FUN TYME CONCEPTS, INC.
290 Wild Avenue
Staten Island, New York 10314
NOTICEOF ANNUAL MEETING OF SHAREHOLDERS To
Be Held on August 11, 1998
To the Shareholders of FUN TYME CONCEPTS, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of FUN
TYME CONCEPTS, INC. (the "Company") will be held at Klarman & Associates at 14
East 60th Street, Suite 402, New York, New York 10022 on Tuesday, August 11,
1998, at 10:00 a.m., New York time, for the following purposes:
1. To elect four Directors to the Company's Board of Directors to hold
office for a period of one year or until their successors are duly elected and
qualified;
2. To vote on the proposal to amend the Company's Certificate of
Incorporation to increase the authorized number of shares of Common Stock from
10 million to 50 million;
3. To vote on the proposal to amend the Company's Certificate of
Incorporation to effect a change of the Company's name from Fun Tyme Concepts,
Inc. to Diversicon Holdings Corp.;
4. To vote on the proposal to reverse-split the Company's outstanding
shares of Common Stock on a 1 for 4 basis;
5. To vote on the proposal to authorize a change of the Company=s domicile
(state of incorporation) from New York to Delaware;
6. To vote on the proposal to authorize an amendment to the Company's
Senior Management Incentive Plan to increase the number of shares of common
stock authorized thereunder from 150,000 to 1,000,000; and
7. To transact such other business as may properly be brought before the
meeting or any adjournment thereof.
The close of business on July 7, 1998 has been fixed as the record date
for the determination of shareholders entitled to notice of, and to vote at, the
meeting and any adjournment thereof.
You are cordially invited to attend the meeting. Whether or not you
plan to attend, please complete, date and sign the accompanying proxy and return
it promptly in the enclosed envelope to assure that your shares are represented
at the meeting. If you do attend, you may revoke any prior proxy and vote your
shares in person if you wish to do so. Any prior proxy will automatically be
revoked if you execute the accompanying proxy or if you notify the Secretary of
the Company, in writing, prior to the Annual Meeting of Shareholders.
By order of the Board of Directors
Richard Rosso, Secretary
Dated: July 21, 1998
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE
COMPLETE, DATE, AND SIGN THE ENCLOSED PROXY AND MAIL
IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER TO
ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE
NEED BE AFFIXED IF MAILED IN THE UNITED STATES.
<PAGE>
FUN TYME CONCEPTS, INC.
290 Wild Avenue
Staten Island, New York 10314
PROXY STATEMENT
FOR
Annual Meeting of Stockholders
To Be Held on August 11, 1998
This proxy statement and the accompanying form of proxy were mailed on
July 21, 1998 to the stockholders of record on July 7, 1998 of Fun Tyme
Concepts, Inc. (the "Company"), a New York corporation, in connection with the
solicitation of proxies by the Board of Directors of the Company for use at the
Annual Meeting to be held at 10:00 a.m., on August 11, 1998, at the offices of
Klarman & Associates, 14 East 60th Street, Suite 402, New York, New York 10022,
and at any adjournment thereof.
Proposals By Stockholders Must
Be Received Pursuant To This Section
Any and all proposals of security holders intended to be presented at
the next annual meeting of the Company, must be received by the Company at its
principal executive offices located at 290 Wild Avenue, Staten Island, New York
10314, on or prior to April __, 1999.
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
Shares of the Company's common stock, par value $.001 per share (the
"Common Stock") represented by an effective proxy in the accompanying form will,
unless contrary instructions are specified in the proxy, be voted FOR (i) the
election of the four (4) persons nominated by the Board of Directors as
Directors; (ii) the proposal to amend the Company's Certificate of Incorporation
to increase the authorized number of shares of Common Stock from 10 million to
50 million; (iii) the proposal to amend the Company's Certificate of
Incorporation to effect a change of the Company's name from Fun Tyme Concepts,
Inc. to Diversicon Holdings Corp.; (iv) the proposal to reverse split the
Company's outstanding shares of Common Stock on a 1 for 4 basis (1 new share for
every 4 shares presently owned); and (v) the proposal to authorize a change of
the Company's domicile (state of incorporation) from New York to Delaware.
Any such proxy may be revoked at any time before it is voted. A
stockholder may revoke this proxy by notifying the Secretary of the Company
either in writing prior to the Annual Meeting or in person at the Annual
Meeting, by submitting a proxy bearing a later date or by voting in person at
the Annual Meeting. An affirmative vote of a plurality of the shares of Common
Stock, present in person or represented by proxy, at the Annual Meeting and
entitled to vote thereon is required to elect the Directors. A stockholder
voting through a proxy who abstains with respect to the election of Directors is
considered to be present and entitled to vote on the election of Directors at
the meeting, and is in effect a negative vote, but a stockholder (including a
broker) who does not give authority to a proxy to vote, or withholds authority
to vote, on the election of Directors shall not be considered present and
entitled to vote on the election of Directors. A stockholder voting through a
proxy who abstains with respect to approval of any other matter to come before
the meeting is considered to be present and entitled to vote on that matter and
is in effect a negative vote, but a stockholder (including a broker) who does
not give authority to a proxy to vote, or withholds authority to vote, on any
such matter shall not be considered present and entitled to vote thereon.
The Company will bear the cost of the solicitation of proxies by the
Board of Directors. The Board of Directors may use the services of its executive
officers and certain Directors to solicit proxies from stockholders in person
and by mail, telegram and telephone. Arrangements may also be made with brokers,
fiduciaries, custodians, and nominees to send proxies, proxy statements and
other material to the beneficial owners of the Company's Common Stock held of
record by such persons, and the Company may reimburse them for reasonable
out-of-pocket expenses incurred by them in so doing.
<PAGE>
The Company's Annual Report on Form 10-KSB for the year ended March 31,
1998 accompanies this proxy statement. The principal executive offices of the
Company are located at 290 Wild Avenue, Staten Island, New York 10314 the
Company's telephone number is (718) 477-2733.
Independent Public Accountants
The Board of Directors of the Company had selected J.H. Cohn, LLP, as
independent accountants of the Company for the calendar year ending March 31,
1998. Stockholders are not being asked to approve such selection because such
approval is not required. The audit services provided by J.H. Cohn, LLP.,
consisted of examination of financial statements, services relative to filings
with the Securities and Exchange Commission, and consultation in regard to
various accounting matters. Representatives of J.H. Cohn, LLP are expected to be
present at the meeting and will have the opportunity to make a statement if they
so desire and answer appropriate questions.
VOTING SECURITIES AND SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The securities entitled to vote at the meeting are the Company's Common
Stock, $.01 par value per share. The presence, in person or by proxy, of a
majority of shares entitled to vote will constitute a quorum for the meeting.
Each share of Common Stock entitles its holder to one vote on each matter
submitted to stockholders. The close of business on June 29, 1998 has been fixed
as the record date for the determination of stockholders entitled to notice of
and to vote at the meeting and any adjournment thereof. At that date, 9,991,965
shares of Common Stock were outstanding. Voting of the shares of Common Stock is
on a non-cumulative basis.
