SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 Rule 14a-11(c) or Rule 14a-12
Inmark Enterprises, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement no.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
INMARK ENTERPRISES, INC.
1 Plaza Road
Greenvale, New York 11548
-----------------------------
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
-------------------------------
The Annual Meeting of the Stockholders (the "Annual Meeting") of
Inmark Enterprises, Inc. (the "Company") will be held at The Marriott Hotel, 101
James Doolittle Boulevard, Uniondale, New York 11553, at 10:00 a.m., local New
York time, on September 15, 1998, to consider the following matters:
(1) The election of six Directors to hold office until the next
Annual Meeting of Stockholders and until their respective
successors are duly elected and qualified.
(2) The transaction of such other businesses as may properly
come before the Annual Meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on July 22,
1998 as the record date for the Annual Meeting. Only stockholders of record of
the Company's Common Stock at the close of business on July 22, 1998 will be
entitled to notice of and to vote at the Annual Meeting or any adjournments or
postponements thereof. Shares can be voted at the Annual Meeting only if the
holder is present or represented by proxy.
The accompanying form of proxy is solicited by the Board of
Directors of the Company. Reference is made to the attached Proxy Statement for
further information with respect to the business to be transacted at the Annual
Meeting.
A complete list of stockholders entitled to vote at the Annual
Meeting shall be open to the examination of any stockholder, for any purpose
germane to the Annual Meeting, during ordinary business hours, for a period of
at least ten days prior to the Annual Meeting, at the Company's principal
offices, 1 Plaza Road, Greenvale, New York 11548.
Stockholders are cordially invited to attend the Annual Meeting.
Whether or not you expect to attend the Annual Meeting in person, please
complete, date and sign the accompanying proxy card and return it without delay
in the enclosed postage prepaid envelope. Your proxy will not be used if you are
present and prefer to vote in person or if you revoke the proxy.
By Order of the Board of Directors
Donald A. Bernard
Secretary
July 29, 1998
<PAGE>
INMARK ENTERPRISES, INC.
1 Plaza Road
Greenvale, New York 11548
-------------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 15, 1998
--------------------------------------
This proxy statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Inmark Enterprises, Inc., a
Delaware corporation (the "Company"), for use at the 1998 Annual Meeting of
Stockholders of the Company and for any adjournments or postponements thereof
(the "Annual Meeting") to be held at The Marriott Hotel, 101 James Doolittle
Boulevard, Uniondale, New York 11553, at 10:00 a.m., local New York time, on
September 15, 1998, for the purposes set forth in the accompanying Notice of
Annual Meeting of Stockholders. A Board of Directors' proxy (the "Proxy") for
the Annual Meeting is enclosed, by means of which you may vote as to the
proposals described in this Proxy Statement.
All Proxies which are properly completed, signed and returned to
the Company prior to the Annual Meeting, and which have not been revoked, will
be voted in accordance with the stockholder's instructions contained in such
Proxy. In the absence of instructions, shares represented by such Proxy will be
voted FOR the election of the nominees of the Board of Directors for Director.
The Board of Directors is not aware of any business to be presented at the
Annual Meeting except the matters set forth in the Notice and described in this
Proxy Statement. If any other matters properly come before the Annual Meeting,
the persons named in the accompanying Proxy will vote on those matters in
accordance with their best judgment. A stockholder may revoke his or her Proxy
at any time before it is exercised by filing with the Secretary of the Company
at its principal executive offices at 1 Plaza Road, Greenvale, New York 11548,
either a written notice of revocation or a duly executed Proxy bearing a later
date, or by attending in person at the Annual Meeting and expressing a desire to
vote his or her shares in person.
This Proxy Statement and the accompanying Notice of Annual Meeting
of Stockholders, Proxy and Annual Report on Form 10-K (including financial
statements) for the fiscal year ended March 31, 1998 ("Fiscal 1998"), are being
sent to stockholders on or about July 29, 1998.
<PAGE>
VOTING SECURITIES
July 22, 1998 has been fixed as the record date for the
determination of stockholders entitled to notice of and to vote at the Annual
Meeting or any adjournment or postponement thereof. As of that date, the Company
had outstanding 4,480,326 shares of Common Stock, $.001 par value (the "Common
Stock"), excluding treasury shares. The presence, in person or by proxy, of
stockholders entitled to cast a majority of votes which stockholders are
entitled to cast on a particular matter at the Annual Meeting will constitute a
quorum for the Annual Meeting. Holders of Common Stock are entitled to one vote
for each share owned upon all matters to be considered at the Annual Meeting.
