SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
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
[_] Definitive Proxy Statement Rule 14a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Hollywood Trenz, Inc.
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(Name of Registrant as Specified In Its Charter)
Shareholders Committee of Hollywood Trenz, Inc.
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[X] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(i) Title of each class of securities to which transaction applies:
(ii) Aggregate number of securities to which transaction applies:
(iii) 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):
(iv) Proposed maximum aggregate value of transaction:
(v) Total fee paid:
[X] 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: $500.00
(2) Form, Schedule or Registration Statement No.: Pre 14A
(3) Filing Party: Shareholders Committee of Hollywood Trenz, Inc.
(4) Date Filed: July 5, 1996 (Filed in hard copy; not filed on Edgar)
Notes:
THE SHAREHOLDERS COMMITTEE
OF HOLLYWOOD TRENZ, INC.
c/o Victor L. Zimmermann, Jr.
O'Rourke O'Hanlan & Zimmermann
27 Pine Street
New Canaan, CT 06840
(203) 966-6664
SOLICITATION OF PROXIES IN CONNECTION WITH PROPOSED CONSENT TO ACTION
October , 1996
Hollywood Trenz, Inc.
3471 North Federal Highway
Ft. Lauderdale, Florida 33306
Copies of this proxy statement and form or proxy
are being mailed on or about ____________, 1996
to shareholders of record as of ___________, 1996
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Dear Fellow Hollywood Trenz Shareholders:
The Shareholders Committee of Hollywood Trenz, Inc. (the "Committee")
believes that the time has come to seek new shareholder representation on the
Board of Directors of Hollywood Trenz, Inc. (the "Company"). Through these
changes, the Committee believes that the Company's Board of Directors and
management will be more able to accomplish the corporate purpose of the Company,
including the completion of the Company's entertainment center in Phoenix,
Arizona, and expansion and development of other theme parks, both domestically
and abroad, and resultant maximization of the value of the Company's shares. To
accomplish this goal, the Committee needs your support and your proxy. The proxy
will be used to execute a consent to action by shareholders without a meeting
whereby existing directors will be removed and new directors will be appointed
to serve until the next annual meeting.
Unless otherwise indicated, the person named in the accompanying BLUE proxy
will execute a consent to action without a meeting FOR the following purposes:
1. FOR the removal of any bylaw amendments adopted by the Board of
Directors of the Company on or after March 31, 1996, which restrict the
rights of shareholders to nominate and/or elect persons for election to
the Board of Directors of the Company, and to raise matters for
consideration of the shareholders at the Company's annual shareholders'
meeting. (As of this date the Committee is not aware that any such
bylaw amendments have been adopted. If such bylaw amendments are either
subsequently adopted or it is learned that such bylaw amendments were
previosly adpopted by the Board of Directors of the Company, additional
proxy materials will be forwarded by the Committee in order to disclose
to shareholders the terms of any such bylaw amendments which the
Committee may seek to remove).
2. FOR the removal of the following directors of the Company:
Edward R. Showalter
Robert E. Burton, Jr.
Gregory D. Smith
3. FOR the election of the Committee's nominees for Director.
If, after reading the Proxy Statement and the accompanying letter, you want
to join us in seeking achievement of the corporate purposes of the Company:
MARK the enclosed BLUE Proxy to indicate how you wish a consent to action
to be executed on your behalf.
SIGN the enclosed BLUE Proxy
DATE the enclosed BLUE Proxy
RETURN the enclosed BLUE Proxy in the postage prepaid envelope.
YOUR PROXY IS IMPORTANT TO US NO MATTER HOW MANY OR HOW FEW SHARES YOU OWN.
PLEASE MARK THE BLUE PROXY, SIGN, DATE, AND RETURN IT PROMPTLY IN THE ENCLOSED,
SELF-ADDRESSED, STAMPED ENVELOPE. BLUE PROXIES WHICH ARE SIGNED, BUT UNMARKED,
WILL BE COUNTED AND A CONSENT WILL BE EXERCISED IN FAVOR OF THE ACTIONS
DESCRIBED ABOVE.
YOU may be receiving a WHITE PROXY from the Company opposing the efforts of
the Committee. WE URGE YOU NOT TO SIGN ANY WHITE PROXY CARD YOU MAY RECEIVE
FROM THE COMPANY.
