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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
June 19, 2007
BIG 5 SPORTING GOODS CORPORATION
(Exact name of registrant as specified in charter)
| Delaware (State or Other Jurisdiction of Incorporation) |
000-49850 (Commission File Number) |
95-4388794 (IRS Employer Identification No.) |
||
| 2525 East El Segundo Boulevard, El Segundo, California (Address of principal executive offices) |
90245 (Zip Code) |
Registrant’s telephone number, including area code: (310) 536-0611
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions (see General
Instruction A.2):
o Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (7 CFR 240.13e-4(c))
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| Item 5.02 | Departure of Directors or Certain Officers; election of directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On
June 19, 2007, the stockholders of Big 5 Sporting Goods
Corporation (the “Company”) approved the Company’s
2007 Equity and Performance Incentive Plan (the “Plan”).
The Plan had previously been approved by the Company’s Board of
Directors, subject to stockholder approval. The principal features of the Plan are summarized below. This
summary, however, is not intended to be a complete discussion of all
of the terms of the Plan. A copy of the Plan is attached as
Exhibit 10.1 to this report, along with a copy of the Form of
Option Grant Notice and Stock Option Agreement for use in connection with the Plan.
Shares Subject
to the Plan
Up to an aggregate of 2,399,250 shares of common stock of
the Company, plus any shares subject to awards granted under the
Company’s previously existing stock option plans (the
“Prior Plans”) which are forfeited, expire or are cancelled after
April 24, 2007 (the effective date of the Plan), are
authorized for issuance under the Plan. The maximum aggregate
number of shares which may be subject to ISOs (as defined below)
will be 2,399,250 shares. Any shares that are subject to
awards of options or stock appreciation rights shall be counted
against this limit as one share for every one share granted,
regardless of the number of shares actually delivered pursuant
to the awards. Any shares that are subject to awards other than
options or stock appreciation rights (including shares delivered
on the settlement of dividend equivalents) shall be counted
against this limit as 2.5 shares for every one share
granted. The aggregate number of shares available under the Plan
and the number of shares subject to outstanding options will be
increased or decreased to reflect any changes in the outstanding
common stock of the Company by reason of any recapitalization,
spin-off, reorganization, reclassification, stock dividend,
stock split, reverse stock split, or similar transaction.
If any shares subject to an award under the Plan or to an award
under the Prior Plans are forfeited, expire or are cancelled
without issuance of such shares, the shares shall again be
available for awards under the Plan. Any shares that again
become available for grant shall be added back as one share if
such shares were subject to options or stock appreciation rights
granted under the Plan or options or stock appreciation rights
granted under the Prior Plans and as 2.5 shares if such
shares were subject to awards other than options or stock
appreciation rights granted under the Plan. Shares which are
received or withheld by the Company to satisfy tax liabilities
arising from the grant or exercise of an option or award, or as
a result of the use of shares to pay the option price, shall not
again be available to awards under the Plan.
Eligibility
and Participation
All employees (including officers), directors, and consultants
of the Company or any subsidiary are eligible for selection to
receive awards under the Plan, subject to the following
restrictions: (1) no ISO may be granted to any person who,
at the time of grant, is not an employee of the Company or any
subsidiary, and (2) no participant may be granted options
or stock appreciation rights during any fiscal year of the
Company with respect to more than 500,000 shares,
(3) no participant may be granted restricted stock,
performance awards
and/or other
stock unit awards that are denominated in shares in any fiscal
year of the Company with respect to more than
250,000 shares, and (4) the maximum dollar value
payable to any participant in any fiscal year of the Company
with respect to performance awards
and/or other
stock unit awards that are valued with reference to cash or
property other than shares is $2,000,000. The share limitations
set forth above are subject to adjustment in the event of a
reorganization, spin-off, recapitalization, reclassification,
stock dividend, stock split, reverse stock split, or similar
transaction during any fiscal year of the Company or portion
thereof. If an option or stock appreciation right expires or
terminates for any reason without having been exercised in full,
or if any award is cancelled, the unpurchased shares subject to
that expired or terminated option or stock appreciation right or
cancelled award continue to be counted against the maximum
number of shares for which options or stock appreciation rights
or other awards may be granted to a participant during a fiscal
year of the Company. Subject to such limitations, an individual
who has been granted an option or stock appreciation right or
other award may, if such individual is otherwise eligible, be
granted additional options or stock appreciation rights or other
awards as the Committee may determine.
Administration
of the Plan
The Plan shall be administered by the Compensation Committee of
the Board of Directors (the “Committee”), consisting
of two or more directors of the Company who are
(a) “non-employee directors” within the meaning
of
Rule 16b-3
of the Exchange Act, and (b) “outside directors”
within the meaning of Section 162(m) of the Code (as
defined below) and (c) “independent directors”
under Nasdaq or other applicable stock exchange rules; except
that, so long as the Committee contains at least two such
directors that meet the above requirements, the Committee may
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also include one additional director who does not meet those
criteria if he or she abstains or recuses himself or herself in
connection with voting on grants and awards to all Covered
Employees (as defined in the Plan) and to all officers of the
Company who are subject to Section 16 of the Exchange Act.
The Committee has extremely broad discretion and power in
interpreting and operating the Plan and in determining the
employees, directors and consultants who shall be participants,
and the terms of individual options, stock appreciation rights,
restricted stock, other stock unit awards, performance awards,
and dividend equivalents. To the extent permitted by applicable
law, the Committee may delegate to one or more directors or
officers the authority to grant awards to employees or officers
who are not directors, “covered employees” whose
compensation is subject to the limits of Section 162(m) of
the Code, or officers subject to the short-swing rules of
Section 16 of the Exchange Act. For a description of the
limitation on deductibility under Section 162(m) of the
Code for compensation paid to certain executive officers, see
“— Federal Income Tax Matters —
$1,000,000 Limit on Deductible Compensation.”
Types of
Awards
Awards under the Plan may consist of options, stock appreciation
rights, restricted stock, other stock unit awards, performance
awards, or dividend equivalents. The nature of each of such
types of awards is discussed below. Each award will be made by
an award agreement whose form and content shall be determined by
the Committee in its discretion, consistent with the provisions
of the Plan. The terms of award agreements for a particular type
of award need not be uniform.
Type of
Options
Two types of options may be granted under the Plan: options
intended to qualify as incentive stock options
(“ISOs”) under Section 422 of the Internal
Revenue Code of 1986, as amended (the “Code”), and
options not so qualified for favorable federal income tax
treatment (“NSOs”).
Stock
Appreciation Rights
The Committee, in its discretion, may also issue stock
appreciation rights to employees, consultants and directors of
the Company. A stock appreciation right is a right to receive a
payment based on the increase in the fair market value of a
share after the date of grant. The Committee may determine, in
its discretion, that a stock appreciation right will be paid out
in cash or in shares on its exercise. The number of shares that
may be issued on the exercise of a stock appreciation right
shall be determined by dividing: (a) the total number of
shares as to which the stock appreciation right is exercised,
multiplied by the amount by which the fair market value of one
share on the exercise date exceeds the fair market value of one
share on the date of grant of the stock appreciation right, by
(b) the fair market value of one share on the exercise
date; provided, however, that fractional shares shall not be
issued and in lieu thereof, a cash adjustment shall be paid. In
lieu of issuing shares on the exercise of a stock appreciation
right, the Committee may in its sole discretion elect to pay the
cash value of such shares. The Committee will not, however, take
any action regarding a stock appreciation right, or otherwise
under the Plan, that could subject a participant to a penalty
tax under Section 409A of the Code.
Restricted
Stock
The Committee, in its discretion, may also grant awards of
restricted stock to participants. Restricted stock shall be
shares granted or sold to a participant that are subject to
vesting restrictions based on continued employment or attainment
of performance goals. Restricted stock that vests solely upon
continued service of the grantee will not fully vest over a
period of less than three years, but vesting may occur ratably
over the vesting period.
Other
Stock Unit Awards
The Committee, in its discretion, may grant other stock unit
awards, which are awards valued in whole or part by reference
to, or otherwise based on, shares. Other stock unit awards shall
be subject to such conditions and restrictions as may be
determined by the Committee, and may be payable in the form of
cash or shares. Stock unit awards that vest solely upon
continued service of the grantee will not fully vest over a
period of less than three years, but vesting may occur ratably
over the vesting period.
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Performance
Awards and Code Section 162(m) Provisions
The Committee, in its discretion, may issue performance awards
to participants, the payment of which will be determined by the
achievement of performance goals over a performance period. Upon
the grant of a performance award, the Committee shall determine
the relevant performance goals and the performance period.
The performance goals shall be based on the attainment of
specified levels, or growth, of one or any combination of the
following factors, or an objective formula determined at the
time of the award that is based on modified or unmodified
calculations of one or any combination of the following factors:
net sales; pretax income before or after allocation of corporate
overhead and bonus; earnings per share; net income; division,
group or corporate financial goals; return on stockholders’
equity; return on assets; attainment of strategic and
operational initiatives; appreciation in
and/or
maintenance of the price of the shares or any other
publicly-traded securities of the Company; market share; gross
profits; earnings before taxes; earnings before interest and
taxes; earnings before interest, taxes, depreciation and
amortization (“EBITDA”); an adjusted formula of EBITDA
determined by the Committee; economic value-added models;
comparisons with various stock market indices; reductions in
costs,
and/or
return on invested capital of the Company or any affiliate,
division or business unit of the Company for or within which the
participant is primarily employed. Such performance goals also
may be based solely by reference to the Company’s
performance or the performance of an affiliate, division or
business unit of the Company, or based upon the relative
performance of other companies or upon comparisons of any of the
indicators of performance relative to other companies. Unless
the Committee determines otherwise when it sets the performance
goals for an award, objective adjustments shall be made to any
of the foregoing measures for items that will not properly
reflect the Company’s financial performance for these
purposes, such as the write-off of debt issuance costs,
pre-opening and development costs, gain or loss from asset
dispositions, asset or other impairment charges, litigation
settlement costs, and other non-routine items that may occur
during the performance period. Also, unless the Committee
determines otherwise in setting the performance goals for an
award, such performance goals shall be applied by excluding the
impact of (a) restructurings, discontinued operations, and
charges for extraordinary items, (b) an event either not
directly related to the operations of the Company or not within
the reasonable control of the Company’s management, or
(c) a change in accounting standards required or
recommended by generally accepted accounting principles.
The performance period shall be determined by the Committee, but
shall not be shorter than one year nor longer than five years.
Performance awards will generally be paid only after the end of
the relevant performance period, and may be paid in cash,
shares, other property, or any combination thereof, in the sole
discretion of the Committee at the time of payment.
The Compensation Committee may determine, in its discretion,
that performance awards granted to executive officers of the
Company whose compensation is subject to the deductibility limit
of Section 162(m) of the Code will qualify as
“performance based” compensation. The Compensation
Committee may likewise determine that the vesting of restricted
stock, and the vesting or payment of any other stock unit award,
granted to such an executive officer will be subject to the
achievement of the objective performance goals over a
performance period, and thus satisfy the requirements to be
“performance based” compensation.
In the case of any performance award, restricted stock, or other
stock unit award that is intended to constitute
“performance based” compensation, the performance
goals and other terms and conditions of the award will be set by
the Committee within the time prescribed by Section 162(m)
and the regulations thereunder. If the performance period is
12 months or longer, such performance goals must be set by
the Committee within the first 90 days of the performance
period.
The Committee may adjust downward, but not upward, the amount
payable to any executive officer of the Company under any award
that is intended to constitute “performance based”
compensation. The Committee may not waive the achievement of the
applicable performance goals, except in the case of death or
disability of the participant, or the occurrence of a change in
control of the Company.
Before the vesting, payment, settlement or lapsing of any
restrictions with respect to any award that is intended to
constitute “performance based” compensation, the
Committee shall certify in writing that the applicable
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performance criteria have been achieved to the extent necessary
for such award to qualify as “performance based”
compensation within the meaning of Section 162(m) of the
Code.
The Committee shall have the power to impose such other
restrictions on awards intended to constitute “performance
based” compensation as it may deem necessary or appropriate
to ensure that such awards satisfy all requirements to
constitute “performance based” compensation within the
meaning of Section 162(m), or which are not inconsistent
with such requirements.
Unless affirmative votes representing a majority of the votes
cast under applicable law or rules approve the continuation of
the “performance based” compensation provisions of the
Plan at the first duly constituted meeting of the stockholders
of the Company that occurs in the fifth year following the
effective date of the Plan, no awards other than stock options
or stock appreciation rights, or restricted stock that is not
intended to be “performance based” compensation, shall
be made following the date of such meeting to executive officers
of the Company whose compensation is subject to the deduction
limit of Section 162(m). Under currently applicable law or
rules, to be duly constituted, a majority of the shares of
capital stock outstanding and entitled to vote would have to be
present in person or by proxy at the meeting at which
stockholders vote to approve the continuation of the
“performance based” compensation provisions of the
Plan.
Dividend
Equivalents
The Committee, in its sole discretion, may determine that a
participant who receives an award will also be entitled to
receive, currently or on a deferred basis, cash, stock or other
property dividends, or cash payments in amounts equivalent to
stock or other property dividends on shares (“dividend
equivalents”) with respect to the number of shares covered
by the award. The Committee may also provide that such amounts
(if any) shall be deemed to have been reinvested in additional
shares or otherwise reinvested. In the event of a
recapitalization, reorganization, spin-off, reclassification,
stock dividend, stock split, reverse stock split or similar
transaction, the Committee may, in its discretion, make an
appropriate adjustment to dividend equivalents.
