<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 Section 240.14a-11(c) or Section
240.14a-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
SEATTLE, WASHINGTON
[date]
Dear Stockholders:
You are cordially invited to attend the annual meeting of stockholders of
Choices Entertainment Corporation to be held on Friday, May 26, 2000 at 10:30
a.m. at the Washington Athletic Club, [street address], Seattle, Washington.
In addition to the items set forth in the accompanying Notice of Annual Meeting
of Stockholders and Proxy Statement, we will report on current activities of the
Company and will provide an opportunity to discuss matters of interest to you as
a stockholder.
We sincerely hope you will be able to attend our Annual Meeting. However,
whether you plan to attend or not, please sign, date and promptly return the
enclosed proxy to ensure that your shares are represented.
On behalf of the Board of Directors, I would like to express our appreciation
for your continued interest in Choices Entertainment Corporation.
<TABLE>
<S> <C>
Very truly yours,
/s/ TRACY M. SHIER
---------------------------------------------
TRACY M. SHIER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>
<PAGE>
CHOICES ENTERTAINMENT CORPORATION
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
[DATE]
------------------------
To the Stockholders:
The Annual Meeting of Stockholders of Choices Entertainment Corporation will
be held on Friday, May 26, 2000 at 10:30 a.m. at the Washington Athletic Club
[address], Seattle, Washington, for the following purposes:
1. To elect four directors, each to a one-year term;
2. To amend the Company's Certificate of Incorporation increasing the
number of authorized shares of common stock from 50,000,000 to
200,000,000 and to increase the number of authorized shares of preferred
stock to 50,000,000;
3. To amend the Company's Certificate of Incorporation to change the name
of the company to CECS Corp.; and
4. To transact such other business as may properly come before the meeting.
Only stockholders of record at the close of business on March 30, 2000 are
entitled to notice of, and to vote at, the meeting.
<TABLE>
<S> <C>
BY ORDER OF THE BOARD OF DIRECTORS
/s/ THOMAS RENNA
---------------------------------------------
THOMAS RENNA
CORPORATE SECRETARY
</TABLE>
[date]
IMPORTANT
WHETHER YOU PLAN TO ATTEND THE MEETING OR NOT, PLEASE SIGN, DATE AND RETURN
PROMPTLY THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE
IF MAILED IN THE UNITED STATES. PROMPTLY SIGNING, DATING AND RETURNING THE PROXY
WILL SAVE THE COMPANY THE ADDITIONAL EXPENSE OF FURTHER SOLICITATION.
<PAGE>
CHOICES ENTERTAINMENT CORPORATION
121 VINE STREET
SEATTLE, WASHINGTON 98121
----------------
PROXY STATEMENT
---------------------
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Choices Entertainment Corporation ("CECS",
the "Company" or "We") to be voted at the 2000 Annual Meeting of Stockholders of
the Company to be held on Friday, May 26, 2000 at 10:30 a.m. Stockholders who
execute proxies may revoke them at any time prior to their exercise by
delivering a written revocation to the Secretary of the Company, by submission
of a proxy with a later date or by voting in person at the meeting. These proxy
materials, together with the Company's annual report to stockholders, are being
mailed to stockholders on or about [date].
Holders of shares of the Company's common stock, par value $.01 (the "Common
Stock") and Series C Preferred Stock, par value $.01 (the "Preferred Stock")
(together the Common Stock and Preferred Stock are referred to herein as the
"Voting Stock") of record at the close of business on March 30, 2000 will be
entitled to vote at the meeting on the basis of one vote for each share of
common stock held and 40,000 votes for each share of Preferred Stock held. On
March 30, 2000, there were outstanding 29,274,355 shares of Common Stock and
499.1 shares of Preferred Stock.
PROPOSAL 1: ELECTION OF DIRECTORS
The Board of Directors shall consist of not less than three nor more than
twelve members. Directors are elected for a one-year term. This year, Tracy M.
