-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FiK31lD4t6mAeN1/TilPxRkWV5J5C5C6StyKraHwfmPLfGtr+9YPPDNowYoP9EkL +OuJ9J7hjtWdCbsEgFDvxQ== 0000895447-97-000012.txt : 19970918 0000895447-97-000012.hdr.sgml : 19970918 ACCESSION NUMBER: 0000895447-97-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970802 FILED AS OF DATE: 19970915 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SHOE CARNIVAL INC CENTRAL INDEX KEY: 0000895447 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-SHOE STORES [5661] IRS NUMBER: 351736614 STATE OF INCORPORATION: IN FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-21360 FILM NUMBER: 97680707 BUSINESS ADDRESS: STREET 1: 8233 BAUMGART ROAD CITY: EVANSVILLE STATE: IN ZIP: 47711 BUSINESS PHONE: 8128674039 MAIL ADDRESS: STREET 1: 8233 BAUMGART RD CITY: EVANSVILLE STATE: IN ZIP: 47711 10-Q 1 2ND QUARTER UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended August 2, 1997 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 0-21360 Shoe Carnival, Inc. (Exact name of registrant as specified in its charter) Indiana 35-1736614 (State or other jurisdiction of (IRS Employer Identification incorporation or organization) Number) 8233 Baumgart Road, Evansville, Indiana 47711 (Address of principal executive offices) (Zip Code) (812) 867-6471 (Registrant's telephone number, including area code) NOT APPLICABLE (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, no par value, 13,047,287 shares outstanding as of September 1, 1997. SHOE CARNIVAL, INC. INDEX TO FINANCIAL STATEMENTS Part I Financial Information Page Item 1 - Financial Statements (Unaudited) Condensed Balance Sheets ................................. 3 Condensed Statements of Income............................ 4 Condensed Statement of Shareholders' Equity............... 5 Condensed Statements of Cash Flows........................ 6 Notes to Condensed Financial Statements................... 7 Item 2 - Management's Discussion and Analysis................ 8-11 Part II Other Information Item 4. Submission of Matters to Vote of Security Holders... 12 Item 6. Exhibits and Reports on Form 8-K.................... 12 Signature.................................................... 13 2
SHOE CARNIVAL, INC. CONDENSED BALANCE SHEETS Unaudited August 2, February 1, August 3, 1997 1997 1996 ---------- ----------- --------- (In thousands) ASSETS Current Assets: Cash and cash equivalents........... $ 1,902 $ 1,625 $ 1,584 Accounts receivable................. 852 916 1,036 Notes receivable from shareholders.. 22 22 40 Merchandise inventories............. 68,819 59,240 64,662 Deferred income tax benefit......... 483 400 811 Other............................... 1,220 906 3,360 --------- --------- --------- Total Current Assets................... 73,298 63,109 71,493 Property and equipment-net............. 31,451 30,817 31,192 --------- --------- --------- Total Assets........................... $ 104,749 $ 93,926 $ 102,685 ========= ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable.................... $ 14,960 $ 12,159 $ 18,596 Accrued and other liabilities....... 4,335 5,172 5,928 Current portion of long-term debt... 717 688 664 --------- --------- --------- Total Current Liabilities.............. 20,012 18,019 25,188 Long-term debt......................... 14,355 9,621 13,472 Deferred lease incentives.............. 1,404 1,458 1,624 Deferred income taxes.................. 1,207 1,056 1,001 --------- --------- --------- Total Liabilities...................... 36,978 30,154 41,285 --------- --------- --------- Shareholders' Equity: Common stock, no par value, 50,000 shares authorized, 13,045, 13,032, 13,022 shares issued and outstanding at August 2, 1997, February 1, 1997 and August 3, 1996................. 0 0 0 Additional paid-in capital.......... 61,616 61,398 61,353 Retained earnings................... 6,155 2,374 47 --------- --------- --------- Total Shareholders' Equity............. 67,771 63,772 61,400 --------- --------- --------- Total Liabilities and Shareholders' Equity.............................. $ 104,749 $ 93,926 $ 102,685 ========= ========= =========
See Notes to Condensed Financial Statements 3
SHOE CARNIVAL, INC. CONDENSED STATEMENTS OF INCOME Unaudited Thirteen Thirteen Twenty-six Twenty-six Weeks Ended Weeks Ended Weeks Ended Weeks Ended August 2, August 3, August 2, August 3, 1997 1996 1997 1996 ----------- ----------- ----------- ----------- (In thousands, except per share data) Net sales.................. $ 62,393 $ 57,597 $ 121,721 $ 115,805 Cost of sales (including buying, distribution and occupancy costs).... 44,271 41,669 85,269 83,528 --------- --------- --------- --------- Gross profit............... 18,122 15,928 36,452 32,277 Selling, general and administrative expenses. 14,575 14,086 29,619 28,435 --------- --------- --------- --------- Operating income........... 3,547 1,842 6,833 3,842 Interest expense, net...... 247 332 478 771 --------- --------- --------- --------- Income before income taxes. 3,300 1,510 6,355 3,071 Income taxes............... 1,337 619 2,574 1,259 --------- --------- --------- --------- Net income................. $ 1,963 $ 891 $ 3,781 $ 1,812 ========= ========= ========= ========= Net income per share....... $ .15 $ .07 $ .29 $ .14 ========= ========= ========= ========= Weighted average common shares and common equivalent shares outstanding............. 13,286 13,021 13,170 13,020 ========= ========= ========= =========
See Notes to Condensed Financial Statements 4
SHOE CARNIVAL, INC. CONDENSED STATEMENT OF SHAREHOLDERS' EQUITY Unaudited Additional Common Stock Paid-In Retained Shares Amount Capital Earnings Total ------ ------ ---------- -------- -------- (In thousands) Balance at February 1, 1997.... 13,032 $ 0 $ 61,398 $ 2,374 $ 63,772 Employee stock purchase plan purchases.......... 13 60 60 Payment on stock purchase.... 158 158 Net income................... 3,781 3,781 ------- ---- ---------- -------- --------- Balance at August 2, 1997..... 13,045 $ 0 $ 61,616 $ 6,155 $ 67,771 ======= ==== ========== ======== =========
See Notes to Condensed Financial Statements 5
SHOE CARNIVAL, INC. CONDENSED STATEMENTS OF CASH FLOWS Unaudited Twenty-six Twenty-six Weeks Ended Weeks Ended August 2, August 3, 1997 1996 ----------- ---------- (In thousands) Cash flows from operating activities: Net income........................................... $ 3,781 $ 1,812 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization...................... 2,840 2,538 Loss on retirement of assets....................... 190 219 Deferred income taxes.............................. 68 1,084 Compensation for forgiveness of debt............... 158 0 Other ............................................ (54) (84) Changes in operating assets and liabilities: Merchandise inventories.......................... (9,579) (1,963) Accounts receivable.............................. 64 (50) Accounts payable and accrued liabilities......... 2,135 5,273 Other............................................ (315) 1,299 --------- --------- Net cash (used in) provided by operating activities..... (712) 10,128 --------- --------- Cash flows from investing activities: Purchases of property and equipment.................. (3,850) (3,661) Lease incentives..................................... 0 (241) Other................................................ 16 2 --------- --------- Net cash used in investing activities................... (3,834) (3,900) --------- --------- Cash flows from financing activities: Borrowings under line of credit...................... 67,425 97,025 Payments on line of credit........................... (62,325) (102,275) Payments on capital lease obligations................ (337) (310) Proceeds from issuance of stock...................... 60 16 --------- --------- Net cash provided by (used in) financing activities..... 4,823 (5,544) --------- --------- Net increase in cash and cash equivalents............... 277 684 Cash and cash equivalents at beginning of period........ 1,625 900 --------- --------- Cash and cash equivalents at end of period.............. $ 1,902 $ 1,584 ========= ========= Supplemental disclosures of cash flow information: Cash paid during period for interest................. $ 473 $ 815 Cash paid (refunded) during period for income taxes.. $ 2,379 $ (2,046) Supplemental disclosure of noncash investing activities: Capital lease obligations incurred................... $ 0 $ 162
