_______________________
THE NOSTALGIA NETWORK, INC.
650 Massachusetts Avenue, N.W.
Washington, D.C. 20001
_______________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 5, 1996
TO THE STOCKHOLDERS:
The 1996 Annual Meeting of Stockholders of The Nostalgia
Network, Inc. will be held at the offices of the Company at 650
Massachusetts Avenue, N.W., Washington, D.C. 20001 on June 5,
1996 at 11:00 a.m. local time, for the following purposes:
1. to elect ten directors to serve until the next annual
meeting of stockholders or until their successors are
elected and qualified;
2. to ratify the appointment of independent accountants
for 1996;
3. to approve the 1996 stock option plan; and
4. to transact such other business as may properly come
before the meeting or any adjournment thereof.
Stockholders of record at the close of business on April 16,
1996 are entitled to notice of, and to vote at, the meeting or
any adjournment thereof.
All stockholders are cordially invited to attend the meeting
in person. However, to assure your representation at the meeting,
you are urged to mark, sign, date and return the enclosed proxy
card in the enclosed envelope as promptly as possible.
April 23, 1996 By order of the Board of Directors
Daniel C. Holdgreiwe
Secretary
YOUR VOTE IS IMPORTANT. Please sign, date and return the enclosed
proxy card immediately, whether or not you plan to attend the
meeting.
<PAGE>
PROXY STATEMENT
1996 ANNUAL MEETING OF STOCKHOLDERS OF
THE NOSTALGIA NETWORK, INC.
TABLE OF CONTENTS
Page
INTRODUCTION........................................... 1
ITEM 1. ELECTION OF DIRECTORS....................... 1
Nominees............................................. 1
Directors Not Nominated for Re-Election.............. 4
Meetings of the Board of Directors and Committees.... 4
Directors' Compensation.............................. 5
ITEM 2. RATIFICATION OF SELECTION OF
INDEPENDENT ACCOUNTANTS..................... 5
ITEM 3. APPROVAL OF 1996 STOCK OPTION PLAN.......... 6
OTHER MATTERS.......................................... 7
VOTE REQUIRED.......................................... 7
SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS........................ 8
EXECUTIVE COMPENSATION................................. 9
Summary Compensation................................. 9
Stock Option Grants.................................. 10
Stock Option Exercises............................... 10
Employment Contracts, Termination of Employment and
Change-in-Control Arrangements...................... 10
Compensation Committee Interlocks and Insider
Participation....................................... 11
Comparative Stock Performance........................ 11
Report of the Board of Directors on Executive
Compensation........................................ 11
Compliance with Reporting Requirements of Section
16(a) of the Securities Exchange Act of 1934........ 11
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS......... 12
OTHER INFORMATION...................................... 14
STOCKHOLDER PROPOSALS.................................. 14
(i)
<PAGE>
INTRODUCTION
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors (the "Board of
Directors") of The Nostalgia Network, Inc. (the "Company") for
use at the Company's 1996 Annual Meeting of Stockholders (the
"Meeting"), at the offices of the Company at 650 Massachusetts
Avenue, N.W., Washington, D.C. 20001, on June 5, 1996 at 11:00
a.m., and at any adjournment thereof, for the purposes set forth
in the foregoing notice of the Meeting. This Proxy Statement, the
accompanying proxy card and the Company's Annual Report to
Stockholders for the year ended December 31, 1995 are first being
sent to stockholders on or about April 29, 1996.
At the close of business on April 16, 1996, the Company had
outstanding 20,274,371 shares of Common Stock, par value $0.04
per share ("Common Stock"), and 3,250 shares of Preferred Stock,
par value $2.00 per share ("Preferred Stock"). Each stockholder
is entitled to one vote per share of Common Stock and one hundred
votes per share of Preferred Stock registered in such
stockholder's name on the books of the Company as of the close of
business on April 16, 1996. The Preferred Stock will vote with
the Common Stock as a single class on all matters expected to
come before the Meeting, with the result that a maximum of
20,599,371 votes may be cast on any such matter.
Any duly executed proxy received prior to the closing of the
polls during the Meeting will be voted in the manner specified on
the proxy. If no direction is indicated on a proxy, it will be
voted to elect as Directors the nominees listed in this Proxy
Statement. A proxy given pursuant to this solicitation may be
revoked by a stockholder of record at any time before it is voted
either by delivering a written notice of revocation bearing a
date later than the proxy or a subsequent, duly-executed proxy
relating to the same shares to the Secretary of the Company or by
voting in person at the Meeting. Materials intended for the
Secretary of the Company should be mailed to the Company at 650
Massachusetts Avenue, N.W., Washington, D.C. 20001. The Company's
telephone number is (202) 289-6633.
ITEM 1. ELECTION OF DIRECTORS
Nominees
Ten nominees, including 9 incumbent members of the Board of
Directors and 1 additional nominee, have been nominated for
election as Directors at the Meeting, each to serve until the
next annual meeting of stockholders of the Company, and until his
or her successor is duly elected and qualified. All nominees for
election have indicated their willingness to serve, but if any of
them should decline or be unable to serve as a Director, it is
intended that the enclosed proxy will be voted for the election
of such person or persons as are nominated as replacements.
THE BOARD RECOMMENDS THAT STOCKHOLDERS
VOTE FOR THE ELECTION OF EACH OF THE NOMINEES
---
Certain information concerning each of the nominees for
election as a Director is set forth below, including the
nominee's age as of the date of this Proxy Statement, position
with the Company, other recent business experience and period of
service as a Director of the Company:
<PAGE>
Christopher A. Cates, 41 Director since October 1990
Mr. Cates has served as Senior Vice President/General
Manager of Atlantic Video, Inc. ("AVI") since July 1989, and
since March 1992, he has served as President of Pyramid Video,
Inc. ("PVI"), a subsidiary of Concept Communications, Inc.
