<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 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
[_] Definitive Proxy Statement Rule 14a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
AMERICAN ARTISTS FILM CORPORATION
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No Fee Required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
--------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------------
(5) Total fee paid:
--------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
--------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
AMERICAN ARTISTS FILM CORPORATION
1245 FOWLER STREET N.W.
ATLANTA, GEORGIA 30318
December 29, 1997
Dear Stockholder,
You are cordially invited to attend the 1998 Annual Meeting of
Stockholders of American Artists Film Corporation (the "Company"), which will be
held at the offices of the Company located at 1245 Fowler St., N.W., Atlanta,
Georgia, on Friday, January 16, 1998, commencing at 2:00 p.m. Atlanta time
(EST). The matters to be acted upon at the meeting are described in the attached
Notice of Annual Meeting of Stockholders and Proxy Statement.
It is important that your shares be represented at the meeting and
voted in accordance with your wishes. Whether or not you plan to attend the
meeting, we urge you to complete, date, sign and return your proxy in the
enclosed prepaid envelope as promptly as possible so that your shares will be
voted at the Annual Meeting. This will not limit your right to vote in person or
to attend the meeting.
Sincerely yours,
Steven D. Brown
Chief Executive Officer
<PAGE>
AMERICAN ARTISTS FILM CORPORATION
1245 FOWLER STREET, N.W.
ATLANTA, GEORGIA 30318
TELEPHONE: (404) 876-7373
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
JANUARY 16, 1998
The 1998 Annual Meeting of Stockholders of American Artists Film
Corporation (the "Company") will be held at the offices of the Company located
at 1245 Fowler St., N.W., Atlanta, Georgia on Friday, January 16, 1998,
commencing at 2:00 p.m. Atlanta time (EST), for the following purposes:
1. To elect nine persons to serve as Directors of the Company until the next
annual meeting of stockholders or until their respective successors are duly
elected and have qualified including one Director to be elected by the
holders of the Company's Class A Common Stock and eight Directors to be
elected by the holders of the Company's Class B Common Stock;
2. To consider and vote upon a proposal to amend the Company's Articles of
Incorporation to change the Company's name to American Artists Entertainment
Corporation; and
3. To transact such other business as may properly come before the meeting.
The Board of Directors has fixed the close of business on December 22, 1997,
as the record date for the determination of stockholders entitled to notice of,
and to vote at, the Annual Meeting or any adjournment thereof. Please mark, sign
and date the enclosed proxy card and mail it promptly in the accompanying
envelope.
By Order of the Board of Directors,
J. ERIC VAN ATTA
Secretary
Atlanta, Georgia
December 29, 1997
IMPORTANT
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY CARD AND RETURN IT IN THE ENVELOPE WHICH HAS BEEN
PROVIDED. IN THE EVENT YOU ATTEND THE ANNUAL MEETING, YOU MAY REVOKE YOUR PROXY
AND VOTE YOUR SHARES IN PERSON.
<PAGE>
AMERICAN ARTISTS FILM CORPORATION
1245 FOWLER STREET, N.W.
ATLANTA, GEORGIA 30318
TELEPHONE: (404) 876-7373
- --------------------------------------------------------------------------------
PROXY STATEMENT
FOR THE
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
JANUARY 16, 1998
- --------------------------------------------------------------------------------
This Proxy Statement and the accompanying proxy card are furnished to the
stockholders of American Artists Film Corporation, a Missouri corporation (the
"Company"), in connection with the solicitation of proxies for Class A Common
Stock and Class B Common Stock by the Board of Directors of the Company for use
at the Annual Meeting of Stockholders of the Company to be held on January 16,
1998, at the Company's headquarters located at 1245 Fowler St., N.W., Atlanta,
Georgia at 2:00 p.m., Atlanta time, and any adjournments thereof. All
stockholders are encouraged to attend the meeting. Your proxy is requested,
however, whether or not you attend in order to assure maximum participation.
At the Annual Meeting, stockholders will be requested to act upon the matters
set forth in this Proxy Statement. If you are not present at the meeting, your
shares can be voted only when represented by proxy. The shares represented by
your proxy will be voted in accordance with your instructions if the proxy is
properly signed and returned to the Company before the Annual Meeting. You may
revoke your proxy at any time prior to its being voted at the Annual Meeting by
delivering a new duly executed proxy bearing a later date or by delivering
written notice of revocation to the Secretary of the Company prior to the day of
the Annual Meeting or by appearing and voting in person at the meeting.
The expenses incidental to the preparation and mailing of this proxy material
are being paid by the Company. Solicitation of proxies also may be made by
personal interview, telephone and facsimile transmission and by directors,
officers and employees of the Company without special compensation therefor.
It is anticipated that this proxy statement, accompanying proxy and the
Company's Annual Report on Form 10-KSB for the year ended July 31, 1997 will
first be mailed to the Company's stockholders on or about December 29, 1997.
