<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. ___________)
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/x/ 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 Rule 14a-11(c) or Rule 14a-12
CHOICES ENTERTAINMENT CORPORATION
- - - ------------------------------------------------------------------------------
(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):
/x/ 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:
--------------------------------------------------------------------------
<PAGE>
CHOICES ENTERTAINMENT CORPORATION
836 W. TRENTON AVENUE, MORRISVILLE, PA 19067
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 20, 1996
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Choices
Entertainment Corporation (the "Company") will be held on Friday, December 20,
1996, at 10:00 a.m., local time, at the Company's offices, at 836 W. Trenton
Avenue, Morrisville, Pennsylvania, for consideration of and action by the
holders of the Company's Common and Series C Preferred Stock upon the following
matters:
1. The election of a Board of three directors, with each director to
serve until the next annual meeting of Shareholders or until the
election and qualification of his respective successor;
2. The ratification of the appointment of KPMG Peat Marwick LLP as the
Company's independent auditors for 1996;
3. An amendment of the Company's Certificate of Incorporation to permit
conversion of the Company's Series C Preferred Stock (the "Preferred
Stock") without any further increase in the authorized shares of
Common Stock and any reduction in the number of presently authorized
shares of Preferred Stock; and
4. The transaction of such other business as may properly come before the
Annual Meeting and any adjournment thereof, and matters incident to
the conduct of the Annual Meeting.
The Board of Directors has fixed the close of business October 30, 1996, as
the record date for the determination of holders of Common and Preferred Stock
of the Company entitled to notice of, and to vote at, the Annual Meeting. The
Company's Annual Report to Shareholders for the year ended December 31, 1996,
accompanies this Notice and Proxy Statement.
SHAREHOLDERS (WHETHER THEY OWN ONE OR MANY SHARES AND WHETHER THEY EXPECT
TO ATTEND THE ANNUAL MEETING OR NOT) ARE REQUESTED TO VOTE, SIGN, DATE AND
RETURN PROMPTLY THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES
NO POSTAGE IF MAILED IN THE UNITED STATES.
By Order of the Board of Directors
November 20, 1996 Ronald W. Martignoni
Chief Executive Officer
<PAGE>
CHOICES ENTERTAINMENT CORPORATION
836 W. TRENTON AVENUE, MORRISVILLE, PA 19067
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 20, 1996
This Proxy Statement is furnished and is first being mailed with the
accompanying proxy on approximately November 20, 1996, to each shareholder of
record of Choices Entertainment Corporation (the "Company") in connection with
the solicitation of proxies by the Board of Directors of the Company, to be
voted at the Annual Meeting of Shareholders of the Company (the "Meeting") to be
held on Friday, December 20, 1996, at 10:00 a.m., local time, at the Company's
offices, at 836 W. Trenton Avenue, Morrisville, Pennsylvania, and at any
adjournment thereof, for the purposes stated below.
Any person giving a proxy has the power to revoke it at any time before its
exercise by a later dated proxy, a written revocation sent to the Secretary of
the Company or attendance at the Meeting and voting in person. In the absence
of contrary instructions, properly executed proxies, received and unrevoked,
will be voted by the persons named in the proxy: (i) for the election of the
directors proposed by the Board of Directors; (ii) for the ratification of KPMG
Peat Marwick LLP as the Company's independent auditors for the year ending
December 31, 1996; (iii) for the proposal to amend the Company's Certificate of
Incorporation; and (iv) in their discretion, on such other business as may
properly come before the Meeting and matters incident to the conduct of the
Meeting.
The enclosed proxy confers discretionary authority to vote with respect to
any and all of the following matters that may come before the Meeting: (i)
matters which the Company does not know, a reasonable time before the proxy
solicitation, are to be presented at the Meeting; (ii) approval of the minutes
of a prior meeting of shareholders if such approval does not amount to
ratification of the action taken at that meeting; (iii) the election of any
person to any office for which a bona fide nominee is named in this Proxy
Statement and such nominee is unable to serve or for good cause will not serve;
(iv) any proposal omitted from this Proxy Statement and proxy pursuant to Rule
14a-8 or Rule 14a-9 promulgated under the Securities Exchange Act of 1934; and
(v) matters incident to the conduct of the Meeting. In connection with such
matters, the persons named on the enclosed proxy card will vote in accordance
with their best judgment.
-2-
<PAGE>
The costs of preparing, assembling, printing, mailing and soliciting
proxies, and any additional material which the Company may furnish shareholders
in connection with the Meeting, will be borne by the Company. In addition to
the use of the mails, certain directors, officers and employees of the Company
without additional compensation may solicit proxies personally, by telephone or
by telecopier. Arrangements will be made with brokerage houses and other
custodians, nominees and fiduciaries to forward proxy solicitation material to
the beneficial owners of stock held of record by these persons, and upon request
therefor, the Company will reimburse them for their reasonable forwarding
expenses.
CERTAIN LEGAL PROCEEDINGS
The Company has recently been involved in certain legal proceedings
concerning control of the Company's Board of Directors. The following is a
description of these proceedings and other material legal proceedings, which are
pending, to which any director, officer or owner of more than five percent of
the Company's Common and Preferred Stock (voting together) is a party adverse to
the Company or has a material interest adverse to the Company.
On July 26, 1996, the Company filed a lawsuit in the United States District
Court for the District of Columbia (the "Washington Proceedings"), entitled
CHOICES ENTERTAINMENT CORPORATION V. CARL SHAIFER ET AL., Civil Action No.
