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 Rule 14a-11(c) or Rule 14a-12
ON STAGE ENTERTAINMENT, INC.
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(Name of Registrant as Specified in Its Charter)
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(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:
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2) Aggregate number of securities to which transaction applies:
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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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] 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.
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1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement no.:
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3) Filing Party:
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4) Date Filed:
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ON STAGE ENTERTAINMENT, INC.
4625 West Nevso Drive
Las Vegas, Nevada 89103
-----------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 27, 1999
10:00 a.m. Pacific Time
-----------------------
To the Stockholders of On Stage Entertainment, Inc.
NOTICE is hereby given that the 1999 annual meeting of stockholders of ON STAGE
ENTERTAINMENT, INC., a Nevada corporation.
Time: Tuesday, July 27, 1999, at 10:00 a.m. Pacific Time.
Place: Imperial Palace, 3535 Las Vegas Boulevard South, Las Vegas, Nevada.
Purposes:
1. To elect one director;
2. To ratify the selection of BDO Seidman, LLP as On Stage's independent
public accountants for the fiscal year ending December 31, 1999; and
3. To transact such other business as may properly come before the annual
meeting or any adjournments of the meeting.
Only stockholders of record on June 24, 1999 may vote at the meeting. A
list of stockholders will be available for inspection during normal business
hours for ten days prior to the annual meeting at our executive offices.
By order of the Board of Directors,
/s/ Christopher R. Grobl
-----------------------------------
Christopher R. Grobl
Secretary
Las Vegas, Nevada
June 24, 1999
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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.
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ON STAGE ENTERTAINMENT, INC.
4625 West Nevso Drive
Las Vegas, Nevada 89103
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PROXY STATEMENT
---------------------
General Information on the Annual Meeting
On Stage's board is using this proxy statement to solicit proxies from the
holders of On Stage Entertainment, Inc. common stock to be used at the 1999
annual meeting of stockholders. The meeting will be held at 10:00 a.m. Pacific
Time on Tuesday, July 27, 1999. The meeting will be held at the Imperial Palace,
3535 Las Vegas Boulevard South, Las Vegas, Nevada, 89103. We are first mailing
this proxy statement and the accompanying form of proxy to On Stage stockholders
on or about June 24, 1999.
The cost of soliciting proxies will be borne by On Stage. 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 On Stage who will not be specially
compensated for those services. On Stage also will request banks and brokers to
solicit proxies from their customers, where appropriate, and will reimburse
those persons for reasonable expenses incurred in that regard.
Voting at the Meeting
Only stockholders of record at the close of business on June 24, 1999 are
entitled to notice of, and to vote at, the annual meeting. As of June 24, 1999,
there were 7,580,517 shares of common stock outstanding. Each stockholder
entitled to vote has the right to one vote for each share of common stock
outstanding in that stockholder's name.
On Stage 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 proxy card 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 the nominee 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 that item. 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 that 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 that item. The shares of 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 under the heading
"Election of Directors," and FOR ratification of the selection of BDO Seidman,
LLP as On Stage's independent public accountants for the fiscal year ended
December 31, 1999. 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 those other matters) in accordance with their
best judgment.
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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 notice of revocation to the Secretary
of On Stage, or by delivering a subsequently executed proxy, at any time before
the proxy is voted.
Your 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 On Stage'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 those shares.
ITEM NO. 1
ELECTION OF DIRECTORS
On Stage's board of directors currently consists of seven members. There is
presently one vacancy on the board, with six directors presently sitting. The
board 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
each director's successor or until the director's death, removal or resignation.
At this year's annual meeting, one director is to be elected for the current
class. The term of office for the director elected at the annual meeting will
expire at the 2002 annual meeting of stockholders.
Mark Tratos has been nominated by the board of directors for election as
director at the annual meeting. Mr. Tratos is a current member of the board. The
board has made no other nomination and anticipates that the other director
vacancy will not be filled at the annual meeting.
The nominee has 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 for the election of this nominee. The board believes the nominee will be
able to serve as a director; if this should not be the case, however, the
proxies may vote the share for one or more substitute nominees to be designated
by the board or the board may decide to reduce the number of directors. The
board recommends a vote FOR the nominee.