Shier, Cornelia F. Eldridge, Patrick Howard, James D. Sink and Thomas Renna have
been nominated to be directors. Unless a stockholder indicates otherwise, each
signed proxy will be voted for the election of these nominees.
We expect that each of the nominees will be available for election, but if
any of them is not a candidate at the time the election occurs, we will vote the
proxies for the election of another nominee to be designated to fill any such
vacancy by the Board of Directors.
The candidates elected are those receiving the largest number of votes cast
by the shares entitled to vote in the election, up to the number of directors to
be elected. Shares held by persons who abstain from voting on the election and
broker "non-votes" will not be counted in the election.
NOMINEES FOR ELECTION
Tracy M. Shier, 49, director, President, Treasurer is a Seattle securities
attorney with public company experience as well as significant experience in
high technology start-ups and corporate finance. From January 1999 to January
2000, Mr. Shier served as General Counsel to the Company. Mr. Shier was of
counsel to the law firm of Monahan & Biagi PLLC of Seattle Washington from April
1997 to December 1998 were he was the principal securities lawyer to the firm.
Prior to joining Monahan & Biagi, PLLC, Mr. Shier was a partner in the law firm
of Boelter & Gale of Seattle, Washington from 1994 to 1997. In 1993 and 1994,
Mr. Shier served as General Counsel of Holly Residential Properties, Inc., a
NYSE traded apartment REIT based in Tacoma, Washington. From 1982 to 1994, Mr.
Shier represented several technology start-ups both as in-house counsel to a
small investment banking firm and as partner in the New York law firm of
Gersten, Savage, Kaplowitz, Simensky and Shier. Mr. Shier was a founder in 1983
of New Era Communications Corp., an early
1
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round applicant for cellular radiotelephone licenses that is a predecessor to
Vanguard Cellular Communications, a company acquired last year by A T & T.
Mr. Shier has also represented and otherwise participated in funding
partnerships and other business entities engaged in, for example, early research
at Yale University on Artificial Intelligence, development of new railcar and
automobile suspension technologies, toxic gas emission detection technology with
emphasis on bomb detection, and Internet start-ups developing various on-line
technologies. Mr. Shier received his Juris Doctor from Seattle University Law
School in 1982 and a Bachelor of Arts in Business Administration from the
University of Washington in 1972.
Cornelia F. Eldridge, x7, director nominee, is a director of the parent of
D.E. Frey Group Inc. and has been since September 1989. Ms. Eldridge is a
founding partner of Camelot Partners, an investment banking firm in formation.
Since 1987, Ms. Eldridge has been self-employed through Eldridge Associates, New
York, New York, engaged in the business of management consulting. From
August 1984 until December 1986 she was a Partner in Ditri Associates, New York,
New York, engaged in the business of management consulting. Ms. Eldridge
graduated from Ohio Wesleyan University in 1963 with a Bachelor of Arts degree
in Art and French and from the University of Massachusetts in 1968 with an MBA.
Patrick Howard, xx, director nominee, joined Tridium Research, Inc. in 1999
as president. He has been a board member since 1997. Prior to joining Tridium to
present, Mr. Howard is and has served two and a half years as a vice president
of investment banking at Seattle-Northwest Securities Corporation in Seattle,
Washington (1997-present); served two years as vice president of real estate
acquisitions and development at Cobalt Properties in Seattle, Washington
(1995-1997); and served five years as a bond ratings analyst of structured and
public finance project bond financings at Standard & Poor's Ratings Group in New
York City (1990-1995). Mr. Howard is a graduate of the University of San
Francisco (1990). While attending the University of San Francisco, Mr. Howard
served on the University Board of Governors as student body president. Prior to
attending that university, he completed course work at Washington University in
St. Louis, Missouri. Mr. Howard currently serves on the King County, Washington
Affordable Housing Credit Enhancement Review Committee. He holds a Series 7
license and remains active in investment banking. Mr. Howard is highly
experienced in all phases of investment financing, technology, and business
management.
