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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement [ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-2.
MIKE'S ORIGINAL, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than 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 0-12
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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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] 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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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
MIKE'S ORIGINAL, INC.
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
December 9, 1998
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To the Stockholders of
MIKE'S ORIGINAL, INC. :
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Mike's
Original, Inc. will be held at ________ located at __________________ on
Wednesday, December 9, 1998 at 10:00 a.m., or at any adjournment thereof, for
the following purposes:
1. To elect three directors to the Board of Directors;
2. To consider and act upon a proposal to amend the Company's Certificate
of Incorporation to change the name of the Corporation to "New Yorker
Marketing Corp.", as set forth in Exhibit A.
3. To consider and act upon a proposal to grant the Board of Directors
authority to amend the Company's Certificate of Incorporation to
authorize a one-for-four or one-for-five reverse stock split of the
Corporation's common stock, par value $.001 per share, as set forth in
Exhibit B.
4. To consider and act upon such other business as may properly come
before this meeting or any adjournment thereof.
The above matters are set forth in the Proxy Statement attached to this
Notice to which your attention is directed.
Only stockholders of record on the books of the Company at the close of
business on November 5, 1998 will be entitled to vote at the Annual Meeting of
Stockholders or at any adjournment thereof. You are requested to sign, date and
return the enclosed Proxy at your earliest convenience in order that your shares
may be voted for you as specified.
By Order of the Board of Directors,
Arthur Rosenberg
---------------------------------
President
October __ , 1998
Jericho, New York
<PAGE>
Mike's Original, Inc.
366 N. Broadway
Jericho, NY 11753
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PROXY STATEMENT
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ANNUAL MEETING OF STOCKHOLDERS
December 9, 1998
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The Annual Meeting of Stockholders of Mike's Original, Inc. (the "Company")
will be held on Wednesday, December 9, 1998 at ____________________, at 10:00
a.m. for the purposes set forth in the accompanying Notice of Annual Meeting of
Stockholders. The enclosed proxy is solicited by and on behalf of the Board of
Directors of the Company for use at the Annual Meeting of Stockholders to be
held on December 9, 1998 and at any adjournments of such meeting. The
approximate date on which this proxy statement and the enclosed proxy are being
first mailed to stockholders is November __, 1998.
If a proxy in the accompanying form is duly executed and returned, the
shares represented by such proxy will be voted as specified. Any person
executing the proxy may revoke it prior to its exercise either by letter
directed to the Company or in person at the Special Meeting.
Voting Rights
Only stockholders of record on November 5, 1998 (the "Record Date") will be
entitled to vote at the Special Meeting or any adjournment thereof. As of the
Record Date, the Company had outstanding one class of voting capital stock,
namely 3,392,929 shares of Common Stock, $.001 par value per share ("Common
Stock"). Each share of Common Stock issued and outstanding on the Record Date is
entitled to one vote at the Special Meeting of Stockholders.
The affirmative vote of a majority of the votes cast at the Annual Meeting
of Stockholders is required for approval of the election of directors. The
affirmative vote of a majority of the outstanding shares on the Record Date is
required for the approval of the amendments to the Certificate of Incorporation
changing the name of the Company and authorizing a reverse stock split. For
purposes of determining whether proposals have received a majority vote,
abstentions will not be included in the vote totals and, in instances where
brokers are prohibited from exercising discretionary authority for beneficial
owners who have not returned a proxy (so called "broker non-votes"), those votes
will not be included in the vote totals. Therefore, abstentions and broker
non-votes will have no effect on the vote, but will be counted in the
determination of a quorum.
<PAGE>
SECURITY OWNERSHIP
The following table sets forth the beneficial ownership of shares of voting
stock of the Company, as of November 5, 1998, of (i) each person known by the
Company to beneficially own 5% or more of the shares of outstanding Common
Stock, based solely on filings with the Securities and Exchange Commission, (ii)
each of the Company's executive officers and directors and (iii) all of the
Company's executive officers and directors as a group. Except as otherwise
indicated, all shares are beneficially owned, and investment and voting power is
held by, the persons named as owners.
<TABLE>
<CAPTION>
Amount and Nature
Name and Address of of Shares Percentage
Beneficial Owner Beneficially Owned Ownership
- -------------------- ------------------ -----------
<S> <C> <C>
Steven A. Cantor 432,295 (2) 12.7%
Annette Cantor 298,650 8.8%
Arthur G. Rosenberg (1) 23,333 (3) *
Frederic D. Heller (1) 75,000 (4) 2.2%
Myron Levy (1) 24,167 *
Louis P. Solferino (5) 180,034 5.3%
Michael Jones (6) 146,342 4.3%
The Moshe Isaac Foundation (7) 200,000 5.9%
Food Commodities Limited (8) 266,667 7.8%
All officers and directors
as a group (3 persons) 370,834 (9) 10.9%
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<FN>
* less than one percent (1%) unless otherwise indicated.
(1) The address for each of these persons is 366 N. Broadway, Jericho, NY 11753
(2) Includes options to purchase 56,667 shares of Common Stock granted under
the 1995 Long-Term Incentive Plan and options to purchase 76,666 shares of
Common Stock granted under the 1996 Non-Qualified Plan.
(3) Includes options to purchase 23,333 shares of Common Stock granted under
the 1996 Non-Qualified Plan.
(4) Includes options to purchase 58,333 shares of Common Stock granted under
the 1996 Non-Qualified Plan.
(5) The address for Mr. Solferino is 115 Blue Spruce Road, Levittown, New York
11756.
(6) The address for Mr. Jones is 86 West Main Street, East Islip, New York
11730.
(7) The address for The Moshe Isaac Foundation is c/o Teaneck Nursing Center,
1104 Teaneck Road, Teaneck, New Jersey 07666. The principal of this entity
is Michael Koenig.
(8) The address for Food Commodities Limited is Bel Royal House, Hilgrove
Street, St. Helier, Jersey JE24WG, British Isles. The principal of this
entity is Robert S. Fraley.
(9) Includes 246,667 shares issuable upon the exercise of options granted
pursuant to the Company's stock option plans.
</FN>
</TABLE>
<PAGE>
ELECTION OF DIRECTORS
The Company's By-Laws provides for a Board of Directors classified into
three classes whose terms of office expire in successive years. The Company's
Board of Directors now consists of three directors as set forth below.
<TABLE>
<CAPTION>
Class I Class II Class III
(To Serve Until the (To Serve Until the (To Serve Until the
Annual Meeting of Annual Meeting of Annual Meeting of
Stockholders in 2000) Stockholders in 2001) Stockholders in 1999)
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<S> <C> <C>
Arthur G. Rosenberg Myron Levy Frederick D. Heller
</TABLE>
Arthur G. Rosenberg is to be elected a director in Class I, to hold office
until the Annual Meeting of Stockholders in 2000 or until his successor is
chosen and qualified. Myron Levy is to be elected a director in Class II, to
hold office until the Annual Meeting of Stockholders in 2001 or until his
successor is chosen and qualified. Frederick D. Heller is to be elected director
in Class III, to hold office until the Annual Meeting of Stockholders in 1999 or
until his successor is chosen and qualified. Shares represented by executed
proxies in the form enclosed will be voted, if authority to do so is not
withheld, for the election as directors of the aforesaid nominees unless any
such nominee shall be unavailable, in which case such shares will be voted for a
substitute nominee designated by the Board of Directors. The Board of Directors
has no reason to believe that any of the nominees will be unavailable or, if
elected, will decline to serve.
