SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OFProxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (AMENDMENT NO. ___________)(Amendment No.__)
Filed by the Registrant /x//X/
Filed by a Partyparty other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/x//X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c)Section 240.14a-11(c) or Rule 14a-12Section
240.14a-12
CHOICES ENTERTAINMENT CORPORATION
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(Name of Registrant as Specified inIn Its Charter)
- - - ---------------------------------------------------------------------------------------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x//X/ No fee required.required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.0-11
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(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.
/ / 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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TRACY M. SHIER
ATTORNEY AT LAW
121 Vine Street
No. 1903
Seattle, Washington 98121-1456
TELEPHONE: (206) 443-6948 E-MAIL: tshier@cablespeed.com FACSIMILE (206) 443-7668
May 3, 2000
Securities and Exchange Commission
Washington D.C.
RE: CHOICES ENTERTAINMENT CORPORATION
Schedule 14A - Definitive
Registrant File No. 000-17001
Dear Sirs:
Enclosed for filing please find the definitive Schedule 14A for Choices
Entertainment Corporation ("Registrant"). Registrant is a qualified small
business issuer and therefore relies on Regulation S-B.
Please call the undersigned at (206) 443-6948 if you have any questions or
comments regarding this letter or the attached filing.
Very truly yours,
Tracy M. Shier
CHOICES ENTERTAINMENT CORPORATION
836 W. TRENTON AVENUE, MORRISVILLE, PA 19067SEATTLE, WASHINGTON
April 28, 2000
Dear Stockholders:
You are cordially invited to attend the annual meeting of stockholders of
Choices Entertainment Corporation to be held on Friday, May 26, 2000 at 10:30
a.m. at the Washington Athletic Club, 1325 Sixth Avenue, Seattle, Washington.
In addition to the items set forth in the accompanying Notice of Annual Meeting
of Stockholders and Proxy Statement, we will report on current activities of the
Company and will provide an opportunity to discuss matters of interest to you as
a stockholder.
We sincerely hope you will be able to attend our Annual Meeting. However,
whether you plan to attend or not, please sign, date and promptly return the
enclosed proxy to ensure that your shares are represented.
On behalf of the Board of Directors, I would like to express our appreciation
for your continued interest in Choices Entertainment Corporation.
Very truly yours,
/s/ TRACY M. SHIER
---------------------------------------------
TRACY M. SHIER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
CHOICES ENTERTAINMENT CORPORATION
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 20, 1996
NOTICE IS HEREBY GIVEN thatSTOCKHOLDERS
---------------------
To the Stockholders:
The Annual Meeting of ShareholdersStockholders of Choices Entertainment Corporation (the "Company") will
be held on Friday, December 20,
1996,May 26, 2000 at 10:0030 a.m., local time, at the Company's offices, at 836 W. TrentonWashington Athletic Club,
1325 Sixth Avenue, Morrisville, Pennsylvania,Seattle, Washington, for consideration of and action by the holders offollowing purposes:
1. To elect four directors, each to a one-year term;
2. To amend the Company's CommonCertificate of Incorporation increasing the
number of authorized shares of common stock from 50,000,000 to
200,000,000 and Series C Preferred Stock uponto increase the following
matters:
1. The electionnumber of a Boardauthorized shares of three directors, with each directorpreferred
stock to serve until the next annual meeting of Shareholders or until the
election and qualification of his respective successor;
2. The ratification of the appointment of KPMG Peat Marwick LLP as the
Company's independent auditors for 1996;50,000,000;
3. An amendment ofTo amend the Company's Certificate of Incorporation to permit
conversionchange the name
of the Company's Series C Preferred Stock (the "Preferred
Stock") without any further increase in the authorized shares of
Common Stock and any reduction in the number of presently authorized
shares of Preferred Stock;company to CECS Corp.; and
4. The transaction ofTo transact such other business as may properly come before the Annual Meeting and any adjournment thereof, and matters incident to
the conductmeeting.
Only stockholders of the Annual Meeting.
The Board of Directors has fixedrecord at the close of business Octoberon March 30, 1996, as
the record date for the determination of holders of Common and Preferred Stock
of the Company2000 are
entitled to notice of, and to vote at, the Annual Meeting. The
Company's Annual Report to Shareholders for the year ended December 31, 1995,
accompanies this Notice and Proxy Statement.
SHAREHOLDERS (WHETHER THEY OWN ONE OR MANY SHARES ANDmeeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ THOMAS RENNA
---------------------------------------------
THOMAS RENNA
CORPORATE SECRETARY
May 3, 2000
IMPORTANT
WHETHER THEY EXPECTYOU PLAN TO ATTEND THE ANNUAL MEETING OR NOT) ARE REQUESTED TO VOTE,NOT, PLEASE SIGN, DATE AND RETURN
PROMPTLY THE ACCOMPANYINGENCLOSED PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE
IF MAILED IN THE UNITED STATES. By Order of the Board of Directors
November 20, 1996 Ronald W. Martignoni
Chief Executive OfficerPROMPTLY SIGNING, DATING AND RETURNING THE PROXY
WILL SAVE THE COMPANY THE ADDITIONAL EXPENSE OF FURTHER SOLICITATION.
CHOICES ENTERTAINMENT CORPORATION
836 W. TRENTON AVENUE, MORRISVILLE, PA 19067121 VINE STREET
SEATTLE, WASHINGTON 98121
----------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 20, 1996---------------------
This Proxy Statementproxy statement is furnished and is first being mailed with the
accompanying proxy on approximately November 20, 1996, to each shareholder of
record of Choices Entertainment Corporation (the "Company") in connection with the solicitation of
proxies by the Board of Directors of Choices Entertainment Corporation ("CECS",
the Company,"Company" or "We") to be voted at the 2000 Annual Meeting of ShareholdersStockholders of
the Company (the "Meeting") to be held on Friday, December 20, 1996,May 26, 2000 at 10:0030 a.m., local time, at the
Company's offices, at 836 W. Trenton Avenue, Morrisville, Pennsylvania, and at
any adjournment thereof, for the purposes stated below.
Any person giving a proxy has the power to Stockholders who
execute proxies may revoke itthem at any time before itsprior to their exercise by
a later dated proxy,delivering a written revocation sent to the Secretary of the Company, by submission
of a proxy with a later date or attendanceby voting in person at the Meeting and voting in person. In the absence
of contrary instructions, properly executed proxies, received and unrevoked,
will be voted by the persons named in the proxy: (i) for the election of the
directors proposed by the Board of Directors; (ii) for the ratification of KPMG
Peat Marwick LLP asmeeting. These proxy
materials, together with the Company's independent auditors for the year ending
December 31, 1996; (iii) for the proposalannual report to amend the Company's Certificatestockholders, are being
mailed to stockholders on or about May 15, 2000.
Holders of Incorporation; and (iv) in their discretion, on such other business as may
properly come before the Meeting and matters incident to the conduct of the
Meeting.
The enclosed proxy confers discretionary authority to vote with respect to
any and all of the following matters that may come before the Meeting: (i)
matters which the Company does not know, a reasonable time before the proxy
solicitation, are to be presented at the Meeting; (ii) approval of the minutes
of a prior meeting of shareholders if such approval does not amount to
ratification of the action taken at that meeting; (iii) the election of any
person to any office for which a bona fide nominee is named in this Proxy
Statement and such nominee is unable to serve or for good cause will not serve;
(iv) any proposal omitted from this Proxy Statement and proxy pursuant to Rule
14a-8 or Rule 14a-9 promulgated under the Securities Exchange Act of 1934; and
(v) matters incident to the conduct of the Meeting. In connection with such
matters, the persons named on the enclosed proxy card will vote in accordance
with their best judgment.
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The costs of preparing, assembling, printing, mailing and soliciting
proxies, and any additional material which the Company may furnish shareholders
in connection with the Meeting, will be borne by the Company. In addition to
the use of the mails, certain directors, officers and employees of the Company
without additional compensation may solicit proxies personally, by telephone or
by telecopier. Arrangements will be made with brokerage houses and other
custodians, nominees and fiduciaries to forward proxy solicitation material to
the beneficial owners of stock held of record by these persons, and upon
request therefor, the Company will reimburse them for their reasonable
forwarding expenses.
CERTAIN LEGAL PROCEEDINGS
The Company has recently been involved in certain legal proceedings
concerning controlshares of the Company's Board of Directors. The following is a
description of these proceedingscommon stock, par value $.01 (the "Common
Stock") and certain other material legal proceedings,
which are pending, to which any director, officer or owner of more than five
percent ofSeries C Preferred Stock, par value $.01 (the "Preferred Stock")
(together the Company's Common Stock and Preferred Stock (voting together) is a
party adverseare referred to the Company or has a material interest adverse to the Company.
On July 26, 1996, the Company filed a lawsuit in the United States District
Court for the District of Columbia (the "Washington Proceedings"), entitled
CHOICES ENTERTAINMENT CORPORATION V. CARL SHAIFER ET AL., Civil Action No.
1:96-CV-01753, seeking declaratory and injunctive relief against the following
group of shareholders: Carl Shaifer, Joseph DeSaye, Max Scheuerer, Maureen and
Lawrence Feeney, William and Evelyn Goatley, P.L. Anderson, Jr., Harold E.
