SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
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[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the
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(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
NETWORK EVENT THEATER, INC.
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<PAGE>
NETWORK EVENT THEATER, INC.
529 Fifth Avenue
New York, New York 10017
October 23, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Network Event Theater, Inc., a Delaware corporation (the "Company"), to be held
on Thursday, November 20, 1997 at 2:30 p.m., Eastern Standard Time, at the
offices of Proskauer Rose LLP, 1585 Broadway, New York, New York.
At this meeting, you will be asked to consider and vote upon the election
of seven directors of the Company, the ratification of the appointment of Ernst
& Young LLP as the Company's independent certified public accountants, and the
approval of the adoption by the Board of Directors of the Company's 1997 Stock
Option Plan.
YOUR VOTE IS IMPORTANT. The Board of Directors appreciates and encourages
stockholder participation in the Company's affairs and cordially invites you to
attend the meeting in person. It is important in any event that your shares be
represented and we ask that you sign, date and mail the enclosed proxy card in
the envelope provided at your earliest convenience.
We sincerely thank you for your support.
Very truly yours,
Harlan D. Peltz
Chairman of the Board and
Chief Executive Officer
<PAGE>
NETWORK EVENT THEATER, INC.
529 Fifth Avenue
New York, New York 10017
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 20, 1997
--------------------------------
To the Stockholders of Network Event Theater, Inc.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Network
Event Theater, Inc., a Delaware corporation (the "Company"), will be held on
Thursday, November 20, 1997 at 2:30 p.m., Eastern Standard Time, at the offices
of Proskauer Rose LLP, 1585 Broadway, New York, New York for the purposes of
considering and voting upon the following matters, as more fully described in
the attached Proxy Statement:
1. To elect seven directors of the Company;
2. To ratify the appointment of Ernst & Young LLP as the independent
certified public accountants of the Company;
3. To approve the adoption by the Board of Directors of the Company's
1997 Stock Option Plan; and
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on October 16, 1997
as the record date for the determination of stockholders entitled to notice of
and to vote at the meeting.
By Order of the Board of Directors,
Bruce L. Resnik
Secretary
October 23, 1997
YOUR ATTENTION IS DIRECTED TO THE ACCOMPANYING PROXY STATEMENT
You are cordially invited to attend the meeting in person. Whether or not
you expect to be present, please mark, date, sign and return the accompanying
form of proxy in the envelope enclosed (to which no postage need be affixed if
mailed in the United States) so that your vote can be recorded.
<PAGE>
NETWORK EVENT THEATER, INC.
529 Fifth Avenue
New York, New York 10017
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PROXY STATEMENT
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ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 20, 1997
This Proxy Statement is being furnished to the stockholders of Network
Event Theater, Inc., a Delaware corporation (the "Company"), in connection with
the solicitation of proxies, in the accompanying form, by the Company for use at
the Annual Meeting of Stockholders to be held at 2:30 p.m., Eastern Standard
Time, on Thursday, November 20, 1997 at the offices of Proskauer Rose LLP, 1585
Broadway, New York, New York and at any and all adjournments or postponements
thereof.
The stockholders of record at the close of business on October 16, 1997
will be entitled to receive notice of and to vote at the meeting and any
adjournments or postponements thereof. As of October 16, 1997, there were issued
and outstanding 9,861,323 shares of the Company's common stock, par value $.01
per share (the "Common Stock"), the only class of voting securities outstanding.
The stockholders of record will be entitled to one vote for each share of Common
Stock registered in his or her name on the record date. A majority of all the
outstanding shares of the Common Stock constitutes a quorum and is required to
be present in person or by proxy to conduct business at the meeting.
Stockholders may revoke the authority granted by their executed proxies at
any time prior to their use by filing with the Secretary of the Company a
written revocation or a duly executed proxy bearing a later date or by attending
the meeting and voting in person. Solicitation of proxies will be made chiefly
through the mails, but additional solicitation may be made by telephone or
telegram by the officers or regular employees of the Company (who will not be
specifically compensated for such services). The Company may also enlist the aid
of brokerage houses or the Company's transfer agent in soliciting proxies, and
the Company will reimburse them for their reasonable expenses. All solicitation
expenses, including costs of preparing, assembling and mailing proxy material,
will be borne by the Company. This Proxy Statement and accompanying form of
proxy are being mailed to stockholders on or about October 23, 1997.
Shares of the Common Stock represented by executed and unrevoked proxies
will be voted in accordance with the choice or instructions specified thereon.
It is the intention of the persons named in the proxy, unless otherwise
specifically instructed in the proxy, to vote all proxies received by them in
favor of the seven nominees named herein for election as directors, in favor of
the ratification of the appointment of Ernst & Young LLP as the independent
certified public accountants of the Company, and in favor of the approval of the
adoption of the Company's 1997 Stock Option Plan. The Board of Directors does
not know of any other matters that may be presented for consideration at the
meeting. However, if other matters properly come before the meeting, the persons
named in the accompanying proxy intend to vote thereon in accordance with their
judgment.
If a quorum is present at the meeting, those nominees receiving a
plurality of the votes cast will be elected as directors. The affirmative vote
of the holders of a majority in voting power of the shares present in person or
represented by proxy and entitled to vote at the meeting will be required to
ratify the appointment of Ernst & Young LLP as the independent certified public
accountants of the Company and to approve the adoption of the Company's 1997
Stock Option Plan. Abstentions from voting on a proposal will have the effect of
a "no" vote. Broker non-votes are not considered shares present, are not
entitled to vote and therefore will not affect the outcome of the vote on a
proposal.
<PAGE>
BENEFICIAL OWNERSHIP OF VOTING SECURITIES
The following table sets forth information regarding the beneficial
ownership of the Common Stock as of October 16, 1997 by (i) each person known by
the Company to be the beneficial owner of more than 5% of the outstanding shares
of Common Stock, (ii) each of the Company's executive officers and directors and
(iii) all executive officers and directors of the Company as a group.
<TABLE>
<CAPTION>
Amount and
Nature of Beneficial Percentage of
Name and Address of Beneficial Owner(1) Ownership(2) Outstanding Shares
- ------------------------------------ --------------------- ------------------
<S> <C> <C>
Harlan D. Peltz ...................................... 2,392,813(3) 24.3%
George Lindemann ..................................... 630,757(4) 6.4
c/o Cellular Dynamics, Inc.