James D. Sink, 54, has served as a director since February 1997 and became
Chairman of the Board in June 1998. Since March 1996, Dr. Sink has been
affiliated with Allegheny University Hospitals in Philadelphia, Pennsylvania,
where he is Professor of Cardiothoracic Surgery. Prior to joining Allegheny
University Hospitals, Dr. Sink was, for more than five years, affiliated with
Presbyterian Medical Center, in Philadelphia, Pennsylvania, where he was Chief
of Cardiothoracic Surgery at the Philadelphia Heart Institute of Presbyterian
Medical Center.
Thomas Renna, 35, director and Secretary, has been a director since
June 1998 and has served as Vice President--Public and Investor Relations since
1999. Prior to that he was employed by Commonwealth Associates, an NASD
broker/dealer as an Investment Executive and held that position from October,
1998 to October 1999. Prior to that he was employed by Consolidated
Merchandising Services, Inc. ("CMSI") (now known as USA Services, Inc.) as a
Vice President of Sales and occupied that position from February 1, 1998 to
October 1998. Mr. Renna's responsibilities in that position included initiating
sales calls to secure new accounts for CMSI as well as advising CMSI as to its
capital raising activities. CMSI is a company which provides "in-store"
merchandising and product assembly and sales services primarily on behalf of
branded product manufacturers or retail companies. CMSI is a company controlled
by George D. Pursglove. Prior to that, Mr. Renna was Vice President of Sales of
SSNN, Inc., ("SSNN") and held that position since October 28, 1997. SSNN, is a
start-up company providing an Internet website which offers company and stock
information on small and micro-cap companies. Mr. Renna's responsibilities
included securing new subscribers for the SSNN service and advising SSNN as to
its capital raising activities. Mr. Renna was employed as a Vice
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President, Investments at Texas Capital Securities from February 1995 to
October 1997. From February 1992 to January 1995, Mr. Renna was a Vice President
of Investments at Berkeley Securities. In his positions with Texas Capital
Securities and Berkeley Securities Mr. Renna was a stockbroker serving the
investment needs of his customers including the buying and selling of
securities.
The Board of Directors recommends a vote FOR each of the nominees as a
director.
BOARD MEETINGS AND COMMITTEES OF THE BOARD
During 1999, the Board of Directors held no meetings. The Board of Directors
has created the following standing committees:
The Executive Committee has the authority to approve the acquisition,
financing and disposition of investments for the Company and execute certain
contracts and agreements, including those related to borrowing money by the
Company. The committee generally exercises all other powers of the Board of
Directors except for those requiring action by the Board of Directors under the
Certificate of Incorporation, Bylaws or applicable law. The Executive Committee
held no meetings in 1999. After the election, the proposed members of the
Executive Committee are Tracy Shier (Chair), Thomas Renna and Cornelia Eldridge.
The Audit Committee consists of directors who are not employees of the
Company and other persons selected by the Board who are, in the opinion of the
Board, free from any relationship that would interfere with their exercise of
independent judgment as Audit Committee members. The Audit Committee has been
established to make recommendations concerning the engagement of independent
public accountants, review with the independent public accountants the plans and
results of audit engagements, approve professional services provided by such
accountants, review the independence of the public accountants retained and
review the adequacy of the Company's internal accounting controls. The Audit
Committee held no meetings in 1999. After the election, the proposed members of
the Audit Committee are Patrick Howard and Cornelia Eldridge.
The Compensation Committee consists of a majority of directors who are not
employees of the Company and the President of the Company. The Compensation
Committee was established to review the Company's general compensation strategy,
establish the salaries of, and review the benefit programs for the President and
other executive officers and for those persons reporting directly to such
persons, as well as to approve certain other significant positions and to set
compensation policy for the Company. The Compensation Committee held no meetings
in 1999. After the election, the proposed members of the Compensation Committee
are Cornelia Eldridge (Chair), James Sink, and Tracy Shier (President),
In 2000, the Compensation Committee intends to commission a report by a
reputable actuary or consulting firm, to generate a compensation report to
facilitate the Compensation Committee in completing its duties. The compensation
report will provides compensation statistics for certain employee and executive
compensation levels for comparable companies in the Company's business segment,
and the types of duties to which those levels of compensation relate. The
Company intends that the Compensation Committee when reviewing appropriate
compensation levels and policy initiatives will use the report in its
deliberations.
