SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant X
---
Filed by a Party other than the Registrant ___
Check the appropriate box:
X Preliminary Proxy Statement __ Confidential, For Use of the Commission
- --- Only (as permitted by Rule 14a-6(e)(2))
__ Definitive Proxy Statement
__ Definitive Additional Materials
__ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
OLYMPIC CASCADE FINANCIAL CORPORATION
(Name of Registrant as Specified in Charter)
Payment of Filing Fee (Check the appropriate box):
X No fee required
---
__ Fee computed on table below per Exchange Act
Rules 14a-6(i)(1)0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------
(3) 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):
-----------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------
(5) Total fee paid:
-----------------------------------------------
__ Fee paid previously with preliminary materials.
__ 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:
------------------------------------------------
(2) Form, Schedule or Registration Statement No.
------------------------------------------------
(3) Filing Party:
------------------------------------------------
(4) Date Filed:
--------------------------------
OLYMPIC CASCADE FINANCIAL CORPORATION
Notice of Annual Meeting of Shareholders
To Be Held Tuesday, March 12, 2002 at 10:00 A.M.
To the Shareholders:
The Annual Meeting of Shareholders of Olympic Cascade Financial Corporation (the
"Company") will be held on March 12, 2002 at 10:00 A.M. at the New York offices
of the Company's subsidiary, National Securities Corporation, located at
120 Broadway, 27th Floor, New York, New York 10271 for the following purposes:
1. To elect two Class I directors to serve until the 2005 Annual
Meeting of Shareholders and until their successors are elected and
qualified;
2. To approve an amendment to the Company's Certificate of
Incorporation to increase the number of shares of Common Stock, par
value $.02 per share, which the Company is authorized to issue from
6,000,000 shares to 60,000,000 shares;
3. To ratify the appointment of Feldman Sherb & Co, P.C. as
independent public accountants for the fiscal year ending
September 27, 2002; and
4. To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Owners of record at the close of business on January 18, 2002 will be entitled
to vote at the meeting or at any adjournments or postponements thereof. A
complete list of the shareholders entitled to vote at the Annual Meeting will be
made available for inspection by any shareholder of record at the offices of the
Company during market hours from March 1, 2002, through the time of the Annual
Meeting.
By Order of the Board of Directors
Robert H. Daskal
Acting Secretary
Chicago, Illinois
January 28, 2002
OLYMPIC CASCADE FINANCIAL CORPORATION
-------------------------------------
875 North Michigan Avenue
Suite 1560
Chicago, Illinois 60611
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
To Be Held March 12, 2002
General
The enclosed Proxy is solicited on behalf of the Board of Directors of Olympic
Cascade Financial Corporation, a Delaware corporation ("Olympic" or the
"Company"), for use at the Annual Meeting of Stockholders to be held on
March 12, 2002, and any adjournment or postponement thereof. The Annual Meeting
will be held at 10:00 A.M. (local time) at the New York offices of the Company's
subsidiary, National Securities Corporation, located at 120 Broadway, 27th
Floor, New York, New York 10271. This Proxy Statement, the enclosed proxy card
and the Company's Annual Report on Form 10-K for the fiscal year ended
September 28, 2001 are being mailed on or about January 28, 2002 to stockholders
entitled to vote at the meeting.
Record Date and Voting Shares
The close of business on January 18, 2002 has been fixed as the record date
("Record Date") for determining the shareholders of record entitled to notice of
and to vote at the Annual Meeting. At the close of business on the Record Date,
there were outstanding and entitled to vote 2,236,449 shares of Common Stock,
$.02 par value (the "Common Stock") and 20,725 shares of Series A Convertible
Preferred Stock, $.01 par value (the "Preferred Stock"). Each share of Preferred
Stock is convertible into Common Stock at the current conversion price of $1.50
per share, and the holder of each share of Preferred Stock is entitled to the
number of votes equal to the number of shares into which such share of Preferred
Stock could be converted at the record date. Accordingly, as of the record date
there were 3,618,115 shares entitled to vote, consisting of Common Stock
outstanding, or 2,236,449 shares, and Common Stock issuable upon conversion of
the Preferred Stock, or 1,381,666 shares. Each share of Common Stock entitles
the holder thereof to one vote upon any proposal submitted for a vote at the
Annual Meeting.
Directors are elected by a plurality of the votes, which means the two nominees
who receive the largest number of properly executed votes will be elected as
directors. Shares that are represented by proxies that are marked "withhold
authority" for the election of one or more director nominees will not be counted
in determining the number of votes cast for those persons.
Under Delaware law, the Proposed Amendment to the Company's Certificate of
Incorporation requires the affirmative vote of the holders of a majority of the
Company's issued and outstanding shares of Common Stock entitled to vote at the
Meeting. If the stockholders approve the Proposed Amendment affecting the
Certificate of Incorporation, the Company will file an amendment with the
Secretary of State of the State of Delaware to the Certificate of Incorporation
that reflects the amendment. The affirmative vote of a majority of the shares
present (in person or by proxy and entitled to vote at the Annual Meeting) is
needed to ratify the appointment of Feldman Sherb & Co, P.C as the Company's
independent auditors. Any other matters properly considered at the meeting will
be determined by a majority of the votes cast.
