<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
NEW WEST EYEWORKS, 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> 2
[NEW WEST EYEWORKS LOGO]
April 27, 1998
Dear Stockholder:
You are cordially invited to attend the 1998 Annual Meeting of Stockholders
of New West Eyeworks, Inc., on Tuesday, June 16, 1998, starting at 8:00 A.M.
local time at the offices of the Company.
As more fully described in the attached Notice of Annual Meeting and the
accompanying Proxy Statement, the principal business to be addressed at the
meeting is the election of directors and ratification of the appointment of
Price Waterhouse LLP as independent accountants for the current year. In
addition, the Company's management team will report on the Company's results and
will be available to respond to stockholders' questions.
Your vote is important to the Company. Whether or not you plan to attend
the Annual Meeting, please return the enclosed Proxy as soon as possible to
ensure your representation at the meeting. You may choose to vote in person at
the Annual Meeting even if you have returned a Proxy.
On behalf of the Directors and management of New West Eyeworks, Inc., we
would like to thank you for your continued support and confidence in the Company
and look forward to seeing you at the meeting.
Sincerely,
RONALD E. WEINBERG BARRY J. FELD
Chairman of the Board President and Chief Executive Officer
<PAGE> 3
NEW WEST EYEWORKS, INC.
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 16, 1998
TO THE STOCKHOLDERS OF NEW WEST EYEWORKS, INC.:
The Annual Meeting of the Stockholders of New West Eyeworks, Inc., a
Delaware corporation (the "Company"), will be held on Tuesday, June 16, 1998 at
the offices of the Company, 2104 West Southern Avenue, Tempe, Arizona 85282,
beginning at 8:00 A.M. local time for the following purposes:
1. To elect the Class II directors to serve for a term of three years
(Proposal 1);
2. To ratify the appointment of Price Waterhouse LLP as independent
accountants for the Company for the fiscal year ending December 26,
1998 (Proposal 2); and
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
These items of business are more fully described in the Proxy Statement
accompanying this Notice.
Only stockholders of record at the close of business on April 17, 1998 are
entitled to vote at the Annual Meeting.
All stockholders are cordially invited to attend the meeting in person.
However, to insure your representation at the meeting, please sign and return
the enclosed Proxy as promptly as possible in the postage prepaid envelope
enclosed for your convenience. Any stockholder attending the meeting may vote in
person even if he or she has returned a Proxy.
By Order of the Board of Directors,
BYRON S. KRANTZ
Secretary
<PAGE> 4
NEW WEST EYEWORKS, INC.
PROXY STATEMENT
------------
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of New West Eyeworks, Inc. (the "Company") to
be used at the 1998 Annual Meeting of Stockholders of the Company to be held on
Tuesday, June 16, 1998, and any postponements or adjournments of the meeting
(the "Annual Meeting"). The Annual Meeting will be held at the offices of the
Company, 2104 West Southern Avenue, Tempe, Arizona 85282, beginning at 8:00 A.M.
local time. As more fully described below, the principal business to be
addressed at the Annual Meeting is the election of directors and the
ratification of the appointment of Price Waterhouse LLP as independent public
accountants for the Company's 1998 fiscal year.
The expense of soliciting proxies, including the cost of preparing,
printing and mailing the proxy materials, will be borne by the Company. In
addition to solicitation of proxies by mail, solicitation may be made personally
and by telephone, and the Company may pay persons holding shares for others
their expenses for sending proxy materials to their principals. No solicitation
will be made other than by directors, officers and employees of the Company.
Any person giving a proxy pursuant to this solicitation may revoke it at
any time before it is voted by delivering to the Secretary of the Company at its
principal office a written notice of revocation or a duly executed proxy bearing
a later date or by attending the Annual Meeting and voting in person. Attendance
at the Annual Meeting will not in and of itself revoke a proxy. Each validly
executed, unrevoked proxy received by the Board of Directors of the Company
pursuant to this solicitation will be voted at the Annual Meeting as specified
by the stockholder. If no choice is indicated, the proxy will be voted FOR the
election of the nominees and FOR the appointment of Price Waterhouse LLP.
This Proxy Statement and the accompanying Chairman and President's Letter,
Notice and Proxy, together with the Company's annual report to stockholders for
the fiscal year ended December 27, 1997, are being sent to stockholders
beginning on or about April 27, 1998.
VOTING AND QUORUM
Holders of record of shares of the Company's common stock, $0.01 par value
per share (the "Common Stock"), at the close of business on April 17, 1998 are
entitled to vote at the Annual Meeting. On April 17, 1998, there were 4,872,436
shares of Common Stock outstanding. Each share is entitled to one vote.
<PAGE> 5
A majority of the issued and outstanding shares of Common Stock entitled to
vote constitutes a quorum at the Annual Meeting. Shares of Common Stock
represented in person or by proxy at the Annual Meeting, including abstentions
and "broker non-votes," will be tabulated by the inspectors of election
appointed for the Annual Meeting and will determine whether or not a quorum is
present. A broker non-vote occurs when a broker holding stock in "street name"
indicates on the proxy that it does not have discretionary authority to vote on
a particular matter.
The affirmative vote of the holders of a plurality of the shares of Common
Stock present in person or represented by proxy at the Annual Meeting is
required for the election of directors. The ratification of Price Waterhouse LLP
as the Company's independent accountants requires the affirmative vote of the
holders of a majority of the shares of Common Stock present in person or
represented by proxy at the Annual Meeting.
