SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant /_/
Check the appropriate box:
/_/ Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/_/ Definitive Additional Materials
/_/ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
URBAN OUTFITTERS, INC
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than Registrant)
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/X/ No Fee Required.
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2) Aggregate number of securities to which transaction applies:
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/_/ Check box if any part of the fee is offset as provided by
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Dear Shareholder:
You are cordially invited to attend the 2000 Annual Meeting of Shareholders
to be held at 10:30 a.m., on May 23, 2000, at the National Society of the
Colonial Dames of America, 1630 Latimer Street, Philadelphia, Pennsylvania.
The matters to be considered and voted upon are described in the 2000
Notice of Annual Meeting of Shareholders and the Proxy Statement that accompany
this letter. It is important that your shares be represented and voted at the
Annual Meeting. Kindly read the attached Proxy Statement, date and sign the
enclosed proxy card and return the proxy card in the accompanying envelope.
I look forward to seeing you at the meeting and having the opportunity to
review the business operations of Urban Outfitters.
Sincerely,
/s/ Richard A. Hayne
-----------------------------------
Richard A. Hayne
Chairman of the Board
April 21, 2000
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 23, 2000
------------------------------
TO OUR SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Urban
Outfitters, Inc. will be held at the National Society of the Colonial Dames of
America, 1630 Latimer Street, Philadelphia, Pennsylvania, on May 23, 2000 at
10:30 a.m., for the following purposes:
1. To elect six Directors to serve for a term of one year.
2. To vote on a proposal to approve the Urban Outfitters 2000 Stock
Incentive Plan.
3. To transact such other business as may properly come before the
meeting.
Only shareholders of record at the close of business on April 5, 2000 are
entitled to notice of, and to vote at, the Annual Meeting or any adjournment or
postponement thereof.
By Order of the Board of Directors
/s/ Richard A. Hayne
------------------------------------
Richard A. Hayne
Chairman of the Board
April 21, 2000
URBAN OUTFITTERS, INC.
1809 WALNUT STREET
PHILADELPHIA, PENNSYLVANIA 19103
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PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
------------------------------
The accompanying proxy is solicited by the Board of Directors of Urban
Outfitters, Inc. (the "Company") for use at the Annual Meeting of Shareholders
(the "Meeting") to be held on Tuesday, May 23, 2000 at 10:30 a.m. at the
National Society of the Colonial Dames of America, 1630 Latimer Street,
Philadelphia, Pennsylvania, and any adjournments or postponements thereof. This
Proxy Statement and accompanying proxy card are being mailed to Shareholders on
or about April 21, 2000.
Only Shareholders of record, as shown on the transfer books of the Company,
at the close of business on April 5, 2000 (the "Record Date") are entitled to
notice of, and to vote at, the Meeting. On the Record Date, there were
17,358,186 Common Shares outstanding.
The Company's Common Shares represented by an unrevoked Proxy in the
enclosed form, which has been properly executed and received prior to the
Meeting, will be voted in accordance with the specifications made on such Proxy.
Any properly executed Proxy received on a timely basis on which no specification
has been made by the Shareholder will be voted "FOR" the election of the
nominees to the Board of Directors listed in this Proxy Statement, "FOR" the
approval of the Urban Outfitters 2000 Stock Incentive Plan and, to the extent
permitted by the rules and regulations of the Securities and Exchange
Commission, in accordance with the judgment of the persons voting the Proxies
upon such other matters as may come before the Meeting and any adjournments. Any
Shareholder giving a Proxy has the power to revoke it prior to its exercise
either by giving written notice to the Secretary of the Company, by voting in
person at the Meeting or by execution of a subsequent Proxy.
Presence at the Meeting in person or by Proxy of the holders of a majority
of the Common Shares entitled to vote is necessary to constitute a quorum. Each
share entitles the holder to one vote. The election of directors will be
determined by a plurality vote and the six nominees receiving the most "FOR"
votes will be elected. Approval of any other proposal, including the approval of
the Urban Outfitters 2000 Stock Incentive Plan, will require the affirmative
vote of a majority of the shares cast on the proposal. In all matters, an
abstention or broker non-vote will not be counted as a vote cast.
1
1. ELECTION OF DIRECTORS
The Company's By-laws provide for the Board of Directors to be composed of
as many directors as are designated from time to time by the Board of Directors.
Currently there are six directors. Each director shall be elected for the term
of one year and shall serve until his successor is elected and qualified.
At the Meeting, six directors will be elected. The Board of Directors has
nominated the six persons listed below for election to the Board at the Meeting.
Unless otherwise directed, the persons named on the Proxy intend to vote all
valid proxies received by them "FOR" the election of the listed nominees. In the
event any of the nominees shall be unable or unwilling to serve as a director,
it is intended that the Proxies will be voted "FOR" the election of such person
nominated by the Board of Directors in substitution. The Company has no reason
to believe that any nominee of the Board of Directors will be unable to serve as
a director if elected.
The nominees for election to the Board of Directors are Richard A. Hayne,
Scott A. Belair, Harry S. Cherken, Jr., Kenneth K. Cleeland, Joel S. Lawson III
and Burton M. Sapiro.
BIOGRAPHICAL INFORMATION
The following information is submitted concerning each nominee for election
as a director:
NAME AGE POSITION
- ---- --- --------
Richard A. Hayne.................. 53 Chairman of the Board of Directors and President
Scott A. Belair(1)(2)............. 52 Director
Harry S. Cherken, Jr.............. 50 Director
Kenneth K. Cleeland............... 59 Director
Joel S. Lawson III(1)(2).......... 52 Director
Burton M. Sapiro.................. 73 Director
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(1) Member of the Audit Committee
(2) Member of the Compensation Committee
Mr. Hayne co-founded the Company in 1970 and has been its President and
Chairman of the Board of Directors since the Company's incorporation in 1976.
Mr. Belair co-founded the Company in 1970, has been a director since its
incorporation in 1976 and has served as Principal of the ZAC Group, a provider
of financial services, during the last ten years. Previously he was a managing
director of Drexel Burnham Lambert Incorporated. Mr. Belair is a director and
President of Balfour Maclaine Corporation and a director and Chief Financial
Officer of W. P. Stewart and Company, Inc.
Mr. Cherken, a director since 1989, has been a partner in the law firm of
Drinker Biddle & Reath LLP in Philadelphia, Pennsylvania since 1984 and served
as a managing partner of that firm from February 1996 to January 2000.
2
Mr. Cleeland has been a director since 1998. He served as Chief Financial
Officer and Treasurer of the Company from 1987 until May 1998. Previously, he
was the Chief Financial Officer of MBI Business Center, Inc. and President of
MBIF Leasing. He was also the Chief Financial Officer and Vice President of J.
G. Hook, Inc. Mr. Cleeland has been the Principal of Wye Associates, a business
consulting firm, since May 1998.
Mr. Lawson, a director since 1985, has, since 1980, been the Managing
Partner and Chief Executive Officer of Howard, Lawson & Co., an investment
banking and corporate finance firm located in Philadelphia, Pennsylvania. He is
also a director of Crusader Holding Corporation.
Mr. Sapiro, a director since 1989, has been a retail-marketing consultant
since his retirement in 1985. Previously, he was Senior Vice President/General
Merchandise Manager and a member of the Executive Committee of both Macy's New
York and Gimbels Philadelphia/Gimbels East. He was also a director of Macy's New
York.
BOARD COMMITTEES AND ATTENDANCE AT MEETINGS
The Board of Directors currently has an Audit Committee and a Compensation
Committee. The Audit Committee oversees actions by the Company's independent
accountants and reviews the Company's internal controls. The Board's
Compensation Committee is responsible for determining salaries, incentives and
other forms of compensation of the executive officers, and also administers the
Company's stock option plans. The Board has not established a nominating or
similar committee.
The Company's Board of Directors held four meetings in the fiscal year
ended January 31, 2000 ("Fiscal 2000"). The Compensation Committee and the Audit
Committee held five meetings and two meetings, respectively, during Fiscal 2000.
Each director attended 75% or more of the meetings of the Board and committees
of which they were members during Fiscal 2000.
COMPENSATION OF DIRECTORS
The Company currently pays each director who is not also an employee of the
Company ("Outside Directors") $1,000 for each meeting of the Board of Directors
attended, excluding committee meetings. The Company also reimburses the
directors for their expenses incurred in connection with their activities as
directors. The Company's 1997 Stock Option Plan (the "1997 Plan") provides for
the grant of non-qualified stock options to each director who is not also an
employee, and the Company's 2000 Stock Incentive Plan (the "2000 Plan"), as
described in more detail below, provides a continuation of these grants.
A person who becomes an Outside Director will receive an initial grant of
an option to purchase 10,000 Common Shares on the date he or she becomes a
director. Thereafter, on the first business day immediately following each of
the dates on which an incumbent Outside Director is elected or re-elected, he or
she will receive an additional grant of an option to purchase 10,000 Common
Shares provided that he or she did not receive an initial grant within the
preceding six-month period. Options generally become exercisable 12 months after
the date of their grant. Each Outside Director may exercise options upon the
termination of his or her membership on the Board for a reason other than death
or disability for up to one year for options granted under the 1997 Plan or up
to thirty days for options granted under the 2000 Plan, except where the option,
by its terms, expires on an earlier date. During Fiscal 2000, each Outside
Director received the grant of
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an option to purchase 10,000 Common Shares. The exercise price of options
granted under the Plan is the fair market value of the Common Shares at the date
of grant.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Mr. Belair and Mr. Lawson.
CERTAIN BUSINESS RELATIONSHIPS
Burton M. Sapiro, a director of the Company, and the Company entered into
an agreement pursuant to which Mr. Sapiro agreed to provide up to 36 days of
retail-marketing consulting services per year to the Company. In consideration
for such services, Mr. Sapiro is paid a daily fee of $1,100 and is reimbursed
for his expenses. The agreement was approved by the Company's disinterested
directors. The total amount paid to Mr. Sapiro in Fiscal 2000 pursuant to these
arrangements, exclusive of directors' fees but including expenses, was $47,858.
Kenneth K. Cleeland, a director of the Company, resigned from his positions
as Chief Financial Officer and Treasurer of the Company effective May 18, 1998.
Concurrently with his resignation, Mr. Cleeland and the Company entered into a
non-competition agreement which expired on May 18, 1999 whereby Mr. Cleeland
received compensation in the total amount of $100,000 payable in equal monthly
installments during the term. In Fiscal 2000, Mr. Cleeland received compensation
under the agreement in the amount of $33,333. Additionally, during Fiscal 2000,
Mr. Cleeland received a car allowance in the amount of $5,935.
