HOLLYWOOD PRODUCTIONS, INC.
14 East 60th Street, Suite 402
New York, New York 10022
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held on January 28, 1998
To the Shareholders of HOLLYWOOD PRODUCTIONS, INC.
NOTICE IS HEREBY GIVEN that an Special Meeting of Shareholders of
HOLLYWOOD PRODUCTIONS, INC. (Athe Corporation@) will be held at the
Corporation's offices located at 14 East 60th Street, Suite 402, New York, New
York, on January 28, 1998, at 10:00 a.m. Eastern time, for the following
purposes:
1. To elect four (4) Directors to the Corporation's Board of Directors to
hold office for a period of one year or until their successors are duly elected
and qualified;
2. To vote on the proposal to reverse split the Corporation's outstanding
shares on a 1 for 3 basis; and
3. To transact such other business as properly may be brought before the
meeting or any adjournment thereof.
The close of business on December 15, 1997 has been fixed as the record
date for the determination of shareholders entitled to notice of, and to vote
at, the meeting and any adjournment thereof.
You are cordially invited to attend the meeting. Whether or not you plan to
attend, please complete, date, and sign the accompanying proxy, and return it
promptly in the enclosed envelope to assure that your shares are represented at
the meeting. If you do attend, you may revoke any prior proxy and vote your
shares in person if you wish to do so. Any prior proxy automatically will be
revoked if you execute the accompanying proxy or if you notify the Secretary of
the Corporation, in writing, prior to the Special Meeting of Shareholders.
By order of the Board of Directors
Robert DiMilia, Secretary
Dated: January 7, 1998
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, AND SIGN
THE ENCLOSED PROXY, AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER TO
ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF MAILED IN
THE UNITED STATES.
<PAGE>
HOLLYWOOD PRODUCTIONS, INC.
14 East 60th Street
New York, New York 10022
PROXY STATEMENT
FOR
Special Meeting of Stockholders
To Be Held on January 28, 1998
This proxy statement and the accompanying form of proxy were mailed on
January 7, 1998 to the stockholders of record (as of December 15, 1997) of
Hollywood Productions, Inc., a Delaware corporation (Athe Corporation@), in
connection with the solicitation of proxies by the Board of Directors of the
Corporation for use at the Special Meeting to be held on January 28, 1998 and at
any adjournment thereof.
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
Shares of the Corporation's Common Stock, par value $.001 per share
(Athe Common Stock@), represented by an effective proxy in the accompanying form
will, unless contrary instructions are specified in the proxy, be voted FOR the
proposal (i) to elect four (4) Directors to the Corporation's Board of Directors
to hold office for a period of one year or until their successors are duly
elected and qualified; and (ii) to reverse split the Corporation's outstanding
shares on a 1 for 3 basis.
Any such proxy may be revoked at any time before it is voted. A
stockholder may revoke this proxy (i) by notifying the Secretary of the
Corporation, either in writing prior to the Special Meeting or in person at the
Special Meeting; (ii) by submitting a proxy bearing a later date; or (iii) by
voting in person at the Special Meeting. An affirmative vote of a plurality of
the shares of Common Stock present in person or represented by proxy at the
Special Meeting and entitled to vote thereon is required to elect the Directors.
A stockholder voting through a proxy who abstains with respect to the election
of Directors is considered to be present and entitled to vote on the election of
Directors at the meeting, and his abstention is, in effect, a negative vote;
however, a stockholder (including a broker) who does not give authority to a
proxy to vote or who withholds authority to vote on the election of Directors
shall not be considered present and entitled to vote on the election of
Directors. A stockholder voting through a proxy who abstains with respect to
approval of any other matter to come before the meeting is considered to be
present and entitled to vote on that matter, and his abstention is, in effect, a
negative vote; however, a stockholder (including a broker) who does not give
authority to a proxy to vote or who withholds authority to vote on any such
matter shall not be considered present and entitled to vote thereon.
