SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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
International Fast Food Corporation
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(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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[ ] 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:
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(4) Date Filed:
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<PAGE>
INTERNATIONAL FAST FOOD CORPORATION
1000 Lincoln Road, Suite 200, Miami Beach, Florida 33139
----------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on September 10, 1998
----------------------
To the Shareholders of International Fast Food Corporation:
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Shareholders
(the "Annual Meeting") of International Fast Food Corporation, a Florida
corporation (the "Company" or "IFFC"), will be held at 9:00 a.m., local time, on
Thursday, September 10, 1998, at the Cheeca Lodge, 81801 Overseas Highway,
Islamorada, Florida 33036, for the following purposes:
(1) To elect five members to the Company's Board of Directors to
hold office until the Company's 1999 Annual Meeting of
Shareholders or until their successors are duly elected and
qualified;
(2) To consider and vote upon a proposal to increase the number of
authorized shares of the Company's common stock, par value
$.01 per share (the "Common Stock"), from 100,000,000 to
200,000,000 shares and to increase the number of authorized
shares of the Company's preferred stock, par value $.01 per
share (the "Preferred Stock"), from 1,000,000 to 2,000,000
shares by amending the Company's Articles of Incorporation;
and
(3) To transact such other business as may properly come before
the Annual Meeting and any adjournments or postponements
thereof.
The Board of Directors has fixed the close of business on August 5,
1998, as the record date for determining those shareholders entitled to notice
of, and to vote at, the Annual Meeting and any adjournment(s) or postponement(s)
thereof.
Whether or not you expect to be present, please sign, date and return
the enclosed proxy card in the enclosed pre-addressed envelope as promptly as
possible. No postage is required if mailed in the United States.
By Order of the Board of Directors
MITCHELL RUBINSON
Chairman of the Board and Chief Executive Officer
Miami Beach, Florida
August 20, 1998
THIS IS AN IMPORTANT MEETING AND ALL SHAREHOLDERS ARE INVITED TO ATTEND THE
MEETING IN PERSON. ALL SHAREHOLDERS ARE RESPECTFULLY URGED TO EXECUTE AND RETURN
THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE. SHAREHOLDERS WHO EXECUTE A
PROXY CARD MAY NEVERTHELESS ATTEND THE MEETING, REVOKE THEIR PROXY AND VOTE
THEIR SHARES IN PERSON.
<PAGE>
1998 ANNUAL MEETING OF SHAREHOLDERS
OF
INTERNATIONAL FAST FOOD CORPORATION
--------------------
PROXY STATEMENT
--------------------
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors (the "Board") of International Fast Food Corporation,
a Florida corporation (the "Company" or "IFFC"), of proxies from the holders of
the Company's common stock, par value $.01 per share (the "Common Stock"), for
use at the 1998 Annual Meeting of Shareholders of the Company to be held at 9:00
a.m., local time, on Thursday, September 10, 1998, at the Cheeca Lodge, 81801
Overseas Highway, Islamorada, Florida 33036, or at any adjournment(s) or
postponement(s) thereof (the "Annual Meeting"), pursuant to the foregoing Notice
of Annual Meeting of Shareholders.
The approximate date that this Proxy Statement and the enclosed form of
proxy are being mailed to shareholders is August 20, 1998. Shareholders should
review the information provided herein in conjunction with the Company's 1997
Annual Report on Form 10-KSB, which accompanies this Proxy Statement. The
Company's principal executive offices are located at 1000 Lincoln Road, Suite
200, Miami Beach, Florida 33139, and its telephone number is (305) 531-5800.
Information Concerning Proxy
The enclosed proxy is solicited on behalf of the Company's Board. The
giving of a proxy does not preclude the right to vote in person should any
shareholder giving the proxy so desire. Shareholders have an unconditional right
to revoke their proxy at any time prior to the exercise thereof, either in
person at the Annual Meeting or by filing with the Company's Secretary at the
Company's headquarters a written revocation or duly executed proxy bearing a
later date; however, no such revocation will be effective until written notice
of the revocation is received by the Company at or prior to the Annual Meeting.
The cost of preparing, assembling and mailing this Proxy Statement, the
Notice of Annual Meeting of Shareholders and the enclosed proxy will be borne by
the Company. In addition to the use of mail, employees of the Company may
solicit proxies personally and by telephone. The Company's employees will
receive no compensation for soliciting proxies other than their regular
salaries. The Company may request banks, brokers and other custodians, nominees
and fiduciaries to forward copies of the proxy material to their principals and
to request authority for the execution of proxies. The Company may reimburse
such persons for their expenses in so doing.
Purposes of the Meeting
At the Annual Meeting, the Company's shareholders will consider and
vote upon the following matters:
(1) The election of five members to the Company's Board of
Directors to serve until the Company's 1999 Annual Meeting of
Shareholders or until their successors are duly elected and
qualified;
<PAGE>
(2) A proposal to increase the number of authorized shares of the
Company's Common Stock from 100,000,000 to 200,000,000 shares
and to increase the number of authorized shares of the
Company's Preferred Stock from 1,000,000 to 2,000,000 shares
by amending the Company's Articles of Incorporation; and
(3) Such other business as may properly come before the Annual
Meeting, including any adjournment(s) or postponement(s)
thereof.
Unless contrary instructions are indicated on the enclosed proxy, all
shares represented by valid proxies received pursuant to this solicitation (and
which have not been revoked in accordance with the procedures set forth above)
will be voted for the election of the five nominees for director named below and
in favor of the matter in item (2). In the event a shareholder specifies a
different choice by means of the enclosed proxy, his or her shares will be voted
in accordance with the specification so made thereon.
Outstanding Voting Securities and Voting Rights
The Board has set the close of business on August 5, 1998 as the record
date (the "Record Date") for determining shareholders of the Company entitled to
notice of and to vote at the Annual Meeting. As of the Record Date, there were
44,776,143 shares of Common Stock issued and outstanding. Only the holders of
issued and outstanding shares of Common Stock are entitled to vote at the Annual
Meeting. Shareholders are entitled to one vote for each share held and do not
have the right to cumulate their votes.
The Company's Bylaws provide that the attendance, in person or by
proxy, of the holders of a majority of the outstanding shares of Common Stock
entitled to vote at the Annual Meeting is necessary to constitute a quorum.
Under the Florida Business Corporation Act (the "Act"), directors will be
elected by a plurality of the votes cast by the shares of Common Stock
represented in person or by proxy at the Annual Meeting. The proposal to approve
the increase in the number of authorized shares of Common Stock to 200,000,000
and the increase in the number of authorized shares of Preferred Stock to
2,000,000 will be approved if a majority of the shares of Common Stock
represented at the Annual Meeting vote in favor of the matter. If less than a
majority of outstanding shares entitled to vote are represented at the Annual
Meeting, a majority of the shares so represented may adjourn the Annual Meeting
to another date, time or place, and notice need not be given of the new date,
time or place if the new date, time or place is announced at the meeting before
an adjournment is taken.
Prior to the Annual Meeting, the Company will select one or more
inspectors of election for the meeting. Such inspector(s) shall determine the
number of shares of Common Stock represented at the meeting, the existence of a
quorum and the validity and effect of proxies, and shall receive, count and
tabulate ballots and votes and determine the results thereof. Abstentions will
be considered as shares present and entitled to vote at the Annual Meeting and
will be counted as votes cast at the Annual Meeting, but will not be counted as
votes cast for or against any given matter. A broker non-vote generally occurs
when a broker who holds shares in street name for a customer does not have
authority to vote on certain non-routine matters because its customer has not
provided any voting instructions on the matter. Broker non-votes have no effect
under Florida law.
2
<PAGE>
SECURITY OWNERSHIP
The following table sets forth certain information as of the Record
Date, concerning the beneficial ownership of the Common Stock by: (i) each
person known by the Company to own beneficially more than 5% of its Common
Stock, (ii) each director and nominee for director of the Company, (iii) the
Chief Executive Officer and the Chief Financial Officer of the Company and (iv)
all directors and executive officers of the Company as a group. Except as
otherwise indicted, the Company believes that all beneficial owners named below
have sole voting and investment power with respect to all shares of Common Stock
beneficially owned by them.
