<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:
/ / 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 Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
THE KUSHNER-LOCKE COMPANY
- --------------------------------------------------------------------------------
(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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $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:
------------------------------------------------------------------------
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>
THE KUSHNER-LOCKE COMPANY
11601 WILSHIRE BOULEVARD, 21ST FLOOR
LOS ANGELES, CA 90025
-------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 17, 1995
-----------------
To the Shareholders:
Notice is hereby given that the Annual Meeting of Shareholders (the "Annual
Meeting") of THE KUSHNER-LOCKE COMPANY (the "Company") will be held at Loews
Santa Monica Beach Hotel, 1700 Ocean Avenue, Santa Monica, California on May 17,
1995, at 2:00 P.M., local time, to consider and vote upon the following:
1. The election of directors;
2. To approve the appointment of KPMG Peat Marwick LLP as the Company's
independent accountants for the fiscal year ending September 30, 1995;
and
3. Such other business as may properly come before the meeting or any
adjournment(s) thereof.
Information concerning these matters, including the names of the nominees
for the Company's Board of Directors, is set forth in the attached Proxy
Statement, which is a part of this Notice.
The Board of Directors has fixed April 17, 1995 as the record date for
determination of shareholders entitled to notice of and to vote at the Annual
Meeting. Accordingly, only those shareholders of record at the close of business
on that date are entitled to vote at the Annual Meeting or any adjournment(s)
thereof.
The Company's Board of Directors urges that all shareholders of record
exercise their right to vote at the meeting personally or by proxy.
Your proxy will continue in full force and effect unless and until you
revoke such proxy prior to the votes such proxy pertains to. You may revoke your
proxy by a writing delivered to the Company stating that such proxy is revoked
or by a subsequent proxy executed by you and presented at the meeting, or by
attending the meeting and voting in person. The dates contained on the forms of
proxy presumptively determine the order of execution, regardless of the postmark
dates on the envelopes in which they are mailed.
By Order of the Board of Directors
Donald Kushner
CO-CHAIRMAN, CHIEF OPERATING OFFICER,
PRESIDENT AND SECRETARY
April 20, 1995
Los Angeles, California
TO ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, PLEASE COMPLETE, SIGN
(DO NOT PRINT) YOUR NAME AND DATE THE ENCLOSED PROXY CARD(S) AS PROMPTLY AS
POSSIBLE AND RETURN IT (THEM) IN THE ENCLOSED PRE-ADDRESSED ENVELOPE. IF YOU
RECEIVE MORE THAN ONE PROXY CARD BECAUSE YOU OWN SHARES REGISTERED IN DIFFERENT
NAMES OR AT DIFFERENT ADDRESSES, EACH PROXY CARD SHOULD BE COMPLETED AND
RETURNED.
<PAGE>
THE KUSHNER-LOCKE COMPANY
11601 WILSHIRE BOULEVARD, 21ST FLOOR
LOS ANGELES, CA 90025
--------------
PROXY STATEMENT
-------------------
This Proxy Statement is furnished to the shareholders in connection with the
solicitation by the Board of Directors of THE KUSHNER-LOCKE COMPANY (the
"Company") of proxies to be used at the Annual Meeting of Shareholders of the
Company (the "Annual Meeting") to be held at Loews Santa Monica Beach Hotel,
1700 Ocean Avenue, Santa Monica, California on May 17, 1995, at 2:00 P.M., local
time, and any adjournment(s) thereof.
The Company's principal executive offices are located at 11601 Wilshire
Boulevard, 21st Floor, Los Angeles, California 90025, and its telephone number
is (310) 445-1111.
This Proxy Statement, the accompanying Notice of Annual Meeting, the
accompanying proxy card(s) and the accompanying Company's 1994 Annual Report are
being first mailed to shareholders on or about April 24, 1995. The Annual Report
is not to be regarded as proxy soliciting material or as a communication by
means of which any solicitation of proxies is to be made.
Each proxy will be voted in accordance with the instructions contained
therein. In the absence of such instructions, the persons designated as proxies
in the accompanying proxy card(s) will vote: for the election of the director
nominees listed in this Proxy Statement (the "Nominees"), for the appointment of
KPMG Peat Marwick LLP as the Company's independent accountants for the fiscal
year ending September 30, 1995 and in their discretion as to any other business
that may properly come before the Annual Meeting or any adjournment(s) thereof.
The Board of Directors does not know of any other business to be brought before
the Annual Meeting. Shares held by banks, custodians, nominees and fiduciaries
not voted in person or by proxy will be deemed not present at the Annual
Meeting, and may possibly effect the existence of a quorum at the Annual
Meeting. The votes of the holders of shares of the Common Stock will be counted
by Imperial Bank or other inspector of elections appointed by the Company.
Each proxy will continue in full force and effect unless and until revoked
by the person executing it prior to the votes pursuant thereto. Such revocation
may be effected by a writing delivered to the Company to the attention of the
Corporate Secretary at the address indicated above stating that such proxy is
revoked, or by a subsequent proxy executed by the person executing the prior
proxy and presented at the meeting, or by attendance at the meeting and voting
in person. The dates contained on the forms of proxy presumptively determine the
order of execution regardless of the postmark dates on the envelopes in which
they are mailed.
GENERAL INFORMATION
The Board of Directors has fixed April 17, 1995 as the record date (the
"Record Date") for the determination of shareholders entitled to notice of and
to vote at the Annual Meeting or any adjournment(s) thereof. As of the end of
business on the Record Date, 31,972,687 shares of Common Stock of the Company
(the "Common Stock") were outstanding and entitled to vote at the meeting.
Shareholders who own shares of Common Stock registered in different names or
at different addresses will receive more than one proxy card. A shareholder must
sign and return each of the proxy cards received to ensure that all of the
shares of Common Stock owned by such shareholder are represented at the Annual
Meeting.
The presence at the Annual Meeting, either in person or by proxy, of the
holders of a majority of the shares of Common Stock outstanding on the Record
Date is necessary to constitute a quorum for the transaction of business.