Any proxy may be revoked at any time before the proxy is exercised by
either a later dated proxy, written notice of revocation to the Secretary of the
Company at its principal office, or a vote in person at the Meeting of
Shareholders. THE ONLY PROXY THAT COUNTS IS THE LATEST, DATED ONE. IF YOUR
SHARES OF THE COMPANY'S STOCK ARE HELD IN THE NAME OF YOUR BROKER, BANK, OR
THEIR NOMINEE, YOU WILL NEED TO CONTACT YOUR BROKER OR BANK TO GIVE INSTRUCTIONS
AS TO WHETHER YOU WISH A CONSENT TO ACTION To BE EXECUTED ON YOUR BEHALF.
As more fully described elsewhere in the Proxy Statement, the Committee and
its nominees are not members of the Company's current management.
If you have any questions or require any assistance in completing your BLUE
Proxy, please call Michael Noveilli at (212) 843-8344.
WHY THE COMMITTEE IS SOLICITING PROXIES
Michael Noveilli, Eric Landis, Scott MacCaughern, and Kenneth Callison,
who as of July 30, 1996, owned, of record or beneficially, in the aggregate
1,622,975 shares or approximately 3.1% of the outstanding shares of the Company,
decided to form the Committee and make this proxy solicitation after they came
to believe, as described below, that current management's policies were not
directed towards achieving the corporate purpose of the Company and allowing
shareholders to exercise their legitimate rights as shareholders. Mr. Noveilli,
Mr. Landis and Mr. MacCaughern are all members of the securities industry, and
have purchased shares of the common stock of the Company for themselves and for
their customers, after being convinced by the Company's President, Edward R.
Showalter ("Showalter"), of his vision for the Company and the concrete steps
which were allegedly being taken to realize the corporate purpose. Mr. Callison
is a shareholder who has made a substantial investment in the Company.
The Committee, which consists of the foregoing persons, has recently become
increasingly dissatisfied with the Board of Directors and management of the
Company. The Committee's primary concerns regarding the Company are:
. Waste of corporate assets.
. Inability to fulfill the corporate purpose of the Company.
. Dilution of shareholder value
. Failure to hold an annual shareholders' meeting the entire period
the Company has been a public company.
(1) Waste of Corporate Assets
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Since January, 1995, the Company has raised over $1,550,000 in cash
according to the notes to its Statement of Cash Flows for the Six Months Ended
June 30, 1995 and 1996 filed as part of its Form 10-QSB dated August 12, 1996.
("Third Quarter 96 10Q.") That cash is non existent according to the Third
Quarter 96 10Q. While the Committee is not aware where all the capital has gone
the Committee is aware that the Company has still been unable to open its first
entertainment park/restaurant. According to an article in the Phoenix Business
Journal on June 21, 1996, which quoted a Denver based real estate broker who
apparently represented the Company in negotiations for its first site in Denver,
the Company executed a lease for a 37,000 square foot entertainment center in
December, 1995 but Showalter did not pay the $12,000 security deposit or come up
with construction plans for the building's retrofit as required by the landlord.
According to the article, the landlord subsequently canceled the lease. The text
of the Phoenix Business Journal article is annexed hereto as Exhibit A.
Where has the money gone? This is not a company doing research and
development which may require substantial capital while failing to show any
tangible assets. This is a Company whose sole corporate objective, as outlined
in its 1994 and 1995 Form 10K's, is to get its flagship entertainment center up
and going. We wonder how in the world it is possible to have so exhausted the
Company's capital that there is not enough left to pay the $12,000 security
deposit on what is supposed to be a major asset of the Company?
The Company was successful in at least having a lease executed and
construction commenced on its Phoenix, Arizona site but has been altogether
unable to meet its obligations to its builders on a timely basis there as well.
In connection with the litigation instituted by a member of the Committee,
Kenneth Callison, against the current directors, (see the "Litigation", below)
the former project manager for the Phoenix site, Spencer Finseth ("Finseth"),
was interviewed in depth. According to Finseth his first four paychecks
bounced, the plumbing contractor received his first draw on his contract and was
not paid again, leaving a balance due of approximately $70,000. When Finseth
complained to Showalter in May, 1996, that the contractors and subcontractors
were not getting paid in a timely manner, Showalter told Finseth that the
Company had no money and that he had been selling stock on the open market to
pay the contractors but the price had gotten so low he could no longer finance
Company operations this way.
How is it possible that a publicly held company runs its business this way
and apparently went through in excess of $1.5 million in capital and cannot pay
its ongoing expenses towards one entertainment center?
The Committee does not know the answers but believes shareholders deserve
not only explanations for where the money went but new better management in the
future if the Company is going to realize its corporate purpose.