1:96-CV-01753, seeking declaratory and injunctive relief against the following
group of shareholders: 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 Raifman and Frank Harvey
(collectively, the "Shareholder Committee") for alleged violations of the
federal securities laws. The Shareholder Committee had previously filed a
Solicitation Statement (the "Solicitation Statement") with the Securities and
Exchange Commission on June 28, 1996, in connection with the Shareholder
Committee's solicitation of written consents from other shareholders for the
purpose of removing and replacing the Board of Directors of the Company without
the holding of a meeting. The Company believes that the Solicitation Statement
contains material misleading statements and omissions of material facts,
including the failure to disclose serious conflicts of interests of the
Shareholder Committee and of certain of its director nominees to the Board, that
the Shareholder Committee has failed to file a Schedule 13D in accordance with
the requirements of the Securities Exchange Act of 1934, and that any consents
obtained by the Shareholder Committee have been obtained in violation of the
federal securities laws and are invalid.
On July 29, 1996, the Shareholder Committee delivered written consents to
the Company, which the Shareholder Committee asserted
-3-
<PAGE>
were sufficient to remove and replace the Company's present Board of
Directors with the nominees of the Shareholder Committee without the holding
of a meeting, and such nominees attempted to assert control and to terminate
the employment of existing management. The Company did not recognize the
action purported to have been taken by the Shareholder Committee, having
concluded that the Shareholder Committee had not delivered sufficient
consents to remove and replace the Company's present Board and, in any event,
that such consents were otherwise invalid as having been obtained in
violation of the federal securities laws.
On August 2, 1996, a lawsuit was filed in the Court of Common Pleas of
Bucks County, Pennsylvania, against the existing Directors of the Company by the
director nominees to the Board of the Shareholder Committee, Carl Shaifer,
Joseph DeSaye and Max Scheuerer, as well as on behalf of the Company, entitled
CHOICES ENTERTAINMENT CORPORATION ET AL., V. RONALD W. MARTIGNONI ET AL., No.
96005737-18-5. The lawsuit requested that the Court grant a preliminary
injunction requiring that the defendants cease acting as corporate officers or
directors and otherwise relinquish control of the Company. On August 9, 1996,
the lawsuit was discontinued by plaintiffs.
On August 16, 1996, the Shareholder Committee's nominees, Carl Shaifer,
Joseph DeSaye and Max Scheuerer, filed a lawsuit in the Delaware Court of
Chancery for New Castle County (the "Delaware Proceedings"), C.A. No. 15170,
entitled CARL SHAIFER, ET AL. V. RONALD W. MARTIGNONI, ET AL., against the
Company and the existing Board of Directors, seeking: (i) a declaration that the
present Board had been duly and validly removed and that plaintiffs were validly
elected as the Company's Board, (ii) an order directing the holding of an annual
meeting of shareholders on a date, to be fixed by the Court, not more than 30
days from August 16, 1996 (the date of the filing of the complaint), (iii) costs
and expenses, including attorneys fees, and (iv) such other relief as the Court
deems just and proper.
On September 4, 1996, after two summary hearings, and prior to the filing
of an answer by defendants in the Delaware Proceedings, the Delaware Court of
Chancery, without ruling on the merits, ordered, INTER ALIA: (i) that the annual
meeting of shareholders be held on December 20, 1996, as previously announced by
the Company, (ii) that the present Board, consisting of Ronald W. Martignoni,
John A. Boylan and Fred E. Portner, shall constitute the Company's board of
directors, until the earlier of the election of directors at the meeting or the
resolution of plaintiffs claims in the lawsuit, and that Joseph DeSaye, except
with respect to certain matters, be permitted to attend Board meetings, and
(iii) that, until the earlier of the election of directors at the meeting or the
resolution of plaintiffs claim in the lawsuit, the Company will not issue any
voting securities in certain specified transactions
-4-
<PAGE>
except upon Court order and that the Company will not, except upon five
business days notice, take any "action out of the ordinary course," as
defined in the order. The order also provides that the restrictions
contained therein may be waived by written agreement of the parties and that
the order may be modified by the Court. On September 6, 1996, defendants
filed an answer to the complaint in the Delaware Proceedings, denying
plaintiffs' allegations with regard to all claims.
On September 12, 1996, counsel for the Company and the Shareholder
Committee notified the Court in the Washington Proceedings that they were
engaged in settlement discussions and requested postponement of the hearing
previously scheduled for September 13, 1996, which postponement was granted.
On September 18, 1996, a lawsuit was filed against the Company in the Court
of Common Pleas of Bucks County, Pennsylvania, captioned MAX SCHEUERER V.
CHOICES ENTERTAINMENT CORPORATION, Civil Action No. 96006871, in which
plaintiff, a member of the Shareholder Committee, is seeking a judgment in the
amount of $146,298 (plus future interest, costs and any other appropriate
damages), which amount allegedly represents $120,000 of principal and $26,298.35
of interest owed by the Company to plaintiff under two 10% promissory notes.
For further information, see CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
VOTING SECURITIES OF THE COMPANY
Only shareholders of record at the close of business on October 30, 1996,
are entitled to notice of, and to vote at, the Meeting. On that date, the
outstanding voting securities of the Company consisted of 22,004,395 shares of
Common Stock, and 37.4 shares of Series C Preferred Stock (the "Preferred
Stock"). Each share of Common Stock is entitled to one vote on all matters
presented to the Meeting with no right to vote cumulatively. Each share of
Preferred Stock is entitled to vote on all matters submitted to a vote of the
Company's stockholders together with the Common Stock and not as a separate
class, unless otherwise required by law, with each share of Preferred Stock
entitled to 40,000 votes. In voting together with the Common Stock, the
outstanding Preferred Stock has 1,496,000 votes. The combined number of votes
attributable to the outstanding shares of the Company's Common Stock and
Preferred Stock, at October 30, 1996, is 23,500,395.
In compliance with the order entered by the Chancery Court in the Delaware
Proceedings and pursuant to 8 DEL. C. Section 211, the shares of stock
represented at the Meeting, either in person or by proxy, and entitled to vote
at the Meeting, shall constitute a quorum, notwithstanding any provision of the
Company's Certificate of Incorporation or By-laws to the contrary.
