<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934, as amended.
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Globecomm Systems Inc.
- --------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:
- --------------------------------------------------------------------------
<PAGE>
(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:
- ---------------------------------------------------------------------------
<PAGE>
GLOBECOMM SYSTEMS INC.
-----------------------
45 OSER AVENUE
HAUPPAUGE, NEW YORK 11788
-----------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 19, 1998
The Annual Meeting of Stockholders (the "Annual Meeting") of Globecomm
Systems Inc. (the "Company") will be held at the offices of the Company, 45
Oser Avenue, Hauppauge, New York 11788 on November 19, 1998, at 10:00 a.m.
(eastern standard time) for the following purposes:
(1) To elect nine directors to serve until the next Annual Meeting of
Stockholders or until their respective successors shall have been
elected and qualified;
(2) To approve the Company's 1999 Employee Stock Purchase Plan;
(3) To ratify the selection of Ernst & Young LLP, as independent
auditors of the Company for fiscal year ending June 30, 1999; and
(4) To transact such other business as may properly come before the
Annual Meeting.
Only stockholders of record at the close of business on September 25, 1998
will be entitled to notice of, and to vote at, the Annual Meeting. A list of
stockholders eligible to vote at the meeting will be available for inspection
at the meeting and for a period of ten days prior to the meeting during
regular business hours at the corporate headquarters at the address above.
Whether or not you expect to attend the Annual Meeting, your proxy vote is
important. To assure your representation at the meeting, please sign and date
the enclosed proxy card and return it promptly in the enclosed envelope,
which requires no additional postage if mailed in the United States or
Canada.
By Order of the Board of Directors
/s/ Thomas A. DiCicco
-----------------------------------
Thomas A. DiCicco
Secretary
October 15, 1998
IT IS IMPORTANT THAT THE ENCLOSED PROXY CARD
BE COMPLETED AND RETURNED PROMPTLY
<PAGE>
GLOBECOMM SYSTEMS INC.
PROXY STATEMENT
OCTOBER 15, 1998
This Proxy Statement is furnished to stockholders of record of Globecomm
Systems Inc. (the "Company") as of September 25, 1998 in connection with the
solicitation of proxies by the Board of Directors of the Company (the "Board
of Directors" or "Board") for use at the Annual Meeting of Stockholders to be
held on November 19, 1998 (the "Annual Meeting").
Shares cannot be voted at the meeting unless the owner is present in
person or by proxy. All properly executed and unrevoked proxies in the
accompanying form that are received in time for the meeting will be voted at
the meeting or any adjournment thereof in accordance with instructions
thereon, or if no instructions are given, will be voted (i) "FOR" the
election of the named nominees, (ii) "FOR" the approval of the Company's 1999
Employee Stock Purchase Plan, and (iii) "FOR" the ratification of Ernst &
Young LLP, independent public auditors, as auditors of the Company for the
fiscal year ending June 30, 1999 and will be voted in accordance with the
best judgment of the persons appointed as proxies with respect to other
matters which properly come before the Annual Meeting. Any person giving a
proxy may revoke it by written notice to the Company at any time prior to
exercise of the proxy. In addition, although mere attendance at the Annual
Meeting will not revoke the proxy, a stockholder who attends the meeting may
withdraw his or her proxy and vote in person. Abstentions and broker
non-votes will be counted for purposes of determining the presence or absence
of a quorum for the transaction of business at the Annual Meeting.
Abstentions will be counted in tabulations of the votes cast on each of the
proposals presented at the Annual Meeting, whereas broker non-votes will not
be counted for purposes of determining whether a proposal has been approved.
The Annual Report of the Company (which does not form a part of the proxy
solicitation material), with the financial statements of the Company for the
fiscal year ended June 30, 1998, is being distributed concurrently herewith
to stockholders.
The mailing address of the principal executive offices of the Company is
45 Oser Avenue, Hauppauge, New York 11788. This Proxy Statement and the
accompanying form of proxy are being mailed to the stockholders of the
Company on or about October 15, 1998.
VOTING SECURITIES
The Company has only one class of voting securities outstanding, its
common stock, par value $.001 per share (the "Common Stock"). At the Annual
Meeting, each stockholder of record at the close of business on September 25,
1998 will be entitled to one vote for each share of Common Stock owned on
that date as to each matter presented at the Annual Meeting. On September 25,
1998, 9,125,908 shares of Common Stock were outstanding. A list of
stockholders eligible to vote at the Annual Meeting will be available for
inspection at the Annual Meeting and for a period of ten days prior to the
Annual Meeting during regular business hours at the principal executive
offices of the Company at the address specified above.
1
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
Unless otherwise directed, the persons appointed in the accompanying form
of proxy intend to vote at the Annual Meeting for the election of the nine
nominees named below as directors of the Company to serve until the next
Annual Meeting of Stockholders or until their successors have been elected
and qualified. If any nominee is unable to be a candidate when the election
takes place, the shares represented by valid proxies will be voted in favor
of the remaining nominees. The Board of Directors currently has ten members,
nine of whom are nominees for re-election. The Board of Directors does not
currently anticipate that any nominee will be unable to be a candidate for
election.
STOCKHOLDER APPROVAL
The affirmative vote of a plurality of the votes of the shares of
Company's outstanding Common Stock present in person or represented by proxy
at the Annual Meeting and entitled to vote on the election of directors is
required to elect the directors.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THESE
NOMINEES.
INFORMATION REGARDING NOMINEES FOR ELECTION AS DIRECTORS
The Board of Directors currently has ten members. The following
information with respect to the principal occupation or employment, other
affiliations and business experience of each of the nine nominees has been
furnished to the Company by such nominee. Except as indicated, each of the
nominees has had the same principal occupation for the last five years.
David E. Hershberg, 61, founded the Company in 1994 and has served as
Chief Executive Officer and Chairman of the Board of Directors since its
inception. From 1976 to 1994, Mr. Hershberg was the President of Satellite
Transmission Systems, Inc. ("STS"), a provider of satellite ground segment
systems and networks, which he founded and which became a subsidiary of
California Microwave, Inc. ("CMI"), and which is currently a subsidiary of
L-3 Communications Corporation. From 1990 to 1994, Mr. Hershberg also served
as Group President of the Satellite Communications Group of CMI, where he
also had responsibility for EFData, Inc., a manufacturer of satellite
communications modems and for Viasat Technology Corp. ("Viasat"), a
manufacturer of communications systems which specialized in portable and
mobile satellite communications equipment. Mr. Hershberg headed the Space
Communications division of ITT Corporation from 1968 to 1972, and the Systems
Division of Comtech Systems, Inc. ("Comtech") from 1972 to 1976. Mr.
Hershberg is a Director of Primus Telecommunications Group, Incorporated
("Primus"), a telecommunications company providing long distance services. He
holds a B.S.E.E. from Rensselaer Polytechnic Institute, an M.S.E.E. from
Columbia University and an M.S. in Management Science from Stevens Institute
of Technology.
Kenneth A. Miller, 53, has served as President and a Director since
joining the Company in November 1994. From 1978 to 1994, he held various
positions with STS, and succeeded Mr. Hershberg as President of that company
in 1994. During his tenure at STS, Mr. Miller developed and implemented
satellite communications systems and networks for customers in the United
States and overseas. Prior to his employment at STS, Mr. Miller was Manager
of Satellite Systems at Comtech and a Satellite Communications Staff Officer
with the United States Army. Mr. Miller holds an M.B.A. from Hofstra
University and a B.S.E.E. from the University of Michigan.
2
<PAGE>
Donald G. Woodring, 51, has served as Vice President--Network and Systems
Analysis and a Director since joining the Company in October 1994. From 1982
to 1994, he was Assistant Vice President for System Analysis at STS. From
1980 to 1982, he was employed by the SHAPE Technical Center and from 1972 to
1980 was employed by the U.S. Department of Defense. Mr. Woodring holds a
B.S. from Penn State University and an M.S.E.E. from Catholic University.
Stephen C. Yablonski, 51, has served as Vice President--Commercial Systems
and a Director since joining the Company in April 1995. From 1988 to 1995, he
was employed by STS, most recently as Vice President and General Manager of
the Commercial Systems and Networks Division. Prior to that he was Vice
President of Engineering at Argo Communications, a telecommunications
services provider. Mr. Yablonski holds a B.S.E.E. from Brown University and
an M.S.E.E. from the University of Pennsylvania.
Herman Fialkov, 76, has been a Director of the Company since January 1995.
In 1968, Mr. Fialkov started the venture capital firm of Geiger & Fialkov and
has been involved in venture investments since that time. He has been a
General Partner of PolyVentures Associates I, L.P., a high technology venture
capital fund since 1987. From 1972 to 1983, he was President and later
Chairman of Standard Microsystems Corporation, a manufacturer and provider of
large-scale integrated circuits and local area network products. He also is a
Director of Primus and a Trustee of Polytechnic University. Mr. Fialkov holds
a B.Ad.E. from New York University.