The following table sets forth certain information at June 30, 1998
with respect to the beneficial ownership of Common Stock held by (i) each person
known by the Company to be the owner of 5% or more of the outstanding Common
Stock; (ii) by each Director; and (iii) by all Officers and Directors as a
group. Except as otherwise indicated below, each named beneficial owner has sole
voting and investment power with respect to the shares of Common Stock listed:
<PAGE>
<TABLE>
<CAPTION>
Title Name and Address Amount and Nature Percentage of
of Class of Beneficial Owner of Beneficial Ownership (1) Class (2)
- -------- ------------------- --------------------------- ---------
<S> <C> <C> <C>
common BBS Holdings, LLC 8,152,000 81.6%
stock c/o Fun Tyme Concepts, Inc.
290 Wild Avenue
Staten Island, New York 10314
common Daniel Catalfumo (3) 151,365 1.5%
stock c/o Fun Tyme Concepts, Inc.
290 Wild Avenue
Staten Island, New York 10314
common Richard Rosso (4) 6,278 *
stock c/o Fun Tyme Concepts, Inc.
290 Wild Avenue
Staten Island, New York 10314
common Herb Marks 0 *
stock c/o Fun Tyme Concepts, Inc.
290 Wild Avenue
Staten Island, New York 10314
common Anthony DiMatteo (5) 0 *
stock c/o Fun Tyme Concepts, Inc.
290 Wild Avenue
Staten Island, New York 10314
common All Officers and Directors 157,643 1.6%
stock as a group (4 persons) (3)-(5)
- ----------------------------------------------------------------------------
</TABLE>
* Less than 1%
(1) Unless otherwise noted, all of the shares shown are held by individuals
or entities possessing sole voting and investment power with respect to such
shares. Shares not outstanding but deemed beneficially owned by virtue of the
right of a person to acquire them within 60 days, whether by the exercise of
options or warrants, are deemed outstanding in determining the number of shares
beneficially owned by such person or group.
(2) The "Percentage Beneficially Owned" is calculated by dividing the
"Number of Shares Beneficially Owned" by the sum of (i) the total outstanding
shares of Common Stock of the Company, and (ii) the number of shares of Common
Stock that such person has the right to acquire within 60 days, whether by
exercise of options or warrants. The "Percentage Beneficially Owned" does not
reflect shares beneficially owned by virtue of the right of any person, other
than the person named and affiliates of the person, to acquire them within 60
days, whether by exercise of options or warrants.
(3) Includes an aggregate of 151,365 shares of Common Stock owned by
members of Mr. Catalfumo's family, of which Mr. Catalfumo disclaims beneficial
ownership. Additionally, Mr. Catalfumo is the grantor of a trust which owns 100%
of BBS Holdings, the majority stockholder of the Company.
(4) Includes 6,278 shares of Common Stock owned by Mr. Rosso's parents, of
which Mr. Rosso disclaims beneficial ownership. Additionally, Mr. Rosso is the
grantor of a trust which owns 10% of BBS Holdings, the majority stockholder of
the Company.
(5) Mr. DiMatteo owns 20% of BBS Holdings, the majority stockholder of the
Company.
<PAGE>
Certain Reports
No person who, during the year ended March 31, 1998, was a director,
officer or beneficial owner of more than ten percent of the Company's Common
Stock (which is the only class of securities of the Company registered under
Section 12 of the Securities Exchange Act of 1934 (the "Act") (a "Reporting
Person") failed to file on a timely basis, reports required by Section 16 of the
Act during the most recent fiscal year or prior years, except that Dan Catalfumo
and Richard Rosso failed to file Form 4's upon consummation of the acquisition
of Play Co. Capital Corp. in May 1998 and the failure of Herbert P. Marks,
Russell C. Murawski and Anthony DiMatteo, officers of the Company to file Form
3's upon their election. The foregoing is based solely upon a review by the
Company of Forms 3 and 4 during the most recent fiscal year as furnished to the
Company under Rule 16a-3(d) under the Act, and Forms 5 and amendments thereto
furnished to the Company with respect to its most recent fiscal year, and any
representation received by the Company from any reporting person that no Form 5
is required, except as described herein.
RECENT DEVELOPMENTS
Effective May 28, 1998, the Company entered into a stock purchase
agreement (the "Acquisition") with Play Co. Capital Corp., a Delaware
corporation, BBS Holdings, LLC ("BBS Holdings"), a limited liability company
organized under the laws of the state of Delaware, the members of BBS Holdings,
Anthony DiMatteo, and LD Trust, a trust formed under the laws of the state of
Delaware, CAT L.L.C., a limited liability company and RICH L.L.C., a limited
liability company, whereby, BBS Holdings acquired an aggregate of 8,152,000
shares or approximately 81.5% of Company's common stock, par value $.001 per
share (the "Common Stock"), of which Company issued 7,230,000 shares directly to
BBS Holdings in exchange for all of the outstanding shares of Play Co. Capital
Corp. ("PCC"). Simultaneously therewith, CAT L.L.C and RICH L.L.C transferred an
aggregate of 922,000 shares of Company's Common Stock to BBS Holdings for a 20%
ownership interest therein.
Prior to the exchange of shares in the Acquisition, Daniel Catalfumo
and Richard Rosso each transferred 461,000 shares of the Company's Common Stock
to CAT L.L.C. and RICH L.L.C., respectively, companies owned by Daniel Catalfumo
and Richard Rosso, former President and Vice President of the Company,
respectively.
Since the Acquisition of PCC and certain other concurrent transactions
resulted in the transfer of an approximate 81.5% controlling interest in the
Company to BBS Holdings, the Acquisition will be treated as a purchase business
combination, effective May 28, 1998, that will be accounted for as a "reverse
acquisition" in which the Company shall be the legal acquirer and PCC will be
accounting acquirer. Accordingly, the assets and liabilities of PCC will be
accounted for at their historical carrying values and the assets and liabilities
of the Company will be valued at their fair values with the excess of BBS
Holdings' cost over the fair value of the Company's assets, if any, allocated to
goodwill.
It is expected that the following will be considered at the meeting and action
taken thereon:
I. ELECTION OF DIRECTORS
The Board of Directors currently consists of four members elected for a
term of one year and until their successors are duly elected and qualified.
An affirmative vote of a plurality of the shares of Common Stock,
present in person or represented by proxy at the Annual Meeting, and entitled to
vote thereon is required to elect the Directors. All proxies received by the
Board of Directors will be voted for the election as Directors of the nominees
listed below if no direction to the contrary is given. In the event any nominee
is unable to serve, the proxy solicited hereby may be voted, in the discretion
of the proxies, for the election of another person in his stead. The Board of
Directors knows of no reason to anticipate this will occur.
<PAGE>
The following table sets forth as of June 30, 1998 certain information
with respect to the three nominees for election as Directors of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Herbert P. Marks 66 President and Director
Daniel Catalfumo 41 Chief Operating Officer and Director
Anthony DiMatteo 47 Executive Vice President of Sales
and Marketing and Director
Richard Rosso 41 Executive Vice President of Entertainment, Secretary, and Director
</TABLE>
In conjunction with the Acquisition, the Company's Board of Directors was
expanded from three members to four members, and a vacancy on the board was
filled.
Herbert P. Marks was elected as a Director and appointed as president and
Chief Executive Officer of the Company in May 1998. Since March 1997, Mr. Marks
has run The Marks Group, L.L.C. a firm created by Mr. Marks to offer consulting
services to lending institutions and businesses. The services offered by The
Marks Group, L.L.C. include financial and management consulting, loan
restructuring and placement, cash control, asset liquidation, collateral
evaluations, asset monitoring support, on-site field examinations, and the
liquidation of assets securing loans. From July 1993 to March 1997 Mr. Marks was
the Director of Marketing in charge of new business development for Century
Business Credit Corp. Mr. Marks shall devote 90% of his business time to the
affairs of the Company.