-5-
<PAGE>
A shareholder may withhold voting for any or all nominees for the Board of
Directors or abstain from voting for any proposal if the shareholder chooses to
do so. With respect to the election of Directors, votes that are withheld will
be excluded entirely from the vote and will have no affect. With respect to
matters submitted to the shareholders, other than the election of Directors,
abstentions will not be counted as votes for or against and will, therefore,
have the same affect as a vote against. Broker non-votes will have no affect on
the outcome of voting. The votes required with respect to the election of
Directors and the proposal to amend the Company's Certificate of Incorporation
are set forth in the discussion of each item herein.
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding ownership of
the Company's Common Stock and Preferred Stock, as of October 30, 1996, by: (i)
each person who is known by the Company to own beneficially more than five
percent of the combined number of votes attributable to all shares of Common and
Preferred Stock outstanding on that date, (ii) each director and nominee for
director who beneficially owns shares of Common or Preferred Stock, (iii) each
Named Executive Officer (as defined under EXECUTIVE COMPENSATION) who
beneficially owns shares of Common or Preferred Stock and (iv) all executive
officers and Directors as a group.
<TABLE>
<CAPTION>
No. of Votes Attributable to
No. of Shares of Common Stock No. of Shares of Preferred Stock Common Stock and Preferred Stock
Name and Address Beneficially Owned, including Beneficially Owned, including Beneficially Owned,
of Beneficial Owner Percentage Owned(1) Percentage Owned(1) including Percentage(1)
------------------- ----------------------------- -------------------------------- --------------------------------
<S> <C> <C> <C>
Attel & Cie, S.A. 2,601,112 (11.8%) -- 2,601,112 (11.1%)
Via Nassa 58
6901 Lugano, Switzerland
John Maioriello 1,826,000 (7.8%)(2) -- 1,826,00 (7.3%)
3416 The Strand
Manhattan Beach, CA 90266
John A. Boylan 1,442,000 (6.2%)(3) -- 1,442,000 (5.8%)
509 Kinsale Road
Timonium, MD 21093
Ronald W. Martignoni 1,425,000 (6.1%)(4) -- 1,425,000 (5.7%)
6 Chadwick Court
Voorhees, NJ 08043
Joseph DeSaye 26,000 * -- 26,000 *
800 Federal Boulevard
Carteret, NJ 07008
Ralph V. Esposito 386,814 (1.8%)(5) -- 386,814 (1.7%)
854 Beckman Drive
No. Bellmore, NY 11710
</TABLE>
-6-
<PAGE>
<TABLE>
<CAPTION>
No. of Votes Attributable to
No. of Shares of Common Stock No. of Shares of Preferred Stock Common Stock and Preferred Stock
Name and Address Beneficially Owned, including Beneficially Owned, including Beneficially Owned,
of Beneficial Owner Percentage Owned(1) Percentage Owned(1) including Percentage(1)
------------------- ----------------------------- -------------------------------- --------------------------------
<S> <C> <C> <C>
Fred E. Portner 190,000 *(6) -- 190,000 *
121 Montgomery Place
Alexandria, VA 22314
Shareholder Committee 2,840,000 (12.9%)(7)(8) 37.4 (90.7%)(7)(9) 4,334,500 (18.3%)(7)(9)
All executive officers 3,332,000 (13.2%)(10) -- 3,332,000 (12.5%)
and Directors as a Group
(four persons)
</TABLE>
__________________
* Less than 1%.
(1) Beneficial Ownership is determined in accordance with the rules of the
Securities Exchange Commission and generally includes voting or investment power
with respect to securities. Shares of Common Stock or Preferred Stock subject to
options or warrants currently exercisable or exercisable within 60 days are
deemed outstanding for purposes of computing the percentage ownership of the
person holding such option or warrant but are not deemed outstanding for
purposes of computing the percentage ownership of any other person. Except as
may be indicated otherwise, and subject to community property laws where
applicable, the persons named in the table above have sole voting and investment
power with respect to all shares of Common and Preferred Stock shown as
beneficially owned by them.
(2) Includes 1,500,000 shares of Common Stock issuable upon exercise of
fully-vested nonqualified stock options. See CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS.
(3) Includes 1,000,000 shares of Common Stock issuable upon exercise of
fully-vested 1991 Management Options and 375,000 shares of Common Stock issuable
upon exercise of fully-vested 1994 Management Options.
(4) Includes 1,050,000 shares of Common Stock issuable upon exercise of
fully-vested 1991 Management Options and 375,000 shares of Common Stock issuable
upon exercise of fully-vested 1994 Management Options.
(5) Represents shares held by Mr. Esposito's wife, Madeline Esposito, as
to which Mr. Esposito disclaims beneficial ownership.
(6) Represents 100,000 shares of Common Stock issuable upon exercise of
fully-vested nonqualified stock options and 90,000 shares of Common Stock
issuable upon exercise of fully-vested 1994 Management Options.
(7) The Shareholder Committee may be deemed to constitute a group under
the rules of the Securities and Exchange Commission. The following table sets
forth the number of shares of the Company's Common and Preferred Stock owned
beneficially by the members of the Shareholder Committee, as well as the
-7-
<PAGE>
percentage of outstanding Preferred Stock owned by each, and together as a
group, on October 30, 1996:
<TABLE>
<CAPTION>
Name Common Stock Preferred Stock
- - - ---- ------------ ---------------
<S> <C> <C>
Carl Shaifer
8515 Seminole Avenue
Philadelphia, PA 19118 565,000 14.1 (36.3%)
Joseph DeSaye 26,000 --
Max Scheuerer 312,000 --
Maureen and Lawrence Feeney 200,000 --
William and Evelyn Goatley
5925 Oakland Valley Drive
Rochester, MI 48306 134,600 9.2 (24.0%)
P.L. Anderson, Jr.
