<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Riddell Sports Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (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:
------------------------------------------------------------------------
/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
RIDDELL SPORTS INC.
900 THIRD AVENUE, 27TH FLOOR
NEW YORK, NEW YORK 10022
DEAR FELLOW STOCKHOLDER:
On behalf of the Board of Directors, I cordially invite you to attend the Annual
Meeting of Stockholders of Riddell Sports Inc. (the "Company") to be held on
Thursday June 27, 1996, at 1:00 o'clock p.m. (Eastern Daylight Time) at the
Mahogany Room at the Harvard Club, 27 West 44th Street, New York, New York
10036. For the reasons set forth in the accompanying proxy statement, your Board
of Directors unanimously recommends that you vote for:
1. Management's nominees for directors;
2. amending the Company's 1991 Stock Option Plan to limit the number of
shares of Common Stock with respect to which options may be granted to
any individual in any year;
3. amending the Company's 1991 Stock Option Plan to increase the number of
shares of Common Stock reserved for issuance thereunder by 250,000
shares;
4. assuming the stockholders approve Proposal 3, amending the Company's
1991 Stock Option Plan to provide fixed grants of options to members of
the Board of Directors;
5. amending the Company's Certificate of Incorporation to increase the
number of shares of Common Stock the Company is authorized to issue from
20,000,000 to 40,000,000 and to increase the number of shares of
Preferred Stock the Company is authorized to issue from 1,000,000 to
5,000,000;
6. appointing Grant Thornton as the Company's independent auditors; and
7. such other business as may properly come before the meeting.
In order to ensure that your shares are represented at the meeting, I urge you
to promptly date, sign and mail the enclosed proxy using the enclosed addressed
envelope, which needs no postage if mailed in the United States. You may
withdraw or revoke your proxy at any time prior to the Annual Meeting.
Very truly yours,
Robert E. Nederlander
CHAIRMAN OF THE BOARD
Dated: May 20, 1996
<PAGE>
RIDDELL SPORTS INC.
900 THIRD AVENUE/27TH FLOOR
NEW YORK, NEW YORK 10022
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 27, 1996
------------------------
Dear Fellow Stockholder of Riddell Sports Inc:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Riddell
Sports Inc. (the "Company") will be held on Thursday, June 27, 1996, at 1:00
o'clock p.m. (Eastern Daylight Time) at the Mahogany Room at the Harvard Club,
27 West 44th Street, New York, New York 10036, for the purpose of considering
and voting upon the following proposals:
1. The election of six directors.
2. To amend the Company's 1991 Stock Option Plan to limit the number of
shares of Common Stock with respect to which options may be granted to
any individual in any year.
3. To amend the Company's 1991 Stock Option Plan to increase the number of
shares of Common Stock reserved for issuance thereunder by 250,000
shares.
4. Assuming the stockholders approve Proposal 3, to amend the Company's
1991 Stock Option Plan to provide fixed grants of options to members of
the Board of Directors.
5. To amend the Company's Certificate of Incorporation to increase the
number of shares of Common Stock the Company is authorized to issue from
20,000,00 to 40,000,000 and to increase the number of shares of Preferred
Stock the Company is authorized to issue from 1,000,000 to 5,000,000.
6. To ratify the appointment of Grant Thornton as the Company's independent
auditors for the calendar year ending December 31, 1996.
7. Such other business as may properly come before the meeting.
The close of business on May 15, 1996 has been fixed as the record date for
determining the stockholders entitled to notice of and to vote at the meeting
and any adjournment thereof, and only stockholders of record on such date are
entitled to notice of and to vote at the meeting.
By Order of the Board of Directors
Robert E. Nederlander
CHAIRMAN OF THE BOARD
Dated: May 20, 1996
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE DATE AND SIGN THE
ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH NEEDS NO POSTAGE IF
MAILED WITHIN THE UNITED STATES. THE PROXY MAY BE REVOKED IN WRITING PRIOR TO
THE MEETING, OR IF YOU ATTEND THE MEETING, YOU MAY REVOKE THE PROXY AND VOTE
YOUR SHARES IN PERSON.
<PAGE>
RIDDELL SPORTS INC.
PROXY STATEMENT
1996 ANNUAL MEETING OF STOCKHOLDERS
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
This proxy statement is solicited on behalf of the Board of Directors of
Riddell Sports Inc. (the "Company") for use at the Annual Meeting of
Stockholders of the Company to be held on Thursday, June 27, 1996, at 1:00
o'clock p.m. (Eastern Daylight Time) at the Mahogany Room at the Harvard Club,
27 West 44th Street, New York, New York 10036, and at any adjournment thereof
(the "Annual Meeting"). The purposes for which the Annual Meeting is to be held
are set forth in the Notice of Meeting on the preceding page. This proxy
statement and the proxies solicited hereby are first being sent or delivered to
stockholders on or about May 20, 1996.
REVOCABILITY AND VOTING OF PROXIES
The proxy may be revoked by the stockholder at any time prior to its use by
the Company by voting in person at the Annual Meeting, by executing a later
proxy, or by submitting a written notice of revocation to the Secretary of the
Company at the Company's office or at the Annual Meeting. If the proxy is signed
properly by the stockholder and is not revoked, it will be voted at the meeting.
If a stockholder specifies how the proxy is to be voted, the proxy will be voted
in accordance with such specification. Otherwise, the proxy will be voted in the
manner specified on the proxy.
In the event of a broker non-vote with respect to any issue coming before
the Annual Meeting arising from the absence of authorization by the beneficial
owner to vote as to that issue, the proxy will be counted as present for
purposes of determining the existence of a quorum, but will not be deemed as
present and entitled to vote as to that issue for purposes of determining the
total number of shares of which a plurality or majority (depending upon the
issue) is required for adoption. Abstentions, being shares present, entitled to
vote and affirmatively not voted are counted for determining a quorum and have
the same effect as a "no" vote.
RECORD DATE AND SHARE OWNERSHIP
At the close of business on April 29, 1996, 8,067,985 shares of the
Company's common stock, $.01 par value ("Common Stock"), were outstanding and
eligible to vote at the Annual Meeting. Each stockholder of record is entitled
to one vote for each share held on all matters to come before the meeting. Only
stockholders of record at the close of business on May 15, 1996 are entitled to
notice of and to vote at the meeting.
RESTRUCTURING OF OWNERSHIP OF COMPANY'S STOCK
BY PRINCIPAL STOCKHOLDERS
In 1988 M.L.C. Partners Limited Partnership ("MLC") acquired 74.5% of the
Company's Common Stock. The original partners of MLC included Messrs.
McConnaughy, Nederlander Toboroff and/or entities controlled by them and certain
others. In January 1994 the Company issued MLC a warrant (the "Warrant") to
purchase 150,000 shares of the Company's Common Stock in consideration of an
extension by MLC of a $2,000,000 Subordinated Secured Term Note originally due
October 31, 1994 (the "Note"). The Warrant is exercisable in full through
January 26, 1999 at $2.44 per share.
On August 9, 1995, in connection with the withdrawal of certain partners of
MLC from the partnership, certain officers and/or directors of the Company,
Messrs. Cougill, Mauer, McConnaughy, Nederlander and Toboroff, or entities they
control, acquired beneficial ownership of an aggregate of 1,657,289 shares of
the Company's Common Stock, including 81,250 shares representing the withdrawing
partners' pro rata interest in the Warrant. These purchasers acquired an
additional 196,592 shares in a private transaction.
<PAGE>
As a result of this MLC restructuring (the "MLC Restructuring"), an entity
controlled by Mr. Nederlander remains the general partner, and entities
controlled by Messrs. Nederlander and McConnaughy remain the limited partners,
of MLC. The shares of the Company's Common Stock retained by MLC (as well as
certain other shares of the Company's Common Stock beneficially owned by Messrs.
Nederlander and McConnaughy) remain subject to a Voting Trust dated May 29, 1991
(the "Voting Trust") of which Mr. Nederlander is the Voting Trustee. And,
Messrs. Cougill, Mauer, McConnaughy, Nederlander and Toboroff and certain
entities they control entered into a Shareholders Agreement dated August 9, 1995
(the "Shareholders Agreement") pursuant to which, generally, they agreed to vote
the shares they acquired in the MLC Restructuring (other than shares underlying
the Warrant) and in the private acquisition in the same manner that Mr.
Nederlander votes as Voting Trustee. The Voting Trust expires May 28, 2001, and
the Shareholders Agreement terminates upon the earliest of the death of Mr.
Nederlander, May 28, 2001 or the date of the transfer of shares subject to the
Shareholders Agreement (other than to certain parties) as to the shares
transferred.
As a result of the foregoing, Messrs. Cougill, Mauer, McConnaughy,
Nederlander and Toboroff may be deemed to have beneficial ownership of and to
exercise control over 47% of the outstanding shares of the Company's Common
Stock. Mr. Toboroff also withdrew from MLC on August 9, 1993 (except to the
extent of his interest in the Note), but remains a member of the control group
and retains his interest in the Company's stock and Warrant.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of April 15, 1996
pertaining to ownership of the Company's Common Stock by persons known to the
Company to own 5% or more of the Company's Common Stock and Common Stock owned
beneficially by each director and named executive officer of the Company and by
directors and named executive officers of the Company as a group.
The information contained herein has been obtained from the Company's
records, or from information furnished directly by the individual or entity to
the Company or in Form 13D filings or Form 4 filings.