Harry S. Cherken, Jr., a Director of the Company, is a partner in the law
firm of Drinker Biddle & Reath LLP, which provided legal services to the Company
in Fiscal 2000 and is expected to continue to do so in the future.
2. URBAN OUTFITTERS 2000 STOCK INCENTIVE PLAN
At the meeting, you will be asked to approve the Urban Outfitters 2000
Stock Incentive Plan. The 2000 plan was approved by the Board of Directors on
February 15, 2000, although it will not be implemented until shareholder
approval is obtained.
The Board of Directors believes that the 2000 plan is necessary for the
Company to attract, retain and motivate employees, non-employee directors and
consultants. The Company has been using the 1997 stock option plan to achieve
these goals. However, as of March 14, 2000, only 330,500 shares of common stock
were available for the granting of future non-qualified and incentive stock
options under the 1997 plan. Therefore, the Board of Directors strongly
recommends approval of the 2000 plan so that the Company may continue to
attract, retain and motivate employees, non-employee directors and consultants
through the grant of options, stock appreciation rights and restricted stock.
The 2000 plan is attached as an Appendix to this proxy statement. The
following description of the 2000 plan is intended merely as a summary of its
principal features and is qualified in its entirety by reference to the
provisions of the 2000 plan.
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GENERAL
COMMON STOCK AVAILABLE. The Company has reserved 1,250,000 shares of its
common stock for issuance under the 2000 plan. During any calendar year, no
employee may be granted options and stock appreciation rights covering more than
300,000 shares of common stock. No more than 500,000 shares of common stock are
available for restricted stock grants under the 2000 plan. Each of the above
limits is subject to adjustment for certain changes in the Company's structure
or capitalization such as stock splits, combinations, etc.
No awards have been granted under the 2000 plan. The closing price of a
share of common stock on the NASDAQ National Market System on March 20, 2000 was
$12.4375.
ADMINISTRATION. The President of the Company administers the 2000 plan for
awards that cover fewer than 10,000 shares of common stock made to individuals
not subject to Section 16(b) of the Securities Exchange Act of 1934. A committee
of members of the board of directors administers the 2000 plan for all other
awards. The President and the board committee are referred to collectively as
the "administrator". The administrator has considerable discretion in setting
the terms of awards granted to employees, consultants and certain awards to
non-employee directors. The administrator has no discretion in setting the terms
of formula options granted to non-employee directors, because the grants are
made under the formula discussed below.
TYPES OF AWARDS. Under the 2000 plan, the administrator may award
incentive stock options, non-qualified stock options, stock appreciation rights,
and restricted stock.
ELIGIBILITY. Employees and consultants of the Company and its related
corporations and non-employee directors of the Company are eligible to receive
awards under the 2000 plan. Employees and consultants are not eligible to
receive formula options, and non-employee directors and consultants are not
eligible to receive incentive stock options. The administrator selects the
employees, non-employee directors and consultants who will receive discretionary
options, stock appreciation rights and restricted stock awards under the 2000
plan. There are approximately 2200 employees and five non-employee directors
currently eligible to receive awards under the 2000 plan. The limited number of
consultants potentially eligible to participate in the 2000 plan is not known.
DISCRETIONARY STOCK OPTIONS
The administrator may award incentive stock options and non-qualified stock
options. Incentive stock options offer employees certain tax advantages --
discussed below -- which are not available for non-qualified stock options. The
administrator determines the terms of the options, including the number of
shares of common stock subject to the option and the exercise price. However,
the option term of incentive stock options may not exceed ten years, and the per
share exercise price of incentive stock options may not be less than the fair
market value of a share of common stock on the date the option is granted.
When an employee, non-employee director or consultant terminates service,
his or her option may expire before the end of the option term. For example, if
an employee, non-employee director or consultant's service terminates for a
reason other than death or disability, his or her options generally remain
exercisable for up to thirty days after termination of service, unless the
administrator provides for a longer period. If the employee, non-employee
director or consultant's
5
service terminates due to death or disability, his or her options generally
remain exercisable for up to six months after termination of service, unless the
administrator provides for a longer period.
An employee, non-employee director or consultant may pay the exercise price
of an option in cash or its equivalent. The administrator may also permit an
optionee to pay the exercise price by surrendering common stock, through a
so-called broker-financed transaction or in any combination of such methods. The
administrator may permit an employee to pay the tax-withholding obligation with
common stock issuable upon the exercise of the non-qualified stock option or
previously acquired common stock.
FORMULA STOCK OPTIONS
The 2000 plan carries forward the formula grants for non-employee directors
that are in place under the 1997 plan. All formula grants to non-employee
directors prior to the 2001 annual shareholders meeting will be made under the
1997 plan. Formula grants on and after the 2001 annual shareholders meeting will
be made under the 2000 plan.
Non-employee directors may receive two types of formula grants under the
2000 plan. A non-employee director will receive an initial option to purchase
10,000 shares of common stock on the date he or she first becomes a non-employee
director. In addition, on the first business day immediately following each of
the dates on which an incumbent non-employee director is elected or re-elected,
he or she will receive an additional option to purchase 10,000 shares of common
stock -- but only if he or she did not receive an initial grant within the
preceding six months.
Each 10,000-share option becomes fully vested on the business day before
the first annual meeting of shareholders after the date the option is granted.
The exercise price of each 10,000-share option is 100% of the fair market value
of the common stock on the date of grant. The exercise price may be paid in
cash, by surrendering common stock to the Company, through a so-called
broker-financed transaction or in any combination of such methods. Generally,
each 10,000-share option expires on the earlier of (1) ten years from the date
of grant, or (2) one year from the date the non-employee director ceases to be a
director for any reason.
A non-employee director may transfer his or her 10,000-share options -- for
no consideration -- to certain "family" members or to certain trusts,
foundations or other entities that "family" members control or have an interest
in.
STOCK APPRECIATION RIGHTS
The administrator may award stock appreciation rights to employees,
non-employee directors and consultants either along with, or independent of,
options. A stock appreciation right entitles the grantee to receive an amount
equal to the excess of the fair market value of the common stock on the date of
exercise over the fair market value on the date of grant. This amount will be
paid in cash, common stock, or a combination of cash and common stock.
When an employee, non-employee director or consultant terminates service,
his or her stock appreciation rights may expire before the end of the stock
appreciation right term. The period during which the stock appreciation right
may be exercised is the same as the period for discretionary options, discussed
above.
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RESTRICTED STOCK
The administrator may make restricted stock awards to employees,
non-employee directors and consultants. A restricted stock award is an award of
common stock that is subject to certain restrictions during a specified period,
such as an employee's continued employment with the Company or the Company
achieving certain financial goals. The Company holds the shares during the
restriction period and the grantee cannot transfer the shares before termination
of that period. The grantee is, however, generally entitled to vote the shares
and receive any dividends during the restriction period.
MISCELLANEOUS
TRANSFERABILITY. Awards, except for formula options, generally are not
transferable, except by will or under the laws of descent and distribution. The
administrator has the authority, however, to permit an employee, non-employee
director or consultant to transfer discretionary non-qualified stock options and
stock appreciation rights to certain permitted transferees.
ACCELERATION OF VESTING. The administrator may, in its discretion,
accelerate the date on which options or stock appreciation rights may be
exercised, and may accelerate the date of termination of the restrictions
applicable to restricted stock, if it determines that to do so would be in the
best interests of the Company and the participants in the 2000 plan. Upon a
change in control of the Company (as defined in the 2000 plan), all outstanding
options and stock appreciation rights become exercisable, and all outstanding
restricted stock becomes vested.
CHANGE IN CAPITALIZATION/CERTAIN CORPORATE TRANSACTIONS. If there is a
change in the Company's capitalization that affects its outstanding common
stock, the aggregate number of shares of common stock subject to awards,
together with the option exercise price, will be adjusted by the administrator,
as described in the 2000 plan. The 2000 plan also provides that, in the event of
a merger, consolidation or other specified corporate transaction, outstanding
awards will be assumed by the surviving or successor corporation, if any. The
2000 plan also authorizes the administrator to terminate the discretionary
awards granted to employees, non-employee directors and consultants in the event
of such a corporate transaction, after giving advance notice. In the event of a
corporate transaction where shareholders are to receive cash, stock or other
property, and formula options granted to non-employee directors are not assumed
by the surviving or successor corporation, all outstanding non-employee director
formula options will be terminated, and each non-employee director will receive
cash equal to the difference between (1) the exercise price of the stock not yet
exercised under the formula option, and (2) the per share value to be received
by shareholders in connection with such transaction.
EFFECTIVE DATE. The 2000 plan became effective on February 15, 2000,
subject to shareholder approval. If the requisite shareholder approval is not
obtained by February 14, 2001, the 2000 plan and all awards granted under the
2000 plan will be null and void.
AMENDMENT/TERMINATION. The Board of Directors may amend or suspend the
2000 plan. Shareholder approval is required, however, for certain amendments,
such as an increase in the number of shares of common stock authorized for
issuance of incentive stock options, and a change in the class of employees who
may receive incentive stock options under the 2000 plan. Requisite shareholder
approval is also required for any amendment that would require shareholder
approval
7
under Section 162(m) of the Internal Revenue Code, or under the rules of the
market on which common stock is listed.
The Board of Directors may terminate the 2000 plan at any time and for any
reason. No incentive stock options will be granted under the 2000 plan after
February 14, 2010.
FEDERAL INCOME TAX CONSEQUENCES - OPTIONS
The Company has been advised that the federal income tax consequences of
granting and exercising options under the 2000 plan are as follows (based on as
of January 1, 2000 federal tax laws and regulations). The grant of an option
does not result in federal income tax consequences for the optionee or a
deduction for the Company.
When an option is exercised, the federal income tax consequences depend on
whether the option is an incentive stock option or a non-qualified stock option.
An optionee exercising a non-qualified stock option will recognize ordinary
income equal to the difference between the fair market value of the stock
exercised (on the date of exercise) and the option price. An employee will not
recognize taxable income as a result of acquiring stock by exercising an
incentive stock option. The difference between the fair market value of the
exercised stock on the date of exercise and the exercise price will, however,
generally be treated as an item of adjustment for purposes of alternative
minimum taxable income. If the employee holds the stock he receives on exercise
of an incentive stock option for a required period of time, the employee will
have a capital gain (or loss) when the stock is later disposed of. If the
employee does not hold the stock for the required period of time, the employee
will generally have ordinary income when the stock is disposed of.
When an optionee recognizes ordinary income on the exercise of a
non-qualified stock option or the sale of stock acquired on exercise of an
incentive stock option, the Company is generally entitled to a deduction in the
same amount. Certain requirements, such as reporting the income to the IRS, must
be met for the deduction to be allowable. Also, for the CEO and the four other
highest compensated officers, the Company's deduction may be contingent on
certain factors such as (1) the grant being made by a committee of outside
directors, and (2) the exercise price being at least equal to 100% of the fair
market value of the common stock on the date of grant.
