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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 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 Rule 14a-11(c) or Rule 14a-12
SPORT SUPPLY GROUP INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction
applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions
applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total Fee Paid
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No:
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(3) Filing Party:
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(4) Date Filed:
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 21, 1997
As a stockholder of Sport Supply Group, Inc. (the "Company"), you are
hereby given notice of and invited to attend in person or by proxy the Annual
Meeting of Stockholders of the Company to be held at Columbian Country Club,
2525 Country Club Drive, Carrollton, Texas 75006, on Friday, March 21, 1997 at
4:00 p.m., for the following purposes:
1. To elect seven directors for a one-year term;
2. To approve the Sport Supply Group, Inc. Amended and Restated
Stock Option Plan;
3. To approve the Sport Supply Group, Inc. 1997 Employee Stock
Purchase Plan; and
4. To transact such other business as may properly come before
the meeting and any adjournment(s) thereof.
The Board of Directors has fixed the close of business on January 24,
1997 as the record date (the "Record Date") for the determination of
stockholders entitled to notice of and to vote at such meeting and any
adjournment(s) thereof. Only stockholders of record at the close of business
on the Record Date are entitled to notice of and to vote at such meeting. The
transfer books of the Company will not be closed.
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. HOWEVER, WHETHER OR
NOT YOU EXPECT TO ATTEND THE MEETING, MANAGEMENT DESIRES TO HAVE THE MAXIMUM
REPRESENTATION AT THE MEETING AND RESPECTFULLY REQUESTS THAT YOU DATE, EXECUTE
AND MAIL PROMPTLY THE ENCLOSED PROXY IN THE ENCLOSED STAMPED ENVELOPE FOR WHICH
NO ADDITIONAL POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. A proxy may
be revoked by a stockholder any time prior to its use as specified in the
enclosed proxy statement.
By Order of the Board of Directors
TERRENCE M. BABILLA,
Secretary
Dallas, Texas
January 30, 1997
YOUR VOTE IS IMPORTANT.
PLEASE EXECUTE AND RETURN PROMPTLY THE
ENCLOSED PROXY CARD IN THE ENVELOPE PROVIDED HEREIN.
<PAGE> 3
SPORT SUPPLY GROUP, INC.
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 21, 1997
To Our Stockholders:
This Proxy Statement is furnished to stockholders of Sport Supply
Group, Inc. (the "Company") for use at the Annual Meeting of Stockholders to be
held at the date, time and place and for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders, or at any adjournment or
adjournments thereof (the "Annual Meeting"). The enclosed proxy is solicited
on behalf of the Board of Directors of the Company and is subject to revocation
at any time prior to the voting of the proxy. Unless a contrary choice is
indicated, all duly executed proxies received by the Company will be voted in
accordance with the instructions set forth on the back side of the proxy card.
The record of stockholders entitled to vote at the Annual Meeting was taken at
the close of business on January 24, 1997 (the "Record Date"). The approximate
date on which this Proxy Statement and the enclosed proxy are first being sent
or given to stockholders is January 30, 1997.
VOTING PROCEDURES AND REVOCABILITY OF PROXIES
The accompanying proxy card is designed to permit each stockholder of
record at the close of business on January 24, 1997 to vote in the election of
directors and on the proposals described in this Proxy Statement. The proxy
card provides space for a stockholder to: (a) vote in favor of or to withhold
voting for the nominees for the Board of Directors; (b) vote for or against
any proposal to be considered at the Annual Meeting; or (c) abstain from
voting on any proposal other than the election of directors if the stockholder
chooses to do so. The election of directors will be decided by a plurality
vote. All other matters will require the affirmative vote of holders of a
majority of the shares of common stock, par value $.01 per share (the "Common
Stock"), having voting power, represented in person or by proxy, at the Annual
Meeting.
The holders of a majority of the outstanding shares of Common Stock
entitled to vote at the Annual Meeting, present in person or by proxy, will
constitute a quorum for the transaction of business at the Annual Meeting. If
a quorum is not present, the Annual Meeting may be adjourned from time to time
until a quorum is obtained. Shares as to which authority to vote has been
withheld with respect to the election of any nominee for director will not be
counted as a vote for such nominee. Abstentions and broker nonvotes are counted
for purposes of determining the presence or absence of a quorum for the
transaction of business. Abstentions are counted in tabulations of the votes
cast on proposals presented to stockholders to determine the total number of
votes cast. Abstentions will have the effect of a vote against the proposal to
approve the Company's Amended and Restated Stock Option Plan and the proposal
to approve the Employee Stock Purchase Plan. Broker nonvotes are not counted
as votes cast for purposes of determining whether a proposal has been approved.
A broker nonvote will have no effect
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on the outcome of the election of directors, the proposal to approve the
Company's Amended and Restated Stock Option Plan or the proposal to approve the
Employee Stock Purchase Plan. Stockholders are urged to sign the accompanying
form of proxy and return it promptly.
When a signed card is returned with choices specified with respect to
voting matters, the shares represented are voted by the proxies designated on
the proxy card in accordance with the stockholder's instructions. The proxies
for the stockholders are Geoffrey P. Jurick, Eugene I. Davis, Peter S.
Blumenfeld and John P. Walker. A stockholder wishing to name another person as
his or her proxy may do so by crossing out the names of the designated proxies
and inserting the name(s) of such other person(s) to act as his or her
proxy(ies). In that case, it will be necessary for the stockholder to sign the
proxy card and deliver it to the person named as his or her proxy and for the
person so named to be present and vote at the Annual Meeting. Proxy cards so
marked should not be mailed to the Company.
If a signed proxy card is returned and the stockholder has made no
specifications with respect to voting matters, the shares will be voted for the
election of the seven nominees for director and in favor of all the proposals
described in this Proxy Statement and, at the discretion of the proxies, on any
other matter that may properly come before the Annual Meeting or any
adjournment(s). Valid proxies will be voted at the Annual Meeting and at any
adjournment in the manner specified.
Any stockholder of the Company has the unconditional right to revoke
his or her proxy at any time prior to the voting thereof by any act
inconsistent with the proxy, including notifying the Secretary of the Company
in writing, executing a subsequent proxy, or personally appearing at the Annual
Meeting and casting a contrary vote. However, no revocation shall be effective
unless notice of such revocation has been received by the Company at or prior
to the Annual Meeting.
The total issued and outstanding capital stock of the Company as of
January 20, 1997 consisted of 8,364,834 shares of Common Stock. Each share of
Common Stock is entitled to one vote.
MATTERS TO BE BROUGHT BEFORE THE MEETING
PROPOSAL ONE - ELECTION OF DIRECTORS
Seven directors are proposed to be elected at the Annual Meeting. If
elected, each director will hold office until the next annual meeting of
stockholders or until his successor shall be elected and shall qualify. The
election of directors will be decided by a plurality vote. All nominees named
below, other than Thomas P. Treichler, are members of the present Board of
Directors of the Company. All nominees have consented to serve if elected. If
any nominee becomes unable to serve, the shares represented by all valid
proxies will be voted for the election of such substitute as the Board may
recommend, the Board may reduce the number of directors to eliminate the
vacancy, or the Board may fill the vacancy at a later date after selecting an
appropriate nominee. Management has no reason to believe that any of the
nominees named below will be unable to serve.
Nominations for election to the Board of Directors may be made by the
Board of Directors, a nominating committee appointed by the Board of Directors
or by any stockholder entitled to vote for the election of directors.
Nominations made by stockholders must be made by written notice, certified
mail, return-receipt requested and received by the Secretary of the Company no
later than 60 days after the end of the Company's fiscal year. If, however,
less than thirty-five days' notice of a stockholders' meeting called for the
election of directors is given to stockholders, nominations by stockholders
must be so made and received by the Secretary of the Company not later than the
close of business on the seventh day following the day on which the notice was
mailed. Such notice shall set forth as to each proposed
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nominee who is not an incumbent director: (a) the name, age, business address
and, if known, residence address of each nominee proposed in such notice; (b)
the principal occupation or employment of each such nominee; (c) the number of
shares of Common Stock of the Company that are beneficially owned by each such
nominee and the nominating stockholder; and (d) any other information
concerning the nominee that must be disclosed of nominees in proxy
solicitations pursuant to Rule 14(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
The nominees named below were nominated for election to the Board of
Directors of the Company by the current Board of Directors. The name, age,
business experience and public directorships of each nominee for director are
as follows:
<TABLE>
<CAPTION>
YEAR
PRINCIPAL OCCUPATION FIRST BECAME
NAME AGE OR EMPLOYMENT (1) DIRECTOR
---- --- ----------------- --------
<S> <C> <C> <C>
Geoffrey P. Jurick 56 Chairman of the Board 1996
and Chief Executive Officer (2) (9)
Peter S. Blumenfeld 48 President and Chief Operating 1991
Officer (3)
John P. Walker 33 Executive Vice President and Chief Financial 1996
Officer (4) (9)
Eugene I. Davis 41 Vice Chairman of Sport Supply Group, Inc.; 1996
President of Emerson Radio Corp.(5) (9)
Peter G. Bunger 56 Consultant (6) (9) 1996
Johnson C.S. Ko 45 Chairman of Universal Appliances Limited (7) 1996
Thomas P. Treichler 52 Chairman of the Board and Chief N/A
Executive Officer of Orient Financial
Corporation (8)
</TABLE>
- ------------------------
(1) Each of the nominees has held the position listed, or a similar
position with the same or an affiliated organization, for at least the
last five years, except as otherwise provided herein.
(2) Geoffrey P. Jurick has served as a director of the Company since
December 10, 1996. Mr. Jurick has served as the Company's Chairman of
the Board since December 11, 1996 and the Company's Chief Executive
Officer since January 23, 1997. Mr. Jurick has served as a director of
Emerson Radio Corp. ("Emerson"), a Delaware corporation listed on the
American Stock Exchange under the symbol "MSN" since 1990, and as
Emerson's Chief Executive Officer and Chairman since July 1992 and
December 1993, respectively. Mr. Jurick served as President of Emerson
from July 1993 to October 1994. Emerson beneficially owns
approximately 35% of the Company's issued and outstanding Common
Stock. See "Certain Relationships and Related Transactions." Since
December 1993, Mr. Jurick has served as a director of Fidenas
International Limited, L.L.C. and its predecessor ("FIN"), and, since
May 1994, as an officer and
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general manager of FIN. Mr. Jurick has also served as a Director of
Fidenas Investment Limited ("FIL") and Fidenas International Bank
Limited ("FIBANK"). On January 10, 1995, the Supreme Court of the
Commonwealth of the Bahamas (the "Bahamas Court") appointed an
official liquidator of FIL and ordered that FIL be wound up. On
January 27, 1995, the Bahamas Court appointed an official liquidator
for FIBANK and ordered, subject to the ongoing supervision of the
Bahamas Court, that FIBANK's assets be liquidated. Mr. Jurick has
served as a director, Chairman, and Chief Executive Officer of GSE
Multimedia Technologies Corporation, which is traded in the
over-the-counter market, since May 1994. Since March 1996, Mr. Jurick
has served as Chairman of Elision International Ltd., a provider of
computer and telecommunication services. For more than the past five
years, Mr. Jurick has held a variety of senior executive positions
with several of the entities comprising the Fidenas group of
companies, whose activities encompass merchant banking, investment
banking, investment management, and corporate development.
(3) Peter S. Blumenfeld serves as President and Chief Operating Officer of
the Company and has served in these or in various other executive
positions with the Company and its predecessors for more than 15
years. Mr. P. Blumenfeld has been a director of the Company since
February 1991.
(4) John P. Walker has served as a director of the Company since December
10, 1996 and has served as the Company's Executive Vice President and
Chief Financial Officer since December 11, 1996. Mr. Walker has
served as Executive Vice President and Chief Financial Officer of
Emerson since April 1996. Mr. Walker served as Emerson's Senior Vice
President from April 1994 until March 1996, Vice President-Finance
from February 1993 to April 1994, Assistant Vice President-Finance
from June 1991 to January 1993, and Director of Financial Management
from September 1989 to May 1991. Emerson beneficially owns
approximately 35% of the Company's issued and outstanding Common
Stock. See "Certain Relationships and Related Transactions."
(5) Eugene I. Davis has served as a director of the Company since December
10, 1996. Mr. Davis served as the Company's Chief Executive Officer
from December 11, 1996 to January 23, 1997. Mr. Davis became Vice
Chairman and began serving as a Consultant to the Company on January
23, 1997. Mr. Davis has served as a director of Emerson since
September 1990 and as President of Emerson since October 1994. Mr.
Davis served as Interim Chief Financial Officer of Emerson from
February 1993 until November 1995 and as Executive Vice President from
July 1993 to October 1994. Emerson beneficially owns approximately 35%
of the Company's issued and outstanding Common Stock. See "Certain
Relationships and Related Transactions." From June 1989 to July 1992,
Mr. Davis was a shareholder and director of the law firm of Holmes,
Millard & Duncan, P.C. in Dallas, Texas. Since August 1992, Mr. Davis
has served as a director of Tipperary Corporation, which is traded on
the American Stock Exchange under the symbol "TPY".
(6) Peter G. Bunger has been a director of the Company since December 10,
1996. Mr. Bunger has been a director of Emerson since July 1992.
Emerson beneficially owns approximately 35% of the Company's issued
and outstanding Common Stock. See "Certain Relationships and Related
Transactions." Presently, he is a consultant with Savarina AG and
serves as a consultant to Emerson. Since October 1992, Mr. Bunger has
served as a director of Savarina AG, an entity engaged in the business
of portfolio management monitoring in Zurich, Switzerland, and since
1992, as a director of ISCS, a computer software company. From
December 1991 until December 1993, Mr. Bunger was Vice Chairman of
Montcour Bank and Trust Company Limited, a bank organized in the
Bahamas and an affiliate of FIN. From 1981 until 1992, Mr.
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Bunger was owner and Managing Director of Peter G. Bunger Investment
Consulting, a firm that supervised, controlled, and analyzed
investments for individuals.
(7) Johnson C.S. Ko has been a director of the Company since December 10,
1996. Since February 1994, Mr. Ko has served as the Chairman and
Director of Universal Appliances Limited ("Universal"), a Hong Kong
corporation listed on the Hong Kong Stock Exchange, which is engaged
in the manufacturing and distribution of consumer electronics,
household electrical and telecommunication products and printed
circuit boards and in the dissemination of international financial
market information and consumer data. Universal is the holding company
for the Universal Group which owns or controls numerous subsidiary
companies. Mr. Ko has also served on certain boards of these
subsidiaries since February 1994. Mr. Ko also has served as the
Chairman and Director of Kwan Wing Holdings Limited ("Kwan Wing
Holdings") since October 1992, which is the holding company of
Universal, organized under the laws of the British Virgin Islands, and
an investment vehicle whose activities encompass trading, real
property holding and financial services. Kwan Wing Holdings'
principal operating company in Hong Kong is its wholly owned
subsidiary Kwan Wing Development Ltd., in which Mr. Ko has served as
director since 1989. Kwan Wing Development Ltd. was the initial
operating company prior to the creation of Kwan Wing Holdings Limited.
From November 1992 to April 1995, Mr. Ko also served as Chairman and
director of Mandarin Dragon Holdings Limited, a Hong Kong corporation
listed on the Hong Kong Stock Exchange, which was also an investment
holding company with business in the manufacturing and distribution of
pharmaceuticals.
(8) Dr. Thomas P. Treichler holds a doctorate in Japanese law from Zurich
University. Dr. Treichler has been the Chairman of the Board and
Chief Executive Officer of Orient Financial Corporation, a San
Francisco based financial and investment banking firm, since 1983.
Dr. Treichler is a founder and member of the Board of Directors of
Satrecol Australia Limited, an Australian venture capital investment
company listed on the Main Board of the Australian Stock Exchange.
Dr. Treichler is also an Independent Director of the Shanghai Growth
Fund (listed on the Hong Kong Stock Exchange), a fund for direct
investments into the greater Shanghai region.
