HMG WORLDWIDE CORPORATION
475 Tenth Avenue
New York, New York 10018
---------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on July 26, 1996
---------------------------------
To the Stockholders of
HMG WORLDWIDE CORPORATION
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of HMG WORLDWIDE CORPORATION, a Delaware corporation (the "Company"),
will be held at the offices of the Company, 234 South Eight Street, Reading,
Pennsylvania 19603 on Friday, July 26, 1996 at the hour of 2:00 p.m., for the
following purposes:
(1) To elect six Directors of the Company for the ensuing year.
(2) To ratify the selection of Friedman Alpren & Green as the Company's
independent auditors for the fiscal year ending December 31, 1996.
(3) To transact such other business as may properly come before the
Meeting.
Only stockholders of record at the close of business on June 19, 1996 are
entitled to notice of and to vote at the Meeting or any adjournment thereof.
HERBERT F. KOZLOV
Secretary
New York, New York
June 28, 1996
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND DATE THE ENCLOSED
PROXY, WHICH IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY, AND PROMPTLY
RETURN IT IN THE PRE-ADDRESSED ENVELOPE PROVIDED FOR THAT PURPOSE. ANY
STOCKHOLDER MAY REVOKE HIS PROXY AT ANY TIME BEFORE THE MEETING BY GIVING
WRITTEN NOTICE TO SUCH EFFECT, BY SUBMITTING A SUBSEQUENTLY DATED PROXY OR BY
ATTENDING THE MEETING AND VOTING IN PERSON.
<PAGE>
HMG WORLDWIDE CORPORATION
475 Tenth Avenue
New York, New York 10018
-----------------------
PROXY STATEMENT
-----------------------
This Proxy Statement is being mailed on or about June 28, 1996 to all
stockholders of record at the close of business on June 19, 1996 in connection
with the solicitation by the Board of Directors of Proxies for the Annual
Meeting of Stockholders (the "Meeting") to be held on July 26, 1996. Proxies
will be solicited by mail, and all expenses of preparing and soliciting such
proxies will be paid by the Company. All Proxies duly executed and received by
the persons designated as proxy therein will be voted on all matters presented
at the Meeting in accordance with the specifications given therein by the person
executing such Proxy or, in the absence of specified instructions, will be voted
for the named nominees to the Company's Board of Directors and to ratify the
selection of Friedman Alpren & Green. The Board does not know of any other
matter that may be brought before the Meeting but, in the event that any other
matter should come before the Meeting, or any nominee should not be available
for election, the persons named as proxy will have authority to vote all Proxies
not marked to the contrary in their discretion as they deem advisable.
Any stockholder may revoke his or her Proxy at any time before the Meeting
by written notice to such effect received by the Company at the address set
forth above, Attn: Corporate Secretary, by delivery of a subsequently dated
Proxy or by attending the Meeting and voting in person.
Abstentions and broker non-votes will be counted for purposes of
determining the presence or absence of a quorum for the transaction of business
at the Meeting. Abstentions will be counted in tabulations of the votes cast on
each of the proposals presented at the Meeting, whereas broker non-votes will
not be counted for purposes of determining whether a proposal has been approved.
"Broker non-votes" are proxies received from brokers who, in the absence of
specific voting instructions from beneficial owners of shares held in brokerage
name, have declined to vote such shares in those instances where discretionary
voting by brokers is permitted.
The total number of shares of the Company's Common Stock outstanding as of
June 19, 1996 was 7,567,517. The Common Stock is the only class of securities
of the Company entitled to vote, each share being entitled to one non-cumulative
vote. Only stockholders of record as of the close of business on June 19, 1996
will be entitled to vote. A majority of the shares of Common Stock outstanding
and entitled to vote, or 3,783,759 shares, must be present at the Meeting in
person or by proxy in order to constitute a quorum for the transaction of
business. Assuming the presence of a quorum, a vote of a majority of the shares
of Common Stock present and voting in person or by proxy at the Meeting is
required to pass upon each of the matters presented.
A list of stockholders entitled to vote at the Meeting will be available at
the Company's offices, 475 Tenth Avenue, New York, New York 10018 for a period
of ten days prior to the Meeting and at the Meeting itself for examination by
any stockholder.
