-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BjCJh41bDdPOyJs6DilHZLxEdtm7bhIU4+Gj8QYqcQzJWHdO5+RAFb9ZredUs6rf G5HR+C23kjgSavL2ihRgwA== 0001036050-99-001124.txt : 19990518 0001036050-99-001124.hdr.sgml : 19990518 ACCESSION NUMBER: 0001036050-99-001124 CONFORMED SUBMISSION TYPE: DEFR14A PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19990517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GLOBAL SPORTS INC CENTRAL INDEX KEY: 0000828750 STANDARD INDUSTRIAL CLASSIFICATION: RUBBER & PLASTICS FOOTWEAR [3021] IRS NUMBER: 042958132 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEFR14A SEC ACT: SEC FILE NUMBER: 000-16611 FILM NUMBER: 99628834 BUSINESS ADDRESS: STREET 1: 555 S HENDERSON ROAD SUITE B STREET 2: RTE 3 INDUSTRIAL PARK CITY: KING OF PRUSSIA STATE: PA ZIP: 19406 BUSINESS PHONE: 6103372200 MAIL ADDRESS: STREET 1: 555 S HENDERSON RD CITY: KING OF PRUSSIA STATE: PA ZIP: 19406 DEFR14A 1 REVISED DEFINITIVE PROXY STATEMENT 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 [_] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [X] Definitive Proxy Statement [_] Definitive Additional Materials [_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12 Global Sports, Inc. - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) Not Applicable - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] No fee required [_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. (1) Title of each class of securities to which transaction applies: ------------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: ------------------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): ------------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: ------------------------------------------------------------------------- (5) Total fee paid: ------------------------------------------------------------------------- [_] Fee paid previously with preliminary materials. [_] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: ------------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: ------------------------------------------------------------------------- (3) Filing Party: ------------------------------------------------------------------------- (4) Date Filed: ------------------------------------------------------------------------- [LOGO OF GLOBAL SPORT, INC.] May 19, 1999 Dear Shareholder: You are cordially invited to attend the 1999 Annual Meeting of Shareholders of Global Sports, Inc. ("Global" or the "Company") which will be held on June 9, 1999 at 10:00 a.m. (Eastern Standard Time) at the office of Global, 555 S. Henderson Road, King of Prussia, PA 19406. The official notice of the Annual Meeting together with a proxy statement and form of proxy are enclosed. Please give this information your careful attention. At the meeting, shareholders of Global are being asked to elect four directors of Global and to approve an amendment to the Company's 1996 Equity Incentive Plan to increase the number of shares of Common Stock issuable thereunder from 1,000,000 shares to 3,000,000 shares. Whether or not you expect to attend the meeting in person it is important that your shares be voted at the meeting. I urge you to specify your choices by marking the enclosed proxy and returning it promptly. Sincerely, /s/Michael G. Rubin Michael G. Rubin Chairman of the Board and Chief Executive Officer 555 S. Henderson Rd., King of Prussia, PA 19406 (610) 768-0900 Global Sports, Inc. 555 S. Henderson Road King of Prussia, PA 19406 ---------------- NOTICE OF ANNUAL MEETING OF SHAREHOLDERS to be held June 9, 1999 ---------------- TO OUR SHAREHOLDERS: Notice is hereby given that the Annual Meeting of Shareholders (the "Annual Meeting") of GLOBAL SPORTS, INC. ("Global" or the "Company") will be held on June 9, 1999 at 10:00 a.m. (Eastern Standard Time), at the office of Global, 555 S. Henderson Road, King of Prussia, PA 19406 for the following purposes: 1. To elect four directors named herein to serve for terms described in the accompanying Proxy Statement and until their successors are elected and qualified, as more fully described in the accompanying Proxy Statement; 2. To approve an amendment to the Company's 1996 Equity Incentive Plan to increase the number of shares issuable thereunder from 1,000,000 shares to 3,000,000 shares; and 3. To act upon such other business as may properly come before this meeting or any postponement or adjournment thereof. The Board of Directors is not aware of any other business to come before the Annual Meeting. The Board has fixed May 14, 1999 as the record date for the determination of shareholders entitled to vote at the Annual Meeting. Only shareholders of record at the close of business on that date will be entitled to notice of, and to vote at, the Annual Meeting. YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE URGED TO SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE; NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. By Order of the Board of Directors, /s/Steven A. Wolf Steven A. Wolf Secretary King of Prussia, Pennsylvania May 19, 1999 Global Sports, Inc. 555 S. Henderson Road King of Prussia, PA 19406 ---------------- PROXY STATEMENT ---------------- The accompanying proxy is solicited by and on behalf of the Board of Directors of Global Sports, Inc. ("Global" or the "Company") for use at the Annual Meeting of Shareholders (the "Annual Meeting") to be held on June 9, 1999 at 10:00 a.m. (Eastern Standard Time) at the office of Global, 555 S. Henderson Road, King of Prussia, PA 19406 and at any postponement or adjournment thereof. The approximate date on which this proxy statement and the accompanying form of proxy will first be sent or given to shareholders is May 19, 1999. Sending in a signed proxy will not affect the shareholder's right to attend the annual meeting and vote in person since the proxy is revocable. Any shareholder giving a proxy has the power to revoke it by, among other methods, delivering a later dated proxy or giving written notice to the Secretary of Global at any time before the proxy is exercised. The expense of the proxy solicitation will be borne by Global. In addition to solicitation by mail, proxies may be solicited in person or by telephone, telegraph or teletype by directors, officers or employees of Global and its subsidiaries without additional compensation. Upon request by brokers, dealers, banks or voting trustees, or their nominees who are record holders of the Company's common stock, par value $0.01 per share (the "Common Stock"), Global is required to pay the reasonable expenses incurred by such record holders for mailing proxy materials and annual shareholder reports to any beneficial owners of the Common Stock. A form of proxy is enclosed. If properly executed and received in time for voting, and not revoked, the enclosed proxy will be voted as indicated in accordance with the instructions thereon. If no directions to the contrary are indicated, the persons named in the enclosed proxy will vote all shares of the Common Stock for election of all nominees for director hereinafter named and for the amendment to the 1996 Equity Incentive Plan. The Company had 12,116,253 shares of Common Stock outstanding at the close of business on May 14, 1999 (the "Record Date"). In order for a quorum to be present at the Annual Meeting, a majority of the outstanding shares of the Company's Common Stock as of the close of business on the Record Date must be present in person or represented by proxy at the Annual Meeting. All such shares that are present in person or represented by proxy at the Annual Meeting will be counted in determining whether a quorum is present, including abstentions and broker non-votes. Each share of Common Stock outstanding is entitled to one vote on each matter which may be brought before the Annual Meeting. The election of directors will be determined by a plurality vote. The affirmative vote of a majority of the shares present or represented by proxy is required to approve the amendment to the 1996 Equity Incentive Plan and any other business matters properly brought before the Annual Meeting. Under the Delaware General Corporation Law, an abstention, withholding of authority to vote or broker non-vote on any proposal, other than the election of directors, will have the same legal effect as an "against" vote. 1 PRINCIPAL SHAREHOLDERS The following table sets forth, as of May 14, 1999, the beneficial ownership of the Company's Common Stock: (i) by each person known by the Company to be the beneficial owner of five percent or more of the Company's outstanding Common Stock, (ii) by each director and nominee for director of the Company, (iii) by the Company's chief executive officer and three most highly paid executive officers during fiscal 1998 (the "Named Officers"), and (iv) by the directors, director nominees and executive officers of the Company as a group. Unless otherwise specified, all persons listed below have sole voting and investment power with respect to their shares. The business address of the officers of Global is that of the Company.
