<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
<TABLE>
<S> <C>
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 Section240.14a-11(c) or
Section240.14a-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)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/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:
----------------------------------------------------------
</TABLE>
<PAGE>
ON STAGE ENTERTAINMENT, INC.
4625 WEST NEVSO DRIVE
LAS VEGAS, NEVADA 89103
------------------------
NOTICE OF 2000 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 16, 2000
------------------------
To the Stockholders of
ON STAGE ENTERTAINMENT, INC.
Notice is hereby given that the 2000 annual meeting of stockholders of ON
STAGE ENTERTAINMENT, INC. will be held at 4625 West Nevso Drive, Las Vegas,
Nevada on June 16, 2000 at 11:00 a.m., local time, for the following purposes:
1. To elect two directors;
2. To ratify the selection of BDO Seidman, LLP as On Stage's independent
public accountants for the fiscal year ending December 31, 2000; 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 as of the close of business on May 19, 2000 will
be entitled to notice of the annual meeting and to vote at the annual meeting
and any adjournments of the meeting. A list of On Stage stockholders will be
available for inspection during normal business hours for ten days prior to the
annual meeting at our executive offices at 4625 West Nevso Drive, Las Vegas,
Nevada 89103.
By Order of the Board of Directors
/s/ Christopher R. Grobl
Christopher R. Grobl
SECRETARY
Las Vegas, Nevada
May 22, 2000
- --------------------------------------------------------------------------------
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
---------------------
GENERAL INFORMATION ON THE ANNUAL MEETING
This proxy statement and the accompanying form of proxy are being mailed on
or about May 22, 2000 to the stockholders of On Stage Entertainment, Inc. These
materials are being furnished in connection with the solicitation by the board
of directors of proxies to be voted at the 2000 annual meeting of stockholders
to be held at the 4625 West Nevso Drive, Las Vegas, Nevada on June 16, 2000 at
11:00 a.m., local time, and at any adjournments of the meeting.
The entire 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 May 19, 2000 are
entitled to notice of, and to vote at, the annual meeting. As of May 19, 2000,
there were 7,226,808 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 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 that 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 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 ending December 31, 2000. If any other matters are properly presented to
the annual meeting
<PAGE>
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.
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 On Stage, 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 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 your shares of common stock.
ITEM NO. 1
ELECTION OF DIRECTORS
On Stage's board of directors currently consists of seven members. There are
presently four vacancies on the board and only three directors are 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 the director's successor or until the director's death, removal
or resignation. At this year's 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 2003 annual meeting of stockholders.
John W. Stuart and Matt Gohd have been nominated by the board of directors
for election as directors at the annual meeting. Both Mr. Stuart and Mr. Gohd
are current members of the board.
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>
NAME OF YEAR FIRST BECAME DIRECTOR, PRINCIPAL OCCUPATION
DIRECTOR AND AGE DURING PAST FIVE YEARS AND CERTAIN DIRECTORSHIPS
- ---------------- ------------------------------------------------
<S> <C>
JOHN W. STUART
56
- Currently serves as the Company's Chairman and Chief
Executive Officer since April 1996 and was the President
and sole member of the Board of Directors 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.
- He received his Bachelor of Arts degree in 1967 from
California State University at Fullerton.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
NAME OF YEAR FIRST BECAME DIRECTOR, PRINCIPAL OCCUPATION
DIRECTOR AND AGE DURING PAST FIVE YEARS AND CERTAIN DIRECTORSHIPS
- ---------------- ------------------------------------------------
<S> <C>
MATT GOHD
44
- Has served as a member of the Board of Directors for On
Stage since September 1998
- Currently a Senior Managing Director at Whale Securities
Co., LP, On Stage's underwriter of its initial public
offering
- Has over 20 years in the securities field working at
various companies in industries such as retail,
technology, healthcare and consumer finance
</TABLE>
DIRECTORS CONTINUING IN OFFICE WITH TERM EXPIRING IN 2001
<TABLE>
<CAPTION>
NAME OF YEAR FIRST BECAME DIRECTOR, PRINCIPAL OCCUPATION
DIRECTOR AND AGE DURING PAST FIVE YEARS AND CERTAIN DIRECTORSHIPS
- ---------------- ------------------------------------------------
<S> <C>
MEL WOODS
48
- Has been a member of the Company's Board of Directors
since July 1998
- He is currently the President and Chief Executive Officer
of Fox Family Worldwide, Inc., Saban Entertainment's
parent company since 1997
- Formerly Chief Financial Officer and Senior Vice President
of DIC Enterprises
</TABLE>
There are no officers continuing in office with a term expiring in 2002.