("Concept"). From December 1985 to July 1989, Mr. Cates served as
Vice President/General Manager of Glendale Studios, a television
production company. From December 1983 to May 1985, Mr. Cates
acted as a free lance producer and consultant. During 1995, AVI
and its affiliates had substantial dealings with the Company. See
Certain Relationships and Related Transactions.
Floyd Christofferson, 42 Director since June 1995
Mr. Christofferson has served as President of Manhattan
Center Studios, a multimedia group, since 1994. Since 1990, he
has been a partner in Delta Imaging, a computer graphics firm and
a creative director for Noble Productions, a multimedia group.
From 1989 to 1991, Mr. Christofferson was the President of
Alapitvany Kiado, kft., a Hungarian/U.S.A. joint venture
publishing firm. From 1985 to 1989, he was an associate publisher
for the Middle East Times in Athens, Greece and, prior to that,
was a foreign correspondent for various newspapers around the
world. Manhattan Center Studios and Middle East Times are
affiliates of AVI. See Certain Relationships and Related
Transactions.
David C. Crane, 49 Nominee
Mr. Crane has served as President of Potomac
Televison/Communications, Inc. ("Potomac"), a video news, studio,
post and field production company, since January 1994. From 1990
to 1994 he was Vice President of Operations and Technical
Services for Potomac. From 1987 to 1990 he was Director of
Operations and Engineering for KLM Video, a video post-production
company. Potomac is a subsidiary of Concept. See Certain
Relationships and Related Transactions.
Dianne M. Faure, 39 Director since June 1995
Ms. Faure is an attorney and, since 1989 has served as a
consultant to a medical practice in the areas of insurance,
malpractice and taxation. She has also served as a board member
to this practice since 1989. From August 1988 to October 1989,
she served as an Assistant General Counsel for the United States
Commission on Civil Rights. From February 1986 to May 1987, she
was a consultant to the Office of General Counsel at Legal
Services Corporation in Washington, D.C.
Dong Moon Joo, 50 Director since October 1992
Mr. Joo became a Director and President of Concept in April
1993. Mr. Joo has been President and Chief Executive Officer of
The Washington Times Corporation and its parent company, News
World Communications, Inc. ("NWC"), since September 1992. He was
Executive Vice President of those companies from July 1991 until
September 1992. Those companies publish numerous newspapers and
periodicals, including The Washington Times, Insight, The World &
I, The Middle East Times and Noticias del Mundo. For at least
three years prior to July 1991, Mr. Joo ran the division of NWC,
Inc. that published The World & I. Since April 1991, Mr. Joo has
also served as President and a director of
<PAGE>
AVI which is engaged in the production and recording of
videotapes, the provision of post-production services and related
activities, and as President of the corporate general partner of
Washington Television Center Limited Partnership ("WTC"), which
owns a multi-purpose building in Washington, D.C., including
office space and television production facilities, where the
Company has its executive offices. Mr. Joo serves as a Director
of AVI, NWC, Crown Capital Corporation, Crown Communication
Corporation, and Concept Communication, Inc. Concept, AVI and WTC
all had substantial transactions with the Company in 1995. See
Certain Relationships and Related Transactions.
Masahisa Kobayashi, 55 Director since September 1994
Since September 1993, Mr. Kobayashi has served as Vice President and Chief
Financial Offficer of True World Group, Inc. (formerly International
Oceanic Enterprises, Inc.), a company engaged in processing and wholesaling
of seafood products. Since January 1994, he has been an officer of
Daikoku Restaurant, Inc. Since February 1993, Mr. Kobayashi had been an
officer of Katsuayo Restaurant, Inc. From August 1985 to March 1993 he was
President of GM Bridge Corporation. From January 1992 to September 1993,
Mr. Kobayashi was an independent financial consultant. From January 1989
to January 1992, Mr. Kobayashi was Controller of the New York office of
Happy World America, Inc., a seafood products trading company. True World
Group is an affiliate of AVI. See Certain Relationships and Related
Transactions.
William H. Lash, III, 35 Director since December 1994
Since March of 1996 Professor Lash has been Associate Dean
of the George Mason University School of Law and Director of that
law school's Center for Law and Economics. From August 1994 until
March 1996 he was Associate Professor of Law at George Mason.
From August 1990 to July 1994, Professor Lash was Assistant
Professor of Law at the Saint Louis University School of Law.
Since November 1993 he has been an Adjunct Fellow of the Center
for the Study of American Business at Washington University. From
1989 through 1990 Professor Lash was an Assistant Professor of
Law at the Western New England College School of Law. From August
1986 to February 1988 and August 1988 to July 1989, he was an
attorney in the Washington, D.C., office of Fried, Frank, Harris,
Shriver & Jacobson. Professor Lash served as Counsel to the
Chairman of the United States International Trade Commission from
February 1988 to August 1988.
