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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
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AMERICAN ENTERTAINMENT GROUP, INC.
160 Bedford Road, Suite 306
Toronto, Ontario M5R 2K9
---------------
NOTICE OF SPECIAL ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 12, 1996
---------------
Notice is hereby given that a Special Annual Meeting of Shareholders
(the "Meeting") of AMERICAN ENTERTAINMENT GROUP, INC., a Colorado corporation
(the "Company"), will be held at 10:00 a.m. local time, on December 12, 1996,
at the Omni West Palm Beach Hotel, 601 Belvedere Road, West Palm Beach,
Florida 33406, for the following purposes:
1. To elect five (5) persons to the Company's Board of Directors, each
such Director to hold office until the next annual meeting of shareholders or
until their successors are elected and qualified;
2. To amend the Company's Articles of Incorporation to authorize
5,000,000 Preferred Shares, which would have such par value, classes and
preferences as the Company's Board of Directors may from time to time
determine
3. To ratify the Board's one-for-ten reverse split of all issued and
outstanding common shares.
4. To consider and act upon any matters which may properly come before
the Meeting or any adjournment thereof. The Board of Directors are not aware
of any business to come before the Meeting.
Any action may be taken on any one of the foregoing proposals at the
Meeting on the date specified above, or on any date or dates to which the
Meeting may be adjourned. Only shareholders of record as of the close of
business on November 5, 1996, are entitled to notice of and to vote at the
Meeting. The stock transfer books of the Company will remain open. There is
printed on the following pages a Proxy Statement to which your attention is
invited. Please read it carefully. You are requested to fill in and sign the
enclosed form of Proxy which is solicited by the management of the Company,
and to mail it promptly. The Proxy will not be used if you attend and vote
at the Meeting in person.
By Order of the Board of Directors:
Joel Wagman
Chairman
November 8, 1996
<PAGE>
YOU ARE CORDIALLY INVITED TO ATTEND THE SPECIAL MEETING. IT IS IMPORTANT
THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU
PLAN TO BE PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE, AND RETURN THE
ENCLOSED PROXY PROMPTLY. IF YOU ATTEND THIS MEETING, YOU MAY VOTE EITHER IN
PERSON OR BY YOUR PROXY. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN WRITING OR IN
PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF.
<PAGE>
AMERICAN ENTERTAINMENT GROUP, INC.
160 Bedford Road, Suite 306
Toronto, Ontario, Canada M5R 2K9
PROXY STATEMENT
SPECIAL ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 12, 1996
INTRODUCTORY STATEMENT
This Proxy Statement and accompanying Proxy are furnished in connection
with a solicitation of Proxies by the Board of American Entertainment Group,
Inc. (the "Company") for use at the Special Annual Meeting of Shareholders of
the Company, to be held at 10:00 a.m. local time, on December 12, 1996, at the
Omni West Palm Beach Hotel, 601 Belvedere Road, West Palm Beach, Florida
33406, for the purposes set forth in the accompanying Notice of Special Annual
Meeting of Shareholders.
Shareholders of record at the close of business on November 5, 1996 will be
entitled to receive notice of and to vote at the meeting. Each share of common
stock is entitled to one vote for each matter submitted to a vote at the
meeting. Shares represented by executed and unrevoked Proxies will be voted in
accordance with the specifications made thereon. If the enclosed form of Proxy
is executed and returned, it nevertheless may be revoked by giving another Proxy
or by letter or telegram directed to the Company. Any such revocation must show
the shareholder's name and must be received prior to the commencement of the
meeting in order to be effective. Additionally, any shareholder attending the
meeting in person, who wishes to do so, may vote by ballot at the meeting,
thereby cancelling any Proxy previously given. Where no instructions are
indicated, Proxies will be voted "FOR" the nominees for directors indicated
below and "FOR" the proposals to be considered at the Special Annual Meeting or
any adjournment thereof. Proxy materials will be mailed to shareholders of
record on or about November 8, 1996.
VOTING SECURITIES, PRINCIPAL HOLDERS AND SECURITY
OWNERSHIP OF MANAGEMENT
The approval of an amendment to the Company's Articles of Incorporation to
authorize Preferred Shares, as set forth in this Proxy Statement, requires the
affirmative vote of a majority of the issued and outstanding common shares of
the Company.