Option
and Other Award Price
The purchase price for shares covered by each option shall not
be less than 100% of the fair market value of such shares on the
date of grant, but if an ISO is granted to a more than 10%
shareholder of the Company or its subsidiaries (measured by
ownership of voting power), the purchase price of an ISO shall
not be less than 110% of the fair market value of such shares on
the date of grant. The base price for a stock appreciation right
shall not be less than 100% of the fair market value of shares
as of the date of grant. The Committee, in its discretion, may
determine the purchase price, if any, for restricted stock,
other stock unit awards, and performance awards.
Exercisability
of Options and Stock Appreciation Rights; Vesting of Restricted
Stock and Other Awards
The Committee shall determine when and under what conditions any
option or stock appreciation right shall become exercisable and
when restricted stock, other stock unit awards, and performance
awards shall become vested. However, the aggregate fair market
value of shares of common stock of the Company (determined at
the date of grant) for which ISOs (whenever granted) are
exercisable for the first time by a participant during any
calendar year shall not exceed $100,000; any options in excess
of this limit shall be treated as NSOs. The purchase price of
shares on the exercise of an option shall be paid in full at the
time of exercise in cash or by check payable to the order of the
Company, or, subject to the approval of the Committee and
subject to applicable law, by the delivery of shares of common
stock of the Company already owned by the participant, through a
“broker’s” exercise involving the immediate sale
or pledge of shares with a value sufficient to pay the exercise
price, or by any other method permitted by applicable law. The
Committee shall determine, in its discretion, the form of any
payment for restricted stock, other stock unit awards, and
performance shares.
Duration
of Options and Stock Appreciation Rights
Each option or stock appreciation right shall expire on the date
specified by the Committee, but all options and stock
appreciation rights shall expire within 10 years of the
date of grant. ISOs granted to more than 10%
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shareholders of the Company (measured by ownership of voting
power) shall expire within five years from the date of grant.
No
Repricing
The Committee has no authority to reprice any option, to reduce
the base price of any stock appreciation right, or cancel any
option in exchange for cash or another award when the fair
market value of shares is less than the option’s exercise
price per share.
Termination
of Employment
If a participant ceases to be employed by the Company or any of
its subsidiaries for any reason (including death or permanent
disability) other than termination for cause, the
participant’s options that were vested and exercisable
shall remain exercisable until the end of the original term or
for the period determined by the Committee in the individual
option agreement or otherwise, whichever expires earlier. After
a participant’s death, options may be exercised by the
person or persons to whom the participant’s rights pass by
will or the laws of descent and distribution. Unless the
Committee determines otherwise in its discretion, similar rules
shall apply to stock appreciation rights. The treatment of each
award of restricted stock, other stock unit award, or
performance award on the termination of employment, death, or
disability of the participant shall be determined by the
Committee in its discretion. If a participant’s employment
is terminated for cause, all of his awards may be immediately
terminated and canceled, in the Committee’s discretion.
Certain
Corporate Transactions
Upon the happening of a merger, reorganization or sale of
substantially all of the assets of the Company or other change
of control events specified in the Plan, the Committee, may, in
its sole discretion, do one or more of the following:
(i) shorten the period during which options and stock
appreciation rights are exercisable (provided they remain
exercisable for at least 30 days after the date notice of
such shortening is given to the participants);
(ii) accelerate in whole or in part any vesting schedule to
which an option, stock appreciation right, restricted stock,
other stock unit award or performance award is subject;
(iii) arrange to have the surviving or successor entity or
any parent entity thereof assume the restricted stock, other
stock unit awards, stock appreciation rights or options or grant
replacement options or stock appreciation rights with
appropriate adjustments in the option prices and adjustments in
the number and kind of securities issuable upon exercise;
(iv) cancel options upon payment to the participants in
cash of an amount that is the equivalent of the excess of the
fair market value of the common stock of the Company (at the
effective time of the merger, reorganization, sale or other
event) over the exercise price of the option to the extent the
options are vested and exercisable, and cancel stock
appreciation rights by paying the value thereof; or
(v) make any other modification or adjustment that the
Committee deems appropriate in its discretion. The Committee may
also provide for one or more of the foregoing alternatives in
any particular award agreement.
Rights as
a Stockholder
The recipient of an option or stock appreciation right will have
no rights as a stockholder with respect to shares of Company
common stock covered by an option or stock appreciation right
until the date such recipient becomes a holder of record of such
shares, unless the Committee, in its discretion, elects to grant
the participant dividend equivalent rights in connection with
such option or stock appreciation right. The recipient of
restricted stock or of an other stock unit award will generally
have all the rights of a shareholder with respect to the shares
of common stock of the Company issued pursuant to such award,
including the right to vote such shares, but the Committee may
determine that any dividends and distributions with respect to
such shares will be subject to the same vesting restrictions, if
any, as the underlying shares.
Assignability
of Options, Stock Appreciation Rights and Other Awards
An ISO granted under the Plan shall, by its terms, be
non-transferable by the participant, either voluntarily or by
operation of law, other than by will or the laws of descent and
distribution, and shall be exercisable during the
participant’s lifetime only by him or her. Any award issued
under the Plan other than an ISO shall be nontransferable
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by the participant, either voluntarily or by operation of law,
other than by will or the laws of descent and distribution, or,
with the consent of the Committee, during the participant’s
lifetime by gift to one or more members of the
participant’s immediate family or to a trust for their
benefit.
Duration,
Termination and Amendment of the Plan
The Plan became effective on April 24, 2007, subject to the approval of the
Plan by the stockholders of the Company (which occurred on
June 19, 2007). The Plan shall continue in effect for
10 years following the April 24, 2007 effective date. The Board of Directors, however, may
suspend or terminate the Plan at any time. However, unless
affirmative votes representing a majority of the votes cast
under applicable law or rules approve the continuation of the
“performance based” compensation provisions of the
Plan at the first duly constituted meeting of the stockholders
of the Company that occurs in the fifth year following the
effective date of the Plan, no awards other than options or
stock appreciation rights, or restricted stock that is not
intended to constitute “performance based”
compensation, shall be made following the date of such meeting
to executive officers of the Company whose compensation is
subject to the deduction limit of Section 162(m). Under
currently applicable rules, to be duly constituted, a majority
of the shares of capital stock outstanding and entitled to vote
would have to be present in person or by proxy at the meeting at
which stockholders vote to approve the continuation of the
“performance based” compensation provisions of the
Plan. The suspension or termination of the Plan will generally
not affect the validity of any option, stock appreciation right,
restricted stock, other stock unit award, performance award or
dividend equivalent outstanding on the date of termination.
The Board of Directors may also amend the Plan at any time,
except that the Board will not amend the Plan in a way which
violates
Rule 16b-3
of the Exchange Act. The Board will not amend the Plan without
obtaining stockholder approval to (a) increase the number
of shares that may be the subject of awards under the Plan,
(b) expand the types of awards available under the Plan,
(c) materially expand the class of persons eligible to
participate in the Plan, (d) amend any provision
prohibiting the Committee from repricing options or taking
similar action, (e) increase the maximum permissible term
of any option, (f) amend the limits on grants of awards to
any participant during a
12-month
period, or (g) make any modification that requires
stockholder approval under applicable law. Furthermore, no
amendment of the Plan shall amend or impair any rights or
obligations under any award theretofore granted under the Plan
without the written consent of the holder of the affected award.
New Plan
Benefits
Awards to be received by participants in the Plan are not
determinable at this time because the Committee, in its
discretion, will determine the nature and performance criteria
for any award provided under the Plan at the time of grants.
Performance awards in particular are dependent upon a
combination of performance criteria, including net sales,
EBITDA, earnings per share, return on stockholders’ equity,
division, group or corporate financial goals, and other factors.
As a result, the grants that may be awarded under the Plan are
not determinable until the Committee assesses the criteria
relevant to each individual participant for the particular
performance period of the award. For similar reasons, the
Company cannot determine the awards that would have been granted
during the Company’s 2006 fiscal year under the Plan if it
had been in place during that year.
Federal
Income Tax Matters
The following discussion of federal income tax consequences does
not purport to be a complete analysis of all of the potential
tax effects of the Plan. It is based upon laws, regulations,
rulings and decisions now in effect, all of which are subject to
change. No information is provided with respect to persons who
are not citizens or residents of the United States, or foreign,
state or local tax laws, or estate and gift tax considerations.
In addition, the tax
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consequences to a particular participant may be affected by
matters not discussed above.
The Plan is not subject to any of the provisions of the Employee
Retirement Income Security Act of 1974 (“ERISA”) and
is not qualified under Section 401(a) of the Code.
Non-Qualified
Stock Options
Under current federal income tax law, the grant of an NSO has no
tax effect on the Company or the participant. If the shares of
common stock of the Company received on the exercise of an NSO
are not subject to restrictions on transfer or risk of
forfeiture, the exercise of the NSO will result in ordinary
income to the participant equal to the excess of the fair market
value of the shares at the time of exercise over the option
price. The participant’s tax basis in the shares will be
equal to the option price plus the amount of ordinary income
recognized upon the exercise of the option. Upon any subsequent
disposition of the shares, any gain or loss recognized by the
participant will be treated as capital gain or loss and will be
long-term capital gain or loss if the shares are held for more
than one year after exercise. At the time of recognition of
ordinary income by the participant upon exercise, the Company
will normally be allowed to take a deduction for federal income
tax purposes in an amount equal to such recognized ordinary
income.
If the shares received on the exercise of an NSO are subject to
restrictions on transfer or risk of forfeiture (e.g., a vesting
condition), different rules will apply, and the tax consequences
will depend on whether the participant makes an election under
Section 83(b) of the Code within 30 days after
exercise of the option. If the participant does not make a
Section 83(b) election, the participant will recognize
ordinary income when the shares vest in an amount equal to the
excess of the fair market value on the date of vesting over the
exercise price. In that case, the participant’s basis in
the shares will be the fair market value of the shares on the
date of vesting, and participant’s holding period will
begin on the date of vesting. Upon any later disposition of the
shares, any gain or loss that the participant recognizes will be
capital gain or loss, and will be long-term capital gain or loss
if the participant holds the shares more than one year after
vesting. The Company will be allowed a deduction for federal
income tax purposes when the shares vest equal to the amount of
ordinary income the participant recognizes.
On the other hand, if the participant makes a Section 83(b)
election, the participant will recognize ordinary income at the
time of exercise equal to the excess of the fair market value on
the date of exercise over the exercise price. The Company will
be allowed a deduction for federal income tax purposes on the
date of exercise equal to the amount of ordinary income he or
she recognizes. The participant’s basis in the shares will
generally begin on the date of exercise, and the
participant’s basis in the shares will generally be the
option price increased by the amount of ordinary income the
participant recognized at the time of exercise. Upon any later
disposition of the shares, any gain or loss that the participant
recognizes will be capital gain or loss, and will be long-term
capital gain or loss if the participant holds the shares more
than one year after exercise. However, if the participant later
forfeits the shares, the participant will recognize a capital
loss equal to excess (if any) of the option price over any
amount the participant receives from the Company on the
forfeiture. In other words, if a participant makes the
Section 83(b) election and thereby recognizes ordinary
income on the date of exercise, the participant will receive no
corresponding deduction or loss if the participant later
forfeits the shares for the amount of ordinary income the
participant recognized.
Incentive
Stock Options
The federal income tax consequences associated with ISOs are
generally more favorable to the participant and less favorable
to the Company than those associated with NSOs. Under current
federal income tax law, the grant of an ISO does not result in
income to the participant or in a deduction for the Company at
the time of the grant. Generally, the exercise of an ISO will
not result in income for the participant if the participant does
not dispose of the shares within two years after the date of
grant or within one year after the date of exercise. If these
requirements are met, the basis of the shares of common stock of
the Company upon a later disposition will be the option price,
any gain on the later disposition will be taxed to the
participant as long-term capital gain, and the Company will not
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be entitled to a deduction. The excess of the market value on
the exercise date over the option price is an adjustment to
regular taxable income in determining alternative minimum
taxable income, which could cause the participant to be subject
to the alternative minimum tax, thereby in effect depriving the
participant of the tax benefits of ISO treatment. If the
participant disposes of the shares before the expiration of
either of the holding periods described above (a
“Disqualifying Disposition”), the participant will
have compensation taxable as ordinary income, and the Company
will normally be entitled to a deduction, equal to the lesser of
(a) the fair market value of the shares on the exercise
date minus the option price, or (b) the amount realized on
the disposition minus the option price. If the price realized in
any such Disqualifying Disposition of the shares exceeds the
fair market value of the shares on the exercise date, the excess
will be treated as long-term or short-term capital gain,
depending on the participant’s holding period for the
shares.
Stock
Appreciation Rights
A participant holding a stock appreciation right will recognize
ordinary income on the exercise of the stock appreciation right
equal to the amount of cash or the fair market value of the
shares he receives on the exercise. The Company will receive a
tax deduction in the same amount. Upon disposition of the shares
acquired, the participant will recognize the appreciation or
depreciation on the shares after the date of grant as either
short-term or long-term capital gain or loss, depending on how
long the shares have been held.
Other
Awards
The taxation of an award other than an option or a stock
appreciation right depends on whether or not it consists of
restricted stock (i.e., stock subject to a vesting restriction
based on continued employment or attainment of performance
goals). If an other stock unit award or a performance award does
not consist of restricted stock, and is not settled in
restricted stock, the participant will recognize ordinary income
on the receipt of cash or shares equal to the amount of cash, or
the excess of the fair market value of the shares over the
amount (if any) that the participant pays for the shares. The
Company will receive a tax deduction in the same amount. Upon
disposition of the shares acquired, the participant will
recognize the appreciation or depreciation on the shares after
the date of grant as either short-term or long-term capital gain
or loss, depending on how long the shares have been held.