(2) Inability to Fulfill the Corporate Purpose of the Company
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As late as April 12, 1996, when the Company's annual report on Form 10K-
KSB was executed by Showalter, the Company was claiming that their entertainment
center in Phoenix was expected to open in the second quarter of 1996 and that
the Denver facility would be open by the summer. As reported in the Phoenix
Business Journal article in July the Denver facility has been abandoned and
according to Finseth the Phoenix facility is nowhere near completion. The
Committee believes that with the continuing problem relative to payments due
contractors in Phoenix the facility may not be completed unless the Company is
recapitalized. The Committee believes it is unlikely that a successful
recapitalization can take place under current management given the unfavorable
publicity regarding Showalter's background and his current track record as chief
executive officer of the Company.
According to Finseth most of the contractors on the Phoenix site had walked
off the job by May 8, 1996 and all of them were gone by May 15, 1996. The
Company has apparently been able to recruit some new contractors and entice
others to return to do some limited work subsequent to that date but Showalter
has continued to bounce checks given to the contractors as payment. According to
Finseth, within the past thirty days the plumbing contractor was recently issued
a $68,000 bad check while JMC Mechanical was issued a $98,000 bad check.
The Committee now believes that so many people have lost confidence in
Showalter that he will never be able to achieve the corporate purpose of opening
an entertainment center in a timely manner in addition to installing needed
confidence in the investment community. Not only has his track record with the
Company evidenced an inability to achieve corporate objectives but there have
been recent unfavorable press reports dealing with Showalter's prior background
which the Committee believes will only make it more difficult for the Company to
achieve its goals with current management. The front page of the Business
Section of the Miami Herald for April 16, 1995, featured an article (the "Herald
Article") dealing with Showalter's inability to fulfill the Company's corporate
objective of opening its first family entertainment center in Denver in 1994 and
included examples of Showalter's past business failures and run-ins with the
law. The Herald Article reported that in the past seven years, according to
court records, Showalter has defaulted on loans, written bad checks, stiffed
landlords, cheated on his taxes and defied court judgments. The article also
noted that Showalter declared personal bankruptcy in 1990 and as a result of his
ownership of a garment company, America's Favorite Clothing, in the mid-1980s,
Showalter ceased business without paying his creditors and was sued for over
$200,000.00 and faced criminal charges for his conduct. Showalter plead no
contest to grand theft and was placed on a fifteen year probationary term in
order to make restitution. The text of the entire article is included as Exhibit
B to these proxy materials.
In addition to the unfavorable press reports the Securities and Exchange
Committee has been conducting an investigation into the Company's affairs. The
existence of this investigation was reported in the Company's 1995 Annual Report
on Form 10KSB.
The Committee believes that the timing of the opening of the Company's
first entertainment center is critical. In large part the Committee's decision
to undertake this consent solicitation is tied to its belief that the Company's
relationship with the Sunkyung Securities LTD. ("SKG") can be extremely
profitable and is integral to its future growth. Sunkyong Securities is the
brokerage and investment banking division of the Sunkyong Group ("SKG"), the
fifth largest conglomerate in Korea. With revenues of over $24 billion, SKG
ranks among the top 100 of the Fortune Global 500. One of the Committee's
nominees for director, Ronald Olsen, former Managing Director of SKG, was
responsible for introducing SKG to the Company. However Mr. Olsen did not
receive, and will not receive any compensation, in the form of finder,
consulting or other fees for making the introduction. The Committee believes
that SKG will provide the financing for construction of the Company's
entertainment centers in Korea and possibly throughout Asia if the Company can
finish its first entertainment center here in the United States in a timely
manner. The Committee believes that the relationship with SKG will be
irreparably jeopardized by further delays since it is believed according to
Ronald Olsen that SKG may already be negotiating with other developers of
similar entertainment centers to joint venture projects overseas.
(3) Dilution of Shareholder Value
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Over the last two and one-half years, according to the Form S-8
registration statements filed with the Securities and Exchange Commission, a
total of 29,680,000 shares of the Company's common stock have been issued all
for purported services rendered and most, if not all, without bringing needed
capital to the Company. All of these shares were registered with the Securities
and Exchange Commission on Form S-8 which may be used to issue shares for
consultants who have provided bona fida services to the Company. These issuances
have substantially diluted shareholder value since there has been no tangible
benefit which is readily apparent from the issuance of these additional shares.
As recently as October 31, 1994, as reported on the Company's quarterly report
on Form 10-Q there were 1,486,495 shares outstanding as opposed to approximately
30,555,544 which it is believed the Company maintained were outstanding as of
the end of May. The number believed to be outstanding as of the end of May,
1996, was determined by the number reported on the Company's Form 10-KSB for
1995 and as reported on subsequent registrations using Form S-8. The Company has
now reported on its Third Quarter 10-QSB that it issued 22,200,000 shares of
restricted common stock for services during May and that it presently has
51,205,544 shares of common stock outstanding as of August 12, 1996.