Proxies marked "Abstain" are included in determining a quorum, but broker
proxies which have not voted in the election of Directors are not included in
determining a quorum for such matter.
Directors will be elected by a plurality of the votes cast at the
Annual Meeting by the holders of shares present in person or represented by
proxy and entitled to vote on the election of Directors. There is no cumulative
voting in the election of Directors. All actions other than the election of
Directors will be authorized by a majority of the votes cast at the Annual
Meeting by the holders of shares entitled to vote thereon.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of July 15, 1998
with respect to stock ownership of (i) those persons or groups known to the
Company to beneficially own more than 5% of the Company's outstanding Common
Stock, (ii) each of the Directors and nominees of the Company and the Company's
executive officers named in the summary compensation table, and (iii) the
Company's Directors and executive officers as a group. Unless otherwise
indicated, the named beneficial owner has sole voting and investment power with
respect to the shares.
<TABLE>
<S> <C> <C> <C>
Amount and Nature of Percent
Name and Address of Beneficial Owner Beneficial Ownership(1) of Class(1)
------------------------------------ -------------------- --------
(i) Beneficial Owners of More Than 5% of the
Common Stock (Other Than Directors,
Nominees and Executive Officers)
OG Holding Corporation 706,731(2) 15.8%
9745 Mangham Drive
Cincinnati, OH 45215
Robert F. Hussey 344,744(3) 7.6%
16 Westbury Road
Garden City, NY 11530
2
<PAGE>
Amount and Nature of Percent
Name and Address of Beneficial Owner Beneficial Ownership(1) of Class(1)
------------------------------------ -------------------- --------
(ii) Directors, Nominees and Executive Officers
John P. Benfield 583,788(4) 12.2%
c/o Inmark Enterprises, Inc.
One Plaza Road
Greenvale, NY 11548
Donald A. Bernard 582,497(5) 12.2%
c/o Inmark Enterprises, Inc.
One Plaza Road
Greenvale, NY 11548
Paul A. Amershadian 578,747(6) 12.1%
c/o Inmark Enterprises, Inc.
One Plaza Road
Greenvale, NY 11548
Thomas E. Lachenman 706,731(2) 15.8%
c/o Optimum Group, Inc.
9745 Mangham Drive
Cincinnati, OH 45215
Herbert M. Gardner 77,531(7) 1.7%
c/o Janney Montgomery Scott Inc.
26 Broadway
New York, NY 10004
Joseph S. Hellman 12,813(8) *
c/o Kronish, Lieb, Weiner & Hellman LLP
1114 Avenue of the Americas
New York, NY 10036-7798
(iii) All Executive Officers and Directors as a 2,542,107 (2)(4)(5)(6)(7)(8) 46.8%
Group (6 persons)
- ------------------
* Less than 1%.
</TABLE>
(1) All information is as of July 15, 1998 and was determined in accordance
with Rule 13d-3 under the Securities Exchange Act of 1934, as amended,
based upon information furnished by the persons listed or contained in
filings made by them with the Securities and Exchange Commission.
(2) Represents shares of Common Stock registered in the name of OG Holding
Corporation. Mr. Lachenman, a Director of the Company and President of the
Company's wholly-owned subsidiary Optimum Group, Inc., is the President
of, and owns 56.9% of the outstanding equity of, OG Holding Corporation.
3
<PAGE>
(3) Includes 62,500 shares of Common Stock issuable upon exercise of
immediately exercisable warrants.
(4) Includes 262,500 shares of Common Stock issuable upon exercise of
immediately exercisable options and 34,121 shares of Common Stock issuable
upon exercise of immediately exercisable warrants.
(5) Includes 262,500 shares of Common Stock issuable upon exercise of
immediately exercisable options and 34,121 shares of Common Stock issuable
upon exercise of immediately exercisable warrants. Also includes 3,750
shares held by Mr. Bernard's wife as to which Mr. Bernard disclaims
beneficial interest.
(6) Includes 262,500 shares of Common Stock issuable upon exercise of
immediately exercisable options and 34,121 shares of Common Stock issuable
upon exercise of immediately exercisable warrants. Also includes 141,063
shares of Common Stock pledged to the Company as security for loans from
the Company in the aggregate principal amount of $225,000. See "CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS."
(7) Includes 37,500 shares of Common Stock issuable upon exercise of
immediately exercisable warrants, 10,313 shares of Common Stock issuable
upon exercise of immediately exercisable options, and 7,500 shares of
Common Stock held in an individual retirement account for the benefit of
Mr. Gardner. Excludes 7,500 shares of Common Stock held by Mr. Gardner's
wife, as to which Mr. Gardner disclaims any beneficial interest, and 2,500
shares of Common Stock owned by the Gardner Family Foundation, a
charitable organization, of which Mr. Gardner is President and a board
member.