767 Fifth Avenue
New York, New York 10153
Freddie Fields ....................................... 332,587(5) 3.4
c/o The Fields & Hellman Company
8899 Beverly Boulevard
Los Angeles, California 90048
Don Leeds ............................................ 312,379(6) 3.2
Metin Negrin ......................................... 75,276 *
Bruce L. Resnik ...................................... 16,666(7) *
Jan Miller ........................................... 2,000 *
Jeffrey Berg ......................................... -- --
Joseph Tahl .......................................... -- --
All executive officers and directors
as a group (9 individuals) ......................... 3,762,478 38.2
Warburg, Pincus Counsellors, Inc. .................... 1,015,873 10.3
466 Lexington Avenue
New York, New York 10017
A. Alfred Taubman .................................... 788,889(8) 8.0
200 East Long Lake Road
Bloomfield Hills, Michigan 48304
Crescent International Holdings ...................... 525,505 5.3
c/o Reid & Priest
40 West 57th Street
New York, New York 10019
</TABLE>
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* Less than 1% of the outstanding Common Stock.
(1) Unless otherwise indicated, the address of each beneficial owner identified
is 529 Fifth Avenue, New York, New York 10017.
(2) Unless otherwise indicated, the Company believes that all persons named in
the table have sole voting and investment power with respect to all shares
of Common Stock beneficially owned by them. A person is deemed to be the
beneficial owner of securities that can be acquired by such person within
60 days from the date of this Proxy Statement upon the exercise of options,
warrants or convertible securities. Each beneficial owner's percentage
ownership is determined by assuming that convertible securities, options or
warrants that are held by such person (but not those held by any other
person) and which are exercisable within 60 days of the date of this Proxy
Statement have been exercised.
(3) Includes 63,544 shares owned by Universal Access Network, Inc., a Delaware
corporation wholly owned by Mr. Peltz.
(4) All shares owned by Activated Communications, L.P. ("ACLP"), which is
wholly owned, directly or indirectly, by Mr. Lindemann and his family
members. Mr. Lindemann is the President, and he and his family members are
the sole shareholders, of the general partner of ACLP.
(5) Includes 276,280 shares issuable upon exercise of options owned by a family
trust of which Mr. Fields is a trustee.
(6) Includes 250,666 shares issuable upon exercise of options granted under the
Company's 1996 Employee Stock Option Plan and by Harlan D. Peltz.
(7) Shares issuable upon exercise of options granted under the Company's 1996
Employee Stock Option Plan. (8) Shares owned as trustee of The A. Alfred
Taubman Restated Revocable Trust.
Harlan D. Peltz may be deemed a "promoter" of the Company, as such term is
defined in the Securities Act of 1933, as amended.
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PROPOSAL I: ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of eight
directors, all with terms expiring at the Annual Meeting of Stockholders. By
unanimous written consent on October 15, 1997, the Board of Directors reduced
the number of directors of the Company to seven, effective as of the date of the
Annual Meeting of Stockholders, and nominated seven of the current directors,
Harlan D. Peltz, Don Leeds, Freddie Fields, Jeffrey Berg, Jan Miller, Metin
Negrin and George Lindemann, for re-election with terms to expire at the next
annual meeting of stockholders. The Board did not nominate Joseph Tahl for
re-election.
It is the intention of each of the persons named in the accompanying form
of proxy to vote the shares represented thereby in favor of each of the seven
nominees. In case any of the nominees are unable or decline to serve, such
persons named in the accompanying form of proxy reserve the right to vote the
shares represented by such proxy for another person duly nominated by the Board
of Directors in his stead or, if no other person is nominated, to vote such
shares only for the remaining nominee(s). The Board of Directors has no reason
to believe that any person named will be unable or will decline to serve.
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<PAGE>
MANAGEMENT
Directors and Executive Officers
The directors and executive officers of the Company are as follows:
Name Age Position
- ----- ---- -------
Harlan D. Peltz .............. 32 Chairman of the Board and Chief
Executive Officer
Don Leeds .................... 46 President and Director
Bruce L. Resnik .............. 51 Executive Vice President, Chief
Financial Officer and Secretary
Freddie Fields ............... 74 Director
Jeffrey Berg ................. 50 Director
Jan Miller ................... 50 Director
Metin Negrin ................. 31 Director
George Lindemann ............. 61 Director
Joseph Tahl .................. 35 Director
Harlan D. Peltz has been Chairman of the Board and Chief Executive Officer
of the Company since its incorporation in December 1995. From August 1993 to
December 1995, Mr. Peltz was the President of Universal Access Network, Inc.,
the general partner of Universal Access Network, LP, the predecessor of the
Company. From September 1991 to July 1993, Mr. Peltz was an associate at
Veronis, Suhler & Associates Inc., an investment banking firm specializing in
the media industry. From July 1990 to May 1991, Mr. Peltz worked for Home Box
Office in the area of international business development in Eastern Europe and
South America. Mr. Peltz received an MBA from the Stern School of Business at
New York University in 1991.
Don Leeds has been a director of the Company since December 1995. He was
elected Executive Vice President-Strategic Planning and Business Development of
the Company in June 1996 and then President in September 1996. From 1989 to June
1996, Mr. Leeds was a Managing Director at Veronis, Suhler & Associates Inc.
Bruce L. Resnik has been Executive Vice President and Chief Financial
Officer of the Company since October 1996. From August 1992 to September 1996,
Mr. Resnik was the Director of Finance of the International Division of Grey
Advertising.
Freddie Fields has been a director of the Company since February 1996 and
a consultant to the Company since January 1995. Since September 1993, Mr. Fields
has been the Chairman of The Fields & Hellman Company, a motion picture and
television production company. Mr. Fields was also the Executive Producer of
"The Montel Williams Show." In 1990, Mr. Fields produced the motion picture
"Glory." Mr. Fields has also served as the President and Chief Executive Officer
of the talent agency, Creative Management Associates (now known as International
Creative Management, Inc.), and as the President of the Metro Goldwyn Mayer and
United Artists motion picture studios. Mr. Fields is a member of the Board of
Directors of The Sports and Entertainment Commission of the City of Los Angeles.
Jeffrey Berg has been a director of the Company since March 1996. Since
1985, Mr. Berg has been the Chairman and Chief Executive Officer of
International Creative Management, Inc. Mr. Berg served as Co-Chair of the
California Information Technology Council and was President of the Executive
Board of the College of Letters and Sciences at the University of California at
Berkeley. Mr. Berg is presently a member of the Board of Visitors of the
Anderson Graduate School of Management and the Board of Trustees of the American
Film Institute. Mr. Berg is also a director of Oracle Corporation, a supplier of
software for information management.
Jan Miller has been a director of the Company since February 1996. Since
January 1980, Ms. Miller has been the President and Chief Executive Officer of
Dupree, Miller & Associates, a literary agency whose clients include Anthony
Robbins, Stephen Covey, Les Brown and Maria Shriver.