Hamburg, David F. Beckman, Mark and Barbara Raifman and Frank Harvey
(collectively, the "Shareholder Committee") for alleged violations of the
federal securities laws. The Shareholder Committee had previously filed a
Solicitation Statement (the "Solicitation Statement") with the Securities and
Exchange Commission on June 28, 1996, in connection with the Shareholder
Committee's solicitation of written consents from other shareholders for the
purpose of removing and replacing the Board of Directors of the Company without
the holding of a meeting. The Company believes that the Solicitation Statement
contains material misleading statements and omissions of material facts,
including the failure to disclose serious conflicts of interests of the
Shareholder Committee and of certain of its director nominees to the Board,
that the Shareholder Committee has failed to file a Schedule 13D in accordance
with the requirements of the Securities Exchange Act of 1934, and that any
consents obtained by the Shareholder Committee have been obtained in violation
of the federal securities laws and are invalid.
On July 29, 1996, the Shareholder Committee delivered written consents to
the Company, which the Shareholder Committee asserted
3
were sufficient to remove and replace the Company's present Board of Directors
with the nominees of the Shareholder Committee without the holding of a
meeting, and such nominees attempted to assert control and to terminate the
employment of existing management. The Company did not recognize the action
purported to have been taken by the Shareholder Committee, having concluded
that the Shareholder Committee had not delivered sufficient consents to remove
and replace the Company's present Board and, in any event, that such consents
were otherwise invalid as having been obtained in violation of the federal
securities laws.
On August 2, 1996, a lawsuit was filed in the Court of Common Pleas of
Bucks County, Pennsylvania, against the existing Directors of the Company by
the director nominees to the Board of the Shareholder Committee, Carl Shaifer,
Joseph DeSaye and Max Scheuerer, as well as on behalf of the Company, entitled
CHOICES ENTERTAINMENT CORPORATION ET AL., V. RONALD W. MARTIGNONI ET AL., No.
96005737-18-5. The lawsuit requested that the Court grant a preliminary
injunction requiring that the defendants cease acting as corporate officers or
directors and otherwise relinquish control of the Company. On August 9, 1996,
the lawsuit was discontinued by plaintiffs.
On August 16, 1996, the Shareholder Committee's nominees, Carl Shaifer,
Joseph DeSaye and Max Scheuerer, filed a lawsuit in the Delaware Court of
Chancery for New Castle County (the "Delaware Proceedings"), C.A. No. 15170,
entitled CARL SHAIFER, ET AL. V. RONALD W. MARTIGNONI, ET AL., against the
Company and the existing Board of Directors, seeking: (i) a declaration that
the present Board had been duly and validly removed and that plaintiffs were
validly electedherein as the
Company's Board, (ii) an order directing the holding of
an annual meeting of shareholders on a date, to be fixed by the Court, not more
than 30 days from August 16, 1996 (the date of the filing of the complaint),
(iii) costs and expenses, including attorneys fees, and (iv) such other relief
as the Court deems just and proper.
On September 4, 1996, after two summary hearings, and prior to the filing
of an answer by defendants in the Delaware Proceedings, the Delaware Court of
Chancery, without ruling on the merits, ordered, INTER ALIA: (i) that the
annual meeting of shareholders be held on December 20, 1996, as previously
announced by the Company, (ii) that the present Board, consisting of Ronald W.
Martignoni, John A. Boylan and Fred E. Portner, shall constitute the Company's
board of directors, until the earlier of the election of directors at the
meeting or the resolution of plaintiffs claims in the lawsuit, and that Joseph
DeSaye, except with respect to certain matters, be permitted to attend Board
meetings, and (iii) that, until the earlier of the election of directors at the
meeting or the resolution of plaintiffs claim in the lawsuit, the Company will
not issue any voting securities in certain specified transactions
4
except upon Court order and that the Company will not, except upon five
business days notice, take any "action out of the ordinary course," as defined
in the order. The order also provides that the restrictions contained therein
may be waived by written agreement of the parties and that the order may be
modified by the Court. On September 6, 1996, defendants filed an answer to the
complaint in the Delaware Proceedings, denying plaintiffs' allegations with
regard to all claims.
On September 12, 1996, counsel for the Company and the Shareholder
Committee notified the Court in the Washington Proceedings that they were
engaged in settlement discussions and requested postponement of the hearing
previously scheduled for September 13, 1996, which postponement was granted.
On September 18, 1996, a lawsuit was filed against the Company in the Court
of Common Pleas of Bucks County, Pennsylvania, captioned MAX SCHEUERER V.
CHOICES ENTERTAINMENT CORPORATION, Civil Action No. 96006871, in which
plaintiff, a member of the Shareholder Committee, is seeking a judgment in the
amount of $146,298 (plus future interest, costs and any other appropriate
damages), which amount allegedly represents $120,000 of principal and
$26,298.35 of interest owed by the Company to plaintiff under two 10%
promissory notes. For further information, see CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS.
VOTING SECURITIES OF THE COMPANY
Only shareholders"Voting Stock") of record at the close of business on OctoberMarch 30, 1996,
are2000 will be
entitled to notice of, and to vote at the Meeting.meeting on the basis of one vote for each share of
Common Stock held and 40,000 votes for each share of Preferred Stock held. On
that date, theMarch 30, 2000, there were outstanding voting securities of the Company consisted of 22,004,39529,274,355 shares of Common Stock and
37.4478.829 shares of Series C Preferred Stock (the "Preferred
Stock"). Each shareStock.
PROPOSAL 1: ELECTION OF DIRECTORS
The Board of Common StockDirectors shall consist of not less than three nor more than
twelve members. Directors are elected for a one-year term. This year, Tracy M.
Shier, Cornelia F. Eldridge, Patrick Howard, James D. Sink and Thomas Renna have
been nominated to be directors. Unless a stockholder indicates otherwise, each
signed proxy will be voted for the election of these nominees.
We expect that each of the nominees will be available for election, but if
any of them is entitlednot a candidate at the time the election occurs, we will vote the
proxies for the election of another nominee to one vote on all matters
presentedbe designated to fill any such
vacancy by the Meeting with no right to vote cumulatively. Each shareBoard of Preferred Stock isDirectors.
The candidates elected are those receiving the largest number of votes cast
by the shares entitled to vote in the election, up to the number of directors to
be elected. Shares held by persons who abstain from voting on all matters submittedthe election and
broker "non-votes" will not be counted in the election.
NOMINEES FOR ELECTION
Tracy M. Shier, 49, director, President, Treasurer is a Seattle securities
attorney with public company experience as well as significant experience in
high technology start-ups and corporate finance. From January 1999 to January
2000, Mr. Shier served as General Counsel to the Company. Mr. Shier was of
counsel to the law firm of Monahan & Biagi PLLC of Seattle Washington from April
1997 to December 1998 were he was the principal securities lawyer to the firm.
Prior to joining Monahan & Biagi, PLLC, Mr. Shier was a partner in the law firm
of Boelter & Gale of Seattle, Washington from 1994 to 1997. In 1993 and 1994,
Mr. Shier served as General Counsel of Holly Residential Properties, Inc., a
NYSE traded apartment REIT based in Tacoma, Washington. From 1982 to 1994, Mr.
Shier represented several technology start-ups both as in-house counsel to a
votesmall investment banking firm and as partner in the New York law firm of
Gersten, Savage, Kaplowitz, Simensky and Shier. Mr. Shier was a founder in 1983
of New Era Communications Corp., an early
1
round applicant for cellular radiotelephone licenses that is a predecessor to
Vanguard Cellular Communications, a company acquired last year by A T & T.
Mr. Shier has also represented and otherwise participated in funding
partnerships and other business entities engaged in, for example, early research
at Yale University on Artificial Intelligence, development of new railcar and
automobile suspension technologies, toxic gas emission detection technology with
emphasis on bomb detection, and Internet start-ups developing various on-line
technologies. Mr. Shier received his Juris Doctor from Seattle University Law
School in 1982 and a Bachelor of Arts in Business Administration from the
University of Washington in 1972.
Cornelia F. Eldridge, 57, director nominee, is a director of the Company's shareholders togetherparent of
D.E. Frey Group Inc. and has been since September 1989. Ms. Eldridge is a
founding partner of Camelot Partners, an investment banking firm in formation.
Since 1987, Ms. Eldridge has been self-employed through Eldridge Associates, New
York, New York, engaged in the business of management consulting. From
August 1984 until December 1986 she was a Partner in Ditri Associates, New York,
New York, engaged in the business of management consulting. Ms. Eldridge
graduated from Ohio Wesleyan University in 1963 with a Bachelor of Arts degree
in Art and French and from the Common StockUniversity of Massachusetts in 1968 with an MBA.
Patrick Howard, 32, director nominee, joined Tridium Research, Inc. in 1999
as president. He has been a board member since 1997. Prior to joining Tridium to
present, Mr. Howard is and nothas served two and a half years as a separate
class, unless otherwise required by law, with each sharevice president
of Preferred Stock
entitled to 40,000 votes. In voting together with the Common Stock, the
outstanding Preferred Stock has 1,496,000 votes. The combined numberinvestment banking at Seattle-Northwest Securities Corporation in Seattle,
Washington (1997-present); served two years as vice president of votes
attributable to the outstanding sharesreal estate
acquisitions and development at Cobalt Properties in Seattle, Washington
(1995-1997); and served five years as a bond ratings analyst of structured and
public finance project bond financings at Standard & Poor's Ratings Group in New
York City (1990-1995). Mr. Howard is a graduate of the Company's Common StockUniversity of San
Francisco (1990). While attending the University of San Francisco, Mr. Howard
served on the University Board of Governors as student body president. Prior to
attending that university, he completed course work at Washington University in
St. Louis, Missouri. Mr. Howard currently serves on the King County, Washington
Affordable Housing Credit Enhancement Review Committee. He holds a Series 7
license and Preferred Stock, at October 30,remains active in investment banking. Mr. Howard is highly
experienced in all phases of investment financing, technology, and business
management.
