Performance Awards. The Committee shall determine the number
of Performance Units or Performance Shares granted to each Participant as a
Performance Award. The Committee shall set performance goals in its discretion
for each Participant who is granted a Performance Award. The extent to which
such performance goals are met will determine the value of the Performance Unit
or Performance Share to the Participant. Such performance goals may be
particular to a Participant, may relate to the performance of the Subsidiary
which employs him, may be based on the performance of the Company generally, or
a combination of the foregoing. The performance goals may be based on
achievement of balance sheet or income statement objectives, or any other
objectives established by the Committee. The performance goals may be absolute
in their terms or measured against or in relationship to other companies
comparably,
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similarly or otherwise situated. The Committee shall determine the time period
during which the performance goals must be met ("Performance Period"), provided,
however, that the Performance Period may not be less than twelve months from the
Award Date. The terms and conditions of each Performance Award shall be set
forth in an Agreement.
8.3 Settlement of Performance Awards. After a Performance Period has ended,
the holder of a Performance Unit or Performance Share shall be entitled to
receive the value thereof based on the degree to which the performance goals
established by the Committee and set forth in the Agreement have been satisfied.
8.4 Form of Payment. Payment of the amount to which a Participant shall be
entitled upon the settlement of a Performance Award shall be made in cash,
Stock, or a combination thereof an determined by the Committee. Payment may be
made in a lump sum or installments as prescribed by the Committee.
8.5 Nontransferability. No Performance Units or Performance Shares granted
under the Plan may be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated, otherwise than by will or by the laws of descent and
distribution. All rights with respect to Performance Units and Performance
Shares granted to a Participant under the Plan shall not be exercisable until
the expiration of twelve months after the Award Date and thereafter during his
lifetime only by such Participant or his guardian or personal representative.
ARTICLE IX.
OTHER STOCK UNIT AWARDS
9.1 Grant. The Committee is authorized to grant to Participants, either
alone or in addition to other Awards made under the Plan, Other Stock Unit
Awards, in lieu of cash payments, to be issued at such times, subject to or
based upon achievement of such performance or other goals and on such other
terms and conditions as the Committee shall deem appropriate and specify in the
Agreement relating thereto, which need not be the same with respect to each
Participant. Stock or other securities granted pursuant to Other Stock Unit
Awards may be issued for no cash consideration or for such minimum consideration
as may be required by applicable law. Stock or other securities purchased
pursuant to Other Stock Unit Awards may be purchased for such purchase price as
the Committee shall determine, which price shall be not less than 75% of the
Fair Market Value of the Stock or other securities on the Award Date.
9.2 Sale and Transferability. Stock or other securities issued pursuant to
Other Stock Unit Awards may not be sold by a Participant until the expiration of
at least twelve months from the Award Date, except that such limitation shall
not apply in the case of death or disability of a Participant. To the extent
Other Stock Unit Awards are deemed to be derivative securities within the
meaning of Rule 16b-3 under the Exchange Act, a Participant's rights with
respect to such Awards shall not vest or be exercisable until the expiration of
at least twelve months from the Award Date. To the extent an Other Stock Unit
Award granted under the Plan is deemed to be a derivative security within the
meaning of Rule 16b-3 under the Exchange Act, it may not be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, otherwise than by
will or by the laws of descent and distribution. All rights with respect to such
Other Stock Unit Awards granted to a Participant under the Plan shall be
exercisable during his lifetime only by such Participant or his guardian or
personal representative.
ARTICLE X.
CHANGE IN CONTROL
In the event of a Change in Control of the Company, the Committee shall
ensure the following actions: (i) all options then outstanding under the Plan
shall become fully exercisable and remain so for the duration of the Option as
specified in the Agreement; and (ii) all restrictions or conditions related to
grants of Restricted Stock shall be deemed immediately and fully satisfied and
all certificates representing such Restricted Stock shall be released or have
any legend removed by the Secretary and thereby become freely transferable.
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ARTICLE XI.
