<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
ON STAGE ENTERTAINMENT, INC.
- -----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
___________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
___________________________________________________________________________
3) Filing Party:
___________________________________________________________________________
4) Date Filed:
___________________________________________________________________________
<PAGE>
ON STAGE ENTERTAINMENT, INC.
4625 West Nevso Drive
Las Vegas, Nevada 89103
-------------------------------
NOTICE OF 1998 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
JUNE 15, 1998
-------------------------------
TO THE STOCKHOLDERS OF
ON STAGE ENTERTAINMENT, INC.
Notice is hereby given that the 1998 annual meeting of stockholders
(the "Annual Meeting") of ON STAGE ENTERTAINMENT, INC. (the "Company" or "On
Stage") will be held at the Imperial Palace, 3535 Las Vegas Boulevard South,
Las Vegas, Nevada on June 15, 1998, at 10:00 a.m., local time, for the
following purposes:
1. To elect two directors;
2. To approve and adopt an amendment to the Company's Amended
and Restated 1996 Stock Option Plan to increase the number
of authorized shares of Common Stock subject to the plan by
615,000 to 1,400,000;
3. To ratify the selection of BDO Seidman, LLP as the Company's
independent public accountants for the fiscal year ending
December 31, 1998; and
4. To transact such other business as may properly come before
the Annual Meeting or any adjournments thereof.
Only stockholders of record as of the close of business on May 20,
1998 will be entitled to notice of the Annual Meeting and to vote at the
Annual Meeting and any adjournments thereof. A list of stockholders of the
Company as of the close of business on May 20, 1998 will be available for
inspection during normal business hours for ten days prior to the Annual
Meeting at the Company's executive offices at 4625 West Nevso Drive, Las
Vegas, Nevada 89103.
By order of the Board of Directors,
Christopher R. Grobl
Secretary
Las Vegas, Nevada
May 21, 1998
===============================================================================
EACH STOCKHOLDER IS URGED TO COMPLETE, SIGN AND RETURN THE ENCLOSED
PROXY CARD IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN
THE UNITED STATES. IF A STOCKHOLDER DECIDES TO ATTEND THE MEETING, HE OR
SHE MAY, IF SO DESIRED, REVOKE THE PROXY AND VOTE THE SHARES IN PERSON.
===============================================================================
<PAGE>
ON STAGE ENTERTAINMENT, INC.
4625 West Nevso Drive
Las Vegas, Nevada 89103
-------------------------------
PROXY STATEMENT
FOR
1998 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
JUNE 15, 1998
-------------------------------
General Information on the Meeting
This proxy statement and the accompanying form of proxy are being
mailed on or about May 21, 1998 to the stockholders of On Stage Entertainment,
Inc. (the "Company" or "On Stage"). These materials are being furnished in
connection with the solicitation by the Board of Directors of the Company of
proxies to be voted at the 1998 Annual Meeting of Stockholders (the "Annual
Meeting") to be held at the Imperial Palace, 3535 Las Vegas Boulevard South,
Las Vegas, Nevada on June 15, 1998, at 10:00 a.m., local time, and at any
adjournments thereof.
The entire cost of soliciting proxies will be borne by the Company.
In addition to the use of the mails, proxies may be solicited by telephone by
officers and directors and a small number of regular employees of the Company
who will not be specially compensated for such services. The Company also will
request banks and brokers to solicit proxies from their customers, where
appropriate, and will reimburse such persons for reasonable expenses incurred
in that regard.
Voting at the Meeting
Only stockholders of record at the close of business on May 20, 1998
are entitled to notice of, and to vote at, the Annual Meeting. As of May 20,
1998, there were 7,190,738 shares of Common Stock outstanding. Each
stockholder entitled to vote shall have the right to one vote for each share
of Common Stock outstanding in such stockholder's name.
The Company presently has no other class of stock outstanding and
entitled to be voted at the Annual Meeting. The presence in person or by proxy
of stockholders entitled to cast a majority of all votes entitled to be cast
at the Annual Meeting will constitute a quorum.
Shares cannot be voted at the Annual Meeting unless the holder of
record is present in person or by proxy. The enclosed form of proxy is a means
by which a stockholder may authorize the voting of his or her shares at the
Annual Meeting. Directors are to be elected at the Annual Meeting by a
plurality of the votes cast by holders of Common Stock present in person or
represented by proxy at the Annual Meeting and entitled to vote, while
approval of any other items at the Annual Meeting will require the affirmative
vote of the holders of a majority of the shares present in person or by proxy
and entitled to vote at the meeting. In the case of shares that are present at
the Annual Meeting for quorum purposes, not voting those shares for a
particular nominee for director (including by withholding authority on the
proxy) will not operate to prevent the election of that nominee if he
otherwise receives affirmative votes; an abstention on any other item will
operate to prevent approval of the item to the same extent as a vote against
approval of such item and a broker "non-vote" on any item (which results when
a broker holding shares for a beneficial owner has not received timely voting
instructions on certain matters from such beneficial owner and those matters
are matters with respect to which the broker has no discretion to vote) will
have no effect on the outcome of the vote on such item. The shares of
<PAGE>
Common Stock represented by each properly executed proxy will be voted at the
Annual Meeting in accordance with each stockholder's directions. Stockholders
are urged to specify their choices by marking the appropriate boxes on the
enclosed proxy card. If no choice has been specified and the enclosed proxy
card is properly executed and returned, the shares will be voted FOR all
nominees listed herein under "Election of Directors," FOR the amendment to the
Company's Amended and Restated 1996 Stock Option Plan (the "Option Plan") and
FOR ratification of the selection of BDO Seidman, LLP as the Company's
independent public accountants for the fiscal year ended December 31, 1998. If
any other matters are properly presented to the Annual Meeting for action, the
proxy holders will vote the proxies (which confer discretionary authority to
vote on such matters) in accordance with their best judgment.
Execution of the accompanying proxy will not affect a stockholder's
right to attend the Annual Meeting and vote in person. Any stockholder giving
a proxy has the right to revoke it by giving written or oral notice of
revocation to the Secretary of the Company, or by delivering a subsequently
executed proxy, at any time before the proxy is voted.
Your proxy vote is important. Accordingly, you are asked to complete,
sign and return the accompanying proxy card whether or not you plan to attend
the Annual Meeting. If you plan to attend the Annual Meeting to vote in person
and your shares are registered with the Company's transfer agent in the name
of a broker or bank, you must secure a proxy from your broker or bank
assigning voting rights to you for your shares of Common Stock.
2
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of seven
members and is divided into three classes, two classes consisting of two
directors each and one class consisting of three directors. One class is
elected each year to hold office for a three year term and until the election
and qualification of the director's successor or until the director's death,
removal or resignation. At the Annual Meeting, two directors are to be elected
for the current class. The term of office for each director elected at the
Annual Meeting will expire at the 2001 annual meeting of stockholders.
Neil H. Foster and James L. Nederlander, both of whom are current
members of the Board of Directors, have been nominated by the Board of
Directors for election as directors at the Annual Meeting.
All nominees have consented to be named and to serve if elected.
Unless otherwise instructed by the stockholders, the persons named in the
proxies will vote the shares represented thereby for the election of such
nominees. The Board of Directors believes all nominees will be able to serve
as directors; if this should not be the case, however, the proxies may be
voted for one or more substitute nominees to be designated by the Board of
Directors or the board may decide to reduce the number of directors. The Board
of Directors recommends a vote FOR each of the nominees.
-----------------------------------------------------------
NOMINEES FOR ELECTION
-----------------------------------------------------------
<TABLE>
<CAPTION>
Year First Became Director, Principal Occupations During
Name of Director Age Past Five Years and Certain Directorships
- ---------------- --- --------------------------------------------------------
<S> <C> <C>
Neil H. Foster 65 Neil H. Foster has been the Executive Vice President of the Company since
October 1985 and a director of the Company since February 1995. From 1977
to 1983, Mr. Foster worked as a producer for the American Broadcasting
Companies, Inc. ("ABC"), where he assisted in the production of "ABC's
Wide World of Sports," the Grammy Awards, "Soap" and "Barney Miller."
James L. Nederlander 38 James L. Nederlander has been a director of the Company since August 1996.
He has also been the Chairman of the Nederlander Producing Company of
America, a producer of live entertainment shows, since August 1996 and prior
to such time, commencing in 1980, he was Executive Vice President of such
organization.
</TABLE>
3
<PAGE>
-----------------------------------------------------------
Directors Continuing in Office with Term Expiring in 1999
-----------------------------------------------------------
<TABLE>
<CAPTION>
Year First Became Director, Principal Occupations During
Name of Director Age Past Five Years and Certain Directorships
- ---------------- --- --------------------------------------------------------
<S> <C> <C>
Mark Tratos 46 Mark Tratos has been a director of the Company since March 1997. Mr.
Tratos has been the managing partner of the law firm Quirk & Tratos
of Las Vegas, Nevada since 1983. He received his J.D. from Lewis and
Clark Law School in 1979. Since 1982, Mr. Tratos has also served as
a member of the adjunct faculty of the University of Nevada Las Vegas
teaching a variety of subjects in the areas of fine and performing
arts and entertainment and business law.
