SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. 3)
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Materials Pursuant to Rule 14a-11(c) or Rule 14a-12
CHOICES ENTERTAINMENT CORPORATION (COMMISSION FILE NO. 0-17001)
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(Name of Registrant as Specified in Its Charter)
COMMITTEE FOR MAXIMIZING CHOICES STOCKHOLDER VALUE
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[X] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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THE COMMITTEE FOR MAXIMIZING
CHOICES STOCKHOLDER VALUE
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CONSENT SOLICITATION STATEMENT FOR
REMOVAL AND REPLACEMENT
OF THE BOARD OF DIRECTORS OF
CHOICES ENTERTAINMENT CORPORATION
Dear Fellow Choices Stockholder:
This consent solicitation statement is being furnished by a
group of concerned stockholders (the "Committee") of Choices Entertainment
Corporation (the "Company" or "Choices") for the purpose of removing and
replacing the Board of Directors of the Company pursuant to action by written
consent of a majority in voting interest of the stockholders of the Company
through resolutions in the form attached hereto as Exhibit "A" (the "Consent").
In order for the Consent to be valid with respect to a particular signatory, (i)
the signatory must be a record stockholder of the Company as of the date of
delivery of the first signed Consent to the Company, and (ii) the Consent must
be signed and delivered to the Company within 60 days after the date of the
first signed Consent. The Consent must be signed and returned to the Committee
at 4949 River Point Road, Jacksonville, Florida 32207, on or before July 28,
1996. The Committee intends to deliver the signed Consents to the Company in one
package once Consents representing a majority in voting interest of the Company
have been received by the Committee.
A stockholder who has signed the Consent and delivered it to
the Committee may revoke the Consent by written notice delivered to the Company
or the Committee at any time before the Committee has delivered to the Company
Consents signed by a majority in voting interest of the stockholders of the
Company (the "Effective Time"). In the event that, before the Effective Time,
Company management solicits proxies and a stockholder decides to grant a proxy
to management for the election of directors of the Company, the stockholder may,
by such affirmative action, revoke his previously given Consent. This consent
solicitation statement is first being mailed or otherwise delivered to selected
Company stockholders on or about June 28, 1996.
THE COMMITTEE
This solicitation is made by the Committee. The members of the
Committee are: Carl Shaifer, Joseph DeSaye, Max Scheuerer, Maureen and Lawrence
Feeney, William and Evelyn Goatley, P.L. Anderson, Jr., Harold E. Hamburg, David
F. Beckman, Mark and Barbara
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Raifman and Frank Harvey, all of whom are stockholders of the Company. The
members of the Committee beneficially own the Company's common stock, par value
$.01 per share (the "Common Stock") and the Company's Series C Preferred Stock,
par value $.01 per share (the "Preferred Stock") as follows:
NAME COMMON STOCK PREFERRED STOCK
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Carl Shaifer 565,000 11.5
Joseph DeSaye 26,000 -
Max Scheuerer 312,000 -
Maureen and Lawrence 200,000 -
Feeney
William and Evelyn 134,600 7.5
Goatley
P.L. Anderson, Jr. 601,000 3.5
Harold E. Hamburg 70,000 3.0
David F. Beckman 272,600 -
Mark and Barbara 514,000 5.0
Raifman
Frank Harvey 145,000 2.0
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TOTAL 2,840,200 32.5
See "Stock Outstanding" below.
SOLICITATION OF CONSENTS
The entire expense of preparing, assembling, printing, mailing
and/or faxing this information statement and the accompanying Consents and the
cost of soliciting the Consents described herein will be borne by the Committee.
The Committee estimates that its total expenditures relating to this
solicitation will be $15,000. To date, the Committee has incurred approximately
$10,000 of such expenses. The Committee will seek reimbursement from the Company
for its expenses and will not request stockholder approval of such
reimbursement.
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The Consents will be solicited by mail, fax, personal
solicitation, telephone or otherwise, by Carl Shaifer, other Committee members
and The JansKen Group, Inc., a Florida business consulting corporation retained
by the Committee ("JansKen"). The Committee has agreed to pay JansKen for its
solicitation services a fee of $1,000 plus expenses. The Committee intends to
solicit Consents until no later than July 28, 1996.
NOMINEES FOR THE COMPANY'S BOARD OF DIRECTORS
The Committee's nominees for director (the "Nominees") are
listed below. Each of the Nominees has consented to be listed in this consent
solicitation statement and to serve as a director if elected.
The following information concerning age, principal occupation
and directorships has been furnished to the Committee by the Nominees.