THE BOARD OF DIRECTORS BELIEVES THAT THE ADOPTION OF THE 2000 STOCK
INCENTIVE PLAN IS IN THE BEST INTERESTS OF THE COMPANY AND RECOMMENDS A VOTE FOR
APPROVAL OF THE 2000 STOCK INCENTIVE PLAN.
3. OTHER MATTERS
The Board of Directors knows of no matters to be presented for action at
the Meeting, other than those set forth in the attached Notice and customary
procedural matters. If any other matters should properly come before the Meeting
or any adjournments thereof, the proxies solicited hereby will be voted on such
matters, to the extent permitted by the rules and regulations of the Securities
and Exchange Commission, in accordance with the judgement of the persons voting
such proxies.
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EXECUTIVE COMPENSATION
SUMMARY EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth certain information
concerning the compensation paid or accrued by the Company for services rendered
during Fiscal 2000 and the Company's fiscal years ended January 31, 1999
("Fiscal 1999") and January 31, 1998 ("Fiscal 1998") by the Company's President
and the Company's four most highly compensated other executive officers whose
total annual salary and bonus exceeded $100,000 (collectively, the "Named
Officers").
Annual Compensation does not include medical, group life insurance or other
benefits received by the Named Officers that are generally available to all
salaried employees of the Company, and certain perquisites and other personal
benefits, securities or property received by the Named Officers that do not
exceed the lesser of $50,000 or 10% of any such officer's salary and bonus
disclosed in this table.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
---------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS # COMPENSATION(1)
- --------------------------- ---- -------- -------- ------------ ---------------
Richard A. Hayne 2000 $235,000 $ 30,000 -- $20,954(2)
Chairman and President 1999 235,000 28,500 -- 37,472
1998 235,000 -- -- 11,006
Glen T. Senk 2000 259,968 205,000 -- 958
President, Anthropologie, Inc. 1999 224,423 61,875 300,000(3) 2,063
1998 210,000 4,000 -- --
Stephen A. Feldman 2000 260,000 44,000 -- 3,358(6)
Chief Financial Officer(4) 1999 165,000 16,000 100,000(5) 53,811
1998 N/A N/A N/A N/A
Michael A. Schultz 2000 220,000 5,000 -- 958
President, Urban Outfitters, 1999 220,000 6,585 -- 2,063
Wholesale, Inc. 1998 220,000 4,000 280,000 --
Glen A.Bodzy 2000 187,019 21,500 5,000 75,778(8)
General Counsel and 1999 175,000 21,500 25,000 2,063
Corporate Secretary(7) 1998 23,558 3,000 -- --
- ------------------
(1) Includes matching cash contributions in fiscal 2000 of $958 by the Company
under the Urban Outfitters 401(k) Savings Plan for each of Messrs. Hayne,
Senk, Schultz, Bodzy and Feldman.
(2) Includes life insurance premiums paid by the Company for Mr. Hayne in the
amount of $11,996 and professional tax services in the amount of $8,000 in
Fiscal 2000.
(3) These options become exercisable on February 1, 2005. These options are also
subject to an accelerated vesting schedule in the event certain performance
goals are met. The accelerated vesting schedule allows these options to
become exercisable as to 60,000 shares on February 1, 2000 and as to
additional 60,000 shares on each February 1 thereafter.
(4) Mr. Feldman joined the Company in June 1998.
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(5) These options become exercisable as to 10,000 shares on June 15, 2000, and
as to additional 10,000 shares on each June 15 thereafter until June 15,
2,002 and 20,000 shares on June 15, 2003 and June 15, 2004 and 30,000 shares
on June 15, 2005. These options are also subject to an accelerated vesting
schedule in the event certain performance goals are met. The accelerated
vesting schedule allows these options to become exercisable as to 20,000
shares on June 15, 2000 and as to additional 20,000 shares on each June 15
thereafter.
(6) Includes professional tax services in the amount of $2,400 in Fiscal 2000.
(7) Mr. Bodzy joined the Company in December 1997.
(8) Includes $72,000 to compensate Mr. Bodzy for relocation expenses and $2,820
for payment of parking expenses.
STOCK OPTION INFORMATION
OPTIONS GRANT TABLE: The following table sets forth certain information
concerning grants of stock options made to the Named Officers during Fiscal
2000.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
- ------------------------------------------------------------------------------
NUMBER OF % OF TOTAL POTENTIAL REALIZABLE VALUE AT
SECURITIES OPTIONS ASSUMED ANNUAL RATES OF STOCK
UNDERLYING GRANTED PRICE APPRECIATION FOR OPTION TERM
OPTIONS TO EMPLOYEES IN EXERCISE OR EXPIRATION -----------------------------------
NAME GRANTED FISCAL 2000 BASE PRICE DATE 5% 10%
---- ---------- --------------- ----------- ---------- ---------------- ----------------
Glen A. Bodzy 5,000(1) 1.5% $26.9688 5/18/2009 $84,803 $214,906
- ------------------
(1) 20% of these options become exercisable on May 18, 2000 and a further 20%
becomes exercisable each year thereafter.
AGGREGATE OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE: The
following table sets forth certain information concerning options exercised by
the Named Officers during Fiscal 2000, information concerning the number of
stock options held by the Named Officers on January 31, 2000, and the value of
in-the-money options outstanding as of such date. The value of in-the-money
options represents the aggregate excess of the fair market value of a Common
Share on January 31, 2000 of $13.375 over the applicable exercise prices
multiplied by the number of Common Shares issuable upon the exercise of the
stock options.
AGGREGATED OPTION EXERCISES
IN FISCAL 2000 AND
FISCAL 2000 YEAR-END OPTION VALUES
NUMBER OF VALUE OF
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FISCAL YEAR-END FISCAL YEAR-END
ACQUIRED ON VALUE --------------------------- ------------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ---------- ----------- ------------- ----------- ----------------
Richard A. Hayne........ -- $ -- -- -- $ -- $ --
Glen T. Senk............ 150,000 2,281,250 150,000 300,000 337,500 --
Stephen A. Feldman...... -- -- -- 100,000 -- --
Michael A. Schultz...... 46,200 730,136 27,800 226,000 26,950 616,000
Glen A. Bodzy........... -- -- 5,000 25,000 -- --
10
REPORT OF THE COMPENSATION COMMITTEE
OF THE
BOARD OF DIRECTORS
Under rules established by the Securities and Exchange Commission (the
"SEC"), the Company is required to provide certain data and information in
regard to the compensation and benefits provided to the Company's executive
officers. In fulfillment of this requirement, the Compensation Committee at the
direction of the Board of Directors has prepared the following report for
inclusion in this Proxy Statement.
The Compensation Committee is composed of two non-management directors of
the Company. The Compensation Committee determines the compensation for the
executive officers of the Company named in the Summary Compensation Table and
the other officers of the Company. The Compensation Committee also administers
the Company's Stock Option Plans.
The Compensation Committee's philosophy is that executive compensation
should be designed to:
o reflect the Company's entrepreneurial orientation;
o assist the Company in attracting and retaining superior executive talent
while incentivizing a long-term commitment to the Company;
o align the interests of management with those of shareholders through a
significant equity-based component; and
o reward an executive's individual contribution toward achievement of the
Company's long-and short-term business goals.
The Company's overall executive compensation program consists of three
principal elements: base salaries; discretionary bonuses; and stock options and
other equity-based compensation. Base salaries are ordinarily established at the
beginning of the fiscal year, while discretionary bonuses are awarded following
the completion of the fiscal year. Stock options and other equity-based
compensation may be granted at any time during the fiscal year.
The base salaries for the Company's executive officers in Fiscal 2000 were
competitively established by the Compensation Committee based upon a general
assessment of the compensation paid by other companies in the retail specialty
apparel industry. In evaluating compensation paid by other companies, the
Compensation Committee relied on the general knowledge that its members have
obtained from informal reviews of various press and industry reports. The
Company's President does not participate in the determination of compensation
policies by the Compensation Committee. The Compensation Committee, however,
consults with the Company's President in determining base salary levels for each
executive officer and takes into consideration the President's assessment of the
performance of each of the executive officers (other than the President) against
the factors established by the Compensation Committee.
The Compensation Committee is also involved in establishing the level of
discretionary bonuses and option awards to the Company's executive officers.
Discretionary cash bonuses to the President and other executive officers are
awarded based upon the Compensation Committee's subjective assessment of the
Company's overall financial performance and the Compensation Committee's
subjective assessment of the President's and other executive officers'
individual
11
contributions to that overall performance. Factors considered by the
Compensation Committee in awarding cash bonuses include the officer's
initiative, managerial ability, his level of responsibilities, development of
subordinates, fairness with respect to bonuses of other executives and his
handling of special projects, but no particular weight is ascribed by the
Compensation Committee to any one or more of these factors. The Compensation
Committee does not rely upon or utilize any particular hurdles, benchmarks or
other objective criteria to determine the amount of the bonuses, nor does the
Compensation Committee compare the compensation of the President or other
executive officers to any peer group for purposes of awarding bonuses.
During Fiscal 2000, the factors considered by the Compensation Committee in
determining the President's salary and bonus were the extent to which the
Company met sales and net income objectives, stock performance and the
recruitment and development of management talent for the Company. The
Compensation Committee also takes into account the fact that the President
beneficially owns 42.1% of the Company's outstanding Common Shares.
The Compensation Committee believes that stock ownership by management and
stock based performance compensation arrangements are useful tools to align the
interests of management with those of the Company's shareholders. A decision
whether to grant stock options and the size of the grant to each executive
officer is determined by the Compensation Committee based upon a subjective
assessment of such executive officer's performance after taking into
consideration prior years' grants and the organizational impact of the executive
officer, as well as to respond to competitive conditions in the attraction and
retention of new and current executive officers.
During Fiscal 2000, the only stock options or other equity based
compensation granted to any executive officers of the Company were options to
purchase 5,000 Common Shares granted to Mr. Bodzy and 10,000 Common Shares
granted to Kenneth R. Bull, Treasurer of the Company.
This report is submitted by the Compensation Committee.
Scott A. Belair
Joel S. Lawson III
12
STOCK PERFORMANCE CHART
The following graph compares the cumulative total shareholder return on the
Company's Common Shares with the cumulative total return on the Standard and
Poor's 500 Composite Stock Index and the Standard and Poor's Retail
Specialty-Apparel Index for the period beginning February 1, 1995 and ending
January 31, 2000, assuming the reinvestment of any dividends and assuming an
initial investment of $100 in each. The comparisons in this table are required
by the Securities and Exchange Commission and are not intended to forecast or be
indicative of possible future performance of the Common Shares or the referenced
indices.