Shelley A. Harrison, 55, has been a Director of the Company since July
1995. Since 1987, Dr. Harrison has been a Managing General Partner of
PolyVentures Associates II, L.P. ("PolyVentures"). He currently serves as
Chairman and Chief Executive Officer of Spacehab, Inc., which develops, owns
and operates habitable modules that provide space-based laboratory research
facilities and logistics aboard the United States space shuttle fleet. In
1973, Dr. Harrison co-founded Symbol Technologies Inc., a leading provider of
bar code laser scanners and portable terminals, where he served as Chairman
and Chief Executive Officer until 1982. As President of Harrison Enterprises,
from 1982 to 1986, he managed venture financing and technology start-ups. Dr.
Harrison also is a Director of NetManage, Inc., Asymetrix Learning Systems,
Inc., and several privately held high technology portfolio companies. He
holds a B.S.E.E. from New York University and an M.S. and a Ph.D. in
Electrophysics from Polytechnic University.
Benjamin Duhov, 69, has been a Director of the Company since January 1996.
He is a Consultant and the President of Stamford Consulting Group which
provides consulting services to the aerospace industry. He worked for
Thomson-CSF S.A. from June 1975 to October 1993, and for CBS Laboratories,
which was devoted to technical developments in the television and defense
industries, from 1972 to 1975. Mr. Duhov holds a B.S.E.E. from Washington
University.
C. J. Waylan, 57, has been a Director of the Company since January 1997.
He currently serves as President, Chief Executive Officer and Director at
Constellation Communications, Inc., a satellite communications provider of
voice, data, positioning and other services to mobile and fixed-site users.
From May 1996 to September 1997, Dr. Waylan served as Executive Vice
President of NextWave Telecom Inc. ("NextWave"), a provider of wireless
personal telecommunications services. Prior to joining NextWave, Dr. Waylan
worked for GTE Corporation from February 1981 to April 1996, where he served
as Executive Vice President for GTE Mobilnet and President of GTE Spacenet
Corporation. Dr. Waylan also is a Director of Stanford Telecommunications,
Inc., a communications technology company. Dr. Waylan holds a B.S. from the
University of Kansas and an M.S.E.E. and a Ph.D. from the Naval Postgraduate
School.
A. Robert Towbin, 63, has been a Director of the Company since November
1997 and has been a Managing Director of C.E. Unterberg, Towbin (formerly
Unterberg Harris), an investment banking firm, since September 1995. From
3
<PAGE>
January 1994 to August 1995 he was the President and Chief Executive Officer of
the Russian-American Enterprise Fund, a U.S. Government owned investment fund.
From 1987 to 1994, he was employed as a Managing Director of Lehman Brothers.
From 1977 to 1986, Mr. Towbin held various executive positions with L.F.
Rothschild, Unterberg, Towbin, an investment banking firm. He also is a
Director of Bradley Real Estate, Inc., Columbus New Millenium Fund (London),
Globalstar Telecommunications Ltd., Gerber Scientific, Inc., K&F Industries
Inc. and Lancit Media Entertainment Ltd. Mr. Towbin holds a B.A. from Dartmouth
College.
COMMITTEES OF THE BOARD
The Audit Committee of the Board of Directors consists of Mr. Fialkov and
Dr. Waylan and reviews, acts on and reports to the Board of Directors with
respect to various auditing and accounting matters, including the selection
of the Company's auditors, the scope of the annual audits, fees to be paid to
the auditors, the performance of the Company's independent auditors and the
accounting practices of the Company.
The Compensation Committee of the Board of Directors consists of Mr.
Fialkov and Dr. Waylan and determines the salaries and incentive compensation
of the officers of the Company and provides recommendations for the salaries
and incentive compensation of the other employees and the consultants of the
Company. The Compensation Committee also administers various incentive
compensation, stock and benefit plans.
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
During fiscal 1998, the Board of Directors held six regular meetings and
no special meetings. There was one meeting of the Audit Committee and one
meeting of the Compensation Committee during fiscal 1998. All directors
attended 75% or more of the (i) meetings of the Board of Directors and (ii)
meetings of the Committees of the Board on which they served (except that Mr.
Duhov was unable to attend two meetings of the Board of Directors) .
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the requirements of Section 16 of the Securities Exchange Act of
1934, as amended, the Company's Directors, executive officers, and any
persons holding more than ten percent of the Company's Common Stock are
required to report their ownership of the Company's Common Stock and any
changes in that ownership to the Securities and Exchange Commission and the
Nasdaq National Market Surveillance Department. Specific due dates for these
reports have been established and the Company is required to report in this
Proxy Statement any failure to file by these dates during 1998. Based solely
on its review of such forms received by it from such persons for their 1998
transactions, the Company believes that all Directors, officers and
beneficial owners of more than ten percent of the Company's Common Stock were
in compliance with all such filing requirements.
COMPENSATION OF DIRECTORS
Each of Mr. Fialkov and Dr. Waylan receives a fee of $500 per month as
members of the Compensation and Audit Committees. Other directors do not
receive any cash compensation for their service as members of the Board of
Directors, although they are reimbursed for certain expenses incurred in
connection with attendance at Board and Committee meetings.
4
<PAGE>
Stock Option Grant. Under the Automatic Option Grant component of the
Company's 1997 Stock Incentive Plan (the "1997 Plan"), each individual who
first becomes a non-employee Board member on or after August 7, 1997 will
receive an option grant for 15,000 shares of Common Stock on the date such
individual joins the Board, provided such individual has not been in the
prior employ of the Company and provided he is not serving as a member of the
Board pursuant to contractual rights granted to certain groups of
stockholders in connection with their purchase of stock in the Company.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
EXECUTIVE OFFICERS
The executive officers of the Company as of June 30, 1998 were the
following:
<TABLE>
<CAPTION>
NAME AGE POSITION
- -------------------- ----- -------------------------------------------------------------
<S> <C> <C>
David E. Hershberg 61 Chief Executive Officer and Chairman of the Board of
Directors
Kenneth A. Miller 53 President and Director
Thomas A. DiCicco 47 Vice President--Government Systems, Corporate Secretary and
Director
Donald G. Woodring 51 Vice President--Network and Systems Analysis and Director
Stephen C. Yablonski 51 Vice President--Commercial Systems and Director
Ray Stuart 60 Vice President--International Marketing
Paul J. Johnson 43 Vice President--Contracts
Andrew C. Melfi 44 Vice President and Chief Financial Officer
Gerald A. Gutman 55 Vice President and General Manager--Globecomm Systems Mobile
Products Division and President--NetSat Express
Gary C. Gomes 52 Executive Vice President--NetSat Express
</TABLE>
INFORMATION CONCERNING EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS OR ARE NOT
NOMINEES FOR ELECTION AS DIRECTORS
Ray Stuart has served as Vice President--International Marketing since
joining the Company in July 1995. From 1989 to 1995, he was employed by
Comsat RSI, a satellite communications equipment supplier, most recently as
Vice President of Business Development. Mr. Stuart holds a B.S.E.E. from
Mississippi State University.
Paul J. Johnson has served as Vice President--Contracts since joining the
Company in October 1996. From 1991 to 1996, he was Director of Contracts for
STS. He holds a B.B.A. from St. Bonaventure University.
Andrew C. Melfi has served as Vice President since September 1997 and as
Chief Financial Officer since joining the Company in January 1996. From 1982
to 1995 he was the Controller of STS. From 1980 to 1982, he was the Assistant
Controller of Dorne and Margolin, Inc., a designer and manufacturer of
antennas. Mr. Melfi holds an M.B.A. and a B.B.A. in accounting from Dowling
College.
Thomas A. DiCicco has served as Vice President--Government Systems,
Corporate Secretary and a Director since joining the Company in October 1994.
From 1988 to 1994, he was employed by STS, most recently as Senior Director.
5
<PAGE>
He was Vice President of Engineering at Comtech from 1979 to 1988 and was
employed by the AIL Division of Cutler Hammer from 1970 to 1979. Mr. DiCicco
holds a B.S.E.E. from Hofstra University and an A.S. in Engineering Science
from SUNY at Farmingdale.
Gerald A. Gutman has served as Vice President and General
Manager--Globecomm Systems Mobile Products Division since September 1997 and
as President of NetSat Express, Inc. ("NetSat Express"), the majority-owned
subsidiary of the Company, since July 1996. From February 1996 to June 1996,
he served as a consultant to the Company. In 1987, he founded Viasat, where
he served as Chief Executive Officer from 1987 to 1995. From 1977 to 1987,
Mr. Gutman served as President and Chief Executive Officer of Nav-Com
Incorporated, a satellite communications company providing communications
services to the maritime industry. Mr. Gutman has served as Chairman of the
COMSAT Manufacturer's Advisory Committee to Inmarsat, Vice Chairman of the
Mobile Satellite User's Association and as President of the National Marine
Electronics Association. He holds a B.B.A. in Marketing from Hofstra
University.
Gary C. Gomes has served as Executive Vice President of NetSat Express
since January 1997 and he served as Vice President of the Company from
September 1995 to December 1996. From October 1994 to September 1995, Mr.