In general, no taxable income will be recognized by a
participant at the time restricted stock is granted. Generally,
on the date the restricted stock becomes vested, the participant
will recognize ordinary income in an amount equal to the
difference between the fair market value of the shares on the
date the shares vest and the purchase price, and the Company
will receive a tax deduction for the same amount. Upon
disposition of the shares acquired, the participant will
recognize the appreciation or depreciation on the shares after
the date of vesting as either short-term or long-term capital
gain or loss, depending on how long the shares have been held.
Alternatively, a participant may elect to make an election under
Section 83(b) of the Code with respect to unvested shares.
If a participant makes a Section 83(b) election with the
Internal Revenue Service within 30 days from the date of
grant, the participant will recognize ordinary income in an
amount equal to the difference between the fair market value of
the shares on the date of grant and the purchase price, and the
Company will receive a tax deduction for the same amount. If the
participant makes a timely Section 83(b) election, the
participant will not recognize ordinary income when the shares
vest. Upon disposition of the shares acquired, the participant
will recognize the appreciation or depreciation on the shares
after the date of grant as either short-term or long-term
capital gain or loss, depending on how long the shares have been
held. If the participant forfeits unvested shares, the
participant will recognize a capital loss equal to the excess
(if any) of the purchase price over any amount the participant
receives from the Company on the forfeiture. Generally, if the
participant makes a Section 83(b) election, and thereby
recognizes ordinary income on the date of grant, the participant
will receive no corresponding deduction or loss for the amount
of ordinary income the participant recognized if the participant
later forfeits any unvested shares.
$1,000,000
Limit on Deductible Compensation
Section 162(m) of the Code provides that any
publicly-traded corporation will be denied a deduction for
compensation paid to certain executive officers to the extent
that the compensation exceeds $1,000,000 per officer
Table of Contents
per year. However, the deduction limit does not apply to
“performance based” compensation, as defined in
Section 162(m). Compensation is performance based
compensation if (i) the compensation is payable on account
of the attainment of one or more performance goals;
(ii) the performance goals are established by a
compensation committee of the Board of Directors of directors
consisting of “outside directors”; (iii) the
material terms of the compensation and the performance goals are
disclosed to and approved by the stockholders in a separate
vote; and (iv) the compensation committee certifies that
the performance goals have been satisfied. The Company believes
that, if the stockholders approve the Plan, the stock options
and stock appreciation rights granted thereunder will satisfy
the requirements to be treated as performance based
compensation, and accordingly will not be subject to the
deduction limit of Section 162(m) of the Code. As discussed
above, the Committee may determine that restricted stock, other
stock unit awards, and performance awards granted to executive
officers whose compensation is subject to the deduction limit of
Section 162(m) will also qualify as performance based
compensation. Restricted stock whose vesting is based solely on
the completion by the recipient of a stated period of service
with the Company will not qualify as performance based
compensation.
Excess
Parachute Payments
Under Section 4999 of the Code, certain officers,
stockholders, or highly- compensated individuals
(“Disqualified Individuals”) will be subject to an
excise tax (in addition to federal income taxes) of 20% of the
amount of certain “excess parachute payments” which
they receive as a result of a change in control of the Company.
Furthermore, Section 280G of the Code prevents the Company
from taking a deduction for any “excess parachute
payments.” The cash out or acceleration of the vesting of
stock options, stock appreciation rights, restricted stock,
other stock unit awards or performance awards upon a change of
control may cause the holders of such stock options, stock
appreciation rights, restricted stock, other stock unit awards
and performance awards who are Disqualified Individuals to
recognize certain amounts as “excess parachute
payments” on which they must pay the 20% excise tax, and
for which the Company will be denied a tax deduction.
Special
Rules; Withholding of Taxes
Special tax rules may apply to a participant who is subject to
Section 16 of the Exchange Act. Other special tax rules
will apply if a participant exercises a stock option by
delivering shares of Company common stock which he or she
already owns, or through a “broker’s exercise.”
The Company may take whatever steps the Committee deems
appropriate to comply with any applicable withholding tax
obligation in connection with the exercise of an option or stock
appreciation right or the grant or vesting of restricted stock,
other stock unit awards, or performance awards, including
requiring any participant to pay the amount of any applicable
withholding tax to the Company in cash. The Committee may, in
its discretion, authorize “cashless withholding.”
Item 9.01. Financial Statements and Exhibits.
| Exhibit No. | Description | |
10.1
|
2007 Equity and Performance Incentive Plan | |
10.2
|
Form of Stock Option Grant Notice and Stock Option Agreement for use with the 2007 Equity and Performance Incentive Plan. |
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| BIG 5 SPORTING GOODS CORPORATION | ||||||
Date:
June 25, 2007 |
||||||
| /s/ Steven G. Miller | ||||||
| Steven G. Miller | ||||||
| President and Chief Executive Officer | ||||||
Exhibit
10.1
BIG 5
SPORTING GOODS CORPORATION
2007 EQUITY AND PERFORMANCE INCENTIVE PLAN
2007 EQUITY AND PERFORMANCE INCENTIVE PLAN
BIG 5 SPORTING GOODS CORPORATION, a corporation existing under
the laws of the State of Delaware (the
“Company”), hereby establishes and adopts the
following 2007 Equity and Performance Incentive Plan (the
“Plan”). Certain capitalized terms used in the
Plan are defined in Article 2.
RECITALS
WHEREAS, the Company desires to encourage high levels of
performance by those individuals who are key to the success of
the Company, to attract new individuals who are highly motivated
and who are expected to contribute to the success of the Company
and to encourage such individuals to remain as directors,
employees, consultants
and/or
advisors of the Company and its Affiliates by increasing their
proprietary interest in the Company’s growth and
success; and
WHEREAS, to attain these ends, the Company has formulated the
Plan embodied herein to authorize the granting of Awards to
Participants whose judgment, initiative and efforts are or have
been or are expected to be responsible for the success of the
Company.
NOW, THEREFORE, the Company hereby constitutes, establishes and
adopts the following Plan and agrees to the following provisions:
ARTICLE I
PURPOSE
OF THE PLAN
1.1 Purpose. The purpose of the
Plan is to assist the Company and its Affiliates in attracting
and retaining selected individuals to serve as directors,
employees, consultants
and/or
advisors of the Company who are expected to contribute to the
Company’s success and to achieve long-term objectives which
will inure to the benefit of all stockholders of the Company
through the additional incentives inherent in the Awards
hereunder.
ARTICLE II
DEFINITIONS
2.1 “Affiliate” shall mean
(i) any person or entity that directly, or through one or
more intermediaries, controls, or is controlled by, or is under
common control with, the Company (including any Parent or
Subsidiary) or (ii) any entity in which the Company has a
significant equity interest, as determined by the Committee.
2.2 “Applicable Laws” means the
legal requirements relating to the administration of and
issuance of securities under stock incentive plans, including,
without limitation, the requirements of state corporations law,
federal and state securities law, federal and state tax law, and
the requirements of any stock exchange or quotation system upon
which the Shares may then be listed or quoted. For all purposes
of this Plan, references to statutes and regulations shall be
deemed to include any successor statutes and regulations, to the
extent reasonably appropriate as determined by the Committee.
2.3 “Award” shall mean any Option,
Stock Appreciation Right, Restricted Stock Award, Performance
Award, Dividend Equivalent, Other Stock Unit Award or any other
right, interest or option relating to Shares or other property
(including cash) granted pursuant to the provisions of the Plan.
2.4 “Award Agreement” shall mean any
written agreement, contract or other instrument or document
evidencing any Award granted by the Committee hereunder.
2.5 “Board” shall mean the board of
directors of the Company.
2.6 “Cause” shall have the meaning
set forth in a Participant’s employment or consulting
agreement with the Company (if any), or if not defined therein,
shall mean (i) acts or omissions by the Participant which
constitute intentional material misconduct or a knowing
violation of a material policy of the Company or any of its
subsidiaries, (ii) the Participant personally receiving a
benefit in money, property or services from the Company or any
of its subsidiaries or from another person dealing with the
Company or any of its subsidiaries, in material violation of
applicable law or Company policy, (iii) an act of fraud,
conversion, misappropriation, or embezzlement by the Participant
or his conviction of, or entering a guilty plea or plea of no
contest with respect to, a felony, or the equivalent thereof
(other than DUI), or (iv) any deliberate and material
misuse or improper disclosure of confidential or proprietary
information of the Company.
2.7 “Change of Control” shall mean
the occurrence of any of the following events:
(i) The direct or indirect acquisition by an unrelated
“Person” or “Group” of “Beneficial
Ownership” (as such terms are defined below) of more than
50% of the voting power of the Company’s issued and
outstanding voting securities in a single transaction or a
series of related transactions;
(ii) The direct or indirect sale or transfer by the Company
of substantially all of its assets to one or more unrelated
Persons or Groups in a single transaction or a series of related
transactions;
(iii) The merger, consolidation or reorganization of the
Company with or into another corporation or other entity in
which the Beneficial Owners of more than 50% of the voting power
of the Company’s issued and outstanding voting securities
immediately before such merger or consolidation do not own more
than 50% of the voting power of the issued and outstanding
voting securities of the surviving corporation or other entity
immediately after such merger, consolidation or
reorganization; or
(iv) During any consecutive two-year period, individuals
who at the beginning of such period constituted the Board of the
Company (together with any new Directors whose election to such
Board or whose nomination for election by the stockholders of
the Company was approved by a vote of a majority of the
Directors of the Company then still in office who were either
Directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for
any reason to constitute a majority of the Board of the Company
then in office.
None of the foregoing events, however, shall constitute a Change
of Control if such event is not a “Change in Control
Event” under Treasury Regulations
Section 1.409A-3(i)(5).
For purposes of determining whether a Change of Control has
occurred, the following Persons and Groups shall not be deemed
to be “unrelated”: (A) such Person or Group
directly or indirectly has Beneficial Ownership of more than 50%
of the issued and outstanding voting power of the Company’s
voting securities immediately before the transaction in
question, (B) the Company has Beneficial Ownership of more
than 50% of the voting power of the issued and outstanding
voting securities of such Person or Group, or (C) more than
50% of the voting power of the issued and outstanding voting
securities of such Person or Group are owned, directly or
indirectly, by Beneficial Owners of more than 50% of the issued
and outstanding voting power of the Company’s voting
securities immediately before the transaction in question. The
terms “Person,” “Group,” “Beneficial
Owner,” and “Beneficial Ownership” shall have the
meanings used in the Exchange Act.
2.8 “Code” shall mean the Internal
Revenue Code of 1986, as amended from time to time, and any
successor thereto.
2.9 “Committee” shall mean the
Committee constituted under Section 4.2 to administer this
Plan.
2.10 “Company” has the meaning set
forth in introductory paragraph of the Plan.
2.11 “Consultant” means any person,
including an advisor, who (i) is a natural person,
(ii) provides bona fide services to the Company or a Parent
or Subsidiary, and (iii) provides services that are not in
connection with the offer or sale of securities in a
capital-raising transaction, and that do not directly or
indirectly promote or maintain a market for the securities of
the Company; provided that the term ’Consultant’ does
not include (i) Employees or (ii) Directors who are
paid only a director’s fee by the Company or who are not
compensated by the Company for their services as Directors.
2.12 “Continuous Status as an Employee,
Director or Consultant” means that the employment,
director or consulting relationship is not interrupted or
terminated by the Company, any Parent or Subsidiary, or by the
Employee, Director or Consultant. Continuous Status as an
Employee, Director or Consultant will not be considered
interrupted in the case of: (i) any leave of absence
approved by the Board, including sick leave, military leave, or
any other personal leave, provided, that for purposes of
Incentive Stock Options, any such leave may not exceed
90 days, unless reemployment upon the expiration of such
leave is guaranteed by contract (including certain Company
policies) or statute; (ii) transfers between locations of
the Company or between the Company, its Parent, its Subsidiaries
or its successor; or (iii) in the case of an Award other
than an Incentive Stock Option, the ceasing of a person to be an
Employee while such person remains a Director or Consultant, the
ceasing of a person to be a Director while such person remains
an Employee or Consultant or the ceasing of a person to be a
Consultant while such person remains an Employee or Director.
2.13 “Covered Employee” shall mean a
“covered employee” within the meaning of
Section 162(m)(3) of the Code, or any successor provision
thereto.
2.14 “Director” shall mean a
non-employee member of the Board or a non-employee member of the
board of directors of a Parent or Subsidiary.
2.15 “Disability” shall mean total
and permanent disability as defined in Section 22(e)(3) of
the Code.
2.16 “Dividend Equivalents” shall
have the meaning set forth in Section 12.5.
2.17 “Employee” shall mean any
employee of the Company or any Parent or Subsidiary.
2.18 “Exchange Act” shall mean the
Securities Exchange Act of 1934 and the rules promulgated
thereunder, as amended.
2.19 “Fair Market Value” shall mean,
with respect to any property other than Shares, the market value
of such property determined by such methods or procedures as
shall be established from time to time by the Committee. The
Fair Market Value of Shares as of any date shall be determined
as follows:
(i) If the Shares are listed on any established stock
exchange or a national market system, including without
limitation, the National Market System of NASDAQ, the Fair
Market Value of a Share will be (i) the closing sales price
for such Shares (or the closing bid, if no sales are reported)
as quoted on that system or exchange (or the system or exchange
with the greatest volume of trading in Shares) on the last
market trading day prior to the day of determination or
(ii) any sales price for such Shares (or the closing bid,
if no sales are reported) as quoted on that system or exchange
(or the system or exchange with the greatest volume of trading
in Shares) on the day of determination, as the Committee may
select, in each case as reported in the Wall Street Journal or
any other source the Committee considers reliable.
(ii) If the Shares are quoted on the NASDAQ System (but not
on the NASDAQ National Market System) or are regularly quoted by
recognized securities dealers but selling prices are not
reported, the Fair Market Value of a Share will be the mean
between the high bid and low asked prices for the Shares on
(i) the last market trading day prior to the day of
determination or (ii) the day of determination, as the
Committee may select, in each case as reported in the Wall
Street Journal or any other source the Committee considers
reliable.