Voting of Proxies
If the enclosed form of Proxy is properly signed and returned, the shares
represented thereby will be voted at the Annual Meeting in accordance with the
instructions specified thereon. If the Proxy does not specify how the shares
represented thereby are to be voted, the Proxy will be voted FOR the election of
the directors proposed by the Board unless the authority to vote for the
election of such directors is withheld and, if no contrary instructions are
given, the Proxy will be voted FOR the approval of Proposal 2 described in this
Proxy Statement, the Proxy will be voted FOR the approval of Proposal 3
described in this Proxy Statement, and in accordance with the discretion of the
proxy holders as to all other matters that may properly come before the Annual
Meeting. If a broker indicates on the
1
enclosed proxy or its substitute that it does not have discretionary authority
as to certain shares to vote on a particular matter ("broker non-votes"), those
shares will not be considered as voting with respect to that matter. The Company
believes that the tabulation procedures to be followed by the Inspector of
Elections are consistent with the general requirements of Delaware law
concerning voting of shares and determination of a quorum.
You may revoke or change your Proxy at any time before the Annual Meeting by
filing with the Secretary of the Company, at the New York offices of the
Company's subsidiary, National Securities Corporation, located at 120 Broadway,
27th Floor, New York, New York 10271, a notice of revocation or another signed
Proxy with a later date. You may also revoke your Proxy by attending the Annual
Meeting and voting in person.
If any stockholder is unable to attend the Annual Meeting, such stockholder may
vote by proxy. If a proxy is properly executed and returned to the Company in
time to be voted at the Annual Meeting, it will be voted as specified in the
proxy, unless it is properly revoked prior thereto. Votes cast in person or by
proxy at the Annual Meeting will be tabulated by the Inspectors of Elections
appointed for the meeting and will determine whether or not a quorum is present.
The holders of a majority of the shares of stock entitled to vote at the
meeting, present in person or represented by proxy, shall constitute a quorum
for the transaction of business.
Solicitation
The Company will bear the entire cost of solicitation, including the
preparation, assembly, printing and mailing of this Proxy Statement, the Proxy
and any additional solicitation materials furnished to the stockholders. Copies
of solicitation materials will be furnished to brokerage houses, fiduciaries and
custodians holding shares in their names that are beneficially owned by others
so that they may forward this solicitation material to such beneficial owners.
In addition, the Company may reimburse such persons for their costs in
forwarding the solicitation materials to such beneficial owners. The original
solicitation of proxies by mail may be supplemented by a solicitation by
telephone, telegram or other means by directors, officers or employees of the
Company. No additional compensation will be paid to these individuals for any
such services. Except as described above, the Company does not presently intend
to solicit proxies other than by mail.
Deadline for Receipt of Stockholder Proposals for 2003 Annual Meeting of
Shareholders
Proposals of stockholders of the Company that are intended to be presented by
such stockholders at the Company's 2003 Annual Meeting must be received no later
than October 1, 2002 in order that they may be included in the proxy statement
and form of proxy relating to that meeting. Proposals should be sent to Olympic
Cascade Financial Corporation, c/o National Securities Corporation, 120
Broadway, 27th Floor, New York, New York 10271 Attention: Corporate Secretary.
PROPOSAL 1
ELECTION OF DIRECTORS
At the Annual Meeting, two Class I directors will be elected by the shareholders
to serve until the 2005 Annual Meeting of Shareholders and until their
successors are elected and qualified. The accompanying form of proxy will be
voted "FOR" the election of the nominees listed below to serve as directors
unless the proxy contains contrary instructions.
On December 28, 2001, the Company completed a series of transactions under which
certain new investors (collectively, the "Investors") have obtained a
significant ownership in Olympic through a $1,072,500 investment in Olympic and
by purchasing a majority of the shares held by Steven A. Rothstein and family,
the former Chairman and Chief Executive Officer of the Company and principal
shareholder (the "Investment Transaction"). The Investors include Triage
Partners LLC ("Triage"), an affiliate of Sands Brothers & Co., Ltd., a New York
Stock Exchange ("NYSE") member firm, and One Clark LLC ("One Clark"), an
affiliate of Mark Goldwasser, the current Chief Executive Officer and President
of the Company. The Investors purchased an aggregate of $1,072,500 of Series A
Preferred Stock from Olympic, which is convertible into Common Stock at a price
of $1.50 per share. In connection with the Investment Transaction, Triage also
purchased 285,000 shares of Common Stock from Mr. Rothstein and his affiliates
at a price of $1.50 per share. In addition, Mr. Rothstein and his affiliates
have granted Triage a three-year voting proxy on the balance of his Olympic
Common Stock (274,660 shares). The Investors have agreed to purchase up to an
additional $500,000 of Series A Preferred Stock upon the same terms in the event
such funds are needed by the Company. The funds for this additional purchase are
being held in escrow. Concurrent with the Investment Transaction,
2
two unrelated individual noteholders holding $2.0 million of the Company's debt
have converted one-half of their debt into the same class of Series A Preferred
Stock. The noteholders also had 100,000 of their existing warrants to acquire up
to 200,000 shares repriced from an exercise price of $5.00 per share to $1.75
per share. Messrs. Goldwasser, Steven Sands and Martin Sands, Peter Rettman, a
designee of the noteholders, and two new independent directors (Andrew Zaro and
Robert J. Rosan) have joined current non-employee director Gary A. Rosenberg on
the board of Olympic. Directors James C. Holcomb, Jr. and D. S. Patel have
resigned their positions on the board. Mr. Rothstein has resigned as an officer
and director of Olympic.