DIRECTORS RESIGNING DURING 1999 AND 2000
Four directors resigned during 1999 and 2000, Mark S. Karlan, David Hope,
James Nederlander and Mark G. Tratos. Mr. Karlan resigned on April 16, 1999,
Mr. Hope resigned on July 6, 1999, Mr. Nederlander resigned on July 9, 1999 and
Mr. Tratos resigned on January 31, 2000. Mr. Karlan resigned from the board
following On Stage's default in its loans from its Mortgage Lender. Mr. Hope,
Mr. Nederlander and Mr. Tratos all resigned to pursue other interests.
GENERAL INFORMATION CONCERNING THE BOARD OF DIRECTORS AND ITS COMMITTEES
The board of directors met on 14 occasions in person, via written consent
and/or telephonically during 1999. 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 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. Mr. Stuart and Mr. Gohd attended
at least 75% of the aggregate of the meetings of the board of directors held
during the period for which they were directors, and the meetings of the
committee or committees on which they served during that period.
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 our principal
financial and accounting officers and independent public accountants to review
the scope of auditing procedures, our 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, which was created on
March 1997, met on July 27, 2000 after the 1999 Annual Meeting of the
Stockholders. The audit committee is currently composed of Matt Gohd and Mel
Woods.
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 our stock option plans. The
compensation committee, which was created in March 1997, did
3
<PAGE>
not meet during 1999. The compensation committee is currently composed of one
non-employee director, Matt Gohd.
EXECUTIVE OFFICERS
The following sets forth biographical information about each of On Stage's
executive officers who served during 1999 or who are presently serving in such
capacities.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- -------- --------
<S> <C> <C>
John W. Stuart....................... 57 Chairman and Chief Executive Officer
David Hope........................... 41 Former President and Chief Operating Officer
Kiranjit S. Sidhu.................... 35 Former Senior Vice President, Chief Financial Officer
and Treasurer
Pedro Perez.......................... 54 Chief Accounting Officer and Treasurer
Christopher R. Grobl................. 32 General Counsel and Secretary
</TABLE>
The employment background for John W. Stuart is described above under the
section entitled "Election of Directors."
DAVID HOPE
David Hope served as the President, Chief Operating Officer and as a
director of On Stage from April 1996 through June 1999. 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.
KIRANJIT S. SIDHU
Kiranjit S. Sidhu was On Stage's Senior Vice President, Chief Financial
Officer and Treasurer from August 1995 to April 1999. 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.
PEDRO PEREZ
Mr. Perez has been the Chief Accounting Officer of On Stage since
April 1999 and is a Certified Public Accountant. Mr. Perez joined On Stage in
July 1996. Before joining On Stage, Mr. Perez served as Corporate Controller of
Mednet, Inc., a publicly traded company from 1993 through 1996. Mr. Perez holds
a Bachelor of Arts degree from the University of Puerto Rico.
CHRISTOPHER R. GROBL
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.
4
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS INVOLVING EXECUTIVE OFFICERS AND
DIRECTORS
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, 1999. 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, we
are also paying directly the association dues, insurance, taxes, maintenance and
utilities on those apartments. We paid aggregate rent to Mr. Stuart for such
apartments of $94,000 for each of the years ended December 31, 1996, 1997 and
1998.
On February 23, 1999, On Stage entered into a Common Stock Purchase
Agreement with Richard S. Kanfer, On Stage's former vice president of sales,
under which the parties agreed to rescind the November 1996 acquisition by On
Stage of Interactive Events, Inc., a Georgia corporation owned by Mr. Kanfer.
Under the terms of the Agreement, On Stage reconveyed all of the assets of
Interactive Events, Inc. to Mr. Kanfer, in consideration for the reconveyance by
Mr. Kanfer of 30,304 shares of On Stage's common stock valued at $1.125 per
share, a non-plan option to purchase 15,000 shares of common stock and incentive
stock options to purchase 19,835 shares of common stock at a price of $5.00 per
share. In addition, the parties agreed to release one another from any liability
rising out of the November 1996 acquisition of Interactive Events, Inc. and any
claim relating to Mr. Kanfer's subsequent employment with On Stage. On Stage and
Mr. Kanfer also entered into a exclusive right of representation agreement in
February 1999, under which On Stage granted to Mr. Kanfer the right to represent
our Legends production in designated areas in consideration of a portion of the
gross proceeds generated from those productions.