Mark S. Karlan 39 Mark S. Karlan has been a director of the Company since March 1998. Mr.
Karlan has been President, Chief Executive Officer and a director of Imperial
Credit Commercial Mortgage Investment Corp., a publicly traded real estate
investment trust since July 1997. From 1990 to 1997, Mr. Karlan was a private
real estate investor managing all aspects of approximately $100 million of real
estate transactions including the acquisition, financing, leasing and sale of
office, retail, industrial and residential assets. Mr. Karlan received a Bachelor
of Arts degree in Economics from Harvard College in 1980 and a Master of
Business Administration degree from the Harvard Business School and a Juris
Doctor degree from the Harvard Law School, both in 1984.
</TABLE>
4
<PAGE>
-----------------------------------------------------------
Directors Continuing in Office with Term Expiring in 2000
-----------------------------------------------------------
<TABLE>
<CAPTION>
Year First Became Director, Principal Occupations During
Name of Director Age Past Five Years and Certain Directorships
- ---------------- --- --------------------------------------------------------
<S> <C> <C>
John W. Stuart 55 John W. Stuart has served as the Chairman and Chief Executive Officer
of the Company since April 1996 and also was the President of the Company
from October 1985 through March 1996. He founded the Company in 1985. He
has been involved in the theatrical business since age seven and has
produced or appeared in over 200 theater productions and several
feature films. Mr. Stuart received a Bachelor of Arts degree in 1967 from
California State University at Fullerton.
David Hope 39 David Hope has served as the President, Chief Operating Officer and as
a director of the Company since joining the Company in April 1996. For
ten years prior to that time, Mr. Hope served in various capacities,
including most recently as Executive Vice President and Chief Operating
Officer, for ITC Entertainment Group ("ITC"), a major independent
producer and worldwide distributor of feature films, television movies
and mini-series and a subsidiary of Polygram N.V., where, as Chief
Operating Officer, he was responsible for day-to-day operations, as well
as strategic and corporate development and acquisitions. Prior to that
time, Mr. Hope was a production manager with Hinchcliffe Productions,
a United Kingdom-based producer and distributor of documentaries and
motor sport events. Mr. Hope received a degree in Management Science
in 1981 from the Loughborough University in England.
Jules Haimovitz 47 Jules Haimovitz has been a director of the Company since March 1997.
Mr. Haimovitz currently serves as the President and Chief Operating
Officer of King World Productions, a leading syndicator of television
programs. From January 1995 to March 1997, he served as the Chief
Executive Officer of ITC after it was sold to PolyGram N.V., one of the
world's leading global music and entertainment companies. Prior to such
time, from April 1993 to January 1995, Mr. Haimovitz served as ITC's
President and Chief Executive Officer while it was owned by Midland
Montague Ventures. Mr. Haimovitz was also acting President of Video
Jukebox Network Inc., a publicly traded interactive music video service,
from October 1992 through August 1993, and a director of such company
from August 1990 to November 1995. From March 1989 to January
1992, Mr. Haimovitz was President, Chief Operating Officer and a
director of Spelling Entertainment Inc. ("Spelling"), a company he helped
found by engineering the acquisitions of Worldvision Enterprises Inc. and
Laurel Entertainment Inc. by, and the merger of such companies with,
Spelling's predecessor, Aaron Spelling Productions, Inc.
</TABLE>
General Information Concerning the Board of Directors and its Committees
The Board of Directors of the Company met on one occasion during 1997
but authorized the Company to take numerous actions through nine meetings via
unanimous written consent. The Nevada General Corporation Law provides that
the Board of Directors, by resolution adopted by a majority of the entire
board, may designate one or more
5
<PAGE>
committees, each of which shall consist of one or more directors. The Board of
Directors annually elects from its members an Audit Committee and a
Compensation Committee. Each director attended at least 75% of the aggregate
of the meetings of the Board of Directors held during the period for which he
was a director, and the meetings of the committee or committees on which he
served during such period.
Audit Committee. The Audit Committee is responsible for providing
general oversight with respect to the accounting principles employed in the
Company's financial reporting. The Audit Committee is to meet at least
annually with the Company's principal financial and accounting officers and
independent public accountants to review the scope of auditing procedures, the
Company's policies relating to internal auditing and accounting procedures and
controls, and to discuss results of the annual audit of the Company's
financial statements. The Audit Committee, which was created on March 1997,
did not meet during 1997. The Audit Committee is currently composed of Mark
Tratos and Jules Haimovitz.
Compensation Committee. The Compensation Committee determines
salaries, bonuses and other compensation matters for officers of the Company,
determines employee health and benefit plans, and administers the Company's
stock option plans. The Compensation Committee, which was created in March
1997, did not meet during 1997. The Compensation Committee is currently
composed of three non-employee directors, Jules Haimovitz, James Nederlander
and Mark Karlan.
EXECUTIVE OFFICERS OF THE COMPANY
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
John W. Stuart...................... 55 Chairman and Chief Executive Officer
David Hope ......................... 39 President and Chief Operating Officer
Neil H. Foster...................... 65 Executive Vice President
Kiranjit S. Sidhu................... 33 Senior Vice President, Chief Financial Officer and Treasurer
Christopher R. Grobl................ 30 General Counsel and Secretary
</TABLE>
The employment backgrounds for John W. Stuart, David Hope and Neil H.
Foster are described above under the section entitled "Election of Directors."
Kiranjit S. Sidhu has been the Company's Senior Vice President, Chief
Financial Officer and Treasurer since joining the Company in August 1995.
Prior to joining the Company, Mr. Sidhu served as Chief Financial Officer and
Corporate Secretary for Aspen Technologies, a computer peripheral
manufacturer, from July 1994 to July 1995. From January 1993 to June 1994, Mr.
Sidhu served as President and a director for Aspen Peripherals, a computer
peripheral reseller. From February 1992 to June 1993, Mr. Sidhu served as a
financial consultant to ITC. From January 1992 to July 1993, Mr. Sidhu served
as Vice President of Finance and a director for Nuvo Holdings of America, a
computer peripheral manufacturer. Mr. Sidhu holds a Masters of Business
Administration from the Wharton School of Business and a Bachelor of Arts in
Computer Science from Brown University.
Christopher R. Grobl has been the General Counsel and Secretary of
the Company since November 1994. Mr. Grobl received a Bachelor of Arts in 1990
from the University of Illinois and a Juris Doctor in 1994 from the John
Marshall Law School in Chicago, Illinois.
Certain Relationships and Related Transactions Involving Executive Officers and
Directors
As of December 31, 1996, Mr. Stuart owed the Company a total of
$1,637,413 principal amount under an 8% promissory note, plus accrued interest
thereon of $143,011. On, and as of such date, the Company forgave all
$1,780,424 (the "Original Stuart Debt Forgiveness"). In March 1997, in
connection with the Company's initial public offering (the "IPO"), the Company
agreed with its underwriter, Whale Securities Co., L.P. (the "Underwriter"),
that it
6
<PAGE>
would neither loan nor advance any sums to or on behalf of Mr. Stuart, other
than those sums advanced to Mr. Stuart between December 31, 1996 and the
effective date of the IPO, without the prior consent of the Underwriter.
Between December 31, 1996 and August 13, 1997, the Company advanced an
additional $222,000 (including principal and interest) to Mr. Stuart, all of
which amount was forgiven by the Company on August 13, 1997. On each of
October 23, 1997 and November 17, 1997, the Company received authorization
from the Underwriter to advance Mr. Stuart $50,000, and on March 25, 1998, the
Company received authorization from the Underwriter to advance up to an
additional $150,000 to Mr. Stuart to be used for the settlement of certain
litigation pending against Mr. Stuart in connection with his involvement in
the Legends in Concert show in Hawaii (see below). As of May 5, 1998, Mr.
Stuart owed the Company a total of $205,483, including principal and interest
(the "Aggregate Advances"). The Aggregate Advances accrue interest at 10% per
annum, are evidenced by promissory notes and are payable in full on December
31, 1998.
In February 1997, Mr. Stuart granted to Senna Venture Capital
Holdings, Inc., an affiliate of DYDX Legends Group L.P. ("DYDX" and a lender
to the Company), an option to purchase 142,292 of his shares of Common Stock
at an exercise price of $5.00 per share, in consideration for (i) DYDX waiving
a technical default under a certain loan agreement entered into between DYDX
and the Company and (ii) DYDX's agreement in connection with such waiver to
allow the Original Stuart Debt Forgiveness. Such option is exercisable for a
period of two years commencing as of February 9, 1998.