Gomes served as a consultant to the Company. Prior to that, he was Senior
Vice President of Marketing at STS, where he was employed from March 1983 to
September 1995. From 1971 to 1981, he was employed by Fairchild Industries,
Inc., a provider of services to the aerospace industry. Mr. Gomes holds a
B.A. in Mathematics and Economics from California Western University, an
M.S.I.A. from Carnegie Mellon's Graduate School of Industrial Administration
and a J.D. from the Law School of the University of Pennsylvania.
6
<PAGE>
SUMMARY COMPENSATION TABLE (1)
The following table sets forth information concerning the compensation
paid by the Company for services rendered during the fiscal years ended June
30, 1998 and June 30, 1997 to: (i) the Company's Chief Executive Officer and
(ii) all of the other executive officers whose base salary during fiscal 1998
was at least $100,000 (together, the "Named Executive Officers"). No
individual resigned during fiscal 1998 who otherwise would have been included
in the following table.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
--------------
ANNUAL SECURITIES ALL OTHER
COMPENSATION UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY OPTIONS (2)
- --------------------------------------- ------ -------------- -------------- --------------
<S> <C> <C> <C> <C>
David E. Hershberg,
Chairman and Chief Executive Officer ... 1998 $165,000 -- $6,400
1997 165,000 -- 6,000
Kenneth A. Miller,
President............................... 1998 160,000 -- 6,400
1997 160,000 85,500 6,000
Stephen C. Yablonski,
Vice President--Commercial Systems .... 1998 120,000 -- 3,600
1997 120,000 149,340 --
Ray Stuart,
Vice President--International Marketing 1998 126,000 5,000 5,040
1997 126,000 69,468 5,040
Andrew C. Melfi,
Chief Financial Officer ................ 1998 102,704 5,000 4,108
1997 91,924 45,600 3,677
</TABLE>
- ------------
(1) Other compensation in the form of perquisites and other personal
benefits has been omitted as the aggregate amount of such perquisites
and other personal benefits constituted the lesser of $50,000 or 10%
of the total annual salary and bonus of the Named Executive Officer
for such year. The Company did not award a bonus to any of its
executive officers during fiscal 1998.
(2) Includes annual registrant contributions to the Company's 401(k)
plan.
7
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR(1)
The following table sets forth certain information regarding the option
grants made pursuant to the 1997 Plan during fiscal 1998 to each of the Named
Executive Officers. The Company has never granted any stock appreciation
rights.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE
AT ASSUMED ANNUAL
RATES
OF STOCK PRICE
NUMBER OF
APPRECIATION FOR
SECURITIES PERCENTAGE OF
OPTION TERM(4)
UNDERLYING OPTIONS TOTAL OPTIONS EXERCISE EXPIRATION ---------------------
NAME GRANTED GRANTED(2) PRICE(3) DATE 5% 10%
- --------------------- ------------------ --------------- ---------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C> <C>
David E. Hershberg .. -- -- -- -- -- --
Kenneth A. Miller ... -- -- -- -- -- --
Stephen C. Yablonski -- -- -- -- -- --
Ray Stuart ........... 5,000 2.3% $14.13 8/21/07 $44,431 $112,598
Andrew C. Melfi....... 5,000 2.3 15.75 11/13/07 49,525 125,507
</TABLE>
- ------------
(1) Each option grant becomes exercisable in four equal annual
installments commencing one year after the date of the option grant.
Each option will accelerate and become exercisable for all of the
shares upon certain acquisitions or changes in control of the
Company.
(2) Based on an aggregate of 221,275 options granted to employees in
fiscal 1998, including options granted to the Named Executive
Officers.
(3) The exercise price may be paid in one or more of the following forms:
(i) cash or check made payable to the Company, (ii) shares of Common
Stock held for the requisite period necessary to avoid a charge to
the Company's earnings for financial reporting purposes and valued at
fair market value on the date of exercise or (iii) through a special
sale and remittance procedure through a broker.
(4) Amounts represent hypothetical gains that could be achieved for the
respective options at the end of the ten-year option term. The
assumed 5% and 10% rates of stock appreciation are mandated by rules
of the Securities and Exchange Commission and do not represent the
Company's estimate of the future market price of the Common Stock.
8
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth, for each of the Named Executive Officers,
certain information concerning the value of unexercised options at the end of
fiscal 1998.
<TABLE>
<CAPTION>
NUMBER OF NET VALUES OF UNEXERCISED
SHARES
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS(1)
ACQUIRED ON VALUE ------------------------------ ------------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------- ------------- ---------- ------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
David E. Hershberg .. -- -- -- -- -- --
Kenneth A. Miller ... -- -- 38,475 47,025 $151,720 $159,671
Stephen C. Yablonski 17,000 $125,940 85,029 47,311 360,081 182,643
Ray Stuart ........... -- -- 31,171 43,297 122,584 129,211
Andrew C. Melfi ...... -- -- 17,100 33,500 54,549 65,151
</TABLE>
- ------------
(1) Based upon the market price of $9.00 per share, which was the closing
selling price per share of Common Stock on the Nasdaq National Market
on June 30, 1998, less the option exercise price payable for such
shares.
EMPLOYMENT CONTRACTS AND CHANGE OF CONTROL ARRANGEMENTS
In January 1997, the Company entered into three-year employment agreements
with each of Messrs. Hershberg and Miller (the "Executive Agreements").
Messrs. Hershberg and Miller are required to devote their full-time efforts
to the Company as Chairman of the Board and Chief Executive Officer, and as
President, respectively. The Company is required to compensate Messrs.
Hershberg and Miller at annual rates of $165,000 and $160,000, respectively
(which amounts are reviewed annually by the Board of Directors and are
subject to increase at their discretion). Messrs. Hershberg and Miller are
entitled to all employee benefits generally made available to executive
officers. If the Company terminates the Executive Agreements other than for
disability or cause, the Company will have the following obligations: (i) if
the termination is after the end of the initial three-year term, the Company
must pay the terminated executive one-twelfth of his then applicable annual
base salary as severance pay and (ii) if the termination is before the end of
the initial three-year term, the Company must pay to the terminated
executive, as they become due, all amounts otherwise payable if he had
remained employed by the Company until the end of the third year of the
Executive Agreements. If their employment is terminated other than for cause
following a change of control of the Company, each of Messrs. Hershberg and
Miller will be entitled to receive: (i) a cash payment equal to three times
his respective annual base salary plus fringe benefits and bonus, (ii) a cash
payment equal to three times the Company's 401(k) contribution for such
executive and (iii) medical benefits for one year for the executive and his
dependents. In addition, all stock options will become immediately
exercisable upon a change of control. A "change in control" is defined in the
Executive Agreements as the acquisition of the Company by merger or asset
sale, or a change in control whether effected by a tender offer or a proxy
contest.
9
<PAGE>
The Compensation Committee as Plan Administrator of the 1997 Plan will
have the authority to provide for the accelerated vesting of the shares of
Common Stock subject to outstanding options held by any executive officer or
the shares of Common Stock subject to direct issuances held by any such
individual, in connection with certain changes in control of the Company or
the subsequent termination of the executive officer's employment following
the change in control.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee consists of Mr. Fialkov and Dr.
Waylan. Neither of these individuals was an officer or employee of the
Company at any time during the 1998 fiscal year or at any other time.
10
<PAGE>
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors is responsible for
establishing the base salary and incentive cash bonus programs for the
Company's executive officers and administering certain other compensation
programs for such individuals, subject in each instance to review by the full
Board of Directors. The Compensation Committee also is responsible for the
administration of the 1997 Plan under which grants may be made to executive
officers. The Board of Directors has reviewed and is in accord with the
compensation paid to executive officers in 1998.
GENERAL COMPENSATION POLICY. The fundamental policy of the Compensation
Committee is to provide the Company's executive officers with competitive
compensation opportunities based upon their contribution to the development
and financial success of the Company and their personal performance. It is
the Compensation Committee's objective to have a portion of each executive
officer's compensation contingent upon the Company's performance as well as
upon his own level of performance. Accordingly, the compensation package for
each executive officer is comprised of two elements: (i) base salary which
reflects individual performance and is designed primarily to be competitive
with salary levels in the industry and (ii) long-term stock-based incentive
awards which strengthen the mutuality of interests between the executive
officers and the Company's stockholders.
FACTORS. The principal factors which the Compensation Committee considered
in ratifying the components of each executive officer's compensation package
for 1998 are summarized below. The Compensation Committee may, however, in
its discretion apply entirely different factors in setting executive
compensation for future years.
o BASE SALARY. The base salary for each executive officer is
determined on the basis of the following factors: experience;
personal performance; the salary levels in effect for comparable
positions within and outside the industry; and internal base salary
comparability considerations. The weight given to each of these
factors differs from individual to individual, as the Compensation
Committee deems appropriate.
o BONUS. While it is the general policy of the Company not to award
performance-based cash bonuses, from time to time, the Committee
may authorize cash bonuses if such bonuses are deemed to be in the
best interest of the Company. The circumstances for such awards may
vary but may include bonus payments pursuant to the terms of
negotiated employment arrangements.
o LONG-TERM INCENTIVE COMPENSATION. Long-term incentives are provided
through stock option grants. The grants are designed to align the
interests of each executive officer with those of the stockholders
and provide each individual with a significant incentive to manage
the Company from the perspective of an owner with an equity stake
in the Company. Each grant allows the individual to acquire shares
of the Company's Common Stock at a fixed price per share over a
specified period of time (up to 10 years). Each option generally
becomes exercisable in installments over a four-year period,
contingent upon the executive officer's continued employment with
the Company. Accordingly, the option will provide a return to the
executive officer only if the executive officer remains employed by
the Company during the vesting period, and then only if the market
price of the underlying shares appreciates over the option term.
