SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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(Name of Registrant as Specified In Its Charter)
THE TODD-AO CORPORATION
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Page (i)
THE TODD-AO CORPORATION
900 N. Seward Street
Los Angeles, California 90038
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
February 24, 1998
To the Stockholders:
The Annual Meeting of Stockholders of The Todd-AO Corporation, a
Delaware corporation, will be held at Todd-AO Studios, 900 N. Seward Street,
Hollywood, CA 90038 on February 24, 1998, at 10:30 a.m. for the following
purposes:
1. To elect a Board of Directors.
2. To approve: (i) an increase in the number of shares authorized
under the 1995 Stock Option Plan from 900,000 to 1,040,000; and (ii) the
award under the 1995 Stock Option Plan of stock options to executive
officers to purchase an aggregate of 30,000 Class A shares at exercise
prices of $9.125 and $9.25 per share; and
3. To approve: (i) an increase in the number of shares authorized
under the 1997 Stock Option Plan from 140,000 to 155,000; and (ii) the
award under the 1997 Stock Option Plan of stock options to a director to
purchase an aggregate of 15,000 Class A shares at an exercise price
of $9.125.
4. To approve restricted stock awards aggregating 100,000 Class A
shares with respect to the services of Salah M. Hassanein.
5. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only stockholders of record at the close of business on January 9, 1998
will be entitled to notice of and to vote at the meeting or any adjournment
thereof.
STOCKHOLDERS ARE REQUESTED TO MARK, DATE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE. THE
ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES.
DATED: January 16, 1998
/s/ Judi M. Sanzo
Judi M. Sanzo
Secretary
Page (ii)
THE TODD-AO CORPORATION
PROXY STATEMENT FOR 1998 ANNUAL MEETING OF STOCKHOLDERS
TABLE OF CONTENTS
Description Page
Information Concerning the Meeting 1
Record Date and Voting Rights 1
Voting of Proxies; Revocability 1
Ownership by Naify Interests 1
Solicitation of Proxies 2
Quorum, Abstentions,
Broker Non-Votes 2
Security Ownership of Certain
Beneficial Owners and Management 2
Election of Directors 4
Director Nominees 5
Meetings 7
Committees 7
Compensation Committee Interlocks
and Insider Participation 7
Other Officers 7
Executive Compensation 8
Summary Compensation Table 8
Option Grants Table 9
Option Exercises and Value Table 10
Employment Agreements 11
Report of the Compensation Committee 12
Section 16(a) Reporting 13
Stock Performance Graph 13
Certain Transactions 14
Stock Options 14
1986 Stock Option Plan 15
1994 Stock Option Plan 15
1995 Stock Option Plan 16
1997 Stock Option Plan 16
Tax Treatment 17
Proposal to Amend the 1995 Stock Option
Plan and Approve Awards Thereunder 18
General 18
Required Vote 18
Proposal to Amend the 1997 Stock Option Plan
Plan and Approve An Award Thereunder 19
General 19
Required Vote 19
Proposal to Approve Restricted Stock
Awards to Salah M. Hassanein 19
General 19
Background 20
Financial and Tax Consequences 20
Required Vote 20
New Plan Benefit Table 20
Independent Auditors 21
Availability of Annual Report 22
Stockholder Proposals 22
Transaction of Other Business 22
PAGE 1
THE TODD-AO CORPORATION
900 N. Seward Street
Los Angeles, California 90038
The accompanying proxy is solicited by the Board of Directors of The
Todd-AO Corporation (the "Company") for use at the Annual Meeting of
Stockholders to be held on February 24, 1998 at 10:30 a.m., and at any
adjournment of the meeting, for the purposes set forth in the accompanying
notice.
INFORMATION CONCERNING THE MEETING
Record Date and Voting Rights
Only stockholders of record as of the close of business on January 9,
1998 are entitled to notice of and to vote at the meeting. On that date
there were outstanding 8,249,970 shares of Class A Stock and 1,747,178 shares
of Class B Stock. The holders of shares of Class A and Class B Stock are
entitled to, respectively, one vote and ten votes for each share held.
Stockholders are not entitled to cumulate their votes in connection with the
election of directors.
Voting of Proxies; Revocability
If the enclosed form of proxy is properly signed and returned, the shares
represented thereby will be voted at the meeting in accordance with the
instructions specified thereon. If the proxy does not specify how the shares
represented thereby are to be voted, they will be voted FOR the election of
management nominees for directors and FOR Proposals 2, 3, 4 and 5. Any
stockholder may revoke his or her proxy at any time before it has been
exercised by written notice to the Company, by submission of a proxy bearing
a later date or by voting in person at the meeting.
Ownership by Naify Interests
On the record date for this meeting, the Naify Interests owned of
record and beneficially 3,277,737 shares of Class A Stock (38.98% of the
total outstanding Class A Stock) and 1,703,639 shares of Class B Stock
(97.51% of the total outstanding Class B Stock) and have over 75% of the
combined voting power of both classes of stock. As a result, stockholder
approval of the proposals is virtually assured, notwithstanding negative
votes by other stockholders.
PAGE 2
Solicitation of Proxies
Solicitation of proxies in the accompanying form is made by the Board of
Directors and the cost thereof will be borne by the Company. In addition to
the use of the mails, management may solicit proxies by telephone, facsimile
and personal interview. Brokers, nominees and other similar record holders
will be requested to forward soliciting material to persons who have a
beneficial interest in the Class A Stock registered in the name of such
nominees and will be reimbursed for their reasonable out-of-pocket expenses
by the Company.
Quorum, Abstentions, Broker Non-Votes
The required quorum for the transaction of business at the Annual
Meeting is one third of the combined number of Class A and Class B
Shares outstanding on the record date. Shares that are voted "For,",
"Against" or "Abstain" with respect to any matter are treated as being
present at the meeting for purposes of establishing a quorum and are
also treated as votes eligible to be cast by the Class A or Class B Shares
present at the meeting in person or by proxy.
While abstentions (or votes "withheld") will be counted for purposes
of determining the presence or absence of a quorum and the number of votes
eligible to be cast with respect to a particular matter, broker non-votes
will not affect the determination as to whether the requisite majority has
been obtained with respect to a particular matter.