TOTAL SHAREHOLDER RETURNS -- DIVIDENDS REINVESTED
INDEXED RETURNS
YEARS ENDING
[GRAPHIC]
In the printed version of the document, a line graph
appears which depicts the following plot points:
Jan.-95 Jan.-96 Jan.-97 Jan.-98 Jan.-99 Jan.-00
------- ------- ------- ------- ------- -------
Urban Outfitters, Inc. $100.00 $ 95.63 $ 94.17 $132.04 $126.70 $104.85
S&P 500 Index $100.00 $138.67 $175.19 $222.33 $294.57 $325.05
Retail (Speciality-Apparel)-500 $100.00 $119.08 $150.78 $273.73 $566.75 $540.42
13
BENEFICIAL OWNERSHIP
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Shares as of March 20, 2000 (December 31, 1999
with respect to Wellington Management Company LLP, T. Rowe Price Associates, and
Pilgrim Baxter and Associates, Ltd.) by: (a) each person known to the Company
who beneficially owns more than five percent of the Company's outstanding Common
Shares, (b) each director and Named Officer and (c) all directors and executive
officers of the Company as a group. Unless otherwise indicated: (a) the address
of each of the beneficial owners identified is 1809 Walnut Street, Philadelphia,
Pennsylvania 19103 and (b) each person has sole voting and investment power with
respect to all such shares.
Richard A. Hayne (1)........................................ 7,316,473 42.1%
T. Rowe Price Associates (2)................................ 2,093,300 12.1%
100 East Pratt Street
Baltimore, Maryland 21202
Wellington Management Company, LLP (2)...................... 842,700 4.9%
75 State Street
Boston, Massachusetts 02109
Pilgrim Baxter & Associates, Ltd. (2)....................... 924,700 5.3%
825 Duportail Road
Wayne, Pennsylvania 19087
Scott A. Belair (3)......................................... 672,000 3.9%
Michael A. Schultz (4)...................................... 365,355 2.1%
Glen T. Senk (5)............................................ 210,648 1.2%
Kenneth K. Cleeland (6)..................................... 135,996 *
Joel S. Lawson III (7)...................................... 75,800 *
Harry S. Cherken, Jr. (8)................................... 70,000 *
Burton M. Sapiro (9)........................................ 62,000 *
Glen A. Bodzy (10).......................................... 10,599 *
Stephen A. Feldman (11)..................................... 1,099 *
All directors and officers as a group....................... 8,922,270 49.8%
(11 persons) (1)(3)(4)(5)(6)(7)(8)(9)(10)(11)
- ------------------
* Less than 1%.
(1) Includes 533,334 shares owned by the Irrevocable Trust of
Richard A. Hayne, 533,334 shares owned by the Irrevocable
Trust of Elizabeth Van Vleck, 92,800 shares owned by the
Hayne Foundation and 3,023 shares allocated under the
Company's 401(k) Savings Plan (formerly the Profit-Sharing
Fund). Excludes 149,998 shares beneficially owned by Mr.
Hayne's spouse, as to which he disclaims beneficial
ownership.
14
(2) All information derived for the following companies were
obtained from Form 13G's filed with the SEC for the period
ending December 31, 1999. T. Rowe Price Associates has sole
voting power as to 331,200 shares and sole dispositive power
as to 2,093,300 shares. Wellington Management Company, LLP
has shared voting power as to 117,700 shares and shared
dispositive power as to 842,700 shares. Pilgrim Baxter &
Associates, Ltd. has sole voting power as to 615,900 shares
and sole dispositive power as to 924,700 shares.
(3) Excludes 333,334 shares owned by Trust U/A/D April 16, 1993
by Scott A. Belair as grantor and Steven D. Burton as
Trustee, as to which he disclaims beneficial ownership.
Includes 52,000 shares subject to presently exercisable
options and 10,000 shares subject to options that will
become exercisable within 60 days.
(4) Includes 55,800 shares subject to presently exercisable
options and 3,023 shares allocated under the Company's
401(k) Savings Plan (formerly the Profit-Sharing Fund).
(5) Includes 210,000 shares subject to presently exercisable
options and 648 shares allocated under the Company's 401(k)
Savings Plan (formerly the Profit-Sharing Fund).
(6) Includes 10,000 shares subject to presently exercisable
options and 10,000 shares subject to options that will
become exercisable within 60 days.
(7) Includes 52,000 shares subject to presently exercisable
options, 10,000 shares subject to options that become
exercisable within 60 days and 1,800 shares held by a trust
of which he is a trustee.
(8) Includes 52,000 shares subject to presently exercisable
options and 10,000 shares subject to options that become
exercisable within 60 days.
(9) Includes 52,000 shares subject to presently exercisable
options and 10,000 shares subject to options that become
exercisable within 60 days.
(10) Includes 10,000 shares subject to presently exercisable
options and 99 shares allocated under the Company's 401(k)
Savings Plan (formerly the Profit-Sharing Fund).
(11) Includes 99 shares allocated under the Company's 401(k)
Savings Plan (formerly the Profit-Sharing Fund).
15
SHAREHOLDER PROPOSALS
Shareholder proposals for next year's 2001 Annual Meeting of Shareholders
must comply with applicable Securities and Exchange Commission rules and
regulations and must be received by the Secretary of the Company prior to
December 19, 2000, to be considered for inclusion in the Company's Proxy
Statement.
CERTAIN TRANSACTIONS
In December 1998, Urban Outfitters provided Mr. Senk with a $70,000 loan
bearing interest at 6%. Interest which accrued on the outstanding principal
balance was due monthly. The principal balance and any unpaid accrued interest
was payable in full upon demand. In June 1999, Mr. Senk repaid the full balance
of the loan, together with interest in the amount of $72,100.
INDEPENDENT ACCOUNTANTS
On December 2, 1999, Urban Outfitters replaced PricewaterhouseCoopers LLP
as the principal accountant for the Company and its subsidiaries. For neither of
the past two years has the former principal accountant's reports on the
Company's financial statements contained an adverse opinion or a disclaimer of
opinion, nor has its opinion been qualified or modified as to uncertainty, audit
scope or accounting principles. The Company's decision to replace its principal
accountant was recommended by the Audit Committee of the Board of Directors of
the Company and approved by the Board of Directors. During the Company's two
most recent fiscal years prior to December 2, 1999 (February 1, 1997 to January
31, 1998 and February 1, 1998 to January 31, 1999) and through December 2, 1999,
there were no disagreements with the former accountant on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction of
the former accountant, would have caused it to make reference to the subject
matter of the disagreement in connection with its report on the financial
statements. During the Company's two most recent fiscal years prior to December
2, 1999 and through December 2, 1999, there have been no reportable events (as
defined in Regulation S-K Item 304(a)(1)(v)).
On December 2, 1999, the Company engaged as its new principal accountant
Arthur Andersen LLP for the fiscal year ended January 31, 2000. The new
principal accountant was not consulted during the Company's two most recent
fiscal years prior to December 2, 1999 and through December 2, 1999 prior to its
engagement regarding the application of accounting principles. The Board has not
proposed that any formal action be taken at the meeting with respect to the
ratification of the appointment of Arthur Anderson LLP because no action is
required.
A representative of Arthur Anderson LLP is expected to be present at the
Annual Meeting to answer appropriate questions and to make a statement if he so
desires.
16
ADDITIONAL INFORMATION
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE. Section 16(a) of
the Securities Exchange Act of 1934 requires the Company's officers and
directors, and persons who own more than 10% of a registered class of the
Company's equity securities ("10% Shareholders") to file reports of ownership
and changes in ownership with the Securities and Exchange Commission. Officers,
directors and 10% Shareholders are required to furnish the Company with copies
of all Section 16(a) forms they file.
Based solely on the Company's review of the copies of such forms received
by it and a written representation from certain reporting persons that no Forms
5 were required for those persons, the Company believes that, during the period
February 1, 1999 through January 31, 2000, all filing requirements applicable to
its officers, directors and 10% Shareholders were complied with on a timely
basis.
PROXY SOLICITATION COSTS. The cost of soliciting proxies will be borne by
the Company. Solicitation may be made by mail, personal interview or telephone
by certain officers and other employees of the Company who will receive no
additional compensation therefor. The Company will reimburse banks, brokers and
other nominees for their reasonable expenses in forwarding proxy materials to
the beneficial owners for whom they hold shares.
ANNUAL REPORT. This Proxy Statement is accompanied by the Company's Annual
Report to Shareholders for Fiscal 2000.
EACH PERSON SOLICITED CAN OBTAIN WITHOUT CHARGE, EXCEPT FOR EXHIBITS, A
COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR FISCAL 2000 AS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION BY SENDING A WRITTEN REQUEST TO:
URBAN OUTFITTERS, INC.
1809 Walnut Street
Philadelphia, Pennsylvania 19103
Attention: Investor Relations
By Order of the Board of Directors
/s/ Richard A. Hayne
------------------------------------
Richard A. Hayne
Chairman of the Board
April 21, 2000
17
URBAN OUTFITTERS
2000
STOCK INCENTIVE PLAN
TABLE OF CONTENTS
SECTION 1 -- PURPOSE AND DEFINITIONS........................ A-1
SECTION 2 -- ADMINISTRATION................................. A-3
SECTION 3 -- ELIGIBILITY.................................... A-4
SECTION 4 -- STOCK.......................................... A-4
SECTION 5 -- GRANTING OF AWARDS............................. A-4
SECTION 6 -- ISO ANNUAL LIMIT............................... A-5
SECTION 7 -- TERMS AND CONDITIONS OF DISCRETIONARY OPTIONS.. A-5
SECTION 8 -- FORMULA NQSOs FOR NON-EMPLOYEE DIRECTORS....... A-7
SECTION 9 -- SARS........................................... A-9
SECTION 10 -- RESTRICTED STOCK.............................. A-10
SECTION 11 -- AWARD AGREEMENTS -- OTHER PROVISIONS.......... A-11
SECTION 12 -- ADJUSTMENT IN CASE OF CHANGES IN COMMON STOCK A-11
SECTION 13 -- CHANGE IN CONTROL............................. A-11
SECTION 14 -- CERTAIN CORPORATE TRANSACTIONS................ A-12
SECTION 15 -- AMENDMENT OF THE PLAN......................... A-13
SECTION 16 -- TERMINATION OF PLAN; CESSATION OF ISO GRANTS.. A-14
SECTION 17 -- SHAREHOLDER APPROVAL.......................... A-14
SECTION 18 -- MISCELLANEOUS................................. A-14
i
URBAN OUTFITTERS
2000
STOCK INCENTIVE PLAN
WHEREAS, Urban Outfitters, Inc. desires to award options, stock
appreciation rights and restricted stock to certain of its employees,
consultants and non-employee directors;
NOW, THEREFORE, the Urban Outfitters 2000 Stock Incentive Plan is hereby
adopted under the following terms and conditions:
SECTION 1 -- PURPOSE AND DEFINITIONS
(a) Purpose. The Plan is intended to provide a means whereby the Company
may, through the grant of Awards to Employees, Consultants and Non-Employee
Directors, attract and retain such individuals and motivate them to exercise
their best efforts on behalf of the Company and of any Related Corporation.