Directors receive no cash compensation for their services to the Company as
directors, but are reimbursed for expenses actually incurred in connection with
attending meetings of the Board of Directors. All members of the Board of
Directors are eligible to participate in the Company's stock option plans.
There were four meetings of the Board of Directors during the fiscal year
ended December 31, 1997. Each director attended or participated in at least 75%
of the meetings of the Board of Directors. The Board of Directors also is
involved in issues concerning auditing and compensation. The Board of Directors
is involved in discussions with the Company's independent public accountants
with respect to the scope and results of the Company's year-end audit, the
Company's internal accounting controls and the professional services furnished
by the independent auditors to the Company; and the Board of Directors approves
executive compensation and the granting of stock options to key employees. The
Company has no standing audit, compensation or nominating committees.
<PAGE>
Principal Occupations of Directors
Set forth below is a brief description of the background of the directors
of the Company based on information provided by them to the Company.
Arthur Rosenberg, Esq. has been a director of the Company since September
1995 and President since August, 1998. Mr. Rosenberg has been the Vice President
of Acquisitions for The Associated Companies, a real estate developer, in
Bethesda, Maryland since June 1987. Mr. Rosenberg is an attorney admitted to
practice in the State of New York and has practiced law for over 30 years.
Myron Levy has been a director of the Company since July 1997. Since June
1993, Mr. Levy has been President of Herley Industries, Inc., a publicly owned
designer and manufacturer of flight instrumentation products. From May 1991 to
June 1993, Mr. Levy served as Executive Vice President and Treasurer of Herley
Industries, Inc. Mr. Levy also has been a director of Herley since 1992.
Frederic D. Heller was Vice President of Finance and director of the
Company from January 1997 until November 14, 1997 when he resigned as an officer
of the Company. Since November 1997, Mr. Heller has been Chief Financial Officer
of J & W Management Corp., a commercial real estate management company. Mr.
Heller is a CPA licensed in the State of New York for over the last ten years.
Prior to joining the Company, from November 1994 through January 1997, he
practiced as an independent financial consultant including rendering such
services to the Company in that capacity from August 1996 to January 1997. From
September 1992 through October 1994, Mr. Heller was Vice President of Finance
and director of Vasomedical, Inc., formerly Future Medical Products, Inc., a
publicly owned business involved in the merchandising of certain medical
technology. From October 1990 through September 1992, Mr. Heller was president
and chief operating officer of FDH Enterprises, Inc., a company rendering
financial consulting services to business clients.
MANAGEMENT
Officers of the Company
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Office Held
---- --- -----------
<S> <C> <C>
Arthur Rosenberg 59 President
Marc P. Palker 46 Secretary
</TABLE>
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<PAGE>
Marc Palker has been a financial consultant to the Company since December,
1997 and Secretary of the Company since August, 1998. From January, 1997 to
the present, Mr. Palker has been an independent financial consultant. From
February, 1989 through December, 1996 Mr. Palker was Chief Financial
Officer of Firetector Inc. a publicly owned business involved in the
design, manufacture and service of life safety communications equipment.
From 1994 through 1995 Mr. Palker served as National Vice President of the
Institute of Management Accountants.
EXECUTIVE COMPENSATION
The following table sets forth the cash and other compensation paid or
accrued by the Company during the year ended December 31, 1997 and 1996 and the
nine months ended December 31, 1995 to the Company's Chief Executive Officer.
Michael Rosen ceased to be the Company's Chief Executive Officer effective in
May 1998. No other executive officer earned over $100,000 in any fiscal year.
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
---------------------------------------------------- Securities
Name and Other Annual Underlying All Other
Principal Position Year Salary Bonus Compensation(2) Options Compensation
- ------------------ ---- ------ ----- -------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Michael Rosen 1997 $ 98,083 - - 50,000(3) -
Chairman of the Board, 1996 112,250(1) - - 200,000(3) -
President, Chief 9/30/95(4) 81,000(1) - - - -
Executive Officer
<FN>
- --------------------
(1) Does not include an aggregate of $89,565 of salary which was accrued and
not paid to Mr. Rosen during the period from inception through September
30, 1996, to which Mr. Rosen has waived all rights.
(2) The value of all perquisites provided to the Company's officers did not
exceed the lesser of $50,000 or 10% of the officer's salary and bonus.
(3) Represents ten-year options granted in May 1996 and September 1996 pursuant
to the Company's 1995 Long Term Incentive Plan.
(4) Represents the nine-month period ended December 31,1995.
</FN>
</TABLE>
<PAGE>
Option/SAR Grants in Last Fiscal Year
The following table sets forth all stock options granted to the executive
officers named in the Executive Compensation table during the fiscal year ended
December 31, 1997 and 1996.
<TABLE>
<CAPTION>
Individual Grants
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Number of % of Total
Securities Options/SARS
Underlying Granted to
Options/SARS Employees in Exercise or Base Expiration
Name Granted (#) Fiscal Year Price ($/Sh) Date
- ---- ------------ ------------ ---------------- ----------
<S> <C> <C> <C> <C>
Michael Rosen 33,333 12.5% $3.00 May 31, 2006 (1)
166,667 62.5% $1.50 September 11, 2006 (2)
50,000 42.9% $1.50 May 1, 2007(3)
<FN>
- ------
(1) Represents ten year options granted in May 1996, pursuant to the Company's
1995 Long Term Incentive Plan. Options became fully vested on November 30,
1996.
(2) Represents ten year options granted in September 1996, pursuant to the
Company's 1995 Long Term Incentive Plan. Options became fully vested on
March 12, 1997.
(3) Represents ten year options granted in May 1997 pursuant to the Company's
1995 Long Term Incentive Plan. Options became fully vested on November 1,
1997.
</FN>
</TABLE>
Consulting Agreements
The Company has entered into a consulting agreement with Alma Management
Corp. ("Alma"), as of November 1, 1996. Under this agreement, which is for a
term ending October 31, 1998, Alma has agreed to cause its two principals (the
"Principals"), to provide sales and marketing advisory and consulting services
to the Company. Alma receives an annual consulting fee of $50,000 payable at the
Company's option in either cash or Common Stock. In addition, Alma has received
30,000 shares of Common Stock and options to purchase 133,333 shares of Common
Stock at an exercise price of $1.50 per share. One-third of the options vest on
May 1, 1997, one-third six months thereafter and the balance vest on May 1,
1998. The Company may terminate the services of either Principal under the
consulting agreement with Alma if such Principal cannot adequately perform his
duties thereunder because of mental or physical disability, death or for "Just
Cause" (as defined). The consulting agreement provides that if one of the
Principals is terminated by the Company, the consulting fee paid to Alma will be
reduced by one half and if both Principals are terminated by the Company, no
further compensation will be paid to Alma. The consulting agreement restricts
Alma and the Principals from engaging in competition with the Company for the
term thereof and for one year thereafter and contains provisions protecting the
Company's trade secrets and proprietary rights and information.