With respect to the election of directors, votes may be cast in favor or
withheld. Votes that are withheld will be excluded entirely from the vote and
will have no effect. Abstentions may be specified on all proposals (other than
the election of directors) and will be counted as shares that are present and
entitled to vote for a proposal, but will not be counted as votes in favor of
such proposal. Accordingly, an abstention from voting on a proposal by a
stockholder present in person or represented by proxy at the Annual Meeting will
have the same legal effect as a vote "against" the matter even though the
stockholder or interested parties analyzing the results of the voting may
interpret the abstention differently. Broker non-votes are not shares entitled
to vote, will not be counted in the total number of votes, and therefore will
have no effect on the outcome of voting.
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
The directors elected by the holders of Common Stock are divided into three
classes serving staggered three year terms of office. The Company's Board of
Directors currently has seven members, one in Class I, two each in Classes II
and III, and two of whom are elected by the holders of the Company's convertible
6% cumulative preferred stock, par value $1,000 per share (the "Preferred
Stock"). The term of the Class II directors expires at the 1998 Annual Meeting.
The term of the Class I and Class III directors will expire in 2000 and 1999,
respectively. The Board has nominated Barry J. Feld and Norman C. Harbert for
re-election as directors and recommends that the stockholders vote FOR Messrs.
Feld and Harbert.
The enclosed Proxy will be voted FOR Messrs. Feld and Harbert unless the
proxy holders are otherwise instructed. If either of Messrs. Feld or Harbert is
unavailable or declines to serve as a director for any reason, the proxy holders
will vote the proxies for a substitute nominee designated by the Board of
Directors. The Board of Directors does not expect that Mr. Feld or Mr. Harbert
will be unavailable.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR MESSRS. FELD AND HARBERT
2
<PAGE> 6
Certain information about the nominees and the current directors with
unexpired terms is set forth below.
<TABLE>
<CAPTION>
NAME AGE POSITION DIRECTOR SINCE
- ------------------------------------------------------------------------------------------------------------
CLASS I -- TERM EXPIRING IN 2000
<S> <C> <C>
Byron S. Krantz 62 Secretary and Director 1988
NOMINEES FOR CLASS II -- TERM EXPIRING IN 2001
Barry J. Feld 41 President, Chief Executive Officer and Director 1991
Norman C. Harbert 64 Director 1994
CLASS III -- TERM EXPIRING IN 1999
Ronald E. Weinberg 56 Chairman of the Board, Treasurer and Director 1988
Larry I. Pollock 50 Director 1990
DIRECTORS ELECTED BY PREFERRED STOCKHOLDERS*
Donald M. Gleklen 61 Director 1988
William P. Sutter, Jr. 40 Director 1988
<FN>
- ------------------
* Under the terms of the Company's Preferred Stock, the holders of each of
Series A and Series B Preferred Stock have the right to elect one director
per Series as long as the applicable Series is outstanding. Donald M.
Gleklen and William P. Sutter, Jr. are the directors elected by the holders
of the Series A and Series B Preferred Stock, respectively. Messrs. Sutter
and Gleklen will hold office until their successors have been duly elected
by the holders of such Series of Preferred Stock and qualified.
</TABLE>
Ronald E. Weinberg has served as Chairman of the Board and Treasurer since
the acquisition of the Company in August 1988. In 1986, Mr. Weinberg led an
investor group in the acquisition of SunMedia Corporation, which publishes a
chain of weekly newspapers in the Cleveland market, and since then, Mr. Weinberg
has served as the Chairman of the Board of SunMedia Corporation. Since December
1997, Mr. Weinberg has been the Chairman of the Board and Chief Executive
Officer of Timestar Communications Corp., a direct mail business in Cleveland,
formerly owned by SunMedia Corporation. Since 1989, Mr. Weinberg has been Vice
Chairman of the Board, Treasurer and a director of Hawk Corporation ("Hawk"),
which manufactures specialized components, principally made from powder metals,
used in a wide variety of aerospace, industrial and commercial applications.
Barry J. Feld has served as President and a member of the Board of
Directors since joining the Company in May 1991, and as Chief Executive Officer
since February 1994. Previously, Mr. Feld was President of Frame-n-Lens Optical,
Inc., the largest chain of retail optical stores in California. Mr. Feld joined
Frame-n-Lens Optical, Inc. in 1987 and served as Executive Vice President and
Chief Operating Officer until January 1990 when he became President. Prior to
that, Mr. Feld spent ten years with Pearle Health Services, Inc., one of the
largest retail optical chains in the United States, serving in various senior
management capacities during his tenure, including Retail Operations Director of
Texas State Optical, Inc., then one of the largest retail optical subsidiaries
of Pearle Health Services, Inc., from 1985 until 1987.
3
<PAGE> 7
Byron S. Krantz has been the Secretary and a director since August 1988.
Mr. Krantz has been a partner in the law firm of Kohrman Jackson & Krantz P.L.L.
since its formation in 1984. Since 1988, Mr. Krantz has been a director of Hawk.