115 Watson Street
Danville, VA 24543 601,000 1.8 (4.9%)
Harold E. Hamburg
4122 Shelbyville Road
Louisville, KY 40207 70,000 3.7 (9.7%)
David F. Beckman 272,600 --
Mark and Barbara Raifman
862 Woodmere Place
Woodmere, NY 11598 514,000 6.1 (16.1%)
Frank Harvey
619 Hallie Drive
Houston, TX 77024 145,000 2.5 (6.5%)
--------- ----
Total 2,840,200 37.4 (90.7%)
--------- ----
--------- ----
</TABLE>
The foregoing table does not include shares of Common Stock obtainable upon
conversion of Preferred Stock, but does include 3.8 shares of Preferred Stock
obtainable upon exercise of warrants, as follows: Carl Shaifer, 1.4 shares;
William and Evelyn Goatley, 0.9 shares; P.L. Anderson, Jr., 0.3 shares; Harold
Hamburg, 0.4 shares; Mark and Barbara Raifman, 0.6 shares and Frank Harvey, 0.3
shares. In addition, on October 30, 1996, Gail A. Ramey, 115 Watson Street,
Danville, VA 24543, owned beneficially 2.5 shares of Preferred Stock, which
includes 0.3 shares obtainable upon exercise of warrants, or 6.5% of the
Preferred Stock outstanding on that date. Ms. Ramey, together with the holders
of Preferred Stock set forth in the foregoing table, represent all persons known
to the Company who own beneficially more than five percent of the Preferred
Stock on October 30, 1996. See also CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS.
(8) Does not include shares of Common Stock obtainable upon conversion of
Preferred Stock.
(9) Includes 3.8 shares of Preferred Stock obtainable upon exercise of
warrants.
(10) Includes 2,250,000 shares of Common Stock issuable upon exercise of
fully-vested 1991 Management Options, 100,000 shares of Common Stock issuable
upon exercise of fully-vested nonqualified options, and 915,000 shares of Common
Stock issuable upon exercise of fully-vested 1994 Management Options.
-8-
<PAGE>
NOMINATION AND ELECTION OF DIRECTORS
At the Meeting, three directors are to be elected to hold office until the
next Annual Meeting of Shareholders and until their respective successors are
elected and qualified. Directors shall be elected by a plurality of the
combined number of votes attributable to the outstanding shares of the Company's
Common and Preferred Stock which are cast at the Meeting. It is the intention
of the persons named in the proxy, unless otherwise directed, to vote all
proxies in favor of the election to the Board of Directors of the nominees
listed below. The Board has no reason to believe that any of the nominees will
be unable or unwilling to be a candidate for election at the time of the
Meeting. If any nominee is unable or unwilling to serve, the persons named in
the proxy will use their best judgment in selecting and voting for a substitute
candidate or the Directors may reduce the size of the Board.
DIRECTOR NOMINEES
The Board of Directors has unanimously nominated Joseph DeSaye, Ralph V.
Esposito and Ronald W. Martignoni for election as directors at the Meeting.
This slate of nominees effects a change in control of the Board of Directors as
a result of the resignation, effective upon the holding of the Meeting, of John
A. Boylan and Fred E. Portner, two of the existing Board's three Directors, and
the nomination of two new Directors, in addition to Mr. Martignoni, of which one
nominee, Joseph DeSaye, is a member of the Shareholder Committee. The
nomination of the new slate was made independently by the existing Board and not
pursuant to the order entered by the Chancery Court in the Delaware Proceedings.
Mr. Boylan's resignation is pursuant to certain severance arrangements that
are more fully described below, which include the termination of options held by
him to purchase 291,667 shares of Common Stock. For further information
concerning Mr. Boylan's severance arrangements, see EXECUTIVE COMPENSATION. Mr.
Portner's resignation is not subject to any separate terms or arrangements. In
connection with this Meeting, Mr. Martignoni has irrevocably agreed to the
cancellation of options to purchase 366,667 shares of Common Stock. Upon their
election, the Company intends to award stock options to purchase 200,000 shares
of Common Stock to each of Messrs. DeSaye and Esposito, who have agreed to be
nominated and to serve subject only to the Company obtaining directors and
officers insurance. The Company has applied for and been issued such insurance,
but may be unable, because of its severely distressed financial condition, to
pay premiums on an ongoing basis, in which event such insurance would lapse.
-9-
<PAGE>
The following table sets forth certain information concerning the nominees:
Year First
Year First Became an
Became a Executive
Name Age Position Director Officer
---- --- -------- ---------- ---------
Joseph DeSaye........ 35 Nominee for Director -- --
Ralph V. Esposito.... 41 Nominee for Director -- --
Ronald W. Martignoni. 41 President, Chief 1992 1988
Executive Officer,
and Nominee for
Director
Joseph DeSaye 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.
Ralph V. Esposito is the Chief Financial Officer and Treasurer of Gilman &
Ciocia, Inc., a financial services company which provides a wide range of
financial services, including preparation of tax returns, acting as an insurance
agent and mortgage broker and, through a subsidiary, JT Securities, Inc.,
providing securities broker/dealer and investment advisory services. Mr.
Esposito has served as Chief Financial Officer of Gilman & Ciocia, Inc. since
April 1994 and from September 1992 through December 1993. During the interim,
from January 1994 through March 1994, he was Chief Financial Officer of Multiva
Securities, a registered securities broker/dealer. Prior to joining Gilman &
Ciocia, Inc. in 1992, he was Vice President of Finance at Gabelli & Company,
Inc.
Ronald W. Martignoni has been President and Chief Executive Officer of the
Company since October 1995. Mr. Martignoni was elected to the Company's Board
of Directors in April 1992 and
-10-
<PAGE>
served as Vice Chairman -- Finance from April 1992 until October 1995. Mr.
Martignoni joined the Company as its Vice President -- Finance and
Administration in July 1988 and was elected to the positions of Senior Vice
President -- Finance, Chief Financial Officer and Treasurer in November 1988,
in which positions he served until October 1995. Mr. Martignoni has also
served as Assistant Secretary since November 1988.