James D. Sink, 50, has served as a director since February 1997 and became
Chairman of the Board in June 1998. Since March 1996, Dr. Sink has been
affiliated with Allegheny University Hospitals in Philadelphia, Pennsylvania,
where he is 23,500,395.
In complianceProfessor of Cardiothoracic Surgery. Prior to joining Allegheny
University Hospitals, Dr. Sink was, for more than five years, affiliated with
the order entered by the Chancery CourtPresbyterian Medical Center, in the Delaware
Proceedings and pursuant to 8 DEL. C. Section 211, the sharesPhiladelphia, Pennsylvania, where he was Chief
of stock
representedCardiothoracic Surgery at the Meeting, eitherPhiladelphia Heart Institute of Presbyterian
Medical Center.
Thomas Renna, 35, director, Vice President and Secretary, has been a
director since June 1998 and has served as Vice President--Public and Investor
Relations since 1999. Prior to that he was employed by Commonwealth Associates,
an NASD broker/dealer as an Investment Executive and held that position from
October, 1998 to October 1999. Prior to that he was employed by Consolidated
Merchandising Services, Inc. ("CMSI") (now known as USA Services, Inc.) as a
Vice President of Sales and occupied that position from February 1, 1998 to
October 1998. Mr. Renna's responsibilities in personthat position included initiating
sales calls to secure new accounts for CMSI as well as advising CMSI as to its
capital raising activities. CMSI is a company which provides "in-store"
merchandising and product assembly and sales services primarily on behalf of
branded product manufacturers or retail companies. CMSI is a company controlled
by proxy,George D. Pursglove. Prior to that, Mr. Renna was Vice President of Sales of
SSNN, Inc., ("SSNN") and entitledheld that position since October 28, 1997. SSNN, is a
start-up company providing an Internet website which offers company and stock
information on small and micro-cap companies. Mr. Renna's responsibilities
included securing new subscribers for the SSNN service and advising SSNN as to
its capital raising activities. Mr. Renna was employed as a Vice
2
President, Investments at Texas Capital Securities from February 1995 to
October 1997. From February 1992 to January 1995, Mr. Renna was a Vice President
of Investments at Berkeley Securities. In his positions with Texas Capital
Securities and Berkeley Securities Mr. Renna was a stockbroker serving the
investment needs of his customers including the buying and selling of
securities.
The Board of Directors recommends a vote at the Meeting, shall constitute a quorum, notwithstanding any provisionFOR each of the Company's Certificate of Incorporation or By-laws to the contrary.
5
A shareholder may withhold voting for any or all nominees foras a
director.
BOARD MEETINGS AND COMMITTEES OF THE BOARD
During 1999, the Board of Directors or abstain from voting for any proposal if the shareholder chooses to
do so. With respect to the electionheld no meetings. The Board of Directors
votes that are withheld will
be excluded entirely fromhas created the votefollowing standing committees:
The Executive Committee has the authority to approve the acquisition,
financing and will have no affect. With respectdisposition of investments for the Company and execute certain
contracts and agreements, including those related to matters submitted toborrowing money by the
shareholders,Company. The committee generally exercises all other thanpowers of the electionBoard of
Directors abstentions will not be counted as votesexcept for or against and will, therefore,
havethose requiring action by the same affect as a vote against. Broker non-votes will have no affect
on the outcome of voting. The votes required with respect to the electionBoard of Directors andunder the proposal to amend the Company's
Certificate of Incorporation, Bylaws or applicable law. The Executive Committee
held no meetings in 1999. After the election, the proposed members of the
Executive Committee are Tracy Shier (Chair), Thomas Renna and Cornelia Eldridge.
The Audit Committee consists of directors who are not employees of the
Company and other persons selected by the Board who are, in the opinion of the
Board, free from any relationship that would interfere with their exercise of
independent judgment as Audit Committee members. The Audit Committee has been
established to make recommendations concerning the engagement of independent
public accountants, review with the independent public accountants the plans and
results of audit engagements, approve professional services provided by such
accountants, review the independence of the public accountants retained and
review the adequacy of the Company's internal accounting controls. The Audit
Committee held no meetings in 1999. After the election, the proposed members of
the Audit Committee are Patrick Howard and Cornelia Eldridge.
The Compensation Committee consists of a majority of directors who are not
employees of the Company and the President of the Company. The Compensation
Committee was established to review the Company's general compensation strategy,
establish the salaries of, and review the benefit programs for the President and
other executive officers and for those persons reporting directly to such
persons, as well as to approve certain other significant positions and to set
compensation policy for the Company. The Compensation Committee held no meetings
in 1999. After the election, the proposed members of the Compensation Committee
are Cornelia Eldridge (Chair), James Sink, and Tracy Shier (President),
In 2000, the Compensation Committee intends to commission a report by a
reputable actuary or consulting firm, to generate a compensation report to
facilitate the Compensation Committee in completing its duties. The compensation
report will provides compensation statistics for certain employee and executive
compensation levels for comparable companies in the Company's business segment,
and the types of duties to which those levels of compensation relate. The
Company intends that the Compensation Committee when reviewing appropriate
compensation levels and policy initiatives will use the report in its
deliberations.
COMPENSATION OF THE BOARD OF DIRECTORS
The current directors of the Company were not compensated during 1999 for
their services as directors, per se. See "Certain Relationships and Related
Transactions" below for a description of other compensation that was paid
directors and one ex-director in 1999. The current Board of Directors of the
Company has adopted a resolution setting the compensation for a non-employee
serving as a
3
director of the Company for the current year commencing immediately after the
2000 Annual Meeting and for the term of office as follows:
Annual retainer as a director............................... $ 10,000
Annual retainer for membership on a standing committee...... $ 5,000
Reimbursement for all reasonable expenses incurred in
attending Board or Committee meetings..................... Variable
Employee directors serve on the Board without additional compensation.
Directors will be given the option of taking directors fees, other than
reimbursement for expenses incurred in attending Board or Committee meetings, in
Common Stock valued at the last sale price as quoted by the Over the Counter
Bulletin Board on the day of the Annual Meeting.
In addition, each director is eligible to participate in the Company's 1987
Stock Option and Appreciation Rights Plan (the "1987 Plan"). See "Executive
Compensation" below for a description of the plan.
EXECUTIVE OFFICERS AND KEY EMPLOYEES OF THE COMPANY
The executive officers of the Company are all also directors as set forth
in the discussion of each item herein.
SECURITIESabove.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding ownership of
the Company's Common Stock and PreferredVoting Stock, as of OctoberMarch 30, 1996,2000 by: (i) each person who is
known by the Company to own beneficially more than five percent (5%) of the
combined number of votes attributable to all shares of Common and Preferred
Stock outstanding on that date, (ii) each director (Messrs. Sink, Shier and
nominee
for director who beneficially owns shares of Common or Preferred Stock,Renna, (iii) each Namedthe Chief Executive Officer (as defined under EXECUTIVE COMPENSATION) who
beneficially owns shares of Common or Preferred Stock(Tracy M. Shier) and (iv) all executive
officers and Directorsdirectors as a group.
NO.AMOUNT AND
NATURE OF VOTES ATTRIBUTABLE TO
NO.PERCENT OF SHARES OF COMMON STOCK NO. OF SHARES OF PREFERRED STOCK COMMON STOCK AND PREFERRED STOCK
NAME AND ADDRESS BENEFICIALLY OWNED, INCLUDING BENEFICIALLY OWNED, INCLUDING BENEFICIALLY OWNED,ADDRESS(1) OF BENEFICIAL OWNER PERCENTAGE OWNED(1) PERCENTAGE OWNED(1) INCLUDING PERCENTAGE(1)
------------------- ----------------------------- -------------------------------- -----------------------------------OWNERSHIP(2) CLASS(3)
- --------------------------------------- ------------ ----------
Attel & Cie, S.A. 2,601,112 (11.8%) -- 2,601,112 (11.1%)
Via Nassa 58
6901 Lugano, Switzerland
John Maioriello 1,826,000 (7.8%)(2) -- 1,826,00 (7.3%)
3416 The Strand
Manhattan Beach, CA 90266
John A. Boylan 1,442,000 (6.2%)(3) -- 1,442,000 (5.8%)
509 Kinsale Road
Timonium, MD 21093
Ronald W. Martignoni 1,425,000 (6.1%)(4) -- 1,425,000 (5.7%)
6 Chadwick Court
Voorhees, NJ 08043
Joseph DeSaye 26,000 * -- 26,000 *
800 Federal Boulevard
Carteret, NJ 07008
Ralph V. Esposito 386,814 (1.8%)(5) -- 386,814 (1.7%)
854 Beckman Drive
No. Bellmore, NY 11710
6
NO. OF VOTES ATTRIBUTABLE TO
NO. OF SHARES OF COMMON STOCK NO. OF SHARES OF PREFERRED STOCK COMMON STOCK AND PREFERRED STOCK
NAME AND ADDRESS BENEFICIALLY OWNED, INCLUDING BENEFICIALLY OWNED, INCLUDING BENEFICIALLY OWNED,
OF BENEFICIAL OWNER PERCENTAGE OWNED(1) PERCENTAGE OWNED(1) INCLUDING PERCENTAGE(1)
------------------- ----------------------------- -------------------------------- -----------------------------------
Fred E. Portner 190,000 *(6) -- 190,000 *
121 Montgomery Place
Alexandria, VA 22314
Shareholder Committee 2,840,000 (12.9%)(7)(8) 37.4 (90.7%)(7)(9) 4,334,500 (18.3%)(7)(9)James D. Sink............................................... 3,461,650(4) 7.1
Thomas Renna................................................ 1,365,500(5) 2.8
Tracy M. Shier.............................................. 1,200,000 2.5
Kenneth Hiniker............................................. 3,039,300(6) 6.3
Max Scheuerer............................................... 3,082,000(7) 6.4
Kenneth Stilger............................................. 2,601,500(8) 5.4
All executive officers and 3,332,000 (13.2%)(10) -- 3,332,000 (12.5%)
Directorsdirectors as a Group
(four(three persons)........................................... 6,027,150 12.4
- - - ------------------
* Less than 1%.------------------------
(1) Unless otherwise indicated, the address of the beneficial owner is c/o the
Company, 121 Vine Street, #1903 Seattle, WA 98121.
