<PAGE>
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 14C-5(D)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or Section 240.14a-12
The Score Board, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
The Score Board, Inc.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 1 4a.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
[_] 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:
<PAGE>
THE SCORE BOARD, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JANUARY 10, 1997
TO OUR SHAREHOLDERS:
The Annual Meeting of Shareholders of THE SCORE BOARD, INC. will be held on
Friday, January 10, 1997 at 1:30 p.m., at The Mansion at Main Street, Plaza
3000, Kresson & Evesham Roads, Voorhees, New Jersey 08043 for the following
purposes:
1. To elect five members of the Board of Directors for a one-year term;
2. To consider and act on an amendment to The Score Board, Inc. 1992
Stock Incentive Plan which increases the number of shares issuable under
the plan from 1,200,000 to 1,850,000;
3. To consider and act on an amendment to The Score Board, Inc. 1992
Directors Stock Option Plan which increases the number of shares issuable
under the plan from 400,000 to 800,000; and
4. To transact such other and further business as may properly come
before the meeting or any postponement or adjournment thereof.
The Board of Directors has fixed December 2, 1996, as the record date for
the determination of shareholders entitled to vote at the Annual Meeting. Only
shareholders of record at the close of business on that date will be entitled
to notice of, and to vote at, the Annual Meeting.
You are cordially invited to attend the Annual Meeting in person. Whether or
not you expect to attend the Annual Meeting in person, you are urged to sign
and date the enclosed proxy and return it promptly in the envelope provided
for that purpose.
By Order of the Board of Directors,
Patrick J. Wujcik, Vice President,
General Counsel and Secretary
December 7, 1996
<PAGE>
THE SCORE BOARD, INC.
1951 OLD CUTHBERT ROAD
CHERRY HILL, NEW JERSEY 08034
----------------
PROXY STATEMENT
----------------
The enclosed proxy is solicited by and on behalf of The Score Board, Inc., a
New Jersey corporation (the "Company"), for use at the Annual Meeting of
Shareholders to be held on Friday, January 10, 1997 at 1:30 P.M., at the The
Mansion at Main Street, Plaza 3000, Kresson & Evesham Roads, Voorhees, New
Jersey 08043, and at any postponement or adjournment thereof (the "Annual
Meeting"). The approximate date on which this Proxy Statement and the
accompanying form of proxy will first be sent or given to shareholders is
December 7, 1996. Sending a signed proxy will not affect the shareholder's
right to attend the Annual Meeting and vote in person since the proxy is
revocable. The grant of a later proxy revokes this proxy. The presence at the
meeting of a shareholder who has given a proxy does not revoke the proxy
unless the shareholder votes the shares subject to the proxy by written ballot
or files written notice of the revocation with the secretary of the meeting
prior to the voting of proxy.
The expense of the proxy solicitation will be borne by the Company. In
addition to solicitation by mail, proxies may be solicited in person or by
telephone or telecopier by directors, officers or employees of the Company
without additional compensation. In addition, Shareholder Communications
Corporation will provide solicitation services to the Company for a fee of
$3,500 plus related expenses. The Company will, on request, reimburse
shareholders of record who are brokers, dealers, banks or voting trustees, or
their nominees, for their reasonable expenses in sending proxy materials and
annual reports to the beneficial owners of the shares they hold of record.
A form of proxy is enclosed. If properly executed and received in time for
voting, and not revoked, the enclosed proxy will be voted as indicated in
accordance with the instructions thereon. If no directions to the contrary are
indicated, the persons named in the enclosed proxy will vote all shares in
favor of the proposals specified in the attached notice.
The enclosed proxy confers discretionary authority to vote with respect to
any and all of the following matters that may come before the meeting: (i)
matters which the Company does not know about a reasonable time before the
proxy solicitation and are properly presented at the meeting; (ii) approval of
the minutes of a prior meeting of shareholders, if such approval does not
amount to ratification of the action taken at the meeting; (iii) the election
of any person to any office for which a bona fide nominee is unable to serve
or for good cause will not serve; and (iv) matters incident to the conduct of
the meeting. In connection with such matters, the persons named in the
enclosed form of proxy will vote in accordance with their best judgment.
OUTSTANDING SHARES AND VOTING RIGHTS
The Company had 14,694,337 shares of Common Stock, par value $.01 per share
("Common Stock"), outstanding at the close of business on December 2, 1996,
the record date fixed for the determination of shareholders entitled to notice
of and to vote at the Annual Meeting. The presence, in person or by proxy, of
shareholders entitled to cast a majority of the votes which all shareholders
are entitled to cast on a particular matter constitutes a quorum for the
purpose of considering such matter. Each share of Common Stock outstanding is
entitled to one vote on each matter which may be brought before the Annual
Meeting. The election of directors will be determined by a plurality vote, and
the nominees receiving the most "for" votes will be elected. Approval of any
other proposal will require the affirmative vote of a majority of the votes
cast with respect to such proposal. An abstention, withholding of authority to
vote for or broker non-vote, therefore, will not have the same legal effect as
an "against" vote and will not be counted in determining whether the proposal
has received the required shareholder vote. Shareholders do not have appraisal
or dissenter rights with respect to any of the proposals specified in the
attached notice.
1
<PAGE>
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
YEAR OF
EXPIRATION
OF TERM AS
NAME AGE POSITION DIRECTOR
---- --- -------- ----------
<S> <C> <C> <C>
Kenneth Goldin.................... 30 Chairman of the Board, Chief 1996
Executive Officer and
President
Barry Bookman..................... 49 Executive Vice President, --
Chief Operating Officer
Michael D. Hoppman................ 34 Chief Financial Officer and --
Sr. Vice President--Finance
and Operations
Roy G. Hyden...................... 43 Vice President--Trading Card --
Operations
James C. Robinson................. 31 Vice President--Marketing --
Michael A. Balser................. 28 Vice President--Sports and --
Entertainment Licensing
Patrick J. Wujcik................. 33 Vice President-- --
Administration, Secretary
and General Counsel
Ira Lubert........................ 46 Director 1996
Allan R. Lyons.................... 55 Director 1996
Fred A. Shabel.................... 64 Director 1996
Gerald B. Shreiber................ 54 Director 1996
Richard C. Yancey................. 69 Director 1996
</TABLE>
ELECTION OF DIRECTORS
Five (5) directors are expected to be elected at the Annual Meeting to serve
on the Company's Board of Directors until the next Annual Meeting of
Shareholders and until each of their respective successors has been duly
elected and qualified as provided in the Company's By-Laws.
All nominees are currently serving on the Board of Directors under terms
which will expire at the Annual Meeting. If any of the nominees becomes unable
to serve, or for good cause will not serve, the persons named in the enclosed
form of proxy will vote in accordance with their best judgment for the
election of such substitute nominee or nominees as shall be designated by the
Board of Directors. The Company's Board of Directors expects all nominees to
be willing and able to serve.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE
NOMINEES FOR DIRECTOR.
The following information describes the current and past business
experiences, certain directorships and the age of each nominee for director
and other executive officers of the Company.
Kenneth Goldin has been employed by the Company in various capacities since
1987 and has been a Director since July 1989. Mr. Goldin has served as
Chairman of the Board, President and Chief Executive Officer of the Company
since May 22, 1994, and served as Executive Vice President from July 1989
through May 21, 1994. He is the son of Carole Goldin.
2
<PAGE>
Ira M. Lubert was first elected a director in November, 1996. Since 1991, he
has been a managing director of Technology Leaders Management L.P., a venture
capital management company which is affiliated with Safeguard Scientifics,
Inc. This company manages TLO II and TL II See "Security Ownership of Certain
Beneficial Owners and Management". Mr. Lubert is a director of National Media
Corporation, CompuCom Systems, Inc., and Sanchez Computer Associates, Inc.
Allan R. Lyons has served as a Director of the Company since June 1990.
Since November 1993, Mr. Lyons has been the Chairman of the Board and Chief
Executive Officer of Piaker & Lyons, P.C., Certified Public Accountants, and
he served as Executive Vice President prior thereto. Mr. Lyons also serves as
a director of Franklin Credit Management Corporation.