Ambassador Phillip Sanchez, 66 Director since September 1994
Since February 1987, Ambassador Sanchez has served as Vice
President of News World Communications, Inc., which publishes
numerous newspapers and periodicals. Ambassador Sanchez is
currently the Publisher of Noticias Del Mundo, a national Spanish-
language daily newspaper. From 1975 to 1977, Ambassador Sanchez
served as the U.S. Ambassador to the Republic of Colombia, and
from 1973 to 1975, he served as the U.S. Ambassador to the
Republic of Honduras. Ambassador Sanchez was National Director of
the U.S. Office of Economic Opportunity ("OEO") from 1971 to 1973
and Assistant Director (Operations) of OEO during 1971. He is a
Director of the International Security Council, President of
CAUSA USA and Vice President of the American Freedom Coalition.
Ambassador Sanchez is the Chairman of the Board of Trustees of
the National Hispanic University (located in San Jose,
California) and serves on the board of Trustees of the University
of the Americas (located in Mexico City), the University of Bridgeport
(located in Bridgeport, Connecticut) and the West Coast
<PAGE>
University (located in Los Angeles). News World Communications, Inc.,
is an affiliate of AVI. See Certain Relationships and Related Transactions.
Josette Shiner, 41 Director since September 1994
Ms. Shiner has served News World Communications, Inc. as
Managing Editor of The Washington Times since September 1992, as
Deputy Managing Editor of that newspaper from May 1985 to
September 1992, as Assistant Managing Editor of that newspaper
from April 1984 through April 1985 and as Features Editor of that
newspaper from February 1982 to April 1984. As Managing Editor,
she is responsible for managing a staff of approximately 250
people and for planning and directing the daily coverage of The
Washington Times. Ms. Shiner has served as a reporter or editor
for eighteen years, during which she has covered the White House,
presidential campaigns and conventions, Congress and the State
Department, and has interviewed many world leaders. Ms. Shiner is
a member of the Council on Foreign Relations, the American
Society of Newspaper Editors, the National Press Club and the
advisory board of the United Negro College Fund. News World
Communications, Inc., is an affiliate of AVI. See Certain
Relationships and Related Transactions.
Robert J. Wussler, 59 Director since January 1995
Mr. Wussler has served as President and Chief Executive
Officer of The Wussler Group, a world-wide media consulting
group, since 1992. From September 1989 to January 1992, Mr.
Wussler served as President and Chief Executive Officer of
COMSAT, an international telecommunications business. Mr. Wussler
is former President of CBS Television, CBS Sports and former
Senior Vice President of Turner Broadcasting System, Inc. Mr.
Wussler serves as a director of Cafe USA.
Directors Not Nominated for Re-election.
John G. Heim, 56 Director since June 1995
Mr. Heim has served as President and Chief Executive Officer
of the Company since August of 1994. Prior to joining the
Company, Mr. Heim held several executive positions in sales and
marketing at the Showtime Networks unit of Viacom, Inc. From
November 1993 through August 1, 1994, he served as Executive Vice
President of Showtime Networks Sales and Marketing and as Co-
President of PVI Transmission, Inc.; from April 1991 through
November 1993, he served as Executive Vice President Sales and
Marketing of Showtime Networks, Inc.; and from February 1984
through April 1991, he served as Executive Vice President Sales
and Affiliate Marketing of Showtime Networks, Inc. Prior to that
time, Mr. Heim held sales marketing and operations positions at
the American Express Company. Mr. Heim's employment contract with
the Company runs out on June 30, 1996.
There exists no family relationship between any of the
director-nominees or between any of such nominees and any
executive officer of the Company.
<PAGE>
Meetings of the Board of Directors and Committees
The Board of Directors has established four permanent
committees of the Board -- an Executive Committee, a Finance
Committee, an Audit Committee, and a 144 Committee. The Board has
established no nominating or compensation committee.
The Executive Committee, composed of Directors Joo, Cates,
Christofferson and Heim, is authorized to exercise the powers of
the Board of Directors in the oversight of management and of the
business affairs of the Company during intervals between the
meetings of the Board of Directors. Prior to the 1995 Annual
Meeting the Executive Committee was composed of Directors Joo and
Cates and former Director Paquette.
The Finance Committee, composed of Directors Shiner and
Wussler, was created in June, 1995, to work with Management in
recommending policy to the Board on all areas of the Company's
finances, including budget, compensation policy, stock option
plans, and such other financially related matters as occur during
the course of the year. Director Heim served on the Finance
Committee from June, 1995, until October, 1995.
The Audit Committee, composed of Directors Christofferson
and Kobayashi, recommends the election or selection of
independent public accountants for the Company, reviews with such
independent public accountants the plan, scope and results of
their audit of the Company's financial statements and the fees
for services performed, reviews with the independent public
accountants the adequacy of internal control systems and receives
audit reports and financial statements of the Company. Prior to
the 1995 Annual Meeting the Audit Committee was composed of
Director Kobayashi and former Director Paquette.
The 144 Committee, composed of Directors Wussler and Lash,
considers proposed transactions that may come within the scope of
Section 144 of the Delaware General Corporation Law, which
relates to transactions in which directors or officers of a
Delaware corporation may have a direct or indirect financial
interest. In 1995, the 144 Committee approved the bridge loan
arrangements between the Company and Concept Communications, Inc.
See Certain Relationships and Related Transactions.
The 1996 Stock Option Plan requires that it be administered
by a committee of the Board consisting of at least two
disinterested directors (where "disinterested" has the meaning
given to it in Rule 16b-3 ("Rule 16b-3") under the Securities
Exchange Act of 1934). The Board has resolved that all directors,
other than those who are not disinterested, will administer the
plan. In effect, all of the disinterested directors will serve on
this committee.
The Board of Directors held four regular and four special
meetings during 1995. Each of the incumbent directors attended at
least 75% of the total number of meetings of the Board and each
committee on which he or she served.