Russell C. Murawski was appointed Chief Financial Officer and Treasurer in
May 1998. Since 1993, Mr. Murawski has been President of Princeton Business
Consultants, Inc., a capital, banking, and financial consulting company, which
he founded. Mr. Murawski shall devote 90% of his business time to the affairs of
the Company.
Daniel Catalfumo has been a Director of the Company since its inception in
1993. From the Company's inception until May 1998, he was also the Company's
Chief Executive Officer and President. In May 1998, upon the appointment of
Herbert P. Marks as President, Mr. Catalfumo was named Chief Operating Officer
and Executive Vice President. From 1982 to November 1994, Mr. Catalfumo was the
sole shareholder, Officer, and Director of Professional Tile Contracting Co., a
tile contracting company located in Brooklyn, New York.
Anthony DiMatteo was elected as a director of the Company and appointed
Executive Vice President of Sales and Marketing in May 1998. Since 1972, Mr.
DiMatteo served as Executive Vice President of Sales and Marketing for Four
Color Litho, Inc., a lithograph plating facility servicing the financial and
commercial printing community of New York and New Jersey. From 1992 to 1995, Mr.
DiMatteo also served as a director of Leadville Milling & Mining Corp., a
Colorado based gold and silver mining company. Mr. DiMatteo voluntarily resigned
his directorship in 1995. Mr. DiMatteo shall devote 90% of his business time to
the affairs of the Company.
Richard Rosso has been the Secretary and a Director of the Company since
its inception in 1993. From the Company's inception until May 1998, he was also
Treasurer. In May 1998 he was appointed Executive Vice President of
Entertainment and Administrative Coordinator. From 1983 to November 1994, Mr.
Rosso was the owner of Dynamic Dental Labs located in Brooklyn, New York. Mr.
Rosso operated Dynamic Dental Labs, which serviced over 1,000 area dentists for
over ten years.
<PAGE>
As permitted under the New York Business Corporations Law, the Company's
Certificate of Incorporation eliminates the personal liability of the Directors
to the Company or any of its shareholders for damages for breaches of their
fiduciary duties as Directors. As a result of the inclusion of such provision,
stockholders may be unable to recover damages against Directors for negligent or
grossly negligent actions which Directors may take or for Directors' actions
which violate their fiduciary duties. The inclusion of this provision in the
Company's Certificate of Incorporation may reduce the likelihood of derivative
litigation against Directors and other types of shareholder litigation.
Board Meetings, Committees and Compensation
During the year ended March 31, 1998, no meetings of the Board of
Directors were held and action was taken on 5 occasions by unanimous written
consent of the Board of Directors in lieu of meeting. The Company does not pay
its Directors for their attendance at meetings of the Board of Directors and
committee meetings. The Company does not have standing audit, nominating, nor
compensation committees of the Board of Directors, nor any other such committee
performing similar functions.
The Board of Directors recommends that you vote "FOR" the nominees for
Director.
EXECUTIVE COMPENSATION AND RELATED MATTERS
Summary of Cash and Certain Other Compensation
The following provides certain information concerning all Plan and Non-Plan
(as defined in Item 402 (a)(6) of Regulation S-B) compensation awarded or paid
by the Company during the years ended March 31, 1998, 1997, and 1996 to each of
the named Executive Officers of the Company.
Summary Compensation Table
Annual Compensation
<TABLE>
<CAPTION>
Shares
Name and Principal Year End Other Annual underlying
Position March 31 Salary($) Bonus($) Compensation Options
- ----------------------- -------- --------- -------- ------------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Daniel Catalfumo(1) 1998
President and 1997 110,000 $1,000 (2) $12,000 (3) 30,000(4)
Director 1996 75,489
Richard Rosso (1) 1998
Vice President, Sec., 1997 110,000 $1,000 (2) $12,000 (3) 30,000(4)
Treas., and Director 1996 86,553
- --------------------------
</TABLE>
(1) In May 1998, Messrs. Catalfumo and Rosso resigned as President and Vice
President and Treasurer, respectively, and were elected Chief Operating Officer
and Executive Vice President of Entertainment, respectively.
(2) In December 1996, the Company issued a $1,000 cash bonus to each
Officer. The Company did not meet the financial requirements for bonuses to be
issued under their employment agreements.
(3) The Company leases automobiles, at approximately $1,000 per month for
Messrs. Catalfumo and Rosso.
(4) In December 1996, the Company granted Messrs. Catalfumo and Rosso
options each to purchase 5,000 shares of the Company's Common Stock at an
exercise price of $0.62 per share. In March 1997, the Company granted Messrs.
Catalfumo and Rosso options each to purchase 25,000 shares of the Company's
Common Stock at an exercise price of $0.69 per share. Such options were
cancelled in June 1998.
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
(Individual Grants)
<TABLE>
<CAPTION>
====================================================================================================================================
Individual Grants
- ------------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
# of Securities % of Total Options
underlying /SAR's Granted to Exercise or
Options/SAR's Granted Employees in Base Expiration Date
Name Fiscal Year Price ($/SH)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Richard Rosso 25,000 (1) $.69 03/31/02
5,000 (1) 50% $.62 12/30/01
====================================================================================================================================
Daniel Catalfumo 25,000 (1) $.69 03/31/02
5,000 (1) 50% $.62 12/30/01
====================================================================================================================================
</TABLE>
In June 1998, these options were cancelled.
The following table contains information with respect to employees of the
Company concerning options held as of March 31, 1997.
AGGREGATED OPTION/SAR EXERCISE IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
====================================================================================================================================
(a) (b) (c) (d) (e)
- ------------------------------------------------------------------------------------------------------------------------------------
Value of
Number of Unexercised
Unexercised In-The-Money
Options/SAR's Options/SAR's
Shares Exercisable/ at FY-End ($)
Acquired on Unexercisable Exercisable/
Exercise (#) Value Realized ($) Unexercisable (1)
------------ ------------ ------------- -----------------
Name
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
25,000/0 (2) 0/0
Richard Rosso - - 5,000/0 (2) 350/0
====================================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
25,000/0 (2) 0/0
Daniel Catalfumo - - 5,000/0 (2) 350/0
====================================================================================================================================
</TABLE>
Based upon the closing price for the Common Stock on March 31, 1997 ($.69), as
reported by a market maker. In June 1998, these options were cancelled.
<PAGE>
Employment and Consulting Agreements
In April 1995, the Company entered into employment agreements with both of
its Officers, Mr. Catalfumo and Mr. Rosso. Such Officers are employed full time
by the Company and pursuant to the terms of their agreements, shall receive
compensation at a rate of $100,000 annually, with yearly escalations during the
term of the agreement. The agreements are of five year duration and expire in
April 2000. Pursuant to the terms of the agreements, Messrs. Catalfumo and Rosso
are to receive yearly bonuses in an amount equal to (i) five percent (5%) of the
Company's first $200,000 of after-tax profit; (ii) seven and one half percent (7
1/2%) of the Company's next $200,000 to $400,000 of after-tax profit; and (iii)
ten percent (10%) of any after-tax profit over $400,000.