Donald M. Gleklen has been a director since August 1988. In September 1997,
Mr. Gleklen became President and Chief Executive Officer of The Maine Merchant
Bank. Since July 1996, Mr. Gleklen has been Chairman of the Board and Chief
Executive Officer of InteliHealth, a provider of health care information and
products to consumers. Since February 1995, Mr. Gleklen has been President of
Jocard Financial Services. From March 1994 to February 1995, Mr. Gleklen was a
private investor and special counsel to Robert J.F. Brobyn & Associates,
attorneys at law. From September 1984 to March 1994, Mr. Gleklen was Senior Vice
President of MEDIQ Incorporated ("MEDIQ"), a provider of health care services to
hospitals, extended care facilities and other health-care professionals, and
President of MEDIQ Investment Services, Inc., with oversight responsibilities
for six of MEDIQ's nine operating subsidiaries and corporate development
responsibilities. Mr. Gleklen is also a director of NutraMax Products, Inc.,
Lason Inc. and Home Health Corporation of America, and Chairman of the Board of
Trustees of the Pennsylvania College of Optometry.
Norman C. Harbert has been a director since April 1994. Since 1988, Mr.
Harbert has served as the Chairman of the Board, President and Chief Executive
Officer of Hawk. Mr. Harbert is a director of Second Bancorp Inc., a bank
holding company.
Larry I. Pollock has been a director since April 1990. In January 1997, Mr.
Pollock became Executive Vice President and Chief Operating Officer of
HomePlace, Inc., a chain of home furnishings and housewares superstores, and
since October 1997, he has served as President, Chief Operating Officer and a
director. HomePlace, Inc. and its affiliates filed for reorganization under
Chapter 11 in the United States Bankruptcy Court in Wilmington, Delaware on
January 5, 1998. From January 1994 to January 1996, Mr. Pollock was President
and Chief Operating Officer of Zale Corporation, a retail jewelry store chain.
From January 1990 to December 1993, Mr. Pollock served as President and Chief
Executive Officer of Karten's Jewelers, Inc., a New England jewelry chain. Mr.
Pollock is a partner of Independent Group, L.P., a privately-held radio
broadcasting company based in Cleveland, Ohio and a director of Borders Group,
Inc.
William P. Sutter, Jr. has been a director since August 1988. Since 1984,
Mr. Sutter has been associated with affiliates of Mesirow Financial Holdings,
Inc., a Chicago-based financial services firm. Mr. Sutter is a Senior Managing
Director of Mesirow Private Equity Investments, Inc. and a Vice President of
Mesirow Financial Services, Inc.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors met three times and acted by written consent twice
in 1997. During 1997, all members of the Board of Directors participated in at
least 80% of all Board and applicable Committee meetings.
4
<PAGE> 8
The Audit Committee consists of Mr. Gleklen, Mr. Pollock and Mr. Weinberg.
The purpose of the Audit Committee is to review the accounting and reporting
principles, policies and practices followed by the Company and the adequacy of
the Company's internal, financial and operating controls. The Audit Committee
met once in 1997.
The Compensation Committee is composed of Mr. Krantz, Mr. Pollock, Mr.
Sutter and Mr. Weinberg, and its purpose is to review and make recommendations
regarding the compensation of executive officers of the Company and to
administer option grants under the Company's Amended and Restated Stock Option
Plan (the "Option Plan"). The Board of Directors reviews and votes upon all
option grants recommended by the Compensation Committee. The Compensation
Committee met twice in 1997.
The Nominating Committee, which is composed of Mr. Krantz, Mr. Sutter and
Mr. Weinberg, is responsible for making recommendations to the Board of
Directors on candidates for election to the Board. The Nominating Committee
reviews nominees recommended to it by stockholders in writing and sent to the
Secretary of the Company. A written recommendation must be delivered to the
Company in a timely fashion as described below in "Stockholder Proposals and
Director Nominations" and must include (1) as to each person whom the
stockholder proposes to nominate for election or re-election as a director, (a)
the name, age, business address and residence address of the person, (b) the
principal occupation or employment of the person, (c) the class and number of
shares of capital stock of the Company beneficially owned by the person, and (d)
any other information relating to the person that is required to be disclosed in
solicitations for proxies for election of directors pursuant to Rule 14a under
the Securities and Exchange Act of 1934, as amended (the "Exchange Act"); and
(2) as to the stockholder giving the notice, (a) the name and record address of
the stockholder, and (b) the class and number of shares of capital stock of the
Company beneficially owned by the stockholder. The Company may require any
proposed nominee to furnish additional information reasonably required by the
Company to determine the eligibility of the proposed nominee to serve as a
director of the Company. The Nominating Committee met once in 1997.
DIRECTOR COMPENSATION
The Company pays each director who is neither an employee of, or legal
counsel to, the Company, nor affiliated with one of the Company's principal
stockholders, a fee of $1,000 per board meeting attended by the director. The
Company also reimburses all directors for expenses incurred in connection with
their services as directors. No additional consideration is paid to the
directors for committee participation. The Company's Option Plan also provides
for the automatic "formula" grant to each non-employee director of an option to
purchase 10,000 shares of Common Stock on the date of his or her initial
election to the Board of Directors.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than 10% of the Company's Common
Stock, to file with the Securities and Exchange Commission ("SEC"), the Nasdaq
System and The Pacific Stock Exchange initial
5
<PAGE> 9
reports of ownership and reports of changes in ownership of the Common Stock.
Officers, directors and greater than 10% stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
Tricia Wood, Vice President -- Real Estate and Construction of the Company,
inadvertently failed to file a required form on a timely basis upon her
appointment as an executive officer of the Company in October 1997. The required
form was subsequently filed. Based solely on its review of copies of reports
furnished to the Company or written representations that no reports were
required, the Company believes that all other Section 16(a) filing requirements
were met in 1997.