See Notes to Condensed Financial Statements 6 SHOE CARNIVAL, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS Unaudited Note 1 - Basis of Presentation In the opinion of management, the accompanying unaudited condensed financial statements contain all adjustments necessary to present fairly the financial position of the Company and the results of its operations and its cash flows for the periods presented. Certain information and disclosures normally included in notes to financial statements have been condensed or omitted according to the rules and regulations of the Securities and Exchange Commission, although the Company believes that the disclosures are adequate to make the information presented not misleading. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. It is suggested that these financial statements be read in conjunction with the financial statements and financial notes thereto included in the Company's 1996 Annual Report. Note 2 - Restructuring Charge In the fourth quarters of 1995 and 1994, the Company recorded restructuring charges related to its plan to close a total of nine unprofitable stores. Eight stores were closed during fiscal years 1995 and 1996, with the remaining store being closed in February 1997. During the first half of 1997 charges applied against the restructuring reserve include cash expenditures of $107,000 for store closing costs and $171,000 for equipment and leasehold improvement write-offs. The remaining reserve of $40,000 will be utilized primarily for lease termination costs. The restructuring charges include management's best estimates of amounts required to be paid for store closing and lease termination costs. The total amount of the cash payments ultimately required could differ materially from the amounts recorded if management is unable to negotiate an acceptable lease termination agreement with the landlord. 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Comparable Number of Stores Store Square Footage Store Sales Beginning End of Net End Increase Quarter Ended Of Period Opened Closed Period Decrease of Period (Decrease) - ------------- --------- ------- ------- ------- --------- ----------- ---------- May 3, 1997 93 0 2 91 (19,000) 1,007,000 4.4% August 2, 1997 91 0 0 91 5,000 1,012,000 8.8% Year-to-date 93 0 2 91 (14,000) 1,012,000 6.0% May 4, 1996 95 2 4 93 (2,000) 1,022,000 (4.4%) August 3, 1996 93 2 2 93 2,000 1,024,000 (3.2%) Year-to-date 95 4 6 93 0 1,024,000 (3.8%)
The following table sets forth the Company's results of operations expressed as a percentage of net sales for the periods indicated:
Thirteen Thirteen Twenty-six Twenty-six Weeks Ended Weeks Ended Weeks Ended Weeks Ended August 2, August 3, August 2, August 3, 1997 1996 1997 1996 ----------- ----------- ----------- ----------- Net sales.................. 100.0% 100.0% 100.0% 100.0% Cost of sales (including buying, distribution and occupancy costs).... 70.9 72.3 70.1 72.1 --------- --------- --------- --------- Gross profit............... 29.1 27.7 29.9 27.9 Selling, general and administrative expenses. 23.4 24.5 24.3 24.6 --------- --------- --------- --------- Operating income........... 5.7 3.2 5.6 3.3 Interest expense........... .4 .6 .4 .6 --------- --------- --------- --------- Income before income taxes. 5.3 2.6 5.2 2.7 Income taxes............... 2.1 1.1 2.1 1.1 --------- --------- --------- --------- Net income................. 3.2% 1.5% 3.1% 1.6% ========= ========= ========= =========
Net Sales Net sales increased $4.8 million to $62.4 million in the second quarter of 1997, an 8.3% increase over net sales of $57.6 million in the comparable prior year period. The increase was attributable to an 8.8% comparable store sales increase and the sales generated by the five new stores opened in 1996, partially offset by the reduction in sales for the eight stores closed in 1996 and 1997. The comparable store sales increase was supported with increases in the majority of the product categories. Average footwear unit prices in comparable stores increased 9.5% while footwear unit sales decreased 1.1%. Sales of private label and non-name brand footwear constituted 17.7% of total footwear sales in the second quarter of 1997 as compared with 16.7% in the prior year quarter. 8 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Net sales increased $5.9 million to $121.7 million in the first half of 1997, a 5.1% increase over net sales of $115.8 million in the comparable prior year period. The increase was attributable to a 6.0% comparable store sales increase and the sales generated by the five new stores opened in 1996, partially offset by the reduction in sales for the eight stores closed in 1996 and 1997. The comparable store sales increase was supported with increases in all major product categories. Average footwear unit prices in comparable stores increased 10.5% while footwear unit sales decreased 4.3%. Sales of private label and non-name brand footwear constituted 17.2% of total footwear sales in the first half of 1997 as compared with 16.4% in the prior year. Gross Profit Gross profit increased $2.2 million to $18.1 million in the second quarter of 1997, a 13.8% increase over gross profit of $15.9 million in the comparable prior year period. The Company's gross profit margin increased to 29.1% from 27.7%. As a percentage of sales, buying, distribution and occupancy costs decreased 0.4%. The increase in merchandise gross profit margin of 1.0% of sales was broad based with all major product categories improving over the comparable prior year period. Gross profit increased $4.2 million to $36.5 million in the first half of 1997, a 12.9% increase over gross profit of $32.3 million in the comparable prior year period. The Company's gross profit margin increased to 29.9% from 27.9%. As a percentage of sales, buying, distribution and occupancy costs decreased .3%. The increase in merchandise gross profit margin of 1.7% of sales was broad based with all major product categories improving over the comparable prior year period. Selling, General and Administrative Expenses Selling, general and administrative expenses increased $489,000 to $14.6 million in the second quarter of 1997 from $14.1 million in the comparable prior year period. As a percentage of sales, these expenses decreased 1.1%. Total pre-opening costs for the two stores opened in the second quarter of 1996 were $132,000 or 0.2% of sales. No stores were opened in the second quarter of 1997. Selling, general and administrative expenses increased $1.2 million to $29.6 million in the first half of 1997 from $28.4 million in the comparable prior year period. As a percentage of sales, these expenses decreased .3%. Total pre-opening costs for the four stores opened in the first half of 1996 were $371,000 or .3% of sales. No stores were opened in the first half of 1997. Interest Expense The reduction in net interest expense in the second quarter and the first six months of 1997 as compared with in the second quarter and the first six months of 1996 resulted from a combination of reduced borrowings and lower interest rates. Income Taxes The effective income tax rate of 40.5% and 41.0% in the second quarters and the first six months of 1997 and 1996 respectively differed from the statutory federal rates due primarily to state and local income taxes, net of the federal tax benefit. 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Liquidity and Capital Resources The Company's primary sources of funds are cash flows from operations and borrowings under its revolving credit facility. Net cash used in operating activities was $712,000 during the first half of 1997. Excluding changes in operating assets and liabilities, cash provided by operating activities was $7.0 million in the first half of 1997. An increase in merchandise inventories of $9.6 million and a reduction in accounts payable and accrued liabilities of $2.1 million were partially offset by the $7.0 million in cash generated by operations before changes in operating assets and liabilities. The increase in merchandise inventories was primarily due to seasonal fluctuations. Working capital increased to $53.3 million at August 2, 1997 from $45.1 million at February 1, 1997 and the current ratio improved to 3.7 to 1 from 3.5 to 1. Long-term debt as a percentage of total capital was 17.5% at August 2, 1997, compared to 13.1% at February 1, 1997. Capital expenditures were $3.9 million in the first half of 1997. Of these expenditures, approximately $2.9 million was incurred for the remodeling of certain stores. The remaining capital expenditures in the first half of 1997 were primarily for technological improvements in the stores and distribution center. The Company intends to end fiscal 1997 with 91 stores after the opening of four stores in the second half of 1997 and the closing of four lower volume stores at the expiration of their leases. Two stores were closed in the first half of 1997. The Company opened four stores in the first half of 1996 and closed six stores. The actual amount of the Company's