<TABLE>
<CAPTION>
Percentage of
Name and Address of Amount and Nature of Outstanding Shares
Beneficial Owner(1)(2) Beneficial Ownership Owned
- ------------------------------------------------- -------------------- ------------------
<S> <C> <C>
Mitchell Rubinson................................ 30,559,211(3) 68.0%
Edda Rubinson.................................... 30,409,211(4) 67.9%
Marilyn Rubinson................................. 4,810,797(5) 10.7%
Joel Hirschhorn.................................. 2,370,000 5.3%
Dr. Mark Rabinowitz.............................. 136,197(6) *
James F. Martin.................................. 206,000(7) *
Larry H. Schatz, Esq............................. 50,000(8) *
Michael T. Welch................................. 250,000(9) *
All directors and executive officers as
a group (five persons)........................... 31,201,408 68.6%
</TABLE>
- -------------------------
* Less than 1%
(1) The address of each of the listed beneficial owners identified is c/o 1000
Lincoln Road, Suite 200, Miami Beach, Florida 33139.
(2) Under Rule 13d-3 of the Securities Exchange Act of 1934 (the "Exchange
Act"), certain shares may be deemed to be beneficially owned by more than
one person (if, for example, persons share the power to vote or the power
to dispose of the shares). In addition, shares are deemed to be
beneficially owned by a person if the person has the right to acquire the
shares (for example, upon exercise of an option) within 60 days of the date
as of which the information is provided. In computing the percentage
ownership of any person, the amount of shares outstanding is deemed to
include the amount of shares beneficially owned by such person (and only
such person) by reason of these acquisition rights. As a result, the
percentage of outstanding shares of any person as shown in this table does
not necessarily reflect the person's actual ownership or voting power with
respect to the number of shares of Common Stock actually outstanding as of
the Record Date.
(3) Includes 30,409,211 shares held jointly with his wife and options to
purchase 150,000 shares of Common Stock granted to Mr. Rubinson pursuant to
the Company's 1993 Stock Option Plan that are immediately exercisable at an
exercise price of $.40 per share. Such figure includes 80,000 outstanding
shares of Common Stock which are subject to an option granted to Whale
Securities Co., L.P. to purchase at any time until August 30, 1998 at a
purchase price of $5.50 per share.
(4) These shares are held jointly with Edda Rubinson's husband, Mitchell
Rubinson. Such figure includes 80,000 outstanding shares of Common Stock
which are subject to an option granted to Whale Securities Co., L.P. to
purchase at any time until August 30, 1998 at a purchase price of $5.50
per share.
(5) Includes 37,666 shares of Common Stock that would be acquired upon the
conversion of 1,130 shares of Series A Convertible Preferred Stock. Marilyn
Rubinson is Mitchell Rubinson's mother.
(6) Includes options to purchase 50,000 shares of Common Stock granted to
Dr. Rabinowitz that are immediately exercisable at an exercise price of
$.40 per share.
(7) Includes options to purchase 100,000 shares of Common Stock granted to Mr.
Martin pursuant to an employment agreement that vest over a three year
period beginning in July 1998 at an exercise price of $.40 per share and
options to purchase 100,000 shares of Common Stock granted to Mr. Martin
that vest over a three year period beginning in July 1998 at an exercise
price of $.81 per share.
(8) Includes options to purchase 50,000 shares of Common Stock granted to
Mr. Schatz that are immediately exercisable at an exercise price of $.40
per share.
(9) Includes options to purchase 250,000 shares of Common Stock granted to
Mr. Welch pursuant to an employment agreement that vest over a three year
period beginning in June 1999 at an exercise price of $.71 per share.
3
<PAGE>
ELECTION OF DIRECTORS
(Proposal No. 1)
The Company's Bylaws provide that the number of directors shall be
fixed from time to time by resolution of the Board within limits specified by
the Company's Articles of Incorporation. Each director elected at the Annual
Meeting will serve for a term expiring at the Company's 1999 Annual Meeting of
Shareholders or until his successor has been duly elected and qualified.
The Company has nominated the following five persons to be elected at
the Annual Meeting as directors of the Company:
Mitchell Rubinson
James F. Martin
Larry H. Schatz
Dr. Mark Rabinowitz
Michael T. Welch
Each such nominee currently serves as a director of the Company except
for Michael T. Welch, who is a first-time director nominee The Board has no
reason to believe that any nominee will refuse or be unable to accept election;
however, in the event that one or more nominees are unable to accept election or
if any other unforeseen contingencies should arise, each proxy that does not
direct otherwise will be voted for the remaining nominees, if any, and for such
other persons as may be designated by the Board.
Under the terms of the Company's 11% Convertible Senior Subordinated
Discount Notes (the "CSS Notes"), the Company is required to nominate one
individual designated by the holders of the CSS Notes to serve as a director of
the Company. In addition, under the terms of the CSS Notes, Mr. Rubinson has
agreed to vote his shares in favor of such nominee. The CSS note holders have
advised the Company that they are waiving their right to nominate an individual
to serve as a director at the Annual Meeting.
Biographical information relating to the nominees for director
positions appears below on page 5 of this Proxy Statement under the heading
"Directors and Executive Officers."
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
ELECTION OF THE FIVE DIRECTOR NOMINEES.
4
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position with the Company
- ------------------------------------------ -------- -----------------------------------------------------
<S> <C> <C>
Mitchell Rubinson(1)(2)(3)................ 51 Chairman of the Board and Chief Executive Officer
Michael T. Welch.......................... 46 President, Chief Operating Officer and Director
James F. Martin, C.P.A.................... 37 Vice President, Chief Financial Officer, Treasurer
and Director
Mark Rabinowitz, M.D.(1)(2)(3)............ 50 Director
Larry H. Schatz, Esq.(1)(2)(3)............ 52 Vice Chairman of the Board
</TABLE>
- --------------------------
(1) Member of the Audit Committee.
(2) Member of the Stock Option Committee.
(3) Member of the Nomination Committee.
Mitchell Rubinson has served as the Chairman of the Board and Chief
Executive Officer of the Company since its incorporation in December 1991 and
served as President from December 1991 to June 1998. Mr. Rubinson has served as
the Chairman of the Board, Chief Executive Officer and President of Capital
Brands from March 1988 to April 1996, and was the Treasurer of Capital
Brands from March 1992 to April 1993. Mr. Rubinson served as the Chairman of
the Board, Chief Executive Officer and President of QPQ Corporation from July
1993 to May 1997.
Michael T. Welch has served as President, Chief Operating Officer and
General Manager, and a director of IFFC since June 1998. Prior to joining the
Company, Mr. Welch served as Vice President of Operations at Checkers Drive-In
Restaurants Inc. and was with that company since June 1994. From April 1987 to
May 1994, Mr. Welch was president of W-S Acquisition Corporation, a franchisee
of Wendy's International. Mr. Welch also spent six years as Senior Vice
President of Franchise Operations with Wendy's International and has over 25
years experience in the restaurant industry.
James F. Martin, C.P.A., has served as Vice President, Chief Financial
Officer, Treasurer and Director of the Company since May 1997 and, as Director
of Finance for the Company's Polish subsidiaries from November 1993 through
February 1995. Mr. Martin served as Chief Financial Officer of QPQ Corporation
from October 1996 to May 1997. From May 1995 through September 1996, Mr. Martin
was a 50% owner in an information systems and software consulting company
located in South Florida. Additionally, Mr. Martin has nine years of commercial
banking experience and is a Certified Public Accountant.
Mark Rabinowitz, M.D. has served as a director of the Company since
January 1996. Since 1983, Dr. Rabinowitz' principal occupations have been
serving as a medical doctor for and the Vice President of Jose E. Gilbert and
Mark Rabinowitz M.D.S., P.A. and serving as a medical doctor and the President
of Women's Centre for Health, Inc. Dr. Rabinowitz served as a director of QPQ
Corporation from January 1996 to May 1997.
Larry H. Schatz, Esq. has served as Vice Chairman of the Board of the
Company since July 1997. Mr. Schatz has served as "of counsel" for the law firm
of Grubman Indursky & Schindler P.C.
5
<PAGE>
from January 1996. From 1991 through 1995 Mr. Schatz worked as an attorney in
private practice.
Additional Senior Officers of the Company
Leon Blumenthal has served as the Senior Vice President and Director of
Operations of the Company's polish subsidiaries since June 1998 and served as
the Senior Vice President and Chief Operating Officer of the Company and
Managing Director and President of the Polish subsidiaries from March 1995 to
June 1998. Mr. Blumenthal served as General Manager of Hanna Holding Fast Foods
("Hanna Holding") from January 1991 to March 1994. As General Manager of Hanna
Holding, Mr. Blumenthal was responsible for the operation of 20 Burger King
restaurants in Denmark, Sweden and Norway. From 1986 to 1990, Mr. Blumenthal
owned and operated two franchised restaurants of C&M Foods, Inc., d/b/a
Bojangles Chicken & Biscuits in Lilburn, Georgia. From 1966 to 1982, Mr.