<PAGE>
Each share of Common Stock entitles the holder thereof to one vote on each
matter to be voted on at the Annual Meeting. With respect to the election of
Directors, the six nominees receiving the highest number of affirmative votes
will be elected. With respect to the approval of the appointment of KPMG Peat
Marwick LLP as the Company's independent accountants for the fiscal year ending
September 30, 1995, the approval of such appointment by a majority of the shares
of Common Stock present at the Annual Meeting either in person or by proxy, will
constitute approval of such appointment.
In the election of directors, a shareholder may cumulate his votes for one
or more nominees, but only if the names of nominees were placed in nomination
prior to the voting and any shareholder has given notice at the meeting prior to
the voting of his intention to so cumulate his votes. If any one shareholder has
given such notice, all shareholders may cumulate their votes in such election of
directors. If the voting for directors is conducted by cumulative voting, each
share will be entitled to a number of votes equal to the number of directors to
be elected, which votes may be cast for a single nominee or distributed among
two or more nominees in such proportions as the shareholder or proxy deems fit.
Dissenters' rights of appraisal will not be available under California law
with respect to any proposal to be submitted by the Board of Directors at the
Annual Meeting.
2
<PAGE>
BENEFICIAL OWNERSHIP OF CERTAIN SHAREHOLDERS
The following table sets forth certain information as of April 17, 1995
concerning the beneficial ownership of Common Stock, by (i) each person who is
known to the Company to be a beneficial owner of more than 5% of the outstanding
Common Stock; (ii) each of the current Directors of the Company; (iii) each of
the named executive officers of the Company; (iv) each person who has been
nominated to be a Director of the Company; and (v) all current Directors and
executive officers of the Company as a group.
<TABLE>
<CAPTION>
COMMON STOCK PERCENT
BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS (10)
- ----------------------------------------------------------- ----------------------------- --------------
<S> <C> <C>
Peter Locke ............................................... 3,110,017(1) 8.9%
11601 Wilshire Blvd., 21st Floor
Los Angeles, CA 90025
Donald Kushner ............................................ 3,111,942(1)(2) 8.9%
11601 Wilshire Blvd., 21st Floor
Los Angeles, CA 90025
S. James Coppersmith ...................................... -- *
11601 Wilshire Blvd., 21st Floor
Los Angeles, CA 90025
Stuart Hersch ............................................. 536,288(3) 1.7%
75 Rockefeller Plaza
New York, NY 10019
Lenore Nelson ............................................. 75,000(4) *
11601 Wilshire Blvd., 21st Floor
Los Angeles, CA 90025
Milton Okun ............................................... 512,821(5) 1.6%
11601 Wilshire Blvd., 21st Floor
Los Angeles, CA 90025
Joseph K. Pagano .......................................... -- *
11601 Wilshire Blvd., 21st Floor
Los Angeles, CA 90025
O. J. Simpson ............................................. 75,000(6) *
11661 San Vicente Blvd., Suite 632
Los Angeles, CA 90049
Froley, Revy Investment Co., Inc. ......................... 4,852,926(7) 13.2%
10900 Wilshire Boulevard
Suite 1050
Los Angeles, CA 90024
BankAmerica Corporation ................................... 3,077,923(8) 8.8%
Bank of America NT&SA
555 California Street
Los Angeles, CA 94104
FMR Corp. ................................................. 3,076,920(9) 8.8%
82 Devonshire Street
Boston, Mass. 02109
All directors and executive officers as a group (five
individuals).............................................. 6,908,247(1)(2)(3)(4)(6) 17.8%
<FN>
- ------------------------
* Less than 1%
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
(1) Includes 180,000 shares of Common Stock subject to options currently
exercisable. Excludes 720,000 shares of Common Stock subject to options not
currently exercisable.
(2) Includes 200,000 shares of Common Stock owned by a corporation controlled
by Mr. Kushner.
(3) Includes 427,096 shares of Common Stock subject to options currently
exercisable.
(4) Represents 75,000 shares of Common Stock subject to options currently
exercisable. Excludes 150,000 shares of Common Stock subject to options not
currently exercisable.
(5) Represents shares of Common Stock issuable upon conversion of the Company's
8% Convertible Subordinated Debentures ("8% Debentures") due December 15,
2000 beneficially owned by Mr. Okun.
(6) Includes 25,000 shares of Common Stock subject to options currently
exercisable and 50,000 shares of Common Stock held in a retirement trust
controlled by Mr. Simpson.
(7) Represents shares of Common Stock issuable upon conversion of the Company's
8% Debentures, and the Company's 9% Convertible Subordinated Debentures due
July 1, 2002 beneficially owned by Froley, Revy Investment Co., Inc. The
information provided herein is based solely upon information contained in a
Schedule 13G, dated February 27, 1995, filed by Froley, Revy Investment
Co., Inc. with the Securities and Exchange Commission.
(8) Includes shares of Common Stock issuable upon conversion of the Company's
8% Debentures beneficially owned by BankAmerica Corporation and Bank of
America NT&SA. The information provided herein is based solely upon
information contained in a Schedule 13G, dated March 31, 1995, filed by
BankAmerica Corporation and Bank of America NT&SA with the Securities and
Exchange Commission.
(9) Represents shares of Common Stock issuable upon conversion of the Company's
8% Debentures beneficially owned by FMR Corp. The information provided
herein is based solely upon information contained in a Schedule 13G, dated
February 14, 1995, filed by FMR Corp. with the Securities and Exchange
Commission.
(10) As a percentage of the 31,972,687 shares of Common Stock outstanding on
April 17, 1995 and certain shares of Common Stock issuable upon conversion
of convertible securities or subject to options held by such person or
persons.