cash requirements for capital expenditures depends in part on the number of new stores opened, the amount of lease incentives, if any, received from landlords and the number of stores remodeled. The opening of new stores will be dependent upon, among other things, the availability of desirable locations, the negotiation of acceptable lease terms and general economic and business conditions affecting consumer spending in areas the Company targets for expansion. As part of the Company's effort to upgrade the image of its stores, a new prototype design has been utilized in all new and remodeled stores since the fourth quarter of 1995. The size of stores utilizing the new prototype design has increased from 10,000 square feet to between 12,000 and 18,000 square feet depending upon, among other factors, the location of the store and the population base the store is expected to service. Accordingly, capital expenditures for new stores have increased to an average of approximately $450,000, including point-of-sale equipment which is generally acquired through equipment leasing transactions. The average inventory investment in a new store is expected to range from $550,000 to $850,000, depending on the size and sales expectation of the store and the timing of the new store opening. Pre-opening expenses, such as advertising, salaries, supplies and utilities, are expected to average $60,000 to $80,000 per-store. The Company's $35 million credit facility provides for a combination of cash advances on a revolving basis and the issuance of commercial letters of credit. Borrowings under the revolving credit line are based on eligible inventory. The credit agreement limits capital expenditures in 1997 to $12 million. Borrowings and letters of credit outstanding under this facility at August 2, 1997 were $13.6 million and $8.5 million, respectively. The Company anticipates that its existing cash and cash flow from operations, supplemented by borrowings under the credit facility will be sufficient to fund its planned expansion and other operating cash requirements for at least the next 12 months. 10 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Seasonality The Company's quarterly results of operations have fluctuated, and are expected to continue to fluctuate in the future primarily as a result of seasonal variances and the timing of sales and costs associated with opening new stores. Non-capital expenditures, such as advertising and payroll, incurred prior to opening of a new store are charged to expense in the month the store is opened. Therefore, the Company's results of operations may be adversely affected in any quarter in which the Company opens new stores. The Company has three distinct selling periods: Easter, back-to-school and Christmas. Factors That May Effect Future Results This report contains certain forward looking statements that involve a number of risks and uncertainties. Among the factors that could cause actual results to differ materially are the following: general economic conditions in the areas of the United States in which the Company's stores are located; changes in the overall retail environment and more specifically in the apparel and footwear retail sectors; the impact of competition, weather patterns, consumer buying trends and the ability of the Company to identify and respond to emerging fashion trends; the availability of desirable store locations and management's ability to negotiate acceptable lease terms and open new stores in a timely manner; and changes in the political and economic environments in the People's Republic of China, where most of the Company's private label products are manufactured, and the contiuned favorable trade relationships between China and the United States. 11 SHOE CARNIVAL, INC. PART II - OTHER INFORMATION Item 4. Submission of Matters to Vote of Security Holders The annual meeting of the common shareholders of the Company was held June 11, 1997. Election of Director David H. Russell was elected at the annual meeting to serve as a Director of the Company for a three year term. Mr. Russell received 11,011,697 votes in favor of his election and none against. Other Matters Voted Upon at the Meeting Deloitte & Touche LLP was appointed as auditor for the Company for 1997. 11,834,360 votes were cast in favor, 19,150 votes were cast against and 9,587 abstentions were recorded with respect to such appointment. Shareholders approved various amendments to the Company's 1993 Stock Option and Incentive Plan including increasing the number of shares of the Company's Common Stock subject to issuance under the plan from 900,000 to 1,500,000. 6,630,195 votes were cast in favor, 2,327,498 votes were cast against, 19,641 abstentions and 2,885,763 broker non-votes were recorded with respect to such approval. Shareholders approved an amendment to the Company's Employee Stock Purchase Plan to allow officers of the Company to participate. 8,215,178 votes were cast in favor, 816,498 votes were cast against, 9,653 abstentions and 2,821,798 broker non-votes were recorded with respect to such approval. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits (10-E) 1993 Stock Option and Incentive Plan of Registrant (10-L) Employee Stock Purchase Plan of Registrant (27) Financial Data Schedule (b) Reports on Form 8-K A report on Form 8-K was filed by the Company on June 9, 1997 to announce the retirement and terms of retirement of David H. Russell, the Company's founder and Vice Chairman. 12 SHOE CARNIVAL, INC. SIGNATURE 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 thereunto duly authorized. Date: September 12, 1997 SHOE CARNIVAL, INC. (Registrant) By: /s/ W. Kerry Jackson W. Kerry Jackson Vice President and Chief Financial Officer 13 EX-10.E 2 1993 STOCK OPTION AND INCENTIVE PLAN OF REGISTRANT SHOE CARNIVAL, INC. 1993 STOCK OPTION AND INCENTIVE PLAN 1. PLAN PURPOSE. The purpose of the Plan is to promote the long-term interests of the Company and its shareholders by providing a means for attracting and retaining officers and key employees of the Company and its Affiliates. 2. DEFINITIONS. The following definitions are applicable to the Plan: "Affiliate" -- means any "parent corporation" or "subsidiary corporation" of the Company as such terms are defined in Section 424(e) and (f), respectively, of the Code. "Award" -- means the grant by the Committee of an Incentive Stock Option, a Non-Qualified Stock Option, or Restricted Stock, or any combination thereof, as provided in the Plan. "Board" -- means the Board of Directors of the Company. "Change in Control" -- means each of the events specified in the following clauses (i) through (iii): (i) any third person, including a "group" as defined in Section 13(d)(3) of the Exchange Act shall, after the date of the adoption of the Plan by the Board, first become the beneficial owner of shares of the Company with respect to which 25% or more of the total number of votes for the election of the Board of Directors of the Company may be cast, (ii) as a result of, or in connection with, any cash tender offer, exchange offer, merger or other business combination, sale of assets or contested election, or combination of the foregoing, the persons who were directors of the Company shall cease to constitute a majority of the Board of Directors of the Company or (iii) the stockholders of the Company shall approve an agreement providing either for a transaction in which the Company will cease to be an independent publicly owned entity or for a sale or other disposition of all or substantially all the assets of the Company; provided, however, that the occurrence of any of such events shall not be deemed a Change in Control if, prior to such occurrence, a resolution specifically approving such occurrence shall have been adopted by at least a majority of the Board of Directors of the Company. "Code" -- means the Internal Revenue Code of 1986, as amended. "Committee" -- means the Committee referred to in Section 3 hereof. "Company" -- means Shoe Carnival, Inc., an Indiana corporation. "Continuous Service" -- means the absence of any interruption or termination of service as an employee of the Company or an Affiliate. Service shall not be considered interrupted in the case of sick leave, military leave or any other leave of absence approved by the Company or in the case of any transfer between the Company and an Affiliate or any successor to the Company. "Employee" -- means any person, including an officer or director, who is employed by the Company or any Affiliate. "Exchange Act" -- means the Securities Exchange Act of 1934, as amended. "Exercise Price" -- means the price per Share at which the Shares subject to an Option may be purchased upon exercise of such