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<PAGE>
Metin Negrin has been a director of the Company since December 1995. Since
August 1993, Mr. Negrin has been the Chief Operating Officer and a Managing
Director of The Athena Group, a real estate investment firm. From July 1990 to
July 1993, Mr. Negrin was an associate in the New York office of LaSalle
Partners, a Chicago-based real estate investment firm.
George Lindemann has been a director of the Company since August 1996.
Since February 1990, Mr. Lindemann has been the Chairman and Chief Executive
Officer of Southern Union Company, one of the largest natural gas distributors
in the United States, and since May 1982, has been the President of Cellular
Dynamics, Inc., the general partner of Activated Communications, L.P., a
diversified communications firm. Mr. Lindemann founded Metro Mobile CTS, Inc., a
cellular telephone company, in 1982 and served as its Chairman and Chief
Executive Officer until it merged with Bell Atlantic Corporation in 1992. Mr.
Lindemann also served as President of Vision Cable Communications, a pioneer in
the cable television industry, from 1972-1981.
Joseph Tahl has been a director of the Company since December 1995. Since
November 1995, Mr. Tahl has been the Executive Vice President and General
Counsel of The Athena Group. From November 1990 to November 1995, Mr. Tahl was
Associate General Counsel of The Trump Organization, a real estate acquisition,
finance and development firm.
All directors hold office until the next annual meeting of stockholders
and the election and qualification of their successors. Directors receive no
cash compensation for serving on the Board of Directors other than reimbursement
of reasonable expenses incurred in attending meetings. Officers are elected
annually by the Board of Directors and serve at the discretion of the Board of
Directors, subject to the provisions of certain employment agreements.
The Company has obtained key man life insurance on the life of Mr. Peltz
in the amount of $2 million.
In connection with the Company's initial public offering on April 9, 1996
(the "Offering"), the Company agreed, for a period of three years following the
date of the offering, if so requested by Whale Securities Co., L.P., the
underwriter of the Offering (the "Underwriter"), to nominate and use its best
efforts to elect a designee of the Underwriter as a director of the Company or,
at the Underwriter's option, as a non-voting advisor to the Company's Board of
Directors. The Underwriter has not yet exercised its rights to designate such a
person.
Board and Committee Meetings
During the fiscal year ended June 30, 1997, the Board of Directors held
four meetings. Each member of the Board attended at least 75% of the meetings of
the Board and meetings of any committees of the Board on which he served that
were held during the time he served.
The Board of Directors does not have an Executive Committee or a
Compensation Committee. The Board will be forming an Audit Committee to comply
with the recently amended maintenance standards for The Nasdaq SmallCap Market,
on which the Common Stock is listed.
Vote Required
The Board Of Directors recommends that holders of the Common Stock Vote for
the seven nominees listed above. Their election will require a plurality of the
votes cast by holders of the Common Stock present in person or represented by
proxy and entitled to vote.
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<PAGE>
Executive Compensation
The following table sets forth certain information for each of the
Company's three fiscal years ended June 30, 1995, 1996 and 1997 with respect to
compensation paid to Harlan D. Peltz, the Company's Chief Executive Officer, Don
Leeds, the Company's President, Bruce L. Resnik, the Company's Executive Vice
President and Chief Financial Officer, and Lawrence Kieves, the Company's former
President. No other executive officer received compensation in any of those
fiscal years that exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
----------------------------------------
Other Annual
Name and Principal Position Fiscal Year Salary($) Bonus($) Compensation($)
- ------------------------- --------- -------- ------- ---------------
<S> <C> <C> <C> <C>
Harlan D. Peltz .......................... 1997 112,500 40,000(1) --
Chief Executive Officer 1996 112,500 -- --
1995 78,846 -- --
Don Leeds ................................ 1997 197,000 30,000(1) 50,000(2)
President
Lawrence Kieves .......................... 1997 56,250 -- --
Former President 1996 112,500 -- --
1995 92,308 -- --
Bruce L. Resnik .......................... 1997 129,230 25,000(1) --
Executive Vice President
Chief Financial Officer
</TABLE>
- --------------------
(1) Discretionary bonuses paid pursuant to each executive officer's employment
agreement with the Company and approved by the Board of Directors.
(2) Additional compensation in connection with the acquisition of the business
and assets of American Passage Media Corporation.
None of the executive officers of the Company named in the Summary
Compensation Table received any long-term compensation awards or payouts during
the Company's last three fiscal years.
Stock Options
In connection with the Company's hiring of Bruce L. Resnik as Executive
Vice President and Chief Financial Officer in October 1996, the Company granted
Mr. Resnik an option under the Company's 1996 Employee Stock Option Plan to
purchase, at a price of $3.44 per share, up to 16,666 shares of Common Stock on
and after October 7, 1997, up to an additional 16,667 shares of Common Stock on
and after October 7, 1998, and up to an additional 16,667 shares of Common Stock
on and after October 7, 1999.
None of the executive officers of the Company named in the Summary
Compensation Table exercised any options during the fiscal year ended June 30,
1997.
Employment Agreements
On April 2, 1996, the Company entered into a three-year employment
agreement with Harlan D. Peltz, its Chairman of the Board and Chief Executive
Officer. The agreement requires Mr. Peltz to devote substantially all of his
business time to the management and operations of the Company and provides for a
base annual salary of $110,000 during the term of the agreement, subject to
increase as determined by the Board of Directors. Mr. Peltz also may be granted
annual bonuses at the discretion of the Board of Directors. The agreement
provides that if Mr. Peltz is terminated without cause, he will continue to
receive the base salary during the remainder of the contract term. The agreement
also provides that the Company will continue to pay the base salary to Mr. Peltz
or his legal representative in the event of his termination due to disability or
death, for a period ending on the earlier of the one-year anniversary of such
termination or the end of the employment term. The agreement contains provisions
prohibiting Mr. Peltz from competing with the Company during the term of
employment and for a period of one year thereafter.
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<PAGE>
On June 17, 1996, the Company entered into a three-year employment
agreement with Don Leeds to serve as its Executive Vice President-Strategic
Planning and Business Development. (Mr. Leeds was elected President in September
1996.) The agreement requires Mr. Leeds to devote substantially all of his
business time to the management and operations of the Company and provides for a
base annual salary of $200,000 during the term of the agreement, subject to
increase as determined by the Board of Directors. Mr. Leeds may also be granted
annual bonuses at the discretion of the Board of Directors. The agreement
requires the Company to provide and maintain certain insurance benefits for Mr.