<PAGE>
Stock Plans
1995 Long Term Incentive Plan
In August 1995, the Company adopted The Mike's Original, Inc. 1995 Long
Term Incentive Plan (the "1995 Incentive Plan") in order to motivate qualified
employees of the Company, to assist the Company in attracting employees and to
align the interests of such persons with those of the Company's stockholders.
The 1995 Incentive Plan provides for the grant of "incentive stock options"
within the meaning of the Section 422 of the Internal Revenue Code of 1986, as
amended, "non-qualified stock options," restricted stock, performance grants and
other types of awards to officers, key employees, consultants and independent
contractors of the Company and its affiliates.
The 1995 Incentive Plan, which is administered by the Board of Directors,
authorizes the issuance of a maximum of 433,333 shares of Common Stock. If any
award under the 1995 Incentive Plan terminates, expires unexercised, or is
canceled, the Common Stock that would otherwise have been issuable pursuant
thereto will be available for issuance pursuant to the grant of new awards. To
date, the Company has granted an aggregate of 306,667 options to purchase Common
Stock under the 1995 Incentive Plan, of which 250,000 options have been granted
to Michael Rosen, the Company's former Chairman of the Board and Chief Executive
Officer. 33,333 of these options are exercisable for ten years from the date of
grant at a price of $3.00 per share and [216,667] of these options are
exercisable for ten years from the date of grant at a price of $1.50 per share.
Another 56,667 options have been granted to Steven A. Cantor. Each of the
options granted to Mr. Cantor are exercisable for a ten year term at a price of
$1.50 per share. As of September 30, 1998, none of these options had been
exercised.
1996 Non-Qualified Stock Option Plan
In October 1996, the Company's Board of Directors approved a 1996
Non-Qualified Stock Option Plan (the "Non-Qualified Plan") which covers 500,000
shares of the Company's Common Stock. The options become exercisable in
installments as determined at the time of grant by the Board of Directors. As of
the date of this proxy statement, the Company had granted [478,332] options to
purchase shares of Common Stock under the Non-Qualified Plan at an exercise
price of $1.50 per share. Arthur G. Rosenberg, Martin Pilossoph and Myron Levy
have been granted options to purchase 23,333 shares of Common Stock each at the
exercise price of $1.50 per share pursuant to the Non-Qualified Plan. Frederic
D. Heller has been granted options to purchase 58,333 shares of Common Stock at
the exercise price of $1.50 per share pursuant to the Non-Qualified Plan. Alma
has been granted options to purchase 133,333 shares of Common Stock at an
exercise price of $1.50 per share pursuant to the Non-Qualified Plan. Steven A.
Cantor has been granted options to purchase 76,667 shares of Common Stock at an
exercise price of $1.50 per share. As of September 30, 1998, none of these
options had been exercised.
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In May 1998, the Company entered into a settlement and general release
("Settlement Agreement") with Michael Rosen, its then Chairman of the Board and
President, Rachelle Rosen, its then Secretary and Treasurer, Martin Pilossoph,
the father of Rachelle Rosen and father-in-law of Michael Rosen and then a
director and Elizabeth Pilossoph, the mother of Rachelle Rosen and mother-in-law
of Michael Rosen. Pursuant to the terms of the Settlement Agreement, (i) Michael
Rosen, Rachelle Rosen and Martin Pilossoph voluntarily resigned as officers and
directors of the Company, (ii) the employment agreements of each of Michael
Rosen and Rachelle Rosen were terminated, (iii) the Company agreed to repay
certain outstanding indebtedness to each of Michael Rosen and Elizabeth
Pilossoph and (iv) each of the Company on the one hand, and the Rosens and
Pilossophs on the other hand, gave the other a general release.
In April 1997, the Company issued 150,000 shares of Common Stock to Steven
A. Cantor, the Company's largest stockholder, as consideration for the
termination of his three year consulting agreement providing for payments of
$125,000 annually, which would have commenced on the Company's initial public
offering.
In December 1996, the Company issued a convertible promissory note to The
Moshe Isaac Foundation bearing interest at the rate of 8% per annum in the
principal amount of $225,000 (the "Convertible Note"). The Convertible Note was
to paid in full the earlier of five (5) days after the closing date of an
initial public offering or December 31, 1997. In lieu of receiving payment, the
holder of the Convertible Note has the right to convert within five (5) days of
the closing of such initial public offering into 200,000 shares of Common Stock.
In April 1997, such note was converted into 200,000 shares of Common Stock.
In October 1996, the Company issued 16,667 shares of Common Stock to
Frederic D. Heller, the Company's Vice President-Finance, Treasurer and a
director, as payment for services rendered during the year ended December 31,
1996. These shares were valued at $3.00 per share, the estimated fair market
value of the Common Stock at the date of issuance.
On August 28, 1996, Michael Rosen, was issued a promissory note in the
principal amount of $206,250. The funds that Mr. Rosen loaned the Company were
the proceeds of a sale by Mr. Rosen to investors of 183,333 shares of his Common
Stock at a price of $1.12 per share. This loan bears interest at a rate of 8%
and initially was payable the earlier of (i) thirteen (13) months from the date
of the loan, or (ii) the date the Company successfully consummates an initial
public offering of securities of the Company, but only to the extent that the
over-allotment option is exercised in such offering and only from the proceeds
received by the Company from the exercise of the over-allotment option. In
September 1996, the maturity date of this promissory note was revised to
September 30, 1998. In addition, the revised promissory note provides that
one-half of the outstanding principal amount of the note will be paid with
accrued interest thereon in the event the Company successfully consummates an
initial public offering of securities of the Company, but only to the extent
that the over-allotment option was exercised in such offering and only from the
proceeds received by the Company from the exercise of the over-allotment option.
As of March 31, 1998, this loan remained outstanding.
In August, September and October 1996, the Company received three loans
from Steven A. Cantor aggregating $253,750. A portion of the funds that this
<PAGE>
stockholder loaned the Company was a result of the stockholder selling shares of
his Common Stock to an investor. In August 1996, this stockholder sold 38,889
shares of his Common Stock at a price of $1.12 per share. In September 1996,
this stockholder sold 23,333 shares of his Common Stock at a price of $1.50 per
share. These loans, which were consolidated into one note in September 1997,
bear interest at a rate of 8% and are payable the earlier of (i) June 1, 1997,
or (ii) with respect to $123,750 of the principal amount, the date the Company
successfully consummates an initial public offering of securities of the
Company, but only to the extent that either the over-allotment option is
exercised in such offering or within ninety (90) days after the underwriter
elects not to exercise the over-allotment option. This loan was repaid in 1997.