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of June 19, 1996, the number and
percentage of shares of Common Stock held by all persons who, to the knowledge
of the Company, are the beneficial owners of, or who otherwise exercise voting
or dispositive control over, more than five (5%) percent of the Company's
outstanding Common Stock within the meaning of Rule 13d-3 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the holdings of all
officers and Directors of the Company as a group:
NAME AND ADDRESS OF NUMBER OF APPROXIMATE
BENEFICIAL HOLDER SHARES(1) PERCENTAGE OF CLASS
- ------------------- --------- -------------------
Michael Wahl(2) 972,875(3) 11.8%
475 Tenth Avenue
New York, New York 10018
Andrew Wahl(2) 575,203(4) 7.2%
475 Tenth Avenue
New York, New York 10018
Gilmour 1994 Jersey Trust 972,222(5)(6) 12.8%
7 Bond Street
St. Helier
Jersey, Channel Island
State of Wisconsin Investment
Board 740,000 9.8%
P. O. Box 7842
Madison, Wisconsin 53707
All executive officers 1,944,145(7) 22.0%
and directors as a group
(7 persons)
- --------------------
(1) Includes shares issuable pursuant to currently exercisable options and
options which will be exercisable within 60 days of June 19, 1996. Except
as otherwise indicated, the persons named herein have sole voting and
dispositive power with respect to the shares beneficially owned.
(2) In connection with the Company's acquisition of its HMG Worldwide In-Store
Marketing, Inc. ("HMG"), Creative Displays, Inc. ("CDI") and HMG Europe
B.V. ("HMG BV") subsidiaries, Michael Wahl and Andrew Wahl each entered
into an agreement with the Company containing, among other provisions,
restrictions upon the disposition of shares of Common Stock of the Company
owned by them, which restrictions lapse upon repayment of the acquisition
indebtedness owing to the Company's bank lender.
(3) Includes 644,400 shares issuable upon exercise of options.
(4) Includes 376,750 shares issuable upon exercise of options.
(5) The trustee of the Gilmour 1994 Jersey Trust (the "Trust") is Hill Samuel
(Channel Islands) Trust Company Limited. The directors of the trustee have
indirect shared voting and dispositive powers with respect to such shares.
(6) Does not include 35,000 shares beneficially owned by David Harrison
Gilmour, a primary beneficiary of the Trust, and 100,002 shares
beneficially owned by Mr. Gilmour's spouse.
(7) Includes 1,361,260 shares issuable upon exercise of options owned by such
executive officers and directors.
2
<PAGE>
ELECTION OF DIRECTORS
Six directors are to be elected at the Meeting to serve for a term of one
year or until their respective successors are elected and qualified.
INFORMATION CONCERNING NOMINEES
- -------------------------------
The following table sets forth the positions and offices presently held
with the Company by each nominee, his age, his tenure as a director and the
number of shares of the Company's Common Stock beneficially owned as of June
19, 1996:
<TABLE>
<CAPTION>
Positions Number of
Presently Held Shares Approximate
with the Director Beneficially Percentage
Name Age Company Since Owned(1) of Class (1)
- ---- --- -------------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Michael Wahl(2) 58 Chairman of the Board and 1984 972,875(3) 11.8%
Chief Executive Officer
Andrew Wahl(2) 35 President and Director 1984 575,203(4) 7.2%
Robert V. Cuddihy, Jr. 36 Chief Operating Officer, 1987 177,808(5) 2.3%
Chief Financial Officer
and Director
L. Randy Riley 44 Executive Vice President 1993 49,133(6) 1.0%
and Director
Herbert F. Kozlov 43 Secretary and Director 1988 132,976(7) 1.7%
Lawrence J. Twill, Sr. 58 Director 1987 36,150(8) *
</TABLE>
- --------------------
<TABLE>
<S> <C>
(1) Includes shares issuable pursuant to currently exercisable options and options which
will be exercisable within 60 days of June 19, 1996. Except as otherwise indicated, the
persons named herein have sole voting and dispositive power with respect to the shares
beneficially owned.
