-----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, SS/Bmrhpsqp6+jZd+DgThyNBIQSXhAOuiU9Edwc8Vomtzo15+SoSd5k0XH79dIpz hM+9iRvjtv6a0fmPz3Hyog== 0000898430-97-001582.txt : 19970418 0000898430-97-001582.hdr.sgml : 19970418 ACCESSION NUMBER: 0000898430-97-001582 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970522 FILED AS OF DATE: 19970417 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: K SWISS INC CENTRAL INDEX KEY: 0000862480 STANDARD INDUSTRIAL CLASSIFICATION: FOOTWEAR, (NO RUBBER) [3140] IRS NUMBER: 954265988 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-18490 FILM NUMBER: 97582890 BUSINESS ADDRESS: STREET 1: 20664 BAHAMA ST CITY: CATSWORTH STATE: CA ZIP: 91311 BUSINESS PHONE: 8189983388 MAIL ADDRESS: STREET 1: 20664 BAHAMA ST CITY: CATSWORTH STATE: CA ZIP: 91311 DEF 14A 1 DEFINITIVE NOTICE & PROXY ================================================================================ 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 Section 240.14a-11(c) or Section 240.14a-12 K-Swiss Inc. - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) - -------------------------------------------------------------------------------- (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: ------------------------------------------------------------------------- Notes: [LOGO OF K.SWISS INC.] 20664 BAHAMA STREET CHATSWORTH, CALIFORNIA 91311 ---------------- NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 22, 1997 ---------------- To the Stockholders of K.Swiss Inc.: The Annual Meeting of Stockholders of K.Swiss Inc. (the "Company") will be held at the K.Swiss(R) Corporate Office, 20664 Bahama Street, Chatsworth, California 91311 on Thursday, May 22, 1997 at 10:00 a.m., Los Angeles time. The purpose of the Annual Meeting is to consider and vote upon the following matters, as more fully described in the accompanying Proxy Statement: (1) For holders of Class A Common Stock to elect two directors, and for holders of Class B Common Stock to elect five directors, in each case to serve one-year terms ending in 1998, or until their successors are elected and qualified. (2) To transact such other business as may properly come before the meeting and any adjournment or postponement thereof. The Board of Directors has fixed the close of business on April 14, 1997 as the record date for the determination of stockholders entitled to receive notice of and to vote at the Annual Meeting and any adjournment or postponement thereof. In order to constitute a quorum for the conduct of business at the Annual Meeting, holders of a majority in voting interest of the Company's outstanding Common Stock must be present in person or be represented by proxy. All stockholders are cordially invited to attend the meeting in person. However, to assure your representation at the meeting, you are requested to mark, date, sign and return the enclosed proxy card as promptly as possible in the envelope provided. Stockholders attending the meeting may vote in person even if they have returned a proxy. By Order of the Board of Directors /s/ Steven Nichols Steven Nichols Chairman of the Board and President Chatsworth, California April 18, 1997 K.SWISS INC. 20664 BAHAMA STREET CHATSWORTH, CALIFORNIA 91311 ---------------- PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS MAY 22, 1997 ---------------- GENERAL INFORMATION ON THE MEETING This Proxy Statement is being mailed on or about April 18, 1997 in connection with the solicitation of proxies by and on behalf of the Board of Directors of K.Swiss Inc., a Delaware corporation ("K.Swiss" or the "Company"), for use at the Annual Meeting of Stockholders of the Company, which is to be held on Thursday, May 22, 1997 at 10:00 a.m. at the K.Swiss(R) Corporate Office, 20664 Bahama Street, Chatsworth, California 91311, and any adjournment or postponement thereof. The entire cost of soliciting proxies will be borne by the Company, including expenses in connection with preparing and mailing of proxy solicitation materials. In addition to the use of mails, proxies may be solicited by certain officers, directors and regular employees of the Company, without extra compensation, by telephone, telegraph, fax or personal interview. Although there is no formal agreement to do so, the Company will reimburse brokerage houses and other custodians, nominees and fiduciaries for reasonable expenses incurred in sending proxies and proxy material to the beneficial owners of the Company's stock. RECORD DATE AND VOTING Only stockholders of record at the close of business on April 14, 1997 are entitled to notice of and to vote at the meeting and at any adjournment or postponement thereof. As of April 14, 1997, 3,533,018 shares of Class A Common Stock and 2,495,572 shares of Class B Common Stock were outstanding, all of which shares are entitled to be voted at the meeting. Stockholders are entitled to one vote for each share of Class A Common Stock held of record, and ten votes for each share of Class B Common Stock held of record. At the meeting, holders of shares of Class A Common Stock will be entitled to elect two members of the Company's Board of Directors, and holders of shares of Class B Common Stock will be entitled to elect the remaining five members of the Company's Board of Directors. With respect to matters other than the election of directors or matters to which a class vote is not required by law, the presence, either in person or by proxy, of persons entitled to vote a majority in voting interest of the Company's outstanding Common Stock is necessary to constitute a quorum for the transaction of business at the Annual Meeting. Votes cast by proxy or in person at the Annual Meeting will be tabulated by the inspector of election appointed for the Annual Meeting and will determine whether or not a quorum is present. The inspector of election will treat abstentions as shares that are present and entitled to vote for purposes of determining the presence of a quorum but as unvoted for purposes of determining the approval of any matter submitted to the stockholders for a vote. If a broker indicates on the proxy that it does not have discretionary authority as to certain shares to vote on a particular matter, those shares will not be considered as present and entitled to vote with respect to that matter. With respect to the election of directors or matters to which a class vote is required