COMPENSATION OF THE BOARD OF DIRECTORS
The current directors of the Company were not compensated during 1999 for
their services as directors, per se. See "Certain Relationships and Related
Transactions" below for a description of other compensation that was paid
directors and one ex-director in 1999. The current Board of Directors of the
Company has adopted a resolution setting the compensation for a non-employee
serving as a
3
<PAGE>
director of the Company for the current year commencing immediately after the
2000 Annual Meeting and for the term of office as follows:
<TABLE>
<S> <C>
Annual retainer as a director............................... $ 10,000
Annual retainer for membership on a standing committee...... $ 5,000
Reimbursement for all reasonable expenses incurred in
attending Board or Committee meetings..................... Variable
</TABLE>
Employee directors serve on the Board without additional compensation.
Directors will be given the option of taking directors fees, other than
reimbursement for expenses incurred in attending Board or Committee meetings, in
Common Stock valued at the last sale price as quoted by the Over the Counter
Bulletin Board on the day of the Annual Meeting.
In addition, each director is eligible to participate in the Company's 1987
Stock Option and Appreciation Rights Plan (the "1987 Plan"). See "Executive
Compensation" below for a description of the plan.
EXECUTIVE OFFICERS AND KEY EMPLOYEES OF THE COMPANY
The executive officers of the Company are all also directors as set forth
above.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding ownership of
the Company's Voting Stock, as of March 30, 2000 by: (i) each person who is
known by the Company to own beneficially more than five percent (5%) of the
combined number of votes attributable to all shares of Common and Preferred
Stock outstanding on that date, (ii) each director (Messrs. Sink, Shier and
Renna, (iii) the Chief Executive Officer (Tracy M. Shier) and (iv) all executive
officers and directors as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT OF
NAME AND ADDRESS(1) OF BENEFICIAL OWNER OWNERSHIP(2) CLASS(3)
- --------------------------------------- ------------ ----------
<S> <C> <C>
James D. Sink............................................... 3,461,650(5) 7.0
Thomas Renna................................................ 1,365,500(4) 2.8
Tracy M. Shier.............................................. 1,200,000 2.4
Kenneth Hiniker............................................. 3,039,300(13) 6.2
Max Scheuerer............................................... 2,660,000(x) 5.4
Kenneth Stilger............................................. 2,601,500(y) 5.3
All executive officers and directors as a Group
(three persons)........................................... 6,027,150 12.2
</TABLE>
- ------------------------
(1) Unless otherwise indicated, the address of the beneficial owner is c/o the
Company, 121 Vine Street, #1903 Seattle, WA 98121.
(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of Voting Stock subject
to stock options and warrants currently exercisable or exercisable within
60 days are deemed to be outstanding for calculating the percentage
ownership of the person holding such options and the percentage ownership of
any group of which the holder is a member, but are not deemed outstanding
for calculating the percentage of any other person. Except as indicated by
footnote, and except for voting or investment power held jointly with a
person's spouse, the persons named in the table have sole voting and
investment power with respect to all shares of Voting Stock shown
beneficially owned by them.
4
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(3) Percentage is calculated based upon 49,274,355 shares of Voting Stock
outstanding on March 30, 2000.
(4) Includes shares held by minor children the ownership of which Sink
disclaims.
(x) Includes xx shares of Preferred Stock and warrants to acquire x shares of
Preferred Stock.