<TABLE>
<CAPTION>
SHARES OWNED PERCENT/SHARES
BENEFICIALLY OUTSTANDING
------------------------ -----------------
<S> <C> <C>
M.L.C. Partners Limited Partnership 830,281(1) 10.2%
c/o Robert Nederlander
810 Seventh Avenue
New York, NY 10019
Robert E. Nederlander 3,623,382(2) 44.2%
810 Seventh Avenue
New York, NY 10019
Leonard Toboroff 1,375,503(3) 16.8%
Riddell Sports Inc.
900 Third Avenue/27th Fl.
New York, NY 10022
John McConnaughy, Jr. 706,808(4) 8.7%
300 Atlantic Street
Stamford, CT 06901
David M. Mauer 239,025(5) 2.9%
Riddell Sports Inc.
900 Third Avenue/27th Fl.
New York, NY 10022
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
SHARES OWNED PERCENT/SHARES
BENEFICIALLY OUTSTANDING
------------------------ -----------------
<S> <C> <C>
Dan Cougill 85,177(6) 1.0%
c/o Riddell, Inc.
3670 N. Milwaukee Avenue
Chicago, IL 60641
Glenn E. "Bo" Schembechler 35,000(7) *
870 Arlington
Ann Arbor, MI 48104
Don R. Kornstein 20,000(8) *
c/o Riddell Sports Inc.
900 Third Avenue/27th Fl.
New York, NY 10022
William Sherman 6,250(9) *
c/o Riddell, Inc.
3670 N. Milwaukee Avenue
Chicago, IL 60641
All officers and directors 4,145,000(10) 47.6%
as a group (8 individuals)
</TABLE>
- ------------------------
* Less than 1%
(1) Includes 43,750 shares underlying the Warrant which are currently
exercisable. MLC is the direct beneficial owner of all shares, which (other
than shares underlying the Warrant) are subject to the Voting Trust
pursuant to which Robert Nederlander is voting trustee and has the sole
voting power. Mr. Nederlander, as controlling stockholder of the
corporation which is the general partner of MLC, may be deemed to
beneficially own these shares. Mr. McConnaughy is the sole owner of a
corporation that is a limited partner in MLC; a corporation controlled by
Mr. Nederlander is also a limited partner in MLC.
(2) Of the 3,623,382 shares beneficially owned by Mr. Nederlander: (i)
1,677,237 shares are owned by Mr. Nederlander directly or through entities
controlled by him having dispositive power over these shares (95,739 of
these 1,677,237 shares underlie options granted under the Company's 1991
Stock Option Plan or the Warrant and are currently exercisable; 830,281 of
those 1,677,237 shares are owned by MLC; and 1,026,873 of these 1,677,237
shares are subject to the Voting Trust) and (ii) an additional 1,946,145
shares are beneficially owned by Mr. Nederlander as Voting Trustee under
the Voting Trust and pursuant to the Shareholders Agreement. Under Rule
13-d of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") Mr. Nederlander is deemed to beneficially own the shares of stock
subject to the Voting Trust and the Shareholders Agreement and owned by
MLC. In addition, Mr. Nederlander was granted an option under the Company's
1991 Stock Option Plan to purchase 15,000 shares of the Company's Common
Stock exercisable in full from June 29, 1996 through June 29, 2000 at $2.00
per share. See "Stock Options Granted in 1995."
(3) Of the 1,375,503 shares of Common Stock beneficially owned by Mr. Toboroff:
(i) 1,228,108 shares are subject to the Shareholders Agreement; (ii)
666,667 shares are pledged to Bestin Worldwide Limited and (iii) 124,538
shares underlie options granted under the Company's 1991 Stock Option Plan
and the Warrant that are currently exercisable. In addition, Mr. Toboroff
was granted an option to purchase 15,000 shares of the Company's Common
Stock exercisable in full from June 29, 1996 through June 29, 2000 at $2.00
per share. See "Stock Options Granted in 1995."
3
<PAGE>
(4) Of the 706,808 shares of Common Stock beneficially owned by Mr.
McConnaughy: (i) 147,444 are subject to the Voting Trust; (ii) 504,625 are
subject to the Shareholders Agreement and (iii) 54,739 shares underlie
options granted under the Company's 1991 Stock Option Plan and the Warrant
that are currently exercisable. Mr. McConnaughy has sole voting power with
respect of 30,000 of the 706,808 shares. In addition, Mr. McConnaughy was
granted an option under the Company's 1991 Stock Option Plan to purchase
15,000 shares of the Company's Common Stock exercisable in full from June
29, 1996 through June 29, 2000 at $2.00 per share.
(5) Of the 239,025 shares of Common Stock beneficially owned by Mr. Mauer: (i)
56,266 shares are subject to the Shareholders Agreement; and (ii) 182,759
shares in the aggregate underlying options granted under the Company's 1991
Stock Option Plan and the Warrant that are exercisable currently. In
addition, Mr. Mauer was granted an option under the Company's 1991 Stock
Option Plan to purchase 50,000 shares of stock at $2.00 per share
exercisable fully commencing June 29, 1996 through June 29, 2000. See
"Stock Options Granted in 1995."
(6) Of the 85,177 shares of Common Stock beneficially owned by Mr. Cougill: (i)
9,702 shares are subject to the Shareholders Agreement and (ii) an
additional 75,475 shares in the aggregate underlie options granted under
the Company's 1991 Stock Option Plan and the Warrant that are exercisable
currently. In addition, Mr. Cougill was granted an option under the
Company's 1991 Stock Option Plan to purchase 15,000 shares of stock at
$3.38 per share, which option vests 25% per annum commencing September 28,
1996 and is exercisable through September 28, 2000. See "Stock Options
Granted in 1995."
(7) Represents shares underlying an option granted under the Company's 1991
Stock Option Plan that is currently exercisable. In addition, Mr.
Schembechler was granted an option under the Company's 1991 Stock Option
Plan to purchase 15,000 shares of the Company's Common Stock; the option is
exercisable in full from June 29, 1996 through June 29, 2000 at $2.00 per
share.
(8) Represents shares underlying an option granted under the Company's 1991
Stock Option Plan that are currently exercisable. In addition, Mr.
Kornstein was granted an option to purchase 7,500 shares of the Company's
Common Stock under the 1991 Stock Option Plan at $3.38 per share
exercisable in full from September 28, 1996 through September 28, 2000.
(9) Represents shares underlying that portion of an option to acquire an
aggregate of 25,000 shares that is currently exercisable at $2.75 per
share. The option vests 25% per annum commencing September 6, 1995 and is
exercisable through September 6, 1999.
(10)Includes the 830,281 shares owned by MLC.
4
<PAGE>
ELECTION OF DIRECTORS AND LIST OF EXECUTIVE OFFICERS
In the absence of contrary instructions, the proxy will be voted for the
re-election of Don R. Kornstein, David M. Mauer, John McConnaughy, Jr., Robert
E. Nederlander, Glenn E. "Bo" Schembechler and Leonard Toboroff to serve as the
directors until the 1997 Annual Meeting of Stockholders or until their
respective successors shall have been elected and shall have qualified. If any
nominee is unable or unwilling to serve, which the Board of Directors does not
anticipate, the persons named in the proxy will vote for another person in
accordance with their best judgment. Assuming the presence of a quorum,
directors shall be elected by a plurality of the votes cast at the Annual
Meeting of Stockholders for the election of directors. Directors hold office
until the next Annual Meeting of Stockholders or until their successors are
elected and qualified.
In April, 1995 the Board decided to reduce the number of members of the
Board from seven to six, eliminating the vacancy created by the resignation from
the Board of Mr. Jeffrey Epstein. Information with respect to the six nominees
and the executive officers of the Company is set forth below as of April 29,
1996 and is based upon the records of the Company and information furnished to
it by the nominees and executive officers. See "Security Ownership of Certain
Beneficial Owners and Management" for information pertaining to the Common Stock
owned by the nominees.
<TABLE>
<CAPTION>
POSITIONS HAS SERVED AS
NAME AGE WITH THE COMPANY DIRECTOR SINCE
- ----------------------------------- ----------- ------------------------------------------- -------------------
<S> <C> <C> <C>
NOMINEES:
Robert E. Nederlander 63 Chairman of the Board April, 1988
David M. Mauer 47 Chief Executive Officer (since April, September, 1993
1993); President (June 1994-June 1995)
Leonard Toboroff 63 Vice President and Director April, 1988
Don R. Kornstein 44 Director April, 1995
John McConnaughy, Jr. 66 Director September, 1989
Glenn E. "Bo" Schembechler 66 Director September, 1991
OTHER EXECUTIVE OFFICERS:
Dan Cougill 43 President and Chief Operating Officer of --
the Company (since June 1995); President
and Chief Operating Officer of Riddell,
Inc. (since February, 1994)
David Groelinger 45 Chief Financial Officer (since March, 1996) --
Lawrence Simon 40 Senior Vice President and Treasurer (since --
March 1996); Vice President, Chief
Financial Officer & Treasurer (October
1990-March 1996)
William Sherman 34 Senior Vice President, Institutional --
Marketing of Riddell, Inc. (since December
1995); Vice President of Riddell, Inc.
(September 1993-December 1995)
Robert Brasser 38 Senior Vice President, Consumer Products of --
Riddell, Inc. (since December 1995); Vice
President of Riddell, Inc. (July
1994-December 1995)
</TABLE>
5
<PAGE>
Set forth below is additional biographical information regarding each
nominee and executive officer of the Company based on information supplied by
them.