<PAGE>
QUORUM AND VOTING REQUIREMENTS
The close of business on December 22, 1997, has been fixed as the record date
(the "Record Date") for the determination of stockholders of the Company
entitled to notice of and to vote at the Annual Meeting. On that date, the
Company had outstanding 912,984 shares of its Class A Common Stock, $.001 par
value (the "Class A Common Stock"), and 5,502,277 shares of its Class B Common
Stock, $001 par value (the "Class B Common Stock" and, together with the Class A
Common Stock, the "Common Stock"). Holders of the Class A Common Stock and the
Class B Common Stock are entitled to vote on every matter submitted to the
stockholders, voting together as a single class except with respect to the
election of directors (as described below) and as otherwise provided by law.
Four members of the Company's Board of Directors consisting of Steven D.
Brown, Rex Hauck, Vivian Jones and Dr. Glen Warren, entered into a voting
agreement dated April 29, 1996 ("Voting Agreement"), to vote their Common Stock
("Committed Shares") together as a single block on all matters submitted for
action by stockholders of the Company. Of the outstanding shares on the Record
Date, 3,303,002 shares of the Class B Common Stock were Committed Shares
(excluding 1,060,013 shares issuable upon the exercise of certain options and
warrants), constituting approximately 60.0% of that class and representing
approximately 51.5% of the combined voting power of both classes of the
outstanding Common Stock. These stockholders have informed the Company that it
will vote, as a single block, for (i) the election to the Board of Directors of
the Company of each of the nine nominees identified in this Proxy Statement; and
(ii) the approval of the proposal to amend the Company's Articles of
Incorporation (the "Articles") to change the Company's name to American Artists
Entertainment Corporation.
At the Annual Meeting, a quorum will consist of a majority of the votes
entitled to be cast by the holders of all shares of Common Stock that are
outstanding and entitled to vote. Abstentions and all shares held by a broker
or nominee who lacks authority to vote such shares will be treated as present
for purposes of determining a quorum.
The Company's stockholders are entitled to one vote at the Annual meeting for
each share of Common Stock held of record by them on the Record Date, except
with respect to the election of directors. Votes may be cast for or withheld
from each nominee for director. Holders of the Class B Common Stock are entitled
to elect the greater of (i) the majority of the Board of Directors or (ii) the
number of directors that most closely represents the proportion of the Common
Stock which the Class B Common Stock constitutes, and holders of the Class A
Common Stock voting as a separate class will be entitled to elect all other
members of the Board of Directors. The directors will be elected by a plurality
of the votes cast by holders of the shares entitled vote. Abstentions and
broker non-votes will have no effect on voting with respect to the election of
directors.
-2-
<PAGE>
Votes may be cast for, against or withheld from approval of the proposal to
amend the Company's Articles to change the Company's name. The affirmative vote
of the majority of the votes cast is required to approve the proposal to amend
the Company's Articles to change the Company's name. Abstentions and broker non-
votes will have no effect on voting with respect to the adoption of the proposal
to change the Company's name.
Each proxy for Class A Common Stock or Class B Common Stock that is properly
executed and returned by a shareholder will be voted as specified thereon by the
shareholder. If no specification is made, the proxy will be voted for the
election of the nominees (Class A or Class B, as the case may be) listed below
under the caption "Election of Directors," and for the proposal relating to the
change of the Company's name, as described in this proxy statement. A proxy
given pursuant to this solicitation may be revoked by a shareholder who attends
the meeting and gives oral notice of his or her election to vote in person,
without compliance with any other formalities. In addition, a proxy given
pursuant to this solicitation may be revoked prior to the meeting by delivering
to the Secretary of the Company either an instrument revoking it or a duly
executed proxy for the same shares bearing a later date.
I. ELECTION OF DIRECTORS
NOMINEES
The Bylaws of the Company provide that the Board of Directors shall consist of
a maximum of fifteen directors, the exact number of directors being established
by action of the Board taken from time to time. The Board of Directors has set
the number of directors at nine. Holders of Class B Common Stock are entitled
to elect eight directors, and holders of Class A Common Stock are entitled to
elect the remaining director. The term of office for each director continues
until the next annual meeting of shareholders and until his or her successor, if
there is to be one, has been elected and has qualified.
In the event that any nominee for director withdraws or for any reason is not
able to serve as a director, each proxy that is properly executed and returned
will be voted for such other person as maybe designated as a substitute nominee
by the Board, but in no event will any Class A proxy be voted for more than one
nominee or Class B proxy be voted for more than eight nominees. All of the
nominees are currently directors of the Company, and the Company has no reason
to believe that any nominee will not serve if elected.
Certain information relating to each nominee proposed by the Board, including
his or her principal occupation during the past five years, is set forth below.
CLASS A NOMINEE
---------------
Ben E. Noble (45) - is a private investor and has been president and chairman
of The Noble Group, Inc., a management investment and consulting firm, since
1989. Mr. Noble became a director of the Company in March 1997.
-3-
<PAGE>
CLASS B NOMINEES
----------------
STEVEN D. BROWN (51) - Mr. Brown founded the Company in July 1991 with Mr.
Hauck and has served as Chairman of the Board since July 1997, as Co-Chairman of
the Board from July 1994 through July 1997 and as Chief Executive Officer since
the Company's inception.