(y) Includes yy shares of Preferred Stock and warrants to acquire x shares of
Preferred Stock.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The federal securities laws require the Company's directors and executive
officers, and persons who own more than ten percent of the Company's common
stock to file with the Securities and Exchange Commission initial reports of
ownership and reports of changes in ownership of any securities of the Company.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company, of which there were none, all of the Company's
directors, executive officers and greater-than-ten percent beneficial owners
made all required filings on a timely basis. , except as set forth below:
PROPOSAL 2: APPROVAL OF AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO
INCREASE NUMBER OF AUTHORIZED SHARES
The Board recommends the approval of the proposed amendment to
Article Sixth of the Company's Certificate of Incorporation increasing the
number of authorized shares of common stock from fifty million (50,000,000) as
set forth in the amended Certificate of Incorporation, to two hundred million
(200,000,000) and increasing the number of authorized shares of preferred stock
from five thousand (5,000) to fifty million (50,000,000). The full text of
amended Article [III] is attached hereto as Exhibit A. This action must be
approved by a majority of the votes cast.
PURPOSES OF AMENDMENT. The Company is seeking stockholder approval of the
proposed amendment to provide additional capital stock which may be issued by
the Company upon: (i) the exercise of convertible securities issued and
outstanding and which may in the future be issued and outstanding,(ii) the
direct grant of stock to key employees, (iii) the exercise of qualified and non-
qualified stock options, as previously granted and may be granted in the future
(iv) the consummation of a merger or acquisition the consideration for which is
securities of the Company, in whole or in part; and generally to provide
additional flexibility to management in adjusting the capitalization of the
Company in light of its future capital requirements. Currently, of the
50,000,000 shares of common stock authorized, 49,274,356 is either issued or
reserved for issuance upon conversion of the Preferred Stock.
EFFECTS OF AMENDMENT. The Company believes that the approval by the
stockholders will reinforce the validity of the Company's outstanding Preferred
Stock by providing enough authorized common stock to exchange for the
outstanding Preferred Stock.
If the proposed amendment is adopted, the additional shares of common and
preferred stock authorized would thereafter be subject to issuance from time to
time by the Board of Directors without shareholder approval and without
preemptive purchase rights by the stockholders. The issuance of authorized
shares of common and preferred stock may result in the dilution of the equity
interests of the Company's then existing stockholders. This would be true in the
event the Company issued shares of common stock in return for consideration
having a fair value of less than the book value per share of the common stock on
the date of issuance.
The overall effect of an issuance of additional shares of common and
preferred stock and the existence of certain provisions contained in the
Company's Certificate of Incorporation and By-Laws
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may be to render more difficult the accomplishment of any attempted merger,
takeover or other change in control affecting the Company and the removal of the
Company's incumbent Board of Directors and management. However, the Board of
Directors does not view the increase in authorized common and preferred stock as
an anti-takeover measure.
The Board of Directors recommends that the stockholders vote FOR approval of
the amendment to the Certificate of Incorporation increasing the number of
authorized shares.
PROPOSAL 3: APPROVAL OF AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO CHANGE
THE NAME OF THE CORPORATION TO CECS CORP.
The Board recommends the approval of the proposed amendment to
Article Second of the Company's Certificate of Incorporation changing the name
of the corporation to CECS Corp. The full text of amended Article Second is
attached hereto as Exhibit B. This action must be approved by a majority of the
votes cast.
PURPOSES OF AMENDMENT. The Company is seeking stockholder approval of the
proposed amendment to change the name of the corporation to CECS Corp. primarily
to reflect the fact that the Company has changed the nature of its business from
that of a video cassette retail rental outlet to that of a technology holding
company. Further, the company wishes to re-establish itself as a corporate
entity without the goodwill which may otherwise be associated with the old name
Choices Entertainment Corporation. The Company dose not believe that there is
any particular reason, given the nature of its business, why it should be
concerned with or otherwise invest in continuing or building the name of the
corporation as a "brand name
EFFECTS OF AMENDMENT. The Company believes that the effects of the name
change will be positive in that it permits the company to re-establish itself as
a newly defined operating enterprise. The Company anticipates that adverse
effects of the amendment will be minimal since the legal effect of the name
change will not alter any of the Company's legal obligations or entitlements and
since the goodwill associated with the old name is not a valuable asset of the
corporation. Finally, the costs associated with the change of name will be
minimal since the Company currently does not have any inventories of corporate
stationery, printed forms or other similar materials which must be replaced and
since the Company has already planned to replace the old stock certificates
which till bare the name of Datavend, Inc.