Blumenthal held various positions with Burger King Corporation and its
franchisees.
Ian Scattergood has served as Director of Development of IFFP since
March 1998. Prior to joining the Company, Mr. Scattergood served as Director of
Development for Burger King Corporation in its European, Middle Eastern and
African territories from December 1996 to September 1997. From March 1987 to
November 1996, Mr. Scattergood held various management positions with Burger
King Corporation. Mr. Scattergood has over ten years experience in the
restaurant industry.
Compensation of Directors
The Company's officers are elected annually by the Board and serve at
the discretion of the Board. The Company's directors hold office until the next
annual meeting of shareholders or until their successors have been duly elected
and qualified. The Company does not pay directors' fees, but reimburses all
directors for their expenses in connection with their activities as directors of
the Company. Directors of the Company who are also employees of the Company do
not receive additional compensation for their services as directors. Mr. Schatz
receives $25,000 per annum for serving as Vice Chairman of the Board. In
connection with the issuance of the CSS Notes, the Company obtained, and is the
beneficiary of, a $27 million key man life insurance policy on the life of Mr.
Rubinson.
Meetings and Committees of the Board of Directors
During the Company's fiscal year ended December 31, 1997, the Company's
Board took action 13 times by unanimous written consent and had two meetings.
All directors attended at least 75% of the meetings of the Board of Directors.
Mitchell Rubinson, Mark Rabinowitz and Larry Schatz currently
constitute the members of the Board's Audit, Stock Option and Nomination
Committees, which were formed in 1998. The Audit Committee reviews the records
and affairs of the Company and their financial condition, reviews with
management and the independent auditors the systems of internal control, and
monitors the Company's adherence in accounting and financial reporting to
generally accepted accounting principles. The Stock Option Committee is
responsible for the grant of options under the Company's 1993 Stock Option Plan
and 1993 Directors Stock Option Plan. The Nomination Committee is charged with
making recommendations to the full Board for the selection of director nominees.
There is no formal procedure for the submission of shareholder recommendations.
6
<PAGE>
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than 10% of
the Company's outstanding Common Stock, to file with the Securities and Exchange
Commission (the "SEC") initial reports of ownership and reports of changes in
ownership of Common Stock. Such persons are required by SEC regulation to
furnish the Company with copies of all such reports they file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, its officers, directors and holders of more than 10% of
the Company's Common Stock complied with all applicable Section 16(a) filing
requirements applicable to its officers, directors and greater than ten percent
beneficial owners were completed, except that the Form 3 for Michael Welch
relating to his appointment as an executive officer and a director of the
Company and the acquisition of options to acquire 250,000 shares of Common Stock
in June 1998 was filed late and a Form 5 for Marilyn Rubinson, a 10% beneficial
owner, relating to the acquisition of 18,575 shares of Common Stock pursuant to
a pro-rata stock dividend paid to all holders of Series A Convertible Preferred
Stock in December 1997 was filed late.
7
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth, for the fiscal years ended December 31,
1995, 1996 and 1997, the aggregate compensation paid by the Company to Mitchell
Rubinson, the Company's Chief Executive Officer. None of the Company's other
executive officers' total annual salary and bonus for the year ended December
31, 1997 was $100,000 or more.
<TABLE>
<CAPTION>
Annual Compensation (1) Long Term Compensation
----------------------------------------- --------------------------------------
Awards Payouts
--------------------- ---------------
Other Annual Securities Underlying All Other
Name and Principal Position Fiscal Year Salary Compensation Options/SARs (#) Compensation
- --------------------------------- ------------- ---------- -------------- --------------------- ---------------
<S> <C> <C> <C> <C> <C>
Mitchell Rubinson, 1997 $192,163 $14,216(5) 0 0
Chief Executive Officer 1996 $181,093 $12,993(4) 0 0
1995 $159,976 $15,223(3) 0 0
</TABLE>
- ----------------
(1) The columns for "Bonus," "Restricted Stock Awards" and "LTIP Payouts"
have been omitted because there is no compensation required to be reported
in such columns.
(2) See "Aggregated Fiscal Year-End Options Value Table" for additional
information concerning outstanding options. The Company has not
granted any stock appreciation rights ("SARs").
(3) Represents an automobile allowance of $12,000 and medical insurance
premiums of $3,223.
(4) Represents an automobile allowance of $12,000 and medical insurance
premiums of $993.
(5) Represents an automobile allowance of $12,000 and medical insurance
premiums of $2,216.
Employment Agreements
On November 7, 1996, IFFC amended its employment agreement with Mr.
Rubinson, Chairman of the Board and Chief Executive Officer of the Company,
extending his employment term until December 31, 1999. The amended agreement
also provides for a minimum annual salary of $183,012.50 during the first year,
subject to a 10% annual increase for each of the remaining two years.
Additionally, Mr. Rubinson is entitled to receive an annual incentive bonus in
the amount of 2.5% of IFFC's net income, after tax. Pursuant to his employment
agreement, Mr. Rubinson is required to devote such portion of his business time
to IFFC as may be reasonably required by IFFC's Board. Mr. Rubinson is entitled
to four weeks of paid vacation during the first year of the initial term and six
weeks of paid vacation during any subsequent year of his employment with IFFC.
For each day of vacation that Mr. Rubinson elects not to take, pursuant to the
employment agreement, IFFC will pay him an amount of money equal to the quotient
of his then annual salary divided by 260. Mr. Rubinson's employment agreement
requires that he not compete or engage in any business competitive with IFFC's
business for the term of the agreement and for one year thereafter. Mr. Rubinson
is also entitled to certain fringe benefits, including an automobile allowance.
Mr. Rubinson's employment agreement provides for certain payments in the event
his employment is terminated by reason of his death or disability and a
severance payment of twice the minimum annual salary then in effect plus the
incentive bonus paid in the prior year, in the event his employment is
terminated by IFFC without cause. Mr. Rubinson's employment agreement does not
provide for a severance payment in the event his employment is terminated for
cause.
IFFC's employment agreement with James F. Martin, effective July 1,
1997, provides that he will serve as Chief Financial Officer of IFFC, for an
initial term of three years, which IFFC may extend for up to two additional
years. His annual salary for the first year is $85,000. Pursuant to his
employment
8
<PAGE>
agreement, Mr. Martin is required to devote his full business time,
attention and best efforts to the performance of his duties under the employment
agreement. Mr. Martin is entitled to three weeks of paid vacation during any
year of employment and an automobile allowance of $400 per month. However, Mr.
Martin is responsible for all associated expenses relating to such automobile,
including, without limitation, insurance, gas and repairs. Mr. Martin is
eligible to receive stock option grants under IFFC's stock option plans in the
discretion of IFFC's Board or Stock Option Committee. IFFC has granted Mr.
Martin stock options to acquire 100,000 shares of IFFC's Common Stock at an
exercise price of $.40 per share and stock options to acquire 100,000 shares of
IFFC's Common Stock at an exercise price of $.81 per share, such options to be
exercisable in whole or in part and cumulatively as follows, provided in each
case that Mr. Martin is an employee of IFFC on the date of exercise: (i) 20% one
year after the effective date of the employment agreement; (ii) 60% two years
after the effective date of the employment agreement; and (iii) 100% three years
after the effective date of the employment agreement. Mr. Martin also receives
housing allowance while he is living in Poland. Mr. Martin's employment
agreement provides for a payment of $20,000 in the event his employment is
terminated by reason of his death or disability and a severance payment in the
event Mr. Martin's employment is terminated without cause, to be calculated as
follows: (i) if such termination occurs between July 1, 1997 and June 30, 1998,
a $20,000 severance amount; (ii) July 1, 1998 and June 30, 1999, a $15,000
severance amount; and (iii) July 1, 1999 through June 30, 2000, a $10,000
severance amount. Mr. Martin's employment agreement does not provide for a
severance payment in the event his employment is terminated for cause. Mr.
Martin's employment agreement requires that he not compete or engage in any
business competitive with IFFC's business for the term of the agreement and for
a period of two years thereafter.
IFFC and its subsidiary, International Fast Food Polska, Sp.zo.o,
executed an employment agreement with Leon Blumenthal, effective July 1, 1997,
for an initial term of three years, which IFFC may extend for up to an
additional two years. His annual salary for the first year is $100,000.
Additionally, under the terms of the employment agreement, Mr. Blumenthal shall
be eligible to receive stock option grants under IFFC's stock option plans in
the discretion of IFFC's Board or Stock Option Committee. IFFC granted Mr.