(2) In connection with the Company's acquisition of its HMG, CDI and HMG BV subsidiaries,
Michael Wahl and Andrew Wahl each entered into an agreement with the Company containing,
among other provisions, restrictions upon the disposition of shares of Common Stock of
the Company owned by them, which restrictions lapse upon repayment of the acquisition
indebtedness owing to the Company's bank lender.
(3) Includes 644,400 shares issuable upon exercise of options.
(4) Includes 376,750 shares issuable upon exercise of options.
(5) Includes 153,850 shares issuable upon exercise of options.
(6) Includes 40,440 shares issuable upon exercise of options.
(7) Includes 115,100 shares issuable upon exercise of options.
(8) Includes 25,400 shares issuable upon exercise of options.
* Less than one percent.
</TABLE>
3
<PAGE>
MICHAEL WAHL has been a director of the Company since its inception in
May 1984 and the Company's Chairman and Chief Executive Officer, since
October 1, 1993. Since 1984, Mr. Wahl has served as the Chairman of the
Board of HMG. Since May 1986, Mr. Wahl has also served as the chief
executive officer of HMG. Mr. Wahl served as HMG's President from 1975 to
April 1986.
ANDREW WAHL has been a director of the Company since its inception in
May 1984 and the Company's President since October 1, 1993. From May 1984
to October 1993, Mr. Wahl served as the Company's chief executive officer.
In December 1990, Mr. Wahl became the Secretary of the Company. From July
1987 to October 1993, Mr. Wahl also served as the Company's Chairman of the
Board. Additionally, Mr. Wahl served as the Company's President from May
1984 until December 1990. From September 1980 until May 1984, Mr. Wahl
served as Vice President for HMG, where his primary responsibilities were
in the areas of new business development and pension and profit-sharing
management.
ROBERT V. CUDDIHY, JR. has been the Company's chief financial officer
and Secretary since July 1987 and a director since February 1988. In March
1989, Mr. Cuddihy also assumed the responsibilities of chief operating
officer of the Company. In December 1990, Mr. Cuddihy became the Company's
President and discontinued his function as its Secretary. On October 1,
1993, he relinquished his role as President. From July 1981 until July
1987, Mr. Cuddihy was with KPMG Peat Marwick, Certified Public Accountants,
where he last served as a senior audit manager.
L. RANDY RILEY has been a director of the Company since March 1994.
Mr. Riley is, and for at least the past five years has been, employed by
HMG in an executive capacity, most recently as President of HMG. He was
previously employed by Ernest & Julio Gallo and by Colgate-Palmolive
Company in senior marketing positions.
HERBERT F. KOZLOV has been a director of the Company since February
1988. From August 1989 until January 1996, Mr. Kozlov has also served as
the chief executive officer of EVS. Mr. Kozlov is a member of Parker Duryee
Rosoff & Haft, counsel to the Company. Mr. Kozlov has been a practicing
attorney for more than the past ten years.
LAWRENCE J. TWILL, SR. has been a director of the Company since July
1987. Since March 1991, Mr. Twill has been President of Ashwood Capital, a
private merchant banking firm. From February 1990 to February 1991, he was
a Managing Director of Peers & Co., which at the time was a subsidiary of
Kemper Securities, Inc. From June 1988 to February 1990, Mr. Twill served
as Executive Vice President, Investment Banking and a member of the
Executive Committee of Bateman Eichler, Hill Richards, a subsidiary of
Kemper Securities, Inc. From February 1986 to November 1988, Mr. Twill was
Chairman of Woolcott & Co., Inc., an investment banking firm which served
as the managing underwriter of the Company's 1987 secondary public
offering. From February 1985 to January 1986, Mr. Twill was the Chairman
and Chief Executive Officer of Lawrence Twill Associates, a financial
consulting firm. From April 1984 to March 1985, Mr. Twill was the President
and Chief Executive Officer of New York Airlines. Mr. Twill is also a
member of the Board of Directors of United Waste Systems, Inc.
Michael Wahl is the father of Andrew Wahl. There are no other family
relationships among the Company's officers and directors.
All directors hold office until the next annual meeting of
stockholders and the election and qualification of their successors.