(9) On September 29, 1993, Emerson and five of its United States
subsidiaries filed voluntary petitions for relief under the
reorganization provisions of Chapter 11 of the United States
Bankruptcy Code. On March 31, 1994, the United States Bankruptcy
Court for the District of New Jersey entered an order confirming the
Fourth Amended Joint Plan of Reorganization which became effective on
that date. See "Certain Relationships and Related Transactions."
THE BOARD OF DIRECTORS URGES STOCKHOLDERS TO VOTE "FOR"
EACH OF THE NOMINEES FOR DIRECTOR SET FORTH ABOVE
PROPOSAL TWO - APPROVE SPORT SUPPLY GROUP, INC. AMENDED AND RESTATED STOCK
OPTION PLAN
STOCK OPTION PLAN
The Company's success is largely dependent upon the efforts of its key
employees. In order to continue to attract, motivate and retain outstanding
key employees, the Board of Directors believes it is essential to provide
compensation incentives that are competitive with those provided by other
companies. In addition, the Board of Directors believes it is important to
further the identity of interests of key employees with those of the
stockholders by encouraging ownership of the Company's Common Stock.
Accordingly, the Board of Directors has adopted, and the stockholders have
approved, the Sport Supply Group, Inc. Stock Option Plan, as amended (the
"Option Plan").
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The Option Plan presently states that up to a maximum of 1,325,000
shares of Common Stock are available for awards of incentive stock options to
key employees and nonqualified stock options to key employees and directors of,
and consultants to, the Company. As of January 20, 1997, options to purchase
541,498 shares of Common Stock had been granted pursuant to the Option Plan and
had not expired, 350,822 shares had been issued upon exercise of options
granted pursuant to the Option Plan, leaving 432,680 shares available for
future grants under the Option Plan.
PROPOSED AMENDMENTS
To continue the effectiveness of the Option Plan, the Board of
Directors has, subject to stockholder approval, amended and restated the Option
Plan to, among other things, increase by 675,000 the number of shares of Common
Stock reserved for issuance under the Option Plan, thus increasing the
aggregate amount of Common Stock for which options have been or may be granted
pursuant to the Option Plan to 2,000,000 shares (subject to adjustment to
prevent dilution). If approved by the stockholders, the increase will permit
the Company to continue to grant options under the Option Plan, which the Board
of Directors believes is necessary in order to attract, motivate and retain
outstanding key employees, directors and consultants.
In addition, the Board of Directors has made various amendments to the
Option Plan that will enable the Company to deduct compensation paid to certain
employees to the extent the compensation exceeds $1 million if, and only if,
the stockholders approve the Amended and Restated Stock Option Plan. These
amendments were made in response to Section 162(m) of the Internal Revenue Code
of 1986, as amended (the "Code"). Section 162(m) of the Code generally
provides that a publicly held corporation's deduction for compensation paid to
its chief executive officer or one of its next four highest compensated
officers (these five individuals are defined in Section 162(m) of the Code as
"covered employees") is limited to $1 million per year, subject to certain
exceptions. One of these exceptions is for "performance-based" compensation,
which includes compensation under stock options plans if certain requirements
are met. In order for the Option Plan to qualify under the "performance-based"
compensation exception to the deductibility limits of Section 162(m) of the
Code in the future, the stockholders must approve the Amended and Restated
Stock Option Plan.
If stockholder approval is not obtained, (i) there will be no increase
in the number of shares of the Company's common stock subject to issuance under
the existing Option Plan, (ii) any individual who is the chief executive
officer of the Company or who is among the four highest compensated officers of
the Company (other than the chief executive officer of the Company) will not be
granted any options under the Amended and Restated Stock Option Plan on or
after the date of the first annual stockholders' meeting held in 1997, and
(iii) any individual who has been granted an option under the Amended and
Restated Stock Option Plan on or after the date of the first annual
stockholders' meeting held in 1997, and who, at the time of the proposed
exercise of the option, is the chief executive officer of the Company or who is
among the four highest compensated officers of the Company (other than the
chief executive officer of the Company) will not be allowed to exercise such
option.
Irrespective of whether the stockholders approve the Company's Amended
and Restated Stock Option Plan, certain amendments have been made to the
existing Option Plan. Most of these amendments were made in response to the
recent revisions made by the Securities and Exchange Commission (the "SEC") to
Rule 16 under the Exchange Act, which revisions were designed to facilitate the
operation of employee benefit plans and broaden exemptions from the short-swing
profit recovery provisions of Section 16 of the Exchange Act. These amendments
include (i) replacing the definition of "Disinterested Director" with
"Non-Employee Director", (ii) permitting the grant of options to Non-Employee
Directors in addition to the formula grant provided in the Option Plan, (iii)
permitting consultants to receive options, (iv) permitting the Stock Option
Committee (as defined below) to reprice
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outstanding options when the exercise price exceeds the market price of the
Company's Common Stock, (v) permitting the transfer of options, (vi) deleting
the provision that prohibited officers and directors from transferring shares
of Common Stock obtained upon exercise of a stock option for a period of six
(6) months from the date the option was granted and (vii) enabling the Board of
Directors or Stock Option Committee to amend the Option Plan without
stockholder approval unless the consent of stockholders would be required under
any applicable law, rule or regulation or unless stockholder approval would be
required in order to comply with Section 162(m) of the Code (or any successor
provision). Previously, the Option Plan could not be amended without
stockholder approval if the amendment would materially (a) increase the
benefits accruing to participants under the Option Plan, (b) increase the
number of securities that may be issued under the Option Plan, or (c) modify
the requirements as to eligibility for participation in the Option Plan.
The following is a summary of certain major provisions of the Amended
and Restated Stock Option Plan:
GENERAL. Under the Amended and Restated Stock Option Plan, options
covering shares of Common Stock are granted to key employees and directors of,
and consultants to, the Company. The options are intended to qualify either as
incentive stock options ("ISOs") pursuant to Section 422 of the Code, or will
constitute nonqualified stock options ("NQSOs"). Options may be granted at any
time prior to December 31, 2000. Provided the stockholders approve the Amended
and Restated Stock Option Plan, a maximum of 1,107,680 shares of Common Stock
(subject to adjustment to prevent dilution) would be available for issuance
under the Amended and Restated Stock Option Plan.
ADMINISTRATION. The Option Plan is presently administered by the
Stock Option Committee, which is currently comprised of two non-employee
directors (the "the Stock Option Committee"). The Amended and Restated Stock
Option Plan provides that the Stock Option Committee has full and final
authority to select the key employees, directors and consultants to whom awards
are granted, the number of shares of Common Stock with respect to each option
awarded, the exercise price or prices of each option, the vesting and exercise
periods of each option, whether an option may be exercised as to less than all
of the Common Stock subject to the option, and such other terms and conditions
of each option, if any, that are not inconsistent with the provisions of the
Amended and Restated Stock Option Plan. In addition, subject to certain
conditions, the Stock Option Committee is authorized to cancel outstanding
options that were previously issued and reissue new options at a lower exercise
price if the fair market value per share of Common Stock at any time prior to
the date of exercise falls below the exercise price of options granted pursuant
to the Amended and Restated Stock Option Plan. In general, the Stock Option
Committee is authorized to construe, interpret and administer the Amended and
Restated Stock Option Plan and the provisions of the options granted
thereunder, prescribe and amend rules for the operation of the Amended and
Restated Stock Option Plan and make all other determinations necessary or
advisable for its implementation and administration.
ELIGIBILITY. Eligibility to participate in the Amended and Restated
Stock Option Plan is limited to key employees and directors of, and consultants
to, the Company and its subsidiaries as determined by the Stock Option
Committee. Non-employee directors are automatically granted NQSOs to purchase
3,125 shares of Common Stock on an annual basis. Because of the discretion
possessed by the Stock Option Committee with respect to key employees,
directors and consultants, it is not possible to indicate the number of persons
who may be selected to participate in the Amended and Restated Stock Option
Plan, the number of options that may be granted to them or the number of shares
of Common Stock subject to each option. Notwithstanding the foregoing, the
number of shares of Common Stock that can be granted to any individual
(including, without limitation, a "Covered Employee") may not exceed the
aggregate number of shares of Common Stock reserved for issuance under the
Amended and Restated Stock Option Plan, as such number may be amended from time
to time.
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TERMS OF OPTIONS AND LIMITATIONS ON RIGHT TO EXERCISE. Under the
Amended and Restated Stock Option Plan, the exercise price of options will not
be less than the fair market value of the Common Stock on the date of grant
(and not less than 110% of the fair market value in the case of an incentive
stock option granted to an optionee owning 10% of the Common Stock of the
Company). Options granted to employees, directors or consultants shall not be
exercisable after the expiration of ten years from the date of grant (or five
years in the case of incentive stock options granted to an optionee owning 10%
of the Common Stock of the Company) or such earlier date determined by the
Board of Directors or Stock Option Committee. The fixed annual grants of NQSOs
granted to non-employee directors shall be exercisable for ten years, except
that in the event of death, termination or resignation of such member as a
director of the Company or a subsidiary, such NQSOs shall only be exercisable
for one year following such member's death or termination or resignation (or,
if shorter, the remaining term of the option).
The Amended and Restated Stock Option Plan permits the exercise of
options by payment of the exercise price in cash or by an exchange of shares of
Common Stock of the Company previously owned by the optionee, or a combination
of both, in an amount equal to the aggregate exercise price for the shares
subject to the option or portion thereof being exercised. The optionee is
entitled to elect to pay all or a portion of the aggregate exercise price by
having shares of Common Stock having a fair market value on the date of
exercise equal to the aggregate exercise price withheld by the Company or sold
by a broker-dealer under certain circumstances. In addition, upon the exercise
of any option granted under the Amended and Restated Stock Option Plan, the
Company may make financing available to the optionee for the purchase of shares
of Common Stock subject to the option on such terms as the Stock Option
Committee shall approve.
All or a portion of NQSOs granted to an optionee may, in the
discretion of the Stock Option Committee, be transferred to another person or
entity deemed appropriate by the Stock Option Committee so long as the stock
option agreement governing such options is approved by the Committee and
expressly provides for such transfer. Neither the optionee nor the optionee's
legal representatives, legatees, transferees or distributees will be deemed to
be a holder of any shares of Common Stock subject to an option until the option
has been validly exercised and the purchase price of the shares paid. An
option may not be exercised except (i) by the optionee, (ii) by a person who
has obtained the optionee's rights under the option by will or under the laws
of descent and distribution, (iii) by a permitted transferee as contemplated
by the Amended and Restated Stock Option Plan or (iv) by a spouse incident to a
DIVORCE.
TERMINATION OF EMPLOYMENT. The Stock Option Committee determines at
the time each option is granted the conditions that will apply to the exercise
of such option in the event the holder of an option ceases to be an employee or
director of, or consultant to, the Company or any of its subsidiaries for any
reason. In the event of death of an optionee while in the employ or while
serving as a director of or consultant to the Company or any of its
subsidiaries, such option will be exercisable in full within the year next
succeeding the date of death or such other period as may be specified in the
option agreement, but in no case later than the expiration date of such option.
DILUTION OR OTHER ADJUSTMENTS. Under certain circumstances, the Stock
Option Committee will make adjustments with respect to the options, or any
provisions of the Amended and Restated Stock Option Plan, as it deems
appropriate to prevent dilution or enlargement of option rights.
AMENDMENT AND TERMINATION. The Board of Directors may amend, abandon,
suspend or terminate the Amended and Restated Stock Option Plan or any portion
thereof at any time; provided, however, no amendment that requires stockholder
approval in order for the Amended and Restated Stock
8
<PAGE> 11
Option Plan to continue to comply with Section 162(m) of the Code or any other
applicable law, rule or regulation (including, without limitation, the Code,
the Exchange Act or any self-regulatory organization such as a national
securities exchange) will be made unless such amendment has received the
requisite approval of stockholders. In addition, no amendment may be made that
adversely affects any of the rights of an Optionee under any option theretofore
granted, without such Optionee's consent. The Plan is scheduled to expire on
December 31, 2000.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES. Under the Amended and
Restated Stock Option Plan, the Company may grant options which, for federal
income tax purposes, (a) are treated as "incentive stock options" within the
meaning of Section 422 of the Code or (b) are treated as nonqualified options
subject to Section 83 of the Code. The federal income tax consequences of each
type of option are different for the participants and for the Company.
INCENTIVE STOCK OPTIONS
For an option granted pursuant to the Amended and Restated Stock
Option Plan that qualifies as an incentive stock option, present law provides:
(a) the participant will not realize taxable income upon either the receipt or
the exercise of the option; provided, however, that in connection with the
computation of the alternative minimum tax, the amount by which the fair market
value of the Common Stock at the time of exercise exceeds the exercise price
generally will constitute an adjustment item; (b) any gain or loss upon a
disposition constituting a qualifying disposition of shares acquired pursuant
to the exercise of the option will be treated as capital gain or loss (assuming
that such shares are a capital asset in the hands of the participant); and (c)
no deduction will be allowed at any time to the Company or any parent or
subsidiary of the Company for federal income tax purposes in connection with
the grant or exercise of the option or a disposition constituting a qualifying
disposition of shares acquired pursuant to the exercise of the option. A
disposition of shares acquired upon exercise of an incentive stock option will
constitute a qualifying disposition if it does not occur within two years of
the granting of the option or within one year after the transfer of
substantially all of the incidents of ownership in the shares to the
participant, and the participant is an employee of the Company (or defined
affiliates) at all times from the grant of the option until three months prior
to exercise. A disposition not satisfying such holding period requirements
results in a disqualifying disposition. If Common Stock acquired upon exercise
of an incentive stock option is disposed of by the participant in a
disqualifying disposition, the participant will be treated as receiving
ordinary income equal to the difference between the fair market value of the
transferred shares on the date of exercise and the exercise price of such
shares, less in most cases any decline in value of the shares from the date of
exercise to the date of sale. In the event the sales price received in a
disqualifying disposition of such Common Stock exceeds the value of the Common
Stock on the date of exercise, the disqualifying disposition also will result
in capital gain to the extent of such excess (assuming that such Common Stock
is a capital asset in the hands of the participant). The amount treated as
ordinary income to the participant because of the disqualifying disposition
will normally be allowed as a federal income tax deduction of the Company (or
any parent or subsidiary of the Company) for compensation expense.
For purposes of computing a participant's capital gain or loss on the
sale of shares that were acquired under the Amended and Restated Stock Option
Plan pursuant to the exercise of an incentive stock option, the participant's
basis in such shares generally will be equal to any amount paid by the
participant to the Company for the shares plus the amount, if any, recognized
as ordinary income to the participant with respect to the shares due to a
disqualifying disposition. The participant's holding period for such shares
generally should begin at the time of the participant's exercise of an option.
The Company and any parent or subsidiary of the Company will not be
liable to any participant or other person if it is determined for any reason by
the Internal Revenue Service or any court having
9
<PAGE> 12
jurisdiction that any option granted pursuant to the Amended and Restated Stock
Option Plan does not qualify for tax treatment as an incentive stock option
under Section 422 of the Code.
NONQUALIFIED OPTIONS
For an option granted pursuant to the Amended and Restated Stock
Option Plan that does not qualify as an incentive stock option, no taxable
income will be realized by the participant upon the grant of such a
nonqualified option. A participant generally will recognize ordinary taxable
income (compensation), subject to withholding, upon exercise of a nonqualified
option in an amount equal to the excess of the fair market value of the Common
Stock on the date of exercise over the option price paid.
For purposes of determining gain or loss upon a subsequent disposition
of Common Stock acquired upon the exercise of a nonqualified option, the
participant's basis in such shares will generally be equal to the purchase
price paid to the Company for the Common Stock increased by the amount, if any,
includable in the participant's taxable income with respect to the Common
Stock. The participant's holding period for determining whether gain or loss
on such subsequent disposition is short-term or long-term begins on the date on
which the participant's rights in the stock are transferable or are not subject
to a substantial risk of forfeiture, whichever occurs earlier.