This Proxy Statement was first mailed to stockholders on or about
January 23, 1998.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to the
beneficial ownership of the Company's outstanding Common Stock as of January
9, 1998 by (i) each person known by the Company to be the beneficial owner of
more than 5% of the outstanding shares of Common Stock, (ii) each director or
executive officer of the Company who beneficially owns any shares, and (iii)
all directors and executive officers of the Company as a group. Except as
otherwise indicated, the persons listed below have sole voting and investment
power with respect to all shares of Common Stock owned by them, except to the
extent such power may be shared with a spouse.
PAGE 3
NUMBER OF SHARES
BENEFICIALLY OWNED PERCENT (2) OPTIONS(3)
NAME(1) CLASS A CLASS B CLASS A CLASS B CLASS A
A.C. Childhouse 57,753 -- .70% --% 16,666
Silas R. Cross 16,700 -- .20 -- 11,700
Clay M. Davis 31,300 -- .37 -- 25,800
J.R. DeLang 65,600 -- .78 -- 54,600
Franklin Resources(4) 652,442 -- 7.86 -- --
Rand Gladden 13,134(5) .16 -- 2,000
David Haas 10,000 .12 -- 10,000
Coburn Haskell 13,350 .16 -- 13,350
Richard C. Hassanein 24,900 -- .30 -- 23,800
Salah M. Hassanein 701,043(6) -- 8.37 -- 194,000
Herbert L. Hutner 25,766 -- .31 -- 16,666
Christopher D. Jenkins 67,800 -- .81 -- 56,800
Robert I. Knudson 78,989 -- .95 -- 33,150
David P. Malm 4,527(5) -- .02 -- 3,000
Marshall Naify(9) 1,158,967(7) 678,839 13.71 38.85 146,150
Michael S. Naify(9) 179,820 -- 2.16 -- 10,000
Robert A. Naify(9) 1,162,014(8) 906,290 13.75 51.87 146,150
Other Naify Interests(9 ) 776,936 118,510 9.36 6.78 --
Richard O'Hare 15,000 -- .18 -- 15,000
A. Frank Pierce 10,000 -- .12 -- 10,000
Kathleen Reck 4,230 -- .05 -- 4,230
William R. Strickley 5,500 -- .05 -- 4,000
Zelbie Trogden 14,800 -- .18 -- 14,800
All directors and
current executive
officers as a group
(22 persons) 3,661,193 1,585,129 43.51% 90.72 811,862
Notes to Security Ownership Table:
(1) The address of each of the beneficial owners identified is 900
N. Seward Street, Hollywood, CA 90038 except for Franklin Resources,
Inc. whose address is 777 Mariners Island Blvd., San Mateo, CA 94404.
(2) Based on 8,249,970 shares of Class A Common Stock and 1,747,178
shares of Class B Common Stock outstanding at January 9, 1998. Pursuant to
SEC rules, certain shares of Common Stock which a person has the right to
acquire within 60 days pursuant to the exercise of stock options are
deemed to be outstanding for the purpose of computing the percentage
ownership of such person but are not deemed outstanding for the purpose
of computing the percentage ownership of any other person.
PAGE 4
(3) Options to purchase Class A Common Stock exercisable within 60 days.
The option for Mr. Malm is subject to shareholder approval of an increase
in authorized shares under the 1997 Stock Option Plan. See "Proposal to
Amend the 1997 Stock Option Plan Plan and Approve An Award Thereunder."
(4) Schedule 13G filed on February 12, 1997 by Franklin Resources, Inc.,
Charles B. Johnson, Rupert Johnson Jr. and Franklin Mutual Advisors, Inc.
indicates that Franklin Mutual Advisors, Inc. has sole investment discretion
and voting authority with respect to the shares of Class A Common Stock,
which are legally owned by one or more of its investment advisory clients.
(5) Includes 11,134 and 1,527 shares beneficially owned by Messrs. Gladden
and Malm respectively, which are issuable upon conversion of certain
convertible subordinated notes acquired by them in connection with the
Company's purchase of Hollywood Digital.
(6) Includes 100,000 Class A Shares which are subject to shareholder
approval and vesting restrictions. See "Proposal to Approve Restricted
Stock Awards to Salah M. Hassanein."
(7) Includes 30,166 shares of Class A Common Stock held by a trust for
which Mr. Naify is both trustee and beneficiary. Excludes 106,092 shares
of Class A Common Stock held by an independent trustee for the
benefit of three of Mr. Naify's children. Mr. Naify disclaims beneficial
ownership of the shares held by the independent trustee.
(8) Excludes 461,473 shares of Class A Common Stock held of record or
beneficially by Mr. Naify's adult children and grandchildren as to which he
disclaims beneficial ownership.
(9) The Naify Interests (consisting of Marshall Naify, Robert A. Naify,
various members of their families and trusts for the benefit of such members)
may be deemed to constitute a "group" for purposes of Sections 13(d) and
13(g) of the Securities Exchange Act of 1934. The total Class A and B Stock
beneficially owned by The Naify Interests as of January 9, 1998 is 3,277,737
shares (39.24%) and 1,703,639 shares (97.51%), respectively.
ELECTION OF DIRECTORS
At the meeting a Board of fourteen directors will be elected to hold
office until the next annual meeting of stockholders or until their
respective successors are duly elected and qualified. Each of the nominees
was elected at the Annual Meeting of Stockholders on February 25, 1997,
except for Mr. Malm who was elected at a board of Directors meeting held on
June 6, 1997. In connection with the acquisition of Hollywood Digital,
the Company agreed to nominate (and Messrs. Marshall Naify and R. A.
Naify individually agreed to vote their shares in favor of) Mr. Malm as a
director at any election of directors occurring before the earlier of
(i) June 19, 2000; or (2) the date upon which certain Hollywood Digital
sellers associated with Mr. Malm dispose of more than 50% of the Class A
Shares underlying the Convertible Subordinated Notes issued to such sellers.
PAGE 5
Certain officers and directors of the Company were formerly
associated in various capacities with United Artists Communications, Inc.
("UACI"), now known as United Artists Theatre Circuit, Inc., a motion
picture theatre company. UACI owned approximately 85% of the Company's
common stock until 1986. Election of each nominee requires the affirmative
votes of a majority of the total combined votes of the Class A and Class B
shares.
EACH PROXY RECEIVED WILL BE VOTED FOR THE ELECTION OF THE
NOMINEES NAMED BELOW UNLESS OTHERWISE SPECIFIED IN THE PROXY.