MODIFICATION, EXTENSIONS AND RENEWAL OF AWARDS
Subject to the terms and conditions and within the limitations of the Plan,
and the applicable provisions of the Code (including but limited Section 162(m)
thereof) and the Exchange Act (including but not limited Rule 16b-3 as
promulgated thereunder), the Committee may modify, extend, or renew outstanding
Awards, or accept the surrender of outstanding Awards (to the extent not yet
exercised) granted under the Plan and authorize the granting of new Awards
pursuant to the Plan in substitution therefor, and the substituted Awards may
specify a longer term than the surrendered Awards or may contain any other
provisions that are authorized by the Plan, provided, however, that the
Committee may not modify outstanding Awards or grant new Awards in substitution
for outstanding Awards that specify a lower Exercise Price. Except as limited by
the foregoing sentence, the Committee may also modify the terms of an
outstanding Agreement. Notwithstanding the foregoing, however, no modification
of an Awards shall, without the consent of the Participant, adversely affect the
rights or obligations of the Participant.
ARTICLE XII.
AMENDMENT, MODIFICATION, AND TERMINATION OF THE PLAN
12.1 Amendment, Modification, and Termination. At any time and from time to
time, the Board may terminate, amend, or modify the Plan. Such amendment or
modification may be without shareholder approval except to the extent that such
approval is required by the Code, pursuant to the rules under Section 16 of the
Exchange Act, by any national securities exchange or system on which the Stock
is then listed or reported, by any regulatory body having jurisdiction with
respect thereto or under any other applicable laws, rules, or regulations.
12.2 Awards Previously Granted. No termination, amendment, or modification
of the Plan, other than pursuant to Section 4.4 herein, shall in any manner
adversely affect any Award theretofore granted under the Plan, without the
written consent of the Participant.
ARTICLE XIII.
WITHHOLDING
13.1 Tax Withholding. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy Federal, State, and local taxes (including the
Participant's FICA obligation) required by law to be withheld with respect to
any grant, exercise, or payment under or as a result of this Plan.
13.2 Stock Withholding. With respect to withholding required upon the
exercise of Nonqualified Stock Options, or upon the lapse of restrictions on
Restricted Stock, or upon the occurrence of any other similar taxable event,
participants may elect, subject to the approval of the Committee, to satisfy the
withholding requirement, in whole or in part, by having the Company withhold
Shares having a Fair Market Value equal to the amount required to be withheld.
The value of the Shares to be withheld shall be based on Fair Market Value of
the Shares on the date that the amount of tax to be withheld is to be
determined. All elections shall be irrevocable and be made in writing, signed by
the Participant on forms approved by the Committee in advance of the day that
the transaction becomes taxable.
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ARTICLE XIV.
SUCCESSORS
All obligations of the Company under the Plan, with respect to Awards
granted hereunder, shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.
ARTICLE XV.
GENERAL
15.1 Requirements of Law. The granting of Awards and the issuance of Shares
under this Plan shall be subject to all applicable laws, rules, and regulations,
and to such approvals by, any governmental agencies as may be required. No
Shares shall be issued or transferred pursuant to this Plan unless and until all
legal requirements applicable to such issuance or transfer have, in the opinion
of counsel to the Company, been complied with. In connection with any such
issuance or transfer, the person acquiring the Shares shall, if requested by the
Company, give assurances satisfactory to counsel to the Company in respect to
such matters as the Company may deem desirable to assure compliance with all
applicable legal requirements.
15.2 Effect of Plan. The establishment of the Plan shall not confer upon
any Participant any legal or equitable right against the Company, a Subsidiary,
or the Committee, except as expressly provided in the Plan. The Plan does not
constitute an inducement or consideration for the employment of any Participant,
nor is it a contract between the Company or any of its Subsidiaries and any
Participant. Participation in the Plan shall not give any Participant any right
to be retained in the service of the Company or any of its Subsidiaries. No
award and no right under the Plan, contingent or otherwise shall be assignable
or subject to any encumbrance, pledge or charge of any nature except that, under
such rules and regulations as the Committee may establish pursuant to the terms
of the Plan, a beneficiary may be designated in respect to the Award in the
event of the death of the holder of the Award and except, also, that if the
beneficiary shall be the executor or administrator of the estate of the holder
of the Award, any rights in respect to such Award may be transferred to the
person or persons or entity (including a trust) entitled thereto under the will
of the holder of such Award or under the laws relating to descent and
distribution.