</TABLE>
Messrs. Kushner and Locke have entered into an agreement dated October 1,
1988 (the "Cross-Purchase Agreement") which provides that (i) upon the death of
either party, the surviving party is obligated to purchase the number of the
decedent's shares in the Company the aggregate value of which equals $3,500,000
(a $3,500,000 life insurance policy has been taken out by the Company for the
benefit of each of Messrs. Kushner and Locke on the life of the other person),
the surviving party shall have the option, but not the obligation, to purchase
the remaining shares at the same price per share if the insurance proceeds are
less than the aggregate purchase price for all of the decedent's shares; (ii) if
either party desires to sell his shares of Common Stock, other than in market
transactions, the other party shall have a right of first negotiation with
respect to such shares; and (iii) if either of Messrs. Kushner or Locke is no
longer employed by the Company by reason of termination (A) by such person, (B)
for cause, (C) on account of disability or (D) by expiration of such person's
employment agreement, and the other party is employed, the employed party will
have the right to purchase the other party's shares for an amount equal to 90%
of the average of the bid and ask price per share for the 30 days prior to the
date on which such option is exercised. The option must be exercised no sooner
than three months or later than six months from the date employment is
terminated and must be accompanied by payment equal to 10% of the aggregate
purchase price. The balance of the purchase price is to be paid in cash no later
than six months from the date of exercise. Messrs. Kushner and Locke have
entered into a Trust Agreement, dated October 1, 1988, to effectuate the
provisions of the Cross-Purchase Agreement.
In fiscal 1992, in connection with the Company's public offering of Common
Stock, Messrs. Kushner and Locke deposited 600,000 shares of the Common Stock
with an escrow agent. Under the agreement with the Company, as revised, if
certain earnings before income taxes and extraordinary items requirements were
4
<PAGE>
not met for the year ending September 30, 1993, Messrs. Kushner and Locke would
make capital contributions by releasing such shares of Common Stock to the
Company. Effective October 1, 1993, these shares were contributed back to the
Company for no consideration and retired.
ELECTION OF DIRECTORS
An entire Board of Directors consisting of 6 directors is proposed to be
elected at the Annual Meeting. Directors are to be elected at the Annual Meeting
to serve until the next Annual Meeting and until their successors are duly
elected and qualified.
The Board of Directors has voted to recommend the following persons for
election as directors:
Peter Locke Stuart Hersch
Donald Kushner Milton Okun
S. James Coppersmith Joseph K. Pagano
All of the nominees for director named above (the "Nominees") have consented
to being named herein and have indicated their intention to serve as directors
of the Company, if elected.
Unless authority to do so is withheld, the persons named as proxies will
vote the shares represented by such proxies for the election of the Nominees. In
case any of the Nominees shall become unavailable for election to the Board of
Directors, which is not anticipated, the persons named as proxies shall have
full discretion and authority to vote or refrain from voting for any other
nominees in accordance with their judgment.
The following table contains certain biographical information with respect
to the Nominees:
INFORMATION CONCERNING NOMINEES FOR DIRECTORS
<TABLE>
<CAPTION>
DIRECTOR TERM
NAME AGE SINCE EXPIRES POSITION
- -------------------- --- -------- ------- -----------------------------------------------
<S> <C> <C> <C> <C>
Peter Locke 51 1983 1996 Co-Chairman, Chief Executive Officer; Director
Donald Kushner+ 50 1983 1996 Co-Chairman, Chief Operating Officer, President
and Secretary; Director
S. James Coppersmith 62 N/A 1996 Director Nominee
Stuart Hersch+ 43 1989 1996 Director
Milton Okun 71 N/A 1996 Director Nominee
Joseph K. Pagano 48 N/A 1996 Director Nominee
<FN>
- ------------------------
+ Member of Audit Committee
</TABLE>
The business experience, principal occupations, and employment of each of
the Nominees for at least the past five years are as follows:
Peter Locke co-founded the Company with Donald Kushner in 1983 and currently
serves as Co-Chairman and Chief Executive Officer of the Company.* Mr. Locke has
served as executive producer on substantially all of the Company's programming
since its inception. Prior to 1983, Mr. Locke produced several prime-time
television programs, including two years of the STOCKARD CHANNING SHOW and the
NBC television mini-series THE STAR MAKER, starring Rock Hudson. Mr. Locke also
produced two made-for-television movies telecast on CBS and the films THE HILLS
HAVE EYES PARTS I and II.
Donald Kushner co-founded the Company with Peter Locke in 1983 and currently
serves as Co-Chairman, Chief Operating Officer, President and Secretary.* Mr.
Kushner has served as executive producer
- ------------------------
*Messrs. Locke and Kushner switch positions annually, with one serving as Chief
Executive Officer and the other serving as Chief Operating Officer and
President.
5
<PAGE>
on substantially all of the Company's programming since its inception. Mr.
Kushner was the producer of TRON, a 1982 Walt Disney theatrical film starring
Jeff Bridges, which was nominated for two Academy Awards.
S. James Coppersmith has served as Chairman of the Board of Trustees of
Emerson College, Boston, Massachusetts, since December 1993. Previously, he
served as President of WCVB-TV in Boston, a division of the Hearst Corporation,
from 1982 to June 1994. In addition, Mr. Coppersmith has been a member of the
Board of Governors of the Boston Stock Exchange since January 1995. Mr.
Coppersmith has been a Director of Sun America Asset Management Corp., a
division of Sun America Corp., since 1985, of Pizzeria Uno Corp. since 1987 and
of Waban Corp. since March 1994.
Stuart Hersch has served as a director of the Company since August 1989. Mr.
Hersch was an executive consultant to the Company on a full-time basis from
August 1989 through August 1990, and on a part-time basis from September 1990
through September 1993. Since August 1990, Mr. Hersch has been President of the
WarnerVision Entertainment division of Atlantic Records, a subsidiary of
Time-Warner, Inc. ("WarnerVision" - formerly "A*Vision"). From 1988 to August
1989, Mr. Hersch was Chairman of Hersch Diener & Company, an independent
consulting firm. From 1983 to 1987, Mr. Hersch was the Chief Operating and Chief
Financial Officer of King World Productions, Inc.