Blumenthal stock options to acquire 100,000 shares of IFFC's Common Stock at an
exercise price of $.40 per share, such options to be exercisable in whole or in
part and cumulatively according to the following schedule: (i) 20% one year
after the effective date of the employment agreement; (ii) 60% two years after
the effective date of the employment agreement; and (iii) 100% three years after
the effective date of the employment agreement. Mr. Blumenthal is entitled to
certain fringe benefits, including an automobile to use in connection with the
performance of his duties under the agreement. Mr. Blumenthal shall be entitled
to three weeks of paid vacation during his employment. Mr. Blumenthal's
employment agreement provides for a payment of $25,000 in the event his
employment is terminated by reason of his death or disability and, in the event
his employment is terminated without cause, Mr. Blumenthal is entitled to a
severance payment as follows: if the termination occurs (i) on or prior to July
1, 1998, the severance amount will be $25,000; (ii) after July 1, 1998 but on or
prior to July 1, 1999, the severance amount will be $20,000; and (iii) after
July 1, 1999, the severance amount will be $15,000. Mr. Blumenthal's employment
agreement does not provide for a severance payment in the event his employment
is terminated for cause. Mr. Blumenthal's employment agreement requires that he
not compete or engage in any business competitive with IFFC's business for the
term of the agreement and for two years thereafter.
IFFC executed an employment agreement with Michael Welch, effective
June 15, 1998, which provides that he will serve as IFFC's President and Chief
Operating Officer for an initial term of three years, which IFFC may extend for
up to an additional two years. His annual salary for the first year is $165,000.
Additionally, under the terms of the employment agreement, Mr. Welch shall be
eligible to receive stock option grants under IFFC's stock option plans in the
discretion of IFFC's Board or Stock Option Committee. IFFC granted Mr. Welch
stock options to acquire 250,000 shares of IFFC's Common Stock at an exercise
price of $.71 per share, which are exercisable in whole or in part and
cumulatively according to the following schedule: (i) 20% one year after the
effective date of the
9
<PAGE>
employment agreement; (ii) 60% two years after the employment agreement; and
(iii) 100% three years after the effective date of the employment agreement. In
addition to salary, Mr. Welch is entitled to certain fringe benefits, including
an automobile to use in connection with the performance of his duties under the
agreement and an housing allowance of $2,500 per month. The housing benefits
will terminate when Mr. Welch's family relocates to Poland. Mr. Welch's
employment agreement provides for a payment of $50,000 in the event that his
employment is terminated by reason of death or disability and, in the event his
employment is terminated without cause, Mr. Welch is entitled to a severance
payment as follows: if termination occurs (i) on or prior to December 14, 1998,
the severance amount will be $25,000; (ii) after December 14, 1998, but on or
prior to June 14, 1999, the severance amount will be $50,000; and (iii) after
June 15, 1999, the severance amount will be $75,000. Mr. Welch's employment
agreement does not provide for a severance payment in the event his employment
is terminated for cause. Additionally, the employment agreement requires that
Mr. Welch not compete or engage in any business competitive with IFFC's business
for the term of the agreement and for a period of two years thereafter.
IFFC executed an employment agreement with Ian Scattergood, effective
March 1, 1998, which provides that he will serve as the Director of Development
for International Fast Food Polska, Sp.zo.o ("IFFP"), the Company's majority
owned Polish subsidiary, for an initial term of one year which IFFC may extend
for up to two years. His annual salary for the first year is $105,000 plus a
certain performance bonus. Mr. Scattergood is to receive an automobile allowance
of $500 per month and a housing allowance of $1,500 per month. Additionally,
under the terms of the employment agreement, Mr. Scattergood shall be eligible
to receive stock option grants under the Company's stock option plans in the
discretion of the Company's Board or Stock Option Committee. The Company granted
Mr. Scattergood a stock option to acquire 100,000 shares of the Company's Common
Stock at an exercise price of $.40 per share, such options to be exercisable in
whole or in part and cumulatively according to the following schedule: (i) 20%
one year after the effective date of the employment agreement; (ii) 60% two
years after the effective date of the employment agreement; (iii) 100% three
years after the effective date of the employment agreement. Mr. Scattergood
shall be entitled to three weeks of paid vacation during each year of his
employment. Mr. Scattergood's employment agreement provides for a payment of
$20,000 in the event his employment is terminated by reason of his death or
disability and, in the event his employment is terminated without cause, Mr.
Scattergood is entitled to a severance payment if the termination occurs on or
prior to February 28, 1999, in an amount equal to $20,000. Mr. Scattergood's
employment agreement does not provide for a severance payment in the event his
employment is terminated for cause. Mr. Scattergood's employment agreement
requires that he not compete or engage in any business competitive with the
Company for the term of the agreement and for two years thereafter.
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Option/SAR Values
The following table sets forth certain information concerning
unexercised stock options held by the Chief Executive Officer as of December 31,
1997. No stock options were exercised by the Chief Executive Officer during the
year ended December 31, 1997. No SARs were granted or are outstanding.
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised Options/SARs at In-the-Money Options/SARs at
December 31, 1997(#) December 31, 1997($)(1)
------------------------------- -----------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- --------------------------------------- -------------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Mitchell Rubinson...................... 150,000 0 $3,000 $0
</TABLE>
- -----------------------
(1) The closing bid quotation for the Company's Common Stock as reported by
the National Association of Securities Dealers on December 31, 1997
was $.42.
10
<PAGE>
Option Repricings
Since the Company's inception, the Company has issued, pursuant to the
terms of the 1993 Stock Option Plan and 1993 Directors Stock Option Plan, a
number of stock options to directors, executive officers and key employees. As
of July 1, 1997 the exercise price of each of the stock options granted by the
Company was above the fair market value of the Common Stock underlying such
stock options. In an effort to provide the holders of the stock options
additional incentive to use their best efforts on behalf of the Company, as of
July 1, 1997 each of the stock option agreements between the Company and the
then-current option holders, including Mitchell Rubinson, was amended to reduce
the exercise price stated therein to the fair market value of the underlying
Common Stock on such date, which was $.40 per share.
Certain Relationships and Related Transactions
In January 1997, after considering various alternatives, including the
market price for the Company's Common Stock, its trading volume, various time
constraints, and the unavailability of funds from other sources, the
disinterested directors of the Company authorized the sale of $100,000,
$300,000, $50,000 and $50,000 aggregate principal amount of convertible
promissory notes to Mitchell Rubinson and his wife Edda, Marilyn Rubinson
(Mitchell Rubinson's mother), Jaime Rubinson and Kim Rubinson (Mitchell
Rubinson's daughters), respectively. The notes bore interest at 8% per annum and
were to mature on January 13, 1999. The notes were convertible into shares of
IFFC's Common Stock at $.10 per share. The proceeds from the sale of the notes
were used to fund the cost and expenses in connection with the Company's
litigation against Burger King Corporation ("BKC") and general working capital.
In June 1997, the $500,000 aggregate principal amount of the convertible
promissory notes was converted into 5,000,000 shares of Common Stock.
On March 14, 1997, the Company issued a promissory note in the original
principal amount of $2,198,494 to Litigation Funding ("Funding") as partial
payment of amounts due to Funding in connection with the settlement of the BKC
litigation. The note bore interest at prime plus 1%, was payable in full on
December 31, 1998, and was prepayable in whole or in part at anytime, without
penalty. On July 14, 1997, the Company and a wholly owned subsidiary entered
into a merger agreement with Funding and Mitchell and Edda Rubinson, the sole
shareholders of Funding. Under the terms of the merger agreement, Funding was
merged with and into the subsidiary of the Company, and 25,909,211 shares of
IFFC's Common Stock were issued to the shareholders of Funding. The exchange
ratio was based on a valuation by the disinterested Directors of the amount owed
to Funding under the prior litigation financing agreements between the Company,
International Fast Food Polish, Sp.zo.o and Funding and the value of Funding's
rights to proceeds of the settlement with BKC. The promissory note previously
issued to Funding was assumed by the Company by virtue of the merger with
Funding.
All of the foregoing transactions were authorized by the disinterested
directors of the Company.
11
<PAGE>
PROPOSED AMENDMENT TO THE ARTICLES OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES
OF COMMON STOCK AND PREFERRED STOCK
(Proposal No. 2)
The Company's Board has adopted, subject to shareholder approval, an
amendment to Article III of the Company's Articles of Incorporation to increase
the number of authorized shares of the Company's Common Stock from 100,000,000
to 200,000,000 shares and to increase the number of authorized shares of the
Company's Preferred Stock from 1,000,000 to 2,000,000 shares. The amendment to
the Company's Articles of Incorporation is attached hereto as Exhibit A.