Mr. Stuart, in addition to being the Chairman and Chief Executive
Officer of the Company, is also the President and sole owner of LVHE, a Nevada
subchapter S corporation, which owns 40% of, and is a member of R.B.L.S., a
Nevada limited liability company. R.B.L.S., in turn, owns a 99% interest in
R.B.L.S. Partnership, which operates a Legends production at the Royal
Hawaiian Shopping Center in Honolulu, Hawaii. Mr. Stuart has a Management
Agreement with R.B.L.S., pursuant to which R.B.L.S. pays him a monthly
management consulting fee of $3,000 per week, provided Mr. Stuart or an
approved representative makes at least one trip to Hawaii to evaluate the
production every two months. In addition, according to the operating agreement
of R.B.L.S., all members are to share ratably in the profits or losses of
R.B.L.S. As such, LVHE is entitled to receive a 40% membership interest in the
profits of R.B.L.S. However, as a result of a dispute between LVHE and
R.B.L.S. as to which of the two entities is responsible for certain litigation
related liabilities (the "Disputed Liabilities"), R.B.L.S. is currently
withholding membership profit distributions from LVHE. The Disputed
Liabilities relate to lawsuits which are based on events that took place prior
to the formation of R.B.L.S. and R.B.L.S. Partnership when the Legends show in
Hawaii was owned by LVHE. LVHE and R.B.L.S. dispute whether these lawsuits
were retained by LVHE or assumed by R.B.L.S. when it acquired the Hawaiian
Legends show from LVHE. LVHE has been informed by R.B.L.S. that R.B.L.S. is
funding the defense of these suits with LVHE's membership profits. LVHE and
R.B.L.S. also dispute which of them would ultimately be responsible for any
settlement payments or judgments if unsuccessful.
In February 1997, the Company agreed, pursuant to a duly authorized
board resolution, that the services provided by Mr. Stuart to R.B.L.S. and/or
LVHE will not place him in a conflict of interest with his employment contract
with the Company (which commenced as of February 1, 1997) on the condition
that all monies received by Mr. Stuart, either directly from R.B.L.S. or
through LVHE, are immediately paid to the Company as producer fees earned by
the Company for providing the services of Mr. Stuart. Simultaneously with such
board resolution, Mr. Stuart entered into the Stuart LVHE Agreement with the
Company pursuant to which he has agreed that, commencing as of February 25,
1997, he will pay any monies received by him from R.B.L.S., or through LVHE
from R.B.L.S., to the Company. The Company will book any such monies received
from Mr. Stuart, including both his R.B.L.S. membership profit and his
management consulting fees, as revenues in the form of producer's fees (in the
same manner that other such services are booked by the Company). As part of
the Stuart LVHE Agreement, Mr. Stuart has also agreed (i) to indemnify the
Company against any of the actions or liabilities of, or arising in connection
with, LVHE, R.B.L.S., R.B.L.S. Partnership or the other members of R.B.L.S.,
including their respective companies, which indemnity has been secured with
200,000 of his shares of Common Stock, and (ii) to contribute all of the
capital stock of LVHE (the "LVHE Stock"), as well as his rights under the
Management Agreement, to the Company whenever the Company deems such
contribution to be permissible under the terms of the R.B.L.S. operating
agreement (such a contribution may require the approval of the other members
of R.B.L.S.; however, LVHE is currently in disagreement with such members
vis-a-vis the Disputed
7
<PAGE>
Liabilities), which contribution pledge has been secured with an additional
200,000 of Mr. Stuart's shares of Common Stock.
The Company leases from Mr. Stuart seven condominium units in
Atlantic City, New Jersey for use by the Company's performers. The current
lease term expires on June 30, 1999. The total lease payment to Mr. Stuart
from the Company is currently $7,833 per month, which amount the Company
believes approximates the fair market value for the use thereof. In addition,
commencing as of January 1, 1997, the Company is also paying, directly, the
association dues, insurance, taxes, maintenance and utilities on such
apartments. The Company paid aggregate rent to Mr. Stuart for such apartments
of $94,000 for each of the years ended December 31, 1996 and 1997.
Pursuant to the terms of the employment agreement between the Company
and Mr. Sidhu, on April 13, 1998, the Company advanced to Mr. Sidhu $63,213
(the "Tax Loan") in order to satisfy Mr. Sidhu's income tax liability incurred
in connection with the grant from the Company to Mr. Sidhu of 40,532 shares of
Common Stock. Mr. Sidhu executed a promissory note in favor of the Company in
connection with the Tax Loan. The promissory note provides for interest on the
Tax Loan to accrue at 8% per annum, is secured by 40,532 shares of Common
Stock owned by Mr. Sidhu and becomes due on April 12, 1999.
On March 13, 1998, several subsidiaries of the Company (the "Single
Purpose Subsidiaries") entered into a loan agreement with Imperial Credit
Commercial Mortgage Investment Corp. ("ICCMIC"). Pursuant to the loan
agreement, the Single Purpose Subsidiaries borrowed an aggregate of $12.5
million from ICCMIC (the "ICCMIC Loan"). The Company, as the ultimate parent
of the Single Purpose Subsidiaries, has guaranteed the full repayment of the
ICCMIC Loan. The ICCMIC Loan accrues interest at a variable rate (currently
10.27%) and becomes due in March 2008. In connection with the ICCMIC Loan, (i)
ICCMIC agreed to provide the Company with a total credit facility of up to $20
million ($12.5 million of which was drawn down on March 13, 1998) and (ii) the
Company granted to ICCMIC and a related entity (see footnote 11 to the section
of this Proxy Statement entitled "Security Ownership of Certain Beneficial
Owners and Management") warrants to purchase an aggregate of 575,000 shares of
Common Stock at an exercise price of $4.44. Mr. Karlan, a director of the
Company, is the President, Chief Executive Officer and a Director of ICCMIC.
8
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of April 26,
1998 (except as otherwise noted) regarding the ownership of Common Stock (i)
by each person known by the Company to be the beneficial owner of more than
five percent of the outstanding Common Stock, (ii) by each director of the
Company, (iii) by each executive officer of the Company named in the Summary
Compensation Table included elsewhere in this proxy statement and (iv) by all
current executive officers and directors of the Company as a group.
<TABLE>
<CAPTION>
Number of Shares Percentage of
Name and Address (1) Beneficially Owned (2) Class(2)
- --------------------------------------------------------- -------------------------- --------------------------
<S> <C> <C>
John W. Stuart (3)....................................... 3,982,760 55.4%
David Hope (4)........................................... 328,550 4.4%
Neil H. Foster (5)....................................... 26,000 *
Kiranjit S. Sidhu (6).................................... 143,922 2.0%
James L. Nederlander (7)................................. 10,000 *
Mark Tratos (8).......................................... 10,000 *
Jules Haimovitz (9)...................................... 10,000 *
Mark S. Karlan (10)...................................... 325,000 4.3%
Hanover Restaurants, Inc................................. 595,238 8.3%
Imperial Credit Industries, Inc (11)..................... 575,000 7.4%
All executive officers and directors as a group
(9 persons) (12)....................................... 4,836,232 60.5%
</TABLE>
- ---------------------------
*Less than one percent
(1) Unless otherwise indicated, the address for each named individual or
group is in care of the Company at the Company's address.
(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 shown as beneficially owned by them,
subject to community property laws where applicable. In accordance
with the rules of the Securities and Exchange Commission, a person is
deemed to be the beneficial owner of Common Stock that can be
acquired by such person within 60 days from April 26, 1998 upon the
exercise of options or warrants. Each beneficial owner's percentage
ownership is determined by assuming that options and warrants that
are held by such person (but not those held by any other person) and
which are exercisable within 60 days of April 26, 1998 have been
exercised. Percentages herein assume a base of 7,190,738 shares of
Common Stock outstanding as of April 26, 1998.
(3) Includes 382,790 shares of Common Stock issuable by Mr. Stuart to third
parties upon the exercise of options granted by him to such persons.
(4) Includes (i) 311,300 shares of Common Stock issuable upon the exercise of
immediately exercisable stock options and (ii) 8,750 shares of Common
Stock issuable upon the exercise of immediately exercisable warrants.
(5) Represents 26,000 shares of Common Stock issuable upon the exercise of
immediately exercisable stock options.
(6) Includes (i) 93,265 shares of Common Stock issuable upon the exercise
of immediately exercisable stock options and (ii) 5,625 shares of
Common Stock issuable upon the exercise of immediately exercisable
warrants. Does not include 16,529 shares of Common Stock issuable
upon exercise of stock options that are not currently exercisable.
(7) Represents 10,000 shares of Common Stock issuable upon the exercise of
immediately exercisable stock options.
(8) Represents 10,000 shares of Common Stock issuable upon the exercise
of immediately exercisable stock options. Does not include 10,000
shares of Common Stock issuable upon the exercise of stock options
that are not currently exercisable.
(9) Represents 10,000 shares of Common Stock issuable upon the exercise
of immediately exercisable stock options. Does not include 20,000
shares of Common Stock issuable upon the exercise of stock options
that are not currently exercisable.
9
<PAGE>
(10) Represents 325,000 shares of Common Stock issuable upon the exercise of
an immediately exercisable warrant granted to Imperial Credit Commercial
Mortgage Investment Corp. ("ICCMIC"). Mr. Karlan is the President, Chief
Executive Officer, Treasurer and a Director of ICCMIC. See footnote 11
below. Does not include 10,000 shares of Common Stock issuable upon the
exercise of stock options that are not currently exercisable.