Approximately 22,200,000 shares were issued, nearly doubling the number
outstanding and there is no disclosure in the Third Quarter 96 10-QSB as to when
the shares were issued or for what consideration. Meanwhile the price of the
Company's common stock has deteriorated from a value of approximately $4.00 per
share on March 31, 1995 (after a one-for-ten reverse stock split in 1994) to the
current level of approximately $.16.
The Committee believes that Showalter knowingly misused the Form S-8
registration process to issue shares to individuals and entities who were not
the ultimate intended beneficiary of the shares and who were not performing bona
fida services which would entitle them to be the recipient of shares registered
on Form S-8. The Committee further believes that Showalter and his fellow
directors approved the recent issuance of 22,200,000 shares solely for the
purpose of entrenching themselves in office and thwarting the efforts of the
Committee. According to a sworn statement of Timothy Brannon, a former employee
of the Company who has submitted an affidavit in connection with the litigation
described below, Showalter told him within one month of joining the Company that
it would be necessary to register the shares on Form S-8 in his name even though
it was intended that the stock would be parceled out to various individuals and
entities after it was registered and even though some of these individuals would
not have performed services for their stock. After the shares were registered on
Form S-8 in Brannon's name he was then requested to find individuals who would
buy the stock of the Company at a discount to the market price and the
securities of the Company which had been registered but not issued in Brannon's
name would then be issued to the buyers. ( A copy of the Brannon affidavit is
annexed hereto as Exhibit C). It is the Committee's belief that
Showalter was attempting to avoid the Securities and Exchange Commission rules
and regulations which call for detailed disclosure regarding shares initially
registered to the public through the misuse of the Form S-8 registration
process.
(4) Failure to Hold An Annual Meeting of Shareholders
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The Committee maintains that Showalter for all intents and purposes, is
Hollywood Trenz. The shareholders exist in name and on paper only, since there
has been no annual or other meeting of shareholders in the Company's existence.
There is currently no oversight available to control Showalter and prevent
continued dilution of shareholder value, waste of corporate assets, and the
continued inability to fulfill the corporate purposes of the Company. It is the
Committee's opinion that shareholders should not have to fight incumbent
management for the right to have an annual meeting at which directors would be
elected by the shareholders. The Company is required to have an annual meeting
of shareholders under the law of the state of Delaware where the Company is
incorporated and Showalter has completely ignored the requirements of state
corporate law in failing to call for an annual meeting. Although the Company's
bylaws provide that the directors shall serve until the next annual meeting of
shareholders the accountability envisioned by this provision has been rendered
meaningless since Showalter has never called for an annual meeting. He and the
other directors have therefore been able to continue in office without putting
themselves up for an annual vote of shareholders.
The Committee believes that such flagrant flouting of the requirements of
state law and shareholder rights is grounds alone for removal of the entire
board.
RECENT LITIGATION
-----------------
A legal action was recently filed against the Showalter and other members
of the Board of the Company in the Court of Chancery of the State of Delaware,
on behalf of one of the Committee's members. The Complaint in this action is
annexed hereto as Exhibit D. A primary objective of this action was to restrain
the Board from further issuing shares on Form S-8. A temporary restraining order
was issued and later re-entered by the Delaware Court of Chancery. The material
allegations of the Complaint have been denied by the defendants. The case has
now entered a discovery phase. The plaintiff in the action, Kenneth Callison,
intends to amend the Complaint to contest the recent issuance of 22,200,000
shares on the grounds that such an issuance is a clear breach of fiduciary duty
which the directors owe to minority shareholders.
THE COMMITTEE'S PLANS FOR REORGANIZATION
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The Committee believes that the Company's management and management policy
should be subject to independent and objective review and that new directors are
required, who are untainted by the prior business and legal troubles reported
with respect to Showalter, who will operate the Company in a manner giving due
regard for the legal rights of shareholders to elect directors and who are able
to bring the necessary strategic vision to the Company.