Name, Position and Address Number of Shares Percentage of Beneficial Owner Beneficially Owned(1) of Class -------------------------- --------------------- ---------- Michael G. Rubin.............................. 8,039,086 66.3% Chairman of the Board and Chief Executive Officer of Global James J. Salter............................... 570,200(2) 4.7% Chief Executive Officer of Off-Price and Action Sports Division David B. Newcombe............................. 19,167(3) * Co-President and General Manager Steven A. Wolf................................ 25,625(4) * Vice President and Chief Financial Officer Kenneth J. Adelberg........................... 119,500(5) 1.0% Director Harvey Lamm................................... 80,000(6) * Director Jeffrey Rayport............................... 15,000(7) * Director All executive officers and directors as a 8,870,078 72.0% group (12 persons)...........................
- -------- (1) The securities "beneficially owned" by an individual are determined in accordance with the definition of "beneficial ownership" set forth in the regulations of the SEC. Accordingly they may include securities owned by or for, among others, the wife and/or minor children or the individual and any other relative who has the same home as such individual, as well as other securities as to which the individual has or shares voting or investment power or has the right to acquire under outstanding stock options within 60 days after the date of this table. Beneficial ownership may be disclaimed as to certain of the securities. (2) Includes options to purchase 20,000 shares of Common Stock awarded to Mr. Salter pursuant to the Company's 1996 Equity Incentive Plan which are exercisable within 60 days of the date of this table. Does not include options to purchase 80,000 shares of Common Stock which are not exercisable within 60 days of the date of this table. (3) Includes options to purchase 5,334 shares of Common Stock awarded to Mr. Newcombe pursuant to the Company's 1996 Equity Incentive Plan which are currently exercisable. Does not include options to purchase 26,332 shares of Common Stock which are not exercisable within 60 days of the date of this table. (4) Includes options to purchase 25,625 shares of Common Stock awarded to Mr. Wolf pursuant to the Company's 1996 Equity Incentive Plan, all of which are currently exercisable. Does not include options to purchase 24,375 shares of Common Stock which are not exercisable within 60 days of the date of this table. (5) Includes options to purchase 46,250 shares of Common Stock awarded to Mr. Adelberg pursuant to the Company's 1996 Equity Incentive Plan, all of which are currently exercisable. Does not include options to purchase 10,000 shares of Common Stock which are not exercisable within 60 days of the date of this table. (6) Includes options to purchase 80,000 shares of Common Stock awarded to Mr. Lamm pursuant to the Company's 1996 Equity Incentive Plan, all of which are currently exercisable. Does not include options to purchase 70,000 shares of Common Stock which are not exercisable within 60 days of the date of this table. (7) Includes options to purchase 15,000 shares of Common Stock awarded to Dr. Rayport pursuant to the Company's 1996 Equity Incentive Plan, all of which are currently exercisable. Does not include options to purchase 15,000 shares of Common Stock which are not exercisable within 60 days of the date of this table. * Less than one percent. 2 PROPOSAL I--ELECTION OF DIRECTORS The Company's Bylaws, as amended, currently provide that the number of directors shall be as established by the Board. The Board has set the number of directors at four. The following table sets forth certain information regarding the Company's nominees for election to the Board of Directors to serve for one-year terms until the 2000 Annual Meeting and until their respective successors are elected and qualified.