(iii) If the Shares are not traded as set forth above, the
Fair Market Value will be determined in good faith by the
Committee with reference to the earnings history, book value and
prospects of the Company in light of market conditions
generally, and any other factors the Committee considers
appropriate, such determination by the Committee to be final,
conclusive and binding.
2.20 “Family Member” means any
child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, former spouse, sibling, niece, nephew,
mother-in-law,
father-in-law,
son-in-law,
daughter-in-law,
brother-in-law,
or
sister-in-law,
including adoptive relationships, any person sharing the
Participant’s household (other than a tenant or employee),
a trust in which these persons (or the Participant) control the
management of assets, and any other entity in which these
persons (or the Participant) own more than 50 percent of
the voting interests.
2.21 “Incentive Stock Option” means
an Option intended to qualify as an incentive stock option
within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
2.22 “Limitations” shall have the
meaning set forth in Section 3.2.
2.23 “Option” shall mean any right
granted to a Participant under the Plan allowing such
Participant to purchase Shares at such price or prices and
during such period or periods as the Committee shall determine.
2.24 “Other Stock Unit Award” shall
have the meaning set forth in Section 8.1.
2.25 “Parent” means a “parent
corporation” with respect to the Company, whether now or
later existing, as defined in Section 424(e) of the Code.
2.26 “Participant” shall mean an Employee,
Director or Consultant who is selected by the Committee to
receive an Award under the Plan.
2.27 “Payee” shall have the meaning set forth
in Section 13.1.
2.28 “Performance Award” shall mean any Award
of Performance Shares or Performance Units granted pursuant to
Article 9.
2.29 “Performance Period” shall mean that
period established by the Committee at the time any Performance
Award is granted or at any time thereafter during which any
performance goals specified by the Committee with respect to
such Award are to be measured.
2.30 “Performance Share” shall mean any grant
pursuant to Article 9 of a unit valued by reference to a
designated number of Shares, which value may be paid to the
Participant by delivery of such property as the Committee shall
determine, including cash, Shares, other property, or any
combination thereof, upon achievement of such performance goals
during the Performance Period as the Committee shall establish
at the time of such grant or thereafter.
2.31 “Performance Unit” shall mean any grant
pursuant to Article 9 of a unit valued by reference to a
designated amount of property (including cash) other than
Shares, which value may be paid to the Participant by delivery
of such property as the Committee shall determine, including
cash, Shares, other property, or any combination thereof, upon
achievement of such performance goals during the Performance
Period as the Committee shall establish at the time of such
grant or thereafter.
2.32 “Prior Plans” shall mean, collectively,
the Company’s 1997 Management Equity Plan and 2002 Stock
Incentive Plan, as amended.
2.33 “Restricted Stock” shall mean any Share
issued with the restriction that the holder may not sell,
transfer, pledge or assign such Share and with such other
restrictions as the Committee, in its sole discretion, may
impose (including any restriction on the right to vote such
Share and the right to receive any dividends), which
restrictions may lapse separately or in combination at such time
or times, in installments or otherwise, as the Committee may
deem appropriate.
2.34 “Restricted Period” shall have the meaning
set forth in Section 7.1.
2.35 “Restricted Stock Award” shall have the
meaning set forth in Section 7.1.
2.36 “Shares” shall mean the shares of common
stock of the Company, par value $0.10 per share.
2.37 “Stock Appreciation Right” shall mean the
right granted to a Participant pursuant to Article 6.
2.38 “Subsidiary” shall mean any corporation
(other than the Company) in an unbroken chain of corporations
beginning with the Company if, at the time of the granting of
the Award, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50% or
more of the total combined voting power of all classes of stock
in one of the other corporations in the chain.
2.39 “Substitute Awards” shall mean Awards
granted or Shares issued by the Company in assumption of, or in
substitution or exchange for, awards previously granted, or the
right or obligation to make future awards, by a company acquired
by the Company or any Subsidiary or with which the Company or
any Subsidiary combines.
ARTICLE III
SHARES SUBJECT
TO THE PLAN
3.1 Number of Shares.
(a) Subject to adjustment as provided in Section 12.2,
a total of 2,399,250 Shares shall be authorized for grant
under the Plan, plus any Shares subject to awards granted under
the Prior Plans, which such awards are forfeited, expire or
otherwise terminate without issuance of Shares, or are settled
for cash or otherwise do not result in the issuance of Shares,
on or after the effective date of this Plan. Any Shares that are
subject to Awards of Options or Stock Appreciation Rights shall
be counted against this limit as one Share for every one Share
granted, regardless of the number of shares actually delivered
pursuant to such Awards. Any Shares that are subject to Awards
other than Options or Stock Appreciation Rights (including, but
not limited to, Shares delivered in satisfaction of Dividend
Equivalents) shall be counted against this limit as
2.5 Shares for every one Share granted.
(b) If any Shares subject to an Award or to an award under
the Prior Plans are forfeited, expire or otherwise terminate
without issuance of such Shares, or any Award or award under the
Prior Plans is settled for cash or otherwise does not result in
the issuance of all or a portion of the Shares subject to such
Award, the Shares shall, to the extent of such forfeiture,
expiration, termination, cash settlement or non-issuance, again
be available for Awards under the Plan, subject to
Section 3.1(e) below.
(c) In the event that (i) any Option or other Award
granted under this Plan or any option or award granted under the
Prior Plans is exercised through the tendering of Shares (either
actually, by attestation, or by the giving of instructions to a
broker to remit to the Company that portion of the sales price
required to pay the exercise price) or by the withholding of
Shares by the Company, or (ii) withholding tax liabilities
arising from such Options or Awards under this Plan or options
or awards under a Prior Plan are satisfied by the tendering of
Shares (either actually, by attestation, or by the giving of
instructions to a broker to remit to the Company that portion of
the sales price required to pay the exercise price) or by the
withholding of Shares by the Company, then the Shares so
tendered or withheld shall not again be available for Awards
under the Plan.
(d) Substitute Awards shall not reduce the Shares
authorized for issuance under the Plan or authorized for grant
to a Participant in any calendar year. Additionally, in the
event that a company acquired by the Company or any Subsidiary,
or with which the Company or any Subsidiary combines, has shares
available under a pre-existing plan approved by shareholders and
not adopted in contemplation of such acquisition or combination,
the shares available for grant pursuant to the terms of such
pre-existing plan (as adjusted, to the extent appropriate, using
the exchange ratio or other adjustment or valuation ratio or
formula used in such acquisition or combination to determine the
consideration payable to the holders of common stock of the
entities party to such acquisition or combination) may be used
for Awards under the Plan and shall not reduce the Shares
authorized for issuance under the Plan; provided that Awards
using such available shares shall not be made after the date
awards or grants could have been made under the terms of the
pre-existing plan, absent the acquisition or combination, and
shall only be made to individuals who were employees, directors
or consultants of such acquired or combined company before such
acquisition or combination.
(e) Any Shares that again become available for grant
pursuant to this Article 3 shall be added back as one Share
if such Shares were subject to Options or Stock Appreciation
Rights granted under the Plan or options or stock appreciation
rights granted under the Prior Plans, and as 2.5 Shares if
such Shares were subject to Awards other than Options or Stock
Appreciation Rights granted under the Plan.
3.2 Limitations on Grants to Individual
Participant. Subject to adjustment as provided in
Section 12.2, no Participant may be granted
(i) Options or Stock Appreciation Rights during any fiscal
year of the Company with respect to more than
500,000 Shares, or (ii) Restricted Stock, Performance
Awards
and/or Other
Stock Unit Awards that are denominated in Shares in any fiscal
year of the Company with respect to more than
250,000 Shares (the “Limitations”). In
addition to the foregoing, the maximum dollar value payable to
any Participant in any fiscal year of the Company with respect
to Performance Awards
and/or Other
Stock Unit Awards that are valued with reference to cash or
property other than Shares is $2,000,000. If an Award is
cancelled, the cancelled Award shall continue to be counted
toward the applicable Limitations.
3.3 Character of Shares. Any Shares
issued hereunder may consist, in whole or in part, of authorized
and unissued shares, treasury shares or shares purchased in the
open market or otherwise.
ARTICLE IV
ELIGIBILITY
AND ADMINISTRATION
4.1 Eligibility. Any Employee,
Director or Consultant shall be eligible to be selected as a
Participant. Only Employees may receive awards of Incentive
Stock Options.
4.2 Administration.
(a) The Plan shall be administered by the Committee,
constituted as follows:
(i) The Committee will consist of the Board, or a committee
designated by the Board, which Committee will be constituted to
satisfy Applicable Laws. Once appointed, a Committee will serve
in its designated capacity until otherwise directed by the
Board. The Board may increase the size of the Committee and
appoint additional members, remove members (with or without
cause) and substitute new members, fill vacancies (however
caused), and remove all members of the Committee and thereafter
directly administer the Plan. Notwithstanding the foregoing,
unless the Board expressly resolves to the contrary, while the
Company is registered pursuant to Section 12 of the
Exchange Act, the Plan will be administered only by the
Compensation Committee of the Board (or such other committee
designated by the Compensation Committee of the Board),
consisting of no fewer than two Directors, each of whom is
(A) a “non-employee director” within the meaning
of
Rule 16b-3
(or any successor rule) of the Exchange Act, (B) an
“outside director” within the meaning of
Section 162(m)(4)(C)(i) of the Code, and (C) an
“independent director” for purpose of the rules and
regulations of the NASDAQ National Market System or other
exchange or quotation system on which the Shares are principally
traded; provided, however, (X) so long as the Committee has
at least two directors that meet the above requirements, the
Committee may contain one additional director who is not a
“non-employee director”, “outside director”
or “independent director”, but only if such director
abstains from voting on all grants or awards to Covered
Employees and to those Participants who have been designated by
the Board of Directors as being “officers” for
purposes of Section 16 of the Exchange Act and the rules
promulgated thereunder and (Y) the failure of the Committee
to be composed solely of individuals who are “non-employee
directors,” “outside directors,” and
“independent directors”, whether pursuant to
clause (X) above or otherwise, shall not render
ineffective or void any awards or grants made by, or other
actions taken by, such Committee.
(ii) The Plan may be administered by different bodies with
respect to Directors, officers who are not Directors, and
Employees and Consultants who are neither Directors nor
officers, and Covered Employees.
(b) The Committee shall have full discretion, power and
authority, subject to the provisions of the Plan and subject to
such orders or resolutions not inconsistent with the provisions
of the Plan as may from time to time be adopted by the Board,
to: (i) select the Employees, Consultants and Directors to
whom Awards may from time to time be granted hereunder;
(ii) determine the type or types of Awards, not
inconsistent with the provisions of the Plan, to be granted to
each Participant hereunder; (iii) determine the number of
Shares to be covered by each Award granted hereunder;
(iv) determine the terms and conditions, not inconsistent
with the provisions of the Plan, of any Award granted hereunder
and the form and content of any Award Agreement;
(v) determine whether, to what extent and under what
circumstances Awards may be settled in cash, Shares or other
property, subject to the provisions of the Plan;
(vi) determine whether, to what extent and under what
circumstances any Award shall be modified, amended, canceled or
suspended; (vii) interpret and administer the Plan and any
instrument or agreement entered into under or in connection with
the Plan, including any Award Agreement; (viii) correct any
defect, supply any omission or reconcile any inconsistency in
the Plan or any Award in the manner and to the extent that the
Committee shall deem desirable to carry it into effect;
(ix) establish such rules and regulations and appoint such
agents as it shall deem appropriate for the proper
administration of the Plan; (x) determine whether any Award
will have Dividend Equivalents; (xi) determine whether, to
what extent, and under what circumstances cash, Shares, or other
property payable with respect to an Award shall be deferred
either automatically or at the election of the Participant;
provided that the Committee shall take no action that would
subject the Participant to a penalty tax under Section 409A
of the Code; and (xii) make any other determination and
take any other action that the Committee deems necessary or
desirable for administration of the Plan.
(c) Decisions of the Committee shall be final, conclusive
and binding on all persons or entities, including the Company,
any Participant, any stockholder and any Employee or any
Affiliate. A majority of the members of the Committee may
determine its actions and fix the time and place of its meetings.
(d) The Committee may delegate to a committee of one or
more Directors of the Company or, to the extent permitted by
Applicable Law, to one or more officers or a committee of
officers, the authority to grant Awards to Employees and
officers of the Company who are not Directors, Covered
Employees, or “officers,” as such term is defined by
Rule 16a-1(f)
of the Exchange Act, and to cancel or suspend Awards to
Employees and officers of the Company who are not Directors,
Covered Employees, or “officers,” as such term is
defined by
Rule 16a-1(f)
of the Exchange Act.
ARTICLE V
OPTIONS
5.1 Grant of Options. Options may
be granted hereunder to Participants either alone or in addition
to other Awards granted under the Plan. Any Option shall be
subject to the terms and conditions of this Article 5 and
to such additional terms and conditions, not inconsistent with
the provisions of the Plan, as the Committee shall deem
desirable.
5.2 Award Agreements. All Options
granted pursuant to this Article 5 shall be evidenced by a
written Award Agreement in such form and containing such terms
and conditions as the Committee shall determine which are not
inconsistent with the provisions of the Plan. Granting of an
Option pursuant to the Plan shall impose no obligation on the
recipient to exercise such Option. Any individual who is granted
an Option pursuant to this Article 5 may hold more than one
Option granted pursuant to the Plan at the same time.