15.3 Creditors. The interests of any Participant under the Plan or any
Agreement are not subject to the claims of creditors and may not, in any way, be
assigned, alienated, or encumbered.
15.4 Governing Law. The Plan, and all Agreements hereunder, shall be
governed, construed, and administered in accordance with and governed by the
laws of the State of Delaware and the intention of the Company is that ISOs
granted under the Plan quality as such under Section 422A of the Code.
15.5 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
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PROXY BULLET SPORTS INTERNATIONAL, INC.
The undersigned hereby appoints Richard P. Crane, Jr. and John A. Haas, and
each of them, as proxies for the undersigned, each with full power of
appointment and substitution, and hereby authorizes them to represent and to
vote, as designated below, all shares of the common stock of Bullet Sports
International, Inc. (the "Company") which the undersigned is entitled to vote at
the Annual Meeting of Stockholders to be held at 10:00 a.m., Pacific Time, on
October 17, 1996 at the Company's principal offices, 2803 South Yale Street,
Santa Ana, California 92704 (the "Meeting"), or at any and all postponements,
continuations or adjournments thereof. This proxy, when properly executed, will
be voted in the manner directed herein by the undersigned Stockholder.
1. Proposal to elect seven (7) directors, to serve until their respective
successors have been elected and qualified.
/ / FOR the nominees listed below (except as indicated)
/ / WITHHOLD AUTHORITY to vote for the nominees listed below
If you wish to withhold authority to vote for an individual nominee, strike
a line through that nominee's name below:
Richard P. Crane, Jr. John A. Haas Mark Green Daniel
Chandler Robert E. Courtney Douglas L. Hawthorne Leonard K. Nave
2. Proposal to amend the Certificate of Incorporation of the Company to increase
the amount of authorized shares of the Company's $.001 par value Common Stock
from 10,000,000 shares to 25,000,000 shares.
/ / FOR / / AGAINST / / ABSTAIN
3. Proposal to amend the Certificate of Incorporation of the Company to:
(a) provide for the classification of the Board of Directors into three
classes of Directors with three-year staggered terms;
/ / FOR / / AGAINST / / ABSTAIN
(b) provide that Directors may be removed only for cause;
/ / FOR / / AGAINST / / ABSTAIN
(c) provide that amendments by stockholders to the Bylaws and amendments to
certain provisions of the Certificate of Incorporation (as set forth in
proposals 3(a) and 3(b) above) may be made only pursuant to a two-thirds
vote of the stockholders;
/ / FOR / / AGAINST / / ABSTAIN
4. Proposal to approve the Company's 1996 Long-Term Incentive Stock Plan.
/ / FOR / / AGAINST / / ABSTAIN
(See other side)
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<PAGE> 37
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5. Proposal to ratify the selection of the accounting firm of Arthur Andersen
LLP as independent public accountants for the Company for the fiscal year
ending February 28, 1997.
/ / FOR / / AGAINST / / ABSTAIN
6. In the discretion of such proxy holders, upon such other business as may
properly come before the Meeting or at any and all postponements,
continuations or adjournments thereof.
THIS PROXY, WHICH IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF BULLET
SPORTS INTERNATIONAL, INC., WILL BE VOTED FOR THE ABOVE PROPOSALS, UNLESS A
CONTRARY DIRECTION IS INDICATED IN WHICH CASE IT WILL BE VOTED AS DIRECTED.
NOTE: Please date the Proxy and
sign as name appears below. When
shares are held by joint tenants,
both should sign. When signing as
attorney, executor, administrator,
trustee or guardian, please give
full title as such. If signer is a
corporation, please sign full
corporate name by authorized
officer.
Dated
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Sign here:
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(Please sign exactly as name
appears hereon. Administrators,
trustees, etc. should so indicate
when signing.)
PLEASE MARK, SIGN, DATE AND RETURN PROMPTLY THIS PROXY.
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