As filed with the Securities and Exchange Commission on November 19, 1996
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
SPORTMART, INC.
(Exact name of registrant as specified in its charter)
Delaware 36-2702213
(State or other jurisdiction (IRS Employer Identification
of incorporation or organization) Number)
1400 South Wolf Road, Suite 200, Wheeling, Illinois 60090
(Address of Principal Executive Offices including Zip Code)
(847) 520-0100
(Issuer's telephone number, including area code)
Sportmart, Inc. 1996 Restricted Stock Plan, as amended and restated
(Full title of plan)
Gregory E. Fix, Esq.
1400 South Wolf Road, Suite 200, Wheeling, Illinois 60090
(Name, address and telephone number of agent for service)
Copies to:
Marshall T. Scott, Esq.
Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661
(312) 902-5200
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Amount to maximum maximum
Title of be offering aggregate Amount of
securities to registered price per offering registration
be registered (1) share(2) price(2) fee
Class A Non-
Voting Common
Stock
($.01 par 400,000 See Footnote
value) shares 2 below $1,262,400 $416.59
(1) Includes an indeterminate number of shares of Sportmart, Inc.
Common Stock that may be issuable by reason of stock splits,
stock dividends or similar transactions.
(2) The amounts are based upon the closing price of the Company's
Class A Non-Voting Common Stock as reported in the Nasdaq
National Market on November 12, 1996 of $3.156 and are used solely
for the purpose of calculating the registration fee pursuant to
Rule 457(h)(1) under the Securities Act of 1933.
<PAGE>
PART I
INFORMATION REQUIRED IN THE PROSPECTUS
The information called for in Part I of Form S-8 is currently
included in the prospectus for the Sportmart, Inc. 1996 Restricted
Stock Plan, as amended and restated (the "Plan"), and is not being filed
with or included in this Form S-8 in accordance with the rules and
regulations of the Securities and Exchange Commission (the "SEC").
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed with the SEC are incorporated in
this Registration Statement by reference:
1. Sportmart, Inc.'s Annual Report on Form 10-K for the year
ended January 28, 1996 (File No. 0-20672).
2. All reports filed pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") since
the end of the fiscal year covered by the Annual Report
referred to above.
3. The description of the Sportmart, Inc. common stock (the
"Common Stock") which is contained in Sportmart, Inc.'s
registration statement filed pursuant to Section 12 of the
Exchange Act and all amendments thereto and reports filed
for the purpose of updating such description.
In addition, all documents filed by Sportmart, Inc. (the
"Company") pursuant to Sections 13(a), 13(c), 14 and 15(d) of the
Exchange Act after the date of this registration statement and prior
to the filing of a post-effective amendment which indicates that all
securities offered hereby have been sold or which deregisters all such
securities then remaining unsold, shall be deemed to be incorporated
in this registration statement by reference and to be a part hereof
from the date of filing of such documents. Any statement contained in
a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of
this registration statement to the extent that a statement contained
herein or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes
such statement.
The Company hereby undertakes to provide without charge to each
person who has received a copy of any of the prospectuses to which
this registration statement relates, upon the written or oral request
of any such person, a copy of any or all the documents that have been
or may be incorporated by reference into this registration statement,
other than exhibits to such documents (unless such exhibits are
incorporated therein by reference).
<PAGE>
Item 4. Description of Securities.
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
Not Applicable.
Item 6. Indemnification of Directors and Officers.
Article Ten of the Company's Restated Certificate of
Incorporation provides that the Company shall indemnify its directors
to the fullest extent permitted by the Delaware General Corporation
Law and may indemnify its officers and employees to such extent,
except that the Company shall not be obligated to indemnify any such
person (i) with respect to proceedings, claims or actions initiated or
brought voluntarily by any such person and not by way of defense, or
(ii) for any amounts paid in settlement of an action indemnified
against by the Company without the prior written consent of the
Company. The Company has entered into indemnity agreements with each
of its directors and certain officers selected by the Company. These
agreements may require the Company, among other things, to indemnify
such officers and directors against certain liabilities that may arise
by reason of their status or service as directors or officers, to
advance expenses to them as they are incurred, provided that they
undertake to repay the amount advanced if it is ultimately determined
by a court that they are not entitled to indemnification, and to
obtain directors' and officers' liability insurance if available on
reasonable terms.
In addition, Article Nine of the Company's Certificate of
Incorporation provides that a director of the Company shall not be
personally liable to the Registrant or its stockholders for monetary
damages for breach of his or her fiduciary duty as a director, except
for liability (i) for any breach of the director's duty of loyalty to
the Company or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the General Corporation
Law of the State of Delaware, or (iv) for any transaction from which
the director derives an improper personal benefit.
Reference is made to Section 145 of the General Corporation Law
of the State of Delaware which provides for indemnification of
directors and officers in certain circumstances.
The Company has purchased an insurance policy under which it is
entitled to be reimbursed for certain indemnity payments it is
required or permitted to make to its directors and officers.
Item 7. Exemption from Registration Claimed.
Not Applicable.
<PAGE>
Item 8. Exhibits.
4.1 Form of Sportmart, Inc. 1996 Restricted Stock Plan, as
amended and restated.
4.2 Restated Certificate of Incorporation of the Company
(incorporated herein by reference to the same numbered Exhibit
to the Company's Statement No. 33-83886).
4.3 By-Laws of the Company (incorporated herein by reference to
the same numbered Exhibit to the Company's Statement No 33-83886).
5. Opinion of Katten Muchin & Zavis as to the legality of
the shares of Common Stock being offered under the Plan.
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Katten Muchin & Zavis (included in
Exhibit 5 herein).
24. Power of Attorney (included on the signature page of this
Registration Statement).
Item 9. Undertakings.
1. The Company hereby undertakes:
(a) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the
Registration Statement (or the most recent post-
effective amendment thereof) which, individually, or in
the aggregate, represent a fundamental change in the
information set forth in the Registration Statement;
(iii) To include any material information
with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material
change to such information in the Registration
Statement;
provided, however, that paragraphs (a)(i) and (a)(ii) do not
apply if the information required to be included in a post-
effective amendment by those paragraphs is contained in periodic
reports filed by the Company pursuant to Section 13 or Section
15(d) of the Exchange Act that are incorporated by reference in
the Registration Statement.
<PAGE>
(b) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) To remove from registration by means of a post-
effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
2. The Company hereby undertakes that, for the purpose of
determining any liability under the Securities Act of 1933, each
filing of the Company's annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d)
of the Exchange Act) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
3. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
c o ntrolling persons of the Company pursuant to the foregoing
provisions, or otherwise, the Company has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act of 1933
and is therefore unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Company of expenses incurred or paid by a director, officer or
controlling person of the Company in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
the Company will, unless in the opinion of its counsel the matter has
b e en settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act of 1933
and will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized on this 19th day of November,
1996.
SPORTMART, INC.