Option. "Incentive Stock Option" -- means an option to purchase Shares granted by the Committee pursuant to Section 6 hereof which is subject to the limitations and restrictions of Section 8 hereof and is intended to qualify under Section 422 of the Code. "Market Value" -- means the last reported sale price on the date in question (or, if there is no reported sale on such date, on the last preceding date on which any reported sale occurred) of one Share on the principal exchange on which the Shares are listed for trading, or if the Shares are not listed for trading on any exchange, on the NASDAQ National Market System or any similar system then in use, or, if the Shares are not listed on the NASDAQ National Market System, the mean between the closing high bid and low asked quotations of one Share on the date in question as reported by NASDAQ or any similar system then in use, of, if no such quotations are available, the fair market value on such date of one Share as the Committee shall determine. "Non-Qualified Stock Option" -- means an option to purchase shares granted by the Committee pursuant to Section 6 hereof, which option is not intended to qualify under Section 422 of the Code. "Option" -- means an Incentive Stock Option or a Non-Qualified Stock Option. "Participant" -- means any officer or key employee of the Company or any Affiliate who is selected by the Committee to receive an Award. "Plan" -- means this 1993 Stock Option and Incentive Plan of the Company. "Reorganization" -- means the liquidation or dissolution of the Company or any merger, consolidation or combination of the Company (other than a merger, consolidation or combination in which the Company is the continuing entity and which does not result in the outstanding Shares being converted into or exchanged for different securities, cash or other property or any combination thereof). "Restricted Period" -- means the period of time selected by the Committee for the purpose of determining when restrictions are in effect under Section 9 hereof with respect to Restricted Stock awarded under the Plan. "Restricted Stock" -- means Shares which have been contingently awarded to a Participant by the Committee subject to the restrictions referred to in Section 9 hereof, so long as such restrictions are in effect. "Securities Act" -- means the Securities Act of 1933, as amended. "Shares" -- means the Common Stock, no par value, of the Company. 3. ADMINISTRATION. The Plan shall be administered by the Committee, which shall consist of two or more members of the Board, each of whom shall be a "non-employee director" as provided under Rule 16b-3 of the Exchange Act, and an "outside director" as provided under Code Section 162(m). The members of the Committee shall be appointed by the Board. Except as limited by the express provisions of the Plan, the Committee shall have sole and complete authority and discretion to (a) select Participants and grant Awards; (b) determine the number of Shares to be subject to types of Awards generally, as well as to individual Awards granted under the Plan; (c) determine the terms and conditions upon which Awards shall be granted under the Plan; (d) prescribe the form and terms of instruments evidencing such grants; (e) establish procedures and regulations for the administration of the Plan; (f) interpret the Plan; and (g) make all determinations deemed necessary or advisable for the administration of the Plan. A majority of the Committee shall constitute a quorum, and the acts of a majority of the members present at any meeting at which a quorum is present, or acts approved in writing by all members of the 2 Committee without a meeting, shall be acts of the Committee. All determinations and decisions made by the Committee pursuant to the provisions of the Plan shall be final, conclusive, and binding on all persons, and shall be given the maximum deference permitted by law. 4. PARTICIPANTS. The Committee may select from time to time Participants in the Plan from those officers and key employees of the Company or its Affiliates who, in the opinion of the Committee, have the capacity for contributing in a substantial measure to the successful performance of the Company or its Affiliates; provided, however, that no Awards shall be granted under the Plan to any individual who, at the time such Award is granted, beneficially owns stock possessing 20% of the total combined voting power of all classes of capital stock of the Company or any Affiliate. 5. SHARES SUBJECT TO PLAN. Subject to adjustment by the operation of Section 10 hereof, the maximum number of Shares with respect to which Awards may be made under the Plan is 1,500,000 Shares. The number of Shares which may be granted under the Plan to any Participant during any calendar year of the Plan under all forms of Awards shall not exceed 300,000 Shares. The Shares with respect to which Awards may be made under the Plan may either be authorized and unissued shares or unissued shares heretofore or hereafter reacquired and held as treasury shares. With respect to any Option which terminates or is surrendered for cancellation or with respect to Restricted Stock which is forfeited, new Awards may be granted under the Plan with respect to the number of Shares as to which such termination or forfeiture has occurred. 6. GENERAL TERMS AND CONDITIONS OF OPTIONS. The Committee shall have full and complete authority and discretion, except as expressly limited by the Plan, to grant Options and to provide the terms and conditions (which need not be identical among Participants) thereof. In particular, the Committee shall prescribe the following terms and conditions: (i) the Exercise Price, (ii) the number of Shares subject to, and the expiration date of, any Option, (iii) the manner, time and rate (cumulative or otherwise) of exercise of such Option, and (iv) the restrictions, if any, to be placed upon such Option or upon Shares which may be issued upon exercise of such Option. The Committee may, as a condition of granting any Option, require that a Participant agree to surrender for cancellation one or more Options previously granted to such Participant. 7. EXERCISE OF OPTIONS. (a) Except as provided in Section 13, an Option granted under the Plan shall be exercisable during the lifetime of the Participant to whom such Option was granted only by such Participant, and except as provided in paragraphs (c), (d) and (e) of this Section 7, no such Option may be exercised unless at the time such Participant exercises such Option, such Participant has maintained Continuous Service since the date of the grant of such Option. (b) To exercise an Option under the Plan, the Participant shall give written notice to the Company (which shall specify the number of Shares with respect to which such Participant elects to exercise such Option) together with full payment of the Exercise Price. The date of exercise shall be the date on which such notice is received by the Company. Payment shall be made either (i) in cash (including check, bank draft or money order) or (ii) by delivering (A) Shares already owned by the Participant and having a Market Value on the date of exercise equal to the applicable Exercise Price, or (B) a combination of cash and such Shares. (c) If the Continuous Service of a Participant is terminated for cause, or voluntarily by the Participant for any reason other than death, disability or retirement, all rights under any Option of such Participant shall expire immediately upon such cessation of Continuous Service. If the Continuous Service of a Participant is terminated by reason of death, disability or retirement, such Participant may exercise such Option, but only to the extent such Participant was entitled to exercise such Option at the date of such cessation, at any time during the remaining term of such Option, or, in the case of Incentive Stock Options, during such shorter period as the Committee may determine 3 and so provide in the applicable instrument or instruments evidencing the grant of such Option. If a Participant shall cease to maintain Continuous Service for any reason other than those set forth above in this paragraph (c) of this Section 7, such Participant may exercise such Option to the extent that such Participant was entitled to exercise such Option at the date of such cessation but only within the period of three (3) months immediately succeeding such cessation of Continuous Service, and in no event after the expiration date of the subject Option; provided, however, that such right of exercise after cessation of Continuous Service shall not be available to a Participant if the Company otherwise determines and so provides in the applicable instrument or instruments evidencing