Gerald B. Shreiber has served as a Director of the Company since December
1994. Mr. Shreiber is the founder of J&J Snack Foods Corp. and has served as
its Chairman of the Board, President and Chief Executive Officer since its
inception in 1971.
Richard C. Yancey has served as a Director of the Company since November
1992. Mr. Yancey had been an investment banker with Dillon, Read & Co. Inc.
from 1952 through 1992, holding various positions, including managing director
from 1975 to 1990, director from 1990 to 1991, and senior advisor from 1991
through 1992. In addition, Mr. Yancey currently serves as a director of CapMac
Holdings, Inc. and eight mutual fund companies of The Composite Group.
Barry Bookman has been Executive Vice President and Chief Operating Officer
of the Company since May 1996. From 1989 through 1993 he was employed by the
Company as Vice President--Operations. From January 1994 through April 1996
Mr. Bookman ran Barron Enterprises, a marketing and distribution company, that
he still owns.
Michael D. Hoppman has been employed by the Company in various capacities,
including Chief Financial Officer, Corporate Controller, Vice President--
Operations and Vice President--Finance, since March 1990. Mr. Hoppman has
served as Chief Financial Officer since March 1996 and Vice President of
Finance of the Company since April 1994. Mr. Hoppman had been an accountant
with Ernst and Young from June 1984 from February 1990, holding various
positions, including audit manager from 1988 to 1990.
Roy G. Hyden has served as the Company's Vice President--Trading Card
Operations since March 1996, and served as Vice President--Operations from
August 1994 through March 1996. Mr. Hyden was the Director of Operations of
the Company's wholly-owned subsidiary, Classic Games, Inc. from October 1993
until August 1994. From July 1974 through July 1993, Mr. Hyden was employed by
Western Publishing Company, Inc., a manufacturer and distributor of books,
games and puzzles, holding several positions, including director of quality
assurance.
James C. Robinson has served as the Company's Vice President--Marketing
since September 1994, and was the Director of Marketing from April 1992
through August 1994. From April 1990 through March 1992, Mr. Robinson was
director of marketing of SI Sport International, Inc., a sports marketing and
management firm.
Patrick J. Wujcik has been employed in the Company's legal department since
February 1994. Mr. Wujcik has served as General Counsel since June 1995, as
corporate secretary since March 1995, and as Vice President of Administration
since March 1996. From May 1992 through February 1994, Mr. Wujcik was an
associate in the corporate department of Pepper, Hamilton & Scheetz, a law
firm based in Philadelphia, Pennsylvania. He was an associate at the law firm
of Braemer Abelson & Hitchner prior thereto.
3
<PAGE>
Michael A. Balser has been employed by the Company in various capacities
since 1990, and has served as Vice President--Sports and Entertainment
Licensing (responsible for negotiating and maintaining licensing and
sublicensing agreements) since August 1994.
Each director is elected for a one-year period ending on the date of the
Company's next Annual Meeting of Shareholders.
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the directors and certain officers of the Company, and persons who own more
than ten percent of the Company's Common Stock, to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of such Common Stock. Such directors, officers and more than ten
percent shareholders are required by regulation to furnish the Company with
copies of all Section 16(a) reports which they file. To the Company's
knowledge, based solely upon a review of the reports furnished to the Company,
all such reports were filed on a timely basis.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In June 1994, the Company received proceeds of approximately $2,000,000 from
a key man life insurance policy on the life of Paul Goldin, the Company's
former Chairman of the Board, Chief Executive Officer and President. In
accordance with Mr. Goldin's employment agreement, the Company is required to
pay approximately $900,000 to Mr. Goldin's estate. During fiscal 1996, $270,000
was paid and the amount payable to Mr. Goldin's estate as of January 31, 1996
was $468,000.
On November 6, 1996, the Company issued 1,600,000 shares of its Common Stock
at $2.49 per share and warrants to acquire 2,270,000 shares of its Common Stock
at $3.07 per share to purchasers led by TL Ventures (Technology Leaders
Management, Inc.). Pursuant to the Securities Purchase Agreement, TLO II and TL
II have the right to name a director of the Company and have designated Ira
Lubert as their nominee.
DIRECTOR MEETINGS AND DIRECTOR COMPENSATION
The Board of Directors held four meetings in fiscal year 1996. No director
attended fewer than seventy-five percent of the meetings of the Board of
Directors or committee meetings of committees on which he served.
The Board of Directors has the authority to establish reasonable compensation
of directors for services to the Company. Additionally, pursuant to the terms
of the 1992 Directors Stock Option Plan, each eligible non-employee director is
entitled to receive on September 1st of each fiscal year: (i) an option to
purchase 15,000 shares of Common Stock at an exercise price equal to the fair
market value of the Common Stock on the date the option is granted, which
option will first be exercisable six months after the date of grant; and (ii)
an option to purchase 15,000 shares of Common Stock at an exercise price equal
to 120% of the fair market value of the Common Stock on the date the option is
granted, which option will first be exercisable on the date of grant.
Messrs. Lyons, Shabel, Shreiber and Yancey were paid $2,000 each for
attending committee meetings during fiscal year 1996. Pursuant to the Company's
1992 Directors Stock Option Plan, in September 1995, Messrs. Lyons, Shabel,
Shreiber and Yancey were each granted 15,000 non-qualified stock options (the
"Options") at an exercise price of $6.00 per share (100% of the fair market
value of the Company's Common
4
<PAGE>
Stock on the date of grant), and 10,000 retainer options (the "Retainer
Options") at an exercise price of $7.20 per share (120% of the fair market
value of the Company's Common Stock on the date of grant). The Options and
Retainer Options all expire upon the earlier of ten years from their
respective dates of grant or three months from the date the recipient ceases
to be a director of the Company. The Options and Retainer Options became
exercisable on March 1, 1996 and September 1, 1995, respectively. Each of
Messrs. Lyons, Shabel, Shreiber and Yancey were also granted an additional
Retainer Option to purchase 5,000 shares at an exercise price of $7.20 per
share, subject to the adoption by the Company's shareholders of an amendment
to the 1992 Directors Stock Option Plan increasing the number of shares
available.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company's Board of Directors has appointed an Audit Committee and a
Compensation Committee. The Company does not have a standing nominating
committee of the Board of Directors. The entire Board of Directors performs
the function of the nominating committee on an ad hoc basis.
Audit Committee. The members of the Audit Committee are Messrs. Lyons
(Chairman), Shabel, Shreiber and Yancey. The Audit Committee is responsible
for making recommendations for the selection of the Company's independent
public accountants and reviewing with them the scope, status and results of
audit. The Audit Committee also is responsible for reviewing accounting
policies and internal control procedures for preparation of financial
statements and all potential conflict-of-interest situations resulting from
related party transactions. The Audit Committee held four meetings during
fiscal year 1996.
Compensation Committee. The members of the Compensation Committee are
Messrs. Lyons (Chairman), Shabel, Shreiber and Yancey. The Compensation
Committee is responsible for recommending remuneration arrangements for senior
management and directors, and for adoption of compensation plans in which
officers and directors are eligible to participate subject to approval of the
entire Board of Directors. The Compensation Committee held one meeting during
fiscal year 1996.