By: /s/ ANDREW S. HOCHBERG
Andrew S. Hochberg
Chief Executive Officer
and Director
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints Gregory E. Fix and Marshall T. Scott, and each of them, his
true and lawful attorneys-in-fact and agents, with full power of
substitution, to sign on his behalf, individually and in each capacity
stated below, all amendments and post-effective amendments to this
Registration Statement on Form S-8 and to file the same, with all
exhibits thereto and any other documents in connection therewith, with
the Securities and Exchange Commission under the Securities Act of
1933, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully and to all
intents and purposes as each might or could do in person, hereby
ratifying and confirming each act that said attorneys-in-fact and
agents may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
Signature Title Date
/s/ LARRY J. HOCHBERG Chairman and Director November 19,1996
/s/ ANDREW S. HOCHBERG Chief Executive Officer
and Director November 19,1996
(Principal Executive Officer)
/s/ C. MARK SCOTT President and Director November 19,1996
/s/ JOHN A. LOWENSTEIN Chief Operating Officer, November 19,1996
Director and Secretary
/s/ THOMAS T HENDRICKSON Executive Vice President
and Chief Financial Officer
(Principal Financial and
Accounting Officer) November 19,1996
/s/ JEROME S. GORE Director November 19,1996
/s/ LAWRENCE J. RING Director November 19,1996
/s/ STUART C. NATHAN Director November 19,1996
/s/ CHARLES G. COOPER Director November 19,1996
<PAGE>
EXHIBIT INDEX
Exhibit Page
Number Description Number
4.1 Form of Sportmart, Inc. 1996
Restricted Stock Plan, as amended and
restated.
4.2* Restated Certificate of Incorporation
of the Company.
4.3* By-Laws of the Company.
5 Opinion of Katten Muchin & Zavis as
to the legality of the shares of
Common Stock being offered under the
Plans.
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Katten Muchin & Zavis
(included in Exhibit 5 herein).
24 Power of Attorney (included on the
signature page of this Registration
Statement).
* This Exhibit is incorporated herein by reference to the same-
numbered Exhibit to Registrant's Statement No. 33-83886.
SPORTMART, INC.
1996 RESTRICTED STOCK PLAN
(as amended and restated)
<PAGE>
SPORTMART, INC.
1996 RESTRICTED STOCK PLAN
(as amended and restated)
TABLE OF CONTENTS
PAGE
ARTICLE I ESTABLISHMENT . . . . . . . . . . . . . . . . . . . .1
1.1 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE II DEFINITIONS . . . . . . . . . . . . . . . . . . . . .1
2.1 "Affiliate" . . . . . . . . . . . . . . . . . . . . . . . . . .1
2.2 "Agreement" or "Award Agreement" . . . . . . . . . . . . . . .1
2.3 "Award" . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
2.4 "Board of Directors" or "Board" . . . . . . . . . . . . . . . .1
2.5 "Cause" . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
2.6 "Change in Control" . . . . . . . . . . . . . . . . . . . . . .2
2.7 "Code" or "Internal Revenue Code" . . . . . . . . . . . . . . .2
2.8 "Commission" . . . . . . . . . . . . . . . . . . . . . . . . .2
2.9 "Committee" . . . . . . . . . . . . . . . . . . . . . . . . . .2
2.10 "Common Stock" . . . . . . . . . . . . . . . . . . . . . . . .2
2.11 "Company" . . . . . . . . . . . . . . . . . . . . . . . . . . .2
2.12 "Disability" . . . . . . . . . . . . . . . . . . . . . . . . .2
2.13 "Effective Date" . . . . . . . . . . . . . . . . . . . . . . .2
2.14 "Exchange Act" . . . . . . . . . . . . . . . . . . . . . . . .2
2.15 "Extraordinary Termination of Employment" . . . . . . . . . . .3
2.16 "Grant Date" . . . . . . . . . . . . . . . . . . . . . . . . .3
2.17 "Non-Employee Director" . . . . . . . . . . . . . . . . . . . .3
2.18 "Participant" . . . . . . . . . . . . . . . . . . . . . . . . .3
2.19 "Plan" . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.20 "Representative" . . . . . . . . . . . . . . . . . . . . . . .3
2.21 "Restricted Stock" . . . . . . . . . . . . . . . . . . . . . .3
2.22 "Retirement" . . . . . . . . . . . . . . . . . . . . . . . . .3
2.23 "Rule 16b-3 and "Rule 16a-1(c)(3)" . . . . . . . . . . . . . .3
2.24 "Securities Act" . . . . . . . . . . . . . . . . . . . . . . .3
2.25 "Termination of Employment" . . . . . . . . . . . . . . . . . .4
ARTICLE III ADMINISTRATION . . . . . . . . . . . . . . . . . . .4
3.1 Committee Structure and Authority . . . . . . . . . . . . . . .4
ARTICLE IV STOCK SUBJECT TO PLAN . . . . . . . . . . . . . . . .6
4.1 Number of Shares . . . . . . . . . . . . . . . . . . . . . . .6
4.2 Release of Shares . . . . . . . . . . . . . . . . . . . . . . .6
4.3 Restrictions on Shares . . . . . . . . . . . . . . . . . . . .6
4.4 Stockholder Rights . . . . . . . . . . . . . . . . . . . . . .7
4.5 Best Efforts To Register . . . . . . . . . . . . . . . . . . .7
4.6 Anti-Dilution . . . . . . . . . . . . . . . . . . . . . . . . .7
ARTICLE V ELIGIBILITY . . . . . . . . . . . . . . . . . . . . .8
5.1 Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . .8
<PAGE>
ARTICLE VI RESTRICTED STOCK . . . . . . . . . . . . . . . . . .8
6.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
6.2 Awards and Certificates . . . . . . . . . . . . . . . . . . . .8
6.3 Terms and Conditions . . . . . . . . . . . . . . . . . . . . .9
6.4 Transfer of Shares . . . . . . . . . . . . . . . . . . . . . 10
6.5 Limited Transfer During Offering . . . . . . . . . . . . . . .10
6.6 Committee Discretion . . . . . . . . . . . . . . . . . . . . 10
ARTICLE VII CHANGE IN CONTROL PROVISIONS . . . . . . . . . . . 10
7.1 Impact of Event . . . . . . . . . . . . . . . . . . . . . . . 10
7.2 Definition of Change in Control . . . . . . . . . . . . . . . 11
7.3 Definition of Good Reason . . . . . . . . . . . . . . . . . . 13
ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . 13
8.1 Amendments and Termination . . . . . . . . . . . . . . . . . 13
8.2 Status of Awards Under Code Section 162(m) . . . . . . . . . 13
8.3 General Provisions . . . . . . . . . . . . . . . . . . . . . 14
8.4 Mitigation of Excise Tax . . . . . . . . . . . . . . . . . . 15
8.5 Rights with Respect to Continuance of Employment . . . . . . 15
8.6 Awards in Substitution for Awards Granted by
Other Corporations . . . . . . . . . . . . . . . . . . . . . .15
8.7 Procedure for Adoption . . . . . . . . . . . . . . . . . . . 16
8.8 Procedure for Withdrawal . . . . . . . . . . . . . . . . . . 16
8.9 Delay . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.10 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . 16
8.12 Successors and Assigns . . . . . . . . . . . . . . . . . . . 16
8.13 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 17
<PAGE>
SPORTMART, INC.