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.
Under the terms of the employment agreement between On Stage and Mr. Sidhu,
on April 13, 1998, On Stage advanced to Mr. Sidhu $63,213 in order to satisfy
Mr. Sidhu's income tax liability incurred in connection with the grant from On
Stage to Mr. Sidhu of 40,532 shares of common stock. Mr. Sidhu executed a
promissory note in favor of On Stage in connection with the this loan. The
promissory note provides for interest on the loan to accrue at 8% per annum, is
secured by 40,532 shares of On Stage common stock owned by Mr. Sidhu and becomes
due on April 12, 1999. On April 16, 1999, Mr. Sidhu sold Mr. Stuart 40,532
shares of the Company's Common Stock. In exchange, Mr. Stuart agreed to assume
Mr. Sidhu's $60,798 note in favor of the Company, 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.
On April 23, 1999, On Stage granted it's securities counsel, Nida & Maloney,
P.C. an option to purchase 40,000 shares of common stock at a purchase price of
$1.00 per share as payment for $38,469 in legal services performed for On Stage
by Nida & Maloney, P.C. The securities were issued under the exception from
registration provided by Section 4(2) of the Securities Act.
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 had accepted $200,000 of the potential
$500,000 from Mr. Stuart.
5
<PAGE>
On May 28, 1998, Silver State Property Management, a Nevada corporation,
Roger A. Bergmann Enterprises, a Nevada corporation, and R.E. Lyle Corp., a
Nevada corporation filed a complaint in the Second Judicial District Court of
the State of Nevada, County of Washoe, alleging, among other things, that John
W. Stuart, acting as an agent, chairman of the board and chief executive officer
of On Stage, breached an alleged oral agreement to purchase the Plaintiff's
respective interests in the Legends in Concert production in Hawaii for an
aggregate purchase price of $1,000,000. On or about September 14, 1999, the
Company successfully negotiated a settlement in this litigation, pursuant to
which the Plaintiff's agreed to dismiss the lawsuit in exchange for a payment
plan, which in the aggregate totals $350,000. The Company paid $50,000 upon
execution of the settlement and agreed to make two (2) additional payments of
$150,000 within the next year. Mr. Stuart personally guaranteed the Company's
payment of the settlement amount, pledged his own real property as security
therefore and agreed to forego any counterclaim he may have personally had
against the Plaintiffs. In consideration for his guaranty, pledge of real
property and agreement to waive his rights against the Plaintiffs, the Company
granted Mr. Stuart 250,000 shares and agreed to grant an additional 250,000
shares to him in the event the guaranty is enforced against him for the
Company's failure to pay the settlement amount. Since On Stage failed to make
the required $150,000 payment to the Plaintiff's in a timely manner, the
Plaintiff's executed on Mr. Stuart's real property in satisfaction of this
$150,000 payment.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of April 14, 2000
(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 and (4) by all current
executive officers and directors 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)........................................... 3,961,155 54.8%
David Hope(4)............................................... 372,550 5.2%
Kiranjit S. Sidhu(5)........................................ 145,625 2.0%
James L. Nederlander(6)..................................... 40,000 *
Mark Tratos(7).............................................. 112,500 1.6%
Mel Woods(8)................................................ 27,500 *
Matt Gohd(9)................................................ 123,438 1.7%
Hanover Restaurants, Inc.(10)............................... 595,238 8.2%
Imperial Credit Industries, Inc(11)......................... 575,000 8.0%
All executive officers and directors as a group (9
persons/entities)(12)..................................... 5,953,006 82.2%
</TABLE>
- ------------------------
* 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
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 7,226,808 shares of common stock outstanding as of
April 14, 2000.
6
<PAGE>
(3) Includes: (a) 782,400 shares pledged by Mr. Stuart as security for
repayment of a margin loan; (b) 40,532 shares pledged to On Stage as
security for the repayment of promissory note; (c) 100,000 shares which
have been optioned to an unrelated third party; (d) 75,000 incentive stock
options, of which 25,000 are currently exercisable; and (e) 300,000 shares
of common stock issuable upon the exercise of immediately exercisable
warrants.
(4) Includes 372,550 shares of common stock issuable upon the exercise of
options or warrants.