The Corporation will bear the cost of the solicitation of proxies by
the Board of Directors. The Board of Directors may use the services of its
Executive Officers and certain Directors to solicit proxies from stockholders in
person and by mail, telegram, and telephone. Arrangements may also be made with
brokers, fiduciaries, custodians, and nominees to send proxies, proxy
statements, and other material to the beneficial owners of the Common Stock held
of record by such persons, and the Corporation may reimburse same for reasonable
out-of-pocket expenses incurred by same in so doing.
<PAGE>
The Special Report on Form 10-KSB for the fiscal year ended December
31, 1997 will be mailed to shareholders when available. The Quarterly Report on
Form 10-QSB for the period ended September 30, 1997, including unaudited
financial statements, accompanies this proxy statement as Appendix AA.@
The principal executive offices of the Corporation are located at 14
East 60th Street, Suite 402, New York, New York 10022; the Corporation's
telephone number is (212) 688-9223.
Certain Reports
No person (Aa Reporting Person@) who during the fiscal year ended
December 31, 1997 was a Director, Officer, or beneficial owner of more than ten
percent of the Corporation's Common Stock [which is the only class of securities
of the Corporation registered under Section 12 of the Securities Exchange Act of
1934 (Athe Act@)], failed to file on a timely basis reports required by Section
16 of the Act during the most recent fiscal year or prior years. The foregoing
is based solely upon a review by the Corporation of (i) Forms 3 and 4 during the
most recent fiscal year as furnished to the Corporation under Rule 16a-3(d)
under the Act; (ii) Forms 5 and amendments thereto furnished to the Corporation
with respect to its most recent fiscal year; and (iii) any representation
received by the Corporation from any reporting person that no Form 5 is
required, except as described herein.
<PAGE>
VOTING SECURITIES AND SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The securities entitled to vote at the meeting are the Corporation=s Common
Stock, par value $.001 per share. The presence, in person or by proxy, of a
majority of shares entitled to vote will constitute a quorum for the meeting.
Each share of Common Stock entitles its holder to one vote on each matter
submitted to the stockholders. The close of business on December 15, 1997 has
been fixed as the record date for the determination of stockholders entitled to
notice of, and to vote at, the meeting and any adjournment thereof. At that
date, 6,092,500 shares of Common Stock were outstanding. Voting of the shares of
Common Stock is on a non-cumulative basis.
The following table sets forth information as of December 15, 1997 with
respect to the beneficial ownership of shares of Common Stock by (i) each person
(including any Agroup@ as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended) known by the Corporation to be the
owner of more than 5% of the outstanding shares of Common Stock; (ii) each
Director; and (iii) all Officers and Directors as a group. Except to the extent
indicated in the footnotes to the following table, each of the individuals
listed below possesses sole voting power with respect to the shares of Common
Stock listed opposite his name.
<TABLE>
<CAPTION>
Name And Address of Amount and Nature Percent of
Beneficial Owner Of Beneficial Owner Class (1)
- ---------------------- ------------------- ---------
<S> <C> <C>
European Ventures Corp. (2) 3,601,050 (3) 59.1%
P.O. Box 47
Road Town, Tortolla, British
Virgin Islands
Harold Rashbaum (2) 157,500 (4) 2.5%
c/o Hollywood Productions, Inc.
14 East 60th Street, Suite 402
New York, New York 10022
Alain A. Le Guillou, M.D. (2) -- --
c/o Hollywood Productions, Inc.
14 East 60th Street, Suite 402
New York, New York 10022
Robert DiMilia 50,000 (5) *
c/o Hollywood Productions, Inc.