5
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain summary information concerning the
compensation paid to the Company's Chief Executive Officer and to the four
most highly compensated executive officers whose total annual salary and bonus
were in excess of $100,000 (collectively, the "Named Executive Officers") for
services rendered in all capacities to the Company and its subsidiaries for
the years ended January 31, 1996, 1995 and 1994:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
- ------------------------------------------------------ ------------
FISCAL SECURITIES ALL OTHER
YEAR UNDERLYING COMPEN-
NAME AND ENDED SALARY BONUS OPTIONS SATION
PRINCIPAL POSITION JANUARY 31, ($) ($) (#) ($)
------------------ ----------- -------- ------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Kenneth Goldin........... 1996 $362,407 0 70,000 $ 67,003(1)
Chief Executive Officer 1995 $375,822 0 150,000 $ 39,499
1994 $190,750 0 120,000 $ 8,363
Michael A. Berkus........ 1996 $195,365 $40,000 25,000 $ 60,793(1)
Sr. V.P.--Sales &
Marketing (2) 1995 $ 10,385 0 50,000 $117,400
Nathan T. Schelle........ 1996 $140,654 0 15,000 $ 1,163(1)
Sr. V.P.--Finance (3) 1995 $ 15,577 0 0 0
Michael D. Hoppman....... 1996 $104,429 0 10,000 $ 10,314(1)
V.P.--Finance 1995 $103,608 0 10,000 $ 8,983
1994 $ 77,423 $15,000 18,000 $ 4,800
Michael A. Balser........ 1996 $100,827 0 25,000 $ 49,389(1)
V.P.--Licensing 1995 $ 91,977 0 3,000 0
1994 $ 50,861 0 4,600 0
</TABLE>
- --------
(1) Includes (a) Company contributions under its profit sharing plan for
certain of the Named Executive Officers (Messrs. Goldin $9,355, Hoppman
$4,684 and Balser $4,293); (b) Company payments on behalf of the Named
Executive Officers of certain life insurance premiums (Messrs. Goldin
$43,428 and Hoppman $713); (c) car allowances for certain of the Named
Executive Officers (Messrs. Goldin $14,220, Berkus $12,168, Schelle
$1,163, Hoppman $4,917 and Balser $5,096); (d) certain moving bonuses
(Messr. Balser $40,000); and (e) certain housing and expense allowances
(Messr. Berkus $48,625).
(2) As of May 31, 1996, Mr. Berkus was no longer an officer or employee of the
Company.
(3) As of March 22, 1996, Mr. Schelle was no longer an officer or employee of
the Company.
6
<PAGE>
The following table sets forth information concerning individual grants of
stock options made during the fiscal year ended January 31, 1996 to each of
the Named Executive Officers:
OPTION GRANTS IN FISCAL YEAR ENDED JANUARY 31, 1996
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED ANNUAL
RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
- ---------------------------------------------------------- --------------------
NUMBER OF
SECURITIES
UNDERLYING EXERCISE
OPTIONS OR BASE
GRANTED PRICE EXPIRATION
NAME (#) (1) ($/SH) DATE 5% ($)(2) 10% ($)(2)
---- ---------- -------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
Kenneth Goldin............ 70,000(3) $4.125 1/31/2000 $79,776 $176,825
Michael A. Berkus......... 25,000(4) $4.00 2/7/2000 $27,628 $ 61,050
Nathan T. Schelle......... 15,000(5) $4.00 9/22/1996 $16,577 $ 36,631
Michael D. Hoppman........ 10,000(6) $4.00 2/7/2000 $11,051 $ 24,420
Michael A. Balser......... 20,000(7) $4.00 2/7/2000 $27,103 $ 48,841
5,000(7) $5.75 6/29/2000 $ 7,943 $ 17,552
</TABLE>
- --------
(1) The options granted to Messrs. Goldin, Berkus, Schelle, Hoppman and Balser
were granted under the Company's 1992 Stock Incentive Plan, with exercise
prices equal to the fair market value on the date of grant and a term of
five years.
(2) The five percent and ten percent assumed rates of appreciation are
mandated by the rules of the Securities and Exchange Commission and do not
represent the Company's estimate or projection of future stock price or
performance.
(3) Effective February 1, 1995, Mr. Goldin was conditionally granted an option
to purchase 70,000 shares of Common Stock at an exercise price of $4.125
per share. The option became exercisable with respect to 35,000 shares on
August 1, 1995. The remainder of the option will become exercisable once
certain conditions are met.
(4) One-third of the option became exercisable February 8, 1996. One-third of
the option will become exercisable on February 8, 1997 and February 8,
1998, respectively.
(5) The option is currently exercisable.
(6) One-third of the option became exercisable February 8, 1996. One-third of
the option will become exercisable on February 8, 1997 and February 8,
1998, respectively.
(7) Effective February 8, 1995, Mr. Balser was granted an option to purchase
20,000 shares of Common Stock at an exercise price of $4.00 per share. The
following options were canceled: (i) option to purchase 2,000 shares of
Common Stock at an exercise price of $17.00 per share; (ii) option to
purchase 4,600 shares of Common Stock at an exercise price of $8.38 per
share; and (iii) option to purchase 3,000 shares of Common Stock at an
exercise price of $9.13 per share. One-third of the option to purchase
20,000 shares became exercisable on August 8, 1995 and February 8, 1996,
respectively, and one-third of the option will become exercisable on
August 8, 1996. One-half of the option to purchase 5,000 shares will
become exercisable on June 30, 1996 and June 30, 1997, respectively.
7
<PAGE>
The following table sets forth information concerning each exercise of stock
options during the fiscal year ended January 31, 1996 by each of the Named
Executive Officers and the value of unexercised options held by each of the
Named Executive Officers as of January 31, 1996:
AGGREGATED OPTION EXERCISES IN FISCAL YEAR ENDED JANUARY 31, 1996
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS
AT FY-END (#) AT FY-END ($)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE (1)
---- --------------- ------------ -------------- -----------------
<S> <C> <C> <C> <C>
Kenneth Goldin.......... 0 0 348,750/60,000 $114,219/$42,500
Michael A. Berkus....... 0 0 20,000/45,000 $ 12,500/$40,625
Nathan T. Schelle....... 0 0 0/15,000 0/$16,875
Michael D. Hoppman...... 0 0 31,333/6,667 $ 3,750/$ 7,500
Michael A. Balser....... 0 0 6,666/18,334 $ 7,499/$15,001
</TABLE>
- --------
(1) This amount represents the market value of the underlying securities
relating to "in-the-money" options at January 31, 1996 minus the exercise
price of such options.
The following table sets forth information concerning repricings of options
held by executive officers of the Company during the last ten completed fiscal
years:
TEN-YEAR OPTION/SAR REPRICINGS
<TABLE>
<CAPTION>
NUMBER OF LENGTH OF
SECURITIES MARKET PRICE EXERCISE ORIGINAL
UNDERLYING OF STOCK AT PRICE AT OPTION TERM
OPTIONS/ TIME OF TIME OF REMAINING AT
SARS REPRICING OR REPRICING OR NEW DATE OF
REPRICED OR AMENDMENT AMENDMENT EXERCISE REPRICING OR
NAME DATE AMENDED (#) ($) ($) PRICE ($) AMENDMENT
---- ------- ----------- ------------ ------------ --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth Goldin ......... 9/30/94 * $4.375 $8.25 $5.00 4.25 years
Chief Executive Officer
Michael Balser.......... 2/8/95 ** $4.00 ** $4.00 **
V.P.--Licensing
</TABLE>
- --------
* Effective September 30, 1994, Mr. Goldin's option to purchase 100,000
shares of Common Stock at an exercise price of $8.25 per share, granted on
June 10, 1994, was canceled and replaced by an option to purchase 50,000
shares at an exercise price of $5.00 per share.
** Effective February 8, 1995, Mr. Balser was granted an option to purchase
20,000 shares of Common Stock at an exercise price of $4.00 per share. The
following options were canceled: (i) option to purchase 2,000 shares of
Common Stock at an exercise price of $17.00 per share (with approximately 2
years of the original option term remaining at date of cancellation); (ii)
option to purchase 4,600 sharers of Common Stock at an exercise price of
$8.38 per share (with approximately 2 1/2 years of the original option term
remaining at date of cancellation); and (iii) option to purchase 3,000
shares of Common Stock at an exercise price of $9.13 per share (with
approximately 3 1/2 years of the original option term remaining at date of
cancellation).
8
<PAGE>
EMPLOYMENT AGREEMENTS, COMPENSATORY ARRANGEMENTS
On December 11, 1995, the Company entered into an employment agreement with
Michael A. Berkus under which Mr. Berkus was to receive an annual base salary
of $215,000. This agreement has been terminated and, effective May 31, 1996,
Mr. Berkus was no longer an officer or employee of the Company. The Company
has entered into a separation and consulting agreement with Mr. Berkus,
pursuant to which it will pay Mr. Berkus consulting fees of $150,000 during a
fourteen month consulting period, unless sooner terminated by the Company. Mr.