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The approval of the remainder of the proposals set forth in this Proxy
Statement requires the affirmative vote of a majority of the quorum of the
shares present and entitled to vote at the Special Annual Meeting of
Shareholders.
All voting rights are vested exclusively in the holders of the Company's no
par value common stock, with each share entitled to one vote. Only shareholders
of record at the close of business on November 5, 1996 are entitled to notice of
and to vote at the meeting and any adjournment thereof.
As of December 31, 1995, there were an aggregate of 18,916,770 common
shares issued and outstanding. The following sets forth the number of shares of
the Company's no par value common stock, pre reverse split, beneficially owned
by (i) each person who, as of December 31, 1995, was known by the Company to own
beneficially more than five percent (5%) of its common stock, (ii) the
individual Directors of the Company, and (iii) the Officers and Directors of the
Company as a group. Effective July 29, 1996, the Company reverse split all
issued and outstanding common shares on the basis of one new share for each
previously ten shares. As of October 1, 1996, there were 1,891,677 shares
eligible to vote at the Meeting.
- ---------------------------------------------------------------------
Name and Address Amount and Nature Percent of
of Beneficial Owner of Beneficial Ownership (1)(2) Class
- ---------------------------------------------------------------------
Joel Wagman (3) 2,150,859 14.70%
160 Bedford Road
Suite 306
Toronto, Canada M5R 2K9
Allan R. Chapman 105,000 .72%
160 Bedford Road
Suite 306
Toronto, Canada M5R 2K9
J.R.Y Hugo (4) 237,801 1.63%
1 Clarendon Avenue
Suite 201
Toronto, Ontario M4V 1H8
Samuel C. Paul 77,967 .53%
160 Bedford Road
Suite 306
Toronto, Canada M5R 2K9
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Jon D.Bridgman 39,835 .27%
1006 Streambank Drive
Mississauga, Canada
L4H 3Z1
Dirk Peper -0- -0-
1 Clarendon Road
Suite 605
Toronto, Canada MVA 1H8
Harve Sherman (5) 2,220,078 15.18%
15 Lonsdale Road
Toronto, Canada
Officers and Directors 2,611,462 17.85%
as a Group (5 persons)
- -------------------------------------------------------------------------------
(1) All ownership is beneficial and of record except as specifically indicated
otherwise.
(2) Beneficial owners listed above have sole voting and investment power with
respect to the shares shown unless otherwise indicated.
(3) Owned by Mr. Wagman and children beneficially, including shares owned of
record by Falconette Corporation.
(4) Includes shares owned of record by Gloria Hugo, the wife of J.R.Y. Hugo and
600,433 Ontario Ltd. and HMSG Corporation.
(5) Owned by Mr. Sherman and his wife beneficially, including shares owned of
record by various corporations. Mr. Sherman resigned from the Board of
Directors in June, 1995. See Legal Proceedings with respect to these
shares. The shares listed herein represent the Company's best information
and belief with respect to Mr. Sherman's direct and indirect ownership
thereof.
ACTION TO BE TAKEN UNDER THE PROXY
Proxies in the accompanying form that are properly executed and returned
will be voted at the Special Annual Meeting in accordance with the instructions
thereon. Any proxy upon which no instructions have been indicated with respect
to a specific matter will be voted as follows with respect to such matter: (a)
"FOR" the election of five (5) persons named in this Proxy Statement
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as Management's nominees for election to the Board of Directors; (b) "FOR"
amendment to the Company's Articles of Incorporation to authorize 5,000,000
Preferred Shares, which would have such par value, classes and preferences as
the Company's Board of Directors may from time to time determine; (c) "FOR"
the ratification of the Board's one-for-ten reverse split of all issued and
outstanding common shares; and (d) "FOR" the transaction of any other
business to come before the Meeting, in the discretion of the holders of such
Proxies.
Management knows of no other matters, other than those stated above, to
be presented for consideration at the Meeting. If, however, any other matters
properly come before the Meeting, the persons named in the enclosed proxy
intend to vote such proxy in accordance with their judgement on such matters.
The persons named in the enclosed proxy may also, if they deem it advisable,
vote such proxy to adjourn the Meeting from time to time.
ELECTION OF DIRECTORS
It is proposed that five (5) of the current Directors be elected to the
Board of Directors of the Company, each such Director to hold office until
the next annual meeting of shareholders or until their successors are elected
and qualified. The nominees are: Joel Wagman, J.R.Y. Hugo, Samuel C. Paul,
Allan P. Chapman, and Jon D. Bridgman. All are presently directors of the
Company who are standing for re-election.