The foregoing is intended as a summary of the effect of certain
federal income tax consequences associated with the Option Plan and does not
purport to be complete. It is recommended that participants consult their own
tax advisors for counseling. The tax treatment under foreign, state or local
law is not covered in this summary.
STOCKHOLDER APPROVAL
The affirmative vote of holders of a majority of the shares of Common
Stock having voting power, represented in person or by proxy, at the Annual
Meeting is required to approve the Amended and Restated Stock Option Plan. The
Board of Directors believes the proposed Amended and Restated Stock Option Plan
is in the best interest of the Company and its stockholders and is important in
order to help assure the ability of the Company to continue to recruit and
retain highly qualified key employees and directors.
THE BOARD OF DIRECTORS URGES STOCKHOLDERS TO VOTE "FOR"
THE COMPANY'S AMENDED AND RESTATED STOCK OPTION PLAN
PROPOSAL THREE - APPROVAL OF THE SPORT SUPPLY GROUP, INC. 1997 EMPLOYEE STOCK
PURCHASE PLAN
EMPLOYEE STOCK PURCHASE PLAN.
The Board of Directors has adopted the Sport Supply Group, Inc. 1997
Employee Stock Purchase Plan (the "1997 Plan"), subject to stockholder
approval. A summary of the material features of the 1997 Plan follows. In the
event stockholder approval is not received, the 1997 Plan will be terminated.
The 1997 Plan provides that eligible employees of the Company and
subsidiaries designated by the Board of Directors may use voluntary, systematic
payroll deductions to purchase shares of the Company's Common Stock and thereby
acquire an interest in the future of the Company. If the 1997 Plan is approved
by the stockholders, the Company will reserve up to 800,000 shares of its
Common Stock for sale under the 1997 Plan.
10
<PAGE> 13
Employees eligible to participate in the 1997 Plan include each
employee of the Company and each designated subsidiary who has a customary
working schedule of at least 20 hours per week and who has been an employee for
at least one year, except that employees who own stock possessing 5% or more of
the total combined voting power or value of all classes of the Company's or any
designated subsidiary's capital stock are not eligible to participate in the
1997 Plan. Approximately 340 employees would be eligible to participate in the
1997 Plan as of January 20, 1997.
Eligible employees acquire Common Stock under the 1997 Plan by
exercising options to acquire Common Stock upon the completion of three-month
periods referred to as "Option Periods." Option Periods commence on each
January 1, April 1, July 1 and October 1; the initial Option Period will
commence on April 1, 1997 and expire on June 30, 1997, subject to stockholder
approval. Prior to the commencement of an Option Period, an eligible employee
authorizes the Company to withhold a portion of such employee's compensation
(not less than 1% nor more than 15% of compensation). However, the maximum
number of shares of Common Stock that an eligible employee can acquire during
any single Option Period is the number of shares that, when multiplied by the
fair market value of a share of Common Stock at the beginning of the Option
Period, produces a dollar amount of $6,000 or less. The payroll deductions are
maintained in a non-interest bearing account, and on the last day of the Option
Period the entire account balance of a participating employee is applied to
purchase the maximum number of shares of the Company's Common Stock. The
shares are purchased at a price equal to 85% of the lesser of (i) fair market
value of the Company's Common Stock on the first day of the Option Period or
(ii) the fair market value of the Company's Common Stock on the last day of the
Option Period.
At any time prior to the expiration of an Option Period, an employee
may cancel his or her option to purchase the Company's Common Stock on the last
day of such Option Period and, upon such cancellation, such employee's account
balance shall be returned to him or her without interest. Rights to purchase
stock under the 1997 Plan are exercisable during the employee's lifetime only
by such employee and may not be sold, pledged, assigned or otherwise
transferred. A participating employee may elect to have any accumulated
payroll deductions at the time of his or her death applied to the purchase of
the Company's Common Stock pursuant to the 1997 Plan for the benefit of his or
her named beneficiaries.
In the event of any change in the outstanding stock of the Company due
to a stock dividend, split-up, recapitalization, merger, consolidation,
reorganization or other capital change, the aggregate number of shares
available under the 1997 Plan, the number of shares under options granted but
not exercised and the option price will be appropriately adjusted. The Company
may from time to time amend or terminate the 1997 Plan, provided that (i) no
such amendment or termination may adversely affect the rights of any
participant without the consent of such participant and (ii) to the extent
required by any applicable law, rule or regulation (including, without
limitation, the Code, the Exchange Act or any self regulatory organization such
as a national securities exchange), no such amendment shall be effective
without the requisite approval of the Company's stockholders. The 1997 Plan
will terminate automatically on March 31, 2007, except that the Company may
suspend or terminate the 1997 Plan at any prior time, but such termination will
not affect the rights of employees holding options at the time of termination.
ADMINISTRATION
The Compensation Committee of the Company's Board of Directors will
administer the 1997 Plan, determine all questions arising thereunder, and
adopt, administer and interpret such rules and regulations relating to the 1997
Plan as it deems necessary or advisable.
11
<PAGE> 14
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
In general, for United States federal income tax purposes, a
participating employee will not recognize taxable income by reason of such
participation during the Option Period.
An employee who purchases shares under the 1997 Plan and disposes of
such shares within two years after the first day of the applicable Option
Period will recognize ordinary income on the difference between the price paid
per share and the fair market value on the last day of that Option Period. The
Company will generally be entitled to a deduction in the amount of this income,
subject to a possible limitation in the case of certain of the Company's
officers. In addition to ordinary income, an employee who sells shares within
this two-year period will recognize a capital gain or loss of the difference
between the amount realized on the sale and the employee's basis in the shares
(i.e., the price paid by the employee under the 1997 Plan plus ordinary income
recognized by reason of the sale).
If an employee disposes of shares purchased under the 1997 Plan more
than two years after the first day of the applicable Option Period, or dies at
any time while holding the shares, ordinary income will be recognized equal to
the lesser of (a) the excess of the fair market value of the shares at the
time of disposition or death over the price paid under the 1997 Plan, or (b)
15% of the fair market value of the shares on the first day of the applicable
Option Period. The Company would not be entitled to a deduction for this
amount. In addition to ordinary income, a capital gain will be recognized on
the excess, if any, of the amount realized on a sale over the employee's basis
in the shares (i.e., the price paid by the employee under the 1997 Plan plus
any ordinary income recognized by reason of the sale). Any loss will be
treated as a capital loss.
The foregoing is intended as a summary of the effect of certain
federal income tax consequences associated with the 1997 Plan and does not
purport to be complete. It is recommended that employees eligible to
participate in the 1997 Plan consult their own tax advisors for counseling.
The tax treatment under foreign, state, local or other law is not covered in
this summary.
STOCKHOLDER APPROVAL
The affirmative vote of the holders of a majority of the shares of
Common Stock present, in person or represented by proxy, and entitled to vote
at the Annual Meeting is required to approve the 1997 Plan. The Board of
Directors believes the 1997 Plan is in the best interest of the Company and its
stockholders and is important in order to help assure the ability of the
Company to continue to recruit and retain highly qualified employees.
THE BOARD OF DIRECTORS URGES STOCKHOLDERS TO VOTE "FOR"
APPROVAL OF THE COMPANY'S 1997 EMPLOYEE STOCK PURCHASE PLAN
12
<PAGE> 15
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth, as of January 20, 1997, the beneficial
ownership of each current director, each nominee for director, each officer
named in the Summary Compensation Table, the directors and executive officers
as a group and each stockholder known to management of the Company to own
beneficially more than 5% of the Company's outstanding shares of Common Stock.
Except as otherwise indicated and based upon the Company's review of
information as filed with the SEC, the Company believes that the beneficial
owners of the securities listed below have sole investment and voting power
with respect to such shares, subject to community property laws where
APPLICABLE.
<TABLE>
<CAPTION>
AMOUNT AND PERCENT
NATURE OF BENEFICIAL OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP CLASS
- ------------------------------------ --------- -----
<S> <C> <C>
Emerson Radio Corp. 3,269,500 (1) 34.9%
Nine Entin Road
Parsippany, New Jersey 07054
Pioneering Management Corporation 502,500 (2) 6.0%
60 State Street
Boston, Massachusetts 02114
Geoffrey P. Jurick* 3,269,500 (3) 34.9%
Peter S. Blumenfeld* 313,388 (4) 3.6%
John P. Walker* -0- **
Eugene I. Davis* -0- **
William H. Watkins, Jr.* 4,765 (5) **
Peter G. Bunger* 3,125 (6) **
Johnson C.S. Ko* 3,125 (6) **
Thomas P. Treichler -0- **
Terrence M. Babilla 200 **
Michael J. Blumenfeld (7) 230,684 (7) 2.8%
Sanford R. Edlein (8) 53,930 (8) **
William R. Estill (9) -0- **
Executive officers and directors
as a group (11 persons) 3,878,717 (10) 39.9%
</TABLE>
- --------------------
(*) Director (all current directors are nominees for director except
William H. Watkins, Jr., who is being replaced by Thomas P. Treichler)
(**) Less than one percent
13
<PAGE> 16
(1) Based on information set forth in Amendment No. 3 to Schedule 13D
dated December 3, 1996, filed with the SEC by Emerson. On August 1,
1996, Emerson and Emerson Radio (Hong Kong) Limited, a wholly owned
subsidiary of Emerson ("Emerson HK"), filed a Schedule 13D with the
SEC. Pursuant to the Schedule 13D, Emerson HK reported that it
acquired 669,500 shares of the Company's Common Stock (the "Initial
Shares"). Emerson HK reported in such Schedule 13D that it has sole
voting and dispositive power with respect to the Initial Shares. On
December 10, 1996, Emerson acquired directly from the Company (i) an
additional 1,600,000 shares of newly-issued Common Stock (the "New
Shares") and (ii) 5-year warrants to acquire an additional 1,000,000
shares of Common Stock at an exercise price of $7.50 per share,
subject to standard anti-dilution adjustments (the "Emerson
Warrants"). Pursuant to a Pledge and Security and Agreement, Emerson
pledged to Congress Financial Corporation ("Congress") the New Shares
and the Emerson Warrants together with all proceeds thereof and all
dividends and other income and distributions thereon or with respect
thereto and all rights of Emerson to have the New Shares and any
shares of Common Stock acquired through the exercise of the Emerson
Warrants (as permitted by Congress) registered under a certain
Registration Rights Agreement. See "Certain Relationships and Related
Transactions" for a more detailed description of Emerson's investment
in the Company.
(2) Based on information set forth in Amendment No. 4 to Schedule 13G,
dated January 21, 1997, filed with the SEC by Pioneering Management
Corporation, a registered investment adviser. Pioneering Management
Corporation reported it has sole voting and dispositive power with
respect to 502,500 shares.
(3) Mr. Jurick's address is c/o Emerson Radio Corp., Nine Entin Road,
Parsippany, New Jersey 07054. Mr. Jurick, directly and indirectly,
beneficially owns 72.3% of the outstanding shares of Emerson's common
stock and is the Chairman of the Board and Chief Executive Officer of
Emerson and, therefore, may be deemed to control Emerson. As a result
of such control, Mr. Jurick may be deemed to beneficially own the
securities of the Company beneficially owned by Emerson. See Note (1)
above. Mr. Jurick disclaims any such beneficial ownership.
(4) Consists of: (a) 2,375 shares of Common Stock and 594 shares of
Common Stock issuable upon exercise of the Company's common stock
purchase warrants (each warrant is exercisable into 1.25 shares of the
Company's Common Stock, the "Existing Warrants") owned of record by
the wife of Mr. P. Blumenfeld; (b) 500 shares of Common Stock and 125
shares of Common Stock issuable upon exercise of Existing Warrants
owned of record by Mr. P. Blumenfeld's minor children; (c) 33,375
shares of Common Stock and 11,469 shares of Common Stock issuable upon
exercise of Existing Warrants owned of record by Mr. P. Blumenfeld;
(d) 193,750 shares of Common Stock issuable upon exercise of stock
options granted in accordance with the Company's Option Plan (each of
which is exercisable into one share of Common Stock, the "Plan
Options") owned of record by Mr. Blumenfeld; and (e) 71,200 shares of
Common Stock issuable upon exercise of stock options granted other
than pursuant to the Company's Option Plan (each of which is
exercisable into one share of Common Stock, the "Non-Plan Options")
owned of record by Mr. Blumenfeld.
(5) Consists of: (a) 1,250 shares of Common Stock; (b) 390 shares of
Common Stock issuable upon exercise of Existing Warrants; and (c)
3,125 shares of Common Stock issuable upon exercise of Plan Options.
(6) Consists of Plan Options.
14
<PAGE> 17
(7) Consists of: (a) 8,925 shares of Common Stock and 2,019 shares of
Common Stock issuable upon exercise of the Existing Warrants owned of
record by the wife of Mr. M. Blumenfeld; and (b) 215,189 shares of
Common Stock and 4,551 shares of Common Stock issuable upon exercise
of the Existing Warrants owned of record by Mr. M. Blumenfeld. Mr.
Blumenfeld is no longer an officer, director or employee of the
Company.
(8) Consists of 53,930 shares of Common Stock issuable upon exercise of
Non-Plan Options. Mr. Edlein is no longer an officer, director or
employee of the Company.
(9) Mr. Estill is no longer an officer, director or employee of the
Company.
(10) Includes (a) 203,125 shares of Common Stock issuable upon exercise of
Plan Options; (b) 125,130 shares of Common Stock issuable upon
exercise of Non-Plan Options; (c) 19,148 shares of Common Stock
issuable upon exercise of Existing Warrants; and (d) 1,000,000
shares of Common Stock issuable upon exercise of the Emerson Warrants.
Mr. Jurick disclaims beneficial ownership of the securities of the
Company owned by Emerson. See footnote 3 above.
BOARD OF DIRECTORS AND COMMITTEES
The business of the Company is managed under the direction of the
Board of Directors. The Board meets during the Company's fiscal year to review
significant developments affecting the Company and to act on matters requiring
Board approval. The Board of Directors held 8 formal meetings and acted by
unanimous written consent 3 times during the 1996 fiscal year. During the 1996
fiscal year, each member of the Board participated in at least 75% of all Board
and committee meetings held during the period for which he served as a director
and/or committee member.
During fiscal 1996, the Board of Directors had an audit committee and
a stock option committee to devote attention to specific subjects and to assist
the Board in the discharge of its responsibilities. The functions of these
committees and their current members are described below.
Audit Committee. As of November 1, 1996, the Company's Audit
Committee was comprised of Robert W. Philip and William H. Watkins, Jr.
(Chairman). Mr. Philip resigned from the Board of Directors on December 10,
1996 and Mr. Watkins is not standing for re-election to the Board of
Directors. The Company's Audit Committee is presently comprised of Peter G.
Bunger and William H. Watkins, Jr. Mr. Watkins will remain on the Audit
Committee until the election of directors at the Annual Meeting, at which time
his replacement will be designated. The Audit Committee recommends to the
Board of Directors the appointment of a firm of certified public accountants to
conduct audits of the accounts and affairs of the Company and monitors the
performance of such firm, reviews accounting objectives and procedures of the
Company and the findings and reports of the independent certified public
accountants, and makes such reports and recommendations to the Board of
Directors as it deems appropriate. The Audit Committee held 1 formal meeting
during fiscal 1996.
Stock Option Committee. As of November 1, 1996, the Company's Option
Plan was administered by Robert W. Philip and William H. Watkins, Jr. Mr.
Philip resigned from the Board of Directors on December 10, 1996 and Mr.