(b) Definitions.
(1) "Award" shall mean an ISO, an NQSO, Restricted Stock or an SAR
awarded by the Company to an Employee, a Consultant or a Non-Employee
Director.
(2) "Award Agreement" shall mean a written document evidencing the
grant of an Award, as described in Section 11.
(3) "Board" shall mean the Board of Directors of the Company.
(4) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(5) "Common Stock" shall mean the common stock of the Company, par
value $0.0001 per share.
(6) "Committee" shall mean:
(A) The President of the Company, with respect to an Award which
(i) covers fewer than 10,000 shares of Common Stock, and (ii) is granted
to an individual who is not subject to Section 16(b) of the Exchange
Act;
(B) With respect to any Award not described in (A):
(i) A committee which consists solely of not fewer than two
directors of the Company who shall be appointed by, and serve at the
pleasure of, the Board (taking into consideration the rules under
Section 16(b) of the Exchange Act and the requirements of Section
162(m) of the Code); or
(ii) In the event a committee has not been established in
accordance with (i) above, the entire Board.
The members of the Committee shall be appointed by, and serve at the pleasure
of, the Board.
(7) "Company" shall mean Urban Outfitters, Inc.
A-1
(8) "Consultant" shall mean an individual who is not an Employee or a
Non-Employee Director and who has entered into a consulting arrangement
with the Company or a Related Corporation to provide services that are not
in connection with the offer or sale of securities in a capital-raising
transaction.
(9) "Employee" shall mean an officer or other employee of the Company
or a Related Corporation.
(10) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(11) "Fair Market Value" shall mean:
(A) The arithmetic average of the highest and lowest quoted selling
price, if there is a market for the Common Stock on a registered
securities exchange or in an over the counter market, on the date of
grant; or
(B) Fair market value determined under such other method as shall
be authorized by the Code, or the rules or regulations thereunder, and
adopted by the Committee.
(12) "Grantee" shall mean an Employee, a Consultant or a Non-Employee
Director who has been granted an Award under the Plan.
(13) "ISO" shall mean an Option which, at the time such Option is
granted under the Plan, qualifies as an incentive stock option within the
meaning of Section 422 of the Code, unless the Award Agreement states that
the Option will not be treated as an ISO.
(14) "Non-Employee Director" shall mean a director of the Company who:
(A) Is not an Employee; and
(B) Has not been an Employee during the immediately preceding
12-month period.
(15) "NQSO" shall mean an Option which, at the time such Option is
granted, does not meet the definition of ISO, whether or not it is
designated as a nonqualified stock option in the Award Agreement.
(16) "Options" shall mean ISOs and NQSOs which entitle the Grantee on
exercise thereof to purchase shares of Common Stock at a specified exercise
price.
(17) "Plan" shall mean the Urban Outfitters 2000 Stock Incentive Plan
as set forth herein and as amended from time to time.
(18) "Related Corporation" shall mean either a "subsidiary
corporation" of the Company, as defined in Section 424(f) of the Code, or
the "parent corporation" of the Company, as defined in Section 424(e) of
the Code.
(19) "Restricted Stock" shall mean an Award that grants the recipient
at no cost (or entitles the recipient to acquire, for a purchase price to
be specified by the Committee, but in no event less than par value) Common
Stock subject to restrictions determined by the Committee.
(20) "SAR" shall mean an Award entitling the recipient on exercise to
receive an amount, in cash or Common Stock or in a combination thereof
(such form to be determined
A-2
by the Committee), determined in whole or in part by reference to
appreciation in the value of Common Stock.
(21) "Termination of Service" shall mean (a) with respect to an Award
granted to an Employee, the termination of the employment relationship
between the Employee and the Company and all Related Corporations; (b) with
respect to an Award granted to a Consultant, the termination of the
consulting arrangement between the Consultant and the Company and all
Related Corporations; and (c) with respect to an Award granted to a
Non-Employee Director, the cessation of the provision of services as a
director of the Company and all Related Corporations; provided, however,
that if the Grantee's status changes from Employee, Consultant or
Non-Employee Director to any other status eligible to receive Awards under
the Plan, the Committee (subject to Section 15(a)) may provide that no
Termination of Service occurs for purposes of the Plan until the Grantee's
new status with the Company and all Related Corporations terminates.
SECTION 2 -- ADMINISTRATION
The Plan shall be administered by the Committee. Each member of the
Committee, while serving as such, shall be deemed to be acting in his or her
capacity as a director or an officer of the Company.
The Committee shall have full authority, subject to the terms of the Plan,
to select the Employees, Consultants and Non-Employee Directors, to be granted
Awards under the Plan, to grant Awards on behalf of the Company, and to set the
date of grant and the other terms of such Awards in accordance with the Plan;
provided, however, that Consultants and Non-Employee Directors shall not be
eligible to receive ISOs under the Plan. The Committee may correct any defect,
supply any omission, and reconcile any inconsistency in the Plan and in any
Award granted hereunder in the manner and to the extent it deems desirable. The
Committee also shall have the authority (1) to establish such rules and
regulations, not inconsistent with the provisions of the Plan, for the proper
administration of the Plan, and to amend, modify, or rescind any such rules and
regulations, (2) to adopt modifications, amendments, procedures, sub-plans and
the like, which may be inconsistent with the provisions of the Plan, as are
necessary to comply with the laws and regulations of other countries in which
the Company operates in order to assure the viability of Awards granted under
the Plan to individuals in such other countries, and (3) to make such
determinations and interpretations under, or in connection with, the Plan, as it
deems necessary or advisable. All such rules, regulations, determinations, and
interpretations shall be binding and conclusive upon the Company, its
shareholders, and all Grantees, upon their respective legal representatives,
beneficiaries, successors, and assigns, and upon all other persons claiming
under or through any of them. Except as otherwise required by the bylaws of the
Company or by applicable law, no member of the Board or the Committee shall be
liable for any action or determination made in good faith with respect to the
Plan or any Award granted under it.
Notwithstanding the foregoing, the terms and conditions of formula NQSOs
granted to Non-Employee Directors under Section 8 are intended to be fixed in
advance. Consequently, neither the Committee nor the Board shall have
discretionary authority with respect to formula NQSOs granted pursuant to
Section 8.
A-3
SECTION 3 -- ELIGIBILITY
Employees, Non-Employee Directors and Consultants shall be eligible to
receive Awards under the Plan. However, Employees and Consultants shall not be
eligible to receive formula NQSOs under Section 8, and Non-Employee Directors
and Consultants shall not be eligible to receive ISOs. More than one Award may
be made to a Grantee under the Plan.
SECTION 4 -- STOCK
The aggregate number of shares of Common Stock that may be delivered under
the Plan is 1,250,000 shares, subject to the following limits:
(a) The aggregate number of shares of Common Stock subject to Options and
SARs granted to an Employee during any calendar year under the Plan shall not
exceed 300,000 shares; and
(b) No more than 500,000 shares of Common Stock shall be available for the
granting of Restricted Stock under the Plan.
Each limit in the preceding sentence shall be subject to the adjustment
described in Section 12. Shares issuable under the Plan may be authorized but
unissued shares or reacquired shares, or the Company may purchase shares
required for this purpose, from time to time, if it deems such purchase to be
advisable.
If any Award expires, terminates for any reason, is cancelled, is forfeited
or is settled in cash rather than Common Stock, the number of shares of Common
Stock with respect to which such Award expired, terminated, was cancelled, was
forfeited or was settled in cash, shall continue to be available for future
Awards granted under the Plan. However, if an Option or SAR is cancelled, the
shares of Common Stock covered by the cancelled Option or SAR shall be counted
against the maximum number of shares specified above for which Options and SARs
may be granted to a single Employee.
SECTION 5 -- GRANTING OF AWARDS
From time to time until the expiration or earlier suspension or
discontinuance of the Plan, the Committee may, on behalf of the Company, grant
to Employees, Consultants and Non-Employee Directors such Awards as it
determines are warranted. However:
(a) Grants of ISOs and NQSOs shall be separate and not in tandem;
(b) Consultants and Non-Employee Directors shall not be eligible to receive
ISOs under the Plan; and
(c) Grants to Non-Employee Directors under Section 8 of the Plan shall be
made as provided in such Section.
A member of the Committee shall not participate in a vote approving the
grant of an Award to himself or herself to the extent provided under the laws of
Pennsylvania governing corporate self-dealing. In making any determination as to
whether an Employee, a Consultant or a Non-Employee Director shall be granted an
Award, the type of Award to be granted, the number of shares to be covered by
the Award, and other terms of the Award, the Committee may take into account the
A-4
duties of the Employee, Consultant or Non-Employee Director, his or her present
and potential contributions to the success of the Company or a Related
Corporation, the tax implications to the Company and the Grantee, and such other
factors as the Committee may deem relevant in accomplishing the purposes of the
Plan. Moreover, the Committee may provide in an Option or an SAR that the Option
or SAR may be exercised only if certain conditions, as determined by the
Committee, are fulfilled.
SECTION 6 -- ISO ANNUAL LIMIT
The aggregate Fair Market Value of the Common Stock with respect to which
ISOs are exercisable for the first time by an Employee during any calendar year
(counting ISOs under this Plan and under any other stock option plan of the
Company or a Related Corporation) shall not exceed $100,000. If an Option
intended as an ISO is granted to an Employee and the Option may not be treated
in whole or in part as an ISO pursuant to the $100,000 limitation, the Option
shall be treated as an ISO to the extent it may be so treated under the
limitation and as an NQSO as to the remainder. For purposes of determining
whether an ISO would cause the limitation to be exceeded, ISOs shall be taken
into account in the order granted. The annual limits set forth above for ISOs
shall not apply to any other Awards.
SECTION 7 -- TERMS AND CONDITIONS OF DISCRETIONARY OPTIONS
Discretionary Options granted to Employees, Non-Employee Directors and
Consultants pursuant to this Section 7 shall include expressly or by reference
the following terms and conditions, as well as such other provisions not
inconsistent with the provisions of the Plan (and, for ISOs, the provisions of
Section 422(b) of the Code), as the Committee shall deem desirable --
(a) Number of Shares. The Option shall state the number of shares of
Common Stock to which it pertains.