As of the Record Date, the Board of Directors of Olympic is as follows:
Year in Which
Name Class Term will Expire
- ---- ----- ----------------
Steven B. Sands I 2002
Martin S. Sands I 2002
Robert J. Rosan II 2003
Andrew Zaro II 2003
Mark Goldwasser III 2004
Gary A. Rosenberg III 2004
Peter Rettman III 2004
The members of the Board of Directors of Olympic are classified into three
classes, one of which is elected at each Annual Meeting of Stockholders to hold
office for a three-year term and until successors of such class have been
elected and qualified. The nominees for the Board of Directors are set forth
below. The proxy holders intend to vote all proxies received by them in the
accompanying form for the nominees for director listed below. In the event that
any nominee is unable or declines to serve as a director at the time of the
Annual Meeting, the proxies will be voted for any nominee who shall be
designated by the present Board of Directors to fill the vacancy. In the event
that additional persons are nominated for election as directors, the proxy
holders intend to vote all proxies received by them for the nominees listed
below. As of the date of this Proxy Statement, the Board of Directors is not
aware of any nominee who is unable or will decline to serve as a director.
Each shareholder will be entitled to one vote for each share of Common Stock
held as of the record date. Shares represented by your proxy will be voted in
accordance with your direction as to the election as directors of the persons
listed below as nominees. In the absence of direction, the shares represented by
your proxy will be voted FOR such election. Election requires the affirmative
vote by the holders of a majority of the Common Stock voting at the Annual
Meeting.
The following sets forth the names and ages of all directors and executive
officers of the Company and its subsidiaries, all positions and offices to be
held with the Company by such persons, and the principal occupations of each
during the past five years.
Nominees for Director
Class and Year
In Which Term
Name Age Will Expire
- ---- --- -----------
Steven B. Sands 43 Class I, 2005
Martin S. Sands 40 Class I, 2005
The Board of Directors recommends a vote FOR the election of each of the
nominees for Director of the Company.
3
Directors Not Standing for Election
Class and Year
In Which Term
Name Age Will Expire
- ---- --- -----------
Robert J. Rosan 70 Class II, 2003
Andrew Zaro 47 Class II, 2003
Mark Goldwasser 43 Class III, 2004
Gary A. Rosenberg 61 Class III, 2004
Peter Rettman 55 Class III, 2004
Steven B. Sands Director
Co-Chairman of Olympic
Steven B. Sands has served as Co-Chairman of the Company since December 28,
2001. He has served as Co-Chairman and Co-Chief Executive Officer of New York
Stock Exchange member Sands Brothers & Co., Ltd., an investment banking and
brokerage firm located in New York City, since 1990. Mr. Sands has been actively
involved in the investment banking business since 1980, and has managed several
investment partnerships affiliated with Sands Brothers over the course of the
past five years. Mr. Sands currently serves as a director of The Pittsburgh
Brewing Company, Critical Capital Growth Fund, L.P. and Sands Brothers Asset
Management LLC. Mr. Sands received his BA degree from Hamilton College in 1980.
Mr. Sands serves as a trustee of the Friends School in Locust Valley, New York.
Martin S. Sands Director
Co-Chairman of Olympic
Martin S. Sands has served as Co-Chairman of the Company since December 28,
2001. He has served as Co-Chairman and Co-Chief Executive Officer of New York
Stock Exchange member Sands Brothers & Co., Ltd., an investment banking and
brokerage firm located in New York City, since 1990. Mr. Sands has been actively
involved in the investment banking business since 1983, and has managed several
investment partnerships affiliated with Sands Brothers over the course of the
past five years. Mr. Sands serves as a director of Sands Brothers Asset
Management, LLC. In October 2000, Mr. Sands was censured, fined and suspended by
the New York Stock Exchange for a 90-day period from supervisory duties for his
failure to reasonably discharge certain supervisory responsibilities at Sands
Brothers. Mr. Sands has fully complied with the New York Stock Exchange Order.
Mr. Sands received his BA from Union College in 1983.
Mark Goldwasser Director
President and Chief Executive Officer of Olympic
Vice Chairman of National
Mr. Goldwasser has served as a director of the Company since December 28, 2001.
He joined the Company in June 2000. He was named President in August 2000 and
Chief Executive Officer in December 2001. Prior to joining the Company, Mr.
Goldwasser was the Global High Yield Sales Manager at ING Barings from 1997 to
2000. From 1995 to 1997, he was the Managing Director of High Yield Sales at
Schroders & Co., and from 1991 to 1995, he was the Vice President of
Institutional High Yield Sales at Lazard Freres & Co. From 1984 to 1991, Mr.
Goldwasser served as the Associate Director of Institutional Convertible Sales
and Institutional High Yield Sales at Bear Stearns & Co., Inc. From 1982 to
1984, he was a Floor member of the New York Mercantile Exchange (NYMEX) and the
Commodity Center (COMEX). Mr. Goldwasser received his BA with Honors from the
University of Capetown in 1979.