Director Nominees
Salah M. Hassanein, age 76, was elected as a Director in 1962. In
July 1996, Mr. Hassanein was appointed the President and Chief Executive
Officer of the Company. From 1994 to 1996, he served as President and Chief
Operating Officer. Prior to 1994, Mr. Hassanein was the Company's Senior
Executive Vice President. Mr. Hassanein also served as President of Warner
Bros. International Theatres Co. from 1988 to June 30, 1994, and is presently
a consultant to Warner Bros. Mr. Hassanein previously served as Executive
Vice President of UACI and President and director of United Artists Eastern
Theatres, Inc. Mr. Hassanein is a principal of SMH Entertainment, Inc. and a
director of Software Technologies Corporation.
J.R. DeLang, age 41, was elected a Director in 1993. He has been a
Senior Vice President of the Company and the Executive Vice President of the
Company's Todd-AO Studios division since 1993. Mr. DeLang previously served
as Vice President of Sales and Marketing of Todd-AO Studios from 1988 to 1993
and Director of Sales and Marketing from 1987 to 1988.
Richard C. Hassanein, age 46, has served as Vice President of the
Company and Director since 1993 and was appointed President of the
Company's subsidiary, Todd-AO Studios West in 1997. He was Executive Vice
President of Todd-AO Studios West from 1995 to 1997 and Executive Vice
President of Todd-AO Studios East from 1991 to 1995. Prior to 1991, Mr.
Hassanein was an independent representative for film and television
producers and President of United Film Distribution Co., Inc. Mr. Hassanein
is the son of Salah M. Hassanein.
Christopher D. Jenkins, age 43, has been a Senior Vice President and
Director of the Company since 1987. He was appointed President of Todd-AO
Studios in 1990 and served as Vice President from 1987 to 1990. Mr. Jenkins
is currently a lead sound mixer for the Company.
Marshall Naify, age 77, was elected a Director in 1964, and currently
serves as Co-Chairman of the Board. He served as Chairman of the Board during
the period of 1990 until July 1996. From 1995 until July 1996, he also served
as Co-Chief Executive Officer. Mr. Naify previously served as Chairman of the
Board and Co-Chief Executive Officer of UACI. Mr. Naify is an investor and
the brother of Robert A. Naify.
PAGE 6
Robert A. Naify, age 75, was elected a Director in 1959 and currently
serves as Co-Chairman of the Board. Mr. Naify served as Co-Chairman and Co-
Chief Executive Officer from 1995 until July 1996. He previously served as
President and Chief Executive Officer during the period of 1990 until 1994.
Mr. Naify also served as President and Co-Chief Executive Officer of UACI.
Mr. Naify is an investor and is a director of Tele-Communications, Inc. He is
the brother of Marshall Naify.
A.C. Childhouse, age 87, was elected a Director in 1964. He
previously served as a Senior Vice President and Director of UACI. Mr.
Childhouse is an investor.
David Haas, age 56, was elected a Director in October 1996. Mr. Haas
has been a financial consultant since 1995, and has assisted clients in the
negotiation and structuring of acquisitions. From 1990 to 1994, Mr. Haas
served as Senior Vice President and Controller of Time Warner Inc.
Herbert L. Hutner, age 88, was elected as a Director in 1987. He is
an investor and a financial consultant.
Robert I. Knudson, age 72, was elected as a Director in 1983, and
currently serves as a consultant to the Company. He was previously an
Executive Vice President of the Company and served as President of
Todd-AO Studios from 1981 until 1990.
David P. Malm, age 33, was elected a Director in 1997. He is
currently a partner of Halpern, Denny & Company, a Director of Hollywood
Digital, Ecce Panis, Inc., H.C. Shaw Company, and Chairman of Brown
Broadcasting Service, Inc. Prior to forming Halpern, Denny & Company
in 1991, Mr. Malm was an associate at Bain Capital. Prior to joining Bain
Capital, he worked in the strategy consulting practice at Bain & Company. He
previously worked in the Investment Banking Group at Morgan Stanley
& Company.
Michael S. Naify, age 35, was elected a Director in 1993. He was
previously Vice President of the Company, serving in that capacity from 1993
to 1994. He is the son of Marshall Naify.
Arthur F. Pierce, age 67, was elected as a Director in October 1996.
Mr. Pierce currently acts as an international consultant providing services
related to motion picture distribution and is a director of Luna Pictures
Limited, a U.K. film company. From January 1993 to June 1996, Mr.
Pierce served as Senior Vice President of Europe Theatrical Distribution for
Time Warner Entertainment. From 1972 to 1993, he served as Vice President of
Europe Theatrical Distribution for Time Warner Entertainment. From 1955 to
1972, Mr. Pierce served in numerous international positions within the motion
picture industry including Managing Director of Italy for Paramount Pictures
International and management positions in four Latin American countries for
Columbia Pictures International.
PAGE 7
Zelbie Trogden, age 61, was elected a Director in 1994. He has been
a financial consultant and a director of Citadel Holding Corporation and
Fidelity Federal Bank since 1993. Prior thereto, he held various executive
positions with Bank of America and Security Pacific National Bank from 1960
to 1993.
Meetings
During the fiscal year ended August 31, 1997, the Board of Directors
held 6 meetings. The only directors who failed to attend at least 75% of
the meetings of the Board of Directors were Marshall Naify and R. A. Naify.
Committees
The Company has an Executive Committee composed of Messrs. Salah
Hassanein, Marshall Naify and Robert A. Naify. The functions of the
Executive Committee include acting on matters which by reason of time
limitations cannot be acted upon by the Board of Directors and studying
matters which are anticipated to be considered by the Board in the future.
During the fiscal year ended August 31, 1997, the Executive Committee held
no formal meetings, but met informally on a number of occasions.
The Company also has a Compensation Committee consisting of Messrs.
Childhouse, Hutner and Pierce and an Audit Committee consisting
of Messrs. Haas, Hutner and Trogden. The principal functions of the
Compensation Committee are to review and make recommendations to the
Board of Directors concerning executive compensation. The Compensation
Committee acted five times during the fiscal year ended August 31, 1997. The
Audit Committee makes recommendations to the Board concerning the
engagement of independent auditors, reviews the auditing engagement, its
results and the Company's internal accounting controls, and directs
investigations into matters within the scope of its functions. The Audit
Committee met once during the fiscal year ended August 31, 1997. The
Company does not have a Nominating Committee.
Compensation Committee Interlocks and Insider Participation
None of the members of the Compensation Committee is an employee of
the Company.
Other Officers
Information concerning the officers of the Company who are not also
directors is incorporated by reference from pp. 13-15 of the Annual Report on
Form 10-K which was mailed concurrently with this Proxy Statement.