Leeds. The agreement provides that in the event of Mr. Leeds' termination due to
disability or death, the Company will continue to pay the base salary to him or
his estate for a period ending on the earlier of the one-year anniversary of
such termination or the end of the contract term. The agreement also provides
that Mr. Leeds may terminate his employment for Good Reason (as defined), in
which event he will be entitled to receive his base salary for the remainder of
the contract term. The agreement contains provisions prohibiting Mr. Leeds from
competing with the Company during the term of employment and, upon the
satisfaction of certain conditions, for a period of one year thereafter. In
connection with his employment by the Company, Mr. Leeds also received a $50,000
fee for consulting services he rendered to the Company prior to his employment
and options from the Company and Harlan D. Peltz.
On September 9, 1996, the Company entered into a three-year employment
agreement with Steven Flanders to serve as its Senior Vice President-Strategic
Alliances. Mr. Flanders employment was terminated in July 1997 and, except for a
provision prohibiting Mr. Flanders from competing with the Company for a period
of one year from the date of his resignation, his employment agreement
terminated.
On September 26, 1996, the Company entered into a three-year employment
agreement with Bruce L. Resnik to serve as its Executive Vice President-Chief
Financial Officer. The agreement provides for a base annual salary of $175,000
during the term of the agreement, subject to increase as determined by the Board
of Directors. Mr. Resnik may also be granted annual bonuses at the discretion of
the Board of Directors. The agreement provides that in the event of Mr. Resnik's
termination due to disability or death, the Company will continue to pay the
base salary to him or his estate for a period ending on the earlier of the
six-month anniversary of such termination or the end of the contract term. The
agreement contains provisions prohibiting Mr. Resnik from competing with the
Company during the term of employment and for a period of one year thereafter.
In connection with his hiring, Mr. Resnik was granted an option pursuant to the
Company's 1996 Employee Stock Option Plan to purchase up to 50,000 shares of the
Common Stock at the fair market value of the stock on the date of grant.
Certain Transactions
In connection with the Company's hiring of Don Leeds as Executive Vice
President in June 1996, the Company granted Mr. Leeds an option under the
Company's 1996 Employee Stock Option Plan to purchase, at a price of $3.875 per
share, up to 66,666 shares of Common Stock immediately, up to an additional
66,667 shares of Common Stock on and after June 17, 1997, and up to an
additional 66,667 shares of Common Stock on and after June 17, 1998. In
addition, Harlan D. Peltz granted to Mr. Leeds an option to purchase up to
176,000 shares of his Common Stock at the same price and in equal proportions
over the same vesting periods.
In connection with its acquisition of the college and high school media
and marketing services business of American Passage Media Corporation in
September 1996, the Company paid a $150,000 fee to Veronis, Suhler and
Associates Inc. ("VS&A"). Don Leeds participated in the transaction on behalf of
VS&A prior to joining the Company as its Executive Vice President, and was paid
$45,000 by VS&A on account of that participation.
In connection with the Company's hiring of Bruce L. Resnik as Executive
Vice President and Chief Financial Officer in October 1996, the Company granted
Mr. Resnik an option under the Company's 1996 Employee Stock Option Plan to
purchase, at a price of $3.44 per share, up to 16,666 shares of Common Stock on
and after October 7, 1997, up to an additional 16,667 shares of Common Stock on
and after October 7, 1998, and up to an additional 16,667 shares of Common Stock
on and after October 7, 1999.
Effective January 1995, the Company entered into a consulting agreement
with The Fields & Hellman Company ("F&H"), a corporation owned by Freddie Fields
and Jerome Hellman. In December 1995, the Company and F&H amended and restated
the consulting agreement entitling F&H to receive, among other
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<PAGE>
things, annual consulting fees of $450,000 and $550,000 in 1996 and 1997,
respectively, annual overhead expense reimbursements (primarily relating to the
Company's office in Los Angeles, California) of $262,500 and $275,625 in 1996
and 1997, respectively, and 10% of the Company's pre-tax income through 1999.
The Company also granted F&H an option to purchase 552,560 shares of Common
Stock at an exercise price of $1.58 per share, which option was assigned 50% to
each of Jerome Hellman, personally, and a family trust of which Freddie Fields
is a trustee. For the year ended December 31, 1995, the Company paid consulting
fees of $300,000 and overhead expenses of $250,000 under such agreement.
On May 20, 1997, the Company entered into a revised agreement with F&H.
The revised agreement relieves Messrs. Fields and Hellman of their obligation to
devote a substantial portion of their business time to the Company, but provides
that each will continue to be available to perform consulting services for the
Company and that Mr. Fields will continue to serve as a director of the Company
at his election. The revised agreement further provides that the Company will
continue to pay F&H the monthly consulting fees and expense reimbursements
provided for in the original agreement (totaling $412,812 for the period from
July 1, 1997 through December 31, 1997), but that the Company may at any time
elect to pay 50% of the remaining balance in a single cash payment and 50% by
issuing to Messrs. Fields and Hellman registered shares of Common Stock.
Section 16(A) of the Securities Exchange Act Of 1934 Beneficial Ownership
Reporting Compliance
Based solely on a review of the reports and representations furnished to
the Company during the last fiscal year, the Company believes that each of the
persons required to file reports under Section 16(a) of the Securities Exchange
Act of 1934 (the "Exchange Act") was in compliance with all applicable filing
requirements with respect to the Company's most recent fiscal year.
8
<PAGE>
PROPOSAL II: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed Ernst & Young LLP, independent
certified public accountants, to audit the books and records of the Company for
the current fiscal year. The affirmative vote of the holders of a majority in
voting power of the shares of the Common Stock present in person or represented
by proxy and entitled to vote at the meeting will be required to ratify the
appointment of Ernst & Young LLP as independent certified public accountants of
the Company.
The Board of Directors recommends that the stockholders of the Company
vote FOR the proposal to ratify such appointment.
Representatives of Ernst & Young LLP are expected to be available at the
meeting of stockholders to respond to appropriate questions and will be given
the opportunity to make a statement if they desire to do so.
9
<PAGE>
PROPOSAL III: APPROVAL OF NETWORK EVENT THEATER, INC.
1997 STOCK OPTION PLAN
The affirmative vote of at least a majority of the shares of Common Stock
present in person or represented by proxy and entitled to vote on this matter at
the meeting is required to approve the adoption of the Network Event Theater,
Inc. 1997 Stock Option Plan. The Board of Directors recommends that the
stockholders vote their shares FOR the proposal to adopt the Network Event
Theater, Inc. 1997 Stock Option Plan.
The following description of the Company's 1997 Stock Option Plan (the
"Stock Option Plan") is a summary of the principal provisions of the Stock
Option Plan and is qualified in its entirety by reference to the Stock Option
Plan, a copy of which has been filed with the Securities and Exchange Commission
as an exhibit to this Proxy Statement.