Executive officers are elected annually by the Board of Directors to hold
office until the first meeting of the Board following the next annual
meeting of stockholders and until their successors are chosen and
qualified.
4
<PAGE>
INFORMATION CONCERNING THE BOARD
- --------------------------------
The Board of Directors held 6 meetings, including actions taken by
unanimous written consent, during the year ended December 31, 1995. All
then incumbent directors attended at least 75% of such meetings, except for
Mr. Brett Tollman who attended four of the six meetings.
The Compensation and Stock Option Committee of the Board is
responsible for oversight and administration of executive compensation and
also reviews and implements appropriate action with respect to all matters
pertaining to stock options granted under the Company's 1986, 1991, 1993
and 1994 stock option plans. The Committee is presently composed of Messrs.
Tollman and Twill. Such committee met one time during the year ended
December 31, 1995.
The Audit Committee of the Board is charged with the review of the
activities of the Company's independent auditors, including, but not
limited to, fees, services and scope of audit. The Audit Committee is
presently composed of Messrs. M. Wahl, Kozlov and Cuddihy. The Audit
Committee did not meet during the year ended December 31, 1995.
The Retirement Committee of the Company Board administers the
Company's Capital Accumulation Plan. Mr. Twill is presently the sole
member of the Retirement Committee. Such Committee did not meet during the
year ended December 31, 1995.
The Company does not have a nominating committee charged with the
search for, and recommendation to the Board of, potential nominees for
Board positions.
SECTION 16(A) - REPORTING DELINQUENCIES
- ---------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than 10% of the
Company's Common Stock, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission ("SEC"). Officers,
directors and greater than 10% stockholders are required by SEC regulation
to furnish the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it,
or written representations from certain reporting persons that no Forms 5
were required for those persons, the Company believes that through December
31, 1995, its officers and directors and greater than 10% beneficial owners
complied with all filing requirements.
5
<PAGE>
EXECUTIVE COMPENSATION
Set forth below is the aggregate compensation for services rendered in
all capacities to the Company during its fiscal years ended December 31,
1995, 1994 and 1993 by its chief executive officer and each of its
executive officers whose compensation exceeded $100,000 during its fiscal
year ended December 31, 1995:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
--------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------ --------------- -----------
OTHER ALL
NAME AND ANNUAL RESTRICTED LONG TERM OTHER
PRINCIPAL COMPEN- STOCK NUMBER OF INCENTIVE COMPEN-
POSITION YEAR SALARY BONUS SATION(1) AWARDS OPTIONS PAYOUTS SATION
- -------- ---- ------ ----- --------- ------ ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Michael Wahl 1995 $250,000 $100,000 - - - - -
Chief Executive 1994 $250,000 $100,000 - - - - -
Officer 1993 $475,000(2) - - - 604,400 - -
Andrew Wahl 1995 $190,000 $ 76,500 - - - - -
President 1994 $190,000 $125,000 - - - - -
1993 $185,000 - - - 300,000 - -
Robert V. Cuddihy, Jr. 1995 $150,000 $100,000 - - - - -
Chief Operating and 1994 $150,000 $125,000 - - - -
Financial Officer 1993 $150,000 - - - 96,600 - -
L. Randy Riley 1995 $210,000 - - - - - -
Executive Vice President 1994 $210,000 $ 70,000 - - - - -
</TABLE>
- --------
(1) Personal benefits provided to Messrs. Michael Wahl, Andrew Wahl, Cuddihy
and Riley did not exceed the disclosure thresholds established under SEC
rules and therefore are not included in this table.
(2) Includes $412,500 of compensation paid by HMG during the nine months ended
September 31, 1993, and $62,500 paid by the Company during the three
months ended December 31, 1993.
No grants of stock options pursuant were made during the year ended December
31, 1995 to the named executive officers.