The number of shares subject to each option grant is set at a level
intended to create a meaningful opportunity for stock ownership based on the
officer's current position with the Company, the base salary associated with
that position, the size of comparable awards made to individuals in similar
positions within the industry, the individual's potential for increased
responsibility and promotion over the option term and the individual's personal
11
<PAGE>
performance in recent periods. The Compensation Committee also considers the
number of unvested options held by the executive officer in order to maintain
an appropriate level of equity incentive for that individual. However, the
Compensation Committee does not adhere to any specific guidelines as to the
relative option holdings of the Company's executive officers. There were 34,950
stock options granted to executive officers in fiscal 1998.
CEO COMPENSATION. In setting the compensation payable to the Company's
Chief Executive Officer, the Compensation Committee seeks to achieve two
objectives: (i) establish a level of base salary competitive with that paid
by companies within the industry which are of comparable size to the Company
and by companies outside of the industry with which the Company competes for
executive talent, and (ii) make a significant percentage of the total
compensation package contingent upon the Company's performance and stock
price appreciation. In fiscal 1998, Mr. Hershberg did not receive any
long-term stock-based incentive awards.
The base salary established for Mr. Hershberg on the basis of the
foregoing criteria was intended to provide a level of stability and certainty
each year. Accordingly, this element of compensation was not affected to any
significant degree by Company performance factors.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M). Section 162(m) of
the Internal Revenue Code, enacted in 1993, generally disallows a tax
deduction to publicly held companies for compensation exceeding $1 million
paid to certain of the corporation's executive officers. The limitation
applies only to compensation which is not considered to be performance-based.
The non-performance based compensation paid to the Company's executive
officers for the 1998 fiscal year did not exceed the $1 million limit per
officer, nor is it expected that the non-performance based compensation to be
paid to the Company's executive officers for fiscal 1999 will exceed that
limit. The 1997 Plan is structured so that any compensation deemed paid to an
executive officer in connection with the exercise of option grants made under
that plan with an exercise price equal to the fair market value of the option
shares on the grant date will qualify as performance-based compensation which
will not be subject to the $1 million limitation. Because it is very unlikely
that the cash compensation payable to any of the Company's executive officers
in the foreseeable future will approach the $1 million limit, the
Compensation Committee has decided at this time not to take any other action
to limit or restructure the elements of cash compensation payable to the
Company's executive officers. The Compensation Committee will reconsider this
decision should the individual compensation of any executive officer ever
approach the $1 million level.
THE COMPENSATION COMMITTEE
MR. HERMAN FIALKOV
DR. C.J. WAYLAN
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PERFORMANCE GRAPH
Set forth below is a graph comparing the annual percentage change in the
Company's cumulative total stockholder return on its Common Stock from August
8, 1997 (the date public trading of the Company's stock commenced) to the
last day of the Company's last completed fiscal year (as measured by dividing
(i) the sum of (A) the cumulative amount of dividends for the measurement
period, assuming dividend reinvestment, and (B) the excess of the Company's
share price at the end over the price at the beginning of the measurement
period, by (ii) the share price at the beginning of the measurement period)
with the cumulative total return so calculated of the Nasdaq Stock Market-US
Index and a Self-Constructed Peer Group Index.
COMPARISON OF 11 MONTH CUMULATIVE TOTAL RETURN*
AMONG GLOBECOMM SYSTEMS INC.,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND PEER GROUP(1)
CUMULATIVE TOTAL RETURN
------------------------------------
8/8/97 6/30/98
GLOBECOMM SYSTEMS INC. 100.00 75.00
PEER GROUP 100.00 89.76
NASDAQ STOCK MARKET (U.S.) 100.00 118.97
- ------------
* ASSUMES $100 INVESTED ON 8/8/97 IN GLOBECOMM SYSTEMS INC.,
THE NASDAQ STOCK MARKET (U.S.) AND THE PEER GROUP -INCLUDING REINVESTMENT
OF DIVIDENDS. FISCAL YEAR ENDING JUNE 30.
(1) Peer Group consists of the following companies: (I) Andrew Corporation,
(II) California Microwave, Inc., (III) Scientific-Atlanta, Inc., (IV) SSE
Telecom, Inc., (V) STM Wireless, Inc., (VI) Vertex Communications Corporation
and (VII) ViaSat, Inc.
13
<PAGE>
PROPOSAL 2
APPROVAL OF 1999 EMPLOYEE STOCK PURCHASE PLAN
The Company's stockholders are also being asked to approve the 1999
Employee Stock Purchase Plan (the "Purchase Plan"), pursuant to which 400,000
shares of Common Stock will be reserved for issuance.
The Purchase Plan is intended to provide eligible employees of the Company
and its participating affiliates with the opportunity to acquire a propriety
interest in the Company through participation in a payroll-deduction based
employee stock purchase plan designed to operate in compliance with Section
423 of the Internal Revenue Code. The Purchase Plan was adopted by the Board
of Directors on September 23, 1998 and will become effective on January 4,
1999 (the "Effective Date"), provided the Purchase Plan is approved by the
stockholders at the Annual Meeting.
The following is a summary of the principal features of the Purchase Plan.
The summary, however, does not purport to be a complete description of all
the provisions of the Purchase Plan. Any stockholder of the Company who
wishes to obtain a copy of the actual plan document may do so upon written
request to the Company's Secretary at the Company's principal executive
offices in Hauppauge, New York.
SHARE RESERVE
400,000 shares of common stock have been reserved for issuance over the
ten-year term of the Purchase Plan.
In the event any change is made to the outstanding shares of Common Stock
by reason of any recapitalization, stock dividend, stock split, combination
of shares, exchange of shares or other change in corporate structure effected
without the Company's receipt of consideration, appropriate adjustments will
be made to (i) the maximum number and class of securities issuable under the
Purchase Plan, (ii) the maximum number and class of securities purchasable
per participant on any one purchase date and (iii) the class and maximum
number of securities subject to each outstanding purchase right and the
purchase price payable per share thereunder.
ADMINISTRATION
The Purchase Plan will be administered by the Compensation Committee of
the Board of Directors. Such committee, as Plan Administrator, will have full
authority to adopt such rules and procedures as it may deem necessary for
proper plan administration and to interpret the provisions of the Purchase
Plan. All costs and expenses incurred in plan administration will be paid by
the Company without charge to participants.
PURCHASE PERIODS
Under the Purchase Plan, shares will be issued through a series of
successive purchase periods, each of a duration of six (6) months. Purchase
periods will run from the first business day in January to the last business
day in June each year and from the first business day in July to the last
business day in December each year. Each participant will be granted a
separate right to purchase shares of Common Stock for each purchase period in
which he or she participates. The purchase right will be granted on the first
day business day of each purchase period and will be automatically exercised
on the last business day of each purchase period. Each purchase right
entitles the participant to purchase the whole number of shares of Common
Stock obtained by dividing the participant's payroll deductions for the
purchase period by the purchase price in effect for such period.
14
<PAGE>
ELIGIBILITY
Any individual who customarily works for more than twenty (20) hours per
week for more than five (5) months per calendar year in the employ of the
Company or any participating affiliate will be eligible to participate in the
Purchase Plan. An individual who is an eligible employee at the start of any
purchase period may join that purchase period at that time.
Participating affiliates include any parent or subsidiary corporations of
the Company, whether now existing or hereafter organized, which elect, with
the approval of the Plan Administrator, to extend the benefits of the
Purchase Plan to their eligible employees.
As of July 1, 1998, approximately 122 employees, including 10 executive
officers, were eligible to participate in the Purchase Plan.
PAYROLL DEDUCTIONS
Each participant may authorize period payroll deductions in any multiple
of one percent (1%) of his or her base salary, up to a maximum of ten percent
(10%).
PURCHASE PRICE
The purchase price per share at which common stock will be purchased on
the participant's behalf on each purchase date will be equal to eighty-five
percent (85%) of the lower of (i) the fair market value per share of Common
Stock on the start date of the purchase period during which the purchase date
occurs or (ii) the fair market value per share of Common Stock on that
purchase date.
PURCHASE PROVISIONS
On the last business day of each purchase period, the accumulated payroll
deductions of each participant will automatically be applied to the purchase
of whole shares of Common Stock at the purchase price in effect for the
participant for that purchase period. However, no participant may, on any one
purchase date, purchase more than 750 shares of Common Stock, subject to
periodic adjustments in the event of certain changes in the Company's
capitalization.