(8) Includes 10,312 shares of Common Stock issuable upon exercise of
immediately exercisable options.
4
<PAGE>
ELECTION OF DIRECTORS
A Board of six Directors of the Company is to be elected at the
Annual Meeting, each to serve, subject to the provisions of the Company's
By-Laws, until the next Annual Meeting of Stockholders and until his successor
is duly elected and qualified. It is management's recommendation that the
accompanying form of Proxy be voted FOR the election as Director of the six
persons named below, all of whom are currently Directors of the Company. The
Board of Directors believes that the nominees named below are willing to serve
as Directors. However, in the event that any of the nominees should become
unable or unwilling to serve as a Director, the Proxy will be voted for the
election of such person or persons as shall be designated by the Directors.
The following table sets forth information with respect to each
nominee for Director of the Company, all of whom are currently serving as
Directors of the Company:
<TABLE>
<S> <C> <C> <C>
Position with the Company and
Principal Occupation or Employment Director
Name Age During the Past Five Years Since
- ---- --- ---------------------------------- --------
Paul A. Amershadian 50 Executive Vice President-Marketing and 1996
Sales and Treasurer of the Company since
September 29, 1995 and of the Company's
respective predecessors, SPAR Promotion
& Marketing Services, Inc. ("Spar") and
R.G. Meadows, Inc. ("Meadows"), from 1986
to September 29, 1995; Secretary of the
Company from October 16, 1996 to September
16, 1997; Director of the
Company since May 1996.
John P. Benfield 47 Director, President and Chief Executive Officer 1995
of the Company since September 29, 1995;
Chairman of the Board of the Company since
October 16, 1996; Executive Vice President of
Operations of both Spar and
Meadows from 1988 to September
29, 1995.
Donald A. Bernard 65 Director, Executive Vice President and 1995
Chief Financial Officer of the Company
since September 29, 1995; Secretary of
the Company since September 16, 1997;
Executive Vice President of Finance of
both Spar and Meadows from 1990 to
September 29, 1995.
5
<PAGE>
Position with the Company and
Principal Occupation or Employment Director
Name Age During the Past Five Years Since
- ---- --- ---------------------------------- --------
Herbert M. Gardner 58 Director of the Company since May 1, 1997; 1997
Senior Vice President of Janney Montgomery
Scott Inc., an investment banking firm, since
1978; Presently serves as Chairman of Board
of Directors of Supreme Industries, Inc. and
as a director of Nu Horizons Electronics Corp.,
Transmedia Network, Inc., TGC Industries, Inc.,
and Hirsch International Corp.
Joseph S. Hellman 67 Director of the Company since May 1, 1997; 1997
Partner in the law firm of Kronish, Lieb,
Weiner & Hellman LLP.
Thomas E. Lachenman 47 President of Optimum Group, Inc., a 1998
wholly-owned subsidiary of the Company,
since March 31, 1998, and of such company's
predecessor from 1963 through March 31, 1998;
Director of the Company since March 31, 1998.
</TABLE>
Thomas E. Lachenman was named a Director on March 31, 1998,
immediately following the closing under the Asset Purchase Agreement (the
"Optimum Agreement") relating to the acquisition of the assets of OG Holding
Corporation, formerly known as Optimum Group, Inc. (the "Optimum Acquisition").
The Optimum Agreement also requires the Company's existing Board of Directors to
nominate Mr. Lachenman in connection with the election of Directors at the
Company's first Annual Meeting of the Stockholders following the closing under
the Optimum Agreement.
6
<PAGE>
Meetings and Committees of the Board of Directors
The Board of Directors held seven meetings during Fiscal 1998 and
acted by unanimous written consent on three occasions. Paul A. Amershadian
attended fewer than 75 percent of the total number of meetings of the Board of
Directors during Fiscal 1998.
The Board of Directors has a standing audit committee and
compensation committee. Herbert M. Gardner and Joseph S. Hellman are the sole
members of both committees. The Company does not currently have a nominating
committee.
The audit committee reviews and reports to the Board of Directors
with respect to various auditing and accounting matters, including
recommendations to the Board of Directors as to the selection of the Company's
independent auditors, the scope of audit procedures, general accounting policy
matters and the performance of the Company's independent auditors. The audit
committee held one meeting during Fiscal 1998.
The compensation committee was formed to review and make
recommendations to the Board of Directors regarding all executive compensation
matters. The compensation committee held three meetings during Fiscal 1998.