It is the intention of the persons named in the accompanying form of
Proxy to vote such Proxy FOR the election of the persons listed below, unless
shareholders specifically indicate in their Proxies that they desire to
abstain from voting for the electing of certain Directors to office. The
Board of Directors does not contemplate that any nominee will be unable to
serve as a Director for any reason, but if that should occur prior to the
meeting, the Board of Directors reserves the right to substitute another
person(s) of their choice as nominee(s). Each nominee must be approved by an
affirmative vote of a majority of the quorum of the shares present and
entitled to vote at the Special Annual Meeting of Shareholders. The Board of
Directors recommends that shareholders vote FOR the election of each nominee.
VOTING
Pursuant to the terms of the Company's Articles of Incorporation every
shareholder voting for the election of directors is entitled to one vote for
each share. A shareholder may vote each share once for one nominee to each
of the director positions being filled. A shareholder may not accumulate
votes.
The Board of Directors intends to vote the Proxies solicited by it
(other than Proxies in which the vote is withheld as to one or more nominees)
for the five candidates standing for election as directors nominated by the
Board of Directors. If any nominee is unable to serve, the shares
represented by all valid Proxies will be voted for the election of such
substitute as the Board
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of Directors may recommend. At this time the Board of Directors knows of no
reason why any nominee might be unavailable to serve.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
With the exception of the Compensation Committee established solely to
administer its compensation plan, the Company has no committees of the Board of
Directors. This Compensation Committee, which was composed of three members of
the Board of Directors: Joel Wagman (Chairman), J.R.Y. Hugo, and Allan P.
Chapman., had two meetings during the fiscal year ended December 31, 1995. No
incumbent director of the Company attended fewer then seventy-five percent (75%)
of total meetings of the Board of Directors. The Board of Directors conducted
six meetings during the fiscal year ended December 31, 1995.
The Company's Directors will serve in such capacity until the next annual
meeting of the Company's shareholders and until their successors have been
elected and qualified. The officers serve at the discretion of the Company's
Directors. There are no familial relationships among the Company's officers and
directors, nor are there any arrangements or understanding between any of the
directors or officers of the Company or any other person pursuant to which any
officer or director was or is to be selected as an officer or director.
The Directors and Executive Officers of the Company, their ages and
positions held in the Company as of December 31, 1995 are as follows:
NAME AGE POSITION HELD
- ---- --- -------------
Joel Wagman 63 Chief Executive Officer/President
Chairman of the Board
J.R.Y. Hugo 63 Vice Chairman and Director
Allan P. Chapman 57 Vice President/Distribution/
Director
Samuel C. Paul 62 Chief Accounting Officer/Treasurer
Director
Jon D. Bridgman 53 Vice President, Corporate
Affairs/Director
Dirk Peper 68 Chief Financial Officer
JOEL WAGMAN. Mr. Wagman has been the Chairman of the Board of Directors, Chief
Executive Officer and a Director since March, 1993. On October 18, 1995, Mr.
Wagman became President
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of the Company. Mr. Wagman received his Bachelor of Arts Degree (BA), in
1955 from the University of Toronto (Toronto, Ontario).
Mr. Wagman is also a graduate of Osgoode Hall Law School (LL.B. York
University, Toronto, Canada)(1959). Mr. Wagman was appointed a "Queens Counsel"
in 1971. During the past five years, Mr. Wagman has been engaged in and with
corporations dealing with merchandising - telecommunications - television.
From September 1987 to July 1991, Mr. Wagman served as President and Chief
Executive Officer of the Telecommerce Corporation (at that time, a Canadian
public reporting company). While Mr. Wagman was President and CEO of
Telecommerce, it was engaged in data-telecommunications relating to the
marketing and sale of goods and services via Regional Bell Operating Companies
(RBOC's).
From August, 1991 until December, 1991, Mr. Wagman served as President of
Corporatel America, Inc., a non-related U.S. private company, engaged in the
production of non-entertainment related Infomercials and the sale of goods and
services thereby. From January, 1992, until the date hereof, Mr. Wagman has at
various times served on a full-time basis as President, Chief Executive Officer
and Chairman of the Board of Corporatel International, Inc. (a subsidiary of
American Entertainment Group, Inc.).