Watkins is not standing for re-election to the Board of Directors. The
Company's Option Plan is presently administered by Johnson C.S. Ko and William
H. Watkins, Jr. (each of whom is a Non-employee Director, as defined in the
Amended and Restated Stock Option Plan). Mr. Watkins will remain on the Stock
Option Committee until the election of directors at the Annual Meeting, at
which time his replacement will be designated. The Amended and Restated Stock
Option Plan provides that the Stock Option Committee has full and final
authority to select the key employees, directors and
15
<PAGE> 18
consultants to whom awards are granted, the number of shares of Common Stock
with respect to such awards, and the terms of such awards, including the
exercise price of the stock options and any vesting periods. In general, the
Stock Option Committee is authorized to construe, interpret and administer the
Amended and Restated Stock Option Plan and the provisions of the options
granted thereunder, prescribe and amend rules for the operation of the Amended
and Restated Stock Option Plan, and make all other determinations necessary or
advisable for its implementation and administration. See "Proposal Two -
Approve Amended and Restated Sport Supply Group Stock Option Plan." The Stock
Option Committee acted by unanimous written consent 3 times during fiscal 1996.
The Board of Directors did not have standing nominating or
compensation committees, or any other committee performing similar functions
during fiscal 1996. The functions customarily attributable to a nominating
committee and compensation committee were performed by the Board of Directors
as a whole.
Compensation Committee. On January 13, 1997, the Board of Directors
elected Peter G. Bunger and Johnson C.S. Ko to serve as members of the
Company's Compensation Committee. The Compensation Committee will administer
the Employee Stock Purchase Plan, if such Plan is approved by the requisite
vote of stockholders. See "Proposal Three - Approve Employee Stock Purchase
Plan." In addition, the Compensation Committee will be responsible for
recommending to the Board of Directors compensation arrangements for the
Company's Chairman of the Board, which recommendation will be subject to the
approval of a majority of the disinterested directors.
COMPENSATION OF DIRECTORS
During fiscal 1996, nonmanagement directors were entitled to receive
up to $7,500 in annual directors' fees. During fiscal 1996, Mr. Philip
received $6,000 in directors' fees and Mr. Watkins received $3,000 in
directors' fees. In addition, the Company reimbursed Mr. Philip, a
nonmanagement director, for his annual health insurance premiums which were
$3,806 for the fiscal year-ended November 1, 1996. In addition, the Company
paid Mr. Watkins $1,888 for consulting fees in fiscal 1996. Officers of the
Company do not receive compensation for serving on the Board of Directors. Non-
employee directors are automatically granted nonqualified stock options to
purchase 3,125 shares of Common Stock on an annual basis.
On November 1, 1996, the Company appointed Mr. Watkins and Mr. Philip
as members of a Special Committee of the Board of Directors to negotiate and
consider various financing transactions, including, without limitation, the
terms of the Securities Purchase Agreement between the Company and Emerson (the
"Emerson Agreement"). See "Certain Relationships and Related Transactions."
In exchange for serving on the Special Committee, the Board of Directors (other
than Mr. Philip and Mr. Watkins) unanimously voted to pay each member of the
Special Committee $1,000 for each Special Committee meeting attended by such
member, not to exceed $10,000 in the aggregate for each member.
16
<PAGE> 19
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary Compensation Table
The following table sets forth certain information regarding
compensation paid during each of the Company's last three fiscal years to the
Company's Chief Executive Officer and each of the Company's other most highly
compensated executive officers, based on salary and bonus earned during fiscal
1996. The Company changed its fiscal year-end to October 31 during 1995. As a
result, fiscal year 1995 is a transition period consisting of ten calendar
months. During fiscal 1995 and 1996, the Company was operating on a 52/53 week
year ending on the Friday closest to October 31. The information set forth in
the following table is for the fiscal year-ended December 31, 1994, for the ten
month fiscal year-ended October 31, 1995 and for the fiscal year-ended November
1, 1996.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------------------------------------------------
SECURITIES
UNDERLYING
OTHER ANNUAL OPTIONS/ ALL OTHER
NAME AND FISCAL SALARY BONUS COMPENSATION SARS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($)($) ($) (#)(1) ($)
- ---------------------- ---- ---------- -------- ------------ ------ ------------
<S> <C> <C> <C> <C> <C> <C>
Michael J. Blumenfeld, 1996 $221,442 --- $25,892 (2) --- ---
Chairman of the 1995 $170,000 --- --- 120,000 (3) ---
Board and Chief 1994 $224,000 $18,500 --- 25,000 ---
Executive Officer (4)
Sanford R. Edlein, 1996 $140,788(5) --- --- --- $74,664 (5)
Chief Executive 1995 $120,812 --- --- 33,930 (6)(7) ---
Officer (5) 1994 $ 44,450 --- --- 25,000 (7) ---
Peter S. Blumenfeld, 1996 $224,258 --- --- --- ---
President and Chief 1995 $178,333 --- --- 21,200 (6) ---
Operating Officer (8) 1994 $224,000 $18,500 --- 25,000 ---
William R. Estill, 1996 $98,166 --- --- --- $42,900 (9)
Vice President, 1995 $90,833 --- --- 11,750 (6)(9) ---
Chief Financial 1994 $115,000 $9,500 --- 20,000 (9) ---
Officer, Secretary
and Treasurer (9)
Terrence M. Babilla, 1996 $182,500 --- --- 25,000 (11) ---
General Counsel and 1995 $108,212 --- --- 25,000 (11) ---
Secretary (10) 1994 --- --- --- --- ---
</TABLE>
- ---------------
17
<PAGE> 20
(1) Options to acquire shares of Common Stock. These stock options enable
the named executive officers to elect for a period of 180 days
following a change in control (as defined in the option agreements
governing the options) to surrender to the Company for cancellation
all or any part of the unexercised portion of the option. In
consideration of such surrender and cancellation, the named executive
officer is entitled to receive for each share of Common Stock as to
which the surrendered portion of the option relates, an amount in cash
equal to the difference between the exercise price per share under the
option and the highest closing sales price per share of Common Stock
during the 360 day calendar period prior to the named executive
officer's election to surrender the option as described in this
paragraph. Mr. Edlein's stock option agreements were amended to delete
this provision. The execution, delivery and performance of the Emerson
Agreement was deemed to be a change in control for purposes of these
options. See "Executive Compensation and Other Information -- Option
Agreements" and "Certain Relationships and Related Transactions." All
of Mr. Blumenfeld's options expired upon his resignation. See
footnote (4) below.
(2) Comprised of $18,258 for automobile allowance and $7,634 for country
club dues.
(3) Includes 20,000 Non-Plan Options granted in lieu of a salary increase
for 1995.
(4) Mr. Blumenfeld served as Chairman of the Board and Chief Executive
Officer during the entire three (3) fiscal years, except that from
December 4, 1995 to May 13, 1996, Mr. Edlein served as Chief Executive
Officer. Mr. Blumenfeld resigned from the Company on December 10,
1996 and was paid $669,760 (before taxes and other deductions)
pursuant to the terms of his Severance Agreement. See "Executive
Compensation and Other Information -- Severance Agreements." All of
Mr. Blumenfeld's options expired upon his resignation.
(5) Mr. Edlein served as Chief Operating Officer from September 9, 1994 to
December 4, 1995 and as Chief Executive Officer from December 4, 1995
to May 13, 1996. Mr. Edlein resigned as a director on May 6, 1996 and
as an officer on May 13, 1996. The Company agreed to pay Mr. Edlein
up to $224,000 as a result of his efforts in facilitating the sale of
the Company's Gold Eagle Golf Products Division. In connection
therewith, the Company has paid Mr. Edlein $18,666 per month,
beginning July 1996, for a total of $74,664 in fiscal 1996.
(6) Consists of Non-Plan Options granted in lieu of a salary increase for
1995.
(7) Although the Stock Option Agreements governing these options expired
by their terms upon Mr. Edlein's resignation from the Company, the
Board of Directors amended the Stock Option Agreements to provide that
(i) all of such stock options shall remain exercisable by Mr. Edlein
until November 10, 1997 and (ii) the change in control provisions
included in any such agreements shall be null and void and of no
further force or effect.
(8) Mr. P. Blumenfeld served as President during the entire three (3)
fiscal years. Mr. P. Blumenfeld also served as Chief Operating
Officer from January 1, 1994 to September 9, 1994 and from December 4,
1995 to the present date.
(9) Mr. Estill resigned as an officer and director of the Company on May
10, 1996. The $42,900 referenced under "All Other Compensation"
relates to indebtedness in the amount of $20,295 that was forgiven
upon Mr. Estill's resignation, value realized from options exercised
in the amount of $18,517 and a $4,088 automobile allowance. Mr.
Estill's stock options have been terminated and have no further force
or effect.
18
<PAGE> 21
(10) Mr. Babilla was employed by the Company on March 13, 1995 and has
served as General Counsel since such date. Mr. Babilla was elected as
Secretary on May 13, 1996 and has served in such capacity since such
date. From September 1987 to February 1995, Mr. Babilla was an
attorney with the law firm of Hughes & Luce, L.L.P. in Dallas, Texas.
(11) Mr. Babilla was granted options to acquire 25,000 shares of the
Company's Common Stock in fiscal 1995. All of Mr. Babilla's options
granted in fiscal 1995 were repriced in fiscal 1996 and are, therefore
required to be reported as compensation in fiscal 1996. See
"Executive Compensation and Other Information -- Ten Year Option
Repricings." Mr. Babilla surrendered his options to the Company on
December 13, 1996 in exchange for $71,875. See "Executive
Compensation and Other Information -- Option Agreements."
OPTION GRANTS DURING 1996 FISCAL YEAR
The following table provides information related to options granted to
the named executive officers during fiscal 1996.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
INDIVIDUAL GRANTS IN LAST FISCAL YEAR APPRECIATION FOR OPTION TERM (1)
------------------------------------------------------------------- -------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/
UNDERLYING SARS EXERCISE GRANT
OPTIONS/ GRANTED TO OR DATE
SARS EMPLOYEES BASE MARKET
GRANTED IN FISCAL PRICE PRICE EXPIRATION
NAME (#)(2) YEAR ($/SH)(3) ($/SH)(3) DATE 0% ($) 5% ($) 10%($)
- ------------------- ----- ---- --------- --------- ---- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Terrence M. Babilla 25,000 3.9% $5.50 $12.00 3/10/05 $0 $73,750 $180,750
</TABLE>
- --------------
(1) The potential realizable value portion of the foregoing table
illustrates value that might be realized upon exercise of the options
immediately prior to the expiration of their term, assuming the
specified compounded rates of appreciation on the Company's Common
Stock over the term of the options.
(2) Although none of these stock options were granted in fiscal 1996, they
were required to be disclosed in this table as granted in fiscal 1996
because the options were repriced in fiscal 1996. These stock options
enable the named executive officer to elect for a period of 180 days
following a change in control (as defined in the option agreements
governing the options) to surrender to the Company for cancellation
all or any part of the unexercised portion of the option. In
consideration of such surrender and cancellation, the named executive
officer is entitled to receive for each share of Common Stock as to
which the surrendered portion of the option relates, an amount in cash
equal to the difference between the exercise price per share under the
option and the highest closing sales price per share of Common Stock
during the 360 day calendar period prior to the named executive
officer's election to surrender the option as described in this
paragraph. The execution, delivery and performance of the Emerson
Agreement was deemed to be a change in control for purposes of these
options. See "Executive Compensation and Other Information -- Option
Agreements." Subsequent to the closing of the Emerson Agreement, Mr.
Babilla surrendered his options to the Company in exchange for
$71,875.
19
<PAGE> 22
(3) The option exercise price may be paid (a) in shares of Common Stock
previously owned by the executive officer, (b) by withholding shares
of Common Stock that would otherwise be issued upon exercise, (c) in
cash or (d) a combination of the foregoing.
OPTION EXERCISES DURING 1996 FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
The following table provides information related to options exercised
by the named executive officers during the 1996 fiscal year and the number and
value of options held at fiscal year end. The Company does not have any
outstanding stock appreciation RIGHTS.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
SHARES AT FY-END AT FY-END
ACQUIRED VALUE (#) ($)(1)
ON EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
- ---------------------- ----------- -------- ------------- -------------
<S> <C> <C> <C> <C>
Michael J. Blumenfeld --- --- 395,000 /-0- $0/0
Sanford R. Edlein --- --- 58,930/-0- $0/0
Peter S. Blumenfeld --- --- 264,950 /-0- $6,719
Terrence M. Babilla --- --- 25,000/-0- $9,375
William R. Estill 3,375 $18,517 0/0 $0/0
</TABLE>
- ------------------
(1) The closing price for the Company's Common Stock as reported by the New
York Stock Exchange on November 1, 1996 was $5.875. Value is calculated on the
basis of the difference between the option exercise price of "in the money"
options and $5.875, multiplied by the number of shares of Common Stock
underlying the option.
20
<PAGE> 23
COMPENSATION COMMITTEE AND BOARD REPORT ON OPTION REPRICING
The Board of Directors and the Stock Option Committee recognized that
the per share exercise price of a significant majority of outstanding options
previously granted to key employees exceeded $10.00 per share and that the
market price of the Company's Common Stock declined significantly since the
issuance of these options. As of January 20, 1997, the last sales price of the
Company's Common Stock as reported on the New York Stock Exchange was $5.38 per
share.
The Board and Stock Option Committee believe the Company has taken
constructive steps to improve its performance and believes hiring and retaining
key employees is central to implementing these measures. In furtherance of
these goals, in May 1996 the Stock Option Committee reduced the per share
exercise prices of options previously granted to all employees, excluding
Michael J. Blumenfeld, Peter S. Blumenfeld, Sanford R. Edlein and Terrence M.
Babilla. The per share exercise price of options owned by directors was not
reduced.
In order to induce Mr. Edlein to join the Company as Chief Operating
Officer, on September 9, 1994, the Board of Directors unanimously approved a
stock option agreement that permitted Mr. Edlein, at his sole discretion, to
reset the exercise price of this option one time by delivering a written notice
to the Company's President or Chief Executive Officer. On September 30, 1994,
Mr. Edlein reset the price of his options in accordance with the terms of his
Option Agreement. No other provision of this option was altered.
In order to induce Mr. Babilla to join the Company as General Counsel,
on February 10, 1995, the Board of Directors unanimously approved a stock
option agreement that permitted Mr. Babilla, at his sole discretion, to reset
the exercise price of this option one time during the term of the option by
delivering a written notice to the Company's President or Chief Executive
Officer. On July 29, 1996, Mr. Babilla reset the price of his options in
accordance with the terms of his Option Agreement. No other provision of this
option was altered.
At a Special Meeting of the Board of Directors held on November 19,
1996, the Board of Directors unanimously ratified and confirmed the grant of
all of the issued and outstanding options to acquire the Company's Common Stock
and the repricing of such options as described above.
In accordance with the rules of the SEC, this Option Repricing Report
of the Board of Directors and the Stock Option Committee is not intended to be
"filed" or soliciting material" or subject to Regulations 14A or 14C or Section
18 of the Exchange Act, or incorporated by reference into any other filing by
the Company with the Commission.
THE STOCK OPTION COMMITTEE THE BOARD OF DIRECTORS
William H. Watkins, Jr. Michael J. Blumenfeld
Robert W. Philip Peter S. Blumenfeld
Robert W. Philip
William H. Watkins, Jr.
21
<PAGE> 24
The following table summarizes certain information concerning the
repricing of options to buy the Company's Common Stock held by all executive
officers since the Company became a reporting company after its initial public
offering in April 1991.
TEN-YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF MARKET ORIGINAL
SECURITIES PRICE OF EXERCISE OPTION TERM
UNDERLYING STOCK AT PRICE AT NEW REMAINING AT
OPTIONS TIME OF TIME OF EXERCISE DATE OF
DATE OF REPRICED REPRICING REPRICING PRICE REPRICING
NAME REPRICING # $ $ $
- ------------------ --------- -------- --------- --------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Sanford R. Edlein,
Chief Executive
Officer (1) Sept. 30, 1994 25,000 $12.13 $15.13 $12.13 3.2 years (1)
Terrence M. Babilla,
General Counsel
and Secretary July 29, 1996 25,000 $5.50 $12.00 $5.50 8.8 years
</TABLE>
- ---------------
(1) Mr. Edlein resigned on May 13, 1996. These options were amended since the
date of repricing and are scheduled to expire on November 10, 1997.