Compensation of Directors
Prior to May 1, 1997, each non-employee Director was paid a
Director fee of $2,500 for each meeting of the Board of Directors attended and
all Directors were reimbursed for reasonable travel expenses incurred in
connection with his attending Board meetings. From May 1, 1997 until April 1,
1998, each non-employee Director received an annual stipend equal to $6,000 per
annum, a fee of $1,000 per Board meeting attended and a fee of $500 per
Committee meeting attended, and was entitled to be reimbursed for reasonable
travel expenses incurred in connection with his attending Board meetings. As of
April 1, 1998, each non-employee Director receives an annual stipend equal to
$10,000 per annum, a fee of $1,000 per Board meeting attended and a fee of $500
per Committee meeting attended, and all Directors continue to be reimbursed for
reasonable travel expenses incurred in connection with attending Board meetings.
Additionally, under a "formula plan" provided for in the Company's
1992 Stock Option Plan, each of the Company's non-employee Directors is granted
an option to purchase up to 6,875 shares of Common Stock (as adjusted for the
Company's 25% stock dividend paid on or about June 14, 1998 to shareholders of
record on May 14, 1998) annually on each April 30 as long as he remains on the
Board. Each such option becomes exercisable as to 50% of the shares covered
thereby on the first anniversary of the date of grant and as to the remaining
50% of the shares on the second anniversary of the date of grant.
7
<PAGE>
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions
During Fiscal 1998, Herbert M. Gardner was a member of the
Company's Compensation Committee and was an officer of Janney Montgomery Scott
Inc., an investment banking firm that was retained to perform services for the
Company in connection with the Optimum Acquisition during Fiscal 1998 and that
continues to perform services for the Company during Fiscal 1999. Similarly,
during Fiscal 1998, Joseph S. Hellman was a member of the Company's Compensation
Committee and was a member of Kronish, Lieb, Weiner & Hellman LLP, a law firm
that the Company retained as its general counsel for Fiscal 1998 and Fiscal
1999.
8
<PAGE>
EXECUTIVE OFFICERS
John P. Benfield, Donald A. Bernard, Paul A. Amershadian and
Thomas E. Lachenman are the current executive officers of the Company. Each of
those individuals has an employment contract with the Company for a term of
office expiring on September 28, 2001 in the case of Messrs. Benfield, Bernard
and Amershadian and on March 31, 2002 in the case of Mr. Lachenman. Additional
information regarding those individuals is provided above in "Election of
Directors" and below in "Executive Employment Contracts, Termination of
Employment and Change-in-Control Arrangements".
EXECUTIVE COMPENSATION
Until the merger of Inmark Services, Inc. with and into the
Company's wholly-owned subsidiary on September 29, 1995 (the "Merger"), the
Company's affairs were directed by an executive committee comprising Robert F.
Hussey and Courtlandt G. Miller, then the only Directors and officers of the
Company, who received no salary for their services as such. From and after the
Merger, the executive officers of Inmark Services, Inc. became the executive
management of the Company. The following table sets forth the total compensation
paid to the Company's chief executive officer and to each of the other executive
officers of the Company whose compensation exceeded $100,000 during Fiscal 1998.
9
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Other Value of Securities
Annual Restricted Underlying All Other
Name and Fiscal Compen- Stock Options/ Compen-
Principal Position Year Salary($) Bonus($) sation($) Awards($) SARs(#) * sation($)
- ------------------ ------ --------- -------- --------- --------- ----------- ---------
John P. Benfield 1998 $240,000(6) $60,000 -- -- 187,500 8,000(5)
President and Chief Executive 1997 $220,000(4) -- -- -- 125,000 3,950(5)
Officer and Director(1) 1996 $200,000(2) --(3) -- -- 109,121 --
Donald A. Bernard 1998 $240,000(6) $60,000 -- -- 187,500 8,000(5)
Executive Vice President and 1997 $220,000(4) -- -- -- 100,000 3,950(5)
Chief Financial Officer and 1996 $200,000(2) --(3) -- -- 109,121 --
Director(1)
Paul A. Amershadian 1998 $240,000(6) $60,000 -- -- 187,500 8,000(5)
Executive Vice President - 1997 $220,000(4) -- -- -- 100,000 3,950(5)
Marketing and Sales and 1996 $200,000(2) --(3) -- -- 109,121 --
Director(1)
Thomas E. Lachenman 1998 $203,846(8) $33,000(8) -- -- -- 8,000(8)
President - Optimum Group, Inc. 1997 -- -- -- -- -- --
and Director(7) 1996 -- -- -- -- -- --
- ---------------------------
* Adjusted for the Company's 25% stock dividend paid on or about June 14, 1998 to shareholders of record
on May 14, 1998.
