MATTHEWS STUDIO EQUIPMENT GROUP
EXHIBIT (11.8) LETTER ISSUED BY NASDAQ
THE NASDAQ STOCK MARKET, INC.
April 15, 1996
Mr. John D. Murray
Executive VP & CFO
Matthews Studio Equipment Group
2405 Empire Avenue
Burbank, CA 91504
Dear Mr. Murray:
Reference is made to our letter dated January 23, 1996, and the submissions on
behalf of Matthews Studio Equipment Group (the "company") dated January 30,
1996, February 13, 1996, March 11, 1996 and April 11, 1996 as they relate to the
issuance of Warrants and the Special Voting Preferred Share pursuant to the
Purchase Agreement dated July 27, 1995 (the "Agreement") with ING Equity
Partners, L.P.I ("ING"). The company has requested confirmation of compliance
with Part III, Section's 6(i)(1)(c), 6(i)(1)(d)(ii) and 6(j) of Schedule D to
the NASD By-Laws as the provisions therein relate to the transaction with ING.
In addition, the company has requested confirmation that the amendments dated
April 5, 1996, with respect to the grant of stock options to purchase 200,000
shares of common stock to each of Mr. Carlos D. De Mattos and Mr. Edward
Phillips result in compliance with Part III, Section 6(i)(1)(a) of Schedule D to
the NASD By-Laws.
Specifically, the company has submitted the following amendments, duly executed
by the appropriate parties, in order to alleviate our concern that the subject
transactions were completed in violation of the aforementioned provisions of
Schedule D.
- Amendment No. 1 to Common Stock Purchase Warrant dated April 5, 1996;
- Matthews Studio Equipment Group Amended and Restated Certificate of
Determination dated April 9, 1996;
- Amendment No. 1 to Purchase Agreement dated April 5, 1996;
- Senior Subordinated Note due July 27, 2000 in the amount of
$4,900,000;
- Senior Subordinated Note due July 27, 2005 in the amount of $100,000;
- Amendment No. 1 to Stockholders Agreement dated April 5, 1996;
- First Amendment to Employment Agreement dated April 5,
1996, with Edward Phillips and Carlos D. De Mattos; and
- Approval of the Secretary of State of California dated April 12, 1996
of the Amended and Restated Certificate of Determination dated April
9, 1996.
Based upon our review of the transaction with ING, as amended, we have
determined that shareholder approval is not required pursuant to Part III,
Section's 6(i)(1)(c) or 6(i)(1)(d)(ii) for the issuance of the Warrants to ING.
In addition, the modifications resulting in the prior issuance of the Special
Voting Preference Share being null and void ab initio has eliminated our concern
with respect to Part III, Section 6(j). In addition, the grant of stock options
to Mr. Phillips and Mr. De Mattos, subject to the approval of stockholders, is
in compliance with Part III, Section 6(i)(1)(a). Therefore, the company is in
compliance with the provisions of Section's 6(i) and 6(j) with respect to the
transactions discussed in our letter dated January 23, 1996 and our review of
this matter has been closed.
Please note that any subsequent sale and/or issuance of common stock or
securities convertible into or exercisable for common stock to ING pursuant to
the participation rights granted in any of the agreements listed in the Exhibit
Index on page 5 of the Form 8-K dated July 27, 1995 or the amendments thereto
may require shareholder approval if the provisions of Section 6(i) are
applicable. We reserve the right to review such future sale/issuances for
compliance with Part III, Section's 6(i) and 6(j) of Schedule D to the NASD By-
Laws. In addition, we strongly recommend that the company discuss any future
material transactions with the NASD staff to ensure compliance with the
requirements for continued listing on The Nasdaq Stock Market.
This determination is based on the facts and circumstances particular to the
Company and this matter should not be interpreted as precedent regarding the
shareholder approval requirement. Furthermore, this determination does not
supersede any provision of the Company's charter or by-laws or any applicable
state or federal law, rule, or regulation, and The Nasdaq Stock Market renders
no opinion regarding the merits of the described plan.
If you have any questions relating to the compliance issues discussed above,
please contact me at (202) 496-2584.
Sincerely,
/s/ John E. Puchalla
- - - --------------------
John E. Puchalla
senior Analyst