Milton Okun is founder and major shareholder of Cherry Lane Music Company,
Inc., which is a privately held music publishing company. Mr. Okun has held
these positions since 1960.
Joseph K. Pagano currently serves as a Director and President of Prime
Cellular, Inc., positions he has held since June 1994. From July 1991 to June
1994 Mr. Pagano was a consultant to Prime Cellular, Inc. In addition, Mr. Pagano
has been a private investor for more than the past five years.
Peter Locke, Donald Kushner and Milton Okun will receive no compensation for
serving as a member of the Board of Directors. S. James Coppersmith, Stuart
Hersch and Joe Pagano will receive $20,000, $25,000 and $20,000 per annum,
respectively, payable quarterly for fiscal 1995 for serving on the Board of
Directors and any committees thereof. Mr. Hersch and O. J. Simpson each received
$25,000 per annum, payable quarterly in fiscal 1994. Jerry Gottlieb, who
resigned as a Director of the Company in October 1994, received $22,500 per
annum in fiscal 1994.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE
SHAREHOLDERS VOTE "FOR" THE ELECTION OF EACH
OF THE NOMINEES DESCRIBED ABOVE.
The Company does not have compensation or nominating committees. The Audit
Committee's functions include reviewing with the independent auditors the plan
and results of the auditing engagement, reviewing the scope and results of the
Company's procedures for internal auditing, reviewing the independence of the
auditors, considering the range of audit and non-audit services and reviewing
the adequacy of the Company's system of internal accounting controls.
During the 1994 fiscal year, there was one meeting of the Board of Directors
and one meeting of the Option Committee of the Board of Directors (the Option
Committee was comprised of two directors, both of whom were outside directors).
All other actions of the Board of Directors and Option Committee were taken
pursuant to unanimous written consents. There was no meeting of the Audit
Committee apart from the full meeting of the Board of Directors. Each
then-current director attended the meetings of the Board of Directors and the
Option Committee held during the period for which he was a director or for which
he served as an Option Committee member.
6
<PAGE>
INDEPENDENT ACCOUNTANTS
Upon recommendation of the Board of Directors, the Company has appointed
KPMG Peat Marwick LLP ("KPMG") as the Company's independent accountants for the
fiscal year ending September 30, 1995. KPMG has served as the Company's
independent accounts since 1987.
Services provided to the Company by KPMG during fiscal year 1994 included
the examination of the Company's consolidated financial statements and
consultations on various tax matters. In the event shareholders do not approve
the appointment of KPMG as the Company's independent accountants for the
forthcoming fiscal year, such appointment will be reconsidered by the Board of
Directors. Representatives of KPMG will be present at the Annual Meeting to
respond to appropriate questions and to make such statements as they may desire.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL
OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP
AS THE COMPANY'S INDEPENDENT ACCOUNTANTS.
7
<PAGE>
EXECUTIVE OFFICERS AND OTHER SIGNIFICANT EMPLOYEES
The executive officers of the Company are chosen by the Board of Directors
and serve at the pleasure of the Board of Directors, subject to the rights, if
any, of an executive officer under any contract of employment.
The following table contains certain biographical information with respect
to the executive officers of the Company:
EXECUTIVE OFFICERS: (1)
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------- --- -----------------------------------------------------------------------------
<S> <C> <C>
Lenore Nelson 44 Chief Financial Officer, Executive Vice President and Assistant Secretary
</TABLE>
Lenore Nelson joined the Company in May 1994 and currently serves as Chief
Financial Officer, Executive Vice President and Assistant Secretary. From
December 1989 to May 1994, Ms. Nelson was a Senior Vice President with the
Entertainment Industries Group at Imperial Bank. Prior thereto, Ms. Nelson was a
Vice President of Entertainment Industries at Bank of California. From 1973 to
1984 Ms. Nelson, was a film technician or post production supervisor at various
entertainment companies including ABC, Universal Studios, Metro Goldwyn Mayer
and Orion Pictures.
- ------------------------
(1) Information with respect to Messrs. Kushner and Locke is set forth above
under Information Concerning Nominees for Directors.
OTHER SIGNIFICANT EMPLOYEES:
The business experience, principal occupations and employment for at least
the past five years of certain other significant employees who have made or are
expected to make significant contributions to the business of the company are as
follows:
Gregory Cascante, age 45, joined the Company on September 1, 1994 as
President and Chief Executive Officer of Kushner-Locke International, Inc., the
international theatrical distribution subsidiary of the Company. Mr. Cascante
has served as President and Chief Executive Officer of August Entertainment,
Inc. since 1988.
Patricia Clifford, age 44, has served as an Executive Producer for the
Company since January 1993. Prior to joining the Company, Ms. Clifford was
President of Interscope Communications from 1986 through January 1993.
Rob Dwek, age 31, has been with the Company since October 1990 as Vice
President of Development and has served as Executive Vice President of
Development of the Company since January 1995. Before joining the Company, Mr.
Dwek was employed by Creative Artists Agency from July 1989 to October 1990 and
prior thereto was with Bob Athens Productions.
Janet Faust, age 40, has served as an Executive Producer for the Company
since March 1992. Prior to joining the Company, Ms. Faust was an Executive
Producer for Spectator Films from June 1989 to March 1992, and from May 1984 to
May 1989 was employed by NBC, where she supervised the development and
production of numerous made-for-television movies.
Larry Friedricks, age 57, has served as President of KL International, Inc.,
the Company's international television distribution subsidiary, since August
1991. Prior to joining the Company, he served as Executive Vice President of
Fries International from 1983 to August 1991.
Lawrence Mortorff, age 48, has served as President of KL Features, Inc., a
subsidiary of the Company responsible for the production of feature films, since
October 1993. From April 1993 to October 1993, Mr. Mortorff served as a
consultant to the Company. Mr. Mortorff was an independent producer of films
from 1987 through the time prior to joining the Company. Additionally, Mr.
Mortorff formed ISO, a company which represents films internationally, in 1989.
From 1985 to 1986, Mr. Mortorff was a founder and president of Scotti Bros.