5.3 Option Price. Other than in
connection with Substitute Awards, the option price per each
Share purchasable under any Option granted pursuant to this
Article 5 shall not be less than 100% of the Fair Market
Value of such Share on the date of grant of such Option. Other
than pursuant to Section 12.2, the Committee shall not be
permitted to (a) lower the option price per Share of an
Option after it is granted, (b) cancel an Option when the
option price per Share exceeds the Fair Market Value of the
underlying Shares in exchange for cash or for another Award
(other than in connection with Substitute Awards), and
(c) take any other action with respect to an Option that
may be treated as a repricing under the rules and regulations of
the NASDAQ National Market System or other exchange or quotation
system on which the Shares are principally traded.
5.4 Option Period. The term of each
Option shall be fixed by the Committee in its sole discretion;
provided that no Option shall be exercisable after the
expiration of ten years from the date the Option is granted.
5.5 Exercise of Options. Vested
Options granted under the Plan shall be exercised by the
Participant or by a Permitted Assignee thereof (or by the
Participant’s executors, administrators, guardian,
beneficiary, or legal representative, or Family Members, as may
be provided in an Award Agreement) as to all or part of the
Shares covered thereby, by the giving of written notice of
exercise to the Company or its designated agent, specifying the
number of Shares to be purchased, accompanied by payment of the
full purchase price for the Shares being purchased. Unless
otherwise provided in an Award Agreement, full payment of such
purchase price shall be made at the time of exercise and shall
be made (a) in cash or by certified check or bank check or
wire transfer of immediately available funds, (b) with the
consent of the Committee, by tendering previously acquired
Shares (either actually or by attestation, valued at their then
Fair Market Value) that have been owned for a period of at least
six months (or such other period to avoid accounting charges
against the Company’s earnings), (c) with the consent
of the Committee, by delivery of other consideration (including,
where permitted by law and the Committee, other Awards) having a
Fair Market Value on the exercise date equal to the total
purchase price, (d) with the consent of the Committee, by
withholding Shares otherwise issuable in connection with the
exercise of the Option, (e) with the consent of the
Committee, by delivery of a properly executed exercise notice
together with any other documentation
as the Committee and the Participant’s broker, if
applicable, require to effect an exercise of the Option and
delivery to the Company of the sale or other proceeds (as
permitted by Applicable Law) required to pay the exercise price,
, (f) through any other method specified in an Award
Agreement, or (g) any combination of any of the foregoing.
In connection with a tender of previously acquired Shares
pursuant to clause (b) above, the Committee, in its sole
discretion, may permit the Participant to constructively
exchange Shares already owned by the Participant in lieu of
actually tendering such Shares to the Company, provided that
adequate documentation concerning the ownership of the Shares to
be constructively tendered is furnished in form satisfactory to
the Committee. The notice of exercise, accompanied by such
payment, shall be delivered to the Company at its principal
business office or such other office as the Committee may from
time to time direct, and shall be in such form, containing such
further provisions consistent with the provisions of the Plan,
as the Committee may from time to time prescribe. In no event
may any Option granted hereunder be exercised for a fraction of
a Share. No adjustment shall be made for cash dividends or other
rights for which the record date is prior to the date of such
issuance.
5.6 Form of Settlement. In its sole
discretion, the Committee may provide, at the time of grant,
that the Shares to be issued upon an Option’s exercise
shall be in the form of Restricted Stock or other similar
securities, or may reserve the right so to provide after the
time of grant.
5.7 Incentive Stock Options. With
respect to the Options that may be granted by the Committee
under the Plan, the Committee may grant Options intended to
qualify as Incentive Stock Options to any Employee of the
Company or any Parent or Subsidiary, subject to the requirements
of Section 422 of the Code. The Award Agreement of an
Option intended to qualify as an Incentive Stock Option shall
designate the Option as an Incentive Stock Option.
Notwithstanding anything in Section 3.1 to the contrary and
solely for the purposes of determining whether Shares are
available for the grant of Incentive Stock Options under the
Plan, the maximum aggregate number of Shares with respect to
which Incentive Stock Options may be granted under the Plan
shall be 2,399,250 Shares. Notwithstanding the provisions
of Section 5.3, in the case of an Incentive Stock Option
granted to an Employee who, at the time the Incentive Stock
Option is granted, owns stock representing more than ten percent
of the voting power of all classes of capital stock of the
Company or any Parent or Subsidiary, the per Share exercise
price will be no less than 110% of the Fair Market Value per
Share on the date of grant. Notwithstanding the provisions of
Section 5.4, in the case of an Incentive Stock Option
granted to an Employee who, at the time the Incentive Stock
Option is granted, owns stock representing more than ten percent
of the voting power of all classes of capital stock of the
Company or any Parent or Subsidiary, the term of the Incentive
Stock Option will be five years from the date of grant or any
shorter term specified in the Award Agreement. Notwithstanding
the foregoing, if the Shares subject to an Employee’s
Incentive Stock Options (granted under all plans of the Company
or any Parent or Subsidiary), which become exercisable for the
first time during any calendar year, have a Fair Market Value in
excess of $100,000, the Options accounting for this excess will
be not be treated as Incentive Stock Options. For purposes of
the preceding sentence, Incentive Stock Options will be taken
into account in the order in which they were granted, and the
Fair Market Value of the Shares will be determined as of the
time of grant.
5.8 Termination of Employment or Consulting
Relationship or Directorship. If a Participant
holds exercisable Options on the date his or her Continuous
Status as an Employee, Director or Consultant terminates (other
than because of termination due to Cause, but including death or
Disability), the Participant may exercise the Options that were
vested and exercisable as of the date of termination until the
end of the original term or for the period set forth in the
Award Agreement or determined by the Committee, whichever is
earlier. If the Participant is not entitled to exercise his or
her entire Option at the date of such termination, the Shares
covered by the unexercisable portion of the Option will revert
to the Plan, unless otherwise set forth in the Award Agreement
or determined by the Committee. The Committee may determine in
its sole discretion that such unexercisable portion of the
Option will become exercisable at such times and on such terms
as the Committee may determine in its sole discretion. If the
Participant does not exercise an Option within the time
specified after termination, that Option will expire, and the
Shares covered by it will revert to the Plan, except as
otherwise determined by the Committee.
ARTICLE VI
STOCK
APPRECIATION RIGHTS
6.1 Grant and Exercise. The
Committee may provide Stock Appreciation Rights either alone or
in addition to other Awards upon such terms and conditions as
the Committee may establish in its sole discretion.
6.2 Terms and Conditions. Stock
Appreciation Rights shall be subject to such terms and
conditions, not inconsistent with the provisions of the Plan, as
shall be determined from time to time by the Committee,
including the following:
(a) Upon the exercise of a Stock Appreciation Right, the
holder shall have the right to receive the excess of
(i) the Fair Market Value of one Share on the date of
exercise or such other amount as the Committee shall so
determine at any time during a specified period before the date
of exercise over (ii) the grant price of the right on the
date of grant, which, except in the case of Substitute Awards or
in connection with an adjustment provided in Section 12.2,
shall not be less than the Fair Market Value of one Share on
such date of grant of the right.
(b) Upon the exercise of a Stock Appreciation Right,
payment shall be made in whole Shares or cash as determined by
the Committee.
(c) The provisions of Stock Appreciation Rights need not be
the same with respect to each recipient.
(d) The Committee may impose such other conditions or
restrictions on the terms of exercise and the exercise price of
any Stock Appreciation Right, as it shall deem appropriate. In
connection with the foregoing, the Committee shall consider the
applicability and effect of Section 162(m) of the Code.
Notwithstanding the foregoing provisions of this
Section 6.2, but subject to Section 12.2, a Stock
Appreciation Right shall not have (i) an exercise price
less than Fair Market Value on the date of grant, or (ii) a
term of greater than ten years. In addition to the foregoing,
but subject to Section 12.2, the base amount of any Stock
Appreciation Right shall not be reduced after the date of grant.
6.3 Termination of Employment or Consulting
Relationship or Directorship. If a Participant
holds exercisable Stock Appreciation Rights on the date his or
her Continuous Status as an Employee, Director or Consultant
terminates (other than because of termination due to Cause, but
including death or Disability), the Participant may exercise the
Stock Appreciation Rights that were vested and exercisable as of
the date of termination until the end of the original term or
for the period set forth in the Award Agreement or determined by
the Committee, whichever is earlier. If the Participant is not
entitled to exercise his or her entire Stock Appreciation Right
at the date of such termination, the Shares covered by the
unexercisable portion of the Stock Appreciation Right will
revert to the Plan, unless otherwise set forth in the Award
Agreement or determined by the Committee. The Committee may
determine in its sole discretion that such unexercisable portion
of the Stock Appreciation Right will become exercisable at such
times and on such terms as the Committee may determine in its
sole discretion. If the Participant does not exercise a Stock
Appreciation Right within the time specified after termination,
that Stock Appreciation Right will expire, and the Shares
covered by it will revert to the Plan, except as otherwise
determined by the Committee.
ARTICLE VII
RESTRICTED
STOCK AWARDS
7.1 Grants. Awards of Restricted
Stock may be issued hereunder to Participants either alone or in
addition to other Awards granted under the Plan (a
“Restricted Stock Award”). A Restricted Stock
Award shall be subject to restrictions imposed by the Committee
covering a period of time specified by the Committee (the
“Restricted Period”); provided, however, that,
in the case of Restricted Stock as to which restrictions lapse
based solely on the recipient’s Continuous Status as an
Employee, Director, or Consultant, the Restricted Period over
which the restrictions may fully lapse shall not be less than
three years, but the restrictions may lapse ratably over such
Restricted Period. The provisions of Restricted Stock Awards
need not be the same with respect to each recipient. The
Committee has absolute discretion to determine whether any
consideration (other than services) is to be received by the
Company or any Affiliate as a condition precedent to the
issuance of Restricted Stock.
7.2 Award Agreements. The terms of
any Restricted Stock Award granted under the Plan shall be set
forth in a written Award Agreement which shall contain
provisions determined by the Committee and not inconsistent with
the Plan.
7.3 Rights of Holders of Restricted
Stock. Except as otherwise provided in the Award
Agreement, beginning on the date of grant of the Restricted
Stock Award and subject to execution of the Award Agreement, the
Participant shall become a shareholder of the Company with
respect to all Shares subject to the Award Agreement and shall
have all of the rights of a shareholder, including the right to
vote such Shares and the right to receive distributions made
with respect to such Shares; provided, however that the Award
Agreement may provide that any Shares or any other property
(including cash) distributed as a dividend or otherwise with
respect to any Restricted Shares as to which the restrictions
have not yet lapsed shall be subject to the same restrictions as
such Restricted Shares.
ARTICLE VIII
OTHER
STOCK UNIT AWARDS
8.1 Other Stock Unit Awards. Other
Awards of Shares and other Awards that are valued in whole or in
part by reference to, or are otherwise based on, Shares or other
property (“Other Stock Unit Awards”) may be
granted hereunder to Participants, either alone or in addition
to other Awards granted under the Plan, and such Other Stock
Unit Awards shall also be available as a form of payment in the
settlement of other Awards granted under the Plan. Other Stock
Unit Awards shall be paid in Shares or cash. Subject to the
provisions of the Plan, the Committee shall have sole and
complete authority to determine the Employees, Consultants and
Directors to whom and the time or times at which such Other
Stock Unit Awards shall be made, the number of Shares to be
granted pursuant to such Awards, and all other conditions of the
Awards; provided, however, that if the vesting of an Other Stock
Unit Award is based solely on the recipient’s Continuous
Status as an Employee, Director or Consultant, the period over
which such Other Stock Unit Award fully vests shall not be less
than three years, but vesting may occur ratably over such
vesting period. The provisions of Other Stock Unit Awards need
not be the same with respect to each recipient.
8.2 Terms and Conditions. Shares
(including securities convertible into Shares) subject to Awards
granted under this Article 8 may be issued for no
consideration or for such minimum consideration as may be
required by Applicable Law. Shares (including securities
convertible into Shares) purchased pursuant to a purchase right
awarded under this Article 8 shall be purchased for such
consideration as the Committee shall determine in its sole
discretion.
ARTICLE IX
PERFORMANCE
AWARDS
9.1 Terms of Performance
Awards. Performance Awards may be issued
hereunder to Participants, for no consideration or for such
minimum consideration as may be required by Applicable Law,
either alone or in addition to other Awards granted under the
Plan. The performance criteria to be achieved during any
Performance Period and the length of the Performance Period
shall be determined by the Committee upon the grant of each
Performance Award; provided, however, that a Performance Period
shall not be shorter than one year nor longer than five years.
Except as provided in Article 11 or as may be provided in
an Award Agreement, Performance Awards will be distributed only
after the end of the relevant Performance Period. Performance
Awards may be paid in cash, Shares, other property, or any
combination thereof, in the sole discretion of the Committee at
the time of payment. The performance goals to be achieved for
each Performance Period shall be conclusively determined by the
Committee and may be based upon the criteria set forth in
Section 10.2. The amount of the Award to be distributed
shall be conclusively determined by the Committee. The terms of
a Performance Award may provide that it will be paid in a lump
sum or in installments following the close of the Performance
Period.
ARTICLE X
CODE
SECTION 162(m) PROVISIONS
10.1 Covered
Employees. Notwithstanding any other provision of
the Plan, if the Committee determines at the time Restricted
Stock, a Performance Award or an Other Stock Unit Award is
granted to a Participant who is, or is likely to be, as of the
end of the tax year in which the Company would claim a tax
deduction in connection with such Award, a Covered Employee, and
that the deduction limit of Section 162(m) of the Code
might apply to such Award, then the Committee may provide that
this Article 10 is applicable to such Award.