</TABLE>
(1) Messrs. Benfield, Bernard and Amershadian commenced employment with the
Company on September 29, 1995 upon consummation of the Merger.
(2) Represents annual base salary under employment contracts executed in
connection with the Merger. Actual salary paid to the named individuals
during the fiscal year ended March 31, 1996 is as follows: Mr. Benfield -
$100,000; Mr. Bernard - $100,000; Mr. Amershadian - $100,000.
(3) Does not include a cash bonus ($55,000 to Mr. Benfield, $40,000 to Mr.
Bernard and $55,000 to Mr. Amershadian) paid by the Company as an
obligation assumed in the Merger representing a bonus earned by these
persons for services performed on behalf of Spar.
(4) Represents annual base salary, adjusted in October 1996, under employment
contracts. Actual salary paid to the named individuals during Fiscal 1997
is as follows: Mr. Benfield - $210,000; Mr. Bernard - $210,000; Mr.
Amershadian - $210,000.
(5) Represents executive's share of Company's matching contribution to
Company's 401(k) Retirement Plan.
(6) Represents annual base salary, adjusted in October 1997, under employment
contracts. Actual salary paid to the named individuals during Fiscal 1998
is as follows: Mr. Benfield - $230,000; Mr. Bernard - $230,000; Mr.
Amershadian - $230,000.
10
<PAGE>
(7) Mr. Lachenman commenced employment, at an annual base salary of $222,480
pursuant to an employment contract, with the Company's wholly-owned
subsidiary, Optimum Group, Inc. on March 31, 1998 upon consummation of the
Optimum Acquisition.
(8) Represents respectively, annual base salary, bonus and 401(k) Retirement
Plan contribution paid by predecessor company of Optimum Group, Inc.
during Fiscal 1998.
Stock Options
The following tables set forth certain information concerning
stock options granted to and exercised by the individuals named in the Summary
Compensation Table during Fiscal 1998 and unexercised stock options held by such
individuals at the end of Fiscal 1998.
Option Grants in Fiscal 1998 *
<TABLE>
Potential Realizable Value
At Assumed Annual Rates
Of Stock Price Appreciation
Individual Grants For Option Term
- --------------------------------------------------------------------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C>
% of
Number of Total Options
Securities Granted to Exercise or
Underlying Employees in Base Price Expiration
Name Options Fiscal Year ($/Shares) Date 5% ($) 10% ($)
- ---- ---------- ------------- ----------- ---------- ------ -------
John P. Benfield 125,000(1) 19.9% $4.00(2) 4/30/07 815,000 1,296,250
62,500(3) 10.0% $5.60(2) 3/23/03 446,875 563,750
------- ----- --------- ---------
187,500 29.9% 1,261,875 1,860,000
Donald A. Bernard 125,000(1) 19.9% $4.00(2) 4/30/07 815,000 1,296,250
62,500(3) 10.0% $5.60(2) 3/23/03 446,875 563,750
-------- ----- --------- ---------
187,500 29.9% 1,261,875 1,860,000
Paul A. Amershadian 125,000(1) 19.9% $4.00(2) 4/30/07 815,000 1,296,250
62,500(3) 10.0% $5.60(2) 3/23/03 446,875 563,750
------- ----- --------- ---------
187,500 29.9% 1,261,875 1,860,000
- ------------------------
* Adjusted for the Company's 25% stock dividend paid on or about June 14, 1998 to shareholders of record on
May 14, 1998.
</TABLE>
(1) Includes 41,667 shares of common stock issuable upon the exercise of
immediately exercisable stock options. The remaining 83,333 shares are
issuable upon the exercise of stock options which become exercisable in
equal installments in May 1999 and May 2000.
(2) The exercise price per share is equal to the fair market of the shares on
the date of grant.
(3) Includes 20,834 shares of Common Stock issuable upon the exercise of
immediately exercisable stock options. The remaining 41,666 shares are
issuable upon exercise of stock options which become exercisable in equal
installments in March 1999 and March 2000.
11
<PAGE>
Aggregated Option Exercises in Fiscal 1998
and FY-End Option Values *
<TABLE>
<S> <C> <C> <C> <C>
Value of
Number of Unexercised
Unexercised In-the-Money
Options at Fiscal Options at Fiscal
Year End (#) Year End ($)
Shares Acquired Exercisable/ Exercisable/
Name on Exercise (#) Value Realized ($) Unexercisable Unexercisable (1)
- ---- --------------- ------------------ ----------------- -----------------
John P. Benfield --- --- 296,621/125,000 1,661,077/700,000
Donald A. Bernard --- --- 296,621/125,000 1,661,077/700,000
Paul A. Amershadian --- --- 296,621/125,000 1,661,077/700,000
- ------------------------
* Adjusted for the Company's 25% stock dividend paid on or about June 14, 1998 to shareholders of record
on May 14, 1998.
