<PAGE> 1
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:
<TABLE>
<S> <C>
[ ] 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 Section 240.14a-11(c) or Section 240.14a-2.
</TABLE>
NOODLE KIDOODLE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than 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)(4) and 0-12.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
NOODLE KIDOODLE, INC.
6801 JERICHO TURNPIKE
SYOSSET, NEW YORK 11791
---------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JULY 8, 1997
---------------------------------------------------------------------
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of the Stockholders
of Noodle Kidoodle, Inc. (the "Company"), which will be held at The Chase
Manhattan Bank, 395 North Service Road, Melville, New York, Media Room, Lower
Level, on Tuesday, July 8, 1997 at 3:00 p.m. local time for the following
purposes:
1. to elect two Class 3 Directors, each to serve for a term of three years,
and to elect one Class 1 Director to serve for a term of one year.
2. to act upon a proposal to amend the Company's Certificate of
Incorporation to reduce from nine to eight the number of Directors to serve on
the Board.
3. to transact such other business as may properly come before the meeting.
The Board of Directors recommends that you vote FOR the election of all
three nominees as Directors and FOR the proposal to amend the Certificate of
Incorporation.
The Board of Directors has fixed the close of business on May 19, 1997 as
the record date for the determination of stockholders entitled to receive notice
of, and to vote at, the meeting or at any adjournment thereof.
By Order of the Board of Directors,
STANLEY GREENMAN
Chairman of the Board
Syosset, New York
June 2, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING OF STOCKHOLDERS IN PERSON,
PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
POSTAGE PAID ENVELOPE.
<PAGE> 3
NOODLE KIDOODLE, INC.
6801 JERICHO TURNPIKE
SYOSSET, NEW YORK 11791
---------------------------------------
PROXY STATEMENT
JULY 8, 1997
---------------------------------------
This proxy statement is furnished in connection with the solicitation by
the Board of Directors of Noodle Kidoodle, Inc. (the "Company") of proxies to be
voted at the Annual Meeting of Stockholders of the Company which has been
scheduled for Tuesday, July 8, 1997 and any adjournment or adjournments thereof.
The shares represented by each properly executed proxy solicited by the Board of
Directors and received by the Company will be voted as specified by the
stockholder on the proxy. If no such specification is made, such shares will be
voted (i) FOR the election, as Directors of the Company, of the three nominees
named below, (ii) FOR the proposal to amend the Company's Certificate of
Incorporation to reduce from nine to eight the number of Directors to serve on
the Board, and (iii) in accordance with the judgment of the person or persons
voting such proxies with respect to such other matters, if any, as may properly
come before the meeting. Any such proxy may be revoked at any time before its
exercise by giving written notice of revocation to the Secretary of the Company,
by submitting a later-dated proxy or by voting in person at the meeting (after
having notified the Secretary at any time prior to the voting of the proxy).
This proxy statement and the accompanying form of proxy are being mailed to
stockholders of the Company on or about June 2, 1997. The Annual Report of the
Company for the fiscal year ended February 1, 1997 is being mailed to
stockholders concurrently with this proxy statement. The principal executive
offices of the Company are located at 6801 Jericho Turnpike, Syosset, New York
11791.
Following the original mailing of proxy soliciting material, executive and
other employees of the Company may solicit proxies by mail, telephone, telegraph
and personal interview. Arrangements may also be made with brokerage houses and
other custodians, nominees and fiduciaries who are record holders of the
Company's Common Stock to forward proxy soliciting material and annual reports
to the beneficial owners of such stock, and the Company may reimburse such
record holders for their reasonable expenses incurred in such forwardings. The
cost of soliciting proxies in the enclosed form will be borne by the Company.
<PAGE> 4
RECORD DATE, VOTING RIGHTS AND VOTING PROCEDURES
Only holders of record of the Company's Common Stock at the close of
business on May 19, 1997 are entitled to receive notice of, and to vote at, the
meeting. At the close of business on May 19, 1997, there were outstanding and
entitled to vote 7,579,640 shares of Common Stock. Each holder of record of
Common Stock on the record date will be entitled to one vote for each share
registered in such stockholder's name on each of the matters to come before the
meeting.
The holders of the Company's Common Stock vote as a single class with
regard to all matters to be voted upon at the Annual Meeting.
Under the rules of the Securities and Exchange Commission, boxes and a
designated blank space are provided on the proxy card for stockholders to mark
if they wish to withhold authority to vote for one or more of the Company's
nominees for Director. The Company's By-Laws require the presence of a quorum
for the Annual Meeting, defined here as a majority of the shares of the
Company's Common Stock issued and outstanding. Votes withheld from Director
nominees and abstentions will be counted in determining whether a quorum has
been reached, as will broker non-votes, which are described below.
Assuming a quorum is present in person or by proxy at the Annual Meeting,
stockholders will vote on the election of Directors and on the proposal to amend
the Certificate of Incorporation to reduce the number of Directors.
Pursuant to the Company's By-Laws, Directors shall be elected by the
affirmative vote of a majority of the votes present at the meeting, either in
person or by proxy; this means that a vote withheld from a particular nominee or
nominees will have the effect of a vote against such nominee.
Abstentions are counted in determining the number of votes present at the
meeting; therefore, abstentions will have the effect of a vote against a
nominee.