(5) Includes 145,625 shares of common stock issuable upon the exercise of
options or warrants.
(6) Includes 40,000 shares of common stock issuable upon the exercise of
options.
(7) Includes 112,500 shares of common stock issuable upon the exercise of
options.
(8) Includes 27,500 shares of common stock issuable upon the exercise of
options.
(9) Includes 100,000 shares of common stock issuable upon the exercise of
options.
(10) Includes 595,238 shares of common stock issuable upon the exercise of
warrants.
(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., which recently merged with Imperial
Credit. 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.
(12) Includes 856,300 and 834,375 shares of common stock issuable upon the
exercise of options and warrants, respectively.
7
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
SUMMARY COMPENSATION TABLE. The following table sets forth, for the years
ended December 31, 1999 and 1998, 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, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------- ------------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS/SAR COMPENSATION
- --------------------------- -------- -------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
John W. Stuart..................... 1999 $250,000 -- 35,869(1) 300,000 --
Chairman and Chief Executive 1998 $250,000 -- 35,869(1) 75,000 --
Officer
David Hope......................... 1999 $104,784 -- 9,519(2) -- --
President and Chief Operating 1998 $207,308 -- 19,578(3) 50,000 --
Officer
Kiran Sidhu........................ 1999 $ 55,659 -- 50,359(4) 140,000(5) --
Senior Vice President Chief 1998 $157,385 -- 14,993(6) 30,000 --
Financial Officer and Treasurer
Gerard O' Riordan.................. 1999 -- -- -- -- --
President--On Stage Theaters 1998 $106,664 -- 14,424(7) -- --
Richard Kanfer..................... 1999 -- -- -- -- --
Vice President--Sales 1998 $109,154 -- 14,791(8) 15,165 --
Gary Panter........................ 1999 $ 95,920 -- -- -- --
Senior Vice President Operations 1998 $102,370 -- 13,627(9) 21,439 10,595(10)
</TABLE>
- ------------------------
(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 1999.
Does not include $149,686 of rent accrued for the leases to On Stage of
which $76,028 was paid in 1999.
(2) Represents $9,519 payments made to Mr. Hope as a consultant for On Stage in
connection with the restructuring of his employment agreement.
(3) 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 1999.
(4) Includes $25,000 for unpaid insurance, car allowances and expenses; $17,887
for all accrued, but unused vacation pay; and a forgiveness of a promissory
note in the amount of $7,472, all of which were paid in connection with the
restructuring of Mr. Sidhu's employment agreement.
(5) Represents 140,000 incentive stock options, which were issued to Mr. Sidhu
in exchange for his previously issued stock options in connection with the
restructuring of Mr. Sidhu's employment agreement.
(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 1999.
(7) Represents $14,424 of car and health allowances paid in 1999.
(8) 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 1999.
(9) 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 1999 and
$11,050 of housing allowance payments.
(10) Represents $10,595 non-recurring relocation-related expenses.
8
<PAGE>
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, 1999:
<TABLE>
<CAPTION>
VALUE AT
PERCENT OF ASSUMED
OPTIONS/SARS ANNUAL RATES
GRANTED TO OF STOCK PRICE
OPTION EMPLOYEES IN EXERCISE EXPIRE POTENTIAL APPLICATION
NAME AND PRINCIPAL POSITION GRANTED FISCAL YEAR PRICE DATE 5% VALUE 10%
- --------------------------- --------- ------------ -------- -------- --------- --------------
<S> <C> <C> <C> <C> <C> <C>
John W. Stuart...................... 300,000(1) 68% $1.00 4/04 $0.00 $0.00
Chairman and Chief Executive Officer
Kiran Sidhu......................... 140,000(2) 32% $1.50 4/09 $0.00 $0.00
Senior Vice President Chief
Financial Officer and Treasurer
</TABLE>
- ------------------------
(1) These warrants were granted as partial consideration for a $300,000 loan
Mr. Stuart made to On Stage.
(2) These options were issued to Mr. Sidhu in April of 1999 in exchange for
Mr. Sidhu's previously issued 139,794 options in connection with the
restructuring of his employment agreement.
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, 1999. Year-end values
are based upon a price of $0.4375 per share, which was the closing market price
of a share of common stock on December 31, 1999. No options were exercised by
the named executive officers in 1999.
