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 Per-
[_] Definitive Proxy Statement mitted by Rule 14-a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Hollywood Trenz, Inc.
--------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Shareholders Committee of Hollywood Trenz, Inc.
--------------------------------------------------
(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 which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and 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 22, 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 November 1, 1996
to shareholders of record as of November 1, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 elected to
serve until the next annual meeting. A consent to action by shareholders without
a meeting is a permissible form of shareholder action under Delaware law, the
state where the Company is incorporated and is being utilized due to the failure
of the Company to convene an annual meeting as required by law where directors
can be elected.
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 the following directors of the Company:
Edward R. Showalter
Robert E. Burton, Jr.
Gregory D. Smith
2. 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 Novielli at (212) 843-8344.
WHY THE COMMITTEE IS SOLICITING PROXIES
Michael Novielli, 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. Novielli,
Mr. Landis, Mr. MacCaughern and Mr. Callison have purchased shares of the common
stock of the Company for themselves and their families and on their
recommendation have persuaded other investors to make such purchases 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. The other investors whom have been persuaded
to purchase shares of the Company include investors who were attracted to an
investment in the Company as a result of possible joint venture relationships
with the Company in the development of family entertainment centers in Asia and
others who have involvement in the motion picture and entertainment industries.
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:
. 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) Inability to Fulfill the Corporate Purpose of the Company
---------------------------------------------------------
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.
("Second Quarter 96 10Q.") That cash has apparently all been spent according to
the Second Quarter 96 10Q which showed zero cash remaining. Nevertheless 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.
As late as April 12, 1996, when the Company's annual report on Form 10-
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 (see Exhibit A) the Denver facility has been
abandoned and according to Spencer Finseth, the former project manager for the
Phoenix site, the Phoenix facility was nowhere near completion at the time.
As of the date of the Phoenix Business Journal article numerous
contractors were apparently owed money and had walked off the job. The article
quoted Finseth as stating that Showalter had "bounced checks" on him and that
"[a] number of subcontractors also have quit and have filed liens against the
property". (see Exhibit A). A spokeswomen for one of the subcontractors, Coleman
Plumbing, was quoted in the article as having stated that Coleman Plumbing was
owed $68,000. (see Exhibit A). A spokesman for the drywall contractor was quoted
as having stated that he "was never paid from the beginning for work on the
park" and was still "owed more than $50,000." (see Exhibit A).
The Committee does not know the current state with respect to
obligations owed to subcontractors or with respect to the construction. However
it does not have any information suggesting that the situation has improved with
respect to payments owed. 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.
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. The
article stated that 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.
In addition to the unfavorable press reports the Securities and Exchange
Commission 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 10-KSB.
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. Mr. Olsen, who is 61
years of age, retired from full time employment with SKG but remains a
consultant to SKG at a sum of $50,000 per year. The Committee believes, as a
result of its discussions with Mr. Olsen, 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. However the Committee has no assurance
that it will be able to successfully negotiate an agreement with SKG since it
also understands from discussions with Ronald Olsen that SKG may already be
negotiating with other developers of similar entertainment centers to joint
venture projects overseas.
(2) Dilution of Shareholder Value
-----------------------------
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 register shares for
subsequent issuance to consultants who have provided bona fide services to the
Company. The Committee does not have information regarding each and every one of
these issuances but as a result of evidence provided in the course of the
litigation described below the Committee believes the Company has not complied
with the with rules and regulations governing the use of Form S-8. The Committee
believes that the Company registered shares pursuant to Form S-8 where the
intended recipient had not provided bona fide services. The reason for the
Committee's belief are statements contained in an affidavit of Timothy Brannon,
a former employee of the Company submitted in connection with the litigation
described below. According to the affidavit
Showalter told Brannon within one month of joining the Company that it would be
necessary to register the shares on Form S-8 noting that Brannon was the
intended recipient 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.
According to the affidavit, after the shares were registered on Form S-8 Brannon
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 with the stated intention of being issued in Brannon's name would
then be issued to the buyers.
As recently as October 31, 1994, as reported on the Company's quarterly
report on Form 10-Q for the third quarter of 1994, there were 1,486,495 shares
outstanding. The Committee has calculated that since October 31, 1994,
29,680,000 shares were issued of Form S-8, increasing the number of outstanding
shares by at least that amount. The Company has subsequently reported on its 10-
QSB for second quarter of 1996 that it issued 22,200,000 shares of restricted
common stock for services during May, 1996 and that it presently has 51,205,544
shares of common stock outstanding as of August 12, 1996. However with respect
to the 22,200,000 shares issued, there was no disclosure in the 10-QSB for the
second quarter of 1996 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.
Based on the lack of disclosure of what the Committee believes to be
material facts with respect to the recent issuance of 22,200,000 shares and the
fact that Showalter may have been aware of the Committee's plans at the time of
the issuance, the Committee 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. The
Committee presently has no other evidence of Showalter's purpose other than the
circumstantial evidence set forth above. The Committee intends to contest the
validity of the issuance under both state and federal law and to argue that
these shares may not be considered outstanding for purposes of determining the
number of shares needed by the Committee to remove the existing directors.