REX A. HAUCK (46) - Mr. Hauck founded the Company in July 1991 with Mr. Brown.
He served as Executive Vice President from the inception of the Company until
July 1994, when he was elected Co-Chairman of the Board, which position he held
from July 1994 until July 1997, and Co-President.
VIVIAN W. JONES (45) - Ms. Jones, who has been involved in the film industry
for 19 years, founded First Light Entertainment Corporation ("First Light"),
originally Current Corporation, in 1993 to purchase certain assets of Jayan
House, Ltd., a commercial production company, where she had been employed as
General Manager and Executive Producer since 1990. She has been a director since
the Company's inception, president of First Light since its founding and, since
First Light's acquisition by the Company in 1993, Co-president of the Company as
well.
JOHN W. BOYD (61) - has been a private investor since January 1996, was a
physician on the staff of Southwest Regional Medical Clinic from 1969 to January
1996 and President of Boyd Medical Center in McComb, Mississippi, from 1965 to
December 1995. Dr. Boyd became a director of the Company in July 1991.
MALCOLM C. DAVENPORT, V (45) - has practiced law in West Point, Georgia, since
October 1993, originally as a sole practitioner and since 1996 as a partner in
the firm of Coulter & Davenport. Mr. Davenport previously practiced law in
Dalton, Georgia, as a sole practitioner from 1984 to 1991 and as a partner in
Ponder & Davenport, P.C., from 1991 to 1993. He is currently a director of ITC
DeltaCom, Inc. a communications holding company, and a director and secretary of
Spintek Gaming Technologies, Inc., a gaming technology manufacturer and
licensor. Mr. Davenport became a director of the Company in July 1994.
DR. DAN W. HOLLOWAY (75) - is a physician in private practice in Las Vegas,
Nevada, and has been affiliated, as a resident physician, with Desert Springs
Hospital since 1982. Dr. Holloway has also served as Chairman of the Department
of Family Practice at Desert Springs Hospital since 1993. Dr. Holloway became a
director of the Company in September 1996.
NORMAN J. HOSKIN (63) - has been Chairman of the Board of Directors of
Atlantic International Capital, Inc. since July 1994. He was previously Chairman
of Atlantic Capital Group, Ltd., a venture capital advisory service, from 1986.
Mr. Hoskin is a director of Aquacare Systems, Inc., a producer of water
purification equipment, Consolidated Technologies Corp., a diversified
manufacturing company, COTG Technologies Group, Inc., a technology company,
Trans Global Services, Inc., a telephone and internet communications company and
Sequential Information Systems, Inc., a high-tech aircraft equipment company.
Mr. Hoskin became a director of the Company in September 1996.
-4-
<PAGE>
DR. GLEN C. WARREN (65) - has served as Chairman of the Board of River Oaks
Hospital in Jackson, Mississippi, since 1988, President of Mississippi
Diagnostic Imaging Center, Ltd., since 1986 and as a clinical professor of
neurological surgery at the University of Mississippi School of Medicine since
1972. Dr. Warren became a director of the Company in July 1994.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES SET FORTH ABOVE.
ADDITIONAL INFORMATION
BOARD MEETINGS
The business of the Company is managed by or under the direction of the Board
of Directors. The Board of Directors met on four occasions and acted by
unanimous written consent on two occasions during the year ended July 31, 1997.
Each of the directors attended at least 75% of the aggregate of (1) the total
meetings of the Board of Directors and (2) the total number of meetings held by
all committees of the Board on which he or she served, during the periods that
he served with exceptions of Norman J. Hoskin and Dr. Dan W. Holloway, who
attended 50% of such meetings. Currently, there are no standing compensation
arrangements for non-executive Board of Director or Board of Director committee
members.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company's Board of Directors currently has an Executive Committee and a
Stock Option Committee.
The Executive Committee, which consists of Steven D. Brown (Chairman), Glen C.
Warren and Vivian W. Jones, may exercise all the powers and authority of the
Board of Directors except as otherwise provided by law or by the Company's
Articles of Incorporation or By-Laws. The Executive Committee acted once by
unanimous written consent during the year ended July 31, 1997 and did not hold
any formal meetings.
The Stock Option Committee of the Board of Directors consists of Steven D.
Brown and Rex A. Hauck. The function of the committee is to administrate the
Company's stock option plan (the "Plan") and to determine the awards of stock
options or rights pursuant to the Plan to members of the Board of Directors and
the employees, consultants and advisors of the Company. The Stock Option
Committee acted six times by unanimous written consent during the year ended
July 31, 1997 and did not hold any formal meetings.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth, as of November 21, 1997, beneficial ownership of
the issued and outstanding shares of Company's Class A Common Stock and Class B
Common Stock by (i) each person known to the Company to own beneficially more
than 5% of the aggregate shares of Common Stock outstanding, (ii) each director
and nominee for election as a director, (iii) each executive officer named in
the Summary Compensation Table, and (iv) the executive officers and directors of
the Company as a group. Unless otherwise indicated, the Company believes that
-5-
<PAGE>
the beneficial owners set forth in the table have sole voting power and sole
dispositive power as to all of the shares shown as beneficially owned by them.