As of the Record Date, the Company had 44,776,143 shares of Common
Stock issued and outstanding and 43,117,178 shares of Common Stock reserved for
issuance, including: (i) 1,115,000 shares of Common Stock reserved for issuance
upon conversion of 33,450 shares of the Company's Preferred Stock (conversion
price of $3.00 per share); (ii) 290,800 shares of Common Stock reserved for
issuance upon exercise of warrants (exercisable at $7.00 per share); (iii)
39,337,143 shares of Common Stock reserved for issuance upon conversion of
$27,536,000 in principal amount of 11% Convertible Notes; (iv) 324,235 shares of
Common Stock reserved for issuance upon conversion of $2,756,000 in principal
amount of 9% Debentures (conversion price of $8.50 per share); (v) 1,070,000
shares of Common Stock reserved for issuance upon the exercise of outstanding
options under the Company's 1993 Stock Option Plan and 1993 Directors Stock
Option Plan (collectively, the "Plans"); (vi) 930,000 shares of Common Stock
reserved for the grant of stock options pursuant to the Plans; and (vii) 50,000
shares of Common Stock reserved for issuance upon the exercise of outstanding
warrants (exercise price of $.28 per share). Accordingly, the Company had only
12,106,679 shares of Common Stock available for future issuance or reservation.
The proposed amendment to the Articles of Incorporation has been
unanimously approved by the Board of Directors for consideration by the
Company's shareholders. The Board believes that it is in the best interest of
the Company to increase the authorized number of shares of Common Stock to
200,000,000 and to increase the authorized number of shares of Preferred Stock
to 2,000,000 so that there will be a sufficient number of authorized but
unissued shares available for general corporate needs, such as future stock
dividends or splits and awards or grants under the Plans. The proposed amendment
would also enable the Company to raise additional capital for its operations or
to effect acquisitions. The Board anticipates that the Company may issue
additional shares of Common Stock or Preferred Stock, or securities convertible
into or exercisable for shares of Common Stock or Preferred Stock, pursuant to
offerings of its securities and/or in connection with acquisitions, although, as
of the date hereof, the Company has not entered into any definitive agreements
involving the issuance of additional shares of its Common or Preferred Stock.
The terms of any series of Preferred Stock to be issued will be dependent
largely on market conditions and other factors existing at the time of issuance.
Once the Company's shareholders approve a level of authorized shares
for any class of the Company's capital stock, no subsequent approval by
shareholders is required for the issuance of shares of that class, up to the
number of shares authorized. Under the Company's Articles of Incorporation, the
Board of Directors has the authority to determine the relative rights of the
Company's capital stock, including voting, conversion, liquidation and dividend
rights and sinking fund provisions. The Articles of Incorporation of the Company
provide that no holder of any class of Company stock will have any preemptive
right to acquire any Company securities.
Depending on the circumstances, the rights of then current holders of
the outstanding securities of the Company may be affected if the Company decides
to issue additional shares of Common Stock or
12
<PAGE>
Preferred Stock. For example, depending on which class of stock is issued and
the terms thereof, the per share voting power, shareholders' equity, or amounts
available for distribution as dividends and on any liquidation of the Company
may be diluted as a result of any such additional issuances.
The issuance of additional shares of Company stock, pursuant to this
proposal, could operate to deter a potential takeover of the Company. For
example, the additional shares proposed to be authorized could be issued to
dilute the stock ownership of a person seeking to obtain control of the Company.
Thus, issuance of the shares authorized under the proposed amendment to the
Company's Articles of Incorporation could operate to (i) preserve current
management; (ii) make more difficult or discourage a merger, tender offer or
proxy contest directed at the Company; (iii) delay the assumption of control by
a holder of a large block of the Company's shares and the removal of incumbent
management; or (iv) increase the degree of control of current management.
Approval of the proposed amendment could be to the advantage of incumbent
management in a hostile takeover attempt and to the disadvantage of stockholders
who might want to participate in the takeover transaction. The Board of
Directors is not aware of any proposal or intention on the part of any person to
attempt a merger, tender offer or any other similar transaction with the
Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
PROPOSAL TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF THE COMPANY'S COMMON
STOCK AND PREFERRED STOCK.
13
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
On January 5, 1998, the Company, upon recommendation of the Board of
Directors, advised Moore Stephens Lovelace, P.L. ("Moore Stephens") that it
would not be appointed as the Company's auditors for the year ended December 31,
1997. During the most recent fiscal year and subsequent interim period through
January 5, 1998, there were no disagreements with Moore Stephens on any matter
of accounting principles or practices, financial statement disclosure or
auditing scope or procedure or any reportable events. Moore Stephens' report on
the Company's financial statements for the most recent fiscal year did not
contain an adverse opinion or a disclaimer of opinion, nor was it qualified or
modified as to uncertainty, audit scope or accounting principles
On January 7, 1998, the Board appointed Arthur Andersen LLP as the
independent public accountants of the Company for the fiscal year ended December
31, 1997 and has selected such firm as the Company's accountants for the fiscal
year ending December 31, 1998. Representatives of Arthur Andersen LLP are
expected to be present at the Annual Meeting, will have the opportunity to make
a statement if they desire to do so and are expected to be available to respond
to appropriate questions from shareholders. Representatives of Moore Stephens
are not expected to attend the Annual Meeting.
OTHER BUSINESS
The Board knows of no business to be brought before the Annual Meeting
other than the matters described in this Proxy Statement. If, however, any other
business should properly come before the Annual Meeting, the persons named in
the accompanying proxy will vote proxies as in their discretion they may deem
appropriate, unless they are directed by a proxy to do otherwise.
INFORMATION CONCERNING SHAREHOLDER PROPOSALS
A shareholder intending to present a proposal at the Company's 1999
Annual Meeting of Shareholders must deliver such proposal in writing to the
Company's principal executive offices no later than April 20, 1999 for
inclusion in the Company's proxy statement relating to such meeting, subject to
applicable rules and regulations.
By Order Of The Board of Directors
MITCHELL RUBINSON
Chairman of the Board and Chief Executive Officer
Miami Beach, Florida
August 20, 1998
14
<PAGE>
ARTICLE III
Capital Stock
The aggregate number of shares of all classes of capital stock that
this Corporation shall have authority to issue is Two Hundred and Two Million
(202,000,000) shares, consisting of (i) Two Hundred Million (200,000,000) shares
of common stock, par value $0.01 per share (the "common stock"), and (ii) Two
Million (2,000,000) shares of preferred stock, par value $0.01 per share (the
"Preferred Stock").
The designations and the preferences, limitations and relative rights
of the Preferred Stock and the common stock are as follows:
A. Provisions Relating to the Preferred Stock.
1. General. The Preferred Stock may be issued from time to
time in one or more classes or series, the shares of each class or series to
have such designations and powers, preferences, and rights, and qualifications,
limitations and restrictions thereof as are stated and expressed herein and in
the resolution or resolutions providing for the issue of such class or series
adopted by the Board of Directors as hereinafter prescribed.
2. Preferences. Subject to the rights of the holders of the
Corporation's common stock, as set forth in Section B of this Article III,
authority is hereby expressly granted to and vested in the Board of Directors to
authorize the issuance of the Preferred Stock from time to time in one or more
classes or series, to determine and take necessary proceedings fully to effect
the issuance and redemption of any such Preferred Stock, and, with respect to
each class or series of the Preferred Stock, to fix and state by the resolution
or resolutions from time to time adopted providing for the issuance thereof the
following:
(a) whether or not the class or series is to have
voting rights, full or limited, or is to be without voting rights;
(b) the number of shares to constitute the class or
series and the designations thereof;
(c) the preferences and relative, participating,
optional or other special rights, if any, and the qualifications, limitations or
restrictions thereof, if any, with respect to any class or series;
(d) whether or not the shares of any class or series
shall be redeemable and if redeemable the redemption price or prices, and the
time or times at which and the terms and conditions upon which such shares shall
be redeemable and the manner of redemption;
(e) whether or not the shares of a class or series
shall be subject to the operation of retirement or sinking funds to be applied
to the purchase or redemption of such shares for retirement, and if such
retirement or sinking fund or funds be established, the annual amount thereof
and the terms and provisions relative to the operation thereof;
(f) the dividend rate, whether dividends are payable
in cash, stock of the Corporation or other property the conditions upon which
and the times when such dividends are payable, the preference to or the relation
to the payment of the dividends payable on any other class or classes or series
of stock,
<PAGE>
whether or not such dividend shall be cumulative or noncumulative and
if cumulative, the date or dates from which such dividends shall accumulate;
(g) the preferences, if any, and the amounts thereof
that the holders of any class or series thereof shall be entitled to receive
upon the voluntary or involuntary dissolution of, or upon any distribution of
the assets of, the Corporation;
(h) whether or not the shares of any class or series
shall be convertible into, or exchangeable for, the shares of any other class or
classes or of any other series of the same or any other class or classes of the
Corporation and the conversion price or prices or ratio or ratios or the rate or
rates at which such conversion or exchange may be made, with such adjustments,
if any, as shall be stated and expressed or provided for in such resolution or
resolutions; and
(i) such other special rights and protective
provisions with respect to any class or series as the Board of Directors may
deem advisable.