6
<PAGE>
Set forth below is information with respect to the unexercised options to
purchase the Company's Common Stock granted in the year ended December 31, 1995
and prior years under the Company's 1986, 1991 and 1993 and 1994 Stock Option
Plans.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
POTENTIAL
REALIZED VALUE
NUMBER OF SECURITIES AT ASSUMED
UNDERLYING UNEXERCISE VALUE OF UNEXERCISED ANNUAL RATES
NUMBER OF OPTIONS AT IN-THE-MONEY OPTIONS OF STOCK PRICE
SHARES DECEMBER 31, 1995 AT DECEMBER 31, 1995 APPRECIATION
ACQUIRED --------------------- ------------------- FOR OPTION TERM
ON VALUE UNEXER- UNEXER- ----------------------
NAME EXERCISE REALIZED EXERCISABLE CISABLE EXERCISABLE CISABLE 5% 10%
- ---- ---------- --------- ----------- ------ ----------- ------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Michael Wahl - - 644,400 - $1,933,200 - $480,000 $1,150,000
Andrew Wahl 5,000 $8,750 376,750 - $1,130,250 - $265,000 $632,000
Robert V
Cuddihy, Jr. 2,500 $2,500 153,850 - $461,550 - $ 95,00 $225,000
L. Randy Riley - - 40,000 54,000 $121,200 $162,200 $ 70,00 $167,000
</TABLE>
EMPLOYMENT AGREEMENTS
Effective October 1, 1993, Michael Wahl became the Company's Chairman of the
Board and chief executive officer pursuant to a five year employment contract
("Wahl Employment Agreement") at a base salary of no less than $250,000 per
year. He is also entitled to receive such bonuses as may be awarded to him from
time to time by the Board in its sole discretion.
Upon termination of the Wahl Employment Agreement by the Company for any
reason other than for cause, the Company will be obligated to continue to make
salary payments to Mr. Wahl, or to his estate in the event of his death, for a
period of up to two years after such termination. The Wahl Employment Agreement
also precludes Mr. Wahl from competing with the Company for a period of two
years following termination of employment.
With the exception of Michael Wahl, none of the executive officers of the
Company is employed by the Company pursuant to an employment agreement.
COMPENSATION OF DIRECTORS
The Company's policy is to reimburse directors for travel and out-of-pocket
expenses incurred, if any, to attend its directors' meetings. See
"Compensation Committee Interlocks and Insider Participation".
DIRECTORS' REPORT ON EXECUTIVE COMPENSATION
Although the Company has a Compensation Committee whose members are Brett
Tollman and Lawrence Twill, the Board of Directors determined that because of
potential conflicts of interest in the Company's acquisition (the "Acquisition")
of its HMG Worldwide In-Store Marketing, Inc. ("HMG"), Creative Displays, Inc.
and HMG Europe B.V. subsidiaries, the Board as a whole rather than the
Compensation Committee should set initial compensation levels for the Company's
executive officers subsequent to the consummation of the Acquisition. Three of
such directors received cash compensation
7
<PAGE>
as executive officers of the Company and each of the directors received options
to purchase a significant number of shares of the Company's Common Stock during
the year ended December 31, 1993. See "- Compensation Committee Interlocks and
Insider Participation".
Upon the consummation of the Acquisition, Michael Wahl, who had previously
been the chief executive officer of HMG, became chairman of the Board and Chief
Executive Officer of the Company pursuant to the Wahl Employment Agreement. In
negotiating the Wahl Employment Agreement, the Board of Directors determined
that Mr. Wahl should receive a base salary equal to that which he then received
under a five year employment agreement entered into in 1990 with HMG. In order
to induce Mr. Wahl to enter into such prior employment agreement, HMG had agreed
to pay Mr. Wahl the additional sum of $1.0 million, of which $750,000 had been
paid, with the balance payable to Mr. Wahl in two installments of $125,000 each
due in 1994 and 1995, respectively. The Wahl Employment Agreement superseded
Mr. Wahl's prior employment agreement with HMG, released HMG from its obligation
to pay Mr. Wahl these two remaining $125,000 installments and provided for no
new inducement payments. The Board of Directors granted Mr. Wahl options to
acquire 600,000 shares of the Company's Common Stock at an exercise price of $1
5/8 per share in lieu of any such payments (the "Wahl Options").