the grant of such Option. (d) In the event of the death of a Participant while in the Continuous Service of the Company or an Affiliate, the person to whom any Option held by the Participant at the time of his death is transferred by will or by the laws of descent and distribution may exercise such Option on the same terms and conditions that such Participant was entitled to exercise such Option. Following the death of any Participant to whom an Option was granted under the Plan, the Committee, as an alternative means of settlement of such Option, may elect to pay to the person to whom such Option is transferred the amount by which the Market Value per Share on the date of exercise of such Option shall exceed the Exercise Price of such Option, multiplied by the number of Shares with respect to which such Option is properly exercised. Any such settlement of an Option shall be considered an exercise of such Option for all purposes of the Plan. (e) Notwithstanding the provisions of the foregoing paragraphs of this Section 7, the Committee may, in its sole discretion, establish different terms and conditions pertaining to the effect of the cessation of Continuous Service, to the extent permitted by applicable federal and state law. 8. INCENTIVE STOCK OPTIONS. Incentive Stock Options may be granted only to Participants who are Employees. Any provisions of the Plan to the contrary notwithstanding, (i) no Incentive Stock Option shall be granted more than ten years from the date the Plan is adopted by the Board of Directors of the Company and no Incentive Stock Option shall be exercisable more than ten years from the date such Incentive Stock Option is granted, (ii) the Exercise Price of any Incentive Stock Option shall not be less than the Market Value per Share on the date such Incentive Stock Option is granted, (iii) any Incentive Stock Option shall not be transferable by the Participant to whom such Incentive Stock Option is granted other than by will or the laws of descent and distribution and shall be exercisable during such Participant's lifetime only by such Participant, and (iv) no Incentive Stock Option shall be granted which would permit a Participant to acquire, through the exercise of Incentive Stock Options in any calendar year, Shares or shares of any capital stock of the Company or any Affiliate thereof having an aggregate Market Value (determined as of the time any Incentive Stock Option is granted) in excess of $100,000. The foregoing limitation shall be determined by assuming that the Participant will exercise each Incentive Stock Option on the date that such Option first becomes exercisable. Notwithstanding the foregoing, in the case of any Participant who, at the date of grant, owns stock possessing more than 10% of the total combined voting power of all classes of capital stock of the Company or any Affiliate, the Exercise Price of any Incentive Stock Option shall not be less than 110% of the Market Value per Share on the date such Incentive Stock Option is granted and such Incentive Stock Option shall not be exercisable more than five years from the date such Incentive Stock Option is granted. 9. TERMS AND CONDITIONS OF RESTRICTED STOCK. The Committee shall have full and complete authority, subject to the limitations of the Plan, to grant awards of Restricted Stock and, in addition to the terms and conditions contained in paragraphs (a) through (f) of this Section 9, to provide such other terms and conditions (which need not be identical among Participants) in respect of such Awards, and the vesting thereof, as the Committee shall determine and provide in the agreement referred to in paragraph (d) of this Section 9. (a) At the time of an award of Restricted Stock, the Committee shall establish for each Participant a Restricted Period during which or at the expiration of which, the Shares of Restricted Stock shall vest. The Committee may also restrict or prohibit the sale, assignment, transfer, pledge or other encumbrance 4 of the Shares of Restricted Stock by the Participant during the Restricted Period. Except for such restrictions, and subject to paragraphs (c), (d) and (e) of this Section 9 and Section 10 hereof, the Participant as owner of such Shares shall have all the rights of a stockholder, including but not limited to, the right to receive all dividends paid on such Shares and the right to vote such Shares. The Committee shall have the authority, in its discretion, to accelerate the time at which any or all of the restrictions shall lapse with respect to any Shares of Restricted Stock prior to the expiration of the Restricted Period with respect thereto, or to remove any or all of such restrictions, whenever it may determine that such action is appropriate by reason of changes in applicable tax or other laws or other changes in circumstances occurring after the commencement of such Restricted Period. (b) Except as provided in Section 12 hereof, if a Participant ceases to maintain Continuous Service for any reason (other than death, total or partial disability or normal or early retirement) unless the Committee shall otherwise determine, all Shares of Restricted Stock theretofore awarded to such Participant and which at the time of such termination of Continuous Service are subject to the restrictions imposed by paragraph (a) of this Section 9 shall upon such termination of Continuous Service be forfeited and returned to the Company. If a Participant ceases to maintain Continuous Service by reason of death or total or partial disability, then the restrictions with respect to the Ratable Portion of the Shares of Restricted Stock shall lapse and such Shares shall be free of restrictions and shall not be forfeited. The Ratable Portion shall be determined with respect to each separate Award of Restricted Stock issued and shall be equal to (i) the number of Shares of Restricted Stock awarded to the Participant multiplied by the portion of the Restricted Period that expired at the date of the Participant's death or total or partial disability reduced by (ii) the number of Shares of Restricted Stock awarded with respect to which the restrictions had lapsed as of the date of the death or total or partial disability of the Participant. (c) Each certificate issued in respect of Shares of Restricted Stock awarded under the Plan shall be registered in the name of the Participant and deposited by the Participant, together with a stock power endorsed in blank, with the Company and shall bear the following (or a similar) legend: "The transferability of this certificate and the shares of stock represented hereby are subject to the terms and conditions (including forfeiture) contained in the 1993 Stock Option and Incentive Plan of Shoe Carnival, Inc., and an Agreement entered into between the registered owner and Shoe Carnival, Inc. Copies of such Plan and Agreement are on file in the office of the Secretary of Shoe Carnival, Inc." (d) At the time of an award of Shares of Restricted Stock, the Participant shall enter into an Agreement with the Company in a form specified by the Committee, agreeing to the terms and conditions of the award, and to such other matters as the Committee shall in its sole discretion determine. (e) At the time of an award of Shares of Restricted Stock, the Committee may, in its discretion, determine that the payment to the Participant of dividends declared or paid on such Shares by the Company or a specified portion thereof, shall be deferred until the earlier to occur of (i) the lapsing of the restrictions imposed under paragraph (a) of this Section 9 or (ii) the forfeiture of such Shares under paragraph (b) of this Section 9, and shall be held by the Company for the account of the Participant until such time. In the event of such deferral, there shall be credited at the end of each year (or portion thereof) interest on the amount of the account at the beginning of the year at a rate per annum as the Committee, in its discretion, may determine. Payment of deferred dividends, together with interest accrued thereon as aforesaid, shall be made upon the earlier to occur of the events specified in (i) and (ii) of the immediately preceding sentence. (f) At the expiration of the restrictions imposed by paragraph (a) of this Section 9, the Company shall redeliver to the Participant (or where the relevant provision of paragraph (b) of this Section 9 applies in the case of a deceased Participant, to his legal representative, beneficiary or heir) the certificate(s) and stock power deposited with it pursuant to paragraph (c) of this Section 9 and the 5 Shares represented by such certificate(s) shall be free of the restrictions referred to in paragraph (a) of this Section 9. 