Position(s) Held Director Term to Name Age in the Company Since Expire ---- --- ---------------- -------- ------- Michael G. Rubin............... 26 Chairman of the Board and 1995 2000 Chief Executive Officer Kenneth J. Adelberg............ 46 Director 1995 2000 Harvey Lamm.................... 63 Director 1998 2000 Jeffrey F. Rayport............. 39 Director 1999 2000
The principal occupation of each director of the Company is set forth below. Michael G. Rubin has served as Chairman of the Board and Chief Executive Officer of the Company since July 31, 1995 and as President and Director of KPR Sports International, Inc., Apex Sports International, Inc. and MR Management, Inc. (the "KPR Companies") since their formation in 1990. Mr. Rubin received the 1995 Entrepreneur of the Year Award for the Delaware Valley Region, which is sponsored by Inc. magazine and Ernst & Young. Mr. Rubin attended Villanova University, Villanova, Pennsylvania. Kenneth J. Adelberg has served as President and Chief Executive Officer of HiFi House Group of Companies, a privately-held company based in Broomall, Pennsylvania, since 1987. Mr. Adelberg is a director and founding stockholder of US Wats, Inc., a publicly-traded company specializing in business telecommunications services, located in Bala Cynwyd, Pennsylvania, which was established in 1989. Mr. Adelberg is a founding stockholder and director of Republic Bank, Philadelphia, Pennsylvania, a publicly-traded bank which has been in operation since 1989. Mr. Adelberg holds Bachelor of Science degrees in Biophysics and Physiological Psychology from Pennsylvania State University and attended the MBA program at Drexel University, Philadelphia, Pennsylvania. Harvey Lamm is a founding partner of Subaru of America, Inc., a wholly-owned subsidiary of Fuji Heavy Industries Ltd., and served as its Chairman of the Board, Chief Executive Officer, President and Chief Operating Officer since its inception in 1968. Until its acquisition by Fuji Heavy Industries Ltd. in August 1990, Subaru of America, Inc. was the exclusive importer of Subaru brand vehicles in the United States and was a publicly traded company listed on the Nasdaq National Market. Mr. Lamm holds degrees from Pennsylvania State University and Drexel University. Jeffrey F. Rayport is an associate professor of business administration in the Service Management Interest Group at the Harvard Business School. His research focuses on the impact of new information technologies on services marketing and management strategies for information-based products and services. Dr. Rayport is also a founder and director of the Monitor Marketspace Center, a technology and e-commerce media unit based at Monitor Company, a global strategy consulting firm headquartered in Cambridge, Massachusetts. Dr. Rayport earned an A.B. from Harvard College, an M.Phil. in International Civilization at Harvard University and a Ph.D. at Harvard in Business History. THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE NOMINEES FOR DIRECTOR. 3 Board, Committees and Attendance at Meetings The Board of Directors of the Company held three meetings during the fiscal year ended December 31, 1998. During fiscal 1998, no director attended fewer than 75% of the aggregate of the total number of Board meetings and the total number of meetings held by committees of the Board of Directors on which he served. The following is a description of each of the committees of the Board of Directors of the Company. Audit Committee. The members of the Audit Committee are Messrs. Lamm and Adelberg. The Audit Committee reviews the Company's audited financial statements and makes recommendations to the Board concerning the Company's accounting practices and policies and the selection of independent accountants. The Audit Committee did not meet during the year ended December 31, 1998. Compensation Committee. The members of the Compensation Committee are Messrs. Rubin and Adelberg. The Compensation Committee is responsible for establishing salaries, bonuses and other compensation for the executive officers and administers the Company's stock option plans. The Compensation Committee did not meet during the year ended December 31, 1998. Compensation of Directors Under the Company's current policy, commencing in fiscal 1999, upon election to the Board, non-employee directors of the Company receive an option to purchase 30,000 shares of the Company's Common Stock as compensation for their services to the Company. The directors do not receive any cash compensation for their services on behalf of the Company but are reimbursed for reasonable travel and lodging expenses incurred in attending meetings of the Board of Directors and any Committee. Mr. Rubin, the only director who is also an officer of the Company, does not receive any separate fee for acting in his capacity as a director. PROPOSAL II -- AMENDMENT TO 1996 EQUITY INCENTIVE PLAN In March 1996, the Board of Directors adopted and in July 1996 the Company's shareholders approved the Company's 1996 Equity Incentive Plan (the "Incentive Plan"). The Incentive Plan originally permitted Awards to be granted for a total of 100,000 shares of the Company's Common Stock. On September 24, 1996, the Board of Directors approved an Amendment to the Incentive Plan that increased the maximum number of shares issuable under the Incentive Plan to 1,000,000 shares. This amendment was approved by the shareholders at a vote held in connection with the Company's annual shareholders meeting on December 4, 1997. Subject to approval by the Company's shareholders, the Board of Directors amended the Incentive Plan as of January 5, 1999 to increase the authorized number of shares of Common Stock issuable thereunder by 2,000,000 shares and to reserve the additional shares for issuance under the Incentive Plan, bringing the total number of shares of Common Stock issuable under the Incentive Plan to 3,000,000. Approval of the amendment to the Incentive Plan will require the affirmative vote of the holders of a majority of the outstanding shares of Common Stock present or represented at the Annual Meeting. Proxies for which no specific direction is included will be voted for the amendment to the Incentive Plan to add 2,000,000 shares of Common Stock to the pool of shares reserved for issuance thereunder. New Plan Benefits
1996 Equity Incentive Plan Number of Name and Position Units ------------------------------------ --------- Executive Group 184,000 Non-Executive Director Group 80,000 Non-Executive Officer Employee Group 253,416
For a more complete description of the principal features of the Incentive Plan, see "Stock Option Plans". THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE AMENDMENT TO THE COMPANY'S 1996 EQUITY INCENTIVE PLAN. 4 EXECUTIVE COMPENSATION Compensation Committee Report The Company's Compensation Committee of the Board of Directors is comprised of Messrs. Rubin and Adelberg. For 1998, the Board of Directors reviewed the compensation of executive officers, made decisions regarding executive compensation and administered the Company's employee stock option plans. The Company's compensation policies for executive officers are to (i) provide compensation packages to attract, motivate and retain executives, (ii) link a significant portion of compensation to financial results to reward successful performance, and (iii) provide long-term equity based compensation to further align the interests of executives with those of the shareholders and further reward success and performance. The principal components of the Company's executive compensation are base salary, incentive compensation and stock options. In determining compensation levels, the Company considers compensation packages offered by similar sized companies within the athletic footwear industry. Compensation levels for individual executive officers may be more or less than those offered by such other companies, depending on a subjective assessment of individual factors, such as the executive's position, skills, achievements, tenure with the Company and historical compensation levels. The Company has employment agreements with the following Named Officers: Michael G. Rubin, James J. Salter, David B. Newcombe and Steven A. Wolf. Pursuant to the agreements, total compensation is divided into three primary components: base salary, bonus and stock options. The award of bonuses and stock options serve as incentives for superior performance and are based upon both the performance of the executives and the Company. Compensation of the Named Officers for fiscal 1998 was determined in accordance with these employment agreements as described herein. Under the stock option plans established by the Company, stock options are periodically granted to employees at the discretion of the Board of Directors or Compensation Committee. It is contemplated that executives of the Company will be eligible to receive stock option grants, subject to individual performance and the performance of the Company as a whole. During 1998, the Company's Named Officers were granted a total of 130,000 options to purchase Common Stock at exercise prices ranging from $2.88 to $6.88 per share. Section 162(m) of the Internal Revenue Code generally denies a deduction to any publicly held company, such as the Company, for certain compensation exceeding $1,000,000 paid in any taxable year to the chief executive officer and the four other highest paid executive officers, excluding, among other things, certain performance-based compensation. The Board has not yet recommended any change to the Company's executive compensation policies and plans as a result of Section 162(m), but the Compensation Committee will continue to evaluate the impact of recently finalized tax regulations to ensure that the Company's executive compensation plans most effectively serve the interests of the Company and its shareholders. Michael G. Rubin Kenneth J. Adelberg 5 Summary Compensation Table The following table sets forth information regarding compensation paid by the Company and its subsidiaries to each Named Officer.