Although the Board of Directors believed that the Wahl Employment Agreement
was reasonable in the context of both his prior level of compensation from HMG
and those compensation arrangements known to the Board of Directors to be then
in effect between other concerns in the in-store marketing and merchandising
display industry and their respective chief executive officers, the Board of
Directors recognized that in view of the then existing relationship between the
Company and HMG, the terms of the Wahl Employment Agreement could be viewed as
having been arrived at on a non-arms-length basis. Consequently, the Board of
Directors retained William M. Mercer, Incorporated ("Mercer"), an independent
compensation consultant, to evaluate the reasonableness of both the Wahl
Employment Agreement and options granted to Mr. Wahl and the other directors and
executive officers of the Company (collectively, the "Option Grants"). See "-
Option Grants in Last Fiscal year" and "-Compensation Committee Interlocks and
Insider Participation" for further information with respect to such option
grants. After reviewing Mr. Wahl's employment arrangements with HMG and the
Wahl Employment Agreement, Mercer rendered a written report to the Board of
Directors that the terms of the Wahl Employment Agreement was reasonable.
In evaluating the reasonableness of the Wahl Employment Agreement, Mercer
considered the present market value of Mr. Wahl's services, as established by
his employment agreement with HMG; the cash flow impact on the stockholders of
the Company of the Acquisition on a fully diluted basis, assuming exercise of
the Option Grants; and compensation arrangements of chief executive officers and
other senior executives of companies in the point-of-purchase marketing industry
having recently been involved in significant financial transactions.
In reaching a determination that the Wahl Employment Agreement, inclusive of
the Wahl Options, was reasonable, Mercer concluded that the terms of the Wahl
Employment Agreement were not substantially more valuable than those of Mr.
Wahl's employment agreement with HMG. Mercer also concluded that despite the
dilutive impact of the exercise of the Wahl Options, the Company's cash flow
would not be adversely impacted based upon anticipated combined operating
results of the Company and the HMG Companies following the consummation of the
Acquisition and that the value of the Wahl Employment Agreement was comparable
to the value of compensation arrangements for chief executive officers of other
companies in the point of purchase marketing industry.
Prior to this engagement by the Board of Directors to evaluate the Wahl
Employment Agreement and the Option Grants, Mercer had no prior relationship
with the Company or any person associated with the Company.
Compensation levels afforded to Andrew Wahl, Robert V. Cuddihy, Jr., L.
Randy Riley and to the Company's other executive officers are based in
substantial part upon a comparative evaluation by the Company's Board of
Directors of each such person's functional responsibility and performance in
that particular segment of the Company's operations for which each is
responsible and, where discernable, the profitability of that segment.
8
<PAGE>
During 1994 and 1995, the Board approved the payment of bonuses to a
number of employees, including executive officers. These bonuses were
approved after considering the significant transactions initiated and
consummated by the executive officers on behalf of the Company during the
past two years. The Board noted that the Company's executive officers
accomplishments included the arrangement of acquisition and working capital
financing from its bank lender and the consummation of (i) the acquisition
of the Acquired Companies, and the reduction of amounts payable pursuant to
the note issued in connection with the Acquisition, (ii) the underwritten
public offering, (iii) a European Marketing Agreement with Turbo Screen
B.V. and (iv) the acquisition of the display operations from Benson Eyecare
Corporation and long-term supply agreement with Benson Eyecare's Foster
Grant Group.
June 19, 1996
Michael Wahl - Chairman Herbert F. Kozlov
Andrew Wahl Brett Tollman
Robert V. Cuddihy, Jr. Lawrence J. Twill, Sr.
L. Randy Riley
9
<PAGE>
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the
Company's cumulative total stockholder return on its Common Stock (based on
the market price of the Company's Common Stock) with the cumulative total
return of U.S. companies on the Nasdaq Stock Market and non-financial
companies on the Nasdaq Stock Market.
