Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934
Filed by the Registrant - x
Filed by a Party other than the Registrant
Check the appropriate box:
Preliminary Proxy Statement
x Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
SPORTMART, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
$125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(l), or 14a-
6(j)(2).
$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:
4) Proposed maximum aggregate value of transaction:
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.:
Proxy Statement pursuant to Section 14(a)
3) Filing Party:
4) Date Filed:
1
Set forth the amount on which the filing fee is
calculated and state how it was determined.
<PAGE>
May 23, 1997
To the Stockholders of
SPORTMART, INC.
You are cordially invited to attend the Annual Meeting of
Stockholders of Sportmart, Inc. (the Company ) to be held at The
Westin Hotel - O Hare, 6100 River Road, Rosemont, Illinois, on Friday,
June 27, 1997 at 10:00 a.m. local time.
The attached notice of Annual Meeting and Proxy Statement fully
describe the formal business to be transacted at the Annual Meeting,
which includes the following matters:
1. Election of three Class II directors.
2. A proposal to ratify and approve a Restricted Stock Plan.
The members of the Board of Directors have unanimously determined
that the proposals summarized above are in the best interest of the
Company and strongly recommend that you vote FOR each of them. The
reasons for the Board of Directors recommendations and other
important information are contained in the accompanying Proxy
Statement. Because of the importance of the issues involved, you are
urged to read the Proxy Statement carefully.
Directors and officers of the Company will be present to help host
the Annual Meeting and to respond to any questions that our
stockholders may have. By attending the Annual Meeting, you will have
the opportunity to hear the plans for our Company s future, to meet
your officers and directors and to participate in the business of the
Annual Meeting.
It is important that your shares be represented and voted at the
Annual Meeting, whether or not you plan to attend in person. Please
sign, date and mail the enclosed proxy card at your earliest
convenience.
/S/ LARRY J. HOCHBERG
LARRY J. HOCHBERG
Chairman of the Board
<PAGE>
SPORTMART, INC.
1400 South Wolf Road
Wheeling, Illinois 60090
NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 27, 1997
The Annual Meeting of Stockholders of Sportmart, Inc., a Delaware
corporation (the Company ), will be held on Friday, June 27, 1997 at
10:00 a.m. (local time) at The Westin Hotel - O Hare, 6100 River Road,
Rosemont, Illinois. Stockholders who desire to attend the Annual
Meeting should mark the appropriate box on the enclosed proxy card.
Persons who do not indicate attendance at the Annual Meeting on the
proxy card will be required to present acceptable proof of stock
ownership for admission to the meeting.
The Annual Meeting will be held for the following purposes:
1. Election of three Class II directors.
2. A proposal to ratify and approve a Restricted Stock Plan.
Only stockholders of record at the close of business on April 30,
1997 are entitled to notice of and to vote at the Annual Meeting. The
list of stockholders entitled to vote at the Annual Meeting will be
open to examination of any stockholder during the ten days prior to
the Annual Meeting at the Company s offices, 1400 South Wolf Road,
Wheeling, Illinois 60090, during normal business hours.
Whether or not you expect to attend the Annual Meeting, please
complete, sign, date and mail your proxy in the enclosed envelope,
which requires no postage if mailed within the United States. If you
are present at the Annual Meeting, you may, if you wish, withdraw your
proxy and vote your shares personally.
By Order of the Board of Directors
/S/ JOHN A. LOWENSTEIN
JOHN A. LOWENSTEIN
May 23, 1997 Corporate Secretary
<PAGE>
SPORTMART, INC.
1400 South Wolf Road
Wheeling, Illinois 60090
(847) 520-0100
PROXY STATEMENT
Annual Meeting of Stockholders
June 27, 1997
SOLICITATION AND REVOCABILITY OF PROXY
T h i s Proxy Statement is furnished in connection with the
solicitation of Proxies by the Board of Directors of Sportmart, Inc.
(the "Company") to be used at the Annual Meeting of Stockholders, and
any adjournment or postponement thereof (the "Meeting"), to be held on
the date, at the time and place, and for the purposes set forth in the
foregoing notice. This Proxy Statement, the foregoing notice and the
enclosed Proxy are first being mailed to stockholders on or about May
23, 1997.
A Proxy in the accompanying form which is properly signed, dated,
returned and not revoked will be voted in accordance with the
instructions contained therein. Unless authority to vote for the
election of directors (or for any one or more nominees) is withheld,
Proxies will be voted for the slate of three directors proposed by
the Board, and, if no contrary instructions are given, Proxies will be
voted for approval of each of the remaining items on the Proxy. The
Board does not intend to bring any matter before the Meeting except as
specifically indicated in the notice, nor does the Board know of any
matters which anyone else proposes to present for action at the
Meeting. However, if any other matters properly come before the
Meeting, the persons named in the enclosed Proxy, or their duly
constituted substitutes acting at the Meeting, will be authorized to
vote or otherwise act thereon in accordance with their judgment and
discretion.
The Company's Annual Report to Stockholders for the year ended
February 2, 1997, including financial statements, is enclosed with
this Proxy Statement. However, the Annual Report to Stockholders does
not constitute a part of this Proxy Statement.
The cost of soliciting Proxies in the accompanying form has been,
or will be, paid by the Company. In addition to the solicitation of
Proxies by the use of the mails, certain officers and associates (who
will receive no compensation therefor in addition to their regular
salaries) may be used to solicit Proxies personally and by telephone
and telegraph. In addition, banks, brokers and other custodians,
nominees and fiduciaries will be requested to forward copies of the
Proxy material to their principals and to request authority for the
execution of Proxies. The Company will reimburse such persons for
their expenses in so doing.
The Proxy may be revoked at any time before it is exercised by
providing written notice of such revocation to Sportmart, Inc., 1400
South Wolf Road, Wheeling, Illinois 60090, Attention: Corporate
Secretary. The Proxy also may be revoked by the attendance and voting
by a stockholder at the Meeting or by the execution and delivery to
the Company of a Proxy dated subsequent to a prior Proxy.
<PAGE>
RECORD DATE; VOTING
The Board of Directors has fixed the close of business on April 30,
1997 as the record date for the determination of stockholders entitled
to notice of, and to vote at, the Meeting. As of the record date of
the Meeting, there were outstanding 5,148,833.5 shares of Voting
Common Stock and 7,694,734.5 shares of Class A Common Stock. The
outstanding shares of Voting Common Stock constitute the only
outstanding voting securities of the Company entitled to be voted at
the Meeting. Each holder of Voting Common Stock is entitled to one
vote for each share held by such person with respect to each matter
(including election of directors) to be voted on at the Meeting.
REQUIRED VOTE
The vote of a plurality of the shares cast in person or by Proxy is
required to elect nominees for director. The vote of a majority of
the shares present in person or by Proxy and entitled to vote is
required to approve the Restricted Stock Plan.