Pictures. Prior to 1985, Mr. Mortorff held various executive positions in the
entertainment industry, including vice president of International Creative
Management, and as an associate attorney in two law firms.
8
<PAGE>
Adam Shapiro, age 37, has served as Vice President of Development of the
Company since April 1989. From January 1984 to September 1985, Mr. Shapiro was
Creative Director for Macy's Broadcast Advertising. From September 1985 to
October 1986, Mr. Shapiro was Senior Creative Director for Atlantic
Communications. From October 1986 to March 1989, Mr. Shapiro was Director/Vice
President, Development for Richard Reid Productions.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In fiscal 1993, the Company entered into a domestic home video distribution
agreement with WarnerVision for the feature film DEADLY EXPOSURE. Stuart Hersch,
a Director of the Company, has been president of WarnerVision since August 1990.
The distribution agreement provides for payment by WarnerVision to the Company
of an advance in exchange for certain domestic home video rights, subject to
certain back-end participation rights of the Company, and payments by the
Company to WarnerVision of 30% of the Company's net revenues derived from
Canadian home video and broadcast television exploitation of DEADLY EXPOSURE.
Through March 31, 1995, the Company has paid approximately $27,800 to
WarnerVision pursuant to such agreement.
In fiscal 1994, the Company entered into certain motion picture financing
arrangements with WarnerVision whereby WarnerVision and the Company share
production costs and expenses and any resulting revenues with respect to certain
motion pictures. The Company has also entered into domestic home video
distribution agreements with WarnerVision for the feature films LADY-IN-WAITING
and LAST GASP. These agreements provide for the payment by WarnerVision to the
Company of $510,000 and $530,000 in exchange for WarnerVision receiving
participation rights with the Company in the revenues derived from the
exploitation of LADY-IN-WAITING and LAST GASP, respectively. The Company has
recently agreed to license to WarnerVision domestic distribution rights to WES
CRAVEN PRESENTS: MIND RIPPER. Through March 31, 1995, the Company had received
approximately $1,393,000 from WarnerVision towards the production costs and
expenses of LADY-IN-WAITING, LAST GASP, and WES CRAVEN PRESENTS: MIND RIPPER
pursuant to such financing, licensing and distribution arrangements. The Company
has also agreed, subject to final documentation, to co-finance five additional
films with WarnerVision.
Following the conclusion of fiscal 1994, the Company agreed to advance
August Entertainment, Inc. ("August") up to $1,000,000. Gregory Cascante,
President and Chief Executive Officer of Kushner-Locke International, Inc., is
President and Chief Executive Officer of August. The Company's outstanding
advance, approximately $646,000 as of March 31, 1995, is secured by all of the
assets of August, including a pledge of all sales commissions due to August from
the films SLEEP WITH ME, LAWNMOWER MAN II and NOSTRADAMUS. In addition pursuant
to an agreement between the Company and August, August receives producer fees,
profit participations and overrides on domestic and international sales for
films which are being packaged by August in conjunction with Kushner-Locke
International, Inc. Films which are expected to generate such fees to August are
FREEWAY and MANSLAYER.
Lawrence Mortorff, President of K-L Features, manages the feature film
division of the Company through a subsidiary of the Company which is 95% owned
by the Company and 5% owned by Mr. Mortorff. Mr. Mortorff has received a loan
from the Company payable on demand which bears interest at Prime plus 1 1/2%. As
of March 31, 1995 the outstanding amount of such loan was $130,000, which will
be repaid to the Company through an assignment of production bonuses due to Mr.
Mortorff. Pursuant to an agreement with the Company, Mr. Mortorff receives
additional compensation from the Company for each film that K-L Features
produces based on the production budget of each such film. Mr. Mortorff's salary
and cumulative per picture fees have a maximum aggregate limit of $425,000 in
fiscal 1995. The initial term of Mr. Mortorff's contract runs through September
30, 1995 with the first extended term from October 1, 1995 to September 30,
1996.
Gregory Cascante, President of Kushner-Locke International, Inc., manages
the international film sales of the Company through a separate subsidiary of the
Company. Mr. Cascante works for the Company on a part-time basis and he is also
President and Chief Executive Officer of August. Mr. Cascante receives a
percentage of the pre-tax profit of Kushner-Locke International, Inc. ranging
from 2.5% to 10% based on a
9
<PAGE>
sliding scale revenue and pre-tax profit schedule, with an aggregate of
compensation and pre-tax profit payments not to exceed 200% of his base salary.
Mr. Cascante's base salary for fiscal 1995 is $187,500 and for fiscal 1996 is
$243,750.
Cherry Lane Music Company, Inc. entered into an agreement to become in
mid-1995 the music administrator for the Kushner-Locke Company on August 15,
1994. They will receive specified fees for revenue collection from music
publishing and record contracts. Mr. Milton Okun, a director nominee for the
Company, is founder and major shareholder of Cherry Lane.
The Company believes that the terms of the foregoing transactions are no
less favorable to the Company than those that could have been obtained in
transactions with unaffiliated third parties.
EXECUTIVE COMPENSATION
CASH COMPENSATION
The following table sets forth the cash compensation paid or accrued by the
Company during the fiscal year ended September 30, 1994 to the Chief Executive
Officer and each executive officer of the Company whose salary and bonus
exceeded $100,000 (the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION -----------
(1) SECURITIES
-------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY BONUS OPTIONS/SARS COMPENSATION
- -------------------------------------------- ----------- --------- --------- ----------- -------------
($) ($) (#) ($) (2)
<S> <C> <C> <C> <C> <C>
Peter Locke, 1994 400,000 -- 900,000/0 8,765
Co-Chairman, Chief Operating Officer 1993 397,000 -- -- 8,765
and President 1992 376,000 -- -- 7,529
Donald Kushner, 1994 400,000 900,000/0 8,065
Co-Chairman, Chief Executive Officer 1993 397,000 -- -- 8,065
and Secretary 1992 376,000 -- -- 7,429
Lenore Nelson 1994 78,000 25,000 225,000/0 --
Chief Financial Officer, Executive Vice 1993 -- -- -- --
President and Assistant Secretary 1992 -- -- -- --
<FN>
- ------------------------
(1) Does not include perquisites, including non-accountable expense allowances
in the case of Messrs. Kushner and Locke, which do not exceed the lesser of
10% of annual salary and bonus reported or $50,000.