Berkus may also earn certain bonuses and commissions if certain sales targets
and business conditions are met.
On April 22, 1996, the Company entered into a two-year employment agreement
with Barry Bookman, pursuant to which Mr. Bookman is to receive an annual
salary of $200,000. The Agreement expires May 13, 1998, after which date the
Agreement will automatically renew for consecutive one-year terms absent
written notification of a desire not to renew at least sixty (60) days prior
to the end of the then current contract year. Mr. Bookman was also granted an
option to purchase 45,000 shares of the Company's Common Stock pursuant to the
Employee Plan at an exercise price of $4.875 per share. One-third of the
Option will become exercisable on each of May 12, 1997, May 12, 1998 and May
12, 1999. The Agreement further provides that Mr. Bookman shall receive a lump
sum cash payment equal to fifty percent (50%) of his current annual salary in
the event that Mr. Bookman remains in the employ of the Company for at least
six (6) months following a change of control (as defined in the Agreement). In
addition, in the event of involuntary termination following a change of
control, Mr. Bookman would receive a lump sum cash payment equal to his then
current annual salary.
On October 31, 1996, the Company and Mr. Bookman amended the Employment
Agreement dated April 22, 1996 to extend the expiration date of the Employment
Agreement to October 31, 1998. The Amendment further provides for an increase
in Mr. Bookman's annual salary to $220,000 for the period commencing November
1, 1997 and expiring October 31, 1998. In addition, the Amendment redefines
"change of control," excluding from the term "beneficial ownership" any shares
of Common Stock or voting securities issuable upon exercise, conversion or
exchange of any other securities.
Effective November 1, 1996, the Company entered into a new employment
agreement with Kenneth Goldin which provides for his employment until October
31, 1998. Under this agreement, Mr. Goldin receives an annual base salary of
$375,000 and various benefits, including life and health insurance. In
addition, the agreement provides for an annual bonus commencing with the end
of 1998 based upon the achievement of certain milestones as determined by the
officers of the Company and approved by the Board of Directors. The Board of
Directors will also determine Mr. Goldin's eligibility for special bonuses
based on share price targets set prior to December 31, 1996 and December 31,
1997.
9
<PAGE>
THE FOLLOWING REPORT OF THE COMPENSATION COMMITTEE 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, AS
AMENDED, OR UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, EXCEPT TO
THE EXTENT THAT THE COMPANY SPECIFICALLY INCORPORATES THIS INFORMATION BY
REFERENCE, AND SHALL NOT OTHERWISE BE DEEMED FILED UNDER SUCH ACTS.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors (the "Compensation
Committee"), which is currently composed of Messrs. Lyons, Shabel, Shreiber
and Yancey, and the Stock Option Committee of the 1992 Stock Incentive Plan
and the 1987 Stock Option Plan (the "Option Committee"), which is composed of
the same directors, are responsible for determining executive compensation.
The Compensation Committee is responsible for making recommendations with
respect to matters concerning base salaries and bonus remuneration of
executive officers of the Company. The Company's executive compensation
program is comprised of base salary, annual incentive compensation in the form
of cash bonuses, and long-term incentive compensation in the form of stock
options. For fiscal year 1996, base salaries were determined pursuant to
existing employment agreements, bonuses were determined by the Compensation
Committee, and stock option awards were determined by the Option Committee.
Compensation Goal. The goal of the Compensation Committee and Option
Committee is to establish and implement an executive compensation program that
will attract and retain superior management talent, recognize and reward
individual performances and align the financial interests of the executive
officers with those of its shareholders and the success of the Company. The
committees also consider compensation paid to executive officers by comparable
companies.
Base Salary. In determining the base salaries payable to executive officers
(whether by employment agreement or otherwise), the individual's expertise,
level of experience and level of responsibility, as well as the impact of such
individual on the profitability and future growth of the Company, were
considered.
Annual Incentive Compensation. Each existing employment agreement between
the Company and an executive officer provides for bonus compensation to be
awarded at the discretion of the Board of Directors. Mr. Berkus received a
bonus of $40,000 in fiscal 1996 under his then existing employment agreement.
For purposes of discretionary compensation, the Compensation Committee
divided the executive officers into various bonus pools based on areas of
responsibility. Each bonus pool, calculated as a pre-determined percentage of
related pre-tax income, could be earned by the pool's membership attaining
certain financial goals, including sales growth, earnings growth and
appropriate related pre-tax margins. The goals were set after analysis of the
Company's annual projections, its historical record and comparison with the
results of a ten company peer group selected by the Compensation Committee.
The Compensation Committee could allocate the pool's funds among the
appropriate individuals according to their individual contribution to the
Company's growth and profitability, but were not required to allocate all of
each pool. If the financial goals were not met, the Compensation Committee had
the discretion to grant bonus compensation to deserving individuals, provided
that the aggregate bonus compensation awarded was less than 50% of the bonus
compensation which would have been paid had the goals been met. None of the
bonus pools attained their financial goals during fiscal 1996, and the
Compensation Committee did not grant discretionary bonus compensation to any
of the Named Executive Officers.
Long-Term Incentive Compensation. The Company's 1992 Stock Incentive Plan,
as well as the 1987 Stock Option Plan under which options are no longer
granted, form the basis of the Company's long-term incentive plan for
executive officers and key employees. The specific objective of these plans is
to align executive and
10
<PAGE>
shareholder long-term interests by creating a direct link between executive
pay and shareholder return. The value of the stock options awarded, which is
an important component of executive compensation, depends on the success of
the Company and the price of its stock. Thus, such awards serve as an
incentive to executive officers to put forth their best efforts on the
Company's behalf.
Stock options previously granted under the 1987 Stock Option Plan, and stock
options granted periodically under the 1992 Stock Incentive Plan, generally
have five-year terms and include certain exercise restrictions and vesting
provisions. The exercise prices for options granted pursuant to these plans
equal the fair market value of the Common Stock as of the dates of grant. The
options are non-transferable, except by will or the laws of descent.
Chief Executive Officer Compensation. During fiscal year 1996, Kenneth
Goldin received a base salary of $362,407 pursuant to his employment
agreement. The employment agreement had been approved by the outside Directors
of the Company in recognition of the dedication and loyalty demonstrated by
Mr. Goldin in prior years and in anticipation of the effort that would be
expected of him during the future fiscal years.
On February 8, 1995, Mr. Goldin was granted an option to purchase 70,000
shares of the Company's Common Stock at an exercise price of $4.00 per share.
One-half of the option became exercisable August 1, 1995, and the remainder
will become exercisable once certain conditions relating to the stock price of
the Company have been met. The number of options granted is consistent with
market practices observed by the Option Committee for chief executive officers
of other companies of similar size and industry. The ultimate value of these
options will be determined by the actual performance of the Company's stock
price.
Deductibility of Certain Compensation. Section 162(m) of the Internal
Revenue Code (the "Code") denies a deduction for certain compensation
exceeding $1,000,000 paid to the chief executive officer and four other
highest paid executive officers, excluding (among other things) certain
performance-based compensation. Through January 31, 1996, this provision has
not affected the Company's tax deductions, but the Company will continue to
monitor the potential impact of Section 162(m) on the Company's ability to
deduct executive compensation.
COMPENSATION COMMITTEE
ALLAN R. LYONS
FRED A. SHABEL
GERALD B. SHREIBER
RICHARD C. YANCEY
11
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The Securities and Exchange Commission requires a comparison of cumulative
total shareholder return for the Company with a relevant broad equity market
index and a peer group of publicly-traded companies over a five-year period.
Cumulative total shareholder return represents share value appreciation
assuming dividend reinvestment. The Common Stock of the Company is traded on
The National Association of Securities Dealers Automated Quotation National
Market System ("NASDAQ"). Set forth below is a graph comparing cumulative
total shareholder return on the Company's Common Stock with the NASDAQ Stock
Market (U.S.) index and a group of companies that the Company selected as a
peer group. The criteria applied in selecting peer companies for this purpose
consisted of publicly-traded companies that are perceived as competitors of
the Company (Marvel Entertainment Group, Inc. and The Topps Company, Inc.) and
the thirty-three (33) publicly-traded companies within the NASDAQ Major
Industry Group of Wholesale Trade (one company included in the peer group
analysis for fiscal year 1995 is no longer publicly traded).