10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of any change in the outstanding Shares subsequent to the effective date of the Plan by reason of any reorganization, recapitalization, stock split, stock dividend, combination or exchange of shares, merger, consolidation or any change in the corporate structure or Shares of the Company, the maximum aggregate number and class of shares as to which Awards may be granted under the Plan and the number and class of shares with respect to which Awards theretofore have been granted under the Plan shall be appropriately adjusted by the Committee, whose determination shall be conclusive. Any shares of stock or other securities received, as a result of any of the foregoing, by a Participant with respect to Restricted Stock shall be subject to the same restrictions and the certificate(s) or other instruments representing or evidencing such shares or securities shall be legended and deposited with the Company in the manner provided in Section 9 hereof. 11. EFFECT OF REORGANIZATION. Awards will be affected by a Reorganization as follows: (a) If the Reorganization is a dissolution or liquidation of the Company then (i) the restrictions of Section 9(a) on Shares of Restricted Stock shall lapse and (ii) each outstanding Option shall terminate, but each Participant to whom the Option was granted shall have the right, immediately prior to such dissolution or liquidation to exercise his Option in full, notwithstanding the provisions of Section 8, and the Company shall notify each Participant of such right within a reasonable period of time prior to any such dissolution or liquidation. (b) If the Reorganization is a merger or consolidation, other than a Change in Control subject to Section 12 of this Agreement, upon the effective date of such Reorganization (i) each Optionee shall be entitled, upon exercise of his Option in accordance with all of the terms and conditions of the Plan, to receive in lieu of Shares, shares of such stock or other securities or consideration as the holders of Shares shall be entitled to receive pursuant to the terms of the Reorganization; and (ii) each holder of Restricted Stock shall receive shares of such stock or other securities as the holders of Shares received which shall be subject to the restrictions set forth in Section 9(a) unless the Committee accelerates the lapse of such restrictions and the certificate(s) or other instruments representing or evidencing such shares or securities shall be legended and deposited with the Company in the manner provided in Section 9 hereof. The adjustments contained in this Section and the manner of application of such provisions shall be determined solely by the Committee. 12. EFFECT OF CHANGE OF CONTROL. If the Continuous Service of any Participant of the Company or any Affiliate is involuntarily terminated, for whatever reason, at any time within eighteen months after a Change in Control, unless the Committee shall have otherwise provided in the agreement referred to in paragraph (d) of Section 9 hereof, any Restricted Period with respect to Restricted Stock theretofore awarded to such Participant shall lapse upon such termination and all Shares awarded as Restricted Stock shall become fully vested in the Participant to whom such Shares were awarded. If a tender offer or exchange offer for Shares (other than such an offer by the Company) is commenced, or if the event specified in clause (iii) of the definition of a Change in Control contained in Section 2 shall occur, unless the Committee shall have otherwise provided in the instrument evidencing the grant of an Option, all Options theretofore granted and not fully exercisable shall (except as otherwise provided in Section 8) become exercisable in full upon the happening of such event and shall remain so exercisable in accordance with their terms; provided, however, that no Option shall be exercisable by a director or officer of the Company within six months of the date of grant of such Option and no Option which has previously been exercised or otherwise terminated shall become exercisable. 13. ASSIGNMENTS AND TRANSFERS. Except as otherwise determined by the Committee, no Award nor any right or interest of a Participant under the Plan in any instrument evidencing any Award under 6 the Plan may be assigned, encumbered or transferred except, in the event of the death of a Participant, by will or the laws of descent and distribution. 14. EMPLOYEE RIGHTS UNDER THE PLAN. No officer, employee or other person shall have a right to be selected as a Participant nor, having been so selected, to be selected again as a Participant and no officer, employee or other person shall have any claim or right to be granted an Award under the Plan or under any other incentive or similar plan of the Company or any Affiliate. Neither the Plan nor any action taken thereunder shall be construed as giving any employee any right to be retained in the employ of the Company or any Affiliate. 15. DELIVERY AND REGISTRATION OF STOCK. The Company's obligation to deliver Shares with respect to an Award shall, if the Committee so requests, be conditioned upon the receipt of a representation as to the investment intention of the Participant to whom such Shares are to be delivered, in such form as the Company shall determine to be necessary or advisable to comply with the provisions of the Securities Act or any other applicable federal or state securities legislation. It may be provided that any representation requirement shall become inoperative upon a registration of the Shares or other action eliminating the necessity of such representation under the Securities Act or other securities legislation. The Company shall not be required to deliver any Shares under the Plan prior to (i) the admission of such shares to listing on any stock exchange or system on which Shares may then be listed, and (ii) the completion of such registration or other qualification of such Shares under any state or federal law, rule or regulation, as the Company shall determine to be necessary or advisable. 16. WITHHOLDING TAX. Upon the termination of the Restricted Period with respect to any Shares of Restricted Stock (or at any such earlier time, if any, that an election is made by the Participant under Section 83(b) of the Code, or any successor provision thereto, to include the value of such Shares in taxable income), the Company shall, in lieu of requiring the Participant or other person receiving such Shares to pay the Company the amount of any taxes which the Company is required to withhold with respect to such Shares, retain a sufficient number of Shares held by it to cover the amount required to be withheld. The Company shall have the right to deduct from all dividends paid with respect to Shares of Restricted Stock the amount of any taxes which the Company is required to withhold with respect to such dividend payments. Where a Participant or other person is entitled to receive Shares pursuant to the exercise of an Option pursuant to the Plan, the Company shall, in lieu of requiring the Participant or such other person to pay the Company the amount of any taxes which the Company is required to withhold with respect to such Shares, retain a number of such Shares sufficient to cover the amount required to be withheld. 17. LOANS. (a) The Company may make loans to a Participant in connection with Restricted Stock or the exercise of Options subject to the following terms and conditions and such other terms and conditions not inconsistent with the Plan, including the rate of interest, if any, as the Company shall impose from time to time. (b) No loan made under the Plan shall exceed (i) with respect to Options, the sum of (A) the aggregate option price payable upon exercise of the Option in relation to which the loan is made, plus (B) the amount of the reasonably estimated income taxes payable by the grantee and (ii) with respect to Restricted Stock, the amount of reasonably estimated income taxes payable by the grantee. In no event may any such loan exceed the Market Value of the related Shares at the time of the loan. (c) No loan shall have an initial term exceeding three years; provided, that loans under the Plan shall be renewable at the discretion of the Committee; and provided, further, that the indebtedness under each loan shall become due and payable on a date no later than (i) one year after termination of the Participant's employment due to death, retirement or disability, or 7 (ii) the day of termination of the Participant's employment for any reason other than death, retirement or disability. (d) Loans under the Plan may be satisfied by the Participant, as determined by the Committee, in cash or, with the consent of the Committee, in whole or in part in Shares at Market Value on the date of such payment. (e) When a loan shall have been made, Shares having an aggregate Market Value equal to the amount of the loan may, in the discretion of the Committee, be required to be pledged by the Participant to the Company as security for payment of the unpaid balance of the loan. Portions of such Shares may, in the discretion of the Committee, be released from time to time as it deems not to be needed as security. (f) Every loan shall meet all applicable laws, regulations and rules of the Federal Reserve Board and any other governmental agency having jurisdiction. 