In December 1997, the Company entered into a consulting agreement with
Herbert P. Marks and Russell C. Murawski to provide financial and management
advice and counsel to the Company. Through June 15, 1998, the Company
compensated Messrs. Marks and Murawski $45,000 and $9,182, respectively, under
the agreement. Subsequent to the agreement, Messrs. Marks and Murawski were
named as Officers of the Company. Accordingly, the consulting agreement was
terminated in June 1998 and beginning July 1998, the Company will commence
compensating Messrs. Marks and Murawski for their services as officers of the
Company.
1995 Senior Management Incentive Plan
In February 1995, the Board of Directors adopted the Senior Management
Incentive Plan ("the Management Plan"), which was adopted by shareholder
consent. The Management Plan currently provides for the issuance of up to
150,000 shares of the Corporation's Common Stock in connection with the issuance
of stock options and other stock purchase rights to executive Officers and other
key employees of the Company.
The adoption of the Management Plan was prompted by the Company's desire
(i) to attract and retain qualified personnel, whose performance is expected to
have a substantial impact on the Company's long-term profit and growth
potential, by encouraging those persons to acquire equity in the Corporation;
and (ii) to provide the Board with sufficient flexibility regarding the forms of
incentive compensation which the Company will have at its disposal in rewarding
executive Officers, key employees, and consultants without unnecessarily
depleting the Company's cash reserves. The Management Plan is designed to
augment the Company's existing compensation programs and is intended to enable
the Company to offer executives, key employees, and consultants a personal
interest in the Company's growth and success through the grant of stock options
and/or other rights pursuant to the Management Plan. It is contemplated that
only those executive management employees (generally the Chairman of the Board,
Vice Chairman, Chief Executive Officer, Chief Operating Officer, Chief Financial
Officer, President, and Vice President of the Company), key employees, and
consultants who perform services of special importance to the Company will be
eligible to receive compensation under the Management Plan. As of the date
hereof, the Company's Officers and Directors number only five: Messrs.
Catalfumo, DiMatteo, Marks, Murowski, and Rosso.
A total of 150,000 shares of Common Stock have been reserved for issuance
under the Management Plan. Pursuant to the Management Plan, options to purchase
an aggregate of 30,000 shares were granted to each of Messrs. Catalfumo and
Rosso. In June 1998, these options were voluntarily terminated. It is
anticipated that awards made under the Management Plan will be subject to three
year vesting periods, although the vesting periods are subject to the discretion
of the Administrator.
Unless otherwise indicated, the Management Plan is to be administered by
the Board of Directors or a committee of the Board, if such a committee is
appointed for this purpose (the Board or such committee, as the case may be,
shall be referred to in the following description as "the Administrator").
Subject to the specific provisions of the Management Plan, the Administrator
will have the discretion to determine (i) the recipients of the awards; (ii) the
nature of the awards to be granted; (iii) the dates such awards will be granted;
(iv) the terms and conditions of the awards; and (v) the interpretation of the
Management Plan, except that any award granted to any employee of the Company
who is also a Director of the Company shall also be subject - in the event the
persons serving as members of the Administrator of the Management Plan at the
time such award is proposed to be granted do not satisfy the requirements
regarding the participation of "disinterested persons" set forth in Rule 16b-3
("Rule 16b-3") promulgated under the Exchange Act - to the approval of an
auxiliary committee consisting of not less than two individuals who are
considered "disinterested persons" as defined under Rule 16b-3. As of the date
hereof, the Company has not yet determined who will serve on such auxiliary
committee, if one is required.
<PAGE>
The Management Plan generally provides that, unless the Administrator
determines otherwise, each option or right granted shall become exerciseable in
full upon certain "change of control" events as described in the Management
Plan, or subject to any right or option granted under the Management Plan
(through merger, consolidation, reorganization, recapitalization, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure, or otherwise), the Administrator will make appropriate adjustments to
such plans and the classes, number of shares, and price per share of stock
subject to outstanding rights or options. Generally, the Management Plan may be
amended by action of the Board of Directors, except that any amendment which (i)
would increase the total number of shares subject to such plan; (ii) extend the
duration of such plan; (iii) materially increase the benefits accruing to
participants under such plan; or (iv) change the category of persons who can be
eligible for awards under such plan, must be approved by the affirmative vote of
a majority of the shareholders entitled to vote. The Management Plan permits
awards to be made thereunder until November 2004.
Directors who are not otherwise employed by the Company will not be
eligible for participation in the Management Plan. The Management Plan provides
for four types of awards: stock options, incentive stock rights, stock
appreciation rights (including limited stock appreciation rights), and
restricted stock purchase agreements.
Certain Relationships and Related Transactions
Prior to the exchange of shares in the acquisition of Play Co. Capital
Corp., Daniel Catalfumo and Richard Rosso each transferred 461,000 shares of the
Company's Common Stock to CAT L.L.C. and RICH L.L.C., respectively, companies
owned by Daniel Catalfumo and Richard Rosso, Officers of the Company.
Additionally, trusts formed by Messrs. Catalfumo and Rosso each acquired 10% of
BBS Holdings, LLC upon consummation of the Acquisition and their transfer of
shares of the Company's Common Stock to BBS Holdings, LLC.
In December 1996, the Company granted Messrs. Catalfumo and Rosso options
each to purchase 5,000 shares of the Company's Common Stock at an exercise price
of $0.62 per share. In addition, the Company issued $1,000 bonuses to each of
Messrs. Rosso and Catalfumo. In March 1997, the Company granted Messrs.
Catalfumo and Rosso each options to purchase 25,000 shares of the Company's
Common Stock at an exercise price of $0.69 per share. Both sets of options were
exercisable for a period of five years commencing on the date of grant. In June
1998, both sets of options were cancelled.
From February through April 1997, the Company repurchased an aggregate of
163,535 shares of its Common Stock at a total cost of $113,660.01. The shares
were returned to treasury as authorized but unissued.
II. PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION TO
INCREASE THE NUMBER OF AUTHORIZED SHARES OF THE COMPANY'S COMMON STOCK FROM 10
MILLION TO 50 MILLION.
The Board of Directors has unanimously approved a proposal to amend the
Company's Certificate of Incorporation (i) to effect an increase in the
authorized number of shares of Common Stock from 10,000,000 to 50,000,000
shares. The full text of the proposed Amendment to the Certificate of
Incorporation is annexed hereto as Appendix A to this Proxy Statement. As of
June 30, 1998, there were 9,991,965 shares of Common Stock issued and
outstanding, 1,336,465 Common Stock Purchase Warrants (the "Warrants"), and a
Senior Management Incentive Plan reserving 150,000 shares of Common Stock for
issuance thereunder.
<PAGE>
Presently, the Company does not have a sufficient number of shares of
Common Stock authorized in order to issue shares upon the exercise of the
outstanding Warrants, though the Warrants are not currently exercisable and the
exercise price is significantly higher then the current market price for the
Company's Common Stock. However, in the event that the Warrants become
exercisable and the market price of the Company's Common Stock is higher then
the exercise price ($5.25), the Company will be required to have 1,336,465
shares reserved for issuance upon the exercise of the Warrants.
The Company desires to aggressively pursue business acquisitions and
opportunities, which may include the issuance of additional shares of Common
Stock and the expenditure of capital. The Company may require additional capital
to sustain operations and for potential acquisitions. The Board of Directors
anticipates it will investigate and consider acquisitions, joint venture and
similar transactions which may involve a broad range of financial arrangements.
The Board of Directors believes that situations will arise where it is necessary
or advantageous to accept additional equity investment through the sale of
Common Stock. Additionally, the Board believes that the issuance of shares to
effect an acquisition, instead of the payment of the Company's operating
revenues is in the best interests of the Company.