Due to their ownership of a majority of the outstanding shares of
Voting Common Stock, Larry J. Hochberg, Barbara P. Hochberg, Andrew S.
Hochberg, John A. Lowenstein and Amy Lowenstein (collectively, the
"Hochberg Family") together have sufficient voting power to elect the
nominees proposed by the Board of Directors and to approve the other
proposal described in this statement and they have advised the Board
of Directors that they intend to vote their shares in favor of the
election of such nominees and such other proposals.
ABSTENTIONS AND BROKER NON-VOTES
The presence at the Annual Meeting in person or by Proxy of the
holders of a majority of the outstanding shares of Voting Common Stock
is necessary to constitute a quorum. Abstentions and broker non-votes
will be included in determining the presence of a quorum. Neither
abstentions nor broker non-votes will have any effect on the proposal
to elect directors. Abstentions will be considered present and
entitled to vote with respect to the proposal to approve the
Restricted Stock Plan and will have the same effect as votes against
such proposal. Broker non-votes will not be considered present and
entitled to vote with respect to such proposal and will have no effect
on the voting of such proposal.
PROXIES
Larry J. Hochberg and Andrew S. Hochberg, the persons named as
proxies on the Proxy accompanying this Proxy Statement, have been
selected by the Board of Directors of the Company to serve in such
capacity. They are both directors of the Company. Each executed and
returned Proxy will be voted in accordance with the directions
indicated thereon, or if no direction is indicated, such Proxy will be
voted in accordance with the recommendations of the Board of Directors
contained in this Proxy Statement.
<PAGE>
ELECTION OF DIRECTORS
(Proposal 1)
The Company's Board of Directors consists of eight directors. The
Restated Certificate of Incorporation of the Company currently in
effect provides that the members of the Board of Directors shall be
divided into three classes, as nearly equal in number as possible,
with one class being elected each year. At the Meeting, three
persons will be elected as Class II directors, each to be elected for
a term of three years expiring at the 2000 Annual Meeting or until
their successors are elected and qualified. All nominees are
currently serving as directors and have consented to serve for new
terms. The Board of Directors recommends that the stockholders vote
in favor of the election of the three nominees named in this Proxy
Statement to serve as directors of the Company.
If any nominee becomes unavailable for any reason, the persons
named in the form of Proxy are expected to consult with management of
the Company in voting the shares represented by them. Management has
no reason to doubt the availability of any of the nominees to serve
and no reason to believe that any of the nominees will be unavailable
or unwilling to serve if elected to office. To the knowledge of
management, the nominees intend to serve the term for which election
is sought. A plurality of the votes cast in person or by proxy at the
Meeting or any adjournment thereof will be required to elect the
nominees for directors. Each stockholder is entitled to one vote per
share held as of the record date. Stockholders will not be allowed to
cumulate their votes in the election of directors.
Nominees
The names of the nominees for the office of director, together with
certain information concerning such nominees, are set forth below:
<TABLE>
Position With The Company Director
Name Age and Principal Occupation Since
<S> <C> <C> <C>
C. Mark Scott 44 President 1996
Jerome S. Gore 77 Director, Chairman 1986
Emeritus, Hartmarx
Corporation
Dr. Lawrence J. Ring 48 Director, Professor of 1995
Business Administration,
College of William & Mary
</TABLE>
C. Mark Scott has been a director of the Company since 1996 and
was promoted to President in September 1996. He joined the Company in
July 1995 as Executive Vice President - Merchandising & Marketing. He
previously was Executive Vice President - Merchandising & Marketing
for Bombay Company from June 1993 until July 1995. From June 1990
u n t i l June 1993, Mr. Scott was Executive Vice President -
Merchandising & Stores for Mark Cross.
Jerome S. Gore has been a Director of the Company since 1986. He
is currently the Chairman Emeritus of Hartmarx Corporation, a publicly
held manufacturer and retailer of apparel. He previously served as a
Director of Hartmarx Corporation until 1989 and as a Director of
Peoples Energy Corp. until 1989.
<PAGE>
Dr. Lawrence J. Ring was elected to the Board of Directors in 1995.
He is a Professor of Business Administration at the College of William
and Mary in Williamsburg, Virginia. Dr. Ring s teaching and research
focus on marketing and retailing strategy and marketing management.
He is the author of the book Decisions in Marketing as well as a
variety of scholarly articles. In addition to his work at William and
Mary, Dr. Ring teaches in numerous executive development programs
worldwide. His current consulting activities include assignments with
IBM Corporation, Office Depot, Sears, Roebuck and Company and Lowe s
Stores. Over the years, Dr. Ring has had numerous other consulting
assignments with retailers such as R.H. Macy, Saks Fifth Avenue,
Marshall Field s Company, T. Eaton and Company (Canada), Coles Myer
(Australia), Cada Department Stores (Venezuela), Macintosh Group
( N etherlands and Portugal), ICA (Sweden) and Kesko (Finland).
Professor Ring is currently serving on the Board of Directors for Bon
Ton Stores, Inc. Dr. Ring has previously held academic appointments
at the University of Toronto, the University of Virginia and Purdue
University.
Other Directors
The following persons will continue to serve as directors of the
Company after the Annual Meeting until their terms of office expire
(as indicated below) or until their successors are elected and
qualified.
<TABLE>
Position With the Company Director Term to
Director's Name Age and Principal Occupation Since Expire
<S> <C> <C> <C> <C>
Larry J. Hochberg 59 Chairman of the Board 1970 1998
Andrew S. Hochberg 34 Chief Executive Officer 1986 1998
John A. Lowenstein 35 Chief Operating Officer 1992 1999
Charles G. Cooper 69 Director; President, GCG 1990 1999
Partners.
Stuart C. Nathan 55 Director, Executive Vice 1972 1998
President, JMB Realty
Corporation
</TABLE>
Larry J. Hochberg was named Chairman of the Board in September 1996
from his previous position as Chairman and Chief Executive Officer.
Mr. Hochberg has been a Director since he co-founded the Company in
1970. Mr. Hochberg also co-founded Children's Bargain Town (now part
of Toys "R" Us), which he sold in 1969. He currently serves on the
Executive Committee and the Board of Directors of the International
Mass Retailing Association. Mr. Hochberg is the father of Andrew S.
Hochberg and the father-in-law of John A. Lowenstein.
Andrew S. Hochberg was promoted to Chief Executive Officer in
September 1996 from his previous position as President, which position
he held from 1995 until 1996. From 1993 to 1995 he was Executive
Vice President. From 1990 to 1993 he was Senior Vice President and
Chief Financial Officer. Mr. Hochberg joined Sportmart in 1987 as
Director of Real Estate and has been a Director of the Company since
1986. Mr. Hochberg also is currently serving on the Board of
Directors of Strouds, Inc., a specialty retailer of home textile
<PAGE>
products and accessories. Prior to joining the Company in 1987, Mr.