EMPLOYMENT AGREEMENTS
In February 1991, the Company entered into a five-year employment
agreement with Peter S. Blumenfeld. In March 1995, the Company entered into a
three-year employment agreement with Terrence M. Babilla. Under their
respective employment agreements and as a result of subsequent pay raises, Mr.
P. Blumenfeld and Mr. Babilla receive base annual compensation (subject to
annual increases by the Board of Directors) of $224,000, and $190,000,
respectively. The employment agreements also provide that each is able to use
a company car and receive certain other benefits, such as participation in the
Company's health insurance plan. Each of the employment agreements
automatically renews for successive one-year periods following the initial
term, unless one party provides written notice that such party intends to
terminate the employment at least six months prior to termination.
The Company may terminate its obligations under the applicable
employment agreement if either of Messrs. P. Blumenfeld or Babilla is
discharged for cause. Each agreement defines "cause" as: (a) an intentional
material act of fraud or embezzlement by the employee in connection with his
employment with the Company; (b) an intentional wrongful material damage to the
Company's property; (c) an intentional wrongful disclosure of material secret
processes or material confidential information of the Company; or (d) an
intentional and continued failure by the employee to perform his duties in his
official capacity. Messrs. P. Blumenfeld or Babilla may be discharged without
cause, provided the Company continues to pay the remaining compensation
payments due under the agreements and continues to provide health insurance.
Messrs. P. Blumenfeld and Babilla may terminate their employment prior to
expiration of the agreements and, if the Company has not breached any provision
of the agreements, the Company will be required to pay only the compensation
earned to the date of
22
<PAGE> 25
termination. Any amount payable upon termination will reduce amounts payable
under the Severance Agreements described below.
SEVERANCE AGREEMENTS
The Company entered into a Severance Agreement with Messrs. Michael J.
Blumenfeld, P. Blumenfeld and Babilla. Upon a change in control of the
Company, each of the Severance Agreements becomes effective for three years.
The execution, delivery and performance of the Emerson Agreement resulted in a
change in control under the Severance Agreements. See "Certain Relationships
and Related Transactions."
After a change in control, the Company may terminate the employee's
employment only by reason of the employee's death or disability or for cause
(as defined in the agreements). The employee is entitled to cash severance
compensation from the Company if the Company terminates the employee's
employment for any other reason after a change in control, or if the employee
resigns after a change in control and any one of the following events has
occurred: (a) an adverse change in the nature or scope of the employee's
position with the Company; (b) a reduction in the employee's salary, bonus or
incentive compensation or a significant reduction in other monetary or
nonmonetary benefits to which the employee was entitled; (c) a good faith
determination by the employee that a change in circumstances has significantly
affected his position, or that a change in the composition or policies of the
Board of Directors, or such other material event, has substantially rendered
such employee unable to carry out or perform his position with the Company; (d)
the Company has required the employee to relocate or travel significantly more
than prior to the change in control; or (e) the Company has committed any
material breach of the agreement.
The cash severance compensation is equivalent to 299% of the sum of:
(a) the highest annual salary of the employee during the period of employment
commencing on the day prior to a change in control and continuing until
expiration of the agreement or the employee's salary immediately prior to the
change in control, whichever is larger; and (b) bonuses or incentive
compensation paid by the Company in the preceding fiscal year. The severance
compensation is generally designed to compensate for the loss of the employee's
compensation, including salary and bonuses, less any amounts the payment of
which might cause adverse consequences under federal income tax laws (as
described in the agreements). Subsequent to the closing of the Emerson
Agreement, Michael J. Blumenfeld resigned from the Company and was paid
$669,760 (before taxes and other deductions) pursuant to the terms of his
Severance Agreement, which agreement is of no further force or effect. As of
January 20, 1997, the maximum aggregate contingent liability under the named
executive officers' severance agreements was approximately $1,347,000.
OPTION AGREEMENTS
All of the option agreements held by the named executive officers
listed above enable such executive officers to elect for a period of 180 days
following a change in control (as defined in the option agreements governing
the options) to surrender to the Company for cancellation all or any part of
the unexercised portion of their respective option. In consideration for such
surrender and cancellation, the named executive officer is entitled to receive
for each share of Common Stock as to which the surrendered portion of the
option relates, an amount in cash equal to the difference between the exercise
price per share under the option and the highest closing sales price per share
of Common Stock during the 360 day calendar period prior to such named
executive officer's election to surrender the option as described in this
paragraph. The execution, delivery and performance of the Emerson Agreement was
deemed to be a change in control for purposes of these options. Subsequent to
the closing of the Emerson Agreement, Mr. Babilla surrendered his options to
the Company in exchange for $71,875. In addition, all
23
<PAGE> 26
of the option agreements held by Mr. M. Blumenfeld and Mr. Estill were
terminated upon the date of their respective resignations and Mr. Edlein's
stock option agreements were amended to delete this provision. As of January
20, 1997 the maximum aggregate contingent liability under the named executive
officers' option agreements was approximately $140,000.
BOARD OF DIRECTOR INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
During fiscal 1996, the members of the Board of Directors were
primarily responsible for determining executive compensation. The following
executive officers, who also were members of the Board of Directors during
fiscal 1996, participated in deliberations concerning executive officer
compensation: Michael J. Blumenfeld, Peter S. Blumenfeld, William R. Estill and
Sanford R. Edlein.
REPORT OF THE BOARD OF DIRECTORS AND STOCK OPTION COMMITTEE ON EXECUTIVE
COMPENSATION
During fiscal 1996, the Company's Board of Directors and the Stock
Option Committee shared the responsibility for establishing and administering
the Company's executive compensation programs. The Board of Directors had
responsibility for determining executive compensation. The Stock Option
Committee had responsibility for administering the Company's Option Plan,
including authority regarding the selection of award recipients and the size
and terms of all option grants under the Option Plan. The Chairman of the
Board, subject to review and approval by the Board of Directors, determined on
an annual basis the compensation to be paid to the executive officers of the
Company. Under the supervision of the Board of Directors, the Company
developed and implemented compensation policies, plans and programs that sought
to enhance the profitability of the Company, and thus stockholder value, by
aligning closely the financial interests of the Company's executives with those
of its stockholders. The specific objectives of the Company's executive
compensation program were to:
- Support the achievement of the Company's strategic operating
objectives.
- Provide compensation at competitive levels that will attract and
retain superior talent and reward executive officers based upon
performance.
- Align the executive officers' interests with the success of the
Company by placing the majority of pay increases at risk (i.e.
increases that are dependent upon Company performance).
The Company's executive officer compensation program for fiscal 1996
was comprised of base salary and long-term incentive compensation in the form
of stock options and various benefits generally available to employees of the
Company (such as health insurance).
During fiscal 1996, it was the objective of the Company to maintain
base salaries that were in the mid-range of competitive amounts paid to senior
executives with comparable qualifications, experience and responsibilities at
other companies engaged in the same or similar business and with revenues and
earnings in a range comparable to those of the Company. Through the use of
industry-specific published compensation surveys and executive compensation
data derived from the proxy statements of a competitive peer group of
companies, the Company has established and continues to monitor the salary
levels of its executive officers. The peer group used by the Company for
establishing salary levels in fiscal 1996 is identical to the group used in the
Corporate Performance Graph described below. The Company has entered into
employment agreements with each of Peter S. Blumenfeld and Terrence M. Babilla.
Pursuant to such employment agreements and subsequent pay raises, Messrs. P.
Blumenfeld and Babilla receive base salaries of $224,000 and $190,000,
respectively. See "-- Employment Agreements".
24
<PAGE> 27
The award of options to purchase Company Common Stock forms the basis
for the Company's long-term incentive plan for officers and key employees. No
option awards were made to any of the named executive officers during fiscal
year 1996.
Michael J. Blumenfeld was the founder of the Company and has served as
Chairman of the Board and Chief Executive Officer of the Company or its
predecessors for more than 20 years. Beginning in 1994, the Board of Directors
established a base salary for Mr. M. Blumenfeld equivalent to $224,000 per
year. Mr. Blumenfeld's base salary remained at $224,000 for calendar years
1995 and 1996. Mr. Blumenfeld agreed to reduce his annual cash salary by
$20,000 for 1995. In addition, he agreed to forego a salary increase for 1995
in exchange for options to acquire 20,000 shares of Common Stock in a
continuing effort to change to a more variable focused compensation package. In
addition, in fiscal 1995 Mr. M. Blumenfeld received as remuneration for
services performed in his capacity as Chief Executive Officer options to
purchase 100,000 shares of Common Stock at an exercise price of $11.63 per
share (fair market value on the date of grant). Mr. Blumenfeld did not receive
an increase in salary for fiscal 1996 or any option grants in fiscal 1996. Mr.
Blumenfeld resigned as an officer and director on December 10, 1996, at which
time all of his stock options expired. Mr. Blumenfeld's salary level was
subjectively established by the Board of Directors and not subject to specific
criteria. However, the Board of Directors believes that the compensation
levels were reasonable.
The Board of Directors has considered the potential impact of Section
162(m) of the Code. Section 162(m) of the Code generally provides that a
publicly held corporation's deduction for compensation paid to its covered
employees (as defined above) is limited to $1 million per year, subject to
certain exceptions. See Proposal Two - "Approve Amended and Restated Stock
Option Plan." Since the cash compensation of each of the Company's current
covered employees is below the $1 million threshold and the Amended and
Restated Stock Option Plan has been revised to meet the requirements of Section
162(m) of the Code, the Board of Directors believes that Section 162(m) will
not reduce the federal income tax deduction available to the Company. The
Company's policy is to qualify, to the extent reasonable, its executive
officers' compensation for deductibility under applicable tax laws. However,
the Board of Directors believes that its primary responsibility is to provide a
compensation program that will attract, retain and reward the executive talent
necessary to the Company's success. Consequently, the Board of Directors
recognizes that the loss of a tax deduction could be necessary in some
circumstances.
This report is submitted by the members of the Board of Directors and
the Stock Option Committee that were in existence at the end of fiscal 1996:
25
<PAGE> 28
<TABLE>
<CAPTION>
Board of Directors Stock Option Committee
- ------------------ ----------------------
<S> <C>
Michael J. Blumenfeld William H. Watkins, Jr.
Peter S. Blumenfeld Robert W. Philip
Robert W. Philip
William H. Watkins, Jr.
</TABLE>
This report will not be deemed to be incorporated by reference in any
filing by the Company under the Securities Act of 1933 (the "Securities Act")
or the Exchange Act, except to the extent that the Company specifically
incorporates this report by reference.
CORPORATE PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total returns for
the Company, the S&P 500 Composite Index and an index of peer companies
selected by the Company for the period since October 31, 1991. The comparison
assumes $100 was invested on October 31, 1991 in the Company's Common Stock and
in each of the two indices and assumes reinvestment of dividends. Companies in
the peer group are as follows: Ajay Sports, Inc., K2, Inc. (f/k/a Anthony
Industries, Inc.), Escalade, Inc., and Johnson Worldwide Associates, Inc.
[CHART]
COMPARISON OF CUMULATIVE TOTAL RETURN
OF COMPANY, PEER GROUP AND BROAD MARKET
<TABLE>
<CAPTION>
- - - - - - - - FISCAL YEAR ENDING - - - - - - -
COMPANY 1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
SPORT SUPPLY GROUP INC. 100 110.60 282.37 244.13 131.28 111.02
PEER GROUP 100 86.82 117.07 123.69 132.33 130.30
BROAD MARKET 100 109.97 126.42 131.31 166.03 206.04
</TABLE>
The stock price performance depicted in the above graph is not necessarily
indicative of future price performance. The Corporate Performance Graph will
not be deemed to be incorporated by reference in any filing by the Company
under the Securities Act or the Exchange Act, except to the extent that the
Company specifically incorporates the graph by reference.
26
<PAGE> 29
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Emerson, one of the nation's largest volume consumer electronics
distributors, directly and through subsidiaries, designs, sources, imports and
markets a variety of video and audio consumer electronics and microwave oven
products. On August 1, 1996, Emerson and Emerson Radio HK, filed a Schedule
13D with the SEC. Pursuant to the Schedule 13D, Emerson HK reported that it
acquired 669,500 shares of the Company's Common Stock (the "Initial Shares").
On December 10, 1996, Emerson acquired directly from the Company (i)
an additional 1,600,000 shares of newly- issued Common Stock (the "New Shares')
for an aggregate consideration of $11,500,000, or approximately $7.19 per
share, and (ii) 5-year warrants to acquire an additional 1,000,000 shares of
Common Stock at an exercise price of $7.50 per share, subject to standard
anti-dilution adjustments (the "Emerson Warrants") for an aggregate
consideration of $500,000. In addition, Emerson agreed to arrange for foreign
trade credit financing of $2 million for the benefit of the Company to
supplement the Company's existing credit facilities.
Prior to the exercise of any of the Emerson Warrants, Emerson and
Emerson HK own approximately 27% of the issued and outstanding shares of Common
Stock. If all of the Emerson Warrants are exercised by Emerson, Emerson will
own approximately 34.9% of the issued and outstanding shares of Common Stock.
Pursuant to a Registration Rights Agreement (the "Registration Rights
Agreement"), the Company granted to Emerson and Emerson HK certain demand and
incidental registration rights with respect to the resale of the shares of
Common Stock they own, as well as on the exercise and resale of the shares of
Common Stock Emerson may acquire under the Warrant Agreement governing the
Emerson Warrants.
The total consideration paid by Emerson pursuant to the Emerson
Agreement was $12 million, of which $11,500,000 was attributable to the
1,600,000 New Shares and $500,000 was attributable to the Emerson Warrants.
The $12,000,000 purchase price was borrowed by Emerson from Congress Financial
Corporation ("Congress"), Emerson's United States senior secured lender, under
the terms of Emerson's existing credit facility and in accordance with the
terms of the consent obtained from Congress. Pursuant to a Pledge and Security
Agreement, Emerson has pledged to Congress the New Shares and the Emerson
Warrants together with all proceeds thereof and all dividends and other income
and distributions thereon or with respect thereto and all rights of Emerson to
have the New Shares (and any shares of Common Stock acquired through the
exercise of the Emerson Warrants, as permitted by Congress) registered under
the Registration Rights Agreement.
Pursuant to the Emerson Agreement, the Company also caused a majority
of the members of its Board of Directors to consist of Emerson's designees.
The Company's Board of Directors now includes the following Emerson designees:
Geoffrey P. Jurick, Emerson's Chairman and Chief Executive Officer; Eugene I.
Davis, Emerson's President; John P. Walker, Emerson's Executive Vice President
and Chief Financial Officer; Johnson C.S. Ko, an independent Hong Kong
businessman; and Peter J. Bunger, a consultant serving both Emerson and
Savarina AG. Peter S. Blumenfeld and William H. Watkins, Jr., remained as
Directors of the Company, while Michael J. Blumenfeld and Robert W. Philip
resigned from the Board. Mr. Jurick is currently the Chairman of the Board and
Chief Executive Officer of the Company. Mr. Walker is currently the Executive
Vice President and Chief Financial Officer of the Company. Mr. Davis is
currently Vice Chairman and a consultant to the Company.
27
<PAGE> 30
In addition, for a period of at least 2 years after the closing,
neither the Company nor any of its subsidiaries are permitted to enter into or
be a party to any agreement or transaction with any Affiliate (as such term is
defined in the Exchange Act) of the Company or Emerson, except (i) in the
ordinary course of the Company's or its subsidiaries' business and on terms no
less favorable to the Company or its subsidiaries than would be obtained in a
comparable arms' length transaction with a person not an Affiliate of the
Company or Emerson or (ii) unless approved by a majority of the Company's
directors who do not have a direct or indirect material financial interest in
the agreement or transaction and which includes a majority of directors who are
not officers or employees of the Company or Emerson or directors of Emerson.