10.2 Performance Criteria. If
Restricted Stock, a Performance Award or an Other Stock Unit
Award is subject to this Article 10, then the lapsing of
restrictions thereon and the distribution of cash, Shares or
other property pursuant thereto, as applicable, shall be subject
to the achievement of one or more objective performance goals
established by the Committee, which shall be based on the
attainment of specified levels, or growth, of one or any
combination of the following factors, or an objective formula
that is determined at the time of the Award that is based on
modified or unmodified calculations of one or any combination of
the following factors: net sales; pretax income before or after
allocation of corporate overhead and bonus; earnings per share;
net income; division, group or corporate financial goals; return
on stockholders’ equity; return on assets; attainment of
strategic and operational initiatives; appreciation in
and/or
maintenance of the price of the Shares or any other
publicly-traded securities of the Company; market share; gross
profits; earnings before taxes; earnings before interest and
taxes; earnings before interest, taxes, depreciation and
amortization (“EBITDA”); an adjusted formula of
EBITDA determined by the Committee; economic value-added models;
comparisons with various stock market indices; reductions in
costs,
and/or
return on invested capital of the Company or any Affiliate,
division or business unit of the Company for or within which the
Participant is primarily employed. Such performance goals also
may be based solely by reference to the Company’s
performance or the performance of an Affiliate, division or
business unit of the Company, or based upon the relative
performance of other companies or upon comparisons of any of the
indicators of performance relative to other companies. Unless
the Committee specifies otherwise when it sets the performance
goals for an award, objective adjustments shall be made to any
of the foregoing measures for items that will not properly
reflect the Company’s financial performance for these
purposes, such as the write-off of debt issuance costs,
pre-opening and development costs, gain or loss from asset
dispositions, asset or other impairment charges, litigation
settlement costs, and other non-routine items that the Committee
foresees may occur during the Performance Period. Also, unless
the Committee determines otherwise in setting the performance
goals for an Award, such performance goals shall be applied by
excluding the impact of (a) restructurings, discontinued
operations and charges for extraordinary items, (b) an
event either not directly related to the operations of the
Company or not within the reasonable control of the
Company’s management, or (c) a change in accounting
standards required by generally accepted accounting principles.
Such performance goals shall be set by the Committee within the
time period prescribed by, and shall otherwise comply with the
requirements of, Section 162(m) of the Code, or any
successor provision thereto, and the regulations thereunder.
10.3 Adjustments. Notwithstanding
any provision of the Plan (other than Article 11), with
respect to any Restricted Stock, Performance Award or Other
Stock Unit Award that is subject to this Article 10, the
Committee may adjust downward, but not upward, the amount
payable pursuant to such Award, and the Committee may not waive
the achievement of the applicable performance goals, except in
the case of the death or Disability of the Participant or the
occurrence of a Change of Control.
10.4 Determination of
Performance. Prior to the vesting, payment,
settlement or lapsing of any restrictions with respect to any
Restricted Stock, Performance Award or Other Stock Unit Award
that is subject to this Article 10, the Committee shall
certify in writing that the applicable performance goals have
been achieved to the extent necessary for such Award to qualify
as “performance based compensation” within the meaning
of Section 162(m)(4)(C) of the Code.
10.5 Restrictions. The Committee
shall have the power to impose such other restrictions on Awards
subject to this Article 10 as it may deem necessary or
appropriate to ensure that such Awards satisfy all requirements
for “performance-based compensation” within the
meaning of Section 162(m)(4)(C) of the Code, or which are
not inconsistent with such requirements.
ARTICLE XI
CHANGE OF
CONTROL PROVISIONS
11.1 Impact of Change of
Control. The terms of any Award may provide in
the Award Agreement evidencing the Award, or the Committee may
determine in its discretion, that, upon a Change of Control of
the Company, (a) Options and Stock Appreciation Rights
outstanding as of the date of the Change of Control immediately
vest and become exercisable in full or in part,
(b) restrictions and deferral limitations on Restricted
Stock lapse and the Restricted Stock becomes free of some or all
restrictions and limitations and becomes partially or fully
vested, (c) Performance Awards shall be considered to be
earned and payable (either in full or pro-rata based on the
portion of Performance Period completed as of the date of the
Change of Control), and any deferral or other restriction shall
lapse and such Performance Awards shall be immediately settled
or distributed, (d) the restrictions and deferral
limitations and other conditions applicable to any Other Stock
Unit Awards or any other Awards shall lapse in full or in part,
and such Other Stock Unit Awards or such other Awards shall
become free of some or all restrictions, limitations or
conditions and become partially or fully vested and
transferable, and (e) such other additional benefits,
changes or adjustments as the Committee deems appropriate shall
apply, subject in each case to any terms and conditions
contained in the Award Agreement evidencing such Award.
Notwithstanding any other provision of the Plan, the Committee,
in its discretion, may determine that, upon the occurrence of a
Change of Control of the Company, (a) each Option and Stock
Appreciation Right shall remain exercisable for only a limited
period of time determined by the Committee (provided that they
remain exercisable for at least 30 days after notice of
such action is given to the Participants), or (b) each
Option and Stock Appreciation Right outstanding shall terminate
within a specified number of days after notice to the
Participant, and such Participant shall receive, with respect to
each Share subject to such Option or Stock Appreciation Right,
an amount equal to the excess of the Fair Market Value of such
Share immediately prior to the occurrence of such Change of
Control over the exercise price per share of such Option
and/or Stock
Appreciation Right; such amount to be payable in cash, in one or
more kinds of stock or property (including the stock or
property, if any, payable in the transaction) or in a
combination thereof, as the Committee, in its discretion, shall
determine. Notwithstanding the foregoing and the provisions of
Section 11.2, the Committee will take no action that would
subject any Participant to a penalty tax under Section 409A
of the Code.
11.2 Assumption Upon Change of
Control. The terms of any Award Agreement may
also provide that, if in the event of a Change of Control the
successor company assumes or substitutes for an Option, Stock
Appreciation Right, Share of Restricted Stock or Other Stock
Unit Award, then each outstanding Option, Stock Appreciation
Right, Share of Restricted Stock or Other Stock Unit Award shall
not be accelerated as described in Sections 11.1(a),
(b) and (d). For the purposes of this Section 11.2, an
Option, Stock Appreciation Right, Share of Restricted Stock or
Other Stock Unit Award shall be considered assumed or
substituted for if following the Change of Control the award
confers the right to purchase or receive, for each Share subject
to the Option, Stock Appreciation Right, Restricted Stock Award
or Other Stock Unit Award immediately prior to the Change of
Control, the consideration (whether stock, cash or other
securities or property) received in the transaction constituting
a Change of Control by holders of Shares for each Share held on
the effective date of such transaction (and if holders were
offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding shares);
provided, however, that if such consideration received in the
transaction constituting a Change of Control is not solely
common stock of the successor company, the Committee may, with
the consent of the successor company, provide that the
consideration to be received upon the exercise or vesting of an
Option, Stock Appreciation Right, Restricted Stock Award or
Other Stock Unit Award, for each Share subject thereto, will be
solely common stock of the successor company substantially equal
in fair market value to the per share consideration received by
holders of Shares in the transaction constituting a Change of
Control. The determination of such substantial equality of value
of consideration shall be made by the Committee in its sole
discretion and its determination shall be conclusive and
binding. Any assumption or substitution of an Incentive Stock
Option will be made in a manner that will not be considered a
“modification” under the provisions of
Section 424(h)(3) of the Code. Notwithstanding the
foregoing, an Award Agreement may provide that, in the event of
a termination of a Participant’s employment in such
successor company within a specified time period following such
Change of Control, all or part of any such Award held by such
Participant at the time of the Change of Control shall be
accelerated as described in Sections 11.1(a), (b) and
(d) above.
ARTICLE XII
GENERALLY
APPLICABLE PROVISIONS
12.1 Amendment and Modification of the
Plan. The Board may, from time to time, alter,
amend, suspend or terminate the Plan as it shall deem advisable,
subject to any requirement for stockholder approval imposed by
Applicable Law; provided that the Board may not amend the Plan
in any manner that would result in noncompliance with
Rule 16b-3
of the Exchange Act; and further provided that the Board may
not, without the approval of the Company’s stockholders,
amend the Plan to (a) increase the number of Shares that
may be the subject of Awards under the Plan (except for
adjustments pursuant to Section 12.2), (b) expand the
types of awards available under the Plan, (c) materially
expand the class of persons eligible to participate in the Plan,
(d) amend any provision of Section 5.3,
(e) increase the maximum permissible term of any Option
specified by Section 5.4, or (f) amend any provision
of Section 3.2. In addition, no amendments to, or
termination of, the Plan (other than by reason of the failure of
stockholders to approve the Plan in the manner set forth in
Section 13.12) shall in any way impair the rights of a
Participant under any Award previously granted without such
Participant’s consent.
12.2 Adjustments. In the event of
any merger, reorganization, consolidation, recapitalization,
dividend or distribution (whether in cash, shares or other
property), stock split, reverse stock split, spin-off or similar
transaction or other change in corporate structure affecting the
Shares or the value thereof, such adjustments and other
substitutions shall be made to the Plan and to Awards as the
Committee, in its sole discretion, deems equitable or
appropriate, including such adjustments in the aggregate number,
class and kind of securities that may be delivered under the
Plan and, in the aggregate or to any one Participant, in the
number, class, kind and option or exercise price of securities
subject to outstanding Awards granted under the Plan (including,
if the Committee deems appropriate, the substitution of similar
options to purchase the shares of, or other awards denominated
in the shares of, another company) as the Committee may
determine to be appropriate in its sole discretion; provided,
however, that the number of Shares subject to any Award shall
always be a whole number. Where an adjustment under this
Section 12.2 is made to an Incentive Stock Option, the
adjustment will be made in a manner which will not be considered
a “modification” under the provisions of
Sections 409A or 424(h)(3) of the Code.
12.3 Transferability of
Awards. Except as provided below, no Award, and
no Shares subject to Awards that have not been issued or as to
which any applicable restriction, performance or deferral period
has not lapsed, may be sold, assigned, transferred, pledged or
otherwise encumbered, other than by will or the laws of descent
and distribution, and such Award may be exercised during the
life of the Participant only by the Participant or the
Participant’s guardian or legal representative.
Notwithstanding the foregoing, to the extent that the Committee
so authorizes in the Award Agreement or otherwise, an Award
other than an Incentive Stock Option may be assigned, in whole
or in part, during the Participant’s lifetime to one or
more Family Members of the Participant. Rights under the
assigned portion may be exercised by the Family Member(s) who
acquire a proprietary interest in such Award pursuant to the
assignment. The terms applicable to the assigned portion shall
be the same as those in effect for the Award immediately before
such assignment and shall be set forth in such documents issued
to the assignee as the Committee deems appropriate.
(a) Designation of Beneficiary. A
Participant may file a written designation of a beneficiary who
is to receive any Awards that remain unexercised in the event of
the Participant’s death. If a Participant is married and
the designated beneficiary is not the spouse, spousal consent
will be required for the designation to be effective. The
Participant may change such designation of beneficiary at any
time by written notice to the Committee, subject to the above
spousal consent requirement.
(b) Effect of No Designation. If a
Participant dies and there is no beneficiary validly designated
and living at the time of the Participant’s death, the
Company will deliver such Participant’s Awards to the
executor or administrator of his or her estate, or if no such
executor or administrator has been appointed (to the knowledge
of the Company), the Company, in its discretion, may deliver
such Awards to the spouse or to any one or more dependents or
relatives of the Participant, or if no spouse, dependent or
relative is known to the Company, then to such other person as
the Company may designate.
(c) Death of Spouse or Dissolution of
Marriage. If a Participant designates his or her
spouse as beneficiary, that designation will be deemed
automatically revoked if the Participant’s marriage is
later dissolved. Similarly, any
designation of a beneficiary will be deemed automatically
revoked upon the death of the beneficiary if the beneficiary
predeceases the Participant. Without limiting the generality of
the preceding sentence, the interest in Awards of a spouse of a
Participant who has predeceased the Participant or whose
marriage has been dissolved will automatically pass to the
Participant, and will not be transferable by such spouse in any
manner, including but not limited to such spouse’s will,
nor will any such interest pass under the laws of intestate
succession.
12.4 Termination of Employment. The
Committee shall determine and set forth in each Award Agreement
whether any Awards granted in such Award Agreement will continue
to be exercisable, and the terms of such exercise, on and after
the date that a Participant’s Continuous Status as an
Employee, Director, or Consultant ceases, whether by reason of
death, disability, voluntary or involuntary termination of
employment or services, or otherwise. The date of termination of
a Participant’s Continuous Status as an Employee, Director
or Consultant will be determined by the Committee, which
determination will be final.
12.5 Dividend Equivalents. Subject
to the provisions of the Plan and any Award Agreement, the
recipient of an Award (including any deferred Award) may, if so
determined by the Committee, be entitled to receive, currently
or on a deferred basis, cash, stock or other property dividends,
or cash payments in amounts equivalent to stock or other
property dividends on Shares (“Dividend
Equivalents”) with respect to the number of Shares
covered by the Award, as determined by the Committee, in its
sole discretion, and the Committee may provide that such amounts
(if any) shall be deemed to have been reinvested in additional
Shares or otherwise reinvested.