Beneficial ownership of common stock has been determined in accordance with
Regulation 13d-3 of the Securities and Exchange Commission. Under this
regulation, a person is deemed to be the beneficial owner of securities if he or
she has sole or shared voting power or investment power in respect of the
securities or has the right to acquire beneficial ownership within 60 days
through the exercise of any option, warrant or right.
<TABLE>
<CAPTION>
SHARES OF CLASS A SHARES OF CLASS B
COMMON STOCK COMMON STOCK
NAME NUMBER %* NUMBER %*
------------ ---- ----------- -------
<S> <C> <C> <C> <C>
Steven D. Brown (1)(2) 100 - 1,256,127 22.83%
Rex A. Hauck (1)(2)(3) 300 - 1,311,029 23.83%
Vivian W. Jones (1)(2)(4) 600 - 1,318,350 20.66%
John W. Boyd (1)(5) 15,400 1.6% 385,906 6.96%
Malcolm C.
Davenport, V(1)(6) 41,866 4.48% 152,133 2.75%
Dan W. Holloway (1) 2,667 - 35,172 -
Norman J. Hoskin (1) - - - -
Ben E. Noble (1)(7) 113,332 11.49% - -
Glen C. Warren (1)(2)(8) 88,564 9.18% 501,348 8.82%
Douglas J. Bates 117,020 12.82% - -
244 B Greenwood Drive
Ballwin, Missouri 63011
Alan G. Johnson 125,720 13.77% - -
325 Highway DD
Defiance, Missouri 63341
Australian Advisors Corp. 300,000 32.86% - -
Bay & Deveaux St. 2nd Fl.
P.O. Box N-1000
Nassau, Bahamas
All Officers and Directors as a
Group (11 persons) 265,596 24.71% 5,145,708 75.56%
- ---------------------------------
</TABLE>
* Any percentages under one percent (1%) are not shown.
-6-
<PAGE>
(1) The address for the officers and directors is the corporate office of
the Company located at 1245 Fowler St., N.W., Atlanta, Georgia 30318.
(2) Under an agreement (the "Voting Agreement") dated April 1996 Messrs.
Brown, Hauck and Warren and Ms. Jones agreed to vote all their shares of Common
Stock of the Company ("Committed Shares") as a block in accordance with the
majority vote (by shares) among themselves. The Voting Agreement will remain in
effect until April 2001, unless sooner terminated by a written agreement
executed by stockholders holding of record a majority of the Committed Shares
then subject to the Agreement.
(3) Includes 11,524 shares of Class B Common Stock and 200 shares of Class
A Common Stock owned by Mr. Hauck's minor children, as to which Mr. Hauck
disclaims beneficial ownership.
(4) Includes 879,300 shares of Class B Common Stock subject to purchase
under currently exercisable options. Also includes 14,555 shares of Class B
Common Stock and 100 shares of Class A Common Stock owned by Ms. Jones' minor
son, as to which Ms. Jones disclaims beneficial ownership, and 72,875 shares of
Class B Common Stock and 400 shares of Class A Common Stock transferred by Ms.
Jones to other relatives, which shares continue to be subject of the voting
agreement between Messrs. Brown, Hauck, Warren and Ms. Jones. See Note (2)
above.
(5) Includes 43,965 shares of Class B Common Stock subject to purchase
under currently exercisable options and 15,000 shares of Class A Common Stock
subject to purchase under currently exercisable warrants. Also includes 2,245
shares of Class B Common Stock and 100 shares of Class A Common Stock owned by
Mr. Boyd's spouse, as to which Mr. Boyd disclaims beneficial ownership.
(6) Includes 87,830 shares of Class B Common Stock and 20,100 shares of
Class A Common Stock, held by Mr. Davenport as trustee of a family trust. Also
includes 21,127 shares of Class B Common Stock subject to purchase under
currently exercisable options and 21,666 shares of Class A Common Stock subject
to purchase under currently exercisable warrants.
(7) Includes 73,332 shares of Class A Common Stock subject to purchase
under currently exercisable warrants.
(8) Includes 180,713 shares of Class B Common Stock subject to purchase
under currently exercisable warrants and options and 52,000 shares of Class A
Common Stock subject to purchase under currently exercisable warrants. Also
Includes 12,315 shares of Class B Common Stock and 100 shares of Class A Common
Stock owned by Mr. Warren's spouse, as to which Mr. Warren disclaims beneficial
ownership.
-7-
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table furnishes compensation information for the year ended
July 31, 1997, for the chief executive officer; no other executive officers
earned more than $100,000 during the year ended July 31, 1997. During fiscal
1997 the Company's chief executive officer did not receive, and as of November
21, 1997, did not hold any stock options or SARs.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------------------------
NAME AND FISCAL OTHER ANNUAL
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION
- --------------------------------------- ------ ------------ ----- ------------
<S> <C> <C> <C> <C>
Steven D. Brown 1997 $ 99,360 -0- -0-
Chairman of the Board 1996 104,040 -0- -0-
Chief Executive Officer 1995 94,500 -0- -0-
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to an agreement dated August 31, 1993, and restructured November
3, 1995, the Company acquired all of the outstanding stock of Current
Corporation (later renamed First Light Entertainment Corporation) from Ms. Jones
in exchange for 439,650 shares of Class B common stock and an option to purchase
up to 879,300 additional shares of Class B common stock on or before September
1, 2003, at a price of $0.85 per share. Ms. Jones' options became exercisable
in three annual increments of 293,100 shares each, the last of which vested
September 1, 1996. Current Corporation, organized by Ms. Jones in August 1993,
had acquired certain assets of Jayan House, Ltd., a commercial production
business with which she had been employed, in exchange for its 4.37% note,
$100,000 principal amount, payable in 20 equal quarterly installments of
principal and interest commencing November 1993.