For these reasons, the Committee has resolved to make this solicitation, in
an effort to ensure that all shareholders of the Company have the choice of
electing new, independent directors to the Board who are committed to the
pursuit of corporate purposes and the maximization of shareholder value. If
action by the shareholders of the Company results in the election of a new Board
of Directors nominated by the Committee, the new directors will initiate an
aggressive reorganization and institute a construction plan to complete the
Company's first entertainment center in Phoenix, Arizona, which has been
beset by problems since construction commenced in July, 1995. The following is a
broad outline of the Committee's plan of reorganization:
1. Close headquarters location in Ft Lauderdale, Florida, effective
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immediately, and move into space at the Company's entertainment center in
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Phoenix. This will result in obvious cost savings to the Company and also result
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in greater management oversight of the Company's initial center, especially
during its embryonic stage.
2. Form Interim Management Committee. The Committee would consist of Ronald
---------------------------------
Olsen, Michael Noveilli and Eric Landis. Mr. Noveilli and Mr. Landis are members
of the Committee while Mr. Olsen is Mr. Landis's father-in-law and a nominee for
director as proposed by the Committee.
3. Hire a high profile Chief Executive Officer. The Committee has had talks
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with an executive with over 20 years of experience in the restaurant industry.
This executive has demonstrated success in managing large country clubs,
resorts, hotels and developing and managing new restaurant entertainment
concepts. This executive founded a company that developed and consulted on over
twelve theme restaurants. The executive has demonstrated significant interest in
becoming the Chief Executive Officer if there is a change in management. However
consummation of an agreement is subject to many variables, including and most
importantly the executive's perception of the financial viability of the Company
at the time of any change in management. If the Committee is not successful in
negotiating an agreement with this individual, someone with like experience will
be sought. The Committee believes that no one in current management has a proven
track record in restaurant management which the Committee believes is critically
important if not essential to the Company's success.
4. Obtain 3-5 million dollar new capital infusion. Since the Company is
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now apparently insolvent the Committee views finding a new source of capital
quickly a critical component of its reorganization plan. The Committee believes
that the Company's present financial difficulties cannot be remedied under
current management because it will be difficult if not impossible to find new
sources of capital given the press reports regarding Showalter's past and
present business and legal difficulties. The Committee believes that given the
fact that Mr. Noveilli, Mr. Landis and Mr. MacCaughern are all members of the
securities industry, the prospects for finding new capital once the Company is
under new management will be good. The Committee does believe that it is likely
that there will need to be further dilution to existing shareholders since any
source for the needed capital will demand significant equity participation.
5. Negotiate With Creditors and Contractors Once a source of new capital
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has been obtained new management will negotiate with existing creditors
including all of the contractors who are owed money on the Phoenix project to
obtain satisfactory resolutions to their claims.
6. Finish Construction on Phoenix Site.
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7. Hire and Train Staff Phoenix Site.
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8. Grand Opening of Phoenix Location.
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9. Negotiate with SKG for Joint Venture in Korea. Through a joint
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venture agreement with SKG of Seoul, Korea, and Hollywood Trenz together, have
anticipated opening the first international Hollywood Trenz center in Seoul,
Korea, within 12 months.
Although the Committee cannot be positive at this time that SKG will still
desire to joint venture this development with the Company even if the Committee
is successful in replacing existing management, the Committee believes that the
chances will be improved with new management and the presence of SKG's former
employer, Ronald Olsen.
10. Determine Future Sites and Forms of Financing.
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The new Board of Directors is well diversified and represents highly
ethical and competent individuals in industries well suited to guide Hollywood
Trenz through this critical stage. The strategy of combining a strong
management team, well defined corporate goals, and an unbridled focus on the
exponential growth of earnings per share, will ultimately lead to maximizing
shareholder value, and enable all of us to participate in the success of this
exciting endeavor. Reference is made to the table under "PRINCIPAL
SHAREHOLDERS" below and Appendix "A" attached for further information about the
members of the Committee.
We believe that corporate democracy depends on the voice of the
shareholders, as reflected in your proxy. We urge you to take an active part in
ensuring shareholder democracy at the Company and in choosing the directors of
your Company.
REMOVAL OF DIRECTORS
For the reasons set forth above, the Committee believes that the Company's
Board of directors has not been acting in a manner which is consistent with the
best interests of the Company and its shareholders. Under Delaware corporate
law, the Company's shareholders are permitted to remove directors of the Company
with or without cause. Under Delaware law, shareholders can act either at a
meeting or by written consent in lieu of a meeting if a majority of outstanding
shares is represented by the consents. Rather than request each shareholder to
execute a consent, the Committee has determined to ask shareholders to execute
proxies to one of the members of the Committee who will then execute one consent
to action on behalf of everyone who has executed a proxy. Under Delaware law, a
proxy is valid for up to three years unless revoked. The Committee believes that
the removal of the following persons from the Company's Board of Directors is in
the best interest of the Company and its shareholders:
Edward R. Showalter
Robert E. Burton, Jr.