PAGE 8
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. Directors who are not employees of the
Company (presently seven individuals) receive $10,000 cash compensation
annually for their services as directors. The table on the next page shows,
for the years ended August 31, 1997, 1996 and 1995 all forms of compensation
for the Chief Executive Officer and each of the most four highly compensated
executive officers of the Company who were serving as executive officers on
August 31, 1997:
Summary Compensation Table
Long Term
Annual Compensation(1) Compensation
No. of Securities
Fiscal Underlying All Other
Name and Principal Position Year Salary Bonus Options Compensation
Salah M. Hassanein 1997 $123,250 (2) $231,875(3)100,000 --
President and 1996 100,000 (2) -- --
Chief Executive Officer 1995 100,001 (2) 66,000 --
The Todd-AO Corporation
J.R. DeLang 1997 403,490 -- 10,000 15,000 (4)
Executive Vice President 1996 335,442 -- -- 15,000 (4)
Todd-AO Studios 1995 293,942 -- 44,000 19,168 (4)
Christopher D. Jenkins 1997 709,306 (5) -- 10,000 4,687 (5)
President 1996 575,631 (5) -- -- 3,400 (5)
Todd-AO Studios 1995 465,981 (5) -- 44,000 3,385 (5)
Clay M. Davis 1997 246,534 -- 15,000 4,687 (6)
Vice President Engineering 1996 176,546 -- -- 3,460 (6)
Todd-AO Studios 1995 151,575 -- 16,500 3,385 (6)
Richard O'Hare 1997 210,922 -- 10,000 15,000 (7)
President 1996 173,695 -- -- 17,228(7)
Todd-AO Video Services 1995 176,491 -- -- 11,000 --
PAGE 9
Notes to Summary Compensation Table
(1) The column for "Other Annual Compensation" has been omitted because
there is no compensation required to be reported in such column. The
aggregate amount of perquisites and other personal benefits
provided to each officer listed above is less than 10% of the total annual
salary of such officer.
(2) Amounts shown as salary include professional fees of $87,500 for
1997 and $80,000 for 1996 and 1995. Effective July 1, 1997, the cash
compensation paid for the services of Salah M. Hassanein was increased
from $100,000 to $250,000 per annum.
(3) Class A Common Stock bonus of 50,000 shares valued at $231,875
as of the grant date. See "Proposal to Approve Restricted Stock Awards
to Salah M. Hassanein."
(4) 1997 salary amount includes non-qualified stock option exercise
compensation of $82,913. Amounts shown as "All Other Compensation"
represent contributions made by the Company to its 401(k) Plan for 1997,
1996 and 1995 and under a collective bargaining agreement to the Motion
Picture Industry Pension Plan for 1994 on Mr. DeLang's behalf.
(5) 1997 salary amount includes non-qualified stock option exercise
compensation of $73,975. Amounts shown as salary include compensation of
$535,331, $475,631 and $365,981 for 1997, 1996 and 1995, respectively,
attributable to services as a sound mixer. Amounts shown as "All Other
Compensation" represent contributions made by the Company under a
collective bargaining agreement to the Motion Picture Industry Pension
Plan on Mr. Jenkins' behalf.
(6) 1997 salary amount includes non-qualified stock option exercise
compensation of $36,988. Amounts shown as "All Other Compensation"
represent contributions made by the Company under a collective bargaining
agreement to the Motion Picture Industry Pension Plan on Mr. Davis' behalf.
(7) Amounts shown as "All Other Compensation" represent contributions
made by the Company to its 401(k) Plan on Mr. O'Hare's behalf.
Option Grants Table
The following table shows all individual grants of stock options during
the fiscal year ended August 31, 1997 to each of the executive officers
named in the Summary Compensation Table:
PAGE 10
Option Grants in Last Fiscal Year
Potential
Realizable Value at
Assumed Annual
Rates of Stock Price
Appreciation
Individual Grants for Option Term
% of
Total
Options/
Granted to Exercise
Options Employees or Base
Granted in Fiscal Price Expiration
Name (#) Year ($/Sh) Date 5% ($) 10% ($)
Salah M. Hassanein 100,000 12.94% $10.50 8/31/2003 $407,354 $941,235
J. R. DeLang 10,000 1.29% 10.50 8/31/2004 48,022 114,036
Christopher D. Jenkins 10,000 1.29% 10.50 8/31/2004 48,022 114,036
Clay M. Davis 10,000 1.29% 10.50 8/31/2004 48,022 114,036
Clay M. Davis 5,000 0.65% 11.00 8/31/2004 24,011 57,018
Richard O'Hare 10,000 1.29% 10.50 8/31/2004 48,022 114,036
Option Exercises and Value Table
The following table shows each exercise of stock options during the
fiscal year ended August 31, 1997 by each of the executive officers named
in the Summary Compensation Table, together with respective aggregate
values of unexercised options as at August 31, 1997.
PAGE 11
Aggregated Option Exercises in Last Fiscal Year
and FY-End Option Values
Number of Value of Unexercised
Unexercised Options In-the-Money Options
at August 31, 1997 at August 31, 1997
Shares
Acquired Value
Name on Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
Salah M. Hassanein -- -- 152,000 124,000 $605,616 $241,472
J. R. DeLang 11,000 $82,913 48,200 16,800 202,054 35,420
Christopher D. Jenkins 11,000 73,975 52,600 12,400 222,244 17,710
Clay M. Davis 5,500 36,988 20,600 16,400 83,837 17,710
Richard O'Hare -- -- 10,800 10,200 32,454 8,114
Employment Agreements
The services of Salah M. Hassanein are provided to the Company
by his wholly-owned corporation (SMH Entertainment, Inc.) at an annual rate
of $250,000. Mr. Hassanein is not employed pursuant to a written agreement,
but serves at the discretion of and on terms determined by the Board of
Directors.
The Company has employment agreements with Messrs. Jenkins and Davis
and is renegotiating agreements with Messrs. DeLang and O'Hare. Under Mr.