The additional shares of Common Stock being authorized by the Amendment
would enable the Company to proceed with financing and acquisition opportunities
without the delay and expense associated with the holding of a special meeting
or soliciting the consent or approval of stockholders as required by any
regulatory authority.
The Company has no current plans, or commitments for the issuance of any
Common Stock, except as described herein. However, the Board may consider
transactions involving the sale or issuance of Common Stock. Accordingly, the
Board of Directors considers it desirable to have additional shares of Common
Stock available to provide the Company with increased flexibility in structuring
possible future financings and acquisitions and in meeting other corporate needs
which may arise.
The affirmative vote of the holders of a majority of the shares of the
Common Stock issued and outstanding on the record date, voting together as a
single class, is required for the approval of this proposal. The principal
stockholder owning of record, beneficially, directly and indirectly, an
aggregate of approximately 81.5% of such shares outstanding on the record date,
has agreed to vote in favor of approval of this proposal.
The Board of Directors deems this Proposal No. II to be in the best
interests of the Company and its stockholders and recommends a vote "FOR"
approval thereof.
III. PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF
INCORPORATION TO EFFECT A CHANGE OF THE
COMPANY'S NAME FROM FUN TYME CONCEPTS, INC.
TO DIVERSICON HOLDINGS CORP.
The Board of Directors has unanimously approved a proposal to amend the
Company's Certificate of Incorporation to effect a change of the name of the
Company from Fun Tyme Concepts, Inc. to Diversicon Holdings Corp.
The Company has decided to redirect the Company's business focus to
include not only its family entertainment business but to include the businesses
of its newly acquired subsidiary, Play Co. Capital Corp., of which the Company
is the sole stockholder, including ski resort management and jewelry marketing.
Additionally, the Company may engage in acquisitions to further diversify its
operations. The Company believes its name shall be an integral part of its
development, in terms or public recognition of its corporate strategy and
product development. As the Company is seeking to refocus its corporate
direction and identity, it believes that changing its name is a clear step in
that direction.
<PAGE>
Stockholders will not be required to submit their stock certificates
for exchange and, following the effective date of the amendment changing the
name of the Company, all new stock certificates issued by the Company will
either be overprinted with the Company's new name or new certificates issued.
The affirmative vote of the holders of a majority of the shares of the
Common Stock issued and outstanding on the record date, voting together as a
single class, is required for the approval of this proposal. The principal
stockholder owning of record, beneficially, directly and indirectly, an
aggregate of approximately 81.5% of such shares outstanding on the record date,
has agreed to vote in favor of approval of this proposal.
The Board of Directors deems this Proposal No. III to be in the best
interests of the Company and its stockholders and recommends a vote "FOR"
approval thereof.
IV. PROPOSAL TO EFFECT A ONE FOR
FOUR REVERSE-STOCK SPLIT
Management of the Company is of the opinion that a reverse-split of the
Company's Common Stock 1 for 4 (1 new share for every 4 old shares) is in the
best interests of the Company's shareholders. All fractional shares will be
rounded up or down to the nearest whole shares. No cash will be paid for any
fractions of shares.
The reverse-split will be effected by reducing its present issued and
outstanding shares from 9,991,965 shares to approximately 2,497,991 shares. The
effective date for purposes of calculating the reverse-split would be as soon as
practical after the meeting date as the Nasd and the OTC Bulletin Board system
could effect the reverse split within its systems. The Company's goal in its
change of corporate focus and in its recent acquisition is to build the Company,
its assets, profits and overall corporate image. Management of the Company is of
the opinion that a reverse-split of the Company's stock 1 for 4 (1 new share for
every 4 old shares) is in the best interests of the Company's shareholders. All
fractional shares will be rounded up or down to the nearest whole shares. No
cash will be paid for any fractions of shares.
Currently, the Company's Common Stock is quoted on the OTC Bulletin Board,
an electronic quotation system. The Company's management, in addition, to its
refocus of the Company's operations plans to seek to regain its listing on the
Nasdaq SmallCap Stock Market ("Nasdaq"). In order to have its Securities listed
on Nasdaq, the Company in addition to meeting the Nasdaq initial listing
requirements, will be require on an ongoing basis meet the following maintenance
requirements (i) net tangible assets of at least $2,000,000; (ii) at least
500,000 shares in the public float; (iii) a minimum market value for the public
float of $1,000,000; (iv) a minimum bid price of $1.00; (v) two market makers;
and (vi) at least 300 stockholders. The Company plans to seek representation by
an investment banking and investor relations firm which would provide assistance
with the Company's financing needs and seek market support for the Company's
securities. The Company has negotiated with several firms for these services but
has not engage one at this time, though the Company believes that a firm will be
engaged in the near future. Through these negotiations, the Company has been
informed by these firms that it would be beneficial to do a stock split and
increase the share price, in addition to its desire to obtain a Nasdaq listing
in the future.
The reverse-split will be effected by an amendment to the Company's
Certificate of Incorporation whereby the Company will reduce its present issued
and outstanding shares from 9,788,050 shares to 2,497,991 shares. The record
date for purposes of calculating the reverse-split will be the record date of
this meeting, and the effective date of the reverse-split will be as soon as
practical, after the meeting and the Company's filing of an amendment to its
Certificate of Incorporation.
<PAGE>
The affirmative vote of the holders of a majority of the shares of the
Common Stock issued and outstanding on the record date, voting together as a
single class, is required for the approval of this proposal. The principal
stockholder owning of record, beneficially, directly and indirectly, an
aggregate of approximately 81.5% of such shares outstanding on the record date,
has agreed to vote in favor of approval of this proposal.
The Board of Directors deems this Proposal No. IV to be in the best
interests of the Company and its stockholders and recommends a vote "FOR"
approval thereof.
V. PROPOSAL TO CHANGE THE COMPANY'S
DOMICILE (STATE OF INCORPORATION)
FROM NEW YORK TO DELAWARE.
General
The Board of Directors has unanimously approved, and recommends for
stockholder approval, the change of the Company's state of incorporation from
New York to Delaware. The transaction will not result in any change in the
business management, assets, liabilities, or net worth of the Company.
Reincorporation in Delaware will allow the Company to take advantage of certain
provisions of the corporate laws of Delaware. The purposes and effects of the
proposed transaction are summarized below.
In order to effect the Company's reincorporation in Delaware, the Company
will be merged into a newly formed, wholly-owned subsidiary incorporated in
Delaware. The Delaware subsidiary, named Diversicon Holdings Corp. (Delaware)
has not engaged in any activities except in connection with the proposed
transaction. The mailing address of its principal executive offices and its
telephone number are the same as those of the Company. As part of its approval
and recommendations of the Company's reincorporation in Delaware, the Board has
approved, and recommends to the stockholders for their adoption and approval,
the merger pursuant to an agreement and plan of merger pursuant to which the
Company will be merged with and into Diversicon Holdings Corp. (Delaware). The
discussion contained in this Proxy Statement is qualified in its entirety by
reference to such Appendix.
The reincorporation of the Company in Delaware through the above-described
merger (hereafter referred to as the "Reincorporation") requires approval of the
Company's stockholders by the affirmative vote of the holders of two-thirds of
all outstanding shares of Common Stock. Stockholders who do not vote for the
proposal and who dissent by complying with the procedures required by the New
York Business Corporation Law will have the right, if the Reincorporation is
consummated, to receive payment of the fair value of their shares. See "Right to
Dissent and Appraisal" below.