Hochberg graduated from the Northwestern University School of Law and
the University of Pennsylvania, Wharton School of Business. Mr.
Hochberg is the son of Larry J. Hochberg and the brother-in-law of
John A. Lowenstein.
John A. Lowenstein was promoted in September 1996 to Chief
Operating Officer from Executive Vice President, Operations, which
position he held from March 1995. From February 1994 to March 1995,
Mr. Lowenstein served as Senior Vice President, Marts, and from
January 1992 to February 1994, Mr. Lowenstein served as Midwest
Regional Vice President. Mr. Lowenstein has been a Director of the
Company since February 1992 and was named Secretary to the Board of
Directors in 1996. Mr. Lowenstein has been with the Company since
1988. He previously served as Executive Vice President of the Chapel
Hill Garden Cemetery Association from 1984 to 1986. In 1990, he
graduated from the Northwestern University School of Law. Mr.
Lowenstein is the son-in-law of Larry J. Hochberg and the brother-in-
law of Andrew S. Hochberg.
Charles G. Cooper has been a Director of the Company since 1990.
Since 1996, he has been President of GCG Partners, a private
partnership providing strategic counsel and equity capital. Mr.
Cooper retired in 1996 from Helene Curtis Industries, Inc., an
international personal care products company where he was Senior Vice
President. From 1985 to 1993, he was the Executive Vice President
and Chief Operating Officer of Helene Curtis Industries, Inc. Mr.
Cooper also was a Director of Helene Curtis Industries, Inc. from
1984 to 1996.
Stuart C. Nathan has been a Director of the Company since 1972.
Since 1972, he has been Executive Vice President and a Director of JMB
Realty Corporation, a national real estate development and management
firm. Mr. Nathan is also the President of JMB Development Corporation
and JMB Urban Development Co.
Meetings
The Board of Directors meets regularly and may schedule additional
special meetings upon request of the Chairman of the Board, the
President of the Company or one-half of the whole Board of Directors.
During fiscal 1996, the Board of Directors met three times in person
and three times by telephone. Each director attended at least 75% of
the Board meetings and meetings of Board committees on which he served
that were held during fiscal 1996.
Committees of the Board of Directors
The Board of Directors has an Audit Committee currently composed of
Charles G. Cooper and Jerome S. Gore. The Audit Committee generally
has responsibility for recommending independent accountants to the
Board for selection, reviewing the plan and scope of the accountants'
audit, reviewing the Company's audit and control functions and
reporting to the full Board of Directors regarding all of the
foregoing. The Audit Committee had three meetings and conferred by
telephone on a number of occasions in fiscal 1996.
<PAGE>
The Board of Directors' Compensation Committee is currently
composed of Charles G. Cooper, Jerome S. Gore and Stuart C. Nathan.
The Compensation Committee determines the compensation of Larry J.
Hochberg, Andrew S. Hochberg, and John A. Lowenstein, while the
compensation of the Company's other executive officers is determined
by the Company in a manner consistent with prior years. The
Compensation Committee s responsibilities include the administration
of the Company s Restricted Stock Plan, Stock Purchase Plan, Stock
Option Plan, and Key Employee Incentive Plan, including designating
participants and awarding options under each of the foregoing plans.
The Compensation Committee took action by written consent on thirteen
occasions and conferred by telephone on a number of occasions in
fiscal 1996.
The Company does not have a Nominating Committee.
Compensation of Directors
Cash Compensation. A director who is an employee of the Company is
not compensated for service as a member of the Board of Directors or a
committee of the Board. For the fiscal year ended February 2, 1997,
non-employee directors received cash compensation consisting of an
annual retainer of $15,000, with additional cash compensation of
$1,000 per day for each committee meeting they attended.
For fiscal 1997, cash compensation for non-employee directors shall
consist of an annual retainer of $15,000. Non-employee directors also
will receive $1,000 per day for each committee meeting they attend.
Directors' Stock Option Plan. The Sportmart, Inc. Directors' Stock
Option Plan (the "Director Plan") was adopted by the Board of
Directors on August 4, 1992 and approved by the Company's stockholders
on September 25, 1992. The Director Plan provides for the granting of
options to purchase an aggregate of 75,000 shares (subject to
adjustment in certain circumstances) of Voting Common Stock to members
of the Board of Directors who are not also employees of the Company or
any of its subsidiaries (the "Outside Directors"). The Director Plan
is designed to promote the interests of the Company by providing an
increased opportunity for existing and potential new directors to
acquire an investment in the Company, thereby maintaining and
strengthening their desire to remain with or join the Company's Board
of Directors and align their interest with those of the stockholders.
Effective October 6, 1992 (the "Initial Grant Date"), each of the
Outside Directors of the Company was granted non-qualified stock
options ("NQSOs") to purchase 3,000 shares of Voting Common Stock at
the initial public offering price. On each anniversary of the Initial
Grant Date, NQSOs to purchase 3,000 shares of Voting Common Stock have
been and will be granted to each of the Outside Directors (with a
limit of options to acquire a total of 15,000 shares to be granted to
any Outside Director). New Outside Directors will be granted options
to acquire 3,000 shares of Voting Common Stock at the first meeting of
directors held subsequent to their election and, thereafter, options
to acquire 3,000 shares at each anniversary of such date if the person
is still serving as a director on such date (with a limit of options
to acquire a total of 15,000 shares to be granted to any Outside
D i rector). All options granted under the Director Plan are
exercisable immediately upon grant and, for options other than those
granted as of the Initial Grant Date, at a price per share equal to
<PAGE>
the closing price of the Voting Common Stock as reported on the Nasdaq
National Market on the date of grant or, if the market is closed on
such date, the next business day. Once granted, options may not be
canceled.
If any options under the Director Plan are surrendered before
exercise or lapse without exercise, in whole or in part, the shares
reserved for grant will revert to the status of available shares. All
options expire on the earlier to occur of (a) seven years following
the Grant Date and (b) two years after the first date on which the
Outside Director is no longer serving as a director of the Company.
The Board of Directors may amend the plan from time to time, but
not more than once every six months, other than to comport with
changes in the Internal Revenue Code, the Employee Retirement Income
Security Act or the rules thereunder. Furthermore, any amendment to
the Director Plan shall be subject to approval by the stockholders of
the Company if the amendment would: (i) materially increase the
benefits accruing to the participants under the Director Plan; (ii)
materially increase the number of securities which may be issued under
the Director Plan; and (iii) materially modify the requirements as to
eligibility for participation under the Director Plan.
EXECUTIVE OFFICERS
The following persons are executive officers of the Company who are
not identified in the tables entitled "Election of Directors
Nominees" or " Other Directors."