Long Term Annual Compensation(1) Compensation Awards ------------------------------------------- ------------------------------------ Securities Restricted Underlying Name and Fiscal Other Annual Stock Options/ All Other Principal Position Year Salary Bonus Compensation(1) Award(s) SARS (#) Compensation ------------------ ------ -------- -------- --------------- ---------- ---------- ------------ Michael G. Rubin........ 1998 $398,269 -- -- -- -- -- Chairman of the Board and 1997 297,115(2) -- -- -- -- -- Chief Executive Officer of Global 1996 593,924(2) -- -- -- -- -- James J. Salter(7)...... 1998 140,625 $100,000 -- -- 100,000(3) -- Chief Executive Officer of Off- 1997 -- -- -- -- -- -- Price and Action Sports Division 1996 -- -- -- -- -- -- David B. Newcombe(8).... 1998 130,058 -- -- -- 30,000(4) -- Co-president and 1997 -- -- -- -- -- -- General Manager-- 1996 -- -- -- -- -- -- Branded Division Steven A. Wolf.......... 1998 124,481 20,000 -- -- -- -- Vice President and Chief Financial Officer 1997 112,178 25,000 -- -- 50,000(5) -- 1996 101,563 -- -- -- 7,500(6) --
- -------- (1) Excludes perquisites and other personal benefits that do not exceed $50,000 or 10% of each officer's total salary and bonus. (2) Includes amounts paid by the KPR Companies until December 15, 1997, the date of the Company's reorganization, and paid by the Company thereafter. (3) Represents an option to purchase 100,000 shares of Common Stock granted to Mr. Salter in fiscal 1998 at an exercise price of $6.875 per share. Such option will vest at a rate of 20% per year over a five year period with the first portion vesting on May 12, 1999, the first anniversary of the date of grant. (4) Represents options to purchase 20,000 shares and 10,000 shares of Common Stock granted to Mr. Newcombe in fiscal 1998 at exercise prices of $2.88 per share and $3.20 per share, respectively. Such options will vest at a rate of 25% per year over four year periods with the first portions vesting on January 2, 1999 and October 19, 1999, the first anniversaries of the respective dates of grant. (5) Represents an option to purchase 32,500 shares of Common Stock granted to Mr. Wolf in fiscal 1997 at an exercise price of $3.20 per share and options to purchase 7,500 shares and 10,000 shares of Common Stock granted to Mr. Wolf in prior periods which were repriced from $4.00 and $9.375, respectively, to $3.20 in fiscal 1997. Such options vest at a rate of 20%, 20% and 33 1/3%, respectively, over five, five and three year periods. (6) Represents an option to purchase 7,500 shares of Common Stock granted to Mr. Wolf in fiscal 1996 at an exercise price of $4.00 per share. Such option was subsequently repriced to $3.20 in fiscal 1997. (7) Mr. Salter joined the Company on May 12, 1998. (8) Mr. Newcombe joined the Company on January 2, 1998. 6 Stock Option Plans 1996 Equity Incentive Plan. Plan Summary. The purposes of the Incentive Plan are to attract and retain key employees and certain other persons who are in a position to make significant contributions to the success of the Company, to reward these employees and other persons for their contributions, to provide additional incentive to these employees and other persons to continue making similar contributions and to further align the interests of these employees and other persons with those of the Company's shareholders. To achieve these purposes, the Incentive Plan permits grants of incentive stock options ("ISO's"), options not intended to qualify as incentive stock options ("Non-ISO's"), stock appreciation rights ("SAR's"), restricted and unrestricted stock awards, performance awards, loans, and supplemental cash awards and combinations of the foregoing (all referred to as "Awards"). Shares issuable under Awards that terminate unexercised, shares issuable under Awards that are payable in stock or cash but are paid in cash and shares issued but later forfeited will be available for future Awards under the Incentive Plan. All current and future employees of the Company, and other persons who, in the opinion of the Board of Directors, are in a position to make significant contributions to the success of the Company, such as consultants and non- employee directors, are eligible to receive Awards under the Incentive Plan. The Incentive Plan is administered by the Board of Directors, which determines, among other things and subject to certain conditions, the persons eligible to receive Awards, the persons who actually receive Awards, the type of each Award, the number of shares of Common Stock subject to each Award, the date of grant, exercise schedule, vesting schedule and other terms and conditions of each Award, whether to accelerate the exercise or vesting schedule or waive any other terms or conditions of each Award, whether to amend or cancel an Award and the form of any instrument used under the Incentive Plan. The Board of Directors has the right to adopt rules for the administration of the Incentive Plan, settle all controversies regarding the Incentive Plan or any Award, and construe and correct defects and omissions in the Incentive Plan or any Award. The Incentive Plan may be amended, suspended or terminated by the Board of Directors, subject to certain conditions, provided that shareholder approval will be required whenever necessary for the Incentive Plan to continue to satisfy the requirements of certain securities and tax laws, rules and regulations. Recipients of stock options under the Incentive Plan will have the right to purchase shares of Common Stock at an exercise price, during a period of time and on such other terms and conditions as are determined by the Board of Directors. For ISO's, the recipient must be an employee, the exercise price must be at least 100% (110% if issued to a 10% or greater shareholder of the Company) of the fair market value of the Company's Common Stock on the date of grant and the term cannot exceed ten years (five years if issued to a 10% or greater shareholder of the Company) from date of grant. If permitted by the Board of Directors and subject to certain conditions, an option exercise price may be paid by delivery of shares of the Company's Common Stock that have been outstanding, a promissory note, a broker's undertaking to promptly deliver the necessary funds or by a combination of those methods. If permitted by the Board of Directors, options (other than those granted in tandem with SAR's) may be settled by the Company paying to the recipient, in cash or shares of Common Stock (valued at the then fair market value of the Company's Common Stock), an amount equal to such fair market value minus the exercise price of the option shares. SAR's may be granted under the Incentive Plan either alone or in tandem with stock options. Generally, recipients of SAR's are entitled to receive upon exercise, cash or shares of Common Stock (valued at the then 7 fair market value of the Company's Common Stock) equal to such fair market value on the date of exercise minus such fair market value on the date of grant of the shares subject to the SAR, although certain other measurements also may be used. A SAR granted in tandem with a stock option is exercisable only if and to the extent that the option is exercised. The Incentive Plan