1996 RESTRICTED STOCK PLAN
(as amended and restated)
ARTICLE I
ESTABLISHMENT
1.1 Purpose.
The Sportmart, Inc. 1996 Restricted Stock Plan ("Plan") is hereby amended
and restated by Sportmart, Inc. ("Company"). The purpose of this Plan is to
promote the overall financial objectives of the Company and its stockholders by
motivating those persons selected to participate in this Plan to achieve long-
term growth in stockholder equity in the Company and by retaining the
association of those individuals who are instrumental in achieving long-term
growth in shareholder equity. This Plan and the grant of awards hereunder are
expressly conditioned upon the Plan's approval by the security holders of the
Company to the extent determined by the Committee prior to the first annual
meeting to occur after July 1,1996. If such approval is sought but not obtained,
then this Plan and all Awards hereunder shall be null and void ab initio. This
Plan is amended and restated effective as of July 1, 1996.
ARTICLE II
DEFINITIONS
For purposes of this Plan, the following terms are defined as set forth
below:
2.1 "Affiliate" means any individual, corporation, partnership,
association, joint-stock company, limited liability company, trust,
unincorporated association or other entity (other than the Company) that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the Company including, without
limitation, any member of an affiliated group of which the Company is a
common parent corporation as provided in Section 1504 of the Code.
2.2 "Agreement" or "Award Agreement" means, individually or
collectively, any agreement entered into pursuant to this Plan pursuant to
which an Award is granted to a Participant.
2.3 "Award" means a grant of Restricted Stock.
2.4 "Board of Directors" or "Board" means the Board of Directors of
the Company.
2.5 "Cause" shall mean, for purposes of whether and when a Participant
has incurred a Termination of Employment for Cause, any act or omission which
permits the Company to terminate the employment of the Participant pursuant
to the written agreement or arrangement between the Participant and the Company
or an Affiliate for "cause" as defined in such agreement or arrangement, or in
the event there is no such agreement or arrangement or the agreement or
arrangement does not define the term "cause," then "cause" shall mean,(a) any
act or failure to act deemed to constitute cause under the Company's
established practices, policies or guidelines applicable to the Participant or
(b) the Participant's act or omission to act constituting gross misconduct with
respect to the Company or an Affiliate in any material respect.
<PAGE>
2.6 "Change in Control" has the meaning set forth in Section 7.2.
2.7 "Code" or "Internal Revenue Code" means the Internal Revenue Code
of 1986, as amended, final Treasury Regulations thereunder and any subsequent
Internal Revenue Code.
2.8 "Commission" means the Securities and Exchange Commission or any
successor agency.
2.9 "Committee" means the person or persons appointed by the Board of
Directors to administer this Plan, as further described herein.
2.10 "Common Stock" means either the shares of (a) the Voting Common
Stock, $.01 par value per share or (b) the Class A Common Stock, $.01 par
value per share, whichever the Committee determines, whether presently or
hereafter issued, and any other stock or security resulting from adjustment
thereof as described hereinafter or the common stock of any successor to the
Company which is designated for the purpose of this Plan.
2.11 "Company" means Sportmart Inc.,a Delaware corporation, and includes
any successor or assignee corporation or corporations into which the Company
may be merged, changed or consolidated; any corporation for whose securities
all or substantially all of the securities of the Company shall be exchanged;
and any assignee of or successor to substantially all of the assets of the
Company.
2.12 "Disability" means a mental or physical illness that entitles the
Participant to receive benefits under the long term disability plan of the
Company or an Affiliate, or if the Participant is not covered by such a plan
or the Participant is not an employee of the Company or an Affiliate, a mental
or physical illness that renders a Participant totally and permanently incapable
of performing the Participant's duties for the Company or an Affiliate.
Notwithstanding the foregoing, a Disability shall not qualify under this
Plan if it is the result of (i) a willfully self-inflicted injury or willfully
self-induced sickness; or (ii) an injury or disease contracted, suffered, or
incurred while participating in a criminal offense. The determination of
Disability shall be made by the Committee. The determination of Disability for
purposes of this Plan shall not be construed to be an admission of disability
for any other purpose.
2.13 "Effective Date" means July 1, 1996.
2.14 "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
2.15 "Extraordinary Termination of Employment" means the Termination of
Employment of the Participant due to death, Disability or Retirement.
2.16 "Grant Date" means the date that as of which an Award is granted
pursuant to this Plan.
2.17 "Non-Employee Director" shall have the meaning set forth in Rule
16b-3, and shall mean a person who is also an "outside director" under Section
162(m) of the Code.
<PAGE>
2.18 "Participant" means a person who satisfies the eligibility
conditions of Article V and to whom an Award has been granted by the Committee
under this Plan, and in the event a Representative is appointed for a
Participant or another person becomes a Representative, then the term
"Participant" shall mean such Representative. The term shall also include a
trust for the benefit of the Participant, a partnership the interest of
which we held by or for the benefit of the Participant, the Participant's
parents, spouse or descendants, or a custodian under a uniform gifts to minors
act or similar statute for the benefit of the Participant's descendants, to the
extent permitted by the Committee and not resulting in liability under Rule
16b-3. Notwithstanding the foregoing, the term "Termination of Employment"
shall mean the Termination of Employment of the employee.
2.19 "Plan" means this Sportmart Inc.1996 Stock Restricted Plan, as
amended and restated, and as the same may be amended from time to time.
2.20 "Representative" means (a) the person or entity acting as the
executor or administrator of a Participant's estate pursuant to the last will
and testament of a Participant or pursuant to the laws of the jurisdiction in
which the Participant had the Participant's primary residence at the date of
the Participant's death; (b) the person or entity acting as the guardian or
temporary guardian of a Participant; (c) the person or entity which is the
beneficiary of the Participant upon or following the Participant's death; or
(d) any person to whom an Award has been transferred with the permission of
the Committee or by operation of law; provided that only one of the foregoing
shall be the Representative at any point in time as determined under
applicable law and recognized by the Committee.
2.21 "Restricted Stock" means shares of Common Stock granted pursuant
to Article VI.
2.22 "Retirement" means the Participant's Termination of Employment
after attaining either the normal retirement age or the early retirement age
as defined in the principal (as determined by the Committee) tax-qualified
plan of the Company or an Affiliate, if the Participant is covered by such
plan, and if the Participant is not covered by such a plan, then age 65, or
age 55 with the accrual of at least 20 years of service.
2.23 "Rule 16b-3 and "Rule 16a-1(c)(3)" means Rule 16b-3 and Rule
16a-1(c)(3), as from time to time in effect and applicable to the Plan and
Participants, promulgated by the Securities and Exchange Commission under
Section 16 of the Exchange Act.