(b) Price. The Option shall state the option price which shall be
determined and fixed by the Committee in its discretion but
(1) with respect to an ISO, the option price shall not be less than
100 percent (110 percent in the case of a more-than-10-percent shareholder,
as provided in subsection (h) below) of the Fair Market Value of the shares
of Common Stock subject to the Option on the date the ISO is granted, and,
(2) in no case may the option price be less than the par value per
share of Common Stock.
(c) Term. The term of each Option shall be determined by the Committee, in
its discretion; provided, however, that the term of each ISO shall be not more
than 10 years (five years in the case of a more-than-10-percent shareholder, as
discussed in subsection (h) below) from the date of grant of the ISO. Each
Option shall be subject to earlier termination as provided in subsections (e),
(f), and (g) below and in Section 14 hereof.
(d) Exercise. Options shall be exercisable in such installments, upon
fulfillment of such other conditions, and on such dates as the Committee may
specify but not earlier than six months from the date of grant. In the case of
new Options granted to a Grantee to replace options (whether
A-5
granted under the Plan or otherwise) held by the Grantee, the new Options may be
made exercisable, if so determined by the Committee, in its discretion, at the
earliest date the original Options were exercisable, but not earlier than three
months from the date of grant of the new Options. The Committee may accelerate
the exercise date of any outstanding Options, in its discretion, if it deems
such acceleration to be desirable.
Any exercisable Options may be exercised at any time up to the expiration
or termination of the Option. Exercisable Options may be exercised, in whole or
in part and from time to time, by giving written notice of exercise to the
Company at its principal office, specifying the number of shares to be purchased
and accompanied by payment in full of the aggregate Option exercise price for
such shares (except that, in the case of an exercise arrangement approved by the
Committee and described in paragraph (4) below, payment may be made as soon as
practicable after the exercise). Only full shares shall be issued under the
Plan, and any fractional share which might otherwise be issuable upon exercise
of an Option granted hereunder shall be forfeited.
The Award Agreement shall set forth, from among the following alternatives,
how the option price is to be paid --
(1) in cash or its equivalent;
(2) in shares of Common Stock previously acquired by the Grantee;
provided that (i) if such shares of Common Stock were acquired through the
exercise of an ISO and are used to pay the option price for ISOs, such
shares have been held by the Grantee for a period of not less than the
holding period described in Section 422(a)(1) of the Code on the date of
exercise, or (ii) if such shares of Common Stock were acquired through the
exercise of an NQSO and are used to pay the option price of an ISO, or if
such shares of Common Stock were acquired through the exercise of an ISO or
an NQSO and are used to pay the option price of an NQSO, such shares have
been held by the Grantee for a period of more than six months on the date
of exercise;
(3) in shares of Common Stock newly acquired by the Grantee upon
exercise of such Option (which shall constitute a disqualifying disposition
in the case of an Option which is an ISO);
(4) by delivering a properly executed notice of exercise of the Option
to the Company and a broker, with irrevocable instructions to the broker
promptly to deliver to the Company the amount of sale or loan proceeds
necessary to pay the exercise price of the Option; or
(5) in any combination of paragraphs (1), (2), (3), and (4) above.
In the event the option price is paid, in whole or in part, with
shares of Common Stock, the portion of the option price so paid shall be
equal to the aggregate Fair Market Value (determined as of the date of
exercise of the Option, rather than the date of grant) of the Common Stock
so surrendered in payment of the option price.
(e) Termination of Service for a Reason Other Than Death or Disability. If
a Grantee's Termination of Service occurs prior to the expiration date fixed for
his or her Option for any reason other than death or disability, such Option may
be exercised, to the extent of the number of shares with respect to which the
Grantee could have exercised it on the date of such Termination of Service, or
to any greater extent permitted by the Committee, by the Grantee at any time
prior to
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the earlier of (i) the expiration date specified in the Award Agreement, or (ii)
thirty days after the date of such Termination of Service (unless the Award
Agreement provides a later expiration date in the case of such a Termination).
(f) Disability. If a Grantee becomes disabled (within the meaning of
Section 22(e)(3) of the Code) prior to the expiration date fixed for his or her
Option, and the Grantee's Termination of Service occurs as a consequence of such
disability, such Option may be exercised, to the extent of the number of shares
with respect to which the Grantee could have exercised it on the date of such
Termination of Service, or to any greater extent permitted by the Committee, by
the Grantee at any time prior to the earlier of (i) the expiration date
specified in the Award Agreement, or (ii) six months after the date of such
Termination of Service (unless the Award Agreement provides a later expiration
date in the case of such a Termination). In the event of the Grantee's legal
disability, such Option may be exercised by the Grantee's legal representative.
(g) Death. If a Grantee's Termination of Service occurs as a result of
death prior to the expiration date fixed for his or her Option, or if the
Grantee dies following his or her Termination of Service but prior to the
earlier of (i) the expiration date fixed for his or her Option, or (ii) the
expiration of the period determined under subsections (e) and (f) above
(including any extension of such period provided in the Award Agreement), such
Option may be exercised, to the extent of the number of shares with respect to
which the Grantee could have exercised it on the date of his or her death, or to
any greater extent permitted by the Committee, by the Grantee's estate, personal
representative, or beneficiary who acquired the right to exercise such Option by
bequest or inheritance or by reason of the death of the Grantee. Such post-death
exercise may occur at any time prior to the earlier of (i) the expiration date
specified in the Award Agreement, or (ii) six months after the date of the
Grantee's death (unless the Award Agreement provides a later expiration date in
the case of death).
(h) Ten-Percent Shareholder. If, after applying the attribution rules of
Section 424(d) of the Code, the Grantee owns more than 10 percent of the total
combined voting power of all shares of stock of the Company or of a Related
Corporation at the time an ISO is granted to him, the option price for the ISO
shall be not less than 110 percent of the Fair Market Value of the optioned
shares of Common Stock on the date the ISO is granted, and such ISO, by its
terms, shall not be exercisable after the expiration of five years from the date
the ISO is granted. The conditions set forth in this subsection shall not apply
to NQSOs.
SECTION 8 -- FORMULA NQSOS FOR NON-EMPLOYEE DIRECTORS
(a) Granting of Formula NQSOs to Non-Employee Directors.
(1) Initial Grant. An NQSO to purchase 10,000 shares of Common Stock
(as adjusted pursuant to Section 12) automatically shall be granted to a
Non-Employee Director on the date he or she becomes a Non-Employee Director
(whether by reason of his or her election by shareholders, appointment by
the Board or expiration of the 12-month period specified in Section
1(b)(14)(B)) if:
(A) The Non-Employee Director was not a Non-Employee Director prior
to the Company's 2001 annual shareholders' meeting; and
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(B) the Non-Employee Director did not previously receive an NQSO
grant under Section 5(a) of the Urban Outfitters, Inc. 1993 Non-Employee
Directors' Non-Qualified Stock Option Plan, Section 7(a)(1) of the Urban
Outfitters, Inc. 1997 Stock Option Plan or Section 8(a)(1) of this Plan.
(2) Subsequent Grants. On the first business day immediately following
each of the dates on which an incumbent Non-Employee Director is elected or
reelected to the Board by shareholders subsequent to the Company's 2000 annual
shareholders' meeting, he or she shall automatically be granted an NQSO to
purchase 10,000 shares of Common Stock (as adjusted pursuant to Section 12),
except that in the case of the first election or reelection following the date
of the Non-Employee Director's initial election or appointment to the Board, no
grant shall be made on account of such first election or reelection unless at
least six months have elapsed since such initial election or appointment. The
grant under this Section 8(a)(2) shall be in addition to the initial grant
pursuant to Section 5(a) of the Urban Outfitters, Inc. 1993 Non-Employee
Directors' Non-Qualified Stock Option Plan, Section 7(a)(1) of the Urban
Outfitters, Inc. 1997 Stock Option Plan, or Section 8(a)(1) of this Plan.
(b) Terms and Conditions of Formula Options. Formula Options granted to
Non-Employee Directors under this Section 8 shall expressly specify that they
are NQSOs. In addition, such NQSOs shall include expressly or by reference the
following terms and conditions, as well as such other provisions not
inconsistent with the provisions of the Plan:
(1) Number of Shares. A statement of the number of shares of Common
Stock to which the NQSO pertains.
(2) Price. A statement of the NQSO exercise price, which shall be the
higher of one hundred percent (100%) of the Fair Market Value per share of
the Common Stock, or the par value thereof, on the date the NQSO is
granted.
(3) Term. Subject to earlier termination as provided in Section
8(b)(5) and Section 14 below, the term of each NQSO granted under this
Section 8 shall be ten (10) years from the date of grant.
(4) Exercise. NQSOs granted under this Section 8 shall be exercisable
on the business day immediately preceding the annual meeting of
shareholders next succeeding the date of grant of such NQSOs. Except as
otherwise provided in Section 8(b)(5), below, NQSOs shall only be
exercisable by a Non-Employee Director while he or she remains a director
of the Company. Any NQSO shares, the right to the purchase of which has
accrued, may be purchased at any time up to the expiration or termination
of the NQSO. Exercisable NQSOs may be exercised, in whole or in part, from
time to time by giving written notice of exercise to the Company at its
principal office, specifying the number of shares to be purchased and
accompanied by payment in full of the aggregate price for such shares. Only
full shares shall be issued under the Plan, and any fractional shares which
might otherwise be issuable upon exercise of an NQSO granted hereunder
shall be forfeited.
The NQSO exercise price shall be payable in any of the methods set forth in
Section 7(d)(1) (cash or equivalent), (2) (previously held shares), or (4)
(broker-financed transaction) or in any combination of such methods.
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In the event such NQSO exercise price is paid, in whole or in part, with
Common Stock, the portion of the NQSO exercise price so paid shall equal the
Fair Market Value of Common Stock so surrendered (determined in accordance with
Section 1(b)(11), but on the date of exercise rather than on the date of grant).
(5) Termination of Services as a Director. If a Non-Employee Director's
service as a director of the Company terminates prior to the expiration date
fixed for his or her NQSO under this Section 8 for any reason (such as, without
limitation, disability, death or failure to be reelected by the Company's
shareholders), such NQSO may be exercised, to the extent of the number of shares
of Common Stock with respect to which he or she could have exercised it on the
date of such termination, by the Non-Employee Director at any time prior to the
earlier of:
(A) The expiration date of such NQSO; or
(B) One year after the date of such termination of service as a
director.
If a Non-Employee Director whose service as a director of the Company
has terminated for any reason other than death shall die following his or
her termination as a director, but prior to the earlier of (A) or (B)
above, such NQSO may be exercised, to the extent of the number of shares of
Common Stock with respect to which he or she could have exercised it on the
date of his or her death at any time prior to the earlier of:
(C) The expiration date fixed for his or her NQSO; or
(D) One year after the date of death.