The shares of each class or series of the Preferred Stock may vary from
the shares of any other series thereof in any or all of the foregoing respects.
The Board of Directors may increase the number of shares of Preferred Stock
designated for any existing class or Series A authorized and unissued shares of
Preferred Stock not designated for any other class or series. The Board of
Directors may decrease the number of shares of the Preferred Stock designated
for any existing class or series by a resolution subtracting from such series
unissued shares of the Preferred Stock designated for such class, or series, and
the shares so subtracted shall become authorized, unissued and undesignated
shares of the Preferred Stock.
3. Provisions Relating to the Series A Preferred Stock.
(a) Designation and Rank.
The series of preferred stock is designated "Series A Convertible
Preferred Stock", and the number of shares which shall constitute such Series
shall be 83,920 shares, par value $.01 per share. All shares of Series A
Convertible Preferred Stock shall rank equally with respect to dividend payments
and liquidation preferences with the highest ranking preferred stock of the
Company hereinafter designated by the Board of Directors.
(b) Dividends.
The Company shall pay dividends on the Series A Convertible Preferred
Stock at an annual rate of 6% ($6.00 per share) and no more. All such dividends
may, at the option of the Company, be paid through the issuance of shares of the
Company's common stock, $.01 par value, per share (the "common stock"), cash or
a combination of cash and common stock, whether or not such dividends have been
declared by the Company's Board of Directors. Dividends shall accrue
cumulatively from and including the date of issuance of the Series A Convertible
Preferred Stock and shall be paid in equal semi-annual payments on June 15 and
December 15 (the "Dividend Payment Dates") in each year through the date of
conversion or redemption of such preferred stock, to all holders of record on a
date not more than 10 days prior to the date on which such dividends are
payable. For purposes of paying dividends in common stock, the price of the
common stock shall be the average of the daily closing prices of the common
stock for the 30 consecutive full business days preceding the day in question.
The closing price for each business day shall be the last reported sale price,
or, in the case that no such reported sale takes place on such day, the average
of the last reported sale prices for the last three trading days, in either case
as officially reported by the principal securities exchange on which the common
stock is listed or admitted for trading or as reported in the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") or,
A-2
<PAGE>
if the common stock is not listed or quoted on a principal securities exchange
or NASDAQ (or if NASDAQ ceases to report closing sales prices), the closing bid
price furnished by the National Association of Securities Dealers, Inc. through
NASDAQ, or similar organization if NASDAQ is no longer reporting such
information, or if the common stock is not quoted by NASDAQ, then as reported by
the National Quotation Bureau Incorporated, or if not quoted by the National
Quotation Bureau Incorporated, the average of the closing bid and asked prices
as furnished by any member of the National Association of Securities Dealers,
Inc. selected from time to time by the Company for that purpose.
(i) The Series A Convertible Preferred Stock
shall be preferred as to the payment of dividends over the shares of all common
stock and any other class or classes of stock of the Company but shall rank in
parity with any class of preferred stock of the Company, if any, which so
provides. Dividends (whether current or in arrears) on the Series A Convertible
Preferred Stock shall be paid before any dividends on any junior stock shall be
declared and set apart for payment or paid.
(ii) All dividends payable on the Series A
Convertible Preferred Stock shall be cumulative.
(iii) Accruals of dividends shall not bear
interest.
(c) Dissolution, Liquidation or Winding-Up.
In the event of a dissolution, liquidation or winding-up of the
Company, whether voluntary or involuntary, the holders of each share of Series A
Convertible Preferred Stock by reason of their ownership thereof, shall be
entitled to receive in exchange for and in redemption of their Series A
Convertible Preferred Stock, prior and in preference to any distribution of any
of the assets or surplus funds of the Company to the holders of common stock and
any other class or classes of stock of the Company (except those that shall rank
in parity with the Series A Convertible Preferred Stock), an amount equal to One
Hundred Dollars ($100) per share, plus all accrued but unpaid dividends, whether
or not declared, on such shares.
If upon any such liquidation, dissolution or winding-up of the Company,
its net assets shall be insufficient to permit the payment in full of the
amounts to which holders of all outstanding shares of the Series A Convertible
Preferred Stock are entitled as above provided, the entire net assets of the
Company remaining shall be distributed among the holders of shares of Series A
Convertible Preferred Stock in amounts proportionate to the full preferential
amounts to which they and holders of shares of preferred stock if any, ranking
in parity with the Series A Convertible Preferred Stock as to rights and
preferences are respectively entitled. For the purpose of this Section III, the
voluntary sale, lease, exchange or transfer, for cash, shares of stock,
securities or other consideration, of all or substantially all of the Company's
property or assets to, or its consolidation or merger with, one or more
corporations, shall not be deemed to be a liquidation, dissolution or winding-up
of the Company, voluntary or involuntary.
(d) Voting Rights.
Except as otherwise specifically provided by the Company's Articles of
Incorporation or by Florida law, the holders of Series A Convertible Preferred
Stock shall not be entitled to vote on any matters required or permitted to be
submitted to the shareholders of the Company for their approval.
(e) Conversion Provisions.
The holders of the Series A Convertible Preferred Stock shall have
conversion rights as follows:
(i) Right to Convert. Subject to the
provisions for adjustment set forth below, after June 30, 1995 (the "Conversion
Date"), and for a period prior to its earlier redemption or repurchase by the
Company, each of Series A Convertible Preferred Stock shall be convertible, at
the option of the holder thereof and upon surrender of the certificate or
certificates evidencing the shares to be converted to the transfer agent or the
A-3
<PAGE>
Company for the Series A Convertible Preferred Stock, into fully paid and
nonassessable shares of common stock of the Company at a conversion price of
$3.00 per share (the "Conversion Price"), subject to adjustment as described in
paragraph (c) below. The right to convert shares of the Series A Convertible
Preferred Stock called for redemption shall terminate on the date fixed for
redemption provided that the Company has complied with Section VI(c).
(ii) Issuance of Shares of common stock on
Conversion. As promptly as practicable after the surrender of shares of Series A
Convertible Preferred Stock for conversion in the manner herein provided, the
Company shall deliver or cause to be delivered, at the office or agency at which
such surrender is made, to or upon the written order of the holder of shares of
Series A Convertible Preferred Stock so surrendered, certificates representing
the number of duly authorized, validly issued, fully paid and nonassessable
shares of common stock of the Company into which such shares of Series A
Convertible Preferred Stock may be converted and cash in respect of any fraction
of a share of common stock issuable upon such conversion. Any such conversion
shall be deemed to have been made immediately prior to the close of business on
the date on which such share(s) of Series A Convertible Preferred Stock shall
have been surrendered for conversion in the manner herein provided accompanied
by written notice, so that the rights of the holder of such share(s) of Series A
Convertible Preferred Stock as holders thereof, shall cease at such time and the
person or persons entitled to receive the shares of common stock upon conversion
of the Series A Convertible Preferred Stock shall be treated for all purposes as
having become the record holder or holders of such shares of common stock at
such time; provided, however, that no such surrender on any date when the stock
transfer books of the Company shall be closed shall be effective to constitute
the person or persons entitled to receive shares of common stock, upon
conversion of such shares of Series A Convertible Preferred Stock, as the record
holder or holders of such shares on such date, but such surrender shall be
effective to constitute the person or persons entitled to receive such shares of
common stock as the record holders or holders thereof for all purposes at the
opening of business on the next succeeding day on which such stock transfer
books are open and such conversion shall be at the applicable Conversion Price
in effect at such time.