Directors' Compensation
The Company reimburses Directors for costs and expenses in
connection with their attendance and participation at Board of
Directors meetings and for other travel expenses incurred on the
Company's behalf. In addition, the Company compensates each non-
employee Director $3,000 per quarter for his efforts on the
Company's behalf, with additional compensation for attendance at
Board meetings. Each quarter, the non-employee Directors receive
$1,000 for attendance (telephonically or in
<PAGE>
person) at Board meetings and reimbursement of expenses if
attendance is in person. The Company compensates members of the
Audit Committee an additional $1,000 per quarter. The Company
compensates members of the 144 Committee $2,000 per quarter for
work on that committee and $200 per hour, with a limit of
$15,000, for work on the private placement of Company stock.
ITEM 2. RATIFICATION OF SELECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, on the recommendation of its Audit
Committee, has selected BDO Seidman as independent public
accountants to audit the financial statements of the Company for
1996. Although ratification by stockholders is not required, the
Board of Directors requests that stockholders ratify this
appointment. If ratification is not obtained, the Board will
reconsider this appointment.
The Company has been advised that representatives of BDO
Seidman will be present at the Meeting. They will be afforded the
opportunity to make a statement, should they desire to do so, and
respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT
STOCKHOLDERS VOTE FOR THIS PROPOSAL
---
Change of Accountants
Prior to 1994, Lane Gorman Trubitt, L.L.P. ("LGT") had
served as independent public accountants to the Company for more
than the prior three years. LGT's reports on the Company's
financial statements for the years ended December 31, 1992 and
1993 contained no adverse opinion or disclaimer of opinion. LGT's
reports on the Company's financial statements for 1992 and 1993
contained a modification regarding the Company's ability to
continue as a going concern, but were not otherwise qualified or
modified as to uncertainty, audit scope or financial accounting
principles.
The Company disagreed with LGT's inclusion of such
modification in its report on the Company's financial statements
for 1993, and a statement to that effect was included in the
Company's Form 10-K for 1993. Neither the Company's Board of
Directors nor its Audit Committee discussed the subject matter of
such disagreement with LGT. The Company has authorized LGT to
respond fully to the inquiries of any successor accountant
concerning the subject matter of such disagreement.
LGT resigned as independent public accountants to the
Company effective August 11, 1994. During 1992 and 1993 and
subsequent interim periods preceding LGT's resignation, there was
no other disagreement on any matter of financial accounting
principles or practices, financial statement disclosure or
auditing scope or procedure or any reportable events. In 1994 BDO
Seidman replaced LGT as the Company's independent public
accountants.
ITEM 3. APPROVAL OF 1996 STOCK OPTION PLAN
On November 21, 1995, the Board of Directors approved,
subject to shareholder approval at the 1996 Annual Meeting, The
Nostalgia Network, Inc. 1996 Stock Option Plan (the "1996 Plan").
Under this plan officers, employees and directors of the Company
will be eligible to receive awards in the form of stock options.
The 1996 Plan is intended to strengthen the Company by providing
an incentive to its
<PAGE>
employees, officers and directors and thereby encourage them to
devote their abilities and industry to the success of the
Company's enterprise.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS
VOTE FOR THE ADOPTION OF THE 1996 PLAN
---
Certain information concerning the 1996 Plan is set forth
below:
The maximum number of shares that may be made the subject of
options granted under the 1996 Plan is the aggregate number of
shares that would have been available for new awards under the
Company's 1987 Stock Option Plan and the 1990 Incentive and
Nonqualified Stock Plan (collectively the "Former Plans") on
November 21, 1995, including the shares that were available for
new grants under each of the Former Plans as of that date and the
shares that are subject to awards granted under either of the
Former Plans and not issued prior to the expiration or other
termination of such awards. This number will not exceed 2,131,506
shares of common stock.
The 1996 Plan requires that it be administered by a
committee of the Board of Directors (the "Committee") which is
made up of at least two directors who are "disinterested" within
the meaning of Rule 16b-3. By resolution of the Board of
Directors, the full Board, other than those directors entitled to
receive options (other than formula options) will administer the
plan. Subject to the provisions of the 1996 Plan, the Committee
is authorized to determine who may participate in the 1996 Plan,
the number of options awarded to participants and the terms and
conditions of such awards, including the purchase price per
share. In addition, the Committee has the power to construe and
interpret the 1996 Plan and to adopt, amend or revoke rules and
regulations for the administration of the 1996 Plan, including,
but not limited to, correcting any defect, inconsistency or
omission in the 1996 Plan or option agreement between the Company
and a grantee, in order that the 1996 Plan complies with
applicable law, including Rule 16b-3 and the Internal Revenue
Code of 1986, as amended (the "Code") and to otherwise make the
1996 Plan fully effective.
Under the 1996 Plan, the Committee is authorized to grant
options to purchase shares of common stock, including options
qualifying as "incentive stock options" ("ISOs") under Section
422 of the Code, and options that do not so qualify ("NSOs"), to
employees as additional compensation for their services to the
Company. The Committee will determine adjustments to options
granted in the event of a Change in Capitalization of the Company
(as defined in the 1996 Plan). The 1996 Plan provides for the
acceleration of certain benefits in the event of a Change in
Control of the Company (as defined in the 1996 Plan).