PROPOSAL NO. 2 -- APPROVAL OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has selected Price Waterhouse LLP as
independent accountants to examine the consolidated financial statements of the
Company for the fiscal year ending December 26, 1998. Although the Bylaws of the
Company do not require the selection of independent accountants to be submitted
to stockholders for approval, this selection is being presented to stockholders
for ratification or rejection at the Annual Meeting. The Board of Directors
recommends that the stockholders vote FOR the ratification of such selection.
Price Waterhouse LLP has been the independent accountant of the Company since
1987, and is considered by the Board of Directors to be well qualified. A
representative of Price Waterhouse LLP is expected to be present at the Annual
Meeting, and will have an opportunity to make a statement if he so desires and
will be available to respond to appropriate questions.
For ratification, this proposal will require the affirmative vote of the
holders of a majority of the shares of Common Stock represented at the meeting
in person or by proxy. If the resolution is rejected, or if Price Waterhouse LLP
declines to act or becomes incapable of action, or if its employment is
discontinued, the Board will appoint other independent accountants whose
continued employment after the following Annual Meeting of Stockholders will be
subject to ratification by stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPOINTMENT OF PRICE WATERHOUSE
LLP
6
<PAGE> 10
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
The following table summarizes the compensation paid by the Company to the
Company's President and Chief Executive Officer, the Chairman of the Board, and
the Executive Vice President and Chief Operating Officer, in the last three
years, the only executive officers who earned more than $100,000 annually in
total compensation at any time during that period (the "Named Executive
Officers").
<TABLE>
<CAPTION>
ANNUAL COMPENSATION NUMBER OF
--------------------------------------- LONG-TERM
NAME AND FISCAL COMPENSATION ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS OPTION AWARDS COMPENSATION*
- ----------------------------- ---------- ------------- ---------- ------------------ -----------------
<S> <C> <C> <C> <C> <C>
Ronald E. Weinberg 1997 $139,411 -- -- $ 2,010
Chairman of the Board 1996 124,687 -- -- 1,918
1995 124,687 -- -- 1,922
Barry J. Feld 1997 $189,423 $15,000 30,000 $ 2,822
President and 1996 175,000 -- -- 2,787
Chief Executive Officer 1995 175,000 -- -- 2,811
James W. Swanson 1997 $101,433 -- 25,000 $ 1,596
Executive Vice President 1996 90,154 $ 3,750 7,000 1,467
and Chief Operating Officer 1995 81,500 10,000 4,500 1,435
<FN>
- ------------------
* These amounts were contributed by the Company to the Company's profit
sharing and 401(k) savings plan, as a matching contribution relating to
before-tax contributions made by each of the Named Executive Officers under
the plan. For a description of additional amounts paid to Mr. Weinberg and
his affiliates in connection with certain transactions, see "Certain
Relationships and Related Transactions."
</TABLE>
OPTION GRANTS IN 1997 FISCAL YEAR
The following table summarizes information concerning options granted
during the Company's fiscal year ended December 27, 1997 to each of the Named
Executive Officers.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED
SHARES OF PERCENT OF ANNUAL RATES OF STOCK
COMMON TOTAL OPTIONS PRICE APPRECIATION
STOCK GRANTED TO EXERCISE FOR OPTION TERM
UNDERLYING EMPLOYEES IN PRICE PER -----------------------
NAME OPTIONS FISCAL 1997 SHARE EXPIRATION DATE 5% 10%
- --------------------- ----------- ------------- --------- ------------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Ronald E. Weinberg -- -- -- -- -- --
Barry J. Feld 30,000 19.1% $5.50 May 16, 2007 $ 103,950 $ 262,350
James W. Swanson 5,000 3.2% $6.00 February 11, 2007 $ 18,900 $ 47,700
20,000 12.7% $9.50 September 25, 2007 $ 119,700 $ 302,100
</TABLE>
7
<PAGE> 11
OPTION VALUES AT 1997 FISCAL YEAR-END
The following table summarizes information with respect to the number of
unexercised options held by the Named Executive Officers as of December 27,
1997. Also reported are values of "in-the-money" options, that is, the amount by
which the exercise price of the option is exceeded by the last sale price of the
Common Stock on December 27, 1997. No Named Executive Officer exercised any
options in 1997.
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
NAME OPTIONS AT DECEMBER 27, 1997 AT DECEMBER 27, 1997
- --------------------------------- ---------------------------------- ----------------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------- ------------- ---------------- ------------- -----------------
<S> <C> <C> <C> <C>
Ronald E. Weinberg -- -- -- --
Barry J. Feld 30,000 -- $ 75,000 --
James W. Swanson 17,000 31,500 $ 22,000 $ 46,770
</TABLE>
LONG-TERM INCENTIVE AND PENSION PLANS
The Company does not have any long-term incentive, pension or similar
plans, other than the Company's profit sharing and 401(k) savings plan.
EMPLOYMENT AGREEMENTS
Effective August 1, 1993, the Company entered into employment agreements
with each of Mr. Weinberg and Mr. Feld. Both agreements have been extended until
December 31, 1999. Under the agreements, the base salaries may be adjusted
annually by the Board of Directors of the Company. Mr. Weinberg agreed to forgo
a portion of his salary in 1995 and 1996.