J.R.Y. HUGO. Mr. Hugo has been the Vice Chairman and a Director since 1994. He
has been in the corporate and finance business since 1989. Prior to that time,
he was a practicing attorney in the corporate and securities area in Toronto. He
obtained undergraduate degrees from the University of Toronto and his law degree
from Osgoode Hall Law School in Toronto.
ALLAN P. CHAPMAN. Mr. Chapman became a Vice President and Director of the
Company in September, 1995. During the past thirty-four years, Mr. Chapman has
been associated with the Baton Broadcasting organization in various capacities,
including Vice President, Managing Director, and President of Glen-Warren
Productions Limited, a wholly-owned subsidiary of Baton Broadcasting
Incorporated and the largest full-service production company in Canada. From
1992 until he joined the Company, he was President of BBS Entertainment. Mr.
Chapman attended the University of Western Ontario.
SAMUEL C. PAUL. Mr. Paul has been a Director of the Company since March, 1994
and the Secretary/Treasurer since 1995. Mr. Paul graduated from McMaster
University (Hamilton, Ontario, Canada) in 1958 with a degree in Economics and
Business. In 1962, Mr. Paul received a Chartered Accountant designation (C.A.),
having completed post graduate work at Queens University, (Kingston, Ontario,
Canada).
Mr. Paul's career spans practicing both in public accounting firms and in
various management positions within the electronics and construction industry.
Until his retirement from public accounting practice in March 1994, Mr. Paul had
been a founding member of the chartered
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accounting firm of Paul and Paul, of Toronto, Ontario, Canada, specializing
in financial and consulting services to small and medium sized clients, both
of a private and public nature.
JON D. BRIDGMAN. Mr. Bridgman has been a Vice President and Director of the
Company since September, 1995. Mr. Bridgman has been involved in the investment
industry for over thirty years and has experience with three major Canadian
brokerage firms and a U.S. insurance company. He has been a co-founder of five
businesses and a Director of two public companies in Canada: Eclipse Capital,
Inc. and Rampart Mercantile, Inc. From 1992 to 1993 he was Executive Vice
President of Rampart Mercantile, Inc. From 1994 until he became associated with
the Company, he was President and Chief Executive Officer of United Mercantile,
Inc. From 1993 to 1994, he was Executive Vice President of Rampart Mercantile,
Inc. From 1991 to 1992, he was Director of US marketing for Eco Corporation.
From 1988 to 1992, he owned J. Bridgman Consulting, a corporate finance
consulting firm. He has attended Concordia University of Montreal, Quebec and
the University of Manitoba.
DIRK PEPER. Mr. Peper has been the Chief Financial Officer since August 16,
1995. Mr. Peper was appointed a Director of the Company on August 10, 1995 and
resigned as a Director on September 27, 1995 and Chief Financial Officer on
April 2, 1996. From 1992 until he joined the Company, he was a Management
Consultant with Canadian Executive Overseas Services. From 1988 to 1992, he
served as Senior Vice President (Special Projects) for Central Capital
Corporation. From May, 1978 to April, 1988, Mr. Peper was the Treasurer of the
Ontario Hydro Electric Power Commission. From October, 1974 to May, 1978, he
served as Treasurer and Commissioner of Finance of the Regional Municipality of
Peel(Province of Ontario). From May, 1967 to September, 1974, he was Deputy
Minister of Finance for the Province of Newfoundland and Labrador. From 1963 to
1967, he was a Senior Management Consultant with Peat, Marwick, Mitchell &
Company. He was educated at Queensland University, Brisbane, Australia.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934.
Section 16(a) of the Securities Exchange Act of 1934 (the "34 Act")
requires the Company's officers and directors and persons owning more than ten
percent of the Company's Common Stock, to file initial reports of ownership and
changes in ownership with the Securities and Exchange Commission ("SEC").
Additionally, Item 405 of Regulation S-B under the 34 Act requires the Company
to identify in its Form 10-KSB and proxy statement those individuals for whom
one of the above referenced reports was not filed on a timely basis during the
most recent fiscal year or prior fiscal years. Given these requirements, the
Company has the following report to make under this section. Messrs. Chapman
and Bridgman made late filings of their Forms 3 and 5.
EXECUTIVE REMUNERATION
The following table sets forth the Summary Compensation Table for the Chief
Executive Officer and the other compensated executive officers other than the
Chief Executive Officer who
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were serving as executive officers at the end of the last completed fiscal
year. Except as indicated in the footnotes to this section, no other
compensation not covered in the following table was paid or distributed by
the Company to such persons during the period covered. Employee Directors
receive no additional compensation for service on the Board of Directors.