CARL SHAIFER, age 64, is Chairman of Foxfire Printing, a
division of MicroLeague Multimedia, Inc. ("MMI"), Philadelphia, Pennsylvania. He
has been a director of MMI since 1989. He was previously a data processing sales
representative with IBM from 1957 to 1960. In 1960, he joined the Winchell
Company, a Philadelphia-based creative printing company ("Winchell"), as a sales
representative. He was promoted to Assistant Treasurer of Winchell in 1964 and
to Treasurer in 1968. In 1972, he became President of Winchell, a position he
held until 1985 when that company was sold. He served as Chairman of Winchell
from 1985 to 1994. Mr. Shaifer received his A.B. with honors from Princeton
University and his MBA in marketing from the Wharton Graduate Division of the
University of Pennsylvania. He has served as President of the Wharton Graduate
Alumni Society.
JOSEPH DESAYE, age 35, has been Vice President of Operations
and a director of Fashion Marketing Inc. ("FMI"), Carteret, New Jersey, since
1981. FMI is a sales, marketing and management company which serves
international ocean and air freight forwarders and provides management services
for affiliated warehousing, distribution and trucking companies. Mr. DeSaye
serves on the board of directors of certain affiliated companies: F.M.I.
Trucking Inc. (since 1987), a local import and domestic transportation company
serving Pennsylvania, New Jersey and Delaware; F.M.I. Express Corp. (since
1987), a line haul trucking company serving the Eastern Seaboard as well as the
Southern tier states to California; and FMI International Corp. (since 1996), a
warehousing and distribution company formed subsequent to the dissolution of a
jointly held affiliate, DSL Atlantic Inc.
MAX SCHEUERER. Since 1967, Mr. Scheuerer, age 54, has been the
president, principal shareholder and chief executive officer of Village Bakery
at Livingston, Inc., a retail bakery company in Livingston, New Jersey. Since
1970, he has been the president, principal shareholder and chief executive
officer of Suburban Essex Realty Company in Livingston, New Jersey. He has been
a licensed real estate broker in New Jersey since 1994.
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STOCK OUTSTANDING
To the knowledge of the Committee, the Company has 22,004,365
shares of Common Stock outstanding, and each share is entitled to one vote. In
addition, to the knowledge of the Committee, the Company has outstanding 34
shares of Preferred Stock, which is entitled to 40,000 votes per share, for a
total of 1,360,000 votes attributable to the Preferred Stock. The Common Stock
and the Preferred Stock vote as a single class. The removal and replacement of
the Company's Board of Directors sought pursuant hereto will require execution
and delivery of the Consent by stockholders owning Common and/or Preferred Stock
representing a majority in voting interest of the Common Stock and Preferred
Stock, taken together. The Common Stock and Preferred Stock carry a total of
23,364,365 votes. Consequently, the Consent, in order to be effective, must be
signed and delivered by stockholders owning Common and/or Preferred Stock with
an aggregate of at least 11,682,183 votes. The members of the Committee
beneficially own Common and Preferred Stock with an aggregate of 4,140,200
votes.
REASONS FOR THE SOLICITATION
The Committee is seeking execution and delivery of the Consent
because it is extremely dissatisfied with the financial condition and results of
operations of the Company under the current Board of Directors and believes that
the Company's survival is in jeopardy. The Company's audited financial
statements contained in its annual report on Form 10-KSB for the year ended
December 31, 1995 (the "Financial Statements"), reflect annual losses of
($2,139,327), ($988,139) and ($686,323) for the years ended December 31, 1995,
1994 and 1993, respectively. The Financial Statements also reflect, as of
December 31, 1995, an accumulated deficit of ($21,399,114), a working capital
deficit of ($1,306,203), and a negative net worth of ($693,867). Finally, the
auditors' opinion delivered with the Financial Statements states, among other
things, that
the Company has suffered recurring losses from
operations, is in default on certain obligations and
has a net working capital deficiency. These factors
raise substantial doubt about the Company's ability
to continue as a going concern.
Further, to the knowledge of the Committee, the Company has
never held any meetings of stockholders or any elections of directors since
1988, when it consummated its initial public offering of Common Stock. The
current members of the Board of Directors have served as Directors since 1988
(John A. Boylan and Fred E. Portner) or 1992 (Ronald W. Martignoni).
The Committee believes that its Nominees are qualified and
capable businessmen who will act in the best interests of the stockholders and
that the prospects for the Company's success will be much greater if the
existing Board is replaced by the Nominees.
The Nominees intend to immediately cut costs by drastically
cutting executive compensation and making significant reductions in staff. In
particular, the Nominees intend to
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immediately terminate the employment of Messrs. Boylan (currently serving as
Chairman of the Board) and Martignoni (currently serving as President and Chief
Executive Officer). The Committee believes that Mr. Boylan currently receives a
salary of approximately $117,000 per year plus various benefits, while Mr.
Martignoni currently receives a salary of approximately $100,000 per year plus
various benefits. These costs will be eliminated immediately upon removal of the
current Board. The Nominees intend to retain Lorraine F. Cannon, currently Chief
Financial Officer of the Company, as a non-officer employee of the Company on an
interim basis pending a review of her position. The Nominees have not yet
developed a specific plan for staff cutbacks; however, the Nominees intend to
carefully review personnel costs immediately upon removal of the current Board
and to take prompt action to cut those costs where appropriate. The Committee
believes that the planned termination of Messrs. Boylan and Martignoni and the
possible termination of Ms. Cannon will not require the Company to pay any
severance or similar benefits to the terminated officers. See "Effects of
Solicitation" below.