2.24 "Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
2.25 "Termination of Employment" means the occurrence of any act or
event whether pursuant to an employment agreement or otherwise that actually
or effectively causes or results in the person's ceasing, for whatever reason,
to be an officer, independent contractor, director or employee of the Company
or of any Affiliate, or to be an officer, independent contractor, director or
employee of any entity that provides services to the Company or an Affiliate,
including, without limitation, death, Disability, dismissal, severance at the
election of the Participant, Retirement, or severance as a result of the
discontinuance, liquidation, sale or transfer by the Company or its Affiliates
of all businesses owned or operated by the Company or its Affiliates. With
respect to any person who is not an employee with respect to the Company or an
<PAGE>
Affiliate, the Agreement shall establish what act or event shall constitute a
Termination of Employment for purposes of this Plan. A transfer of employment
from the Company to an Affiliate, or from an Affiliate to the Company, shall
not be a Termination of Employment, unless expressly determined by the
Committee. A Termination of Employment shall occur to an employee who is
employed by an Affiliate if the Affiliate shall cease to be an Affiliate and
the Participant shall not immediately thereafter become an employee of the
Company or an Affiliate.
In addition, certain other terms used herein have definitions given to
them in the first place in which they are used.
ARTICLE III
ADMINISTRATION
3.1 Committee Structure and Authority. This Plan shall be administered
by the Committee which shall be comprised of one or more persons. The Committee
shall be the Compensation Committee of the Board of Directors, unless such
committee does not exist or the Board establishes a committee whose purpose is
the administration of this Plan. In the absence of an appointment, the Board
or the portion thereof that are Non-Employee Directors (if determined relevant
by the Board) shall be the Committee. A majority of the Committee shall
constitute a quorum at any meeting thereof (including telephone conference)
and the acts of a majority of the members present, or acts approved in writing
by a majority of the entire Committee without a meeting, shall be the acts of
the Committee for purposes of this Plan. The Committee may authorize any one
or more of its members or an officer of the Company to execute and deliver
documents on behalf of the Committee. If determined applicable by the Board,
the Committee shall be comprised of such number of Non-Employee Directors as
is required for application of Rule 16b-3 and the deduction of compensation
under Section 162(m) of the Code. A member of the Committee shall not exercise
any discretion respecting himself or herself under this Plan. The Board shall
have the authority to remove, replace or fill any vacancy of any member of the
Committee upon notice to the Committee and the affected member. Any member of
the Committee may resign upon notice to the Board. The Committee may allocate
among one or more of its members, or may delegate to one or more of its agents,
such duties and responsibilities as it determines.
Among other things, the Committee shall have the authority, subject
to the terms of this Plan:
(a) to select those persons to whom Awards may be granted from time
to time;
(b) to determine the number of shares of Common Stock to be covered
by each Award granted hereunder;
(c) to determine the terms and conditions of any Award granted
hereunder (including, but not limited to, any restriction or limitation and
any acceleration or forfeiture waiver regarding any shares of Common Stock);
(d) to adjust the terms and conditions, at any time or from time
to time, of any Award, subject to the limitations of Section 8.1;
(e) to determine under what circumstances an Award may be settled
in cash or Common Stock.
<PAGE>
(f) to provide for the forms of Agreement to be utilized in connection
with this Plan;
(g) to determine whether a Participant has a Disability or a
Retirement;
(h) to determine what securities law requirements are applicable
to this Plan, Awards, and the issuance of shares of Common Stock and to require
of a Participant that appropriate action be taken with respect to such
requirements;
(i) to cancel, as provided in this Plan or an Agreement, outstanding
Awards;
(j) to interpret and make a final determination with respect to the
remaining number of shares of Common Stock available under this Plan;
(k) to require as a condition of the issuance or transfer of a
certificate of Common Stock, the withholding from a Participant of the amount
of any federal, state or local taxes as may be necessary in order for the
Company or any other employer to obtain a deduction or as may be otherwise
required by law;
(l) to determine whether and with what effect an individual has
incurred a Termination of Employment;
(m) to determine whether the Company or any other person has a right
or obligation to purchase Common Stock from a Participant and,if so,the terms
and conditions on which such Common Stock is to be purchased;
(n) to determine the restrictions or limitations on the transfer of
Common Stock;
(o) to determine whether an Award is to be adjusted, modified or
purchased, under this Plan or the terms of an Agreement;
(p) to adopt, amend and rescind such rules and regulations as, in its
opinion, may be advisable in the administration of this Plan; and
(q) to appoint and compensate agents, counsel, auditors or other
specialists to aid it in the discharge of its duties.
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing this Plan as it shall,
from time to time, deem advisable, to interpret the terms and provisions of this
Plan and any Award issued under this Plan (and any Agreement) and to otherwise
supervise the administration of this Plan. The Committee's policies and
procedures may differ with respect to Awards granted at different times or to
different Participants.
Any determination made by the Committee pursuant to the provisions of
this Plan shall be made in its sole discretion, and in the case of any
determination relating to an Award, may be made at the time of the grant of
the Award or, unless in contravention of any express term of this Plan or an
Agreement, at any time thereafter. All decisions made by the Committee pursuant
to the provisions of this Plan shall be final and binding on all persons,
including the Company and Participants. Any determination shall not be subject
to de novo review if challenged in court.
<PAGE>
ARTICLE IV
STOCK SUBJECT TO PLAN
4.1 Number of Shares. Subject to the adjustment under Section 4.6, the
total number of shares of Common Stock reserved and available for distribution
pursuant to Awards under this Plan shall be 400,000 shares of Common Stock
authorized for issuance on the Effective Date. The Committee in its discretion
may determine whether an Award will be Voting Common Stock or Class A Common
Stock, or a combination for purposes of an Award. Such shares may consist, in
whole or in part, of authorized and unissued shares or treasury shares.
4.2 Release of Shares. The Committee shall have full authority to
determine the number of shares of Common Stock available for Award, and in its
discretion may include (without limitation) as available for distribution any
shares of Common Stock that have ceased to be subject to an Award, any shares
of Common Stock subject to any Award that are forfeited, any Award that
otherwise terminates without issuance of shares of Common Stock being made to
the Participant, or any shares (whether or not restricted) of Common Stock
that are received by the Company, including any shares received in satisfaction
of a tax withholding obligation. If any shares could not again be available
for Awards to a particular Participant under any applicable law, such shares
shall be available exclusively for Awards to Participants who are not subject
to such limitations.
4.3 Restrictions on Shares. Shares of Common Stock issued upon exercise
of an Award shall be subject to the terms and conditions specified herein and
to such other terms, conditions and restrictions as the Committee in its
discretion may determine or provide in the Award Agreement. The Company shall
not be required to issue or deliver any certificates for shares of Common Stock,
cash or other property prior to (i) the listing of such shares on any stock
exchange (or other public market) on which the Common Stock may then be listed
(or regularly traded), (ii) the completion of any registration or qualification
of such shares under federal or state law, or any ruling or regulation of any
government body which the Committee determines to be necessary or advisable,
and (iii) the satisfaction of any applicable withholding obligation in order
for the Company or an Affiliate to obtain a deduction with respect to an Award.