SUMMARY COMPENSATION TABLE
<TABLE>
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------- --------------------------------------
AWARDS PAYOUTS
----------- ---------------
NAME OTHER RESTRICTED ALL
AND SALARY ANNUAL STOCK(1)(3) LTIP OTHER
PRINCIPAL(1)(2) COMPEN- BONUS COMPEN- AWARD(S) OPTIONS/PAYOUTS
SATION SATION
POSITION YEAR ($) ($) ($) SARS(#) ($)
- -------- ---- ------- ----- ------ ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Joel 1995 120,000 -- -- -- --
Wagman 1994 82,140 -- -- -- --
Chairman 1993 -- -- 34,500 -- --
J.R.Y. 1995 120,000 -- -- -- --
Hugo 1994 41,982 -- -- -- --
Vice Chrmn. 1993
Jon D. 1995 10,000 -- -- -- --
Bridgman 1994 -- -- -- -- --
Vice Pres. 1993 -- -- -- -- --
Samuel C. 1995 100,000 -- -- -- --
Paul 1994 38,982 -- 26,500 -- --
Treasurer 1993 -- -- 8,500 -- --
</TABLE>
(1) As of June 26, 1995, Messrs. Sherman and Waxman resigned as Officers and
Directors of the Company. Messrs. Sherman and Waxman were compensated a total of
$10,500 each, during the period from December 31, 1994 up to the date of their
resignations.
Under an amended agreement between the Company and Messrs. Wagman, Sherman
and Waxman, which was superseded by the written agreements, salaries under their
respective agreements were payable at the rate of $120,000 per annum for each
person in cash and/or in common shares at the rate of $0.25 per share. Further,
by amended agreement between the Company and Messrs. Stevens and Paul, which
expired on December 31, 1993, salaries under their respective agreements were
payable at the rate of $50,000 and $40,000, respectively, in cash and/or in
common shares at the rate of $0.50 per share. All such individuals were paid
such salaries and fees in common stock through June 30, 1993. Unpaid salaries
subsequent to June 30, 1993 have been accrued by the Company. It should be noted
that the valuation of $0.25 and $0.50 per share was arrived at through
negotiations between these executives and the
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Company and was based upon the fair market value of the Company's shares at
the time the share price was negotiated. All shares were paid to these
executives pursuant to their employment arrangements and not under a stock
option plan. No further shares of common stock in lieu of cash salary are
expected to be paid in the future under any written or oral employment
agreement.
(2) As of March 11, 1994, Mr. Wagman executed a written employment contract
with the Company. This contract is for a period of seven years and is
thereafter renewable on a year-to-year basis. Mr. Wagman is to receive a
salary of $120,000 per annum under his individual contract plus the
reimbursement of automobile and certain out-of-pocket expenses. In addition,
for the fiscal year ended December 31, 1993 he was eligible to receive a
salary bonus of 3% at such time as the Company generated gross revenues of
between $10,000,000 and $50,000,000; 2% of the Company's gross revenues
between $50,000,001 and $100,000,000; and 1% of the Company's gross revenues
in excess of $100,000,000. No such bonus is to be paid under this bonus
arrangement. For the fiscal year to end on December 31, 1995, Mr. Wagman was
to be eligible to participate, along with other Company executives, in a
Company bonus pool not to exceed 12% of the pre-tax operating profits of the
Company. The amount and allocation of distribution will be determined in the
sole discretion of the Compensation Committee of the Company (of which
Messrs. Wagman, Hugo, and Chapman are the members). Such bonuses will be
payable 80% within 90 days of the end of each fiscal quarter, with the
remainder due within 90 days of the end of each fiscal year.
Pursuant to stock options in his written employment agreement, Mr.
Wagman is eligible to exercise options of up to 800,000 common shares at any
time on or before January 1, 1997 at a price of $.50 per share, and up to an
additional 1,000,000 shares vesting January 1, 1994, at a price of $2.00 per
share, on a schedule to exercise 333,333 shares each year, cumulative,
beginning on January 1, 1996 and ending on January 1, 1998. On October 30,
1995, the exercise price regarding 1,000,000 shares was amended to reflect
the following: 200,000 options exercisable at $.50 per share; 200,000 at $.75
per share; 200,000 at $1.00 per share; 200,000 at $1.25 per share; 200,000 at
$1.50 per share. The dates of vesting and the term remain the same.