(11) Includes 325,000 shares of Common Stock issuable upon the exercise of an
immediately exercisable warrant granted to ICCMIC. ICCMIC is managed by
Imperial Credit Commercial Asset Management Corporation, which is a
wholly owned subsidiary of Imperial Credit Industries, Inc. Imperial
Credit Industries, Inc. also beneficially owns approximately 8.9% of the
outstanding common stock of ICCMIC. Also includes 250,000 shares of
Common Stock issuable upon the exercise of an immediately exercisable
warrant granted to Imperial Capital Group, LLC (the "LLC"). Imperial
Credit Industries, Inc. has a 60% interest in the LLC. Imperial Credit
Industries, Inc. disclaims the beneficial ownership of the shares of
Common Stock held by the LLC. All information provided in this footnote
11 was derived from a Schedule 13G filed by Imperial Credit Industries,
Inc. with the Securities and Exchange Commission on April 3, 1998.
(12) Includes (i) 464,973 shares of Common Stock issuable upon the exercise of
immediately exercisable stock options and (ii) 339,375 shares of Common
Stock issuable upon the exercise of immediately exercisable warrants.
Does not include 65,345 shares of Common Stock issuable upon the exercise
of stock options, including 40,000 shares of Common Stock subject to
options granted to non-employee directors of the Company, that are not
currently exercisable.
10
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Summary Compensation Table. The following table sets forth, for the
years ended December 31, 1997 and 1996, certain compensation paid by the
Company to its Chief Executive Officer and the other most highly paid
executive officers of the Company, whose cash compensation exceeded $100,000
for the year ended December 31, 1997.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Long Term
Compensation Compensation
------------------------------------------ ------------
Securities
Other Annual Underlying All Other
Name and Principal Position Year Salary Bonus Compensation Options/ SARs Compensation
--------------------------- ---- ------ ----- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
John W. Stuart......................... 1997 $250,000 -- $ 239,398(1) -- $9,615(2)
Chairman and Chief Executive Officer 1996 $250,000 -- $1,780,424(3) -- --
David Hope............................. 1997 $221,461 $ 37,865 -- -- --
President and Chief Operating Officer 1996 $130,769 -- $ 23,673(4) 311,300 --
Kiranjit S. Sidhu...................... 1997 $161,596 $162,129(5) -- 85,000 --
Senior Vice President 1996 $123,461 -- -- 24,794 --
</TABLE>
- ------------------
(1) Includes $221,500 in compensation representing the forgiveness of certain
indebtedness owed by Mr. Stuart to the Company.
(2) Represents payment of unused vacation time carried forward from prior years.
(3) Includes $1,780,424 in compensation representing the forgiveness of certain
indebtedness owed by Mr. Stuart to the Company.
(4) Includes $9,212 representing car and health insurance allowances and $14,461
representing non-recurring relocation-related expenses.
(5) Represents the issuance of 40,532 shares of Common Stock to Mr. Sidhu
pursuant to his employment agreement.
11
<PAGE>
Option Grants. The following table sets forth certain information
regarding stock options granted during the year ended December 31, 1997 to the
persons named in the Summary Compensation Table.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------
Potential Realizable
Value At Assumed
Percent of Annual Rates of Stock
Total Options Price Appreciation For
Granted to Option Term(2)
Options Employees in Exercise Expiration ---------------
Name Granted(1) 1997 Price Date 5% 10%
---- ---------- ---- ----- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
John W. Stuart................. -- -- -- -- -- --
Chairman and Chief Executive
Officer
David Hope..................... -- -- -- -- -- --
President and Chief Operating
Officer
Kiranjit S. Sidhu.............. 85,000 77% $4.00 08/13/07 $213,824 $541,872
Senior Vice President
</TABLE>
- ----------------
(1) These options were granted under the Option Plan and have a term of ten
years, subject to earlier termination in certain events related to the
termination of employment.
(2) The potential realizable values are based on an assumption that the stock
price of the Common Stock starts equal to the exercise price shown for
the particular option grant and appreciates at the annual rate shown
(compounded annually) from the date of grant until the end of the term of
the option. These amounts are reported net of the option exercise price,
but before any taxes associated with exercise or subsequent sale of the
underlying stock. The actual value, if any, an option holder may realize
will be a function of the extent to which the stock price exceeds the
exercise price on the date the option is exercised and also will depend
on the option holder's continued employment through the vesting period.
The actual value to be realized by the option holder may be greater or
less than the values estimated in this table.
Year End Values. The following table summarizes option exercises
during 1997 and the value of vested and unvested options for the persons named
in the Summary Compensation Table at December 31, 1997. Year-end values are
based upon a price of $4.125 per share, which was the closing market price of
a share of the Company's Common Stock on December 31, 1997.
Aggregated Option Exercises in Last Year and
Year-End Option Values
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised In-the-Money Options at
Options at December 31, 1997 December 31, 1997 (1)
---------------------------- ----------------------------
Shares Acquired
Name on Exercise Value Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John W. Stuart -- -- -- -- -- --
David Hope -- -- 311,300 -- $42,026 --
Kiranjit S. Sidhu -- -- 93,265 16,529 $10,625 0
</TABLE>
- --------------
(1) Values calculated using the closing market price of a share of the
Company's Common Stock on December 31, 1997 and the per share exercise
price of the individual's options.
12
<PAGE>
Employment Agreements
John W. Stuart. On February 1, 1997, the Company entered into an
employment agreement with Mr. Stuart to employ him as its Chairman and Chief
Executive Officer until May 31, 2000. In accordance with this employment
agreement, Mr. Stuart receives an annual salary of $250,000 and may receive
annual salary increases of up to 10% of his base salary amount at the
discretion of the Compensation Committee of the Board of Directors. Mr. Stuart
will not be eligible to receive any bonuses during the initial term of his
employment agreement. Mr. Stuart is provided with family health insurance and
a $1,500 monthly automobile allowance. The Company has the right to terminate
Mr. Stuart's employment at any time, without cause, provided that the Company
pays Mr. Stuart a lump sum payment equal to one year's base salary, car
allowance and insurance allowance.
David Hope. On February 1, 1997, the Company entered into an amended
employment agreement with Mr. Hope to employ him as the President and Chief
Operating Officer of the Company until May 31, 2000. In accordance with this
employment agreement, Mr. Hope receives an annual salary of $220,000 which is
subject to potential annual increases of up to 10% of his base salary amount
contingent upon meeting reasonable financial performance goals as determined
between Mr. Hope and the Compensation Committee of the Board of Directors. For
the years ended December 31, 1998 and 1999, Mr. Hope shall be entitled to
receive a bonus equal to 2% of the Company's audited pre-tax earnings, after
deduction for non-recurring charges such as original issue discount,
compensation and interest expense charges for each such year, provided that
the Company achieves certain designated financial goals for the respective
year. See "-- Executive Bonus Plan." Mr. Hope is currently provided with
family health insurance and a $500 monthly automobile allowance. The Company
shall have the right to terminate Mr. Hope's employment agreement at any time,
without cause, provided that the Company pays Mr. Hope a lump sum payment on
the date of such termination equal to the greater of (i) his base salary, car
allowance and insurance allowance due from the date of termination up until
April 1999, plus any accrued bonus up until his date of termination and (ii)
one year's base salary, car allowance and insurance allowance, plus any
accrued bonus up until the date of termination. In addition, upon termination
of Mr. Hope's employment, without cause, any non-vested options held by Mr.
Hope shall immediately vest.
Kiranjit S. Sidhu. On February 1, 1997, the Company entered into an
amended employment agreement with Mr. Sidhu to employ him as its Senior Vice
President, Chief Financial Officer and Treasurer. Mr. Sidhu's employment
contract, which expires on May 31, 2000, provides for an annual salary of
$165,000 and eligibility for annual salary increases of up to 10% of his base
salary amount at the discretion of the Compensation Committee of the Board of
Directors. Mr. Sidhu is also eligible to receive a bonus under the Executive
Bonus Plan, at the discretion of the Board of Directors; and, in addition to
his salary, he receives family health insurance and a $500 monthly automobile
allowance. In the event his employment is terminated, without cause, Mr. Sidhu
will be entitled to a lump sum payment equal to one year's base salary, car
allowance and insurance allowance and the vesting of all of his stock options.
In connection with each of their respective employment agreements,
each of Messrs. Stuart, Hope and Sidhu also entered into a Confidentiality and
Non-Compete Agreement with the Company, which, in addition to the obligations
of confidentiality imposed upon each, provides that in the event of the
termination of an employment agreement for any reason, the Company shall have
the option to pay the respective employee at the date of termination 50% of
such employee's base salary for five years (in the case of Mr. Stuart) and two
years (in the case of Messrs. Hope and Sidhu) in consideration for such
employee's covenant not to compete with the Company during such five-year and
two-year periods, respectively. In the case of Mr. Stuart, such non-compete
relates to any business associated with the live entertainment industry and,
in the case of each of Messrs. Hope and Sidhu, such non-compete relates to any
business associated with the theatrical segment of the live entertainment
industry.