Jenkins' agreement (expiring December 31, 2000) compensation for sound mixing
services is paid on an hourly basis at four times the minimum supervisor
union rate. Mr. Jenkins receives an additional $100,000 per year for
management and administrative services. Mr. Davis 'agreement (expiring
February 28, 1999) provides for compensation of $200,000 per annum,
consisting of $150,000 for engineering and technical services and
$50,000 per annum for management and administrative services. Mr. DeLang's
prior agreement (which expired September 30, 1997) provided for a salary of
$285,000, $300,000 and $320,000 for the twelve month periods ending
September 30, 1995, 1996 and 1997 respectively. Mr. O'Hare's prior
agreement (which expired August 31, 1997) provided for a salary of
$153,016, $168,000 and $203,000 for the twelve month periods
ending August 31, 1995, 1996, and 1997, respectively.
None of the foregoing agreements include any termination or
change-in-control payments. The Company's stock option plans provide that
the unvested portion of the awards will become vested and exercisable in
connection with a change-in-control.
PAGE 12
REPORT OF THE COMPENSATION COMMITTEE
Securities and Exchange Commission rules require a disclosure of the
Compensation Committee's policies applicable to the Company's executive
officers with respect to compensation reported for the fiscal year ending
August 31, 1997. During the fiscal year, the Compensation Committee
approved new employment agreements with Rand Gladden, Coburn Haskell,
Christopher Jenkins and Richard Hassanein (each of whom also received stock
options for 10,000 Class A Shares) and with W. R. Strickley (who received
a stock option for 20,000 shares):
(1) Mr. Gladden's agreement was entered into concurrently with the
Hollywood Digital acquisition on June 19,1997 and expires on January 1, 2001.
During the first, second and third years of the term, annual compensation is
payable at rates of $275,000, $300,000 and $325,000, respectively. For the
last six months of the term, compensation is payable at an annualized rate
of $350,000. Mr. Gladden's agreement with the previous owners of
Hollywood Digital provided for a lower salary but also for potentially
unlimited bonuses based on pre tax profits.
(2) Mr. Haskell's agreement commenced as of August 1, 1996
and expires on July 31, 1998. Annual compensation of $115,000 and $130,000
is payable during the first and second years of the term, respectively.
(3) The terms of Mr. Jenkins' agreement are described under the
caption "Employment Agreements." The Committee noted Mr.. Jenkins'
industry stature and the substantial amounts of revenue generated by
his services as a lead sound mixer.
(4) Mr. Richard Hassanein's agreement (expiring August 31, 1999)
provides for annual compensation of $130,000, $140,000 and $150,000 for the
twelve month periods ending August 31, 1997, 1998 and 1999, respectively.
(5) Mr. Strickley's agreement (expiring May 18, 2000) provides for annual
compensation of $175,000, $200,000 and $225,000 for the twelve month periods
ending May 18, 1998, 1999 and 2000, respectively. The factors considered by
the Committee included Mr. Strickley's prior entertainment industry
experience over his twenty five year career with Bank of America.
The Board of Directors also unanimously approved an increase in Mr.
Salah Hassanein's cash compensation from $100,000 to $250,000 annually
and restricted stock awards totaling 100,000 Class A Shares, as set forth
under "Proposal to Approve Restricted Stock Awards to Salah M.
Hassanein."
In all cases, the Committee believes that the indicated compensation
levels are commensurate with the responsibilities of the respective
individuals and consistent with amounts earned by other executives of
comparable experience. Compensation levels for the Company's full
time executives are generally determined primarily by reference to
competitive levels for individuals of like experience in similar positions
and by prior performance with the Company rather than by relationship
to corporate performance.
PAGE 13
Federal income tax law now limits the deductibility of an executive's
compensation in excess $1,000,000 per year. In light of the current
level of executive compensation, the Company has not adopted a policy with
respect to the deductibility limit, but will adopt such a policy should it
become relevant.
The Company's compensation policy is to provide a reasonably
competitive level of current compensation to its executives together with
long term equity incentives, the value of which depends upon performance that
increases value to the stockholders. The Company does not presently pay cash
bonuses to its executive officers and the equity incentives consist solely
of restricted stock awards or stock options with vesting restrictions, which
the Committee believes encourages commitment and provides benefits
directly related to corporate performance.
COMPENSATION COMMITTEE
A. C. Childhouse
Herbert L. Hutner
Arthur F. Pierce
SECTION 16(a) REPORTING
Section 16(a) of the Exchange Act requires the Company's officers,
directors and 10% shareholders to file reports of ownership with the SEC and
to provide the Company with copies of such filings. Based solely upon
a review of the copies received, the Company believes that its executive
officers, directors and 10% shareholders were in compliance with
Section 16(a) for the fiscal year ended August 31, 1997, except that a Form 3
filing by Mr. Clay Davis was 2 days late.
STOCK PERFORMANCE GRAPH
The following graph compares the yearly percentage change in
the cumulative total shareholder return on the Company's Class A Common
Stock during the five years ended August 31, 1997 with the cumulative total
return on the NASDAQ Stock Market Index (U. S. Companies) and a selected
peer group index consisting of NASDAQ stocks with a Standard Industrial
Classification similar to the Company's.
The Todd-AO Corporation
Five Year Performance Comparison
(GRAPH)
PAGE 14
Year End Data
08/31/92 08/31/93 08/31/94 08/31/95 08/31/96 08/31/97
The Todd-AO Corporation 100.0 90.60 158.30 256.00 343.20 249.20
NASDAQ Stock Market 100.0 131.90 137.30 184.90 208.50 291.00
NASDAQ Peer Group 100.0 219.10 158.70 178.30 82.30 96.80
(SIC 7810-7819 US + Foreign)
Motion Picture Production
and Allied Services
CERTAIN TRANSACTIONS
On June 20, 1997, the Company acquired the assets and certain
liabilities of Hollywood Digital Limited Partnership ("Hollywood Digital.")
from various sellers. The acquisition price was $26,160,000, consisting
of $17,761,000 cash and $8,399,000 in Convertible Subordinated Notes.
(the "Notes"). Mr. David Malm, a director of the Company, is a partner in
Halpern Denny & Company, a venture capital firm which is associated
with certain of the Hollywood Digital sellers and which received consulting
fees and related compensation of $465,000 in connection with the
transaction. Mr. Malm and Mr. Rand Gladden (President of Hollywood Digital
and a Vice President of the Company) have indirect interests as sellers
in $12,386 and $131,519 respectively principal amount of the Notes.
STOCK OPTIONS
The Company presently has four stock option plans: the 1986 Stock
Option Plan (the "1986 Plan"), the 1994 Stock Option Plan (the "1994 Plan"),
the 1995 Stock Option Plan (the "1995 Plan" ) and the 1997 Stock Option
Plan (the "1997 Plan"). All plans relate solely to Class A shares, whose
closing NASDAQ market price was $8.75 on January 9, 1998.