Gregory D. Smith
The persons named in the BLUE Proxy or their substitutes will execute a
consent to action without a meeting on your behalf removing the Company's Board
of Directors and electing those named above unless you withheld authority to so
act with respect to one or more Directors by marking the appropriate space in
the BLUE Proxy.
ELECTION OF DIRECTORS
According to the Company's bylaws, the term of office of each director
expires every one year. The number of directors is currently fixed at three.
All directors are supposed to be elected each year.
The Committee has proposed removal of all of the Company's three current
directors. The committee has assembled nominees for directors whom it believes
are highly qualified and have the talent, vision and experience necessary to
maximize shareholder value while overseeing the Company's business. Any person
so appointed will serve until his successor is elected and qualified.
The persons named in the BLUE Proxy or their substitutes will execute a
consent to action without a meeting which action will result in the removal of
existing directors and the election of the Committee's nominees listed below
(the "Committee's Nominees") as directors unless you withhold authority by
marking the appropriate space on the BLUE Proxy.
Each of the Committee's Nominees has agreed to serve as a director if
appointed or elected. If any of the Committee's Nominees should become
unavailable for election (which contingency is not now expected), the shares
represented by the BLUE Proxy will be voted for such substitute nominees(s) as
the Committee may name.
If appointed or elected as directors of the Company, each of the
Committee's Nominees will devote such portion of his time as he deems
appropriate to serve as a director of the Company. If elected, the nominees
will suggest that the Board of Directors initially meet monthly with additional
Board meetings held as needed.
Except as set forth in this Proxy Statement, as of the date hereof, none of
the committee's members and nominees, nor any of their respective affiliates
have or intend to have any arrangement or understanding with any person with
respect to any future employment by the Company or with respect to any future
transaction to which the Company or any of its affiliates will or may be a
party. None of the Committee's nominees have had any business relationships
with the Company during its last fiscal year nor are any of the Committee's
nominees employed by the Company or any of its subsidiaries or affiliates.
To the extent practicable, the Committee desires to be able, through the
election of its slate, to direct the policies of the Board of Directors of the
company with the least possible disruption to the Company's business and
employees. There can be no assurance, however, that all key personnel will
remain in the employ of the Company even if requested to do so. None of the
committee members has any current intention of making a proposal with respect to
any merger or similar transaction involving the Company.
THE COMMITTEE'S NOMINEES
The following table sets forth certain information concerning the
Committee's Nominees:
Name Age Principal Business Occupation
- ---- --- -----------------------------
For the Last Five Years
-----------------------
Joseph B. LaRocco 37 Attorney, Stamford, Connecticut since 1982. Mr.
LaRocco represents securities firms, investment
funds, investment banks, and corporate finance
firms.
Alfred Hahnfeldt 50 Founder and Chief Executive Officer of the
NetStar Company, a company specializing in the
design, development and installation of
interactive voice response systems which enable
companies to provide services for customers on the
Internet. Also founder and Chief Executive
Officer of Spinneret Financial Systems, Ltd., a
financial consulting firm. Formerly Vice
President and Chief Financial Officer for HO Penn
Machinery Company, Inc. at $180 million
Caterpillar dealership. B.A. Yale University
1968.
Ronald D. Olsen 60 President, Human Resources International.
Formerly Managing Director of Sunkyong Group of
Korea, a major multinational conglomerate, from
1987-1996. Executive with IBM corporation from
1958-1987.
Except as indicated in the foregoing table, none of the Committee members
own any shares of the Company solely of record but not beneficially. Appendix
"A" hereto lists all purchases and sales of securities of the Company made
within the past two years by members of the Committee, the Nominees and their
associates.
No member of the Committee or Nominee is or has been within the past year a
party to any contracts, 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
guaranties of profit, division of losses or profits or the giving or withholding
of proxies except as noted below./1/ None of the members of the Committee or
the Nominees has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors during the last ten years).
/1/ Michael Noveilli, a member of the Committee, executed a consulting
agreement in April, 1996 whereby he agreed to attempt to find sources of capital
for the Company. Pursuant to this agreement, Mr. Noveilli was to receive
shares of the Company's common stock to be issued immediately, the purpose of
which was to compensate him for his efforts to locate sources of capital as well
as to recognize his assistance in locating market makers for the Company's stock
and negotiating an agreement with Sunkyong Securities Ltd.. The shares were not
issued and Mr. Noveilli thereafter decided he could no longer continue to work
with Mr. Showalter and decided to assist in forming the Committee. Mr. Noveilli
has agreed to waive any claim pursuant to this agreement, which he may have
against the Company, in the event the Committee's nominees are elected.