Brokers holding shares in street name for beneficial owners must vote those
shares according to specific instructions they receive from the owners. Under
applicable rules, if specific instructions are not received, however, brokers
have the authority to vote the shares in their discretion on certain "routine"
matters. Absent specific instructions from the beneficial owner in the case of
"non-routine" matters, the brokers may not vote the shares. The election of
Directors is considered a "routine" matter upon which brokers may vote, in their
discretion, absent specific instructions from the beneficial owners of the
shares. The vote on the Proposal to amend the Company's Certificate of
Incorporation is considered a "non-routine" matter on which brokers may not vote
in their discretion. Broker non-votes on the Proposal will have the effect of a
vote against the Proposal.
Pursuant to Delaware General Corporation Law Section 242 (b)(1), the
amendment of the Company's Certificate of Incorporation requires the affirmative
vote of a majority of the outstanding stock entitled to vote thereon.
Abstentions will have the effect of a vote against the proposal.
At the Annual Meeting, voting will be tabulated by inspectors of election
appointed by the Chairman of the Company's Board of Directors.
2
<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPAL STOCKHOLDERS
As of May 19, 1997, the following persons were known by the Company to own
beneficially (as defined under applicable rules of the Securities and Exchange
Commission) more than 5% of the Company's Common Stock:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
-------------------------------------------- -------------------- --------
<S> <C> <C>
Travelers Group Inc......................... 437,434 (1) 5.8%
388 Greenwich Street
New York, New York 10013
Dimensional Fund Advisors................... 405,100 (2) 5.3%
1299 Ocean Avenue
Suite 650
Santa Monica, California 90401
</TABLE>
- ------------------------------------
1. Based upon information contained in a Schedule 13G filed with the Securities
and Exchange Commission on February 6, 1997. Such Schedule states that
Travelers Group Inc., through various of its subsidiaries, has shared voting
and dispositive power as to 437,434 shares.
2. Based upon information contained in a Schedule 13G filed with the Securities
and Exchange Commission on February 5, 1997. Such Schedule states that
Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 405,100 shares. All of
such shares are held in portfolios of DFA Investment Dimensions Group, Inc.,
a registered open-end investment company, or in series of the DFA Investment
Trust Company, a Delaware business trust, or the DFA Group Trust and DFA
Participation Group Trust, investment vehicles for qualified employee benefit
plans, all of which Dimension Fund Advisors, Inc. serves as investment
manager. Dimensional disclaims beneficial ownership of all such shares.
3
<PAGE> 6
MANAGEMENT
As of May 19, 1997 each Director and nominee for Director of the Company,
and the Named Officers (as defined in "Executive Compensation" below) and
executive officers, nominees and directors of the Company as a group,
beneficially owned (as defined under applicable rules of the Securities and
Exchange Commission) shares of the Company's Common Stock as follows:
<TABLE>
<CAPTION>
PERCENT OF
AMOUNT AND NATURE OF CLASS AS OF
BENEFICIAL OWNERSHIP(1) MAY 19, 1997
----------------------- ------------
<S> <C> <C>
Stanley Greenman........................... 366,772(2) 4.8%
Stewart Katz............................... 359,107(3) 4.7%
Lester Greenman............................ 188,000 2.5%
Robert Stokvis............................. 19,000 *
Barry W. Ridings........................... 9,000 *
Joseph A. Madenberg........................ 9,000 *
Robin L. Farkas............................ 9,000 *
Kenneth S. Betuker......................... 100 *
Melvin C. Redman........................... 0 *
All executive officers, nominees and
directors, as a group (9 persons)........ 959,979 12.2%
</TABLE>
- ------------------------------------
* Less than 1%.
1. Includes shares issuable upon exercise of options currently exercisable or
exercisable within 60 days from May 19, 1997 as follows: Stanley Greenman
(127,500), Stewart Katz (127,500), Lester Greenman (8,000), Robert Stokvis
(6,500), Barry W. Ridings (8,000), Joseph A. Madenberg (9,000), Robin L.
Farkas (9,000).
2. Includes 18,750 shares owned of record by Ari Greenman, Mr. Greenman's son,
with respect to which Mr. Greenman disclaims beneficial ownership.
3. Includes 181,200 shares owned of record and beneficially by Stewart Katz's
wife and 37,907 shares owned of record by Bradley and Brian Katz, Mr. Katz's
sons, with respect to which Mr. Katz disclaims beneficial ownership.
Except as noted in the footnotes to the two tables above, to the Company's
knowledge, the beneficial holders listed above have sole voting and investment
power regarding the shares shown as being beneficially owned by them.
Management controls, in the aggregate, approximately 12.2% of the
outstanding Common Stock of the Company. Management intends to vote its Common
Stock in favor of the three nominees for Director set forth below and in favor
of the proposal to amend the Certificate of Incorporation to reduce the number
of Directors on the Board.
4
<PAGE> 7
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission ("SEC") initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Reporting persons are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company, all Section 16(a) filing requirements
applicable to its officers, directors and greater than ten percent stockholders
were complied with during the fiscal year ended February 1, 1997.
ELECTION OF DIRECTORS
Pursuant to the Company's Certificate of Incorporation and By-Laws, the
number of Directors of the Company is currently set at nine members, classified
into three equal classes, which classes have staggered three year terms. The
Board of Directors proposes the election, as Class 3 Directors, of the two
nominees listed below. Class 3 Directors elected at the Annual Meeting will
serve until the 2000 Annual Meeting, and until their successors have been
elected and qualified.