14 East 60th Street, Suite 402
New York, New York 10022
All Officers and Directors 207,500 (5) 3.3%
(3 as a Group) (2)-(5)
* Less than 1%
</TABLE>
<PAGE>
(footnotes from previous page)
(1) Does not give effect to the issuance of (i) 4,400,000 shares of Common
Stock reserved for issuance upon the exercise of the Warrants; (ii) 240,000
shares of Common Stock reserved for issuance upon the exercise of the
underwriter's warrants and the Warrants underlying the underwriter's warrants;
and (iii) 250,000 shares of Common Stock reserved for issuance under the
Corporation's 1995 Senior Management Incentive Plan, except for the 75,000
shares issued thereunder and the 150,000 shares underlying options granted
pursuant thereto.
(2) Harold Rashbaum is the father-in-law of Ilan Arbel, the sole officer
and director of European Ventures Corp. (AEVC@).
(3) Does not include shares of Common Stock underlying Warrants issuable
upon the exercise of Warrants owned by EVC. ---------------------------
(4) Includes (i) 50,000 shares of Common Stock under the Senior Management
Incentive Plan, pursuant to a vesting schedule, none of which have vested; (ii)
100,000 shares of Common Stock underlying an option granted under the
Corporation=s Senior Management Incentive Plan; and (iii) 7,500 shares issued to
H.B.R. Consultants Sales Corp. in September 1996. See AExecutive Compensation-
Employment and Consulting Agreements@ and @Senior Management Incentive Plan.@
- ------
(5) Includes 50,000 shares of Common Stock issuable upon the exercise of an
option granted to Robert DiMilia under the Corporation=s Senior Management
Incentive Plan.
It is expected that the following will be considered at the meeting and
that action will be taken thereon:
I. ELECTION OF DIRECTORS
The Board of Directors currently consists of three members elected for a
term of one year or until their successors are duly elected and qualified. In
order to ensure compliance with new continued listing requirements imposed by
the Nasdaq SmallCap Market, one additional outside director shall be elected at
the Special meeting.
An affirmative vote of a plurality of the shares of Common Stock present in
person or represented by proxy at the Special Meeting and entitled to vote
thereon is required to elect the Directors. All proxies received by the Board of
Directors will be voted for the election as Directors of the nominees listed
below if no direction to the contrary is given. In the event any nominee is
unable to serve, the proxy solicited hereby may be voted, in the discretion of
the proxy, for the election of another person in his stead. The Board of
Directors knows of no reason to anticipate this will occur.
The following table sets forth, as of December 15, 1997, the four nominees
for election as Directors of the Corporation:
3
<PAGE>
<TABLE>
<CAPTION>
Position with Corporation; Director
Name Principal Occupation and Age Since
<S> <C> <C>
Harold Rashbaum President, CEO, and Director; 70 1996
Robert DiMilia Vice President, Secretary and 1997
Director; 51
Alain A. Le Guillou, M.D. Director; 40 1996
James B. Frakes N/A; 40 --
</TABLE>
The Directors of the Corporation are elected Specially by the stockholders,
and the Officers of the Corporation are appointed Specially by the Board of
Directors. Vacancies on the Board of Directors may be filled by the remaining
Directors. Each current Director and Officer will hold office until the next
Special meeting of stockholders or until his successor is elected and qualified.
All outside Directors receive a Director=s fee of $1,000 per month for their
participation as Directors. The sole outside Director to date is Alain D. Le
Guillou, M.D. (son-in-law of Harold Rashbaum). Upon consummation of this
election, James B. Frakes shall constitute the second outside Director. The
Corporation does not have key man insurance on the lives of any of its Officers
or Directors. On January 10, 1997, Robert Melillo and the Corporation mutually
agreed to the resignation of Mr. Melillo as the President, Chief Executive
Officer, and Director of the Corporation. As of that time, Mr. Rashbaum took
over as President and Chief Executive Officer of the Corporation. Mr. Melillo
remained a consultant to the Corporation, at a weekly fee of $600, until April
1, 1997.
Harold Rashbaum has been the President, Chief Executive Officer, and a
Director of the Corporation since January 1997. He was elected President and
Chief Executive Officer when Robert Melillo, former President and Chief
Executive Officer, resigned. From May 1996 to January 1997, Mr. Rashbaum served
as Secretary and Treasurer of the Corporation. Also since May 1996, Mr. Rashbaum
has served as the Secretary, Treasurer, and a Director of D.L. Productions, Inc.