On May 30, 1996, the Company received loans of $50,000 each from Louis P.
Solferino and Michael P. Jones. The loans bear interest at an annual rate of 10%
and initially were due on demand. In September 1996, the maturity date of these
promissory notes was revised to occur the earlier of (i) May 30, 1998 or (ii)
the date the Company successfully consummates an initial public offering of
securities of the Company, but only to the extent that the over-allotment option
is exercised in such offering and only from the proceeds received by the Company
from the exercise of the over-allotment option. In addition, the Company issued
6,667 shares of its Common Stock to each of Mr. Solferino and Mr. Jones. These
shares were valued at $3.00 per share, the fair market value of the Common Stock
at the date of issuance. As of September 30, 1998, these loans remained
outstanding.
In February 1996, the Company issued $150,000 and $75,000 of 12%
convertible promissory notes to Mr. Solferino and Mr. Jones, respectively, which
were payable on the earlier of August 31, 1996 or upon the consummation of an
interim financing as contemplated by a letter of intent with an investment
banker for an initial public offering of the Company's securities. In June 1996,
in lieu of receiving payment in such event, the holders of the notes exchanged
the notes, based on a conversion price determined by the notes, into Second
Private Placement Units. In April 1997, Mr. Solferino and Mr. Jones converted
$16,050 and $8,025 of the principal and accrued interest into 8,025 and 4,013
shares of Common Stock, respectively.
As a general rule, all transactions among the Company and its officers,
directors or stockholders have been, and in the future will be, made on terms no
less favorable to the Company than those available from unaffiliated parties.
Report on Interlocks and Insider Participation
Except as otherwise disclosed herein, none of the Company's directors had
any relationship requiring disclosure in this Proxy Statement.
In accordance with rules promulgated by the Securities and Exchange
Commission, the information included under the captions "Report on
Executive Compensation" and "Company Stock Performance" will not be deemed
to be filed or to be proxy soliciting material or incorporated by reference
in any prior or future filings by the Company under the Securities Act of
1933 or the Securities Exchange Act of 1934.
<PAGE>
REPORT ON EXECUTIVE COMPENSATION
The compensation of the Company's executive officers is determined by the
Board of Directors. None of the Company's directors is an employee of the
Company or any of its affiliates.
General Policies
The Company's compensation programs are intended to enable the Company to
attract, motivate, reward and retain the management talent required to achieve
aggressive corporate objectives in a rapidly changing industry, and thereby
increase stockholder value. It is the Company's policy to provide incentives to
its senior management to achieve both short-term and long-term objectives and to
reward exceptional performance and contributions to the development of the
Company's business. To attain these objectives, the Company's executive
compensation program includes a competitive base salary, coupled with a
substantial cash incentive component which is "at risk" based on the performance
of the Company's business, primarily as reflected in the achievement of
financial goals. As a general matter, as an executive officer's level of
management responsibility in the Company increases, a greater portion of his or
her potential total compensation depends upon the Company's performance as
measured by objective standards over one or more years.
Stock options are granted to employees, including the Company's executive
officers, by the Board of Directors under the Company's 1995 Long-Term Incentive
Plan and 1996 Non-Qualified Stock Option Plan . The Committee believes that
stock options provide an incentive that focuses the executive's attention on
managing the Company from the perspective of an owner with an equity stake in
the business. Options are awarded with an exercise price equal to the market
value of Common Stock on the date of grant, have a maximum term of five to ten
years and generally become exercisable for half of the option shares one year
from the date of grant and for all of the option shares two years from the date
of grant. Among the Company's executive officers, the number of shares subject
to options granted to each individual generally depends upon the level of that
officer's responsibility. The largest grants are awarded to the most senior
officers who, in the view of the Board of Directors, have the greatest potential
impact on the Company's profitability and growth. Previous grants of stock
options are reviewed but are not considered the most important factor in
determining the size of any executive's stock option award in a particular year.
Relationship of Compensation to Performance
The Board of Directors annually establishes, subject to the approval of the
Board of Directors and any applicable employment agreements, the salaries which
will be paid to the Company's executive officers during the coming year. In
setting salaries, the Board of Directors takes into account several factors,
including competitive compensation data, the extent to which an individual may
participate in the incentive compensation and stock option plans maintained by
the Company and its affiliates, and qualitative factors bearing on an
individual's experience, responsibilities, management and leadership abilities,
and job performance.
The Board of Directors also determines the terms of the Company's executive
management incentive program. In doing so, the Board of Directors reviews
management's plans for the Company's growth and profitability, determines the
criteria to be used for the determination of bonus awards under the executive
management incentive program and fixes the levels of target and maximum awards
for participants and the level of attainment of financial performance objectives
necessary for awards to be made under each incentive compensation plan.
<PAGE>
Stock options are granted to key employees, including the Company's
executive officers, by the Board of Directors under the Long-Term Incentive Plan
and Non-Qualified Stock Option Plan. Among the Company's executive officers, the
number of shares subject to options granted to each individual generally depends
upon his or her base salary and the level of that officer's management
responsibility. The largest grants are awarded to the most senior officers who,
in the view of the Board of Directors, have the greatest potential impact on the
Company's profitability and growth.
Compensation of President
For fiscal 1997, pursuant to the terms of his employment agreement with the
Company, Mr. Michael Rosen, the Company's President, received compensation of
$98,083. See "Executive Compensation-Employment Agreements". In light of this
employment agreement, the Board of Directors was not required to make any
decision regarding the base compensation of Mr. Rosen. In fiscal 1997, the Board
of Directors granted to Mr. Rosen options to purchase an aggregate of 50,000
shares of Common Stock exercisable at $1.50 per share under the 1995 Long-Term
Incentive Plan. These options were granted at exercise prices equal to the
market value of the Company's Common Stock on the date of grant. The Board of
Directors believed that these options provided an incentive for Mr. Rosen to
maximize long-term shareholder value. Upon the termination of Mr. Rosen's
employment in May 1998, all outstanding options granted to Mr. Rosen were deemed
to be fully vested pursuant to, and as of the date of, the Settlement Agreement.
Compliance with Section 16(a) of the Securities Exchange Act
Section 16(a) of the Exchange Act requires the Company's executive
officers, directors and persons who own more than ten percent of a registered
class of the Company's equity securities ("Reporting Persons") to file reports
of ownership and changes in ownership on Forms 3, 4, and 5 with the Securities
and Exchange Commission (the "SEC") and the National Association of Securities
Dealers (the "NASD"). These Reporting Persons are required by SEC regulation to
furnish the Company with copies of all Forms 3, 4 and 5 they file with the SEC
and NASD. Based solely on the Company's review of the copies of the forms it has
received, the Company believes that all Reporting Persons complied on a timely
basis with all filing requirements applicable to them with respect to
transactions during fiscal year 1997.
PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION
TO CHANGE THE NAME OF THE COMPANY
General
The Board of Directors has proposed and recommended to its stockholders a
proposal which authorizes the Board in its discretion to file an amended
Certificate of Incorporation which, among other things, amends Article First of
the Company's Amended and Restated Certificate of Incorporation to change the
name of the Company to "New Yorker Marketing Corp."
<PAGE>
Board Position and Required Vote
The proposal will be adopted only if it receives the affirmative vote of a
majority of the outstanding shares of Common Stock. The Board of Directors
believes that the proposed amendment is in the best interests of the Company and
its stockholders in that it more formally identifies the recent change in the
business plan of the Company from a manufacturer of ice cream to a distributor
of ice cream and related products concentrating in the New York City
Metropolitan area. Accordingly, the Board of Directors recommends a vote FOR its
adoption. Proxies received will be voted in favor of the proposed amendment
unless otherwise indicated.
PROPOSAL TO AMEND CERTIFICATE OF INCORPORATION
TO EFFECT A REVERSE STOCK SPLIT
The Board of Directors has proposed and recommended to the stockholders a
proposal which authorizes the Board of Directors to file a Certificate of
Amendment (the "Amendment") to the Company's Amended and Restated Certificate of
Incorporation which amends Article Fourth to effect a reverse stock split (the
"Reverse Stock Split").
The Company has determined that it is advisable to engage in an
underwritten secondary offering, the proceeds of which are intended to be used
by the Company to engage in specific acquisitions of companies which will
compliment or expand its business consistent with its business plan to become a
distributor of ice cream and related products. The Company has been advised by
the proposed underwriter that the underwriter will not proceed with the offering
unless the Company effects the Reverse Stock Split so that the per share price
of the Common Stock is substantially greater than the current market price which
was $.75 per share on October 12, 1998. The Company has not entered into any
agreements with respect to the offering and there can be no assurance that such
offering will in fact be consummated. In addition, the Company and the proposed
underwriter of the secondary offering have not yet determined the number of
shares of Common Stock to be sold or the proposed offering price of such shares.
The Board of Directors believes that it is in the best interests of the
Company to expand its business through the acquisition of one or more companies
with complimentary businesses. The Company does not have adequate capital to
purchase such companies without borrowing money or selling equity securities.
The Board of Directors believes that, as a result of the financial condition of
the Company, the sale of equity securities is preferable to the incurrence of
indebtedness and the proposed underwriter of the Company's secondary offering
has advised the Company that a recapitalization of the Common Stock is a
prerequisite to the consummation of a secondary offering. Consequently, the
Board of Directors recommends the Reverse Stock Split. In addition, the Board of
Directors believes that to issue equity securities in a secondary offering in
the absence of the Reverse Stock Split at its current market price could impair
the marketability of the Common Stock to institutional investors and members of
the investing public and create a negative impression with respect to the
Company when compared with the Company's competitors.
If the Reverse Stock Split is approved by the stockholders of the Company,
the Board will select, in its discretion, a number of shares of old common stock
("Old Common Stock") to be reclassified into each share of new common stock
<PAGE>
("New Common Stock") (the "ratio"). Its determination of the Reverse-Split ratio
must be a whole-number ratio of either one-for-four or one-for-five. The
stockholders are requested to approve a Reverse Stock Split in each of the
following ratios of: one-for-four or one-for-five (individually the "Reverse
Stock Split" and collectively the "Reverse Stock Splits"), and the Board can
choose either one or none of these alternatives in its discretion; and the
remaining alternative Reverse Stock Split would be abandoned by the Board
pursuant to Section 242(c) of the General Corporation Law of Delaware without
further action by the stockholders of the Company. A Reverse Stock Split will be
effected only upon determination by the Board of Directors that a Reverse Stock
Split is in the best interests of the Company and the Stockholders. A Reverse
Stock Split would become effective on any date (the "Effective Date") selected
by the Board of Directors after authorization by stockholders.
The Board currently expects to effect a Reverse Stock Split in the ratio of
one-for-five. The Board may consider the advice of financial advisors and
factors deemed relevant by the Board, which may include but not be limited to
belief as to future marketability and liquidity of the Common Stock, prevailing
market conditions, the likely effect on the market price of the Common Stock and
factors deemed relevant by the Board, which may include, but not be limited to,
belief as to future marketability and liquidity of the Common Stock, prevailing
market conditions, the likely effect on the market price of the Common Stock and
other relevant factors. The Board of Directors reserves the right,
notwithstanding stockholder approval of this proposal and without further action
by the stockholders, to abandon the Reverse Stock Split, if, at any time prior
to filing the Amendment with the Delaware Secretary of State, the Board of
Directors, in its sole discretion, determines that the Reverse Stock Split is no
longer in the best interests of the Company and its stockholders. Conversely,
the Board reserves the right to effectuate the Reverse Stock Split under less
than favorable conditions based on any factors deemed material by the Board, in
its sole discretion. The Board of Directors believes that leaving the discretion
to the Board of Directors in these regards will permit flexibility so as to
effectuate the Reverse Stock Split in an appropriate and well-planned manner.
For example, one of the most important factors that the Board will consider will
be the effect of the Reverse Stock Split on the market price of the Common
Stock. Other factors may also cause the Board of Directors to effect a
Reverse-Stock-Split, including an effort to make the Common Stock more
attractive to members of the financial community and certain types of investors
who may have a tendency to avoid purchasing low-priced stock.
Effects of the Reverse Stock Split
Consummation of a Reverse Stock Split will not alter the number of
authorized shares of Common Stock, which will remain at 20,000,000 shares.
Consummation of the Reverse Stock Split will not alter the par value of Common
Stock, which will remain at $.001 per share of Common Stock.
If the Reverse Stock Split takes place, a number of outstanding shares will
resume the status of authorized and unissued shares, and these shares will again
be available for issuance. Effective with the Reverse Stock Split, the
conversion rate of certain outstanding options and warrants will be adjusted
proportionately, so that, for example, if a one-for-five Reverse Split is
effected, each such outstanding option or warrant would thereafter cover
one-fifth as many shares of Common Stock, or if a one-for-four Reverse Stock
Split is effected, each outstanding option or warrant would thereafter cover
one-fourth as many shares of Common Stock. Shares that are no longer necessary
for issuance upon conversion or exercise will become unreserved and available
for future issuance or reservation. Proportionate voting rights and other rights
of stockholders will not be altered by any Reverse Stock Split (other than as a
result of payment in cash in lieu of fractional shares.)
<PAGE>
Consummation of a Reverse Stock Split should have no material federal tax
consequences to most stockholders; however, tax effects, which are especially
dependent upon a stockholder's individual circumstances, may be material to you;
and each stockholder must obtain his or her own tax advice; and this general
description is not tax advice.
The Common Stock is listed for trading on the OTC Bulletin Board. On the
Record Date, the reported closing price of the Common Stock on the OTC Bulletin
Board was $_____ per share. No assurance can be made as to the future price of
shares of Common Stock.