by law, the presence, either in person or by proxy, of persons entitled to vote a majority in voting interest of outstanding shares of a class of the Company's common stock is necessary to constitute a quorum for the election of directors to represent such class or for such other matters requiring a class vote. A stockholder giving a proxy may revoke 1 it at any time before it is voted by filing written notice of revocation with the Secretary of the Company at 20664 Bahama Street, Chatsworth, California 91311, or by appearing at the meeting and voting in person. A prior proxy is automatically revoked by a stockholder giving a valid proxy bearing a later date. Shares represented by all valid proxies will be voted in accordance with the instructions contained in the proxies. In the absence of instructions, shares represented by valid proxies will be voted in accordance with recommendations of the Board of Directors as shown on the proxy. PRINCIPAL STOCKHOLDERS The following table sets forth certain information known to the Company as of April 14, 1997 with respect to the beneficial ownership of the Company's Common Stock by (i) each stockholder known by the Company to own beneficially more than 5% of the outstanding shares of any class of Common Stock, (ii) each director of the Company, and (iii) all directors and officers as a group:
CLASS A CLASS B ---------------------------------- ----------------------------- NAME OR IDENTITY OF GROUP NUMBER OF SHARES PERCENT OF NUMBER OF SHARES PERCENT OF AND ADDRESS(1) BENEFICIALLY OWNED(2) CLASS A(3) BENEFICIALLY OWNED CLASS B(3) - ------------------------- --------------------- ---------- ------------------ ---------- Directors: Steven Nichols......... 268,422(4)(5)(6) 7.1% 1,619,706(7) 64.9% George Powlick......... 73,482(6)(8) 2.0 -- -- Stanley Bernstein...... 30,000(9) 0.8 637,294(9) 25.5 Lawrence Feldman....... 2,780(5) 0.1 90,876(10) 3.6 Stephen Fine........... 30,000(9) 0.8 637,294(9) 25.5 Jonathan K. Layne...... 1,000 0.0 -- -- Martyn Wilford......... -- -- -- -- All Directors and Offi- cers as a Group (15 persons)............ 463,611 11.7 2,347,876 94.1 Other Principal Stock- holders: Nichols Family Trust... -- -- 1,619,706(7) 64.9 20664 Bahama Street Chatsworth, CA 91311 The Biltrite Corpora- tion.................. 30,000(9) 0.8 637,294(9) 25.5 Two University Office Park 51 Sawyer Road Waltham, MA 02254 John Hancock Mutual Insurance Company..... 518,193(11) 14.7 -- -- P.O. Box 111 Boston, MA 02117 Schwartz Investment Counsel, Inc. ........ 432,500(12) 12.2 -- -- 3707 W. Maple Road Bloomfield Hills, MI 48301 Quest Advisory Corp.... 357,400(13) 10.1 -- -- 1414 Avenue of the Americas New York, NY 10019 Kahn Brothers & Compa- ny, Inc. ............. 248,500(14) 7.0 -- -- 555 Madison Avenue New York, NY 10022- 3301 Dimensional Fund Advi- sors Inc. ............ 214,400(15) 6.1 -- -- 1299 Ocean Avenue Santa Monica, CA 90401
2 - -------- (1) Unless otherwise indicated, all addresses are c/o K.Swiss Inc., 20664 Bahama Street, Chatsworth, California 91311. (2) If shares of Class B Common Stock are owned by the named person or group, excludes shares of Class B Common Stock convertible into a corresponding number of shares of Class A Common Stock. (3) Percentages are calculated based on the total number of shares of Class A Common Stock outstanding (3,533,018) and on the total number of shares of Class B Common Stock outstanding (2,495,572) as of April 14, 1997, plus, where applicable, shares issuable upon exercise of options within sixty days after April 14, 1997. (4) Includes options to acquire 260,500 shares of Class A Common Stock, which options are exercisable within sixty days after April 14, 1997 but excludes options to acquire 12,000 shares of Class A Common Stock transferred by Mr. Nichols to trusts for the benefit of family members. (5) Steven Nichols exercises sole voting control over 2,780 shares beneficially owned by Lawrence Feldman pursuant to an agreement between Steven Nichols and Lawrence Feldman. Such shares are shown as beneficially owned by each of Messrs. Nichols and Feldman. (6) Steven Nichols exercises sole voting control over 5,142 shares beneficially owned by George Powlick pursuant to an agreement between Steven Nichols and George Powlick. Such shares are shown as beneficially owned by each of Messrs. Nichols and Powlick. (7) Steven Nichols, co-trustee of the Nichols Family Trust, exercises sole power to vote and dispose of shares held by the Nichols Family Trust. Such shares, which are owned by the Nichols Family Trust, are also shown as beneficially owned by Mr. Nichols. (8) Includes options to acquire 58,840 shares of Class A Common Stock, which options are exercisable within sixty days after April 14, 1997. (9) Such shares are owned of record by The Biltrite Corporation, of which Stanley Bernstein is Chairman of the Board and Chief Executive Officer, and of which Stephen Fine is a Director and President. Mr. Bernstein and Mr. Fine are also the sole stockholders of The Biltrite Corporation. Mr. Bernstein's and Mr. Fine's addresses are c/o The Biltrite Corporation at the address set forth in the table. (10) Such shares are held by Lawrence Feldman and his wife as trustees of trusts for the benefit of other unrelated individuals. (11) Based solely upon information contained in a Schedule 13G dated July 7, 1993 received by the Company. (12) Based solely upon information contained in a Schedule 13G dated December 31, 1996 received by the Company from Schwartz Investment Trust on behalf of its series fund, Schwartz Value Fund, as to 235,000 shares and Schwartz Investment Counsel, Inc. as to 197,500 shares. (13) Based solely upon information contained in Schedule 13Gs, as amended, each dated February 3, 1997, received by the Company from Quest Advisory Corp. as to 357,400 shares and from Mr. Charles M. Royce. (14) Based solely upon information contained in a Schedule 13G, dated February 5, 1997 received by the Company. (15) Based solely upon information contained in a Schedule 13G dated February 5, 1997 received by the Company. Dimensional Fund Advisors Inc. ("Dimensional") has advised the Company that it is a registered investment advisor and that the securities shown above are held by several investment vehicles for which Dimensional serves as investment manager and that Dimensional thereby disclaims beneficial ownership of all such securities. 