From December 1993 through July 1997, Dr. Warren purchased 86,205 shares of
Class B common stock at an aggregate price of $125,000 ($1.45 per share). In
connection with certain of these purchases, Dr. Warren also received warrants
for the purchase of 25,862 shares of Class B common stock at a price, to be
determined by the related agreement, between $2.56 and $3.41. These warrants
are exercisable through June 1998.
In July 1993, Dr. Warren and Mr. Boyd personally secured a $100,000
revolving bank line of credit for the benefit of the Company. In September 1994,
the revolving line of credit was replaced by a note which the Company repaid in
monthly installments. This note was paid in full in fiscal 1997.
-8-
<PAGE>
In June 1994, the Company purchased a 49% interest in Diversity Filmworks,
Inc., a newly incorporated corporation, consisting of 490 shares of common
stock, for a purchase price of $245. The owner of the other 51% is Tyrone C.
Johnson. In September 1996, the Company and Mr. Johnson entered into a
stockholder agreement pursuant to which the size of Diversity's board of
directors was set at five, of which three will be individuals designated by the
Company.
In November 1995, the Company granted Dr. Warren an option to purchase
117,240 shares of Class B common stock at $1.45 per share, exercisable through
June 1999.
From December 1993 to July 1997, the Company made seven loans totaling
$70,844 to Mr. Brown, each of which was represented by an unsecured promissory
note due December 1998, with accumulated interest of 7% per annum.
From December 1993 to July 1997, the Company made five loans totaling
$54,767 to Mr. Hauck, each of which was represented by an unsecured promissory
note due December 1998, with accumulated interest of 7% per annum.
From December 1993 to July 1997, the Company made four loans totaling
$87,600 to Vivian Jones, each of which was represented by an unsecured
promissory note due December 1998, with accumulated interest of 7% per annum.
Ms. Jones repaid $23,000 against these notes in October 1996.
In April 1996, Messrs. Brown and Hauck, Dr. Warren and Ms. Jones entered an
agreement under which they agreed to vote all their shares of Class A and Class
B common stock as a block in accordance the majority vote (by shares) among
themselves. By reason of their corporate offices, share ownership and voting
agreements they may be deemed "controlling persons" of the Company.
In May 1996, the Company agreed to issue to Dr. Warren options, exercisable
through June 2000, for the purchase of 28,208 shares of Class B common stock, at
$1.71 per share, contingent upon Dr. Warren arranging for the Company a three
month $75,000 line of credit. The line of credit was arranged in July 1996.
The line of credit was converted at its expiration into a six month unsecured
note due in May 1997 with a per annum interest rate of 8.75%. The due date of
the note was subsequently extended to November 1997. Dr. Warren is the co-
signer on the note.
The Company's original agreement dated May 16, 1995, as amended, with
Atlantic International Capital, Ltd., ("AIC"), of which Mr. Hoskin is an officer
and stockholder, was terminated by mutual consent on September 27, 1996. The
Company then entered a new agreement retaining AIC, effective October 1, 1996,
(i) to advise and offer counsel concerning communications and relations with
investors and with market makers in the common stock of the Company, and (ii) to
provide other business advice and counsel. This agreement was terminated, by
mutual consent of both parties, on October 31, 1996.
-9-
<PAGE>
In October 1996, Dr. Warren and Mr. Davenport, each loaned $25,000 to the
Company for use as working capital and to fund operating losses. The loans are
due upon demand by the respective holders, but no later than August 1997, and
bear interest at the prime rate plus 1%. As consideration, the Company issued
each of the lenders an option to purchase up to 9,403 of Class B common stock at
$1.71 per share at any time through June 2000. The Company re-paid $25,000 of
these loans in June 1997; the remaining loan's fixed due date was extended to
August 1, 1998.
In a private placement completed in May 1997, several directors of the
Company subscribed as follows for units consisting of 10,000 shares of Class A
common stock and a warrant, exercisable through June 2000, to purchase 3,333
shares of Class A common stock at a price of $3.00 per share: Mr. Loveless, one
unit for $25,000; Mr. Noble, four units for $100,000; and Mr. Davenport, two
units for $50,000 (including one unit as trustee of the Malcolm C. Davenport
Trust).
In April 1997, Dr. Warren made a short-term advance, without interest, of
$30,000 to the Company for a period of eight days.
In June 1997, Dr. Warren loaned the Company $30,000. This demand loan, as
amended, bore interest at the prime rate plus 1% and was due on demand, but no
later than August 1, 1998. The Company settled this loan in August 1997.