provides for restricted and unrestricted stock awards. Stock awards allow the recipient to acquire shares of the Company's Common Stock for their par value or any higher price determined by the Board of Directors. In the case of restricted stock awards, the shares acquired are subject to a vesting schedule and other possible conditions determined by the Board of Directors. The Incentive Plan provides for performance awards entitling the recipient to receive stock options, stock awards or other types of Awards conditional upon achieving performance goals determined by the Board of Directors. Performance goals may involve overall corporate performance, operating group or business unit performance, personal performance or any other category of performance determined by the Board of Directors. Financial performance may be measured by revenue, operating income, net income, earnings per share, Common Stock price, price-earnings multiple or other financial factors determined by the Board of Directors. Under the Incentive Plan, loans or supplemental cash awards may be granted to recipients of Awards to help defray taxes due as a result of the Awards. The terms and conditions of loans and supplemental cash awards, including the interest rate, which may be zero, and whether any loan will be forgiven, are determined by the Board of Directors. Except as otherwise agreed by the employee and the Company, upon termination of a recipient's employment or other relationship with the Company, (i) stock options and SAR's remain exercisable for a period of three months (one year if termination is due to death or disability) to the extent that they were exercisable at the time of termination and (ii) unvested shares under outstanding restricted stock awards vest immediately, except in the case of a voluntary resignation or termination for cause (as defined in the Incentive Plan). Stock options, SAR's and other Awards that are not exercisable at the time of termination automatically terminate, and payments or benefits under deferred stock awards, performance awards and supplemental cash awards that are not irrevocably due at the time of termination are forfeited. Summary of Federal Income Tax Consequences. This discussion, which is based upon federal income tax law as in effect on December 31, 1998, generally summarizes certain federal income tax consequences associated with the Incentive Plan. The tax consequences to executive officers may be different from those summarized below. No taxable income is realized upon the grant of a stock option, nor upon the exercise of an ISO except to the extent that the exercise may result in alternative minimum tax liability. Upon the exercise of a non-qualified option, the recipient realizes ordinary income equal to the fair market value on the date of exercise minus the exercise price of the option shares. If restricted shares of the Company's common stock are used to settle a stock option, however, then the realization of income may be deferred. Upon a disposition of shares acquired by exercise of a stock option, the gain or loss generally constitutes a capital gain or loss. In the case of a disposition of ISO shares within one year after the date of exercise or within two years after the date of grant, the difference between the fair market value on the date of exercise and the exercise price constitutes ordinary income, and any additional gain or loss above or below the fair market value on the date of exercise constitutes a capital gain or loss. Upon the grant of an unrestricted stock award, the recipient realizes ordinary income equal to the fair market value on the date of grant minus the price paid for the shares awarded. A recipient of a restricted stock award realizes ordinary income only as of and when the shares vest. The ordinary income realized on each vesting or transfer date equals the fair market value on that date less the price paid for the shares. A recipient of a restricted stock award may, however, choose or be required by the terms of the award to elect under Section 83(b) of the Code to have the ordinary income associated with all of the restricted shares realized and measured on the date of grant. A recipient who makes such an election and later forfeits restricted shares may not claim a loss for tax 8 purposes. The tax consequences of a performance award depend upon the nature of the underlying Award earned if and when the performance goals are achieved. Generally, loans made under the Incentive Plan do not result in taxable income to the recipient. If the interest rate is lower than certain rates specified under the Code, however, then ordinary income may be imputed to the recipient. Forgiveness of all or part of a loan also results in ordinary income to the recipient. The recipient of a supplemental cash award realizes ordinary income equal to the amount received. Generally, whenever a recipient realizes ordinary income, a corresponding deduction is available to the Company. Under Section 162(m) of the Code, however, the Company will be denied a deduction for certain compensation exceeding $1,000,000 paid to its chief executive officer and four other highest paid executive officers, excluding (among other things) certain performance-based compensation (see Report of the Compensation Committee). Other Stock Option Plans In addition to the 1996 Equity Incentive Plan, which is discussed above, the Company has adopted the following seven separate stock option plans (the "Plans"): the 1987 Stock Option Plan, the 1988 Stock Option Plan, the 1990 Stock Option Plan, the 1992 Stock Option Plan, the 1993 Stock Option Plan, the 1995 Stock Option Plan, and the 1995 Non-Employee Directors' Stock Option Plan. The following terms and conditions are virtually identical for each of the Plans, except for the 1995 Non-Employee Directors' Stock Option Plan which is separately summarized below. Pursuant to the Plans, options originally could have been granted to purchase 31,321, 17,500, 37,500, 43,750, 45,000, 75,000 and 12,500 shares of Common Stock, respectively. Although no options currently may be granted by the Company under the 1987 Stock Option Plan, the 1988 Stock Option Plan or the 1990 Stock Option Plan, these Plans remain in effect as to unexercised options granted thereunder. Shares available for issuance under the remaining Plans are 126, 51, 8,333 and 10,000, respectively. Options under the Plans may be granted as incentive stock options intended to qualify under Section 422 of the Code or as options not intended to so qualify. In the case of both incentive stock options and non-qualified stock options, the option price must be equal to at least 100% of the fair market value of the Company's Common Stock on the date of grant. There is no limit on the number of shares for which options may be granted to any single employee under a Plan, except that incentive stock options first exercisable by a recipient in any one year under a Plan may not exceed $100,000 in value (determined at the time of grant). In addition, an incentive option granted to any person who owns 10% or more of the shares of voting stock of Global must have had an option price of not less than 110% of the fair market value of the shares at the time of grant and the option must expire not more than five years after its grant. Payment of the option exercise price may be made in cash, shares of Common Stock or a combination of cash and Common Stock. Except with respect to the 1995 Stock Option Plan, all officers, directors and key employees of the Company or any current or future parent or subsidiary of the Company are eligible to receive options under the Plans. Under the 1995 Stock Option Plan, non-employee members of the Board of Directors of the Company are not eligible to receive options. The Plans are administered by the Board of Directors which selects the optionee, determines the number of shares subject to each option and prescribes other terms and conditions of each option. 