<PAGE> 1
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:
<TABLE>
<S> <C>
/ / 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
THE KUSHNER-LOCKE COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
THE KUSHNER-LOCKE COMPANY
- --------------------------------------------------------------------------------
(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), or 14a-6(i)(1), or 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> 2
THE KUSHNER-LOCKE COMPANY
11601 WILSHIRE BOULEVARD, 21ST FLOOR
LOS ANGELES, CA 90025
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 23, 1996
------------------------
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 the
Summit Hotel Bel-Air, 11461 Sunset Boulevard, Los Angeles, California on May 23,
1996, 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, 1996;
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 4, 1996 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 or
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
/s/ DONALD KUSHNER
------------------------------------
DONALD KUSHNER
Co-Chairman, Co-Chief Executive
Office and Secretary
April 18, 1996
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> 3
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 the Summit Hotel Bel-Air, 11461
Sunset Boulevard, Los Angeles, California on May 23, 1996, 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 1995 Annual Report are
being first mailed to shareholders on or about April 18, 1996. 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, 1996 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. 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 4, 1996 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, 37,540,118 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.
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 five nominees receiving the highest number of
<PAGE> 4
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, 1996, 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.
BENEFICIAL OWNERSHIP OF CERTAIN SHAREHOLDERS
The following table sets forth certain information as of April 4, 1996
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>
PERCENT
COMMON STOCK OF
BENEFICIAL OWNER BENEFICIALLY OWNED CLASS(8)
- ------------------- ------------------ --------
<S> <C> <C>
Peter Locke.................................................... 3,346,017(1) 8.83%
11601 Wilshire Blvd., 21st Floor
Los Angeles, CA 90025
Donald Kushner................................................. 3,346,942(1)(2) 8.83%
11601 Wilshire Blvd., 21st Floor
Los Angeles, CA 90025
Lenore Nelson.................................................. 150,000(3) *
11601 Wilshire Blvd., 21st Floor
Los Angeles, CA 90025
S. James Coppersmith........................................... 25,000 *
11601 Wilshire Blvd., 21st Floor
Los Angeles, CA 90025
(617) 631-2097
Stuart Hersch.................................................. 427,096(4) 1.12%
11601 Wilshire Blvd., 21st Floor
Los Angeles, CA 90025
Milton Okun.................................................... 512,820(5) 1.35%
11601 Wilshire Blvd., 21st Floor
Los Angeles, CA 90025
(310) 275-7618
Froley, Revy Investment Co., Inc............................... 4,393,053(6) 11.70%
10900 Wilshire Boulevard
Suite 1050
Los Angeles, CA 90024
FMR Corp....................................................... 3,396,920(7) 9.05%
82 Devonshire Street
Boston, Massachusetts 02109
All directors and executive officers as a group (six
individuals)................................................. 7,807,875(1)(2)(3) 19.84%
(4)(5)
</TABLE>
- ---------------
* Less than 1%
2
<PAGE> 5
(1) Includes 360,000 shares subject to options which are currently exercisable
or exercisable within 60 days of the date hereof, and excludes 540,000
options which are not currently exercisable or exercisable within 60 days of
the date hereof.
(2) Includes 200,000 shares owned by a corporation controlled by Mr. Kushner.
(3) Includes 150,000 shares subject to options which are currently exercisable
or exercisable within 60 days of the date hereof, and excludes 75,000
options which are not currently exercisable or exercisable within 60 days of
the date hereof.
(4) Includes 427,096 shares subject to options 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 owned by Mr. Okun.
(6) Represents shares of Common Stock issuable upon conversion of the Company's
8% and the Company's 9% Convertible Subordinated Debentures due December 15,
2000 and July 1, 2002, respectively, beneficially owned by Froley, Revy
Investment Co., Inc. The information provided herein is based on information
contained in a Schedule 13G dated February 13, 1996 as filed by Froley, Revy
Investment Co., Inc. with the Securities and Exchange Commission.