The employment agreements also required the adoption of an annual bonus
plan. On May 6, 1997, the members of the Compensation Committee of the Board of
Directors adopted the 1997 incentive bonus plan, which provided that a bonus
would only be payable to Messrs. Feld and Weinberg if the Company's annual
pre-tax income exceeded $1.35 million. The bonus would then increase along with
an increase in the Company's annual pre-tax income according to a formula
adopted by the Compensation Committee. Because the Company did not reach the
pre-tax income target in 1997, no bonus was paid to either Mr. Feld or Mr.
Weinberg pursuant to the 1997 incentive bonus plan. Even though the annual
target was not met, the Board of Directors elected, on the recommendation of the
Compensation Committee, to pay Mr. Feld a bonus of $15,000 in 1997 for
outstanding performance in achieving certain short term goals.
Mr. Weinberg devotes a substantial amount of his time and effort to the
business of the Company, but under the terms of Mr. Weinberg's employment
agreement he is not required to devote all of his time and efforts to the
Company so long as he performs the duties of his office to the best of his
ability in a manner that promotes the best interests of the Company. If either
Mr. Weinberg or Mr. Feld dies during the term of their respective employment
agreements, the
8
<PAGE> 12
Company will pay his base annual salary for 12 months and any bonus earned but
not paid, and if either becomes mentally or physically disabled during the term,
the Company will pay his base annual salary for 12 months. Each employment
agreement also provides for a two year non-competition provision; however, Mr.
Feld's non-competition provision is conditioned upon the Company paying him 75%
of his base salary then in effect.
The Company has no other employment agreements with any of its executive
officers or other employees.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is responsible for
reviewing and recommending changes to the Company's compensation policies and
programs applicable to the Company's executive officers. The Compensation
Committee also administers option grants under the Option Plan. The Compensation
Committee is composed of three non-employee directors and the Company's Chairman
of the Board.
COMPENSATION PHILOSOPHY AND OBJECTIVES
The Company's compensation philosophy is to provide a total compensation
program that will attract, retain and motivate the high caliber executives
required for the success of the business. The Company achieves these objectives
by compensating its executive officers primarily through a combination of three
components: a base salary, an annual bonus plan, and long-term incentive
opportunities in the form of stock options.
COMPENSATION COMPONENTS
The Company's executive compensation packages for fiscal 1997, which the
Compensation Committee reviewed, were designed to attract and retain the
management team responsible for the Company's success, with ties to business
objectives and outstanding performance. The Compensation Committee assesses the
past performance and the anticipated future contribution, and considers the
total compensation (actually earned and potentially available), of each
executive officer in establishing each element of compensation.
Salary
The Company annually reviews each officer's salary, taking into account job
performance for the prior year as viewed subjectively by the person to whom the
individual reports, internal pay equity considerations and level of
responsibilities. Increases in base salaries are also influenced by the
performance of the Company and the individual in achieving goals and objectives
established by the Company.
9
<PAGE> 13
Bonus
The Company uses annual bonuses to motivate its executive officers and
reward individuals for their initiative and outstanding performance. Bonuses are
contingent upon the Company's performance measured against pre-established
financial and other business goals and upon individual performance measured
against established revenue, profitability and other objectives, all of which
are based upon the individual's area of responsibility.
Stock Options
Stock option awards are designed to provide management with a direct
financial incentive to enhance stockholder values, thereby aligning the
interests of the Company's executives with the long-term interest of its
stockholders. The Compensation Committee approves option grants subject to
vesting periods to retain executives and encourage sustained contributions.
CHIEF EXECUTIVE OFFICERS' COMPENSATION
The compensation for Mr. Weinberg, Chairman of the Board, and Mr. Feld,
Chief Executive Officer and President, is determined by the members of the
Compensation Committee, other than Mr. Weinberg, through a process similar to
the policies and procedures discussed above for executive officers in general.
The Compensation Committee's approach in setting Mr. Feld's compensation is
to provide compensation stability in the form of the base salary element of his
compensation package. Mr. Weinberg's compensation takes into account his overall
level of experience and contribution to the Company, as well as his devotion of
less than 100% of his time to the management of the Company. Both executives
participate in a bonus plan providing them with an incentive to lead the Company
toward clearly defined performance goals.
The base salary levels established by the Compensation Committee reflect
the continued year-to-year growth of revenues and operating cash flow, the
attainment of same store year-to-year sales gains above industry averages, the
continuation of the Company's new store opening program and the achievement of
other specified strategic objectives of the business.
The bonus plans for Messrs. Weinberg and Feld are keyed to specifically
budgeted operating results for the year. For 1997, the bonuses were based on
attained levels of pre-tax income. No bonuses were paid in 1997 to either Mr.
Weinberg or Mr. Feld pursuant to the bonus plans because the Company did not
reach the pre-tax income target in 1997. Even though the annual target was not
met, the Compensation Committee recommended, and the Board of Directors
approved, a bonus of $15,000 for Mr. Feld in 1997 for outstanding performance in
achieving certain short term goals. See "Executive Compensation and Other
Information -- Employment Agreements."
COMPENSATION COMMITTEE
BYRON S. KRANTZ
LARRY I. POLLOCK
WILLIAM P. SUTTER, JR.