4
Gary A. Rosenberg Director
Mr. Rosenberg has served as a Director of the Company since its inception in
February 1997 and served as its President from August 1997 until April 1998. He
was appointed to the Board of National in December 1996. Mr. Rosenberg was
Chairman and CEO of UDC Homes, Inc. (and its predecessors) from 1968 to 1994,
and the Chairman (non-management) from 1994 to 1996. Presently, Mr. Rosenberg is
Chairman, Chief Executive Officer and Director of Canterbury Development
Corporation, a family held company with financial, technology, entertainment and
real estate interests. He is also Chairman, President and CEO of One Stop Shop,
Inc., a retail company serving homeowners and homebuyers; Chairman and Director
of the Rosenberg Foundation; Founder and Chairman of the Real Estate Research
Center; member of the Board at The Kellogg Graduate School of Management at
Northwestern University; and a Trustee of St. Norbert College. Mr. Rosenberg
received his BS and MBA from Northwestern University and his JD from the
University of Wisconsin.
Peter Rettman Director
Registered Representative of National
Mr. Rettman has served as a director of the Company since December 28, 2001. He
has served as a Registered Representative of National Securities Corporation
since December 1994. Mr. Rettman has taught investments at the University of
Washington extension program since 1975, and is a speaker and presenter at
national and regional stock broker training and development programs. Mr.Rettman
currently serves as a director of Ultravection Corp., International
Bioproducts, and Microplanet Corp.
Robert J. Rosan Director
Mr. Rosan has served as a director of the Company since December 28, 2001. He is
a partner in the law firm of Rosan & Rosan P.C. His practice specializes in real
estate, banking and contract law. Mr. Rosan has been a partner of Rosan & Rosan
P.C. for thirty (30) years. Mr. Rosan received his LLB from Columbia Law School.
Andrew Zaro Director
Mr. Zaro has served as a director of the Company since December 28, 2001. He is
currently the managing member and majority shareholder of Cavalry Investments
LLC ("Cavalry"). Cavalry specializes in the acquisition and collection of
non-performing consumer debt nationally. Calvary has a $3 billion portfolio with
over 1 million accounts. Calvary employs 160 full time people, 300 contingent
law firms and 10 outside collection agencies. In 1991, Mr. Zaro founded and had
overall management responsibility for Zirmak Investments LP, a partnership
specializing in the acquisition of non performing consumer loans. Four years
later he also founded Zirgo, LP, a successful subprime auto finance company
based in Phoenix, Arizona. Zirmak Investments and Zirgo, LP, are both being
serviced by Cavalry Investments LLC.
Executive Officers
Michael A. Bresner 58 years old President of National
Mr. Bresner joined the Company in January 1998. In August 1998, he was named
President of National. Prior to joining the Company, Mr. Bresner worked as
Managing Director of H.J. Meyers, Inc., a position he held since 1990. Mr.
Bresner served as Directing Editor of the Value Line Special Situations Service.
Mr. Bresner is a Supervisory Analyst.
Craig M. Gould 32 years old Vice Chairman of Technology
Managing Director of National
Mr. Gould, primarily responsible for the Company's technology and interactive
development, was named Vice-Chairman in July 1999. Mr. Gould joined National in
May 1995 and is currently the Managing Director of Capital Markets. Prior to
joining National, Mr. Gould worked at Merrill Lynch & Co., Inc. Mr. Gould
graduated with a B.A. from the University of Wisconsin.
5
Meetings of Directors
During the fiscal year ended September 28, 2001, the Company's Board of
Directors met or acted by Unanimous Written Consent a total of 13 times. No
incumbent director attended fewer than 75% of the aggregate number of meetings
of the Board and committees of which he was a member.
Director Compensation
Outside directors (i.e., directors who are not also officers or employees of the
Company or of a subsidiary) are paid $1,000 per meeting attended in person, and
$500 per meeting attended by telephone. Outside directors are also granted
options to purchase 5,000 shares of the Company's Common Stock each year of
their tenure, which fully vest six months after the date of issuance. This
annual option grant will be increased to 10,000 shares effective with the 2002
Annual Meeting. The exercise price of such options will equal or exceed fair
market value of the Common Stock on the date of grant. The Company shall
reimburse all directors for expenses incurred traveling to and from board
meetings. The Company does not pay inside directors any compensation as a
director.
Certain Relationships and Related Transactions
Messrs. Goldwasser, Rettman, Bresner and Gould have brokerage margin accounts
with National. The transactions, borrowings and interest charges in these
accounts are handled in the ordinary course of business and are consistent with
other similar customer accounts.
In August 2001, Mr. Rothstein's IRA loaned the Company $50,000, pursuant to the
terms of a Subordinated Promissory Note. The Note bears interest at a rate of 9%
and is due in August 2004.
In March 2001, the Company had its initial closing of Robotic Ventures Fund I,
L.P., a venture capital fund dedicated to investing in companies engaged in the
business of robotics and artificial intelligence. As of September, 2001 the fund
raised a total of $5.2 million, $265,000 of which was capital directly invested
by the Company into the fund. The Company serves as the managing member of
Robotic Ventures Group LLC, the general partner of the fund. As the managing
member of the funds general partner, the Company is entitled to the 2%
management fee paid by the fund. Additionally, the Company owns 24.5% of the
funds general partner, which is entitled to 20% of the profits generated by the
fund after the investors receive the return of their invested capital. Each of
Messers Rothstein and Goldwasser own 7.5% of Robotic Ventures Group LLC.