(ADLP@), a company which filed for voluntary dissolution in October 1997; he
became President of DLP in January 1997. Since February 1996, Mr. Rashbaum has
also been the President and a Director of H.B.R. Consultant Sales Corp. (AHBR@),
of which his wife is the sole stockholder. Mr. Rashbaum has also been a
consultant for Play Co. Toys & Entertainment Corp. (APlayco@), a wholesaler and
retailer of children=s toys, since July 1995. He became Chairman of the Board of
Playco in September 1996. Prior thereto, from February 1992 to June 1995, Mr.
Rashbaum was a consultant to 47th Street Photo, Inc., an electronics retailer.
Mr. Rashbaum held this position at the request of the bankruptcy court during
the time 47th Street Photo, Inc. was in Chapter 11. From January 1991 to
February 1992, Mr. Rashbaum was a consultant for National Wholesale Liquidators,
Inc., a major retailer of household goods and housewares.
Robert DiMilia has been a Director, Vice President, and Secretary of the
Corporation since January 10, 1997. Prior thereto, he was a consultant to the
Corporation with respect to the production of Dirty Laundry, the Corporation=s
first motion picture. From March 1995 to May 1996, Mr. DiMilia was a media and
marketing consultant in the film industry working on a variety of projects. From
1991 to 1994, Mr. DiMilia was a Vice President for the Bon Bon Group, a national
payroll/accounting entertainment service Corporation.
<PAGE>
Alain A. Le Guillou, M.D. has been a Director of the Corporation since May
1996. Since July 1995, Dr. Guillou has been a doctor of pediatrics at Montefiore
Medical Group. From July 1992 to June 1995, Dr. Guillou was a pediatric resident
at the University of Minnesota, Gillette Hospital, St. Paul, Minnesota. From
July 1991 to June 1992, Dr. Guillou was an intern at Montefiore Medical Center,
Bronx, New York. Dr. Guillou is the son-in-law of Harold Rashbaum.
James B. Frakes is nominated to be elected as a Director of the Company.
Mr. Frakes was elected Chief Financial Officer of Playco in June 1997. Prior
thereto, from June 1990 to March 1997, Mr. Frakes was Chief Financial Officer of
Urethane Technologies, Inc. (AUTI@) and two of its subsidiaries: Polymer
Development Laboratories, Inc. (APDL@) and BMC Acquisition, Inc. These were
specialty chemical companies which focused on the polyurethane segment of the
plastics industry. Mr. Frakes was also Vice President and a Director of UTI
during this period. In March 1997, three unsecured creditors of PDL filed a
petition for the involuntary bankruptcy of PDL. This matter is pending before
the United States Bankruptcy Court, Central District of California. In 1989, Mr.
Frakes and his wife purchased JLJ Enterprises d/b/a TME Travel (AJLJ@), a travel
agency which provided services primarily for the business community. Mr. Frakes
was the Vice President, Chief Financial Officer, and a Director of JLJ; his wife
was the President and a Director. In November 1992, Mr. Frakes and his wife sold
JLJ. From 1985 to 1990, Mr. Frakes was a manager for Berkeley International
Capital Corporation, an investment banking firm specializing in later stage
venture capital and leveraged buyout transactions. In 1980, Mr. Frakes obtained
a Masters in Business Administration from University of Southern California. He
obtained his Bachelor of Arts degree in history from Stanford University from
which he graduated with honors in 1978.
Significant Employees
Dan Stone, 61, Chairman of the Board of Breaking Waves, Inc. from its
inception in 1991 until the consummation of the Corporation=s acquisition of
Breaking Waves, Inc. in September 1996 (Athe Acquisition@), became a consultant
to the Corporation in September 1996. Mr. Stone has been the President and a
Director of D. Stone Industries, Inc. and Dan Stone Industries, Inc. since their
inceptions in 1981 and 1991, respectively.