1995 Directors' Plan On September 19, 1995, the Board of Directors adopted, and on November 15, 1995, the shareholders approved, the 1995 Non-Employee Directors' Stock Option Plan (the "Directors' Plan"). Pursuant to the Directors' Plan, options originally could be granted with respect to an aggregate of 12,500 shares of Common Stock. Effective December 31, 1997, the Board of Directors terminated the Directors' Plan, which remains in effect only as to unexercised options granted thereunder. Options granted under the Directors' Plan are nonstatutory stock options which do not qualify under Section 422 of the Code. Only non-employee directors of Global or any subsidiary of Global ("Non-Employee Director") are eligible to participate in the Directors' Plan. 9 Grants of stock options under the Directors' Plan were discretionary and all questions of interpretation of the Directors' Plan are determined by the Executive Committee of the Board of Directors. The Directors' Plan provided that commencing January 1, 1996 and annually on January 1 of each year thereafter, an option to purchase 1,250 shares of Global Common Stock was to be granted to each Non-Employee Director. The option exercise price for each option granted under the Directors' Plan was the fair market value on the date the option was granted. All options granted under the Directors' Plan vest at the rate of 25% per calendar quarter after the date of grant (or earlier in event of the death or disability of the Non-Employee Director or sale of Global). Upon departure from the Board of Directors by reason of death or disability, all options held by a Non-Employee Director may be exercised by him or her or by his or her executor or administrator, or by the person or persons to whom the option is transferred by will or the applicable laws of descent and distribution, only during the one-year period after such departure. If a Non-Employee Directors' service with Global terminates for any other reason, all options held by the Non-Employee Director that are not then exercisable will terminate and options that are exercisable on the date of termination will continue to be exercisable for the original option exercise period. Upon sale of Global, all options held by Non-Employee Directors will terminate. In all other events, options granted under the Directors' Plan remain exercisable until the fifth anniversary of the date of grant. No option may be transferred other than by will or by the laws of descent and distribution. Option Grants and Exercises The following table sets forth information regarding options to purchase shares of Common Stock exercised by the Named Officers during fiscal 1998 under the Company's stock option plans and the values of options held by such individuals at fiscal year end. AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION/SAR VALUES
Number of Securities Value of Unexercised Underlying Unexercised In-the-Money Options/ SARs at Options/SARs at Fiscal Year End Fiscal Year End Shares Acquired Value Exercisable/ Exercisable/ Name on Exercise(#) Realized($) Unexercisable Unexercisable(1) ---- --------------- ----------- ---------------------- -------------------- Michael G. Rubin........ -- -- -- -- Chairman of the Board and Chief Executive Officer of Global James J. Salter......... -- -- --/100,000 --/$100,000(2) Chief Executive Officer of Off-Price and Action Sports Division David B. Newcombe....... -- -- --/ 31,666 --/$150,440(3) Co-president and General Manager--Branded Division Steven A. Wolf.......... -- -- 25,625/ 24,375 $119,796/$113,953(4) Vice President and Chief Financial Officer
- -------- (1) Represents the aggregate market value (market price of the Common Stock less the exercise price) of the options granted based upon the closing sales price per share of $7.875 on December 31, 1998. (2) The exercise price of an option to purchase 100,000 shares held by Mr. Salter is $6.875 per share. Such option vests at a rate of 20% of the initial award per year over a five year period commencing on May 12, 1999. (3) The exercise prices of options to purchase 20,000 shares and 10,000 shares held by Mr. Newcombe are $2.88 per share and $3.20 per share, respectively. Such options vest at a rate of 25% and 20%, respectively, of the initial awards per year over four and five year periods commencing on January 2, 1999, and October 19, 1999, respectively. (4) The exercise price of options to purchase 32,500 shares, 7,500 shares and 10,000 shares held by Mr. Wolf are $3.20 per share. Such options vest at rates of 20%, 20% and 33 1/3%, respectively, of the initial awards per year over five, five and three year periods commencing on December 15, 1998. 10 The following table sets forth information regarding options to purchase shares of Common Stock granted to the Named Officers during fiscal 1998. No SAR's were granted during fiscal 1998. OPTION/SAR GRANTS IN LAST FISCAL YEAR INDIVIDUAL GRANTS
Potential Realized Value at Number of % of Total Assumed Annual Rates of Securities Options/SARs Exercise Stock Price Appreciation for Underlying Granted to or Base Option Term Options/SARs Employees in Price Expiration ------------------------------ Name Granted (#) Fiscal Year ($/sh) Date 5% ($) 10% ($) ---- ------------ ------------ -------- ---------- 0% ($) --------- ----------- Michael G. Rubin....... -- -- -- -- -- -- -- Chairman of the Board and Chief Executive Officer of Global James J. Salter........ 100,000(1) 14.6% $6.875 5/13/08 -- $ 432,365 $ 1,095,697 Chief Executive Officer of Off-Price and Action Sports Division David B. Newcombe...... 20,000(2) 2.9% $2.88 1/02/08 -- $ 35,553 $90,731 Co-president and General Manager-- Branded Division 10,000(3) 1.5% $3.20 10/19/08 $13,000 $41,300 $84,718 Steven A. Wolf......... -- -- -- -- -- -- -- Vice President and Chief Financial Officer