The Company may cause any certificate for any share of Common Stock to be
delivered to be properly marked with a legend or other notation reflecting the
limitations on transfer of such Common Stock as provided in this Plan or as the
Committee may otherwise require. The Committee may require any person
exercising an Award to make such representations and furnish such information
as it may consider appropriate in connection with the issuance or delivery of
the shares of Common Stock in compliance with applicable law or otherwise.
Fractional shares shall not be delivered, but shall be rounded to the next
lower whole number of shares.
4.4 Stockholder Rights. No person shall have any rights of a stock-
holder as to shares of Common Stock subject to an Award until, after proper
exercise of the Award or other action required, such shares shall have been
recorded on the Company's official stockholder records as having been issued
and transferred. No adjustment shall be made for cash dividends or other
rights for which the record date is prior to the date such shares are recorded
as issued and transferred in the Company's official stockholder records,
except as provided herein or in an Agreement.
<PAGE>
4.5 Best Efforts To Register. The Company will use its best efforts to
register under the Securities Act the Common Stock delivered or deliverable
pursuant to Awards on Commission Form S-8 if available to the Company for this
purpose (or any successor or alternate form that is substantially similar to
that form to the extent available to effect such registration), in accordance
with the rules and regulations governing such forms, as soon as such forms are
available for registration to the Company for this purpose. The Company will
use its best efforts to cause the registration statement to become effective
as soon as possible and will file such supplements and amendments to the
registration statement as may be necessary to keep the registration statement
in effect until the earlier of (a) the date the Company is no longer a
reporting company under the Exchange Act and (b) the date all Participants
have disposed of all shares delivered pursuant to any Award. The Company may
delay the foregoing obligation if the Committee reasonably determines that any
such registration would materially and adversely affect the Company's
interests or if there is no material benefit to Participants.
4.6 Anti-Dilution. In the event of any Company stock dividend, stock
split, combination or exchange of shares, recapitalization or other change in
the capital structure of the Company, corporate separation or division of the
Company (including, but not limited to, a split-up, spin-off, split-off or
distribution to Company stockholders other than a normal cash dividend), sale
by the Company of all or a substantial portion of its assets (measured on either
a stand-alone or consolidated basis), reorganization, rights offering, a
partial or complete liquidation, or any other corporate transaction, Company
share offering or event involving the Company and having an effect similar to
any of the foregoing, then the Committee may adjust or substitute, as the case
may be, the number of shares of Common Stock available for Awards under this
Plan, the number and class of shares of Common Stock covered by outstanding
Awards, and any other characteristics or terms of the Awards as the Committee
shall deem necessary or appropriate to reflect equitably the effects of such
changes to the Participants; provided, however, that the Committee may limit
any such adjustment so as to maintain the deductibility of the Awards under
Section 162(m) of the Code, and that any fractional shares resulting from such
adjustment shall be eliminated by rounding to the next lower whole number of
shares with appropriate payment for such fractional share as shall reasonably
be determined by the Committee.
ARTICLE V
ELIGIBILITY
5.1 Eligibility. Except as herein provided, the persons who shall be
eligible to participate in this Plan and be granted Awards shall be those
persons who are officers, employees or consultants of the Company or any
subsidiary of the Company, who shall be in a position, in the opinion of the
Committee, to make contributions to the growth, management, protection and
success of the Company and its subsidiaries. Of those persons described in
the preceding sentence, the Committee may, from time to time, select persons
to be granted Awards and shall determine the terms and conditions with respect
thereto. In making any such selection and in determining the form of the
Award, the Committee may give consideration to the functions and
responsibilities of the person's contributions to the Company and its
subsidiaries, the value of the individual's service to the Company and its
subsidiaries and such other factors deemed relevant by the Committee. The
Committee may designate any person who is not eligible to participate in this
Plan if such person would otherwise be eligible to participate in this Plan.
<PAGE>
ARTICLE VI
RESTRICTED STOCK
6.1 General. The Committee shall have authority to grant Restricted
Stock under this Plan at any time or from time to time. The Committee shall
determine the persons to whom and the time or times at which grants of
Restricted Stock will be awarded, the number of shares of Restricted Shares
to be awarded to any Participant, the time or times within which such Awards
may be subject to forfeiture and any other terms and conditions of the
Award. Each Award shall be confirmed by, and be subject to the terms of, an
Agreement. The Committee may condition the grant of Restricted Stock upon the
Participant's completing a period of service or attainment of specified
performance goals by the Participant or by the Company or an Affiliate
(including a division or department of the Company or an Affiliate) for or
within which the Participant is primarily employed or upon such other factors
or criteria as the Committee shall determine. The provisions of Awards need
not be the same with respect to any Participant.
6.2 Awards and Certificates. Restricted Stock granted under the
Plan may be evidenced in such manner as the Committee shall determine. Each
Participant receiving an Award of Restricted Stock may be issued a certificate
in respect of such shares of Restricted Stock. Such certificate shall be
registered in the name of such Participant and shall bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to such Award
as determined by the Committee. The Committee may require that the certificates
evidencing such shares be held in custody by the Company until the restrictions
thereon shall have lapsed and that, as a condition of any Award of Restricted
Stock, the Participant shall have delivered a stock power, endorsed in blank,
relating to the Common Stock covered by such Award.
6.3 Terms and Conditions. Shares of Restricted Stock shall be subject
to the following terms and conditions:
(a) Limitations on Transferability. The purchase price for shares
of Restricted Stock shall be set by the Committee and may be zero.
Restricted Stock shall be subject to such restrictions on transferability,
risk of forfeiture and other restrictions, if any, as the Committee may
impose, which restrictions may lapse separately or in combination at such
times, under such circumstances (including achievement of performance
goals and/or future service requirements), in such installments or
otherwise, as the Committee may determine at the Grant Date or thereafter.
Subject to the provisions of this Plan and the Agreement, during a
period set by the Committee, commencing with the Grant Date (the
"Restriction Period"), the Participant shall not be permitted to sell,
convey, gift, assign, margin, transfer, pledge, encumber, hypothecate,
alienate or otherwise dispose of any interest in shares of Restricted
Stock; provided, however, to the extent that the Company would not be
entitled to deduct the Award under Section 162(m) of the Code, the
Restriction Period (and any restrictions regarding the Restricted Stock)
shall be extended to the extent and until the Award would be deductible
under Section 162(m) of the Code.
<PAGE>
(b) Rights. Except to the extent restricted under the terms of
the Plan and any Award Agreement, and except as provided in Section
6.3(a), the Participant shall have, with respect to the shares of
Restricted Stock, all of the rights of a stockholder of Common Stock,
including, if applicable, the right to vote the shares and the right to
receive any dividends. Unless otherwise determined by the Committee
and subject to this Plan, dividends on Common Stock shall be automatically
reinvested in additional shares of Restricted Stock.