Except as indicated in the foregoing table, no associates of members of the
committee or associates of Nominees to the Board of Directors holds any common
stock of the Company.
SOLICITATION OF PROXIES
The Committee expects to solicit proxies by mail, telephone, telegram and
personal interview. The Committee will also request brokers, custodians, and
other nominees to forward solicitation materials to the beneficial owners of the
voting securities of the Company, and they will be reimbursed for their
reasonable out-of-pocket expenses.
All of the expenses of this solicitation will be borne by the Committee.
It is estimated that the total costs incurred to date in connection with this
solicitation have been approximately $15,000 and that it is estimated that a
total of approximately $100,000 (including legal fees) will be expended in
connection therewith. It is the Committee's beliefs that this solicitation will
enhance the value of all shareholder interests is in the Company. Accordingly,
the Committee intends to seek reimbursement from the Company of the costs of
this solicitation in the event that it is successful in removing Edward R.
Showalter as a director and then only to the extent cash flow permits and such
reimbursement does not materially affect the Company's ability to complete
construction on its Phoenix site. The Committee will submit the question of
such reimbursement to a vote of the shareholders.
[Front of the proxy]
THIS PROXY IS BEING SOLICITED BY THE SHAREHOLDERS COMMITTEE OF
HOLLYWOOD TRENZ, INC.
To Be Used to Act by
Written Consent Without A Meeting
October 1, 1996
The undersigned hereby revokes all prior proxies given by the undersigned and he
hereby appoints Eric T. Landis, Michael Noveilli and Scott MacCaugheren, or any
one of them, as Proxies, each with the power to appoint his substitute, and
hereby authorizes them and each of them to represent the undersigned to act by
written consent without a meeting for the purposes set forth below with all
powers which the undersigned would possess if personally present, with respect
to all of the shares of Hollywood Trenz, Inc., standing in the name of the
undersigned, upon such business as follows:
1. Amend the Company's Bylaws to remove amendments after April 1, 1996, (if
any), which impose certain requirements upon shareholders who wish to
nominate a person to the Company's Board of Directors or bring any other
business before an annual meeting of the shareholders of the Company. (As
of this date, there have been no such amendments to the Committee's
knowledge).
[ ] For [ ] Against [ ] Abstain
2. Remove the following Directors:
Edward R. Showalter
Robert E. Burton, Jr.
Gregory A. Smith
[ ] For [ ] Against [ ] For the Removal of All Except
INSTRUCTIONS: To withhold authority to act for the removal of any director,
mark the "For All Except" box and write the name(s) of the director(s) as to
whom your action is to be withheld in the space provided below.
- --------------------------------------------------------------------------------
3. Elect or appoint the following Directors for a one-year term:
Ronald D. Olsen
Joseph B. LaRocco
Alfred Hahnfeldt
[ ] For [ ] Against [ ] For All Except
INSTRUCTIONS: To withhold authority to act for any nominee, mark the "For All
Except" box and write the name(s) of the nominee(s) for whom your action is to
be withheld in the space provided below.
- --------------------------------------------------------------------------------
[This is the back of the proxy]
THIS PROXY IS SOLICITED ON BEHALF OF THE SHAREHOLDERS COMMITTEE OF HOLLYWOOD
TRENZ, INC. THE COMMITTEE RECOMMENDS AFFIRMATIVE VOTES ON PROPOSALS ONE, TWO,
AND THREE. CONSENTS TO ACTION WILL BE EXECUTED AS SPECIFIED. IF NO
SPECIFICATION IS MADE, A CONSENT TO ACTION WILL BE EXECUTED ON BEHALF OF THE
SHARES REPRESENTED IN FAVOR OF PROPOSALS ONE, TWO, AND THREE.
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
- ---------------------------
RECORD DATE SHARES
(signature) X: Date:
-------------------------- --------------------
(signature) X: Date:
-------------------------- --------------------
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. If a corporation, please sign in full corporate
name by President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
APPENDIX "A"
------------
INFORMATION ABOUT THE COMMITTEE AND THE NOMINEES
------------------------------------------------
All securities of the Company set forth in this Appendix are owned
beneficially by the persons indicated in the table below, except as described in
the table. No funds were borrowed to acquire such shares. No member of the
Committee or Nominee is or has been within the past year a party to any
contracts, arrangements or understandings with any person with respect to any
securities of the Company including, but not limited to joint ventures, loan or
option arrangement, puts or calls, guarantees against loss or guaranties of
profit, division of losses or profits or the giving or withholding of proxies
except the agreement with Michael Noveilli previously set forth above.