(iii) Adjustment of Conversion Price. The
Conversion Price shall be subject to adjustment from time to time as follows:
a) In the event that the Company shall
at any time after the date hereof subdivide or combine the outstanding shares of
common stock or issue additional shares of common stock as a dividend or other
distribution on the common stock, the Conversion Price in effect immediately
prior to such subdivision or combination of such shares or share dividend or
distribution shall be proportionately adjusted so that, with respect to each
such subdivision of shares or share dividend or distribution, the number of
shares of common stock deliverable upon conversion of each share of Series A
Convertible Preferred Stock shall be increased in proportion to the increase in
the number of shares of the then outstanding common stock resulting from such
subdivision of shares or share dividend or distribution, and with respect to
each such combination of shares, the number of shares of the common stock
deliverable upon conversion of each share of Series A Convertible Preferred
Stock shall be decreased in proportion to the decrease in the number of shares
of the then outstanding common stock resulting from such combination of shares.
Any such adjustment in the Conversion Price shall become effective, in the case
of any such subdivision or combination of shares, at the close of business on
the effective date thereof, and, in the case of any such share dividend or
distribution, at the close of business on the record date fixed for the
determination of shareholders entitled thereto or on the first business day
during which the stock transfer books of the Company shall be closed for the
purpose of such determination, as the case may be.
b) In the case of any capital
reorganization or any reclassification of the common stock, or in the case of
the consolidation or merger of the Company with or into any other corporation or
in case of any sale or transfer of all or substantially all of the assets of the
Company, the holder of each share of Series A Convertible Preferred Stock then
outstanding shall have the right thereafter to convert the Series A Convertible
Preferred Stock into the kind and amount of shares of stock and other securities
and property receivable upon such reorganization, reclassification,
consolidation, merger, sale or transfer by a holder of the
A-4
<PAGE>
number of shares of common stock of the Company into which such share(s) of
Series A Convertible Preferred Stock might have been converted immediately prior
to such reorganization, reclassification, consolidation, merger, sale or
transfer; and in any such case, appropriate adjustment (as determined in good
faith by the Board of Directors of the Company) shall be made in the application
of the provisions of this Section V(c) (including provisions with regard to the
adjustment of the Conversion Price) in order that the rights and interests of
the holders thereafter shall be as nearly equivalent as may be practicable to
the rights and interests provided for in this Section.
c) Whenever the Company shall fix a
record date for the holders of the common stock for the purpose of determining
the holders entitled (for a period expiring within 45 days after such record
date) to subscribe for or purchase shares of common stock at a price per share
less than the Market Price (as defined below) of the common stock as of such
record date, the Conversion Price shall be adjusted so that the number of shares
of the common stock into which each share of Series A Convertible Preferred
Stock shall thereafter be convertible shall be determined by multiplying the
number of shares of the common stock into which each share of Series A
Convertible Preferred Stock was theretofore convertible by a fraction of which
the numerator shall be the number of shares of the common stock outstanding
immediately prior to the taking of such record plus the number of additional
shares of common stock offered for subscription or purchase, and of which the
denominator shall be the number of shares of the common stock outstanding
immediately prior to the taking of such record plus the number of shares of the
common stock which the aggregate offering price (without deduction of any
expenses, including commissions or discounts) of the total number of shares of
the common stock so offered would purchase at the Market Price of the common
stock as of the record date. In the case of the proposed issuance of common
stock for a consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair market value thereof as
determined by the Board of Directors of the Company. This subsection shall not
apply in the case of any shares of common stock proposed to be issued by the
Company as or as a result of a stock dividend payable in shares of common stock
or as a result of any subdivision or split-up of the outstanding shares of
common stock.
The term "Market Price" means the average of the daily closing prices
of the common stock for the 30 consecutive full business days preceding the day
in question. The closing price for each business day shall the last reported
sale price, or, in the case that no such reported sale takes place on such day,
the average of the last reported sale prices for the last three trading days, in
either case as officially reported by the principal securities exchange on which
the common stock is listed or admitted for trading or as reported on NASDAQ or,
If the common stock is not listed or quoted on a principal securities exchange
or NASDAQ (or if NASDAQ ceases to report closing sales prices), the closing bid
price furnished by the National Association of Securities Dealers, Inc. through
NASDAQ, or similar organization if NASDAQ is no longer reporting such
information, or if the common stock is not quoted by NASDAQ, then as reported by
the National Quotation Bureau Incorporated, or if not quoted by the National
Quotation Bureau Incorporated, the average of the closing bid and asked prices
as furnished by any member of the National Association of Securities Dealers,
Inc. selected from time to time by the Company for that purpose.
d) Whenever the Company shall fix a
record date for the holders of the common stock for the purpose of determining
the holders entitled to receive any distribution of evidences of its
indebtedness, capital stock or assets (other than dividends or distributions
payable out of earnings or earned surplus and dividends payable in stock for
which adjustment is made pursuant to subparagraph i) of this Section V(c)), or
rights to subscribe for or purchase any evidences of the Company's indebtedness
or assets (other than rights referred to in the preceding subparagraph iii)),
the Conversion Price shall be adjusted so that the number of shares of common
stock into which each share of Series A Convertible Preferred Stock shall
thereafter be convertible shall be determined by multiplying the number of
shares of the common stock into which each share of Series A Convertible
Preferred Stock was theretofore convertible by a fraction of which the numerator
shall be the aggregate Market Price of the common stock as of the record date
and of which the denominator shall be the aggregate Market Price of the common
stock as of the record date less the difference between the aggregate fair
market value (as determined by the Board of Directors of the Company, whose
determination shall be conclusive) of
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the portion of the assets, capital stock or evidences of indebtedness so
distributed or of such subscription or purchase rights and the aggregate
consideration, if any, received therefore, applicable to the common stock.
e) Notwithstanding anything to the
contrary provided herein, no adjustment in the Conversion Price shall be
required unless such adjustment would result in an increase or decrease of at
least 1% in the Conversion Price or the Conversion Price as last adjusted, as
the case may be; provided however, that any adjustments which by reason of this
subparagraph v) are not required to be made shall be carried forward until used
and taken into account in any subsequent adjustment.
f) The provisions of this Section V(c)
shall similarly apply to successive subdivisions, combinations reorganizations,
reclassifications, consolidations, mergers, sales or transfers. Adjustments made
pursuant to subparagraphs iii) and iv) of this Section V(c) shall be made
successively whenever any record date referred to therein is fixed; and in the
event that any rights offering or subscription referred to in such subparagraphs
is not made, the Conversion Price shall again be adjusted to be Conversion Price
which would be in effect if such record date had not been fixed.
g) For the purpose of making the
adjustments referred to in the applicable provisions of this Section V, the
books of the Company shall, absent manifest error, control absolutely in
determining the number of outstanding shares of common stock and the number of
additional shares issued or decreased as a result of any stock dividend,
subdivision or combination.
(iv) No Fractional Shares to be Issued. No
fractional share of common stock shall be issued upon the conversion of the
Series A Convertible Preferred Stock. Instead of any fractional share of common
stock which would otherwise be issuable upon conversion of any share(s) of
Series A Convertible Preferred Stock, the Company shall pay to the holder
thereof, a cash adjustment in respect of such fraction in an amount equal to the
same fraction of the closing puce per share of common stock (determined in the
manner provided in the second sentence of the definition of "Market Price" in
Section V(c)(iii) above) as of the business day next preceding the date of such
conversion as of which the closing price can be determined.
(v) Reservation of common stock Issuable
Upon Conversion. The Company shall at all times reserve and keep available out
of its authorized but unissued shares the full number of shares of common stock
into which all shares of Series A Convertible Preferred Stock from time to time
outstanding are convertible.
(vi) Payment of Taxes Upon Conversion. The
Company will pay any and all issue and other taxes that may be payable in
respect of any issue or delivery of shares of common stock on conversion of
shares of Series A Convertible Preferred Stock. The Company shall not, however,
be required to pay any tax which may be payable in respect of any transfer
involved in the issue and delivery of common stock in a name other than that in
which the shares of Series A Convertible Preferred Stock converted were
registered, and no such issue or delivery shall be made unless and until the
person requesting such issue has paid to the Company the amount of any such tax,
or has established, to the satisfaction of the Company, that such tax has been
paid.
(vii) Notices of Record Date. In the event
of any taking by the Company of a record of the holders of securities other than
the Series A Convertible Preferred Stock for the purpose of determining the
holders thereof who are entitled to receive any dividend or other distribution,
any right to subscribe for, purchase or otherwise acquire any shares of stock of
any class or any other securities or property, or to receive any other right,
the Company shall mail to each holder of the Series A Convertible Preferred
Stock at least twenty (20) days prior to the date specified therein a notice
specifying the date on which any such record is to be taken for the purpose of
such dividend, distribution or rights, and the amount and character of such
dividend, distribution or rights.