(2) Beneficial Ownershipownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of Common Stock or PreferredVoting Stock subject
to stock options orand warrants currently exercisable or exercisable within
60 days are deemed to be outstanding for purposes of computingcalculating the percentage
ownership of the person holding such option or warrantoptions and the percentage ownership of
any group of which the holder is a member, but are not deemed outstanding
for purposes of computingcalculating the percentage ownership of any other person. Except as may be indicated otherwise,by
footnote, and subject to community property laws where
applicable,except for voting or investment power held jointly with a
person's spouse, the persons named in the table above have sole voting and
investment power with respect to all shares of Common and PreferredVoting Stock shown
as
beneficially owned by them.
(2) Includes 1,500,0004
(3) Percentage is calculated based upon 48,427,515 shares of CommonVoting Stock
issuable upon exercise of
fully-vested nonqualified stock options. See CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS.
(3) Includes 1,000,000 shares of Common Stock issuable upon exercise of
fully-vested 1991 Management Options and 375,000 shares of Common Stock issuable
upon exercise of fully-vested 1994 Management Options.outstanding on March 30, 2000.
(4) Includes 1,050,000 shares of Common Stock issuable upon exercise of
fully-vested 1991 Management Options and 375,000 shares of Common Stock
issuable upon exercise of fully-vested 1994 Management Options.
(5) Represents shares held by Mr. Esposito's wife, Madeline Esposito, asminor children the ownership of which Sink
disclaims.
(5) Includes warrants to which Mr. Esposito disclaims beneficial ownership.
(6) Represents 100,000 shares of Common Stock issuable upon exercise of
fully-vested nonqualified stock options and 90,000 shares of Common Stock
issuable upon exercise of fully-vested 1994 Management Options.
(7) The Shareholder Committee may be deemed to constitute a group under
the rules of the Securities and Exchange Commission. The following table sets
forth the number of shares of the Company's Common and Preferred Stock owned
beneficially by the members of the Shareholder Committee, as well as the
7
percentage of outstanding Preferred Stock owned by each, and together as a
group, on October 30, 1996:
NAME COMMON STOCK PREFERRED STOCK
- - - ---- ------------ ---------------
Carl Shaifer
8515 Seminole Avenue
Philadelphia, PA 19118 565,000 14.1 (36.3%)
Joseph DeSaye 26,000 --
Max Scheuerer 312,000 --
Maureen and Lawrence Feeney 200,000 --
William and Evelyn Goatley
5925 Oakland Valley Drive
Rochester, MI 48306 134,600 9.2 (24.0%)
P.L. Anderson, Jr.
115 Watson Street
Danville, VA 24543 601,000acquire 1.8 (4.9%)
Harold E. Hamburg
4122 Shelbyville Road
Louisville, KY 40207 70,000 3.7 (9.7%)
David F. Beckman 272,600 --
Mark and Barbara Raifman
862 Woodmere Place
Woodmere, NY 11598 514,000 6.1 (16.1%)
Frank Harvey
619 Hallie Drive
Houston, TX 77024 145,000 2.5 (6.5%)
--------- ----
Total 2,840,200 37.4 (90.7%)
--------- ----
--------- ----
The foregoing table does not include shares of Common Stock obtainable upon
conversion of Preferred Stock, but does include 3.8 shares of Preferred Stock
obtainable upon exercise of warrants, as follows: Carl Shaifer, 1.4 shares;
William and Evelyn Goatley, 0.9 shares; P.L. Anderson, Jr., 0.3 shares; Harold
Hamburg, 0.4 shares; Mark and Barbara Raifman, 0.6 shares and Frank Harvey, 0.3
shares. In addition, on October 30, 1996, Gail A. Ramey, 115 Watson Street,
Danville, VA 24543, owned beneficially 2.5Stock.
(6) Includes 50 shares of Preferred Stock, which
includes 0.3Stock.
(7) Includes 66.5 shares obtainable upon exercise of warrants, or 6.5% of the
Preferred Stock outstanding on that date. Ms. Ramey, together with the holders
of Preferred Stock set forth in the foregoing table, represent all persons
known to the Company who own beneficially more than five percent of the
Preferred Stock on October 30, 1996. See also CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS.
(8) Does not include shares of Common Stock obtainable upon conversion of Preferred Stock.
(9)(8) Includes 3.856 shares of Preferred Stock obtainable upon exercise of
warrants.
(10) Includes 2,250,000 shares of Common Stock issuable upon exercise of
fully-vested 1991 Management Options, 100,000 shares of Common Stock issuable
8
upon exercise of fully-vested nonqualified options, and 915,000 shares of
Common Stock issuable upon exercise of fully-vested 1994 Management Options.
NOMINATION AND ELECTION OF DIRECTORS
At the Meeting, three directors are to be elected to hold office until the
next Annual Meeting of Shareholders and until their respective successors are
elected and qualified. Directors shall be elected by a plurality of the
combined number of votes attributable to the outstanding shares of the Company's
Common and Preferred Stock which are cast at the Meeting. It is the intention
of the persons named in the proxy, unless otherwise directed, to vote all
proxies in favor of the election to the Board of Directors of the nominees
listed below. The Board has no reason to believe that any of the nominees will
be unable or unwilling to be a candidate for election at the time of the
Meeting. If any nominee is unable or unwilling to serve, the persons named in
the proxy will use their best judgment in selecting and voting for a substitute
candidate or the Directors may reduce the size of the Board.
DIRECTOR NOMINEES
The Board of Directors has unanimously nominated Joseph DeSaye, Ralph V.
Esposito and Ronald W. Martignoni for election as directors at the Meeting.
This slate of nominees, if elected, would effect a change in control of the
Board of Directors as a result of the resignation, effective upon the holding of
the Meeting, of John A. Boylan and Fred E. Portner, two of the existing Board's
three Directors. The nomination of the new slate includes the nomination of two
new Directors, in addition to Mr. Martignoni, of which one nominee, Joseph
DeSaye, is a member of the Shareholder Committee. The nomination of the new
slate was made independently by the existing Board and not pursuant to the order
entered by the Chancery Court in the Delaware Proceedings.
Mr. Boylan's resignation is pursuant to certain severance arrangements that
are more fully described below, which include the termination of options held by
him to purchase 291,667 shares of Common Stock. For further information
concerning Mr. Boylan's severance arrangements, see EXECUTIVE COMPENSATION. Mr.
Portner's resignation is not subject to any separate terms or arrangements. In
connection with this Meeting, Mr. Martignoni has irrevocably agreed to the
cancellation of options to purchase 366,667 shares of Common Stock at an
exercise price of $1.25 per share. Upon their election, the Company intends to
award stock options to purchase 200,000 shares of Common Stock to each of
Messrs. DeSaye and Esposito, who have agreed to be nominated and to serve
subject only to the Company obtaining directors and officers insurance. The
Company has applied for and been issued such insurance, but may be unable,
because of its severely distressed financial condition, to
9
pay premiums on an ongoing basis, in which event such insurance would lapse.
The following table sets forth certain information concerning the nominees:
YEAR FIRST
YEAR FIRST BECAME AN
BECAME A EXECUTIVE
NAME AGE POSITION DIRECTOR OFFICER
---- --- -------- ---------- ----------
Joseph DeSaye........ 36 Nominee for Director -- --
Ralph V. Esposito.... 41 Nominee for Director -- --
Ronald W. Martignoni. 41 President, Chief 1992 1988
Executive Officer,
and Nominee for
Director
Joseph DeSaye has been Vice President of Operations and a director of
Fashion Marketing Inc. ("FMI"), Carteret, New Jersey, since 1981. FMI is a
sales, marketing and management company which serves international ocean and air
freight forwarders and provides management services for affiliated warehousing,
distribution and trucking companies. Mr. DeSaye serves on the board of
directors of certain affiliated companies: F.M.I. Trucking Inc. (since 1987), a
local import and domestic transportation company serving Pennsylvania, New
Jersey and Delaware; F.M.I. Express Corp. (since 1987), a line haul trucking
company serving the Eastern Seaboard as well as the Southern tier states to
California; and FMI International Corp. (since 1996), a warehousing and
distribution company formed subsequent to the dissolution of a jointly held
affiliate, DSL Atlantic Inc.