<TABLE>
Name Age Position
<S> <C> <C>
Thomas T. Hendrickson 42 Executive Vice President and
Chief Financial Officer
Joseph A. DeFalco, Jr. 43 Senior Vice President - Human
Resources
Mitchell P. Kahn 36 Senior Vice President - Corporate
Development
Robert Morrison 41 Senior Vice President - Stores
Gregory E. Fix 38 Vice President and General Counsel
</TABLE>
Mr. Hendrickson joined the Company in January 1993 as Vice
President - Financial Operations. In March 1993, he was named Chief
Financial Officer and in March 1995 he was named Senior Vice President
and Chief Financial Officer. In September 1996, Mr. Hendrickson was
promoted to Executive Vice President and Chief Financial Officer.
Prior to joining the Company, Mr. Hendrickson was employed as the Vice
President and Controller by Millers Outpost Stores from 1987 to his
hiring at Sportmart.
Mr. DeFalco joined the Company in 1987 as Director of Human
Resources, and was promoted to Vice President - Human Resources in
1993. In November 1995 he was named Senior Vice President - Human
Resources. Prior to joining the Company, Mr. DeFalco was employed by
Wieboldt Stores, Inc. as Director of Human Resources.
<PAGE>
Mr. Kahn joined the Company in 1992 as Vice President - Real
Estate. In November 1995 he was promoted to Senior Vice President -
Corporate Development. From 1989 to 1991, he was a partner in the law
firm of Levenstein and Resnick as an attorney specializing in real
estate law. From 1987 to 1989, Mr. Kahn was associated with the law
firm of Nagelberg and Resnick.
Mr. Morrison joined the Company in September 1995 as Vice President
- - Stores. He was promoted to Senior Vice President - Stores in July
1996. Previously Mr. Morrison was employed as Director of Factory
Stores for Ann Taylor from March 1993 until September 1995. Prior to
March 1993 he was Senior Vice President of Stores, Regional Director
for Ann Taylor.
Mr. Fix joined the Company in 1990 as Corporate Counsel, and was
promoted to Vice President and General Counsel in 1994. From 1987
until 1990, Mr. Fix was associated with the law firm of Kroesch &
Kavanagh.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires
executive officers and directors, and persons who beneficially own
more than ten percent (10%) of the Company's stock, to file initial
reports of ownership and reports of changes in ownership with the
Securities and Exchange Commission and NASDAQ. Executive officers,
directors, and greater than ten percent (10%) beneficial owners are
required by SEC regulations to furnish the Company with copies of all
Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to
the Company and written representations from the executive officers
and directors, the Company believes that all Section 16(a) filing
requirements applicable to its executive officers, directors, and
greater than ten percent (10%) beneficial owners were complied with.
EXECUTIVE COMPENSATION
The following table provides information concerning the annual and
long-term compensation for services in all capacities to the Company
for 1996, 1995, and 1994 for those persons who were at February 2,
1997 (i) the chief executive officer and (ii) the four other most
highly compensated (combined salary and bonus) executive officers of
the Company (collectively, the "Named Officers").
<PAGE>
<TABLE> SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation Awards
Restricted Securities All Other
Stock Underlying Compensation
Name and Principal Year Salary($) Bonus($) Awards($)(1) Options(#)(2) ($)(3)
Position
<S> <C> <C> <C> <C> <C> <C>
Larry J.Hochberg 1996 300,000 - - 15,657 2,200
Chairman of the Board 1995 151,309 - - 30,000 1,323
1994 360,776 - - - 1,868
Andrew S. Hochberg 1996 300,000 - - 39,526 2,626
Chief Executive Officer 1995 139,692 - - 30,000 2,078
1994 191,370 15,000 - - 2,196
C. Mark Scott(4) 1996 289,469 35,376 312,500 20,000 293,642
President 1995 275,000 50,000 - 50,000 34,357
1994 - - - - -
John A. Lowenstein 1996 232,692 - - 36,220 2,706
Chief Operating Officer 1995 111,184 - - 20,000 587
1994 129,488 10,000 - 10,000 1,342
Thomas T. Hendrickson 1996 221,916 24,150 234,375 49,981 3,071
Executive Vice President 1995 173,531 3,000 - 15,000 1,087
& Chief Financial Officer 1994 131,958 9,500 3,000 6,500 695
</TABLE>
(1) Represents the dollar of grants of restricted stock awards
consisting of Class A Common Stock, calculated based upon the
closing price of the Company's Class A Common Stock as reported on
Nasdaq National Market on November 19, 1996.
(2) The securities underlying all options in this table are shares of
the Company's Voting Common Stock and Class A Common Stock. The
securities underlying the options grants made in fiscal years
1993 and 1994 are for the purchase of shares of the Company's
V o ting Common Stock, except for an option grant to Mr.
Hendrickson made in 1994 to purchase 2,500 shares of the
Company's Class A Common Stock. The securities underlying the
option grants made in fiscal 1995 are for the purchase of shares
of the Company's Class A Common Stock.
(3) Detail of amounts reported in the "All Other Compensation" column
for 1996 is provided in the table below.
(4) Mr. Scott became an employee of the Company effective July 24,
1995; the salary set forth for fiscal 1995 is the base salary Mr.
Scott would have received for the full fiscal year; Mr. Scott
actually received $182,212 in salary and bonus in fiscal 1995.
<PAGE>
<TABLE>
Item L. Hochberg A. Hochberg M. Scott J. Lowenstein T. Hendrickson
<S> <C> <C> <C> <C> <C>
Company Contribution
to Profit Sharing Plan $ 712 $ 812 $ 812 $ 812 $ 812
Company Match
for 401(k) Plan $ 1,488 $ 1,814 $ 1,214 $ 1,889 $ 2,259
Other
Compensation -0- -0- $291,616(1) -0- -0-
Total All Other
Compensation $ 2,200 $ 2,626 $293,642 $ 2,701 $ 3,071
</TABLE>
__________________
(1) $ 1 7 2,616 of this amount represents expenses incurred in
connection with the relocation of Mr. Scott from his residence in
Texas to his new residence in Illinois; the remaining $119,000 of
this amount represents the forgiveness of a $90,000 loan,
grossed up for income taxes, which was made to Mr. Scott.
Option Grants In Last Fiscal Year
The following table provides information on grants of stock
options during fiscal 1996 to the Named Officers pursuant to the Stock
Option Plan. The securities underlying all options in this table are
shares of the Company's Class A Common Stock.
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE> Annual Rates of Stock
Individual Grants Price Appreciation
for Option Term(2)
Number of
Shares of
Class A Total Options
Common Stock Granted to
Underlying Employees Exercise
Options in Fiscal or Base Expiration
Name Granted Year(%) Price(1) Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Larry J. Hochberg 10,657 1.28 $ 3.265 04/08/06(3) $ 21,882 $ 55,455
5,000 0.60 2.940 11/25/06(4) 9,244 23,428
Andrew S. Hochberg 19,526 2.34 3.265 04/08/06(3) 40,094 101,605
20,000 2.40 2.940 11/25/06(4) 36,980 93,712
C. Mark Scott 10,000 1.20 3.375 01/29/06(5) 21,225 53,789
10,000 1.20 3.265 04/08/06(3) 20,533 52,036
John A. Lowenstein 16,220 1.94 3.265 04/08/06(3) 33,305 84,402
20,000 2.40 2.940 11/25/06(4) 36,980 93,712
Thomas T. Hendrickson 30,000 3.60 3.375 01/29/06(5) 63,676 161,366
19,981 2.40 3.265 04/08/06(3) 41,028 103,973
</TABLE>
__________________
(1) Price of the Company's stock on the date of the grant of stock
options.