Executive Bonus Plan
In March 1997, the Company implemented a three-year Executive Bonus
Plan, which is administered by the Compensation Committee. Under the Executive
Bonus Plan, an annual bonus pool of up to 5% of the Company's audited pre-tax
earnings, after non-recurring charges such as original issue discount,
compensation and interest expense charges
13
<PAGE>
and excluding extraordinary items ("Pre-Tax Earnings"), may be established for
distribution at the discretion of the Company's Board of Directors, to the
Company's executive officers (other than Mr. Stuart, who is not eligible for
bonuses under the plan) in 1999 and 2000, provided that the Company achieves
at least minimum Pre-Tax Earnings for the respective preceding fiscal year as
follows:
Year Minimum Pre-Tax Earnings
---- ------------------------
1998 $5,000,000
1999 $8,700,000
The terms of the Executive Bonus Plan, including the minimum Pre-Tax
Earnings requirements set forth above, were determined by negotiations between
the Company and the underwriter of the Company's initial public offering, and
should not be construed to imply or predict any future earnings of the
Company.
Compensation of Directors
Directors of the Company currently are not paid a fee for their
services, but are reimbursed for all reasonable expenses incurred in attending
Board meetings. In addition, each non-employee director will receive options
under the Option Plan to purchase an aggregate of 10,000 shares of Common
Stock each year that the director serves as such a director (each such year, a
"Grant Year"), partially contingent upon the director's attendance at the
Company's four scheduled Board of Directors meetings during the Grant Year.
One-quarter of the annual option grant will vest as of each of the Grant
Year's first three scheduled Board of Director meetings and the remainder of
such option grant will vest as of the fourth scheduled meeting; provided, in
the latter case, that the director has attended all four of that Grant Year's
scheduled Board meetings.
14
<PAGE>
PROPOSAL NO. 2
AMENDMENT OF THE AMENDED AND RESTATED 1996 STOCK OPTION PLAN
At the Annual Meeting, there will be presented to the stockholders a
proposal to approve and adopt an amendment to the Company's Amended and
Restated 1996 Stock Option Plan (the "Option Plan"). On March 30, 1998, the
Board of Directors of the Company approved the proposed amendment to the
Option Plan subject to stockholder approval at the Annual Meeting. The
amendment will not be effective unless and until stockholder approval is
obtained.
The amendment would increase the number of shares available for
issuance under the Option Plan from 785,000 to 1,400,000 shares of Common
Stock. The Board of Directors believes that the Company's ability to grant
options under the Option Plan is a valuable and necessary compensation tool
that aligns the long-term financial interests of employees, consultants and
directors with the financial interests of the Company's stockholders. As of
April 26, 1998, options to purchase 637,203 shares of Common Stock were
outstanding under the Option Plan; options to purchase 147,797 remain
available for future grants. An increase in the number of shares available for
issuance is necessary to meet the above objectives. The Board of Directors
believes that it is in the best interests of the Company and its stockholders
to incorporate this change into the Option Plan.
The Board of Directors unanimously recommends a vote FOR approval of
the amendment to the Option Plan.
The proposed amendment to the Option Plan is set forth as Exhibit A
to this Proxy Statement, and the description of such amendment contained
herein is qualified in its entirety by reference to Exhibit A.
--------------------------------------------------------------
DESCRIPTION OF THE OPTION PLAN
--------------------------------------------------------------
Summary of Material Terms of the Option Plan
The Option Plan was approved by the Board of Directors and the
stockholders on August 7, 1996 and restated and amended in its entirety by the
Board of Directors on January 13, 1997. Subject to certain increases and
adjustments, the Option Plan provides for the issuance of an aggregate of
1,400,000 shares of Common Stock pursuant to options granted under the Option
Plan. Unless sooner terminated by the Board of Directors, the Option Plan will
expire by its terms on March 5, 2006 and no option may be granted under the
Option Plan after that date. As of April 26, 1998, options to purchase 637,203
shares of Common Stock have been granted under the Option Plan.
The Option Plan provides for the grant, for no consideration other
than services, of options to purchase shares of the Common Stock of the
Company to certain employees and directors of the Company or its subsidiaries
and to certain other individuals who provide services to the Company or its
subsidiaries. Options granted pursuant to the Option Plan may either be
"incentive stock options" as defined in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), which are intended to qualify for
special federal income tax treatment ("ISOs"), or "non-qualified stock
options" ("NQSOs"). Capitalized terms not defined below have the same meanings
as set forth in the Option Plan attached hereto. The Option Plan is not
subject to the requirements of the Employee Retirement Income Security Act of
1974, known as "ERISA."
Administration, Modification and Amendment of the Option Plan. The
Option Plan provides that it shall be administered by the Board of Directors
or a committee of the Board consisting of at least three persons (either the
Board of Directors acting in such capacity of the appointed committee being
referred to herein as the "Committee"). The
15
<PAGE>
members of the Committee shall be appointed from time to time by the Board of
Directors of the Company and may, but need not be, directors. The Committee
has the final authority to interpret the Option Plan, to determine which
Eligible Employees, as defined below, shall receive options, the times when
such options shall be granted and when they may be exercised, the fair market
value of Common Stock for the purposes of determining exercise prices and the
number of shares to be subject to any option, to determine the terms and
provisions of option agreements, to prescribe, amend and rescind rules and
regulations relating to the Option Plan, to construe options under the Option
Plan, and to make all other determinations necessary and advisable for proper
administration of the Option Plan. All decisions and determinations of the
Committee are final.
The Board of Directors may at any time suspend or terminate the
Option Plan or may amend it from time to time in such respects as the Board of
Directors may deem advisable either to conform the terms of the Option Plan to
any changes in the law or for any other reason that the Board of Directors may
deem to be in the best interests of the Company and its stockholders;
provided, however, that without approval of the stockholders of the Company,
no such amendment may (1) except in certain limited circumstances, increase
the number of shares for which options may be granted under the Option Plan,
(2) materially modify the requirements as to eligibility for participation in
the Option Plan, or (3) materially increase the benefits accruing to
participants under the Option Plan.
Eligibility and Grants of Options. All key employees of the Company
are eligible for selection by the Committee to receive ISOs under the Option
Plan and all key employees, directors and any other persons who perform
services for the Company ("Consultants") and who, in the opinion of the
Committee, will contribute to the success of the Company, are eligible to
receive NQSOs under the Option Plan (together "Eligible Employees"). The
Committee determines and designates from time to time the number and nature of
the options to be granted to any Eligible Employee. The number of options that
may be granted to any particular individual or group is not determinable until
the Committee takes action with respect thereto. As of April 26, 1998,
approximately 29 non-director employees, six directors and no Consultants were
eligible to participate in the Option Plan.
Term of Options. The term of each option is determined by the
Committee, but no option will be exercisable more than ten years from the date
the option was granted. ISOs granted to a "control person" will not be
exercisable more than five years from the date the option was granted. For
purposes of the Option Plan, a "control person" is any person who, as of the
date of an option grant, owned more than 10% of the voting stock of the
Company or of any parent or subsidiary corporation.
Exercise of Options. Except as otherwise determined by the Committee,
options granted under the Option Plan are exercisable as follows: (i) at any
time after one year from the date of grant, 33 1/3% of the shares subject to
the option or any part thereof; and (ii) at any time after two years from the
date of grant, an additional 33 1/3% of the shares subject to the option or
any part thereof; and (iii) at any time after three years from the date of
grant, an additional 33 1/3% of the shares subject to the option or any part
thereof. The Committee may, in its discretion, accelerate or otherwise amend
the times any or all outstanding options are exercisable, including in the
event of a Change of Control.
Option Exercise Price. The exercise price of an option is determined
by the Committee at the time the option is granted, although it may not be
less than the Fair Market Value of the shares on the date of grant. With
respect to a "control person" the exercise price of an ISO cannot be less than
110% of the Fair Market Value on the date of grant. "Fair Market Value" on a
specified date refers to the mean between the highest and lowest quoted
selling prices of the Common Stock or, if not available, the mean between the
bona fide bid and asked prices of the Common Stock. If an option is granted in
connection with an initial public offering of the Company's Common Stock, Fair
Market Value refers to the price at which the Common Stock is sold in such
public offering.
16
<PAGE>
Termination of Employment. Except as the Committee may determine
otherwise with respect to any NQSO, if an option holder terminates his or her
employment with the Company or a subsidiary for any reason other than his
death or Permanent Disability, all unexercised options of such holder shall
terminate three months from the date on which such option holder terminates
his employment (whether voluntarily or involuntarily). Except as the Committee
may determine otherwise with respect to any NQSO, if an option holder shall
die at a time when he is employed by the Company or a subsidiary or if the
option holder shall terminate employment by reason of Permanent Disability,
all unexercised options of such holder shall terminate one year after the date
of his or her death or termination of employment due to death or Permanent
Disability. In the case of death, the option may be exercised by the person or
persons to whom the option holder's rights under the option shall pass by will
or by the laws of descent and distribution.