ROBERT E. NEDERLANDER. Mr. Nederlander has been Chairman of the Board of
the Company since April 1988 and was the Company's Chief Executive Officer from
April 1988 through April 1, 1993. From February until June 1992, Mr. Nederlander
was also the Company's interim President and Chief Operating Officer. Mr.
Nederlander has been President and a Director since November 1981 of the
Nederlander Organization, Inc., owner and operator of one of the world's largest
chains of legitimate theaters. He served as the Managing General Partner of the
New York Yankees from August 1990 until December 1991, and has been a limited
partner since 1973. Mr. Nederlander has been President since October 1985 of the
Nederlander Television and Film Productions, Inc.; Chairman of the Board since
January 1988 of Mego Corporation and Vice Chairman of the Board since February
1988 to early 1993 of Vacation Spa Resorts, Inc., an affiliate of Mego
Corporation; and Chairman of the Board of Allis-Chalmers Corp. from May 1989 to
1993, when he became Vice Chairman. In 1995, Mr. Nederlander became a director
of HFS Incorporated. Mr. Nederlander was a senior partner in the law firm of
Nederlander, Dodge and Rollins in Detroit, Michigan, between 1960 and 1989.
DAVID M. MAUER. Mr. Mauer became the Company's Chief Executive Officer on
April 1, 1993, succeeding Mr. Nederlander. Mr. Mauer was President of Mattel
U.S.A. from late 1990 through the beginning of 1993 and was President of Tonka
U.S.A. Toy Group from 1988 until 1990. In 1995, Mr. Mauer was elected a member
of the Board of Directors of The Topps Company, Inc.
LEONARD TOBOROFF. Mr. Toboroff has been Vice President of the Company since
April 1988. Since May 1989, Mr. Toboroff has been a Vice President and Vice
Chairman of the Board of Allis-Chalmers Corp. Mr. Toboroff has been a practicing
attorney since 1961 and from January 1, 1988 to December 31, 1990, was counsel
to Summit Solomon & Feldesman in New York City, which was counsel to the Company
from April 1988 through February 1993. He has been a Director since August 1987
and was Chairman and Chief Executive Officer from December 1987 to May 1988 of
Ameriscribe Corp. Mr. Toboroff was Chairman and Chief Executive Officer from
May-July 1982, and then was Vice Chairman from July 1982 through September 1988
of American Bakeries Company. Mr. Toboroff has been a director of Banner
Aerospace, Inc., a supplier of aircraft parts and a director of ANMR Corp., a
manufacturer of medical diagnostic equipment, since September 1992. He has been
a director of Engex, Inc. and director of Saratoga Springs Beverage Co. since
1993.
DON R. KORNSTEIN. Mr. Kornstein has been a member of the Board of
Directors, Chief Executive Officer and President of Jackpot Enterprises, Inc.
since September 1994. Prior to this he was a Senior Managing Director at Bear,
Stearns & Co. Inc. for 17 years through September 1994.
JOHN MCCONNAUGHY, JR. Mr. McConnaughy is Chairman and Chief Executive
Officer of JEMC Corp. From 1969 to 1986, Mr. McConnaughy served as Chairman and
Chief Executive Officer of Peabody International Corp. ("Peabody"). From 1981 to
1992, he served as Chairman and Chief Executive Officer of GEO International
Corp. when it was spun off from Peabody in 1981. Mr. McConnaughy is a Director
of DeVlieg Bullard Inc., Mego Corp., Transact International, Inc., Pantapec
International, Inc., Enviropur Waste Refining and Technologies, Inc., Wave
Systems, Inc., Oxigene, Inc. and Commonwealth Snack Co. GEO International Inc.
filed a petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code
in October 1993.
GLENN E. "BO" SCHEMBECHLER. Mr. Schembechler was President of the Detroit
Tigers from January 1990 through August 1992 and a member of the Tigers Board of
Directors from 1989
6
<PAGE>
through 1990. He is also a Director of Midland Company. From 1968 through 1989,
Mr. Schembechler was head football coach of the University of Michigan and
served as its Athletic Director in 1988 and 1989.
DAN COUGILL. Mr. Cougill was appointed President and Chief Operating
Officer of the Company in June, 1995 and of its subsidiary, Riddell, Inc., in
February 1, 1994. Prior to his appointment, Mr. Cougill was employed in various
capacities by Wilson Sporting Goods since 1977 and was a Vice President of
Wilson Sporting Goods and the General Manager of its Team Sports Division prior
to joining the Company.
DAVID GROELINGER. In March of 1996, Mr. David Groelinger was appointed the
Company's Chief Financial Officer. Before joining the Company and from 1994 he
was a member of the Board of Directors, Executive Vice President and Chief
Financial Officer of Regency Holdings (Cayman) Inc., which owned and operated a
major international cruise line. Prior to this Mr. Groelinger served in various
senior financial capacities during twelve years at Chiquita Brands
International, Inc. In 1990, he was promoted to Vice President reporting to the
Chiquita's President and Chief Operating Officer. Regency Holdings (Cayman) Inc.
filed a petition to reorganize under Chapter 11 of the United States Bankruptcy
Code in November 1995.
LAWRENCE F. SIMON. Mr. Simon was Controller of the Company from April 1988
until appointed Treasurer and Chief Financial Officer of the Company in October
1990. Mr. Simon was Vice President, Chief Financial Officer and Treasurer from
September 1993 through March 1996, when he was appointed Senior Vice President
and Treasurer.
WILLIAM SHERMAN. Mr. Sherman joined Riddell, Inc. (one of the Company's
principal operating subsidiaries) in September 1994 as its Vice
President-Institutional Marketing and was elected Senior Vice President in
December, 1995. Prior to joining the Company, Mr. Sherman was employed by Wilson
Sporting Goods since 1984. Most recently before joining Riddell, Inc. Mr.
Sherman was Wilson's Vice President of Business Development, responsible for
development for new business categories. Prior to that he was Vice
President/Business Director responsible for research and development, marketing,
purchasing/manufacturing and finance for Wilson's Team Sports Division. Mr.
Sherman also was responsible for license management and strategic planning for
Wilson's licensing program.
ROBERT BRASSER. Mr. Brasser was appointed Senior Vice President, Consumer
Products of Riddell, Inc. (one of the Company's principal operating
subsidiaries) in December 1995 after joining Riddell, Inc. as Vice President of
Retail marketing in July 1994. Prior to joining Riddell, Mr. Brasser served as
Vice President of Sales and Marketing for Matrixx Marketing, Inc. from Septemer
1991 to June 1994, and from November 1988 to September 1991 was President of
Waveland Associates. Prior to this Mr. Brasser held marketing positions with
Kimberly-Clark and Helene Curtis.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS
VOTE "FOR" THE NOMINEES FOR DIRECTORS.
STRUCTURE AND COMPENSATION OF BOARD OF DIRECTORS
DIRECTORS' FEES AND BOARD MEETING ATTENDANCE
Directors who are not officers of the Company received a fee in 1995 of
$15,000 per annum. In 1995, directors who were members of the Audit and
Compensation Committees of the Board (Messrs. McConnaughy, Kornstein and
Schembechler) were also each paid an aggregate additional amount of $5,000 per
annum for their Committee memberships.
During 1995, directors other than Mr. Mauer and Kornstein were granted an
option to purchase 15,000 shares of the Company's Common Stock at an exercise
price of $2.00 per share. Mr. Mauer, the Company's Chief Executive Officer, was
granted an option in 1995 to acquire
7
<PAGE>
50,000 shares of Common Stock at an exercise price of $2.00 per share. See
"Options Granted in 1995". In 1995, Mr. Kornstein was granted an option to
acquire 20,000 shares at $1.81 per share and an option to acquire 7,500 shares
of stock at an exercise price of $3.38 per share. See "Security Ownership of
Certain Beneficial Owners and Management."
The Company has agreed to indemnify each director and officer against
certain claims and expenses for which the director might be held liable in
connection with services on the Board. In addition, the Company maintains an
insurance policy insuring its directors and officers against such liabilities.
During calendar year ended December 31, 1995, there were 5 meetings of the
Board of Directors, and all members attended each meeting.
COMMITTEE STRUCTURE AND MEETINGS
The Board of Directors maintains an Executive Committee consisting of Mr.
Nederlander, the Committee's Chairman, Mr. Mauer and Mr. Toboroff. Under the
Company's Bylaws the Executive Committee has the power of the full Board. The
Executive Committee met one time in 1995.
The Board of Directors also maintains a Compensation Committee comprised in
1995 of Messrs. McConnaughy, Schembechler and, since April 4, 1995, Mr.
Kornstein. Mr. McConnaughy was Chairman of the Committee in 1995. None of these
individuals has ever been an officer of the Company. The Compensation Committee
reviews and establishes the cash and non cash compensation of key employees and
recommends grants of stock options under the Company's 1991 Stock Option Plan.
It considers recommendations of management and, when it deems appropriate, the
advice of outside experts in connection with these determinations. The
Compensation Committee had one meeting, and acted by unanimous written consent
in lieu of a meeting two times, in 1995.
The Board of Directors has established an Audit Committee which in 1995 was
comprised of Messrs. McConnaughy, Schembechler and, since April 4, 1995, Mr.