As of March 11, 1994, Mr. Paul executed a written employment contract
with the Company which superseded all prior agreements. This contract was for
a period of seven years and is thereafter renewable on a year-to-year basis.
Mr. Paul was to receive a salary of $50,000 per annum under his contract.
Commencing with the fiscal year end of December 31, 1994, Mr. Paul was
eligible to participate, along with other Company executives, in a Company
bonus pool not to exceed 12% of the pre-tax operating profits of the Company.
The amount and allocation of distribution will be determined in the sole
discretion of the Compensation Committee of the Company (of which Messrs.
Wagman, Hugo, and Chapman are the members). Such bonuses will be payable 80%
within 90 days of the end of each fiscal quarter, with the remainder due
within 90 days of the end of each fiscal year. On October 30, 1995, the
salary of Mr. Paul was retroactively increased to $100,000 per annum,
commencing April 1, 1994.
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On October 30, 1995, the employment contract with Mr. Paul was modified.
Pursuant to stock options in his written employment agreement, Mr. Paul had
been eligible to exercise options of up to 40,000 common shares at any time
on or before January 1, 1997 at a price of $.50 per share. As of March 1,
1996, Mr. Paul's previous options were cancelled. He obtained options to
acquire as an aggregate of 1,800,000 shares in the common stock of the
Company as follows: a) up to 800,000 common shares at any time on or before
January 1, 1997 at a price of $.50 per share; and b) 200,000 options
exercisable at $.50 per share; 200,000 at $.75 per share; 200,000 at $1.00
per share; 200,000 at $1.25 per share; 200,000 at $1.50 per share. The dates
of vesting and the term remain the same.
As of April 15, 1994, John R.Y. Hugo executed a written employment
contract with the Company which superseded all prior agreements, save and
except for an option in favor of Mr.Hugo respecting 200,000 common shares to
be issued to Mr. Hugo at $ .50 per share. Said option is to expire January
1, 1997. This contract is for a period of seven years and is thereafter
renewable on a year-to-year basis. Mr. Hugo is to receive a salary of
$120,000 per annum under the contract.
Commencing with the fiscal year end of December 31, 1994, Mr. Hugo will
be eligible to participate, along with other Company executives, in a Company
bonus pool not to exceed 12% of the pre-tax operating profits of the Company.
The amount and allocation of distribution will be determined in the sole
discretion of the Compensation Committee of the Company (of which Messrs.
Wagman, Hugo, and Chapman are the members). Such bonuses will be payable 80%
within 90 days of the end of each fiscal quarter, with the remainder due
within 90 days of the end of each fiscal year.
Pursuant to stock options in his written employment agreement, Mr. Hugo
is eligible to exercise options of up to 600,000 common shares at any time on
or before January 1, 1997 at a price of $.50 per share, and up to an
additional 1,000,000 shares vesting January 1, 1994, at a price of $2.00 per
share, on a schedule to exercise 333,333 shares each year, cumulative,
beginning on January 1, 1996 and ending on January 1, 1998. On October 30,
1995, the exercise price regarding 1,000,000 shares was amended to reflect
the following: 200,000 options exercisable at $.50 per share; 200,000 at $.75
per share; 200,000 at $1.00 per share; 200,000 at $1.25 per share; 200,000 at
$1.50 per share. The dates of vesting and the term remain the same.
As of November 24, 1995, Mr. Jon Bridgman executed a written employment
contract with the Company which supersedes all prior agreements with Mr.
Bridgman. This contract is for a period of four years and is thereafter
renewable on a year to year basis. Pursuant to the contract, Mr. Bridgman is
to receive a salary of $60,000 per annum. Additionally, Mr. Bridgman was
granted common stock options in the Company, to expire on November 30, 1999,
as follows: 200,000 shares at $.75 per share; 200,000 shares at $1.00 per
share; 200,000 shares at $1.25 per share; and 200,000 shares at $1.50 per
share.
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(3) On October 30, 1995, the Company authorized a bonus to Messrs. Wagman,
Hugo, and Paul each of 250,000 restricted common shares of the Company.
Although authorized, no such shares have been issued any such person as of
March 31, 1996.