(2) Potential realizable value is presented net of the option
exercise price but before any federal or state income taxes
associated with exercise. These amounts represent certain
assumed rates of appreciation only. Actual gains are dependent
on the future performance of the common stock and the option
holder's continued employment throughout the vesting period. The
amounts reflected in the table may not necessarily be achieved.
(3) Options granted are 100% exercisable starting on July 1, 1996.
(4) Options granted are exercisable starting on November 25, 1997,
with options to purchase 33.3% of the shares of Class A
Common Stock covered thereby becoming exercisable at that time and
with options to purchase an additional 33.3% of the shares on each
successive November 25 with full vesting occurring on November 25, 1999.
(5) Options granted are exercisable starting on January 29, 1997,
with options to purchase 20% of the shares of Class A Common
Stock covered thereby becoming exercisable at that time and with
options to purchase an additional 20% of the shares on
each successive January 29 with full vesting occurring on January
29, 2001.
<PAGE>
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year End
Option Values
The following table provides information on the Named Officers'
unexercised options at February 2, 1997. None of the Named Officers
exercised any options during fiscal 1996.
FISCAL YEAR END OPTION VALUES
<TABLE>
Numbers of Shares Numbers of Shares Value ofShares
Voting Common Stock Class A Common Stock Underlying
Underlying Underlying Unexercised
Unexercised Options Unexercised Options In-the-Money
at FY-End at FY-End Options at FY-End (1)
<S> <C> <C> <C>
Name Exercisable/Unexercisable Exercisable/Unexercisable Exercisable/Unexercisable
Larry J. Hochberg 12,000/8,000 16,657/29,000 -/-
Andrew S. Hochberg 12,000/8,000 25,526/44,000 -/-
C. Mark Scott 0/0 22,000/48,000 -/-
John A. Lowenstein 6,000/4,000 20,220/36,000 -/-
Thomas T. Hendrickson 16,481/6,400 29,981/37,500 -/-
Hendrickson
</TABLE
__________________
(1) The exercise price of each of the referenced options exceeded the
closing prices of both the Company's Voting Common Stock of
$3.4375 and the Company s Class A Common Stock of $2.75 as
reported on the Nasdaq National Market on January 31, 1997.
Report of the Board of Directors and Compensation Commitee
Traditionally, annual compensation and bonuses for the Company's
executive officers (other than the chairman, chief executive officer
and chief operating officer) have been determined by the Company's
chairman and chief executive officer due to the relatively small
number of executive officers and the chairman and chief executive
o f f icer's personal knowledge of the relative performance and
responsibilities of each executive officer. Option grants to such
executives are determined by the Compensation Committee. Executive
compensation for the Company's executive officers for the fiscal year
ended February 2, 1997 was established in this manner. The
compensation of the chairman of the board, the chief executive officer
and the chief operating officer, is set by the Compensation Committee
of the Board of Directors.
<PAGE>
The compensation policy of the Company is to provide a total
compensation package that is comparable to the market. The "market"
is defined as companies against which the Company competes for human
resources talent. This includes other sporting goods retailers and
other discount specialty retailers occupying large volume stores like
the Company. "Comparable" to the market means setting pay levels at
or near the 50th percentile. Executive compensation consists of both
annual and long-term compensation. Annual compensation decisions are
based partly on short-term performance measures and partly on the
cumulative long-term performance of the Company during the executive's
tenure in a position. Long-term compensation through the grant of
stock options is intended to compensate executives primarily for their
contributions to long-term increases in stockholder value.
Annual compensation consists of a base salary and an annual
bonus. All executive officers participate in the Key Employee
Incentive Plan (the "KEIP"), a corporate-level executive bonus
program. Salary levels and bonus criteria and plans for the Company's
executive officers are examined each year to take into account the
f a ctors discussed above and other additional factors believed
appropriate at the time. Executive compensation structures and levels
are determined following meetings between the chief executive officer
and the other executive officers. Department budgets and targeted
performance goals are also reviewed.
Pursuant to the KEIP, the Compensation Committee reviews and
approves the recommendations of management for target annual bonus
opportunities for executives under the Plan. In fiscal 1996, each
Participant s target annual bonus opportunity was based on overall
Company earnings before income taxes. In fiscal 1996, the Company s
earnings before income taxes were not sufficient to meet the defined
criteria for the award of bonuses. However, the Compensation
Committee did approve a management proposal to pay bonuses at mid-year
for retention purposes. The chairman, chief executive officer and
chief operating officer were excluded from these bonus awards.
Compensation for the chairman, chief executive officer, and chief
operating officer was set by the Compensation Committee in fiscal
1996. After the close of the 1995 fiscal year the Compensation
Committee, in agreement with the chairman, chief executive officer,
and chief operating officer, determined to substantially reduce the
annual salaries for fiscal 1995 of these executive officers. This
decision was reached in view of the fact that no executives of the
Company were receiving cash bonuses for fiscal 1995. In a show of
solidarity with executives and managers of the Company these three
executive officers returned in the aggregate approximately $377,000 of
their fiscal 1995 salaries to the Company. In 1996, the salaries for
the chairman and chief executive officer were restored to their
original fiscal 1995 levels.
Throughout fiscal 1996, other executive officers and other
officers and managers were granted stock options in varying amounts as
part of the Company's stock option program. As part of this program,
in April 1996, 10,657 stock options were granted to the chairman,
19,526 stock options to the chief executive officer and 16,220 stock
options were granted to the chief operating officer. In November 1996,
options to purchase 5,000 shares were granted to the chairman and
options to purchase 20,000 shares were granted to both the chief
<PAGE>
executive officer and the chief operating officer as part of the
Company s annual stock option grant. Survey data as to customary award
sizes for stock options was reviewed as well as the potential value of
options to the executive officers under various scenarios of growth in
stock price, which in turn were related to incumbents' base salaries.
T h e Board believes this form of compensation helps align an
executive's interests with the interests of stockholders.
The Board of Directors currently intends for all compensation
paid to the Named Officers to be tax deductible to the Company
pursuant to Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"). Section 162(m) of the Code provides that
compensation paid to the Named Officers in excess of $1,000,000 cannot
be deducted by the Company for Federal income tax purposes unless, in
general, such compensation is performance based, is established by an
independent committee of directors, is objective and the plan or
agreement providing for such performance based compensation has been
approved in advance by stockholders. In the future, however, if, in
the judgment of the Board, the benefits to the Company of a
c o mpensation program that does not satisfy the arbitrary and
inflexible conditions of Section 162(m) of the Code outweigh the costs
to the Company of the failure to satisfy these conditions, the Board
may adopt such a program.