Possible Advantages
The Board of Directors believes that it is in the best interests of the
Company to expand its business through the acquisition of one or more companies
with complimentary businesses. The Company does not have adequate capital to
purchase such companies without borrowing money or selling equity securities.
The Board of Directors believes that, as a result of the financial condition of
the Company, the sale of equity securities is preferable to the incurrence of
indebtedness and the proposed underwriter of the Company's secondary offering
has advised the Company that a recapitalization of the Common Stock is a
prerequisite to the consummation of a secondary offering. There can be no
assurance that such offering will in fact be consummated.
In the event that the Company does not proceed with a secondary offering, the
Board believes that a decrease in the number of shares of Common Stock
outstanding without any corresponding alteration of the proportionate economic
interest in the Company represented by individual shareholdings may increase the
trading price of such shares and such higher price would be more appropriate for
the Common Stock. However, no assurance can be given that the market price of
the Common Stock will rise in proportion to the reduction in the number of
shares outstanding resulting from any Reverse Stock Split.
In addition, any increase in the difference between the authorized number of
shares of Common Stock and the number of shares outstanding or committed after
giving effect to the Reverse Stock Split and issuance of shares in the secondary
offering could have an advantage of permitting the Company to issue shares for
acquisition, sale of equity, conversion of convertible debt, and other purposes
that could improve the financial position of the Company. In the absence if a
secondary offering, an even greater number of shares of Common Stock would be
available for issuance under such circumstances.
If the Reverse Stock Split is approved by stockholders, the Board will have
authority without further stockholder approval to effect a Reverse Stock Split
of one share for each outstanding four or five, corresponding to the ratios
shown in the following table.
The following table sets forth the number of shares of Common Stock that
would be outstanding (based on the 3,392,929 shares outstanding as of September
10, 1998) immediately after the Reverse Stock Split. The reduction of the number
of shares outstanding in the Reverse Stock Split has the inverse effect on
authorized and unissued shares. The table does not attempt to account for
cashing out fractional shares, nor does it account for the proposed increase in
the Company's authorized capital stock.
<PAGE>
<TABLE>
<CAPTION>
Ratio of Reverse Common Stock Authorized and
Stock Split Outstanding Unissued Common Stock
- ---------------- ------------ -------------------------------
Before Reverse After Reverse
Stock Split Stock Split
-------------- -------------
<S> <C> <C> <C>
None 3,392,929 16,607,071
1-for-4 848,232 19,151,768
1-for-5 678,585 19,321,415
</TABLE>
Upon determination of the exact ratio of the Reverse Stock Split and the
filing of appropriate documents to effect such Reverse Stock Split, the Board
will notify Stockholders that the Reverse Stock Split has been effected. In
addition, the Board shall have authority to determine the exact timing of the
Reverse Stock Split.
The Company's reporting obligations under the Securities Exchange Act of
1934 should not be affected by the changes in capitalization contemplated
pursuant to the Reverse Stock Split. No significant reduction should be
anticipated in the number of record holders of the Common Stock below its Record
Date level of __, which is and will continue to be below the Securities Exchange
Act of 1934's (the "Exchange Act") going-private threshold of fewer than 300.
However, the Company has no intention of terminating the registration of the
Common Stock under the Exchange Act.
Possible Disadvantages
The Board of Directors anticipates that the decrease in the number of
shares of Common Stock outstanding caused by the Reverse Stock Split will be
offset by the additional shares of Common Stock issued in the secondary
offering. In the event that the Company does not proceed with the secondary
offering, the Board is hopeful that the decrease in the number of shares of
Common Stock outstanding will stimulate interest in the Company's Common Stock
and possibly promote greater liquidity. However, the possibility does exist that
such liquidity may be adversely affected by the reduced number of shares which
would be outstanding if the proposed Reverse Stock Split is effected. The
Reverse Stock Split will reduce the number of shares outstanding to between
678,585 (if a 1-for-5 Reverse Stock Split is effected) and 848,232 (if a 1-for-4
Reverse Stock Split is effected). Fewer publicly held shares may result in lower
trading volume which may reduce financial community interest in the Common
Stock. A lower trading volume for the Common Stock may also depress the Common
Stock market price.
If the Reverse Stock Split takes place, a number of outstanding shares will
resume the status of authorized and unissued shares, which shares will again be
available for issuance. In the event that any additional authorized and unissued
shares of the Company's Common Stock remain after giving effect to the issuance
of shares of Common Stock in the secondary offering, additional shares will be
available in the event the Board of Directors determines that it is necessary
and appropriate to raise additional capital through the sale of securities in
the public or private market, enter into a strategic partnership with another
company, grant options to the Company's employees or acquire another company,
business or assets, or in other events. Common Stock would be authorized to be
issued in the discretion of the Board of Directors without stockholder approval
of each issuance. The Board does not intend to solicit further stockholder
approval prior to the issuance of any additional shares of Common Stock, unless
applicable law or regulation requires otherwise. In the event the Company issues
additional shares of Common Stock, such issuance may depress the price of
<PAGE>
currently outstanding shares of Common Stock or impair the liquidity of such
shares. In addition, the issuance may be on terms that are dilutive to
stockholders. Issuance of additional shares may also have the effect of diluting
the earnings per share and book value per share of shares currently outstanding.
Except for currently outstanding preferred stock, warrants, options and
option plans, there are no existing agreements or agreements in principle which
call for the issuance of any shares of Common Stock or Preferred Stock.
Potential Anti-Takeover Effect of Authorized but Unissued Securities and Bylaw
Provision
In the absence of a secondary offering, the Reverse Stock Split would
result in a greater difference between the number of authorized shares and the
number of outstanding shares. Even if a secondary offering is consummated,
depending upon the number of shares of Common Stock sold in the secondary
offering, following a Reverse Stock Split there may be a greater difference
between the number of authorized shares and number of outstanding shares. The
issuance of shares of Common Stock or Preferred Stock under particular
circumstances may have the effect of discouraging an attempt to change control
of the Company, especially in the event of a hostile takeover bid. The increase
in the spread between authorized and issued (and committed) Common Stock
recommended by the Board of Directors could have the overall effect of rendering
more difficult the accomplishment of an acquisition of the Company, and to make
more difficult the removal of incumbent management of the Company. Common Stock
would be authorized to be issued in the discretion of the Board of Directors
without stockholder approval of each issuance. The proportionate increase in the
authorized number of shares of Common Stock could have an advantage of
permitting the Company to issue shares for other purposes that could improve the
financial position of the Company. However, the proportionately larger spread
between authorized shares and outstanding (or committed) shares might be used to
increase the stock ownership or voting rights of persons seeking to obtain
control of the Company; and this anti-takeover effect could benefit incumbent
management at the expense of the stockholders. Issuance of additional shares
also could have the effect of diluting the earnings per share and book value per
share of shares of Common Stock outstanding.