(c) Criteria. Based on service, performance by the Participant
or by the Company or the Affiliate, including any division or department
for which the Participant is employed or such other factors or criteria
as the Committee may determine, the Committee may provide for the lapse
of restrictions and may accelerate the vesting of all or any part of any
Award and waive the restrictions for all or any part of such Award.
(d) Forfeiture. Unless otherwise provided in an Agreement or
determined by the Committee, if the Participant incurs an Extraordinary
Termination of Employment during the Restriction Period, the restrictions
shall lapse and the Participant shall be fully vested in the Restricted
Stock. Except to the extent otherwise provided in the applicable
Agreement and this Plan, upon a Participant's Termination of Employment
for any reason during the Restriction Period other than an Extraordinary
Termination of Employment, all shares of Restricted Stock still subject
to restriction shall be forfeited by the Participant, except the
Committee shall have the discretion to waive in whole or in part any or
all remaining restrictions with respect to any or all of such
Participant's shares of Restricted Stock.
(e) Delivery. If and when the Restriction Period expires without
a prior forfeiture of the Restricted Stock subject to such Restriction
Period, unlegended certificates for such shares shall be delivered to the
Participant.
(f) Election. A Participant may elect to further defer receipt of
the Restricted Stock for a specified period or until a specified event,
subject in each case to the Committee's approval and to such terms as are
determined by the Committee. Subject to any exceptions adopted by the
Committee, such election must be made one (1) year prior to completion
of the Restriction Period.
6.4 Transfer of Shares. Unless otherwise provided in an Agreement, a
Participant may at any time make a transfer of shares of Common Stock received
pursuant to the exercise of an Award to his parents, spouse or descendants,
to any trust for the benefit of the foregoing or to a partnership the interests
of which are for the foregoing persons or to a custodian under a uniform gifts
to minors act or similar statute for the benefit of any of the Participant's
descendants. Any transfer of shares received pursuant to the exercise of an
Award shall not be permitted or valid unless and until the transferee agrees
to be bound by the provisions of this Plan, and any provision respecting
Common Stock under the Agreement, provided that "Termination of Employment"
shall continue to refer to the Termination of Employment of the employee.
<PAGE>
6.5 Limited Transfer During Offering. In the event there is an
effective registration statement under the Securities Act pursuant to which
shares of Common Stock shall be offered for sale in an underwritten offering,
a Participant shall not, during the period requested by the underwriters
managing the registered public offering, effect any public sale or distribution
of shares received directly or indirectly pursuant to an Award.
6.6 Committee Discretion. The Committee may in its sole discretion
include in any Agreement an obligation that the Company purchase a Participant's
shares of Common Stock received upon the exercise of an Award, or may obligate
a Participant to sell shares of Common Stock to the Company upon such terms and
conditions as the Committee may determine and set forth in an Agreement.
ARTICLE VII
CHANGE IN CONTROL PROVISIONS
7.1 Impact of Event. Unless otherwise provided in an Agreement, in the
event of a Change in Control of the Company (as defined in Section 7.2), if the
Participant incurs an involuntary Termination of Employment other than due to
Cause, or if the Participant incurs a Termination of Employment due to Good
Reason (as defined in Section 7.3), in either case within eighteen (18) months
after the date of the Change in Control of the Company, the Restricted Stock of
such Participant shall be fully vested, nonforfeitable and transferable. In
addition, notwithstanding anything herein to the contrary, in the event
of a Change in Control of the Company, the Committee shall have full discretion
(regardless of whether the Participant incurs a Termination of Employment) to
do any or all of the following with respect to outstanding Restricted Stock:
(1) to cause any shares of Restricted Stock to be immediately and
fully vested, nonforfeitable and transferable;
(2) to provide that the securities of another entity be
substituted hereunder for the Common Stock and to make equitable adjustment
with respect thereto; and
(3) to grant the Participant the right to elect by giving notice
during a set period of time from and after a Change in Control to surrender all
or some of the Restricted Stock to the Company and to receive cash in an amount
equal to the fair market value of the Restricted Stock.
If any right under the Plan would cause a transaction to be ineligible
for pooling of interest accounting that would, but for such right under the
Plan, be eligible for such accounting treatment, the Committee may modify or
adjust the right so that pooling of interest accounting shall be available.
7.2 Definition of Change in Control. For purposes of this Plan, a
"Change in Control" shall mean the happening of any of the following events:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
<PAGE>
Exchange Act) of twenty-five percent (25%) or more of either (A) the then
outstanding shares of common stock of the Company (the "Outstanding
Company Common Stock") or (B) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally
in the election of directors (the"Outstanding Company Voting Securities");
provided, however, that the following acquisitions shall not constitute
a Change in Control of the Company: (1) any acquisition directly from the
Company (excluding an acquisition by virtue of the exercise of a
conversion privilege), (2) any acquisition by the Company, (3) any
acquisition by any employee benefit play (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company,
or (4) any acquisition by any corporation pursuant to a reorganization,
merger or consolidation, if, following such reorganization, merger or
consolidation, the conditions described in clauses (A), (B) and (C) of
subsection (c) of this Section are satisfied; or
(b) Individuals who, as of the effective date of this Plan,
constitute the Board of Directors of the Company (the "Incumbent Board
of the Company") cease for any reason to constitute at least a majority
of the Board of Directors of the Company; provided, however, that any
individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's shareholders,
was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board of the Company shall be considered as
though such individual were a member of the Incumbent Board of the
Company, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of either an actual
or threatened election contest (as contemplated by Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board of Directors of the Company; or
(c) Approval by the shareholders of the Company of a
reorganization (including a plan of reorganization under applicable
bankruptcy law), merger or consolidation, in each case, unless,
following such reorganization, merger or consolidation, (A) more than
seventy-five percent (75%) of, respectively, the then outstanding share
of common stock of the corporation resulting from such reorganization,
merger or consolidation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such reorganization, merger or
consolidation in substantially the same proportions as their ownership,
immediately prior to such reorganization, merger or consolidation, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (B) no Person (excluding the Company, any
employee benefit plan (or related trust) of the Company or such
corporation resulting from such reorganization, merger or consolidation
and any Person beneficially owning immediately prior to such
reorganization, merger or consolidation, directly or indirectly, twenty
five percent (25%) or more of the Outstanding Company Common Stock or
Outstanding Voting Securities, as the case may be) beneficially owns,
directly or indirectly, twenty-five percent (25%) or more of,
<PAGE>
respectively, the then outstanding shares of common stock of the
corporation resulting from such reorganization, merger or consolidation
or the combined voting power of the then outstanding voting securities
of such corporation entitled to vote generally in the election of
directors and (C) at least a majority of the members of the board of
directors of the corporation resulting from such reorganization, merger
or consolidation were members of the Incumbent Board of the Company at
the time of the execution of the initial agreement providing for such
reorganization, merge or consolidation; or
(d) Approval by the shareholders of the Company of the sale or
other disposition of all or substantially all of the assets of the
Company, other than to a corporation, with respect to which following such
sale or other disposition, (A) more than seventy-five percent (75%) of,
respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the
election of directors is then beneficially owned, directly or indirectly,
by all or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common Stock
and Outstanding Company Voting Securities immediately prior to such sale
or other disposition in substantially the same proportion as their
ownership, immediately prior to such sale or other disposition, of the
Outstanding Company Voting Securities, as the case may be, (B) no
Person (excluding the Company, any employee benefit plan (or related
trust) of the Company or such corporation and any Person beneficially
owning, immediately prior to such sale or other disposition, directly or
indirectly, twenty-five percent (25%) or more of the Outstanding Company
Voting Securities, as the case may be) beneficially owns, directly or
indirectly, twenty-five percent (25%) or more of, respectively, the
corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election
of directors and (C) at least a majority of the members of the board of
directors of such corporation were members of the Incumbent Board of the
Company at the time of the execution of the initial agreement or action
of the Board providing for such sale or other disposition of assets of
the Company.