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG THE SCORE BOARD, INC., THE NASDAQ STOCK MARKET-US INDEX AND A PEER GROUP
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
SCORE BOARD, INC. PEER GROUP NASDAQ STOCK MARKET-US
<S> <C> <C>
1/91 100 100 100
1/92 581 138 153
1/93 381 151 173
1/94 523 242 199
1/95 144 189 190
1/96 176 226 268
</TABLE>
12
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of December 2, 1996, information
concerning beneficial ownership of shares of the Company's Common Stock with
respect to (i) each person known to the Company to own five percent or more of
the outstanding shares of Common Stock, (ii) each director of the Company,
(iii) each of Company's five most highly compensated executive officers for
the fiscal year ended January 31, 1996 and (iv) all directors and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
SHARES
NAME AND ADDRESS BENEFICIALLY PERCENT OF
OF BENEFICIAL OWNER OWNED(1) CLASS
------------------- ------------ ----------
<S> <C> <C>
DIRECTORS, NOMINEES AND NAMED EXECUTIVE OFFICERS*
Kenneth Goldin........................................ 1,076,650(2) 7%
Michael A. Berkus..................................... 1,000 **
Nathan T. Schelle..................................... 0 **
Michael D. Hoppman.................................... 32,583(3) **
Michael A. Balser..................................... 24,500(4) **
Ira Lubert............................................ 160,000(5) 1%
Allan R. Lyons........................................ 207,000(6) 1%
Fred A. Shabel........................................ 90,000(7) **
Gerald B. Shreiber.................................... 55,000(8) **
Richard C. Yancey..................................... 155,000(9) 1%
Barry Bookman......................................... 5,000 **
FIVE PERCENT SHAREHOLDERS
Carole Goldin*........................................ 1,274,500(10) 9%
McCullough Andrews & Cappeillo, Inc.***
101 California Street,
Suite 4250
San Francisco, CA 94111.............................. 920,000 6%
T. Rowe Price Associates, Inc.***
100 East Pratt Street
Baltimore, MD 21202.................................. 700,000 5%
Technology Leaders Offshore II C.V. ("TLO II")
8000 The Safeguard Building
435 Dover Park Drive
Wayne, PA 19087...................................... 1,487,472(11) 10%
Technology Leaders II L.P. ("TL II")
8000 The Safeguard Building
435 Dover Park Drive
Wayne, PA 19087...................................... 1,872,528(12) 12%
Technology Leaders II Management L.P.
8000 Dover Park Drive
435 Dover Park Drive
Wayne, PA 19087...................................... 3,360,000(13) 20%
All Directors and Officers as a Group (15 persons).... 1,826,891(14) 12%
</TABLE>
- --------
* The address for each such person is c/o The Score Board, Inc., 1951 Old
Cuthbert Road, Cherry Hill, New Jersey 08034.
** Less than one percent.
*** Reflects information set forth on Form 13F filed by the holder with the
Securities and Exchange Commission.
13
<PAGE>
- --------
(1) The securities "beneficially owned" by a person are determined in
accordance with the definition of "beneficial ownership" set forth in the
regulations of the Securities and Exchange Commission and, accordingly,
may include securities owned by or for, among others, the spouse,
children or certain other relatives of such person as well as other
securities as to which the person has or shares voting or investment
power or has the right to acquire within sixty days after November 30,
1996. The same shares may be beneficially owned by more than one person.
Beneficial ownership may be disclaimed as to certain of the securities.
(2) Includes 249,750 shares of Common Stock issuable upon exercise of
currently exercisable stock options.
(3) Includes 31,333 shares of Common Stock issuable upon exercise of
currently exercisable stock options.
(4) Includes 22,500 shares of Common Stock issuable upon exercise of
currently exercisable stock options.
(5) Mr. Lubert is one of the General Partners of Technology Leaders II
Management L.P. (See Note 13).
(6) Includes 125,500 shares of Common Stock issuable upon exercise of
currently exercisable stock options.
(7) Includes 85,000 shares of Common Stock issuable upon exercise of
currently exercisable stock options.
(8) Includes 55,000 shares of Common Stock issuable upon exercise of
currently exercisable stock options.
(9) Includes 115,000 shares of Common Stock issuable upon exercise of
currently exercisable stock options.
(10) Includes 96,000 shares of Common Stock issuable upon exercise of
currently exercisable stock options.
(11) Includes 956,230 shares of Common Stock issuable upon exercise of
currently exercisable warrants to purchase common stock.
(12) Includes 1,203,758 shares of Common Stock issuable upon exercise of
currently exercisable warrants to purchase common stock.
(13) Includes 2,159,988 shares of Common Stock issuable upon exercise of
currently exercisable warrants to purchase common stock. Technology
Leaders Management L.P. ("TLM II") is the sole general partner of TL II
and a co-general partner of TLO II. TL II and TLO II are venture capital
funds which are required by their governing documents to make all
investment, voting and disposition actions in tandem. TLM II has sole
authority and responsibility for all investment, voting and disposition
decisions for TL II and TLO II, which powers are exercised through its
eleven-person executive committee, by whose decisions the general partner
has agreed to be bound. As a result of TLM II's investment control over
all of the Issuer's common stock held by TL II and TLO II, TLM II may be
deemed to beneficially own all of the shares beneficially owned by TL II
and TLO II. TLM II disclaims beneficial ownership of all such shares
except to the extent of its proportionate pecuniary interest therein.
(14) Includes 696,416 shares of Common Stock issuable upon exercise of
currently exercisable warrants to purchase common stock.
14
<PAGE>
PROPOSAL 2
APPROVAL OF AMENDMENT TO THE COMPANY'S 1992 STOCK INCENTIVE PLAN
On March 22, 1996, the Board of Directors approved an amendment to the
Company's 1992 Stock Incentive Plan (the "Employee Plan") that increased the
maximum amount of shares issuable under the Employee Plan by 650,000 shares to
a total of 1,850,000 shares, subject to approval by the shareholders of the
Company.
INCREASE IN AUTHORIZED SHARES
Currently, options for a total of 1,200,000 may be issued under the Employee
Plan, after giving effect to the Company's two-for-one stock split in November
1993. Of these shares, 55,400 shares remain currently available for future
options. Options for 30,000 shares were issued to Barry Bookman at an exercise
price of $1.82 per share and for 20,000 shares to James Robinson at an
exercise price of $2.00 per share. A condition of the exercise of these
options is that the shareholders approve this amendment. The amendment
increases the maximum amount of shares issuable under the Employee Plan by
650,000 shares to a total of 1,850,000 shares. If the shareholders do not
approve the increase, the maximum amount of shares issuable under the Employee
Plan will remain at 1,200,000.
The purpose of the proposed increase is to provide sufficient shares for
future option grants to key employees, directors, consultants and advisors of
the Company. The Board of Directors believes that the Company should have
shares available under the Employee Plan to provide options to such persons.
The Board of Directors believes that the Company and its shareholders
significantly benefit from having the Company's key employees receive options
to purchase the Company's Common Stock, and that the opportunity afforded
these employees to acquire Common Stock is an essential element of an
effective management incentive program. The Board of Directors also believes
that stock options are very valuable in attracting and retaining highly
qualified employees, directors, consultants and advisors and in providing
additional motivation to these persons to use their best efforts on behalf of
the Company and its shareholders.
Set forth below is a summary of certain significant provisions of the
Employee Plan.
GENERAL
Pursuant to the Employee Plan, stock options may be granted which are
intended to qualify as incentive stock options ("Incentive Options") under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), as
well as stock options not intended to so qualify ("Non-Qualified Options").
The primary purpose of the Employee Plan is to further the growth and
development of the Company by encouraging employees, consultants and advisors
to obtain a proprietary interest in the Company by owning its stock. The
Company also intends that the Employee Plan will afford the Company a means of
attracting to its service persons of outstanding quality.