Ralph V. Esposito is the Chief Financial Officer and Treasurer of Gilman &
Ciocia, Inc., a financial services company which provides a wide range of
financial services, including preparation of tax returns, acting as an insurance
agent and mortgage broker and, through a subsidiary, JT Securities, Inc.,
providing securities broker/dealer and investment advisory services. Mr.
Esposito has served as Chief Financial Officer of Gilman & Ciocia, Inc. since
April 1994 and from September 1992 through December 1993. During the interim
period, from January 1994 through March 1994, Mr. Esposito was Chief Financial
Officer of Multiva Securities, a registered securities broker/dealer. Prior to
joining Gilman & Ciocia, Inc. in 1992, Mr. Esposito was Vice President of
Finance at Gabelli & Company, Inc., a registered securities broker/dealer.
10
Ronald W. Martignoni has been President and Chief Executive Officer of the
Company since October 1995. Mr. Martignoni was elected to the Company's Board
of Directors in April 1992 and served as Vice Chairman -- Finance from April
1992 until October 1995. Mr. Martignoni joined the Company as its Vice
President -- Finance and Administration in July 1988 and was elected to the
positions of Senior Vice President -- Finance, Chief Financial Officer and
Treasurer in November 1988, in which positions he served until October 1995. Mr.
Martignoni has also served as Assistant Secretary since November 1988.
The following table sets forth certain information concerning members of
the present Board of Directors who have resigned effective upon the holding of
this Meeting:
YEAR FIRST
YEAR FIRST BECAME AN
BECAME A EXECUTIVE
NAME AGE POSITION DIRECTOR OFFICER
---- --- -------- ---------- ----------
John A. Boylan....... 53 Chairman of the Board and 1988 1987
Director
Fred E. Portner...... 52 Director 1988 --
John A. Boylan was elected Chairman of the Board, President, and Chief
Executive Officer in April 1992. He resigned as Chairman in November 1994, while
continuing as a Director, and was reelected as Chairman in September 1995. He
resigned as President and Chief Executive Officer in October 1995. Mr. Boylan
initially joined the Company as its Senior Vice President -- Franchise
Development in November 1987, in which position he served until June 1990, and
was elected a Director in November 1988. From June 1990 until April 1992, Mr.
Boylan served as the Company's Senior Vice President -- Business Development.
Fred E. Portner has served as a Director since July 1988. Since January
1992, Mr. Portner has served as President of Portner Consulting Services, a
mortgage banking consulting company, wholly-owned by Mr. Portner. Mr. Portner
also served as Executive Vice President and Chief Financial Officer of M.D.S.
Bankmark Company, a residential mortgage company, from September 1993 to January
1996. From June 1990 to December 1991, Mr. Portner served as Executive Vice
President of Directors Mortgage Loan Corporation, a California mortgage banking
company.
Directors of the Company hold their offices until the next annual meeting
of the Company's shareholders, until their successors have been duly elected and
qualified or until their earlier resignation, removal from office or death.
11
BOARD MEETINGS
The Company does not have standing audit, nominating or compensation
committees of the Board of Directors, or committees performing similar
functions. During 1995, the Board of Directors held 15 meetings.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
ELECTION OF MESSRS. DESAYE, ESPOSITO AND MARTIGNONI.
EXECUTIVE OFFICERS
In addition to those directors listed above who are executive officers of
the Company in the positions indicated, the following person is also an
executive officer of the Company:
YEAR FIRST
BECAME AN
EXECUTIVE
NAME AGE POSITION OFFICER
---- --- -------- ----------
Lorraine E. Cannon... 45 Chief Financial Officer, 1989
Treasurer and Secretary
Lorraine E. Cannon has been Chief Financial Officer and Treasurer since
October 1995. Ms. Cannon joined the Company as its Controller in January 1989
and was elected to the position of Secretary in August 1989.
Officers of the Company serve at the pleasure of the Board of Directors and
until the first meeting of the Board of Directors following the next annual
meeting of the Company's shareholders and until their successors have been
chosen and qualified or until their earlier resignation, removal from office or
death.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Mr. Portner inadvertently failed to file a Form 5 for 1994, as required by
Section 16(a) of the Securities Exchange Act of 1934, with respect to the
expiration of an option in accordance with its terms during 1994, and
inadvertently failed to file a Form 4, as required by the Exchange Act, with
respect to the grant of an option in 1995. Both the expiration and grant were
subsequently reported by Mr. Portner in a late Form 5 filed in April 1996.
EXECUTIVE COMPENSATION
The following table sets forth certain information relating to the
compensation awarded to, earned by or paid to the Chief Executive Officer andfederal securities laws require the Company's otherdirectors and executive
officers, whose
12
total annual salary and bonus exceeded $100,000 during 1995 (the "Named
Executive Officers") for services in all capacities during 1995, 1994 and 1993.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------ ------------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL COMPENSATION OPTIONS COMPENSATION
POSITION YEAR SALARY($) ($) (#) ($)(3)
- - - ------------------ ---- --------- ------------ ------------ ------------
John A. Boylan(1) 1995 $ 130,000 -0- $ 1,030
Chairman of the Board 1994 130,000 375,000 1,030
1993 125,000 $ 12,587(2) -0- 1,030
Ronald W. Martignoni 1995 115,914 -0- 529
President and Chief 1994 116,346 375,000 529
Executive Officer 1993 120,192 -0- 569
- - - ----------------
(1) Mr. Boylan served as President and Chief Executive Officer until October
1995.
(2) Includes automobile benefits of $10,315.
(3) Includes term life insurance premiums paid by the Company.
In April 1992, the Company entered into severance agreements with three
officers, including Messrs. Boylan and Martignoni, which provide, under certain
circumstances, that the Company will pay these officers upon their severance an
amount equal to one full year's base salary in the event that their affiliation
with the Company ceases within either one or two years (depending upon the
circumstances) following a "change in control" of the Corporation, as that term
is defined under the Company's Stock Option and Appreciation Rights Plan of
1987. In November 1993, the Board of Directors adopted amendments to the
severance agreements for Messrs. Boylan and Martignoni,persons who are also directors
of the Company. The amendments principally increase the amount to be paid on
severance from one full year's base salary to two full years' base salary, as
well as contain certain other provisions, including a provision for the
continued registration of option stock following termination of their
affiliation with the Company.
On August 15, 1996, the Company entered into an agreement with Mr. Boylan,
pursuant to which he resigned from employment and from all positions with the
Company, while remaining a director and Chairman of the Board until this
Meeting, released the Company from all obligations and liabilities, including
any obligations under the severance agreement between him and the Company
referred to above, and agreed to the cancellation of fully-vested options to
13
purchase 291,667 shares of Common Stock at an exercise price of $1.25 per share,
and the Company entered into an eleven-month consulting agreement with Mr.
Boylan, under which he receives $3,500 on a bi-weekly basis, has use of a car,
already under lease by the Company, and receives health insurance benefits for a
period of one year.
STOCK OPTIONS HELD AT FISCAL YEAR-END
The following table sets forth the aggregate options to purchase shares of
Common Stock of the Company held by the Named Executive Officers at December 31,
1995. No options were exercised during the year ended December 31, 1995 by any
of the Named Executive Officers, and there were no in-the-money unexercised
options held by any of the Named Executive Officers at December 31, 1995.
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
OPTIONS HELD AT
DECEMBER 31, 1995(#)(1)
--------------------------
NAME EXERCISABLE UNEXERCISABLE
- - - ---- ----------- -------------
John A. Boylan 1,666,667 -0-
Ronald W. Martignoni 1,791,667 -0-
- - - ----------------
(1) Following cancellation of certain existing options (see NOMINATION AND
ELECTION OF DIRECTORS), at October 30, 1996, Messrs. Boylan and Martignoni held
options to purchase 1,375,000 and 1,425,000 shares of Common Stock,
respectively.
COMPENSATION OF DIRECTORS
The Company currently has no standard arrangements pursuant to which
non-employee Directors are compensated for services provided as Directors.
On September 27, 1995, Mr. Portner, a non-employee Director, was granted a
nonqualified option to purchase 100,000 sharesown more than ten percent of the Company's Common Stock,
exercisable on or after September 27, 1996, at an exercise price of $0.17 per
share, the price of the Company's Common Stock on the date of grant, which
option expires on September 27, 2000.
14
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
John E. Maioriello, Chairman of the Board and a principal stockholder of JD
Store Equipment, Inc. ("JD"), is deemed under rules ofcommon
stock to file with the Securities and Exchange Commission initial reports of
ownership and reports of changes in ownership of any securities of the Company.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to be the beneficial ownerCompany, of more than five percentwhich there were none, all of the Company's
Commondirectors, executive officers and Preferred Stock voting together. See SECURITIES OWNERSHIPgreater-than-ten percent beneficial owners
made all required filings on a timely basis.
PROPOSAL 2: APPROVAL OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
On November 4, 1994, the Company and JD entered into a letter of intent
(the "JD Letter of Intent"), providing for a merger of the Company and JD (the
"JD Merger"). In connection with the JD Letter of Intent, JD paid $100,000 to
the Company, paid an additional $100,000 to the Company to secure the right of
the Company to negotiate the acquisition of another company and arranged for the
issuance on its credit of a $100,000 letter of credit to a vendor of the
Company, which letter of credit expired in accordance with its terms on April
15, 1995. Upon expiration of the letter of credit, Mr. Maioriello personally
guaranteed a line of credit provided by said vendor to the Company in an amount
of approximately $250,000.