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Nominee for Election
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Name of Director Year First Became Director, Principal Occupation During Past
& Age Five Years and Certain Directorships
- -------------- ------------------------------------------------------------
Mark Tratos
46 o Director of On Stage since March 1997.
o Managing Partner of the law firm of Quirk & Tratos since
1983.
o Member of the adjunct faculty of the University of Nevada
Las Vegas.
o Received his Juris Doctor from Lewis and Clark Law School
in 1979.
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Directors Continuing in Office with Term Expiring in 2000
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Name of Director Year First Became Director, Principal Occupation During Past
& Age Five Years and Certain Directorships
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John W. Stuart
55 o Chairman and Chief Executive Officer of On Stage since
April 1996.
o President of On Stage from 1985 through March 1996.
o Founded On Stage in 1985.
o Has been involved in the theatrical business since age
seven and has produced or appeared in over 200 theater
productions and several feature films.
o Received his Bachelor of Arts degree in 1967 from
California State University at Fullerton.
David Hope
39 o Has served as President, Chief Operating Officer and as
director of On Stage since joining in April 1996.
o For the ten years prior to joining On Stage,
he served in various capacities, including most recently
as Executive Vice President and Chief Operating Officer,
for ITC Entertainment Group, a major independent producer
and worldwide distributor of feature films, television
movies and mini-series and a subsidiary of Polygram
N.V., where he served as the Chief Operating Officer.
o Was production manager with Hinchcliffe Productions, a
United Kingdom-based producer and distributor of
documentaries and motor sport events.
o Has a degree in Management Science in 1981 from
Loughborough University in England.
Matt Gohd
43 o Has served as member of the board for On Stage since
September 1998.
o Currently a Senior Managing director at Whale Securities
Co., LP, On Stage's underwriter in its initial public
offering.
o Has over 20 years in the securities field working in
various companies in industries such as retail, technology,
healthcare and consumer finance.
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Directors Continuing in Office with Term Expiring in 2001
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Name of Director Year First Became Director, Principal Occupations During Past
& Age Five Years and Certain Directorship
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James L.
Nederlander
38 o Has been director since August 1996.
o He served also as Chairman of the Nederlander Production
Company since August 1996
o Was Executive Vice President of Nederlander Producing
Company 1980 to 1996.
Mel Woods
47 o Has been a director since July 1998.
o President and Chief Operating Officer of Fox Family
Worldwide, Inc., Saban Entertainment's parent company
since 1997.
o Chief Financial Officer and Senior Vice President of DIC
Enterprises.
Directors Resigning During 1998 and 1999
Four directors resigned during 1998 and 1999, Kenneth Berg, Nelson Foster, Jules
Haimovitz and Mark S. Karlan. Mr. Berg resigned on January 21, 1998, Mr. Foster
resigned on June 26, 1998, Mr. Haimovitz resigned on September 8, 1998 and Mr.
Karlan resigned on April 16, 1999. Mr. Foster resigned to create a vacancy for
current director Mel Woods and Jules Haimovitz resigned to create a vacancy for
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current director Matt Gohd. Mr. Karlan has been the President, Chief Executive
Officer and a director of Imperial Credit Commercial Mortgage Investment Corp.,
a publicly traded real estate investment trust since July 1997. Mr. Karlan
resigned from the board following On Stage's default in its loans from Imperial
Credit.
General Information Concerning the Board of Directors and its Committees
During 1998, the board met on 10 occasions in person or telephonically and acted
by unanimous written consent nine occasions. The Nevada General Corporation Law
provides that the board, by resolution adopted by a majority of the entire
board, may designate one or more committees, each of which shall consist of one
or more directors. The board annually elects from its members an audit committee
and a compensation committee. During 1998, each director attended at least
seventy-five percent (75%) of the meetings of the board and the meetings of the
committee or committees of the board of which they were a member.
Audit Committee. The audit committee is responsible for providing general
oversight with respect to the accounting principles employed in our financial
reporting. The audit committee is to meet at least annually with On Stage's
principal financial and accounting officers and independent public accountants
to review the scope of auditing procedures, to review On Stage's policies
relating to internal auditing and accounting procedures and controls, and to
discuss results of the annual audit of On Stage's financial statements. The
audit committee met one time during 1998. The audit committee is currently
composed of three non-employee directors, Mark Tratos, Mel Woods and Matt Gohd.
Compensation Committee. The compensation committee determines salaries, bonuses
and other compensation matters for officers of On Stage, determines employee
health and benefit plans, and administers On Stage's stock option plans. The
compensation committee met one time during 1998. The compensation committee is
currently composed of two non-employee directors, James Nederlander and Matt
Gohd.