Board of Directors Compensation Committee
(as of February 2, 1997) (as of February 2, 1997)
Larry J. Hochberg Charles G. Cooper
Andrew S. Hochberg Jerome S. Gore
C. Mark Scott Stuart C. Nathan
John A. Lowenstein
Charles G. Cooper
Jerome S. Gore
Stuart C. Nathan
Lawrence J. Ring
<PAGE>
PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total
returns for the Company, the NASDAQ-U.S. Companies Index and the
NASDAQ Retail Trade Index during the period commencing October 6,
1992, the date of the Company's initial public offering, and ending on
February 2, 1997, the close of the Company's fiscal year. The
comparison assumes $100.00 was invested on October 6, 1992 in the
Company's Common Stock, the NASDAQ-U.S. Companies Index and the NASDAQ
Retail Trade Index and assumes the reinvestment of all dividends, if
any.
SPORTMART
Dates and Dollars Used for Sportmart's Semi-Annual Performance Graph
</TABLE>
<TABLE>
Date Sportmart, Peer Group NASDAQ Market
Inc. Index Index
<S> <C> <C> <C>
10/06/92 $100.000 $100.000 $100.000
01/22/93 $106.557 $123.197 $110.792
07/23/93 $ 52.459 $122.744 $104.191
01/24/94 $118.033 $138.593 $116.665
07/22/94 $111.475 $126.081 $104.337
01/24/95 $ 64.661 $135.531 $105.908
07/24/95 $ 55.562 $174.510 $122.570
01/24/96 $ 29.564 $186.702 $114.405
07/24/96 $ 23.024 $187.386 $128.446
01/24/97 $ 19.582 $245.124 $146.359
</TABLE>
APPROVAL OF THE
RESTRICTED STOCK PLAN
(Proposal 2)
T h e Board of Directors adopted the Sportmart, Inc. 1996
Restricted Stock Plan (the "Restricted Stock Plan") effective as of
July 1, 1996. Restricted Stock awards are grants of shares of Common
Stock that are subject to certain restrictions and to a risk of
forfeiture. An aggregate of 400,000 shares of Voting Common Stock and
Class A Common stock have been reserved for issuance under the
Restricted Stock Plan. The Compensation Committee may award shares of
either Voting Common Stock or Class A Common Stock, or a combination
thereof, to participants of the Restricted Stock Plan. As of February
2, 1997, the Company has granted Restricted Stock awards in the
aggregate amount of 300,000 shares of Class A Common Stock. The
restrictions on these shares will lapse completely after August 1,
1999, assuming all other terms and conditions of the awards are met.
A copy of the Restricted Stock Plan is attached as Exhibit A to this
Proxy Statement. A description of the Restricted Stock Plan, as
approved by the Board of Directors, is set forth below. Such
description is qualified in its entirety by reference to the
Restricted Stock Plan.
<PAGE>
Restricted Stock, in general, is stock granted to a participant
which can be forfeited at termination of employment prior to a certain
number of years and which cannot be transferred during the restricted
period. The purpose of Restricted Stock awards is to motivate and
retain individuals who are instrumental in achieving long term growth
in shareholder equity. The Compensation Committee, in its discretion,
determines the persons to whom the Restricted Stock shall be granted,
the number of shares of Restricted Stock to be granted to each
participant, the period for which Restricted Stock is restricted, and
any other restrictions to which the Restricted Stock is subject. The
Compensation Committee may condition the award of Restricted Stock on
such performance goals and other criteria as it may determine. The
terms and conditions of the Restricted Stock award shall be confirmed
in and subject to an agreement between the Company and the participant
(an "Agreement"). During the restriction period, the Compensation
Committee may require that the certificates evidencing the Restricted
Stock be held by the Company. During the restriction period, the
Restricted Stock may not be sold, assigned, transferred, pledged or
otherwise encumbered. Unless otherwise specified in an Agreement, if
a participant s employment terminates during the restriction period
due to death, disability or Retirement (as therein defined), the
restrictions on the Restricted Stock shall lapse. Unless otherwise
specified in an Agreement, if a participant s employment shall
terminate for any other reason, unless otherwise agreed by the
Compensation Committee, the remaining Restricted Stock shall be
forfeited by the participant to the Company.
I f the participant incurs an involuntary Termination of
Employment within 18 months of a Change in Control other than due to
Cause or Good Reason, all restrictions on the Restricted Stock shall
lapse and such award shall become fully vested, nonforfeitable and
transferable at that time. "Change in Control", "Termination of
Employment", "Cause", and "Good Reason" have the meanings set forth in
the Restricted Stock Plan.
Discussion of Federal Income Tax Consequences
The following summary of tax consequences with respect to awards
under the Restricted Stock Plan is not comprehensive and is based upon
laws and regulations in effect on May 1, 1997. Such laws and
regulations are subject to change.
When awards under the Restricted Stock Plan result in the
issuance of shares of Common Stock or other property that is either
not restricted as to transferability or not subject to a substantial
risk of forfeiture, the participant must generally recognize ordinary
income equal to the cash or fair market value of shares of Common
Stock or other property received. Deferral of the time of issuance
will generally result in the deferral of the liability for income
taxes with respect to such payments or issuance. The Company
generally will be entitled to a deduction in an amount equal to the
ordinary income reported by the participant. With respect to awards
of Restricted Stock, the participant must generally recognize ordinary
income equal to the fair market value of the shares of Common Stock or
other property received at the first time the shares of Common Stock
or other property become transferable or not subject to a substantial
risk of forfeiture, whichever occurs earlier. The Company generally
will be entitled to a deduction in an amount equal to the ordinary
<PAGE>
income received by the participant. A participant may elect under
Section 83 (b) of the Internal Revenue Code (the Code ) to be taxed
at the time of receipt of Restricted Stock rather that upon lapse of
restrictions on transferability or the substantial risk of forfeiture
(and the Company could take a corresponding deduction). If the
participant subsequently forfeits such shares or property, the
participant would not be entitled to any tax deduction, including a
capital loss, for the value of the shares or property on which he
previously paid tax. The participant must file such election with the
Internal Revenue Service within 30 days of the receipt of the
Restricted Stock.
Section 162 (m) of the Code. Section 162(m) of the Code
disallows a public company s tax deduction for compensation to the
Named Officers in excess of $1,000,000 in any tax year beginning on or
after January 1, 1994. Compensation that qualifies as performance-
based compensation , however, is excluded from the $1,000,000
deductibility cap; however, Restricted Stock awards do not qualify as
performance-based compensation and will count against such
limitation. The Restricted Stock Plan, however, provides that, to the
extent the Restricted Stock award will not be deductible under 162
(m), vesting will be delayed until such award will be deductible by
the Company.