(7) 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 on information contained in a Schedule 13G dated February
14, 1996 as filed by FMR Corp. with the Securities and Exchange Commission.
(8) As a percentage of the 37,540,118 shares outstanding on April 4, 1996 plus
certain shares issuable upon conversion of convertible securities or subject
to certain options held by such person or persons.
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 right is exercised. The option or right 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.
ELECTION OF DIRECTORS
An entire Board of Directors consisting of 5 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 may be increased to not more than
a total of 7 directors by action of the Board of Directors.
The Board of Directors has voted to recommend the following persons for
election as directors:
<TABLE>
<S> <C>
Peter Locke Stuart Hersch
Donald Kushner Milton Okun
S. James Coppersmith
</TABLE>
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.
3
<PAGE> 6
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................. 52 1983 1997 Co-Chairman, Co-Chief Executive Officer
and President; Director
Donald Kushner+............. 51 1983 1997 Co-Chairman, Co-Chief Executive Officer
and Secretary; Director
S. James Coppersmith+*...... 63 1995 1997 Director
Stuart Hersch+*............. 45 1989 1997 Director
Milton Okun*................ 72 1995 1997 Director
</TABLE>
- ---------------
+ Member of Audit Committee
* Member of the Option Committee
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, Co-Chief Executive Officer and President 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, Co-Chief Executive Officer, and Secretary. Mr.
Kushner has served as executive producer 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 director of the Company since May 1995.
Mr. Coppersmith has been Chairman of the Board of Trustees of Emerson College,
Boston, Massachusetts, since December 1993. Previously, he served as President
of WCVB-TV-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
each of Sun America Asset Management Corp., a division of Sun America Corp.,
since 1985, of Pizzeria Uno Corp. since 1987, of Waban, Inc. since March 1994
and of Chyron Corporation (a maker of video post-production equipment) since
March 1996.
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. From August 1990 to January 1996, Mr. Hersch was
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.
4
<PAGE> 7
Milton Okun has served as a director of the Company since May 1995. Mr.
Okun is founder and major shareholder of Cherry Lane Music Company, Inc., which
is a privately held company. Mr. Okun has held these positions since 1960.
COMPENSATION OF DIRECTORS
Directors who are also executive officers of the Company do not receive any
additional compensation for serving as members of the Board of Directors or any
committee thereof.
Peter Locke, Donald Kushner and Milton Okun will receive no compensation
for serving as a member of the Board of Directors. S. James Coppersmith and
Stuart Hersch will receive $20,000 and $25,000, respectively, payable quarterly
for fiscal 1996 for serving on the Board of Directors and any committees,
thereof. Mr. Coppersmith and Mr. Hersch received $20,000 and $25,000,
respectively, per annum paid quarterly in fiscal 1995.
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 1995 fiscal year, there were two meetings of the Board of
Directors and no meetings of the Option Committee of the Board of Directors (the
Option Committee was comprised of three directors, each of which 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.
INDEPENDENT ACCOUNTANTS
Upon unanimous 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 1995 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.
5
<PAGE> 8
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 PRINCIPAL OCCUPATION
- ---- --- --------------------
<S> <C> <C>
Lenore Nelson.................................... 45 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. Ms. Nelson has
also acted as manager of film/television post-production services provided to
various entertainment companies, including Columbia Television, The Walt Disney
Company, Warner Brothers, Inc., Paramount Communications, Inc., and NBC
Productions.
- ---------------
(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 46, 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, a
foreign sales agency for theatrical film producers, since 1988.
Patricia Clifford, age 45, 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 32, has been with the Company since October 1990 as Vice
President of Development; as Executive Vice President of Development of the
Company since January 1995; and as President of Television since June 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 41, 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.
Marvinia Anderson, age 53, has served as President of KL International,
Inc., the Company's international television distribution subsidiary, since June
1995. Prior to joining the Company, she served as Executive Vice President of
World International Network, Inc. from 1983 to June 1995; and has held executive
sales positions at Capital Cities/ABC, Valley Cable TV, Inc. and Times Mirror
Cable Television, Inc.