Federal Income Tax Consequences
Non-Qualified Options. Upon the exercise of an NQSO, the amount by
which the fair market value of the shares on the date of exercise exceeds the
option price is taxed to the optionee as ordinary compensation income. In
general, the Company is entitled to a deduction equal to the amount of the
ordinary compensation income realized by the optionee. At such time as the
optionee sells shares issued to him upon exercise of his option, if the shares
were held as capital assets, he will realize capital gain or loss (long-term,
mid-term or short-term, depending on whether the shares were held for more
than 18 months, more than 12 months but less than 18 months, or 12 months or
less, before sale) in an amount equal to the difference between his tax basis
in the shares and the selling price. The Company is not entitled to any tax
deductions with respect to capital gains realized by the optionee.
Incentive Stock Options. The holder of an ISO will not be subject to
federal income tax upon the grant or exercise of the ISO, and the Company will
not be entitled to a tax deduction by reason of such exercise. A sale of the
shares received upon the exercise of an ISO which does not occur within one
year after the exercise of the ISO or within two years after the grant of the
ISO will result in the realization of capital gain or loss in the amount of
the difference between the amount realized on the sale and the optionee's tax
basis in such shares if such shares were held as capital assets. Generally,
upon a prior disposition of the shares, the optionee will recognize ordinary
compensation income equal to the lesser of (1) the excess of the fair market
value of the shares on the date of transfer to the optionee over the option
price or (2) the excess of the amount realized on the disposition over the
optionee's tax basis in the shares. In certain circumstances, upon a prior
disposition, such as a disposition by gift or a transfer to a related person,
the amount of ordinary compensation income recognized by the optionee will be
the excess of the fair market value of the shares on the date of transfer to
the optionee over the option price. The Company may claim a tax deduction on a
prior disposition of such shares in the amount of the ordinary compensation
income which is realized by the optionee, and at the time so recognized.
The excess of the fair market value of the shares at the time of
exercise of an ISO over the option price constitutes an item of tax preference
subject to the alternative minimum tax, unless a subsequent disqualifying
disposition occurs.
Tax Advice Caveat. The preceding discussion is based upon federal tax
laws and regulations in effect on the date of this Proxy Statement, which are
subject to change, and does not purport to be a complete description of the
federal income tax aspects of the Option Plan. Optionees also may be subject
to state and local taxes in connection with the grant or exercise of options
and the sale or other disposition of shares acquired upon the exercise
thereof. The Company suggests that optionees consult with their individual tax
advisors to determine the applicability of the tax aspects of options to their
personal tax circumstances.
--------------------------------------------------------------
17
<PAGE>
PROPOSAL NO. 3
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed the firm of BDO Seidman, LLP as
independent public accountants for the year ending December 31, 1998. BDO
Seidman, LLP has audited the Company's financial statements since September 8,
1995. The appointment of independent public accountants is approved annually
by the Board of Directors, which is based in part on the recommendations of
the Audit Committee. In making its recommendations, the Audit Committee
reviews both the audit scope and estimated audit fees for the coming year.
This appointment will be submitted to the stockholders for ratification at the
Annual Meeting.
If ratification is not received, the Board will take this into
account when it considers the appointment of independent accountants for 1999.
A representative of BDO Seidman, LLP is expected to be available at the Annual
Meeting to respond to appropriate questions and to make a statement if he so
desires.
The affirmative vote of a majority of the votes cast at the Annual
Meeting by the holders of the outstanding shares of Common Stock is required
for the ratification of this selection.
The Board of Directors recommends that the stockholders vote FOR
ratification of the selection of BDO Seidman, LLP as the Company's independent
public accountants for the fiscal year ending December 31, 1998.
OTHER MATTERS
The Board of Directors is not aware of any matters not set forth
herein that may come before the meeting. If, however, further business
properly comes before the meeting, the persons named in the proxies will vote
the shares represented thereby in accordance with their judgment.
STOCKHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING
Stockholders may submit proposals on matters appropriate for
stockholder action at annual meetings in accordance with regulations adopted
by the SEC. To be considered for inclusion in the proxy statement and form of
proxy relating to the 1999 annual meeting, such proposals must be received by
the Company no later than January 17, 1999. Proposals should be directed to
the attention of the Secretary of the Company.
ANNUAL REPORT ON FORM 10-K
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH PERSON WHOSE PROXY IS
BEING SOLICITED, UPON THE WRITTEN REQUEST OF SUCH PERSON, A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED DECEMBER 31, 1997,
INCLUDING THE FINANCIAL STATEMENTS, BUT EXCLUDING EXHIBITS. REQUESTS FOR
COPIES OF SUCH REPORT SHOULD BE DIRECTED TO THE COMPANY, ATTENTION:
CHRISTOPHER R. GROBL.
By order of the Board of Directors,
Christopher R. Grobl
Secretary
May 21, 1998
18
<PAGE>
EXHIBIT A
ON STAGE ENTERTAINMENT, INC.
PROPOSED AMENDMENT TO THE AMENDED AND RESTATED 1996 STOCK OPTION PLAN
FIRST AMENDMENT TO THE
ON STAGE ENTERTAINMENT, INC.
AMENDED AND RESTATED 1996 STOCK OPTION PLAN
The "On Stage Entertainment, Inc. Amended and Restated 1996 Stock
Option Plan" (the "Plan"), which was effective January 13, 1997 (the "On Stage
Entertainment, Inc. 1996 Stock Option Plan" was effective August 7, 1996), is
hereby amended, effective March 30, 1998, as follows (subject to the obtaining
of subsequent approval of the stockholders of the Company):
By deleting Section 4 of the Plan and substituting therefor the
following:
4. NUMBER OF SHARES SUBJECT TO THE PLAN. The stock to be offered under the
Plan shall consist of 1,400,000 shares of Common Stock. If any Option granted
hereunder shall expire or terminate for any reason without having been
exercised in full, the unpurchased shares subject thereto shall again be
available for purposes of this Plan.
19
<PAGE>
APPENDIX
This Appendix is being filed pursuant to
Instruction 3 of Item 10 of Schedule 14A
and Rule 14a-6 under the Securities
Exchange Act of 1934. This Appendix was not
included in the Proxy Statement that was
sent to shareholders.
ON STAGE ENTERTAINMENT, INC.
AMENDED AND RESTATED
1996 STOCK OPTION PLAN
1. PURPOSE
-------
The purpose of the Amended and Restated On Stage Entertainment, Inc.
1996 Stock Option Plan (the "Plan") is to further the interests of On Stage
Entertainment, Inc. (the "Company") by strengthening the desire of employees
to continue their employment with the Company and by securing other benefits
for the Company through stock options to be granted hereunder. Options granted
under the Plan are either options intending to qualify as "incentive stock
options" within the meaning of Section 422 of the Code or non-qualified stock
options.
2. DEFINITIONS
-----------
Whenever used herein the following terms shall have the following
meanings, respectively:
(a) "Board" shall mean the Board of Directors of On Stage
Entertainment, Inc.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Committee" shall mean the Compensation Committee appointed by
the Board of Directors of the Company, or if no committee has been appointed,
reference to "Committee" shall be deemed to refer to the Board of Directors of
the Company.
(d) "Common Stock" shall mean the Company's Common Stock as described
in the Company's Articles of Incorporation.
(e) "Company" shall mean On Stage Entertainment, Inc., a Nevada
corporation.
<PAGE>
(f) "Employee" shall mean in connection with Non-Qualified Options
and the On Stage Entertainment, Inc. Non-Qualified Stock Option Agreement (i)
any director, officer, actual employee or independent contractor of the
Company or any Subsidiary or Parent of the Company, (ii) any individual in an
effort to induce said individual to become and remain an employee or
independent contractor of the Company, or (iii) any other individual or entity
the Committee may deem appropriate to receive a Non-Qualified Option (so long
as the grant of the Non-Qualified Option furthers a specific Company purpose
and the Committee deems it in the best interests of the Company to grant the
Non-Qualified Option to said individual or entity). In connection with
Incentive Options and the On Stage Entertainment, Inc. Incentive Stock Option
Agreement, the term "Employee" shall include only actual employees of the
Company or of any Subsidiary or Parent of the Company.
(g) "Fair Market Value Per Share" of the Company's Common Stock shall
mean if the Company's Common Stock is publicly traded the mean between the
highest and lowest quoted selling prices of the Common Stock on the date of
the grant of the Option or, if not available, the mean between the bona fide
and asked prices of the Common Stock on the date of the grant of the Option.
In any situation not covered above or if there were no sales on the date of
the grant of an Option, the Fair Market Value Per Share shall be determined by
the Committee in accordance with Section 20.2031-2 of the Federal Estate Tax
Regulations. Notwithstanding the foregoing, if the Option is granted in
connection with an initial public offering of the Company's Common Stock, the
Fair Market Value Per Share shall be at the price at which the Common Stock is
sold in such public offering.
(h) "Incentive Option" shall mean an Option granted under the Plan
which is designated as and qualifies as an incentive stock option within the
meaning of Section 422 of the Code.
(i) "Non-Qualified Option" shall mean an Option granted under the
Plan which is designated as a non-qualified stock option and which does not
qualify as an incentive stock option within the meaning of Section 422 of the
Code.
(j) "Option" shall mean an Incentive Option, as defined in Section
2(h) hereof, or a Non-Qualified Option, as defined in Section 2(i) hereof.