Kornstein. Mr. McConnaughy was Chairman of the Committee in 1995. No member of
the Audit Committee has ever been an officer of the Company. The Audit Committee
reviews the Company's internal controls and the objectivity of its financial
reporting and the scope and results of the auditing engagement. It meets with
appropriate Company financial personnel and independent public accountants in
connection with these reviews. The auditors have access to such Committee at any
time. The Audit Committee met one time in 1995.
The Company does not have a standing nominating committee.
The members of each Committee are appointed by the Board of Directors for a
term beginning after the first regular meeting of the Board following the Annual
Meeting and until their respective successors are elected and qualified. Each
Committee elects its own Chairman.
SECTION 16(A) DISCLOSURE
The Company believes, based solely on its review of the copies of the Forms
3, 4 and 5 required to be filed with the Company pursuant to Section 16(a) of
the Exchange Act by its Officers, Directors and Beneficial Owners of over 10% of
the Company's Common Stock ("insiders"), that during the fiscal year ended
December 31, 1995, all filing requirements applicable to its insiders were
materially complied with.
BOARD OF DIRECTORS REPORT ON COMPENSATION
GENERAL
After consultation with supervising management, the Compensation Committee
of the Board of Directors determined the cash compensation of, and recommended
for full Board approval
8
<PAGE>
grants of incentive stock options to, senior executive officers for 1995.
Messrs. Nederlander, Mauer and Toboroff are senior executive officers and
members of the Board of Directors of the Company and do not vote on matters
concerning their own compensation.
COMPENSATION PHILOSOPHY
The executive compensation philosophy (which is intended to apply to all
Company management, including its Chief Executive Officer) of the Board of
Directors and its Compensation Committee is to provide competitive levels of
compensation, provide incentives to management, reward above average corporate
performance, and assist the Company in attracting and retaining qualified
management. Management compensation is intended to be set at levels that the
Board of Directors believes is consistent with others in the Company's industry
and at a level that will aid in attracting and retaining qualified management.
The Board of Directors endorses the position that equity ownership by management
is beneficial in aligning management's and shareholders' interests in the
enhancement of shareholder value.
The components of executive officer compensation are designed to meet the
Company's compensation policies. Presently, the program is comprised of two
elements: 1) base salary (plus benefits customarily paid to employees, such as
insurance) and 2) incentive compensation, consisting of cash (bonus) and
non-cash (stock options) incentive compensation.
The Company from time to time consults with executive compensation experts
to assist it in evaluating and establishing appropriate cash and noncash
compensation for key employees and directors.
CHIEF EXECUTIVE COMPENSATION
In order to induce Mr. Mauer, the Company's Chief Executive Officer, to join
the Company and become a member of its Board of Directors, in 1993 the Company
entered into an employment agreement with him containing a compensation package
including salary, stock options and an annual bonus described in "Employment and
Consulting Agreements." Mr. Mauer's initial compensation was determined after
the Board reviewed compensation paid to similarly qualified Chief Executive
Officers in the competitive marketplace.
In determining Mr. Mauer's salary, bonus and stock option awards for 1995,
the Compensation Committee reviewed the significant improvement in the Company's
overall operating results from prior years and the complex changes in its
business required to achieve these results. Excluding the effect of certain
pre-tax charges in 1994, the Company's operating income increased by $2,985,000
to $5,266,000 in 1995 compared to $2,281,000 in 1994. For the 1995 selling year
Mr. Mauer successfully completed a transition of the Company's distribution
system for its institutional products to a factory-direct basis by utilizing the
Company's existing sales force, which had previously only sold athletic
equipment reconditioning services. In addition, Mr. Mauer expanded the
categories of the athletic products these salesmen sold to include items such as
baseball products.
The Committee also considered that Mr. Mauer restructured the Company's
collectible products division by hiring separate management and introducing new
products, including miniature football and hockey helmets. Sales in this
division grew from $5,000,000 in 1993 to $8,800,000 in 1994 and nearly doubled
to approximately $17,200,000 in 1995. Furthermore, the athletic reconditioning
business experienced growth of 12% in 1995, principally due to increased volume
resulting from an acquisition in January 1995 of a reconditioner located in the
northeast corridor. Overall, under Mr. Mauer's leadership sales in the Company's
sports products and services segment (which includes sales of athletic
equipment, sports collectible products and reconditioning services) increased
23% in 1995 compared to 1994, and gross profit increased 28%.
9
<PAGE>
COMPENSATION OF OTHER EXECUTIVE OFFICERS
Base salaries for new executive officers are determined initially by
evaluating the responsibilities of the position and the experience,
qualifications and talents of the individual relevant to his or her position,
and by reference to the competitive marketplace for management talent, including
a comparison of base salaries for comparable positions at comparable public
companies. Salary adjustments are, generally, discretionary and determined by
evaluating management's recommendations, the competitive marketplace, the
performance of the Company, the performance and overall contribution of the
executive, and any increased responsibilities assumed by the executive.
In order to induce qualified individuals to join the Company and continue
their employment, the Company has granted certain senior executive officers
guaranteed signing bonuses in fixed amounts as well as bonuses for the first
year of employment. Bonuses in 1995 were determined by the Compensation
Committee. In determining the size of an executive's bonus, if any, the
Committee compared performance of the division in which the executive works to
the Company's business plan for that division in that year, the contribution of
the individual to the performance of that division, and the individual's
performance against agreed-upon goals developed by the employee with senior
management.
After reviewing recommendations of supervising management, the Compensation
Committee recommended for full Board approval grants of stock options to certain
employees and executive officers. In keeping with the philosophy of the Board of
Directors, options granted to executive officers generally vest over a period of
years. It is the philosophy of the Board of Directors that stock options should
be awarded primarily to key employees of the Company and its subsidiaries and
members of its Board of Directors to promote the long-term interest in the
welfare of the Company and assist in the retention of such employees, and that
stock options should be awarded on an intermittent basis in furtherance of this
philosophy.
In accordance with rules of the Securities and Exchange Commission (the
"Commission"), the Executive Compensation Philosophy of the Board 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 BOARD OF DIRECTORS
Robert E. Nederlander
David M. Mauer
Leonard Toboroff
Don R. Kornstein
John McConnaughy, Jr.
Glenn E. Schembechler
10
<PAGE>
SUMMARY COMPENSATION TABLE
The table below sets forth the cash compensation paid to or accrued for the
Company's Chief Executive Officer and its four most highly paid executive
officers in 1995 for services rendered in all capacities to the Company and its
subsidiaries during the fiscal years ended December 31, 1995, 1994 and 1993.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION AWARDS
ANNUAL COMPENSATION --------------------
--------------------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) OPTIONS(2) COMPENSATION(4)
- ------------------------------ --------- --------- ----------- ---------------- -------------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
David M. Mauer 1995 $ 457,500 $ 170,000 -- 50,000 $ 4,620
Chief Executive Officer 1994 420,000 120,000 100,000(3) 1,100
(since April 1993) 1993 307,244 61,710 300,000(3) --
Robert E. Nederlander 1995 $ 173,355 -- -- 15,000 $ 0
Chairman of the Board; (since 1994 166,565 -- -- 15,000 --
1988); Chief Executive 1993 162,504 -- -- -- --
Officer (1988-April 1, 1993);
President and Chief Operating
Officer (February-June 1992)
Leonard Toboroff 1995 $ 173,355 -- -- 15,000 $ 11,647
Vice President 1994 166,565 -- -- 15,000 1,422
(since April 1988) 1993 162,504 -- -- -- --
Dan Cougill 1995 $ 206,923 $ 60,000 -- 15,000 $ 4,322
President and Chief Operating 1994 180,000 110,000 -- 75,000 --
Officer
(since June 1995); President
and Chief Operating Officer
of Riddell, Inc. (since
February 1994)
William Sherman 1995 $ 127,923 $ 25,000 -- -- $ 967
Senior Vice President- 1994 65,535 20,000 -- 25,000
Institutional Products (since
December 1995) of Riddell,
Inc; Vice President (from
September 1994 to December
1995) of Riddell, Inc.
</TABLE>
- ------------------------------
(1) Perquisites and other personal benefits paid in 1995 for the named
executive officers aggregated less than the lesser of $50,000 and 10% of
the total annual salary and bonus set forth in the columns entitled,
"Salary" and "Bonus" for each named executive officer and, accordingly, are
omitted from the table as permitted by the rules of the Commission.
(2) These options were issued under the Company's 1991 Stock Option Plan. See
"Stock Options Granted in 1995."
(3) In 1994 the Company canceled an option previously granted to Mr. Mauer to
acquire 100,000 shares of Common Stock and in its place issued an option to
acquire an equal number of shares at a lower exercise price per share. The
option to acquire 300,000 shares issued in 1993 includes the option to
acquire 100,000 shares so repriced.
(4) Represents the Company's contribution to its 401K Plan on behalf of the
employee, and in the case of Mr. Toboroff, includes the dollar value of
approximately $7,000 of insurance premiums paid on behalf of Mr. Toboroff
under an Indeterminate Premium One Year Term Life Policy pursuant to which
he will receive the cash surrender value.