7.3 Definition of Good Reason. For purposes of this Plan, "Good
Reason" means the occurrence of a Change in Control and following which there
occurs, without a Participant's prior written consent, within 12 months after
a Change in Control of the Company:
(a) the assignment to the Participant of any material duties
inconsistent in any respect with the Participant's position (including
status, offices, titles and reporting requirements), authority, duties
or responsibilities, or any other material action by the Company
which results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial
and inadvertent action not taken in bad faith and which is remedied by
the Company promptly after receipt of notice thereof given by the
Participant;
(b) a reduction in the Participant's annual base salary in an
amount exceeding 5 percent or, other than changes occasioned by a
substitution or modification of general welfare plans that are generally
applicable to all employees and do not discriminate against the
Participant, a reduction in benefits and other compensation including
amounts excluded from annual base salary; or
<PAGE>
(c) the Company's requiring the Participant to be based at any
office or location more than 50 miles from the Participant's prior office
or location or the Company's requiring the Participant to travel on
Company business to a substantially greater extent than required
immediately prior to the date of the Change in Control."
ARTICLE VIII
MISCELLANEOUS
8.1 Amendments and Termination. The Board or the Committee may amend,
waive, alter, discharge, terminate or discontinue the Plan or any Award at any
time even with prejudice to the Participant. Notwithstanding anything in the
Plan to the contrary, if any right under this Plan would cause a transaction to
be ineligible for pooling of interest accounting that would, but for the right
hereunder, be eligible for such accounting treatment, the Committee may modify
or adjust the right so that pooling of interest accounting shall be available.
8.2 Status of Awards Under Code Section 162(m). It is the intent of the
Company that Awards granted to persons who are "covered "employees within the
meaning of Code Section 162(m) shall be fully deductible under Code Section
162(m). Accordingly, the provisions of the Plan shall be interpreted in a
manner consistent with Code Section 162(m). If any provision of the Plan or
any agreement relating to such an Award does not comply or is inconsistent with
the requirements of Code Section 162(m), such provision shall be construed or
deemed amended to the extent necessary to conform to such requirements.
8.3 General Provisions
(a) Representation. The Committee may require each person
purchasing or receiving shares pursuant to an Award to represent to and
agree with the Company in writing that such person is acquiring the shares
without a view to the distribution thereof. The certificates for such
shares may include any legend which the Committee deems appropriate to
reflect any restrictions on transfer.
(b) No Additional Obligation. Nothing contained in this Plan
shall prevent the Company or an Affiliate from adopting other or
additional compensation arrangements for its employees.
(c) Withholding. No later than the date as of which an amount
first becomes includible in the gross income of the Participant for
Federal income tax purposes with respect to any Award, the Participant
shall pay to the Company (or other entity identified by the Committee),
or make arrangements satisfactory to the Company or other entity
identified by the Committee regarding the payment of, any Federal,
state, local or foreign taxes of any kind required by law to be withheld
with respect to such amount required in order for the Company or an
Affiliate to obtain a current deduction. Unless otherwise determined by
the Committee, withholding obligations may be settled with Common Stock,
including Common Stock that is part of the Award that gives rise to the
withholding requirement provided that any applicable requirements under
Section 16 of the Exchange Act are satisfied. The obligations of the
Company under this Plan shall be conditional on such payment or
arrangements, and the Company and its Affiliates shall, to the extent
permitted by law, have the right to deduct any such taxes from any payment
otherwise due to the Participant.
<PAGE>
(d) Reinvestment. The reinvestment of dividends in additional
Restricted Stock at the time of any dividend payment shall only be
permissible if sufficient shares of Common Stock are available for such
reinvestment.
(e) Representation. The Committee shall establish such procedures
as it deems appropriate for a Participant to designate a Representative
to whom any amounts payable in the event of the Participant's death are
to be paid.
(f) Controlling Law. This Plan and all Awards made and actions
taken thereunder shall be governed by and construed in accordance with
the laws of the State ofDelaware (other than its law respecting choice
of law). This Plan shall be construed to comply with all applicable law,
and to avoid liability to the Company, an Affiliate or a Participant,
including, without limitation, liability under Section 16(b) of the
Exchange Act.
(g) Offset. Any amounts owed to the Company or an Affiliate by
the Participant of whatever nature may be offset by the Company from the
value of any shares of Common Stock, cash or other thing of value under
this Plan or an Agreement to be transferred to the Participant, and no
shares of Common Stock, cash or other thing of value under this Plan or
an Agreement shall be transferred unless and until all disputes between
the Company and the Participant have been fully and finally resolved and
the Participant has waived all claims to such against the Company or an
Affiliate.
(h) Fail-Safe. With respect to persons subject to Section 16 of
the Exchange Act, transactions under this Plan are intended to comply
with all applicable conditions of Rule 16b-3. To the extent any provision
of the Plan or action by the Committee fails to so comply, it shall be
deemed null and void, to the extent permitted by law and deemed advisable
by the Committee. Moreover, in the event the Plan does not include a
provision required by Rule 16b-3 to be stated herein, such provision
shall be deemed to be incorporated by reference into the Plan with respect
to Participants subject to Section 16.
(i) Right to Capitalize. The grant of an Award shall in no way
affect the right of the Company to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge,
consolidation, dissolve, liquidate or sell or transfer all or any part
of its business or assets.