18. TERMINATION, AMENDMENT AND MODIFICATION OF PLAN. The Board may at any time terminate, and may at any time and from time to time and in any respect amend or modify, the Plan; provided however, that to the extent necessary and desirable to comply with Rule 16b-3 under the Exchange Act or Section 422 of the Code (or any other applicable law or regulation, including requirements of any stock exchange or NASDAQ system on which the Common Stock is listed or quoted) shareholder approval of any Plan Amendment shall be obtained in such a manner and to such a degree as is required by the applicable law or regulation; and provided further, that no termination, amendment or modification of the Plan shall in any manner affect any Award theretofore granted pursuant to the Plan without the consent of the Participant to whom the Award was granted or transferee of the Award. 19. EFFECTIVE DATE AND TERM OF PLAN. The Plan shall become effective upon its adoption by the Board of Directors and shareholders of the Company and shall continue in effect for a term of ten years from the date of adoption unless sooner terminated under Section 18 hereof. 8 EX-10.L 3 EMPLOYEE STOCK PURCHASE PLAN OF REGISTRANT SHOE CARNIVAL, INC. EMPLOYEE STOCK PURCHASE PLAN SECTION 1. DESIGNATION AND PURPOSE OF PLAN. The name of this Plan is the Shoe Carnival, Inc. Employee Stock Purchase Plan. The purpose of the Plan is to provide incentives, through the ownership of Company common stock, for employees to enhance Company performance through their services. The Plan is intended to comply, and should be interpreted where possible to comply, with the terms of Code section 423. SECTION 2. SHARES RESERVED FOR THE PLAN. The Company shall reserve for issuance and purchase by employees under the Plan an aggregate of 300,000 shares of Common Stock, subject to adjustment as provided in Section 14. Shares subject to the Plan shall be authorized but unissued shares. Shares needed to satisfy the Plan may be acquired from the Company or by purchases at the Company's expense on the open market or in private transactions. SECTION 3. DEFINITIONS. As used in the Plan, the following terms, when capitalized, have the following meanings: (a) "Board" means the Board of Directors of the Company. (b) "Code" means the Internal Revenue Code of 1986, as amended from time to time, and its interpretive rules and regulations. (c) "Committee" means the committee established pursuant to Section 4 to administer the Plan. (d) "Common Stock" means the Company's common stock, no par value. (e) "Company" means Shoe Carnival, Inc. and any successor by merger, consolidation or otherwise. (f) "Compensation" means, with respect to an Eligible Employee for a calendar year, the Eligible Employee's wages, salary, commissions, bonuses, and other remuneration for services, including salary reduction contributions pursuant to elections under a plan subject to Code sections 125 or 401(k). (g) "Eligible Employee" means any employee of the Company that meets the eligibility requirements of Section 5. (h) "Enrollment Form" means the form filed with the Committee authorizing payroll deductions pursuant to Section 6. (i) "Entry Date" means each April 1 and October 1. (j) "Fair Market Value" means, with respect to any Investment Date, the closing price, as reported by Nasdaq, on the last business day of the immediately prior calendar quarter. (k) "Investment Account" means the account established for each Participant to hold Common Stock purchased under the Plan pursuant to Section 7. (l) "Investment Date" means the first business day of each calendar quarter on which shares of Common Stock are or could be traded over-the-counter. (m) "Participant" means an Eligible Employee who elects to participate in the Plan by filing an Enrollment Form pursuant to Section 6 and who has not ceased to participate in the Plan pursuant to Section 10 or Section 11. (n) "Payroll Deduction Account" means the account established for a Participant to hold payroll deductions pursuant to Section 6. (o) "Plan" means this instrument and the employee stock purchase plan established by this instrument. (p) "Purchase Price" means the price for each whole and fractional share of Common Stock, including those purchased by dividend reinvestment, which shall be 85% of the Fair Market Value of such whole or fractional share on the Investment Date. (q) "Servicing Agent" means Merrill Lynch, Pierce, Fenner & Smith Incorporated or any successor servicing agent selected by the Company. SECTION 4. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the Committee, consisting of not less than two members appointed by the Board. (a) The Committee shall be the Company's Stock Option Committee unless the Board shall appoint another committee to administer the Plan. The Board from time to time may fill vacancies, however caused, in the Committee. (b) Subject to the express provisions of the Plan, the Committee shall have the authority to take any and all actions (including directing the Servicing Agent as to the acquisition of shares) necessary to implement the Plan and to interpret the Plan, to prescribe, amend and rescind rules and regulations relating to it, and to make all other determinations necessary or advisable in administering the Plan. All of such determinations shall be final and binding upon all persons. (c) A quorum of the Committee shall consist of a majority of its members and the Committee may act by vote of a majority of its members at a meeting at which a quorum is present, or without a meeting by a written consent to their action taken signed by all members of the Committee. (d) The Committee may request advice or assistance or employ such other persons as are necessary for proper administration of the Plan. SECTION 5. ELIGIBLE EMPLOYEES. All employees of the Company are eligible to participate in the Plan during a calendar year, except for any employee who had not been employed for more than one year at the beginning of that calendar year. SECTION 6. ELECTION TO PARTICIPATE. Each Eligible Employee may become a Participant effective on the first Entry Date coinciding with or following the date he first becomes an Eligible Employee. (a) The Eligible Employee shall file with the Committee an Enrollment Form authorizing specified regular payroll deductions from his Compensation. (b) Regular payroll deductions shall be subject to a minimum deduction of 1% and a maximum deduction of 15% of Compensation for the payroll period and to a maximum annual deduction of $5,000. (c) The Company shall hold all payroll deductions as part of its general assets, but shall credit each Participant's payroll deductions, without interest, to a Payroll Deduction Account in his name. 2 (d) To begin participation as of an Entry Date, an Eligible Employee must file his Enrollment Form with the Committee not less than 14 days before that Entry Date, unless a shorter period of time is prescribed by the Committee. An Enrollment Form not filed within the prescribed filing period shall be effective the second Entry Date following the filing of the Enrollment Form. (e) A Participant may increase or decrease his payroll deduction, effective as of the first day of the next following calendar quarter, by filing a new Enrollment Form. (f) At any time during the first 2 1/2 months of a calendar quarter, a Participant may elect to terminate his payroll deductions and receive a refund of the balance in his Payroll Deduction Account. In that event, he shall not again become a Participant until the second Entry Date following his election to terminate. SECTION 7. PARTICIPANT PURCHASES AND INVESTMENT ACCOUNTS. On each Investment Date, each Participant shall be deemed, without further action, to have purchased shares of Common Stock with the entire balance in his Payroll Deduction Account, and the Servicing Agent shall credit the purchased shares to the Participant's Investment Account. (a) The Participant shall be credited with the number of whole and fractional shares (rounded to the nearest ten thousandth) that his Payroll Deduction Account balance can purchase