RONALD E. WEINBERG
10
<PAGE> 14
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION IN COMPENSATION DECISIONS
Byron S. Krantz serves as Secretary of the Company without compensation and
is a partner in the law firm of Kohrman Jackson & Krantz P.L.L., which provides
legal services to the Company. William P. Sutter, Jr. is a Senior Managing
Director of Mesirow Private Equity Investments, Inc. and a Vice President of
Mesirow Financial Services, Inc., both of which are corporate general partners
of partnerships that are stockholders of the Company. Ronald E. Weinberg serves
as Chairman of the Board of the Company and is President and sole shareholder of
Weinberg Capital Corporation, which provides certain management services to the
Company.
PERFORMANCE GRAPH
The following graph compares the cumulative total return on the Company's
Common Stock with the cumulative total return of the companies in the Russell
2000 Index and the S&P Specialty Retail Index. Cumulative total return for each
of the periods shown in the Performance Graph is calculated from the last sale
price of the Company's Common Stock at the end of the period and assumes an
initial investment of $100 on December 25, 1993, the last day of the Company's
1993 fiscal year, and the reinvestment of any dividends. [GRAPHIC OMITTED]
12/25/93 12/30/94 12/30/95 12/28/96 12/27/97
-------- -------- -------- -------- --------
NEWI 100 48.95 62.45 97.89 109.71
S&P Retail 100 75.03 56.65 79.68 80.04
Russell 2000 100 101.04 129.79 149.74 178.33
11
<PAGE> 15
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of April 17, 1998, information regarding
the beneficial ownership of the Company's capital stock, by (1) each stockholder
known by the Company to be the beneficial owner of more than five percent of the
Company's outstanding shares of capital stock, (2) each director, (3) the Named
Executive Officers, and (4) all directors and executive officers of the Company
as a group. The information contained in the table does not include 140,900
shares of Common Stock issuable under the Option Plan under options that are
outstanding, but not presently exercisable. The information contained in the
table does include (1) 167,600 shares of Common Stock issuable under presently
exercisable options granted by the Company pursuant to the Option Plan, (2)
156,563 shares of Common Stock issuable upon the exercise of warrants that are
presently exercisable, and (3) 650,000 shares of Common Stock issuable upon
conversion of the Preferred Stock.
<TABLE>
<CAPTION>
NAMES AND ADDRESS (1) BENEFICIAL OWNERSHIP (2)
- ------------------------------------------------- --------------------------------------------------
SHARES PERCENTAGE
--------------------- -------------------
<S> <C> <C>
Ronald E. Weinberg (3) 884,923 15.1%
Mesirow Group (4) 1,236,688 21.2%
Barry J. Feld (5) 266,937 4.6%
Donald M. Gleklen (6) 32,260 *
Norman C. Harbert (7) 34,119 *
Byron S. Krantz (8) 52,895 *
Larry I. Pollock (9) 11,700 *
William P. Sutter, Jr. (10) 27,690 *
James W. Swanson (11) 19,000 *
All directors and executive officers 1,361,824 23.3%
as a group (12 individuals) (12)
<FN>
- ------------------
* Less than 1%
(1) Unless otherwise indicated, the address of each of the beneficial owners
identified is c/o New West Eyeworks, Inc., 2104 West Southern Avenue,
Tempe, Arizona 85282.
(2) Unless otherwise indicated, the Company believes that all persons named in
the table have sole investment and voting power over the shares of capital
stock owned.
(3) Includes (i) a warrant to purchase 22,500 shares of Common Stock; (ii)
6,805 shares of Common Stock and 15,714 shares of Common Stock issuable
upon the conversion of shares of Series A Preferred Stock held of record
by Flag Partners, an Ohio partnership ("Flag"); and (iii) 1,000 shares
beneficially owned by Mr. Weinberg's wife as to which shares Mr. Weinberg
disclaims beneficial ownership. The partners of Flag are all directors of
the Company. Flag holds of record 30,623 shares of Common Stock and 594
shares of Series A Preferred Stock presently convertible into 70,714
shares of Common Stock.
</TABLE>
12
<PAGE> 16
(4) Each of Mesirow Capital Partners II ("Mesirow II"), Mesirow Capital
Partners III ("Mesirow III"), Mesirow Capital Partners IV ("Mesirow IV"),
Mesirow Capital Partners V ("Mesirow V") and Mesirow Capital Partners VI
("Mesirow VI") (collectively, the "Mesirow Group") is a limited
partnership, the corporate general partners of which are affiliates of
Mesirow Financial Holdings, Inc. The Mesirow Group's address is 350 North
Clark Street, Chicago, Illinois 60610. William P. Sutter, Jr. is an
officer of each of the corporate general partners of the Mesirow Group and
a director of the Company. Includes (i) a warrant to purchase 9,000 shares
of Common Stock held by Mesirow V and a warrant to purchase 13,500 shares
a Common Stock held by Mesirow VI; (ii) 392,857 shares of Common Stock
issuable upon the conversion of shares of Series A Preferred Stock held of
record by Mesirow VI; (iii) 178,572 shares of Common Stock issuable upon
the conversion of Series B Preferred Stock of which (a) 59,524 shares are
held of record by Mesirow II, (b) 41,667 shares are held by Mesirow III,
(c) 35,714 shares are held of record by Mesirow IV, and (d) 41,667 shares
are held of record by Mesirow V; and (iv) 642,759 shares of Common Stock,
of which (a) 64,519 shares are held of record by Mesirow II, (b) 74,719
shares are held of record by Mesirow III, (c) 333,386 shares are held of
record by Mesirow V, and (d) 170,135 shares are held by Mesirow VI. Mr.