In April 1997, the Board of Directors appointed Mr. Melvin C. Redman as a
Class 1 Director to fill the vacancy created by the resignation of Irwin
Tantleff as a Director in February 1997. The Board of Directors proposes the
election, as a Class 1 Director, of the nominee listed below. The Class 1
Director elected at the Annual Meeting will serve until the 1998 Annual Meeting,
and until his successor has been elected and qualified.
The terms of office of the remaining Class 1 Directors and all Class 2
Directors currently serving on the Board will continue until the 1998 and 1999
Annual Meetings respectively.
Unless the stockholder specifies in the proxy that authority to vote is
withheld, proxies will be voted for all of the nominees named below. In the
event any nominee is unable to or declines to serve as Director at the time of
the Annual Meeting, proxies that do not withhold authority to vote for all
nominees may be voted for any substitute nominee selected by the Board of
Directors. The Board has no reason to believe, at this time, that any of the
persons named will be unable or unwilling to serve if elected.
5
<PAGE> 8
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THE ELECTION
OF THE NOMINEES LISTED BELOW.
The following table sets forth information about the nominees for election
as Directors and about the Directors who will continue in office, including
their principal occupations. Information relating to the number of shares of the
Company's Common Stock beneficially owned by each current Director and nominees,
and by all current Directors and executive officers of the Company as a group,
is set forth above under "Security Ownership of Certain Beneficial Owners and
Management."
NOMINEES FOR ELECTION AS
CLASS 3 DIRECTORS TO SERVE UNTIL 2000 MEETING
STANLEY GREENMAN(1) DIRECTOR SINCE 1976
Mr. Greenman, age 48, has been Chairman of the Board, Chief Executive
Office and Treasurer of the Company since 1990. Mr. Greenman has been an
employee of the Company since 1969.
JOSEPH MADENBERG DIRECTOR SINCE 1993
Mr. Madenberg, age 60, has been the President of Joseph A. Madenberg, Inc.
(retail management consulting firm) since 1968. Until his retirement in December
1992, Mr. Madenberg was a Professor of Business Administration at Suffolk County
Community College.
NOMINEE FOR ELECTION AS
CLASS 1 DIRECTOR TO SERVE UNTIL 1998 MEETING
MELVIN C. REDMAN DIRECTOR SINCE APRIL 17, 1997
Mr. Redman, age 46, is the founder and has served as President of Alliance
Consulting, Inc. (management consulting firm) since November 1995, and is the
founder and has served as sole proprietor of Redman & Associates (management
consulting firm) since September 1995. From 1978 until his retirement in June
1995, he served in a variety of management positions at Wal-Mart Stores, Inc.
(mass merchandise retail chain). Mr. Redman's positions at Wal-Mart included the
following: Senior Vice President Store Operations in 1995; Senior Vice President
and CEO in 1994; Senior Vice President from 1992-1993; and Senior Vice President
Store Planning and Operations Systems from 1990-1992.
CLASS 1 DIRECTORS CONTINUING TO SERVE UNTIL 1998 MEETING
LESTER GREENMAN(1) DIRECTOR SINCE 1994
Mr. Greenman, age 42, is presently a consultant in the entertainment
software industry. Mr. Greenman served as Senior Vice President of Software
Publishing for Marvel Entertainment Group, Inc. from September 1996 to March
1997; Vice President of Legal and Business Affairs of Sony Electronic Publishing
Company ("SEPC") from 1993-1996, as Director of Legal and Business Affairs for
SEPC from 1992-1993 and as Counsel to SEPC from 1991-1992; as Assistant United
States Attorney in the Southern District of New York from 1990 to 1991; and as
an associate at the law firm of Gibson, Dunn & Crutcher from 1987 to 1990.
6
<PAGE> 9
BARRY W. RIDINGS DIRECTOR SINCE 1994
Mr. Ridings, age 44, has been a Managing Director of Alex. Brown & Sons
Incorporated (investment banking and securities brokerage firm) since 1990 and
was a Managing Director at Drexel Burnham Lambert from 1986 to 1990. Mr. Ridings
is also a member of the boards of directors of New Valley Corporation,
Norex-America, Inc., Sub-Micron Systems, Inc., Telemundo Group, Inc., Transcor
Waste Services Corp., and Search Capital Group.
CLASS 2 DIRECTORS TO SERVE UNTIL 1999 MEETING
ROBIN FARKAS DIRECTOR SINCE 1993
Mr. Farkas, age 63, is currently a self-employed private investor. From
March 1994 to March 1995, Mr. Farkas was director of Dormitory Authority of the
state of New York and from 1984 to 1992, he was Chairman of the Board, Chief
Executive Officer of Alexanders, Inc. (mass merchandise retail chain).
Alexanders, Inc. filed for bankruptcy under Chapter 1 of the United States
Bankruptcy Code on May 15, 1992 and emerged from bankruptcy and reorganized on
October 4, 1993. Mr. Farkas is also a member of the boards of directors of
Insignia Financial Group, Inc., and Refac Technology Corp.
STEWART KATZ(1) DIRECTOR SINCE 1973
Mr. Katz, age 56, has been the President, Chief Operating Officer and
Assistant Secretary of the Company since 1977. Mr. Katz has been an employee of
the Company since 1970.
ROBERT STOKVIS DIRECTOR SINCE 1991
Mr. Stokvis, age 49, has been the owner and President of Stokvis
Enterprises, Inc. (distributor of materials handling equipment and wholesale
automobile dealer) for more than the past five years. Mr. Stokvis is also the
Chairman of the Board of First Choice Copy (electronic printing business) and
Chairman of the Board for Red Rose Legal Copy Centers Inc.