at the Purchase Price on that Investment Date. (b) All dividends paid with respect to the whole and fractional shares of the Common Stock and shares so purchased shall be reinvested in Common Stock and added to the shares held for a Participant in his Investment Account. (c) Expenses incurred in the purchase of shares and the expenses of the Servicing Agent shall be paid by the Company. SECTION 8. LIMITATION ON PURCHASES. Participant purchases are subject to the following limitations: (a) During any one calendar year, a Participant may not purchase, under the Plan or under any other plan qualified under Code section 423, shares of Common Stock having a Fair Market Value (determined by reference to the Fair Market Value on each date of purchase) in excess of $25,000. (b) A Participant's Payroll Deduction Account may not be used to purchase Common Stock on any Investment Date to the extent that, after such purchase, the Participant would own (or be considered as owning within the meaning of Code section 424(d)) stock possessing 5% or more of the total combined voting power of the Company. For this purpose, stock which the Participant may purchase under any outstanding option shall be treated as owned by such Participant. As of the first Investment Date on which this paragraph limits a Participant's ability to purchase Common Stock, the Participant's payroll deductions shall terminate, and he shall receive a refund of the balance in his Payroll Deduction Account. SECTION 9. SERVICING AGENT STOCK PURCHASES. As of each Investment Date, the Servicing Agent shall acquire, using the accumulated balances of all Participants' Payroll Deduction Accounts, shares of Company Stock to be credited to those Participants' Investment Accounts. (a) The Servicing Agent shall acquire shares issued by the Company or, if directed by the Committee, by purchases on the open market or in private transactions. (b) If shares are purchased in one or more transactions on the open market or in private transactions at the direction of the Committee, the Company will pay the Servicing Agent the 3 difference between the Purchase Price and the price at which such shares are purchased for Participants. SECTION 10. INVESTMENT ACCOUNT WITHDRAWALS. Upon 14 days advance written notice to the Servicing Agent, a Participant may elect as of any Investment Date to withdraw the assets in his Investment Account. (a) The Participant may elect to obtain a certificate for the whole shares of Common Stock credited to his Investment Account. As a condition of participation in the Plan, each Participant agrees to notify the Company if he sells or otherwise disposes of any of his shares of Common Stock within two years of the Investment Date on which such shares were purchased. (b) The Participant may elect that all shares in his Investment Account be sold and that the proceeds, less expenses of sale, be remitted to him. (c) In either event, the Servicing Agent will sell any fractional shares held in the Investment Account and remit the proceeds of such sale, less selling expenses, to the Participant. (d) If a Participant withdraws the assets in his Investment Account, he shall cease to be a Participant and shall not again become a Participant until the second Entry Date following the withdrawal. SECTION 11. CESSATION OF PARTICIPATION. If a Participant dies, terminates employment, or withdraws assets from his Investment Account, he shall cease to participate in the Plan, the Company shall refund the balance in his Payroll Deduction Account, and the Servicing Agent shall distribute the assets in his Investment Account. (a) In the event of the Participant's death, his Payroll Deduction Account balance and his Investment Account assets shall be delivered to his estate. (b) If the Participant terminates employment, or if a Participant ceases to participate in the Plan pursuant to Section 10, he shall receive the amount in his Payroll Deduction Account and the assets in his Investment Account. (c) The Participant, or if applicable his beneficiary or estate, may elect to obtain a certificate for the whole shares of Common Stock credited to the Participant's Investment Account or may elect that any whole shares in his Investment Account be sold. The Servicing Agent will sell such whole shares and any fractional shares held in the Investment Account and remit the proceeds of such sale, less selling expenses. SECTION 12. BENEFICIAL INTERESTS IN PLAN. Each Payroll Deduction Account and each Investment Account shall be in the name of the Participant. A Participant may designate a beneficiary to receive his interests in both accounts in the event of his death. If a Participant dies without having designated a beneficiary, or if the designated beneficiary does not survive the Participant, the Participant's estate shall be deemed his beneficiary. SECTION 13. RIGHTS NOT TRANSFERABLE. Rights under the Plan are not transferable by a Participant. SECTION 14. CHANGE IN CAPITAL STRUCTURE. Despite anything in the Plan to the contrary, the Committee may take the following actions without the consent of any Participant or beneficiary, and the Committee's determination shall be conclusive and binding on all persons for all purposes. (a) In the event of a stock dividend, stock split or combination of shares, recapitalization or merger in which the Company is the surviving corporation or other change in the Company's capital stock 4 (including, but not limited to, the creation or issuance to shareholders generally of rights, options or warrants for the purchase of common stock or preferred stock of the Company), the number and kind of shares of stock or securities of the Company to be subject to the Plan, the maximum number of shares or securities which may be delivered under the Plan, the selling price and other relevant provisions shall be appropriately adjusted by the Committee, whose determination shall be binding on all persons. (b) If the Company is a party to a consolidation or a merger in which the Company is not the surviving corporation, a transaction that results in the acquisition of substantially all of the Company's outstanding stock by a single person or entity, or a sale or transfer of substantially all of the Company's assets, the Committee may take such actions with respect to the Plan as the Committee deems appropriate. SECTION 15. AMENDMENT OF THE PLAN. The Board may at any time, or from time to time, amend the Plan in any respect. The shareholders of the Company, however, must approve any amendment that would increase the number of shares of Common Stock that may be issued under the Plan (other than an increase merely reflecting a change in capitalization of the Company), or a change in the designation of any corporations whose employees become Eligible Employees under the Plan. SECTION 16. TERMINATION OF THE PLAN. The Plan and all rights of employees and beneficiaries under the Plan shall terminate: (a) on the Investment Date that Participants become entitled to purchase a number of shares greater than the number of reserved shares remaining available for purchase; or (b) at any date at the discretion of the Board. In the event that the Plan terminates under circumstances described in (a) above, reserved shares remaining as of the termination date shall be issued to Participants on a pro rata basis. Upon termination of the Plan, each Participant shall receive the balance in his Payroll Deduction Account and all shares in his Investment Account. SECTION 17. INDEMNIFICATION OF COMMITTEE. Service on the Committee shall constitute service as a director of the Company so that members of the Committee shall be entitled to indemnification and reimbursement as directors of the Company pursuant to its Certificate of Incorporation and Bylaws. SECTION 18. GOVERNMENT AND OTHER REGULATIONS. The Plan, and the grant and exercise of the rights to purchase shares hereunder, and the Company's obligation to sell and deliver shares upon the exercise of rights to purchase shares, shall be subject to all applicable federal, state and foreign laws, rules and regulations, and to such approvals by any regulatory or government agency as may, in the opinion of counsel for the Company, be required. SECTION 19. EFFECTIVE DATE OF PLAN. The Plan is effective as of October 1, 1995, subject to receiving shareholder approval prior thereto. 5 EX-27 4 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED AUGUST 2, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS JAN-31-1998 FEB-02-1997 AUG-02-1997 1,902 0 874 0 68,819 73,298 51,287 19,836 104,749 20,012 14,355 0 0 0 67,771 104,749 121,721 121,721 85,269 85,269 0 0 478 6,355 2,574 0 0 0 0 3,781 .29 .29
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