Malcolm Becker, 61, has been the Vice President of design, merchandising,
and production of Breaking Waves, Inc. since its inception in 1991.
Michael Friedland, 59, has been the Vice President of design, marketing,
and sales of Breaking Waves, Inc., since its inception in 1991.
The Corporation has agreed to indemnify its Officers and Directors with
respect to certain liabilities including liabilities which may arise under the
Securities Act of 1933. Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to Directors, Officers, and controlling
persons of the Corporation pursuant to any charter, provision, by-law, contract,
arrangement, statute or otherwise, the Corporation has been advised that in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Corporation of expenses incurred or
paid by a Director, Officer, or controlling person of the Corporation in the
successful defense of any such action, suit, or proceeding) is asserted by such
Director, Officer, or controlling person of the Corporation in connection with
the Securities being registered, the Corporation will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act. The Corporation will be
governed by the final adjudication of such issue.
<PAGE>
Board Meetings, Committees, and Compensation
During the fiscal year ended December 31, 1997, no meetings of the Board of
Directors were held. Actions were taken on three (3) occasions by unanimous
written consent of the Board of Directors, which consent was obtained in lieu of
meetings. The Corporation does not pay its Directors for attendance at Board of
Directors meetings or committee meetings.
The Board of Directors recommends that you vote "FOR" the nominees for
Directors.
EXECUTIVE COMPENSATION
Summary of Cash and Certain Other Compensation
The following provides certain information concerning all Plan and
Non-Plan (as defined in Item 402 (a)(ii) of Regulation S-B) compensation awarded
to, earned by, or paid by the Corporation during the period ended September 30,
1997 to each of the named executive officers of the Corporation:
4
<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table
Securities Restricted Securities
Name and Principal Underlying Underlying All Other
Position Year Salary($) Options/SARS ($) Award Compensation
- ------------------ ---- --------- ---------------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
Harold Rashbaum 1997 (1) 108,000 100,000 (2) 50,000 (3) --
Chief Executive Officer
President
Robert Melillo 1997 (5) 4,000 -- 25,000 (6) --
Former Chief Executive Officer
</TABLE>
(1) In October 1996, Mr. Rashbaum began receiving a salary of approximately
$100,000 per annum. His salary was increased to $156,000 in March 1997. At the
closing of the Corporation=s initial public offering, HBR, a Corporation
controlled by Mr. Rashbaum and owned by his wife, received 7,500 shares of
Common Stock and a consulting fee of $40,000 for services rendered prior to his
becoming an Officer of the Corporation.
(2) Includes options to purchase shares of Common Stock issued in March
1997 under the Corporation=s Senior Management Incentive Plan. See ASenior
Management Incentive Plan.@
(3) Includes shares issued under the Senior Management Incentive Plan in
June 1996, subject to a vesting schedule. See ASenior Management Incentive
Plan.@
(4) Mr. Melillo received an Special salary of $104,000 per annum through
January 10, 1997, when he resigned as an Officer and Director of the
Corporation. He continued as a consultant until April 1997 and received a
consulting fee of $600 per week. See AManagement.@
(5) Mr. Melillo received 50,000 shares of Common Stock in the Corporation
pursuant to the Corporation=s Senior Management Incentive Plan, subject to a
vesting schedule, whereby 25,000 shares would vest in each of June of 1997 and
1998. Upon his resignation on January 10, 1997, Mr. Melillo returned 25,000
shares to the Corporation, and the Corporation agreed that the remaining shares
should be vested.
Employment and Consulting Agreements
Prior to his becoming an Officer and Director of the Corporation, Mr.
