SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant /_/
Filed by a Party other than the Registrant /X/
Check the appropriate box:
/X/ Preliminary Proxy Statement
/_/ Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/_/ Definitive Proxy Statement
/_/ Definitive Additional Materials
/_/ Soliciting Material Under Rule 14a-12
SIMON WORLDWIDE, INC.
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(Name of Registrant as Specified in Its Charter)
EVEREST SPECIAL SITUATIONS FUND L.P.
MAOZ EVEREST FUND MANAGEMENT LTD.
ELCHANAN MAOZ
MERON MANN
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(Name of Persons(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/_/ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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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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Proposed maximum aggregate value of transaction:
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Total fee paid:
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/_/ Fee paid previously with preliminary materials:
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/_/ Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid
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Form, Schedule or Registration Statement No:
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Filing Party:
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Date Filed:
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PRELIMINARY COPY SUBJECT TO COMPLETION
DATED JULY 5, 2007
EVEREST SPECIAL SITUATIONS FUND L.P.
July 5, 2007
Dear Fellow Stockholder:
Everest Special Situations Fund L.P. ("Everest" or "we") and certain of
its affiliates are the beneficial owners of an aggregate of 2,158,732 shares of
common stock, $.01 par value (the "Common Stock") of Simon Worldwide, Inc. (the
"Company"), representing approximately 12.9% of the outstanding Common Stock of
the Company. We believe the current Board of Directors of the Company is not a
true representation of the current composition of the beneficial owners of the
Common Stock as discussed in the attached Proxy Statement. We are therefore
seeking your support at the annual meeting of stockholders (the "Annual
Meeting") scheduled to be held at the Los Angeles Airport Marriott Hotel, 5855
W. Century Boulevard, Los Angeles, California, on July 19, 2007, at 10:00 a.m.
(local time), to consider and act on the following matters:
1. TO ELECT EVEREST'S DIRECTOR NOMINEES, MERON MANN AND ELCHANAN
MAOZ TO SERVE AS CLASS I DIRECTORS OF THE COMPANY, IN OPPOSITION
TO THE COMPANY'S CLASS I DIRECTOR NOMINEES, TO SERVE FOR TWO-YEAR
TERMS.
2. TO ADOPT A NON-BINDING RECAPITALIZATION PROPOSAL SUBMITTED BY
EVEREST WHEREIN ALL ISSUED AND OUTSTANDING SHARES OF SERIES A1
SENIOR CUMULATIVE PARTICIPATING CONVERTIBLE PREFERRED STOCK (THE
"PREFERRED STOCK") OF THE COMPANY SHALL BE CONVERTED INTO SHARES
OF COMMON STOCK TO ALIGN THE INTERESTS OF ALL EQUITY HOLDERS OF
THE COMPANY.
The Board of Directors of the Company is currently composed of seven (7)
members, with the holder of the Preferred Stock entitled to three (3)
representatives (the "Preferred Stock Directors"). Through the attached Proxy
Statement we are soliciting proxies to elect our two Class I director nominees
and the candidates who have been nominated by the Company EXCEPT FOR Messrs.
Bartlett and Brown. This gives stockholders the ability to vote for a total of
seven (7) directors up for election at the Annual Meeting. The names,
backgrounds and qualifications of the Company's nominees, and other information
about them, can be found in the Company's proxy statement. There is no assurance
that any of the Company's nominees will serve as directors if our nominees are
elected.
We are not seeking control of the Company's Board of Directors. We also
hope that the result of this election contest will send a strong message to the
incumbent directors who will be re-elected that the current stockholders of the
Company are seeking a change in the management style of the Company.
Furthermore, we hope that after this election contest, the majority of the
members of the Board of Directors will be composed of representatives of the
principal equity holders of the Company.
We urge you to carefully consider the information contained in the
attached Proxy Statement and support our efforts by signing, dating and
returning the enclosed GOLD proxy card today. The attached Proxy Statement and
the enclosed GOLD proxy card are first being furnished to the stockholders on or
about July __, 2007.
If you have already voted for the incumbent management slate you have
every right to change your vote by signing, dating and returning a later dated
proxy card or by voting in person at the Annual Meeting. Only your latest dated
proxy card will count.
Since only your latest dated proxy card will count, we urge you not to
return any proxy card you receive from the Company. Even if you return the
management proxy card marked "withhold" as a protest against the incumbent
directors, it will revoke any proxy card you may have previously sent to
Everest. Remember, you can vote for our two independent nominees only on our
GOLD proxy card. So please make certain that the latest dated proxy card you
return is the GOLD proxy card.
If you have any questions or require any assistance with your vote, please
contact MacKenzie Partners, Inc., which is assisting us, at their address and
toll-free numbers listed on the following page.
Thank you for your support,
Elchanan Maoz
Everest Special Situations Fund L.P.
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If you have any questions regarding your proxy, or need
assistance in voting your Shares, please call:
MACKENZIE PARTNERS, INC.
105 Madison Avenue
New York, NY 10016
Call Toll-Free: 1-800-322-2885
E-Mail: proxy@MacKenziepartners.com
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ANNUAL MEETING OF STOCKHOLDERS
OF
SIMON WORLDWIDE, INC.
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PROXY STATEMENT
OF
EVEREST SPECIAL SITUATIONS FUND L.P.
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PLEASE SIGN, DATE AND MAIL THE ENCLOSED GOLD PROXY CARD TODAY
Everest Special Situations Fund L.P. ("Everest" or "we"), a Delaware
limited partnership, together with certain of its affiliates who are named as
participants in this Proxy Statement are stockholders of Simon Worldwide, Inc.,
a Delaware corporation (the "Company"). We are writing to you in connection with
the election of directors of the Company (the "Company's Board") at the annual
meeting of stockholders scheduled to be held at the Los Angeles Airport Marriott
Hotel, 5855 W. Century Boulevard, Los Angeles, California, on July 19, 2007, at
10:00 a.m. (local time), including any adjournments or postponements thereof and
any meeting which may be called in lieu thereof (the "Annual Meeting"). This
proxy statement (the "Proxy Statement") and the enclosed GOLD proxy card are
first being furnished to stockholders on or about July __, 2007.
This Proxy Statement and the enclosed GOLD proxy card are being furnished
to stockholders of the Company by Everest in connection with the solicitation of
proxies from Everest's stockholders for the following:
1. TO ELECT EVEREST'S DIRECTOR NOMINEES, MERON MANN AND ELCHANAN
MAOZ (TOGETHER, OUR "NOMINEES") TO SERVE AS CLASS I DIRECTORS OF
THE COMPANY, IN OPPOSITION TO THE COMPANY'S DIRECTOR NOMINEES, TO
SERVE FOR TWO-YEAR TERMS.
2. TO ADOPT A NON-BINDING RECAPITALIZATION PROPOSAL SUBMITTED BY
EVEREST WHEREIN ALL ISSUED AND OUTSTANDING SHARES OF SERIES A1
SENIOR CUMULATIVE PARTICIPATING CONVERTIBLE PREFERRED STOCK (THE
"PREFERRED STOCK") OF THE COMPANY SHALL BE CONVERTED INTO SHARES
OF COMMON STOCK TO ALIGN THE INTERESTS OF ALL EQUITY HOLDERS OF
THE COMPANY (THE "RECAPITALIZATION RECOMMENDATION").
This Proxy Statement is soliciting proxies to elect our Nominees as Class
I directors and the candidates who have been nominated by the Company EXCEPT FOR
Messrs. Bartlett and Brown. This gives stockholders who wish to vote for our
Nominees the ability to vote for five nominees in total.
Everest, Maoz Everest Fund Management Ltd. ("MEFM,"), an Israeli company,
and each of our Nominees are members of a group (the "Group") formed in
connection with this proxy solicitation and are deemed participants in this
proxy solicitation.
The Company has set the record date for determining stockholders entitled
to notice of and to vote at the Annual Meeting as June 18, 2007 (the "Record
Date"). The mailing address of the principal executive offices of the Company is
5200 West Century Boulevard, Los Angeles, California 90045. Stockholders of
record at the close of business on the Record Date will be entitled to vote at
the Annual Meeting. According to the Company, as of the Record Date, there were
(i) 16,673,193 shares of common stock, $.01 par value (the "Common Stock"), and
(ii) 33,032 shares of Series A1 Senior Cumulative Participating Convertible
Preferred Stock ("Preferred Stock" and, together with the shares of Common
Stock, the "Shares") so held, which shares of Preferred Stock including accrued
dividends were convertible for 4,021,320 shares of Common Stock, entitled to
vote at the Annual Meeting. In the election of directors of the Company and the
Recapitalization Proposal, the shares of Preferred Stock vote together with the
shares of Common Stock on an as converted basis.
As of the Record Date, Everest with the other participants in this
solicitation, were the owners of an aggregate of 2,158,732 shares of Common
Stock, which represents approximately 12.9% of the voting securities outstanding
(based on the Company's proxy statement). The participants in this solicitation
intend to vote such Common Stock "FOR" the election of our Nominees and "FOR"
those candidates who have been nominated by the Company EXCEPT FOR Messrs.
Bartlett and Brown and "FOR" the Recapitalization Recommendation, as further
described herein.
THIS SOLICITATION IS BEING MADE BY EVEREST AND NOT ON BEHALF OF THE
COMPANY'S BOARD OR MANAGEMENT. EVEREST IS NOT AWARE OF ANY OTHER MATTERS TO BE
BROUGHT BEFORE THE ANNUAL MEETING. SHOULD OTHER MATTERS, WHICH EVEREST IS NOT
AWARE OF A REASONABLE TIME BEFORE THIS SOLICITATION, BE BROUGHT BEFORE THE
ANNUAL MEETING, THE PERSONS NAMED AS PROXIES IN THE ENCLOSED GOLD PROXY CARD
WILL VOTE ON SUCH MATTERS IN THEIR DISCRETION.