11
<PAGE>
STOCK OPTIONS GRANTED IN 1995
The following table sets forth information concerning individual grants of
stock options made during 1995 to each executive officer listed below pursuant
to the Company's 1991 Stock Option Plan.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
NUMBER OF STOCK PRICE
SECURITIES APPRECIATION FOR
UNDERLYING % OF TOTAL OPTIONS OPTION TERM(4)
OPTIONS GRANTED TO EMPLOYEES EXERCISE PRICE EXPIRATION --------------------
NAME GRANTED IN FISCAL YEAR PER SHARE DATE 5% 10%
- ----------------------------- ------------ --------------------- --------------- ------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
David M. Mauer 50,000(1) 28% $ 2.00 6/29/00 $ 27,628 $ 61,051
Dan Cougill 15,000(2) 8% $ 3.38 9/28/00 13,987 30,907
Robert Nederlander 15,000(3) 8% $ 2.00 6/29/00 8,228 18,315
Leonard Toboroff 15,000(3) 8% $ 2.00 6/29/00 8,228 18,315
</TABLE>
- ------------------------
(1) This option expires in June, 2000, vests in full on June 29, 1996, and is
canceled upon a termination of employment for cause. In the event Mr.
Mauer's employment is terminated by the Company, generally, other than for
cause, this stock option becomes fully exercisable for 90 days.
(2) Mr. Cougill's option vests as to 25% of the underlying shares on each of the
first, second, third and fourth anniversaries of the date of grant and
expires September 28, 2000. The option is canceled upon a termination of
employment for cause. In the event Mr. Cougill's employment is terminated by
the Company, generally, other than for cause, the option becomes fully
exercisable for 90 days.
(3) Messrs. Nederlander and Toboroff were granted options together with the
other members of the Company's Board of Directors in 1995 under the
Company's 1991 Stock Option Plan. The options are fully exercisable
commencing June 1996 through 2000. Each option is canceled upon a
termination of employment for cause. In the event the employee's employment
is terminated by the Company, generally, other than for cause, each stock
option becomes fully exercisable for 90 days.
(4) Based upon the per share market price on the date of grant and an annual
appreciation of such market price at the rate stated in the table through
the expiration date of such options. Gains, if any, are dependent upon the
actual performance of the Common Stock, as well as the continued employment
of the executive officers through the vesting period. The potential
realizable values indicated have not taken into account amounts required to
be paid as income tax under the Internal Revenue Code and any applicable
state laws.
12
<PAGE>
STOCK OPTIONS HELD AT END OF 1995
The following table indicates the total number of exercisable and
unexercisable stock options held by each executive officer listed below on
December 31, 1995. No options to purchase the Company's Common Stock were
exercised during 1995. On Friday, December 29, 1995, the last sales price of the
Common Stock on NASDAQ was $3.13 per share.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT DECEMBER 31, IN-THE-MONEY OPTIONS
1995 AT DECEMBER 31, 1995
-------------------------- --------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
David M. Mauer 120,000 230,000 $ -- $ 56,250
Dan Cougill 37,500 52,500 21,094 21,094
Robert E. Nederlander 71,000 15,000 7,500 16,875
William Sherman 6,250 18,750 2,344 7,031
Leonard Toboroff 71,000 15,000 7,500 16,875
</TABLE>
13
<PAGE>
COMPARATIVE PERFORMANCE BY THE COMPANY
The following graph shows a comparison of cumulative total returns for the
Company, the NASDAQ Market Index and an index of peer companies selected by the
Company for the period from June 27, 1991 (the day the Company's Common Stock
began publicly trading) to December 31, 1995. In accordance with the rules of
the Commission, the Company's Comparative Performance Information 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.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
RIDDELL SPORTS
INC. SIC INDEX NASDAQ MARKET INDEX
<S> <C> <C> <C>
6/27/91 $100.00 $100.00 $100.00
12/31/91 103.13 113.51 114.75
12/31/92 54.69 103.62 115.87
12/31/93 28.13 154.44 138.99
12/31/94 25.00 160.13 145.93
12/31/95 39.06 144.13 189.28
Assumes $100 invested on June 27,
1990
</TABLE>
The graph compares the performance of the Company, the NASDAQ Market Index
and an index of companies in the sporting and athletic goods industry having the
same SIC Code as the Company (SIC Code 3949-Sporting and Athletic Goods), with
the investment weighted on market capitalization at the beginning of each period
for which a return is indicated. The total returns presented assume the
reinvestment of dividends, although dividends have not been declared on the
Company's Common Stock. The line of business index (SIC Code 3949), obtained
through Media General Financial Services, is the same index as the index used by
the Company in its Proxy Statement dated May 20, 1995.
14
<PAGE>
EMPLOYMENT AGREEMENTS AND CHANGE OF CONTROL ARRANGEMENTS
In June 1992, the Company entered into an employment agreement with each of
Messrs. Nederlander and Toboroff. Each agreement continues until terminated by
the Company, with termination effective three years after the Company delivers
notice of termination or, if earlier, until the death or disability of the
employee. The agreements are immediately terminable by the Company for Cause (as
defined). Bonuses are discretionary with the Board. Each agreement provides a
base salary of $162,500 which may be increased in the discretion of the Board,
provided that in any event each year the salaries are increased at least by the
percentage increase in the Consumer Price Index. Each agreement provides that in
the event the Company terminates the employee's employment, generally, other
than for Cause, the employee will receive his full salary through the end of the
term of his agreement and annual bonuses for the remainder of the term equal to
the average of the annual bonuses awarded to the employee prior to termination.
Each agreement acknowledges that the employee will devote time and provide
services to entities other than the Company.
In April 1993, the Company entered into an employment agreement with Mr.
Mauer. The agreement, as amended in 1994, provides an annual base salary in such
amount in excess of $400,000 as the Board of Directors may determine from time
to time. The agreement provides for years after 1993 that the Board of Directors
and Mr. Mauer establish target bonuses based upon measures to be agreed upon
before the beginning of each calendar year, and that Mr. Mauer's bonus will be a
percentage, not to exceed 100%, of his base salary based upon the percent of the
targets achieved. The agreement continues until terminated by the Company, with
termination effective three years after the Company delivers notice of
termination or, if earlier, until Mr. Mauer's death or disability. The agreement
is immediately terminable for Cause (as defined). In the event Mr. Mauer's
employment is terminated, generally, other than for Cause, Mr. Mauer will
receive his salary for a period of three years plus a pro rata portion of the
bonus earned through the date of termination, and his options become fully
exercisable for one year.
The Company entered into an employment agreement with Mr. Cougill as of
February 1, 1994, providing for a $50,000 signing bonus, an annual salary of
$200,000 per annum and minimum bonus of $50,000 for 1994. Mr. Cougill was
granted an Option for five years to purchase 75,000 shares of the Company's
Common Stock at $2.56 per share. In the event Mr. Cougill's employment is
terminated by the Company, generally, other than for Cause (as defined), the
stock options become fully exercisable for one year. The employment agreement
also provides that in the event the Company terminates Mr. Cougill's employment,
generally, other than for Cause, Mr. Cougill will receive his full salary for a
period of one year plus the pro rata portion of his bonus earned through the
date of termination by the Company, and his options become exercisable in full
for one year. The Agreement is immediately terminable for Cause and expires,
unless renewed, in May 1998.
The Company entered into a two year employment agreement with Mr. Groelinger
effective March 1996 in connection with his joining the Company as Chief
Financial Officer. The agreement provides for an annual base salary of $180,000
and a guaranteed minimum bonus for 1996 of $25,000. Thereafter, bonuses will be
a percentage of his salary, with a target of 40%. Mr. Groelinger was granted a
ten year option to purchase 65,000 shares of the Company's Common Stock at an
exercise price of $4.63 per share. The agreement is immediately terminable for
Cause (as defined). The agreement provides generally that if Mr. Groelinger's
employment is terminated other than for Cause, he will be paid no less than one
year's salary (two years' salary in the event termination arises in connection
with a Change of Control (as defined)) plus a pro rata portion of his bonus
through the date of termination, and his stock options become immediately
exercisable for one year to the extent then vested.
15
<PAGE>
The stock options granted to Messrs. Mauer, Cougill and Groelinger in
connection with their employment agreements become immediately exercisable in
the event of a change of control (as defined in their respective employment
agreements).
PROPOSED AMENDMENTS TO 1991 STOCK OPTION PLAN
INTRODUCTION
The Company's Board of Directors has previously adopted the 1991 Stock
Option Plan (the "1991 Plan"). The Board believes that the 1991 Plan is
desirable to attract and retain directors, executives and other key employees of
outstanding ability. Under the 1991 Plan, options may be granted from time to
time to key employees, including officers, directors, advisors and independent
consultants to the Company or to any of its subsidiaries.
The Company is proposing four amendments to the 1991 Plan discussed below.
The following discussion is qualified by the terms of the proposed amendments,
which are attached hereto as Exhibit A.
GENERAL DESCRIPTION OF 1991 STOCK OPTION PLAN
The 1991 Plan is administered by the Board of Directors, which may empower a
committee of directors to administer the 1991 Plan. If such committee is
appointed, it may exercise all of the powers of the Board in relation to the
1991 Plan. The Board is generally empowered to interpret the 1991 Plan, to
prescribe rules and regulations relating thereto, to determine the terms of the
option agreements, to amend them with the consent of the optionee, to determine
the employees to whom options are to be granted, and to determine the number of
shares subject to each option and the exercise price thereof. Options granted
under the 1991 Plan may be designated as incentive stock options ("ISOs") or
nonqualified stock options ("NQSOs"). The per share exercise price for ISOs
granted to directors, officers and employees may not be less than 100% of the
fair market value of a share of Common Stock on the date the option is granted
(110% of such fair market value if the optionee owns more than 10% of the Common
Stock of the Company), and for NQSOs, not less than 85% of fair market value on
the date the NQSO is granted. Upon exercise of an option, the optionee may pay
the purchase price with previously acquired securities of the Company, or at the
discretion of the Board, the Company may loan some or all of the purchase price
to the optionee.