The holders of the Series A Preferred Stock that was issued in connection with
the Investment Transaction, which includes Triage Partners LLC and One Clark
LLC, were granted demand and piggy-back registration rights relating to the
Common Stock issuable upon conversion of the Preferred Stock.
As part of the Investment Transaction, Messrs. Rothstein and Daskal each entered
into a Termination and Consulting Agreement with the Company. The agreement with
Mr. Rothstein provides for the termination of all provisions and obligations
pursuant to his Employment Agreement, and payment by the Company of a monthly
consulting fee of $10,000 for a period of 18 months. All unexercised stock
options previously granted to Mr. Rothstein were cancelled. Mr. Rothstein's
obligation to repay an $11,000 principal amount loan obligation to the Company
was forgiven. The Company also agreed to sell 100% of the common stock,
representing its entire ownership interest, in Canterbury Securities Corporation
to Mr. Rothstein, at a price equal to its net book value, of approximately
$11,100. The agreement with Mr. Daskal provides for the termination of all
provisions and obligations pursuant to his Employment Agreement, his retention
as a non-executive employee of the Company for a period of three months, and
payment by the Company of a monthly consulting fee of $10,000 for a period of 27
months thereafter. All unexercised stock options previously granted to Mr.
Daskal were cancelled, with the exception of options to acquire 50,000 shares of
Common Stock that will expire one year after closing. Mr. Daskal subsequently
agreed to serve as the Company's Acting Chief Financial Officer and Acting
Secretary through March 31, 2002.
6
Executive Compensation
The following table sets forth the cash compensation paid by the Company to each
of its executive officers whose total annual salary and bonus exceeded $100,000
for fiscal 2001 (the "Named Executive Officers") during the fiscal years ended
2001, 2000 and 1999:
ANNUAL COMPENSATION
Long-Term
Compensation
Other Securities
Year Annual Underlying
Name and Capacity Ended Salary(1) Bonus Compensation Options
- ------------------------------------------------------------------------------------------------------------------------
Steven A. Rothstein (2) 2001 $ 554,000 (3) $ 110,000 $ - $ -
Chairman and Chief Executive Officer 2000 $ 677,000 (3) $ 50,000 $ - $ -
1999 $ 402,000 (3) $ 57,000 $ - $ -
Mark Goldwasser 2001 $ 428,000 $ 25,000 $ - $ -
President 2000 $ 123,000 $ - $ - $ -
Robert H. Daskal (4) 2001 $ 206,000 $ 60,000 $ - $ -
Senior Vice President, Chief Financial 2000 $ 247,000 $ 30,000 $ - $ -
Officer, Treasurer and Secretary 1999 $ 230,000 $ 18,000 $ - $ -
Craig M. Gould (5) 2001 $ 171,000 $ 60,000 $ - $ -
Vice Chairman of Technology 2000 $ 220,000 $ 15,000 $ - $ -
Michael A. Bresner 2001 $ 300,000 $ 135,000 $ - $ -
President of National 2000 $ 350,000 $ 40,000 $ - $ -
1999 $ 250,000 $ 26,000 $ - $ -
(1) Amounts include commissions earned in the normal course of business,
fees received for Corporate Finance services and profit from the sale
during the year of the Company's stock obtained through the exercise of
options.
(2) Resigned as an executive officer of the Company as of December 28, 2001.
(3) Compensation paid to Mr. Rothstein by the Company includes a percentage
of business generated or supervised by Mr. Rothstein as follows: he is
paid 50% of the commission generated on retail trades (compared to the
70% typically paid to National's brokers) and a portion of premiums for
term life insurance paid by the Company.
(4) Resigned as an executive officer of the Company as of December 28,
2001. Mr. Daskal will remain as acting Chief Financial
Officer and acting Secretary through March 31, 2002.
(5) Compensation in 1999 paid to Mr. Gould did not exceed $100,000 and
therefore is not listed for that fiscal year.
In April, July and August 2001, as part of the efforts to reduce overhead costs,
management of the Company received a temporary reduction in compensation up to
84% of base salary.
7
The Company has granted options to certain officers, directors, employees,
investment executives and consultants. The options granted during the last
fiscal year (adjusted for stock dividends) to the Named Executive Officers are
as follows:
Option Grants in Last Fiscal Year
------------------------------------------------------------------------------------------
Number of % of Total Potential Realized Value
Securities Options at Assumed Annual Rates
Underlying Granted to of Stock Price Appreciation
Options Employees Exercise Expiration for Option Term
-------------------------------
Name Granted in Fiscal Year Price Date 5% 10%
- ------------------------ ------------------------------------------------------------------------------------------
Steven A. Rothstein 12,000 4.07% $ 3.88 01/10/06 $ 13,000 $ 28,000
Mark Goldwasser 12,000 4.07% $ 3.88 01/10/06 $ 13,000 $ 28,000
Robert H. Daskal 8,000 2.72% $ 3.88 01/10/06 $ 9,000 $ 19,000
Michael A. Bresner 8,000 2.72% $ 3.88 01/10/06 $ 9,000 $ 19,000
Craig M. Gould 8,000 2.72% $ 3.88 01/10/06 $ 9,000 $ 19,000
The options exercised by the Named Executive Officers, and the fiscal year end
value of unexercised options, are as follows:
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option Values
---------------------------------------------------------------------------------------------------
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options
Acquired Value Options at Fiscal Year End at Fiscal Year End
----------------------------------------------------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ------------------------ ---------------------------------------------------------------------------------------------------
Steven A. Rothstein 66,603 $248,000 209,194 5,000 $ - $ -
Mark Goldwasser - $ - 192,000 - $ - $ -
Robert H. Daskal - $ - 91,851 5,000 $ - $ -
Michael A. Bresner - $ - 99,250 - $ - $ -
Craig M. Gould - $ - 76,968 5,000 $ - $ -
Employment Agreements
The Company has employment agreements with each of the Named Executive Officers.