In the event of the Non-Employee Director's legal disability, such NQSO may
be so exercised by his or her legal representative. In the event of the
Non-Employee Director's death, such NQSO may be so exercised by the Non-Employee
Director's estate, personal representative or beneficiary who acquired the right
to exercise such NQSO by bequest or inheritance or by reason of the death of the
Non-Employee Director.
SECTION 9 -- SARS
(a) Nature of SARs. An SAR entitles the Grantee to receive, with respect
to each share of Common Stock as to which the SAR is exercised, the excess of
the share's Fair Market Value on the date of exercise over its Fair Market Value
on the date the SAR was granted. Such excess shall be paid in cash, shares of
Common Stock, or a combination thereof, as determined by the Committee.
(b) Grant of SARs. SARs may be granted in tandem with, or independently
of, Options granted under the Plan. An SAR granted in tandem with an Option that
is not an ISO may be granted either at or after the time the Option is granted.
An SAR granted in tandem with an ISO may be granted only at the time the Option
is granted.
(c) Rules Applicable to Tandem Awards. When SARs are granted in tandem
with Options, the number of SARs granted to a Grantee that shall be exercisable
during a specified period shall not exceed the number of shares of Common Stock
that the Grantee may purchase upon the exercise of the related Option during
such period. Upon the exercise of an Option, the SAR relating to the shares of
Common Stock covered by such Option will terminate. Upon the exercise of an SAR,
the related Option will terminate to the extent of an equal number of shares of
Common
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Stock. The SAR will be exercisable only at such time or times, and to the
extent, that the related Option is exercisable and will be exercisable in
accordance with the procedure required for exercise of the related Option. The
SAR will be transferable only when the related Option is transferable, and under
the same conditions. An SAR granted in tandem with an ISO may be exercised only
when the Fair Market Value of the shares of Common Stock subject to the Option
exceeds the exercise price of such Option.
(d) Exercise of Independent SARs. An SAR not granted in tandem with an
Option shall become exercisable at such time or times, and on such conditions,
as the Committee may specify in the Award Agreement. The Committee may at any
time accelerate the time at which all or any part of the SAR may be exercised.
Any exercise of an independent SAR must be in writing, signed by the proper
person, and delivered or mailed to the Company, accompanied by any other
documents required by the Committee.
(e) Termination of Service. If a Grantee's Termination of Service occurs
prior to the expiration date fixed for his or her SAR, Section 7(e), (f) or (g)
shall be applied to determine the extent to which and the period during which
the SAR may be exercised. For purposes of this Section 9(e), the term "SAR"
shall replace the term "Option" in each place such term appears in Section 7(e),
(f) and (g).
SECTION 10 -- RESTRICTED STOCK
(a) General Requirements. Restricted Stock may be issued or transferred
for consideration or for no consideration, as determined by the Committee. If
for consideration, payment may be in cash or check (acceptable to the
Committee), bank draft, or money order payable to the order of the Company.
(b) Rights as a Stockholder. Unless the Committee determines otherwise, a
Grantee who receives Restricted Stock shall have certain rights of a stockholder
with respect to the Restricted Stock, including voting and dividend rights,
subject to the restrictions described in subsection (c) below and any other
conditions imposed by the Committee at the time of grant. Unless the Committee
determines otherwise, certificates evidencing shares of Restricted Stock will
remain in the possession of the Company until such shares are free of all
restrictions under the Plan and the Grantee has satisfied any federal, state and
local tax withholding obligations applicable to such shares.
(c) Restrictions. Except as otherwise specifically provided by the Plan,
Restricted Stock may not be sold, assigned, transferred, pledged, or otherwise
encumbered or disposed of, and if the Grantee incurs a Termination of Service
for any reason, must be offered to the Company for purchase for the amount paid
for the shares of Common Stock, or forfeited to the Company if nothing was so
paid. These restrictions will lapse at such time or times, and on such
conditions, as the Committee may specify in the Award Agreement. Upon the lapse
of all restrictions, shares of Common Stock will cease to be Restricted Stock
for purposes of the Plan. The Committee may at any time accelerate the time at
which the restrictions on all or any part of the shares of Restricted Stock will
lapse.
(d) Notice of Tax Election. Any Grantee making an election under Section
83(b) of the Code for the immediate recognition of income attributable to the
award of Restricted Stock must provide a copy thereof to the Company within 10
days of the filing of such election with the Internal Revenue Service.
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SECTION 11 -- AWARD AGREEMENTS -- OTHER PROVISIONS
Awards granted under the Plan shall be evidenced by Award Agreements in
such form as the Committee shall from time to time approve, and containing such
provisions not inconsistent with the provisions of the Plan (and, for ISOs , not
inconsistent with Section 422(b) of the Code), as the Committee shall deem
advisable. The Award Agreements shall specify the type of Award granted. Each
Grantee shall enter into, and be bound by, an Award Agreement as soon as
practicable after the grant of an Award.
SECTION 12 -- ADJUSTMENT IN CASE OF CHANGES IN COMMON STOCK
The following shall be adjusted, as may be deemed appropriate by the
Committee, to reflect any stock dividend, stock split, spin-off, share
combination, or similar change in the capitalization of the Company:
(a) the limits set forth in Section 4 (regarding shares available under the
Plan, shares subject to grants to Employees in any calendar year and shares
available for Restricted Stock),
(b) the number of shares subject to a formula NQSO to be granted to a
Non-Employee Director under Section 8, and
(c) the number of shares issuable upon exercise or vesting of outstanding
Awards under the Plan (as well as the option price per share under such
outstanding Awards); provided, however, that no such adjustment shall be made to
an outstanding ISO if such adjustment would constitute a modification under
Section 424(h) of the Code, unless the Grantee consents to such adjustment. In
the event any such change in capitalization cannot be reflected in a straight
mathematical adjustment of the number of shares issuable upon the exercise or
vesting of outstanding Awards (and a straight mathematical adjustment of the
exercise price thereof), the Committee shall make such adjustments as are
appropriate to reflect most nearly such straight mathematical adjustment. Such
adjustments shall be made only as necessary to maintain the proportionate
interest of Grantees, and preserve, without exceeding, the value of Awards.
SECTION 13 -- CHANGE IN CONTROL
(a) FULL VESTING. Notwithstanding any other provision of this Plan, all
outstanding Awards shall become fully vested and exercisable upon a Change in
Control; provided, however, that this Section 13 shall not increase the extent
to which an Award is vested or exercisable if the Grantee's Termination of
Service occurs prior to the Change in Control.
(b) DEFINITIONS.
(1) For purposes of this Plan, a "Change in Control" with respect to
the Company shall mean any of the following events:
(A) a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation resulting in the
voting power of the securities (as described in clause (D) below) of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting stock
of the surviving entity) more than a majority of the combined voting
power of the securities of
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the Company (or such surviving entity) outstanding immediately after
such merger of consolidation;
(B) any sale, lease, exchange, or other transfer (in one
transaction or in a series of related transactions) of all, or
substantially all, of the assets of the Company;
(C) the dissolution and liquidation of the Company; or
(D) any person or "group" (other than a benefit plan sponsored by
either the Company or a subsidiary of the Company and other than Richard
A. Hayne), becoming after February 15, 2000 the "beneficial owner,"
directly or indirectly, of securities representing a majority of the
combined voting power of the then outstanding securities of the Company
ordinarily (and apart from the rights accruing under special
circumstances) having the right to vote in the election of directors
(calculated as provided in paragraph (d) of Rule 13d-3 in the case of
rights to acquire such securities).
(2) For purposes hereof, the terms "group" and "beneficial owner"
shall have the meanings given to them in Rule 13d-3; and Rule 13d-3 shall
mean Rule 13d-3 of the Securities and Exchange Commission promulgated under
the Exchange Act.
SECTION 14 -- CERTAIN CORPORATE TRANSACTIONS
In the event of a corporate transaction (such as, for example, a merger,
consolidation, acquisition of property or stock, separation, reorganization, or
liquidation), the surviving or successor corporation shall assume each
outstanding Award or substitute a new award of the same type for each
outstanding Award; provided, however, that, in the event of a proposed corporate
transaction, the Committee may terminate all or a portion of the outstanding
Awards, effective upon the closing of the corporate transaction, if it
determines that such termination is in the best interests of the Company. If the
Committee decides so to terminate outstanding Options and SARs, the Committee
shall give each Grantee holding an Option or SAR to be terminated not fewer than
seven days' notice prior to any such termination, and any Option or SAR which is
to be so terminated may be exercised (if and only to the extent that it is then
exercisable under the terms of the Award Agreement and Section 13) up to, and
including the date immediately preceding such termination. Further, as provided
in Sections 7(d), 9(d) and 10(c) hereof, the Committee, in its discretion, may
accelerate, in whole or in part, the date on which any or all Awards become
exercisable or vested (to the extent such Award is not fully exercisable or
vested pursuant to the Award Agreement and Section 13).
The Committee also may, in its discretion, change the terms of any
outstanding Award to reflect any such corporate transaction, provided that, in
the case of ISOs, such change would not constitute a "modification" under
Section 424(h) of the Code, unless the Grantee consents to the change.
Notwithstanding the foregoing, in the event of a corporate transaction (as
described above) in which holders of Common Stock are to receive cash,
securities or other property, and provision is not made for the continuance and
substitution or assumption of formula NQSOs granted to Non-Employee Directors
under Section 8, all such outstanding NQSOs shall terminate as of the last
business day immediately preceding the closing date of such corporate
transaction and the Company shall pay to each Non-Employee Director an amount in
cash with respect to each share
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to which a terminated NQSO pertains equal to the difference between the NQSO
exercise price and the value of the consideration to be received by the holders
of Common Stock in connection with such transaction.
SECTION 15 -- AMENDMENT OF THE PLAN
(a) IN GENERAL. The Board, pursuant to a written resolution, from time to
time may amend or suspend the Plan, and the Committee may amend any outstanding
Awards in any respect whatsoever; except that the following amendments shall
require the approval of shareholders (given in the manner set forth in
subsection (b) below) --
(1) a change in the class of employees eligible to participate in the
Plan with respect to ISOs;
(2) except as permitted under Section 12 hereof, an increase in the
maximum number of shares of Common Stock with respect to which ISOs may be
granted under the Plan;
(3) an extension of the date, under Section 16 hereof, as of which no
ISOs shall be granted hereunder;
(4) a modification of the material terms of the "performance goal,"
within the meaning of Treas. Reg. ss.1.162-27(e)(4)(vi) or any successor
thereto (to the extent compliance with Section 162(m) of the Code is
desired); and
(5) any amendment for which shareholder approval is required under the
rules of the exchange or market on which the Common Stock is listed or
traded.