ARTICLE XIII
MISCELLANEOUS
13.1 Tax Withholding. The Company
shall have the right to make all payments or distributions
pursuant to the Plan to a Participant (or to the
Participant’s executors, administrators, guardian,
beneficiary, or legal representative, or Family Members) (any
such person, a “Payee”) net of any applicable
Federal, State and local taxes required to be paid or withheld
as a result of (a) the grant of any Award, (b) the
exercise of an Option or Stock Appreciation Rights, (c) the
delivery of Shares or cash, (d) the lapse of any
restrictions in connection with any Award, or (e) any other
event occurring pursuant to the Plan. The Company or any
Affiliate shall have the right to withhold from wages or other
amounts otherwise payable to such Payee such withholding taxes
as may be required by law, or to otherwise require the Payee to
pay such withholding taxes. If the Payee shall fail to make such
tax payments as are required, the Company or its Affiliates
shall, to the extent permitted by law, have the right to deduct
any such taxes from any payment of any kind otherwise due to
such Payee or to take such other action as may be necessary to
satisfy such withholding obligations. The Committee shall be
authorized to establish procedures for election by Participants
to satisfy such obligation for the payment of such taxes by
tendering previously acquired Shares (either actually or by
attestation, valued at their then Fair Market Value) that have
been owned for a period of at least six months (or such other
period to avoid accounting charges against the Company’s
earnings), or by directing the Company to retain Shares (up to
the employee’s minimum required tax withholding rate)
otherwise deliverable in connection with the Award. If Shares
acquired upon exercise of any Incentive Stock Option are
disposed of in a disposition that, under Section 422 of the
Code, disqualifies the holder from the application of
Section 421(a) of the Code, the holder of the Shares
immediately before the disposition will comply with any
requirements imposed by the Company in order to enable the
Company to secure the related income tax deduction to which it
is entitled in such event.
13.2 Right of Discharge Reserved; Claims to
Awards. Nothing in the Plan nor the grant of an
Award hereunder shall confer upon any Employee, Consultant or
Director the right to continue in the employment or service of
the Company or any Affiliate or affect any right that the
Company or any Affiliate may have to terminate the employment or
service of (or to demote or to exclude from future Awards under
the Plan) any such Employee, Consultant or Director at any time
for any reason. The Company shall not be liable for the loss of
existing or potential profit from an Award granted in the event
of termination of an employment or other relationship. No
Employee or Participant shall have any claim to be granted any
Award under the Plan, and there is no obligation for uniformity
of treatment of Employees or Participants under the Plan.
13.3 Prospective Recipient. The
prospective recipient of any Award under the Plan shall not,
with respect to such Award, be deemed to have become a
Participant, or to have any rights with respect to such Award,
until and unless such recipient shall have executed an agreement
or other instrument evidencing the Award and delivered a copy
thereof to the Company, and otherwise complied with the then
applicable terms and conditions.
13.4 Cancellation of
Award. Notwithstanding anything to the contrary
contained herein, all outstanding Awards granted to any
Participant may be canceled in the discretion of the Committee
if the Participant’s Continuous Status as an Employee,
Director or Consultant is terminated for Cause, or if, after the
termination of the Participant’s Continuous Status as an
Employee, Director, or Consultant, the Committee determines that
Cause existed before such termination.
13.5 Stop Transfer Orders. All
certificates for Shares delivered under the Plan pursuant to any
Award shall be subject to such stop-transfer orders and other
restrictions as the Committee may deem advisable under the
provisions of this Plan, the rules, regulations and other
requirements of the Securities and Exchange Commission, any
stock exchange upon which the Shares are then listed, and any
applicable federal or state securities law, and the Committee
may cause a legend or legends to be put on any such certificates
to make appropriate reference to such restrictions.
13.6 Nature of Payments. All Awards
made pursuant to the Plan are in consideration of services
performed or to be performed for the Company or any Affiliate,
division or business unit of the Company. Any income or gain
realized pursuant to Awards under the Plan and any Stock
Appreciation Rights constitute a special incentive payment to
the Participant and shall not be taken into account, to the
extent permissible under Applicable Law, as compensation for
purposes of any of the employee benefit plans of the Company or
any Affiliate except as may be determined by the Committee or by
the Board or board of directors of the applicable Affiliate.
13.7 Other Plans. Nothing contained
in the Plan shall prevent the Board from adopting other or
additional compensation arrangements, subject to stockholder
approval if such approval is required; and such arrangements may
be either generally applicable or applicable only in specific
cases.
13.8 Severability. If any provision
of the Plan shall be held unlawful or otherwise invalid or
unenforceable in whole or in part by a court of competent
jurisdiction, such provision shall (a) be deemed limited to
the extent that such court of competent jurisdiction deems it
lawful, valid
and/or
enforceable and as so limited shall remain in full force and
effect, and (b) not affect any other provision of the Plan
or part thereof, each of which shall remain in full force and
effect. If the making of any payment or the provision of any
other benefit required under the Plan shall be held unlawful or
otherwise invalid or unenforceable by a court of competent
jurisdiction, such unlawfulness, invalidity or unenforceability
shall not prevent any other payment or benefit from being made
or provided under the Plan, and if the making of any payment in
full or the provision of any other benefit required under the
Plan in full would be unlawful or otherwise invalid or
unenforceable, then such unlawfulness, invalidity or
unenforceability shall not prevent such payment or benefit from
being made or provided in part, to the extent that it would not
be unlawful, invalid or unenforceable, and the maximum payment
or benefit that would not be unlawful, invalid or unenforceable
shall be made or provided under the Plan.
13.9 Construction. All references
in the Plan to “Section,”
“Sections,” or “Article” are
intended to refer to the Section, Sections or Article, as the
case may be, of the Plan. As used in the Plan, the words
“include” and “including,” and
variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the
words “without limitation.”
13.10 Unfunded Status of the
Plan. The Plan is intended to constitute an
“unfunded” plan for incentive and deferred
compensation. With respect to any payments not yet made to a
Participant by the Company, nothing contained herein shall give
any such Participant any rights that are greater than those of a
general creditor of the Company. In its sole discretion, the
Committee may authorize the creation of trusts or other
arrangements to meet the obligations created under the Plan to
deliver the Shares or payments in lieu of or with respect to
Awards hereunder; provided, however, that the existence of such
trusts or other arrangements is consistent with the unfunded
status of the Plan.
13.11 Governing Law. The Plan and
all determinations made and actions taken thereunder, to the
extent not otherwise governed by the Code or the laws of the
United States, shall be governed by the laws of the State of
Delaware and construed accordingly.
13.12 Effective Date of Plan; Termination of
Plan. The Plan shall be effective on
April 24, 2007, subject to the approval of the Plan, within
12 months thereafter, by affirmative votes representing a
majority of the votes cast under Applicable Laws at a duly
constituted meeting of the stockholders of the Company. After
the adoption of this Plan by the Board, Awards may be made, but
all such Awards shall be subject to stockholder approval of this
Plan in accordance with the first sentence of this
Section 13.12, and no Options or Stock Appreciation Rights
may be exercised prior to such stockholder approval of the Plan.
If the stockholders do not approve this Plan in the manner set
forth in the first sentence of this Section 13.12, this
Plan, and all Awards granted hereunder, shall be null and void
and of no effect. Awards may be granted under the Plan at any
time and from time to time on or prior to the tenth anniversary
of the effective date of the Plan (unless the Board sooner
suspends or terminates the Plan under Section 12.1), on
which date the Plan will expire except as to Awards then
outstanding under the Plan. Notwithstanding the foregoing,
unless affirmative votes representing a majority of the votes
cast under Applicable Laws approve the continuation of
Article 10 at the first duly constituted meeting of the
stockholders of the Company that occurs in the fifth year
following the effective date of this Plan, no Awards other than
Options or Stock Appreciation Rights, or Restricted Stock that
is not intended to satisfy the requirements of Article 10,
shall be made to Covered Employees following the date of such
meeting. Except as set forth in the third sentence of this
Section 13.12, outstanding Awards shall remain in effect
until they have been exercised or terminated, or have expired.
13.13 Foreign Employees. Awards may
be granted to Participants who are foreign nationals or employed
outside the United States, or both, on such terms and conditions
different from those applicable to Awards to Employees employed
in the United States as may, in the judgment of the Committee,
be necessary or desirable in order to recognize differences in
local law or tax policy. The Committee also may impose
conditions on the exercise or vesting of Awards in order to
minimize the Company’s obligation with respect to tax
equalization for Employees on assignments outside their home
country.
13.14 Effect on Prior Plans. On the
approval of this Plan by the stockholders of the Company in the
manner set forth in Section 13.12, the Prior Plans shall be
cancelled and no further grants or awards shall be made under
the Prior Plans. Grants and awards made under the Prior Plans
before the date of such cancellation, however, shall continue in
effect in accordance with their terms.
13.15 Other Company Compensation
Plans. Shares available for Awards under the Plan
may be used by the Company as a form of payment of compensation
under other Company compensation plans, whether or not existing
on the date hereof. To the extent any Shares are used as such by
the Company, such Shares will reduce the then number of Shares
available under Article 3 of the Plan for future Awards.
13.16 Captions. The captions in the
Plan are for convenience of reference only, and are not intended
to narrow, limit or affect the substance or interpretation of
the provisions contained herein.
Exhibit 10.2
BIG 5 SPORTING GOODS CORPORATION
STOCK OPTION GRANT NOTICE
(2007 Equity and Performance Incentive Plan)
STOCK OPTION GRANT NOTICE
(2007 Equity and Performance Incentive Plan)
Big 5 Sporting Goods Corporation (the “Company"), pursuant to its 2007 Equity and Performance
Incentive Plan (the “Plan"), hereby grants to Optionee the option to purchase the number of Shares
of the Company set forth below (the “Option"). This Option is subject to all of the terms and
conditions as set forth in this Grant Notice, the Stock Option Agreement (the “Option Agreement”)
and the Plan, all of which are attached hereto and incorporated herein in their entirety.
Optionee:
|
|||||||
Date of Grant:
|
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Number of Shares of Common Stock:
|
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Exercise Price Per Share:
|
$ |
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Initial Vesting Date:
|
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| Type of Option | NQSO or ISO | ||||||
Vesting Schedule: Subject to the restrictions and limitations of the Option Agreement and the
Plan, this Option shall vest and become exercisable with respect to 25.00% of the Shares subject to
this Option on the Initial Vesting Date. On each subsequent anniversary of the Initial Vesting
Date, this Option shall become vested and exercisable with respect to an additional 25.00% of the
Shares subject to this Option.
Additional Terms/Acknowledgements: The undersigned Optionee acknowledges receipt of, and has read
and understands and agrees to, the Option Agreement and the Plan. Optionee further acknowledges
that as of the Date of Grant, the Option Agreement and the Plan set forth the entire understanding
between Optionee and the Company regarding the grant by the Company of the Option referred to in
this Grant Notice. Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Board or the Administrator upon any questions arising under the Plan.
| BIG 5 SPORTING GOODS CORPORATION | OPTIONEE: | |||||||
By: |
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| Signature | Signature | |||||||
Title:
|
Date: | |||||||
Date: |
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ATTACHMENTS: Stock Option Agreement and 2007 Equity and Performance Incentive Plan
SPOUSE OF OPTIONEE:
Spouse has read and understands the Option Agreement and the Plan and is executing this Grant
Notice to evidence Spouse’s consent and agreement to be bound by all of the terms and conditions of
the Option Agreement and the Plan (including those relating to the appointment of the Optionee as
agent for any interest that Spouse may have in the Option Shares).
| Date: | ||||
Signature |
||||
Optionee Address:
BIG 5 SPORTING GOODS CORPORATION
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (together with the attached grant notice (the “Grant Notice”), the
“Agreement”) is made and entered into as of the date set forth on the Grant Notice by and between
Big 5 Sporting Goods Corporation, a Delaware corporation (the “Company”), and the individual (the
“Optionee”) set forth on the Grant Notice.
A. Pursuant to the Big 5 Sporting Goods Corporation 2007 Equity and Performance Incentive Plan
(the “Plan”), the Administrator has determined that it is to the advantage and best interest of the
Company to grant to Optionee an option (the “Option”) to purchase the number of shares of the
Common Stock of the Company (the “Shares” or the “Option Shares”) set forth on the Grant Notice, at
the exercise price determined as provided herein, and in all respects subject to the terms,
definitions and provisions of the Plan, which is incorporated herein by reference.
B. Unless otherwise defined herein, capitalized terms used in this Agreement shall have the
meanings set forth in the Plan.
NOW, THEREFORE, in consideration of the mutual agreements contained herein, the Optionee and
the Company hereby agree as follows:
1. Grant and Terms of Stock Option.
1.1 Grant of Option. Pursuant to the Grant Notice, the Company has granted to the
Optionee the right and option to purchase, subject to the terms and conditions set forth in the
Plan and this Agreement, all or any part of the number of shares of the Common Stock of the Company
set forth on the Grant Notice at a purchase price per share equal to the exercise price per Share
set forth on the Grant Notice. If the Grant Notice indicates (under “Type of Option”) that this
Option is an “ISO”, then this Option is intended by the Company and Optionee to be an Incentive
Stock Option. However, if the Grant Notice indicates that this Option is a “NQSO”, then this
Option is not intended to be an Incentive Stock Option and is instead intended to be a Nonqualified
Stock Option.
1.2 Vesting and Exercisability. Subject to the provisions of the Plan and the other
provisions of this Agreement, this Option shall vest and become exercisable in accordance with the
schedule set forth in the Grant Notice. Notwithstanding the foregoing, in the event of termination
of Optionee’s Continuous Status as an Employee, Director or Consultant for any reason, with or
without Cause, including as a result of death or Disability, this Option shall immediately cease
vesting and shall be cancelled to the extent of the number of Shares as to which this Option has
not vested as of the date of termination.
1.3 Term of Option. No portion of this Option may be exercised more than ten years
from the date of this Agreement. In the event of termination of Optionee’s Continuous Status as an
Employee, Director or Consultant, this Option shall be cancelled as
to any unvested Shares as provided in Section 1.2, and shall terminate and be cancelled with respect
to any vested Shares on the earlier of (i) the expiration of the ten year period set forth in the
first sentence of this Section 1.3, or (ii) 90 days after termination of Optionee’s Continuous
Status as an Employee, Director or Consultant (or 12 months in the case of termination as a result
of Optionee’s Disability or death); provided, however, if Optionee’s Continuous Status as an
Employee, Director or Consultant is terminated for Cause, this entire Option shall be cancelled and
terminated as of the date of such termination and shall no longer be exercisable as to any Shares,
whether or not previously vested.