The Nominees will provide the Company with appropriate
executive management services on an interim basis without pay, until the Meeting
(defined below). Mr. Shaifer will serve as Chairman and Chief Executive Officer,
Mr. Scheuerer will serve as President and Chief Financial Officer, and Mr.
DeSaye will serve as Vice President and Secretary. The Nominees will not receive
any compensation for their services as directors of the Company.
Promptly upon removal of the existing Board, the Nominees will
call an annual meeting of the Company's stockholders, to be held within four
months after such removal, for the purpose of electing a new Board of Directors
and transacting other appropriate business (the "Meeting"). The Nominees do not
know whether or not they will seek election as directors at the Meeting. The new
Board elected at the Meeting will elect officers of the Company and set their
compensation and may, if it deems appropriate and if the Company has available
funds, cause the Company to compensate the Nominees for their services as
officers of the Company prior to the Meeting (the "Interim Services"). The
Nominees will not seek nor accept compensation for the Interim Services in
excess of an aggregate annual rate of $108,500 (50% of the aggregate current
salaries of Messrs. Boylan and Martignoni). Thus, for example, if the Nominees
serve as officers during a four-month interim period and the Board elected at
the Meeting decides to cause the Company to compensate them for such services,
such compensation to the Nominees will not exceed an aggregate of $36,167 for
all of the Nominees combined.
The Committee believes that the Nominees' business experience
makes them well-qualified to serve on the Company's Board of Directors at this
time. Mr. Shaifer's long and distinguished career includes extensive experience
as a chief executive officer. Mr. DeSaye is a well-experienced operations
officer. Mr. Scheuerer has built and managed a successful retail enterprise. The
Committee believes that the Company needs chief executive, operations and retail
management expertise and that the Nominees are well-qualified to provide this
expertise. The Nominees will devote extensive efforts to increasing revenues at
the Company's stores and will actively seek business combinations with other
companies and investors which would be advantageous to the Company.
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EFFECTS OF THE SOLICITATION
Messrs. Boylan and Martignoni and Ms. Cannon have severance
agreements with the Company, entered into in 1992 and amended in 1994, which, in
essence, provide for payment to them of lump sum severance compensation equal to
two years' (Boylan and Martignoni) or one year's (Cannon) salary in the event
that their employment is terminated upon a "Change in Control" (as defined in
the severance agreements). The Committee believes that the severance agreements
are inapplicable to the proposed termination of the Company's current officers
because the applicable definition of "Change in Control" does not include the
simple removal and replacement of the Company's Board by shareholder action, as
contemplated by the Committee. Further, the Committee believes that, even if the
contemplated shareholder action constitutes a "Change in Control" under the
severance agreements, such agreements would be unenforceable because they were
approved by a Board of Directors which had not been properly elected in
accordance with Delaware law due to the lack of any stockholder meeting since
1988. Notwithstanding the foregoing, there can be no assurance that Mr. Boylan,
Mr. Martignoni or Ms. Cannon will not claim an entitlement to payment under the
severance agreements or that any such claims will not be successful.
Except for the severance agreements described above, the
Committee is unaware of any agreements or other circumstances which might cause
any material liability on the part of the Company as a result of the proposed
removal of the current Board of Directors and termination of the current
officers of the Company.
THE COMMITTEE FOR MAXIMIZING
CHOICES STOCKHOLDER VALUE
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THIS CONSENT IS BEING SOLICITED ON BEHALF OF
THE COMMITTEE FOR MAXIMIZING CHOICES STOCKHOLDER VALUE
YOU MAY WITHHOLD AUTHORITY TO ELECT ANY OF THE THREE
NOMINEES LISTED IN THE SECOND RESOLUTION BELOW BY LINING
THROUGH OR OTHERWISE STRIKING OUT THE NAME OF SUCH NOMINEE
ACTION OF THE STOCKHOLDERS OF
CHOICES ENTERTAINMENT CORPORATION
BY WRITTEN CONSENT
The undersigned stockholders of Choices Entertainment
Corporation, a Delaware corporation (the "Company"), hereby consent in writing,
without a meeting, to the following action pursuant to Section 228 of the
Delaware General Corporation Law:
RESOLVED, that John A. Boylan, Ronald W.
Martignoni and Fred E. Portner are removed
from the Board of Directors of the Company
effective immediately.
FURTHER RESOLVED, that Carl Shaifer, Joseph DeSaye and Max
Scheuerer are hereby elected to the Board of Directors of the
Company to serve until the next annual meeting of shareholders
or until their respective successors are duly elected and
qualified.
NO. OF
NAME SHARES DATE
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EXHIBIT "A"