1997 Stock Option Plan
The Stock Option Plan is intended to promote the financial interests and
growth of the Company by attracting, retaining and rewarding key employees and
consultants, as well as non-employee directors of the Company. The Stock Option
Plan provides for the granting of options to purchase not more than an aggregate
of 450,000 shares of Common Stock, subject to adjustment under certain
circumstances.
The Stock Option Plan is administered by a committee (the "Committee") of
the Board of Directors of the Company. The Committee is intended to consist of
three or more directors, each of whom will be a "non-employee director," as
defined in Rule 16b-3 promulgated under the Exchange Act. The Committee has full
power and authority to administer and interpret the provisions of the Stock
Option Plan and will determine the persons to whom stock options will be
granted, the amount of stock to be optioned to such persons, and the terms and
conditions of any stock options.
Two types of stock options may be granted under the Stock Option Plan:
incentive stock options, which are intended to qualify under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), and non-qualified stock
options. The exercise price per share for both types of options may not be less
than the fair market value of the Common Stock (110% of fair market value in the
case of incentive stock options granted to 10% stockholders) at the time the
option is granted.
All officers, directors and employees of the Company will be eligible to
participate in the Stock Option Plan, although non-employee directors of the
Company may not be granted options to purchase in excess of 5,000 shares of
Common Stock in any one calendar year. Additionally, the Stock Option Plan
permits the grant of options to other parties who perform services for the
Company.
Options under the Stock Option Plan may be granted with terms of no more
than ten years (five years in the case of incentive stock options granted to 10%
stockholders) from the date of grant. Options under the Stock Option Plan are
generally exercisable during the time the optionee is employed by or otherwise
performing services for the Company and will generally survive for a limited
period following the optionee's death or disability, provided that the term of
the option has not lapsed. Options granted under the Stock Option Plan may be
exercisable only to the extent provided in an option agreement between the
optionee and the Company as determined by the Committee.
The Stock Option Plan may be amended or terminated by the Committee at any
time; however, no amendment may increase the total number of shares reserved for
issuance under the Stock Option Plan or change the class of persons to whom
options may be granted, unless such amendment is first approved by the
stockholders of the Company. In no event will any amendment or termination
either modify or affect any right or obligation created prior to such amendment
or termination without the consent of the purchaser owning shares so affected.
No option may be granted under the stock Option Plan after October 15, 2007,
subject to the right of the Committee to ealier terminate the plan.
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Optionees may be limited under Section 16(b) of the Exchange Act to
certain specific exercise, election or holding periods with respect to the
options granted to them under the Stock Option Plan. Options granted under the
Stock Option Plan are subject to restrictions on transfer and exercise. Although
options will generally be nontransferable (except by will or the laws of descent
and distribution), the Committee may determine at the time of grant or
thereafter that a non-qualified stock option that is otherwise nontransferable
is transferable in whole or in part and in such circumstances, and under such
conditions, as specified by the Committee.
U.S. Federal Income Tax Consequences
The following discussion of the principal U.S. federal income tax
consequences with respect to options under the Stock Option Plan is based on
statutory authority and judicial and administrative interpretations as of the
date of this Proxy Statement, which are subject to change at any time (possibly
with retroactive effect) and may vary in individual circumstances. Therefore,
the following is designed to provide only a general understanding of the federal
income tax consequences (state and local income tax and estate tax consequences
are not addressed below). This discussion is limited to the U.S. federal income
tax consequences to individuals who are citizens or residents of the U.S., other
than those individuals who are taxed on a residence basis in a foreign country.
Non-qualified Stock Options. In general, an optionee will realize no
taxable income upon the grant of non-qualified stock options and the Company
will not receive a deduction at the time of such grant, unless the non-qualified
stock option has a readily ascertainable fair market value (as determined under
applicable tax law) at the time of grant. Upon exercise of a non-qualified stock
option, an optionee generally will recognize ordinary income in an amount equal
to the excess of the fair market value of the stock on the date of exercise over
the purchase price. Upon a subsequent sale of the stock by the optionee, the
optionee will recognize short-term or long-term capital gain or loss, depending
upon his or her holding period for the stock. Subject to the limitation under
Section 162(m) of the Code (as described below), the Company will generally be
allowed a deduction equal to the amount recognized by the optionee as ordinary
income in connection with the exercise of the non-qualified stock option.
Incentive Stock Options. Options granted under the Stock Option Plan may
be incentive stock options, provided that such options satisfy the applicable
requirements of the Code. In general, neither the grant nor the exercise of an
incentive stock option will result in taxable income to the optionee or a
deduction to the Company, although the exercise of an incentive stock option may
have implications in the computation of alternative minimum taxable income. The
sale of Common Stock received pursuant to the exercise of an incentive stock
option which satisfies the requirement of an incentive stock option, as well as
the holding period requirement described below, will result in long-term capital
gain or loss to the optionee equal to the difference between the amount realized
on the sale and the purchase price and will not result in a tax deduction to the
Company. To receive incentive stock option treatment, the optionee must not
dispose of the Common Stock purchased pursuant to the exercise of an incentive
stock option either (i) within two years after the incentive stock option is
granted or (ii) within one year after the date of exercise.
If all requirements for incentive stock option treatment other than the
holding period requirement are satisfied, the recognition of income by the
optionee is deferred until disposition of the Common Stock, but, in general, any
gain (in an amount equal to the lesser of (i) the fair market value of the
Common Stock on the date of exercise (or, with respect to officers and
directors, the date that the sale of such stock would not create liability under
Section 16(b) of the Exchange Act) minus the purchase price or (ii) the amount
realized on the disposition minus the purchase price) is treated as ordinary
income. Any remaining gain is treated as long-term or short-term capital gain
depending on the optionee's holding period for the stock disposed of. The
Company will be entitled to a deduction at that time equal to the amount of
ordinary income realized by the optionee.
Certain Other Tax Issues. In general, Section 162(m) of the Code denies a
publicly held corporation a deduction for federal income tax purposes for
compensation in excess of $1,000,000 per year per person to its chief executive
officer and the four other officers whose compensation is disclosed in its proxy
statement, subject to certain exceptions. Although options granted under the
Stock Option Plan are not intended to satisfy any of the exceptions under
Section 162(m) of the Code, the Company does not anticipate that its ability to
deduct amounts received by an optionee as compensation pursuant to the exercise
of a non-qualified option will be limited.
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In addition, any entitlement to a tax deduction on the part of the Company
is subject to the applicable federal tax rules, and in the event that the
exercisability of an option is accelerated because of a change in control,
payments relating to the options, either alone or together with certain other
payments, may constitute parachute payments under Section 280G of the Code,
which excess amounts may be subject to excise taxes and be nondeductible by the
Company.