There are no other written employment contracts or stock options with
officers, directors, or employees of the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As of November 19, 1993, the Company had a Compensation Committee, which
is currently made up of three members of the Board of Directors, Messrs.
Wagman, Hugo, and Chapman. This Compensation Committee had a total of two
meetings during the fiscal year ended December 31, 1995.
The Company has no retirement or pension plans covering its Officers and
Directors, but anticipates the formulation of such a plan, to be subsequently
approved by its Board of Directors, although no specific plan terms have been
formulated as of the date hereof. There is a recently implemented bonus plan
which is described in the preceding section.
AUTHORIZATION OF PREFERRED SHARES
The Company proposes to amend its Articles of Incorporation to authorize
the issuance of up to 5,000,000 Preferred Shares, which would have such par
value, classes and preferences as the Company's Board of Directors may from
time to time determine. This amendment would be made as soon as the
Shareholders approve the amendment to the Articles of Incorporation.
The present Articles of Incorporation of the Company only provide for
the issuance of Common Shares. The specific classes and preferences of the
Preferred Shares will be left to the Company's Board of Directors to
determine at such time as those Preferred Shares may be issued. This
Amendment will have no effect on the number of authorized or issued Common
Shares, which will remain the same. The issuance of these Preferred Shares
could be used as an anti-takeover measure and could have the effect of
preventing those who do not presently control the Company from mounting an
effort to do so. Although the issuance of Preferred Shares could be used for
this purpose, this is not the intention of the Company in proposing the
authorization of Preferred Shares.
At the present time, the Company has no definite intention to issue
Preferred Shares and has made no arrangements with anyone for such an issue.
However, as the Company expands, there will be need for additional capital,
and the Management of the Company believes that it is in the best interests
of the Company and its shareholders to have the option to issue Preferred
Shares as an additional avenue to raise capital. In some cases, Preferred
Shares can be used to acquire capital without diluting the Common
Shareholders. The Company has an ongoing need for additional capital and
wants to have as much flexibility as possible in creating programs for
11
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raising such capital. The Company's Management believes that the addition of
Preferred Shares will be an important step in developing that flexibility.
This is the principal reason for the proposal to authorize Preferred Shares.
This resolution requires the affirmative vote of a majority of the issued and
outstanding shares of the Company. The Board of Directors recommends that
shareholders vote FOR the resolution.
RATIFICATION OF REVERSE SPLIT
The Board of Directors of the Company has approved and implemented a
one-for-ten reverse split of the Company's issued and outstanding common
stock, effective July 29, 1996. Fractional shares after the reverse split
will be rounded up to the next whole number. The authorized capitalization or
par value of the Company was not affected by this reverse split.
Prior to the reverse split (July 31, 1996), there were a total of
18,916,770 common shares issued and outstanding. As a result of the reverse
split, there were a total of 1,891,677 common shares issued and outstanding.
All holders of issued and outstanding shares, including officers, directors,
and their affiliates, have had their shares reverse split on a one-for-three
and one-half basis.
The Company has an ongoing need for additional capital and wants to have
as much flexibility as possible in creating programs for raising such
capital. The Company's Management believes that the reverse split is an
important step in developing that flexibility. With the reverse split, the
trading price of the Common Shares could more easily reach a level at which
institutions would be attracted to participate in both secondary
distributions and trading of the Common Shares. Further, regulatory
restrictions generally are eased on securities which trade at a higher price.
Finally, the type of market makers and underwriters which the Company wishes
to attract for both secondary trading and future stock distributions prefer
Common Shares trading at higher prices. This resolution is for the purposes
of ratification of the July 29, 1996 Board of Directors action.
The ratification of the Board's actions with regard to the reverse split
requires the affirmative vote of a majority of the issued and outstanding
shares of the Company. The Board of Directors recommends that shareholders
vote FOR the resolution.
OTHER MATTERS
As of the date of this Proxy Statement, the Company's management has no
knowledge of any business, other than previously described herein, which should
be presented for consideration at the meeting. In the event that any other
business is presented at the meeting, it is intended that the persons named in
the enclosed Proxy will have authority to vote such Proxy in accordance with
their best judgment on such business.
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SHAREHOLDER PROPOSALS
According to Rule 14a-8 under the Securities Exchange Act of 1934, a
shareholder may require that certain proposals suggested by shareholders be
voted on at a shareholders meeting. Information concerning such proposals
must be submitted to the Company for inclusion in its proxy statement. Such
proposals for inclusion in the Company's proxy materials relating to the next
Annual Meeting of the Company must be received by the Company not later than
November 30, 1996.