Rashbaum provided consulting to the Corporation through HBR, a corporation of
which he is an Officer and Director and of which his wife is the sole
stockholder. HBR entered into an oral consulting agreement with the Corporation
whereby it will receive 5% of the net profits of the Motion Picture received by
the Corporation. In addition, HBR received $40,000 and 7,500 shares of the
Corporation's Common Stock at the closing of the Corporation=s initial public
offering. Mr. Rashbaum receives a salary of $156,000 per annum for being an
Officer of the Corporation. In addition, Mr. Rashbaum received 50,000 shares of
Common Stock under the Corporation's Senior Management Incentive Plan. These
shares vest at the rate of 25,000 shares on each of March 1997 and 1998.
Pursuant to the restricted share agreement, the shares only vest if Mr. Rashbaum
continues to provide services to the Corporation. Shares not vested shall be
returned to the Corporation's treasury.
<PAGE>
In March 1997, pursuant to the Corporation=s Senior Management Incentive
Plan, the Corporation granted (i) Mr. Rashbaum, as Chief Executive Officer of
the Corporation, an option to purchase 100,000 shares of Common Stock at $5.125
per share; and (ii) Mr. DiMilia, as Secretary, an option to purchase 50,000
shares of Common Stock at $5.125 per share. See ACertain Relationships and
Related Transactions.@ Neither Mr. Rashbaum nor Mr. DiMilia have entered
employment agreements with the Corporation or any of its subsidiaries.
In January 1996, Dan Stone entered into a two year consulting agreement
with Breaking Waves, Inc. Pursuant to the agreement, Mr. Stone oversees the
operation of Breaking Waves, Inc. in return for a yearly consulting fee of
$100,000. Mr. Stone received $50,000 from the proceeds of the Corporation=s
initial public offering as payment in advance for half of the 1997 consulting
fee, the balance of which fee is being paid in weekly installments.
In November 1997, Breaking Waves, Inc. entered into 3 year employment
agreements with each of Malcolm Becker and Michael Friedland. The agreements
provide for salaries of $110,000 for the terms of employment and the granting of
shares of the Corporation=s Common Stock each year. The number of shares of the
Common Stock shall be equal to a Market Value (as hereinafter defined) of
$25,000 on the date of issuance, subject to a vesting schedule. The vesting
schedule shall be as follows: (i) 2 of the shares received on November 27, 1996
shall vest 90 days from said date with the balance vesting 270 days from
November 27, 1996; and (ii) on each subsequent Special issuance, commencing
November 27, 1997, 2 of the shares shall vest six months from issuance with the
balance vesting on the following anniversary. The shares vest pursuant to
restricted share agreements. AMarket Value@ shall mean (i) $5.00 per share with
respect to the shares issued in November 1996; and (ii) the average of the
closing bid and asked prices for a share of Common Stock for a period of 30 days
ending five days prior to the date of issuance, as officially reported by the
principal securities exchange on which the Common Stock is quoted. The
agreements include nondisclosure and non-compete clauses.
Senior Management Incentive Plan
In May 1996, the Board of Directors adopted the Senior Management Incentive
Plan (Athe Management Plan@) which was approved and adopted by stockholder
consent. The Management Plan provided for the issuance of up to 250,000 shares
of the Corporation's Common Stock in connection with the issuance of stock
options and other stock purchase rights to Executive Officers and other key
employees and consultants. The Board of Directors, upon stockholder approval
obtained at the Corporation=s 1997 Special Meeting held on June 30, 1997,
adopted a proposal to increase the shares issuable under the Management Plan to
750,000 shares.
The Management Plan was adopted to provide the Board of Directors with
sufficient flexibility regarding the forms of incentive compensation which the
Corporation will have at its disposal for rewarding Executive Officers,
employees, and consultants of the Corporation (or any subsidiaries thereof) who
render significant services to the Corporation. The Management Plan provides
equity ownership, or the right to acquire equity ownership, in the Corporation
through the grant of stock options and other rights pursuant to the Management
Plan to enable the Corporation to attract and retain qualified personnel without
unnecessarily depleting the Corporation's cash reserves. The Management Plan is
designed to augment the Corporation's existing compensation programs and is
intended to enable the Corporation to offer a personal interest in the
Corporation's growth and success through awards of either shares of Common Stock
or rights to acquire shares of Common Stock to individuals who provide
significant services to the Corporation.