In July 1997 certain directors of the Company guaranteed revolving lines of
credit, or extended personal revolving lines of credit to the Company in the
following principal amounts; Messrs. Boyd, Davenport and Dr. Warren, $75,000
each; Mr. Noble, $100,000. The lines of credit bear interest on loan balances
outstanding at the prime rate plus 1% and are due July 1998. As consideration,
in October 1997 the Company issued each member of the group warrants for the
purchase of 5,000 shares of Class A common stock at $4.58 per share, exercisable
through June 2000, in respect of each $25,000 of revolving line of credit
guaranteed or provided.
In August 1997, Dr. Warren purchased 36,364 shares of Class A common stock
for a an aggregate price of $100,000. In connection with this purchase Dr.
Warren also received a warrant to purchase 37,000 shares of Class A common stock
at $2.80 per share, exercisable through June 2000.
In August 1997, Messrs. Boyd, Davenport, Noble and Dr. Warren, participated
in the organization of Video Communications Network, LLC, a 83.3% owned
subsidiary of the Company that has not yet commenced operations. In exchange
for nominal consideration, this group received 666 Ordinary LLC shares of VCN,
representing 6.7% of the outstanding Ordinary and Deferred LLC shares.
In October 1997, Mr. Noble received warrants to purchase 40,000 shares of
Class A common stock at a purchase price of $4.58 per share, exercisable through
June 2000, in consideration of his having agreed to join the board of directors.
-10-
<PAGE>
II. PROPOSAL TO AMEND THE COMPANY'S ARTICLES OF INCORPORATION
TO CHANGE THE COMPANY'S NAME TO
AMERICAN ARTISTS ENTERTAINMENT CORPORATION
On October 10, 1997, the Company's Board of Directors approved a proposal
to amend the Articles to change the Company's name to American Artists
Entertainment Corporation. This amendment to the Articles would be effective
immediately upon filing amended Articles of Incorporation with the Missouri
Secretary of State which the Company anticipates doing as soon as practicable
after the Annual Meeting.
The Company was organized in July 1995 as a Missouri corporation under the
name Setab Alpha, Inc. ("Setab"), and is the successor by merger of a Georgia
corporation named American Artists Film Corporation that was founded in July
1991. Setab, as the surviving corporation, subsequently changed its name to
American Artists Film Corporation. The Company's Board of Directors believes
that the name American Artists Entertainment Corporation would better reflect
the Company's current and proposed business operations and that the new name
would be more attractive to a broader spectrum of investors and, therefore,
should benefit both the Company and its stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE RESOLUTION
TO CHANGE THE COMPANY'S NAME TO AMERICAN ARTISTS ENTERTAINMENT CORPORATION.
OTHER MATTERS
The Board of Directors does not know of any other matters to be presented
for action at the meeting. If any other business should properly come before
the meeting, the persons named in the accompanying form of proxy intend to vote
thereon in accordance with their best judgment.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "1934
Act") requires the Company's officers, directors, and persons who own more than
ten percent of the registered class of the Company's equity securities to file
reports with the Securities and Exchange Commission (the "SEC") regarding
beneficial ownership of Common Stock and other equity securities of the Company.
Officers, directors and greater than ten percent stockholders are required by
the SEC regulations to furnish the Company with copies of all Section 16(a)
forms they file.
To the Company's knowledge, based solely on a review of copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended July 31, 1997, all officers,
directors and greater then ten percent beneficial owners complied with the
Section 16(a) filing requirements of the 1934 Act, with the following
exceptions: (i) Malcolm C. Davenport V, a director, failed to timely file Form 4
in relation to one transaction, (ii) Ben E. Noble, a director, failed to timely
file Form 3 in relation to one transaction, (iii) Dr. Glen C. Warren, a
director, failed to timely file Form 4 in relation to one transaction,
-11-
<PAGE>
(iv) Robert A. Martinez, an officer, failed to timely file Form 4 in relation to
two transactions, and (v) J. Eric Van Atta, an officer, failed to timely file
Form 4 in relation to two transactions. These Forms 3 and 4 were filed with the
SEC prior to October 24, 1997.
The Company, which first became subject to Section 16(a) reporting
requirements in September 1996, has now initiated a reporting compliance program
which it expects will substantially reduce the possibility of inadvertent
reporting oversights in the future.
STOCKHOLDER PROPOSALS
Any stockholder of the Company who wishes to present a proposal at the 1999
Annual Meeting of Stockholders of the Company and who wishes to have such
proposal included in the Company's proxy material for that meeting must deliver
a copy of such proposal to the Company at 1245 Fowler St., N.W., Atlanta,
Georgia 30318, Attention; Corporate Secretary, for receipt not less than 120
days nor more than 150 days prior to the date of this notice to stockholders for
the 1997 Annual Meeting of Stockholders; however, if next year's annual meeting
of stockholders is held on a date more than 30 days before or after the
anniversary of the 1997 Annual Meeting of Stockholders, any stockholder who
wishes to have a proposal included in the Company's proxy statement for that
meeting must deliver a copy of the proposal to the Company a reasonable time
before the proxy solicitation is made. The Company reserves the right to decline
to include in the Company's proxy material any stockholder's proposal which does
not comply with the rules of the SEC for inclusion therein.