The Company may issue new securities without first offering them to
stockholders. The holders of Common Stock of the Company have no preemptive
rights. Preemptive rights would have given stockholders a right to purchase pro
rata new securities issued by the Company. Preemptive rights protect such
holders from dilution to some extent by allowing holders to purchase shares
according to their percentage ownership in each issuance of new securities.
Therefore, the Company may issue its shares in a manner that dilutes current
stockholders.
Accounting for Reverse Stock Split
The Reverse Stock Split will cause the number of "odd-lot" holders to go up
and cause the number of "round-lot" holders of the Common Stock to go down. The
number of round-lot holders is a common measure of a stock's distribution, and a
lower number may reflect more negatively on the Company's shares. Higher numbers
of odd-lot holders may become reluctant to trade their shares because of any
stigma or higher commissions associated with odd-lot trading. This may
negatively impact the average trading volume and thereby diminish interest in
Common Stock by some investors and advisors.
<PAGE>
If a Reverse Stock Split is declared, it will require that an amount equal
to the number of fewer shares issued times such shares' par value transferred to
the Company's Surplus Account (specifically, its Capital Surplus Account) from
its Capital Account. The number of shares of Common Stock outstanding will be
reduced. As a consequence, the aggregate par value of the outstanding Common
Stock will be reduced, while the aggregate capital in excess of par value
attributable to the outstanding Common Stock for statutory and accounting
purposes will be increased correspondingly. The resolutions approving the
Reverse Stock Split provide that this increase in capital in excess of par value
will be treated as capital for statutory purposes. However, under Delaware law,
the Board of Directors of the Company will have the authority, subject to
various limitations, to transfer some or all of such increased capital in excess
of par value from capital to surplus, which additional surplus could be
distributed to stockholders as dividends or used by the Company to repurchase
outstanding stock. The Company currently has no plans to use any surplus so
created to pay any such dividend or to repurchase stock.
The following tables illustrate, by way of example, the principal effects
of the Reverse Stock Split to the Company's capital accounts on a pro forma
basis as at November 5, 1998 in the event of a one-for-four and one-for-five
Reverse Stock Split:
<TABLE>
<CAPTION>
Prior to After a 1-for-4 After a 1-for-5
Reverse Stock Reverse Stock Reverse Stock
Number of Shares Split Split Split
- ---------------- ------------- --------------- ---------------
<S> <C> <C> <C>
Common Stock:
Authorized. . . . . . . . . 20,000,000 20,000,000 20,000,000
Outstanding . . . . . . . . 3,392,929 848,232 678,585
Reserved. . . . . . . . . . 933,333 233,333 186,666
Available for Future
Issuance . . . . . . . . . . 15,673,738 18,918,435 19,134,749
</TABLE>
Liquidation of Fractional Shares
At the effective date of the Reverse Stock Split (the "Effective Date"),
each share of old Common Stock issued and outstanding immediately prior thereto,
will be reclassified as and changed into the appropriate fraction of a share of
the Company's New Common Stock. All fractional share interests that are not
combined into whole shares will be subject to the treatment of fractional share
interests as described below. Shortly after the Effective Date, the Company will
send transmittal forms to the holders of the Old Common Stock to be used in
forwarding their certificates formerly representing shares of Old Common Stock
for (i) surrender and exchange for certificates representing whole shares of New
Common Stock and (ii) cash in lieu of any fraction of a share of New Common
Stock to which such holders would otherwise be entitled.
American Stock Transfer & Trust Company will act as the Company's exchange
agent (the "Exchange Agent") to act for holders of Old Common Stock in
implementing the exchange of their certificates. Do not send stock certificates
until you receive a notice requesting you to transmit them to the Exchange
Agent.
If this proposal is approved by stockholders and the Company files the
Amended Certificate of Incorporation, stockholders will be notified and
<PAGE>
requested to surrender their certificates representing shares of Old Common
Stock to the Exchange Agent in exchange for certificates representing New Common
Stock. Beginning on the Effective Date, each certificate representing shares of
the Company's Old Common Stock will be deemed for all corporate purposes to
evidence ownership of a proportionate number of shares of New Common Stock and a
right to payment in cash for fractional interests.
The Company will either deposit sufficient cash with its Exchange Agent or
set aside sufficient cash for the purchase of the above-referenced fractional
interests. Stockholders are encouraged to surrender their certificates to the
exchange agent for certificates evidencing whole shares of the New Common Shares
and to claim the sums, if any, due them for fractional interests, as promptly as
possible following the Effective Date. No interest will accrue or be payable to
stockholders on account of such deposit. The Company shall be entitled to
earnings, if any, on funds deposited.
The ownership of a fractional interest will not give the holder thereof any
voting, dividend, or other rights except to receive payment therefor as
described herein. No service charge will be payable by stockholders in
connection with the exchange of certificates or the issuance of cash for
fractional interests, all of which will be borne and paid by the Company.
The number of record holders of the Common Stock on the Record Date was __.
The Company does not anticipate that the payment in cash in lieu of fractional
shares following any Reverse Stock Split would result in a significant reduction
in the number of such holders. Holders of New Common Stock will continue to be
entitled to receive such dividends as may be declared by the Board of Directors.
To date no dividends on the Common Stock have been paid by the Company.
Board Position and Required Vote
The proposal will be adopted only if it receives the affirmative vote of a
majority of the outstanding shares of Common Stock. The Board of Directors
believes that the proposed amendment is in the best interests of the Company and
its stockholders and recommends a vote FOR each of the proposed alternative
ratios. Proxies received will be voted in favor of the proposed amendment unless
otherwise indicated.
INDEPENDENT PUBLIC ACCOUNTANTS
Grant Thornton LLP served as the Company's independent auditors for the
nine month period ended December 31, 1995, and the fiscal year ended December
31, 1996. On September 10, 1997, the Company received a letter from Grant
Thornton LLP in which they advised the Company in writing that they had resigned
as the Company's independent auditors.
On January 15, 1998, with the approval of Registrant's Board of Directors,
the Registrant retained Lazar Levine & Felix LLP as its independent accountants
for the year ending December 31, 1997.
<PAGE>
FINANCIAL STATEMENTS
The Company has enclosed its Annual Report of Stockholders for the fiscal
year ended December 31, 1997 with this Proxy Statement. Stockholders are
referred to the report for financial and other information about the Company,
but such report is not incorporated in this Proxy Statement and is not a part of
the proxy soliciting material.
MISCELLANEOUS INFORMATION
As of the date of this Proxy Statement, the Board of Directors does not
know of any business other than specified above to come before the meeting, but,
if any other business does lawfully come before the meeting, it is the intention
of the persons named in the enclosed Proxy to vote in regard thereto, in
accordance with their judgment.
The Company will provide without charge to any stockholder as of the Record
Date, copies of the Company's Annual Report on Form 10-KSB, upon written request
delivered to the Secretary, at the Company's offices at 366 N. Broadway,
Jericho, NY 11753.