Parachute Payments. Any payments or rights accruing to a
participant upon a Change in Control, or any other payments awarded
under the Restricted Stock Plan, may constitute parachute payments
under Section 280G of the Code, depending upon the amount of such
payments accruing and the other income of the participant from the
Company. If the Restricted Stock would constitute a parachute
payment and be subject to an excise tax (in addition to ordinary
income tax) and the Company would be disallowed a deduction for the
amount of the actual payment, then the participant s right to receive
Restricted Stock under the Plan is forfeited to the extent necessary
to avoid classification as parachute payments.
The Board of Directors unanimously recommends that stockholders vote
"FOR" the proposed Restricted Stock Plan.
BOARD OF DIRECTOR INTERLOCKS AND INSIDER PARTICIPATION
Larry J. Hochberg, the Chairman of the Company, Andrew S.
Hochberg, the Chief Executive Officer of the Company, C. Mark Scott,
President, and John A. Lowenstein, Chief Operating Officer and
Secretary of the Company, are members of the Board of Directors.
CERTAIN TRANSACTIONS
From time to time the Company has transacted business with
entities in which its principal stockholders or management or other
affiliates of the Company have an interest.
<PAGE>
Property Leases
As of February 2, 1997, eight of the Company's 70 stores (Niles,
Lombard, Calumet City, Schaumburg, Vernon Hills, Chicago (Lakeview),
Merrillville, and North Riverside) and the Company's No Contest stores
in Ferguson, Missouri and Crestwood, Missouri as well as a vacant
store in Wheeling, Illinois were leased from partnerships or land
trusts in which the following members of management and their families
own, in the aggregate, all of the beneficial interests through various
partnerships: Larry Hochberg, Barbara Hochberg, Andrew Hochberg, John
Lowenstein, Amy Lowenstein, and Mitchell Kahn.
In fiscal 1995, the Company determined to discontinue the
operation of its No Contest division and to close its River North and
Wheeling, Illinois locations. Notwithstanding the discontinuance of
No Contest operations and the closing of the two Sportmart locations,
the Company is still obligated on the leases for these locations. As
of February 2, 1997, the Company has subleased the No Contest
locations and is actively marketing the remaining locations to
potential substitute tenants. Finally, in April 1997 one of the above-
described partnerships sold the Vernon Hills, Illinois location to an
unrelated third party. Thus, the Company currently has seven leases
with the partnerships as described above.
The Company believes that the occupancy costs to the Company
under each lease are no higher than those which would be charged by an
unrelated third party under similar circumstances. Each of the lease
agreements provides for the Company, as tenant, to pay monthly fixed
rent, percentage rent based upon sales in excess of stipulated amounts
and its pro rata share of all utilities, insurance, taxes and other
common area costs associated with the property (other than free
standing stores which pay all of the costs associated with the
property). A partnership in which members of management and their
families indirectly own the general partner and hold up to a one-third
interest as limited partners owns the property on which the Chicago
(River North), Illinois mart is located. The aggregate lease payments
(net of utilities, insurance, taxes and other common area costs) for
the above locations in fiscal years 1996, 1995, and 1994 were
approximately $3.7, $3.9, and $3.6 million, respectively.
Additionally, various lease amendments and leases have been
entered into between the Company and certain of the above described
partnerships, all with the approval of the outside members of the
Board of Directors. Generally, these lease amendments and leases are
for the purpose of adding space to existing locations, extending lease
terms or adding option terms.
<PAGE>
Company Guarantees and Interim Financing of Partnerships
The Company has provided interim financing to certain management-
owned partnerships to cover expenses incurred by the partnerships in
connection with the purchase and management of properties. Each
partnership reimburses the Company for such advances, including
accrued interest, as and when the partnership is billed by the
Company. As of February 2, 1997, the total amount owed by such
p a rtnerships was approximately $216,900. There are no Company
guarantees of partnership obligations.
Miscellaneous
Each of the management-owned partnerships which lease property to
the Company pays a management fee to the Company equal to 2.5% of the
gross rent for the particular property as reimbursement for property
management services provided by the Company. For fiscal 1996, total
management fees were $123,065.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth, as of May 1, 1997, certain
information with respect to the beneficial ownership of the Company's
Class A Common Stock and Voting Common Stock by (i) each person known
by the Company to own beneficially more than 5% of the outstanding
shares of either class of Common Stock (ii) each director of the
Company, (iii) the Named Officers and (iv) all executive officers and
directors as a group.
<TABLE>
Voting Common Stock Class A Common Stock
No. of Shares Percentage No. of Shares Percentage
Name of Beneficial Owner(1) Beneficially Owned of Total Beneficially Owned of Total
<S> <C> <C> <C> <C>
Larry J. Hochberg 2,683,849 52.0% 1,954,178 25.3%
Barbara P. Hochberg 102,000 2.0 1,566,200 20.4
Andrew S. Hochberg 441,136 8.6 766,203 9.9
John A. Lowenstein 157,307 3.1 321,622 4.2
C. Mark Scott (11) 650 * 22,000 *
Thomas Hendrickson 19,964 * 33,129 *
Charles G. Cooper (6) 15,000 * 1,000 *
Jerome S. Gore (6) 15,000 * 3,000 *
Stuart C. Nathan (6) 15,000 * _ *
Lawrence J. Ring (7) 6,000 * 500 *
Joseph L. Harrosh (13) - * 582,400 7.6
Directors & Executive 3,354,793 63.9 3,163,566 40.1
Officers as a Group
(14) (13 persons)
</TABLE>
__________________
*Less than 1%
(1) The address of each stockholder listed, with the exception of
Joseph L. Harrosh, is c/o Sportmart, Inc., 1400 South Wolf Road,
Wheeling, Illinois 60090. Joseph L. Harrosh s address is 40900
Grimmer Boulevard, Fremont, California 94538.
(2) Excludes 131,700 shares of Class A Common Stock and 102,000
shares of Voting Common Stock beneficially owned by Larry J.
Hochberg's wife, Barbara P. Hochberg, of which shares Larry J.
Hochberg disclaims beneficial ownership. Excludes 126,732 shares
of Class A Common Stock which are held by Barbara P. Hochberg and
John A. Lowenstein as Trustees of the AHL Investment Trust U/A/D
12/7/90, of which shares Larry J. Hochberg disclaims beneficial
ownership. Excludes 555,424 shares of Class A Common Stock and
275,329 shares of Voting Common Stock held by Barbara P. Hochberg
and Andrew Hochberg, as Trustees of AH Investment Trust U/A/D
6/3/87, of which shares Larry J. Hochberg disclaims beneficial
ownership. Includes 1,434,000 shares of Class A Common Stock,
which shares are held in a Delaware limited partnership of which
a revocable trust, of which Larry J. Hochberg and Barbara P.