In the following discussion of the proposed Reincorporation, the term "Fun
Tyme Concepts, Inc." refers to the Company as currently organized as a New York
corporation; the term ADiversicon Holdings Corp." refers to the new wholly owned
Delaware subsidiary of Fun Tyme Concepts, Inc. that will be the surviving
corporation after the completion of the transaction, and the term "Company"
includes either or both, as the context may require, without regard to the state
of incorporation.
Upon stockholder approval of the Reincorporation and upon approval of
appropriate certificates of merger by the Secretaries of State of the States of
New York and Delaware, Fun Tyme Concepts, Inc. will be merged with and into
Diversicon Holdings Corp. (Delaware) pursuant to the Reincorporation Agreement,
resulting in a change in the Company's state of incorporation. The Company then
will be subject to the Delaware General Corporation Law and the Certificate of
Incorporation and By-Laws of Diversicon Holdings Corp. (Delaware). Upon the
effective date of the Reincorporation, each outstanding share of common stock of
Fun Tyme Concepts, Inc. and each share of common stock of Fun Tyme Concepts,
Inc. held in the treasury of Fun Tyme Concepts, Inc. automatically will be
<PAGE>
converted into one share of common stock of Diversicon Holdings Corp.
(Delaware). Outstanding options to purchase shares of common stock of Fun Tyme
Concepts, Inc. will be converted into options to purchase the same number of
shares of common stock of Diversicon Holdings Corp. (Delaware). Each employee
stock plan and any other employee benefit plan to which Fun Tyme Concepts, Inc.
is a party, whether or not such plan relates to the Common Stock of Fun Tyme
Concepts, Inc., will be assumed by Diversicon Holdings Corp.(Delaware) and to
the extent any such plan provides for the issuance or purchase of shares of
common stock of Diversicon Holdings Corp. (Delaware).
IT WILL NOT BE NECESSARY FOR STOCKHOLDERS OF THE COMPANY TO EXCHANGE THEIR
EXISTING STOCK CERTIFICATES FOR CERTIFICATES OF DIVERSICON HOLDINGS CORP.
(DELAWARE); OUTSTANDING STOCK CERTIFICATES OF FUN TYME CONCEPTS, INC. SHOULD NOT
BE DESTROYED OR SENT TO THE COMPANY. The Common Stock of the Company will
continue to be traded on the OTC Bulletin Board, and the exiting stock
certificates will be considered as constituting "good delivery" in transactions
subsequent to the Reincorporation.
Principal Reasons for Changing the Company's State of Incorporation
The Company's Board of Directors believes that the Reincorporation will
provide flexibility for both the management and business of the Company.
Delaware is a favorable legal and regulatory environment in which to
operate. For many years, Delaware has followed a policy of encouraging
incorporation in that state and, in furtherance of that policy, has adopted
comprehensive, modern, and flexible corporate laws which are periodically
updated and revised to meet changing business needs. As a result, many major
corporations have initially chosen Delaware for their domicile or have
subsequently reincorporated in Delaware. The Delaware courts have developed
considerable expertise in dealing with corporate issues, and a substantial body
of case law has developed construing Delaware law and establishing public
policies with respect to Delaware corporations thereby providing greater
predictability with respect to corporate legal affairs.
While the Reincorporation proposal is not being recommended in response
to any specific efforts of which the Company is aware, the Board believes that
the provisions of the Delaware General Corporation Law ("Delaware Statutes")
will enhance the Board's ability to access the financial markets and engage
additional management personnel and members to its board. For a comparison of
the Delaware Statute and New York Business Corporation Law ("New York Statutes"
or "BCL") see the discussion below.
The Delaware Statute
Section 152 of the Delaware Statutes states that subscriptions to purchase,
or the purchase of, the capital stock to be issued by a corporation shall be
paid for in the form and manner as the Board of Directors shall determine;
however, such stock may be issued and deemed to be fully paid and non-assessable
if (1) the entire amount of such consideration has been received by the company
either in cash, services rendered, or property (personal or real), or (2) not
less than the par value or stated value shall be paid upon issuance, and the
balance shall be paid pursuant to a binding obligation of the purchaser.
The New York Statute
Section 504 of the New York Statutes requires that consideration for the
issuance of shares shall be made by money, property (tangible or intangible) or
the performance of labor and/or service performed. Further, certificates for
shares may not be issued until the full consideration therefor has been paid
(except in the case of shares purchased pursuant to stock options under a plan
permitting installment payments).
<PAGE>
The application of the Delaware Statute could adversely affect the
Company's shareholders by diluting their ownership interest in the Company. The
Delaware Statute provisions would enable the Company the ability to benefit from
alternative financing transactions including the issuance of stock for
consideration of future obligations or performances which, in turn, could reduce
the cost of such purchases. Further, in the event the obligation is not
completed, the Company would be able to call the stock to be returned to the
Company.
The Board of Directors has carefully considered the potential adverse
effects of being subject to the Delaware Statute described above and has
unanimously concluded that the adverse effects are substantially outweighed by
the increased ability for the Company to finance operations which, in turn, it
believes will benefit its stockholders.
Comparison of Certain Provisions of the Certificates of Incorporation and
By-Laws of Diversicon Holdings Corp. (Delaware) and Fun Tyme Concepts, Inc.
Limitation on Directors' Liability
The Fun Tyme Concepts, Inc. Certificate of Incorporation provides that
Directors shall not be personally liable to the Company for a breach of
fiduciary duty except if a judgment or other final adjudication finds that (i)
the Director's actions were in bad faith or involved intentional misconduct or a
knowing violation of law, (ii) the Director gained a financial profit or other
advantage to which such Director was not legally entitled, or (iii) the
Director's acts violated Section 719 of the New York Business Corporation Law
which relates to the improper payment of a dividend, invalid purchase of shares
of distributions of assets, and unauthorized loans to Directors.
The Diversicon Holdings Corp. (Delaware) Certificate of Incorporation
contains a provision that eliminates a Director's liability for monetary damage
for breaches of fiduciary duty of care, subject to certain exceptions described
below.
In 1985, the Delaware legislature enacted an amendment to the Delaware
General Corporation Law allowing provisions such as the Liability Provision as a
response to changes in the market for Directors' liability insurance. The
proliferation of stockholder derivative and class action suits for breaches of
Directors' fiduciary duties has in large part made it difficult to obtain
liability insurance. Thus, the Delaware legislature amended the Delaware General
Corporation Law in order to maintain qualified and able Directors to govern
corporations.
The Liability Provision does not relieve a director of monetary liability
for breaches of the Duty of loyalty, acts or omissions not in good faith or
involving intentional misconduct or knowing violations of law, the unlawful
repurchase or redemption of stock or payment of unlawful dividends, or any
transaction from which a director derives an improper personal benefit. Thus,
liability for monetary damages will still exist under the Liability Provision if
liability is based upon one of these grounds. The Liability Provision will have
no effect on the availability of equitable remedies, such as an injunction or
rescission for the breach of a director's fiduciary duty, and will in no way
limit or otherwise affect liability for violation of the federal securities
laws.