ELIGIBILITY AND ADMINISTRATION
Persons eligible to receive options under the Employee Plan are key
employees, directors, consultants and advisors of the Company and its
subsidiaries. The Employee Plan is administered by an option committee, the
current members of which are Messrs. Lyons, Shabel, Shreiber and Yancey (the
"Option Committee"). Subject to the provisions of the Employee Plan, the
Option Committee determines, among other things, which persons will be granted
options under the Employee Plan, whether options granted will be Incentive
Options or Non-Qualified Options, the number of shares subject to an option,
the exercise price of the shares covered by an option, the time at which an
option is granted, and the manner in and conditions under which an option is
exercisable. The Option Committee also has the authority to interpret the
Employee Plan and to prescribe, amend and rescind the rules and regulations
relating to it. The Board of Directors has the right to modify, suspend or
terminate the Employee Plan, subject to certain conditions.
15
<PAGE>
NUMBER OF SHARES AND ADJUSTMENT
The aggregate number of shares which may be issued upon the exercise of
options granted under the Employee Plan will be increased as a result of the
proposed amendment from 1,200,000 to 1,850,000 shares of the Company's Common
Stock. The aggregate number and kind of shares issuable under the Employee
Plan are subject to appropriate adjustment to reflect changes in the
capitalization of the Company, such as by recapitalization, reclassification,
stock split, combination of shares or stock dividend. Any shares of Common
Stock subject to options that expire or terminate will be available for future
options granted under the Employee Plan.
EXERCISE PRICE AND TERMS
The exercise price for options granted under the Employee Plan is determined
at the discretion of the Option Committee, provided that the exercise price
for Incentive Options must be equal to at least 100% of the fair market value
of the Company's Common Stock as of the date of grant (or 110% in the case of
an Incentive Option granted to an individual owning shares of the Company
possessing more than ten percent of the total combined voting power of all
classes of stock of the Company). Unless terminated earlier by the option's
terms, Non-Qualified Options and Incentive Options granted under the Employee
Plan will expire ten years after the date they are granted, except that if
Incentive Options are granted to an individual owning shares of the Company
possessing more than ten percent of the total combined voting power of all
classes of stock of the Company on the date of the grant, such option will
expire five years after the date it is granted.
Payment of the option price upon exercise of Incentive Options and Non-
Qualified Options may be made in cash, shares of the Company's Common Stock,
or a combination of both.
TERMINATION OF SERVICE; DEATH AND DISABILITY
All unexercised options will terminate three months following the date an
optionee ceases to be employed by the Company or a subsidiary, other than by
reason of disability or death (but in no event later than the expiration date
of the option). An optionee who ceases to be an employee because of a
disability must exercise the option within one year after he ceases to be an
employee (but in no event later than the expiration date of the option). The
personal representatives, heirs or legatees of a deceased optionee may
exercise an option within one year following the optionee's death (but in no
event later than the expiration date of the option). No option granted under
the Employee Plan is transferable except by the laws of descent and
distribution in the event of death.
FEDERAL INCOME TAX CONSEQUENCES
Non-Qualified Options. Generally, there will be no federal income tax
consequences to either the optionee or the Company on the grant of a Non-
Qualified Option. On the exercise of a Non-Qualified Option, the optionee
(except as described below) has taxable ordinary income equal to the excess of
the fair market value of the shares acquired on the exercise date over the
option price of the shares. The Company will be entitled to a federal income
tax deduction in an amount equal to such excess, subject to the deduction
limitation imposed by Section 162(m) of the Code. See "Section 162(m)" below.
However, special rules apply where stock is registered under the Exchange
Act and the optionee is a Section 16(b) Person subject to potential liability
under Section 16(b) of the Exchange Act for so-called "short-swing" profits in
connection with certain purchases and sales, or sales and purchases, of the
Company's stock within a period of six months.
A Section 16(b) Person will be required to recognize ordinary income (i) on
the date of exercise (in the event of exercise after six months from the date
of grant) or (ii) in the event of exercise on or before six months of the date
of grant, (A) the date of exercise (in the case of options granted on or after
November 1, 1996 by the
16
<PAGE>
entire board of directors or a committee of non-employee directors as defined
in Section 16(b)) or (B) six months after the date of grant with respect to
options not described in (ii)(A) above. A Section 16(b) Person can be certain
of recognizing income on the exercise date by making an election not later
than 30 days following the exercise date to have the income determined as of
the date of exercise (an "83(b) Election"), in which case the Company's
deduction will also be determined as of the exercise date.
Upon the sale of stock acquired by exercise of a Non-Qualified Option,
optionees will realize long-term or short-term capital gain or loss depending
upon their holding period for such stock. Under current law, net capital gain
(net long-term capital gain less net short-term capital loss) is subject to a
maximum tax rate of 28%. Capital losses are deductible only to the extent of
capital gains for the year plus $3,000 for individuals.
An optionee who surrenders shares in payment of the exercise price of a Non-
Qualified Option will not recognize gain or loss with respect to the shares so
delivered unless such shares were acquired pursuant to the exercise of an
Incentive Stock Option and the delivery of such shares is a disqualifying
disposition. See "Incentive Stock Options" below. The optionee will recognize
ordinary income on the exercise of the Non-Qualified Option as described
above. Of the shares received in such an exchange, that number of shares equal
to the number of shares surrendered will have the same tax basis and capital
gains holding period as the shares surrendered. The balance of the shares
received will have a tax basis equal to their fair market value on the date of
exercise and the capital gains holding period will begin on the date of
exercise (or such later date, as described above, if the optionee is a 16(b)
Person who has not made an 83(b) Election, and such later date is applicable).
Incentive Stock Options. Generally, under the Code, an optionee will not
realize taxable income by reason of the grant or the exercise of an Incentive
Option (see, however, the discussion of alternative minimum tax below). If an
optionee exercises an Incentive Option and does not dispose of the shares
until the later of (i) two years from the date the option was granted and (ii)
one year from the date of exercise, the entire gain, if any, realized upon
disposition of such shares will be taxable to the optionee as long-term
capital gain, and the Company will not be entitled to any deduction. If an
optionee disposes of the shares within the period of two years from the date
of grant or one year from the date of exercise (a "disqualifying
disposition"), the optionee generally will realize ordinary income in the year
of disposition, and the Company will receive a corresponding deduction in an
amount equal to the excess of (1) the lesser of (a) the amount, if any,
realized on the disposition and (b) the fair market value of the shares on the
date the option was exercised (or such later date, if applicable, as described
above in "Non-Qualified Options" if the optionee is a 16(b) Person who has not
made an 83(b) Election) over (2) the option price, provided that the deduction
limit of Section 162(m) is not exceeded or the Incentive Option qualifies for
the performance-based compensation exception provided for in Section 162(m).
See "Section 162(m)" below. Any additional gain realized on the disposition
will be long-term or short-term capital gain and any loss will be long-term or
short-term capital loss. The optionee will be considered to have disposed of a
share if he sells, exchanges, makes a gift of or transfers legal title to the
share (except transfers, among others, by pledge, on death or to spouses). If
the disposition is by sale or exchange, the optionee's tax basis will equal
the amount paid for the share plus any ordinary income realized as a result of
the disqualifying disposition.
The exercise of an Incentive Option may subject the optionee to the
alternative minimum tax. The amount by which the fair market value of the
shares purchased at the time of the exercise (or such later date, if
applicable, as described above in "Non-Qualified Options" if the optionee is a
16(b) Person who has not made an 83(b) Election) exceeds the option exercise
price is an adjustment for purposes of computing the so-called alternative
minimum tax. In the event of a disqualifying disposition of the shares in the
same taxable year as exercise of the Incentive Option, no adjustment is then
required for purposes of the alternative minimum tax, but regular income tax,
as described above, may result from such disqualifying disposition.
An optionee who surrenders shares as payment of the exercise price of his
Incentive Option generally will not recognize gain or loss on his surrender of
such shares. The surrender of shares previously acquired upon exercise of an
Incentive Option in payment of the exercise price of another Incentive Option
is, however, a
17
<PAGE>
"disposition" of such shares. If the incentive stock option holding period
requirements described above have not been satisfied with respect to such
shares, such disposition will be a disqualifying disposition that may cause
the optionee to recognize ordinary income as discussed above.