In the discretion of the Board, NQSOs may be exercisable immediately and
need not terminate upon termination of the optionee's relationship with the
Company, and the Board may amend the terms and provisions (other than the option
price) of any NQSOs. Options could be exercisable for a term which may not be
less than one year or greater than ten years from the date of grant. ISOs are
not transferable other than by will or by the laws of descent and distribution.
NQSOs may be transferred to the optionee's spouse or lineal descendants, subject
to certain restrictions. In the event of a change in control or certain other
basic changes in the Company, in the Board's discretion, each option may become
fully and immediately exercisable. Options may be exercised during the holder's
lifetime only by the holder, his or her guardian or legal representative. The
Board may decrease the exercise price of outstanding options to the fair market
value of the Common Stock on the date the Board resolves to decrease such price.
Options granted pursuant to the 1991 Plan may be designated as ISOs, with
the attendant tax benefits provided under Sections 421 of the Internal Revenue
Code of 1986, as amended. Accordingly, the 1991 Plan provides that the aggregate
fair market value (determined at the time an ISO is granted) of the Common Stock
subject to ISOs becoming exercisable for the first time by an employee during
any calendar year (under all stock option plans of the Company and its
subsidiaries) may not exceed $100,000.
Assuming the stockholders approve the amendments to the 1991 Plan described
below, each Company director other than any director who is also the Chief
Executive Officer will receive an
16
<PAGE>
option to acquire 7,500 shares of Common Stock each year. In addition, each
individual (other than current directors) will receive an option to acquire
15,000 shares of Common Stock upon becoming a member of the Board of Directors
and, after the first anniversary of his joining the Board, the annual grant of
an option to acquire 7,500 shares concurrently with the grants to the other
directors. All such directors' options will become exercisable in full on the
first anniversary of the date of grant.
The Board may modify, suspend or terminate the 1991 Plan, provided however,
that certain material modifications affecting the 1991 Plan must be approved by
the stockholders, and any change in the 1991 Plan that may adversely affect an
optionee's rights under an option previously granted under the 1991 Plan
requires the consent of the optionee.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF OPTIONS GRANTED UNDER THE 1991 PLAN
The Company has been advised by its counsel as follows regarding the federal
income tax consequences with respect to the grant and exercise of stock options
and the payment in stock of the exercise price of options under the 1991 Plan.
An optionee will not be taxed upon the grant of an option. At the time of
exercise of an option other than an ISO, the optionee generally will realize
ordinary income in an amount equal to the excess of the fair market value of the
shares over the option price. The Company generally will be entitled to a
deduction in the same amount, and the shares so acquired will have a basis to
the optionee equal to their fair market value. Upon the sale of a share so
acquired, any gain or loss will be a capital gain or loss measured by the
difference between the optionee's basis and the amount realized on such sale,
provided the share is a capital asset in the hands of the holder.
At the time of exercise of an ISO, the optionee will realize no income, and
the Company will not be entitled to any deduction. The optionee generally will
have an item of tax preference equal to the excess of the fair market value of
the shares at such time over the option price. Upon the sale of a share acquired
pursuant to the exercise of an ISO, any gain or loss will generally result in a
capital gain or loss (measured by the difference between the amount realized on
such sale and the exercise price, provided the share sold is a capital asset in
the hands of the holder). However, if at the time of the sale or other
disposition of such share, the optionee held the share for less than one year
after its issuance to him or less than two years after the grant of the option
(a "Disqualifying Disposition"), a portion (or all) of any gain will be taxed as
ordinary income at the time of the disposition in an amount equal to the excess
of the fair market value of the shares on the date of exercise (or if less, the
amount realized upon disposition) over the option price. The Company is not
entitled to a tax deduction with respect to the grant or exercise of an ISO.
However, if the optionee disposes of his stock in a Disqualifying Disposition,
the Company may be entitled to a tax deduction for the amount of ordinary
income, if any, realized by the optionee.
If an optionee uses previously acquired shares of Common Stock to pay the
exercise price of an option, the optionee would not ordinarily recognize any
taxable income to the extent that the number of new shares of Common Stock
received upon exercise of the option does not exceed the number of previously
acquired shares so used. If nonrecognition treatment applies to the payment for
option shares with previously acquired shares, the tax basis of the option
shares received without recognition of taxable income is the same as the basis
of the shares surrendered as payment. In the case of an ISO, if a greater number
of shares of Common Stock is received upon exercise than the number of shares
surrendered in payment of the option price, such excess shares will have a zero
basis in the hands of the holder. Where an option other than an ISO is being
exercised, the option holder will be required to include in gross income (and
the Company will be entitled to deduct) an amount equal to the fair market value
of the additional shares on the date the option is exercised less any cash paid
for the shares. Moreover, if the stock previously acquired by exercise of an ISO
is transferred in connection with the exercise of another option whether or not
an ISO, and if, at the time of such transfer, the stock so
17
<PAGE>
transferred has not been held for the holding period required in order to
receive favorable treatment under the rules governing ISOs, then such transfer
will be treated as a Disqualifying Disposition of the shares so transferred.
PROPOSED AMENDMENT INCREASING AVAILABLE OPTIONS
The Company's Board of Directors adopted the 1991 Plan, which was approved
by the Company's shareholders, to attract and retain qualified management.
Currently, options to acquire an aggregate of 1,165,500 shares of Common Stock
may be granted under the 1991 Plan, and options to acquire 1,099,550 shares have
been granted as of April 15, 1996. Because it believes that the 65,950 shares
remaining available for grant under the 1991 Plan are not sufficient to reward,
attract and retain qualified management, the Board of Directors has approved an
amendment to the 1991 Plan, hereby submitted for stockholder approval. The
amendment will increase the number of shares of Common Stock available for grant
of options by 250,000 from 1,165,500 to 1,415,500.
PROPOSED AMENDMENT LIMITING ANNUAL GRANTS
In order for the compensation in respect of options granted in the future
under the 1991 Plan to be deductible to the Company as "performance based
compensation" (within the meaning of Section 162(m) of the Internal Revenue Code
of 1986, as amended (the "Code"), the Board has adopted, and hereby recommends,
an amendment to the 1991 Plan limiting the number of shares of Common Stock with
respect to which options may be granted to any individual in any year to no more
than 150,000.
PROPOSED AMENDMENT PROVIDING ANNUAL GRANTS TO DIRECTORS
Section 16(b) of the Exchange Act provides, among other things, that the
Company may be entitled to recover any gain that an officer or director receives
when he sells shares of stock upon exercising an option granted to him under the
1991 Plan if within six months before or after such sale he is granted another
option under the 1991 Plan. In view of the potential harshness of this rule, the
Commission promulgated an exemption from its application contained in Rule 16b-3
of the Exchange Act. In order for this exemption to be available to individuals
receiving grants of options under the 1991 Plan, the Rule requires that
"disinterested directors" administer the plan.
In order that the directors qualify as "disinterested directors" under
Section 16 of the Exchange Act, and to otherwise eliminate the use of discretion
in the grant of options to directors, the Board has adopted, subject to the
condition that the proposed amendment increasing by 250,000 the number of shares
available for grant of options under the 1991 Plan is approved by the
stockholders, an amendment to the 1991 Plan pursuant to which each director
other than any director who is also the Chief Executive Officer will receive an
annual grant of an option to purchase 7,500 shares of Common Stock. The
amendment would also provide that each individual who joins the Board of
Directors (excluding current directors) will receive an initial grant of an
option to acquire 15,000 shares of Common Stock, and after the first anniversary
of his joining the Board will receive the annual grant of an option to acquire
7,500 shares concurrently with the grants to other directors. All such options
will have an exercise price equal to the fair market value of the Common Stock
on the date of grant, which will be the closing price of the Common Stock on the
date of each Annual Meeting of Stockholders. Assuming the stockholders approve
the proposed amendment to increase the number of shares available for grant of
options under the 1991 Plan, the Board is submitting for stockholder approval,
and recommending, that the stockholders approve the proposed amendment to
provide fixed grants of options to directors.
REQUIRED VOTE FOR APPROVAL OF AMENDMENTS
The 1991 Plan requires approval of a majority of stockholders present at a
meeting of stockholders by proxy or in person in order to implement certain
material modifications to the
18
<PAGE>
1991 Plan. Thus, assuming a quorum is present, the affirmative vote of a
majority of the shares of the Common Stock present at the Annual Meeting of
Stockholders entitled to vote is required to approve the above-described
amendments to the 1991 Plan.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING
"FOR" THE APPROVAL OF THE AMENDMENTS TO THE 1991 STOCK OPTION PLAN.