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(f) Redemption.
(i) Optional Redemption. Shares of the
Series A Convertible Preferred Stock may, at the option of the Company, be
redeemed by the Company at any time, provided that the closing price of the
common stock exceeds 150% of the Conversion Price of the Series A Convertible
Preferred Stock for a period of ten (10) consecutive trading days prior to such
redemption. If the Company should determine to redeem the Series A Convertible
Preferred Stock, such shares shall be redeemable at the Company's election in
whole or in part at any time or from time to time, with funds legally available
for such purpose under Florida law, at a redemption price of One Hundred Dollars
($100) per share plus an amount equal to all accrued and unpaid dividends.
(ii) Pro Rata Redemption. If less than all
shares of Series A Convertible Preferred Stock are redeemed at any time under
this Section IV, shares of Series A Convertible Preferred Stock held by each
holder of record thereof shall be called for redemption pro rata, according to
the number of shares of Series A Convertible Preferred Stock held by such holder
subject, however, to such adjustment as may be equitably determined by the
Company in order to avoid the redemption of fractional shares.
(iii) Redemption Procedures. Any redemption
of any or all of the outstanding shares of Series A Convertible Preferred Stock,
whether mandatory or optional, shall be effected as follows:
a) Any such redemption shall be
effected by written notice given by certified or registered mail, postage
prepaid, not less than thirty (30) days nor more than fifty (50) days prior to
the date fixed for redemption to the holders of record of Series A Convertible
Preferred Stock whose shares are to be redeemed at their respective addresses as
the same shall appear on the books of the Company. Each such notice of
redemption shall specify the date fixed for redemption, the redemption price and
place of payment thereof, and if less than all outstanding shares of Series A
Convertible Preferred Stock are to be redeemed, the number of shares of Series A
Convertible Preferred Stock held by each holder of record thereof which are
being called for redemption.
b) On the date fixed for redemption of
any shares of Series A Convertible Preferred Stock, the Company shall, at least
one business day prior to such date, deposit the aggregate amount of the
redemption price of the shares called for redemption, except that no such
deposit shall be required with respect to any such shares which prior to the
date of such deposit shall have been converted pursuant to the exercise of any
conversion right, with the transfer agent or with a paying agent designated in
the notice of such redemption, for payment to the holders of the shares of
Series A Convertible Preferred Stock being called for redemption and deliver
irrevocable written instructions authorizing such transfer agent to apply such
deposit solely to the redemption of the shares of Series A Convertible Preferred
Stock called for redemption except that any of such deposit which shall not be
required for such redemption because of the exercise of any conversion right of
the shares called for redemption shall be released or repaid to the Company.
c) Notice of redemption having been
duly given, the redemption price of the shares being called for redemption
having been deposited as aforesaid, then on the date for such redemption, the
certificates for the Series A Convertible Preferred Stock called for redemption
(whether or not surrendered) shall be deemed no longer outstanding for any
purpose; and all rights with respect to such shares shall thereupon cease and
terminate, except the right of the holders of such shares to receive, out of
such deposit in trust, on the redemption date, the redemption price to which
they are entitled, without interest
d) If any holder of shares of Series A
Convertible Preferred Stock called for redemption shall, after the mailing by
the Company of notice of such redemption and prior to the date fixed for such
redemption convert any shares of Series A Convertible Preferred Stock, such
shares of Series A Convertible Preferred Stock so converted by such holder (not
exceeding, however, the number of shares of Series A
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<PAGE>
Convertible Preferred Stock held by such holder which shall have been called for
redemption) shall be deemed to constitute shares of Series A Convertible
Preferred Stock held by such holder which shall have been so called for
redemption.
e) In case any certificate for shares
of Series A Convertible Preferred Stock shall be surrendered by the holder
thereof for payment in connection with the redemption of only a portion of the
shares represented thereby, the Company shall deliver to or upon the order of
the holder thereof a certificate or certificates for the number of shares of
Series A Convertible Preferred Stock represented by such surrendered certificate
which are not being redeemed.
In case any holder of Series A
Convertible Preferred Stock called for redemption shall not, within ninety (90)
days after deposit by the Company of funds for the redemption thereof claim the
amount deposited for redemption thereof, the bank trust company or transfer
agent with which such funds were deposited shall, upon demand pay over to the
Company the balance of such amount so deposited and such bank, trust company or
transfer agent shall thereupon be relieved of all responsibility to such holder,
who shall thereafter look solely to the Company for payment of the redemption
price of his shares.
(iv) No Reissue. Shares of Series A
Convertible Preferred Stock which have been converted by the holder thereof or
redeemed, purchased or otherwise acquired by the Company shall be canceled and
may not be reissued, but may be redesignated as provided in Section IV hereof.
(g) Reacquired Shares.
Any shares of Series A Convertible Preferred Stock that have been
issued and subsequently reacquired by the Company upon their conversion for
shares of common stock or redeemed or purchased or otherwise acquired by the
Company in any manner whatsoever shall be retired and canceled promptly after
the acquisition thereof. All such shares upon their cancellation shall become
authorized but unissued shares of the preferred stock, par value $.01 per share,
of the Company and may be reissued as part of a new series of preferred stock of
the Company to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth in
the Company's Articles of Incorporation.
B. Provisions Relating to the common stock.
1. Voting Rights. Except as otherwise required by law or as
may be provided by the resolutions of the Board of Directors authorizing the
issuance of any class or series of the Preferred Stock, as hereinabove provided,
all rights to vote and all voting power shall be vested exclusively in the
holders of the common stock.
2. Dividends. Subject to the rights of the holders of the
Preferred Stock, the holders of the common stock shall be entitled to receive
when, as and if declared by the Board of Directors, out of funds legally
available therefor, dividends payable in cash, stock or otherwise.
3. Liquidating Distributions. Upon any liquidation,
dissolution or winding-up of the Corporation, whether voluntary or involuntary,
and after the holders of the Preferred Stock shall have been paid in full the
amounts to which they shall be entitled (if any) or a sum sufficient for such
payment in full shall have been set aside, the remaining net assets of the
Corporation shall be distributed pro rata to the holders of the common stock in
accordance with their respective rights and interests to the exclusion of the
holders of the Preferred Stock.
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<PAGE>
INTERNATIONAL FAST FOOD CORPORATION
THIS PROXY IS SOLICITED ON BEHALF
OF THE COMPANY'S BOARD OF DIRECTORS
The undersigned, a holder of Common Stock of International Fast Food
Corporation, a Florida corporation (the "Company"), hereby appoints Mitchell
Rubinson and Larry H. Schatz, and each of them, as proxies for the
undersigned, each with full power of substitution, for and in the name of the
undersigned to act for the undersigned and to vote, as designated below, all of
the shares of stock of the Company that the undersigned is entitled to vote at
the 1998 Annual Meeting of Shareholders of the Company, to be held on Thursday,
September 10, 1998, at 9:00 a.m., local time, at the Cheeca Lodge, 81801
Overseas Highway, Islamorada, Florida 33036, and at any adjournment(s) or
postponement(s) thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS AND THE
OTHER PROPOSALS SET FORTH IN THE ACCOMPANYING PROXY STATEMENT.
(1) ELECTION OF Mitchell Rubinson, James F. Martin, Larry H. Schatz,
Dr. Mark Rabinowitz and Michael T. Welch as directors.
[ ] VOTE FOR all nominees listed above, except vote withheld from
the following nominees (if any):______________________
[ ] VOTE WITHHELD from all nominees listed above.
(2) PROPOSAL to increase the authorized number of shares of the Company's
Common Stock to 200,000,000 and authorized number of shares of
Preferred Stock to 2,000,000 by amending the Articles of Incorporation.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) Upon such other matters as may properly come before the Annual Meeting
and any adjournments thereof. In their discretion, the proxies are
authorized to vote upon such other business as may properly come before
the Annual Meeting, and any adjournment(s) or postponement(s) thereof.
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED 'FOR' ALL OF THE PROPOSALS.
Dated: ______________________, 1998
___________________________________
(Signature)
___________________________________
(Signature if held jointly)
IMPORTANT: Please sign exactly as your name appears and mail it promptly even
though you now plan to attend the meeting. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENVELOPE
PROVIDED.
NO POSTAGE NECESSARY IF MAILED IN THE UNITED STATES.