6
<PAGE> 9
Lawrence Mortorff, age 49, 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, in 1989
Mr. Mortorff formed ISO, a company which represents films internationally. 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 California law firms.
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, was president of WarnerVision at such time. 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, 1996, 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 also
agreed to license to WarnerVision domestic distribution rights to Wes Craven
Presents: Mind Ripper for a recoupable minimum guaranty payment against
revenues.
In fiscal 1995, the Company entered into a $696,000 net revenue arrangement
with WarnerVision similar to Double Exposure, Lady-in-Waiting and Last Gasp for
a fourth film entitled Serpent's Lair. Through March 31, 1996, the Company had
received approximately $1,986,000 from WarnerVision towards the production costs
and expenses of these films pursuant to such financing and distribution
arrangements. The Company believes that the terms of the forgoing transactions
with WarnerVision are no less favorable to the Company than those that could
have been obtained in transactions with unaffiliated third parties.
Following the conclusion of fiscal 1994, the Company agreed to advance
August Entertainment, Inc. ("August") up to $1,000,000 of which $650,000 was
advanced and which bears interest at the lesser of (a) Prime (8.25% as of March
31, 1996) + 2% and (b) 10%. Gregory Cascante, President and Chief Executive
Officer of Kushner-Locke International, Inc., is also President and Chief
Executive Officer of August Entertainment. The Company's outstanding advance 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 from which the Company has been paid approximately $179,000 against
this advance. As of March 31, 1996 the outstanding balance of principal and
accrued interest was approximately $551,000. 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 may generate such fees to August are Freeway and Manslayer.
Mr. Cascante manages the international film sales of the Company through a
separate subsidiary of the Company. Under his employment agreement entered into
in September 1994, Mr. Cascante was to receive a percentage of pre-tax profit of
Kushner-Locke International, Inc. ranging from 2.5% to 10% based on a sliding
scale related to certain profit thresholds, with an aggregate of compensation
and pre-tax profit payments not to exceed 200% of his $187,500 base salary. In
October 1995, Mr. Cascante and the Company agreed to amend
7
<PAGE> 10
his employment agreement to remove his pre-tax profit participation in
Kushner-Locke International, Inc. Mr. Cascante's base salary for fiscal 1996 is
$243,750.
Lawrence Mortorff, President of KL Features, Inc., manages the feature film
division of the Company through this subsidiary of the Company which is 95%
owned by the Company, and 5% owned by Mr. Mortorff. Mr. Mortorff has personally
received loans of $175,000 from the Company payable on demand which bear
interest at Prime (8.25% as of March 31, 1996) + 1 1/2%. As of March 31, 1996,
there was no outstanding amount remaining on such loans as they were repaid
through an assignment of production bonuses. Pursuant to an October 1993
employment agreement with the Company, Mr. Mortorff received a salary of
$198,000 in fiscal 1995 and additional compensation in bonuses for each film
that KL Features, Inc. produced based on the amount of the production budget of
each such film. Under an amendment to his employment agreement, subject to final
documentation and resolution of certain issues, it is contemplated that Mr.
Mortorff will receive an annual salary of $325,000; his ownership interest in KL
Features, Inc. will be capped at 5% and the definition and terms of his
production bonuses will be modified.
Cherry Lane Music Company, Inc. ("Cherry Lane"), which is owned by Board of
Directors member Milton Okun, entered into an agreement to become the music
administrator for The Kushner-Locke Company effective August 15, 1994. Cherry
Lane will receive specified fees for the collection of revenues derived from
music publishing and record contracts.