EXECUTIVE OFFICERS
The following sets forth biographical information about each of On Stage's
executive officers who served during 1998 or who are presently serving in such
capacities.
Name Age Position
John W. Stuart............... 56 Chairman and Chief Executive Officer
David Hope................... 40 President and Chief Operating Officer
Kiranjit S. Sidhu............ 34 Senior Vice President, Chief
Financial Officer and Treasurer
Christopher R. Grobl......... 31 General Counsel and Secretary
The employment backgrounds for John W. Stuart and David Hope are described above
under the section entitled "Election of Directors."
Kiranjit S. Sidhu has been On Stage's Senior Vice President, Chief Financial
Officer and Treasurer since joining On Stage in August 1995. Prior to joining On
Stage, 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.
On April 16, 1999, Mr. Sidhu agreed to restructure his current employment
agreement with On Stage in an attempt to assist On Stage with our restructuring
plan. Pursuant to the terms of his employment restructuring, Mr. Sidhu and On
Stage entered a new employment agreement under which he will be an "at-will"
consultant.
Christopher R. Grobl has been the General Counsel and Secretary of On Stage
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.
5
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Certain Relationships and Related Transactions Involving Executive Officers and
Directors
On April 5, 1999, On Stage entered into an agreement with Mr. Stuart under which
On Stage agreed to accept a bridge loan from Mr. Stuart in an amount of up to
$500,000 in return for a one year promissory note bearing 12% interest, a 5%
origination fee and a warrant to purchase one share of common stock for each
$1.00 loaned, provided that On Stage did not repay Mr. Stuart within thirty
(30) days. As of May 3, 1999, On Stage has accepted $200,000 of the potential
$500,000 from Mr. Stuart.
On March 4, 1999, the board of directors authorized a loan in the principal
amount of $100,000 from Mr. Stuart our chairman, chief executive officer and
principal stockholder. This loan is evidenced by a one year promissory note
bearing an interest rate of twelve percent (12%) per annum, due on March 3,
2000. In consideration for this loan, the board of directors approved the
issuance of warrants to purchase 100,000 shares of common stock at a price of
$1.00 per share, the market price on the closing date of the Loan. Additionally,
On Stage agreed to pay legal fees incurred by Mr. Stuart in connection with this
transaction, as well as an additional $12,500 for previous legal bills Mr.
Stuart personally incurred for On Stage related matters.
In March 1997, On Stage agreed with the underwriter of our initial public
offering, Whale Securities Co., L.P., that we would neither loan nor advance any
sums to or on behalf of Mr. Stuart, other than those sums advanced to Mr. Stuart
from December 31, 1996 through August 13, 1997, the effective date of our
initial public offering without Whale's prior written consent. On October 23,
1997 and again on November 17, 1997, On Stage advanced Mr. Stuart an aggregate
of $105,483 for which we obtained Whales prior written consent. Whale authorized
On Stage on March 25, 1998 to advance an additional $150,000 to Mr. Stuart for
settlement of litigation related to his involvement in the Legends in Concert
show in Hawaii. As of June 30, 1998, On Stage had advanced Mr. Stuart an
aggregate of $136,194, evidenced by a promissory note. The funds advanced by On
Stage accrued interest at the rate of ten percent (10%) per annum. The advance
to Mr. Stuart became due and payable one year from the date of which it was
made. On July 6, 1998, Mr. Stuart repaid the advance in full.
In February 1997, Mr. Stuart granted to Senna Venture Capital Holdings, Inc., an
affiliate of DYDX Legends Group L.P. (and a lender to On Stage), 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 loan
agreement entered into between DYDX and On Stage and (ii) DYDX's agreement in
connection with a waiver to allow $1,780,424 in debt forgiveness to Mr. Stuart
in 1997. That option is exercisable for a period of two years commencing as of
February 9, 1998.
On Stage leases from Mr. Stuart seven condominium units in Atlantic City, New
Jersey for use by On Stage's performers. The current lease term expires on June
30, 2000. The total lease payment to Mr. Stuart from On Stage is currently
$7,833 per month, which amount we believe approximates the fair market value for
the use of these properties. In addition, commencing as of January 1, 1997, On
Stage began paying directly the association dues, insurance, taxes, maintenance
and utilities on the leases. On Stage paid aggregate rent to Mr. Stuart for the
leases of $150,686 and $149,686 for the years ended December 31, 1997 and 1998,
respectively.