(1) Stanley Greenman and Lester Greenman are brothers. Stewart Katz is the
brother-in-law of Stanley Greenman and Lester Greenman.
PROPOSAL 2. REDUCING THE NUMBER OF DIRECTORS
The Board of Directors believes that the number of Directors on the Board
should be reduced from nine to eight. The Board believes that eight is an
adequate number of Directors to enable it to have the benefit of diverse
experiences and points of view. The ninth position has remained vacant for
several years with no adverse effect. The Board also believes that the proposal
to reduce the number of Directors will save money for the Company.
Therefore, the Board of Directors has proposed that Article V of the
Certificate of Incorporation be amended as follows:
"FIFTH: (a) The number of Directors shall be eight, plus such number
as shall be added to the Board of Directors pursuant to Article FOURTH
Section 3 hereof. The Directors shall not be required to be stockholders.
(b) With the exception of Directors added to the Board of Directors
pursuant to Article FOURTH Section 3(c)(i) hereof, the Board of Directors
shall be divided into three classes which henceforth shall be constituted
as follows: two Class 3 Directors with terms expiring at the Annual Meeting
of
7
<PAGE> 10
Stockholders in 2000, and triennially thereafter; three Class 1 Directors
with terms expiring at the Annual Meeting of Stockholders in 1998; and
triennially thereafter; and three Class 2 Directors with terms expiring at
the Annual Meeting of Stockholders in 1999, and triennially thereafter.
At each annual meeting of stockholders, Directors chosen to succeed
those whose terms then expired shall be elected for a term of office
expiring at the third succeeding Annual Meeting of Stockholders after their
election.
(c) Except as required in the By-Laws no election of Directors need be
by written ballot."
Article FOURTH of the Company's Certificate of Incorporation is a statement
of the powers, preferences and relative, participating, optional or other
special rights, and qualifications, limitations or restrictions of Series A
Junior Participating Preferred Stock (the "Series A Preferred Stock"). In the
event that dividends on such stock accrue unpaid for six quarterly periods,
Article FOURTH, Section 3(c)(i), provides that the affected holders of the
Series A Preferred Stock have the right to elect two Directors to the Board to
serve as non-staggered and unclassified Directors in addition to the Directors
already serving. There are currently no outstanding shares of Series A Preferred
Stock and the Board has no plans to issue such Series A Preferred Stock.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THE
AMENDMENT OF THE CERTIFICATE OF INCORPORATION
TO REDUCE THE NUMBER OF DIRECTORS
In the event that the stockholders do not vote in favor of the proposal, it
is the present intention of the Board to leave the ninth position, a seat in
Class 3, vacant at this time.
BOARD OF DIRECTORS COMMITTEES, MEETINGS AND DIRECTOR COMPENSATION
EXECUTIVE COMMITTEE: The Executive Committee is currently comprised of
Stanley Greenman, Stewart Katz and Joseph Madenberg. The Executive Committee
meets between Board meetings when necessary and has the authority to act, within
limits set by the Board of Directors, on behalf of the Board of Directors in
connection with substantially all operating matters. The Executive Committee did
not hold any meetings during the fiscal year ended February 1, 1997.
AUDIT COMMITTEE: The Audit Committee is currently comprised of Barry
Ridings, Robin Farkas and Robert Stokvis. Mr. Farkas and Mr. Stokvis were
appointed to the Audit Committee by the Board of Directors to replace Irwin
Tantleff, who resigned from his position as a Director in February 1997 and
Stewart Katz, who resigned his position as a member of the Audit Committee in
March 1996. The Audit Committee meets with the Company's independent auditors
and principal financial personnel to review the results of the annual audit. The
Audit Committee also reviews the scope of the annual audit and other services
before being undertaken by the Company's independent auditors, and reviews the
adequacy and effectiveness of the Company's internal accounting controls. The
Audit Committee communicates any findings or recommendations to the Board. The
Audit Committee held 2 meetings during the fiscal year ended February 1, 1997.
8
<PAGE> 11
COMPENSATION AND STOCK OPTION COMMITTEE: The Compensation and Stock Option
Committee is currently comprised of Robin Farkas, Joseph Madenberg and Robert
Stokvis. The primary function of the Compensation and Stock Option Committee is
to review and approve the compensation of certain officers of the Company, and
to review and approve the granting of stock options to officers and other key
members of management. The Compensation and Stock Option Committee held 5
meetings during the fiscal year ended February 1, 1997.
STRATEGIC PLANNING COMMITTEE: The Strategic Planning Committee is
currently comprised of Robin Farkas, Joseph Madenberg, Robert Stokvis, Stanley
Greenman and Stewart Katz. The Strategic Planning Committee has the
responsibility for developing short and long-term strategies for the Company's
business and reviewing, from time to time, the Company's progress in
implementing such strategies. The majority of the members of the Committee are
Directors who are not employees of the Company. The Strategic Planning Committee
held 2 meetings during the fiscal year ended February 1, 1997.
The Company does not have a standing nominating committee or a committee
performing similar functions.
During the fiscal year ended February 1, 1997, the Board of Directors held
11 meetings. Directors as a whole attended approximately 93% of the aggregate of
all Board and Committee meetings (with respect to Committees of which they were
members, excluding the Executive Committee, for which no attendance records are
maintained). Mr. Ridings attended less than 75% of the combined Board and
Committee meetings (with respect to Committees of which he is a member).