28
<PAGE> 31
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended
("Section 16(a)") requires the Company's officers and directors, and persons
who own more than 10% of a registered class of the Company's equity securities
to file reports of ownership and changes in ownership with the SEC and the New
York Stock Exchange. Officers, directors and greater than 10% stockholders are
required by certain regulations to furnish the Company with copies of all
Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it,
the Company believes that, since October 31, 1995, its officers, directors and
greater than 10% beneficial owners have complied with all applicable filing
requirements with respect to the Company's equity securities.
STOCKHOLDER PROPOSALS
A proper proposal submitted by a stockholder in accordance with
applicable rules and regulations for presentation at the Company's next annual
meeting that is received at the Company's principal executive office by October
5, 1997 will be included in the Company's proxy statement and form of proxy
for that meeting.
PERSONS MAKING THE SOLICITATION
The enclosed proxy is solicited on behalf of the Board of Directors of
the Company. The cost of soliciting proxies in the accompanying form will be
paid by the Company. Officers of the Company may solicit proxies by mail,
telephone or telegraph. Upon request, the Company will reimburse brokers,
dealers, banks and trustees, or their nominees, for reasonable expenses
incurred by them in forwarding proxy material to beneficial owners of shares of
the Common Stock.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen, LLP, independent certified public accountants, has
been selected by the Board of Directors as the Company's independent auditor
for the current year. A representative of Arthur Andersen, LLP is expected to
be present at the Annual Meeting, will have an opportunity to make a statement
if he desires to do so and is expected to be available to respond to
appropriate questions.
OTHER MATTERS
The Board of Directors is not aware of any matter to be presented for
action at the meeting other than the matters set forth herein. Should any
other matter requiring a vote of stockholders arise, the proxies in the
enclosed form confer upon the person or persons entitled to vote the shares
represented by such proxies discretionary authority to vote the same in
accordance with their best judgment in the interest of the Company.
29
<PAGE> 32
FINANCIAL STATEMENTS
THE COMPANY WILL PROVIDE, WITHOUT CHARGE, TO EACH PERSON TO WHOM A
COPY OF THIS PROXY STATEMENT IS DELIVERED, UPON THE WRITTEN OR ORAL REQUEST OF
SUCH PERSON AND BY FIRST CLASS MAIL OR OTHER EQUALLY PROMPT MEANS WITHIN ONE
BUSINESS DAY OF RECEIPT OF SUCH REQUEST, A COPY OF THE COMPANY'S ANNUAL REPORT
ON FORM 10-K. REQUESTS SHOULD BE DIRECTED TO INVESTOR RELATIONS (ATTENTION:
JOHN P. WALKER), SPORT SUPPLY GROUP, INC., 1901 DIPLOMAT DRIVE, FARMERS BRANCH,
TEXAS 75234.
By Order of the Board of Directors,
TERRENCE M. BABILLA
Secretary
January 30, 1997
30
<PAGE> 33
SPORT SUPPLY GROUP, INC.
1997 EMPLOYEE STOCK PURCHASE PLAN
<PAGE> 34
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
II. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
III. PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
IV. OPTIONS TO PURCHASE; MAXIMUM SHARES AVAILABLE . . . . . . . . . . . . . . . 5
V. PURCHASE OF STOCK PURSUANT TO OPTIONS . . . . . . . . . . . . . . . . . . . 5
VI. ADMINISTRATION OF PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
VII. ADJUSTMENT UPON CHANGES IN COMMON STOCK . . . . . . . . . . . . . . . . . . 8
VIII. AMENDMENT; TERMINATION OF PLAN . . . . . . . . . . . . . . . . . . . . . . . 9
IX MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
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Sport Supply Group, Inc. 1997 Employee Stock Purchase Plan Page i
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SPORT SUPPLY GROUP, INC.
1997 EMPLOYEE STOCK PURCHASE PLAN
I. INTRODUCTION
The purpose of the 1997 Employee Stock Purchase Plan is to make
available to eligible employees of Sport Supply Group, Inc. ("Sport Supply
Group" or the "Company"), and certain related companies a means of purchasing
shares of Sport Supply Group Common Stock through voluntary, regular payroll
deductions. The Plan is not subject to the provisions of the Employee
Retirement Income Security Act of 1974, but is intended to qualify as an
"Employee Stock Purchase Plan" under Section 423 of the Internal Revenue Code
of 1986, as amended (the "Code"). The Plan shall be administered, interpreted
and construed in accordance with Section 423 of the Code.
Participation in the Plan is entirely voluntary, and the Company makes
no recommendations to employees as to whether they should or should not
participate.
II. DEFINITIONS
2.1. DEFINITIONS. The following words and phrases shall have the
following meanings:
"Administrator" means the entity or person designated to act as
Administrator of the Plan pursuant to Section 6.1.
"Base Compensation" means gross compensation for the relevant pay
period, including overtime pay, but excluding all bonuses, severance pay, any
extraordinary pay, expense allowances/reimbursements, moving expenses and
income from restricted stock or stock option awards. For these purposes, gross
compensation includes any amount that would be included in taxable income but
for the fact that it was contributed to a qualified plan pursuant to an
elective deferral under Section 401(k) of the Code or contributed under a
salary reduction agreement pursuant to Section 125 of the Code.
"Board" means the Board of Directors of Sport Supply Group.
"Broker" means a duly licensed securities dealer, broker or agent
designated to act as Broker of the Plan pursuant to Section 6.2.
"Committee" means the Compensation Committee of the Board, which, to
the extent required by Rule 16b-3, shall consist entirely of non-employee
directors (as defined in Rule 16b-3).
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Sport Supply Group, Inc. 1997 Employee Stock Purchase Plan Page 1
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"Company" means Sport Supply Group, Inc.
"Common Stock" means Sport Supply Group's Common Stock, par value $.01
per share.
"Eligible Employee" means any employee of any Sport Supply Group
Company, excluding any employee (a) who has been employed by a Sport Supply
Group Company for less than twelve months, (b) whose customary employment with
the employee's Employer is 20 hours or less per week, (c) whose customary
employment with the employee's Employer is not for more than five months in any
calendar year, or (d) who immediately after the grant of an option under this
Plan to the employee would (in accordance with the provisions of Sections 423
and 424(d) of the Code) own stock possessing 5% or more of the total combined
voting power or value of all classes of stock of the "employer corporation" or
of its "parent corporations" or "subsidiary corporations," as defined in
Section 424 of the Code.
"Employer" means, with respect to any Participant, the Sport Supply
Group Company of which the Participant is an Eligible Employee.
"Fair Market Value" means, with respect to a share of Common Stock,
the last sales price (or average of the quoted closing bid and asked prices if
there is no closing sales price reported) of a share of Common Stock as
reported by the NASDAQ (or by the principal national stock exchange on which
the Common Stock is then listed) on the date of valuation, if such date is a
business day, or the immediately preceding business day, if such date is not a
business day.
"Initial Option Period" means the Option Period commencing on the Plan
Start Date and ending on June 30, 1997.
"1933 Act" means the Securities Act of 1933, as amended.
"Option" means an option granted pursuant to this Plan at the
beginning of each Option Period to acquire Common Stock.
"Option Exercise Date" means the last day of each Option Period.
"Option Period" means each three-month period beginning on the first
day of each calendar quarter and ending on the last day of each calendar
quarter.
"Payroll Deduction Account" means, with respect to each Participant,
the amounts credited to the Participant's account from the payroll deductions
made by the Participant under this Plan, less any amounts withdrawn from such
account (for payment of Common
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Sport Supply Group, Inc. 1997 Employee Stock Purchase Plan Page 2
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Stock, payment to the Participant, payment of withholding and other taxes or
amounts or payment of other obligations or amounts).
"Participant" has the meaning set forth in Section 3.2.
"Plan" means the Sport Supply Group, Inc., 1997 Employee Stock
Purchase Plan as the same may be amended from time to time.
"Plan Start Date" means April 1, 1997.
"Related Corporation" means any present or future corporation which
(i) would be a "subsidiary corporation" or "parent corporation" of Sport Supply
Group, Inc. as such terms are defined in Section 424 of the Code, and (ii) is
designated as a participating employer in this Plan by the Board.
"Rule 16b-3" means Rule 16b-3 under the 1933 Act.
"Sport Supply Group Company" means Sport Supply Group, Inc. or a
Related Corporation.
"Stock Account" means, with respect to each Participant, the number of
whole shares of Common Stock credited under this Plan to the Participant's
account. Dividends with respect to shares of Common Stock credited to a
Participant's Stock Account shall be paid to the Participant and shall not be
held in either the Participant's Stock Account or Payroll Deduction Account.
III. PARTICIPATION
3.1. ELIGIBLE EMPLOYEES. Subject to Article VIII, all Eligible
Employees as of the beginning of each Option Period may participate in the Plan
for such Option Period at their election.
3.2. PARTICIPATION PROCEDURES. If an Eligible Employee does not
otherwise have an election to become a Participant in effect, each Eligible
Employee choosing to participate in the Plan (herein called a "Participant")
during an Option Period shall enroll as a Participant in the Plan by filing
with the Participant's Employer a completed enrollment form (authorized by the
Administrator) no later than (a) 15 days prior to the beginning of any Option
Period other than the Initial Option Period, and (b) 3 business days prior to
the Initial Option Period.
3.3. EMPLOYEE CONTRIBUTIONS. Subject to other limitations provided
in this Plan, a Participant may contribute under the Plan a minimum of one
percent (1%) and a maximum of fifteen percent (15%) of the Participant's Base
Compensation. However,
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Sport Supply Group, Inc. 1997 Employee Stock Purchase Plan Page 3
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the maximum number of shares of Common Stock that an Eligible Employee can
acquire during any single Option Period is the number of shares that, when
multiplied by the Fair Market Value of a share of Common Stock at the beginning
of the Option Period, produces a dollar amount of $6,000 or less.
Contributions may be made only through regular payroll deductions, net of any
tax or other withholdings.
An enrollment form and payroll deduction authorization will remain
effective for each Option Period until terminated in writing by a Participant
or until the Participant is no longer eligible to participate in the Plan. The
payroll deduction authorization may be reduced or terminated at any time by the
Participant's written request submitted to the Participant's Employer:
provided, however, that a Participant may not recommence or increase payroll
deductions until the beginning of the next Option Period, nor may a Participant
make more than one revision of the Participant's payroll deduction
authorization in any Option Period. Termination of deductions shall constitute
withdrawal from the Plan as set forth in Section 3.5 and cancellation of any
outstanding Options of the Participant. Reduction or termination of deductions
will become effective as soon as practicable after a Participant's written
request is received by the Participant's Employer.
3.4. PARTICIPANT RESTRICTION. Notwithstanding any provisions of
this Plan to the contrary, no Participant will be granted an option under this
Plan which would permit (a) the Participant's rights to purchase shares of
stock under all employee stock purchase plans of Sport Supply Group and "parent
corporations" and "subsidiary corporations" (within the meaning of Section 424
of the Code) to accrue at a rate which exceeds $25,000 in Fair Market Value of
such stock (determined at the time each Option is granted) for each calendar
year during which any Option granted to such Participant is outstanding at any
time, as provided in Sections 423 and 424(d) of the Code; and (b) the
Participant to acquire Common Stock as a result of the exercise of such Option
having a Fair Market Value (determined at the time the Option is granted) of
more than $6,000.
3.5. WITHDRAWAL FROM PLAN. A Participant may withdraw from the
Plan (thereby canceling all Options then in existence) at any time by giving
written notice to the Participant's Employer and to the Administrator. The
Administrator shall, as soon as practicable after receiving written notice of a
Participant's withdrawal from the Plan, cause to be delivered to the
Participant (i) a certificate issued in the name of the Participant
representing the number of full shares of Common Stock held in the
Participant's Stock Account and (ii) a check representing any funds held to the
credit of the Participant's Payroll Deduction Account. A Participant who has
withdrawn from the Plan may thereafter reenter the Plan by following the
procedure described under Section 3.2, but not sooner than the beginning of the
next Option Period after the Participant has withdrawn from participation.
3.6. TERMINATION OF PARTICIPANT'S EMPLOYMENT. Upon termination of
a Participant's employment from the Sport Supply Group Companies for any
reason, including death or disability, the Participant's Stock Account and
Payroll Deduction
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Sport Supply Group, Inc. 1997 Employee Stock Purchase Plan Page 4
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Account in the Plan shall be closed, and all existing Options held by the
Participant shall be canceled. The Administrator shall, as soon as practicable
after termination of a Participant's employment, cause to be delivered to the
Participant or the Participant's estate or the Participant's designated
beneficiary as provided below, as applicable, (i) a certificate issued in the
name of the Participant representing the number of full shares of Common Stock
in the Participant's Stock Account, and (ii) a check representing any funds
held to the credit of the Participant's Payroll Deduction Account. In the event
of a Participant's death, the Participant's Common Stock and Payroll Deduction
Account shall be delivered and paid to the estate of such Participant or to a
beneficiary designated by the Participant in writing on a form approved by the
Administrator.
IV. OPTIONS TO PURCHASE STOCK; MAXIMUM SHARES AVAILABLE
4.1. MAXIMUM SHARES. The maximum number of shares which shall be
issued under the Plan, subject to adjustment upon changes in Common Stock under
Article VII, shall be 800,000 shares.
4.2. OFFERINGS. Subject to Article XIII, the Company shall make
consecutive offerings on the beginning of each Option Period to Participants to
purchase Common Stock as long as shares authorized remain available for
issuance. Each offering as of the beginning of each Option Period shall be the
total number of shares authorized under Section 4.1, less the number of shares
issued by purchases of Common Stock under Section 5.5 in prior Option Periods.
V. PURCHASE OF STOCK PURSUANT TO OPTIONS
5.1. PAYROLL DEDUCTION ACCOUNTS. Each Sport Supply Group Company
will deduct from its Participants' paychecks such amounts as have been
authorized by the Participants and, promptly after the end of each month, remit
to the Administrator all amounts so deducted during the month, together with a
report showing each Participant and the amounts allocable to the Payroll
Deduction Account of each Participant. The Administrator shall credit each
Participant's Payroll Deduction Account with the amount of such deposits, and
shall reduce the Participant's Payroll Deduction Account by the purchase price
of all Common Stock purchased by the Participant under this Plan and by any
other withdrawals from the Participant's Payroll Deduction Account. The Plan,
through its Administrator, shall purchase for the Stock Accounts of the
Participants shares of Common Stock with funds received under the Plan.
5.2. STOCK ACCOUNTS. The Administrator will open and maintain a
Stock Account in the name of each Participant to which will be credited all
shares of Common Stock purchased for the Participant's benefit. All shares
held under the Plan will be registered in the name of the Plan, the
Administrator or the Administrator's nominee, and
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Sport Supply Group, Inc. 1997 Employee Stock Purchase Plan Page 5
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will remain so registered until the shares are delivered to the Participant.
The Participant shall have the right to sell all or any part of the shares held
in the Participant's Stock Account, pursuant to procedures established by the
Administrator.
5.3 GRANT OF OPTIONS AND PURCHASE. Subject to Article VIII, each
person who is a Participant on the first day of an Option Period will as of the
first day of such Option Period be granted an Option for such period. Such
Option will be for the number of whole shares (not in excess of the share
maximum as hereinafter defined) of Common Stock to be determined by dividing
(a) the balance in the Participant's Payroll Deduction Account on the Option
Exercise Date, by (b) the purchase price per share of Common Stock determined
under Section 5.4 below. For purposes of the immediately preceding sentence,
the share maximum with respect to any Option for any Option Period shall be the
quotient of (c) $6,000, divided by (d) the Fair Market Value of a share of
Common Stock at the beginning of the Option Period; provided, however, that the
quotient in this Section 5.3 shall be rounded down to a whole number. The
number of shares of Common Stock receivable by each Participant upon exercise
of an Option for an Option Period shall be reduced, on a substantially
proportionate basis, in the event that the number of shares then available
under the Plan is otherwise insufficient.