(2) Term life insurance premiums paid by the Company on behalf of the Named
Executive Officer in respect of a $3,500,000 policy and disability
insurance premiums paid by the Company on behalf of the Named Executive
Officer.
</TABLE>
EMPLOYMENT AGREEMENTS
MESSRS. KUSHNER AND LOCKE. In March 1994, Messrs. Kushner and Locke each
agreed to an amendment to his respective employment agreement with the Company
to (i) extend the term of the agreement to September 1998 and (ii) reduce the
maximum annual performance bonus that each may receive to 4% of pre-tax earnings
for the applicable period up to a maximum of $200,000 in fiscal 1994, $220,000
in fiscal 1995, $250,000 in fiscal 1996, $270,000 in fiscal 1997 and $290,000 in
fiscal 1998. Under the revised employment agreements, Messrs. Kushner and Locke
each received a base salary of $400,000 in fiscal 1994 and will receive a base
salary of $425,000 in each of fiscal 1995 through fiscal 1998, subject to
potential increase upon review of such salaries by the Company's Board of
Directors after fiscal 1995.
In order to induce Messrs. Kushner and Locke to enter into the amended
employment agreements, the Company granted to each, as of March 7, 1994, options
to purchase 900,000 shares of Common Stock at an
10
<PAGE>
exercise price per share equal to $0.84 (the last reported sale price of the
Common Stock on the date of the initial closing of the 8% Debentures). The
options vest over a five-year period, with 20% vesting at each anniversary of
the date of grant (subject to possible acceleration following a
"change-in-control" as defined in the the Company's 1988 Stock Incentive Plan).
Options to purchase up to 180,000 shares of common stock have vested to each
officer as of March 1995. Options granted to Messrs. Kushner and Locke were
approved by the shareholders of the Company at the Annual Meeting of
Shareholders held on May 17, 1994.
The Company also provides Messrs. Kushner and Locke with certain fringe
benefits, including payment of an amount equal to the premiums in respect of
$3,500,000 of term life insurance (Messrs. Kushner and Locke have designated the
other person as the beneficiary) and disability insurance for each person. The
agreements permit Messrs. Kushner and Locke to collect outside compensation to
which they may be entitled and to provide incidental and limited services
outside of their employment with the Company and to receive compensation
therefor, so long as such activities do not materially interfere with the
performance of their duties under the agreements. Each of Messrs. Kushner and
Locke also may require the Company to change its name to remove his name within
one year after the expiration or termination of the term of his employment,
except for product released prior to such termination, and except that the
Company may continue to use such name for a period of one year after such
notice.
MS. NELSON. In April 1994, Ms. Nelson entered into a two-year employment
contract with the Company providing for a base salary of $175,000 per year,
subject to an increase of 7 1/2% commencing in the second year of the agreement.
Ms. Nelson received a signing bonus equal to $25,000 and is entitled to an
annual incentive bonus equal to 1/2% of the Company's pre-tax earnings, which
incentive bonus cannot exceed 50% of Ms. Nelson's base salary for such year. As
of April 25, 1994, the Company granted Ms. Nelson options to acquire an
aggregate of 225,000 shares of Common Stock at an exercise price of $0.75 per
share (the last reported sale price of the Common Stock on the date of the
grant); such options vest in installments of 75,000 shares over a three-year
period on each anniversary of the date of the grant.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
-------------------------- VALUE AT
PERCENT OF ASSUMED ANNUAL RATES
TOTAL OF STOCK
NUMBER OF OPTIONS/ PRICE APPRECIATION
SECURITIES SARS GRANTED FOR
UNDERLYING TO EMPLOYEES EXERCISE OR OPTION TERM
OPTION/SARS IN FISCAL BASE PRICE EXPIRATION ---------------------
NAME GRANTED (#) YEAR (S/SH) DATE 5% ($) 10% ($)
- ------------------ ------------ ------------ ------------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Peter Locke 900,000 28% .84 3/7/04 475,000 1,205,000
Donald Kushner 900,000 28% .84 3/7/04 475,000 1,205,000
Lenore Nelson 225,000 7% .75 4/24/04 106,000 269,000
</TABLE>
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN- THE-MONEY
VALUE OPTIONS/SARS AT FY-END OPTIONS/SARS AT FY-END
SHARES ACQUIRED ON REALIZED (#) ($)
NAME EXERCISE (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ------------------ ------------------- ----------- ----------------------- -----------------------
<S> <C> <C> <C> <C>
Peter Locke -0- N/A 0/900,000 0/180,000
Donald Kushner -0- N/A 0/900,000 0/180,000
Lenore Nelson -0- N/A 0/225,000 0/ 75,000
</TABLE>
In March 1994, Lawrence Mortorff was granted options to purchase 400,000
shares of Common Stock at an exercise price of $0.81 per share. 100,000 options
vested in March 1, 1995 and will expire on March 1, 1999. In August 1994,
Gregory Cascante was granted options to purchase 400,000 shares of Common Stock
at an exercise price of $1.06 per share. 100,000 options will vest on September
31, 1995 and will expire on September 31, 1999. The remaining options will vest
pending achievement of scheduled performance goals.
11
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the most recently completed fiscal year, the Board of Directors did
not have a compensation committee. Rather, the full Board of Directors of the
Company participates in deliberations and decisions regarding executive
compensation. Other than Messrs. Kushner and Locke, no member of the Board of
Directors was, during the fiscal year, or formerly, an officer or employee of
the Company or any of its subsidiaries. During fiscal year 1994, Mr. Locke
served as Co-Chairman of the Board and Chief Operating Officer and President of
the Company, and Mr. Kushner served as Co-Chairman of the Board, Chief Executive
Officer and Secretary of the Company.