3 ELECTION OF DIRECTORS Under the Restated Certificate of Incorporation and the Restated Bylaws of the Company, two (2) directors out of a total of seven (7) are to be elected at the 1997 Annual Meeting of Stockholders by the holders of Class A Common Stock to serve one-year terms expiring at the 1998 Annual Meeting of Stockholders or until their successors are duly elected and qualified. The remaining five (5) directors are to be elected at the 1997 Annual Meeting of Stockholders by the holders of Class B Common Stock to serve one-year terms expiring at the 1998 Annual Meeting of Stockholders or until their successors are duly elected and qualified. Unless authority to vote for a certain nominee is withheld by an indication thereon, the Class A Common Stock proxy will be voted to re-elect Jonathan K. Layne and Martyn Wilford, and the Class B Common Stock proxy will be voted to re-elect Steven Nichols, George Powlick, Stanley Bernstein, Lawrence Feldman and Stephen Fine, in all cases to serve until the 1998 Annual Meeting of Stockholders or until their respective successors are elected and qualified. The Company has no reason to believe that any of those named will not be available as a candidate. However, if such a situation should arise, the proxy may be voted for the election of other nominees as directors at the discretion of the person acting pursuant to the proxy. Certain information regarding the nominees for election by the holders of Class A Common Stock and the holders of Class B Common Stock is set forth below: NOMINEES FOR ELECTION BY CLASS A COMMON STOCKHOLDERS AT THE 1997 ANNUAL MEETING
AGE AT POSITION WITH DIRECTOR NAME DECEMBER 31, 1996 COMPANY SINCE ---- ----------------- ------------- -------- Jonathan K. Layne....... 43 Director 1990 Martyn Wilford.......... 45 Director 1990
NOMINEES FOR ELECTION BY CLASS B COMMON STOCKHOLDERS AT THE 1997 ANNUAL MEETING
AGE AT POSITION WITH DIRECTOR NAME DECEMBER 31, 1996 COMPANY SINCE ---- ----------------- ------------- -------- Steven Nichols.......... 54 Chairman of the Board, President 1987 George Powlick.......... 52 Vice President--Finance, Chief Financial 1990 Officer, Secretary and Director Stanley Bernstein....... 53 Director 1987 Lawrence Feldman........ 54 Director 1987 Stephen Fine............ 48 Director 1987
PRINCIPAL OCCUPATIONS OF CLASS A AND CLASS B NOMINEES DURING LAST FIVE YEARS STEVEN NICHOLS has been President and Chairman of the Board of the Company since 1987. From 1980 to 1986, Mr. Nichols was a director and Vice-President-- Merchandise of Stride Rite Corp., a footwear manufacturer and holding company. In addition, Mr. Nichols was President of Stride-Rite Footwear from 1982 to 1986. From 1979 to 1982, Mr. Nichols served as an officer and President of Stride Rite Retail Corp., the largest retailer of branded children's shoes in the United States. From 1962 through 1979, he was an officer of Nichols Foot Form Corp., which operated a chain of New York retail footwear stores. GEORGE POWLICK, Director, Vice President--Finance, Chief Financial Officer and Secretary, joined the Company in January 1988. Mr. Powlick is a certified public accountant and was an audit partner in the independent public accounting firm of Grant Thornton from 1975 to 1987. STANLEY BERNSTEIN, a Director of the Company, has been Chairman of the Board and Chief Executive Officer of The Biltrite Corporation since 1985. Biltrite is a supplier of rubber and plastics products used in footwear, flooring and industrial applications. From 1982 to 1985, Mr. Bernstein served as Executive Vice-President of Biltrite. From 1968 to 1982, he held numerous executive positions with American Biltrite Inc. Mr. Bernstein is a member of the Massachusetts bar. Mr. Bernstein is also a member of the Board of Directors of Senior Tour Players Development, Inc., a developer, acquirer and operator of golf courses and golf practice facilities. Mr. Bernstein is the cousin of the wife of Stephen Fine, a Director of the Company. 4 LAWRENCE FELDMAN, a Director of the Company, has been President of the Rug Warehouse, Inc., a New York City oriental rug retailer and wholesaler, since 1977. From 1973 to 1977, he was Vice President for Design and Product Development for Hart Schaffner & Marx, a clothing manufacturer and retailer. STEPHEN FINE, a Director of the Company, has been a Director, President and Chief Operating Officer of The Biltrite Corporation since 1985, and from 1982 to 1985 he served as Executive Vice-President of Biltrite, a supplier of rubber and plastics products used in footwear, flooring and industrial applications. From 1970 to 1982, he held various executive positions with American Biltrite Inc. Mr. Fine is also a Director of Maxwell Shoe Company Inc., a manufacturer of women's casual and dress footwear. Mr. Fine's wife is the cousin of Stanley Bernstein, a Director of the Company. JONATHAN K. LAYNE, a Director of the Company, has been a partner in the law firm of Gibson, Dunn & Crutcher LLP since 1987, where he specializes in corporate and securities law matters. From 1979 to 1986 he was an associate of the same law firm. Mr. Layne is also a member of the Board of Directors of Amwest Insurance Group, Inc., an insurance holding company, The Finish Line, Inc., a retailer of brand name athletic and leisure footwear, activewear and accessories and Maxwell Shoe Company Inc., a manufacturer of women's casual and dress footwear. MARTYN WILFORD, a Director of the Company and of K.Swiss UK Ltd. (a Company subsidiary), has been Chairman of the Board and Chief Executive Officer of Joseph Clark & Sons (Soho) Limited, a British leather trader, since 1986. Mr. Wilford joined Joseph Clark & Sons in 1974. He is a chartered accountant. CERTAIN INFORMATION CONCERNING THE BOARD OF DIRECTORS AND CERTAIN OF ITS COMMITTEES The Board of Directors has the following standing committees: Compensation and Stock Option Committee and Audit Committee. The Company does not have a nominating committee of its Board of Directors. MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES The Board of Directors held four formal meetings during fiscal 1996 and took action on numerous matters by unanimous written consent. Each Director attended at least 75% of the meetings of the Board and Board Committees of which he was a member. The Compensation and Stock Option Committee is composed of Messrs. Lawrence Feldman, Stephen Fine and Martyn Wilford. This Committee met five times during fiscal 1996. The Audit Committee is composed of Messrs. Stanley Bernstein and Jonathan K. Layne. This committee met two times during fiscal 1996. REMUNERATION OF DIRECTORS During 1996, all directors who are not employees were paid a lump-sum of $2,000, plus $2,000 per regular Board meeting attended, and normal and necessary expenses for attending all such meetings. The Company also pays non- employee directors of its subsidiaries similar amounts. 5 EXECUTIVE COMPENSATION The following table sets forth information with respect to the compensation paid by the Company during the years ended December 31, 1996, 1995 and 1994 to the Chief Executive Officer and the four most highly compensated executive officers of the Company (the Named Officers) whose salary and bonus exceeded $100,000 in 1996. SUMMARY COMPENSATION TABLE