The following table sets forth certain information concerning members of
the present Board of Directors who have resigned effective upon the holding of
this Meeting:
Year First
Year First Became an
Became a Executive
Name Age Position Director Officer
---- --- -------- ---------- ----------
John A. Boylan....... 53 Chairman of the Board and 1988 1987
Director
Fred E. Portner...... 52 Director 1988 --
John A. Boylan was elected Chairman of the Board, President, and Chief
Executive Officer in April 1992. He resigned as Chairman in November 1994, while
continuing as a Director, and was reelected as Chairman in September 1995. He
resigned as President and Chief Executive Officer in October 1995. Mr. Boylan
initially joined the Company as its Senior Vice President -- Franchise
Development in November 1987, in which position he served until June 1990, and
was elected a Director in November 1988. From June 1990 until April 1992, Mr.
Boylan served as the Company's Senior Vice President -- Business Development.
Fred E. Portner has served as a Director since July 1988. Since January
1992, Mr. Portner has served as President of Portner Consulting Services, a
mortgage banking consulting company, wholly-owned by Mr. Portner. Mr. Portner
also served as Executive Vice President and Chief Financial Officer of M.D.S.
Bankmark Company, a residential mortgage company, from September 1993 to January
1996. From June 1990 to December 1991, Mr. Portner served as Executive Vice
President of Directors Mortgage Loan Corporation, a California mortgage banking
company.
Directors of the Company hold their offices until the next annual meeting
of the Company's shareholders, until their successors have been duly elected and
qualified or until their earlier resignation, removal from office or death.
-11-
<PAGE>
BOARD MEETINGS
The Company does not have standing audit, nominating or compensation
committees of the Board of Directors, or committees performing similar
functions. During 1995, the Board of Directors held 15 meetings.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
ELECTION OF MESSRS. DESAYE, ESPOSITO AND MARTIGNONI.
EXECUTIVE OFFICERS
In addition to those directors listed above who are executive officers of
the Company in the positions indicated, the following person is also an
executive officer of the Company:
Year First
Became an
Executive
Name Age Position Officer
---- --- -------- ----------
Lorraine E. Cannon... 45 Chief Financial Officer, 1989
Treasurer and Secretary
Lorraine E. Cannon has been Chief Financial Officer and Treasurer since
October 1995. Ms. Cannon joined the Company as its Controller in January 1989
and was elected to the position of Secretary in August 1989.
Officers of the Company serve at the pleasure of the Board of Directors and
until the first meeting of the Board of Directors following the next annual
meeting of the Company's shareholders and until their successors have been
chosen and qualified or until their earlier resignation, removal from office or
death.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Mr. Portner inadvertently failed to file a Form 5 for 1994, as required by
Section 16(a) of the Securities Exchange Act of 1934, with respect to the
expiration of an option in accordance with its terms during 1994, and
inadvertently failed to file a Form 4, as required by the Exchange Act, with
respect to the grant of an option in 1995. Both the expiration and grant were
subsequently reported by Mr. Portner in a late Form 5 filed in April 1996.
EXECUTIVE COMPENSATION
The following table sets forth certain information relating to the
compensation awarded to, earned by or paid to the Chief Executive Officer and
the Company's other executive officers whose
-12-
<PAGE>
total annual salary and bonus exceeded $100,000 during 1995 (the "Named
Executive Officers") for services in all capacities during 1995, 1994 and
1993.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation Awards
------------------------------ ------------
Securities
Other Annual Underlying All Other
Name and Principal Compensation Options Compensation
Position Year Salary($) ($) (#) ($)(3)
- - - ------------------ ---- --------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C>
John A. Boylan(1) 1995 $ 130,000 -0- $ 1,030
Chairman of the Board 1994 130,000 375,000 1,030
1993 125,000 $ 12,587(2) -0- 1,030
Ronald W. Martignoni 1995 115,914 -0- 529
President and Chief 1994 116,346 375,000 529
Executive Officer 1993 120,192 -0- 569
</TABLE>
______________
(1) Mr. Boylan served as President and Chief Executive Officer until October
1995.
(2) Includes automobile benefits of $10,315.
(3) Includes term life insurance premiums paid by the Company.
In April 1992, the Company entered into severance agreements with three
officers, including Messrs. Boylan and Martignoni, which provide, under certain
circumstances, that the Company will pay these officers upon their severance an
amount equal to one full year's base salary in the event that their affiliation
with the Company ceases within either one or two years (depending upon the
circumstances) following a "change in control" of the Corporation, as that term
is defined. In November 1993, the Board of Directors adopted amendments to the
severance agreements for Messrs. Boylan and Martignoni, who are also directors
of the Company. The amendments principally increase the amount to be paid on
severance from one full year's base salary to two full years' base salary, as
well as contain certain other provisions, including a provision for the
continued registration of option stock following termination of their
affiliation with the Company.
On August 15, 1996, the Company entered into an agreement with Mr. Boylan,
pursuant to which he resigned from employment and from all positions with the
Company, while remaining a director and Chairman of the Board until this
Meeting, released the Company from all obligations and liabilities, including
any obligations under the severance agreement between him and the Company
referred to above, and agreed to the cancellation of fully-vested options to
purchase 291,667 shares of Common Stock at an exercise price of
-13-
<PAGE>
$1.25, and the Company entered into an eleven-month consulting agreement with
Mr. Boylan, under which he receives $3,500 on a bi-weekly basis, has use of a
car, already under lease by the Company, and receives health insurance
benefits for a period of one year.
STOCK OPTIONS HELD AT FISCAL YEAR-END
The following table sets forth the aggregate options to purchase shares of
Common Stock of the Company held by the Named Executive Officers at December 31,
1995. No options were exercised during the year ended December 31, 1995 by any
of the Named Executive Officers, and there were no in-the-money unexercised
options held by any of the Named Executive Officers at December 31, 1995.