In fiscal 1996, the Company required additional financing for the purchase
of airtime to broadcast the infomercial related to Contemporary Christian Music
which was unavailable under its bank line of credit due to the lack of
traditionally acceptable collateral having not yet been generated by the
recently completed infomercial. Test market results had been positive for
specific media and time periods. In order to fund a prompt roll-out of the
product, members of the Board of Directors were asked to personally provide
funds for the purchase of airtime to the joint venture between The Kushner-Locke
Company and David Sams Industries, Inc. called TVFirst. Certain Board members,
including Messrs. Locke and Kushner, have agreed to provide loans aggregating
between $1,000,000 and $1,500,000, in consideration of a customary rate of
interest and an agreed upon override, subject to the completion of final terms
and conditions and their documentation.
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, 1995 to the Co-Chief
Executive Officers and each executive officer of the Company whose salary and
bonus exceeded $100,000 (the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL AWARDS
COMPENSATION(1) ---------------
---------------- SECURITIES ALL OTHER
FISCAL SALARY BONUS UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) OPTIONS/SARS(#) ($)(2)
- ------------------------------------------- ------ ------- ------ --------------- ------------
<S> <C> <C> <C> <C> <C>
Peter Locke................................ 1995 425,000 -- 32,037
Co-Chairman, Co-Chief Executive Officer 1994 400,000 -- 900,000/0 8,765
and President 1993 397,000 -- -- 8,765
Donald Kushner............................. 1995 425,000 -- 29,255
Co-Chairman, Co-Chief Executive Officer and 1994 400,000 -- 900,000/0 8,065
Secretary 1993 397,000 -- -- 8,065
Lenore Nelson.............................. 1995 182,000 5,000 --
Chief Financial Officer, Executive Vice 1994 78,000 25,000 225,000/0 --
President and Assistant Secretary 1993 -- -- -- --
</TABLE>
8
<PAGE> 11
- ---------------
(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.
EMPLOYMENT AND COMPENSATION ARRANGEMENTS
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. Overhead for the first quarter of fiscal 1996 did not include the
4% pre-tax earnings performance bonus accruing to each of Messrs. Kushner and
Locke under their employment agreements as amended in March 1994. As approved by
the Board of Directors in February 1996, Messrs. Kushner and Locke amended their
employment agreements to waive their pre-tax earnings performance bonus in the
event the Company's annual net income in fiscal 1996 is less than $1,000,000 and
will receive 6% of pre-tax earnings of the Company for fiscal 1996 in excess of
$1,000,000 and up to $3,000,000; but in no event shall either one of them be
entitled to receive greater than $250,000 of performance bonus.
Under the March 1994 revised employment agreements, Messrs. Kushner and
Locke each received a base salary of $425,000 in fiscal 1995 and will receive a
base salary of $425,000 in each of fiscal 1996 through fiscal 1998, subject to
potential increase upon review of such salaries by the Company's Board of
Directors.
In order to induce Messrs. Kushner and Locke to enter into the March 1994
amended employment agreements, the Company granted to each, as of March 7, 1994,
options to purchase 900,000 shares of Common Stock at an 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 Company's 1988 Stock Incentive Plan). Options to purchase up to 360,000
shares of common stock have vested to each officer as of March 1996. The Option
Grant was voted on and approved by shareholders at the Annual Meeting of
Shareholders held 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. Pursuant to an agreement dated 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 $0.75 per share (the last reported sale
price of the Common Stock on the date of the grant). Such options vest in
installments of 75,000 shares over a three-year period on each anniversary of
the date of the grant.
9
<PAGE> 12
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FY-END (#) FY-END ($)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
----- --------------- ------------ ---------------------- --------------------
<S> <C> <C> <C> <C>
Peter Locke........................ -0- N/A 180,000/720,000 0/0
Donald Kushner..................... -0- N/A 180,000/720,000 0/0
Lenore Nelson...................... -0- N/A 75,000/150,000 0/0
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the most recently completed fiscal year, the Board of Directors did
not have a compensation committee meeting. Rather, the full Board of Directors
of the Company participated in deliberations and decisions regarding executive
compensation. The option committee, comprised of Board members Stuart Hersch, S.