Messrs. Rothstein, Goldwasser, Daskal, Bresner and Gould are paid a base annual
salary of $480,000, $400,000, $240,000, $350,000 and $200,000, respectively plus
bonuses and additional benefits offered other executives of the Company. As a
result of several reductions in compensation, each of the Named Executive
Officers was being paid an annual salary of $75,000, effective
8
in October 2001. Messrs. Rothstein's, Daskal's and Gould's agreements expire on
July 1, 2002. Mr. Goldwasser's agreement expires on June 12, 2003. Messrs.
Rothstein, Goldwasser, Daskal and Gould are entitled to a lump sum severance
payment, equaling one year's salary if their employment is terminated under
certain circumstances. Mr. Bresner's agreement expires on June 30, 2003 and he
is entitled to a lump sum severance payment, equaling two years' salary if his
employment is terminated under certain circumstances. In the event of a change
of control of the Company or National, each Named Executive Officer or the
Company may terminate their employment with the Company in exchange for a
lump-sum payment of two years' base compensation, plus continuation for 18
months of certain employee benefits provided by the Company. Each Named
Executive Officer has agreed not to induce or solicit any customer of the
Company to discontinue its relationship with the Company during the term of his
employment and for a one-year period thereafter.
In November 2001, Mr. Goldwasser voluntarily terminated his employment agreement
in exchange for a profit participation in National's branch office at 120
Broadway in New York City. As part of the Investment Transaction, Messrs.
Rothstein and Daskal agreed to terminate their employment agreements, and
entered into Termination and Consulting Agreements with the Company. Also as
part of the Investment Transaction, the term of Mr. Bresner's employment
agreement was extended to June 30, 2004.
Compensation Committee
The Company's Compensation Committee for the fiscal year 2001 consisted of two
outside Directors, Messrs. Holcomb and Patel. The Committee believes the
compensation paid to the Company's Executive Officers is competitive with
companies within its industry that are comparable in size and by companies
outside the industry with which the Company competes for executive talent.
Report of the Compensation Committee:
This report of the Compensation Committee shall not be deemed incorporated by
reference by any general statement incorporating the Proxy Statement by
reference into any filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934 (the "Acts"), except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
The Committee is responsible for making recommendations to the Company's Board
of Directors concerning the compensation of the Company's Chief Executive
Officer and, based upon recommendations received from the Company's Chief
Executive Officer, the compensation of the Company's other officers, consistent
with employment contracts where appropriate.
The Company has a compensation program that consists of salary and performance
bonus (which are generally reviewed annually) and stock options. The overall
executive compensation philosophy is based upon the premise that compensation
should be aligned with and support the Company's business strategy and long-term
goals. The Company believes it is essential to maintain an executive
compensation program, which provides overall compensation competitive with that
paid executives with comparable qualifications and experience. This is critical
to attract and retain competent executives.
Annual cash bonuses are determined by action of the Board of Directors on
recommendations made to it by its Compensation Committee. Stock options may be
granted to key employees of the Company as determined by the Board of Directors
pursuant to the Company's stock option plans which provides additional incentive
to maximize stockholder value. The plans may also utilize vesting periods to
encourage option recipients to continue in the employ of the Company. The
Company grants stock options to its officers, directors, employees, investment
executives and consultants.
Compensation of the Chief Executive Officer:
The annual salary and bonus of the Company's Chief Executive Officer are
determined in consultation with Mr. Rothstein. Mr. Rothstein's base annual
salary is $480,000. As a result of several salary reductions, in fiscal 2001,
Mr. Rothstein received a base salary of $468,000, commissions and other
compensation of $86,000 and a cash bonus of $110,000, attributable to the
Company's financial results. In fiscal 2000, Mr. Rothstein received a base
salary of $480,000, commissions and other compensation of $197,000 and a cash
bonus of $50,000, attributable to the Company's financial results. In fiscal
1999, Mr. Rothstein received a base salary, commissions and other
9
compensation of $402,000 and a cash bonus of $57,000. Amounts for commissions
and other compensation are made up of brokerage commissions earned at the
employee payout rate of 50% and a car lease for Mr. Rothstein paid by the
Company. Cash bonuses are determined by the annual bonus pool, which is based on
the Company's profits, and allocated by senior management. In fiscal 1998 and
fiscal 1999 Mr. Rothstein had agreed to a voluntary reduction in base salary and
as recognition of this reduction in salary Mr. Rothstein received a bonus of
$57,000 in fiscal 1999. These amounts reflect the Committee's philosophy as
described above.
The Compensation Committee regularly evaluates its policies with respect to
executive compensation. The Compensation Committee believes that a combination
of salary, bonus, and stock options provides a mix of short and long-term
rewards necessary to attract motivate and retain an excellent management team.