ANNUAL LONG TERM COMPENSATION COMPENSATION -------------------- ------------ AWARDS ------------ OPTIONS/ NAME AND PRINCIPAL SARS ALL OTHER POSITION YEAR SALARY BONUS(1) (#) COMPENSATION(2) - ------------------ ---- -------- -------- ------------ --------------- Steven Nichols.......... 1996 $675,308 $ -- (5) 50,000 $22,232 President and Chief 1995 630,889(3) -- -- 40,690 Executive Officer 1994 572,613(3) 363,055 40,000 37,985 Preston Davis........... 1996 150,835 -- (5) 3,000 4,044 Vice President Sales 1995 144,792 -- -- 20,890 1994 136,292 34,250 3,600 22,557 Lewis Goldberg.......... 1996 149,280 -- (5) 3,000 3,353 Senior Vice President 1995 143,441 -- -- 20,473 1994 134,791 33,875 3,600 23,486 Thomas Harrison......... 1996 149,127 10,357(5) 1,200 3,093 Senior Vice President 1995 143,295 9,611 -- 17,454 1994 134,791 33,788 3,600 21,431 George Powlick.......... 1996 230,705 -- (5) 7,800 9,697(4) Vice President--Finance, 1995 221,045 -- -- 26,388(4) Chief Financial Officer 1994 203,000 51,135 9,600 32,057(4)
- -------- (1) Includes cash bonuses earned and accrued during the year indicated, but paid subsequent to the end of the year. (2) Comprised of the Company's profit sharing and 401(k) matching contributions made in the stated year on behalf of the Named Officers, cash payments made relating to the number of stock options held by the Named Officers and term life insurance premiums for the benefit of the Named Officers. The Company did not make a profit sharing contribution during 1996. (3) Mr. Nichols' 1995 salary of $657,176 (less an 8% discount factor for an actual payment of $630,889) was advanced to him in December 1994. (4) Includes $1,544, $1,760 and $1,284 for 1996, 1995 and 1994, respectively, of imputed interest related to a non-interest bearing loan made by the Company to Mr. Powlick. See "Certain Transactions". (5) Effective July 1, 1996 the Company adopted an executive bonus program based on changes in Economic Value Added ("EVA"). See "Compensation and Stock Option Committee Report". The terms of the program for 1996 mandated that no payouts would be made for 1996 and that any declared bonus would be carried forward to 1997 as a beginning bank balance for the executive, except in the case of Mr. Harrison who received a cash bonus of $10,357 for 1996. The remaining amounts accrued and deposited in notional EVA bank accounts for 1996 for the Named Officers are as follows: Steven Nichols--$0, Preston Davis--$28,474, Lewis Goldberg--$28,180, Thomas Harrison--$17,795, George Powlick--$0. 6 STOCK OPTION GRANTS IN 1996 The following table sets forth information with respect to options to purchase the Company's Class A Common Stock granted in 1996 to the Named Officers.
POTENTIAL REALIZABLE VALUE AT ASSUMED ANNUAL RATES OF STOCK PRICE APPRECIATION FOR INDIVIDUAL GRANTS OPTION TERM(1) ----------------------------------------------- ----------------------- % OF TOTAL OPTIONS OPTIONS GRANTED TO GRANTED EMPLOYEES EXERCISE PRICE EXPIRATION NAME (#)(2) IN 1996 (PER SHARE)(3) DATE 5% 10% ---- ------- ---------- -------------- ---------- ----------- ----------- Steven Nichols.......... 50,000(4) 27% $ 8.75 02/26/06 $ 275,625 $ 695,625 Preston Davis........... 1,200(5) 1 8.75 02/26/06 6,615 16,695 1,800(6) 1 10.75 11/07/06 12,191 30,797 Lewis Goldberg.......... 1,200(5) 1 8.75 02/26/06 6,615 16,695 1,800(6) 1 10.75 11/07/06 12,191 30,797 Thomas Harrison......... 1,200(5) 1 8.75 02/26/06 6,615 16,695 George Powlick.......... 4,800(5) 3 8.75 02/26/06 26,460 66,780 3,000(6) 2 10.75 11/07/06 20,318 51,278
- -------- (1) Potential realizable value is based on the assumption that the common stock price appreciates at the annual rate shown (compounded annually) from the grant date until the end of the ten year option term. This value is calculated based on requirements of the Securities and Exchange Commission and does not reflect the Company's estimate of future stock price growth. (2) The Company's 1990 Stock Incentive Plan is administered by the Compensation and Stock Option Committee of the Board of Directors which determines the eligibility of persons under the Plan, the number of awards to be granted and the terms of such grants. (3) Options were granted at market value at the date of grant (the closing price of the Company's Class A Common Stock on the NASDAQ National Market System). The exercise price and tax withholding obligations related to exercise may be paid by delivery of already owned shares or by offset of the underlying shares, subject to certain conditions. (4) Options granted on February 26, 1996 vest at the rate of 50% on the first anniversary of the date of grant and an additional 5% at the end of each calendar month thereafter. (5) Options granted commenced vesting on February 26, 1996 and vest 33% three years, four years and five years, respectively, after the date upon which such options commenced vesting. (6) Options granted commenced vesting on February 1, 1997 and vest 33% three years, four years and five years, respectively, after the date upon which such options commenced vesting. 7 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES The following table sets forth information with respect to options exercised, unexercised options, and year end values, in each case with respect to options to purchase the Company's Class A Common Stock granted in 1996 and prior years under the 1990 Stock Incentive Plan and the 1988 Stock Option Plan to the Named Officers and held by them at December 31, 1996.