Each Plan provides for the grant of incentive stock options (at not less
than 100% of fair market value on the date of the grant), non-qualified
stock options (at not less than 85% of fair market value on the date of
the grant) or a combination thereof. All of the Company's employees,
directors and consultants (approximately 650 people) are eligible to
receive options, but the Plans are each administered by the Compensation
Committee, which determines the individuals to whom options are granted
and the terms of the awards. The awards typically involve vesting
restrictions but the recipients do not otherwise pay for the options.
PAGE 15
1986 Stock Option Plan
The 1986 Plan was approved by the shareholders in July 1987.
An aggregate of 660,000 Class A Shares has been reserved for issuance
under the 1986 Plan. Options to purchase an aggregate of 207,060
shares were outstanding under the 1986 Plan at January 9, 1998 as incentive
and non-qualified options at exercise prices ranging from $2.03 to $5.06 per
share. During February 1995, the shareholders approved an extension of the
termination date of the 1986 Plan until August 31, 2004 with respect to
options for an aggregate of 213,675 shares granted on September 26, 1994.
On March 27, 1996, the shareholders approved an extension of the
termination date of the 1986 Plan with respect to nonqualified options to
purchase an aggregate of 163,560 shares originally expiring on August 31,
1996. The termination date was extended to August 31, 1997 with respect
to 50% of such shares and until August 31, 1998 as to the remaining 50%.
The Company does not presently intend to grant further options
under the 1986 Plan and no action with respect to the 1986 Plan is scheduled
to be taken at the meeting.
1994 Stock Option Plan
The 1994 Plan was approved by the shareholders in August 1994.
An aggregate of 630,000 shares has been reserved for issuance under the
1994 Plan, all of which have been awarded as follows:
Awards Under 1994 Stock Option Plan
(Date of Shareholder Approval: August 25, 1994)
Number of Shares Vesting On:
Name 09/01/94 09/01/95 09/01/96 09/01/97 09/01/98 Total
Salah M. Hassanein 22,000 22,000 22,000 22,000 22,000 110,000
Marshall Naify 22,000 22,000 22,000 22,000 22,000 110,000
Robert A Naify 22,000 22,000 22,000 22,000 22,000 110,000
All of the options described in the foregoing table were awarded as
incentive options. The exercise price is $3.26 per share for Mr. Hassanein
and $3.59 per share for Messrs. Naify and Naify. Once vested, the options
expire on August 31, 2003 (in the case of Mr. Hassanein) and June 23, 1999
(in the case of Messrs. Naify and Naify, who are each 10% shareholders).
PAGE 16
Awards Under 1994 Stock Option Plan
Date of Shareholder Approval: February 25, 1997
Number of Shares Vesting On:
Name 01/08/97 09/01/97 09/01/98 09/01/99 09/01/00 09/01/01 Total
Salah M. Hassanein 20,000 20,000 20,000 20,000 20,000 -- 100,000
Marshall Naify 20,000 20,000 20,000 20,000 9,474 10,526 100,000
Robert A Naify 20,000 20,000 20,000 20,000 9,474 10,526 100,000
All of the options described in the foregoing table were awarded as
nonqualified options except for incentive options of 26,994 shares to Mr.
Hassanein and 11,673 shares each to Marshall Naify and Robert A. Naify.
The exercise price for each option is $10.50 per share. The expiration date of
the options is August 31, 2003 (the termination date of the 1994 Plan) except
that incentive options granted to Messrs. Naify and Naify will expire on
January 7, 2002.
There are presently no options available for grant under the 1994 Plan.
No action with respect to the 1994 Plan is scheduled to be taken at the
meeting.
1995 Stock Option Plan
The 1995 Plan was approved by the shareholders in February 1995.
An aggregate of 900,000 shares has been reserved for issuance under the 1995
Plan. Options to purchase an aggregate of 616,686 shares were outstanding
under the 1995 Plan at January 9, 1998 as incentive and non-qualified options
at exercise prices ranging from $4.50 to $10.50 per share. The options vest
(generally over a five year period) and once vested terminate on August 31,
2004. As of January 9, 1998, there were 183,140 options available for
grant under the 1995 Plan.
If adopted, Proposal 2 will: (i) increase the number of shares
reserved for issuance under the 1995 Plan by 140,000; and (ii) approve the
award to officers and directors of options to purchase 30,000 shares at
exercise prices of $9.125 and $9.25.
1997 Stock Option Plan
The 1997 Plan was approved by the shareholders in February 1997.
An aggregate of 140,000 shares has been reserved for issuance under
the 1995 Plan, all of which have been issued to non-employee directors
as nonqualified options at an exercise price of $10.50 per share,
vesting as follows:
PAGE 17
Awards Under 1997 Stock Option Plan
Date of Shareholder Approval: February 25, 1997
Number of Shares Vesting On:
Name 01/08/97 09/01/97 09/01/98 09/01/99 09/01/00 Total
A. C. Childhouse 8,333 8,333 8,334 -- -- 25,000
David Haas 5,000 5,000 5,000 5,000 5,000 25,000
Herbert Hutner 8,333 8,333 8,334 -- -- 25,000
Michael S. Naify 5,000 5,000 5,000 5,000 5,000 25,000
A. Frank Pierce 5,000 5,000 5,000 5,000 5,000 25,000
Zelbie Trogden 3,000 3,000 3,000 3,000 3,000 15,000
Total 140,000
If adopted, Proposal 2 will: (i) increase the number of shares
reserved for issuance under the 1997 Plan by 15,000; and (ii) approve the
award to a director of an option to purchase 15,000 shares at
an exercise price of $9.125 per share.
Tax Treatment
Based on management's understanding of existing federal income tax
laws, the principal consequences of the grant and exercise of incentive
stock options and non-qualified stock options are summarized below.
Incentive Options. The grant of an incentive stock option does not
ordinarily have any income tax consequences to the optionee. If the shares
are held at least one year after exercise and are not disposed of within two
years from the date of grant, the optionee does not recognize taxable income
upon exercise, but the amount by which the fair market value of the stock at
the time of exercise exceeds the exercise price will be an item of tax
preference which may be subject to the alternative minimum tax. Any gain or
loss recognized upon the disposition of such shares by the optionee after
the two-year and one-year periods described above will be treated as
long-term capital gain or loss. If the option is treated as an incentive
option, the Company does not receive a tax deduction.