DIRECTOR COMPENSATION
Directors who are not employees of the Company receive a fee of $2,000 for
each Board meeting they attend and $1,000 for attendance at committee meetings
which are held on a date other than that of a scheduled Board of Directors
Meeting.
Under the Company's Outside Directors' 1994 Stock Option Plan (the "Plan"),
as amended, Directors who are not employees of the Company are issued an option
to purchase 5,000 shares of Common Stock of the Company upon initial election to
the Board of Directors. Each year thereafter, on April 26th, non-employee
Directors are automatically issued an option to purchase 4,000 shares of Common
Stock of the Company. The options granted under the Plan have a term of 5 years
and become exercisable as to 50% of the shares on the first anniversary of the
date of the grant and as to the remaining 50% on the second anniversary of the
date of grant.
Mr. Bernard Greenman, a founder and former Chairman of the Company, passed
away in April, 1994. Pursuant to a consulting agreement, dated January 31, 1990,
by and between the Company and Bernard Greenman, the Company is required to
provide coverage or reimbursement for all medical and dental expenses, incurred
by Mr. Greenman's widow, Phyllis Greenman, during her lifetime.
9
<PAGE> 12
EXECUTIVE OFFICERS
The executive officers of the Company are Stanley Greenman and Stewart
Katz, for whom certain background information is set forth above under "Election
of Directors," and Kenneth S. Betuker.
Mr. Betuker, age 44, has been the Vice President, CFO and Secretary of the
Company since December, 1996. For more than five years prior thereto, he was the
Executive Vice President, Chief Financial and Administrative Officer and
Treasurer of First National Supermarkets, Inc., (retail supermarket chain) a
wholly owned subsidiary of Royal Ahold N.V.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the compensation for
services, in all capacities for the fiscal years ended February 1, 1997 ("fiscal
1997"), February 3, 1996 ("fiscal 1996"), and January 28, 1995 ("fiscal 1995"),
of those persons who were, at the end of fiscal 1997, the Chief Executive
Officer and the only other executive officers of the Company whose compensation
for fiscal 1997 exceeded $100,000 (collectively, the "Named Officers").
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
---------------------------------------- ---------------------------------
OTHER ANNUAL RESTRICTED ALL OTHER
NAME AND PRINCIPAL FISCAL COMPENSATION STOCK LTIP COMPENSATION
POSITION YEAR SALARY BONUS (1) AWARDS OPTIONS(#) PAYOUTS (2)
- ------------------------------- ------ -------- ----- ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Stanley Greenman............... 1997 $275,000 None -- None None None $ 252.30
Chairman of the Board, 1996 $275,000 None -- None None None $ 588.14
Chief Executive Officer 1995 $263,500 None -- None 30,000 None $ 552.15
and Treasurer
Stewart Katz................... 1997 $250,000 None -- None None None $ 259.24
President, 1996 $250,000 None -- None None None $ 571.17
Chief Operating Officer 1995 $241,000 None -- None 30,000 None $ 738.48
and Assistant Secretary
Kenneth S. Betuker(3).......... 1997 $ 23,558 None -- None 25,000 None None
Vice President -- Chief 1996 -- -- -- -- -- -- --
Financial Officer and 1995 -- -- -- -- -- -- --
Secretary
William A. Johnson, Jr.(4) .... 1997 $150,000 None -- -- -- -- $ 180.92
Vice President -- Chief 1996 $162,500 None -- -- -- -- $ 662.30
Financial Officer and 1995 $160,000 None -- -- -- -- $ 638.96
Secretary
</TABLE>
- ------------------------------------
(1) The aggregate amount of prerequisites and other personal benefits paid to
each of the Three Named Officers for fiscal 1997 did not exceed the lesser
of 10% of such officer's total annual salary and bonus for each of fiscal
1997, 1996 and 1995 or $50,000; such amounts are, therefore, not reflected
in the table.
(2) Represents matching contributions made by the Company under the Company's
401(k) Plan.
(3) Mr. Kenneth S. Betuker has served as the Vice President, Chief Financial
Officer and Secretary since December 9, 1996. His annualized salary is
$175,000.
(4) Mr. William A. Johnson, Jr., resigned his position as Vice President, Chief
Financial Officer and Secretary on December 31, 1996. His annualized salary
was $162,500.
10
<PAGE> 13
OPTION GRANTS TABLE FOR FISCAL 1997
The following table sets forth information concerning stock option grants
made during fiscal 1997 to the Three Named Officers. These grants are also
reflected in the Summary Compensation Table. In accordance with SEC rules, a
repricing of outstanding options is treated as a new grant. Also in accordance
with the SEC rules, the hypothetical gains or "options spreads" for each option
grant are shown based on compound annual rates of stock price appreciation of 5%
and 10% from the grant date to the expiration date. The assumed rates of growth
are prescribed by the SEC and are for illustrative purposes; they are not
intended to predict future stock prices, which will depend upon market
conditions and the Company's future performance. The Company has not granted any
stock appreciation rights.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE OF
ASSUMED ANNUAL RATES OF
INDIVIDUAL GRANTS STOCK PRICE APPRECIATION
----------------------------------------------------- FOR OPTION TERM
% OF TOTAL -------------------------------------
NUMBER OF OPTIONS
SECURITIES GRANTED TO 5% 10%
UNDERLYING EMPLOYEES IN EXERCISE ----------------- -----------------
OPTIONS FISCAL YEAR PRICE EXPIRATION STOCK POTENTIAL STOCK POTENTIAL
NAME GRANTED(#) 1997(1) ($-SHARE)(2) DATE(3) PRICE VALUE PRICE VALUE
- ------------------------------ ---------- ------------ ------------ ---------- ----- --------- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Stanley Greenman.............. None -- -- -- -- -- -- --
Stewart Katz.................. None -- -- -- -- -- -- --
Kenneth S. Betuker............ 25,000 10.2% $5.625 12/11/01 $7.18 $38,875 $9.06 $226,500
William A. Johnson, Jr. ...... None -- -- -- -- -- -- --
</TABLE>
- ------------------------------------
(1) During fiscal 1997, options to purchase a total of 244,000 shares were
granted to 145 employees.