VALUE OF UNEXERCISED NUMBER OF UNEXERCISED IN-THE-MONEY SHARES OPTIONS AT OPTIONS AT ACQUIRED DECEMBER 31, 1996(#) DECEMBER 31, 1996(1) ON VALUE ------------------------- ------------------------- NAME EXERCISE(#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE ---- ----------- -------- ----------- ------------- ----------- ------------- Steven Nichols.......... -- $ -- 240,000 50,000 $ -- $56,250 Preston Davis........... -- -- 23,900 12,600 25,778 1,350 Lewis Goldberg.......... -- -- 13,800 12,600 -- 1,350 Thomas Harrison......... -- -- 18,900 10,800 25,778 1,350 George Powlick.......... -- -- 54,330 27,670 -- 5,400
- -------- (1) Represents the difference between the closing price of the Company's Class A Common Stock on December 31, 1996 of $9.875 and the exercise price of the options. EMPLOYMENT AGREEMENTS The Company and Steven Nichols, the Company's Chairman, President and Chief Executive Officer, are parties to a five-year employment agreement commencing January 1, 1996 and ending December 31, 2000. Under this agreement, Mr. Nichols receives an annual base salary of $675,308 (plus an adjustment for cost of living increases during 1996 and during each subsequent year thereafter). Mr. Nichols also receives a cash bonus award each year in an amount ranging up to 200% of his base salary, depending upon the financial performance of the Company as compared to the prior year. Mr. Nichols receives no bonus for a year in which the Company's earnings before income taxes do not exceed 110% of the prior year's earnings before income taxes, excluding extraordinary items. Mr. Nichols will be awarded a bonus equal to 4% of base salary for each percentage point that earnings before income taxes for any year exceed 110%, up to and including 135%, of earnings before income taxes in the immediately preceding year. In addition, Mr. Nichols will be awarded a bonus equal to 5% of base salary for each percentage point that earnings before income taxes for any year exceed 135%, up to and including 155%, of earnings before income taxes in the immediately preceding year. In the event earnings before income taxes for any year exceed 155% of earnings before income taxes in the immediately preceding year, Mr. Nichols will be awarded a bonus equal to 200% of his base salary for such year (which is the maximum bonus payable to Mr. Nichols in any one year under the employment agreement). For the purpose of calculating Mr. Nichols' 1996 bonus, 1995 earnings before income taxes are deemed to be $7,184,000. Mr. Nichols has voluntarily agreed to waive the bonus provisions of his employment agreement for 1996 and 1997 and instead become eligible to participate under the Company's Economic Value Added bonus plan. See "Executive Compensation--Compensation and Stock Option Committee Report." The employment agreement prohibits Mr. Nichols from competing with the Company and its subsidiaries for a period of 12 months following termination of his employment, although this restriction is not applicable beyond December 31, 2000 if Mr. Nichols remains employed by the Company on or after that date. The agreement is terminable upon 30 days written notice by Mr. Nichols under certain circumstances, such as a reduction in salary or position, and is terminable by the Company for cause. In connection with a prior employment agreement, the Company and Mr. Nichols entered into an amended and restated registration rights agreement which granted Mr. Nichols the right to cause the Company to register outstanding shares of Class A Common Stock issuable upon conversion of Class B Common Stock, held by Mr. Nichols or any entity formed primarily for the benefit of members of his family, in each case upon any proposal by the Company to register shares of any class of Common Stock under the Securities Act of 1933, as amended, in a public offering for cash. 8 COMPENSATION AND STOCK OPTION COMMITTEE REPORT SUMMARY OF COMPENSATION POLICIES FOR EXECUTIVE OFFICERS The Compensation and Stock Option Committee (the "Compensation and Stock Option Committee" or the "Committee") administers the Company's stock option plans, reviews the Company's compensation plans, programs and policies and monitors the performance and compensation of executive officers and other key employees and makes appropriate recommendations and reports to the full Board of Directors concerning matters of executive compensation. The Company's philosophy is to maintain compensation programs which attract, retain and motivate senior management with economic incentives which are directly linked to financial performance and increased stockholder value. The key elements of the Company's executive compensation program consists of a base salary, potential for an annual bonus directly linked to individual and overall Company performance and the grant of stock options and other stock incentive awards intended to encourage the achievement of superior results over time and to directly align executive officer and stockholder economic interests. The Committee believes the Chief Executive Officer's compensation should be heavily influenced by Company performance. The Chief Executive Officer and the Company are parties to a five-year employment agreement which expires December 31, 2000. See "Executive Compensation--Employment Agreements." The Chief Executive Officer's annual base salary of $675,308 established for 1996 (after an adjustment for cost of living increases for 1995) will increase through the current five-year employment agreement which expires December 31, 2000 only by cost-of-living adjustments. He is also eligible to receive a cash bonus award each year in an amount ranging up to 200% of his base salary, depending entirely upon the financial performance of the Company as compared to the prior year, provided however, for the years ending December 31, 1996 and 1997, Mr. Nichols has voluntarily agreed to waive the bonus provisions of his employment agreement and instead become eligible to participate under the Company's Economic Value Added ("EVA") bonus plan. The Company's EVA bonus plan was designed by Stern Stewart & Co., consultants specializing in EVA plans, and basically rewards managers for increases in EVA (i.e. after tax operating profit, minus a charge for all capital employed). Under the applicable bonus program, the Chief Executive Officer received bonus payments of $363,055, $0 and $0 for the years ending December 31, 1994, 1995 and 1996, respectively. The Committee believes this arrangement provides the Chief Executive Officer significant incentive and aligns what could amount to (as in 1994) a bonus equal to a substantial percentage of his annual salary directly to the Company economic improvement. In addition, the Chief Executive Officer's five-year 1990 employment agreement provided for the grant by the Company of 200,000 shares of Class A Common Stock which options have now been granted at exercise prices ranging from $15.25 to $19.25 per share. In November 1994 he received a grant of 40,000 options to purchase shares of Class A Common Stock at an exercise price of $21.25 per share and in February 1996 he received a grant of 50,000 options to purchase shares of Class A Common Stock at an exercise price of $8.75 per share. All exercise prices were not less than the fair market value of such shares at the time of grant. The Committee believes these salary, bonus and option arrangements, together with the Chief Executive Officer's substantial equity ownership in the Company, provide him with incentive to perform at superior levels and in a manner which is directly aligned with the economic interests of the Company's stockholders. The Committee has adopted similar policies with respect to overall compensation of the Company's other executive officers. The salaries of the Company's executive officers have been established by considering the salaries of similar executives of comparably-sized companies both within and outside the industry within which the Company operates. In addition, other relative