James Coppersmith and Milton Okun, did vote by Unanimous Written Consent to
grant new options to certain employees and to reduce the exercise price of
outstanding options for two employees (none of the forgoing for any of the named
Executive Officers) in connection with agreements to amend or extend their
employment agreements with the Company. 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 1995, Mr. Locke served as Co-Chairman of the Board Co-Chief Executive
Officer and President of the Company, and Mr. Kushner served as Co-Chairman of
the Board, Co-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 as amended in March 1994 (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 were based upon
agreements described in "Executive Compensation -- Employment Agreements"or
employment agreements then in effect.
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
10
<PAGE> 13
of the foregoing factors. Such factors are not necessarily linked to any
specific performance related targets or given any particular weight. Bonus
arrangements 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'
interests. 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 such as promotion, contribution to Company
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
were 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
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.
As approved by the Board of Directors in February 1996, Messrs. Kushner and
Locke amended their employment contracts to waive each of their 4% pre-tax
earnings performance bonuses in the event the Company's annual net income in
fiscal 1996 is less than $1,000,000 and will receive 6% of pre-tax earnings of
11
<PAGE> 14
the Company for fiscal 1996 in excess of $1,000,000 and up to $3,000,000 and 4%
of pre-tax earnings thereafter; but in no event shall either of them be entitled
to receive more than a $250,000 performance bonus.
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
S. James Coppersmith
Stuart Hersch
Milton Okun
12
<PAGE> 15
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, 1991, 1992, 1993,
1994 and 1995. The graph assumes that $100 was invested on September 28, 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 during such period. The historical price performance data shown on the
graph is not necessarily indicative of future price performance.
TOTAL RETURN TO STOCKHOLDERS
(ASSUMES $100 INVESTMENT ON SEPTEMBER 28, 1990)
<TABLE>
<CAPTION>
THE KUSHNER- DOW JONES DOW JONES
MEASUREMENT PERIOD LOCKE ENTERTAIN- EQUITY
(FISCAL YEAR COVERED) COMPANY MENT & LEIS MARKET
<S> <C> <C> <C>
9/28/90 100.00 100.00 100.00
9/30/91 125.00 103.98 132.92
9/30/92 46.67 128.33 148.51
9/30/93 66.67 170.89 169.28
9/30/94 53.33 156.51 174.18
9/29/95 30.00 201.95 226.84
</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 10 and the Corporate Performance Graph on page
13 shall not be incorporated by reference into any such filings.
13
<PAGE> 16
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, other than Stuart Hersch,
has complied with all Section 16(a) filing requirements applicable to such
executive officers, directors and greater than 10% beneficial owners. The
Company believes that Stuart Hersch failed to file a Form 4 in connection with
one transaction selling shares of the Company's Common Stock.
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 9, 1996.
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 1995 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
/s/ DONALD KUSHNER
------------------------------------
DONALD KUSHNER
Co-Chairman, Co-Chief Executive
Officer and Secretary
14
<PAGE> 17
PRELIMINARY COPY
- --------------------------------------------------------------------------------
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 23, 1996 ANNUAL MEETING OF SHAREHOLDERS
The undersigned, revoking any previous proxies for such stock,
hereby appoints each of Donald Kushner, Peter Locke, Lenore Nelson and
Jerry Rubin, 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
23, 1996 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 this proxy 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 / /
S. James Coppersmith FOR / / AGAINST / / ABSTAIN / /
Milton Okun FOR / / AGAINST / / ABSTAIN / /
- -------------------------------------------------------------------------------
<PAGE> 18
- --------------------------------------------------------------------------------
Approval of the appointment of KPMG Peat Marwick LLP as the
Company's independent accountants: FOR / / AGAINST / / ABSTAIN / /
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: , 1996
-------------------------
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY.
A STAMPED AND ADDRESSED ENVELOPE HAS BEEN PROVIDED FOR YOUR USE.
- -------------------------------------------------------------------------------