PROPOSED AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION
GENERAL
The Company's Certificate of Incorporation (the "Certificate") currently
authorizes 20,000,000 shares of Common Stock, $0.01 par value, and 1,000,000
shares of Preferred Stock (the "Preferred Stock") par value $0.01 per share. On
December 8, 1995, the Company's Board of Directors adopted, subject to
shareholder approval, an amendment to the Certificate (the "Amendment") to
increase the number of shares of Common Stock authorized for issuance under the
Certificate by 20,000,000, to a total of 40,000,000 shares and to increase the
number of shares of Preferred Stock authorized for issuance under the
Certificate by 4,000,000, to a total of 5,000,000 shares. To implement this
amendment, the first paragraph of Article 4 of the Company's Certificate would
be amended to read in its entirety:
"Fourth. The total number of shares of Stock which the Corporation shall
have authority to issue is FORTY-FIVE MILLION (45,000,000) consisting of
Forty Million (40,000,000) shares of Common Stock, par value $.01 per
share, and (ii) Five Million (5,000,000) shares of Preferred Stock, par
value $.01 per share.
REASONS FOR THE PROPOSED AMENDMENT
The number of authorized shares of the Company's stock has remained at
20,000,000 share of Common Stock and 1,000,00 shares of Preferred Stock since
the Company was formed as a privately held corporation in 1988. As of April 15,
1996 approximately 9,566,000 shares of Common stock were issued and outstanding
or reserved for the issuance of shares under options and warrants, leaving
approximately 10,434,000 shares of Common Stock available for future issuance.
No shares of Preferred Stock are currently outstanding. The number of shares
remaining available is not considered adequate for the Company's future possible
requirements as a publicly held corporation.
The Company's Board of Directors believes that it is prudent to increase the
number of authorized shares of Common Stock and Preferred Stock to the proposed
level in order to provide a reserve of shares available for issuances in
connection with possible future actions. Such actions may include, but are not
limited to, issuing additional shares in connection with stock splits or stock
dividends, financing through the issuance of equity securities, acquiring
property or companies with the Company's stock, establishing strategic
relationships with corporate partners, employee benefit plans or creating
impediments to a takeover or transfer of control of the Company and for other
general corporate purposes. If the additional authorized Common Stock and
Preferred Stock is available for issuance, the Board of Directors would avoid
delays and expense occasioned by the necessity of obtaining stockholder approval
at the time the action is to occur, which will better enable the Company to
engage in such transactions.
The additional Common Stock to be authorized by adoption of the Amendment
would have rights identical to the currently outstanding Common Stock of the
Company. If the Amendment is adopted, it will become effective upon filing of
the Amendment with the Secretary of the State of Delaware.
19
<PAGE>
POSSIBLE EFFECTS OF THE AMENDMENT
If the proposed Amendment is approved, the Board of Directors may cause the
issuance of additional shares of Common Stock or Preferred Stock without further
vote of stockholders of the Company, except as provided under the Delaware
corporate law or under the rules of the NASDAQ or any national securities
exchange on which shares of Common Stock or Preferred Stock of the Company are
then listed. Current holders of Common Stock have no preemptive or like rights,
which means that current stockholders do not have a prior right to purchase any
new issue of capital stock of the Company in order to maintain their
proportionate ownership thereof. The effects of the authorization of additional
shares of stock may also include dilution of the voting power of currently
outstanding shares and reduction of the portion of dividends and of liquidation
proceeds payable to the holders of currently outstanding Common Stock.
In addition, the Board of Directors could use authorized but unissued shares
to create impediments to a takeover or a transfer of control of the Company.
Accordingly, the increase in the number of authorized shares of stock may deter
a future takeover attempt which holders of Common Stock may deem to be in their
best interest or in which holders of Common Stock may be offered a premium for
their shares over the market price. The Board of Directors is not currently
aware of any attempt to take over or acquire the Company. While it may be deemed
to have potential anti takeover effects, the proposed Amendment to increase the
authorized Common Stock and Preferred Stock is not prompted by any specific
effort or takeover threat currently perceived by management.
REQUIRED VOTE
Assuming the presence of a quorum, the affirmative vote of a majority of the
shares of Common Stock at the Annual Meeting of Stockholders and entitled to
vote on this item is required to approve the Amendment to the Certificate of
Incorporation.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A
VOTE "FOR" THE AMENDMENT TO THE CERTIFICATE OF INCORPORATION.
COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
In 1995, the Company entered into an agreement with Mr. McConnaughy pursuant
to which he agreed to provide certain investment banking services through 1996
for an aggregate fee of $75,000. Mr. McConnaughy is a member of the Company's
Board of Directors and its Compensation and Audit Committees and a member of a
group of stockholders who may be deemed to beneficially own and exercise control
over approximately 47% of the Company's outstanding Common Stock and management
as of April 15, 1996. See "Security Ownership of Certain Beneficial Owners and
Management" and "Restructuring of Ownership of Company's Stock by Principal
Stockholders." Mr. McConnaughy did not vote with respect to the Board of
Directors' resolution to enter into the agreement for his investment banking
services.
In 1996 the Company began presenting "Bo Schembechler Football Clinics"
throughout the United States. Mr. Schembechler, the former head football coach
at the University of Michigan from 1968 through 1989, assisted in designing and
operating the clinics. Mr. Schembechler was also the lead speaker on football
coaching and safety to over 1,000 high school coaches and athletic directors at
these clinincs. Mr. Schembechler received a fee of $2,500 for each of 8 clinics
for his services in 1996, and the Company anticipates conducting additional
clinics in future years for which Mr. Schembechler will receive additional
compensation. In April 1996, Mr. Schembechler resigned from the Compensation
Committee of the Company's Board but remains a member of the Board and its Audit
Committee.
20
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
OBLIGATIONS TO CERTAIN SHAREHOLDERS
In September 1988, the Company issued the Note to MLC in the original
principal amount of $2,000,000 in connection with a recapitalization. In the
recapitalization, the Company issued Common Stock in exchange for Class A Common
Stock of the Company owned by MLC (which had a preferential right to receive
$4,000,000 before any dividends or distributions were to be made to any other
stockholders), Class B Common Stock owned by MacGregor Sporting Goods, Inc.
("Mac I") (from certain subsidiaries of which the Company acquired its initial
businesses in April 1988 for certain cash consideration, Class B Common Stock,
long term notes and assumed liabilities) and Class B Common Stock owned by Mr.
Frederick Brooks (the Company's President and Chief Operating Officer until
February 1992). Originally due in 1993, the Note was extended until January
1998, subject to mandatory prepayments relating to cash flow measurement and
changes in capitalization. The outstanding balance of the Note at April 15, 1996
was $870,834. The Note bears interest at 10% per annum, is secured by a lien on
substantially all of the assets of the Company and is subordinated to the
Company's indebtedness to NBD Bank.
In 1994 the Company granted MLC a Warrant to purchase 150,000 shares of its
Common Stock in consideration for the extension of the Note. As discussed in
"Restructuring of Ownership of Company's Stock by Principal Stockholders," in
August 1995 certain of the original partners withdrew from MLC, and in
connection with MLC Restructuring, Messrs. Cougill, Mauer, McConnaughy,
Nederlander and Toboroff or entities controlled by them acquired interests in
the Warrant.
In May 1991, Messrs. Nederlander, Toboroff, Epstein, McConnaughy and Brooks
(the "Investors") acquired from a party not affiliated with the Company a
promissory note with an aggregate principal amount of $439,000. The Note was
originally issued in April 1988 to Mac I in connection with the acquisition
described above. The unaffiliated seller had acquired substantially all of the
assets of Mac I's successor, MacGregor Sports Inc., in a sale authorized during
the successor's bankruptcy proceedings. The Note is due in April 1998 and bears
simple interest at the rate of 8% per annum (which interest accrues and is not
paid until the principal is due) and is unsecured. In August 1995, Mr. Epstein
transferred his interest in the Note to Messrs. Cougill, Mauer, McConnaughy,
Nederlander and Toboroff in connection with the MLC Restructuring.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Grant Thornton have been the principal accountants of the Company during the
calendar year ended December 31, 1995 and have been selected as the Company's
principal accountants for the current calendar year, subject to ratification by
the shareholders. A representative of Grant Thornton will be present at the
Annual Meeting, with an opportunity to make a statement if he desires to do so,
and will be available to respond to appropriate questions.
If, prior to the next Annual Meeting of Stockholders, such firm shall
decline to act or otherwise become incapable of acting, or if its engagement
shall be otherwise discontinued by the Board of Directors, the Board of
Directors will appoint other independent auditors whose appointment for any
period subsequent to the next Annual Meeting will be subject to stockholder
approval at such meeting.
Assuming the presence of a quorum, the affirmative vote of a majority of the
shares of Common Stock present at the Annual Meeting of Stockholders and
entitled to vote on this item is required to ratify the selection of the
Company's independent auditors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" THE
RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT AUDITORS
21
<PAGE>
SUBMISSION OF STOCKHOLDER PROPOSALS
Any stockholder desiring to submit a proposal for action at the next Annual
Meeting of Stockholders which the stockholder desires to be presented in the
Company's Proxy Statement with respect to such meeting should submit such
proposal to the Company, c/o its General Counsel, Lisa J. Marroni, Esq., Riddell
Sports Inc., 900 Third Avenue, 27th Floor, New York, New York 10022, no later
than February 27, 1997.
OTHER MATTERS
Other than as set forth in this proxy statement, within a reasonable time
before the commencement of this solicitation, the Board of Directors did not
know of any other business constituting a proper subject for action by the
stockholders to be presented at the Annual Meeting. However, if any such matter
should properly come before the meeting, the persons named in the enclosed proxy
intend to vote such proxy in accordance with their best judgment.