Under the Code, all of the shares received by an optionee upon exercise of
an Incentive Option by surrendering shares will be subject to the incentive
stock option holding period requirements. Of those shares, a number of shares
(the "Exchange Shares") equal to the number of shares surrendered by the
optionee will have the same tax basis for capital gains purposes (increased by
ordinary income recognized as a result of any disqualifying disposition of the
surrendered shares if they were incentive stock option shares) and the same
capital gains holding period as the shares surrendered. For purposes of
determining ordinary income upon a subsequent disqualifying disposition of the
Exchange Shares, the amount paid for such shares will be deemed to be the fair
market value of the shares surrendered. The balance of the shares received by
the optionee will have a tax basis (and a deemed purchase price) of zero and a
capital gains holding period beginning on the date of exercise. The incentive
stock option holding period for all shares will be the same as if the option
had been exercised for cash.
Section 162(m). Section 162(m) of the Code will generally limit to $1.0
million the Corporation's federal income tax deduction for compensation paid
in any year to its chief executive officer and its four highest paid executive
officers, to the extent that such compensation is not "performance based."
Under Treasury regulations, and subject to certain transition rules, a stock
option will, in general, qualify as "performance based" compensation if it (i)
has an exercise price of not less than the fair market value of the underlying
stock on the date of grant, (ii) is granted under a plan that limits the
number of shares for which options may be granted to an employee during a
specified period, which plan is approved by a majority of the shareholders
entitled to vote thereon, and (iii) is granted by a compensation committee
consisting solely of at least two independent directors. If a stock option to
an executive referred to above is not "performance based", the amount that
would otherwise be deductible by the Corporation in respect of such stock
option will be disallowed to the extent that the executive's aggregate non-
performance based compensation paid in the relevant year exceeds $1.0 million.
OPTION GRANTS
At November 30, 1996, options to purchase a total of 866,000 shares of
Common Stock were outstanding under the Employee Plan at an average exercise
price of $5.13. No determination has been made as to how the proposed
additional 650,000 option shares will be allocated among any particular
eligible participants in the Employee Plan.
18
<PAGE>
The following table sets forth information concerning options issued to date
under the Employee Plan, including options which have been exercised:
<TABLE>
<CAPTION>
TOTAL WEIGHTED
OPTIONS AVERAGE
NAME AND POSITION GRANTED EXERCISE PRICE
----------------- ------- --------------
<S> <C> <C>
Kenneth Goldin......................................... 434,750 $4.88
Chairman, CEO & President
Barry Bookman.......................................... 55,000 $5.47
Executive V.P. & COO
Michael A. Berkus...................................... 25,000 $4.00
Former Sr. V.P.--Sales & Marketing
Nathan T. Schelle...................................... 15,000 $4.00
Former Sr. V.P.--Finance
Michael D. Hoppman..................................... 53,000 $5.69
V.P.--Finance
Michael A. Balser...................................... 30,000 $4.44
V.P.--Licensing
All current Executive Officers as a Group.............. 615,250 $4.95
All current Directors who are not Executive Officers,
as a group............................................ 0 $ 0
All Employees, other than Executive Officers & Direc-
tors, as a Group...................................... 529,350 $7.12
</TABLE>
On November 30, 1996, the last sale price of the Company's Common Stock was
$2.625.
Unless authority has been withheld, the proxy agents intend to vote FOR
approval of the amendment to the Employee Plan. The approval of the amendment
to the Employee Plan requires the affirmative vote of a majority of the votes
cast by all shareholders represented and entitled to vote thereon. An
abstention, withholding of authority to vote or broker non-vote, therefore,
will not have the same legal effect as an "against" vote and will not be
counted in determining whether the proposal has received the required
shareholder vote. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
"FOR" APPROVAL OF THE AMENDMENT TO THE EMPLOYEE PLAN.
19
<PAGE>
PROPOSAL 3
APPROVAL OF AMENDMENT TO THE COMPANY'S 1992 DIRECTORS STOCK OPTION PLAN
On March 22, 1996, the Board of Directors approved an amendment to the
Company's 1992 Directors Stock Option Plan (the "Directors Plan") that
increased the maximum number of shares issuable under the Directors Plan by
400,000 shares to a total of 800,000 shares, subject to approval by the
shareholders of the Company.
INCREASE IN AUTHORIZED SHARES
Currently, options for a total of 400,000 shares (after giving effect to the
Company's two-for-one stock split in November 1993) may be issued under the
Directors Plan. No shares remain currently available for future options. The
amendment increases the maximum number of shares issuable under the Directors
Plan by 400,000 shares to a total of 800,000 shares. If the shareholders do
not approve the increase, the maximum number of shares issuable under the
Directors Plan will remain at 400,000.
The purpose of the proposed increase is to provide sufficient shares for
future option grants to directors of the Company who are not employees of the
Company or its affiliates. The Board of Directors believes that the Company
should have shares available under the Directors Plan to provide options to
outside directors, and believes that the Company's shareholders significantly
benefit from having outside directors receive options to purchase the
Company's Common Stock. The Board of Directors also believes that stock
options are very valuable in attracting persons of outstanding quality to
serve on the Board of Directors.
Set forth below is a summary of certain significant provisions of the
Directors Plan.
PURPOSE; ELIGIBILITY
The purpose of the Directors Plan is to further the growth and development
of the Company by encouraging directors to obtain a proprietary interest in
the Company by owning its stock. The Company also intends that the Directors
Plan will afford it a means of attracting persons of outstanding quality to
service on its Board of Directors. The only persons eligible to receive
options under the Directors Plan are directors who are not employees of the
Company or its affiliates.
ADMINISTRATION
The Directors Plan is administered by the Option Committee. Subject to the
provisions of the Directors Plan, the Option Committee has the authority to,
among other things, interpret the Directors Plan and to prescribe, amend and
rescind the rules and regulations relating to it.
NUMBER OF SHARES AND ADJUSTMENT
The aggregate number of shares which may be issued upon the exercise of
options granted under the Directors Plan will be increased as a result of the
proposed amendment from 400,000 shares to 800,000 shares of the Company's
Common Stock. The aggregate number and kind of shares issuable under the
Directors Plan is subject to appropriate adjustment to reflect changes in
capitalization of the Company, such as by recapitalization, reclassification,
stock split, combination of shares or stock dividend. Any shares of Common
Stock subject to options that expire or are terminated will be available for
future options granted under the Directors Plan.
EXERCISE PRICE AND TERMS
Eligible directors receive options under the Directors Plan as follows (the
number of shares subject to the options reflects the Company's two-for-one
stock split in November 1993):
(i) Each director who was eligible to participate in the Directors Plan
on September 1, 1992 received a Non-Qualified Option to purchase 15,000
shares of Common Stock on September 8, 1992;
20
<PAGE>
(ii) Each person who became or becomes an eligible director after
September 1, 1992 has received or will receive a Non-Qualified Option to
purchase 30,000 shares of Common Stock on the date such person became or
becomes an eligible director;
(iii) Beginning on September 1, 1993, each eligible director receives a
Non-Qualified Option to purchase 15,000 shares of Common Stock on each
September 1st;
(iv) Each director eligible to participate in the Directors Plan on
September 1, 1992 received a retainer option (a "Retainer Option") to
purchase 15,000 shares of Common Stock on September 8, 1992; and
(v) Beginning on September 1, 1993, each eligible director receives a
retainer option to purchase 15,000 shares of Common Stock on each September
1st.
The purchase price of the Common Stock underlying each Non-Qualified Option
is the fair market value of the Common Stock on the date the option is
granted. The purchase price of the Common Stock underlying each Retainer
Option is 120% of the fair market value of the Common Stock on the date the
Retainer Option is granted. A Non-Qualified Option cannot be exercised within
the sixth month period immediately following the date it is granted. This
sixth month restriction does not apply to Retainer Options. Unless terminated
earlier by the option's terms, the Non-Qualified Options and Retainer Options
granted under the Directors Plan will expire ten years after the date they are
granted. Payment of the option price on exercise may be made in cash, Common
Stock of the Company, or a combination of both.