AGGREGATED OPTION EXERCISE IN LAST YEAR AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT DECEMBER 31, 1999 AT DECEMBER 31, 1999
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
John W. Stuart................................. 325,000 50,000 $ -- $ --
David Hope..................................... 361,300 -- $ -- $ --
Kiran Sidhu.................................... 139,794 -- $ -- $ --
Gerard O'Riordan............................... -- -- $ -- $ --
Richard S. Kanfer.............................. -- -- $ -- $ --
Gary Panter.................................... 35,000 -- $ -- $ --
</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 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. 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.
9
<PAGE>
In connection with Mr. Stuart's employment agreement, Mr. Stuart also
entered into a confidentiality and non-compete agreement with the Company,
which, in addition to the obligations of confidentiality imposed upon him,
provides that in the event of the termination of his employment agreement for
any reason, the Company shall have the option to pay Mr. Stuart at the date of
termination 50% of his base salary for five years in consideration for
Mr. Stuart's covenant not to compete with the Company during such five-year
period. The non-compete relates to any business associated with the live
entertainment industry.
TERMINATION OF EMPLOYMENT AGREEMENTS
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. During 1999, the Company and
Mr. Hope mutually agreed to terminate this employment agreement.
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. During 1999, the Company and Mr. Sidhu
mutually agreed to terminate this employment agreement.
EXECUTIVE BONUS PLAN
In March 1997, On Stage implemented a three-year executive bonus plan, which
is administered by the compensation committee of the board. 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
our 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 for the respective preceding
fiscal year as follows:
<TABLE>
<CAPTION>
YEAR MINIMUM PRE-TAX EARNINGS
- ---- ------------------------
<S> <C>
1998.................................................. $5,000,000
1999.................................................. $8,700,000
</TABLE>
The terms of the executive bonus plan, including the minimum pre-tax
earnings requirements set forth above, was 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 bonuses 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 of directors meetings during the year of grant. One-quarter of
the annual option grant will vest as of each of the grant year's scheduled
meetings. In 1999, On Stage granted each of Mr. Gohd, Mr. Tratos and Mr. Fred
Ordower (a board advisee) 75,000 stock options at $1.00 strike price as
consideration for the excessive time and energy the board spent on company
issues during 1999.
ITEM NO. 2
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, 2000. BDO
Seidman, LLP has audited our financial
10
<PAGE>
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 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
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 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 their beneficial ownership of our common stock and any
subsequent changes in their ownership Section 16(a) of the Securities Exchange
Act of 1934, we believe that all the reporting persons complied with the
applicable filing requirements of Section 16(a) for 1999.
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
by the proxies in accordance with their judgment.
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, 2001. Proposals should be directed to the attention of the Secretary
at our principal executive offices.
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 for the year ended December 31, 1999, including the financial
statements, but excluding exhibits. Requests for copies of that report should be
directed to On Stage, Attention: Christopher R. Grobl.
By order of the Board of Directors,
/s/ Christopher R. Grobl
Christopher R. Grobl
SECRETARY
May 22, 2000
11
<PAGE>
V Please Detach and Mail in the Envelope Provided V
- --------------------------------------------------------------------------------
ON STATE ENTERTAINMENT, INC.
ANNUAL MEETING OF STOCKHOLDERS JUNE 16, 2000
THIS PROXY IS SOLICITED ON BAHALF OF THE VOARD OF DIRECTORS
The undersigned hereby appoints JOHN W. STUART and CHRISTOPHER R. GROBL,
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. to be held at the 4625 West
Nevso Drive, Las Vegas, Nevada on June 16, 2000 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>
V Please Detach and Mail in the Envelope Provided V
- --------------------------------------------------------------------------------
/X/ Please mark your
votes as in this
example
FOR the nominees WITHHOLD
listed at right AUTHORITY
(except as marked to vote for all
to the contrary) nominees
1. ELECTION OF / / / / Nominees: John W. Stuart
DIRECTORS Matt Gohd
(Class 3)
Instructions: To withhold authority to vote for any
individual nominee, strike such nominee's name from the list at right.
FOR ABSTAIN AGAINST
2. Proposal to Ratify the Appointment of BDO Seidman, / / / / / /
LLP as Independent Public Accountants of On Stage
Entertainment Inc. for the Fiscal Year Ending
December 31, 2000.
3. 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 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:_____________, 2000
- ---------------------- ------------------------------
SIGNATURE SIGNATURE, IF HELD JOINTLY
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.