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
1/1/91 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
HMG WORLDWIDE $100 $150 $47 $520 $180 $160
NASDAQ US $100 $161 $187 $215 $210 $296
NASDAQ NON-FINANCIAL $100 $161 $176 $203 $195 $268
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
ASSUMES $100 INVESTED ON JANUARY 1, 1991
10
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Each member of the Board of Directors participated in the determination
of the level of compensation of the Company's executive officers. Five of
such directors are officers of the Company, i.e., Michael Wahl - Chief
Executive Officer, Andrew Wahl - President, Robert V. Cuddihy, Jr. - Chief
Operating Officer and Chief Financial Officer, L. Randy Riley - Executive
Vice President, and Herbert F. Kozlov - Secretary.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 1994, the Company advanced $250,000 to Robert V. Cuddihy, Jr., an
officer and Director. Such amount is due to be repaid in one installment
due December 31, 1997. Unpaid amounts bear interest at a fluctuating rate
equal to the six months U.S. Treasury bill rate. In 1995, Mr. Cuddihy made
a prepayment of $66,422 plus accrued interest. At December 31, 1995, the
unpaid balance of such advance was $183,578.
In 1995, the Company advanced $100,000 to Andrew Wahl, an officer and
Director. Such amount is due to be repaid in one installment due January
1, 1997. Unpaid amounts bear interest at a fluctuating rate equal to the
six months U.S. Treasury bill rate. In 1995, Mr. Wahl made a prepayment of
$25,000. At December 31, 1995, the unpaid balance of such advance was
$75,000.
Herbert F. Kozlov, a director of the Company, is a member of Parker
Duryee Rosoff & Haft, counsel to the Company.
Lawrence J. Twill, Sr., a director of the Company, is President of
Ashwood Capital. Such firm, from time to time, also serves as an
investment banking advisor to the Company.
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Friedman Alpren & Green to audit
the accounts of the Company for the fiscal year ending December 31, 1996.
Such firm, which has served as the Company's independent auditor since 1989
has reported to the Company that none of its members has any direct
financial interest or material indirect financial interest in the Company.
Unless instructed to the contrary, the persons named in the enclosed
proxy intend to vote the same in favor of the ratification of Friedman
Alpren & Green as the Company's independent auditors.
A representative of Friedman Alpren & Green is expected to attend the
meeting and will be afforded the opportunity to make a statement and/or
respond to appropriate questions from stockholders.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the Company's 1997
Annual Meeting of Stockholders pursuant to the provisions of Rule 14a-8 of
the Securities and Exchange Commission, promulgated under the Exchange Act,
must be received by the Company's offices in New York, New York by March
28, 1997 for inclusion in the Company's proxy statement and form of proxy
relating to such meeting.
11
<PAGE>
- -------------------------------------------------------------------------------
Please mark your
votes as in this
/X/ example.
This proxy, when properly executed, will be voted in the manner
directed by the undersigned stockholder. If no direction is
made, this proxy will be voted FOR Proposals 1 and 2.
- -------------------------------------------------------------------------------
1. Election of Directors.
(except as marked to the contrary below)
FOR
all nominees listed below
(except as marked to
the contrary below)
[ ]
WITHHOLD
AUTHORITY
to vote for all nominees
listed below
[ ]
Nominees: Robert V. Cuddihy, Jr., Herbert F.
Kozlov, L. Randy Riley,
Lawrence J. Twill, Sr.,
Andrew Wahl, Michael Wahl
2. To ratify the selection of Friedman Alpren & Green as
HMG's independent auditors for the fiscal year ending
December 31, 1996.
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
3. In their discretion, the Proxies are authorized to vote
upon such other business as may properly come before the
Annual Meeting or any adjournment thereof.
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
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Please sign exactly as name appears below. When shares are held
by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate
name by the President or other authorized officer. If a
partnership, please sign in partnership name by authorized
person.
SIGNATURE(S)_______________________________ DATED: _____________ 1996
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
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<PAGE>
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HMG WORLDWIDE CORPORATION
475 Tenth Avenue
New York, New York 10018
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
P The undersigned hereby appoints Robert V. Cuddihy, Jr. and Herbert
R F. Kozlov as Proxies, each with the power to appoint his
O substitute, and hereby authorizes them, and each of them, to
X represent and vote, as designated below, all the shares of Common
Y Stock of HMG Worldwide Corporation ("HMG") held of record by the
undersigned on June 19, 1996 at the Annual Meeting of Stockholders
to be held on Friday, July 26, 1996, or any adjournment thereof.
(TO BE SIGNED ON REVERSE SIDE) SEE REVERSE SIDE
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