5.4 PURCHASE PRICE. The purchase price of each share of Common
Stock sold pursuant to the exercise of an Option shall be equal to the product
of (a) 0.85 multiplied by (b) the lesser of (i) the Fair Market Value of the
Common Stock on the first day of the Option Period, or (ii) the Fair Market
Value of the Common Stock on the last day of the Option Period.
5.5 EXERCISE OF OPTIONS. Each person who is a Participant in the
Plan on the Option Exercise Date will be deemed to have exercised on the Option
Exercise Date the Option granted to the Participant for that Option Period.
Upon such exercise, the balance of the Participant's Payroll Deduction Account
shall be applied to the purchase of the number of whole shares of Common Stock
determined under Section 5.3, and the amount of shares of Common Stock
purchased shall be credited to the Participant's Stock Account. In the event
that the balance of the Participant's Payroll Deduction Account following an
Option Period is in excess of the total purchase price of the shares of Common
Stock so sold, the balance of the Payroll Deduction Account shall be returned
to the Participant; provided, however, that if the balance in the Payroll
Deduction Account consists solely of an amount equal to the value of a
fractional share it will be retained in the Payroll Deduction Account and
carried over to the next Option Period. No fractional shares shall be issued
hereunder.
Notwithstanding anything herein to the contrary, Sport Supply Group's
obligation to sell and deliver shares of Common Stock under the Plan is subject
to the approval required of any governmental authority in connection with the
authorization, issuance, sale or transfer of such shares, to any requirements
of the NASDAQ or any national securities exchange applicable thereto, and to
compliance by Sport Supply Group with
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Sport Supply Group, Inc. 1997 Employee Stock Purchase Plan Page 6
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other applicable legal requirements in effect from time to time, including
without limitation any applicable tax withholding requirements.
5.6. NO ASSIGNMENT OF PARTICIPANT'S INTEREST IN PLAN. A
Participant may not assign, sell, transfer, pledge, hypothecate or alienate any
Options or other interests in or rights under the Plan. Options under the Plan
are exercisable by a Participant during the Participant's lifetime only by the
Participant. All employees shall have the same rights and privileges under the
Plan.
5.7. VESTING. Each Participant will immediately acquire full
ownership of all shares of Common Stock at the time such shares are credited to
the Participant's Stock Account.
5.8. DELIVERY OF STOCK. A Participant may instruct the
Administrator, in writing, at any time to deliver to the Participant a
certificate, issued in the name of the Participant, representing any or all of
the full shares of Common Stock held in the Participant's Stock Account. As
soon as practicable after receiving such instructions, the Administrator shall
cause the certificate to be mailed to the Participant. Such instruction to the
Administrator, requesting delivery of a certificate, will not affect the
Participant's status under the Plan unless the Participant also terminates the
payroll deduction authorization.
5.9. DIVIDENDS, SPLITS AND DISTRIBUTIONS. Any stock dividends or
stock splits in respect of shares held in the Participant's Stock Account will
be credited to the Participant's account without charge. Any distributions to
holders of Common Stock or other securities or rights to subscribe for
additional shares of Common Stock will be sold and the proceeds will be handled
in the same manner as a cash dividend, unless the Participant instructs the
Administrator to the contrary.
5.10. VOTING RIGHTS. The Administrator will deliver to each
Participant as promptly as practicable, by mail or otherwise, all notices of
meetings, proxy statements and other material distributed by Sport Supply Group
to its stockholders. The full shares of Common Stock in each Participant's
Stock Account will be voted in accordance with the Participant's signed proxy
instructions duly delivered to the Administrator or pursuant to any other
method of voting available to holders of Common Stock. There will be no charge
to the Participant for the Administrator's retention or delivery of stock
certificates, or in connection with notices, proxies or other such material.
5.11. NO INTEREST TO BE PAID. No interest will be paid to or
credited to the Payroll Deduction Accounts or Stock Accounts of the
Participants.
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Sport Supply Group, Inc. 1997 Employee Stock Purchase Plan Page 7
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VI. ADMINISTRATION OF PLAN
6.1. THE ADMINISTRATOR AND THE COMMITTEE. To carry out the
purposes of the Plan, the Committee shall appoint an Administrator. The
Administrator may be any company or individual that the Committee deems
qualified, including Sport Supply Group. The Administrator shall be
responsible for the implementation of the Plan, including allocation of funds
and stock to the Payroll Deduction Accounts and Stock Accounts and keeping
adequate and accurate records for the Participants.
The Committee shall be entitled to adopt and apply guidelines and
procedures consistent with the purposes of the Plan. In order to effectuate
the purposes of the Plan, the Committee shall have the discretionary authority
to construe and interpret the Plan, to supply any omissions therein, to
reconcile and correct any errors or inconsistencies, to decide any questions in
the administration and application of the Plan, and to make equitable
adjustments for any mistakes or errors made in the administration of the Plan,
and all such actions or determinations made by the Committee, and the
application of rules and regulations to a particular case or issue by the
Committee, in good faith, shall not be subject to review by anyone, but shall
be final, binding and conclusive on all persons ever interested hereunder.
6.2. BROKER. The Administrator may, in its discretion, with the
consent and approval of the Committee, appoint a Broker. The Broker may be any
company or individual that the Committee deems qualified; provided, however,
that the Broker shall be a licensed security dealer, broker, or agent
authorized to make purchases and sales of Common Stock.
6.3. REPORTING TO PARTICIPANTS. The Administrator will send to
each Participant a statement at the end of each calendar quarter (or such other
period as determined by the Committee in its sole discretion). Each such
statement shall contain information concerning transactions in the
Participant's Payroll Deduction Account and Stock Account during the relevant
period and reflect the balance in the Participant's Payroll Deduction Account
and Stock Account at the end of such period.
VII. ADJUSTMENT UPON CHANGES IN COMMON STOCK
7.1. CHANGES IN COMMON STOCK. If any change is made in the Common
Stock (through merger, consolidation, reorganization, recapitalization, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or otherwise), the Administrator may make appropriate adjustments in
the number of shares and price per share of Common Stock subject to the Plan or
to any Option granted under the Plan.
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Sport Supply Group, Inc. 1997 Employee Stock Purchase Plan Page 8
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7.2. DISSOLUTION; MERGER; CAPITAL REORGANIZATION; ETC. In the
event of (i) a dissolution or liquidation of Sport Supply Group; (ii) a merger
or consolidation in which Sport Supply Group is not the surviving corporation,
or a reverse merger in which Sport Supply Group is the surviving corporation
but the shares of Common Stock by virtue of the merger are converted into other
property, whether in the form of securities, cash or otherwise; or (iii) any
other capital reorganization in which more than 50 percent of the shares of
Common Stock entitled to vote are exchanged, the Plan shall terminate, unless
another corporation assumes the responsibility of continuing the operation of
the Plan or the Committee determines in its discretion that the Plan shall
nevertheless continue in full force and effect. If the Committee elects to
terminate the Plan, the Administrator shall send to each Participant a stock
certificate representing the number of whole shares to which the Participant is
entitled. In addition, the Administrator shall send checks drawn on the Plan's
account to each Participant in an amount equal to the funds held to the credit
of such Participant's Payroll Deduction Account.
7.3. COMPANY'S RIGHT TO RESTRUCTURE, ETC. The grant of any right
to a Participant pursuant to the Plan shall not affect in any way the right or
power of Sport Supply Group to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer all or any part
of its business or assets.
VIII. AMENDMENT; TERMINATION OF PLAN
8.1. AMENDMENT AND TERMINATION. Sport Supply Group, acting through
the Committee, reserves the right to amend or terminate the Plan at any time or
times; provided, however, any amendment that would require the consent of
stockholders under applicable law, rule or regulation (including, without
limitation, the Code, the Exchange Act or any self regulatory organization such
as a national securities exchange), will not be made unless such stockholders'
consent is obtained.
In addition, the Plan shall terminate automatically on March 31, 2007,
or on any Option Exercise Date when Participants become entitled to purchase a
number of shares greater than the number of reserved shares remaining available
for purchase, subject to the allocation of remaining shares pursuant to the
last sentence of Section 5.3. Upon termination of the Plan, all amounts held
in the Payroll Deduction Accounts shall, to the extent not used to purchase
shares of Common Stock, be refunded to the Participants entitled thereto.
IX. MISCELLANEOUS
9.1. EXPENSES OF PLAN. The Broker's brokerage commissions, if any,
incurred in connection with transactions in Common Stock under the Plan, and
the
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Administrator's administrative charges for maintaining Participants' accounts
relating to purchases of securities and all other expenses of administering or
maintaining the Plan will be paid by the Company. If the Company is acting as
Administrator, no expenses will be charged to the Participants.
9.2. INDEMNIFICATION. In the event and to the extent not insured
against under any contract of insurance with an insurance company, Sport Supply
Group shall indemnify and hold harmless each "Indemnified Person," as defined
below, against any and all claims, demands, suits, proceedings, losses,
damages, interest, penalties, expenses (specifically including, but not limited
to, counsel fees to the extent approved by the Board or otherwise provided by
law, court costs and other reasonable expenses of litigation), and liability of
every kind, including amounts paid in settlement, with the approval of the
Board, arising from any action or cause of action related to the Indemnified
Person's act or acts or failure to act. Such indemnity shall apply regardless
of whether such claims, demands, suits, proceedings, losses, damages, interest,
penalties, expenses and liability arise in whole or in part from (a) the
negligence or other fault of the Indemnified Person, or (b) from the imposition
on such Indemnified Person of any civil penalties or excise taxes pursuant to
the Code or any other applicable laws; except when the same is judicially
determined to be due to gross negligence, fraud, recklessness, or willful or
intentional misconduct of such Indemnified Person. "Indemnified Person" shall
mean each member of the Board, the Administrator, each member of the Committee
and each other employee of any Sport Supply Group Company who is allocated
fiduciary responsibility hereunder.
9.3. NO CONTRACT OF EMPLOYMENT INTENDED. The granting of any
rights to an Eligible Employee under this Plan shall not constitute an
agreement or understanding, express or implied, on the part of any Sport Supply
Group Company, to employ such Eligible Employee for any specified period.
9.4. GOVERNING LAW. The construction, validity and operation of
this Plan shall be governed by the laws of the State of Delaware.
9.5. SEVERABILITY OF PROVISIONS. If any provision of this Plan is
determined to be invalid, illegal or unenforceable, such invalidity, illegality
or unenforcability shall not affect the remaining provisions of this Plan, but
such invalid, illegal or unenforceable provisions shall be fully severable, and
the Plan shall be construed and enforced as if such provision had never been
inserted herein.
9.6. NO LIABILITY OF SPORT SUPPLY GROUP. Neither Sport Supply
Group, its directors, officers or employees of the Committee, nor any Related
Corporation which is in existence or hereafter comes into existence, shall be
liable to any Participant or other person if it is determined for any reason by
the Internal Revenue Service or any court having jurisdiction that the Plan
does not qualify under Section 423 of the Code.
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Sport Supply Group, Inc. 1997 Employee Stock Purchase Plan Page 10
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IN WITNESS WHEREOF, the Company has caused this Plan to be adopted
effective as of the Plan Start Date.
SPORT SUPPLY GROUP, INC.
By:
-------------------------
Name:
----------------------
Title:
---------------------
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Sport Supply Group, Inc. 1997 Employee Stock Purchase Plan Page 11
<PAGE> 46
SPORT SUPPLY GROUP, INC.
AMENDED AND RESTATED
STOCK OPTION PLAN
1. PURPOSE
The purpose of the Sport Supply Group, Inc. Amended and Restated
Stock Option Plan (hereinafter called the "Plan") is to advance the interests
of Sport Supply Group, Inc. (hereinafter called the "Company") by strengthening
the ability of the Company to attract and retain key personnel of high caliber
through encouraging a sense of proprietorship by means of stock ownership.
Certain options granted under this Plan are intended to qualify as
"incentive stock options" pursuant to Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"), while certain other options granted under the
Plan will constitute nonqualified options.
2. DEFINITIONS
As used in this Plan, and in any Option Agreement, as hereinafter
defined, the following terms shall have the following meanings, unless the
context otherwise requires:
(a) "Common Stock" shall mean the Common Stock of the
Company, par value $.01 per share.
(b) "Date of Grant" shall mean the date on which a stock option
is granted pursuant to this Plan.
(c) "Non-Employee Director" shall mean an individual who is a
"non-employee director" within the meaning set forth in Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and also an
"outside director" within the meaning of Treasury Regulation Section
1.162-27(e)(3).
(d) "Fair Market Value" shall mean the closing sale price (or
average of the quoted closing bid and asked prices if there is no closing sale
price reported) of the Common Stock on the date specified as reported by NASDAQ
or by the principal national stock exchange on which the Common Stock is then
listed. If there is no reported price information for such date, the Fair
Market Value will be determined by the reported price information for Common
Stock on the day nearest preceding such date.
(e) "Optionee" shall mean the person to whom an option is
granted under the Plan or who has obtained the right to exercise an option in
accordance with the provisions of the Plan.
(f) "Subsidiary" shall mean any now existing or hereinafter
organized or acquired corporation of which more than fifty percent (50%) of the
issued and outstanding voting stock is owned or controlled directly or
indirectly by the Company or through one or more Subsidiaries of the Company.
1 of 7
<PAGE> 47
3. SHARES SUBJECT TO THE PLAN
Subject to the provisions of Section 9 of this Plan, the aggregate
amount of Common Stock for which options may be granted under this Plan shall
not exceed 2,000,000 shares of Common Stock. The number of shares of Common
Stock subject to awards granted to any single Optionee shall not exceed the
number set forth in the immediately preceding sentence, as such number may be
amended from time to time. Such shares may be authorized and previously
unissued shares or previously issued shares that have been reacquired by the
Company. Any shares subject to unexercised portions of options granted under
this Plan which shall have terminated, been canceled, or expired may again be
subject to options under this Plan.
4. ADMINISTRATION
(a) The Plan shall be administered by the Board of Directors or,
at the option of the Board of Directors, by a committee of two or more
Non-Employee Directors appointed by the Board of Directors of the Company (the
group responsible for administering the Plan is referred to herein as the
"Committee"). Options may be granted under this Section 4(a) only if (i) the
transaction is approved by the Board of Directors or by the unanimous agreement
of the members of the Committee or (ii) the transaction is approved or
ratified, in compliance with Section 14 of the Exchange Act, by either (A) the
affirmative votes of the holders of a majority of the securities of the Company
present, or represented, and entitled to vote at a meeting duly held in
accordance with the applicable laws of the Company's state of incorporation or
(B) the written consent of the holders of a majority of the securities of the
Company entitled to vote, provided that such ratification occurs no later than
the date of the Company's first annual meeting of stockholders following the
date of grant. The Committee may create a subcommittee for purposes of making
grants to officers, directors and consultants if the Committee would otherwise
not qualify for making such grants under Rule 16b-3 of the Exchange Act or
Section 162(m) of the Code. References herein to the "Committee" shall include
any such subcommittee. Stock option agreements ("Option Agreements"), in the
forms as approved by the Committee, and containing such terms and conditions
not inconsistent with the provisions of this Plan as shall have been determined
by the Committee, may be executed on behalf of the Company by the Chairman of
the Board, the Chief Executive Officer, the President or any Vice President of
the Company. Except with respect to Section 4(b) of this Plan, the Committee
shall have complete authority to construe, interpret and administer the
provisions of the Plan and the provisions of the Option Agreements granted
hereunder; to prescribe, amend and rescind rules and regulations pertaining to
the Plan; and to make all other determinations necessary or deemed advisable in
the administration of the Plan. The determinations, interpretations and
constructions made by the Committee shall be final and conclusive.
(b) Members of the Committee shall be specified by the Board of
Directors, and shall consist solely of Non-Employee Directors. On the date
Non-Employee Directors are elected to the Board of Directors and on each
subsequent anniversary of such date that a Non-Employee Director serves as a
member of the Board of Directors, such Non-Employee Director shall
automatically be granted nonqualified options to purchase 3,125 shares of
Common Stock.