The Stock Option Plan is not subject to any of the requirements of the
Employee Retirement Income Security Act of 1974, as amended. The Stock Option
Plan is not, nor is it intended to be, qualified under Section 401(a) of the
Code.
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OTHER MATTERS
The Company's Board of Directors does not know of any other matters that
may be brought before the meeting. However, if any such other matters are
properly presented for action, it is the intention of the persons named in the
accompanying form of proxy to vote the shares represented thereby in accordance
with their judgment on such matters.
MISCELLANEOUS
It is important that proxies be returned promptly. Stockholders who do not
expect to attend the meeting in person are urged to mark, sign and date the
accompanying proxy and mail it in the enclosed return envelope, which requires
no postage if mailed in the United States, so that their votes can be recorded.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the next Annual Meeting
of Stockholders of the Company must be received by the Company by June 21, 1998
in order to be considered for inclusion in the Company's proxy statement
relating to such meeting.
By Order of the Board of Directors,
Bruce L. Resnik
Secretary
New York, New York
October 23, 1997
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EXHIBITS
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Exhibit A: Network Event Theater, Inc. 1997 Stock Option Plan
<PAGE>
EXHIBIT A
1997 STOCK OPTION PLAN
OF
NETWORK EVENT THEATER, INC.
1. Purpose. The purpose of this 1997 Stock Option Plan is to advance the
interests of the Company and its stockholders by (i) providing key employees and
consultants of the Company, upon whose judgment, initiative and efforts the
successful conduct of the Company's business largely depends, with an additional
incentive to continue their efforts on behalf of the Company, thereby
attracting, retaining and rewarding people of experience and ability, and (ii)
making equity-based awards to non-employee directors, thereby attracting,
retaining and rewarding non-employee directors and strengthening the mutuality
of interests between non-employee directors and the Company's stockholders.
2. Definitions. When used in this Plan, unless the context otherwise
requires:
(a) "Board of Directors" shall mean the Board of Directors of the
Company, as constituted at any time.
(b) "Committee" shall mean the Stock Option Committee of the Board of
Directors, as described in Section 3.
(c) "Company" shall mean Network Event Theater, Inc., a Delaware
corporation.
(d) "Fair Market Value" on a specified date shall mean the last sales
price reported for the Shares on the last trading day immediately preceding
the applicable date (i) as reported on the principal national securities
exchange on which the Shares are primarily traded, or (ii) if the Shares
are not traded on a national securities exchange, as quoted on an automated
quotation system sponsored by The Nasdaq Stock Market ("Nasdaq"). If the
Shares are not listed on a national
<PAGE>
securities exchange or quoted on a system sponsored by Nasdaq, the Fair
Market Value of the Shares shall be as established by the Committee using
any reasonable method of valuation.
(e) "Internal Revenue Code" shall mean the Internal Revenue Code of
1986, as amended, or the comparable provisions of future Internal Revenue
laws.
(f) "Options" shall mean the stock options issued pursuant to this
Plan.
(g) "Plan" shall mean this 1997 Stock Option Plan of the Company, as
such Plan from time to time may be amended.
(h) "Share" shall mean a share of common stock of the Company, par
value $.01.
(i) "Subsidiary" shall mean any "subsidiary corporation," as such term
is defined in Section 424(f) of the Internal Revenue Code.
3. Administration of the Plan. The Plan shall be administered by a
Committee of at least three members of the Board of Directors, each of whom is a
"non-employee director" within the meaning of Rule 16b-3(b)(3) under the
Securities Exchange Act of 1934. Each member of the Committee shall hold office
until the next regular annual meeting of the Board of Directors following his
designation and until his successor is designated as a member of the Committee.
Any vacancy in the Committee may be filled by a resolution adopted by a majority
of the full Board of Directors. Any member of the Committee may be removed at
any time, with or without cause, by resolution adopted by a majority of the full
Board of Directors. A member of the Committee may resign from the Committee at
any time by giving written notice to the Chairman or Secretary of the Company
and, unless otherwise specified therein, such resignation shall take effect upon
receipt thereof. The acceptance of such resignation shall not be necessary to
make it effective. The Committee shall establish such rules and procedures as it
considers necessary or advisable to administer the Plan and shall make such
determinations and
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interpretations and take such action in connection with the Plan and any Options
granted pursuant to the Plan as it considers necessary or advisable.
4. Participants. Except as hereinafter provided, the class of persons who
are potential recipients of Options to be granted under this Plan consists of
the employees, consultants and non-employee directors of the Company or a
Subsidiary, as determined by the Committee. The persons to whom Options are
granted under this Plan and the number of Shares subject to each Option shall be
determined by the Committee in its sole discretion, subject, however, to the
terms and conditions of this Plan. Options may be granted to employees and
consultants who are also officers and/or directors of the Company or a
Subsidiary.
5. Shares. The Committee may, but shall not be required to, grant, in
accordance with this Plan, Options to purchase Shares for an aggregate of up to
450,000 Shares (subject to adjustment as provided in Section 14), which may be
either treasury Shares or authorized but unissued Shares. If an Option shall
expire or terminate for any reason without having been exercised in full, then
the Committee may grant Options with respect to the unpurchased Shares subject
to any such expired or terminated Option.
6. Grant of Options. An Option granted under this Plan to an employee of
the Company shall be an incentive stock option within the meaning of Section 422
of the Internal Revenue Code, unless the Committee, in its sole discretion,
designates otherwise. Options granted to employees that are designated not to be
incentive stock options and Options granted to consultants and non-employee
directors shall not be treated as such for purposes of this Plan and the
Internal Revenue Code.
Notwithstanding any other provision of this Plan to the contrary (a) the
aggregate Fair Market Value (determined as of the date an Option is granted) of
the Shares with respect to which any individual employee may be granted Options
that are incentive stock options and that become exercisable in any one calendar
year (under this Plan and
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all other stock option plans maintained by the Company or any Subsidiary), shall
not exceed $100,000, and (b) the maximum number of Shares that may be granted
under this Plan to each non-employee director of the Company shall not exceed
5,000 Shares in any one calendar year.
The form, terms and conditions to each Option shall be determined from time
to time by the Committee and shall be set forth in writing in an agreement (the
"Option Agreement") signed by the Option holder and on behalf of the Company by
the Chairman, President or a Vice President of the Company. The Option Agreement
shall state whether or not the Option is an incentive stock option. The
Committee may, in its sole discretion, at the time an Option is granted,
establish one or more conditions to the exercise of an Option, provided that, if
the Option is designated as an incentive stock option, then the condition or
conditions shall not be inconsistent with Section 422 of the Internal Revenue
Code.