Non-Qualified Options. The grant of a non-qualified stock option also
does not ordinarily have any income tax consequences to the optionee. Upon
exercise, the optionee will recognize ordinary income equal to the difference
between the fair market value of the shares on the date of exercise and the
exercise price. The Company is entitled to a tax deduction in the same
amount as the income recognized by the optionee and at the same time that
the optionee recognizes such income.
PAGE 18
When an optionee disposes of shares acquired upon exercise of a non-
qualified stock option, any amount realized in excess of the fair market
value of the shares on the date of exercise will be treated as capital gain
if the shares are a capital asset and will be long-term or short-term,
depending on the holding period for the shares. The holding period commences
upon exercise of the option. If the amount realized is less than such fair
market value, the loss will be treated as long-term or short-term capital
loss, depending upon the holding period for the shares.
PROPOSAL TO AMEND
THE 1995 STOCK OPTION PLAN
AND APPROVE AWARDS THEREUNDER
General
The Board of Directors proposes to increase the number of shares
reserved for issuance under the 1995 Plan by 140,000. As of January
9, 1998 there were only 183,140 options available for grant under the
1995 Plan. The Board of Directors believes that it is in the Company's
best interests to have additional shares available for potential issuance
to key personnel.
The shareholders are also requested to approve option awards
under the 1995 Plan to W.R. Strickley and Rand Gladden, who each joined the
Company during fiscal 1997. Mr. Strickley's option relates to 20,000 shares
at an exercise price of $9.25 and Mr. Gladden's option relates to 10,000
shares at an exercise price of $9.125. Each option vests over a five year
period commencing 09/01/97. Shareholder approval of the option awards
is requested (but not required) to assure that such awards meet the
exemptive criteria set forth in Securities Exchange Act Rule 16b-3.
Messrs. Strickley and Gladden are each active in the Company's
management and do not participate in any other bonus or incentive plans.
The award of additional options is consistent with the Company's policy of
providing long term equity incentives the value of which depends upon
performance that increases value to the stockholders.
Required Vote
Approval of the increase in reserved shares under the 1995 Plan requires
the affirmative votes of a majority of the total combined votes of the Class
A and Class B shares. Approval of the awards under the 1995 Plan does not
require a shareholder vote but is nonetheless requested and will be
deemed obtained by the affirmative votes of a majority of the total
combined votes of the Class A and Class B shares. The Board of Directors
recommends a vote FOR this proposal.
PAGE 19
PROPOSAL TO AMEND
THE 1997 STOCK OPTION PLAN
AND APPROVE AN AWARD THEREUNDER
General
The Board of Directors proposes to increase the number of shares
reserved for issuance under the 1997 Plan by 15,000. On June 19, 1997
David P. Malm was elected a director of the Company and was awarded
an option to purchase 15,000 shares, vesting over a five year period
beginning September 1, 1997, exercisable at $9.125 per share. The award
is subject to shareholder approval of an increase in reserved shares under
the 1997 Plan. Shareholder approval of the option award to Mr. Malm
is requested (but not required) to assure that the award meets the
exemptive criteria set forth in Securities Exchange Act Rule 16b-3.
Required Vote
Approval of the increase in reserved shares under the 1997 Plan requires
the affirmative votes of a majority of the total combined votes of the Class
A and Class B shares. Approval of the award to Mr. Malm under the 1997 Plan
does not require a shareholder vote but is nonetheless requested and will be
deemed obtained by the affirmative votes of a majority of the total
combined votes of the Class A and Class B shares. The Board of Directors
believes that Mr. Malm brings valuable investment banking experience and
recommends a vote FOR this proposal.
PROPOSAL TO APPROVE
RESTRICTED STOCK AWARDS
TO SALAH M. HASSANEIN
General
The Board of Directors has approved the following restricted stock awards
with respect to the services of Salah M. Hassanein: (i) 50,000 Class A Shares
with respect to services rendered during 1997 (the "1997 Award"); and
(ii) 50,000 Class A Shares with respect to services to be rendered during
the fiscal year ending August 31, 1998 (the "1998 Award"). The 1997
Award is fully vested. The 1998 Award vests on August 31, 1998 provided
that Mr. Hassanein continues to serve as President of the Company
(and/or in such other capacities as may be approved by the Board
of Directors) during fiscal 1998. Notwithstanding the foregoing, the 1998
Award becomes fully vested on an accelerated basis in the event of Mr.
Hassanein's death or permanent disability prior to August 31, 1998.
Both the 1997 Award and the 1998 Award are subject to approval by the
shareholders. The shares underlying the 1997 Award and the 1998 Award
have not been registered under the Securities Act of 1933 and the
transferability thereof is restricted. Subject to the foregoing, the shares
underlying the 1997 and 1998 Awards have been issued to SMH Entertainment,
Inc., a corporation wholly owned by Mr. Hassanein which provides his
services to the Company.
PAGE 20
Background
The Board noted that since Mr. Hassanein was appointed President in 1994
the Company had completed six acquisitions and an underwritten public
offering, expanding from a provider of sound services to a diversified
postproduction company. Revenues had more than doubled and earnings
per share had almost tripled during this period. Market capitalization
of the Class A Shares had risen from approximately $33,000,000 on
August 31, 1994 to over $72,000,000 as at August 31, 1997.
The Board also considered Mr. Hassanein's 35 years of service to the
Company and noted that his cash compensation had remained at $100,000
per annum from September 1, 1987 to July 1, 1997. Under these circumstances
and in view of the Company's performance, an increase in annual cash
compensation to $250,000 and the grant of the 1997 and 1998 Awards
are consistent with the Company's compensation policies.
Financial and Tax Consequences
The shares underlying the 1997 and 1998 Awards have not been registered
under the Securities Act of 1933 and cannot be resold absent such
registration or an exemption therefrom. In view of the restricted
transferabilility and based upon independent financial advice, the Company
has valued the 1997 Award at $231,875 and the 1998 Award at $241,812,
which amounts will represent charges to earnings for fiscal 1997 and fiscal
1998 respectively. For federal income tax purposes, SMH Entertainment, Inc.
is required to value the stock without regard to the transfer restrictions,
which value will constitute taxable income to it and a corresponding tax
deduction for the Company. The closing market prices for the Class A Stock
on the grant dates of the 1997 Award (August 22, 1997) and the 1998 Award
(September 5, 1997) were $8.75 and $9.125, respectively.