(3) Failure to Hold An Annual Meeting of Shareholders
-------------------------------------------------
According to information provided by the Company in its Form 10-KSB for
fiscal year ending December 31, 1995, ("1995 10-K") the Company was incorporated
on August 25, 1987 and first sold units to the public in September, 1989. Also
according to the 1995 10-K the Company's principal business has been the
development of family entertainment centers since April, 1993 when the Company
changed its name to Hollywood Trenz, Inc. The Committee believes that the
Company has never had an annual meeting of shareholders at least since it
changed its name in April, 1993. Under Section 211(b) of the Delaware General
Corporation Law the Company is under an explicit duty to convene an annual
meeting of stockholders to elect directors. If a annual meeting is not held by
the scheduled meeting date as set forth in the by-laws Delaware law directs the
directors to call a meeting "as soon thereafter as convenient". Unless the
meeting has been called within a specified time (30 days after the stated date,
or 13 months after the last meeting) the Court of Chancery in Delaware on
application of any stockholder or director may summarily order a meeting. 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. In fact the Committee has elected for now not to
have an annual meeting ordered by the Court but rather solicit proxies for the
purpose of thereafter removing existing directors by written consent of the
stockholders acting without a
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 the Company has never called
for an annual meeting. Showalter and the other directors have therefore been
able to continue in office without putting themselves up for an annual vote of
shareholders.
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 C. 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 vacated by the Delaware Court of
Chancery. The material allegations of the Complaint have been denied by the
defendants. The case is pending but there has not been any recent activity. The
plaintiff in the action, Kenneth Callison, has not decided whether to continue
to prosecute the action.
THE COMMITTEE'S PLANS FOR REORGANIZATION
----------------------------------------
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
----------------------------------------------------------------
immediately, and move into space at the Company's entertainment center in
- -------------------------------------------------------------------------
Phoenix. This will result in obvious cost savings to the Company and also
- -------
result 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 Novielli and Eric Landis. Mr. Novielli 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 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
-----------------------------------------------
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. Novielli, 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. To
date there have been no material discussions regarding future financing nor does
the Committee expect such discussions to occur until and unless it is successful
in electing its proposed slate of directors.
5. Negotiate With Creditors and Contractors. Once a source of new
-----------------------------------------
capital 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.
------------------------------------
7. Hire and Train Staff Phoenix Site.
----------------------------------
8. Grand Opening of Phoenix Location.
----------------------------------
9. Negotiate with SKG for Joint Venture in Korea. In December, 1995,
----------------------------------------------
the Company announced that it had entered into an agreement for the joint
venturing of Hollywood Trenz family entertainment centers in Korea, Singapore,
Japan and Taiwan. SKG was to secure financing and arrange joint ventures for the
construction and operation of the family entertainment centers. The announcement
stated that the Company anticipated opening centers in Asia in 1996. 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. As previously discussed Mr. Olsen continues to act as a
consultant with SKG since his retirement.
10. Determine Future Sites and Forms of Financing.
----------------------------------------------
The Committee's proposed Board of Directors is well diversified and the
Committee believes represents highly ethical and competent individuals in
industries well suited to guide Hollywood Trenz through this critical stage.
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. The Committee has decided to
seek election of its proposed slate of directors by written consent without a
meeting. 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 a 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. Once the holder of proxies executes a written
consent, the consent, to be effective, must be delivered to the Company within
sixty days of the date the consent is executed.
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.
In order to be able to remove the existing directors the Committee will
need to receive proxies from shareholders holding a majority of the Company's
outstanding shares as of the record date. The record date will be the date on
which the first written consent is executed by a holder of one of the proxies.
After it has received proxies representing a majority of the Company's
outstanding shares, (calculated by the Committee so as to exclude the shares
whose voting rights the Committee intends to contest), the Committee intends to
expeditiously execute written consents on behalf of all shareholders who have
executed proxies and deliver them forthwith to the Company. The Committee then
intends to commence a special proceeding under Section 225 of the Delaware
General Corporation Law to contest the issuance of the 20,200,000 shares. In
order to prevail the Committee must be successful in the Section 225 proceeding
in obtaining a determination excluding holders of the 20,200,000 shares issued
by the Company in May, 1996 from voting their shares for the election of
directors or otherwise having their shares count in calculating a majority of
shares outstanding or else it will not be possible to remove the existing
directors and to elect the Committee's proposed slate of directors. The
Committee believes it will be successful since it believes these shares were
issued without consideration and with the sole purpose of entrenching Showalter
and incumbent management. The Committee estimates that the entire process
through completion of the Section 225 hearing may take between sixty and one
hundred and twenty days.
ELECTION OF DIRECTORS
According to the Company's bylaws, the number of directors which shall
constitute the whole board shall be not less than two nor more than nine. There
are currently three directors. All directors elected shall hold office
according to the by-laws until his successor is elucidated and qualified.
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 elected 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
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 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. Mr. Noveilli
thereafter decided to assist in forming the Committee before he was issued his
stock. 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.
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).
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 Novielli and Scott MacCaughern, 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 Novielli previously set forth above.
Names and Business Addresses of Committee
-----------------------------------------
Michael Novielli 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
---------------- ---- -------- ----------------
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 Novielli 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
Novielli, 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