Options shall be exercisable over such period as may be
determined by the Committee, but no stock option may be exercised
after ten years from the date of the grant (five years in the
case of an ISO granted to a ten-percent stockholder). Options may
be exercisable in installments and upon such other terms as
determined by the Committee. Options are evidenced by option
agreements. No options may be transferred other than by will or
by the laws of descent and distribution. The purchase price of
common stock subject to an option shall not be less than 100% of
the Fair Market Value ( as defined in the 1996 Plan) of such
common stock on the date of grant (110% in the case of an ISO
granted to a ten-percent stockholder). There are currently no
options outstanding pursuant to the 1996 Plan. Options may be
paid for in cash or shares of common stock, at the discretion of
the Committee.
Under the 1996 Plan, each nonemployee director will
automatically be granted, on the first business day in August of
each year, an option to purchase 25,000 shares of common stock.
The option exercise price
<PAGE>
will be equal to 100% of the fair market value of
the common stock on the trading day prior to the date of the
grant. The options will become exercisable with respect to 33
1/3% of the shares subject thereto on the first, second, and
third anniversaries of the grant date provided the optionee is
still a director as of that date, and will expire ten years after
the grant date. The option price will be paid in cash. All
options granted to nonemployee directors are nontransferable,
other than by will or the laws of descent and distribution, and
each option is exercisable, during the lifetime of the optionee,
only by the optionee. If a nonemployee director's service
terminates for any reason other than disability, death or cause,
options that are not then exercisable shall be canceled and
options that are then exercisable may be exercised at any time
within 90 days after the date of such termination (but not later
than ten years from the date of grant). The portion of the 1996
Plan applicable to nonemployee directors is designed to operate
automatically and not require administration.
OTHER MATTERS
The Board of Directors does not intend to bring any matter
before the Meeting other than as stated in this Proxy Statement,
and is not aware of any other matter that may be presented for
action at the Meeting. If any other matter comes before the
Meeting, the persons named in the enclosed form of proxy will
vote the proxy with respect thereto in accordance with their best
judgment, pursuant to the discretionary authority granted by the
proxy.
VOTE REQUIRED
The Company's Bylaws provide that the holders of a majority
of the outstanding shares of the Company entitled to vote at the
Meeting, present in person or by proxy, will constitute a quorum,
and that the affirmative vote of a majority of the shares
represented and entitled to vote at the Meeting will decide any
question brought before the Meeting, unless a greater proportion
or number of votes is required by law or by the Company's
Certificate of Incorporation or Bylaws. The election of
directors, the ratification of the appointment of independent
accountants and the approval of the 1996 Stock Option Plan will
each require the affirmative vote of a majority of the shares
present at the Meeting. Abstentions and broker non-votes will
have the same effect as a negative vote with respect to the
election of directors, the ratification of the appointment of
independent accountants, and the approval of the 1996 Stock
Option Plan.
Concept Communications, Inc. ("Concept") has indicated that
it intends to vote all shares over which it has voting power to
elect as Directors the ten nominees listed above. Concept has
voting power over shares having at least 14,430,427 votes, or
approximately 70.1% of the votes entitled to be cast at the
Meeting. The Board of Directors expects that Concept's voting of
such shares at the Meeting as it has indicated will constitute a
quorum for the Meeting and will cause the nominees for which
Concept votes to be elected as Directors.
SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of April 16, 1996, the
number of shares of Common Stock and Preferred Stock beneficially
owned (within the meaning of Rule 13d-3 under the Securities
Exchange
<PAGE>
Act of 1934) by each executive officer named in the Summary
Compensation Table on page 11, by each current director or
nominee for director of the Company, by all directors and
executive officers as a group, and by all persons, to the
knowledge of the Company, beneficially owning more than five
percent (5%) of the outstanding Common Stock or Preferred Stock.
<TABLE>
<CAPTION>
Common Stock Preferred Stock
------------ ---------------
Percent of Percent of
Name of Beneficial Number of Outstanding Number of Outstanding
Owner(1) Shares Shares Shares Shares
------------------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C>
NAMED EXECUTIVE OFFICERS
John G. Heim........... 429,920(2) 2.1% -0- 0%
DIRECTORS AND NOMINEES
Christopher A. Cates... 20,000(3) * -0- 0%
Floyd Christofferson... -0- 0% -0- 0%
David C. Crane......... -0- 0% -0- 0%
Dianne M. Fauer........ -0- 0% -0- 0%
John G. Heim (see
above)..............
Dong Moon Joo.......... -0- 0% -0- 0%
Masahisa Kobayashi..... -0- 0% -0- 0%
William H. Lash, III... -0- 0% -0- 0%
Phillip Sanchez........ -0- 0% -0- 0%
Josette Shiner......... -0- 0% -0- 0%
Robert J. Wussler...... -0- 0% -0- 0%
ALL DIRECTORS AND
EXECUTIVE OFFICERS
AS A GROUP (12 PERSONS)... 449,920 2.2% -0- 0%
NAME AND ADDRESS OF
OTHER 5% HOLDERS
Concept Group (4)........14,645,432(5) 70.6% 2,500 76.9%
650 Massachusetts
Ave.,NW
Washington, DC 20001
Charles Potter........... 123,285(6) * 750 23.1%
475 Sunset Avenue
Haworth, NJ 07641
</TABLE>
____________________
* Less than one percent.
(1) Unless otherwise indicated, each person included in the
table has sole power to vote, or dispose or direct the
disposition of, all shares beneficially owned, subject to
applicable community property laws.
<PAGE>
(2) Includes 419,920 shares of Common Stock issuable upon the
exercise of currently exercisable options held by Mr. Heim.
Excludes 419,920 shares for which options would vest in
November 1996, and August 1997 if Mr. Heim were remaining
with the Company.