The Liability Provision does not eliminate the liability of Officers of the
Company for monetary damages arising out of the Directors' breaches of their
fiduciary duty of care. The duty of care refers to the fiduciary duty of
Directors to be sufficiently diligent and careful in considering a transaction
or taking or refusing to take some corporate action. Liability for a breach of
the duty of care arises when Directors have failed to exercise sufficient care
in reaching decisions and otherwise attending to their responsibilities as
Directors. The Liability Provision does not eliminate the duty of care; it only
eliminates monetary damage awards occasioned by a breach of that duty in certain
circumstances. Thus a breach of the duty of care remains a valid basis for a
suit seeking to stop a proposed transaction from occurring. After the
transaction has occurred, however, the stockholders no longer have a claim for
monetary damages based on a breach of the duty of care even if that breach
involves gross negligence on the part of the Directors.
<PAGE>
The Liability Provision's coverage extends only so far as is legally
permitted. If the courts or the Delaware legislature narrow or expand the
coverage of the amendment to the Delaware General Corporation Law, the Liability
Provision will likewise be narrowed or expanded without further stockholder
action. Under present law, however, any subsequent change to the actual wording
of the Liability Provision will require a stockholder vote, notwithstanding new
legislation or interpretations.
In the event that a stockholder desires to commence a derivative or class
action suit against a Director for violation of his fiduciary duty of care, the
Liability Provision of the Diveriscon Holdings Corp. (Delaware) Certificate of
Incorporation provides that monetary damages will not be payable by the
Director, subject to the exceptions set forth above, even if such violation is
proved. This means that Directors will not be liable for monetary damages for
grossly negligent business decisions, including decisions taken in connection
with merger proposals, negotiations, and other substantive matters affecting the
Company and its stockholders, unless one of the exceptions set forth in the
statute applies.
Certain Differences between the Corporation Laws of New York and Delaware
Summarized below are certain differences between the New York Business
Corporation Law and the Delaware General Corporation Law which may affect the
interests of stockholders. The summary does not purport to be a complete
statement of the difference between the New York Business Corporation Law and
the Delaware General Corporation Law and related laws affecting stockholders'
rights, and the summary is qualified in its entirety by reference to the
provisions of these laws.
Vote Required for Mergers
New York law requires the affirmative vote of two-thirds of a
corporation's outstanding shares to authorize a merger, consolidation,
dissolution, or disposition of substantially all of its assets. Delaware law
requires the affirmative vote of a majority of the outstanding shares to
authorize any such action, unless otherwise expressly provided in the
certificate of incorporation. There is no such provision in the Diversicon
Holdings Corp. (Delaware) Certificate of Incorporation.
Delaware law permits a merger without the approval of the stockholders
of the surviving corporation if, among other things, no charter amendment is
involved, each outstanding share of common stock is to be an identical share of
the surviving corporation after the merger, and the merger results in no more
than a 20% increase in outstanding shares of common stock of such corporation.
Dividends
Under both New York and Delaware law, a corporation may generally pay
dividends out of surplus. In addition, Delaware law permits a corporation, under
certain circumstances, to pay dividends if there is no surplus out of its net
profits for the fiscal year in which the dividend is declared and/or the
preceding fiscal year.
Loans to Directors
New York law prohibits loans to Directors unless authorized by stockholder
vote. Delaware law permits a Board of Directors, without stockholder approval,
to authorize loans to corporate Directors who also are officers.
Stock Repurchases
New York law permits repurchases of shares out of surplus except when the
corporation is insolvent or would be made insolvent thereby and permits a
corporation to purchase its own shares out of stated capital, except when the
corporation is insolvent or would be made insolvent thereby, if the purchase is
made for the purpose of (i) eliminating fraction of shares; (ii) collecting or
compromising indebtedness to the corporation; or (iii) paying stockholders
entitled to receive payment for their shares under the appraisal provisions of
the New York corporation laws. Under Delaware law, a corporation may purchase or
redeem shares of any class except when its capital is impaired or such purchase
would cause impairment of capital, except that a corporation may purchase or
redeem out of capital any of its preferred shares (or common shares in the
absence of any outstanding preferred shares) if such shares will be retired upon
the acquisition and the capital of the corporation will be reduced thereby.
<PAGE>
Stockholder Records
Under New York Law, a person must have been a stockholder for at least
six months, or be authorized in writing by the holders of 5% of any class of a
corporation's outstanding shares, in order to examine the minutes and
stockholder records of a corporation. Under Delaware law, any stockholder with a
proper purpose may demand inspection.
Corporate Action without a Stockholders Meeting
A stockholders meeting to authorize corporate action may be dispensed with
by a New York corporation only upon the written consent of all stockholders.
Delaware law permits corporate action without a meeting of stockholders upon the
written consent of the holders of that number of shares necessary to authorize
the proposed corporate action being taken, unless the certificate of
incorporation expressly provides otherwise. There is no such provision in the
U.S. Bridge of N.Y., Inc. (Delaware) Certificate of Incorporation.
Rights and Options
New York requires stockholder approval of any plan pursuant to which rights
or options are to be granted to Directors, officers, or employees. Delaware law
does not require stockholder approval of such plans, although various other
applicable legal requirements, such as rules of the Securities and Exchange
Commission, may make stockholder approval of certain rights or option plans
necessary or desirable.
Dissenters' Rights
New York law provides that, upon compliance with the applicable
requirements and procedures, a dissenting stockholder has the right to receive
the fair value of his shares if he objects to (i) certain mergers; (ii) a
consolidation; (iii) a disposition of assets requiring stockholder approval; or
(iv) certain amendments to the certificate of incorporation which adversely
affect the rights of such stockholder. See "Right to Dissent and Appraisal" for
information respecting the rights of stockholders of the Company who dissent
from the merger to appraisal of their shares. Delaware law provides such
appraisal rights only in the case of a stockholder objecting to certain mergers
or consolidations, and such appraisal rights do not apply (i) to stockholders of
the surviving corporation in a merger if stockholder approval of the merger is
not required; or (ii) to any class of stock which is either listed on a national
securities exchange or held of record by more than 2,000 holders, unless
stockholders are required to accept for their shares in the merger or
consolidation anything other than common stock of the surviving or resulting
corporation or common stock of another corporation that is so listed or held
(and cash in lieu of fractional shares).
Notices and Record Date
Under Delaware law, the Board of Directors of Diversicon Holdings Corp.
(Delaware) may fix a record date for stockholder meetings and may give notices
for such meetings which shall not be more than sixty nor less than ten days
before the date of a meeting. New York law allows for a period of between ten
and fifty days for notices or determinations of a record date.
Right to Dissent and Appraisal
Section 910 of the New York Business Corporation Law ("BCL") sets forth
the rights of stockholders of the Company who object to the merger which will
take place in connection with the Reincorporation. Any stockholder of the
Company who does not vote in favor of the Reincorporation may, if the
Reincorporation is effected, obtain payment in cash of the fair value of his
shares by complying with the requirements of Section 623 of the BCL. The
dissenting stockholder must file with the Company, before the stockholder vote
on the Reincorporation, a written objection including a notice of election to
<PAGE>
dissent, the dissenting stockholder's name and residence address, the number of
shares as to which the objection applies, and a demand for payment of the fair
value of such shares if the Reincorporation is effected. Failure by a
stockholder to provide such an objection constitutes a waiver of the right to
dissent. Such objection is not required from any stockholder to whom the Company
did not give proper notice of the meeting pursuant to which such vote was taken.