(k) "Optionee" shall mean any Employee who has been granted an
Incentive Option to purchase shares of Common Stock under the Plan and shall
mean any person (including an Employee) who has granted a Non-Qualified Option
under the Plan.
(l) "Parent" shall have the meaning set forth in Section 424(e) of
the Code.
(m) "Permanent Disability" shall mean termination of employment with
the Company or with the consent of the Company by reason of permanent and
total disability within the meaning of Section 22(e)(3) of the Code.
<PAGE>
(n) "Plan" shall mean this On Stage Entertainment, Inc. 1996 Stock
Option Plan, as amended and restated.
(o) "Subsidiary" shall have the meaning set forth in Section 424(f)
of the Code.
3. ADMINISTRATION
--------------
(a) The Plan shall be administered either (i) by the Board, or (ii)
in the discretion of the Board, by a Committee of at least three persons
appointed by the Board. The Board may from time to time appoint members of the
Committee in substitution for or in addition to members previously appointed
and may fill vacancies.
(b) Any action of the Committee with respect to the administration of
the Plan shall be taken by majority vote or by written consent of a majority
of its members.
(c) Subject to the provisions of the Plan, the Committee or the Board
shall have the authority to construe and interpret the Plan, to define the
terms used therein, to determine the time or times an Option may be exercised
and the number of shares which may be exercised at any one time, to prescribe,
amend and rescind rules and regulations relating to the Plan, to approve and
determine the duration of leaves of absence which may be granted to
participants without constituting a termination of their employment for
purposes of the Plan, and to make all other determinations necessary or
advisable for the administration of the Plan. All determinations and
interpretations made by the Committee shall be conclusive and binding on all
Employees and on their guardians, legal representatives and beneficiaries.
(d) The Company will indemnify and hold harmless the members of the
Board and the Committee from and against any and all liabilities, costs and
expenses incurred by such persons as a result of any act, or omission to act,
in connection with the performance of such persons' duties, responsibilities
and obligations under the Plan, other than such liabilities, costs and
expenses as may result from the negligence, gross negligence, bad faith,
willful misconduct and/or criminal acts of such person.
(e) The Company will provide financial information to the Optionees
on the same basis as the Company provides such information to its
shareholders.
4. NUMBER OF SHARES SUBJECT TO PLAN
--------------------------------
The stock to be offered under the Plan shall consist of up to 785,000
shares of Common Stock. If any Option granted hereunder shall expire or
terminate for any reason without having been exercised in full, the
unpurchased shares subject thereto shall again be available for purposes of
this Plan.
<PAGE>
5. ELIGIBILITY AND PARTICIPATION
-----------------------------
(a) The Committee shall determine the Employees to whom Options shall
be granted, the time or times at which such Options shall be granted and the
number of shares to be subject to each Option. An Employee who has been
granted an Option may, if he is otherwise eligible, be granted an additional
Option or Options if the Committee shall so determine. An Employee may be
granted Incentive Options or Non-Qualified Options or both under the Plan;
provided, however, that the grant of Incentive Options and Non-Qualified
Options to an Employee shall be the grant of separate Options and each
Incentive Option and each Non-Qualified Option shall be specifically
designated as such.
(b) In no event shall an Employee be granted in any calendar year,
under the Plan and all other plans of the Company and any Subsidiary or Parent
of the Company, Incentive Options that are first exercisable during any one
calendar year for stock with an aggregate fair market value (determined as of
the time the option was granted) in excess of $100,000.
6. PURCHASE PRICE
--------------
(a) The purchase price of each share covered by each Incentive Option
shall not be less than 100% of the Fair Market Value Per Share of the Common
Stock of the Company on the date the Incentive Option is granted; provided,
however, that if at the time an Incentive Option is granted the Optionee owns
or would be considered to own by reason of Section 424(d) of the Code more
than 10% of the total combined voting power of all classes of stock of the
Company or any Subsidiary or Parent of the Company, the purchase price of the
shares covered by such Incentive Option shall not be less than 110% of the
Fair Market Value Per Share of the Common Stock on the date the Incentive
Option is granted.
(b) The purchase price of each share covered by each Non-Qualified
Option shall be determined by the Committee.
7. DURATION OF OPTIONS
-------------------
The expiration date of each Option and all rights thereunder shall be
determined by the Committee. In the event the Committee does not specify the
expiration date of the Option, the expiration date shall be 10 years from the
date on which the Option is granted, and shall be subject to earlier
termination as provided herein; provided, however, that if at the time an
Incentive Option is granted the Optionee owns or would be considered to own by
reason of Section 424(d) of the Code more than 10% of the total combined
voting power of all classes of stock of the Company or any Subsidiary or
Parent of the Company, such Incentive Option shall expire 5 years from the
date the Incentive Option is granted unless the Committee selects an earlier
date.
<PAGE>
8. EXERCISE OF OPTIONS
-------------------
Except as otherwise determined by the Committee, an Option shall be
exercisable as follows: (i) at any time after one year from the date of grant,
33 1/3% of the shares subject to the Option, or any part thereof; and (ii) at
any time after two years from the date of grant, an additional 33 1/3% of the
shares subject to the Option, or any part thereof; and (iii) at any time after
three years from the date of grant, an additional 33 1/3% of the shares
subject to the Option or any part thereof.
An Optionee may purchase less than the total number of shares for
which the Option is exercisable, provided that a partial exercise of an Option
may not be for less than 100 shares, unless the exercise is during the final
year of the Option, and shall not include any fractional shares. As a
condition to the exercise, in whole or in part, of any Option, the Committee
may in its sole discretion require the Optionee to pay, in addition to the
purchase price of the shares covered by the Option, an amount equal to any
federal, state and local taxes that the Committee has determined are required
to be paid in connection with the exercise of such Option in order to enable
the Company to claim a deduction or otherwise. Furthermore, if any Optionee
disposes of any shares of stock acquired by exercise of an Incentive Option
prior to the expiration of either of the holding periods specified in Section
422(a)(1) of the Code, the Optionee shall pay to the Company, or the Company
shall have the right to withhold from any payments to be made to the Optionee,
an amount equal to any federal, state and local taxes the Committee has
determined are required to be paid in connection with the exercise of such
Option, in order to enable the Company to claim a deduction or otherwise.
9. METHOD OF EXERCISE
------------------
(a) To the extent that the right to purchase shares has accrued,
Options may be exercised from time to time by giving written notice to the
Company stating the number of shares with respect to which the Option is being
exercised, accompanied by payment in full, by cash or by certified or
cashier's check payable to the order of the Company or the equivalent thereof
acceptable to the Company, of the purchase price for the number of shares
being purchased and, if applicable, any federal, state or local taxes required
to be paid in accordance with the provisions of Section 8 hereof. The Company
shall issue a separate certificate or certificates with respect to each Option
exercised by an Optionee.
(b) In the Committee's discretion, payment of the purchase price for
the shares with respect to which the Option is being exercised may be made in
whole or in part with shares of Common Stock of the Company. If payment is
made with shares of Common Stock, the Optionee, or other person entitled to
exercise the Option, shall deliver to the Company certificates representing
the number of shares of Common Stock in payment for the shares being
purchased, duly endorsed for transfer to the Company. If requested by the
Committee, prior to the acceptance of such certificates in payment for such
shares, the Optionee, or any other person entitled to exercise the Option,
shall supply the Committee with a representation and warranty in writing that
he has good and marketable title to the shares represented by the
certificate(s), free and clear of all liens and encumbrances. The value of the
shares of Common Stock tendered in payment for the shares being
<PAGE>
purchased shall be their Fair Market Value Per Share on the date of the
Optionee's exercise.
(c) Notwithstanding the foregoing, the Company shall have the right
to postpone the time of delivery of the shares for such period as may be
required for it to comply, with reasonable diligence, with any applicable
listing requirements of any national securities exchange or any federal, state
or local law. If an Optionee, or other person entitled to exercise an Option,
fails to accept delivery of or fails to pay for all or any portion of the
shares requested in the notice of exercise, upon tender of delivery thereof,
the Committee shall have the right to terminate his Option with respect to
such shares.
10. NON-TRANSFERABILITY OF OPTIONS
------------------------------
No Option granted under the Plan shall be assignable or transferable
by the Optionee, either voluntarily or by operation of law, otherwise than by
will or the laws of descent and distribution, and shall be exercisable during
his lifetime only by the Optionee.
11. CONTINUANCE OF EMPLOYMENT
-------------------------
Nothing contained in the Plan or in any Option granted under the Plan
shall confer upon any Optionee any rights with respect to the continuation of
his employment by the Company or interfere in any way with the right of the
Company at any time to terminate such employment or to increase or decrease
the compensation of the Optionee from the rate in existence at the time of the
grant of an Option.