(1) The value has been determined based on an average of the closing bid and ask price on March 31, 1998,
the last trading day of Fiscal 1998.
</TABLE>
12
<PAGE>
COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
The Board believes that increasing the value of the Company to its
stockholders is the Board's most important objective and should be the key
measure of management performance. The Board also believes that executive
compensation should be objectively determined. For this reason, the Compensation
Committee, which is made up of Directors who are not employees of the Company,
is responsible for determining the compensation packages of the Company's
executives. The Compensation Committee also approves the potential levels of
contribution to the Company's 401(k) plan.
The Compensation Committee's role in determining the compensation of the
executives of the Company is to assure that the Company's compensation strategy
is aligned with the Board's overall objective and that executive compensation is
structured to provide fair, reasonable and competitive base salary levels and
the opportunity for the executives to earn incentive compensation reflecting
both the Company's and the individual's performance.
The compensation package for Fiscal 1998 for the Company's Chief Executive
Officer and other executive officers consisted of three elements: base salary,
cash bonus and stock options. Base salaries are established by the employment
agreements for each person within the executive group, subject to annual
adjustment by the Compensation Committee. Factors considered in establishing
salaries include the responsibilities of the position, compensation of
executives in companies of similar size or in the same industry, external market
conditions and financial performance of the Company. Annual cash bonus awards
are based on the Company's financial performance. Stock options are intended to
recognize the financial performance of the Company and of the executive and to
create a sense of executive ownership in the Company.
Specific factors that the Compensation Committee took into consideration
in determining the compensation of the Company's Chief Executive Officer and
other executive officers during Fiscal 1998 include: an increase in sales for
Fiscal 1998 of approximately 37% over Fiscal 1997, a more than 62% increase in
operating income for Fiscal 1998 over Fiscal 1997, a return on shareholders'
equity during Fiscal 1998 of approximately 40%, and the consummation of the
acquisition of the Optimum Group, Inc. (which is expected to add significantly
to the Company's sales and profits during the fiscal year ending March 31, 1999
("Fiscal 1999")). In addition, the Compensation Committee considered the unique
qualifications of the Company's executive officers, who serve in a collegial
manner as if the "Office of the CEO" with respect to major issues facing the
Company, who are directly responsible for the success of the Company and who
would be very difficult to replace.
Finally, the Compensation Committee engaged the services of an outside
compensation consultant to obtain information and advice about competitive
levels of compensation and particular compensation techniques of public
companies of comparable size which are engaged in comparable businesses, and to
obtain recommendations regarding and assistance in structuring bonuses and stock
option awards for Fiscal 1998 and executive compensation packages for Fiscal
1999.
Herbert M. Gardner
Joseph S. Hellman
13
<PAGE>
Executive Employment Contracts, Termination of
Employment and Change-in-Control Arrangements
- ----------------------------------------------
Pursuant to employment agreements, dated September 29, 1995 and amended
by agreements dated as of May 2, 1997, the Company employed Messrs. Benfield,
Bernard and Amershadian as President, Executive Vice President and Chief
Financial Officer, and Executive Vice President Marketing and Sales,
respectively. Each agreement, as amended, currently provides for a base salary
of $250,000 and payment of bonuses based upon performance payable in cash and
stock options according to a formula but limited in the aggregate to a value not
in excess of 100% of base salary. The term of each agreement expires on
September 28, 2001 (unless sooner terminated for cause, disability or
incapacity) and automatically renews for additional one-year terms unless
terminated by either party thereto upon at least sixty days notice before the
expiration of the then current term.
Pursuant to an employment agreement, dated March 31, 1998, the
Company's subsidiary, Optimum Group, Inc., employed Mr. Lachenman as President
and Chief Executive Officer. The agreement currently provides for a base salary
of $222,480 and, in the event that the pre-tax profits of Optimum Group, Inc.
equal or exceed $2 million in any fiscal year, a bonus equal to 17.7% of 7.5% of
the amount of such pre-tax profits which do not exceed $3 million. The initial
term of the agreement expires on March 31, 2002 (unless sooner terminated for
cause) but the term of the agreement automatically continues thereafter unless
terminated by either party thereto upon at least ninety days notice of
termination effective on or after March 31, 2002.