- -------- (1) Such options vest at a rate of 20% of the initial award per year over a five year period commencing May 12, 1999. (2) Such options vest at a rate of 25% of the initial award per year over a four year period commencing January 2, 1999. (3) Such options vest at a rate of 20% of the initial award per year over a five year period commencing October 19, 1999. Employment Agreements Michael G. Rubin. On September 25, 1996, the Company entered into an agreement with Mr. Rubin for an initial term of five years commencing on December 15, 1997, subject to automatic annual extensions, to serve as the Company's Chairman and Chief Executive Officer. Pursuant to the terms of the employment agreement, Mr. Rubin is entitled to receive (i) an annual base salary of $450,000 during the fiscal year ending December 31, 1999, increasing by $50,800 effective January 1, 2000 and $49,280 effective January 1, 2001, (ii) an annual bonus based upon the achievements of Mr. Rubin and the results of operations of the Company, (iii) other benefits similar to those provided to Global's other officers. The agreement was entered into in anticipation of the Company completing a reorganization on or about January 1, 1997, which reorganization did not occur until December 15, 1997. The terms of the agreement specified that in the event that the reorganization did not occur prior to June 30, 1997, the agreement would become null and void. On the date of the reorganization, the employment agreement was amended such that the terms of the original agreement were adopted. Mr. Rubin's employment agreement may be terminated by Global with cause, which is defined to include, among other things, the willful failure or refusal by Mr. Rubin to comply with explicit directions of the Board of Directors or Executive Committee or to render the services required by the employment agreement, willful breach or habitual neglect in the performance of his duties, conviction of a felony or fraud or embezzlement involving assets of Global. In the event of termination by Global for any other reason, Mr. Rubin will be entitled to receive any unpaid salary and benefits through the date of termination. Under the employment agreement, for a period of one year following his termination, Mr. Rubin is prohibited from engaging in the planning, research, development, production, manufacturing, marketing, sales or distribution of athletic footwear, rugged outdoor footwear, sportswear, licensed products, related products, equipment or services or any other line of business engaged in or under demonstrable development by the Company. In addition, Mr. Rubin is prohibited from 11 enticing, inducing or encouraging other employees of the Company to engage in any other activity which done by them would violate any provision of the contract. James J. Salter. On May 12, 1998, the Company entered into an employment agreement with James J. Salter, Chief Executive Officer of the Company's Off- Price and Action Sports Division, for an initial term of four years, subject to automatic annual extensions after the initial term. Mr. Salter's compensation is comprised of the following: (i) an annual base salary of $315,000 during the first year of the agreement increasing by not less than 5% each following year, (ii) stock option grants, (iii) incentive compensation of up to $100,000 based upon the sales and profit levels of the Company's Off- Price Division, and (iv) other benefits similar to those provided to Global's other officers. David B. Newcombe. On January 1, 1998, the Company entered into an employment agreement with David B. Newcombe, Co-president and General Manager--Branded Division, for an initial term of four years, subject to automatic annual extensions after the initial term. Mr. Newcombe's compensation is comprised of the following: (i) an annual base salary of $150,000 during the fiscal year ending December 31, 1999 increasing by $12,500 effective January 1, 2000, (ii) stock option grants, (iii) incentive compensation up to 40% of Mr. Newcombe's base salary based upon the achievements of Mr. Newcombe and the results of operations of the Company, and (iv) other benefits similar to those provided to Global's other officers. Steven A. Wolf. On August 1, 1995, the Company entered into an employment agreement with Steven A. Wolf, Vice President and Chief Financial Officer of Global, for an initial term of three years, subject to automatic annual extensions after the initial term. Mr. Wolf's compensation is comprised of the following: (i) an annual base salary of $137,500 during the fiscal year ending December 31, 1999 increasing by $12,500 effective January 1, 2000; $5,000 effective January 1, 2001 and $5,000 effective January 1, 2002, (ii) stock option grants, (iii) incentive compensation up to 30% of Mr. Wolf's base salary based upon the achievements of Mr. Wolf and the results of operations of the Company, and (iv) other benefits similar to those provided to Global's other officers. Each of Mr. Salter's, Mr. Wolf's and Mr. Newcombe's employment agreements may be terminated by Global with cause, which is defined the same as in Mr. Rubin's agreement. In the event of termination by Global for any other reason, they would also be entitled to receive any unpaid salary and benefits through their respective dates of termination. All of their employment agreements contain three year restrictive covenants similar to the one in Mr. Rubin's agreement. 12 Stock Performance Graph The following graph shows a comparison of the cumulative total return for the Company's Common Stock, the NASDAQ Stock Market and the Peer Group Index (defined below), assuming an investment of $100 in each on January 1, 1994, and the reinvestment of all dividends. The data points used for the performance graph are listed below. The Peer Group Index reflects the performance of the following publicly traded companies in industries similar to that of the Company: K-Swiss Inc., Rocky Shoes & Boots, Inc., Saucony, Inc., The Timberland Company and Wolverine World Wide, Inc. [Graph appears here]
12/31/93 12/31/94 12/31//95 12/31/96 12/31/97 12/31/98 Performance Graph Data Points -------- -------- --------- -------- -------- -------- Global.................. $100.00 105.88 94.12 107.94 62.06 170.10 NASDAQ.................. $100.00 65.65 81.48 122.70 162.65 116.27 Peer Group Index........ $100.00 104.99 136.18 169.23 207.00 291.96
13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The Company does not have any formal policy concerning the direct or indirect pecuniary interest of any of its officers, directors, security holders or affiliates in any investment to be acquired or disposed of by the Company or in any transaction to which the Company is a party or has an interest. The Company will not enter into any such transactions unless approved by a majority of the entire Board of Directors, not including any interested director. The Company's main executive offices and warehouse are located in King of Prussia, Pennsylvania in a 75,000 square foot facility leased from Mr. Rubin. Pursuant to the lease, the Company pays approximately $29,000 per month, plus maintenance and utilities, for use of these facilities. Payments by the Company to Mr. Rubin under the lease totalled $349,008 in fiscal 1998. The lease expires on September 30, 2009. As of December 31, 1998, the Company owed Mr. Rubin $1,829,935, including accrued interest, in connection with a loan by Mr. Rubin to the Company. Interest accrues on the loan at the Company's choice of prime plus 1/4% or LIBOR (Adjusted Eurodollar Rate) plus two hundred seventy-five basis points. The loan is subordinated to the Company's line of credit from its principal lending bank. SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Exchange Act ("Section 16(a)") requires the Company's directors, executive officers, and persons who own more than 10% of a registered class of the Company's equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Officers, directors