12. TERMINATION OF EMPLOYMENT OTHER THAN BY
DEATH OR PERMANENT DISABILITY
----------------------------------------
Except as the Committee may determine otherwise with respect to any
Non-Qualified Options granted hereunder: If an Optionee ceases to be an
Employee for any reason other than his death or Permanent Disability, any
Options granted to him under the Plan shall terminate 3 months from the date
on which such Optionee terminates his employment (whether voluntarily or
involuntarily) unless such Optionee has been rehired by the Company and is an
Employee on such date. During such 3 month period, the Optionee may exercise
any Option granted to him but only to the extent such Option was exercisable
on the date of termination of his employment and provided that such Option has
not expired or otherwise terminated as provided herein. A leave of absence
approved in writing by the Committee shall not be deemed a termination of
employment for purposes of this Section, but no Option may be exercised during
any such leave of absence, except during the first 3 months thereof.
13. DEATH OR PERMANENT DISABILITY OF OPTIONEE
-----------------------------------------
Except as the Committee may determine otherwise with respect to any
Non-qualified Options granted hereunder:
<PAGE>
If an Optionee shall die at a time when he is employed by the Company
or if the Optionee shall cease to be an Employee by reason of Permanent
Disability, any Options granted to him under this Plan shall terminate one
year after the date of his death or termination of employment due to Permanent
Disability unless by its terms it shall expire before such date or otherwise
terminate as provided herein, and shall only be exercisable to the extent that
it would have been exercisable on the date of his death or his retirement due
to Permanent Disability. In the case of death, the Option may be exercised by
the person or persons to whom the Optionee's rights under the Option shall
pass by will or by the laws of descent and distribution.
14. STOCK PURCHASE NOT FOR DISTRIBUTION
-----------------------------------
Each Optionee shall, by accepting the grant of an Option under the
Plan, represent and agree, for himself and his transferees by will or the laws
of descent and distribution, that all shares of stock purchased upon exercise
of the Option will be received and held without a view to distribution except
as may be permitted by the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder. After each notice of exercise of any
portion of an Option, if requested by the Committee, the person entitled to
exercise the Option must agree in writing that the shares of stock are being
acquired in good faith without a view to distribution except as may be
permitted by the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
15. PRIVILEGES OF STOCK OWNERSHIP
-----------------------------
No person entitled to exercise any Option granted under the Plan
shall have any of the rights or privileges of a shareholder of the Company
with respect to any shares of Common Stock issuable upon exercise of such
Option until such person has become the holder of record of such shares. No
adjustment shall be made for dividends or distributions of rights in respect
of such shares if the record date is prior to the date on which such person
becomes the holder of record, except as provided in Section 16 hereof.
16. ADJUSTMENTS
-----------
(a) If the number of outstanding shares of Common Stock of the
Company are increased or decreased, or if such shares are exchanged for a
different number or kind of shares or securities of the Company through
reorganization, merger, reverse merger, recapitalization, reclassification,
stock dividend, stock split, reverse split, combination of shares or other
similar transaction, the aggregate number of shares of Common Stock subject to
the Plan as provided in Section 4 hereof and the shares of Common Stock
subject to issued and outstanding Options under the Plan shall be
appropriately and proportionately adjusted by the Committee. Any such
adjustment in the outstanding Options shall be made without change in the
aggregate purchase price applicable to the unexercised portion of the Option
but with an appropriate adjustment in the price for each share or other unit
of any security covered by the Option.
(b) Notwithstanding the provisions of subsection (a) of this section,
upon the dissolution
<PAGE>
or liquidation of the Company or upon any reorganization, merger or
consolidation with one or more corporations as a result of which the Company
is not the surviving corporation, or upon a sale of substantially all the
assets of the Company or of more than 50% of the then outstanding stock of the
Company to another corporation or entity, the Plan and each outstanding Option
shall terminate; provided, however, that: (i) each Option, for which no option
has been tendered by the surviving corporation in accordance with all of the
terms of provision (ii) immediately below shall become fully exercisable
subject to the provisions of Sections 9(b) and (c) hereof within thirty days
before the effective date of such dissolution, liquidation, merger,
consolidation or sale of stock or assets in which the Company is not the
surviving corporation; or (ii) in its sole and absolute discretion, the
surviving corporation may, but shall not be obligated to, tender to any
Optionee holding an Option an option or options to purchase shares of the
surviving corporation or acquiring corporation, and such new option or options
shall contain such terms and provisions as shall be required substantially to
preserve the rights and benefits of any Option then outstanding under this
Plan.
(c) Adjustments under this section shall be made by the Committee,
whose determination as to what adjustments shall be made, and the extent
thereof, shall be final, binding and conclusive. No fractional shares of stock
shall be issued under the Plan or in connection with any such adjustment.
17. AMENDMENT AND TERMINATION OF PLAN
---------------------------------
(a) The Board of Directors of the Company may from time to time, with
respect to any shares at the time not subject to Options, suspend or terminate
the Plan or amend or revise the terms of the Plan; provided that any amendment
to the Plan shall be approved by a majority of the shareholders of the Company
if the amendment would (i) materially increase the benefits accruing to
participants under the Plan; (ii) increase the number of shares of Common
Stock which may be issued under the Plan, except as permitted under the
provisions of Section 16 hereof; or (iii) materially modify the requirements
as to eligibility for participation in the Plan.
(b) No amendment, suspension or termination of the Plan shall,
without the consent of the Optionee, alter or impair any rights or obligations
under any Option theretofore granted to such Optionee under the Plan.
(c) The terms and conditions of any Option granted to an Optionee
under the Plan may be modified or amended only by a written agreement executed
by the Optionee and the Company; provided, however, that if any amendment or
modification of an Incentive Option would constitute a "modification,
extension or renewal" within the meaning of Section 424(h) of the Code, such
amendment shall be null and void unless the amendment contains an
acknowledgment by the parties substantially in the following form: "The
parties hereto recognize and agree that this amendment constitutes a
modification, renewal or extension, within the meaning of Section 424(h) of
the Code, of the option originally granted ________."
<PAGE>
18. EFFECTIVE DATE OF PLAN
----------------------
This Plan shall become effective upon adoption by the Board of
Directors of the Company and approval by the Company's shareholders; provided,
however, that prior to approval of the Plan by the Company's shareholders, but
after adoption by the Board of Directors, Options may be granted under the
Plan subject to obtaining such shareholders' approval. Notwithstanding the
foregoing, such shareholders' approval must occur no later than 12 months
after the date of adoption of the Plan by the Board of Directors.
19. TERM OF PLAN
------------
No Option shall be granted pursuant to the Plan after 10 years from
the earlier of the date of adoption of the Plan by the Board of Directors of
the Company or the date of approval of the Plan by the Company's shareholders.
The date of adoption of the original On Stage Entertainment, Inc.
1996 Stock Option Plan by the Board of Directors was August 7, 1996 and the
date of the approval of such plan by the shareholders was August 7, 1996. The
adoption of this Amended and Restated On Stage Entertainment, Inc. 1996 Stock
Option Plan by the Board of Directors was effected on January 13, 1997.
<PAGE>
- ------------------------------------------------------------------------------
ON STAGE ENTERTAINMENT, INC.
ANNUAL MEETING OF STOCKHOLDERS--JUNE 15, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints JOHN W. STUART and DAVID HOPE, or either of
them, acting alone in the absence of the other, the proxies of the
undersigned, with full powers of substitution (the "Proxies"), to attend and
act as proxy or proxies of the undersigned at the Annual Meeting of
Stockholders of On Stage Entertainment, Inc. (the "Company") to be held at the
Imperial Palace, Las Vegas, Nevada on June 15, 1998, at 10:00 a.m. or any
adjournment thereof, and to vote as specified herein the number of shares
which the undersigned, if personally present, would be entitled to vote.
(Continued and to be signed on the reverse side.)
- ------------------------------------------------------------------------------
<PAGE>
- ------------------------------------------------------------------------------
A /X/ Please mark your
votes as in this
examples.
1. Election of FOR the nominees WITHHOLD Nominees: Neil H. Foster
Directors listed at right AUTHORITY James I. Nederlander
(Class 1) (except as marked to vote for
to the contrary) all nominees
/ / / /
INSTRUCTIONS: To withhold authority to vote for any
individual nominee, strike such nominee's name from the list at
right:
2. Proposal to Amend the Company's FOR AGAINST ABSTAIN
Amended and Restated 1996 Stock / / / / / /
Option Plan.
3. Proposal to Ratify the Appointment / / / / / /
of BDO Seidman, LLP as
Independent Public Accountants of
the Company for the Fiscal Year
Ending December 31, 1998.
4. Other Business. In their discretion, the Proxies are authorized to vote upon
such other business as may properly come before the Annual Meeting and any
and all adjournments thereof.
This Proxy, when properly executed, will be voted as directed by the
stockholder. If no such directions are indicated, the Proxies will have
authority to vote "FOR" the director nominees, "FOR" the amendment of the
Company's Amended and Restated 1996 Stock Option Plan and "FOR" the
ratification of BDO Seidman, LLP as the Independent Public Accountants of the
Company.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
DATE , 1998
- ---------------------- --------------------------- -------------
SIGNATURE SIGNATURE
NOTE: Please sign exactly as name or names appear on this Proxy. If
stock is held jointly, each hold must sign. If signing as attorney,
trustee, executor, administrator, custodian or corporate officer,
please give full name.
- ------------------------------------------------------------------------------