REPORT ON EXECUTIVE COMPENSATION
The Board of Directors has furnished the following report on executive
compensation:
COMPENSATION OVERVIEW
Executive compensation consists of three key elements: base salary, cash
bonus and periodic grants of stock options under the Company's 1988 Stock
Incentive Plan (the "Plan") or outside of the Plan. Additional benefits,
including retirement and insurance benefits, are provided to executives and
other key employees that the Company believes are similar to those provided by
other similar companies. The Company draws most of its executives and other key
employees from the entertainment industry where creative talent is crucial and
commands a significant premium, where decisions made by a relatively small
number of employees with an in-depth knowledge of creative businesses can have a
major impact on the performance of the Company. Persons with such unique
qualifications are rare and are being pursued by other companies both in and out
of the entertainment industry, many of whom have greater available resources
than the Company. The goal of the Company is to attract and retain the services
of qualified executives in part through its executive compensation programs. The
Company believes its compensation program for executives benefits the Company
through the continuation of growth expansion and new opportunities designed to
enhance shareholder value.
SALARY
Salaries paid to the Company's executive officers are based upon agreements
described in "Executive Compensation -- Employment Agreements."
BONUS
Following each fiscal year, the Co-Chairmen develop individual bonus
recommendations based on the subjective assessment of the Company's overall
performance and each executive's contribution to such performance. No specific
formula is used; however, factors may include selected financial goals (e.g.,
operating performance), project development, long-term objectives and the
executive's leadership role in any of the foregoing factors. Such factors are
not necessarily linked to any specific performance related targets or given any
particular weight. Bonus plans in employment contracts are quantified and
measurable. Each of the executive officers' and certain other employment
contracts include provisions for non-discretionary bonuses based on certain
operating results of the Company as described under "Executive Compensation --
Employment Agreements." No other bonuses have been paid to the executive
officers.
OPTION GRANTS
The Company uses non-qualified stock options and other available forms of
compensation under the Plan which are intended to provide additional long term
incentive to key employees, including the Company's executive officers, and have
the intent of aligning the executive officers' interests with the shareholders'
interest. The Plan under which awards have been made was approved by the
Company's shareholders. Grants under the Plan generally require the executive
officer to be employed by the Company on the exercise date and vest over a
period of years following the date of grant. The exercise price of such grants
is generally equal to the market price of the Common Stock on the grant date;
therefore grants will only benefit an executive officer if the market price of
the Common Stock is greater than on the date of the option grant. No specific
formula is used to determine grants made to any particular employee, including
executive officers, but grants are generally based on factors such as employment
agreements, and subjective factors
12
<PAGE>
such as promotion, contribution to performance, and individual criteria. The
Co-Chairmen make recommendations to the Option Committee with respect to option
grants and vesting. While options typically vest over a five-year period,
options granted to certain executive officers may have different vesting
periods. See "Executive Compensation."
CO-CHAIRMEN COMPENSATION
Messrs. Kushner and Locke, as Co-Chairmen, are compensated pursuant to
employment agreements described under "Executive Compensation -- Employment
Agreements" above. The employment agreements, as amended from time to time, were
negotiated in connection with the Company's initial public offering in October
1988 ("IPO") and were negotiated between the Company and the Co-Chairmen and
subject to the review and approval of an underwriter of the IPO. In August 1992,
such agreements were extended by an additional three years. In November 1992,
such employment agreements were further amended whereby the Co-Chairmen each
reduced the aggregate amount of annual bonuses to 7 1/2% of pre-tax earnings for
the applicable period, subject to increase by an additional 2 1/2% upon review
by the Board of Directors. Additionally, each of the Co-Chairmen pledged 300,000
shares of the Company's Common Stock owned by them against certain financial
performance goals of the Company, which shares were subsequently contributed
back to the Company in October 1993 for no consideration.
During March 1994, the Co-Chairmen further agreed to amend their employment
contracts to extend the agreements through 1998 and reduce base salary to
$400,000 for fiscal year 1994, increasing to $425,000 in fiscal 1995 through
fiscal 1998 subject to potential increase upon review by the Board of Directors
after fiscal 1995. The revised employment agreements also call for a maximum
aggregate annual bonus equal to 4% of pre-tax earnings up to $200,000 in fiscal
1994 increasing annually to $290,000 in fiscal 1998. Further, the revised
employment agreements call for a one time non-qualified stock option grant of
900,000 shares to each of the Co-Chairmen at an exercise price equal to $0.84
(the fair market value on the date of grant, which grant was March 7, 1994). In
connection with these amendments, the Company retained KPMG Peat Marwick LLP
Performance and Compensation Management Consulting to review the proposed
agreements prior to the Board of Directors' approval of the amendments. The
consultants reviewed the proposed compensation package (excluding benefits) and
compared such package to eight similarly sized or slightly larger entertainment
companies for which data was publicly available. The consultants determined that
the proposed compensation fell within the competitive norm for such companies
and noted the Company's shift in the emphasis to balance payment-for-performance
and integration with long-term shareholder returns. In addition, the grant of
such options to Messrs. Locke and Kushner were approved by the shareholders of
the Company at the Annual Meeting of Shareholders held on May 17, 1994.
See "Executive Compensation -- Employment Agreements."
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
allows tax deductions to public companies for compensation over $1,000,000 paid
to the corporation's chief executive officer and four other most highly
compensated executive officers. Qualifying performance based compensation will
not be subject to the deduction limit if certain requirements are met. The
Company intends to consider the provisions of Section 162(m) in connection with
the performance based portion of the compensation of its executives (which
currently consists of stock option grants and annual bonuses described above).
However, the committee does not necessarily intend to structure compensation to
its executives to avoid disallowance of any tax deductions in the future.