Number of Securities
Underlying Unexercised
Options Held at
December 31, 1995(#)(1)
--------------------------
Name Exercisable Unexercisable
---- ----------- -------------
John A. Boylan 1,666,667 -0-
Ronald W. Martignoni 1,791,667 -0-
- - - -----------------
(1) Following cancellation of certain existing options, at October 30, 1996,
Messrs. Boylan and Martignoni held options to purchase 1,375,000 and 1,425,000
shares of Common Stock, respectively.
COMPENSATION OF DIRECTORS
The Company currently has no standard arrangements pursuant to which
non-employee Directors are compensated for services provided as Directors.
On September 27, 1995, Mr. Portner, a non-employee Director, was granted a
nonqualified option to purchase 100,000 shares of the Company's Common Stock,
exercisable on or after September 27, 1996, at an exercise price of $0.17 per
share, the price of the Company's Common Stock on the date of grant, which
option expires on September 27, 2000.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
John E. Maioriello, Chairman of the Board and a principal stockholder of JD
Store Equipment, Inc. ("JD"), is deemed under
-14-
<PAGE>
rules of the Securities and Exchange Commission to be the beneficial owner of
more than five percent of the Company's Common and Preferred Stock voting
together. See SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
On November 4, 1994, the Company and JD entered into a letter of intent
(the "JD Letter of Intent"), providing for a merger of the Company and JD (the
"JD Merger"). In connection with the JD Letter of Intent, JD paid $100,000 to
the Company, paid an additional $100,000 to the Company to secure the right of
the Company to negotiate the acquisition of another company and arranged for the
issuance on its credit of a $100,000 letter of credit to a vendor of the
Company, which letter of credit expired in accordance with its terms on April
15, 1995. Upon expiration of the letter of credit, Mr. Maioriello personally
guaranteed a line of credit provided by said vendor to the Company in an amount
of approximately $250,000.
In accordance with the JD Letter of Intent and in contemplation of the JD
Merger, John Maioriello was appointed Chairman of the Board of the Company. In
connection with his appointment, on November 29, 1994, Mr. Maioriello was
granted an option to purchase 1,500,000 shares of the Company's Common Stock at
an exercise price of $0.75 per share (the fair market value on the date of
grant), which option is fully vested. Also in contemplation of the JD Merger,
the Company and JD incurred certain costs in connection with the Company's plans
to acquire certain retail video store chains.
In connection with the JD Letter of Intent, the Company and JD also reached
an agreement for the payment of finder's fees, in the event the JD Merger was
not consummated, with respect to any completed merger or acquisition which Mr.
Maioriello was responsible for having introduced to the Company from the date of
the JD Letter of Intent until such time as it was publicly announced that the JD
Merger would not be consummated (September 11, 1995). Any finder's fees paid
are to consist of warrants to purchase shares of the Company's Common Stock in
an amount based upon 10% of the consideration issued or paid by the Company in
said merger or acquisition. The exercise price of the warrants is to be at a
20% discount to the bid price of the Company's Common Stock, generally
calculated on the date of the letter of intent for said merger or acquisition.
The warrants are to have a five-year term and are to include piggy-back
registration rights.
The Company and JD entered into an Agreement and Plan of Reorganization and
Merger (the "Merger Agreement"), dated as of July 19, 1995, as amended, which
provided, INTER ALIA, for the JD Merger, through the merger of a newly formed
California corporation, formed as a wholly-owned subsidiary of the Company, with
and into JD, as a result of which, JD, as the surviving
-15-
<PAGE>
corporation in the merger, would become a wholly-owned subsidiary of the
Company. On September 8, 1996, JD notified the Company that it was
terminating the Merger Agreement in accordance with its terms and, in
connection therewith, Mr. Maioriello resigned as Chairman of the Board of the
Company.
JD previously agreed, on December 6, 1994, that, in the event the JD Merger
was not consummated, JD would pay to the Company all legal fees billed to the
Company by the law firm retained in connection with the Company's acquisition
program. That law firm resigned as counsel to the Company shortly after JD
notified the Company that it was terminating the Merger Agreement and, in
accordance with its agreement with JD, the Company has made a demand for payment
upon JD for all fees and disbursements in the amount of $793,281 billed to it by
the law firm, of which $439,482 has to date been paid by the Company.
The Company, in connection with a private offering of units of preferred
stock, which terminated in September 1995, issued a total of: (1) 34 shares of
the Company's Preferred Stock, convertible (subject to shareholder approval)
into 1,360,000 shares of common stock, (ii) 5% unsecured promissory notes in the
aggregate principal amount of $680,000 due in September 1997, with interest
payable annually in cash or, at the election of the Company, in shares of
Preferred Stock (valued at $.25 per share), and with
-16-
<PAGE>
principal and any accrued but unpaid interest convertible into Preferred
Stock (valued at $.25 per share) at the sole option of the holder in the
event the Company defaults in the payment of principal or is otherwise in
default, and (iii) three-year warrants to purchase 10.2 shares of Preferred
Stock at an exercise price of $10,000 per share, convertible (subject to
shareholder approval) into a total of 408,000 shares of common stock.
Certain of the members of the Shareholder Committee, Carl Shaifer, William
and Evelyn Goatley, P.L. Anderson, Jr., Harold E. Hamburg, Mark and Barbara
Raifman and Frank Harvey, purchased in the private placement a total of 30.5
shares of Preferred Stock, 5% unsecured promissory notes in the aggregate
principal amount of $610,000, and three-year warrants to purchase 3.8 shares
of Preferred Stock. See SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT.