The Board of Directors recommends that the stockholders vote FOR approval of
the amendment to the Certificate of Incorporation changing the name of the
corporation to CECS Corp.
6
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The table below shows, for the last three fiscal years, compensation paid to
the Company's Chief Executive Officer and the three most highly paid executive
officers serving at fiscal year end whose total compensation exceeded $100,000.
We refer to all these officers as the "Named Executive Officers."
ANNUAL COMPENSATION
<TABLE>
<CAPTION>
FISCAL SALARY BONUS OTHER ANNUAL
NAME AND PRINCIPAL POSITION YEAR ($) ($) COMPENSATION ($)
- --------------------------- -------- -------- -------- ----------------
<S> <C> <C> <C> <C>
James D. Sink............................................ 1999 0 0 0(1)
Chairman of the Board 1998 0 0
1996 0 0
Thomas Renna............................................. 1999 0 0 0(2)(3)
Vice President and 1998 Director 1998 0 0 0
1997 N/A
Tracy M. Shier........................................... 1999 0 0 0(4)
President/CEO 1998 N/A
Director 1997 N/A
</TABLE>
- ------------------------
(1) Mr. Sink served as Chairman of the Board of directors until recently when
the By-Laws of the Company were changed eliminating the position as
Chairman. Under the old by-laws, Mr. Sink may have been an executive officer
of the Company. Excludes the value of 2,400,000 shares of restricted Common
Stock issued to Mr. Sink in satisfaction of an obligation fixed by the Board
of Directors during 1999. See "Certain Relationships and Related
Transactions."
(2) Prior to this year, Mr. Renna was not an employee of the Company. Mr. Renna
has received compensation under a consulting agreement. Additionally,
amounts shown exclude the value of 1,200,000 shares of restricted Common
Stock issued to Mr. Renna in partial satisfaction of an obligation fixed by
the Board of Directors during 1999. See "Certain Relationships and Related
Transactions."
(3) Represents amounts paid to Mr. Renna as an independent contractor.
(4) Prior to this year, Mr. Renna was not an employee of the Company. Mr. Renna
has received compensation under a consulting agreement. Additionally,
amounts shown exclude the value of 1,200,000 shares of restricted Common
Stock issued to Mr. Renna in partial satisfaction of an obligation fixed by
the Board of Directors during 1999. See "Certain Relationships and Related
Transactions."
1987 STOCK OPTION AND APPRECIATION RIGHTS PLAN (THE "1987 PLAN")
The Company's 1987 Stock Option and Appreciation Rights Plan (the "1987
Plan") (the "Plan") provides for the granting of stock bonuses, stock options,
stock appreciation rights, and other stock-based awards. The Plan is
administered by the Board of Directors which has the right to grant awards to
eligible participants and to determine the terms and conditions of such grants,
including, but not limited to, the vesting schedule and exercise price of the
awards. All directors, officers, consultants and other employees are eligible to
receive awards under the Plan.
7
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OPTION GRANTS IN THE LAST FISCAL YEAR
During the fiscal year ended December 31, 1999, no options were granted to
any of the Named Executive Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
During the last fiscal year, none of the Named Executive Officers held
options to purchase shares of the Company's Common Stock.
REPORT OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
During 1999, the officers and directors of the Company served without
compensation. In the future, the Board of Directors will be responsible for
establishing compensation policy and administering the compensation programs of
the Company's executive officers.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There was no Compensation Committee in 1999. See "Certain Relationships and
Related Transactions." below
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In August 1999, the Company's Board of Directors passed a resolution
expressly recognizing the obligation of the Company to compensate each of Jim
Sink, George Pursglove, Thomas Renna and Tracy Shier for services rendered and
to be rendered to the Company in connection with the change of control of the
Company and the maintenance of it as an existing, reporting corporation.