VALUATION
The fair market value per share of Common Stock on any relevant date will
be the closing selling price per share on such date on the Nasdaq National
Market. On July 1, 1998, the fair market value per share of Common Stock was
$8.88 per share.
SPECIAL LIMITATIONS
The Purchase Plan imposes certain limitations upon a participant's rights
to acquire Common Stock, including the following limitations:
(i) No purchase right may be granted to any individual who owns stock
(including stock purchasable under any outstanding purchase rights)
possessing 5% or more of the total combined voting power or value
of all classes of stock of the Company or any or its affiliates.
(ii) No purchase right granted to a participant may permit such
individual to purchase Common Stock at a rate greater than $25,000
worth of such Common Stock (valued at the time such purchase right
is granted) for each calendar year the purchase right remains
outstanding at any time.
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<PAGE>
(iii) No participant may purchase more than 750 shares of Common Stock on
any one purchase date.
TERMINATION OF PURCHASE RIGHTS
The purchase right will immediately terminate upon the participant's loss
of eligible employee status or upon his or her affirmative withdrawal from
the purchase period. The payroll deductions collected for the purchase period
in which the participant withdraws may, at the participant's election, be
immediately refunded or applied to the purchase of Common Stock at the end of
that purchase period. The payroll deductions collected for the purchase
period in which the participant ceases to be an eligible employee will be
immediately refunded.
STOCKHOLDER RIGHTS
No participant will have any stockholder rights with respect to the shares
of Common Stock covered by his or her purchase right until the shares are
actually purchased on the participant's behalf. No adjustment will be made
for dividends, distributions or other rights for which the record date is
prior to the date of such purchase.
ASSIGNABILITY
No purchase right will be assignable or transferable other than in
connection with the participant's death and will be exercisable only by the
participant during his or her lifetime.
ACQUISITION
Should the Company be acquired by merger or asset sale during a purchase
period, all outstanding purchase rights will automatically be exercised
immediately prior to the effective date of such acquisition. The purchase
price will be 85% of the lower of (i) the fair market value per share of
Common Stock on the start date of the purchase period during which the
acquisition occurs or (ii) the fair market value per share of Common Stock
immediately prior to such acquisition.
AMENDMENT AND TERMINATION
The Purchase Plan will terminate upon the earliest to occur of (i)
December 31, 2008, (ii) the date on which all available shares are issued or
(iii) the date on which all outstanding purchase rights are exercised in
connection with an acquisition of the Company.
The Board of Directors may at any time alter, suspend or discontinue the
Purchase Plan. However, the Board of Directors may not, without stockholder
approval, (i) materially increase the number of shares issuable under the
Purchase Plan or the maximum aggregate number of purchasable shares on any
one purchase date except in connection with certain changes in the Company's
capital structure, (ii) alter the purchase price formula so as to reduce the
purchase price, (iii) materially increase the benefits accruing to
participants or (iv) materially modify the requirements for eligibility to
participate in the Purchase Plan.
PLAN BENEFITS
No purchase rights have been granted and no shares have been purchased
under the Purchase Plan.
16
<PAGE>
FEDERAL TAX CONSEQUENCES
The Purchase Plan is intended to be an "employee stock purchase plan"
within the meaning of Section 423 of the Internal Revenue Code. Under a plan
which so qualifies, no taxable income will be recognized by a participant,
and no deductions will be allowable to the Company, in connection with the
grant or the exercise of an outstanding purchase right. Taxable income will
not be recognized until there is a sale or other disposition of the shares
acquired under the Purchase Plan or in the event the participant should die
while still owning the purchased shares.
If the participant sells or otherwise disposes of the purchased shares
within two (2) years after the start date of the purchase period in which
such shares were acquired or within one (1) one year after the actual
purchase date of those shares, then the participant will recognize ordinary
income in the year of sale or disposition equal to the amount by which the
fair market value of the shares on the purchase date exceeded the purchase
price paid for those shares, and the Company will be entitled to an income
tax deduction, for the taxable year in which such sale or disposition occurs,
equal in amount to such excess.
If the participant sells or disposes of the purchased shares more than two
(2) years after the start date of the purchase period in which such shares
were acquired and more than one (1) one year after the actual purchase date
of those shares, then the participant will recognize ordinary income in the
year of sale or disposition equal to the lesser of (i) the amount by which
the fair market value of the shares on the sale or disposition date exceeded
the purchase price paid for those shares or (ii) 15% of the fair market value
of the shares on the start date of that purchase period, and any additional
gain upon the disposition will be taxed as a long-term capital gain. The
Company will not be entitled to any income tax deduction with respect to such
sale or disposition.
If the participant still owns the purchased shares at the time of death,
the lesser of (i) the amount by which the fair market value of the shares on
the date of death exceeds the purchase price or (ii) 15% of the fair market
value of the shares on the start date of the purchase period in which those
shares were acquired will constitute ordinary income in the year of death.
ACCOUNTING TREATMENT
Under current accounting rules, the issuance of Common Stock under the
Purchase Plan will not result in a compensation expense chargeable against
the Company's reported earnings. However, the Company must disclose, in
pro-forma statements to the Company's financial statements, the impact the
purchase rights granted under the Purchase Plan would have upon the Company's
reported earnings were the value of those purchase rights treated as
compensation expense.
STOCKHOLDER APPROVAL
The affirmative vote of a majority of the outstanding voting shares of the
Company present or represented and entitled to vote at the Annual Meeting is
required for approval of the Purchase Plan. Should such stockholder approval
not be obtained, then the Purchase Plan will not be implemented, and no
purchase rights will be granted and no stock issuances will be made under the
Purchase Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
APPROVAL OF THE PURCHASE PLAN. THE BOARD BELIEVES THAT IT IS IN THE BEST
INTERESTS OF THE COMPANY TO IMPLEMENT A PROGRAM OF STOCK OWNERSHIP FOR THE
COMPANY'S EMPLOYEES IN ORDER TO PROVIDE THEM WITH A MEANINGFUL OPPORTUNITY TO
ACQUIRE A SUBSTANTIAL PROPRIETARY INTEREST IN THE COMPANY AND THEREBY
ENCOURAGE SUCH INDIVIDUALS TO REMAIN IN THE COMPANY'S SERVICE AND MORE
CLOSELY ALIGN THEIR INTERESTS WITH THOSE OF THE STOCKHOLDERS.
17
<PAGE>
PROPOSAL 3
INDEPENDENT PUBLIC ACCOUNTANTS
Upon the recommendation of the Audit Committee, the Board of Directors
appointed Ernst & Young LLP, independent public auditors of the Company since
November 27, 1996, as auditors of the Company to serve for the year ending
June 30, 1999, subject to the ratification of such appointment by the
stockholders at the Annual Meeting. A representative of Ernst & Young LLP
will attend the Annual Meeting of Stockholders, will have the opportunity to
make a statement if he or she so desires and will also be available to answer
inquiries.
STOCKHOLDER APPROVAL
The affirmative vote of a majority of the Company's outstanding Common
Stock represented and voting at the Annual Meeting is required to ratify the
appointment of Ernst & Young LLP as independent auditors of the Company to
serve for the year ending June 30, 1999.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP.
On November 27, 1996, the Company dismissed PricewaterhouseCoopers LLP as
its independent accountants. The reports of PricewaterhouseCoopers LLP on the
Company's financial statements for the two fiscal years prior to such
dismissal contained no adverse opinion or disclaimer of opinion, and were not
qualified or modified as to uncertainty, audit scope or accounting
principles. In connection with its audits for the year ended June 30, 1996
and for the period from August 17, 1994 (inception) through June 30, 1995,
and through November 27, 1996, there have been no disagreements with
PricewaterhouseCoopers LLP on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure,
which disagreements if not resolved to the satisfaction of
PricewaterhouseCoopers LLP would have caused them to make reference thereto
in their report on the financial statements for such years. The decision to
change firms was approved by the Company's Board of Directors. The Company
had requested that PricewaterhouseCoopers LLP furnish it with a letter
addressed to the Commission stating whether or not it agrees with the above
statements. A copy of such letter was filed as an exhibit to the Company's
Registration Statement on Form S-1 (Registration No. 333-22425).
18
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of September 25, 1998, certain
information with respect to the beneficial ownership of shares of Common
Stock of: (i) all stockholders known by the Company to be the beneficial
owners of more than 5% of its outstanding Common Stock, (ii) each director,
nominee for director and Named Executive Officer of the Company and (iii) all
directors and executive officers of the Company as a group. Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission and includes voting and investment power with respect to
shares.
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK PERCENTAGE
BENEFICIALLY OF SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER(1) OWNED(2) OUTSTANDING
- -------------------------------------------- ---------------- -------------
<S> <C> <C>
David E. Hershberg .......................... 1,297,000(3) 14.21%
Kenneth A. Miller ........................... 302,750(4) 3.3%
Stephen C. Yablonski ........................ 90,591(5) 1.0%
Ray Stuart .................................. 46,225(6) *
Andrew C. Melfi ............................. 24,200(7) *
Thomas A. DiCicco ........................... 77,312(8) *
Donald G. Woodring .......................... 162,452(9) 1.8%
Herman Fialkov............................... 42,750(10) *
Shelley A. Harrison ......................... 45,778(11) *
Benjamin Duhov .............................. 5,700 *
C.J. Waylan ................................. 14,250(12) *
A. Robert Towbin ............................ 12,590(13) *
All current directors and executive officers
as a group (15 persons)..................... 2,181,098(14) 22.9%
</TABLE>
- ------------
* Represents less than 1%.