Sutter disclaims beneficial ownership of such shares. Does not include
shares beneficially owned by Mr. Sutter.
(5) Includes (i) a warrant to purchase 5,000 shares of Common Stock; (ii)
5,104 shares of Common Stock and 11,786 shares of Common Stock issuable
upon the conversion of shares of Series A Preferred Stock held of record
by Flag; (iii) 300 shares of Common Stock held by Mr. Feld as custodian
for his children; and (iv) an option to purchase 30,000 shares of Common
Stock granted to Mr. Feld pursuant to the Option Plan. Annette C. Feld,
Vice President -- Marketing and Merchandise of the Company, is the wife of
Barry J. Feld. Also includes the presently exercisable portion of options
to purchase 27,000 shares of Common Stock granted to Ms. Feld pursuant to
the Option Plan, which options are presently exercisable for 16,000
shares, as to which Mr.
Feld disclaims beneficial ownership.
(6) Includes (i) an option to purchase 10,000 shares of Common Stock granted
to Mr. Gleklen pursuant to the Option Plan; (ii) 7,857 shares of Common
Stock issuable upon the conversion of shares of Series A Preferred Stock;
(iii) 1,000 shares held by Mr. Gleklen's wife as to which shares Mr.
Gleklen disclaims beneficial ownership; and (iv) 4,403 shares of Common
Stock held by an IRA.
(7) Includes (i) the presently exercisable portion of an option granted to Mr.
Harbert pursuant to the Option Plan to purchase 10,000 shares of Common
Stock, which option is presently exercisable for 6,600 shares; (ii) 5,000
shares of Common Stock held of record by Mr. Harbert's defined benefits
plan; and (iii) 6,805 shares of Common Stock and 15,714 shares of Common
Stock issuable upon the conversion of shares of Series A Preferred Stock
held of record by Flag.
(8) Includes (i) an option to purchase 10,000 shares of Common Stock granted
to Mr. Krantz pursuant to the Option Plan; and (ii) 6,805 shares of Common
Stock and 15,714 shares of Common Stock issuable upon the conversion of
shares of Series A Preferred Stock held of record by Flag.
(9) Includes an option to purchase 10,000 shares of Common Stock granted to
Mr. Pollock pursuant to the Option Plan.
(10) Includes (i) an option to purchase 10,000 shares of Common Stock granted
to Mr. Sutter pursuant to the Option Plan; (ii) 5,104 shares of Common
Stock and 11,786 shares of Common Stock issuable upon the conversion of
shares of Series A Preferred Stock held of record by Flag; and (iii) 800
shares of Common Stock held by Mr. Sutter as a custodian for his children.
(11) Includes options to purchase 17,000 shares of Common Stock granted to Mr.
Swanson pursuant to the Option Plan.
(12) Includes (i) options to purchase shares of Common Stock granted to
directors and executive officers pursuant to the Option Plan, which are
presently exercisable for 141,600 shares in the aggregate; (ii) warrants
to purchase 27,500 shares of Common Stock in the aggregate; (iii) 7,857
shares of Common Stock issuable upon the conversion of shares of Series A
Preferred Stock held by Mr. Gleklen; and (iv) 30,623 shares of Common
Stock and 70,714 shares of Common Stock issuable upon the conversion of
shares of Series A Preferred Stock held of record by Flag. Does not
include shares beneficially owned by the Mesirow Group. See footnote 4
above.
13
<PAGE> 17
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In early 1997, the Company completed a public offering of 1,505,400 shares
of its Common Stock at an offering price of $6.00 per share (the "Offering").
Mesirow II, Mesirow III and Mesirow IV sold 106,642, 123,501 and 169,857 shares
of Common Stock in the Offering, respectively. The Company received none of the
proceeds from the sale of Common Stock by the selling stockholders. Mesirow
Financial, Inc. participated in and served as co-manager of the Offering and is
affiliated with the members of the Mesirow Group. William P. Sutter, Jr. is a
director of the Company and an officer of each of the corporate general partners
of the Mesirow Group, which corporate general partners are affiliates of Mesirow
Financial, Inc.
In December 1996, the Company entered into a bridge loan for $350,000 with
The Second National Bank of Warren (Ohio). Ronald E. Weinberg, Chairman of the
Board of the Company, guaranteed the loan and Barry J. Feld, President and Chief
Executive Officer of the Company, agreed with Mr. Weinberg to share his guaranty
obligations. The Company paid Mr. Weinberg and Mr. Feld a total of $7,500 in
exchange for their guaranty of the loan. Norman C. Harbert is a director of the
Company and Second Bancorp, Inc., the parent holding company of The Second
National Bank of Warren (Ohio). In February 1997, the Company repaid the bridge
loan with a portion of proceeds from the Offering.
In June 1996, the Company entered into a $2.0 million revolving line of
credit which was secured by guarantees from Mesirow V, Mesirow VI, and Mr.
Weinberg. Mr. Feld agreed to share in the obligations of the guarantors. In
exchange for the guarantee of the Company's obligations under its revolving line
of credit by such officers and shareholders, the Company issued warrants to them
to purchase, in the aggregate, 50,000 shares of Common Stock at a price per
share of $6.11, subject to customary anti-dilution adjustments. In February
1997, the Company reduced the amount outstanding on the revolving line of credit
by approximately $1.9 million with a portion of the proceeds from the Offering.