performance factors, including the individual's past performance and future potential, are considered in establishing base salaries of executive officers. Salaries for the Company's executive officers for 1996 generally increased 4% over the prior year's salaries with specific salary increases depending upon corporate performance, individual performance and inflation during the prior fiscal year. 9 Effective July 1, 1996, the Company adopted, for certain of its executive officers plus other key management personnel, a bonus plan based on increasing the Company's EVA. Participants can earn a target bonus, based on the participant's role, responsibilities, and business unit, if target results are achieved. If target results are exceeded or missed, bonuses are proportionately increased or decreased. Target bonuses (expressed as a percentage of salary) and related performance goals (expressed as changes in EVA) were established at the plan adoption date, after assessing recommendations of management and Stern Stewart & Co. EVA represents the net after tax operating profit less a charge for capital employed and is measured for the Company as a whole as well as individual business units within the Company. Each year a participating executive receives a bonus declaration equal to their target bonus multiplied by their business unit's EVA performance factor. The bonus declaration is accrued and placed in a notional bank account from which annual bonus payments are made to the executive. Annual payments from the notional bank account are equal to the bank balance (if the bank balance is less than or equal to one target bonus) plus one third of any excess bank balance after payment of target bonus, limited to one additional target bonus. Remaining bank balances are carried forward and are subject to forfeiture if the employee leaves the Company or the subsequent years change in EVA does not achieve plan performance parameters. During 1996, certain Named Officers earned a portion of their target bonus because the Company's corporate plans and goals were partially met for their business unit; however, Mr. Nichols and Mr. Powlick, did not earn any portion of their target bonus. The committee believes that EVA represents a key financial indicator of stockholder value and is an appropriate measure of Company financial performance. The Committee also generally grants stock options to the executive officers based primarily upon a subjective evaluation of the executive's past performance and future ability to influence the Company's long-term growth and profitability and secondarily upon the Company's recent economic performance. See "Stock Option Plans." Options are generally (but not always) granted at current market values and generally (but not always) contain vesting periods over a three-year period commencing on the third anniversary of the date of option grant. In some cases, the Committee has granted options with exercise prices of $1.00 per share to certain employees in amounts less than it would have granted to such persons at the then current market values. The Committee believes that this practice, although not widely utilized, can be a significant factor in motivating certain individuals, particularly those persons the Company is seeking initially to hire. In making new option grants, the Committee does consider the number of options already held by an executive officer. Since the value of a stock option bears a direct relationship to the Company's stock price, the Committee believes they are effective incentives for management to create value for stockholders. Consequently, the Committee believes stock options are a critical component of its long-term, performance- based compensation philosophy. Under 1993 federal law and applicable regulations, income tax deductions for compensation paid by publicly-traded companies may be limited to the extent total compensation (including base salary, annual bonus, restricted stock awards, stock option exercises, and non-qualified benefits) for certain executive officers exceeds $1 million in any one year. Under the law, the deduction limit does not apply to payments which qualify as "performance- based". To qualify as "performance-based", compensation payments must be made from a plan that is administered by a committee of outside directors. In addition, the material terms of the plan must be disclosed to and approved by stockholders, and the committee must certify that the performance goals were achieved before payments can be awarded. 10 The Committee intends to design the Company's compensation programs to conform with the legislation and related regulations so that total compensation paid to any employee will not exceed $1 million in any one year, except for compensation payments in excess of $1 million which qualify as "performance-based". However, the Company may pay compensation which is not deductible in limited circumstances when sound management of the Company so requires. Compensation and Stock Option Committee Lawrence Feldman Stephen Fine Martyn Wilford Dated: April 11, 1997 The above report of the Compensation and Stock Option Committee will not be deemed to be incorporated by reference into any filing by the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates same by reference. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION Directors Feldman, Fine and Wilford comprise the Compensation and Stock Option Committee. In June 1988, the Company issued to the Rug Warehouse Inc. Pension Plan & Trust ("RWI") (of which Mr. Feldman, a Director of the Company, was trustee) 10% junior subordinated debentures in the principal amount of $400,000 to refinance certain junior subordinated debentures that were then repaid. The debentures are due on December 31, 2001 with interest payable quarterly. Beginning June 30, 1996 and on each December 31 and June 30 thereafter until the debentures are fully retired, the holder of such debentures may require the Company to redeem $50,000 (or such lesser principal amount outstanding) of such debentures on such dates. The Company has been informed that RWI has transferred its debentures to Mrs. Susan Feldman, the wife of Mr. Feldman. As of December 31, 1996, Mr. Feldman owed the Company $16,386 in connection with a loan made by the Company to Mr. Feldman for income taxes incurred on the acquisition of Class A Common Stock of the Company. The loan is non- interest bearing, is secured by shares of the Company's Class A Common Stock owned by Mr. Feldman and is due no later than April 10, 1998. The Biltrite Corporation, for which Mr. Fine serves as President, Chief Operating Officer and a director, is a party to a stockholders agreement relating to the manner in which certain shares of the Company's Common Stock are voted. See "Certain Transactions." 11 STOCK PRICE PERFORMANCE GRAPH COMPARE 5-YEAR CUMULATIVE TOTAL RETURN AMONG K.SWISS INC. CLASS A COMMON STOCK, NASDAQ MARKET INDEX AND PEER GROUP INDEX(1) The Stock Price Performance Graph below shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts. PERFORMANCE GRAPH APPEARS HERE
Measurement Period K-SWISS INC. INDUSTRY BROAD (Fiscal Year Covered) CLASS A INDEX MARKET - --------------------- ----------- -------- ------ Measurement Pt- 1991 $100 $100 $100 FYE 1992 $139.68 $109.22 $100.98 FYE 1993 $146.03 $ 83.68 $121.13 FYE 1994 $125.85 $100.83 $127.17 FYE 1995 $ 69.74 $123.22 $164.96 FYE 1996 $ 63.85 $194.22 $204.98