On July 12, 1994, Max Scheuerer, a member of the Shareholder Committee,
loaned the Company $50,000, and on December 7, 1994, loaned the Company
$100,000, which loans are evidenced by two 10% promissory notes. The
aggregate principal amount owing on the promissory notes was reduced to
$120,000 from $150,000 as a result of a $30,000 payment by the Company on
November 30, 1995, in response to a lawsuit filed by Mr. Scheuerer seeking
collection of said notes. In connection with such payment, Mr. Scheuerer
discontinued the lawsuit without prejudice and agreed not to reinstate it for
any remaining balance owing on the notes prior to March 15, 1996. On
September 18, 1996, Mr. Scheuerer filed a new lawsuit against the Company in
the Court of Common Pleas of Bucks County, Pennsylvania, captioned MAX
SCHEUERER V. CHOICES ENTERTAINMENT CORPORATION, Civil Action No. 96006871, in
which Mr. Scheuerer is seeking a judgment in the amount of $146,298 (plus
future interest, costs and any other appropriate damages), which amount
allegedly represents $120,000 of principal and $26,298.35 of interest then
owed by the Company to Mr. Scheuerer under the two 10% promissory notes.
RATIFICATION OF APPOINTMENT
OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed the Company's present independent
auditors, KPMG Peat Marwick LLP, as the Company's independent auditors for the
fiscal year ending December 31, 1996.
-17-
<PAGE>
This appointment will be submitted to the Shareholders for ratification at
the Meeting.
The submission of the appointment of KPMG Peat Marwick LLP for ratification
by the Shareholders is not required by law or by the By-laws of the Company.
The Board of Directors is nevertheless submitting it to the shareholders to
ascertain their views. If the Shareholders do not ratify the appointment, the
selection of other independent public accountants will be considered by the
Board of Directors.
Representatives of KPMG Peat Marwick LLP are expected to be present at the
Meeting to respond to appropriate questions and will have the opportunity to
make a statement if they so desire.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR RATIFICATION
OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE COMPANY'S INDEPENDENT
AUDITORS.
PROPOSAL TO AMEND CERTIFICATE OF INCORPORATION
The Company's Certificate of Incorporation currently authorizes the
issuance of 5,000 shares of preferred stock, $0.01 par value, which may be
issued from time to time in one or more series by the Company's Board of
Directors without shareholder approval. The Company's Board of Directors may
also fix for any series the dividend rate, redemption price, liquidation or
dissolution preferences, conversion rights, voting rights and other preferences
and privileges.
The Board of Directors has previously approved for issuance up to 500
shares of its presently authorized preferred stock, which has been designated
"Series C Preferred Stock," of which 37.4 shares are presently outstanding.
Under the terms of the Preferred Stock, each share will become convertible, at
the option of the holder thereof, into 40,000 shares of the Company's common
stock, subject to adjustment, only after receipt of approval by the Company's
shareholders of an amendment to the Company's Certificate of Incorporation
increasing the number of authorized shares of the Company's Common Stock (as
provided by the terms of the Preferred Stock). At the time of the issuance of
the outstanding Preferred Stock, the Company stated that it was its intention to
schedule a meeting of shareholders to vote upon such an increase in the number
of authorized shares of the Company's Common Stock.
In relevant part, the terms of the Preferred Stock (Amendment No. 1 to
Certificate of Designations of Series C Preferred Stock) presently provide, with
respect to conversion, as follows:
-18-
<PAGE>
3. CONVERSION. The Series C Preferred Stock shall not be
convertible when issued, but shall automatically become convertible
into shares of Common Stock (at the rate of 40,000 shares of Common
Stock for every one share of Series C Preferred Stock (the "Conversion
Rate")) upon the filing of an amendment to the Corporation's
Certificate of Incorporation (the "Amendment") which increases the
number of authorized shares of Common Stock by a number equal to or
greater than the sum of (i) 40,000 multiplied by the number of then
outstanding shares of Series C Preferred Stock, plus (ii) that number
of additional shares of Common Stock, if any, needed to be reserved
for issuance upon the conversion or exercise of all other then
outstanding convertible or exercisable securities of the Corporation.
Upon filing of the Amendment, the number of shares approved for
issuance as Series C Preferred Stock shall automatically be decreased
from 500 to a number equaling the number of then outstanding shares of
Series C Preferred Stock (thus preventing the issuance of any
additional shares of Series C Preferred Stock). The following
provisions shall apply after the Series C Preferred Stock becomes
convertible:
[Provisions relating to conversion then follow]
At the time of the designation of the Preferred Stock, its conversion was
made contingent upon shareholder approval of an amendment of the Certificate of
Incorporation (increasing the authorized common stock), because it was
contemplated, at that time, that the Company would be issuing Preferred Stock in
such amounts, in connection with its acquisition program, that it would not have
sufficient shares of Common Stock authorized for issuance upon conversion.
However, because of the discontinuance of its acquisition program, the Company
has in excess of 13 million shares of Common Stock authorized which are neither
outstanding nor reserved for issuance upon the conversion or exercise of
convertible or exercisable securities. For this reason, the Board believes that
there is no longer any basis for making conversion subject to increasing the
authorized Common Stock or in authorizing additional Common Stock to permit such
conversion, and has recommended that the Preferred Stock be amended to delete
this provision.
The terms of the Preferred Stock, stated in relevant part above, also
provide, upon the filing of an amendment to the Certificate of Incorporation,
described therein, increasing the authorized Common Stock, that the number of
shares of Series C Preferred Stock would automatically be decreased from 500 to
a number equaling the number of then outstanding shares of Preferred Stock. The
Board believes that this provision should be deleted
-19-
<PAGE>
because there are presently outstanding convertible and exercisable
securities which may be converted into or exercised to acquire shares of
Preferred Stock, which securities themselves contain anti-dilution
provisions. It is therefore not possible at this time to determine how many
shares of Preferred Stock will become outstanding or even the maximum number
that may become outstanding for purposes of effecting any reduction in the
number of authorized shares of Preferred Stock. The Board does not intend or
view deletion of this provision as an anti-takeover measure, and has no
present plans calling for issuance of any additional shares of Series C
Preferred Stock other than pursuant to the terms of currently outstanding
convertible and exercisable securities.