EVEREST URGES YOU TO SIGN, DATE AND RETURN THE GOLD PROXY CARD IN FAVOR OF
THE ELECTION OF ITS NOMINEES AND THE NOMINEES OF THE COMPANY EXCEPT FOR MESSRS.
BARTLETT AND BROWN AND FOR ITS RECAPITALIZATION RECOMMENDATION.
IF YOU HAVE ALREADY SENT A PROXY CARD FURNISHED BY THE COMPANY'S BOARD
BACK TO THE COMPANY, YOU MAY REVOKE THAT PROXY AND VOTE FOR EACH OF THE
PROPOSALS DESCRIBED IN THIS PROXY STATEMENT BY SIGNING, DATING AND RETURNING THE
ENCLOSED GOLD PROXY CARD. ONLY THE LATEST DATED PROXY COUNTS. ANY PROXY MAY BE
REVOKED AT ANY TIME PRIOR TO THE ANNUAL MEETING BY DELIVERING A WRITTEN NOTICE
OF REVOCATION OR A LATER DATED PROXY FOR THE ANNUAL MEETING OR BY VOTING IN
PERSON AT THE ANNUAL MEETING. ALTHOUGH A REVOCATION IS EFFECTIVE IF DELIVERED TO
THE COMPANY, EVEREST REQUESTS THAT EITHER THE ORIGINAL OR PHOTOSTATIC COPIES OF
ALL REVOCATIONS BE MAILED TO EVEREST IN CARE OF MACKENZIE PARTNERS, INC. AT THE
ADDRESS SET FORTH ON THE BACK COVER OF THIS PROXY STATEMENT.
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IMPORTANT
YOUR VOTE IS IMPORTANT, NO MATTER HOW MANY SHARES YOU OWN. WE URGE YOU TO
SIGN, DATE, AND RETURN THE ENCLOSED GOLD PROXY CARD TODAY TO VOTE FOR THE
ELECTION OF OUR NOMINEES AND THE OTHER COMPANY NOMINEES EXCEPT FOR MESSRS.
BARTLETT AND BROWN.
o IF YOUR SHARES ARE REGISTERED IN YOUR OWN NAME, please sign and date the
enclosed GOLD proxy card and return it to Everest, c/o MacKenzie Partners,
Inc., in the enclosed envelope today.
o IF YOUR SHARES ARE HELD IN A BROKERAGE ACCOUNT OR BANK, you are considered
the beneficial owner of the Shares, and these proxy materials, together
with a GOLD voting form, are being forwarded to you by your broker or
bank. As a beneficial owner, you must instruct your broker, trustee or
other representative how to vote. YOUR BROKER CANNOT VOTE YOUR SHARES ON
YOUR BEHALF WITHOUT YOUR INSTRUCTIONS.
o Depending upon your broker or custodian, you may be able to vote either by
toll-free telephone or by the Internet. Please refer to the enclosed
voting form for instructions on how to vote electronically. You may also
vote by signing, dating and returning the enclosed voting form.
Since only your latest dated proxy card will count, we urge you not to
return any proxy card you receive from the Company. Even if you return the
management proxy card marked "withhold" as a protest against the incumbent
directors, it will revoke any proxy card you may have previously sent to
Everest. Remember, you can vote for our two independent nominees only on our
GOLD proxy card. So please make certain that the latest dated proxy card you
return is the GOLD proxy card.
PLEASE CALL MACKENZIE PARTNERS, INC.,
IF YOU NEED ASSISTANCE IN VOTING YOUR GOLD PROXY CARD.
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If you have any questions regarding your proxy, or need
assistance in voting your Shares, please call:
MACKENZIE PARTNERS, INC.
105 Madison Avenue
New York, NY 10016
Call Toll-Free: 1-800-322-2885
E-Mail: proxy@MacKenziepartners.com
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REASONS WHY WE ARE SEEKING REPRESENTATION ON THE BOARD OF DIRECTORS
The following is a summary of the reasons why we are seeking
representation on the Board of Directors at the Annual Meeting.
WE BELIEVE THAT THE INCUMBENT DIRECTORS DO NOT TRULY REPRESENT THE CURRENT
COMPOSITION OF THE BENEFICIAL OWNERS OF THE COMPANY.
o The Company held its last Annual/Special Meeting of Stockholders of
the Company to elect directors on April 2001.
o Terms of all incumbent directors should have lapsed at most three
years since the last meeting of stockholders of the Company.
o Based on the Company's security beneficial ownership table in the
Company's annual report for the period ended December 31, 2006 (the
"Annual Report"), Everest and Hazelton Capital Ltd. have acquired
beneficial ownership of Shares in the aggregate amount of
approximately 12.9% and 6.8% of the outstanding Shares,
respectively, since the last meeting of stockholders.
o These new principal stockholders have not had the opportunity to
elect their own representatives to the Company's Board.
WE BELIEVE THAT THE COMPANY'S BOARD HAS NOT BEEN SUCCESSFUL IN IDENTIFYING
STRATEGIC ALTERNATIVES FOR THE COMPANY AND HAS NOT MADE THE COMPANY ATTRACTIVE
TO STRATEGIC PARTNERS.
o It is worth noting that the Company has not disclosed any concrete
plan of operations in its Annual Reports for the immediately
preceding four years except to say that the Company's Board
"continues to consider various alternative courses of action for the
Company, including possibly acquiring or combining with one or more
operating businesses."
o In addition, the Company also disclosed that it "cannot predict when
the Directors will have developed a proposed course of action or
whether any such course of action will be successful."
o It has been six years since the Company ceased its operations and
two years since the Company has settled its claim against McDonald's
Corporation but not once has the Company gone back to its
stockholders and requested their consideration, or at the very least
informed them, of a possible corporate reorganization in the Company
WE BELIEVE THAT THE BOARD OF DIRECTORS OF THE COMPANY HAS NOT BEEN
RECEPTIVE TO THE CONCERNS RAISED BY ITS PRINCIPAL STOCKHOLDERS.
OFFICER AND DIRECTOR COMPENSATION
o We are concerned with the level of salaries paid to the Company's
officers and directors, especially in light of the fact that the
Company is a non-operating entity without any operating revenues.
o Based on the Company's periodic reports, the Company's only source
of assets has been the settlement of a litigation involving the
discontinued operations of the Company with McDonald's Corporation
for approximately $24,500,000, recorded in fiscal year ended
December 31, 2004.
o We believe that it is very disconcerting that during such time frame
when the Company had no operations and operating revenues, the
Company has disclosed in its periodic reports that it has spent an
aggregate of $20,625,000 in general and administrative expenses for
the immediately preceding five fiscal years (2002 through 2006), or
an average $5,156,250 per year and 16% per year of its totals assets
as of December 31, 2006, most of which were paid as salaries to its
management and current directors.
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o The Board of Directors is currently composed of seven members, with
three directors as representatives of the holder of the Preferred
Stock, the Company's largest shareholder. Based on the Annual
Report just for annual director retainer fees alone, the Company is
expending corporate assets of a minimum of $350,000 per year. If we
add the base salaries paid to two employee directors, total
executive and director salary costs jump to at least $1,050,000, or
approximately 4% of the total assets of the Company as of December
31, 2006. It must be noted that based on the Annual Report, the
Company paid approximately $560,332 and $1,229,044 for director fees
and reimbursement and executive compensation, respectively, for
fiscal year ended December 31, 2006.
o Without any operating units and a clear plan of operations, together
with the settlement of the Company's major litigation proceedings,
we question the need to retain such highly-paid management and
directors.
FINANCIAL RECAPITALIZATION
o Based on the Company's report for the period ended March 31, 2007,
the total assets of the Company are approximately $25.5 million and
total liabilities are $32.7 million, primarily as a result of its
obligations due to the holders of the Company's Preferred Stock,
leaving a total stockholder's deficit of approximately $8.6 million.
o The Preferred Stock also has a liquidation preference.
o On February 25, 2007, we sent a Memorandum of Understanding to the
Company and the holder of the Preferred Stock with respect to our
proposed financial recapitalization wherein all outstanding shares
of Preferred Stock will be converted into shares of Common Stock of
the Company. The recapitalization would have minimized the
stockholder's deficit, eliminated any liquidation preference and
better positioned the Company to seek an acquisition partner. On
March 27, 2007, the Company requested we provide more information
about our proposed financial restructuring. After we formally
submitted additional supporting information with respect to the
proposed financial restructuring on April 17, 2007, the Company
continued to disregard our proposal.
o We have submitted the financial recapitalization as a stockholder
proposal to be voted on by the Company's stockholders at the Annual
Meting.
o If elected, our Nominees' first priority would be to work with the
director representatives of the holder of the Preferred Stock, one
of the other principal stockholders of the Company, to effect a
financial restructuring that would make the Company more attractive
to strategic partners.
LACK OF COMMUNICATION WITH STOCKHOLDERS
o On May 11, 2006, we sent a letter to the Company's Board to, among
other things, request it to call an annual meeting of stockholders
of the Company. In its response letter on June 6, 2006, the
Company's Board responded by stating that it "agrees that increased
shareholder communication is appropriate and will consider your
request for a shareholder meeting." Unfortunately, the Company did
not proactively schedule any stockholder meeting.
o On April 17, 2007, we filed a Complaint with Court of Chancery for
the State of Delaware against the Company and demanded that the
Company hold an annual meeting of stockholders. On May 23, 2007, the
Court of Chancery for the State of Delaware entered a Stipulation
and Order of Final Judgment wherein the Company was required to
announce an annual meeting of stockholders of the Company no later
than June 25, 2007 to be held on July 19, 2007.