In accordance with the JD Letter of Intent and in contemplation of the JD
Merger, John Maioriello was appointed Chairman of the Board of the Company. In
connection with his appointment, on November 29, 1994, Mr. Maioriello was
granted an option to purchase 1,500,000 shares of the Company's Common Stock at
an exercise price of $0.75 per share (the fair market value on the date of
grant), which option is fully vested. Also in contemplation of the JD Merger,
the Company and JD incurred certain costs in connection with the Company's plans
to acquire certain retail video store chains.
In connection with the JD Letter of Intent, the Company and JD also reached
an agreement for the payment of finder's fees, in the event the JD Merger was
not consummated, with respect to any completed merger or acquisition which Mr.
Maioriello was responsible for having introduced to the Company from the date of
the JD Letter of Intent until such time as it was publicly announced that the JD
Merger would not be consummated (September 11, 1995). Any finder's fees paid
are to consist of warrants to purchase shares of the Company's Common Stock in
an amount based upon 10% of the consideration issued or paid by the Company in
said merger or acquisition. The exercise price of the warrants is to be at a
20% discount to the bid price of the Company's Common Stock, generally
calculated on the date of the letter of intent for said merger or acquisition.
The warrants are to have a five-year term and are to include piggy-back
registration rights.
The Company and JD entered into an Agreement and Plan of Reorganization and
Merger (the "Merger Agreement"), dated as of
15
July 19, 1995, as amended, which provided, INTER ALIA, for the JD Merger,
through the merger of a newly formed California corporation, formed as a
wholly-owned subsidiary of the Company, with and into JD, as a result of which,
JD, as the surviving corporation in the merger, would become a wholly-owned
subsidiary of the Company. On September 8, 1996, JD notified the Company that
it was terminating the Merger Agreement in accordance with its terms and, in
connection therewith, Mr. Maioriello resigned as Chairman of the Board of the
Company.
Previously, on December 6, 1994, JD agreed that, in the event the JD Merger
was not consummated, JD would pay to the Company all legal fees billed to the
Company by the law firm retained in connection with the Company's acquisition
program. That law firm resigned as counsel to the Company shortly after JD
notified the Company that it was terminating the Merger Agreement and, in
accordance with its agreement with JD, the Company has made a demand for payment
upon JD for all fees and disbursements in the amount of $793,281 billed to it by
the law firm, of which $439,482 has to date been paid by the Company.
The Company, in connection with a private offering of units of preferred
stock, which terminated in September 1995, issued a total of: (1) 34 shares of
the Company's Preferred Stock, convertible (subject to shareholder approval)
into 1,360,000 shares of common stock, (ii) 5% unsecured promissory notes in the
aggregate principal amount of $680,000 due in September 1997, with interest
payable annually in cash or, at the election of the Company, in shares of
Preferred Stock (valued at $.25 per share), and with principal and any accrued
but unpaid interest convertible into Preferred Stock (valued at $.25 per share)
as the sole remedy of the holder in the event the Company defaults in the
payment of principal or is otherwise in default, and (iii) three-year warrants
to purchase 10.2 shares of Preferred Stock at an exercise price of $10,000 per
share, convertible (subject to shareholder approval) into a total of 408,000
shares of common stock. Certain of the members of the Shareholder Committee,
Carl Shaifer, William and Evelyn Goatley, P.L. Anderson, Jr., Harold E. Hamburg,
Mark and Barbara Raifman and Frank Harvey, purchased in the private placement a
total of 30.5 shares of Preferred Stock, 5% unsecured promissory notes in the
aggregate principal amount of $610,000, and three-year warrants to purchase 3.8
shares of Preferred Stock. See SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT.
On July 12, 1994, Max Scheuerer, a member of the Shareholder Committee,
loaned the Company $50,000, and on December 7, 1994, loaned the Company
$100,000, which loans are evidenced by two 10% promissory notes. The aggregate
principal amount owing on the promissory notes was reduced to $120,000 from
$150,000 as a result of a $30,000 payment by the Company on November 30, 1995,
in
16
response to a lawsuit filed by Mr. Scheuerer seeking collection of said notes.
In connection with such payment, Mr. Scheuerer discontinued the lawsuit without
prejudice and agreed not to reinstate it for any remaining balance owing on the
notes prior to March 15, 1996. Since that time, the Company has made payments
to Mr. Scheuerer totaling $6,988.74. On September 18, 1996, Mr. Scheuerer
filed a new lawsuit against the Company in the Court of Common Pleas of Bucks
County, Pennsylvania, captioned MAX SCHEUERER V. CHOICES ENTERTAINMENT
CORPORATION, Civil Action No. 96006871, in which Mr. Scheuerer is seeking a
judgment in the amount of $146,298 (plus future interest, costs and any other
appropriate damages), which amount allegedly represents $120,000 of principal
and $26,298.35 of interest then owed by the Company to Mr. Scheuerer under the
two 10% promissory notes.
RATIFICATION OF APPOINTMENT
OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed the Company's present independent
auditors, KPMG Peat Marwick LLP, as the Company's independent auditors for the
fiscal year ending December 31, 1996. This appointment will be submitted to the
shareholders for ratification at the Meeting.
The submission of the appointment of KPMG Peat Marwick LLP for ratification
by the shareholders is not required by law or by the By-laws of the Company.
The Board of Directors is nevertheless submitting it to the shareholders to
ascertain their views. If the shareholders do not ratify the appointment, the
selection of other independent public accountants will be considered by the
Board of Directors.
Representatives of KPMG Peat Marwick LLP are expected to be present at the
Meeting to respond to appropriate questions and will have the opportunity to
make a statement if they so desire.AMENDMENT TO THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR RATIFICATION
OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE COMPANY'S INDEPENDENT
AUDITORS.
PROPOSAL TO AMEND CERTIFICATE OF INCORPORATION The Company's Certificate of Incorporation currently authorizes the
issuance of 5,000 shares of preferred stock, $0.01 par value, which may be
issued from time to time in one or more series by the Company's Board of
Directors without shareholder approval. The Company's Board of Directors may
also fix for any series the dividend rate, redemption price, liquidation or
dissolution preferences, conversion rights, voting rights and other preferences
and privileges.
17
TO
INCREASE NUMBER OF AUTHORIZED SHARES
The Board of Directors has previously approved for issuance up to 500
shares of its presently authorized preferred stock, which has been designated
"Series C Preferred Stock," of which 37.4 shares are presently outstanding.
Underrecommends the termsapproval of the Preferred Stock, each share will become convertible, at
the option of the holder thereof, into 40,000 shares of the Company's common
stock, subject to adjustment, only after receipt of approval by the Company's
shareholders of anproposed amendment to
Article Sixth of the Company's Certificate of Incorporation increasing the
number of authorized shares of common stock from fifty million (50,000,000) as
set forth in the Company's Common Stock (as
provided by the termsamended Certificate of the Preferred Stock). At the time of the issuance of
the outstanding Preferred Stock, the Company stated that it was its intentionIncorporation, to schedule a meeting of shareholders to vote upon such an increase intwo hundred million
(200,000,000) and increasing the number of authorized shares of preferred stock
from five thousand (5,000) to fifty million (50,000,000). The full text of
amended Article Sixth is attached hereto as Exhibit A. This action must be
approved by a majority of the Company's Common Stock.
In relevant part,votes cast.
PURPOSES OF AMENDMENT. The Company is seeking stockholder approval of the
termsproposed amendment to provide additional capital stock which may be issued by
the Company upon: (i) the exercise of convertible securities issued and
outstanding and which may in the future be issued and outstanding, (ii) the
direct grant of stock to key employees, (iii) the exercise of qualified and non-
qualified stock options, as previously granted and may be granted in the future
(iv) the consummation of a merger or acquisition the consideration for which is
securities of the Company, in whole or in part; and generally to provide
additional flexibility to management in adjusting the capitalization of the
Company in light of its future capital requirements. Currently, of the
50,000,000 shares of common stock authorized, 49,274,356 is either issued or
reserved for issuance upon conversion of the Preferred Stock (Amendment No. 1 to
CertificateStock.
EFFECTS OF AMENDMENT. The Company believes that the approval by the
stockholders will reinforce the validity of Designations of Series C Preferred Stock) presently provide, with
respect to conversion, as follows:
3. CONVERSION. The Series Cthe Company's outstanding Preferred
Stock shall not be
convertible when issued, but shall automatically become convertible
intoby providing enough authorized common stock to exchange for the
outstanding Preferred Stock.
If the proposed amendment is adopted, the additional shares of Common Stock (atcommon and
preferred stock authorized would thereafter be subject to issuance from time to
time by the rateBoard of 40,000 shares of Common
Stock for every one share of Series C Preferred Stock (the "Conversion
Rate")) uponDirectors without shareholder approval and without
preemptive purchase rights by the filing of an amendment to the Corporation's
Certificate of Incorporation (the "Amendment") which increases the
numberstockholders. The issuance of authorized
shares of Common Stock bycommon and preferred stock may result in the dilution of the equity
interests of the Company's then existing stockholders. This would be true in the
event the Company issued shares of common stock in return for consideration
having a number equal to or
greaterfair value of less than the sumbook value per share of (i) 40,000 multiplied by the numbercommon stock on
the date of then
outstanding sharesissuance.