and greater than 10% shareholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file. To the Company's knowledge, based solely on a review of the copies of such reports furnished to the Company and written representations that no other reports were required, during the fiscal year ended December 31, 1998 all Section 16(a) filing requirements applicable to its officers, directors and greater than 10% beneficial owners were complied with, except that none of such officers, directors or greater than 10% beneficial owners, other than Mr. Rubin, filed a Form 3 or Form 5. SHAREHOLDER PROPOSALS Pursuant to recent amendments to the proxy rules under the Exchange Act, the Company's shareholders are notified that the deadline for providing the Company timely notice of any shareholder proposal to be submitted outside of the Rule 14a-8 process for consideration at the Company's 2000 Annual Meeting of Shareholders (the "2000 Meeting") will be March 19, 2000. As to all such matters which the Company does not have notice on or prior to March 19, 2000, discretionary authority shall be granted to the persons designated in the Company's proxy related to the 2000 Meeting to vote on such proposal. This change in procedure does not affect the Rule 14a-8 requirements applicable to inclusion of shareholder proposals in the Company's proxy materials related to the 2000 Meeting. A shareholder proposal regarding the 2000 Meeting must be submitted to the Company at its office located at 555 S. Henderson Road, King of Prussia, Pennsylvania, 19406, by January 3, 2000 to receive consideration for inclusion in the Company's 2000 proxy materials. Any such proposal must also comply with the proxy rules under the Exchange Act, including Rule 14a-8. INDEPENDENT PUBLIC ACCOUNTANTS Based upon the recommendation of the Audit Committee, the Board of Directors has selected Deloitte & Touche LLP to be the Company's independent certified public accountants for fiscal 1999. A representative of 14 Deloitte & Touche LLP is expected to be present at the Annual Meeting to have the opportunity to make a statement if he or she desires to do so and to be available to respond to appropriate questions. OTHER MATTERS As of the date of this proxy statement, the Company knows of no other business that will be presented for consideration at the Annual Meeting (other than procedural matters). However, the enclosed proxy confers discretionary authority to vote with respect to any and all of the following matters that may come before the meeting: (i) matters that the Company's Board of Directors does not know, a reasonable time before proxy solicitation, are to be presented for approval at the meeting; (ii) approval of the minutes of a prior meeting of shareholders, if such approval does not constitute ratification of the action at the meeting; (iii) the election of any person to any office for which a bona fide nominee is unable to serve or for good cause will not serve; (iv) any proposal omitted from this Proxy Statement and the form of proxy pursuant to Rules 14a-8 or 14a-9 under the Securities Exchange Act of 1934, as amended; and (v) matters incident to the conduct of the meeting. If any such matters come before the meeting, the proxy agents named in the accompanying proxy card will vote in accordance with their judgment. ANNUAL REPORT This Proxy Statement is accompanied by the Annual Report to Shareholders for the year ended December 31, 1998 (the "Annual Report"). The Annual Report contains the Company's audited financial statements and "Management's Discussion and Analysis of Financial Condition and Results of Operations." EACH PERSON SOLICITED HEREUNDER CAN OBTAIN A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998 REQUIRED TO BE FILED WITH THE SEC WITHOUT CHARGE, EXCEPT FOR EXHIBITS TO THE REPORT, BY SENDING A WRITTEN REQUEST THEREFOR TO: Steven A. Wolf Vice President, Chief Financial Officer and Secretary 555 S. Henderson Road King of Prussia, PA 19406 By Order of the Board of Directors, /s/Steven A. Wolf Steven A. Wolf, Secretary 15 GLOBAL SPORTS, INC. 1999 Annual Meeting of Shareholders -- June 9, 1999 SOLICITED ON BEHALF OF THE COMPANY AND APPROVED BY THE BOARD OF DIRECTORS The undersigned hereby appoints Steven A. Wolf and Arthur Carver to act as attorneys and proxies for the undersigned, with full powers of substitution, to appear at the Annual Meeting of Shareholders of Global Sports, Inc. (the "Company") to be held on the 9th day of June, 1999 at the office of the Company, 555 S. Henderson Road, King of Prussia, Pennsylvania 19406 and at any postponement or adjournment thereof, and to vote all of the shares of the Company that the undersigned is entitled to vote, with all the powers and authority the undersigned would possess if personally present. The undersigned hereby directs that this proxy be voted as follows: THE PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE AFOREMENTIONED NOMINEES AS DIRECTORS. A MAJORITY OF THE PROXY AGENTS PRESENT AND ACTING IN PERSON OR BY THEIR SUBSTITUTES (OR IF ONLY ONE IS PRESENT AND ACTING, THEN THAT ONE) MAY EXERCISE ALL THE POWERS CONFERRED HEREBY. DISCRETIONARY AUTHORITY IS CONFERRED HEREBY AS TO CERTAIN MATTERS DESCRIBED IN THE COMPANY'S PROXY STATEMENT. Should the undersigned be present and choose to vote at the Meeting or at any adjournments or postponements thereof, and after notification to the Secretary of the Company at the Meeting of the shareholder's decision to terminate this proxy, then the power of such attorneys or proxies shall be deemed terminated and of no further force and effect. This proxy may also be revoked by filing a written notice of revocation with the Secretary of the Company or by duly executing a proxy bearing a later date. Receipt of the Company's 1998 Annual Report to Shareholders and the Notice of the 1999 Annual Meeting and Proxy Statement relating thereto is hereby acknowledged. PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE. (Continued and to be SIGNED on Reverse Side) X Please mark your votes as in this example using dark ink only.
FOR THE WITHHOLD AUTHORITY TO NOMINEES VOTE FOR ALL THE LISTED BELOW NOMINEES LISTED BELOW FOR AGAINST ABSTAIN 1. Election of The Board of Directors 2. The approval of an Directors: [ ] [ ] recommends a vote "FOR" amendment to the [ ] [ ] [ ] the election of the Company's 1996 nominees listed below. Equity Incentive Plan to increase the number of shares of Common Stock issuable thereunder from 1,000,000 shares to 3,000,000 shares. Nominees: For the election of Michael G. Rubin, Kenneth J. Adelberg, Harvey Lamm and Jeffrey F. Rayport to serve as directors for one-year terms. (Instruction: To withhold authority to vote for any individual nominee, write that nominee's name in the space provided below. _______________________________________________________ _________________________________________________ Date: ______________ , 1999 (Signature(s) of Shareholder(s)) (Please date this Proxy) Please sign exactly as your name(s) appear(s) to the left. When signing as attorney, executor, administrator, trustee or guardian, please give your full title. If shares are held jointly, each holder should sign.
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