ANNUAL REPORT TO SHAREHOLDERS
The Company's Annual Report to Shareholders, including financial
statements, has been mailed with these materials to all shareholders of
record. Any shareholder who has not received a copy of such Annual Report may
obtain a copy by writing to the Company. The Company hereby incorporates by
reference into this proxy solicitation material the financial statements,
management's discussion and analysis of financial condition and results of
operations, and changes in and disagreements with accountants on accounting
and financial disclosure from its Annual Report to Shareholders. Otherwise,
such Annual Report is not to be treated as part of the proxy solicitation
material, nor as having been incorporated by reference.
SOLICITATION OF PROXIES
The cost of solicitation will be borne by the Company. The Company will
reimburse brokerage firms and other custodians, nominees, and fiduciaries for
reasonable expenses incurred by them in sending proxy material to the
beneficial owners of common stock. In addition to solicitation by mail,
directors, officers, and regular employees of the Company may solicit Proxies
personally or by telegraph or telephone, without additional compensation.
NOTICE TO BANKS, BROKERS/DEALERS, VOTING TRUSTEES, AND THEIR NOMINEES
Please advise the Company, in care of its corporate address, whether any
other persons are the beneficial owners of the shares of common stock for which
Proxies are being solicited from you, and, if so, the number of copies of the
Proxy Statement, and other soliciting materials, you wish to receive in order to
supply copies to the beneficial owners of shares.
AMERICAN ENTERTAINMENT GROUP, INC.
By: Joel Wagman
Chairman
Dated: November 8, 1996
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PROXY
AMERICAN ENTERTAINMENT GROUP, INC.
160 Bedford Road, Suite 306
Toronto, Ontario Canada M5R 2K9
PROXY FOR SPECIAL ANNUAL MEETING OF SHAREHOLDERS
OF AMERICAN ENTERTAINMENT GROUP, INC.
THE UNDERSIGNED hereby appoints and constitutes Joel Wagman and J.R.Y.
Hugo, and each of them, his true and lawful agents and proxies, with full power
of substitution and revocation in each, to attend, represent and to vote the
shares of common stock of the undersigned at the Special Annual Meeting of
Shareholders of AMERICAN ENTERTAINMENT GROUP, INC. (the Company), to be held at
the Omni West Palm Beach Hotel, 601 Belvedere Road, West Palm Beach, Florida
33406 on December 12, 1996, at 10 a.m., local time, for the purposes set forth
in the accompanying Notice of Meeting of Shareholders and at any adjournment
thereof, on all matters coming before said meeting.
Management recommends a vote FOR items 1,2, 3, 4, and 5, and SHARES WILL BE
SO VOTED UNLESS YOU INDICATE OTHERWISE:
1. Approval of the following individuals to serve on the Board of
Directors:
Joel Wagman FOR __ AGAINST __ ABSTAIN __
J.R.Y. Hugo FOR __ AGAINST __ ABSTAIN __
Samuel C. Paul FOR __ AGAINST __ ABSTAIN __
Allen P. Chapman FOR __ AGAINST __ ABSTAIN __
Jon D. Bridgman FOR __ AGAINST __ ABSTAIN __
2. To amend the Company's Articles of Incorporation to authorize
5,000,000 Preferred Shares, which would have such par value, classes and
preferences as the Company's Board of Directors may from time to time determine;
FOR __ AGAINST __ ABSTAIN __
3. To ratify the Board's one-for-ten reverse split of all issued and
outstanding common shares
FOR __ AGAINST __ ABSTAIN __
4. Approval of any other matter to come before the meeting.
FOR __ AGAINST __ ABSTAIN __
Dated: , 1996
-----------------------------
(Printed Name of Shareholder)
--------------------------------------------------
(Signature of Shareholder)
-----------------------------------------------------
This Proxy Must Be Signed Exactly As Your Name Appears On Your Stock
Certificate. Executors, Administrators, Trustees, Etc., Should Give Full Title
As Such. If The Signer Is A Corporation, Please Sign Full Corporate Name By
Duly Authorized Officer.
<PAGE>
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY. THE FAILURE TO
CHECK A BLOCK WILL BE TAKEN AS A VOTE FOR THE PROPOSITION.