(2) The exercise price of the options granted was equal to the fair market value
of the underlying stock on the date of grant.
(3) Grants become exercisable in equal installments on the first four
anniversaries of the date of grant. Vesting may be accelerated upon the
occurrence of certain events. See "Executive Compensation -- Employment
Agreements."
AGGREGATED OPTION EXERCISES IN FISCAL 1997 AND FISCAL YEAR-END OPTION VALUE
TABLE
The following table provides information concerning all exercises of stock
options during fiscal 1997 by the Named Officers and the fiscal year-end value
of unexercised options on an aggregated basis. The Company has not granted any
stock appreciation rights.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED UNEXERCISED IN-THE-MONEY
OPTIONS AT 02/01/97(#) OPTIONS AT 02/01/97($)(1)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------- --------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stanley Greenman......... None N/A 127,500 15,000 $ 0 $ 0
Stewart Katz............. None N/A 127,500 15,000 $ 0 $ 0
Kenneth S. Betuker....... None N/A None 25,000 $ 0 $ 0
William A. Johnson,
Jr. ................... None N/A 12,500 None $ 0 $ 0
</TABLE>
- ------------------------------------
(1) Options are "in-the-money" if on February 1, 1997, the market price of the
Common Stock ($3.00) exceeded the exercise price of such options. The value
of such options is calculated by determining the difference between the
aggregate market price of the Common Stock covered by the options on
February 1, 1997 and the aggregate exercise price of such options.
11
<PAGE> 14
EMPLOYMENT AGREEMENTS
As of February 1, 1995, the Company entered into new employment agreements
with Stanley Greenman and Stewart Katz (collectively, the "Employment
Agreements").
Each of the Employment Agreements provides for employment until January 31,
1998 and annual base salaries for Messrs. Greenman and Katz of $275,000 and
$250,000 respectively, in each case subject to increases determined by the
Compensation and Stock Option Committee and approved by the Board of Directors.
In addition, each of the Employment Agreements, provide that in the event of a
Change in Control of the Company (as defined in such agreements) which results
in an actual or constructive termination of employment (as defined in such
agreements), such terminated officer is entitled to receive severance pay equal
to the difference between 299% of his respective average annual compensation for
the prior five calendar years and the present value of all other payments
received by him which would be considered as contingent on a change in control.
Exercisability of certain stock options held by the Named Officers would also be
accelerated by actual or constructive termination or hostile takeover events and
the value of such accelerated options would be included in the aforementioned
299%.
In addition, the Employment Agreements provide for the payment of a
performance bonus to each of Mr. Greenman and Mr. Katz (each an "Executive"),
for each of the three fiscal years ended February 3, 1996 ("Year 1"), February
1, 1997 ("Year 2"), and January 31, 1998 ("Year 3"), based upon the net pre-tax
profits or losses of the Company during each such year. The level of the
performance bonus for each year can range from zero to 30% of such Executive's
salary for the applicable year. If the maximum performance bonus is not payable
for all of Years 1, 2 and 3, each Executive will be paid an additional bonus if
a certain aggregate profit level is reached during Years 1, 2 and 3; provided,
however, that the aggregate performance bonus paid to each Executive cannot
exceed 30% of the sum of such Executive's salary during Years 1, 2 and 3. In
addition, the maximum amount of the aggregate performance bonus paid to the
Executives shall not exceed 10% of the Company's profits (as defined in the
Employment Agreements) for Year 3. For fiscal 1997, no bonus payments were made
to Mr. Greenman and Mr. Katz pursuant to their Employment Agreements.
The Employment Agreements also provide that each Executive will be granted
stock options pursuant to the Company's 1994 Stock Incentive Plan based upon the
level of net pre-tax profits or losses of the Company achieved in Year 1 and
Year 2. The option grant for each year can range from no options to a maximum of
30,000 options. In addition, if the maximum option grant is not awarded for both
Year 1 and Year 2, each Executive will be awarded additional options if a
certain aggregate profit level is reached during Year 1 and 2; provided,
however, that in no event will any Executive be granted more than an aggregate
of 60,000 options for Year 1 and Year 2. For fiscal 1997, no stock options were
granted to Mr. Greenman and Mr. Katz pursuant to their Employment Agreements.
COMPENSATION AND STOCK OPTION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following report was prepared by the Compensation and Stock Option
Committee of the Board of Directors (the "Committee") which is presently
composed of independent Directors who are not employees of the Company. The
Committee determines the compensation of the two most senior executive officers
(Mr. Stanley Greenman and Mr. Stewart Katz) and approves the policies and
parameters applicable to such compensation. The current members of the Committee
are Robin Farkas, Joseph Madenberg and Robert Stokvis. All of the members have
served on the Committee throughout fiscal 1997.