7. Exercise Price for Options. The exercise price per share of the Shares
to be purchased pursuant to any Option shall be fixed by the Committee at the
time an Option is granted; provided, however, that in no event shall the
exercise price per Share be less than the Fair Market Value of a Share on the
date on which the Option is granted.
8. Duration of Options and Rights. The duration of any Option granted under
this Plan shall be for a period fixed by the Committee but not more than ten
years from the date upon which the Option is granted.
9. Limitations on Options Granted to Ten Percent Stockholders. No Option
that is intended to qualify as an incentive stock option may be granted under
this Plan to any employee who, at the time the Option is granted, owns, or is
considered as owning, within the meaning of Section 422 of the Internal Revenue
Code, Shares possessing more than ten percent of the total combined voting power
or value of all classes of stock of the Company or any Subsidiary, unless the
exercise price under the Option is at
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least 110% of the Fair Market Value on the date such Option is granted and the
duration of such Option is no more than five years.
10. Option Holder Not a Stockholder. An Option holder shall not be deemed
to be the holder of, or to have any of the rights of a stockholder with respect
to, any Shares subject to that Option unless and until the Option shall have
been exercised pursuant to the terms thereof, the Company shall have issued and
delivered Shares to the Option holder, and the holder's name shall have been
entered as a stockholder of record on the books of the Company. Thereupon, the
holder shall have full voting, dividend and other ownership rights with respect
to those Shares.
11. Non-transferability of Options. Options may be exercised or surrendered
during the holder's lifetime only by the holder thereof, and all rights
thereunder shall be non-transferable and non-assignable by the holder thereof,
other than by will or the laws of descent and distribution. Notwithstanding the
foregoing, the Committee may determine, at the time of grant or thereafter, that
a non-qualified option that is otherwise transferable pursuant to this Section
is transferable in whole or in part and in such circumstances, and under such
conditions, as specified by the Committee.
12. Exercise of Options. Except as otherwise provided herein, an Option,
after the grant thereof, shall be exercisable by the holder at such times as may
be fixed by the Committee at the time the Option is granted; provided, however,
that no Option may be exercised in part or in full prior to the approval of the
Plan by the stockholders of the Company as provided in Section 19 of this Plan.
All or any part of any remaining unexercised Options granted to any person
shall, after approval of the Plan by the stockholders of the Company as provided
in Section 19 of this Plan, be exercisable in full, whether or not then
exercisable, upon the occurrence of such special circumstance or event as in the
sole discretion of the Committee merits special consideration.
An Option shall be exercised by the delivery to any officer of the
Company, designated for the purpose of receiving the same, of a written notice
of exercise duly signed by the Option holder (or the representative of the
estate or the heirs of a deceased
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Option holder), together with the Option certificate and either cash, a
certified check payable to the order of the Company or Shares duly endorsed over
to the Company (which Shares shall be valued at their Fair Market Value as of
the day of that exercise), or any combination of these methods of payment, that
together amount to the full exercise price of the Shares purchased pursuant to
the terms of the Option; provided, however, that a holder may not use any Shares
he has acquired pursuant to the exercise of an Option granted under this Plan or
any other stock option plan maintained by the Company or any Subsidiary unless
he has beneficially owned such Shares for at least six months (and for which the
holder has good title, free and clear of any liens, claims and encumbrances, and
has represented to the Company that he has owned such Shares for at least six
months). No Option may be granted pursuant to this Plan or exercised at any time
when that Option, or the granting or exercise thereof, may result in the
violation of any law or governmental order or regulation.
Within a reasonable time after exercise of an Option the Company shall
cause to be delivered to the person entitled thereto a certificate for the
Shares purchased pursuant to the exercise of the Option. If the Option shall
have been exercised with respect to fewer than all of the Shares subject to the
Option, the Company shall also cause to be delivered to the persons entitled
thereto a new Option certificate, in replacement of the Option certificate
surrendered at the time of the exercise of the Option, indicating the number of
Shares with respect to which the Option remains available for exercise, or the
original Option certificate shall be endorsed to give effect to the partial
exercise thereof.
13. Termination of Option upon Termination of Service. At the time an
Option is granted, the Committee shall determine the period of time during which
the Option holder may exercise the Option following his termination of service
with the Company and its Subsidiaries; provided, however, that an Option shall
be exercisable only to the extent the Option, by its terms, is exercisable as of
the date the Option holder's service is terminated, unless the Option is made
fully exercisable by the Committee pursuant to the provisions of Section 12 of
this Plan, and such exercise must be accomplished prior to the expiration of the
term of such Option. The Committee may fix different periods of time during
which such Option may be exercised following the Option
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holder's termination of service, depending on the cause for the Option holder's
termination of service. Notwithstanding the foregoing, unless otherwise
determined by the Committee, if an Option holder's service is terminated for
cause for any reason, any Option held by such holder shall thereupon terminate
and expire as of the date of termination, regardless of whether any such Option
shall have become exercisable.
14. Adjustment of Shares. If, prior to the complete exercise of any Option,
there shall be declared and paid a stock dividend upon the Shares or if the
Shares shall be split up, converted, exchanged, reclassified, or in any way
substituted for, then the Option, to the extent that it has not been exercised,
shall entitle the holder thereof upon the future exercise of the Option to such
number and kind of securities subject to the terms of the Option to which he
would have been entitled had he actually owned the Shares subject to the
unexercised portion of the Option at the time of the occurrence of such stock
dividend, split-up, conversion, exchange, reclassification or substitution, and
the aggregate purchase price upon the future exercise of the Option shall be the
same as if the originally optioned Shares were being purchased thereunder.
If, at any time during the term of this Plan, there shall be declared and
paid a stock dividend upon the Shares or if the Shares shall be split up,
converted, exchanged, reclassified, or in any way substituted for, the number of
Shares referred to in Section 5 for which Options may be granted and the
exercise price of the Shares shall be adjusted to reflect such stock dividend,
split-up, conversion, exchange, reclassification or substitution.
The Committee shall have the power, in the event of any merger or
consolidation of the Company with or into any other corporation, or the merger
or consolidation of any other corporation into the Company, to amend all
outstanding Options to permit the exercise of all such Options prior to the
effectiveness of any such merger or consolidation and to terminate such Options
as of such effectiveness. If the Committee, in its discretion, shall exercise
that power, all Options then outstanding and subject to such requirement shall
be deemed to have been amended to permit the exercise thereof in whole or in
part by the holder at any time prior to the effectiveness of such
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merger or consolidation and these Options shall be deemed to terminate upon such
effectiveness.