YOUR VOTE IS IMPORTANT
You are encouraged to let us know your preference by marking the
appropriate boxes on the enclosed proxy card.
-12-
<PAGE>
AMERICAN ARTISTS FILM CORPORATION
1245 Fowler St., N.W.
Atlanta, Georgia 30318
(404) 876-7373
================================================================================
Class A Proxy
Solicited on Behalf of the Board of Directors
For the Annual Meeting of Stockholders to be held on January 16, 1998
The undersigned hereby revokes all previous proxies, acknowledges receipt
of the Notice of Annual Meeting of Stockholders to be held on January 16, 1998
(the "Notice") and appoints Steven D. Brown, Rex A. Hauck and Vivian W. Jones,
and each of them, proxies, with full power of substitution and with
discretionary authority, to represent and to vote all shares of Class A Common
Stock of American Artists Film Corporation held of record by the undersigned on
December 22, 1997 at the 1998 Annual Meeting of Stockholders to be held at 1245
Fowler Street, N.W., Atlanta, Georgia 30318 at 2:00 p.m., Atlanta time, (EST) on
Friday, January 16, 1998 and any adjournments or postponements thereof, as
indicated upon all matters referred to on this proxy card and described in the
Notice and, in their discretion, upon any other matters which may properly come
before the meeting.
<TABLE>
<CAPTION>
<S> <C> <C>
1. Election of Director [ ] FOR the nominee listed [ ] WITHHOLD AUTHORITY
below (except as written to to vote for the nominee listed
the contrary below) below
Ben E. Noble
</TABLE>
2. Approval of the proposal to amend the Company's Articles of Incorporation to
change the Company's name to American Artists Entertainment Corporation.
<TABLE>
<CAPTION>
<S> <C> <C>
[ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
(Continued on reverse side)
<PAGE>
PROXY INSTRUCTIONS
1. The shares represented by this proxy will, on any poll, be voted as the
stockholder may have specified by marking an "X" in the spaces provided for
the purpose. IF NO CHOICE IS SPECIFIED ON A PARTICULAR MATTER AND STEVEN D.
BROWN, REX A. HAUCK AND/OR VIVIAN W. JONES IS APPOINTED AS PROXYHOLDER, THE
SHARES WILL BE VOTED AS IF THE STOCKHOLDER HAD SPECIFIED AN AFFIRMATIVE VOTE.
2. IF THE STOCKHOLDER DOES NOT WISH TO APPOINT THE PERSON NAMED IN THIS PROXY,
HE/SHE SHOULD STRIKE OUT HIS NAME AND INSERT IN THE BLANK SPACE PROVIDED THE
NAME OF THE PERSON HE WISHES TO ATTEND AND ACT AS HIS PROXYHOLDER. THAT
PERSON NEED NOT BE A STOCKHOLDER OF THE COMPANY. IF THE INSTRUCTIONS BY THE
STOCKHOLDER ON THIS PROXY ARE CERTAIN, THE SHARES REPRESENTED BY THE PROXY
WILL BE VOTED ON ANY POLL AND WHERE THE STOCKHOLDER SPECIFIES A CHOICE WITH
RESPECT TO ANY MATTER TO BE ACTED ON, THE SHARES WILL BE VOTED ON ANY POLL IN
ACCORDANCE WITH THE SPECIFICATIONS SO MADE.
3. No matters other than those stated in the attached notice are at present
known to be considered at the Meeting, but, if such matters should arise,
proxies will be voted in accordance with the instructions of the stockholder
voting by proxy. IF THE STOCKHOLDER VOTES FOR SUCH OTHER MATTERS AS MAY COME
BEFORE THE MEETING, THIS PROXY WILL BE VOTED AT THE DISCRETION OF THE
PROXYHOLDER NAMED.
4. This proxy may not be valid unless it is dated and signed by the stockholder
or by his attorney duly authorized by him in writing, or, in the case of a
corporation, is executed under its corporate seal or by an officer or
officers or attorney for the corporation duly authorized. If this proxy is
executed by an attorney for an individual stockholder or joint stockholder or
by an officer or officers or attorney of a corporate shareholder not under
its corporate seal, the instrument so empowering the officer or officers or
the attorney, as the case may be, or a notarial copy thereof, should
accompany the proxy.
5. If stock is held in the name of two or more persons, all must sign. When
signing as attorney, as executor, administrator, trustee, or guardian, please
give full title as such. If a corporation, please sign in full corporate name
by President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
6. This proxy may not be used at the Meeting unless it is deposited at the
OFFICE OF THE COMPANY, 1245 Fowler St., N.W., Atlanta, GA 30318 not later
than January 14, 1998. The Chairman of the Meeting has the discretion to
accept proxies filed subsequently.