THE BOARD OF DIRECTORS
Peter Locke, Co-Chairman
Donald Kushner, Co-Chairman
Stuart Hersch
O.J. Simpson
13
<PAGE>
CORPORATE PERFORMANCE
Set forth is a line graph comparing the stock price of the Company with that
of the Dow Jones Equity Market Index and the Dow Jones Entertainment and Leisure
- -- Recreational Products and Services Index as of the last trading date for each
of the Company's fiscal years ending September 30, 1990, 1991, 1992, 1993 and
1994. The graph assumes that $100 was invested on September 30, 1990 in the
Company's Common Stock and each index, and that all dividends were reinvested.
No dividends have been declared or paid on the Company's Common Stock. The
historical price performance data shown on the graph is not necessarily
indicative of future price performance.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
THE KUSHNER-LOCKE DOW JONES EQUITY DOW JONES ENTERTAINMENT
COMPANY MARKET & LEISURE
<S> <C> <C> <C>
9/30/90 200.00 315.01 229.33
1991 162.50 418.71 281.90
1992 93.80 467.81 342.92
1993 134.40 533.26 454.54
1994 103.10 548.68 425.21
12/31/94 71.90 547.62 432.84
</TABLE>
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
EXCHANGE ACT OF 1934 (THE "EXCHANGE ACT") THAT MIGHT INCORPORATE FUTURE FILINGS,
INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE REPORT OF THE BOARD OF
DIRECTORS REGARDING EXECUTIVE COMPENSATION (ENTITLED "REPORT ON EXECUTIVE
COMPENSATION") BEGINNING ON PAGE 12 AND THE CORPORATE PERFORMANCE GRAPH ON PAGE
14 SHALL NOT BE INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS.
14
<PAGE>
MISCELLANEOUS
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934.
Section 16(a) of the Exchange Act requires executive officers and directors,
and persons who beneficially own more than 10% of any class of the Company's
equity securities to file initial reports of ownership and reports of changes in
ownership with the Securities and Exchange Commission (the "SEC"). Executive
officers, directors and greater than 10% beneficial owners of any class of the
Company's equity securities are required by the SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to the
Company and certain written representations from executive officers and
directors, the Company believes that each such person has complied with all
Section 16(a) filing requirements applicable to such executive officers,
directors and greater than 10% beneficial owners.
PROPOSALS OF SHAREHOLDERS
To be considered for inclusion in the Company's proxy statement for the next
Annual Meeting, proposals of shareholders intended to be present at such meeting
must be received by the Corporate Secretary, The Kushner-Locke Company, 11601
Wilshire Boulevard, 21st Floor, Los Angeles, California 90025 no later than
December 21, 1995.
COST OF SOLICITING PROXIES
The expense of preparing and mailing the Notice of Annual Meeting, the Proxy
Statement, the proxy card(s) and the Company's 1994 Annual Report will be paid
by the Company. It is anticipated that banks, custodians, nominees and
fiduciaries will forward proxy soliciting material to beneficial owners of the
Company's Common Stock and that the Company will reimburse them for their
reasonable expenses.
ANNUAL REPORT TO SECURITIES AND EXCHANGE COMMISSION
The Company files each year with the SEC an Annual Report on Form 10-K as
prescribed by the rules of the SEC. Copies of the 10-K will be provided, without
charge, to any shareholder of the Company. Written requests for a copy of the
10-K should be directed to Donald Kushner, 11601 Wilshire Boulevard, 21st Floor,
Los Angeles, California 90025.
By Order of the Board of Directors
[sig]
Donald Kushner
CO-CHAIRMAN, CHIEF OPERATING OFFICER,
PRESIDENT AND SECRETARY
15
<PAGE>
PROXY THE KUSHNER-LOCKE COMPANY
11601 WILSHIRE BOULEVARD, 21ST FLOOR
LOS ANGELES, CALIFORNIA 90025
PROXY SOLICITED BY THE BOARD OF DIRECTORS OF THE KUSHNER-LOCKE COMPANY
FOR MAY 17, 1995 ANNUAL MEETING OF SHAREHOLDERS
The undersigned, revoking any previous proxies for such stock, hereby
appoints each of Donald Kushner, Peter Locke and Lenore Nelson, as attorney and
agent, acting individually or by a majority of those present, with full power of
substitution, to vote as proxy in the name, place and stead of the undersigned
at the annual meeting of shareholders of THE KUSHNER-LOCKE COMPANY to be held on
May 17, 1995 and at any adjournment thereof, according to the number of votes
that the undersigned would be entitled to vote if personally present. Without
limiting the generality hereof, each of such persons is authorized to vote (1)
as hereinafter specified upon the proposals listed on the reverse side and
described in the Proxy Statement for the meeting and (2) in his or her
discretion upon any other matter that may properly come before the meeting.
The shares represented by this proxy shall be voted as specified. If no
specification is made, the shares shall be voted as recommended by the Board of
Directors. The Board of Directors has proposed the matters set forth below for
the vote of the shareholders of THE KUSHNER-LOCKE COMPANY.
The Board of Directors recommends a vote FOR the items below.
Approval of the following nominees to the Board of Directors:
Peter Locke FOR / / AGAINST / / ABSTAIN / /
Donald Kushner FOR / / AGAINST / / ABSTAIN / /
Stuart Hersch FOR / / AGAINST / / ABSTAIN / /
Joseph K. Pagano FOR / / AGAINST / / ABSTAIN / /
S. James Coppersmith FOR / / AGAINST / / ABSTAIN / /
Milton Okun FOR / / AGAINST / / ABSTAIN / /
<PAGE>
Approval of the appointment of KPMG Peat FOR / / AGAINST / / ABSTAIN / /
Marwick LLP as the Company's independent
accountants
IMPORTANT: Please sign your name or
names exactly as stenciled on this
proxy. When signing as attorney,
executor or administrator, trustee or
guardian, please give your full title
as such.
_______________________________________
Signature
_______________________________________
Signature
Date: ___________________________, 1995
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY.
A STAMPED AND ADDRESSED ENVELOPE HAS BEEN PROVIDED FOR YOUR USE.