ASSUMES $100 INVESTED ON JANUARY 1, 1992 ASSUMES DIVIDENDS REINVESTED FISCAL YEARS ENDING DECEMBER 31 ASSUMES $100 INVESTED ON JANUARY 1, 1992 ASSUMES DIVIDENDS REINVESTED FISCAL YEARS ENDING DECEMBER 31 - -------- (1) Peer Group chosen was Media General Industry Group 552--Footwear STOCK OPTION PLANS In 1988, the Company adopted the 1988 Stock Option Plan (the "1988 Plan"), pursuant to which the Company reserved 157,500 shares of Class A Common Stock, subject to certain adjustments, for issuance upon exercise of benefits granted under the 1988 Plan. On January 9, 1990, the Board of Directors terminated the 1988 Plan. Benefits outstanding under the 1988 Plan as of that date continue to vest and remain exercisable pursuant to the terms of the 1988 Plan and any agreements with respect to such benefits. As of April 14, 1997, there were 67,818 options granted, 51,576 options exercised, 7,351 options cancelled and 8,891 options outstanding under the 1988 Plan. Such options are exercisable at a price of $2.51. There are no options available for future grant under the 1988 Plan. 12 All officers and employees of the Company were eligible to participate under the 1988 Plan. The 1988 Plan provided for the issuance of incentive stock options (as defined in Section 422 of the Internal Revenue Code (the "Code")) ("Incentive Options" or "ISOs"), non-qualified options ("Nonqualified Options" or "NSOs") and warrants (collectively, "Benefits"). The 1988 Plan is administered by a committee of the Board of Directors of the Company, which has full power to construe the 1988 Plan. The 1988 Plan provided that the aggregate fair market value (determined at the time the option was granted) of stock with respect to which ISOs are exercisable for the first time by any individual during each calendar year (under all plans of the Company and its subsidiaries) could not exceed $100,000. The per share exercise price of ISOs could not be less than 100% of the fair market value of the underlying Class A Common Stock on the date the option was granted (not less than 110% of such fair market value with respect to ISOs granted to an individual who owns 10% or more of the outstanding capital stock of the Company). No Benefit granted under the 1988 Plan may be exercised more than ten years after it was granted. The 1988 Plan generally provided that Benefits vest one- third after three years of continuous employment with the Company after the date of grant, one-third after four years of continuous employment with the Company after the date of grant and one-third after five years of continuous employment with the Company after the date of grant. Unvested portions of Benefits are forfeited upon termination of employment. Vested portions are exercisable only if at the time of exercise the Benefit holder is employed by the Company. On January 9, 1990, the Board of Directors adopted the K.Swiss Inc. 1990 Stock Incentive Plan which authorized the issuance of up to 525,000 shares of Class A Common Stock, subject to adjustments under certain circumstances. As amended, the aggregate number of shares issuable upon options and other awards under this plan is currently 825,000 shares of Class A Common Stock. The purpose of such plan is to enable the Company to attract, retain and motivate its key employees by providing for or increasing their proprietary interest in the Company. Any person who is employed by the Company on a salaried basis is eligible to participate in the 1990 Stock Incentive Plan. Awards may not be granted under the 1990 Plan after January 9, 2000. Although any award that was duly granted on or prior to such date may thereafter be exercised or settled in accordance with its terms, no shares of Class A Common Stock may be issued pursuant to any award after January 9, 2010. The 1990 Plan is administered by a committee of the Board of Directors of the Company, which has full power to construe the 1990 Plan. The 1990 Plan authorizes the Compensation and Stock Option Committee to enter into any type of arrangement with an eligible employee that, by its terms, involves or might involve the issuance of (1) Class A Common Stock, (2) an option, warrant, convertible security, stock appreciation right or similar right with an exercise or conversion privilege at a price related to the Class A Common Stock, or (3) any other security or benefit with a value derived from the value of the Class A Common Stock. As of April 14, 1997, 160 persons were eligible to so participate. During the year ended December 31, 1996 all current executive officers (11 persons) were granted options to acquire an aggregate of 113,300 shares of Class A Common Stock at an average per share exercise price of $9.30. During the year ended December 31, 1996, other employees were granted options to acquire 72,700 shares of Class A Common Stock at an average exercise price of $8.16 per share. As of April 14, 1997, there were 982,268 options granted, 27,474 options exercised, 277,523 options cancelled, 677,271 options outstanding and 120,255 options available for future grant under the 1990 Stock Incentive Plan. Such options are exercisable at prices ranging from $1.00 to $23.00 per share. CERTAIN TRANSACTIONS In June 1988, the Company issued to George Powlick (Director, Vice President--Finance and Chief Financial Officer of the Company) 10% junior subordinated debentures in the principal amount of $100,000 to refinance certain junior subordinated debentures that were then repaid. The debentures are due on December 31, 2001 with interest payable quarterly. Beginning June 30, 1996 and on each December 31 and June 30 thereafter until the debentures are fully retired, the holder of such debentures may require the Company to redeem $50,000 (or such lesser principal amount outstanding) of such debentures on such dates. 13 Jonathan Layne is a member of the Board of Directors of the Company and a nominee to continue as a Class A Director. See "Election of Directors". Mr. Layne is a partner of the law firm Gibson, Dunn & Crutcher LLP which has provided legal services to the Company. The Company expects that such law firm will continue to render legal services to the Company. As of December 31, 1996, Mr. Powlick owed the Company $26,753 in connection with a loan made by the Company to Mr. Powlick for income taxes incurred on the acquisition of Class A Common Stock of the Company. The loan is non- interest bearing, is secured by shares of the Company's Class A Common Stock owned by Mr. Powlick and is due no later than April 10, 1998. The holders of all outstanding shares of Class B Common Stock other than Kenneth Zises are parties to an agreement (the "Stockholders Agreement") that provides in part as follows: so long as the number of shares of Class B Common Stock held by Biltrite and its affiliates (collectively, the "Biltrite Group") exceeds 15% of the total number of shares of Class B Common Stock outstanding, Steven Nichols and his affiliates (collectively, the "Nichols Group") will vote their shares of Class B Common Stock in favor of the election of two nominees of Biltrite as directors of the Company. The Nichols Group and the Biltrite Group will also vote their shares in connection with a merger or consolidation of the Company or a sale or lease of substantially all of its assets (collectively, a "Sale"), as Steven Nichols and Biltrite shall mutually direct. So long as the aggregate number of shares of Class B Common Stock held by the Biltrite Group is greater than or equal to 15% of the total number of outstanding shares of all classes of the Company's Common Stock (the "Biltrite Threshold") and the aggregate number of shares of Class B Common Stock held by the Nichols Group is greater than or equal to 10% of the total number of outstanding shares of all classes of the Company's Common Stock (the "Nichols Threshold"), Biltrite and Mr. Nichols shall direct the Biltrite Group and the Nichols Group to vote their shares in favor of a Sale only if both Biltrite and Mr. Nichols shall so agree. If Biltrite and Mr. Nichols do not agree, they shall mutually direct the Biltrite Group and the Nichols Group to vote their shares of Class B Common Stock against such Sale. If the number of shares of Class B Common Stock held by the Biltrite Group falls below the Biltrite Threshold, Biltrite and Mr. Nichols shall mutually direct the voting of the shares of Class B Common Stock in connection with a Sale as Mr. Nichols shall determine. If the number of shares of Class B Common Stock held by the Nichols Group falls below the Nichols Threshold, Biltrite and Mr. Nichols shall direct the voting of the shares of Class B Common Stock in connection with a Sale as Biltrite shall direct. If the number of shares of Class B Common Stock held by each of the Biltrite Group and the Nichols Group falls below the Biltrite Threshold and the Nichols Threshold, respectively, members of each group are free to vote their shares with respect to a Sale as they see fit. During 1993, the number of shares of Class B Common Stock held by the Biltrite Group fell below the Biltrite Threshold. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Martyn Wilford, a director of the Company, inadvertently failed to timely file with the Securities and Exchange Commission a Form 4 reporting the May 1996 sale of shares of the Company's Class A Common Stock. A Form 5 reporting such transaction was filed in April 1997. RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS Grant Thornton was the Company's certified public accountant for fiscal 1996. During fiscal 1996, the Company also engaged Grant Thornton to render certain non-audit professional services involving general consultations. The appointment of auditors is approved annually by the Board of Directors which is based in part on the recommendation of the Audit Committee. In making its recommendation, the Audit Committee reviewed both the audit scope and estimated audit fees for the coming year. Grant Thornton has been selected by the Audit Committee and the Board of Directors for the current year. Stockholder approval is not sought in connection with this selection. Each professional service performed by Grant Thornton during fiscal 1996 was reviewed, 14 and the possible effect of such service on the independence of the firm was considered, by the Audit Committee. Representatives of Grant Thornton will be present at the Annual Meeting of Stockholders and will be given an opportunity to make a statement if they desire to do so and will respond to questions from stockholders. STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING Stockholders who wish to present proposals for action at the 1998 Annual Meeting of Stockholders should submit their proposals in writing to the Secretary of the Company at the address set forth on the first page of this Proxy Statement. Proposals must be received by the Secretary no later than December 12, 1997, for inclusion in next year's proxy statement and proxy card. MISCELLANEOUS The Company knows of no matters other than the foregoing to be brought before the Annual Meeting, but if any other such matter properly comes before the meeting, or any adjournment or postponement thereof, it is the intention of the persons named in the accompanying form of Proxy to vote the proxies in accordance with their best judgment. The Annual Report of the Company for the fiscal year ended December 31, 1996, including financial statements, is being mailed under the same cover to each person who was a stockholder of record on April 14, 1997. The Company will furnish without charge a copy of its Annual Report on Form 10-K for the fiscal year ended December 31, 1996, as filed with the Securities and Exchange Commission, to any stockholder desiring a copy. Stockholders may write to K.Swiss Inc., 20664 Bahama Street, Chatsworth, California 91311, Attention: George Powlick, Vice President--Finance. EACH STOCKHOLDER WHO DOES NOT EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON IS URGED TO EXECUTE THE PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. By Order of the Board of Directors /s/ Steven Nichols Steven Nichols Chairman of the Board and President Chatsworth, California April 18, 1997 15 PROXY K-SWISS INC. PROXY Class A Common Stock Proxy for Annual Meeting of Stockholders, May 22, 1997 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS for the Annual Meeting of Stockholders to be held on May 22, 1997 at 10:00 a.m. at the K-Swiss Corporate Office, 20664 Bahama Street, Chatsworth, California 91311. The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and the accompanying Proxy Statement for the 1997 Annual Meeting and, revoking all prior Proxies, appoints Steven Nichols and George Powlick, and each of them, with full power of substitution in each, the Proxies of the undersigned to represent the undersigned and vote all shares of Class A Common Stock of the undersigned in K-Swiss Inc., at the Annual Meeting of Stockholders to be held on May 22, 1997, and any adjournments or postponements thereof upon the following matters and in the manner designated on the reverse side hereof. This Proxy will be voted FOR Item 1 unless otherwise specified. (Continued and to be signed on reverse side.) K-SWISS INC. P.O. BOX 11251 NEW YORK, N.Y. 10203-0251 1. ELECTION OF DIRECTORS FOR all nominees [_] WITHHOLD AUTHORITY to vote [_] EXCEPTIONS* [_] listed below for all nominees listed below
Nominees: Jonathan K. Layne, Martyn Wilford (INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark the "Exceptions" box and write that nominee's name on the space provided below.) *Exceptions___________________________________________________________________ 2. To transact such other business as may properly come before the meeting or any adjournment or postponement thereof and as to which the undersigned hereby confers discretionary authority. Change of Address and/ [_] or Comments Mark Here Please sign as name(s) appears. Executors, administrators, guardians, officers of corporations, and others signing in a fiduciary capacity should state their full title as such. Dated:_____________________________________, 1997 _________________________________________________ _________________________________________________ Votes must be Indicated (x) In Black or Blue Ink. PLEASE MARK, DATE AND MAIL THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. PROXY K-SWISS INC. PROXY Class B Common Stock Proxy for Annual Meeting of Stockholders, May 22, 1997 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS for the Annual Meeting of Stockholders to be held on May 22, 1997 at 10:00 a.m. at the K-Swiss Corporate Office, 20664 Bahama Street, Chatsworth, California 91311. The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and the accompanying Proxy Statement for the 1997 Annual Meeting and, revoking all prior Proxies, appoints Steven Nichols and George Powlick, and each of them, with full power of substitution in each, the Proxies of the undersigned to represent the undersigned and vote all shares of Class B Common Stock of the undersigned in K-Swiss Inc., at the Annual Meeting of Stockholders to be held on May 22, 1997, and any adjournments or postponements thereof upon the following matters and in the manner designated on the reverse side hereof. This Proxy will be voted FOR Item 1 unless otherwise specified. (Continued and to be signed on reverse side.) K-SWISS INC. P.O. BOX 11251 NEW YORK, N.Y. 10203-0251 1. ELECTIONS OF DIRECTORS FOR all nominees [_] WITHHOLD AUTHORITY to vote [_] EXCEPTIONS* [_] listed below for all nominees listed below
Nominees: Steven Nichols, George Powlick, Stanley Bernstein, Lawrence Feldman, Stephen Fine (INSTRUCTIONS: To withhold authority to vote for any Individual nominee, mark the "Exceptions" box and write that nominees's name on the space provided below.) *Exceptions___________________________________________________________________ 2. To transact such other business as may properly come before the meeting or any adjournment or postponement thereof and as to which the undersigned hereby confers discretionary authority. Change of Address and/ [_] or Comments Mark Here Please sign as name(s) appears. Executors, administrators, guardians, officers of corporations, and other signing in a fiduciary capacity should state their full title as such. Dated:_____________________________________, 1997 _________________________________________________ _________________________________________________ Votes must be indicated (x) In Black or Blue Ink PLEASE MARK, DATE AND MAIL THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. -----END PRIVACY-ENHANCED MESSAGE-----