Hochberg are grantors and trustees, is a limited partner and
general partner. Includes 18,100 shares of Class A Common Stock
and 792 shares of Voting Common Stock held in a irrevocable trust
of which Larry J. Hochberg is co-trustee. Includes 312,500
shares Voting Common Stock beneficially owned by Sanford Cantor,
which shares are subject to a voting agreement pursuant to which
Larry J. Hochberg may vote such shares; Larry J. Hochberg
disclaims beneficial ownership of such shares.
<PAGE>
(3) Excludes 478,921 shares of Class A Common Stock and 2,358,557
shares of Voting Common Stocks beneficially owned by Barbara P.
Hochberg s husband, Larry J. Hochberg. Excludes 126,732 shares
of Class A Common Stock held by Barbara P. Hochberg and John A.
Lowenstein, as Trustees of the AHL Investment Trust U/A/D
12/7/90. Excludes 555,424 shares of Class A Common Stock and
275,329 shares of Voting Common Stock held by Barbara P. Hochberg
and Andrew S. Hochberg, as Trustees of the AH Investment Trust
U/A/D 6/3/87, with respect to which shares Barbara P. Hochberg
and Andrew S. Hochberg share voting power. Excludes 18,100
shares of Class A Common Stock and 792 shares of Voting Common
Stock held in an irrevocable trust of which Larry J. Hochberg is
co-trustee. Includes 1,434,000 shares of Class A Common Stock,
which shares are held in a Delaware limited partnership of which
a revocable trust, of which Larry J. Hochberg and Barbara P.
Hochberg are grantors and trustees, is a limited partner and a
general partner.
(4) Excludes 100,000 shares of Class A Common Stock held by John A.
Lowenstein and Andrew S. Hochberg, as Trustees of the AHL Annuity
Trust U/A/D 03/27/95, with respect to which shares John A.
Lowenstein and Andrew S. Hochberg share voting power. Includes
555,424 shares of Class A Common Stock and 275,329 shares of
Voting Common Stock held by Andrew S. Hochberg and Barbara P.
Hochberg, as Trustees of the AH Investment Trust U/A/D 6/3/87,
with respect to which shares Andrew S. Hochberg and Barbara P.
Hochberg share voting power. Includes 56,207 shares of Class A
Common Stock and 138,015 shares of Voting Common Stock held by
Andrew Hochberg, as Trustee of the Andrew Hochberg Revocable
Trust. Includes 64,500 shares of Class A Common Stock held in a
limited partnership in which a trust, of which Andrew S.
Hochberg is trustee, is the general partner. Includes 5,000 and
11,989 shares of Class A Common Stock respectively held by the
spouse and children of Andrew S. Hochberg, and 18,100 shares of
Class A Common Stock and 792 shares of Voting Common Stock held
in an irrevocable trust of which Mr. Hochberg s wife is co-
trustee. Andrew S. Hochberg disclaims beneficial ownership of
all these shares. Includes 15,000 shares of Voting Common Stock
and 4,500 shares of Class A Common Stock held by the Andrew S.
Hochberg Trust U/D DTD 01/03/90, with respect to such trust
Andrew S. Hochberg is the beneficiary.
(5) Includes 126,732 shares of Class A Common Stock held by Barbara
P. Hochberg and John A. Lowenstein, as Trustees of the AHL
Investment Trust U/A/D 12/7/90. Includes 120,227 shares of Class
A Common Stock and 138,807 shares of Voting Common Stock held by
the spouse of John A. Lowenstein. Includes 40,943 shares of
Class A Common Stock held by the children of John A. Lowenstein.
Includes 12,500 shares of Voting Common Stock and 4,500 shares of
Class A Common Stock held by the Amy H. Lowenstein Trust U/D DTD
01/03/90, with respect to such trust the spouse of John A.
Lowenstein is the beneficiary.
(6) Includes 15,000 shares of Voting Common Stock which are currently
issuable on or before June 29, 1997 upon exercise of options
pursuant to the Directors' Plan.
(7) Includes 6,000 shares of Voting Common Stock currently issuable
on or before June 29,1997 upon exercise of options pursuant to
the Directors Plan.
<PAGE>
(8) Includes 12,000 shares of Voting Common Stock and 22,657 shares
of Class A Common Stock which are currently issuable on or before
June 29, 1997 upon exercise of options pursuant to the Stock Option
Plan.
(9) Includes 12,000 shares of Voting Common Stock and 31,526 shares
of Class A Common Stock which are currently issuable on or before
June 29, 1997 upon exercise of options pursuant to the Stock Option
Plan.
(10) Includes 6,000 shares of Voting Common Stock and 24,220 shares of
Class A Common Stock which may be acquired on or before June 29,
1997 upon exercise of options pursuant to the Stock Option Plan.
(11) Includes 22,000 shares of Class A Common Stock which may be
acquired on or before June 29, 1997 upon exercise of options
pursuant to the Stock Option Plan.
(12) Includes 19, 281 shares of Voting Common Stock and 32,981 shares
of Class A Common Stock which may be acquired on or before June
29, 1997 upon exercise of options pursuant to the Stock Option
Plan.
(13) As reported on a Schedule 13D filed by Joseph L. Harrosh on March
19, 1997. According to such Schedule 13D, Joseph L. Harrosh has
sole voting power and sole dispositive power with respect to all
of these shares.
(14) Includes 100,281 shares of Voting Common Stock and 194,573 shares
of Class A Common Stock which may be acquired on or before June
29, 1997 upon exercise of options pursuant to the Stock Option
Plan and the Director's Plan.
GENERAL
Proposals of Stockholders
Proposals of stockholders intended to be considered at the 1998
Annual Meeting of Stockholders must be received by the Corporate
Secretary of the Company not less than 120 days nor more than 150 days
prior to May 30, 1998.
Form 10-K
The Company will furnish without charge to each person whose
Proxy is being solicited, upon request of any such person, a copy of
the Annual Report of the Company on Form 10-K for the fiscal year
ended February 2, 1997 as filed with the Securities and Exchange
Commission, including the financial statements and schedules. Such
report was filed with the Securities and Exchange Commission on May 5,
1997. Requests for copies of such reports should be directed to
Sportmart, Inc., Attention: Investor Relations, 1400 South Wolf Road,
Wheeling, Illinois 60090.
Please date, sign and return the enclosed Proxy at your earliest
convenience in the enclosed envelope. No postage is required for
mailing in the United States. A prompt return of your Proxy will be
appreciated.
By Order of the Board of Directors,
/S/ JOHN A. LOWENSTEIN
John A. Lowenstein
Corporate Secretary
<PAGE>
-28-<PAGE>
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
i
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
ii
<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 b
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 include
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.
3
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.
4
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
5
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
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
7
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
8
<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
9
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.
10
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.
11
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
12
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__________________________________
14<PAGE>