(3) Includes 20,000 shares of Common Stock issuable upon the
exercise of currently exercisable options held by Mr. Cates.
(4) Concept Group consists of Concept, Crown Communications
Corporation ("Communications") and Crown Capital Corporation
("Capital"), which constitute a "group" within the meaning
of Section 13(d)(3) of the Exchange Act. Communications
claims to be a subsidiary of Capital, and Concept claims to
be a subsidiary of Communications. Communications and
Capital claim to share voting and dispositive power with
respect to all shares as to which Concept claims sole voting
and dispositive power.
(5) Includes 13,430,427 shares of Common Stock, 215,005 shares
of Common Stock that could be acquired upon the exercise of
warrants, 125,000 shares of Common Stock that may be
acquired upon the conversion of 1,250 shares of Preferred
Stock, all of which are held of record by Concept, which
claims sole voting and dispositive power thereto. Also
includes 1,000,000 shares of Common Stock that Concept may
acquire pursuant to an option agreement with Allied Cellular
Cellular Systems, Inc.
(6) Includes 75,000 shares of Common Stock issuable upon
conversion of 750 shares of Preferred Stock held of record
by Mr. Potter.
__________________________
EXECUTIVE COMPENSATION
Summary Compensation
The following table sets forth information concerning the
annual and long-term compensation for services in all capacities
to the Company for the years ended December 31, 1993, 1994 and
1995 of those persons serving as the Company's chief executive
officer or acting in a similar capacity in 1995. During 1995, no
other executive officer of the Company received total annual
salary and bonus in excess of $100,000. No restricted stock
awards or stock appreciation rights ("SARs") have been granted at
any time in prior years.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation
Other
Name and Annual All Other
Principal Position Year Salary($) Bonus($) Compensation($) Compensation($)
- ------------------ ---- --------- -------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
John G. Heim, 1995 $317,654 -- $9,000(2) --
Chief Executive 1994 $84,000 $150,000 $3,750(2) --
Officer (1) 1993 -- -- -- --
</TABLE>
____________________
(1) The Company entered into an employment agreement with Mr.
Heim dated August 22, 1994. See Employment Contracts and
Termination of Employment and Change-in-Control
Arrangements.
(2) Comprised of automobile allowance.
<PAGE>
Stock Option Grants
No stock option grants were made during 1995 to the
executive officers named in the Summary Compensation Table above.
No SARs have been granted at any time to any of the named
executive officers or any other Company employee.
Stock Option Exercises
The following table summarizes information relating to stock
option exercises during 1995 and the number and value of
unexercised stock options previously granted to the executive
officers named in the Summary Compensation Table. As previously
indicated, no SARs have been granted at any time to any of the
named executive officers or any other Company employee.
Aggregate Option Exercises in 1995 and
Option Values as of December 31, 1995
<TABLE>
Number of Value of
Securities Unexercised
Underlying In-the-Money
Unexercised Options
Options at at December 31,
December 31, 1995 1995*
----------------- ---------------
Shares
Acquired
on Value
Name Exercise Realized Exercisable Unexercible Exercisable Unexercisable
---- -------- -------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John G. Heim None None 209,960 629,880 -0- $0
</TABLE>
_______________________
* Based on a stock price of $.25, which was the average of the
high asked and low bid prices reported on December 29, 1995.
Employment Contracts and Termination of Employment and
Change-in-Control Arrangements
On August 2, 1994, the Company entered into an employment
agreement with John G. Heim which provided that Mr. Heim would
hold the offices of President and Chief Executive Officer and
that the Company would pay Mr. Heim an annual base salary of
$300,000, with annual increases of no less than 5%. The Company
paid Mr. Heim a one-time "sign-on" bonus of $150,000 in order to
compensate him for the bonus he forfeited by terminating his
previous employment. In addition, Mr. Heim was entitled to
receive bonuses of $150,000 to $300,000 if the Company attained
or exceeded its annual business plan. However, Mr. Heim was not
eligible for bonuses for the first two contract years . The
Company has also provided Mr. Heim with a monthly stipend of $750
for obtaining and maintaining an automobile and $2,000,000 in
life insurance. Also on August 2, 1994, the Company granted Mr.
Heim options to purchase 839,840 shares of Common Stock at an
exercise price of $1.174 per share. Only 419,920 of these shares
will have vested by the time Mr. Heim's employment agreement
terminates on June 30, 1996.
<PAGE>
On March 1, 1996, the Company and Mr. Heim by mutual
agreement entered into a modification of that employment
agreement under which the agreement will expire on June 30, 1996,
at which time Mr. Heim will receive an amount equal to three
months compensation as serverance. A search for a replacement for
Mr. Heim is currently being conducted by the Executive Committee
of the Company's Board of Directors.
Compensation Committee Interlocks and Insider Participation
The Board of Directors determines the compensation of, and
incentives for, the Company's Chief Executive Officer.
Comparative Stock Performance
The following graph indicates the Company's cumulative total
return to holders of its Common Stock for the past five years, as
compared to the cumulative total return for the Standard & Poor's
("S&P") 500 Composite Stock Index and the S&P Broadcast Media
Index, on an annual basis. The comparison assumes $100 was
invested on December 31, 1990 in Common Stock and in each of the
foregoing indices and assumes reinvestment of dividends, if any.
The stock performance shown on the following graph is not
necessarily indicative of future performance.
[Comparative Stock Performance Graph of information
listed in the chart below was printed in the proxy here]
<PAGE>
<TABLE>
<CAPTION>
Company/Index 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
- ------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
The Nostalgia Newtork, $100 $222.42 $266.90 $422.60 $161.21 $ 44.48
Inc.