TERMINATION OF SERVICE; DEATH AND DISABILITY
All unexercised options will terminate three months following the date the
optionee ceases to be a director of the Company, other than by reason of
disability or death (but in no event later than the expiration date of the
option). An optionee who ceases to be a director because of a disability must
exercise the option within one year after he ceases to be a director (but in
no event later than the expiration date of the option). Personal
representatives, heirs or legatees of a deceased optionee may exercise an
option within one year following the optionee's death (but in no event later
than the expiration date of the option). No option granted under the Directors
Plan is transferable except by the laws of descent and distribution in the
event of death.
FEDERAL INCOME TAX CONSEQUENCES
See discussion regarding Federal Income Tax Consequences under Proposal 2.
Options under this plan are not subject to the limitations of Section 162(m).
OPTION GRANTS
At July 31, 1996, options to purchase a total of 370,000 shares of Common
Stock were outstanding under the Directors Plan at an average exercise price
of $7.07. The proposed additional 400,000 option shares will be allocated
among eligible participants in the Directors Plan in accordance with its
terms.
The following table sets forth information concerning options issued to date
under the Directors Plan, including options which have been exercised:
<TABLE>
<CAPTION>
TOTAL AVERAGE
OPTIONS WEIGHTED
NAME OF DIRECTOR GRANTED EXERCISE PRICE
---------------- ------- --------------
<S> <C> <C>
Allan R. Lyons........................................ 115,000 $8.44
Fred A. Shabel........................................ 115,000 $8.44
Gerald B. Shreiber.................................... 55,000 $4.38
Richard C. Yancey..................................... 115,000 $8.44
Ira Lubert............................................ -0- --
</TABLE>
21
<PAGE>
Unless authority has been withheld, the proxy agents intend to vote FOR
approval of the amendment to the Directors Plan. The approval of the amendment
to the Directors Pan requires the affirmative vote of a majority of the votes
cast by all shareholders represented and entitled to vote thereon. An
abstention, withholding of authority to vote or broker non-vote, therefore,
will not have the same legal effect as an "against" vote and will not be
counted in determining whether the proposal has received the required
shareholder vote. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
"FOR" APPROVAL OF THE AMENDMENT TO THE DIRECTORS PLAN.
SHAREHOLDER PROPOSALS
Shareholder proposals for the 1997 Annual Meeting must be submitted to the
Company by July 1, 1997 to receive consideration for inclusion in the
Company's Proxy Statement.
INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of Arthur Andersen LLP acted as the Company's
independent public accountants for the fiscal year ended January 31, 1996 and
has been selected by the Board of Directors to serve as the Company's
independent public accountants for the fiscal year ending January 31, 1997. A
representative of Arthur Andersen LLP is expected to be present at the Annual
Meeting and to have the opportunity to make a statement, if he desires to do
so, and is expected to be available to respond to appropriate questions.
On November 8, 1995, the Company dismissed BDO Seidman LLP ("BDO") as the
Company's independent public accountants and auditors, a capacity in which
that firm has served for several years, and selected Arthur Andersen LLP to
replace BDO in this role. The decision to change the Company's accountants and
auditors was approved by the Company's full Board of Directors.
During the fiscal years 1994 and 1995 and the subsequent period through
November 8, 1995, the date on which BDO was dismissed as the Company's
independent public accountants and auditors, there were no disagreements
between the Company and BDO on any matter relating to accounting principles or
practices, financial statement disclosure, or auditing scope or procedures,
which disagreements, if not resolved to BDO's satisfaction, would have caused
them to make reference in connection with their reports to the subject matter
of the disagreement. In addition, BDO's reports on the Company's financial
statements for fiscal years 1994 and 1995 contained no adverse opinions or
disclaimers of opinion, nor were such reports qualified as to uncertainty,
audit scope or accounting principles.
The Company authorized BDO to respond fully to the inquiries of Arthur
Andersen LLP. The Company also provided BDO with a copy of the disclosures
contained in the Form 8-K filed with the Securities and Exchange Commission on
November 15, 1995 in connection with BDO's dismissal, and BDO furnished the
Company with a letter addressed to the Securities and Exchange Commission
stating that it agreed with the statements made by the Company therein.
On November 10, 1995, the Company appointed the accounting firm of Arthur
Andersen LLP as the Company's independent public accountants and auditors.
FINANCIAL STATEMENTS
Consolidated financial statements of the Company and its subsidiaries are
contained in the Company's Annual Report on Form 10-K/A/1 for the fiscal year
ended January 31, 1996, which is being delivered to you herewith.
22
<PAGE>
OTHER MATTERS
The Board of Directors is not currently aware of any other matter to be
transacted at the Annual Meeting. If, however, such other matters come before
the meeting, it is the intention of the persons named in the proxy to vote on
any such matters in accordance with the recommendation of the Board of
Directors.
Shareholders are urged to sign the enclosed proxy, which is solicited on
behalf of the Board of Directors, and return it in the enclosed envelope.
EACH PERSON SOLICITED HEREUNDER CAN OBTAIN AN ADDITIONAL COPY OF THE
COMPANY'S ANNUAL REPORT AND FORM 10-K/A-1, AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION, FOR THE YEAR ENDED JANUARY 31, 1996 WITHOUT CHARGE, BY
SENDING WRITTEN REQUEST TO THE SCORE BOARD, INC., 1951 OLD CUTHBERT ROAD,
CHERRY HILL, NEW JERSEY 08034, ATTENTION PATRICK J. WUJCIK, GENERAL COUNSEL.
By Order of the Board of Directors
Patrick J. Wujcik, Secretary
23
<PAGE>
THE SCORE BOARD, INC.
ANNUAL MEETING OF SHAREHOLDERS
JANUARY 10, 1997
The undersigned hereby appoints Kenneth Goldin and Allan R. Lyons, with full
powers of substitution, to act as attorneys and proxies for the undersigned to
vote all shares of capital stock of The Score Board, Inc. ("the Company") which
the undersigned is entitled to vote at the Annual Meeting of Shareholders (the
"Meeting") to be held at the Mansion at Main Street, Plaza 1000, Voorhees, New
Jersey 08043 on January 10, 1997 at 1:30 p.m. and at any and all adjournments
and postponements thereof.
I.The election as directors of all nominees listed below (except as marked to
the contrary)
[_] FOR [_] VOTE WITHHELD
INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE IN
THAT NOMINEE'S NAME BELOW.
ALLAN R. LYONS GERALD B. SHREIBER IRA LUBERT
FRED A. SHABEL RICHARD C. YANCEY
II.The approval of the amendment to the 1992 Stock Incentive Plan.
[_] FOR [_] AGAINST [_] ABSTAIN
III.The approval of the amendment to the 1992 Directors Stock Option Plan.
[_] FOR [_] AGAINST [_] ABSTAIN
In their discretion, the proxies are authorized to vote on any other business
that may properly come before the Meeting or any adjournment or postponement
thereof.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY WILL BE VOTED FOR EACH OF THE PROPOSALS AND THE NOMINEE LISTED
ABOVE. IF ANY OTHER BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY WILL BE
VOTED BY THOSE NAMED IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME,
THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE
MEETING.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE PROPOSALS AND THE
ELECTION OF THE NOMINEE LISTED ABOVE.
(Continued and to be SIGNED on Reverse Side)
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Should the undersigned be present and choose to vote at the Meeting or at any
adjournments or postponements thereof, and after notification to the Secretary
of the Company at the Meeting of the shareholder's decision to terminate this
proxy, then the power of such attorneys or proxies shall be deemed terminated
and no further force and effect. This proxy may also be revoked by filing a
written notice of revocation with the Secretary of the Company or by duly
executing a proxy bearing a later date.
The undersigned acknowledges receipt from the Company, prior to the execution
of this proxy, of notice of the Meeting, a Proxy Statement and an Annual Report
to Shareholders.
Dated: __________________________ , 1996
(Please date this Proxy)
----------------------------------------
Signature of Shareholder
----------------------------------------
Signature of Shareholder
Please sign exactly as your name(s)
appear(s) to the left. When signing as
attorney, executor, administrator,
trustee or guardian, please give your
full title. If shares are held jointly,
each holder should sign.