Within ten days after the vote of stockholders authorizing the Reincorporation,
the Company must give written notice of such authorization to each dissenting
stockholder who filed written objection or from whom written objection was not
required. Within twenty days after the giving of such notice, any stockholder
from whom written objection was not required and who elects to dissent from the
proposed Reincorporation must file with the company a written notice of such
election, stating the dissenting stockholder's name and residence address, the
number of shares to which the notice applies and a demand for payment of the
fair value of shares. Stockholders may not dissent as to fewer than all of their
shares.
At the time of filing the notice of election to dissent or within one
month thereafter, the stockholder must submit the certificates representing the
shares to the Company or its transfer agent for notation thereon of the election
to dissent, after which such certificates will be returned to the stockholder.
Failure to submit the certificates for such notation may result in the loss of
dissenter's rights. Within fifteen days after the expiration of the period
within which stockholders may file their notices of election to dissent, or
within fifteen days after consummation of the Reincorporation, whichever is
later (but not later than ninety days after the stockholders' vote authorizing
the Reincorporation), the Company must make a written offer (which, if the
Reincorporation has not been consummated, may be conditioned upon such
consummation) to each stockholder who has filed such notice of election to pay
for the shares at a specified price which the Company considers to be their fair
value. The dissenting stockholder has a period of thirty days within which to
accept such written offer. A stockholder may withdraw the notice of election to
dissent at any time prior to the acceptance in writing of the Company's offer,
but in no case later than sixty days from the date of the consummation of the
Reincorporation. Thereafter, such withdrawal shall require the consent of the
Company. A judicial proceeding may be instituted by the Company to determine the
rights of dissenting stockholders and to fix the fair market value of their
shares. If the Company does not institute such a proceeding, the dissenting
stockholders may institute same. The Company is not required to notify the
dissenting stockholder of the Company's decision not to institute such a
proceeding, and the Company currently does not intend to give such notice. A
negative vote on the reincorporation does not constitute a "written objection"
required to be filed by a dissenting stockholder. Failure to vote against the
Reincorporation, or failure to specify any vote on the proxy card, however, will
not constitute a waiver of rights under sections 910 and 623 of the BCL provided
that written objection has been properly filed.
The foregoing summary does not purport to be a complete statement of
the provisions of Section 910 and 623 of the BCL and is qualified in its
entirety by reference to those Sections.
Amendment
The Reincorporation Agreement may be amended, modified, or supplemented
prior to the effective date of the Reincorporation upon the approval of the
Board of Directors of Fun Tyme Concepts, Inc. and Diversicon Holdings
Corp.(Delaware). However, an amendment, modification, or supplement which
changes the Reincorporation Agreement in a way which, in the judgment of the
Board of Directors of Fun Tyme Concepts, Inc., would have a material adverse
effect on the stockholders of Fun Tyme Concepts, Inc. may be made after the
adoption of the Reincorporation Agreement by the stockholders of Fun Tyme
Concepts, Inc., unless such amendment, modification, or supplement is approved
by such stockholders.
<PAGE>
Termination
The Reincorporation Agreement provides that the Board of Directors of
Fun Tyme Concepts, Inc. may terminate the Reincorporation Agreement and abandon
the merger contemplated thereby at any time prior to its effective date, whether
before or after approval by the stockholders of Fun Tyme Concepts, Inc. if (i)
the Reincorporation shall not have received the requisite approval of the
stockholders of Fun Tyme Concepts, Inc.; or (ii) the Board of Directors of Fun
Tyme Concepts, Inc. determines for any reason in its sole judgment that the
consummation of the transaction would be inadvisable or not in the best
interests of Fun Tyme Concepts, Inc. and its stockholders.
Stockholder Vote Required to Approve the Proposal
The affirmative vote of the holders of two-thirds of the shares of the
Company's Common Stock issued and outstanding on the record date, voting
together as a single class, is required for the approval of this proposal. The
principal stockholder owning of record, beneficially, directly and indirectly,
an aggregate of approximately 81.5% of such shares outstanding on the record
date, has agreed to vote in favor of approval of this proposal.
The Board of Directors deems this Proposal No. V to be in the best
interests of the Company and its stockholders and recommends a vote "FOR"
approval thereof.
VI. PROPOSAL TO INCREASE THE NUMBER
OF SHARES AUTHORIZED UNDER
THE SENIOR MANAGEMENT
INCENTIVE PLAN
The Board of Directors has unanimously approved, subject to shareholder
approval, an amendment to the Management Plan to increase the number of shares
issuable under such plan from 150,000 shares to 1,000,000 shares. See "I.
Election of Directors - 1995 Senior Management Incentive Plan."
The amendment to the Management Plan is necessary because of the recent
increase in the number of officers of the Company and the expansion of the
Company's operations. The number of shares authorized under the Plan has been
deemed by the Board of Directors as insufficient to provide for awards to
attract and retain key executive management personnel and to provide incentive
to management personnel to maximize shareholder value. The Management Plan is
designed to augment the Company's existing compensation programs. The Management
Plan is intended to enable the Company to have its executives, key employees,
and consultants participate in the growth and success of the Company through
awards under the Management Plan, in addition, and as an alternative, to cash
compensation. Management believes that equity incentives are necessary to
attract, motivate, and retain key personnel.
The Company plans to expand its operations during the current fiscal year.
Management believes that the Company will be required to offer competitive
compensation packages to obtain and retain the qualified management, which the
Company and its subsidiaries need in order to successfully and profitably expand
operations.
The affirmative vote of the holders of a majority of the shares of the
Common Stock issued and outstanding on the record date, voting together as a
single class, is required for the approval of this proposal. The principal
stockholder owning of record, beneficially, directly and indirectly, an
aggregate of approximately 81.5% of such shares outstanding on the record date,
has agreed to vote in favor of approval of this proposal.
The Board of Directors deems this Proposal No. VI to be in the best
interests of the Company and its stockholders and recommends a vote "FOR"
approval thereof.
<PAGE>
FINANCIAL INFORMATION
A COPY OF THE COMPANY'S ANNUAL REPORTS ON FORM 10-KSB FOR THE FISCAL
YEAR ENDED MARCH 31, 1998 AS TO BE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION WILL BE FURNISHED WITHOUT THE ACCOMPANYING EXHIBITS TO STOCKHOLDERS
WITHOUT CHARGE UPON WRITTEN REQUEST THEREFOR SENT TO RICHARD RUSSO, SECRETARY,
FUN TYME CONCEPTS, INC., 290 WILD AVENUE, STATEN ISLAND, NEW YOK 10314. EACH
SUCH REQUEST MUST SET FORTH A GOOD FAITH REPRESENTATION THAT AS OF JULY 7, 1998
THE PERSON MAKING THE REQUEST WAS THE BENEFICIAL OWNER OF COMMON SHARES OF THE
COMPANY ENTITLED TO VOTE AT THE ANNUAL MEETING OF STOCKHOLDERS.
VII. OTHER BUSINESS
As of the date of this proxy statement, the only business which the Board
of Directors intends to present, and knows that others will present, at the
Annual Meeting is that herein above set forth. If any other matter or matters
are properly brought before the Annual Meeting, or any adjournments thereof, it
is the intention of the persons named in the accompanying form of proxy to vote
the proxy on such matters in accordance with their judgment.
By Order of the Board of Directors,
Richard Rosso
Secretary
July 21, 1998
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING,
PLEASE COMPLETE AND RETURN YOUR PROXY PROMPTLY
IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED
IF IT IS MAILED IN THE UNITED STATES OF AMERICA.