Each employment agreement prohibits the executive officer that is a
party thereto from competing with the Company or inducing or attempting to
influence any employee of the Company or any subsidiary to terminate his
employment with the Company or any subsidiary during the term of the agreement
and for a period of two years after the termination of the officer's employment
with the Company, in the case of Messrs. Benfield, Bernard and Amershadian, and
18 months after the termination of the officer's employment with Optimum Group,
Inc. or any of its affiliates, in the case of Mr. Lachenman. Each agreement also
prohibits the executive officer from disclosing certain confidential information
of the Company.
Finally, the employment agreements with each of Messrs. Benfield,
Bernard and Amershadian provide that if the officer's employment is terminated
due to (i) the sale or transfer of a majority of the Company's outstanding
capital stock, property or business assets, (ii) the consolidation or merger or
the Company into or with another entity where the Company is not the surviving
entity, or (iii) certain specified changes in the identity of the Board of
Directors, the Company must make a lump sum cash payment to the executive
officer in a maximum amount equal to two times the executive officer's then
annual base salary.
14
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On January 10, 1996, the Company loaned $200,000 to Paul A.
Amershadian, the Company's Executive Vice President-Marketing and Sales and a
Director. The loan bears interest at an annual rate of 10%. Pursuant to a Pledge
Agreement, Mr. Amershadian pledged to the Company 141,063 shares of the
Company's Common Stock owned by him (as adjusted for the Company's 25% stock
dividend paid on or about June 14, 1998 to shareholders of record on May 14,
1998) to secure his obligation in connection with the loan. On April 7, 1997,
the Company loaned an additional $25,000 to Mr. Amershadian. This additional
loan bears interest at an annual rate of 10% and is payable in full, together
with the principal sum of $25,000 and with the principal of and interest on the
January 10, 1996 $200,000 loan, on April 7, 1999. On April 7, 1997, the Pledge
Agreement was amended to secure the additional $25,000 loan as well as the
original $200,000 loan to Mr. Amershadian.
Joseph S. Hellman, a Director and nominee, is a member of Kronish,
Lieb, Weiner & Hellman LLP, a law firm that the Company retained as its general
counsel for Fiscal 1998 and Fiscal 1999.
Herbert M. Gardner, a Director and nominee, is an officer of Janney
Montgomery Scott Inc., an investment banking firm that has been retained, other
than as participating underwriter in a syndicate, to perform services for the
Company during Fiscal 1998 and Fiscal 1999.
On March 31, 1998, Optimum Group, Inc., formerly known as OG
Acquisition Corp., a wholly owned subsidiary of the Company, completed the
acquisition of the assets of OG Holding Corporation, formerly known as Optimum
Group, Inc. The purchase price for the Optimum Acquisition, which was paid to OG
Holding Corporation, consisted of (i) approximately $8,700,000 in cash, (ii) a
subordinated note of the Company in the principal amount of $2.5 million, (iii)
706,731 shares of Common Stock of the Company (as adjusted for the Company's 25%
stock dividend paid on or about June 14, 1998 to shareholders of record on May
14, 1998), and (iv) the payment or assumption by Optimum Group, Inc., of
approximately $2.0 million of the OG Holding Corporation's liabilities and debt.
Mr. Lachenman is the President of, and owns 56.9% of the outstanding equity of,
OG Holding Corporation.
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and Directors and persons who
own more than 10% of a registered class of the Company's equity securities
(collectively, the "Reporting Persons") to file reports of ownership and changes
in ownership with the Securities and Exchange Commission and to furnish the
Company with copies of these reports. To the Company's knowledge, based solely
on a review of the Forms 3, 4, and 5 submitted to the Company during and with
respect to Fiscal 1998, there are no known failures to file a required Form 3, 4
or 5 and no known late filings of a required Form 3, 4 or 5 during Fiscal 1998
by any person required to file such forms with respect to the Company pursuant
to Section 16 of the Exchange Act.
15
<PAGE>
Comparison of Cumulative Total Returns
Performance Graphs for
INMARK ENTERPRISES, INC.
The following graph reflects a comparison of the cumulative total
stockholder return (change in stock price plus reinvested dividends) of an
initial $100 investment on March 31, 1994 in the Company's Common Stock, the
Standard & Poors' 500 Stock Index and a peer group index consisting of those
public companies traded on an exchange and listed under the Standard Industry
Classification (S.I.C.) Code 7311 for Advertising, and other related S.I.C.
Codes. The peer group is made up of: Acxiom Corporation, Advo, Inc., Concord
EFS, Inc., Cendant Corporation, Dun & Bradstreet Corporation, Grey Advertising,
Inc., Information Resources, Inc., PIA Merchandising Services, Inc., Quick
Response Services, Inc. and Valassis Communications, Inc. The comparisons in
this table are required by the Securities and Exchange Commission. The stock
price performance shown on the graph is not intended to forecast or be
indicative of future price performance.
[GRAPHIC OMITTED]
Cumulative Total Return
-----------------------
3/31/94 3/31/95 3/31/96 3/31/97 3/31/98
------- ------- ------- ------- -------
IMKE 100 31 67 146 215
S & P 500 100 112 145 170 247
Peer Group 100 111 147 172 252
16
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RELATIONSHIP WITH INDEPENDENT AUDITORS
KPMG Peat Marwick LLP was the Company's auditors for Fiscal 1998, and
has been selected to serve as the auditors for the fiscal year ending March 31,
1999. A representative of KPMG Peat Marwick LLP is expected to be present at the
Annual Meeting to respond to appropriate questions from stockholders and to make
a statement if he desires to do so.
EXPENSES
The entire cost of preparing, assembling, printing and mailing this
Proxy Statement, the enclosed Proxy, Annual Report on Form 10-K and other
materials, and the cost of soliciting Proxies with respect to the Annual
Meeting, will be borne by the Company. The Company will request banks and
brokers to solicit their customers who beneficially own shares listed of record
in names of nominees, and will reimburse those banks and brokers for the
reasonable out-of-pocket expenses of such solicitations. The Company has
retained Morrow & Co., Inc. to solicit proxies for a fee of approximately $3,000
plus reimbursable expenses. The solicitation of Proxies by mail may be
supplemented by telephone and telegram by officers and other regular employees
of the Company, but no additional compensation will be paid to such individuals.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the Annual
Meeting of Stockholders in 1999 and included in the Company's proxy statement
and form of proxy for such annual meeting must be received by the Company at its
principal executive office by no later than March 25, 1999.
By order of the Board of Directors
Donald A. Bernard
Secretary
Greenvale, New York
July 29, 1998
17
<PAGE>
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED MARCH 31,
1998, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (INCLUDING THE
FINANCIAL STATEMENTS AND THE SCHEDULES THERETO, BUT EXCLUDING EXHIBITS), IS
BEING MAILED WITH THIS PROXY STATEMENT. THE COMPANY WILL PROVIDE TO EACH PERSON
SOLICITED BY THIS PROXY STATEMENT, ON THE WRITTEN REQUEST OF ANY SUCH PERSON AND
UPON PAYMENT OF A FEE OF $3.00 PER EXHIBIT, A COPY OF ANY EXHIBIT TO THE
ENCLOSED ANNUAL REPORT ON FORM 10-K. A LIST OF EXHIBITS IS SET FORTH IN SECTION
IV OF THE ANNUAL REPORT ON FORM 10-K. REQUESTS FOR COPIES OF EXHIBITS SHOULD BE
DIRECTED TO DONALD A. BERNARD, EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER, INMARK ENTERPRISES, INC., 1 PLAZA ROAD, GREENVALE, NEW YORK 11548
(TELEPHONE: (516) 625-3500).
18
<PAGE>
PROXY
INMARK ENTERPRISES, INC.
1 Plaza Road, Greenvale, New York 11548
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS - SEPTEMBER 15, 1998
The undersigned hereby appoints John P. Benfield and Donald A. Bernard,
or either of them, as Proxy or Proxies of the undersigned with full power of
substitution to attend and to represent the undersigned at the Annual Meeting of
Stockholders of Inmark Enterprises, Inc. (the "Company") to be held on September
15, 1998, and at any adjournments thereof, and to vote thereat the number of
shares of stock of the Company the undersigned would be entitled to vote if
personally present, in accordance with the instructions set forth on this proxy
card. Any proxy heretofore given by the undersigned with respect to such stock
is hereby revoked.
Dated: ________________________, 1998
_______________________________________
_______________________________________
Please sign exactly as name
appears above. For joint
accounts, each joint owner
must sign. Please give full
title if signing in a
representative capacity.
[ ] PLEASE CHECK IF YOU PLAN TO ATTEND THE MEETING
PLEASE MARK, DATE AND SIGN THIS PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE
1. ELECTION OF DIRECTORS.
NOMINEES: Paul A. Amershadian, John P. Benfield, Donald A. Bernard,
Herbert M. Gardner, Joseph S. Hellman and Thomas E. Lachenman.
[ ] FOR ALL nominees listed above.
[ ] FOR ALL nominees listed above EXCEPT: ___________________________.
(Instruction: To withhold authority to vote on any individual nominee,
write the name above.)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed above.
2. ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
If no specification is made, this proxy will be voted FOR Proposals 1 and 2
listed above.
<PAGE>