Compliance with Section 162(m) of the Internal Revenue Code of 1986:
The Company intends to comply with the requirements of Section 162 (m) of the
Internal Revenue Code of 1986 for the fiscal year 2001.
Compensation Committee:
James C. Holcomb
D.S. Patel
Audit Committee
The Audit Committee for the fiscal year 2001 consisted of the following three
outside Directors: Messrs. Rosenberg, Holcomb and Patel. The Audit Committee
reviewed the Company's audited financial statements as of and for the fiscal
year ended September 28, 2001 with management and the Company's independent
public accountants, Feldman Sherb & Co., P.C. This review included the matters
required to be discussed by Statement on Auditing Standards No. 61,
"Communication with Audit Committees," as issued and amended by the Auditing
Standards Board of the American Institute of Certified Public Accountants. The
Audit Committee discussed with Feldman Sherb & Co., P.C., their independence
from management and from the Company.
Based on the above review and discussions, the Audit Committee recommended to
the Board of Directors that the audited financial statements as of and for the
year ended September 28, 2001 be included in the Company's Annual Report on Form
10-K for the year ended September 28, 2001.
Audit Committee:
Gary A. Rosenberg
James C. Holcomb
D.S. Patel
Section 16(a) Beneficial Ownership Reporting Compliance
Pursuant to Section 16 of the Exchange Act, the Company's directors and
executive officers and beneficial owners of more than 10% of the Common Stock
are required to file certain reports, within specified time periods, indicating
their holdings of and transactions in the Common Stock.
Messrs. Holcomb, Patel, Rosenberg, Rothstein, Bresner, Daskal, Goldwasser and
Gould failed to file in a timely manner a Form 5 in the fiscal year 2001.
10
Comparison of Five-Year Cumulative Total Return
The following chart and graph compares cumulative total stockholder return on
the Company's Common Stock with the cumulative total stockholder return on the
common equity of the companies in the AMEX U.S. Index and the AMEX Financial
Index (the "Peer Group") for the period from October 1, 1996 to September 28,
2001. We assume a $100 investment on October 1, 1996, in each of Olympic Cascade
Financial Corporation Common Stock, AMEX U.S. Index and the AMEX financial Index
(the "Peer Group"), and further assume the reinvestment of all dividends.
Olympic AMEX
Measurement Period Cascade AMEX Financial
(Fiscal Year Covered) Financial U.S. Index Index
------------------- --------- ---------- -----
1996 100.00 100.00 100.00
1997 83.35 103.83 153.67
1998 15.50 128.46 177.62
1999 51.96 130.58 167.66
2000 78.40 162.31 158.63
2001 30.92 198.81 183.65
[GRAPHIC HERE]
11
Security Ownership of Certain Beneficial Owners and Management
Certain Beneficial Owners
The following table sets forth certain information with respect to persons known
by the management of the Company to own beneficially more than five percent (5%)
of the voting Securities of the Company as of January 18, 2002:
Amount and Percentage
Name and Address of Nature of Beneficial of
Beneficial Owner Ownership (1) Class
- ----------------------------------------------------------------------------
Steven B. Sands 642,533 (2) 24.77%
90 Park Avenue
39th Floor
New York, NY 10016
Martin S. Sands 642,533 (2) 24.77%
90 Park Avenue
39th Floor
New York, NY 10016
Mark Goldwasser 577,967 (3) 20.75%
120 Broadway
27th Floor
New York, New York 10271
Gary A. Rosenberg 129,444(4) 5.47%
676 North Michigan Avenue
Suite 3660
Chicago, Illinois 60611
Peter Rettman 150,000(5) 6.29%
1001 Fourth Avenue
Suite 2200
Seattle, Washington 98154
Gregory P. Kusnick and 433,333 (6) 16.23%
Karen Jo Gustafson
P.O. Box 22443
Seattle, WA 98122
Gregory C. Lowney and 433,333 (6) 16.23%
Maryanne K. Snyder
15207 NE 68th Street
Redmond, WA 98052
Steven A. Rothstein 286,363(7) 12.78%
875 North Michigan Avenue
Suite 1560
Chicago, Illinois 60611
12
(1) All securities are beneficially owned directly by the persons listed
on the table (except as otherwise indicated).
(2) Includes 285,000 shares owned indirectly through Triage Partners LLC
and 357,533 shares issuable upon conversion of 5,363 shares of Series A
Preferred Stock owned indirectly though Triage Partners LLC. Does not
include voting proxy granted to Triage Partners LLC over 274,660 shares
owned directly and indirectly by Mr. Rothstein.
(3) Includes 357,467 shares issuable upon conversion of 5,362 shares of
Series A Preferred Stock owned indirectly through One Clark LLC and
192,000 shares of vested unexercised stock options.
(4) Includes 127,194 shares of vested unexercised stock options and 2,250
restricted stock warrants.
(5) Includes 150,000 restricted warrants to purchase Common Stock.
(6) Includes 333,333 shares issuable upon conversion of 5,000 shares of
Series A Preferred Stock and 100,000 restricted stock
warrants owned as joint tenants with rights of survivorship.
(7) Includes 88,750 shares owned by direct family members, and 92,510
shares and 5,000 restricted stock warrants owned by retirement plan.
Triage Partners LLC has been granted a voting proxy on 274,660 shares
owned directly and indirectly by Mr. Rothstein.