S&P 500 Index $100 $130.47 $140.41 $154.56 $156.60 $215.45
S&P Broadcast Media $100 $107.76 $131.18 $184.00 $170.84 $223.65
Network
</TABLE>
Report of the Board of Directors on Executive Compensation
The Company has no compensation committee or other committee
of the Board of Directors performing similar functions.
Accordingly, the Board of Directors determines the amount of
compensation of, and incentives for, the Company's Chief
Executive Officer. The Chief Executive Officer determines the
compensation of, and incentives for, the Company's other
executive officers. The Board also administers the stock option
plans of the Company.
The base salary, bonus and benefits payable for 1995 to John
G. Heim, the Company's Chief Executive Officer since August 2,
1994, is fixed under a multi-year employment agreement. Mr.
Heim's employment agreement, dated August 2, 1994, was approved
by the Board of Directors. Mr. Heim received no annual bonus for
1995. Effective August 1, 1995, the Board increased Mr. Heims
salary by seven and one-half percent (7.5%).
Stock options may be granted, at the direction of the Board,
under the Company's 1987 Stock Option Plan and the 1990 Incentive
and Nonqualified Stock Option Plan (collectively the "Plans"), to
members of the Board as well as the Company's executive officers,
other employees, independent contractors and agents. However, by
resolution of November 21, 1995, the Board resolved that no
options will be granted to directors under the Plans. The
purposes of the Plans are to attract and retain high-quality
personnel and strengthen the Company by providing incentives for
its success. Under the Plans, stock options are granted for terms
not exceeding ten years, with an exercise price equal to (or
greater than) the market price of the Common Stock on the date of
grant, and typically are granted, subject to vesting, in
installments of share amounts over a three year period. There
were no grants to directors under the Plans in 1995. In August
1995, grants of options representing a total of 178,000 shares of
common stock were made to 14 employees of the Company. These
options will vest over three years and have an exercise price of
$1.00.
CHRISTOPHER A. CATES MASAHISA KOBAYASHI
FLOYD CHRISTOPHERSON WILLIAM H. LASH, III
DIANNE M. FAURE PHILLIP SANCHEZ
JOHN G. HEIM JOSETTE SHINER
DONG MOON JOO ROBERT J. WUSSLER
Compliance With Reporting Requirements of Section 16(a) of the
Securities Exchange Act of 1934
Pursuant to Section 16(a) of the Exchange Act, the Company's
directors, executive officers and any persons holding ten percent
or more of its stock are required to report their beneficial
ownership and any changes therein to the SEC. Specific due dates
for these reports have been established and the Company is
required to report herein any failure to file such reports by
those due dates. Based solely on review of the copies of such
reports furnished to the Company or written representations that
no other reports were required, the Company believes that, during
the 1995 fiscal year, all filing requirements applicable to
officers, directors and greater than 10% beneficial owners were
complied except that
<PAGE>
Robert J. Wussler failed to timely file Form 3 when he became a
director. Such filing was made on February 24, 1995.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company had the following transactions directly or
indirectly with Directors, executive officers and holders of more
than five percent of the Company's issued and outstanding stock
since the beginning of 1995:
Concept. Since 1995, loans from Concept Communications, Inc.
("Concept"), the Company's majority shareholder, have been the
principal source of the Company's capital. Concept provided $2.5
million and $7.5 million in bridge loan financing during 1994 and
1995, respectively. Additionally, Concept has provided $11
million in debt financing and financing commitments to the
Company since January 1, 1996. As of April 23, 1996, Nostalgia
had issued promissory notes in connection with this indebtedness
to Concept bearing interest at rates ranging from 5.31% to 8.59%
per annum and secured by a security agreement covering all of the
Company's assets. Concept has represented that it does not intend
to call any of these promissory notes prior to February 1, 1997.
If all accrued and unpaid interest on the notes is not paid in
full by February 1, 1997, then the notes will bear interest at a
rate equal to the prime rate reported in the Wall Street Journal,
as adjusted from time to time, plus two percent.
In connection with a loan made on March 29, 1995, Concept
and the Company entered into a letter agreement (the "Letter
Agreement") which provides that Concept and the Company
anticipate that the principal on the amounts loaned by Concept to
the Company will be converted into equity securities of the
Company when Concept and the Company reach agreement as to the
price at which such equity securities will be issued to Concept
in such conversion. The Letter Agreement provides that, as part
of such conversion, the Company will issue to Concept at least
2,000 shares of its Preferred Stock and that, in the interim, the
Company will not issue any shares of its Preferred Stock to any
other person or entity. In the Letter Agreement, the Company has
granted to Concept a right of first refusal in the event that,
prior to the date of conversion of such loan into securities of
the Company, the Company desires to sell to any person or persons
acting in concert in any transaction or series of transactions
more than 500,000 shares of Common Stock or more than 500 shares
of its Preferred Stock. In the Letter Agreement, the Company
agrees that, in the event that it sells any of its shares to a
third party at a price less than the price at which the Company
and Concept agree to convert the loans evidenced by the
promissory notes, the Company will issue such number of
additional shares to Concept as would cause Concept's conversion
price to be adjusted to such lesser purchase price.
The Letter Agreement also provides that during the term of
the loans evidenced by the promissory notes, the Company will not
enter into any agreement committing it to spend in excess of
$1,000,000 unless such expenditure is provided for in the
Company's long-range business plan or otherwise approved by
Concept. In the Letter Agreement, the Company agrees to provide
to Concept monthly financial statements and financial information
through the date on which the loans evidenced by the Concept
Notes is converted into Nostalgia equity securities.