Names and Business Addresses of Committee
------------------------------------------
Michael Noveilli Kenneth Callison
Dutchess Capital Partners Allied Health Association
380 Lexington Avenue 7936 East Arapahoe Court
Suite 517 Suite 2300
New York, NY 10168 Englewood, CO 80112
Scott MacCaughern Eric T. Landis
Round Hill Securities Merit Capital Associates, Inc.
5263 Heather Lane 1221 Post Road East
Park City, UT 84060 Westport, CT 06880
Names and Business Addresses of Nominees
----------------------------------------
Ron Olsen
c/o Merit Capital Associates, Inc.
1221 Post Road East
Westport, CT 06880
Alfred Hahnfeldt Joseph B. LaRocco
Spinneret Financial Systems, Ltd. 1055 Washington Boulevard
One Marshall Street Stamford, CT 06901
Suite 206
South Norwalk, CT 06854
Purchases and Sales of Shares of Company Common Stock, No Par Value
-------------------------------------------------------------------
Committee Member Date Buy/Sell Number of Shares
---------------- ---- -------- ----------------
Shares
- ------
Eric Landis 7/11/95 B 45,000
7/14/95 B 5,000
7/31/95 B 100
9/28/95 B 15,000
10/2/95 B 6,450
10/3/95 B 5,000
10/16/95 B 20,000
11/15/95 B 20,000
12/14/95 B 50,000
12/14/95 B 50,000
12/20/95 B 50,000
2/9/96 B 20,000
2/12/96 B 20,000
2/23/96 B 50,000
2/26/96 B 50,000
3/6/96 B 9,000
3/7/96 B 14,000
3/8/96 B 30,450
3/11/96 B 3,000
3/11/96 B 5,000
3/12/96 B 4,000
3/12/96 B 3,000
3/13/96 B 5,000
3/18/96 B 10,000
3/26/96 B 7,000
3/27/96 B 33,000
3/27/96 B 30,000
3/29/96 B 97,000
4/22/96 B 57,000
4/29/96 B 3,000
5/31/96 B 7,000
7/11/95 S 20,000
2/16/96 S 55,000
3/13/96 S 45,000
3/26/96 S 7,000
3/28/96 S 30,000
5/31/96 S 7,000
6/10/96 S 60,000
William Landis 8/11/95 B 20,000
(father) 11/7/95 B 5,000
11/13/95 B 15,000
12/14/95 B 50,000
12/20/95 B 100,000
1/31/96 B 135,000
3/13/96 B 45,000
3/26/96 B 70,000
3/27/96 B 30,000
3/28/96 B 10,000
3/29/96 B 100,000
4/30/96 B 5,000
4/30/96 B 20,000
5/1/96 B 85,000
5/2/96 B 30,000
5/3/96 B 20,000
5/6/96 B 14,000
5/6/96 B 30,000
5/7/96 B 20,000
5/7/96 B 30,000
5/8/96 B 10,000
5/8/96 B 10,000
5/9/96 B 15,000
6/10/96 S 19,000
Ronald D. Olsen/2/ 7/24/95 B 6,550
2/9/96 B 25,000
Scott MacCaughern (owner of record or beneficially owned)
Eileen MacCaughern 4/5/95 B 1,000
(mother) 4/6/95 B 100
4/6/95 B 2,000
8/30/95 B 17,400
Barbara Pires 4/25/85 B 2,000
(sister) 5/2/95 B 1,475
Linda Lee 10/18/96 B 2,450
(sister-in-law)
Michael Noveilli 4/6/96/3/ B 79,000
(individually) 5/6/96 S 10,000
5/8/96 S 10,000
Mr./Mrs. Michael 8/22/95 B 10,000
Noveilli, Sr. 1/18/96 B 10,000
(father and mother)
Kenneth Callison 9/27/94 B 30,000
9/28/94 B 20,000
11/7/94 B 5,000
12/15/94 B 2,650
12/16/94 B 2,350
6/11/96 B 25,000
6/12/96 B 51,000
- ----------------------------
/2/ Also a Nominee for director
/3/ Shares journaled from Allied Capital on April 6, 1996.
Nominees for Director
---------------------
Alfred Hahnfeldt 1/26/95 B 10,000
2/17/95 S 7,000
2/24/95 S 3,000
3/13/95 B 3,500
3/30/95 S 3,500
Joseph B. LaRocco 8/19/95 B 10,000
1/5/96 B 15,000
2/9/96 B 25,000