Required Vote
Approval of the 1997 and 1998 Awards requires the affirmative votes
of a majority of the total combined votes of the Class A and Class B shares.
The Board of Directors believes that it is appropriate to so recognize Mr.
Hassanein's contributions and recommends a vote FOR this proposal.
NEW PLAN BENEFIT TABLE
The table on the following page sets forth information regarding the
expected benefits arising from Proposals 2, 3 and 4 for each person named
in the Summary Compensation Table and for the indicated groups:
PAGE 21
NEW PLAN BENEFITS
APPROVAL OF AWARDS UNDER 1995 STOCK OPTION PLAN
APPROVAL OF AWARD UNDER 1997 STOCK OPTION PLAN
APPROVAL OF RESTRICTED STOCK AWARDS TO SALAH M. HASSANEIN
AMENDMENT OF 1995 AMENDMENT OF 1997 RESTRICTED
STOCK OPTION PLAN STOCK OPTION PLAN STOCK AWARDS
Number Number Number
Dollar of Dollar of Dollar of
Name Value ($) Units Value($) Units Value($) Units
Salah M. Hassanein $ -- -- -- -- $473,687(1) 100,000
J. R. DeLang -- -- -- -- -- --
Christopher D. Jenkins -- -- -- -- -- --
Rick O'Hare -- -- -- -- -- --
Clay Davis -- -- -- -- -- --
Executive Group (2) $-0-(3) 30,000 -- -- -- --
Non-Executive (4) -- -- $-0-(3) 15,000 -- --
Director Group
Non-Executive Officer (5) -- -- -- -- -- --
Employee Group
Notes to New Plan Benefit Table:
(1) Valued as set forth above under the caption "Financial and Tax
Consequences."
(2) This group consists of all executive officers.
(3) On January 9, 1998, the closing price of the Company's Class A Stock
as reported by NASDAQ was $8.75 and the exercise price of the related
options was $9.125 and $9.25.
(4) This group consists of Messrs. Childhouse, Haas, Hutner, Knudson,
Malm, Michael S. Naify and Pierce. Messrs. Salah Hassanein and Malm
are the only director nominees whose compensation will be submitted for
shareholder action at this meeting.
(5) This group consists of employees who are not executive officers.
INDEPENDENT AUDITORS
Deloitte & Touche LLP serves as the Company's principal auditors. The
Company does not presently intend to request a representative of this firm
to attend the Annual Meeting.
PAGE 22
AVAILABILITY OF ANNUAL REPORT
The Company's 1997 Form 10-K Report, which includes the Annual Report
to Shareholders, is being mailed with this Proxy Statement. A copy of the
10-K Report is available without charge by written request to the Corporate
Secretary at the address set forth in the following paragraph.
STOCKHOLDER PROPOSALS
If any stockholder intends to present a proposal for action at the
Company's Annual Meeting to be held in 1998 and wishes to have such
proposal set forth in management's proxy statement, such stockholder must
forward the proposal to the Company so that it is received on or before the
later of (i) August 31, 1998, or (ii) a reasonable time before the proxy
materials for the annual meeting are mailed to stockholders. Proposals
should be addressed to the Company at 900 N. Seward Street, Los Angeles,
CA 90038 (Attention: Corporate Secretary).
TRANSACTION OF OTHER BUSINESS
As of the date of this Proxy Statement, there are no other matters which
management intends to present or has reason to believe others will present
to the meeting. If other matters are presented, proxies will be voted in
accordance with management's judgment unless instructions to the contrary
are given.
Dated: January 16, 1998
By Order of the
Board of Directors
/s/ Judi M. Sanzo
Judi M. Sanzo, Secretary
Form of Proxy Card:
THE TODD-AO CORPORATION
ANNUAL MEETING OF STOCKHOLDERS FEBRUARY 24, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
The undersigned hereby appoints Salah M. Hassanein, Silas R. Cross and
Judi M. Sanzo, and each of them, with power of substitution, as proxies of
the undersigned, to attend the Annual Meeting of Stockholders of The Todd-AO
Corporation to be held at 900 N. Seward Street, Hollywood, CA 90038 on
February 24, 1998, at 10:30 A.M., and any adjournment(s) thereof, and to
vote all shares of Class A or Class B Stock of The Todd-AO Corporation
which the undersigned would be entitled to vote if personally present on
the following:
(1) To elect a board of fourteen directors for the ensuing year.
FOR all nominees listed WITHOUT AUTHORITY
below (except as marked to vote for all
to the contrary below) nominees listed
below
(INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through the nominee's name in the list below)
A. C. Childhouse, J. R. DeLang, David Haas, Richard C. Hassanein, Salah M.
Hassanein, Herbert L. Hutner, Christopher D. Jenkins, Robert I. Knudson,
David P. Malm, Marshall Naify, Michael S. Naify, Robert A. Naify,
Arthur F. Pierce and Zelbie Trogden.
(2) To approve: (i) an increase in the number of shares authorized
under the 1995 Stock Option Plan from 900,000 to 1,040,000; and
(ii) the award under the 1995 Stock Option Plan of stock options to
executive officers to purchase an aggregate of 30,000 Class A shares
at exercise prices of $9.125 and $9.25 per share
FOR AGAINST ABSTAIN
(3) To approve: (i) an increase in the number of shares authorized
under the 1997 Stock Option Plan from 140,000 to 155,000; and (ii) the
award under the 1997 Stock Option Plan of stock options to a director to
purchase an aggregate of 15,000 Class A shares at an exercise price
of $9.125.
FOR AGAINST ABSTAIN
(4) To approve restricted stock awards aggregating 100,000 Class A
shares with respect to the services of Salah M. Hassanein.
FOR AGAINST ABSTAIN
(5) In their discretion, upon any and all such other matters as may
properly come before the meeting or any adjournment thereof.
FOR AGAINST ABSTAIN
THIS PROXY WILL BE VOTED AS DIRECTED. IN THE ABSENCE
OF DIRECTIONS, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF DIRECTORS NOMINATED BY MANAGEMENT AND
FOR PROPOSALS 2, 3, 4 and 5.
Dated: , 1998
(Signature)
(Signature)
Please sign exactly as
name appears at left.
Joint owners should each
sign. Attorneys,
administrators, trustees,
etc. should so indicate
when signing.
STOCKHOLDERS ARE URGED TO MARK, DATE, SIGN AND
RETURN THIS PROXY PROMPTLY IN THE ENVELOPE
PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN
THE UNITED STATES.