5
The overall effect of Series C Preferred Stock, plus (ii) that numberan issuance of additional shares of Common Stock, ifcommon and
preferred stock and the existence of certain provisions contained in the
Company's Certificate of Incorporation and By-Laws may be to render more
difficult the accomplishment of any needed to be reserved
for issuance uponattempted merger, takeover or other change
in control affecting the conversion or exercise of all other then
outstanding convertible or exercisable securitiesCompany and the removal of the Corporation.
Upon filingCompany's incumbent
Board of Directors and management. However, the Amendment,Board of Directors does not view
the number of shares approved for
issuanceincrease in authorized common and preferred stock as Series C Preferred Stock shall automatically be decreased
from 500an anti-takeover
measure.
Presently the Company has no plans to a number equaling the number of then outstanding shares of
Series C Preferred Stock (thus preventing the issuance of anyissue additional shares of Series C Preferred Stock).either
common or preferred stock.
The following
provisions shall apply afterBoard of Directors recommends that the Series C Preferred Stock becomes
convertible:
[Provisions relating to conversion then follow]
At the time of the designation of the Preferred Stock, its conversion was
made contingent upon shareholderstockholders vote FOR approval of
an amendment of the Certificate of
Incorporation (increasing the authorized common stock), because it was
contemplated, at that time, that the Company would be issuing Preferred Stock in
such amounts, in connection with its acquisition program, that it would
18
not have sufficient shares of Common Stock authorized for issuance upon
conversion. However, because of the discontinuance of its acquisition program,
the Company has in excess of 13 million shares of Common Stock authorized which
are neither outstanding nor reserved for issuance upon the conversion or
exercise of convertible or exercisable securities. For this reason, the Board
believes that there is no longer any basis for making conversion subject to
increasing the authorized Common Stock or in authorizing additional Common
Stock to permit such conversion, and has recommended that the Preferred Stock
be amended to delete this provision.
The terms of the Preferred Stock, stated in relevant part above, also
provide, upon the filing of an amendment to the Certificate of Incorporation described therein, increasing the authorized Common Stock, that the number of
shares of Series C Preferred Stock would automatically be decreased from 500 to
a number equaling the number of then outstanding shares of Preferred Stock. The
Board believes that this provision should be deleted because there are presently
outstanding convertible and exercisable securities which may be converted into
or exercised to acquire shares of Preferred Stock, which securities themselves
contain anti-dilution provisions. It is therefore not possible at this time to
determine how many shares of Preferred Stock will become outstanding or even the
maximum number that may become outstanding for purposes of effecting any
reduction in the number of
authorized shares of Preferred Stock.shares.
PROPOSAL 3: APPROVAL OF AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO CHANGE
THE NAME OF THE CORPORATION TO CECS CORP.
The Board does
not intend or view deletion of this provision as an anti-takeover measure, and
has no present plans calling for issuance of any additional shares of Series C
Preferred Stock other than pursuant torecommends the terms of currently outstanding
convertible and exercisable securities.
For the reasons set forth above, and in order to facilitate and permit
conversionapproval of the Preferred Stock, the Board has approved anproposed amendment to
Article Second of the Company's Certificate of Incorporation to permit conversion of Preferred Stock
without any increase in authorized Common Stock, and with no reduction inchanging the authorized shares of Preferred Stock from 500 to that number presently
outstanding, and has recommended its approval by the stockholders.
The amendment, as proposed, amends and restates the termsname
of the Preferred
Stock, stated in relevant part above,corporation to read in their entiretyCECS Corp. The full text of amended Article Second is
attached hereto as follows:
3. CONVERSION. The Series C Preferred Stock is convertible into
shares of Common Stock at the rate of 40,000 shares of Common Stock
for every one share of Series C Preferred Stock (the "Conversion
Rate"). The following provisions shall apply with respect to
conversion:
19
[Provisions relating to conversion then follow: no change other than
conforming changes]
The affirmative vote of the holders of at leastExhibit B. This action must be approved by a majority of the
combined
numbervotes cast.
PURPOSES OF AMENDMENT. The Company is seeking stockholder approval of votes attributablethe
proposed amendment to change the name of the corporation to CECS Corp. primarily
to reflect the fact that the Company has changed the nature of its business from
that of a video cassette retail rental outlet to that of a technology holding
company. Further, the company wishes to re-establish itself as a corporate
entity without the goodwill which may otherwise be associated with the old name
Choices Entertainment Corporation. The Company does not believe that there is
any particular reason, given the nature of its business, why it should be
concerned with or otherwise invest in continuing or building the name of the
corporation as a "brand name".
EFFECTS OF AMENDMENT. The Company believes that the effects of the name
change will be positive in that it permits the Company to re-establish itself as
a newly defined operating enterprise. The Company anticipates that adverse
effects of the amendment will be minimal since the legal effect of the name
change will not alter any of the Company's legal obligations or entitlements and
since the goodwill associated with the old name is not a valuable asset of the
corporation. Finally, the costs associated with the change of name will be
minimal since the Company currently does not have any inventories of corporate
stationery, printed forms or other similar materials which must be replaced and
since the Company already planned to replace the old stock certificates which
still bear the name of Datavend, Inc.
The Board of Directors recommends that the stockholders vote FOR approval of
the amendment to the outstandingCertificate of Incorporation changing the name of the
corporation to CECS Corp.
6
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The table below shows, for the last three fiscal years, compensation paid to
the Company's Chief Executive Officer and the three most highly paid executive
officers serving at fiscal year end whose total compensation exceeded $100,000.
We refer to all these officers as the "Named Executive Officers."
ANNUAL COMPENSATION
FISCAL SALARY BONUS OTHER ANNUAL
NAME AND PRINCIPAL POSITION YEAR ($) ($) COMPENSATION ($)
- --------------------------- -------- -------- -------- ----------------
James D. Sink............................................ 1999 0 0 0(1)
Chairman of the Board 1998 0 0
1996 0 0
Thomas Renna............................................. 1999 0 0 0(2)(3)
Vice President and 1998 Director 1998 0 0 0
1997 N/A
Tracy M. Shier........................................... 1999 0 0 0(4)
President/CEO 1998 N/A
Director 1997 N/A
- ------------------------
(1) Mr. Sink served as Chairman of the Board of directors until recently when
the By-Laws of the Company were changed eliminating the position as
Chairman. Under the old by-laws, Mr. Sink may have been an executive officer
of the Company. Excludes the value of 2,400,000 shares of restricted Common
Stock issued to Mr. Sink in satisfaction of an obligation fixed by the Board
of Directors during 1999. See "Certain Relationships and Related
Transactions."
(2) Prior to this year, Mr. Renna was not an employee of the Company. Mr. Renna
has received compensation under a consulting agreement. Additionally,
amounts shown exclude the value of 1,200,000 shares of restricted Common
Stock issued to Mr. Renna in partial satisfaction of an obligation fixed by
the Board of Directors during 1999. See "Certain Relationships and Related
Transactions."
(3) Represents amounts paid to Mr. Renna as an independent contractor.
(4) Amounts shown exclude the value of 1,200,000 shares of restricted Common
Stock issued to Mr. Shier in partial satisfaction of an obligation fixed by
the Board of Directors during 1999. See "Certain Relationships and Related
Transactions."
1987 STOCK OPTION AND APPRECIATION RIGHTS PLAN (THE "1987 PLAN")
The Company's 1987 Stock Option and Appreciation Rights Plan (the "1987
Plan") (the "Plan") provides for the granting of stock bonuses, stock options,
stock appreciation rights, and other stock-based awards. The Plan is
administered by the Board of Directors which has the right to grant awards to
eligible participants and to determine the terms and conditions of such grants,
including, but not limited to, the vesting schedule and exercise price of the
awards. All directors, officers, consultants and other employees are eligible to
receive awards under the Plan.
OPTION GRANTS IN THE LAST FISCAL YEAR
During the last fiscal year, no options were granted to any of the Named
Executive Officers.
7
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
During the last fiscal year, none of the Named Executive Officers held
options to purchase shares of the Company's Common StockStock.
REPORT OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
During the last fiscal year, the officers and Preferred Stock entitleddirectors of the Company
served without compensation. In the future, the Board of Directors will be
responsible for establishing compensation policy and administering the
compensation programs of the Company's executive officers.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There was no Compensation Committee in 1999. See "Certain Relationships and
Related Transactions." below
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In August 1999, the Company's Board of Directors passed a resolution
expressly recognizing the obligation of the Company to vote thereon is requiredcompensate each of Jim
Sink, George Pursglove, Thomas Renna and Tracy Shier for services rendered and
to be rendered to the Company in connection with the change of control of the
Company and the maintenance of it as an existing, reporting corporation.
Pursuant to that resolution, the Board fixed the obligation to each of the named
individuals at $120,000 and gave each the option to take some part or the entire
amount in securities of the Company. On December 29, 1999 the Board of Directors
of the Company passed a resolution instructing the Company's transfer agent to
issue restricted shares of the Company's common stock to the named individuals,
in an amount of shares and in exchange for release of an amount of the Company's
obligation as follows: Jim Sink--2,400,000 shares--$120,000; George
Pursglove--1,200,000 shares--$60,000; Thomas Renna--1,200,000 shares--$60,000;
and Tracy Shier--1,200,000 shares--$60,000. At or about the time of the adoption
of the proposed amendment. THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR
ADOPTIONDecember 29th resolution, the price of the common stock was approximately
$.05 per share.