EXECUTED on the day of
------------ ---------------------
---------------------------------------------
Signature
---------------------------------------------
Name of Stockholder(s) (Please Print Clearly)
---------------------------------------------
Address
---------------------------------------------
City/Province
---------------------------
Number of Shares Held
<PAGE>
AMERICAN ARTISTS FILM CORPORATION
1245 Fowler St., N.W.
Atlanta, Georgia 30318
(404) 876-7373
================================================================================
Class B Proxy
Solicited on Behalf of the Board of Directors
For the Annual Meeting of Stockholders to be held on January 16, 1998
The undersigned hereby revokes all previous proxies, acknowledges receipt of
the Notice of Annual Meeting of Stockholders to be held on January 16, 1998 (the
"Notice") and appoints Steven D. Brown, Rex A. Hauck and Vivian W. Jones, and
each of them, proxies, with full power of substitution and with discretionary
authority, to represent and to vote all shares of Class B Common Stock of
American Artists Film Corporation held of record by the undersigned on December
22, 1997 at the 1998 Annual Meeting of Stockholders to be held at 1245 Fowler
Street, N.W., Atlanta, Georgia 30318 at 2:00 p.m., Atlanta time, (EST) on
Friday, January 16, 1998 and any adjournments or postponements thereof, as
indicated upon all matters referred to on this proxy card and described in the
Notice and, in their discretion, upon any other matters which may properly come
before the meeting.
<TABLE>
<CAPTION>
<S> <C> <C>
1. Election of Directors [ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY
below (except as written to to vote for all nominees listed
the contrary below) below
Steven D. Brown John W. Boyd Dr. Dan W. Holloway
Rex A. Hauck Malcolm C. Davenport, V Norman J. Hoskin
Vivian W. Jones Dr. Glen C. Warren
</TABLE>
Instruction: To withhold authority to vote for any individual nominee, write
the nominee's name in the space provided below.
-----------------------------------------------------------
-----------------------------------------------------------
2. Approval of the proposal to amend the Company's Articles of Incorporation to
change the Company's name to American Artists Entertainment Corporation.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued on reverse side)
<PAGE>
PROXY INSTRUCTIONS
1. The shares represented by this proxy will, on any poll, be voted as the
stockholder may have specified by marking an "X" in the spaces provided for
the purpose. IF NO CHOICE IS SPECIFIED ON A PARTICULAR MATTER AND STEVEN D.
BROWN, REX A. HAUCK AND/OR VIVIAN W. JONES IS APPOINTED AS PROXYHOLDER, THE
SHARES WILL BE VOTED AS IF THE STOCKHOLDER HAD SPECIFIED AN AFFIRMATIVE VOTE.
2. IF THE STOCKHOLDER DOES NOT WISH TO APPOINT THE PERSON NAMED IN THIS PROXY,
HE/SHE SHOULD STRIKE OUT HIS NAME AND INSERT IN THE BLANK SPACE PROVIDED THE
NAME OF THE PERSON HE WISHES TO ATTEND AND ACT AS HIS PROXYHOLDER. THAT
PERSON NEED NOT BE A STOCKHOLDER OF THE COMPANY. IF THE INSTRUCTIONS BY THE
STOCKHOLDER ON THIS PROXY ARE CERTAIN, THE SHARES REPRESENTED BY THE PROXY
WILL BE VOTED ON ANY POLL AND WHERE THE STOCKHOLDER SPECIFIES A CHOICE WITH
RESPECT TO ANY MATTER TO BE ACTED ON, THE SHARES WILL BE VOTED ON ANY POLL IN
ACCORDANCE WITH THE SPECIFICATIONS SO MADE.
3. No matters other than those stated in the attached notice are at present
known to be considered at the Meeting, but, if such matters should arise,
proxies will be voted in accordance with the instructions of the stockholder
voting by proxy. IF THE STOCKHOLDER VOTES FOR SUCH OTHER MATTERS AS MAY COME
BEFORE THE MEETING, THIS PROXY WILL BE VOTED AT THE DISCRETION OF THE
PROXYHOLDER NAMED.
4. This proxy may not be valid unless it is dated and signed by the stockholder
or by his attorney duly authorized by him in writing, or, in the case of a
corporation, is executed under its corporate seal or by an officer or
officers or attorney for the corporation duly authorized. If this proxy is
executed by an attorney for an individual stockholder or joint stockholder or
by an officer or officers or attorney of a corporate shareholder not under
its corporate seal, the instrument so empowering the officer or officers or
the attorney, as the case may be, or a notarial copy thereof, should
accompany the proxy.
5. If stock is held in the name of two or more persons, all must sign. When
signing as attorney, as executor, administrator, trustee, or guardian, please
give full title as such. If a corporation, please sign in full corporate name
by President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
6. This proxy may not be used at the Meeting unless it is deposited at the
OFFICE OF THE COMPANY, 1245 Fowler St., N.W., Atlanta, GA 30318 not later
than January 14, 1998. The Chairman of the Meeting has the discretion to
accept proxies filed subsequently.
EXECUTED on the day of
------------ ---------------------
---------------------------------------------
Signature
---------------------------------------------
Name of Stockholder(s) (Please Print Clearly)
---------------------------------------------
Address
---------------------------------------------
City/Province
---------------------------
Number of Shares Held