Pursuant to that resolution, the Board fixed the obligation to each of the named
individuals at $120,000 and gave each the option to take some part or that
entire amount in securities of the Company. On December 29, 1999 the Board of
Directors of the Company passed a resolution instructing the Company's transfer
agent to issue restricted shares of the Company's common stock to the named
individuals, in an amount of shares and in exchange for release of an amount of
the Company's obligation as follows: Jim Sink--2,400,000 shares--$120,000;
George Pursglove--1,200,000 shares--$60,000; Thomas Renna--1,200,000
shares--$60,000; and Tracy Shier--1,200,000 shares--$60,000. At or about the
time of the adoption of the December 29th resolution, the price of the stock was
approximately $.05 per share.
PERFORMANCE GRAPH
[TO BE FILED BY AMENDMENT IF REQUIRED]
SHAREHOLDER PROPOSALS
Under Rule 14a-8(3) of the Securities and Exchange Commission, stockholder
proposals intended for inclusion in next year's proxy statement must be directed
to the Corporate Secretary at Choices Entertainment Corporation, 121 Vine
Street, #1903, Seattle, Washington 98121, and must be received by [February 1,
2000]. Any stockholder proposal for next year's annual meeting submitted after
[February 1, 2000] will not be considered filed on a timely basis with the
Company under SEC Rule 14a-4(c)(1). For proposals that are not timely filed, the
Company retains discretion to vote proxies it receives. For proposals that are
timely filed, the Company retains discretion to vote proxies it receives
provided (1) the Company includes in its proxy statement advice on the nature of
the proposal and how it intends to exercise its voting discretion and (2) the
proponent does not issue a proxy statement.
8
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INDEPENDENT AUDITORS
Miller and Co. LLP, Certified Public Accountants, were the independent
auditors for the Company for the most recent fiscal year. The Audit Committee of
the Board of Directors has not convened in 2000 for the purpose of selecting
independent auditors for the 2000 fiscal year. Representatives of Miller and Co.
LLP will not be present at the meeting.
SOLICITATION OF PROXIES
The proxy card accompanying this proxy statement is solicited by the Board
of Directors. Proxies may be solicited by officers, directors and other
employees of the Company, none of whom will receive any additional compensation
for their services. Solicitations of proxies may be made personally, or by mail,
telephone, telegraph, facsimile or messenger. The Company will pay persons
holding shares of common stock in their names or in the names of nominees, but
not owning such shares beneficially, such as brokerage houses, banks and other
fiduciaries, for the expense of forwarding soliciting materials to their
principals. All costs of soliciting proxies will be paid by the Company.
OTHER MATTERS
The Company is not aware of any other business to be acted upon at the
meeting. If other business requiring a vote of the stockholders should come
before the meeting, the holders of the proxies will vote in accordance with
their best judgment.
[date]
A copy of the Company's Annual Report on Form 10-KSB for fiscal year 1999,
containing information on operations, filed with the Securities and Exchange
Commission is available upon written request. Please write to: Investor
Relations, Choices Entertainment Corporation, 121 Vine Street, #1903, Seattle,
Washington 98121
EXHIBIT A
AMENDED TEXT OF ARTICLE SIXTH:
"SIXTH: The total number of shares capital stock of all classes which the
Corporation has authority to issue is Two Hundred Fifty Million (250,000,000)
shares, having an aggregate par value of Two Million Five Hundred Thousand
Dollars ($2,500,000), and divided into Two Hundred Million (200,000,000) shares
of common stock with a par value of One Cent ($0.01) per share and Fifty Million
(50,000,000) shares of preferred stock with a par value of One Cent ($0.01) per
share."
EXHIBIT B
AMENDED TEXT OF ARTICLE SECOND:
"SECOND: The name of the Corporation hereinafter is:
CECS CORP."
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