12
<PAGE> 15
Compensation Principles. In determining the amount and composition of
executive compensation, the Committee is guided by the following fundamental
objectives: 1) to ensure that salaries and benefits are at levels which enable
the Company to attract and retain high-quality employees necessary to the
success of the Company; 2) to provide rewards through bonus and other incentive
plans which are closely linked to Company performance; and 3) to provide
stock-based long term incentives that link the compensation of executives to
stock appreciation. In order to implement these objectives, the Company has
established both short-term and long-term components of executive compensation.
The Salary Component. Messrs. Greenman and Katz have each entered into an
employment agreement with the Company, which provides for his employment until
January 31, 1998. Each of the contracts provides for a stated annual salary for
the term of the agreement, subject to increases determined by the Committee and
approved by the Board of Directors. See "Executive Compensation -- Employment
Agreements" for a discussion of the employment agreements.
In considering whether to recommend salary increases for each of the Named
Officers, the following qualitative and quantitative factors are considered, by
the Committee, in the case of Messrs. Greenman and Katz, and by management of
the Company, in the case of Mr. Betuker: job level and responsibility, recent
corporate performance, including results of operations; success in implementing
corporate strategy and long-term goals; and development of future strategies.
The Salary Reduction Plan. Effective April 1994, the Named Officers along
with certain other senior level executives of the Company accepted pay cuts of
5%. These cuts were made in recognition of the earnings pressures that the
Company was experiencing as it restructured itself. In 1994, the Board of
Directors approved a bonus program for fiscal 1995 (the "Payback Program")
pursuant to which the value of the salary cuts accepted under the Salary
Reduction Plan could be repaid to the affected executives, including Messrs.
Greenman and Katz, if the Company exceeded the fiscal 1995 budget as approved by
the Board of Directors. In fiscal 1995, no payments were made pursuant to the
Payback Program to the affected executives, including Messrs. Greenman and Katz.
The Bonus Component. The Company adopted a Bonus Incentive Plan (the
"BIP") for fiscal 1997. Home office salaried employees are entitled to benefits
under the BIP. The purpose of the BIP is to provide an incentive for the Company
to achieve profitability in excess of its budgeted results. The BIP provides for
the payment of cash bonuses to all home office salaried employees exclusive of
the Chief Executive Officer and the President. The BIP provides that any awards
to the Chief Executive Officer and President shall be payable in the form of
stock options.
No bonuses were paid to eligible participants of the BIP for fiscal 1997.
Stock Option Program. Stock option grants have been an integral part of
the Company's long-term executive compensation strategy; they are used as a
means of aligning the long-term interests of the Company's executives with those
of its stockholders.
In determining an appropriate stock option grant, the Committee considers
the executive's position and responsibility, the executive's contribution toward
the Company's performance and the executive's expected contribution toward
meeting the Company's long-term strategic goals. Any value received by the
executive from an option grant depends completely upon the increase in the price
of the Company's stock. Consequently, the value of the compensation is directly
aligned with increased stockholder value.
13
<PAGE> 16
The Company's 1994 Stock Incentive Plan (the "1994 Plan") provides for the
issuance of incentive stock options, non-qualified stock options, stock
appreciation rights, dividend equivalent rights, restricted stock, unrestricted
stock and performance shares to such officers and other employees of the Company
and its subsidiaries (including employees who are directors), and to such
consultants to the Company as the Committee shall, in its discretion, select.
The option exercise price will be established by the Committee, provided that
the option exercise price will be no less than 75% of the closing price of
Common Stock on the date of grant or, in the case of incentive stock options,
100% of such closing price. Each stock option granted under the 1994 Plan will
be exercisable during the period fixed by the Committee; however, options will
generally not be exercisable less than one year after the date of grant and no
incentive stock option may be exercised more than ten years after the date of
grant. Unless the Committee expressly provides otherwise, an option will become
exercisable as to 25% of the shares subject thereto on each of the first through
fourth anniversaries of the date of grant. Such vesting schedule may be
accelerated in the event of a "Change in Control" as defined in the 1994 Plan.
Options to purchase shares were granted to Kenneth S. Betuker during fiscal
1997. See "Options Grants Table for Fiscal 1997."
Chief Executive Officer's Compensation. As described above, Stanley
Greenman has entered into an employment agreement with the Company that expires
on January 31, 1998. Mr. Greenman's contract provides for a stated annual
salary, subject to increases determined by the Committee and approved by the
Board of Directors. In determining Mr. Greenman's salary for fiscal 1997, the
Committee considered the qualitative and quantitative factors described above in
the section entitled "The Salary Component" as well as the fact that Mr.
Greenman had received only one salary increase since 1989. Further, for fiscal
1995, Mr. Greenman accepted a voluntary pay cut of 5% as of April 1994. See "The
Salary Reduction Plan." Based on the reported fiscal 1997 losses, Mr. Greenman
did not receive a cash bonus nor was he eligible for a stock option grant.