No such amendment or suspension shall alter or impair any outstanding
Awards or cause the modification (within the meaning of Section 424(h) of the
Code) of an ISO, without the consent of the Grantee affected thereby.
(b) MANNER OF SHAREHOLDER APPROVAL. The approval of shareholders must
comply with all applicable provisions of the corporate charter and bylaws of the
Company, and applicable state law prescribing the method and degree of
shareholder approval required for the issuance of corporate stock or options. If
the applicable state law does not prescribe a method and degree of shareholder
approval in such case, the approval of shareholders must be effected.
(1) by a method and in a degree that would be treated as adequate
under applicable state law in the case of an action requiring shareholder
approval (i.e., an action on which shareholders would be entitled to vote
if the action were taken at a duly held shareholders' meeting); or
(2) by a majority of the votes cast (including abstentions, to the
extent abstentions are counted as voting under applicable state law), in a
separate vote at a duly held shareholders' meeting at which a quorum
representing a majority of all outstanding voting stock is, either in
person or by proxy, present and voting on the Plan.
(c) AMENDMENTS AFFECTING FORMULA AWARDS TO NON-EMPLOYEE
DIRECTORS. Notwithstanding the foregoing, no amendment to any provision of the
Plan that would affect NQSOs to be awarded to Non-Employee Directors under
Section 8 shall be made if such amendment would cause the terms and conditions
of grants made under Section 8 to fail to be fixed in advance, within the
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meaning of Securities and Exchange Commission interpretations under Section
16(b) of the Exchange Act.
SECTION 16 -- TERMINATION OF PLAN; CESSATION OF ISO GRANTS
The Board, pursuant to written resolution, may terminate the Plan at any
time and for any reason. No ISOs shall be granted hereunder after February 14,
2010, which date is within 10 years after the date the Plan was adopted by the
Board, or the date the Plan was approved by the shareholders of the Company,
whichever is earlier. Nothing contained in this Section, however, shall
terminate or affect the continued existence of rights created under Awards
granted hereunder, and outstanding on the date the Plan is terminated, which by
their terms extend beyond such date.
SECTION 17 -- SHAREHOLDER APPROVAL
This Plan shall become effective on February 15, 2000 (the date the Plan
was adopted by the Board); provided, however, that if the Plan is not approved
by the shareholders, in the manner described in Section 15(b) hereof, within 12
months before or after the date the Plan was adopted by the Board, the Plan and
all Awards granted hereunder shall be null and void and no additional Awards
shall be granted hereunder.
SECTION 18 -- MISCELLANEOUS
(a) RIGHTS. Neither the adoption of the Plan nor any action of the Board
or the Committee shall be deemed to give any individual any right to be granted
an Award, or any other right hereunder, unless and until the Committee shall
have granted such individual an Award, and then his or her rights shall be only
such as are provided in the Award Agreement. Notwithstanding any provisions of
the Plan or the Award Agreement with an Employee, the Company and any Related
Corporation shall have the right, in its discretion but subject to any
employment contract entered into with the Employee, to retire the Employee at
any time pursuant to its retirement rules or otherwise to terminate his or her
employment at any time for any reason whatsoever. A Grantee shall have no rights
as a shareholder with respect to any shares covered by his or her Award until
the issuance of a stock certificate to him or her for such shares, except as
otherwise provided under Section 10(b) (regarding Restricted Stock).
(b) INDEMNIFICATION OF BOARD AND COMMITTEE. Without limiting any other
rights of indemnification which they may have from the Company and any Related
Corporation, the members of the Board and the members of the Committee shall be
indemnified by the Company against all costs and expenses reasonably incurred by
them in connection with any claim, action, suit, or proceeding to which they or
any of them may be a party by reason of any action taken or failure to act
under, or in connection with, the Plan, or any Award granted thereunder, and
against all amounts paid by them in settlement thereof (provided such settlement
is approved by legal counsel selected by the Company) or paid by them in
satisfaction of a judgment in any such action, suit, or proceeding, except a
judgment based upon a finding of willful misconduct or recklessness on their
part. Upon the making or institution of any such claim, action, suit, or
proceeding, the Board or Committee member shall notify the Company in writing,
giving the Company an opportunity, at its own expense, to handle and defend the
same before such Board or Committee
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member undertakes to handle it on his or her own behalf. The provisions of this
Section shall not give members of the Board or the Committee greater rights than
they would have under the Company's by-laws or Pennsylvania law.
(c) TRANSFERABILITY; REGISTRATION. No ISO or Restricted Stock shall be
assignable or transferable by the Grantee other than by will or by the laws of
descent and distribution. During the lifetime of the Grantee, an ISO shall be
exercisable only by the Grantee or, in the event of the Grantee's legal
disability, by the Grantee's guardian or legal representative.
Except as provided in a Grantee's Award Agreement, such limits on
assignment, transfer and exercise shall also apply to discretionary NQSOs
granted under Section 7 and SARs granted under Section 9.
A Non-Employee Director may transfer an NQSO granted under Section 8 for no
consideration to (1) the Non-Employee Director's 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, and
sister-in-law, including adoptive relationships, and any person sharing the
Non-Employee Director's household (other than a tenant or employee) ("Permitted
Transferees"), (2) a trust in which one or more Permitted Transferees in the
aggregate have more than 50% of the beneficial interest, (3) a foundation in
which one or more Permitted Transferees (and the Non-Employee Director) in the
aggregate control the management of assets, and (4) any other entity in which
one or more Permitted Transferees (and the Non-Employee Director) in the
aggregate own more than 50% of the voting interests. Except as provided in the
preceding sentence, or by will or the laws of descent and distribution, formula
NQSOs granted under Section 8 shall not be assignable or transferable by the
Non-Employee Director, and during the lifetime of the Non-Employee Director, the
NQSO shall be exercisable only by the Non-Employee Director or by his guardian
or legal representative. Any formula NQSO transferred by a Non-Employee Director
shall not be assignable or transferable by the transferee.
If the Grantee so requests at the time of exercise of an Option or an SAR,
or at the time of grant of Restricted Stock, the certificate(s) shall be
registered in the name of the Grantee and the Grantee's spouse jointly, with
right of survivorship.
(d) LISTING AND REGISTRATION OF SHARES. Each Award shall be subject to the
requirement that, if at any time the Committee shall determine, in its
discretion, that the listing, registration, or qualification of the shares of
Common Stock covered thereby upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the granting of
such Award or the purchase of shares of Common Stock thereunder, or that action
by the Company, its shareholders, or the Grantee should be taken in order to
obtain an exemption from any such requirement or to continue any such listing,
registration, or qualification, no such Award may be exercised, in whole or in
part, and no Restricted Stock may be awarded, unless and until such listing,
registration, qualification, consent, approval, or action shall have been
effected, obtained, or taken under conditions acceptable to the Committee.
Without limiting the generality of the foregoing, each Grantee or his or her
legal representative or beneficiary may also be required to give satisfactory
assurance that such person is an eligible purchaser under applicable securities
laws, and that the shares purchased or granted pursuant to the Award shall be
for investment purposes and not with a view to distribution; certificates
representing such shares may be legended accordingly.
A-15
(e) WITHHOLDING AND USE OF SHARES TO SATISFY TAX OBLIGATIONS. The
obligation of the Company to deliver shares of Common Stock upon the exercise of
any Award or upon the vesting of Restricted Stock shall be subject to applicable
federal, state, and local tax withholding requirements.
If the exercise of any Award or the vesting of Restricted Stock is subject
to the withholding requirements of applicable federal, state or local tax law,
the Committee, in its discretion, may permit or require the Grantee to satisfy
the federal, state and/or local withholding tax, in whole or in part, by
electing to have the Company withhold shares of Common Stock (or by returning
previously acquired shares of Common Stock to the Company); provided, however,
that the Company may limit the number of shares withheld to satisfy the tax
withholding requirements with respect to any Option to the extent necessary to
avoid adverse accounting consequences. Shares of Common Stock shall be valued,
for purposes of this subsection, at their Fair Market Value (determined as of
the date the amount attributable to the exercise or vesting of the Award is
includible in income by the Grantee under Section 83 of the Code (the
"Determination Date"), rather than the date of grant). If shares of Common Stock
acquired by the exercise of an ISO are used to satisfy the withholding
requirement described above, such shares of Common Stock must have been held by
the Grantee for a period of not less than the holding period described in
Section 422(a)(1) of the Code as of the Determination Date.
The Committee shall adopt such withholding rules as it deems necessary to
carry out the provisions of this subsection.
(f) APPLICATION OF FUNDS. Any cash received in payment for shares pursuant
to an Award shall be added to the general funds of the Company. Any Common Stock
received in payment for shares shall become treasury stock.
(g) NO OBLIGATION TO EXERCISE AWARD. The granting of an Award shall impose
no obligation upon a Grantee to exercise such Award.
(h) GOVERNING LAW. The Plan shall be governed by the applicable Code
provisions to the maximum extent possible. Otherwise, the laws of the
Commonwealth of Pennsylvania shall govern the operation of, and the rights of
Grantees under, the Plan, and Awards granted thereunder.
A-16
URBAN OUTFITTERS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all prior proxies, hereby appoints Richard A.
Hayne and Stephen A Feldman, or either of them, with full power of substitution,
as the undersigned's proxies to vote at the Annual Meeting of Shareholders of
Urban Outfitters, Inc. (the "Company") called for May 23, 2000 and at any
adjournment thereof.
1. ELECTION OF DIRECTORS
/ / FOR the nominees listed below / / WITHHOLD AUTHORITY
to vote for the nominees
listed below
Nominees: Richard A. Hayne, Scott A. Belair, Harry S. Cherken, Jr., Kenneth
K. Cleeland, Joel S. Lawson III, Burton M. Sapiro.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(S),
WRITE THE NAME(S) OF SUCH NOMINEE(S) ON THE LINE BELOW.)
__________________________________________________________________________
2. APPROVAL OF THE URBAN OUTFITTERS 2000 STOCK INCENTIVE PLAN.
/ / FOR / / AGAINST / / ABSTAIN
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
(CONTINUED ON REVERSE SIDE)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2 AND FOR
PROPOSAL 3.
You are urged to sign and return
this proxy so that you may be
sure that your shares will be
voted.
Dated: __________________ , 2000
________________________________
Signature of Shareholder
________________________________
Signature of Shareholder
Please sign exactly as your name
appears hereon, date and return
promptly. When shares are held
by joint tenants, both should
sign. Executors, administrators,
trustees and other fiduciaries
should indicate their capacity
when signing.