The revolving line of credit matured on May 31, 1997.
The Company is a party to an expense sharing arrangement under which the
Company shares the expenses of its Cleveland, Ohio headquarters with Weinberg
Capital Corporation, of which Mr. Weinberg is President and sole shareholder.
Pursuant to a formula based on full-time equivalent personnel, the Company pays
approximately 28% of the overhead costs of the headquarters, including rent,
utilities and copying, telephone and other expenses. The aggregate amount of the
payments by the Company for the shared headquarters were approximately $137,000
in 1997, $109,000 in 1996 and $136,000 in 1995.
In August 1993, the Company chose Mesirow Insurance Services, Inc. as its
primary insurance broker to arrange its insurance coverage, including real and
personal property, workers' compensation and general liability. Mesirow
Insurance Services, Inc. is affiliated with the members of the Mesirow Group.
The original insurance agreement was for a period of one year and has since been
renewed. Under the terms of the insurance agreement, the annual aggregate
premiums paid by the Company are approximately $280,000.
14
<PAGE> 18
Byron S. Krantz, a director and the Secretary of the Company, is a partner
of the law firm of Kohrman Jackson & Krantz P.L.L., which provides legal
services to the Company. The Company paid legal fees to Kohrman Jackson & Krantz
P.L.L. in 1997 of $333,515 for services in connection with a variety of matters,
including the Offering.
The Company believes that the terms of the transactions and the agreements
described above are on terms at least as favorable as those which it could
otherwise have obtained from unrelated parties. On-going and future transactions
with related parties will be (1) on terms at least as favorable as those that
the Company would be able to obtain from unrelated parties, (2) for bona fide
business purposes, and (3) approved by a majority of the disinterested and
non-employee directors.
STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
A stockholder intending to present a proposal to be included in the
Company's Proxy Statement for the Company's 1999 Annual Meeting of Stockholders
must deliver a proposal, in accordance with the requirements of the Company's
Bylaws, to the Secretary of the Company at the Company's principal executive
office no earlier than February 20, 1999 and no later than March 22, 1999.
Stockholders desiring to nominate a director for election at the Company's 1999
Annual Meeting of Stockholders must deliver a notice, in accordance with the
requirements of the Company's Bylaws, to the Secretary of the Company at the
Company's principal executive office no earlier than February 20, 1999 and no
later than March 12, 1999.
OTHER MATTERS
The Board of Directors of the Company is not aware of any other matters to
be submitted to the Annual Meeting. If any other matters properly come before
the Annual Meeting, it is the intention of the persons named in the accompanying
Proxy to vote the shares they represent as the Board of Directors may recommend.
You are urged to sign and return your Proxy promptly to make certain your
shares will be voted at the Annual Meeting. For your convenience, a return
envelope is enclosed requiring no additional postage if mailed in the United
States.
By Order of the Board of Directors,
BYRON S. KRANTZ
Secretary
April 27, 1998
15
<PAGE> 19
PROXY NEW WEST EYEWORKS, INC. PROXY
ANNUAL MEETING OF STOCKHOLDERS, JUNE 16, 1998
2104 WEST SOUTHERN AVENUE, TEMPE, ARIZONA 85282
8:00 A.M. LOCAL TIME
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Ronald E. Weinberg and Byron S. Krantz, or
either one of them acting singly, with full power of substitution, the proxy or
proxies of the undersigned to attend the Annual Meeting of the Stockholders of
New West Eyeworks, Inc. to be held on June 16, 1998, at its offices, 2104 West
Southern Avenue, Tempe, Arizona, 85282, beginning at 8:00 A.M. local time, and
any adjournments, and to vote all shares of stock that the undersigned would be
entitled to vote if personally present in the manner indicated below and on the
reverse side, and on any other matter properly brought before the Meeting or any
adjournments thereof, all as set forth in the April 27, 1998 Proxy Statement.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting,
Proxy Statement and Annual Report of New West Eyeworks, Inc.
PLEASE MARK YOUR CHOICE LIKE THIS [X] IN BLUE OR BLACK INK.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR "FOR ALL NOMINEES" and FOR
PROPOSAL 2.
1. Election of Barry J. Feld and Norman C. Harbert as directors.
FOR ALL NOMINEES (unless struck out above) [ ] WITHHOLD FROM ALL NOMINEES [ ]
(Authority to vote for any nominee may be withheld by lining through or
otherwise striking out the name of such nominee.)
THIS PROXY IS CONTINUED ON THE REVERSE SIDE, PLEASE DATE, SIGN AND RETURN
PROMPTLY.
2. Ratification of appointment of independent accountants.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(Signature should be exactly
as name or names appear on
this proxy. If stock is held
jointly each holder should
sign. If signature is by
attorney, executor,
administrator, trustee or
guardian, please give full
title.)
Dated: _________________, 1998
------------------------------
Signature
------------------------------
Signature if held jointly
I plan to attend the
meeting: Yes [ ] No [ ]
THIS PROXY WILL BE VOTED FOR THE NOMINEES AND THE ABOVE MATTER UNLESS OTHERWISE
INDICATED, AND IN THE DISCRETION OF THE PROXIES ON ALL OTHER MATTERS PROPERLY
BROUGHT BEFORE THE MEETING.