(1) Except as otherwise indicated, (i) the stockholders named in the
table have sole voting and investment power with respect to all
shares beneficially owned by them and (ii) the address of all
stockholders listed in the table is: c/o GSI, 45 Oser Avenue,
Hauppauge, New York 11788.
(2) The number of shares of Common Stock outstanding as of September 25,
1998 is 9,125,908. Amounts shown for each stockholder include (i) all
shares of Common Stock owned by each stockholder and (ii) shares of
Common Stock underlying options, warrants and rights of first refusal
exercisable within 60 days of September 25, 1998.
(3) Includes 342,000 shares of Common Stock held by certain members of
Mr. Hershberg's family, over which such shares Mr. Hershberg has
power of attorney to dispose of and invest and 171,000 shares of
Common Stock held by Deerhill Associates, a family partnership of
which Mr. Hershberg is General Managing Partner. Mr. Hershberg
disclaims beneficial ownership of the shares held by his family
members and those held by Deerhill Associates except to the extent of
his proportionate pecuniary interest therein.
(4) Includes 28,500 shares of Common Stock held by Mr. Miller's wife and
25,650 shares of Common Stock held by certain other members of Mr.
Miller's family, of which Mr. Miller disclaims beneficial ownership,
and 42,750 shares of Common Stock issuable upon exercise of stock
options.
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<PAGE>
(5) Consists of 1,425 shares of Common Stock held by Mr. Yablonski's wife
of which Mr. Yablonski disclaims beneficial ownership and 87,166
shares of Common Stock issuable upon exercise of stock options.
(6) Consists of 46,225 shares of Common Stock issuable upon exercise of
stock options.
(7) Includes 24,050 shares of Common Stock issuable upon exercise of
stock options.
(8) Includes 35,624 shares of Common Stock issuable upon exercise of
stock options.
(9) Includes 19,950 shares of Common Stock held by certain members of Mr.
Woodring's family of which Mr. Woodring disclaims beneficial
ownership and 35,624 shares of Common Stock issuable upon exercise of
stock options.
(10) Includes 14,250 shares of Common Stock issuable upon exercise of
stock options.
(11) Consists of 3,028 shares of Common Stock held by PolyVentures of
which Dr. Harrison is the Managing General Partner, and 42,750 shares
of Common Stock issuable upon exercise of stock options. Dr. Harrison
disclaims beneficial ownership of the shares held by PolyVentures
except to the extent of his proportionate pecuniary interest therein.
(12) Consists of 14,250 shares of Common Stock issuable upon the exercise
of stock options.
(13) Includes 1,000 shares held in trust by Mr. Towbin for a member of his
family, of which Mr. Towbin disclaims beneficial ownership and 5,000
shares of Common Stock issuable upon the exercise of stock options.
(14) See Notes (3) through (13) above.
20
<PAGE>
CERTAIN TRANSACTIONS
From July 1, 1997 through September 25, 1998 the Company granted executive
officers and directors of the Company and employees, some of whom are
immediate family members of the Company's executive officers, a total of
229,775 stock options for the purchase of the Company's Common Stock with
exercise prices ranging from $5.63 to $18.38 per share.
In August 1997, the Company consummated its initial public offering. A.
Robert Towbin, a Director of the Company, serves as a Managing Director of
C.E. Unterberg, Towbin, which was formerly Unterberg Harris and a co-managing
underwriter in the initial public offering.
STOCKHOLDER PROPOSALS
Pursuant to the new stockholder proposal rules recently adopted by the
Commission, if the Company has not received notice prior to August 24, 1999
of any matter a stockholder intends to propose for a vote at the 1999 Annual
Meeting of Stockholders, then a proxy solicited by the Board of Directors may
be voted on such matter in the discretion of the proxy holder, without
discussion of the matter in the proxy statement soliciting such proxy and
without such matter as a separate item on the proxy card.
The deadline for stockholders to submit proposals to be considered for
inclusion in the Company's Proxy Statement for next year's Annual Meeting of
Stockholders is anticipated to be June 17, 1999. Such proposals may be
included in next year's Proxy Statement, if they comply with certain rules
and regulations promulgated by the Commission. Stockholder proposals must be
mailed to the attention of the Company's Secretary at the Company's principal
executive offices located at 45 Oser Avenue, Hauppauge, New York 11788.
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<PAGE>
OTHER MATTERS
Management knows of no matters that are to be presented for action at the
Annual Meeting other than those set forth above. If any other matters
properly come before the Annual Meeting, the persons named in the enclosed
form of proxy will vote the shares represented by proxies in accordance with
their best judgment on such matters.
Proxies will be solicited by mail and may also be solicited in person or
by telephone by some regular employees of the Company. The Company may also
consider the engagement of a proxy solicitation firm. Costs of the
solicitation will be borne by the Company.
By Order of the Board of Directors
/s/ Thomas A. DiCicco
-----------------------------------
Thomas A. DiCicco
Secretary
Hauppauge, New York
October 15, 1998
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<PAGE>
APPENDIX I
GLOBECOMM SYSTEMS INC.
1999 EMPLOYEE STOCK PURCHASE PLAN
I. PURPOSE OF THE PLAN
This 1999 Employee Stock Purchase Plan is intended to promote the
interests of Globecomm Systems Inc. by providing eligible employees with the
opportunity to acquire a proprietary interest in the Corporation through
participation in a payroll-deduction based employee stock purchase plan
designed to qualify under Section 423 of the Code.
Capitalized terms herein shall have the meanings assigned to such terms in
the attached Appendix.
II. ADMINISTRATION OF THE PLAN
The Plan Administrator shall have full authority to interpret and construe
any provision of the Plan and to adopt such rules and regulations for
administering the Plan as it may deem necessary in order to comply with the
requirements of Code Section 423. Decisions of the Plan Administrator shall be
final and binding on all parties having an interest in the Plan.
III. STOCK SUBJECT TO PLAN
A. The stock purchasable under the Plan shall be shares of authorized but
unissued or reacquired Common Stock, including shares of Common Stock purchased
on the open market. The maximum number of shares of Common Stock which may be
issued over the term of the Plan shall not exceed 400,000 shares.
B. Should any change be made to the Common Stock by reason of any stock
split, stock dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Common Stock as a class
without the Corporation's receipt of consideration, appropriate adjustments
shall be made to (i) the maximum number and class of securities issuable under
the Plan, (ii) the maximum number and class of securities purchasable per
Participant on any one Purchase Date and (iii) the number and class of
securities and the price per share in effect under each outstanding purchase
right in order to prevent the dilution or enlargement of benefits thereunder.
IV. PURCHASE PERIODS
A. Shares of Common Stock shall be offered for purchase under the Plan
through a series of successive purchase periods until such time as (i) the
maximum number of shares of Common Stock available for issuance under the Plan
shall have been purchased or (ii) the Plan shall have been sooner terminated.
<PAGE>
B. Each purchase period shall have a duration of six (6) months. Purchase
periods shall run from the first business day in January to the last business
day in June each year and from the first business day in July each year to the
last business day in December each year. The first purchase period shall
commence on the Effective Date.
V. ELIGIBILITY
A. Each individual who is an Eligible Employee on the start date of any
purchase period shall be eligible to participate in the Plan for that purchase
period.
B. To participate in the Plan for a particular purchase period, the
Eligible Employee must complete the enrollment forms prescribed by the Plan
Administrator (including a stock purchase agreement and a payroll deduction
authorization form) and file such forms with the Plan Administrator (or its
designate) on or before the start date of the purchase period.
VI. PAYROLL DEDUCTIONS
A. The payroll deduction authorized by the Participant for purposes of
acquiring shares of Common Stock under the Plan may be any multiple of one
percent (1%) of the Base Salary paid to the Participant during each purchase
period, up to a maximum of ten percent (10%). The deduction rate so authorized
shall continue in effect for the entire purchase period. The Participant may
not increase his or her rate of payroll deduction during a purchase period.
However, the Participant may, at any time during the purchase period, reduce
his or her rate of payroll deduction to become effective as soon as possible
after filing the appropriate form with the Plan Administrator. The Participant
may not, however, effect more than one (1) such reduction per purchase period.
B. Payroll deductions shall begin on the first pay day following the start
date of the purchase period and shall (unless sooner terminated by the
Participant) continue through the pay day ending with or immediately prior to
the last day of the purchase period. The amounts so collected shall be credited
to the Participant's book account under the Plan, but no interest shall be paid
on the balance from time to time outstanding in such account. The amounts
collected from the Participant shall not be held in any segregated account or
trust fund and may be commingled with the general assets of the Corporation and
used for general corporate purposes.