2. Method of Exercise.
2.1 Delivery of Notice of Exercise. This Option shall be exercisable by written notice
in the form attached hereto as Exhibit A which shall state the election to exercise this Option,
the number of Shares in respect of which this Option is being exercised, and such other
representations and agreements with respect to such Shares as may be required by the Company
pursuant to the provisions of this Agreement and the Plan. Such written notice shall be signed by
Optionee (or by Optionee’s beneficiary or other person entitled to exercise this Option in the
event of Optionee’s death under the Plan) and shall be delivered to
the Secretary of the Company. The written notice shall be accompanied by payment of the exercise
price. This Option shall not be deemed exercised until the Company receives such written notice
accompanied by the exercise price and any other applicable terms and conditions of this Agreement
are satisfied. This Option may not be exercised for a fraction of a Share.
2.2 Restrictions on Exercise. No Shares will be issued pursuant to the exercise of
this Option unless and until there shall have been full compliance with all applicable requirements
of the Securities Act of 1933, as amended (whether by registration or satisfaction of exemption
conditions), all Applicable Laws, and all applicable listing requirements of any national
securities exchange or other market system on which the Common Stock is then listed. As a
condition to the exercise of this Option, the Company may require Optionee to make any
representation and warranty to the Company as may be necessary or appropriate, in the judgment of
the Administrator, to comply with any Applicable Law.
2.3 Method of Payment. Payment of the exercise price shall be made in full at the time
of exercise in cash or by check payable to the order of the Company, or, subject in each case to
the advance approval of the Administrator in its sole discretion, (a) by delivery of shares of
Common Stock already owned by Optionee having a Fair Market Value
equal to the exercise price and held for at least six months (or
for such other period as is necessary to avoid accounting charges against the Company’s earnings),
(b) by a “broker’s exercise” involving the sale, at the time of the exercise of the Option, of
Shares having a Fair Market Value equal to the exercise price, and the simultaneous remission of
the exercise price to the Company, or (c) by any combination of the foregoing. Shares of Common
Stock used to satisfy the exercise price of this Option shall be valued at their Fair Market Value
determined on the date of exercise (or if such date is not a business day, as of the close of the
business day immediately preceding such date). In addition, the Administrator may impose such
other conditions in connection with the delivery of shares of Common Stock in satisfaction of the
exercise price as it deems appropriate in its sole discretion, including without limitation a
requirement that the shares
-2-
of Common Stock delivered have been
held by the Optionee for a specified period of time.
2.4 Notice of Disqualifying Disposition of Incentive Stock Option. If this Option is
an Incentive Stock Option and the Optionee sells or otherwise disposes of any of the Shares
acquired upon exercise of this Option on or before the later of (i) two years after the date of
grant, or (ii) one year after the date such Shares were acquired, the Optionee shall immediately
notify the Company in writing of such disposition. The Optionee agrees that he or she may be
subject to income tax withholding by the Company on the taxable income recognized as a result of
such disposition and that the Optionee shall be required to satisfy such withholding obligations
either by making a payment to the Company in cash or by withholding from current earnings of the
Optionee.
3. Non-Transferability of Option. This Option may not be transferred in any manner
otherwise than by will or by the laws of descent or distribution or to a beneficiary designated
pursuant to the Plan, and may be exercised during the lifetime of Optionee only by Optionee.
Subject to all of the other terms and conditions of this Agreement, following the death of
Optionee, this Option may, to the extent it remained unexercised (but vested and exercisable by
Optionee in accordance with its terms) on the date of death, be exercised by Optionee’s beneficiary
or other person entitled to exercise this Option in the event of Optionee’s death under the Plan.
Notwithstanding the first sentence of this Section 3, (i) if this Option is a Nonqualified Stock
Option, this Option may be assigned pursuant to a qualified domestic relations order as defined by
the Code, and exercised by the spouse of the Optionee who obtained such Option pursuant to such
qualified domestic relations order, and (ii) this Option may be assigned, during the Optionee’s
lifetime, to one or more Family Members. Rights under the assigned portion may be exercised by the
person or persons who acquire a proprietary interest in such Option pursuant to the assignment.
The terms applicable to the assigned portion shall be the same as those in effect for the Option
immediately before such assignment and shall be set forth in such documents issued to the assignee
as the Administrator deems appropriate.
4. General.
4.1 Governing Law. This Agreement shall be governed by and construed under the laws
of the state of Delaware applicable to Agreements made and to be performed entirely in Delaware,
without regard to the conflicts of law provisions of Delaware or any other jurisdiction.
4.2 Notices. Any notice required or permitted under this Agreement shall be given in
writing by express courier or by postage prepaid, United States registered or certified mail,
return receipt requested, to the address set forth below or to such other address for a party as
that party may designate by 10 days advance written notice to the other parties. Notice shall be
effective upon the earlier of receipt or 3 days after the mailing of such notice.
-3-
If to the Company:
|
Big 5 Sporting Goods Corporation 2525 East El Segundo Boulevard El Segundo, CA 90245 Attention: Senior Vice President and General Counsel |
|
| If to Optionee, at the address set forth on the Grant Notice. | ||
4.3 Community Property. Without prejudice to the actual rights of the spouses as
between each other, for all purposes of this Agreement, the Optionee shall be treated as agent and
attorney-in-fact for that interest held or claimed by his or her spouse with respect to this Option
and the parties hereto shall act in all matters as if the Optionee was the sole owner of this
Option. This appointment is coupled with an interest and is irrevocable.
4.4 Modifications. This Agreement may be amended, altered or modified only by a
writing signed by each of the parties hereto
4.5 Application to Other Stock. In the event any capital stock of the Company or any
other corporation shall be distributed on, with respect to, or in exchange for shares of Common
Stock as a stock dividend, stock split, reclassification or recapitalization in connection with any
merger or reorganization or otherwise, all restrictions, rights and obligations set forth in this
Agreement shall apply with respect to such other capital stock to the same extent as they are, or
would have been applicable, to the Option Shares on or with respect to which such other capital
stock was distributed.
4.6 Additional Documents. Each party agrees to execute any and all further documents
and writings, and to perform such other actions, which may be or become reasonably necessary or
expedient to be made effective and carry out this Agreement.
4.7 No Third-Party Benefits. Except as otherwise expressly provided in this
Agreement, none of the provisions of this Agreement shall be for the benefit of, or enforceable by,
any third-party beneficiary.
4.8 Successors and Assigns. Except as provided herein to the contrary, this Agreement
shall be binding upon and inure to the benefit of the parties, their respective successors and
permitted assigns.
4.9 No Assignment. Except as otherwise provided in this Agreement, the Optionee may
not assign any of his, her or its rights under this Agreement without the prior written consent of
the Company, which consent may be withheld in its sole discretion. The Company shall be permitted
to assign its rights or obligations under this Agreement, but no such assignment shall release the
Company of any obligations pursuant to this Agreement.
4.10 Severability. The validity, legality or enforceability of the remainder of this
Agreement shall not be affected even if one or more of the provisions of this Agreement shall be
held to be invalid, illegal or unenforceable in any respect.
-4-
4.11 Equitable Relief. The Optionee acknowledges that, in the event of a threatened
or actual breach of any of the provisions of this Agreement, damages alone will be an inadequate
remedy, and such breach will cause the Company great, immediate and irreparable injury and damage.
Accordingly, the Optionee agrees that the Company shall be entitled to injunctive and other
equitable relief, and that such relief shall be in addition to, and not in lieu of, any remedies
they may have at law or under this Agreement.
4.12 Arbitration.
4.12.1 General. Any controversy, dispute, or claim between the parties to this
Agreement, including any claim arising out of, in connection with, or in relation to the formation,
interpretation, performance or breach of this Agreement shall be settled exclusively by
arbitration, before a single arbitrator, in accordance with this section 4.12 and the then most
applicable rules of the American Arbitration Association. Judgment upon any award rendered by the
arbitrator may be entered by any state or federal court having jurisdiction thereof. Such
arbitration shall be administered by the American Arbitration Association. Arbitration shall be
the exclusive remedy for determining any such dispute, regardless of its nature. Notwithstanding
the foregoing, either party may in an appropriate matter apply to a court pursuant to California
Code of Civil Procedure Section 1281.8, or any comparable provision, for provisional relief,
including a temporary restraining order or a preliminary injunction, on the ground that the award
to which the applicant may be entitled in arbitration may be rendered ineffectual without
provisional relief. Unless mutually agreed by the parties otherwise, any arbitration shall take
place in the City of Los Angeles, California.
4.12.2 Selection of Arbitrator. In the event the parties are unable to agree upon an
arbitrator, the parties shall select a single arbitrator from a list of nine arbitrators drawn by
the parties at random from a list of twenty persons (which shall be retired judges or corporate or
litigation attorneys experienced in stock options and buy-sell agreements) provided by the office
of the American Arbitration Association having jurisdiction over Los Angeles, California. If the
parties are unable to agree upon an arbitrator from the list so drawn, then the parties shall each
strike names alternately from the list, with the first to strike being determined by lot. After
each party has used four strikes, the remaining name on the list shall be the arbitrator. If such
person is unable to serve for any reason, the parties shall repeat this process until an arbitrator
is selected.
4.12.3 Applicability of Arbitration; Remedial Authority. This agreement to resolve
any disputes by binding arbitration shall extend to claims against any parent, subsidiary or
affiliate of each party, and, when acting within such capacity, any officer, director, shareholder,
employee or agent of each party, or of any of the above, and shall apply as well to claims arising
out of state and federal statutes and local ordinances as well as to claims arising under the
common law. In the event of a dispute subject to this paragraph the parties shall be entitled to
reasonable discovery subject to the discretion of the arbitrator. The remedial authority of the
arbitrator (which shall include the right to grant injunctive or other equitable relief) shall be
the same as, but no greater than, would be the remedial power of a court having jurisdiction over
the parties and their dispute. The arbitrator shall, upon an appropriate motion, dismiss any claim
without an evidentiary hearing if the party bringing the motion establishes that he or it would be
entitled to
-5-
summary judgement if the matter had been pursued in court litigation. In the event of a
conflict between the applicable rules of the American Arbitration Association and these procedures,
the provisions of these procedures shall govern.
4.12.4 Fees and Costs. Any filing or administrative fees shall be borne initially by
the party requesting arbitration. The Company shall be responsible for the costs and fees of the
arbitration, unless the Optionee wishes to contribute (up to 50%) to the costs and fees of the
arbitration. Notwithstanding the foregoing, the prevailing party in such arbitration, as
determined by the arbitrator, and in any enforcement or other court proceedings, shall be entitled,
to the extent permitted by law, to reimbursement from the other party for all of the prevailing
party’s costs (including but not limited to the arbitrator’s compensation), expenses, and
attorneys’ fees.
4.12.5 Award Final and Binding. The arbitrator shall render an award and written
opinion, and the award shall be final and binding upon the parties. If any of the provisions of
this paragraph, or of this Agreement, are determined to be unlawful or otherwise unenforceable, in
whole or in part, such determination shall not affect the validity of the remainder of this
Agreement, and this Agreement shall be reformed to the extent necessary to carry out its provisions
to the greatest extent possible and to insure that the resolution of all conflicts between the
parties, including those arising out of statutory claims, shall be resolved by neutral, binding
arbitration. If a court should find that the arbitration provisions of this Agreement are not
absolutely binding, then the parties intend any arbitration decision and award to be fully
admissible in evidence in any subsequent action, given great weight by any finder of fact, and
treated as determinative to the maximum extent permitted by law.
4.13 Headings. The section headings in this Agreement are inserted only as a matter
of convenience, and in no way define, limit, extend or interpret the scope of this Agreement or of
any particular section.
4.14 Number and Gender. Throughout this Agreement, as the context may require, (a)
the masculine gender includes the feminine and the neuter gender includes the masculine and the
feminine; (b) the singular tense and number includes the plural, and the plural tense and number
includes the singular; (c) the past tense includes the present, and the present tense includes the
past; (d) references to parties, sections, paragraphs and exhibits mean the parties, sections,
paragraphs and exhibits of and to this Agreement; and (e) periods of days, weeks or months mean
calendar days, weeks or months.
4.15 Counterparts. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
4.16 Complete Agreement. The Grant Notice, this Agreement and the Plan constitute the
parties’ entire agreement with respect to the subject matter hereof and supersede all agreements,
representations, warranties, statements, promises and understandings, whether oral or written, with
respect to the subject matter hereof.
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EXHIBIT A
NOTICE OF EXERCISE OF STOCK OPTION
NOTICE OF EXERCISE OF STOCK OPTION
Big 5 Sporting Goods Corporation
2525 East El Segundo Boulevard
El Segundo, CA 90245
Attn: Senior Vice President and General Counsel
2525 East El Segundo Boulevard
El Segundo, CA 90245
Attn: Senior Vice President and General Counsel
Ladies and Gentlemen:
The undersigned hereby elects to exercise the option indicated below:
Option Grant Date: ___
Type of Option: Incentive Stock Option / Nonqualified Stock Option
Number of Shares Being Exercised: ___
Exercise Price Per Share: ___
Total Exercise Price: $___
Method of Payment: ___
Type of Option: Incentive Stock Option / Nonqualified Stock Option
Number of Shares Being Exercised: ___
Exercise Price Per Share: ___
Total Exercise Price: $___
Method of Payment: ___
Enclosed herewith is payment in full of the total exercise price and a copy of the Grant
Notice.
My exact name, current address and social security number for purposes of the stock
certificates to be issued and the shareholder list of the Company are:
Name:
|
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Address:
|
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| Social Security Number: | ||||
| Sincerely, | ||||||
Dated:
|
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| (Optionee’s Signature) |
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