<PAGE>
The Management Plan is intended to help the Corporation attract and retain
key executive management personnel whose performance is expected to have a
substantial impact on the Corporation's long-term profit and growth potential by
encouraging and assisting those persons to acquire equity in the Corporation. It
is contemplated that only employees who perform services of special importance
to the Corporation will be eligible to participate under the Management Plan. It
is anticipated that awards made under the Management Plan will be subject to
vesting periods, although the vesting periods are subject to the discretion of
the Board or an administrator of the Management Plan.
In March 1997, pursuant to the Management Plan, the Corporation issued
100,000 options to Mr. Rashbaum and 50,000 options to Mr. DiMilia.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In December 1995, in connection with the incorporation of the Corporation,
European Ventures Corporation (AEVC@) acquired 5,000,000 shares of the
Corporation's Common Stock and 2,000,000 Warrants for an aggregate consideration
of $1,100,000. The sale of 1,400,000 shares of Common Stock and 2,000,000
Warrants was registered for resale in the Corporation=s initial public offering.
of these shares and Warrants have been resold to date.
In January 1996, Dan Stone entered into a two year consulting agreement
with Breaking Waves, Inc. Pursuant to the agreement, Mr. Stone oversees the
operation of Breaking Waves, Inc. in return for a yearly consulting fee of
$100,000. Mr. Stone received $50,000 from the proceeds of the Corporation=s
initial public offering as payment in advance for half of the 1997 consulting
fee, the balance of which fee is being paid in weekly installments.
In June 1996, pursuant to the Management Plan, the Corporation issued
50,000 shares of Common Stock to Robert Melillo, the former Chief Executive
Officer, President, and Director of the Corporation. The shares were to vest at
the rate of 25,000 in each of June 1997 and 1998. On January 10, 1997, Mr.
Melillo resigned and returned 25,000 shares to the Corporation. These shares
were returned to the Corporation=s treasury. Pursuant to Mr. Melillo=s agreement
with the Corporation, the remaining 25,000 shares became fully vested.
Prior to Mr. Rashbaum=s election as an Officer and Director of the
Corporation, commencing in March 1996, Mr. Rashbaum provided consulting to the
Corporation through HBR. HBR entered into an oral consulting agreement with the
Corporation whereby it would receive 5% of the net profits of the Motion Picture
received by the Corporation. In addition, HBR received $40,000 and 7,500 shares
of the Corporation's Common Stock at the closing of the Acquisition from the
Corporation. In March 1996, Mr. Rashbaum received 50,000 shares of Common Stock
under the Management Plan. These shares vest at the rate of 25,000 shares on
each of March 1997 and 1998.
In March 1997, pursuant to the Management Plan, the Corporation issued
100,000 options to Mr. Rashbaum and 50,000 options to Mr. DiMilia.
See AExecutive Compensation-Employment and Consulting Agreements@ for a
discussion of the Corporation=s employment and consulting agreements.
All transactions between the Corporation and any Officer, Director, or 5%
stockholder will be on terms no less favorable than those which might be
obtained in transactions between the Corporation and independent third parties
and will be approved by a majority of the independent disinterested directors of
the Corporation. The Corporation believes that all prior affiliated transactions
were made on terms no less favorable to the Corporation than those which might
have been obtained in transactions between the Corporation and unaffiliated
parties.
<PAGE>
II. REVERSE STOCK SPLIT
Management of the Corporation is of the opinion that a reverse-split of the
Corporation's stock 1 for 3 (1 new share for every 3 old shares) is in the best
interests of the Corporation's shareholders. All fractional shares will be
rounded up or down to the nearest whole shares. No cash will be paid for any
fractions of shares.