Notes Receivable from Chief Financial Officer
On April 16, 1999, Mr. Sidhu sold Mr. Stuart 40,532 shares of common stock. In
exchange, Mr. Stuart agreed to assume Mr. Sidhu's $60,798 note in favor of On
Stage, with recourse only to the 40,532 shares of common stock purchased from
Mr. Sidhu. Mr. Sidhu executed a new promissory note in the principal amount of
$7,472, which was subsequently forgiven as part of Mr. Sidhu's employment
restructuring in April 1999.
On April 16, 1999, Mr. Sidhu agreed to restructure his current employment
agreement with On Stage attempt to assist On Stage with our restructuring plan.
Under the terms of his employment restructuring, Mr. Sidhu agreed to forego any
rights he had to his employment, option, and confidentiality agreements, in
return for the following:
o a new agreement which he will be an "at-will" consultant at a flat rate
of $50.00 per hour;
o a new option agreement which affords him the right to purchase 140,000
shares of common stock at an exercise price of $1.50 per share;
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o a reimbursement of $25,000 for unpaid insurance, car allowances and
expenses;
o $17,887 for all accrued, but unused vacation pay;
o all earned, but unpaid salary under his old employment agreement; and
o forgiveness of a promissory note in the amount of $7,472 held by On
Stage.
Additionally, On Stage agreed to pay Mr. Sidhu $25,000 within ninety (90) days
of the restructuring, in consideration for Mr. Sidhu's execution of a new
confidentiality and non-competition agreement.
Imperial Credit Commercial Mortgage Investment Corporation Related Transactions
On March 13, 1998, Imperial Credit Commercial Mortgage Investment Corporation
signed an agreement with On Stage to fund up to $20,000,000 of mortgate
financing. On the same day, On Stage used $12,500,000 of the facility to fund
the cash portion of the acquisition of assets of On Stage purchased from Gedco
USA, Inc. and related fees. On June 30, 1998, On Stage used an additional
$1,100,000 to fund the cash portion of the purchase of a fee simple interest in
the Legends Theater in Surfside Beach, South Carolina, and the purchase of a
leasehold interest in the Eddie Miles Theater in North Myrtle Beach, South
Carolina. On October 7, 1998, On Stage used an additional $550,000 for working
capital purposes. The initial $12,500,000 loan and the subsequent $1,650,000 in
loans extended by Imperial Capital to On Stage under the mortgage financing
facility currently bear interest at the rate of 9.06% and 9.9%, respectively. In
addition, On Stage granted Imperial Capital and a related entity warrants to
purchase an aggregate of 575,000 shares of common stock at an exercise price of
$4.44 per share. In consideration for Imperial Capital's October 7, 1998 funding
of $550,000, On Stage reset the strike price on 325,000 of the Imperial Capital
warrants from $4.44 to $1.25 per share. This transaction is discussed in
"Security Ownership of Certain Beneficial Owners and Management" below. Mr.
Karlan, a director of On Stage until April 20, 1999, is the President, Chief
Executive Officer and a Director of Imperial Capital.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of May 31, 1999 (except as
otherwise noted) regarding the ownership of On Stage common stock (1) by each
person known by us to be the beneficial owner of more than five percent of the
outstanding common stock, (2) by each director, (3) by each executive officer
named in the Summary Compensation Table included elsewhere in this proxy
statement and (4) by all current executive officers and directors as a group.
Number of Shares Percentage of
Name and Address (1) Beneficially Owned (2) Class(2)
- ---------------------- ---------------------- -------------
John W. Stuart (3).............. 3,678,755 48.6%
David Hope (4).................. 377,300 5.0%
Kiranjit S. Sidhu (5)........... 147,000 1.9%
James L. Nederlander (6)........ 30,000 *
Mark Tratos (7)................. 30,000 *
Mel Woods (8)................... 20,000 *
Matt Gohd (9)................... 367,500 4.8%
Hanover Restaurants, Inc(10..... 595,238 7.9%
Imperial Credit Industries,
Inc (11)....................... 575,000 7.6%
All executive officers and
directors as a group
(9 persons) (12)............... 5,820,793 76.8%
- -------------------------
*Less than one percent
(1) Unless otherwise indicated, the address for each named individual or group
is in care of On Stage at 4625 West Nevso, Las Vegas, NV 89103.
(2) Unless otherwise indicated, On Stage 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
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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 that person within 60 days,
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 that person (but not those held by any other person) and
which are exercisable within 60 days have been exercised. Percentages
herein assume a base of 7,572,046 shares of common stock outstanding as of
April 30, 1999.
(3) Includes: (a) 382,790 shares of common stock transferarable by Mr. Stuart
to third parties upon the exercise of options granted by him; and (b)
300,000 shares of common stock issuable upon the exercise of immediately
exercisable warrants.
(4) Includes: (a) 368,800 shares of common stock issuable upon the exercise of
options or warrants.
(5) Includes: (a) 142,500 shares of common stock issuable upon the exercise of
options or warrants.
(6) Includes 30,000 shares of common stock issuable upon the exercise of
options.
(7) Includes 30,000 shares of common stock issuable upon the exercise of
options.
(8) Includes 20,000 shares of common stock issuable upon the exercise of
options.
(9) Includes (a) 217,500 shares of common stock issuable upon the exercise of
options or warrants.
(10) In the Gedco Acquisition a settlement has been reached where the 595,238
shares of common stock issued to Haover as part of the Acquisition were
returned back to On Stage.
(11) Includes 325,000 shares of common stock issuable upon the exercise of an a
warrant granted to Imperial Credit Commercial Mortgage Investment
Corporation. Imperial Credit 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 Imperial Credit.
Also includes 250,000 shares of common stock issuable upon the exercise of
a warrant granted to Imperial Capital Group, LLC. Imperial Credit
Industries, Inc. has a 60% interest in Imperial Capital Group. Imperial
Credit Industries, Inc. disclaims the beneficial ownership of the shares of
common stock held by Imperial Capital Group. All information provided in
this footnote 10 was derived from a Schedule 13G filed by Imperial Credit
Industries, Inc. with the Securities and Exchange Commission on April 3,
1998.
(11) Includes 464,973 and 339,375 shares of common stock issuable upon the
exercise of options and warrants.
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COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Summary Compensation Table. The following table sets forth, for the years
ended December 31, 1998 and 1997, certain compensation paid by On Stage to its
chief executive officer and the other most highly paid executive officers of On
Stage, whose cash compensation exceeded $100,000 for the year ended December 31,
1998.
Summary Compensation Table
<TABLE>
<CAPTION> Summary Compensation
<S> <C> <C> <C> <C> <C> <C>
Annual Long Term
Compensation Compensation
------------ ------------
Securities
Other Annual Underlying All Other
Name and Principal Position Year Salary Bonus Compensation Options/SAR Compensation
- --------------------------- ---- ------- ------ ------------- ---------- ------------
John W. Stuart............. 1998 $250,000 - 35,869(1) 75,000 -
Chairman and Chief 1997 $259,615 - 38,321(2) - 239,398(3)
Executive Officer
David Hope................. 1998 $207,308 - 19,578(4) 50,000 -
President and Chief 1997 $221,461 $37,865 19,578(5) - -
Operating Officer
Kiran Sidhu................ 1998 $157,385 - 14,993(6) 30,000 -
Senior Vice President 1997 $161,596 $162,129(8) 17,215(7) 85,000 -
Chief Finanical Officer
and Treasurer
Gerard O' Riordan.......... 1998 $106,664 - 14,424(9) - -
President-On Stage Theaters 1997 - - - - -
Richard Kanfer............. 1998 $109,154 - 14,791(10) 15,165 -
Vice President- Sales 1997 $115,769 - 10,560(11) - -
Gary Panter................ 1998 $102,370 - 13,627(12) 21,439 10,595(14)
Senior Vice President 1997 $101,400 - 13,909(13) 10,389 -
Operations
</TABLE>
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(1) Represents $11,971 in unused vacation time accrued but not paid, and
$23,898 of car and health allowances accrued, of which $14,895 was paid in
1998. Does not include $149,686 of rent accrued for leases to On Stage of
which $76,028 was paid in 1998.
(2) Represents $14,423 unused vacation time accrued but not paid, and $23,898
of car and health allowances paid in 1997. Does not include $150,686 of
rent for the leases to On Stage paid in 1997.
(3) Includes $221,500 in compensation as a result of forgivness of certain
indebtedness owed by Mr. Stuart to On Stage and payment of $17,898 of
unused vacation time carried forward from prior years.
(4) Represents $6,346 in unused vacation time accrued but not paid and $13,232
of car and health allowances accrued, of which $9,732 was paid in 1998.
(5) Represents $6,346 in unused vacation time accrued but not paid and $13,232
of car and health allowances accrued paid in 1997.
(6) Represents $5,393 in unused vacation time accrued but not paid and $9,600
of car and health allowances accrued, of which $6,100 was paid in 1998.
(7) Represents $7,615 in unused vacation time accrued but not paid and $9,600
of car and health allowances paid in 1997.
(8) Represents the fair market value of the issuance of 40,532 shares of common
stock as incentive compensation pursuant to his employment agreement.
(9) Represents $14,424 of car and health allowances paid in 1998.
(10) Represents $4,231 in unused vacation time accrued but not paid and $10,560
of car and health allowances accrued, of which $7,560 was paid in 1998.
(11) Represents $10,560 of car and health allowances paid in 1997.
(12) Represents $3,238 in unused vacation time accrued but not paid and $10,389
of car and health allowances accrued, of which $8,639 was paid in 1998, and
$11,050 of housing allowance payments.
(13) Represents $3,520 in unused vacation time accrued but not paid and $10,389
of car and health allowances paid in 1997.
(14) Represents $10,595 non-recurring relocation-related expenses.
Option Grants in Last Fiscal Year
Option Grants. The table below sets forth the grants of stock options to the
persons named in the Summary Compensation Table during the year ended December
31, 1998
9
<PAGE>
<TABLE>
<CAPTION> Option Grant in Last Fiscal Year
Percent Value at
of Assumed Annual
Options/SARS Rates of Stock
Granted Price Application
Name and Principal Options to Employees Exercise Expire Potential Value
Position Granted in Fiscal Year Price Date 5% 10%
- -------------------- -------- -------------- -------- ------ ------- --------
<S> <C> <C> <C> <C> <C> <C>
John W. Stuart............... 75,000 21% $ 4.38 6/03 $418,780 $528,449
Chairman and Chief
Executive Officer
David Hope................... 50,000 14% $1.50 6/03 $95,721 $120,788
President and Chief
Operating Officer
Kiran Sidhu.................. 30,000(2) 9% $1.50 9/03 $57,433 $ 72,473
Senior Vice President
Chief Financial Officer
and Treasurer
Gerard O' Riordan............ 0(1) 0% - - - -
President, On Stage
Theaters
Richard Kanfer............... 15,165 4% $1.50 9/03 $29,032 $ 36,635
Vice President-Sales
Gary Panter.................. 12,500 4% $1.50 9/03 $23,930 $ 30,197
Senior Vice President of
Operations
Barbara Lindquist............ 28,000 8% $1.50 9/03 $53,604 $ 67,641
Vice President Merchandising
</TABLE>
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<PAGE>
(1) Excludes warrants to purchase 180,000 shares of common stockgranted in
connection with the Gedco asset acquisition.
(2) Mr. Sidhu's options were subsequently cancelled, and replaced with
subsequent options in accordance with Mr. Sidhu's amended employment
agreemetn described below.
Option Exercise and Fiscal Year-End Option Values.
The following table summarizes the value of vested and unvested in-the-money
options for the persons named in the Summary Compensation Table at December 31,
1998. Year-end values are based upon a price of $1.50 per share, which was the
closing market price of a share of common stock on December 31, 1998. No options
were exercised by the named executive officers in 1998.
<TABLE>
<CAPTION> Aggregated Option Exercise in Last Year and Year-End Option Values
Value of Unexercised
Number of Unexercised In-the-Money Options
Options at December 31, 1998 at December 31, 1998
---------------------------- ------------------------
<S> <C> <C> <C> <C>
Name Exercisable Unexercisable Exercisable Unexercisable
- -------------- -------------- ------------- ------------- -------------
John W. Stuart..... - 75,000 $ - $ -
David Hope......... 361,300 - $ - $ -
Kiran Sidhu........ 139,794 - $ - $ -
Gerard O'Riordan... - - $ - $ -
Richard S. Kanfer.. - - $ - $ -
Gary Panter........ 1,563 10,937 $ - $ -
</TABLE>
Employment Agreements and Termination of Employment and Change in Control
Arrangements
John W. Stuart. On February 1, 1997, On Stage entered into an employment
agreement with Mr. Stuart to employ him as our chairman and chief executive
officer until May 31, 2000. In accordance with his 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. On Stage has the right to terminate Mr. Stuart's
employment at any time, without cause, provided that On Stage pays Mr. Stuart a
lump sum payment equal to one year's base salary, car allowance and insurance
allowance. On Stage has the right to terminate Mr. Stuart's employment agreement
at any time, without cause, provided that On Stage pays 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. Stuart's employment,
without cause, any non-vested options held by Mr. Stuart immediately vest.
David Hope. On February 1, 1997, On Stage entered into an amended employment
agreement with Mr. Hope to employ him as the president and chief operating
officer of On Stage 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 upon meeting
reasonable financial performance goals as determined between Mr. Hope and the
compensation committee of the board of directors. For each of the years ended
December 31, 1998 and 1999, Mr. Hope is entitled to receive a bonus equal to 2%
of On Stage's audited pre-tax earnings, after deduction for non-recurring
charges such as original issue discount, compensation and interest expense
charges for that year, provided that On Stage achieves certain designated
financial goals for the respective year. Mr. Hope is currently provided with
family health insurance and a $500 monthly automobile allowance. On Stage has
the right to terminate Mr. Hope's employment agreement at any time, without
cause, provided that On Stage pays Mr. Hope a lump sum payment on the date of
such termination equal to the greater of (1) 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 (2) 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 immediately vest.
10
<PAGE>
On September 16, 1998, Mr. Hope agreed to permanently reduce his annual salary
from $220,000 to $165,000 per annum in exchange for having the strike price on
his 361,300 stock options reduced to $1.50, which was the fair market value of
On Stage's common stock on September 16, 1998.
In connection with each of their respective employment agreements, Messrs.
Stuart and Hope also entered into a confidentiality and non-compete agreement
with On Stage, 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, On Stage has the option to pay the respective employee
at the date of termination 50% of his base salary for five years (in the case of
Mr. Stuart) and two years (in the case of Mr. Hope) in consideration for that
employee's covenant not to compete with On Stage during those five-year and
two-year periods, respectively. In the case of Mr. Stuart, the non-compete
relates to any business associated with the live entertainment industry and, in
the case of Mr. Hope, the non-compete relates to any business associated with
the theatrical segment of the live entertainment industry.
Resignation and Contractor Status
Kiranjit S. Sidhu. On February 1, 1997, On Stage entered into an amended
employment agreement with Mr. Sidhu to employ him as its senior vice president,
chief financial officer and treasurer. That employment contract, which was
scheduled to expire on May 31, 2000, provided 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 which is discussed below, at the discretion of the board of
directors. In addition to his salary, he received family health insurance and a
$500 monthly automobile allowance. In the event his employment is terminated
without cause, Mr. Sidhu was entitled under the agreement 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.
On April 16, 1999, Mr. Sidhu agreed to restructure his current employment
agreement with On Stage to assist On Stage with facilitating our restructuring
plan. Under the terms of his employment restructuring, Mr. Sidhu agreed to
forego any rights he had to his employment, option, and confidentiality
agreements, in return for the following:
o a new agreement under which he will be an "at-will" consultant at a flat
rate of $50.00 per hour;
o a new option agreement which affords him the right to purchase 140,000
shares of common stock at an exercise price of $1.50 per share;
o a reimbursement of $25,000 for unpaid insurance, car allowances and
expenses;
o $17,887 for all accrued, but unused vacation pay;
o all earned, but unpaid salary under his old employment agreement; and
o forgiveness of a promissory note in the amount of $7,472 held by On
Stage.
Additionally, On Stage agreed to pay Mr. Sidhu $25,000 within ninety (90) days
of this restructuring in consideration for Mr. Sidhu's execution of a new
confidentiality and non-competition agreement.
Executive Bonus Plan
In March 1997, On Stage 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 On Stage's audited pre-tax earnings, after
non-recurring charges, such as original issue discount, compensation and
interest expense charges and excluding extraordinary items, may be established
for distribution at the discretion of the board of directors, to On Stage's
executive officers (other than Mr. Stuart, who is not eligible for bonuses under
the plan) in 1999 and 2000, provided that On Stage achieves at least minimum
pre-tax earnings as calculated under the plan for the respective preceding
fiscal year as follows:
11
<PAGE>
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 On Stage
and the underwriter of our initial public offering, and should not be construed
to imply or predict any future earnings. No bonsuses have been paid under the
executive bonus plan.
Compensation of Directors
Directors 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 to purchase an aggregate of
10,000 shares of common stock each year that the director serves as a director,
partially contingent upon the director's attendance at the four scheduled board
meetings during the year of grant. One-quarter of the annual option grant vests
as of each of the grant year's scheduled meetings. In 1998, On Stage also
granted each director 10,000 stock options at $1.50 strike price as
consideration for the excessive time and energy the board spent on company
issues during 1998.
ITEM NO. 2
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The board has appointed the firm of BDO Seidman, LLP as independent public
accountants for the year ending December 31, 1999. BDO Seidman, LLP has audited
our financial statements since September 8, 1995. The appointment of independent
public accountants is approved annually by the board, 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 2000. 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 or she so desires.
The affirmative vote of a majority of the votes cast at the annual meeting is
required for the ratification of this selection.
The board recommends that the stockholders vote FOR ratification of the
selection of BDO Seidman, LLP as On Stage's independent public accountants for
the fiscal year ending December 31, 1999.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on our review of the copies of Forms 3, 4 and 5 received by On
Stage or of written representations from officers, directors and other persons
required to report under Section 16(a) of the Securities Exchange Act of 1934
initial or changes in beneficial ownership of On Stage common stock, we believe
that all the reporting persons complied with the applicable filing requirements
of Section 16(a) for 1998.
OTHER MATTERS
The board 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 by the proxies
in accordance with their judgment.
12
<PAGE>
STOCKHOLDER PROPOSALS FOR THE 2000 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 2000 annual meeting, proposals must be received by On Stage no later than
January 15, 2000. Proposals should be directed to the attention of the Secretary
at our principal executive offices set forth on the first page of this proxy
statement.
ANNUAL REPORT ON FORM 10-K
On Stage will furnish without charge to each person whose proxy is being
solicited, upon the written request of that person, a copy of our annual report
on Form 10-KSB, as amended, for the year-ended December 31, 1998, including the
financial statements, but excluding exhibits. Requests for copies of that report
should be directed to On Stage at our principal executive offices set forth on
the first page of this proxy statement, Attention: Christopher R. Grobl.
By order of the Board of Directors,
/s/ Christopher R. Grobl
---------------------------------------
Christopher R. Grobl
Secretary
June 24, 1999
13
<PAGE>
ON STAGE ENTERTAINMENT, INC.
ANNUAL MEETING OF STOCKHOLDERS--JULY 27, 1999
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 power of substitution, to attend and act as proxy or proxies of the
undersigned at the annual meeting of stockholders of On Stage Entertainment,
Inc. to be held at the Imperial Palace, Las Vegas, Nevada on Tuesday, July 27,
1999, 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.)
14
<PAGE>
A [X] Please mark your votes as in this example.
1. Election of FOR the nominee WITHHOLD Nominee: Mark Tratos
Directors listed at right AUTHORITY
(Class II) (except as marked to vote for
the contrary) nominee
[ ] [ ]
INSTRUCTIONS: To withhold authority to vote for any individual nominee, strike
such nominee's name from the list at right.
FOR AGAINST SUSTAIN
2. Proposal to Ratify the Appointment [ ] [ ] [ ]
of BDO Seidman, LLP as Independent
Public Accountants of On Stage Entertainment
Inc. for the Year Ending December 31, 1999.
3. Other Business. In their discretion, the person appointed or proxies in this
proxy card are authorized to vote upon such other business as may properly come
before the annual meeting and any and all adjournments thereof.
This proxy card, when properly executed, will be voted as directed by the
stockholder. If no such directions are indicated, the persons appointed or
proxies in this proxy card will have authority to vote "FOR" the director
nominees and "FOR" the ratification of BDO Seidman, LLP as the independent
public accountants of On Stage.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
DATE ,1999
- ----------------------------------------------- -------------------------------
SIGNATURE
NOTE: Please sign exactly as name or names appear on this proxy card. If stock
is held jointly, each hold must sign. If signing as attorney, trustee, executor,
administrator, custodian or corporate officer, please give full name.
- --------------------------------------------------------------------------------
15
<PAGE>