C. Payroll deductions shall automatically cease upon the termination of
the Participant's purchase right in accordance with the provisions of the Plan.
D. The Participant's acquisition of Common Stock under the Plan on any
Purchase Date shall neither limit nor require the Participant's acquisition of
Common Stock on any subsequent Purchase Date.
2.
<PAGE>
VII. PURCHASE RIGHTS
A. GRANT OF PURCHASE RIGHT. A Participant shall be granted a separate
purchase right on the start date of each purchase period in which he or she
participates. The purchase right shall provide the Participant with the right
to purchase shares of Common Stock on the Purchase Date upon the terms set
forth below. The Participant shall execute a stock purchase agreement embodying
such terms and such other provisions (not inconsistent with the Plan) as the
Plan Administrator may deem advisable.
Under no circumstances shall purchase rights be granted under the Plan to
any Eligible Employee if such individual would, immediately after the grant,
own (within the meaning of Code Section 424(d)) or hold outstanding options or
other rights to purchase, stock possessing five percent (5%) or more of the
total combined voting power or value of all classes of stock of the Corporation
or any Corporate Affiliate.
B. EXERCISE OF THE PURCHASE RIGHT. Each purchase right shall be
automatically exercised on the Purchase Date, and shares of Common Stock shall
accordingly be purchased on behalf of each Participant (other than any
Participant whose payroll deductions have previously been refunded in
accordance with the Termination of Purchase Right provisions below) on such
date. The purchase shall be effected by applying the Participant's payroll
deductions for the purchase period ending on such Purchase Date to the purchase
of shares of Common Stock (subject to the limitation on the maximum number of
shares purchasable per Participant on any one Purchase Date) at the purchase
price in effect for that purchase period.
C. PURCHASE PRICE. The purchase price per share at which Common Stock will
be purchased on the Participant's behalf on each Purchase Date shall be equal
to eighty-five percent (85%) of the lower of (i) the Fair Market Value per
share of Common Stock on the start date of the purchase period or (ii) the Fair
Market Value per share of Common Stock on that Purchase Date.
D. NUMBER OF PURCHASABLE SHARES. The number of shares of Common Stock
purchasable by a Participant on each Purchase Date shall be the number of
shares obtained by dividing the amount collected from the Participant through
payroll deductions during the purchase period ending with that Purchase Date by
the purchase price in effect for that Purchase Date. However, the maximum
number of shares of Common Stock purchasable per Participant on any one
Purchase Date shall not exceed 750 shares, subject to periodic adjustments in
the event of certain changes in the Corporation's capitalization.
E. EXCESS PAYROLL DEDUCTIONS. Any payroll deductions not applied to the
purchase of shares of Common Stock on any Purchase Date because they are not
sufficient to purchase a whole share of Common Stock shall be held for the
purchase of Common Stock on the next Purchase Date. However, any payroll
deductions not applied to the purchase of Common Stock by reason of the
limitation on the maximum number of shares purchasable by the Participant on
the Purchase Date shall be promptly refunded.
3.
<PAGE>
F. TERMINATION OF PURCHASE RIGHT. The following provisions shall govern
the termination of outstanding purchase rights:
(i) A Participant may, at any time prior to the last day of the
purchase period, terminate his or her outstanding purchase right by filing
the appropriate form with the Plan Administrator (or its designate), and
no further payroll deductions shall be collected from the Participant with
respect to the terminated purchase right. Any payroll deductions collected
during the purchase period in which such termination occurs shall, at the
Participant's election, be promptly refunded or held for the purchase of
shares on the next Purchase Date. If no such election is made at the time
such purchase right is terminated, then the payroll deductions collected
with respect to the terminated right shall be refunded as soon as
possible.
(ii) The termination of such purchase right shall be irrevocable, and
the Participant may not subsequently rejoin the purchase period for which
the terminated purchase right was granted. In order to resume
participation in any subsequent purchase period, such individual must
re-enroll in the Plan (by making a timely filing of the prescribed
enrollment forms) on or before the start date of the new purchase period.
(iii) Should the Participant cease to remain an Eligible Employee for
any reason (including death, disability or change in status) while his or
her purchase right remains outstanding, then that purchase right shall
immediately terminate, and all of the Participant's payroll deductions for
the purchase period in which the purchase right so terminates shall be
promptly refunded. However, should the Participant cease to remain in
active service by reason of an approved unpaid leave of absence, then the
Participant shall have the right, exercisable up until the last business
day of the purchase period in which such leave commences, to (a) withdraw
the payroll deductions collected during such purchase period or (b) have
such funds held for the purchase of shares at the next scheduled Purchase
Date. In no event, however, shall any further payroll deductions be
collected on the Participant's behalf during such leave. Upon the
Participant's return to active service (i) within ninety (90) days
following the commencement of such leave or, (ii) prior to the expiration
of any longer period for which such Participant's right to reemployment
with the Corporation is guaranteed by either statute or contract, his or
her payroll deductions under the Plan shall automatically resume at the
rate in effect at the time the leave began. However, should the
Participant's leave of absence exceed ninety (90) days and his or her
re-employment rights not be guaranteed by either statute or contract, then
the Participant's status as an Eligible Employee will be deemed to
terminate on the ninety-first (91st) day of that leave, and such
Participant's purchase right for the offering period in which that leave
began shall thereupon terminate. An individual who returns to active
employment following such a leave shall be treated as a new Employee for
purposes of the Plan and must, in order to resume
4.
<PAGE>
participation in the Plan, re-enroll in the Plan (by making a timely
filing of the prescribed enrollment forms) on or before his or her
scheduled Entry Date into the offering period.
G. CORPORATE TRANSACTION. Each outstanding purchase right shall
automatically be exercised, immediately prior to the effective date of any
Corporate Transaction, by applying the payroll deductions of each Participant
for the purchase period in which such Corporate Transaction occurs to the
purchase of shares of Common Stock at a purchase price per share equal to
eighty-five percent (85%) of the lower of (i) the Fair Market Value per share
of Common Stock on the start date of the purchase period in which such
Corporate Transaction occurs or (ii) the Fair Market Value per share of Common
Stock immediately prior to the effective date of such Corporate Transaction.
However, the applicable limitation on the number of shares of Common Stock
purchasable per Participant shall continue to apply to any such purchase.
The Corporation shall use reasonable efforts to provide prior written
notice of the occurrence of any Corporate Transaction, and Participants shall,
following the receipt of such notice, have the right to terminate their
outstanding purchase rights prior to the effective date of the Corporate
Transaction.
H. PRORATION OF PURCHASE RIGHTS. Should the total number of shares of
Common Stock which are to be purchased pursuant to outstanding purchase rights
on any particular date exceed the number of shares then available for issuance
under the Plan, the Plan Administrator shall make a pro-rata allocation of the
available shares on a uniform and nondiscriminatory basis, and the payroll
deductions of each Participant, to the extent in excess of the aggregate
purchase price payable for the Common Stock pro-rated to such individual, shall
be refunded.
I. ASSIGNABILITY. The purchase right shall be exercisable only by the
Participant and shall not be assignable or transferable by the Participant.
J. STOCKHOLDER RIGHTS. A Participant shall have no stockholder rights with
respect to the shares subject to his or her outstanding purchase right until
the shares are purchased on the Participant's behalf in accordance with the
provisions of the Plan and the Participant has become a holder of record of the
purchased shares.
VIII. ACCRUAL LIMITATIONS
A. No Participant shall be entitled to accrue rights to acquire Common
Stock pursuant to any purchase right outstanding under this Plan if and to the
extent such accrual, when aggregated with (i) rights to purchase Common Stock
accrued under any other purchase right granted under this Plan and (ii) similar
rights accrued under other employee stock purchase plans (within the meaning of
Code Section 423) of the Corporation or any Corporate Affiliate, would
otherwise permit such Participant to purchase more than Twenty-Five Thousand
Dollars ($25,000) worth of stock of the Corporation or any Corporate Affiliate
(determined on the basis
5.
<PAGE>
of the Fair Market Value of such stock on the date or dates such rights are
granted) for each calendar year such rights are at any time outstanding.
B. For purposes of applying such accrual limitations, the following
provisions shall be in effect:
(i) The right to acquire Common Stock under each outstanding purchase
right shall accrue on the Purchase Date in effect for the purchase period
for which such right is granted.
(ii) No right to acquire Common Stock under any outstanding purchase
right shall accrue to the extent the Participant has already accrued in
the same calendar year the right to acquire Common Stock under one (1) or
more other purchase rights at a rate equal to Twenty-Five Thousand Dollars
($25,000) worth of Common Stock (determined on the basis of the Fair
Market Value per share on the date or dates of grant) for each calendar
year such rights were at any time outstanding.
C. If by reason of such accrual limitations, any purchase right of a
Participant does not accrue for a particular purchase period, then the payroll
deductions which the Participant made during that purchase period with respect
to such purchase right shall be promptly refunded.
D. In the event there is any conflict between the provisions of this
Article and one or more provisions of the Plan or any instrument issued
thereunder, the provisions of this Article shall be controlling.