The Company will pay the cost of soliciting proxies in the accompanying
form. In addition to solicitation by use of the mails, certain officers and
regular employees of the Company may solicit proxies by telephone, telegraph or
personal interview. The Company may also request brokerage houses and other
custodians, and, nominees and fiduciaries, to forward soliciting material to the
beneficial owners of stock held by record by such persons, and may make
reimbursement for payments made for their expense in forwarding soliciting
material to the beneficial owners of the stock held of record by such persons.
Stockholder proposals with respect to the Company's next Annual Meeting of
Stockholders must be received by the Company no later than ______ __, 1998 to be
considered for inclusion in the Company's next Proxy Statement.
By Order of the Board of Directors,
Arthur Rosenberg
----------------
President
October __, 1998
Jericho, New York
<PAGE>
Exhibit A
AMENDMENT TO THE CERTIFICATE OF INCORPORATION
CHANGING THE NAME OF THE COMPANY
The following sets forth the changes to Article "FIRST" of the Company's
Certificate of Incorporation if the proposed Amendment is approved:
"FIRST: The name of the corporation is: NEW YORKER MARKETING CORP."
<PAGE>
Exhibit B
PROPOSED REVERSE STOCK SPLIT
If proposal 3 is approved, the following will be included in an amendment
to the Amended and Restated Certificate of Incorporation of the Company, in
article FOURTH, subsection (a), third paragraph thereof:
Each issued and outstanding share of Common Stock of the par value of
$.001 per share of the Corporation (the "Old Common Stock") as of the date of
filing of this amended and restated certificate of incorporation (the "Effective
Date") shall automatically and without any action on the part of the holder
thereof, be reclassified as and changed into one-x(1/x) [x is to be completed
with a whole number which shall be either four (4) or five (5), inclusive,
hereafter approved by the Board of Directors] of one share of Common Stock of
the par value of $.001 per share (the "New Common Stock"), subject to the
treatment of fractional share interests as described below. Each holder of a
certificate or certificates which immediately prior to the Effective Date
represented outstanding shares of Old Common Stock (the "Old Certificates",
whether one or more) shall be entitled to receive upon surrender of such Old
Certificates to the Company's Transfer Agent for cancellation, a certificate or
certificates (the "New Certificates", whether one or more) representing the
number of whole shares of the New Common Stock into which any for which the
shares of the Old Common Stock formerly represented by such Old Certificates so
surrendered, are reclassified under the terms hereof. From and after the
Effective Date, Old Certificates shall represent only the right to receive New
Certificates (and, where applicable, cash in lieu of fractional shares, as
provided below) pursuant to the provisions hereof. No certificates or scrip
representing fractional share interests in New Common Stock will be issued, and
no such fractional share interest will entitle the holder thereof to vote, or to
any rights of a stockholder of the Company. A holder of Old Certificates shall
receive, in lieu of any fraction of a share of New Common Stock to which the
holder would otherwise be entitled, a cash payment therefor on the basis of the
average of the last reported "bid" and "asked" prices of the Old Common Stock on
the OTC Bulletin Board on the Effective Date (or in the event the Company's
Common Stock is not so traded on the Effective Date, such average of the last
reported "bid" and "asked" prices on the next preceding day on which such stock
was traded on the OTC Bulletin Board). If more than one Old Certificate shall be
surrendered at one time for the account of the same Stockholder, the number of
full shares of New Common Stock for which New Certificates shall be issued shall
be computed on the basis of the aggregate number of shares represented by the
Old Certificates so surrendered. In the event that the Company's Transfer Agent
determines that a holder of Old Certificates has not tendered all his
certificates for exchange, the Transfer Agent shall carry forward any fractional
share until all certificates of that holder have been presented for exchange
such that payment for fractional shares to any one person shall not exceed the
value of one share. If any New Certificate is to be issued in a name other than
that in which the Old Certificates surrendered for exchange are issued, the Old
Certificates so surrendered shall be properly endorsed and otherwise in proper
form for transfer, and the person or persons requesting such exchange shall
affix any requisite stock transfer tax stamps to the Old Certificates
surrendered, or provide funds for their purchase, or establish to the
satisfaction of the Transfer Agent that such taxes are not payable. From and
after the Effective Date, the amount of capital represented by the shares of the
New Common Stock into which and for which the shares of the Old Common Stock are
reclassified under the terms hereof shall be the same as the amount of capital
represented by the shares of Old Common Stock so reclassified, until thereafter
reduced or increased in accordance with applicable law.
<PAGE>
Mike's Original, Inc. The undersigned hereby appoints Arthur Rosenberg and
Myron Levy, or either of them, attorneys and Proxies
with full power of substitution in each of them, in the
name and stead of the undersigned to vote as Proxy all
the stock of the undersigned in MIKE'S ORIGINAL,
INC., a Delaware corporation, at the Special Meeting of
Stockholders scheduled to be held December 9, 1998 and
any adjournments thereof
The Board of Directors recommends a vote FOR the following proposals:
1. Election of the following nominees, as set forth in the proxy statement:
Arthur G. Rosenberg, Myron Levy and Frederick D., Heller.
[ ] FOR all nominees listed below [ ] WITHHOLD authority to vote
(Instruction: To withhold authority to vote for any individual nominee, print
the nominee's name on the line provided below)
- --------------------------------------------------------------------------------
2. Proposal to amend the Company's Certificate of Incorporation to change the
name of the Company to "New Yorker Marketing Corp.", as set forth in
Exhibit A to the Proxy Statement.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Proposal to grant the Board of Directors authority to amend the Company's
Certificate of Incorporation to effect a reverse stock split of the Common
Stock, in the proportion determined by the Board of Directors, as set forth
in Exhibit B to the Proxy Statement.
You may vote for, vote against or abstain from voting on any one or more of the
following. The Board will select one and only one of the approved ratios:
A. To authorize a four-for-one reverse stock split:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
B. To authorize a five-for-one reverse stock split:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. Upon such other business as may properly come before the meeting or any
adjournment thereof.
- --------------------------------------------------------------------------------
(Continued and to be signed on reverse side)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
THE SHARES REPRESENTED HEREBY SHALL BE VOTED BY PROXIES, AND EACH OF THEM, AS
SPECIFIED AND, IN THEIR DISCRETION, UPON SUCH OTHER MATTERS AS MAY PROPERLY COME
BEFORE THE MEETING. SHAREHOLDERS MAY WITHHOLD THE VOTE FOR ONE OR MORE
NOMINEE(S) BY WRITING THE NOMINEE(S) NAME(S) IN THE BLANK SPACE PROVIDED ON THE
REVERSE HEREOF. IF NO SPECIFICATION IS MADE, THE SHARES WILL BE VOTED FOR THE
PROPOSALS SET FORTH ON THE REVERSE HEREOF.
Dated: _____________, 1998
[L.S.]
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[L.S.]
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(Note: Please sign exactly as your name appears hereon.
Executors, administrators, trustees, etc. should so indicate
when signing, giving full title as such. If signer is a
corporation, execute in full corporate name by authorized
officer. If shares are held in the name of two or more
persons, all should sign.)
PLEASE DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE