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BACKGROUND TO SOLICITATION
The following is a chronology of events leading up to this proxy
solicitation:
o Everest began purchasing Shares in February 2006.
o On May 11, 2006, Everest sent a letter to the Company enumerating a
number of its concerns with respect to the affairs of the Company
including, but not limited to, what Everest believes is the
excessive salaries of management and directors of the Company and
the lack of communications with the Company's stockholders
exemplified by the Company's not having held an annual meeting of
stockholders in the immediately preceding five years.
o On June 6, 2006, the Company's Board response to Everest's letter
was a brief description of the background of the Company similar to
the disclosure found in the Company's periodic reports. The
Company's Board's response also stated that management has been
"managing the defense and offense of the many significant lawsuits
and many other aspects of preserving the assets of the Company." It
further stated that "the compensation currently paid to these
individuals [the officers and directors] reflects their expertise
and background." The Company's Board's response also stated that it
"agrees that increased shareholder communication is appropriate and
will consider your request for a shareholder meeting."
Unfortunately, the Company's Board did not proactively schedule any
shareholder meeting.
o On June 12, 2006, as per request of the Company, Everest submitted a
demand letter to inspect the books and records of the Company.
o On June 16, 2006, the Company's counsel responded to Everest's
demand letter and provided Everest with the certain internal
documents that it requested.
o From June through August 2006, Everest continued to study the
documents provided to it, as well as other publicly available
information.
o Based on Everest's review of the Company's publicly available
information, including the standstill provision in Section 5.07 of
that certain Securities Purchase Agreement dated September 1, 1999
by and between the Company and Overseas Toys, L.P., an investment
vehicle of Yucaipa AEC Associates LLC (together with Overseas Toys,
L.P., "Yucaipa"), Yucaipa is not allowed to (i) enter into any
agreement with Everest or any other stockholder in seeking board
representation for other itself or other stockholders and (ii) seek
approval for any shareholder proposal any such stockholder may
propose. However, Everest believes that Yucaipa is not prohibited
from (i) exercising, in its sole discretion, its right to vote on
all matters presented at a stockholders meeting and (ii) discussing
with other stockholders of the Company on their views on how to
maximize the return on their respective investments.
o On April 25, 2006, Elchanan Maoz, Chairman of Everest, initially met
with Greg Mays, a member of the Company's Board and a representative
of Yucaipa and had follow-up meetings with Ronald Burkle and Ira
Tochner, other representatives of Yucaipa. In such meetings, Mr.
Maoz discussed Everest's belief that the Company is attractive to
strategic partners given the Company's relatively high level of cash
on hand and potential to use the high net operating losses of the
Company to offset tax liabilities in the future. Mr. Maoz stated
that Everest believes that the cash on hand of the Company could be
used to acquire a profitable private business and that if such
acquisition was designed properly, the Company could maximize the
use of the Company's net operating losses. Everest also believes
that such acquisition should take advantage of the expertise and
business relationships of the Company's directors and officers,
specifically that of the representatives of Yucaipa. Everest has not
identified any proposed acquisition. Mr. Maoz stated, however, that
Everest believes that liquidation preference of the holder of the
Preferred Stock was making the Company less attractive to potential
strategic partners because it diminishes the potential use of the
cash on hand to make any business combination possible, make
acquisitions inclusive of common stock less viable and does not
align the interests of the two classes of existing stockholders.
Yucaipa did not enter into any agreement or understanding of any
kind with Everest. Yucaipa did not object to Mr. Maoz presenting
Everest's ideas to the Company's Board.
o From May 2006 until February 2007, Mr. Maoz made courtesy calls to
Yucaipa representatives to inform Yucaipa of Everest's intention to
seek Board representation and its proposed restructuring plan. While
Yucaipa did not provide any specific comments on the terms of to the
restructuring plan presented, Yucaipa asked questions regarding the
procedures for implementing the restructuring plan and Everest's
views of the benefits thereof. At no such time did Everest have an
agreement or understanding of any kind with Yucaipa. Yucaipa did not
express any opinion as to whether they will support or object to
Everest's intention to seek Board representation or the proposed
restructuring plan.
o On October 26, 2006, Mr. Maoz sent a letter to Yucaipa to formalize
Everest's views on the Company including, but not limited to,
electing new directors, aligning the compensation costs of the
Company, and engaging in a financial recapitalization to make the
Company more attractive to strategic partners.
-6-
o On February 25, 2007, Everest sent a letter and a draft Memorandum
of Understanding to both the holder of Yucaipa and the Company
summarizing the terms Everest's proposed financial restructuring.
Everest proposed that all outstanding shares of Preferred Stock be
converted into that number of shares of Common Stock such that
Yucaipa will own 70% of the then outstanding shares of Common Stock.
As a result, the stockholder deficit would be eliminated and the
other stockholders would get 30% of whatever value remained with the
Company, making the Company more attractive to potential strategic
partners. Yucaipa did not express any opinion as to whether they
will support or object to the proposals embodied in the Memorandum
of Understanding.
o On March 27, 2007, the Company's Board sent a letter to Everest
requesting it to reinforce the purpose behind Everest's proposed
financial restructuring as well as to explain the benefits of
increasing the size of the Company's Board and appointing Everest's
representatives as directors.
o On April 17, 2007, Everest sent a response letter to the Company
expressing its disappointment of the Company's Board's response to
the recapitalization proposal of Everest. Everest stated in its
letter that its proposed financial recapitalization would remove the
structural subordination obstacles posed by the existence of the
Preferred Stock and provide flexibility for the Company to pursue
business acquisitions using cash and/or common stock. Everest also
stated that its proposed representatives to the Company's Board
would have experience in value creation that will spearhead the
efforts to return the Company to profitability and growth prospects
after reviewing appropriate target companies for acquisition.
Everest also stated that it would not hesitate to take any and all
action required if it cannot come to a mutually agreeable
restructuring in the best interest of all stockholders. The Company
did not accept Everest's proposals.
o On April 17, 2007, we filed a Complaint with Court of Chancery for
the State of Delaware against the Company and demanded that the
Company hold an annual meeting of stockholders.
o On May 23, 2007, the Court of Chancery for the State of Delaware
entered a Stipulation and Order of Final Judgment wherein the
Company was required to announce an annual meeting of stockholders
of the Company no later than June 25, 2007 to be held on July 19,
2007.
o On June 12, 2007, Everest sent a nomination letter to the Company
nominating Elchanan Maoz and Meron Mann as directors of the Company.
Everest also submitted a non-binding proposal with respect to the
Company engaging in a financing recapitalization.
o On June 20, 2007, the Company announced that it would hold an annual
stockholders meeting on July 19, 2007, with a record date of June
18, 2007.
-7-
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's Board is currently composed of seven directors, with three
directors acting as representatives of the holder of the Preferred Stock (the
"Preferred Stock Directors"). Although the Company's Board is classified into
Classes I, II and III, with the term of each class of directors expiring every
three years, the terms of all incumbent directors of the Company are expiring at
the Annual Meeting since it has not held an annual meeting of stockholders since
2001. Since the incumbent directors have not been elected by the current
composition of stockholders of the Company, we believe that they do not truly
represent the current stockholders' interests.
We are seeking your support at the 2007 Annual Meeting to elect Elchanan
Maoz and Meron Mann (together, our "Nominees") as Class I directors of the
Company and the candidates who have been nominated by the Company EXCEPT FOR
Messrs. Bartlett and Brown. Your vote to elect our Nominees will have the legal
effect of replacing two incumbent directors of the Company with our Nominees. If
elected, our Nominees will represent a minority of the members of the Company's
Board and plan, if possible, to work with the director nominees of the holder of
the Preferred Stock Directors, to form a majority of the Company's Board. There
can be no assurance that our Nominees, if elected, may be able to reach an
understanding with a majority of the members of the Company's Board or could
successfully implement the changes advocated in this proxy statement.
THE CASE AGAINST THE ELECTION OF CERTAIN DIRECTORS
We believe the election of our Nominees represents the best means for the
Company's stockholders to maximize the value of their Shares. As a significant
stockholder of the Company, we have a vested interest in maximizing stockholder
value. If elected to the Company's Board, our Nominees will use their best
efforts to develop a strategic plan that will include minimizing the costs and
restructuring the Company's financial position to make it more attractive to
strategic partners in exploring all potential alternatives to maximize
stockholder value. We believe that these improvements need to be implemented
through a more proactive style of management and more of the representation of
existing stockholders, the persons who have most to gain from the Company's
success.
We would like to make it clear that we are engaging in this election
contest as a last resort. As discussed in further detail in the "Background to
Solicitation", we made numerous efforts to enter into meaningful discussions
with the incumbent Board of Directors and management to discuss our concerns
with the Company. At one point, we submitted a Memorandum of Understanding to a
financial restructuring of the Company, after informing with the holder of
Preferred Stock of our proposal. While the holder of the Preferred Stock did not
provide any specific comments on the terms specified in the Memorandum of
Understanding, the holder of Preferred Stock asked questions regarding the
procedures for implementing the restructuring plan and Everest's views of the
benefits thereof. At no such time did Everest have an agreement or understanding
of any kind with the holder of the Preferred Stock.
The material terms proposed by Everest in its Memorandum of Understanding
were (i) exchanging, by the Company, of all its outstanding shares of Preferred
Stock for a number of shares of Common Stock equal to 70% of the issued and
outstanding shares of Common Stock (on a fully diluted basis) to Yucaipa,
immediately after the proposed financial restructuring. The other 30% of the
issued and outstanding shares of Common Stock shall be held by the holders of
the shares of Common Stock immediately prior to the proposed financial
restructuring and (ii) increasing the number of directors on the Company's Board
and electing two representatives of Everest to the Company's Board. The
Memorandum of Understanding was filed as Exhibit D to Amendment No. 4 to
Schedule 13D filed by Everest with the Securities and Exchange Commission on
February 27, 2007 and can be accessed through the Securities and Exchange
Commission's website at WWW.SEC.GOV.
The Company's Board rejected such a proposal but did not offer any
alternative strategic proposal on how to alleviate the current $8.6 million
stockholder deficit.
LACK OF STRATEGIC GOAL
It is worth noting that the Company has not disclosed any concrete plan of
operations in its annual reports for the immediately preceding five years except
to say that the Company's Board "continues to consider various alternative
courses of action for the Company, including possibly acquiring or combining
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with one or more operating businesses." In addition, the Company also disclosed
that it "cannot predict when the Directors will have developed a proposed course
of action or whether any such course of action will be successful." We believe
that the continuation of the Company in its current state is also leading to the
destruction of stockholder value since the Company ceased active business
operations more than six years ago and two years since the Company has settled
its claim against McDonalds Corporation. The Company continues to incur
significant and unnecessary general and administrative costs and not once has
the Company gone back to its stockholders and requested their consideration or,
at the very least, informed them, of a possible corporate reorganization of the
Company.
Based on the Company's periodic report for the period ended March 31,
2007, the total assets of the Company is approximately $25.5 million and total
liabilities is $34.1 million, primarily as a result of its obligations due to
the holder of the Preferred Stock, leaving a total stockholder's deficit of
approximately $8.6 million. The Preferred Stock also has a liquidation
preference over the Common Stock. If the Company was liquidated on March 31,
2007, the Preferred Stock liquidation preference would be $32.7 million, which
is $7.2 million more than the Company's total assets of $25.5 million. The
Company's incumbent Board rejected our proposal to engage the Company in a
financial recapitalization by converting all of the shares of Preferred Stock
into shares of Common Stock of the Company. The recapitalization would have
minimized the stockholder's deficit, eliminated any liquidation preference and
better positioned the Company to seek a strategic partner. We have no assurance
that the holder of the Preferred Stock would support the proposed
recapitalization or any other recapitalization of the Company but we believe
that it is in all stockholders' best interest to align the interests of the
Preferred and Common Stockholders. The Company has not provided any alternative
to resolve the continued stockholder deficit.
Our Nominees have experience in value creation that we believe will be of
most value in spearheading an effort to return the Company to profitability and
growth after reviewing appropriate target companies for acquisition.
LEVEL OF COMPENSATION
We are also concerned with the level of salaries paid to the Company's
officers and directors, especially in light of the fact that the Company is a
non-operating entity without any operating revenues. In the past five years, the
Company's only source of assets has been the settlement of a litigation
involving the discontinued operations of the Company with McDonald's Corporation
for approximately $24,500,000, recorded in fiscal year ended December 31, 2004.
It is very disconcerting for us to note that during such time frame, when the
Company had no operations and operating revenues, the Company has spent an
aggregate of $20,625,000 in general and administrative expenses for the
immediately preceding five fiscal years (2002 through 2006), or an average
$5,156,250 per year and 16% per year of its totals assets as of December 31,
2006, most of which were paid as salaries to its management and current
directors, as disclosed in its periodic reports. The Company's Board is
currently composed of seven members, including the three Preferred Stock
Directors. Based on the Annual Report, just for annual director retainer fees
alone, the Company is expending corporate assets of a minimum of $350,000 per
year. If we add the base salaries paid to two employee directors, total
executive and director salary costs jump to at least $1,050,000, or
approximately 4% of the total assets of the Company as of December 31, 2006. It
must be noted that based on the Annual Report, the Company paid approximately
$560,332 and $1,229,044 for director fees and reimbursement and executive
compensation, respectively, for fiscal year ended December 31, 2006. Without any
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operating units and clear plan of operations, together with the settlement of
the Company's major litigation proceedings, we believe that the Company can do
just as well with fewer directors and officers.
We find these levels of compensation for a shell company without operating
revenues to be excessive. We believe that executive compensation should be
linked to value delivered to stockholders and that a public company's
compensation programs should be designed to provide a correlation between the
amounts of work performed by the executive to the satisfaction of goals of the
Company. Not only do we not see a correlation but also we have not received any
report from the Company's Board or management of any developments in their
effort in seeking strategic alternatives for the Company.
The Company's Board has not acted on our requests for Board representation
and lowering compensation of directors and officers. The Board's inaction to
address our concerns leads us to believe that incumbent directors who are not
Preferred Stock Directors and who control a majority of the Company's Board have
a vested interest to entrench themselves as directors of the Company due to
excessive salaries and director compensation they receive.
We share a common interest with all stockholders in enhancing long-term
performance and improving corporate governance at the Company. We believe these
changes can begin to be implemented with the election of our Nominees. Once
elected, the Nominees plan to work, if possible, with the Preferred Stock
Directors (although we have no agreements and understanding) and allow the
direct representatives of the stockholders to effect changes including, but not
limited to, adjusting the compensation of the directors and management of the
Company and effectuating a financial restructuring. We believe these changes
would benefit all stockholders of the Company by making the Company more
attractive to strategic partners and maximizing the use of the Company's assets.
WE STRONGLY URGE YOU TO VOTE "FOR" THE ELECTION OF OUR NOMINEES BY SIGNING,
DATING AND RETURNING YOUR GOLD PROXY CARD TODAY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
THE NOMINEES
The following information sets forth the name, age, business address,
present principal occupation, and employment and material occupations,
positions, offices, or employments for more than the past five years of each of
the Nominees. This information has been furnished to Everest by the Nominees.
The Nominees are citizens of Israel.
ELCHANAN (NANI) MAOZ (AGE 40) has served as the Chairman of Everest Funds
LP, an investment partnership that he founded, since 2000. From 1998 to 2000,
Mr. Maoz served as manager of the General Partner to the Galil Fund, an
investment partnership. From 1994 to 1998, Mr. Maoz held a number of different
positions with Dovrat Shrem & Company Investment Management Ltd, an investment
company, including chairman of Dovrat Shrem Enterprises and board member of
Dovrat Shrem & Co. Provident Fund Management. Mr. Maoz serves on the Israeli
Board of the America Israel Friendship League and is a director of (i) Metro One
Telecommunications, Inc., a directory assistance and information service
provider, and (ii) a private software service provider. A former member of the
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Israeli Army and the elite Special Forces, Mr. Maoz holds a Bachelor of Science
degree in Engineering with honors from King's College, University of London.
MERON MANN (AGE 56) is currently involved in the European operations of
Keter Plastic Ltd., Israel's largest plastics company. From 1978 to 2005, Mr.
Mann was involved in Teva Pharmaceutical Industries, Ltd., a global
pharmaceutical company, where he has served as Group Vice President Europe since
2002 and has been the President and CEO of Teva Pharmaceutical Europe B.V. since
2002. From 1990 to 2002, he served as President of Teva's Active Pharmaceuticals
Ingredients division and from April 2002 to August 2002, he served as GVP Global
Resources. He received his M.Sc. in Industrial Engineering from the Haifa
Technion-The Israel Institute of Technology in 1978 and his B.Sc. from Tel Aviv
University in 1976.
For information regarding transactions during the past two years of
securities of the Company by the Nominees and the other participants in this
Proxy Solicitation, please see Schedule I.
The Nominees will not receive any compensation from Everest for their
services as directors of the Company. Other than as stated herein, there are no
arrangements or understandings between Everest and any of the Nominees or any
other person or persons pursuant to which the nomination described herein is to
be made, other than the consent by each of the Nominees to be named in this
Proxy Statement and to serve as a director of the Company if elected as such at
the Annual Meeting. No participant in this solicitation is a party adverse to
the Company or any of its subsidiaries or has a material interest adverse to the
Company or any of its subsidiaries in any material pending legal proceedings.
We do not expect that our Nominees will be unable to stand for election,
but, in the event that such persons are unable to serve or for good cause will
not serve, the Shares represented by the enclosed GOLD proxy card will be voted
for substitute nominees, to the extent this is not prohibited under the
Company's Bylaws and applicable law. In addition, we reserve the right to
nominate substitute persons if the Company makes or announces any changes to its
Bylaws or takes or announces any other action that has, or if consummated would
have, the effect of disqualifying the Nominees, to the extent this is not
prohibited under the Bylaws and applicable law. In any such case, Shares
represented by the enclosed GOLD proxy card will be voted for such substitute
nominees. We reserve the right to nominate additional persons, to the extent
this is not prohibited under the Company's Bylaws and applicable law, if the
Company increases the size of the Company's Board above its existing size or
increases the number of directors whose terms expire at the Annual Meeting.
Additional nominations made pursuant to the preceding sentence are without
prejudice to our position that any attempt to increase the size of the Company's
Board or to reconstitute or reconfigure the classes on which the current
directors serve constitutes an unlawful manipulation of the Company's corporate
machinery.
YOU ARE URGED TO VOTE FOR THE ELECTION OF EVEREST'S DIRECTOR NOMINEES ON THE
ENCLOSED GOLD PROXY CARD.
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PROPOSAL NO. 2
EVEREST'S NON-BINDING RECAPITALIZATION PROPOSAL
The Company's current capital structure consists of issued and outstanding
Common and Preferred Stock. We are seeking your support at the Annual Meeting
for our non-binding recapitalization proposal wherein all issued and outstanding
shares of Preferred Stock shall be converted into Common Stock. As of the date
hereof, holders of the Preferred Stock have a liquidation preference that
exceeds the Company's cash on hand. We believe that this situation creates
differences in the approaches on how to maximize the financial interest in the
Company of the holder of the Preferred Stock and holders of the Common Stock.
Your vote to support this proposal would send a strong message to the Company's
Board that you are interested in aligning the interests of all equity
stockholders of the Company.
THE CASE FOR A FINANCIAL RESTRUCTURING OF THE COMPANY
We believe something needs to be done in order to salvage stockholder
value in the Company. Currently the Company is subject to significant and
unnecessary general and administrative costs even though the Company ceased
active business operations more than six years ago. Moreover, the holder of
Preferred Stock has a liquidation preference that exceeds the Company's net
asset value, meaning any liquidation of the Company would result in a total loss
of value to holders of the Common Stock. In addition, the Company has not
disclosed any concrete plan of operations in its public filings over the past
few years except to say that the Company's Board "continues to consider various
alternative courses of action...including possible acquiring or combining with
one or more operating businesses."
We believe, however, that the Company CANNOT pursue such a course of
action because, as the Company is currently structured, it is not in the holder
of the Preferred Stock's best interest to approve a transaction that would
significantly diminish the Company's liquid assets, thereby effectively wiping
out Preferred Stock's liquidation preference. Accordingly we believe the most
viable way for the Company to preserve stockholder value is to restructure the
capitalization of the Company in such a way that would eliminate the Preferred
Stock and their related liquidation preference and align the interests of ALL
stockholders owning Common Stock. We believe the Proposed Restructuring would
remove the structural subordination obstacles posed by the existence of the
Preferred Stock and provide flexibility for the Company to pursue business
acquisitions using cash and/or common stock and aligning the interests of the
holders of Common Stock and Preferred Stock. Although there is no assurance that
a business combination can be effectuated if the Company is recapitalized, of
the exact terms thereof, or that the Company, if a business combination is
effectuated, will become profitable, we are proposing, for approval at the
Annual Meeting, a non-binding recapitalization proposal wherein all issued and
outstanding shares of Preferred Stock shall be converted into shares of Common
Stock.
We have no assurance that the holders of the Preferred Stock would support
the proposed recapitalization or any other recapitalization of the Company but
we believe that it is in all stockholders' best interest to align the interests
of the Preferred and Common Stockholders.
SHOW THE COMPANY'S BOARD THAT YOU ARE INTERESTED IN ALIGNING THE INTEREST
OF ALL STOCKHOLDERS OF THE COMPANY. VOTE FOR OUR RECOMMENDATION THAT THE
COMPANY'S BOARD APPROVE A PROPOSAL TO RECAPITALIZE THE COMPANY.
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We initially submitted our proposal to the Company's Board and the holder
of the Preferred Stock in February 25, 2007. However, on March 27, 2007, the
Company's Board gave an unfavorable response to our proposal and requested more
justification. In April 17, 2007, we sent a letter to the Company's Board to
reinforce our argument for the financial recapitalization and for representation
on the Company's Board. We again explained the situation and stated that the
recapitalization proposal was in the best interest of all stockholders and that
the Company, as it is currently structured, is slowly destroying stockholder
value. We stated in our letter that our proposed financial recapitalization
would remove the structural subordination obstacles posed by the existence of
the Preferred Stock and provide flexibility for the Company to pursue business
acquisitions using cash and/or common stock. We also stated that our proposed
representatives to the Company's Board would have experience in value creation
that will spearhead the efforts to return the Company to profitability and
growth prospects after reviewing appropriate target companies for acquisition.
We also stated that we would not hesitate to take any and all action required if
we cannot come to a mutually agreeable restructuring in the best interest of all
stockholders.
The Company did not accept our proposals. Such resistance on the part of
the Company's Board to the plight of holders of the Common Stock has forced us
to take our proposal directly to you, the stockholders.
SHOW THE COMPANY'S BOARD THAT YOU WILL NOT TOLERATE THEIR INDIFFERENCE TO
THE PLIGHT OF STOCKHOLDERS. VOTE FOR EVEREST'S RECOMMENDATION THAT THE COMPANY'S
BOARD APPROVE A PROPOSAL TO RECAPITALIZE THE COMPANY.
Our non-binding proposal is that, upon approval by the Company's Board and
the holders of the Shares, all the issued and outstanding Preferred Stock shall
be converted into Common Stock equal to 70% of the issued and outstanding shares
of the Company. The remaining 30% of the issued and outstanding Common Stock
shall be distributed pro-rata to the existing stockholders of the Company based
on their percentage ownership of Common Stock immediately prior the financial
recapitalization.
The non-binding proposal is as follows:
RESOLVED, that the stockholders of the Company recommend that the
Company's Board of Directors (i) approve a proposal to convert all issued
and outstanding shares of Series A1 Senior Cumulative Participating
Convertible Preferred Stock of the Company (the "Preferred Stock") into
that number of shares of Common Stock, $.01 par value (the "Common
Stock"), equal to 70% of the resulting issued and outstanding shares of
the Common Stock and (ii) submit such proposal for approval by the
Company's holders of Common Stock and Preferred Stock, voting separately
and as a group, in the form of an amendment to the Company's Certificate
of Incorporation, as required by the Delaware General Corporation Law and
the Company's Certificate of Incorporation, at a special meeting of
stockholders of the Company to be held as soon as practicable.
-13-
To effectuate the proposed financial restructuring, the Company's Board
after the Annual Meeting needs to approve the following amendments to the
Company's Certificate of Incorporation to accomplish the following:
(i) increase the number of shares of Common Stock from 50,000,000 to
at least 100,000,000; and
(ii) concurrently exchange all issued and outstanding shares of
Preferred Stock into that number of shares equal to 70% of the
issued and outstanding shares of Common Stock and eliminate the
right, preferences, designation and powers of the shares of
Preferred Stock.
Once the amendments described above are approved by the Company's Board,
the Company's Board would need to call a special meeting of stockholders of the
Company and present such amendments for approval by the holders of a majority of
the outstanding Preferred Stock, voting as a separate class, and a majority of
the holders of Common Stock and Preferred Stock as a group (with the holders of
Preferred Stock voting on as converted basis). If approved, the financial
recapitalization will be in effect by filing the amendments to the Company's
Certificate of Incorporation with the Office of the Secretary of the State of
the State of Delaware.
WE STRONGLY URGE YOU TO VOTE "FOR" THE RECAPITALIZATION RECOMMENDATION BY
SIGNING, DATING AND RETURNING YOUR GOLD PROXY CARD TODAY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
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VOTING AND PROXY PROCEDURES
Only stockholders of record on the Record Date will be entitled to notice
of and to vote at the Annual Meeting. Each share of Common Stock is entitled to
one vote. Each share of Preferred Stock is entitled to one vote for each share
of Common Stock issuable upon conversion of such share of Preferred Stock as of
the Record Date. Stockholders who sell Shares before the Record Date (or acquire
them without voting rights after the Record Date) may not vote such Shares.
Stockholders of record on the Record Date will retain their voting rights in
connection with the Annual Meeting even if they sell such Shares after the
Record Date. Based on publicly available information, we believe that the only
outstanding classes of securities of the Company entitled to vote at the Annual
Meeting are its shares of Common Stock and Preferred Stock.
Shares represented by properly executed GOLD proxy cards will be voted at
the Annual Meeting as marked and, in the absence of specific instructions, will
be voted "FOR" the election of our Nominees to the Company's Board, "FOR" the
candidates who have been nominated by the Company EXCEPT FOR Messrs. Bartlett
and Brown, "FOR" the Recapitalization Recommendation and in the discretion of
the persons named as proxies on all other matters as may properly come before
the Annual Meeting.
According to the Company's proxy statement for the Annual Meeting, the
Company's Board intends to nominate seven candidates for election as directors
at the Annual Meeting. This Proxy Statement is soliciting proxies to elect our
Nominees and the candidates who have been nominated by the Company EXCEPT FOR
Messrs. Bartlett and Brown. This gives stockholders who wish to vote for our
Nominees and such other persons the ability to do so. Under applicable proxy
rules we are required either to solicit proxies only for our Nominees, which
could result in limiting the ability of stockholders to fully exercise their
voting rights with respect to the Company's nominees, or to solicit for our
Nominees and for fewer than all of the Company's nominees, which enables a
stockholder who desires to vote for our Nominees to also vote for those of the
Company's nominees for whom we are soliciting proxies. The names, backgrounds
and qualifications of the Company's nominees, and other information about them,
can be found in the Company's proxy statement. There is no assurance that any of
the Company's nominees will serve as directors if our Nominees are elected.
QUORUM
In order to conduct any business at the Annual Meeting, a quorum must be
present in person or represented by valid proxies. A quorum consists of a
majority in interest of the Shares issued and outstanding on the Record Date.
All Shares that are voted "FOR", "AGAINST" or "ABSTAIN" (or "WITHHOLD" in the
case of election of directors) on any matter will count for purposes of
establishing a quorum and will be treated as Shares entitled to vote at the
Annual Meeting (the "Votes Present").
VOTES REQUIRED FOR APPROVAL
ELECTION OF DIRECTORS. A plurality of the total votes cast by holders of
the Shares for the Nominees is required for the election of directors and the
seven nominees who receive the most votes will be elected (assuming a quorum is
present). A vote to "WITHHOLD" for any nominee for director will be counted for
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purposes of determining the Votes Present, but will have no other effect on the
outcome of the vote on the election of directors. A stockholder may cast such
votes for the Nominees either by so marking the ballot at the Annual Meeting or
by specific voting instructions sent with a signed proxy to either Everest in
care of MacKenzie Partners, Inc., at the address set forth on the back cover of
this Proxy Statement or to the Company at 5200 W. Century Boulevard, Los
Angeles, California 90045 or any other address provided by the Company.
APPROVAL OF THE RECAPITALIZATION RECOMMENDATION. The affirmative vote of
the holders of a majority of the Shares present in person or represented by
proxy at the Annual Meeting is required to approve the Recapitalization
Recommendation.
EVEREST HAS NO AGREEMENT OR UNDERSTANDING THAT THE HOLDERS OF THE
PREFERRED STOCK WOULD SUPPORT THE PROPOSED FINANCIAL RECAPITALIZATION OR ANY
OTHER RECAPITALIZATION OF THE COMPANY.
ABSTENTIONS
Abstentions will count as Votes Present for the purpose of determining
whether a quorum is present. Abstentions will not be counted as votes cast in
the election of directors or for the approval of the Recapitalization
Recommendation.
DISCRETIONARY VOTING
Shares held in "street name" and held of record by banks, brokers or
nominees may not be voted by such banks, brokers or nominees unless the
beneficial owners of such Shares provide them with instructions on how to vote.
REVOCATION OF PROXIES
Stockholders of the Company may revoke their proxies at any time prior to
exercise by attending the Annual Meeting and voting in person (although
attendance at the Annual Meeting will not in and of itself constitute revocation
of a proxy) or by delivering a written notice of revocation. The delivery of a
subsequently dated proxy which is properly completed will constitute a
revocation of any earlier proxy. The revocation may be delivered either to the
Company in care of MacKenzie Partners, Inc., at the address set forth on the
back cover of this Proxy Statement or to the Company at 5200 W. Century
Boulevard, Los Angeles, California 90045 or any other address provided by the
Company. Although a revocation is effective if delivered to the Company, we
request that either the original or photostatic copies of all revocations be
mailed to Everest in care of MacKenzie Partners, Inc. at the address set forth
on the back cover of this Proxy Statement so that we will be aware of all
revocations and can more accurately determine if and when proxies have been
received from the holders of record on the Record Date of a majority of the
outstanding Shares. Additionally, MacKenzie Partners, Inc., may use this
information to contact stockholders who have revoked their proxies in order to
solicit later dated proxies for the election of the Nominees.
IF YOU WISH TO VOTE FOR THE ELECTION OF THE NOMINEES TO THE COMPANY'S BOARD OR
FOR THE APPROVAL OF THE RECAPITALIZATION RECOMMENDATION, PLEASE SIGN, DATE AND
RETURN PROMPTLY THE ENCLOSED GOLD PROXY CARD IN THE POSTAGE-PAID ENVELOPE
PROVIDED.
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SOLICITATION OF PROXIES
The solicitation of proxies pursuant to this Proxy Statement is being made
by the members of the Group. Proxies may be solicited by mail, facsimile,
telephone, telegraph, Internet, in person and by advertisements.
Everest has entered into an agreement with MacKenzie Partners, Inc., for
solicitation and advisory services in connection with this solicitation, for
which MacKenzie Partners, Inc., will receive a fee not to exceed $20,000,
together with reimbursement for its reasonable out-of-pocket expenses, and will
be indemnified against certain liabilities and expenses, including certain
liabilities under the federal securities laws. MacKenzie Partners, Inc., will
solicit proxies from individuals, brokers, banks, bank nominees and other
institutional holders. We have requested banks, brokerage houses and other
custodians, nominees and fiduciaries to forward all solicitation materials to
the beneficial owners of the Shares they hold of record. We will reimburse these
record holders for their reasonable out-of-pocket expenses in so doing. It is
anticipated that MacKenzie Partners, Inc., will employ approximately 25 persons
to solicit the Company's stockholders for the Annual Meeting.
The entire expense of soliciting proxies is being borne by Everest
pursuant to the terms of the Joint Filing and Solicitation Agreement (as defined
below). Costs of this solicitation of proxies are currently estimated to be
approximately $70,000. Everest estimates that through the date hereof, its
expenses in connection with this solicitation are approximately $30,000. Everest
intends to seek reimbursement from the Company of all expenses incurred in
connection with the solicitation of proxies for the election of the Nominees to
the Company's Board at the Annual Meeting. Everest does not intend to submit the
question of such reimbursement to a vote of security holders of the Company.
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OTHER PARTICIPANT INFORMATION
Each member of the Group is a participant in this solicitation. Elchanan
Maoz is the chairman of Everest. MEFM is the general partner of Everest. The
principal business of Everest is investing in securities. The principal business
of MEFM is acting as the general partner of Everest. The principal occupation of
Elchanan Maoz is investing in securities. The principal business address of
Everest, MEFM and Elchanan Maoz is Platinum House, 21 Ha'arba'a Street, Tel Aviv
64739 Israel. As of the date hereof, Everest directly owned 2,158,732 shares of
Common Stock. MEFM, as the general partner of Everest, may be deemed to be the
beneficial owner of the securities owned by Everest. Elchanan Maoz, as the
chairman of Everest with the power to exercise investment discretion, may be
deemed to be the beneficial owner of the securities owned by Everest. The Common
Stock owned by Everest was purchased with Everest's working capital. Currently,
Meron Mann does not directly own any Shares. Each of the participants in this
solicitation, as members of a "group" for the purposes of Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended, is deemed to be a beneficial
owner of all 2,158,732 Shares owned by Everest. Each of the participants in this
solicitation disclaims beneficial ownership of Shares that he or it does not
directly own. For information regarding purchases and sales of securities of the
Company during the past two years by the participants in this solicitation, see
Schedule I.
On June 6, 2007, the members of the Group entered into a Joint Filing and
Solicitation Agreement in which, among other things, (a) the parties agreed to
the joint filing on behalf of each of them of statements on Schedule 13D with
respect to the securities of the Issuer, (b) the parties agreed to vote in favor
of the election of the Nominees and to solicit proxies or written consents for
the election of the Nominees, or any other person(s) nominated by Everest at the
Annual Meeting (the "Solicitation"), (c) Everest agreed to indemnify and hold
each of Messrs. Maoz and Mann harmless from and against any and all claims of
any nature, whenever brought, arising from such Nominee's nomination for
election as director of the Issuer and from the Solicitation, and (d) Everest
agreed to bear all expenses incurred in connection with the Group's activities,
including approved expenses incurred by any of the parties in connection with
the Solicitation, subject to certain limitations.
Except as set forth in this Proxy Statement (including the Schedules
hereto), (i) during the past 10 years, no participant in this solicitation has
been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors); (ii) no participant in this solicitation directly or indirectly
beneficially owns any securities of the Company; (iii) no participant in this
solicitation owns any securities of the Company which are owned of record but
not beneficially; (iv) no participant in this solicitation has purchased or sold
any securities of the Company during the past two years; (v) no part of the
purchase price or market value of the securities of the Company owned by any
participant in this solicitation is represented by funds borrowed or otherwise
obtained for the purpose of acquiring or holding such securities; (vi) no
participant in this solicitation is, or within the past year was, a party to any
contract, arrangements or understandings with any person with respect to any
securities of the Company, including, but not limited to, joint ventures, loan
or option arrangements, puts or calls, guarantees against loss or guarantees of
profit, division of losses or profits, or the giving or withholding of proxies;
(vii) no associate of any participant in this solicitation owns beneficially,
directly or indirectly, any securities of the Company; (viii) no participant in
this solicitation owns beneficially, directly or indirectly, any securities of
any parent or subsidiary of the Company; (ix) no participant in this
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solicitation or any of his/its associates was a party to any transaction, or
series of similar transactions, since the beginning of the Company's last fiscal
year, or is a party to any currently proposed transaction, or series of similar
transactions, to which the Company or any of its subsidiaries was or is to be a
party, in which the amount involved exceeds $120,000; (x) no participant in this
solicitation or any of his/its associates has any arrangement or understanding
with any person with respect to any future employment by the Company or its
affiliates, or with respect to any future transactions to which the Company or
any of its affiliates will or may be a party; and (xi) no person, including the
participants in this solicitation, who is a party to an arrangement or
understanding pursuant to which the Nominees are proposed to be elected has a
substantial interest, direct or indirect, by security holdings or otherwise in
any matter to be acted on at the Annual Meeting.
OTHER MATTERS AND ADDITIONAL INFORMATION
OTHER MATTERS
Everest is unaware of any other matters to be considered at the Annual
Meeting. However, should other matters, which Everest is not aware of a
reasonable time before this solicitation, be brought before the Annual Meeting,
the persons named as proxies on the enclosed GOLD proxy card will vote on such
matters in their discretion.
STOCKHOLDER PROPOSALS
Any stockholder who wishes to present a proposal for action at the 2008
Annual Meeting of Stockholders and who wishes to have it set forth in the proxy
statement and identified in the form of proxy prepared by the Company, must
deliver such proposal to the Company at its principal executive offices no
earlier than December 27, 2007 and no later than January 26, 2008, and must meet
the other requirements for inclusion set forth in Rule 14a-8 under the
Securities Exchange Act of 1934, as amended. If a stockholder who wishes to
present a proposal fails to notify the Company by January 26, 2008, the
stockholder would not be entitled to present the proposal at the meeting. If,
however, notwithstanding the requirements of the By-Laws of the Company, the
proposal is brought before the meeting, then under the SEC's proxy rules the
proxies solicited by management with respect to the 2008 Annual Meeting of
Stockholders will confer discretionary voting authority with respect to the
stockholder's proposal on the persons selected by management to vote the
proxies. If a stockholder makes a timely notification, the proxies may still
exercise discretionary voting authority under circumstances consistent with the
SEC's proxy rules.
The information set forth above regarding the procedures for submitting
stockholder proposals for consideration at Company's 2008 annual meeting of
stockholders is based on information contained in the Company's proxy statement.
The incorporation of this information in this Proxy Statement should not be
construed as an admission by us that such procedures are legal, valid or
binding.
INCORPORATION BY REFERENCE
WE HAVE OMITTED FROM THIS PROXY STATEMENT CERTAIN DISCLOSURE REQUIRED BY
APPLICABLE LAW THAT IS EXPECTED TO BE INCLUDED IN THE COMPANY'S PROXY STATEMENT
RELATING TO THE ANNUAL MEETING. THIS DISCLOSURE IS EXPECTED TO INCLUDE, AMONG
OTHER THINGS, CURRENT BIOGRAPHICAL INFORMATION ON THE COMPANY'S CURRENT
DIRECTORS, INFORMATION CONCERNING EXECUTIVE COMPENSATION, AND OTHER IMPORTANT
INFORMATION. ALTHOUGH WE DO NOT HAVE ANY KNOWLEDGE INDICATING THAT ANY STATEMENT
MADE BY US HEREIN IS UNTRUE, WE DO NOT TAKE ANY RESPONSIBILITY FOR THE ACCURACY
OR
-19-
COMPLETENESS OF STATEMENTS TAKEN FROM PUBLIC DOCUMENTS AND RECORDS THAT WERE NOT
PREPARED BY OR ON OUR BEHALF, OR FOR ANY FAILURE BY THE COMPANY TO DISCLOSE
EVENTS THAT MAY AFFECT THE SIGNIFICANCE OR ACCURACY OF SUCH INFORMATION. SEE
SCHEDULE II FOR INFORMATION REGARDING PERSONS WHO BENEFICIALLY OWN MORE THAN 5%
OF THE SHARES AND THE OWNERSHIP OF THE SHARES BY THE DIRECTORS AND MANAGEMENT OF
THE COMPANY.
The information concerning the Company contained in this Proxy Statement
and the Schedules attached hereto has been taken from, or is based upon,
publicly available information.
EVEREST SPECIAL SITUATIONS FUND L.P.
July 5, 2007
-20-
SCHEDULE I
TRANSACTIONS IN SECURITIES OF THE COMPANY
DURING THE PAST TWO YEARS
Transaction Quantity Date Price ($)
----------- -------- ---- ---------
Everest Special Situations Fund L.P.
-------------------------------------
Buy 200,000 02/21/06 0.2500
Buy 300,000 02/22/06 0.2500
Buy 250,000 02/23/06 0.2500
Buy 580,000 02/27/06 0.2500
Buy 5,000 03/01/06 0.3000
Buy 15,000 03/01/06 0.3000
Buy 95,000 03/02/06 0.3500
Buy 5,000 03/03/06 0.4300
Buy 7,500 03/03/06 0.4300
Buy 10,000 03/03/06 0.4300
Buy 17,500 03/03/06 0.4429
Buy 22,000 03/03/06 0.4377
Buy 40,000 03/14/06 0.4038
Buy 40,000 03/15/06 0.4200
Buy 25,000 03/16/06 0.4420
Buy 5,000 03/24/06 0.4600
Buy 5,000 03/27/06 0.4700
Buy 25,000 03/29/06 0.5040
Buy 85,000 06/28/06 0.3694
Buy 6,945 07/31/06 0.4500
Buy 75,000 09/12/06 0.3100
Buy 5,000 09/28/06 0.3300
Buy 25,000 09/29/06 0.3400
Buy 8,287 10/23/06 0.3400
Buy 150,000 11/08/06 0.3050
Buy 20,000 03/21/07 0.3800
Buy 1,500 03/22/07 0.3900
Buy 10,000 04/04/07 0.3800
Buy 10,000 04/05/07 0.3700
Buy 20,000 04/26/07 0.3975
Buy 25,000 04/27/07 0.4000
Buy 5,000 04/30/07 0.4000
Buy 35,000 06/12/07 0.4000
Buy 30,000 06/13/07 0.4000
Maoz Everest Fund Management Ltd.
---------------------------------
None
I-1
Meron Mann
----------
None
Elchanan Maoz
-------------
None
I-2
SCHEDULE II
THE FOLLOWING TABLE IS REPRINTED FROM THE COMPANY'S PROXY STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 20, 2007
[EXCEPT WHERE SPECIFICALLY NOTED]
STOCK OWNERSHIP OF PRINCIPAL OWNERS AND MANAGEMENT
The following table sets forth, as of June 18, 2007, the beneficial
ownership of shares of the Company's Common stock, $.01 par value ("Common
Stock"), by each director and each executive officer named in the Summary
Compensation Table and each person known to the Company to be the beneficial
owner of more than five percent (5%) of its outstanding shares of Common Stock,
and by the Directors and executive officers of the Company as a group.
Amount & Nature
of Beneficial
Name and Address (1) Ownership (2) % of Class
Allan I. Brown (3) 1,133,023 6.8%
Joseph W. Bartlett (4) 85,000 *
J. Anthony Kouba (5) 60,000 *
Greg Mays(6) 10,000 *
Erika Paulson -- -
Ira Tochner -- -
Terrence Wallock (7) 5,000 *
Directors and all Executive Officers 1,288,023 7.7%
as a Group (8)
Yucaipa and affiliates (9)(10) 4,021,320 19.4%
Overseas Toys, L.P.
OA3, LLC
Multi-Accounts, LLC
Ronald W. Burkle
Everest Special Situations Fund L.P.(11) 2,158,732 12.9%(15)
Maoz Everest Fund Management Ltd.
Elchanan Maoz
Platinum House
21 H' arba' a Street
Tel Aviv 64739 Israel
Patrick D. Brady 1,187,414 7.1%
Hazelton Capital Limited (11)(12) 1,130,537 6.8%
28 Hazelton Avenue
Toronto, Ontario Canada M5R 2E2
II-1
Eric Stanton(11)(12)(13) 1,123,023 6.7%
39 Gloucester Road
6th Floor
Wanchai
Hong Kong
Gregory P. Shlopak(11)(12)(14) 1,064,900 6.4%
63 Main Street
Gloucester, MA 01930
H. Ty Warner (11)(12) 975,610 5.9%
P.O. Box 5377
Oak Brook, IL 60522
- ------------
* Less than one percent (1%)
(1) The address for all directors and executive officers is the corporate
address.
(2) The number of shares beneficially owned by each stockholder is determined
in accordance with the rules of the Securities and Exchange Commission and
is not necessarily indicative of beneficial ownership for any other
purpose. Under these rules, beneficial ownership includes those shares of
common stock that the stockholder has sole or shared voting or investment
power and any shares of common stock that the stockholder has a right to
acquire within sixty (60) days after December 31, 2006, through the
exercise of any option, warrant or other right including the conversion of
the series A preferred stock. The percentage ownership of the outstanding
common stock, however, is based on the assumption, expressly required by
the rules of the Securities and Exchange Commission, that only the person
or entity whose ownership is being reported has converted options,
warrants or other rights into shares of common stock including the
conversion of the series A preferred stock.
(3) Includes 20,000 shares issuable pursuant to stock options exercisable
within 60 days of December 31, 2006. Mr. Brown has the sole power to vote,
or to direct the vote of, and the sole power to dispose, or to direct the
disposition of, 1,113,023 shares of common stock. Mr. Brown is party to a
Voting Agreement, dated September 1, 1999, with Yucaipa, Patrick D. Brady,
Gregory P. Shlopak, the Shlopak Foundation, Cyrk International Foundation,
and the Eric Stanton Self-Declaration of Revocable Trust, pursuant to
which Messrs. Brady, Brown, Shlopak, and Stanton and the trusts have
agreed to vote in favor of certain nominees of Yucaipa to the Company's
Board of Directors. Mr. Brown expressly disclaims beneficial ownership of
any shares except for the 1,133,023 shares as to which he possesses sole
voting and dispositive power.
(4) The 85,000 shares are issuable pursuant to stock options exercisable
within 60 days of December 31, 2006.
(5) The 60,000 shares are issuable pursuant to stock options exercisable
within 60 days of December 31, 2006.
(6) The 10,000 shares are issuable pursuant to stock options exercisable
within 60 days of December 31, 2006.
(7) The 5,000 shares are issuable pursuant to stock options exercisable within
60 days of December 31, 2006.
II-2
(8) Includes a total of 180,000 stock options exercisable within 60 days of
December 31, 2006.
(9) Represents shares of common stock issuable upon conversion of 32,564
shares of outstanding series A preferred stock and accrued dividends.
Percentage based on common stock outstanding, plus all such convertible
shares. Overseas Toys, L.P. is an affiliate of Yucaipa and is the holder
of record of all the outstanding shares of series A preferred stock.
Multi-Accounts, LLC is the sole general partner of Overseas Toys, L.P.,
and OA3, LLC is the sole managing member of Multi-Accounts, LLC. Ronald W.
Burkle is the sole managing member of OA3, LLC. The address of each of
Overseas Toys, L.P., Multi-Accounts, LLC, OA3, LLC, and Ronald W. Burkle
is 9130 West Sunset Boulevard, Los Angeles, California 90069. Overseas
Toys, L.P. is party to a Voting Agreement, dated September 1, 1999, with
Patrick D. Brady, Allan I. Brown, Gregory P. Shlopak, the Shlopak
Foundation, Cyrk International Foundation, and the Eric Stanton
Self-Declaration of Revocable Trust, pursuant to which Overseas Toys,
L.P., Multi-Accounts, LLC, OA3, LLC, and Ronald W. Burkle may be deemed to
have shared voting power over 8,233,616 shares for the purpose of election
of certain nominees of Yucaipa to the Company's Board of Directors, and
may be deemed to be members of a "group" for the purposes of Section
13(d)(3) of the Securities Exchange Act of 1934, as amended. Overseas
Toys, L.P., Multi-Accounts, LLC, OA3, LLC and Ronald W. Burkle disclaim
beneficial ownership of any shares, except for the shares as to which they
possess sole dispositive and voting power.
(10) Based on 20,620,396 shares of common stock outstanding and issuable upon
conversion of 32,564 shares of outstanding series A preferred stock and
accrued dividends as of December 31, 2006.
(11) Based on 16,673,193 shares of common stock outstanding as of December 31,
2006.
(12) The information concerning these holders is based solely on information
contained in filings pursuant to the Securities Exchange Act of 1934.
(13) Eric Stanton, as trustee of the Eric Stanton Self-Declaration of Revocable
Trust, has the sole power to vote, or to direct the vote of, and the sole
power to dispose, or to direct the disposition of, 1,123,023 shares. Mr.
Stanton, as trustee of the Eric Stanton Self-Declaration of Revocable
Trust, is a party to a Voting Agreement, dated September 1, 1999, with
Yucaipa and Patrick D. Brady, Allan I. Brown, Gregory P. Shlopak, the
Shlopak Foundation Trust, and the Cyrk International Foundation Trust
pursuant to which Messrs. Brady, Brown, Shlopak, and Stanton and the
trusts have agreed to vote in favor of certain nominees of Yucaipa to the
Company's Board of Directors. Mr. Stanton expressly disclaims beneficial
ownership of any shares except for the 1,123,023 shares as to which he
possesses sole voting and dispositive power.
(14) The information concerning this holder is based solely on information
contained in filings Mr. Shlopak has made with the Securities and Exchange
Commission pursuant to Sections 13(d) and 13(g) of the Securities Exchange
Act of 1934, as amended. Includes 84,401 shares held by a private
charitable foundation as to which Mr. Shlopak, as trustee, has sole voting
and dispositive power. Mr. Shlopak is a party to a Voting Agreement, dated
September 1, 1999, with Yucaipa, Patrick D. Brady, Allan I. Brown, the
Shlopak Foundation, Cyrk International Foundation, and the Eric Stanton
Self-Declaration of Revocable Trust, pursuant to which Messrs. Brady,
Brown, Shlopak, and Stanton and the trusts have agreed to vote in favor of
II-3
certain nominees of Yucaipa to the Company's Board of Directors. Mr.
Shlopak expressly disclaims beneficial ownership of any shares except for
the 1,064,900 shares as to which he possesses sole voting and dispositive
power.
(15) Based on Everest Special Situations Fund, L.P. Schedule 13D Amendment No.
6 filed with the Securities and Exchange Commission on June 14, 2007.
II-4
IMPORTANT
Tell your Board what you think! Your vote is important. No matter how many
Shares you own, please give Everest your proxy FOR the election of its Nominees
and for the ... by taking three steps:
o SIGNING the enclosed GOLD proxy card,
o DATING the enclosed GOLD proxy card, and
o MAILING the enclosed GOLD proxy card TODAY in the envelope provided (no
postage is required if mailed in the United States).
IF ANY OF YOUR SHARES ARE HELD IN THE NAME OF A BROKERAGE FIRM, BANK, BANK
NOMINEE OR OTHER INSTITUTION, ONLY IT CAN VOTE SUCH SHARES AND ONLY UPON RECEIPT
OF YOUR SPECIFIC INSTRUCTIONS. Depending upon your broker or custodian, you may
be able to vote either by toll-free telephone or by the Internet. Please refer
to the enclosed voting form for instructions on how to vote electronically. You
may also vote by signing, dating and returning the enclosed GOLD voting form.
If you have any questions or require any additional information concerning
this Proxy Statement, please contact MacKenzie Partners, Inc. at the address set
forth below.
- --------------------------------------------------------------------------------
If you have any questions regarding your proxy, or need
assistance in voting your Shares, please call:
MACKENZIE PARTNERS, INC.
105 Madison Avenue
New York, NY 10016
Call Toll-Free: 1-800-322-2885
E-Mail: proxy@MacKenziepartners.com
- --------------------------------------------------------------------------------
PRELIMINARY COPY SUBJECT TO COMPLETION
DATED JULY 5, 2007
GOLD PROXY CARD
SIMON WORLDWIDE, INC.
2007 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF EVEREST SPECIAL SITUATIONS FUND L.P.
THE BOARD OF DIRECTORS OF SIMON WORLDWIDE, INC.
IS NOT SOLICITING THIS PROXY
P R O X Y
The undersigned appoints Elchanan Maoz, attorney and agent with full power of
substitution to vote all shares of stock of Simon Worldwide, Inc. (the
"Company") which the undersigned would be entitled to vote if personally present
at the Annual Meeting of Stockholders of the Company scheduled to be held at the
Los Angeles Airport Marriott Hotel, 5855 W. Century Boulevard, Los Angeles,
California, on July 19, 2007, at 10:00 a.m. (local time), and including any
adjournments or postponements thereof and at any meeting called in lieu thereof
(the "Annual Meeting").
The undersigned hereby revokes any other proxy or proxies heretofore given to
vote or act with respect to the shares of stock of the Company held by the
undersigned, and hereby ratifies and confirms all action the herein named
attorneys and proxies, their substitutes, or any of them may lawfully take by
virtue hereof. If properly executed, this Proxy will be voted as directed on the
reverse and in the discretion of the herein named attorneys and proxies or their
substitutes with respect to any other matters as may properly come before the
Annual Meeting that are unknown to Everest Special Situations Fund L.P.
("Everest") a reasonable time before this solicitation.
IF NO DIRECTION IS INDICATED WITH RESPECT TO ANY PROPOSAL ON THE REVERSE, THIS
PROXY WILL BE VOTED "FOR" SUCH PROPOSAL.
This Proxy will be valid until the sooner of one year from the date indicated on
the reverse side and the completion of the Annual Meeting.
IMPORTANT: PLEASE SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY!
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
GOLD PROXY CARD
EVEREST RECOMMENDS A VOTE "FOR" EACH OF ITS NOMINEES LISTED IN PROPOSAL NO. 1
AND "FOR" PROPOSAL NO. 2.
IN THE EVENT THAT ANY OF EVEREST'S NOMINEES LISTED BELOW ARE UNABLE TO SERVE OR
FOR GOOD CAUSE WILL NOT SERVE AS NOMINEES, THE SHARES REPRESENTED BY THIS PROXY
CARD WILL BE VOTED FOR A SUBSTITUTE NOMINEE DESIGNATED BY EVEREST.
[X] PLEASE MARK VOTE AS IN THIS EXAMPLE
1. APPROVAL OF EVEREST'S PROPOSAL TO ELECT DIRECTORS:
WITHHOLD
AUTHORITY TO FOR ALL
FOR ALL VOTE FOR ALL NOMINEES
NOMINEES NOMINEES EXCEPT
Everest Nominees:
Elchanan Maoz [ ] [ ] [ ]
Meron Mann
EVEREST INTENDS TO USE THIS PROXY TO VOTE (I) "FOR" ELCHANAN MAOZ AND MERON MANN
AS CLASS I DIRECTORS TO SERVE FOR A TWO-YEAR TERM AND (II) "FOR" THE CANDIDATES
WHO HAVE BEEN NOMINATED BY THE COMPANY EXCEPT FOR MESSRS. BARTLETT AND BROWN
(FOR WHOM EVEREST IS NOT SEEKING AUTHORITY TO VOTE FOR AND WILL NOT EXERCISE ANY
SUCH AUTHORITY). THE NAMES, BACKGROUNDS AND QUALIFICATIONS OF THE CANDIDATES WHO
HAVE BEEN NOMINATED BY THE COMPANY, AND OTHER INFORMATION ABOUT THEM, CAN BE
FOUND IN THE COMPANY'S PROXY STATEMENT.
THERE IS NO ASSURANCE THAT ANY OF THE CANDIDATES WHO HAVE BEEN NOMINATED BY THE
COMPANY WILL SERVE AS DIRECTORS IF EVEREST'S NOMINEES ARE ELECTED.
NOTE: IF YOU DO NOT WISH FOR YOUR SHARES TO BE VOTED "FOR" A PARTICULAR EVEREST
NOMINEE, MARK THE "FOR ALL NOMINEES EXCEPT" BOX AND WRITE THE NAME(S) OF THE
NOMINEE(S) YOU DO NOT SUPPORT ON THE LINE BELOW. YOUR SHARES WILL BE VOTED FOR
THE REMAINING EVEREST NOMINEE(S). YOU MAY ALSO WITHHOLD AUTHORITY TO VOTE FOR
ONE OR MORE ADDITIONAL CANDIDATES WHO HAVE BEEN NOMINATED BY THE COMPANY BY
WRITING THE NAME OF THE NOMINEE(S) BELOW.
---------------------------------------------------------------
---------------------------------------------------------------
2. APPROVAL OF EVEREST'S NON-BINDING RECAPITALIZATION PROPOSAL WHEREIN ALL
ISSUED AND OUTSTANDING SHARES OF SERIES A1 SENIOR CUMULATIVE PARTICIPATING
CONVERTIBLE PREFERRED STOCK OF THE COMPANY SHALL BE CONVERTED INTO SHARES
OF COMMON STOCK TO ALIGN THE INTERESTS OF ALL EQUITY HOLDERS OF THE
COMPANY.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
DATED: __________________________
_________________________________
(Signature)
_________________________________
(Signature, if held jointly)
_________________________________
(Title)
WHEN SHARES ARE HELD JOINTLY, JOINT OWNERS SHOULD EACH SIGN. EXECUTORS,
ADMINISTRATORS, TRUSTEES, ETC., SHOULD INDICATE THE CAPACITY IN WHICH SIGNING.
PLEASE SIGN EXACTLY AS NAME APPEARS ON THIS PROXY.