5. ELIGIBILITY
Incentive stock options to purchase Common Stock may be granted under
Section 4(a) of the Plan to such key employees of the Company or its
Subsidiaries (including any director who is also a key employee of the Company
or one of its Subsidiaries) as shall be determined by the Committee.
Nonqualified stock options to purchase Common Stock may be granted under
Section 4(a) of the Plan to
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<PAGE> 48
such key employees or directors of, or consultants to, the Company or its
Subsidiaries as shall be determined by the Committee. Which persons are to be
granted options under Section 4(a) of the Plan, the number of options, the
number of shares subject to each option, the exercise price or prices of each
option, the vesting and exercise period of each option, whether an option may
be exercised as to less than all of the Common Stock subject thereto, and such
other terms and conditions of each option, if any, as are not inconsistent with
the provisions of this Plan shall be determined on the Date of Grant in
accordance with Section 4(a) of this Plan. Notwithstanding any provision of
this Plan to the contrary, unless the stockholders of the Company approve the
Plan at the first annual stockholders' meeting held in 1997: (a) no incentive
stock option or nonqualified stock option may be granted to a "covered
employee" (within the meaning of Section 162(m)(3) of the Code) on or after the
date of such meeting, and (b) no incentive stock option or nonqualified stock
option granted on or after the date of such meeting may be exercised during any
year in which the Optionee is a "covered employee." In connection with the
granting of incentive stock options, the aggregate Fair Market Value
(determined at the Date of Grant of an incentive stock option) of the shares
with respect to which incentive stock options are exercisable for the first
time by an Optionee during any calendar year (under all such plans of the
Optionee's employer corporation and its parent and subsidiary corporations as
defined in Section 424 of the Code) shall not exceed $100,000 or such other
amount as from time to time provided in Section 422(d) of the Code or any
successor provision.
6. EXERCISE PRICE
The purchase price or prices for Common Stock subject to an option
(the "Exercise Price") granted pursuant to Section 4(a) of the Plan shall be
determined at the Date of Grant; provided, however, that (a) the Exercise Price
for any option shall not be less than 100% of the Fair Market Value of the
Common Stock at the Date of Grant, and (b) if the Optionee owns more than 10
percent of the total combined voting power of all classes of stock of the
Company or its parent or any of its subsidiaries, as more fully described in
Section 422(b)(6) of the Code or any successor provision (such stockholder is
referred to herein as a "10-Percent Stockholder"), the Exercise Price for any
incentive stock option granted to such Optionee shall not be less than 110% of
the Fair Market Value of the Common Stock at the Date of Grant.
Notwithstanding the foregoing, nothing contained herein shall prohibit the
Board of Directors or the Committee, in the sound exercise of business
judgment, from canceling outstanding options that were previously issued
pursuant to Section 4(a) of the Plan and reissuing new options at a lower
Exercise Price in the event that the Fair Market Value per share of Common
Stock at any time prior to the date of exercise falls below the Exercise Price
of options granted pursuant to the Plan; provided, however, that such actions
shall only be permitted when approved by a majority of the Committee or a
majority of the disinterested directors of the Company.
7. TERM OF STOCK OPTIONS AND LIMITATIONS ON RIGHT TO EXERCISE
No incentive stock option granted pursuant to Section 4(a) of this
Plan shall be exercisable (a) more than five years after the Date of Grant
with respect to a 10-Percent Stockholder, and (b) more than ten years after the
Date of Grant with respect to all persons other than 10-Percent Stockholders.
No nonqualified stock option granted pursuant to Section 4(a) of this Plan
shall be exercisable more than ten years after the Date of Grant. Nonqualified
stock options granted to members of the Committee pursuant to Section 4(b) of
this Plan shall be exercisable for ten years, except that in the event of
death, termination or resignation of such member as a director of the Company
or a Subsidiary, such nonqualified stock options shall only be exercisable for
one year following the date of such member's death, termination or resignation
(or if shorter, the remaining term of the option). The Company shall not be
required to issue any fractional shares upon the exercise of any options
granted under this Plan.
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<PAGE> 49
No Optionee nor his legal representatives, legatees, distributees or
transferees, as the case may be, will be, or will be deemed to be, a holder of
any shares subject to an option unless and until said option has been exercised
and the purchase price of the shares in respect of which the option has been
exercised has been paid. An option shall not be exercisable except (i) by the
Optionee, (ii) by a person who has obtained the Optionee's rights under the
option by will or under the laws of descent and distribution, (iii) by a
permitted transferee as contemplated by Section 11(b) hereof or (iv) by a
spouse incident to divorce within the meaning of Section 1041 of the Code or
any successor provision.
8. TERMINATION OF EMPLOYMENT
The conditions that shall apply to the exercise of an option granted
under Section 4(a) in the event an Optionee shall cease to be employed by the
Company or a Subsidiary for any reason shall be determined at the Date of
Grant. In the event of the death of an Optionee while in the employ or while
serving as a director of or consultant to the Company or a Subsidiary, the
option theretofore granted to him shall be exercisable by the executor or
administrator of the Optionee's estate, or if the Optionee's estate is not in
administration, by the person or persons to whom the Optionee's right shall
have passed under the Optionee's will or under the laws of descent and
distribution, within the year next succeeding the date of death or such other
period as may be specified in the Option Agreement, but in no case later than
the expiration date of such option, and then only to the extent that the
Optionee was entitled to exercise such option at the date of his death. Neither
this Plan nor any option granted hereunder is intended to confer upon any
Optionee any rights with respect to continuance of employment or other
utilization of his services by the Company or by a Subsidiary, nor to interfere
in any way with his right or that of his employer to terminate his employment
or other services at any time (subject to the terms of any applicable written
contract).
9. DILUTION OR OTHER ADJUSTMENTS
In the event that there is any change in the Common Stock subject to
this Plan or subject to options granted hereunder as the result of any stock
dividend on, dividend of or stock split or stock combination of, or any like
change in, stock of the same class or in the event of any change in the capital
structure of the Company, the Board of Directors or the Committee shall make
such adjustments with respect to options, or any provisions of the Plan, as it
deems appropriate to prevent dilution or enlargement of option rights.
10. EXPIRATION AND TERMINATION OF THE PLAN
Options may be granted at any time under Section 4(a) of the Plan and
as specified under Section 4(b) of the Plan prior to December 31, 2000, as long
as the total number of shares which may be issued pursuant to options granted
under this Plan does not (except as provided in Section 9 above) exceed the
limitations of Section 3 above. This Plan may be abandoned, suspended or
terminated at any time by the Board of Directors of the Company except with
respect to any options then outstanding under the Plan.
11. RESTRICTIONS ON ISSUANCE OF SHARES
(a) The Company shall not be obligated to sell or issue any
shares upon the exercise of any option granted under this Plan unless:
(i) the shares with respect to which such option
is being exercised have been registered under applicable federal
securities laws or are exempt from such registration;
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(ii) the prior approval of such sale or issuance
has been obtained from any state regulatory body having
jurisdiction; and
(iii) in the event the Common Stock has been listed
on any exchange, the shares with respect to which such option is
being exercised have been duly listed on such exchange in
accordance with the procedure specified therefor.
If the shares to be issued upon the exercise of any option granted under the
Plan are intended to be issued by the Company in reliance upon the exemptions
from the registration requirements of applicable federal securities laws, the
Optionee, if so requested by the Company, shall furnish to the Company such
evidence and representations, including an opinion of counsel, satisfactory to
the Company, as the Company may reasonably request.
(b) All or a portion of the nonqualified options to be granted
to an Optionee may, in the sole discretion of the Committee (or the Board of
Directors, as the case may be), be on terms that permit transfer by such
Optionee to (i) the spouse, children or grandchildren of the Optionee
("Immediate Family Members"), (ii) a trust or trusts for the exclusive benefit
of such Immediate Family Members, (iii) a partnership or other entity in which
such Immediate Family Members are the only partners or (iv) to other
persons or entities deemed appropriate by the Committee, provided that (x) the
stock option agreement pursuant to which such nonqualified options are granted
must be approved by the Committee (or the Board of Directors, as the case may
be), and must expressly provide for transferability in a manner consistent with
this Section, and (y) subsequent transfers of transferred options shall be
prohibited except by will or the laws of descent and distribution. Following
transfer, any such options shall continue to be subject to the same terms and
conditions as were applicable immediately prior to transfer, provided that for
purposes of each Option Agreement and Sections 7, 11(a) and (c) and 14(b)
hereof the term "Optionee" shall be deemed to refer to the transferee. The
events of termination of employment of Section 8 hereof shall continue to be
applied with respect to the original Optionee, following which the options
shall be exercisable by the transferee only to the extent, and for the periods
specified herein and in the Stock Option Agreement.
(c) Except as set forth in Section 11(b) above, no option
granted pursuant to the Plan shall be transferable by the Optionee other than
by will or the laws of descent and distribution or by a spouse incident to
divorce within the meaning of Section 1041 of the Code or any successor
provision.
(d) The Board of Directors or Committee may impose such other
restrictions on the ownership and transfer of shares issued pursuant to this
Plan as it deems desirable; any such restrictions shall be set forth in any
Option Agreement entered into hereunder.
12. PROCEEDS
The proceeds to be received by the Company upon exercise of any option
granted under this Plan may be used for any proper purposes.
13. AMENDMENT OF THE PLAN
The Board of Directors may amend the Plan from time to time in such
respects as it may deem advisable in its sole discretion or in order that the
options granted hereunder shall conform to any change in applicable laws,
including tax laws, or in regulations or rulings of administrative agencies or
in order
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that options granted or stock acquired upon exercise of such options may
qualify for simplified registration under applicable securities or other laws;
provided, however, that no amendment that requires stockholder approval in
order for the Plan to continue to comply with Section 162(m) of the Code or
under any other applicable law, rule or regulation (including, without
limitation, the Code, the Exchange Act or any self-regulatory organization such
as a national securities exchange), will be made unless such amendment has
received the requisite approval of stockholders. In addition, no amendment may
be made that adversely affects any of the rights of an Optionee under any
option theretofore granted, without such Optionee's consent.
14. PAYMENT UPON EXERCISE; WITHHOLDING
(a) Shares of Common Stock shall be issued to the Optionee
upon payment in full either in cash or by an exchange of shares of Common Stock
of the Company previously owned by the Optionee, or a combination of both, in
an amount or having a combined value equal to the aggregate Exercise Price for
the shares subject to the option or portion thereof being exercised. The value
of the previously owned shares of Common Stock exchanged in full or partial
payment for the shares purchased upon the exercise of an option shall be equal
to the Fair Market Value of such shares on the date of the exercise of such
Option. The Optionee shall be entitled to elect to pay all or a portion of the
aggregate purchase price by having shares of Common Stock having a Fair Market
Value on the date of exercise equal to the aggregate Exercise Price withheld by
the Company or sold by a broker-dealer under circumstances meeting the
requirements of 12 C.F.R. Part 220. In addition, upon the exercise of any
option granted under the Plan, the Company may make financing available to the
Optionee for the purchase of the Common Stock that may be acquired pursuant to
the exercise of such option on such terms as the Committee shall specify.
(b) The Company may defer making payment or delivery of any
benefits under the Plan until satisfactory arrangements have been made for the
payment of any tax attributable to any amounts payable on shares deliverable
under the Plan. The Optionee shall be entitled to elect to pay all or a
portion of all taxes arising in connection with the exercise of any option by
paying cash or electing to (1) have the Company withhold shares of Common Stock
that were to be issued to the Optionee upon such exercise, or (2) deliver other
shares of Common Stock previously owned by the Optionee having a Fair Market
Value equal to the amount to be withheld; provided, however, that the amount to
be withheld shall not exceed the Optionee's estimated total federal (including
FICA), state and local tax obligations associated with the transaction. The
Fair Market Value of fractional shares remaining after payment of the
withholding taxes shall be paid to the Optionee in cash.
15. STOCKHOLDERS' APPROVAL
The Plan was originally adopted by the Board of Directors and approved
by the sole stockholder of the Company on February 25, 1991. Amendment No. 1 to
the Plan was adopted by the Board of Directors on March 27, 1992 and approved
by the stockholders of the Company on May 22, 1992. Amendment No. 2 to the Plan
was adopted and approved by the Board of Directors of the Company on November
30, 1993. Amendment No. 3 to the Plan was adopted by the Board of Directors on
February 23, 1994 and approved by the stockholders of the Company on May 5,
1994. The Amended and Restated Plan was adopted by the Board of Directors on
January 13, 1997 and approved by the stockholders of the Company on
_____________________, 1997.
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16. LIABILITY OF THE COMPANY
Neither the Company, its directors, officers or employees, nor any of
the Company's Subsidiaries which are in existence or hereafter come into
existence, shall be liable to any Optionee or other person if it is determined
for any reason by the Internal Revenue Service or any court having jurisdiction
that any incentive stock options granted hereunder do not qualify for tax
treatment as incentive stock options under Section 422 of the Code.
SPORT SUPPLY GROUP, INC.
------------------------
Geoffrey P. Jurick
Chairman of the Board
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SPORT SUPPLY GROUP, INC.
BOARD OF DIRECTORS PROXY FOR THE ANNUAL MEETING
OF STOCKHOLDERS AT 4:00 P.M., FRIDAY, MARCH 21, 1997
COLUMBIAN COUNTRY CLUB
2525 COUNTRY CLUB DRIVE
CARROLLTON, TEXAS 75006
The undersigned stockholder of Sport Supply Group, Inc. (the "Company")
hereby appoints Geoffrey P. Jurick, Eugene I. Davis, Peter S. Blumenfeld and
John P. Walker, or any of them, as proxies, each with full powers of
substitution, to vote the shares of the undersigned at the above stated Annual
Meeting and at any adjournment(s) thereof:
(CONTINUED FROM REVERSE SIDE)
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A [X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
FOR all nominees WITHHOLD
listed at right (except AUTHORITY
as provided to the to vote for all
contrary below) nominees at right
1. To elect seven [ ] [ ]
directors for a
one-year term;
(INSTRUCTION: To withhold authority NOMINEES: Geoffrey P. Jurick
to vote for any Eugene I. Davis
individual nominee(s) Peter S. Blumenfeld
write that nominee's John P. Walker
name on the space Peter G. Bunger
provided below): Johnson C. S. Ko
Thomas P. Treichler
2. To approve the Sport Supply Group, Inc. Amended and Restated Stock Option
Plan; and
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. To approve the Sport Supply Group, Inc. 1997 Employee Stock Purchase Plan;
and
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. To transact such other business as may properly come before the meeting
and any adjournment(s) thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE VOTED
IN ACCORDANCE WITH THE SPECIFICATIONS MADE HEREON. IF A CHOICE IS NOT
INDICATED WITH RESPECT TO ITEMS (1), (2) AND/OR (3), THIS PROXY WILL BE VOTED
"FOR" SUCH ITEMS. THE PROXIES WILL USE THEIR DISCRETION WITH RESPECT TO ANY
MATTER REFERRED TO IN ITEM (4). THIS PROXY IS REVOCABLE AT ANY TIME BEFORE IT
IS EXERCISED.
Receipt herewith of the Company's 1996 Annual Report and Notice of Meeting and
Proxy Statement, dated January 30, 1997, is hereby acknowledged.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD USING THE ENCLOSED ENVELOPE.
PLEASE SIGN, DATE AND MAIL TODAY.
SIGNATURE DATE
------------------------------- ------------------------
SIGNATURE DATE
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(Signature if held jointly)
NOTE: (JOINT OWNERS MUST EACH SIGN. PLEASE SIGN EXACTLY AS YOUR NAME(S)
APPEAR(S) ON THIS CARD. WHEN SIGNING AS ATTORNEY, TRUSTEE, EXECUTOR,
ADMINISTRATOR, GUARDIAN OR CORPORATE OFFICER, PLEASE GIVE YOUR FULL
TITLE.)
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