8.4 Mitigation of Excise Tax. Subject to any agreement between the
Participant and the Company, if any payment or right accruing to a Participant
under this Plan (without the application of this Section 8.4), either alone or
together with other payments or rights accruing to the Participant from the
Company or an Affiliate ("Total Payments") would constitute a "parachute
payment" (as defined in Section 280G of the Code and regulations thereunder),
such payment or right shall be reduced to the largest amount or greatest right
that will result in no portion of the amount payable or right accruing under
this Plan being subject to an excise tax under Section 4999 of the Code or
being disallowed as a deduction under Section 280G of the Code. The
determination of whether any reduction in the rights or payments under this
Plan is to apply shall be made by the Committee in good faith after
consultation with the Participant, and such determination shall be conclusive
and binding on the Participant. The Participant shall cooperate in good faith
with the Committee in making such determination and providing the necessary
information for this purpose.
<PAGE>
8.5 Rights with Respect to Continuance of Employment. Nothing contained
herein shall be deemed to alter the relationship between the Company or an
Affiliate and a Participant, or the contractual relationship between a
Participant and the Company or an Affiliate if there is a written contract
regarding such relationship. Nothing contained herein shall be construed to
constitute a contract of employment between the Company or an Affiliate and
a Participant. The Company or an Affiliate and each of the Participants
continue to have the right to terminate the employment or service relationship
at any time for any reason, except as provided in a written contract. The
Company or an Affiliate shall have no obligation to retain the Participant in
its employ or service as a result of this Plan. There shall be no inference
as to the length of employment or service hereby, and the Company or an
Affiliate reserves the same rights to terminate the Participant's
employment or service as existed prior to the individual becoming a
Participant in this Plan.
8.6 Awards in Substitution for Awards Granted by Other Corporations.
Awards may be granted under this Plan from time to time in substitution for
awards held by employees, directors or service providers of other entities
who are about to become officers, directors or employees of the Company or an
Affiliate.
8.7 Procedure for Adoption. Any Affiliate of the Company may by
resolution of such Affiliate's board of directors, with the consent of the
Board of Directors and subject to such conditions as may be imposed by the
Board of Directors, adopt this Plan for the benefit of its employees as of
the date specified in the board resolution.
8.8 Procedure for Withdrawal. Any Affiliate which has adopted this
Plan may, by resolution of the board of directors of such direct or indirect
subsidiary, with the consent of the Board of Directors and subject to such
conditions as may be imposed by the Board of Directors, terminate its adoption
of this Plan.
8.9 Delay. If at the time a Participant incurs a Termination of
Employment (other than due to Cause) or if at the time of a Change in Control,
the Participant is subject to "short-swing" liability under Section 16 of the
Exchange Act, any time period provided for under this Plan or an Agreement to
the extent necessary to avoid the imposition of liability shall be suspended
and delayed during the period the Participant would be subject to such
liability, but not more than six (6) months and one (1) day. The Company
shall have the right to suspend or delay any time period described in this
Plan or an Agreement if the Committee shall determine that the action may
constitute a violation of any law or result in liability under any law to the
Company, an Affiliate or a stockholder of the Company until such time as the
action required or permitted shall not constitute a violation of law or
result in liability to the Company, an Affiliate or a stockholder of
the Company. The Committee shall have the discretion to suspend the
application of the provisions of this Plan required solely to comply with
Rule 16b-3 if the Committee shall determine that Rule 16b-3 does not apply to
this Plan.
8.10 Headings. The headings contained in this Plan are for reference
purposes only and shall not affect the meaning or interpretation of this Plan.
<PAGE>
8.11 Severability. If any provision of this Plan shall for any reason
be held to be invalid or unenforceable, such invalidity or unenforceability
shall not effect any other provision hereby, and this Plan shall be construed
as if such invalid or unenforceable provision were omitted.
8.12 Successors and Assigns. This Plan shall inure to the benefit of
and be binding upon each successor and assign of the Company. All obligations
imposed upon a Participant, and all rights granted to the Company hereunder,
shall be binding upon the Participant's heirs, legal representatives and
successors.
8.13 Entire Agreement. This Plan and the Agreement constitute the
entire agreement with respect to the subject matter hereof and thereof,
provided that in the event of any inconsistency between this Plan and the
Agreement, the terms and conditions of the Agreement shall control.
Executed as of the 1st day of July, 1996.
SPORTMART INC.
By__________________________________
November 19, 1996
Sportmart, Inc.
1400 South Wolf Road
Corporate Square
Suite 200
Wheeling, Illinois 60090
Ladies and Gentlemen:
We have acted as counsel for Sportmart, Inc., a Delaware
corporation (the"Company"), in connection with the preparation and filing of
a Registration Statement on Form S-8 (the "Registration Statement") for
the registration for sale under the Securities Act of 1933, as amended, of
400,000 shares of the Company's Class A Non-Voting Common Stock, $.01 par
value (the "Common Stock"), which may be issued pursuant to the Sportmart,
Inc. 1996 Restricted Stock Plan, as amended and restated (the "Plan").
In connection with this opinion, we have examined and relied upon
originals or copies of, certified or otherwise identified to our
satisfaction, the following:
1. The Registration Statement;
2. The Restated Certificate of Incorporation of the
Company;
3. The By-Laws of the Company;
4. Resolutions duly adopted by the Board of Directors of
the Company relating to the adoption of the Plan;
5. The Plan;
6. Certificates of public officials, certificates of
officers, representatives and agents of the Company, and
we have assumed that all of the representations
contained therein are accurate and complete; and
7. Such other instruments, documents, statements and
records of the Company and others as we have deemed
relevant and necessary to examine and rely upon for the
purpose of this opinion.
<PAGE>
In connection with this opinion, we have assumed the accuracy and
completeness of all documents and records that we have reviewed, the
genuineness of all signatures, the authenticity of the documents
submitted to us as originals and the conformity to authentic original
documents of all documents submitted to us as certified, conformed or
reproduced copies. We have further assumed that all natural persons
involved in the transactions contemplated by the Registration Statement
(the "Offering") have sufficient legal capacity to enter into and
perform their respective obligations and to carry out their roles in
the Offering.
Based upon the foregoing, we are of the opinion that the 400,000
shares of Common Stock issuable under the Plan, when issued and
delivered by the Company in accordance with the terms of the Plan, will
be validly issued, fully paid and nonassessable securities of the
Company.
Our opinion expressed above is limited to the laws of the State of
Delaware, and we do not express any opinion herein concerning any other
laws. This opinion is solely for the information of the addressee
hereof and is not to be quoted in full or in part or otherwise referred
to, nor is it to be filed with any governmental agency or any other
person without our prior written consent. This opinion is given as of
the date hereof and we assume no obligation to advise you of changes
that may hereafter be brought to our attention.
We hereby consent to the use of this opinion for filing as Exhibit
5 to the Registration Statement.
Very truly yours,
KATTEN MUCHIN & ZAVIS
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in this registration
statements of Sportmart, Inc. on Form S-8 relating to the Sportmart, Inc.
Restricted Stock Plan, as amended and restated, of our report dated
April 2, 1996 on our audits of the consolidated financial statements of
Sportmart, Inc. and Subsidiary as of January 28, 1996 and January 29, 1995
for each of the three fiscal years in the period ended January 28, 1996,
which report is included in this Annual Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
November 19, 1996