Members of the Compensation and Stock Option Committee during fiscal 1997:
ROBIN FARKAS JOSEPH MADENBERG ROBERT STOKVIS
14
<PAGE> 17
PERFORMANCE GRAPH
The line graph below compares the cumulative total stockholder return on
the Company's Common Stock over a 5-year period with the return (i) on the
Nasdaq Stock Market Total Return Index ("Nasdaq Stock Market-US"), (ii) of a
group of issuers in specialty retail businesses ("1996 Peer Group")* and (iii)
of a group of issuers which had market capitalizations similar to that of the
Company at the time of the preparation of the Company's 1995 Proxy Statement
("1995 Market Cap Group")** with whose results the Company's results were
compared in its 1995 Proxy Statement. In the 1995 Proxy Statement, the Company
chose to use a peer group made up of similarly capitalized companies based upon
its belief that, because of the diverse nature of the businesses then conducted
by the Company, it could not reasonably identify a peer group. In 1996, the
Company decided that it was appropriate to create the 1996 Peer Group because
the Company's business was more narrowly focused, allowing it to identify a peer
group of retailers focused on particular products and market niches. In order to
provide stockholders with a basis against which to evaluate the Company's
results consistent with that contained in the 1995 Proxy Statement, the graph
below contains a comparison of the Company's stockholders return with, among
other groups, that of the 1995 Market Cap Group.
<TABLE>
<CAPTION>
Measurement Period NOODLE KIDOODLE NASDAQ STOCK
(Fiscal Year Covered) INC. PEER GROUP MARKET-U.S.
<S> <C> <C> <C>
Jan-92 100 100 100
Jan-93 86 117 113
Jan-94 136 113 130
Jan-95 88 94 124
Jan-96 175 81 176
Jan-97 62 95 230
</TABLE>
- ------------------------------------
* The 1996 Peer Group is comprised of the following specialty retail issuers,
as adjusted for relative market capitalization: Just for Feet, Inc.; Toys R
Us, Inc.; West Marine, Inc.; Mens Wearhouse, Inc.; Piercing Pagoda, Inc.;
Petco Animal Supplies, Inc.; and Barnes & Noble, Inc. During fiscal 1997, the
stock of Bailey Corp., a former member of the peer group, ceased to be
publicly traded.
** The 1995 Market Cap Group is comprised of the following issuers, which had
capitalizations similar to that of the Company, as adjusted for relative
market capitalization: Datum Inc.; SBM Industries, Inc.; Zygo Corp.; TII
Industries, Inc.; Elsinore Corp.; MSR Exploration LTD.; Stifel Financial
Corp.; Caretenders Healthcorp; Nycor Inc.; and Ldi Corp.
15
<PAGE> 18
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Janover, Rubinroit LLC (or its predecessor firm, Kalish,
Rubinroit & Co.), independent certified public accountants, has audited the
Company's financial statements for the fiscal year ended February 1, 1997 and
for more than five years prior thereto. The Board of Directors has appointed
this firm independent accountants for the Company for the fiscal year ending
January 31, 1998.
A representative of Janover, Rubinroit LLC is expected to be present at the
meeting and available to respond to appropriate questions, and will have the
opportunity to make a statement if they desire to do so.
STOCKHOLDER PROPOSALS
Stockholder proposals for the 1998 Annual Meeting of Stockholders must be
received at the principal executive offices of the Company, 6801 Jericho
Turnpike, Syosset, New York 11791, not later than February 3, 1998 for inclusion
in the 1998 proxy statement and form of proxy.
OTHER MATTERS
Other than the matters specified above, the Company is unaware of any
matter that will be brought before the meeting. However, if other matters
properly come before the meeting, it is the intention of the persons named in
the enclosed form of proxy to vote the proxy in accordance with their best
judgment.
On behalf of the Board of Directors,
STANLEY GREENMAN
Chairman of the Board
Syosset, New York
June 2, 1997
16
<PAGE> 19
PROXY
NOODLE KIDOODLE, INC.
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY, JULY 8, 1997
The undersigned stockholder of NOODLE KIDOODLE, INC. hereby appoints
STANLEY GREENMAN, STEWART KATZ, and JOSEPH MADENBERG or any of them, with full
power of substitution in each, attorneys and proxies for the undersigned, to
vote all the shares of Common Stock of Noodle Kidoodle, Inc. which the
undersigned could vote if personally present at the Annual Meeting of
Stockholders thereof to be held at Chemical Bank, 395 North Service Road,
Melville, New York on July 8, 1997 at 3:00 o'clock in the afternoon and at any
adjournment or adjournments thereof for the purposes of (1) electing three
directors; (2) approving the amendment to the Company's Certificate of
Incorporation; and (3) transacting such other business as may properly come
before the meeting.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE.)
<PAGE> 20
1. ELECTION OF DIRECTORS
CLASS 3 DIRECTORS TO SERVE UNTIL 2000 ANNUAL MEETING
Stanley Greenman, Joseph Madenberg
CLASS 1 DIRECTOR TO SERVE UNTIL 1998 ANNUAL MEETING
Melvin C. Redman
2. Approval of the amendment to the Company's Certificate of Incorporation.
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
If not otherwise specified, this Proxy will
be voted FOR the nominees as indicated, FOR
approval of the amendment to the Company's
Certificate of Incorporation and with
discretionary authority on such other
business as may properly come before the
meeting and any adjournment or adjournments
thereof.
Dated:____________________________ , 1997
Signature
Signature
(Please sign exactly as your name appears
hereon. When signing as attorney, executor,
administrator, trustee or guardian, please
give your full title. If shares are held
jointly, EACH holder must sign. If a
corporation, please sign in full corporate
name by President or other authorized
officer. If a partnership, please sign in
partnership name by authorized person.)
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF THE CORPORATION.