IX. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan was adopted by the Board on September 23, 1998 and shall
become effective on the Effective Date, provided no purchase rights granted
under the Plan shall be exercised, and no shares of Common Stock shall be
issued hereunder, until (i) the Plan shall have been approved by the
stockholders of the Corporation and (ii) the Corporation shall have complied
with all applicable requirements of the 1933 Act (including the registration of
the shares of Common Stock issuable under the Plan on a Form S-8 registration
statement filed with the Securities and Exchange Commission), all applicable
listing requirements of any stock exchange (or the Nasdaq National Market, if
applicable) on which the Common Stock is listed for trading and all other
applicable requirements established by law or regulation. In the event such
stockholder approval is not obtained, or such compliance is not effected,
within twelve (12) months after the date on which the Plan is adopted by the
Board, the Plan shall terminate and have no further force or effect and all
sums collected from Participants during the initial purchase period hereunder
shall be refunded.
B. Unless sooner terminated by the Board, the Plan shall terminate upon
the earliest to occur of (i) the last business day in December 2008, (ii) the
date on which all shares available for issuance under the Plan shall have been
sold pursuant to purchase rights exercised
6.
<PAGE>
under the Plan or (iii) the date on which all purchase rights are exercised in
connection with a Corporate Transaction. No further purchase rights shall be
granted or exercised, and no further payroll deductions shall be collected,
under the Plan following such termination.
X. AMENDMENT/TERMINATION OF THE PLAN
A. The Board may alter, amend, suspend or terminate the Plan at any time
to become effective immediately following the close of any purchase period.
However, the Plan may be amended or terminated immediately upon Board action,
if and to the extent necessary to assure that the Corporation will not
recognize, for financial reporting purposes, any compensation expense in
connection with the shares of Common Stock offered for purchase under the Plan,
should the financial accounting rules applicable to the Plan at the Effective
Time be subsequently revised so as to require the recognition of compensation
expense in the absence of such amendment or termination.
B. In no event may the Board effect any of the following amendments or
revisions to the Plan without the approval of the Corporation's stockholders:
(i) increase the number of shares of Common Stock issuable under the Plan or
the maximum number of shares purchasable per Participant on any one Purchase
Date, except for permissible adjustments in the event of certain changes in the
Corporation's capitalization, (ii) alter the purchase price formula so as to
reduce the purchase price payable for the shares of Common Stock purchasable
under the Plan or (iii) modify eligibility requirements for participation in
the Plan.
XI. GENERAL PROVISIONS
A. All costs and expenses incurred in the administration of the Plan shall
be paid by the Corporation.
B. Nothing in the Plan shall confer upon the Participant any right to
continue in the employ of the Corporation or any Corporate Affiliate for any
period of specific duration or interfere with or otherwise restrict in any way
the rights of the Corporation (or any Corporate Affiliate employing such
person) or of the Participant, which rights are hereby expressly reserved by
each, to terminate such person's employment at any time for any reason, with or
without cause.
7.
<PAGE>
SCHEDULE A
CORPORATIONS PARTICIPATING IN
1999 EMPLOYEE STOCK PURCHASE PLAN
AS OF THE EFFECTIVE DATE
GLOBECOMM SYSTEMS INC.
<PAGE>
APPENDIX
The following definitions shall be in effect under the Plan:
A. BASE SALARY shall mean the regular base salary paid to a Participant by
one or more Participating Companies during such individual's period of
participation in the Plan, plus any pre-tax contributions made by the
Participant to any Code Section 401(k) salary deferral plan or any Code Section
125 cafeteria benefit program now or hereafter established by the Corporation
or any Corporate Affiliate.
B. BOARD shall mean the Corporation's Board of Directors.
C. CODE shall mean the Internal Revenue Code of 1986, as amended.
D. COMMON STOCK shall mean the Corporation's common stock.
E. CORPORATE AFFILIATE shall mean any parent or subsidiary corporation of
the Corporation (as determined in accordance with Code Section 424), whether now
existing or subsequently established.
F. CORPORATE TRANSACTION shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities possessing more
than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities are transferred to a person or
persons different from the persons holding those securities immediately
prior to such transaction, or
(ii) the sale, transfer or other disposition of all or substantially
all of the assets of the Corporation in complete liquidation or
dissolution of the Corporation.
G. CORPORATION shall mean Globecomm Systems Inc., a Delaware corporation,
and any corporate successor to all or substantially all of the assets or voting
stock of Globecomm Systems Inc. by appropriate action adopt the Plan.
H. EFFECTIVE DATE shall mean January 4, 1999. Any Corporate Affiliate
which becomes a Participating Corporation after such Effective Date shall
designate a subsequent Effective Date with respect to its
employee-Participants.
I. ELIGIBLE EMPLOYEE shall mean any person who is employed by a
Participating Corporation on a basis under which he or she is regularly
expected to render more than twenty (20) hours of service per week for more
than five (5) months per calendar year for earnings considered wages under Code
Section 3401(a).
A-1.
<PAGE>
J. EMPLOYEE shall mean an individual who is in the employ of the
Corporation or any Corporate Affiliate subject to the control and direction of
the employer entity as to both the work to be performed and the manner and
method of performance.
K. FAIR MARKET VALUE per share of Common Stock on any relevant date shall
be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq National
Market, then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question, as such price is reported
by the National Association of Securities Dealers on the Nasdaq National
Market or any successor system. If there is no closing selling price for
the Common Stock on the date in question, then the Fair Market Value shall
be the closing selling price on the last preceding date for which such
quotation exists.
(ii) If the Common Stock is at the time listed on any Stock Exchange,
then the Fair Market Value shall be the closing selling price per share of
Common Stock on the date in question on the Stock Exchange determined by
the Plan Administrator to be the primary market for the Common Stock, as
such price is officially quoted in the composite tape of transactions on
such exchange. If there is no closing selling price for the Common Stock
on the date in question, then the Fair Market Value shall be the closing
selling price on the last preceding date for which such quotation exists.
L. 1933 ACT shall mean the Securities Act of 1933, as amended.
M. PARTICIPANT shall mean any Eligible Employee of a Participating
Corporation who is actively participating in the Plan.
N. PARTICIPATING CORPORATION shall mean the Corporation and such Corporate
Affiliate or Affiliates as may be authorized from time to time by the Board to
extend the benefits of the Plan to their Eligible Employees. The Participating
Corporations in the Plan as of the Effective Date are listed in attached
Schedule A.
O. PLAN shall mean the Corporation's 1999 Employee Stock Purchase Plan, as
set forth in this document.
P. PLAN ADMINISTRATOR shall mean the committee of two (2) or more Board
members appointed by the Board to administer the Plan.
Q. PURCHASE DATE shall mean the last business day of each purchase period.
R. SERVICE shall mean the performance of services to the Corporation or
any Corporate Affiliate by a person in the capacity of an Employee.
S. STOCK EXCHANGE shall mean either the American Stock Exchange or the New
York Stock Exchange.
A-2.
<PAGE>
APPENDIX II
(Form of Proxy)
GLOBECOMM SYSTEMS INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - November 19, 1998
(THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY)
The undersigned stockholder of Globecomm Systems Inc. hereby appoints
David E. Hershberg and Kenneth A. Miller, and each of them, with full power of
substitution, proxies to vote the shares of common stock which the undersigned
could vote if personally present at the Annual Meeting of Stockholders of
Globecomm Systems Inc. to be held at the offices of Globecomm Systems Inc.,
45 Oser Avenue, Hauppauge, New York 11788, on November 19, 1998, telephone
number 516-231-9800, at 10:00 a.m. (eastern standard time), or any adjournment
thereof.
1. ELECTION OF DIRECTORS (for terms as described in the Proxy Statement)
[ ] FOR all nominees below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary) to vote for all nominees below
Benjamin Duhov, Herman Fialkov, Shelley A. Harrison, David E. Hershberg,
Kenneth A. Miller, A. Robert Towbin, C. J. Waylan, Donald G. Woodring
and Stephen C. Yablonski.
INSTRUCTION: To withhold authority to vote for an individual nominee,
write the nominee's name in the space provided below:
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2. APPROVAL OF EMPLOYEE STOCK PURCHASE PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN WITH RESPECT TO
proposal to approve the adoption of the Company's 1999 Employee Stock
Purchase Plan.
3. RATIFICATION OF ACCOUNTANTS
[ ] FOR [ ] AGAINST [ ] ABSTAIN WITH RESPECT TO
proposal to ratify the selection of Ernst & Young LLP, as independent
auditors of the Company as described in the Proxy Statement.
4. IN THEIR DISCRETION UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE
THE MEETING
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION
OF THE PERSONS NOMINATED BY MANAGEMENT AS DIRECTORS AND FOR PROPOSALS 2
AND 3.
Please date and sign exactly as your name appears on the envelope in which
this material was mailed. If shares are held jointly, each stockholder
should sign. Executors, administrators, trustees, etc. should use full
title and, if more than one, all should sign. If the stockholder is a
corporation, please sign full corporate name by an authorized officer.
------------------------------------------
Signature of Stockholder
------------------------------------------
Print name
Dated:
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