Throughout 1995, Dong Moon Joo was an officer and director
of Concept, and a Director of the Company. Director nominee David
C. Crane is an officer of a Concept subsidiary.
<PAGE>
AVI. The Company and AVI are parties to an agreement, as
amended, under which AVI provides to the Company certain
exclusive television production, post-production and master
control/uplink services and equipment and leases to the Company
3,000 square feet of office space in AVI's Alexandria, Virginia
production facilities. This agreement, as amended, has a six-year
term expiring September 30, 1996, unless renewed, and provides
for minimum monthly payments to AVI of $75,000, plus payment for
office space rental, videotape stock purchases and additional
production/post-production services beyond a certain level. The
Company is required to purchase a minimum number of hours of such
services during each term month at specified rates, which rates,
in some instances, vary depending upon the time of day such
services are used. The net amount payable to AVI with respect to
1995 was approximately $259,964. Under the terms of the amended
agreement, the Company leases approximately 3,000 square feet
through October 1996 at the following monthly base rent rates:
from October 1, 1992 through September 30, 1993, $1,458.33; from
October 1, 1993 through September 30, 1994, $1,875.00; from
October 1, 1994 through September 30, 1995, $2,291.67; from
October 1, 1995 through September 30, 1996, $2,708.33.
In March 1992, in connection with payment of amounts then
claimed by AVI to be due under that agreement prior to its
amendment, the Company paid $2,000,000 for the benefit of AVI and
executed a promissory note in favor of AVI in the principal
amount of $305,000, bearing interest at the rate of 2.5 percent
per quarter, compounded quarterly, due March 31, 2002 (the "AVI
Note"). The AVI Note contains provisions for, inter alia,
conversion of the indebtedness into Senior Preferred Stock, which
the Company currently is not authorized to issue. Pursuant to a
security agreement entered into between the Company and AVI at
that time, the Company granted AVI a security interest in (a)
$150,000 in specified accounts receivable and certain other
accounts and contracts; (b) proceeds thereof; and (c) copies of
certain books and records, provided that, as long as the Company
was not in default, AVI agreed not to perfect its security
interest and to hold for filing the UCC-1 financing statement.
Throughout 1994, Christopher A. Cates and Dong Moon Joo were
officers or directors of AVI and Directors of the Company.
Washington Television Center Limited Partnership ("WTC").
The Company's executive offices are located at 650 Massachusetts
Avenue, N.W., Washington, D.C., where the Company leases
approximately 5,100 square feet of space from the Washington
Television Center, L.P. The lease expires in November 1999 and
provided for an initial base monthly rent of $12,537.50.
Effective November, 1995 that rent increased to $12,788.25. All
of the interest in Washington Television Center, L.P. is owned by
U.S. Property Development Corporation (99% directly and 1%
through a USPDC subsidiary). Throughout 1994, Mr. Dong Moon Joo
was an officer and director of U.S. Property and a Director of
the Company. WTC is under common control with AVI.
AVI Affiliates. The Company is informed that in addition to
WTC a number of other companies (the "AVI Affiliates) are under
common control with AVI. These AVI Affiliates include Manhattan
Center Studios, Inc., True World Group, Inc. (formerly
International Oceanic Enterprises, Inc.), and News World
Communications, Inc. Throughout 1995 Mr. Christofferson was an
officer of Manhatten Center Studios, Inc., and a Director of the
Company. Throughout 1995 Mr. Kobayashi was an officer of True
World Group, Inc. and a Director of the Company. Throughout 1995
Amb. Sanchez was an officer of News World Communications, Inc.,
and a Director of the Company. Throughout 1995 Ms. Shiner was a
senior employee of News World Communications, Inc., and a
Director of the Company.
<PAGE>
OTHER INFORMATION
The expense of the Company's solicitation of proxies for the
Meeting, including the cost of printing, preparing and mailing
the notice of the Meeting, this Proxy Statement and the
accompanying proxy card, will be borne by the Company. In
addition to the use of the mails, proxies may be solicited in
person, by telephone or by facsimile transmission by Directors,
nominees, officers and employees of the Company without special
compensation therefor. Brokers and other persons holding stock in
their names, or in the names of a nominee, will be requested to
forward this Proxy Statement and the accompanying material to the
beneficial owners of the stock and to obtain proxies, and the
Company will defray reasonable expenses incurred in forwarding
such material.
The Company's Annual Report to Stockholders, which includes
the Company's Annual Report on Form 10-K for the year ended
December 31, 1995, including financial statements and schedules
filed with the Securities and Exchange Commission, accompanies
this Proxy Statement. If a stockholder desires an additional copy
of that Form 10-K, with exhibits, one will be provided without
charge upon written request to the Company.
STOCKHOLDER PROPOSALS
Stockholders may submit written proposals to be considered
for stockholder action at the 1997 Annual Meeting of Stockholders
of the Company expected to be held in June 1997. To be eligible
for inclusion in the Company's Proxy Statement for the 1997
Annual Meeting, stockholder proposals must be received by the
Company by December 31, 1996 and must otherwise comply with
applicable SEC regulations. Stockholder proposals should be
addressed to the Company at its principal place of business,
attention: Secretary.
In addition, the Company's Certificate of Incorporation
requires that stockholders wishing to nominate a person for
election as a director give written notice to the Company and
provide certain information regarding the nominee not less than
14 nor more than 50 days prior to the meeting.