Currently, the Corporation's Common Stock is quoted on the Nasdaq SmallCap
Stock Market ("Nasdaq"). The Corporation is required to maintain certain Nasdaq
maintenance requirements, one of which is that the shares of Common Stock
maintain a bid price of $1.00. Due to the Corporation=s failure to maintain the
Nasdaq bid price requirement the Corporation has proposed this reverse stock
split. In order to continue to have its shares of Common Stock listed on Nasdaq,
the Corporation is required to maintain (i) net tangible assets of at least
$2,000,000; (ii) total stockholders' equity of $2,000,000; (iii) a minimum bid
price of $1.00; (iv) two market makers; (v) 300 stockholders; (vi) at least
500,000 shares in the public float; and (vii) a minimum market value of
$1,000,000 for the public float.
At present, the bid price of the Corporation's units are below $1.00. The
proposed reverse-split is necessary to keep the Corporation in compliance with
Nasdaq's continued listing requirements. Management believes that a
reverse-split of the Corporation's stock is the best strategy to keep the
Corporation in compliance with the continued listing requirements of the Nasdaq
SmallCap Market.
In the event the Corporation's Common Stock is delisted from Nasdaq,
trading, if any, of the Corporation's securities will thereafter be conducted in
the over-the-counter market on the OTC Bulletin Board. Consequently, an investor
may find his securities to be less liquid, and therefore, more difficult to
transfer. He may also find it difficult to obtain accurate quotations of the
price of the Corporation's securities. In effecting this reverse stock split,
the Corporation anticipates that it will be able to obtain additional equity
capital and continue to maintain its Nasdaq listing. The reverse split will be
effected by reducing the Corporation=s present issued and outstanding shares
from approximately 6,092,500 shares to approximately 2,030,833 shares. The
effective date for purposes of calculating the reverse split will be as soon as
practicable, after the meeting date, as Nasdaq can effect the reverse split
within its systems.
The affirmative vote of the holders of a majority of the shares of the
Common Stock issued and outstanding on the record date, voting together as a
single class, is required for the approval of this proposal. The Directors and
Officers of the Corporation and other principal stockholders owning of record,
beneficially, directly and indirectly, an aggregate of approximately of such
shares outstanding on the record date, have agreed to vote in favor of approval
of this proposal; therefore, this proposal shall be approved at the meeting.
The Board of Directors recommends that you vote "FOR" this Proposal.
FINANCIAL INFORMATION
A COPY OF THE CORPORATION'S SPECIAL REPORT ON FORM 10-KSB FOR THE FISCAL
YEAR ENDED DECEMBER 31, 1997 SHALL BE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION AND SHALL BE FURNISHED WITHOUT THE ACCOMPANYING EXHIBITS TO
STOCKHOLDERS, WITHOUT CHARGE, UPON WRITTEN REQUEST THEREFOR SENT TO ROBERT
DIMILIA, SECRETARY, HOLLYWOOD PRODUCTIONS, INC., 14 EAST 60TH STREET, SUITE 402,
NEW YORK, NEW YORK 10022. EACH SUCH REQUEST MUST SET FORTH A GOOD FAITH
REPRESENTATION THAT AS OF DECEMBER 15, 1997, THE PERSON MAKING THE REQUEST WAS
THE BENEFICIAL OWNER OF SHARES OF THE CORPORATION'S COMMON STOCK ENTITLED TO
VOTE AT THE SPECIAL MEETING OF STOCKHOLDERS.
<PAGE>
III. OTHER BUSINESS
As of the date of this proxy statement, the only business which the Board
of Directors intends to present and knows that others will present at the
Special Meeting is that herein set forth. If any other matter is properly
brought before the Special Meeting or any adjournments thereof, it is the
intention of the persons named in the accompanying form of proxy to vote the
proxy on such matters in accordance with their judgment.
By Order of the Board of Directors,
Robert DiMilia
Secretary
January 7, 1998
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE AND RETURN YOUR
PROXY PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF IT IS MAILED
IN THE UNITED STATES OF AMERICA.
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