The proxies named in the enclosed form of proxy and their substitutes, if
any, will vote the shares represented by the enclosed form of proxy, if the
proxy appears to be valid on its face and, where a choice is specified on the
form of proxy, the shares will be voted in accordance with each specification so
made.
A list of stockholders of record of the Company as of May 15, 1996, will be
available for inspection by stockholders during normal business hours from May
31 through July 1, 1996 at the offices of the Company, 900 Third Avenue, 27th
Floor, New York, New York 10022.
In addition to soliciting proxies by mail, the Company may make requests for
proxies by telephone, telegraph or messenger or by personal solicitation by
officers, directors, or employees of the Company, or by any one or more of the
foregoing means. The Company will also reimburse brokerage firms and other
nominees for their actual out-of-pocket expenses in forwarding proxy material to
beneficial owners of the Company's shares. All expenses in connection with such
solicitation are to be paid by the Company.
By Order of the Board of Directors
Robert E. Nederlander
CHAIRMAN OF THE BOARD
Dated: May 20, 1996
22
<PAGE>
EXHIBIT A
AMENDMENT NO. 3 TO THE
RIDDELL SPORTS INC. 1991
STOCK OPTION PLAN
WHEREAS, the Board of Directors (the "Board") of Riddell Sports Inc. (the
"Company") has heretofore adopted the Riddell Sports Inc. 1991 Stock Option Plan
(the "Plan"); and
WHEREAS, the Board has previously amended the Plan on August 20, 1992 and on
September 30, 1993; and
WHEREAS, the Board desires to further amend the Plan.
NOW, THEREFORE, the Plan is hereby further amended, subject to the approval
of this Amendment by the stockholders of the Company, as follows:
1. The third sentence of Section 2 is hereby amended by deleting the number
"1,165,500" and inserting, in lieu thereof, the number "1,415,500."
2. Section 2 is hereby further amended by adding a new sentence at the end
thereof to read as follows:
"In no event may Options with respect to more than 150,000 shares be
granted to any Eligible Individual in any one calendar year."
3. Section 18 is hereby amended by deleting paragraph 2 thereof and
inserting, in lieu thereof, the following:
"2. The term "disinterested person" shall have the meaning ascribed
thereto in Rule 16b-3 under the Securities Exchange Act of 1934,
as amended (the "Exchange Age")."
4. The Plan is hereby amended by adding a new Section 19 thereto to read as
follows:
"DIRECTOR OPTIONS
Notwithstanding any of the other provisions of the Plan to the
contrary, the provisions of this Section 19 shall apply only to
grants of Options to directors of the Company. Except as set forth in
this Section 19, the other provisions of the plan shall apply to
grants of Options to directors to the extent not inconsistent with
this Section.
(a) GENERAL. Directors shall receive nonqualified stock options in
accordance with this Section 19 and may not be granted Incentive
Stock Options under this Plan. The exercise price per share of Common
Stock purchasable under Options granted to directors under this
Section 19 shall be the fair market value (determined under Section
5) of a share of Common Stock on the date of grant. No Agreement with
any director may alter the provisions of this Section 19 and no
Option granted to a director under this Section 19 may be subject to
a discretionary acceleration of exercisability.
(b) AUTOMATIC GRANTS. (1) Upon becoming a member of the Board of
Directors, each director (other than members of the Board on the date
of the annual stockholders' meeting in 1996 and other than a director
who is also the Chief Executive Officer) shall be granted
automatically without action by the Board, an Option to purchase
15,000 shares of Common Stock.
(2) On the date of the annual stockholders' meeting first occurring
after the first anniversary of a grant to a director pursuant to
paragraph b(1) above, such director shall be granted an Option to
acquire 7,500 shares of Common Stock.
<PAGE>
(3) On the date of each annual meeting of stockholders commencing
with the annual meeting in 1996, each director, other than a director
who is also the Chief Executive Officer and other than a director who
has received a grant of Options pursuant to paragraph b(1) above less
than one year prior to such annual meeting date, will be granted
automatically, without action by the Board, an Option to purchase
7,500 shares of Common Stock.
(4) On the date of each annual meeting of stockholders commencing
with the annual meeting in 1997, each director who has previously
received an Option under paragraph b(2) or b(3) above (other than a
director who is then also the Chief Executive Officer), will be
granted automatically, without action by the Board, an Option to
purchase 7,500 shares of Common Stock.
(c) VESTING. Subject to Section 18 hereof, each Option shall be
exercisable as to 100 percent of the shares covered by the Option on
the first anniversary of the date the Option is granted; provided,
however, that upon the Retirement of a director all Options held by
such director pursuant to this Section 19 shall become 100 percent
exercisable. To the extent not exercised, installments shall
accumulate and be exercisable, in whole or in part, at any time after
becoming exercisable, but no later than the date the option expires.
Sections 9 and 10 hereof shall not apply to Options granted to
directors pursuant to this Section 19.
(d) DURATION. Each Option granted to a director pursuant to this
Section 19 shall expire on the first to occur of (i) the tenth
anniversary of the date of grant of the Option, (ii) the second
anniversary of the director's termination of service as a member of
the Board other than for Cause or (iii) thirty days following the
director's removal from the Board for Cause. The Board may not
provide for an extended exercise period beyond the periods set forth
in this Section 19.
(e) DEFINITIONS. For purposes of this Section 19, the following
terms shall have the following meanings:
"Cause" shall mean the termination of service as a member of the
Board by a director due to any act of (i) fraud or intentional
misrepresentation, or (ii) embezzlement, misappropriation or
conversion of assets or opportunities of the Company or any
subsidiary.
"Retirement" shall mean the termination of service as a member of
the Board by a director that occurs (i) after having served as a
member of the Board for at least 10 years and (ii) other than for
Cause."
-2-
<PAGE>
RIDDELL SPORTS INC.
ANNUAL MEETING OF STOCKHOLDERS -- JUNE 27, 1996 PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND UNLESS
OTHERWISE PROPERLY MARKED AND EXECUTED BY THE UNDERSIGNED STOCKHOLDER THIS WILL
BE VOTED FOR PROPOSALS 1 AND 2 AS RECOMMENDED BY THE BOARD OF DIRECTORS.
The undersigned hereby appoints each of Robert E. Nederlander and David M.
Mauer, each with full power to act without the other, and with full power of
substitution as the undersigned or any attorneys and proxies of the undersigned
would be entitled to vote if personally present at the Annual Meeting of
Stockholders, to be held at the Harvard Club, 27 West 44th Street, New York, New
York on Thursday, June 27, 1996 at 1:00 p.m., local time, or at any adjournment
thereof, upon such business as may properly come before the meeting, including
the items set forth below.
<TABLE>
<S> <C>
1. ELECTION OF DIRECTORS.
/ / FOR all nominees below (except as marked to the contrary below)
NOMINEES: ROBERT E. NEDERLANDER, DAVID M. MAUER, LEONARD TOBOROFF, DON
R. KORNSTEIN, JOHN MCCONNAUGHY, JR., AND GLENN E. ("BO") SCHEMBECHLER.
<CAPTION>
1.
<S> <C>
/ / WITHHOLD AUTHORITY to vote for all nominees below
</TABLE>
INSTRUCTION: To withhold authority to vote for any nominee, write that nominee's
name in the space provided: ___________________________________________________
<TABLE>
<S> <C>
2. AMENDING THE COMPANY'S 1991 STOCK OPTION PLAN TO LIMIT THE NUMBER OF
SHARES OF COMMON STOCK WITH RESPECT TO WHICH OPTIONS MAY BE GRANTED TO
ANY INDIVIDUAL IN ANY YEAR.
<CAPTION>
2.
<CAPTION>
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
<TABLE>
<S> <C>
3. AMENDING THE COMPANY'S 1991 STOCK OPTION PLAN TO INCREASE THE NUMBER
OF SHARES OF COMMON STOCK RESERVED FOR ISSUANCE THEREUNDER BY 250,000
SHARES.
<CAPTION>
3.
<CAPTION>
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
<PAGE>
<TABLE>
<S> <C>
4. IN THE EVENT PROPOSAL NUMBER 3 IS APPROVED BY THE STOCKHOLDERS,
AMENDING THE COMPANY'S 1991 STOCK OPTION PLAN TO PROVIDE FIXED GRANTS
OF OPTIONS TO MEMBERS OF THE BOARD OF DIRECTORS.
<CAPTION>
4.
<CAPTION>
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
<TABLE>
<S> <C>
AMENDING THE COMPANY'S CERTIFICATE OF INCORPORATION TO INCREASE THE
5. NUMBER OF SHARES OF COMMON STOCK THE COMPANY IS AUTHORIZED TO ISSUE
FROM 20,000,000 TO 40,000,000 AND TO INCREASE THE NUMBER OF SHARES OF
PREFERRED STOCK THE COMPANY IS AUTHORIZED TO ISSUE FROM 1,000,000 TO
5,000,000.
<CAPTION>
<CAPTION>
5.
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
<TABLE>
<S> <C>
6. TO RATIFY THE APPOINTMENT OF GRANT THORNTON AS CERTIFIED INDEPENDENT
PUBLIC ACCOUNTANTS FOR THE 1996 CALENDAR YEAR.
<CAPTION>
6.
<CAPTION>
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Dated _______________________, 1996
Signature _________________________
___________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN
THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