The Committee also may grant Options having terms and provisions that vary
from the terms specified in this Plan provided that any Option granted pursuant
to this Section is granted only in substitution for or in connection with the
assumption of existing options granted by another corporation and assumed or
otherwise agreed to be provided for by the Company pursuant to or by reason of a
transaction involving a corporate merger, consolidation, acquisition of property
or stock, separation, reorganization, or liquidation to which the Company is a
party.
15. No Right to Continued Service. Nothing contained herein or in any
Option shall be construed to confer on any holder any right to continue in the
service of the Company or any Subsidiary or derogate from any right of the
Company or any Subsidiary to terminate, retire, request the resignation of or
discharge such holder, at any time, with or without cause.
16. Issuance of Shares and Compliance with Securities Laws. Before issuing
and delivering any Shares upon the exercise of an Option, the Company may: (i)
require the holder to give satisfactory assurances that the Shares are being
purchased for investment and not with a view to resale or distribution, and will
not be transferred in violation of applicable securities laws; (ii) restrict the
transferability of the Shares and require a legend to be endorsed on the
certificate representing the Shares; and (iii) condition the issuance and
delivery of Shares upon the listing, registration or qualification of such
Shares upon a securities exchange or under applicable securities laws. At the
time an Option is granted, the Committee shall determine whether an appropriate
registration statement covering the Shares to be issued pursuant to this Plan
shall be filed with the Securities and Exchange Commission under the Securities
Act of 1933, and whether to cause a registration statement covering the reoffer
and resale of Shares by holders of Options who may be deemed to be affiliates of
the Company to be so filed, and the length
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of time the Company will cause any such registration statement to become and
remain effective.
This Plan is intended to comply with Rule 16b-3 under the Securities
Exchange Act of 1934 ("Rule 16b-3"). Any provision inconsistent with that Rule
shall be inoperative and shall not affect the validity of this Plan or any
Option Agreement.
17. Income Tax Withholding. If the Company or a Subsidiary shall be
required to withhold any amounts be reason of any federal, state or local tax
rules or regulations in respect of the issuance of Shares pursuant to the
exercise of an Option, the holder shall make available to the Company or the
Subsidiary sufficient funds to meet the withholding requirements and the Company
or the Subsidiary shall be entitled to take and authorize any steps it deems
advisable in order to have such funds made available to the Company or the
Subsidiary out of any funds or property due or to become due to the holder. If
an employee disposes of Shares acquired pursuant to an Option that is an
incentive stock option in any transaction considered to be a "disqualifying
transaction" under Sections 421 and 422 of the Internal Revenue Code, the
Company shall have the right to deduct any taxes required to be withheld from
any amounts otherwise payable to the employee.
18. Administration and Amendment of this Plan. Except as hereinafter
provided, the Committee may at any time withdraw or from time to time amend this
Plan as it relates to the terms and conditions of any Options not theretofore
granted, and the Committee with the consent of each adversely affected holder of
any Option may at any time withdraw or from time to time amend this Plan as it
relates to the terms and conditions of any outstanding Option. Notwithstanding
the foregoing, any amendment by the Committee that would increase the number of
Shares issuable under this Plan, change the class of persons to whom Options may
be granted or otherwise amend this Plan in a manner that would require
stockholder approval under Rule 16b-3, the rules of any exchange on which the
Company's securities are listed or traded, or of Nasdaq, or, with respect to
incentive stock options, under Section 422 of the Internal Revenue Code, shall
be subject to the approval of the stockholders of the Company solely to the
extent required under Rule 16b-3, the rules of such exchange or Nasdaq or, with
respect to incentive stock options, under Section 422 of the Internal Revenue
Code.
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Determinations of the Committee as to any question that may arise with
respect to the interpretation of the provisions of this Plan shall be final and
binding on all participants and their legal representatives and beneficiaries.
The Committee may authorize and establish such rules, regulations and revisions
thereof, not inconsistent with the provisions of this Plan, as it may deem
advisable to make this Plan and any Options effective or provide for their
administration, and may take such other action with regard to this Plan and any
Options as it shall deem desirable to effectuate their purposes.
19. Effective Date of the Plan. This Plan shall become effective upon the
date specified by the Board of Directors in its resolution adopting the Plan,
provided that the Plan is conditioned upon the approval of the common
stockholders of the Company in accordance with Delaware law in order for this
Plan to be in compliance with the requirements of Rule 16b-3, the rules of any
exchange on which the Company's securities are listed or traded, or of Nasdaq,
or, with respect to incentive stock options, Section 422 of the Internal Revenue
Code. In the event that this Plan is not approved by the stockholders of the
Company, this Plan and any Options granted hereunder shall be void and of no
force or effect.
20. Term of Plan. No Option shall be granted pursuant to this Plan on or
after the tenth anniversary of the earlier of the date the Plan is adopted or
the date of shareholder approval, but Options granted prior to such tenth
anniversary may be exercised beyond that date and the terms and conditions of
this Plan shall continue to apply to those Options.
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NETWORK EVENT THEATER, INC.
529 Fifth Avenue
New York, New York 10017
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Harlan D. Peltz, Don Leeds and Bruce L.
Resnik, and each of them, as proxies, each with the power to appoint his
substitute, and hereby authorizes them to represent and to vote, as designated
below, all of the shares of Common Stock of Network Event Theater, Inc. (the
"Company") held of record by the undersigned on October 16, 1997 at the Annual
Meeting of Stockholders to be held on November 20, 1997 or any adjournments or
postponements thereof.
1. ELECTION OF SEVEN DIRECTORS
Nominees: Harlan D. Peltz, Don Leeds, Freddie Fields, Jeffrey Berg, Jan
Miller, Metin Negrin and George Lindemann
STOCKHOLDERS MAY WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE BY DRAWING A
LINE THROUGH OR OTHERWISE STRIKING OUT THE NAME OF SUCH NOMINEE. ANY PROXY
EXECUTED IN SUCH MANNER AS NOT TO WITHHOLD AUTHORITY TO VOTE FOR THE
ELECTION OF ANY NOMINEE SHALL BE DEEMED TO GRANT SUCH AUTHORITY.
[ ] GRANT authority to vote [ ] WITHHOLD authority to vote
for the seven nominees for the seven nominees
2. Ratification of the appointment of Ernst & Young LLP as the independent
certified public accountants of the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Approval of the adoption by the Board of Directors of the Company's 1997
Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Authority to vote in their discretion on such other business as may
properly come before the meeting.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued on the reverse side)
<PAGE>
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted for each of the proposals named above.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY, USING THE ENCLOSED
ENVELOPE.
Dated:_____________________________ , 1997
__________________________________________
(Signature)
__________________________________________
(Signature if held jointly)
__________________________________________
(Title if applicable)
Please sign exactly as name appears
hereon. When shares are held by joint
tenants, both should sign. When signing as
attorney, 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.