SHAREHOLDER PROPOSALS
Under Rule 14a-8(3) of the Securities and Exchange Commission, stockholder
proposals intended for inclusion in next year's proxy statement must be directed
to the Corporate Secretary at Choices Entertainment Corporation, 121 Vine
Street, #1903, Seattle, Washington 98121, and must be received by January 26,
2001. Any stockholder proposal for next year's annual meeting submitted after
January 26, 2001 will not be considered filed on a timely basis with the Company
under SEC Rule 14a-4(c)(1). For proposals that are not timely filed, the Company
retains discretion to vote proxies it receives. For proposals that are timely
filed, the Company retains discretion to vote proxies it receives provided
(1) the Company includes in its proxy statement advice on the nature of the
proposal and how it intends to exercise its voting discretion and (2) the
proponent does not issue a proxy statement.
INDEPENDENT AUDITORS
Miller and Co. LLP, Certified Public Accountants, were the independent
auditors for the Company for the most recent fiscal year. The Audit Committee of
the Board of Directors has not convened in 2000 for the purpose of selecting
independent auditors for the 2000 fiscal year. Representatives of Miller and Co.
LLP will not be present at the meeting.
8
SOLICITATION OF THE PROPOSED AMENDMENT.PROXIES
The proxy card accompanying this proxy statement is solicited by the Board
of Directors. Proxies may be solicited by officers, directors and other
employees of the Company, none of whom will receive any additional compensation
for their services. Solicitations of proxies may be made personally, or by mail,
telephone, telegraph, facsimile or messenger. The Company will pay persons
holding shares of common stock in their names or in the names of nominees, but
not owning such shares beneficially, such as brokerage houses, banks and other
fiduciaries, for the expense of forwarding soliciting materials to their
principals. All costs of soliciting proxies will be paid by the Company.
OTHER MATTERS
NoThe Company is not aware of any other mattersbusiness to be acted upon at the
meeting. If other business requiring a vote of the shareholders are expected tostockholders should come
before the Meeting. However, if other matters should properly come beforemeeting, the Meeting, it is the intentionholders of the persons named in the enclosed proxy toproxies will vote in accordance with
their best judgment on such matters.
EXPENSES OF SOLICITATION
The solicitation of proxies being on behalfjudgment.
May 3, 2000
A copy of the BoardCompany's Annual Report on Form 10-KSB for fiscal year 1999,
containing information on operations, filed with the Securities and Exchange
Commission is available upon written request. Please write to: Investor
Relations, Choices Entertainment Corporation, 121 Vine Street, #1903, Seattle,
Washington 98121
EXHIBIT A
AMENDED TEXT OF ARTICLE SIXTH:
"SIXTH: The total number of Directors,shares capital stock of all expenses in connection therewith will be paid byclasses which the
Company. Request will be
madeCorporation has authority to issue is Two Hundred Fifty Million (250,000,000)
shares, having an aggregate par value of brokerage housesTwo Million Five Hundred Thousand
Dollars ($2,500,000), and other custodians, nomineesdivided into Two Hundred Million (200,000,000) shares
of common stock with a par value of One Cent ($0.01) per share and fiduciaries to
forward the solicitation material at the expenseFifty Million
(50,000,000) shares of preferred stock with a par value of One Cent ($0.01) per
share."
EXHIBIT B
AMENDED TEXT OF ARTICLE SECOND:
"SECOND: The name of the Company to the
beneficial owners of stock held of record by such persons.
SHAREHOLDER PROPOSALS
Proposals by shareholders intended to be presented at the next Annual
Meeting of Shareholders of the Company must be received by the Company at its
executive offices at 836 W. Trenton Avenue, Morrisville, PA 19067, on or before
July 23, 1997, to be included in the Company's proxy statement and form of proxy
for the 1997 annual meeting.
----------------------
THE COMPANY WILL PROVIDE TO EACH PERSON SOLICITED, WITHOUT CHARGE EXCEPT
FOR EXHIBITS, UPON REQUEST IN WRITING, A COPYCorporation hereinafter is:
CECS CORP."
9
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF ITS ANNUAL REPORT ON FORM
10-KSB, INCLUDING THE FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES, AS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1995. REQUESTS SHOULD BE DIRECTED TO LORRAINE E. CANNON, CHIEF
FINANCIAL OFFICER,STOCKHOLDERS
CHOICES ENTERTAINMENT CORPORATION
836 W. TRENTON AVENUE,
MORRISVILLE, PENNSYLVANIA 19067.
By Order ofMAY 26, 2000
V Please Detach and Mail in the Board of Directors
November 20, 1996 Ronald W. Martignoni
Chief Executive Officer
20
(FRONT SIDE OF PROXY CARD)
CHOICES ENTERTAINMENT CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS - DECEMBER 20, 1996
The undersigned shareholder of CHOICES ENTERTAINMENT CORPORATION (the
"Company"), revokingEnvelope Provided V
A /X/ Please mark your
vote as in this
example
WITHHOLD
FOR AUTHORITY
all previous proxies, hereby appoints Lorraine E. Cannon
and Bonnie J. Neil, and each of them acting individually, as the attorney and
proxy of the undersigned, with full power of substitution,nominees to vote for all sharesnominees
listed at right listed at right
1. Election of
stock of the Company which the undersigned would be entitleddirectors. / / / /
NOMINEES: Tracy M. Shier
Cornelia F. Eldridge
Patrick Howard
James D. Sink
Thomas Renna
To withhold authority to vote
if
personally present atfor any individual nominee,
please write that nominee's name
on the Annual Meeting of Shareholders of the Company,space provided below.
- ---------------------------------
PROPOSAL 2. Approve Amendment to be
held at the Company's offices, at 836 W. Trenton Avenue, Morrisville,
Pennsylvania on December 20, 1996, at 10:00 a.m., and at any adjournment
thereof; provided that said proxies are authorized and directed to vote as
indicated with respect to the following matters:
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
(BACK SIDE OF PROXY CARD)
[X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE
FOR ALL NOMINEES WITHHOLD
(EXCEPT AS AUTHORITY
MARKED TO THE TO VOTE FOR ALL
CONTRARY BELOW) NOMINEES
1. ELECTION OF [ ] [ ] NOMINEES: Joseph DeSaye
DIRECTORS Ralph V. Esposito
Ronald Martignoni
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE(S), WRITE NAME(S) ON LINE BELOW:
- - - -----------------------------------------------------------
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS.Certificate FOR AGAINST ABSTAIN
[ ] [ ] [ ]of Incorporation increasing the number
of authorized shares / / / / / /
PROPOSAL 3. PROPOSAL TO AMEND CERTIFICATE OF INCORPORATION.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]Approve the Amendment to the
Certificate of Incorporation changing
the name of the corporation / / / / / /
4. OTHER MATTERS. In their discretion, the Proxiesproxies are authorized to vote upon such other
business as mayany matter to
properly come before the meeting.
I plan to attend the meeting. / /
THIS PROXY, WHEN PROPERLY SIGNED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF THE NOMINEES NAMED IN PROPOSAL 1 AND FOR PROPOSALS
2 AND 3.
IMPORTANT - PLEASE SIGN AND RETURN THIS PROXY PROMPTLY.
Signature(s__________________________________________ Date _________________
note: When shares are held by joint tenants, both should sign. When signing
as attorney, executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate name by
President or other authorized officer. If a partnership, please sign in
partnership name by an authorized person.
PROXY
For the Annual Meeting.Meeting of the Stockholders of
CHOICES ENTERTAINMENT CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. UNLESS OTHERWISE
SPECIFIED, THE SHARES REPRESENTED HEREBY WILLDIRECTORS
The undersigned hereby appoints Tracy M. Shier and Thomas Renna, and each of
them, with full power of substitution, as proxies to vote the shares which
the undersigned is entitled to vote at the Annual Meeting of Stockholders to
be held on May 26, 2000 and at any adjournment thereof.
(CONTINUED AND TO BE VOTED "FOR" ELECTION OF
NOMINEES FOR DIRECTORS LISTED AT LEFT HEREOF, "FOR" RATIFICATION OF THE
APPOINTMENT OF KPMG PEAT MARWICK LLP, AS THE COMPANY'S INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS FOR 1996 AND "FOR" THE PROPOSAL TO AMEND THE COMPANY'S
CERTIFICATE OF INCORPORATION. THIS PROXY ALSO DELEGATES DISCRETIONARY AUTHORITY
TO THE PROXY HOLDERS NAMED WITH RESPECT TO ANY OTHER BUSINESS WHICH MAY PROPERLY
COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
- - - ------------------------------------- --------------
SIGNATURE OF SHAREHOLDER DATE
- - - -------------------------------------- --------------
SIGNATURE OF SHAREHOLDER DATE
NOTE: PLEASE SIGN THIS PROXY EXACTLY AS NAME(S) APPEARSIGNED ON YOUR STOCK
CERTIFICATE. WHEN SIGNING AS ATTORNEY-IN-FACT, EXECUTOR, ADMINISTRATOR, TRUSTEE
OR GUARDIAN, PLEASE ADD YOUR TITLE AS SUCH, AND IF SIGNER IS A CORPORATION,
PLEASE SIGN WITH FULL CORPORATE NAME BY A DULY AUTHORIZED OFFICER OR OFFICERS
AND AFFIX THE CORPORATE SEAL. WHERE STOCK IS ISSUED IN THE NAME OF TWO (2) OR
MORE PERSONS, ALL SUCH PERSONS SHOULD SIGN.REVERSE SIDE)