For the reasons set forth above, and in order to facilitate and permit
conversion of the Preferred Stock, the Board has approved an amendment to the
Company's Certificate of Incorporation to permit conversion of Preferred Stock
without any increase in authorized Common Stock, and with no reduction in the
authorized shares of Preferred Stock from 500 to that number presently
outstanding, and has recommended its approval by the stockholders.
The amendment, as proposed, amends and restates the terms of the Preferred
Stock, stated in relevant part above, to read in their entirety as follows:
3. CONVERSION. The Series C Preferred Stock is convertible into
shares of Common Stock at the rate of 40,000 shares of Common Stock
for every one share of Series C Preferred Stock (the "Conversion
Rate"). The following provisions shall apply with respect to
conversion:
[Provisions relating to conversion then follow: no change other than
conforming changes]
The affirmative vote of the holders of at least a majority of the combined
number of votes attributable to the outstanding shares of the Company's Common
Stock and Preferred Stock entitled to vote thereon is required for adoption of
the proposed amendment. THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR
ADOPTION OF THE PROPOSED AMENDMENT.
OTHER MATTERS
No other matters requiring a vote of the shareholders are expected to come
before the Meeting. However, if other matters should properly come before the
Meeting, it is the intention of the persons named in the enclosed proxy to vote
in accordance with their best judgment on such matters.
-20-
<PAGE>
EXPENSES OF SOLICITATION
The solicitation of proxies being on behalf of the Board of Directors, all
expenses in connection therewith will be paid by the Company. Request will be
made of brokerage houses and other custodians, nominees and fiduciaries to
forward the solicitation material at the expense of the Company to the
beneficial owners of stock held of record by such persons.
SHAREHOLDER PROPOSALS
Proposals by shareholders intended to be presented at the next Annual
Meeting of Shareholders of the Company must be received by the Company at its
executive offices at 836 W. Trenton Avenue, Morrisville, PA 19067, on or before
July 23, 1997, to be included in the Company's proxy statement and form of proxy
for the 1997 annual meeting.
-------------------
THE COMPANY WILL PROVIDE TO EACH PERSON SOLICITED, WITHOUT CHARGE EXCEPT
FOR EXHIBITS, UPON REQUEST IN WRITING, A COPY OF ITS ANNUAL REPORT ON FORM
10-KSB, INCLUDING THE FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES, AS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1995. REQUESTS SHOULD BE DIRECTED TO LORRAINE E. CANNON, CHIEF
FINANCIAL OFFICER, CHOICES ENTERTAINMENT CORPORATION, 836 W. TRENTON AVENUE,
MORRISVILLE, PENNSYLVANIA 19067.
By Order of the Board of Directors
November 20, 1996 Ronald W. Martignoni
Chief Executive Officer
-21
<PAGE>
CHOICES ENTERTAINMENT CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
Annual Meeting of Shareholders - December 20, 1996
The undersigned shareholder of CHOICES ENTERTAINMENT CORPORATION (the
"Company"), revoking all previous proxies, hereby appoints Lorraine E. Cannon
and Bonnie J. Neil, and each of them acting individually, as the attorney and
proxy of the undersigned, with full power of substitution, to vote all shares of
stock of the Company which the undersigned would be entitled to vote if
personally present at the Annual Meeting of Shareholders of the Company, to be
held at the Company's offices, at 836 W. Trenton Avenue, Morrisville,
Pennsylvania on December 20, 1996, at 10:00 a.m., and at any adjournment
thereof; provided that said proxies are authorized and directed to vote as
indicated with respect to the following matters:
1. ELECTION OF DIRECTORS / / FOR ALL NOMINEES
Nominees: Joseph DeSaye, Ralph V. Esposito and / / WITHHOLD AUTHORITY
Ronald Martignoni TO VOTE FOR ALL
NOMINEES
/ / WITHHOLD AUTHORITY
TO VOTE FOR ANY
INDIVIDUAL
NOMINEE(S). WRITE
NAME(S) ON LINE BELOW
____________________.
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS FOR AGAINST ABSTAIN
--- ------- -------
/ / / / / /
3. PROPOSAL TO AMEND CERTIFICATE OF INCORPORATION FOR AGAINST ABSTAIN
--- ------- -------
/ / / / / /
4. OTHER MATTERS
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting.
(Continued and to be signed on reverse side)
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. UNLESS
OTHERWISE SPECIFIED, THE SHARES REPRESENTED HEREBY WILL BE VOTED "FOR" ELECTION
OF NOMINEES FOR DIRECTORS LISTED ON THE REVERSE SIDE HEREOF, "FOR" RATIFICATION
OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP, AS THE COMPANY'S INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS FOR 1996 AND "FOR" THE PROPOSAL TO AMEND THE
COMPANY'S CERTIFICATE OF INCORPORATION. THIS PROXY ALSO DELEGATES DISCRETIONARY
AUTHORITY TO THE PROXY HOLDERS NAMED ON THE REVERSE SIDE WITH RESPECT TO ANY
OTHER BUSINESS WHICH MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT
THEREOF.
----------- ------------------------
Date Signature of Shareholder
----------- ------------------------
Date Signature of Shareholder
NOTE: PLEASE SIGN THIS PROXY EXACTLY AS NAME(S) APPEAR
ON YOUR STOCK CERTIFICATE. WHEN SIGNING AS ATTORNEY-
IN-FACT, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN,
PLEASE ADD YOUR TITLE AS SUCH, AND IF SIGNER IS A CORPORATION,
PLEASE SIGN WITH FULL CORPORATE NAME BY A DULY AUTHORIZED
OFFICER OR OFFICERS AND AFFIX THE CORPORATE SEAL. WHERE
STOCK IS ISSUED IN THE NAME OF TWO (2) OR MORE PERSONS,
ALL SUCH PERSONS SHOULD SIGN.