Management
The following information is furnished as of January 18, 2002 as to each class
of equity securities of the Company beneficially owned by all Directors and
Named Executive Officers (exclusive of Mr. Rothstein who resigned as an
executive officer on December 28, 2001) of the Company:
Amount and Nature of
Name of Beneficial Owner Beneficial Ownership Percent of Class
- -------------------------------------------------------------------------------------------------------------------
Steven B. Sands - Co-Chairman 642,533 (1) 24.77%
Martin S. Sands - Co-Chairman 642,533 (1) 24.77%
Mark Goldwasser - President and Chief Executive Officer 577,967 (2) 20.75%
Gary A. Rosenberg - Director 129,444 (3) 5.47%
Peter Rettman - Director 150,000 (4) 6.29%
Andrew Zaro - Director -0- 0.0%
Robert J. Rosan - Director -0- 0.0%
Michael A. Bresner - President of National 99,250 (5) 4.25%
Craig M. Gould - Vice Chairman of Technology and Managing 84,963 (6) 3.67%
Director of National
Robert H. Daskal - Acting Chief Financial Officer and Acting 51,875 (7) 2.27%
Secretary
All executive officers and directors of the Company as a 1,736,032 (8) 47.57%
group (ten persons)
13
(1) Includes 285,000 shares owned indirectly through Triage Partners LLC
and 357,533 shares issuable upon conversion of 5,363 shares of Series A
Preferred Stock owned indirectly though Triage Partners LLC. Does not
include voting proxy granted to Triage Partners LLC over 274,660 shares
owned directly and indirectly by Mr. Rothstein.
(2) Includes 357,467 shares issuable upon conversion of 5,362 shares of
Series A Preferred Stock owned indirectly through One Clark LLC and
192,000 shares of vested unexercised stock options.
(3) Includes 127,194 shares owned of vested unexercised stock options and
2,250 of restricted stock warrants.
(4) Includes 150,000 restricted warrants to purchase Common Stock.
(5) Includes only shares of vested unexercised stock options.
(6) Includes 76,968 shares of vested unexercised stock options.
(7) Includes 50,000 shares of vested unexercised stock options.
(8) Includes 715,000 shares issuable upon conversion of 10,725 shares of
Series A Preferred Stock, 545,412 shares of vested unexercised stock
options and 152,250 restricted stock warrants. Does not include voting
proxy granted to Triage Partners LLC over 274,660 shares owned directly
and indirectly by Mr. Rothstein.
PROPOSAL 2
TO AMEND THE CERTIFICATE OF INCORPORATION TO
INCREASE THE NUMBER OF SHARES OF COMMON STOCK AUTHORIZED FOR ISSUANCE
General
The Company's Certificate of Incorporation currently authorizes the issuance of
6,000,000 shares of Common Stock, par value $.02, and 100,000 shares of
Preferred Stock, par value $.01. In January 2002, the Board of Directors adopted
a resolution approving, and declared advisable, subject to stockholder approval,
an amendment to the Certificate of Incorporation to increase the number of
authorized shares of the Company's Common Stock from 6,000,000 to 60,000,000
shares. No change is being proposed to the authorized number of shares of
Preferred Stock. An increase in the authorized Common Stock is necessary to
allow for the conversion of Series A Preferred Stock issued in the Investment
Transaction and to enable the Company to have a sufficient number of authorized
and unissued shares of Common Stock for corporate opportunities, such as
additional stock offerings, acquisitions, stock dividends and compensation
plans. If the stockholders approve this proposal, the first paragraph of Article
IV of the Company's Certificate of Incorporation would be amended to read in its
entirety as follows:
"The total number of shares of all classes of stock which the
corporation has authority to issue is Sixty Million One Hundred
Thousand (60,100,000) shares, consisting of two classes: Sixty Million
(60,000,000) shares of Common Stock, $.02 par value per share (the
"Common Stock"), and One Hundred Thousand (100,000) shares of Preferred
Stock, $.01 par value per share (the "Preferred Stock")."
Reasons for the Increase in the Number of Authorized Shares of Common Stock
The Company's reserve of authorized but unissued shares of Common Stock has been
depleted in recent years as a result of the granting of stock options under the
Company's stock option plans and the consummation of the Investment Transaction.
In order to provide that the Company will have a sufficient number of authorized
and unissued shares of Common Stock to allow for the conversion of Series A
Preferred Stock issued in the Investment Transaction and the exercise of options
and warrants and to allow flexibility with respect to potential corporate
opportunities, such as additional stock offerings, acquisitions, stock dividends
and compensation plans, the Board of Directors has decided to increase the
number of authorized shares of Common Stock from 6,000,000 to 60,000,000.
However, other than the shares of Common Stock the Company needs to reserve for
issuance pursuant to the conversion of Series A Preferred Stock issued in the
Investment Transaction and under its existing stock option plans and outstanding
warrants, the Company currently has no specific commitments or agreements to
issue any
14
shares of Common Stock pursuant to any stock offerings, acquisitions, stock
dividends or compensation plans. Also, while this is not the intent of this
proposal, in addition to general corporate purposes, the proposed share increase
can be used to make a change in control of the Company more difficult. See
"Potential Anti-Takeover Effect of Authorized Securities" below.
The additional shares of Common Stock for which authorization is sought would be
identical to the shares of Common Stock of the Company authorized prior to
approval of this proposal. Holders of Common Stock do not have preemptive rights
to subscribe to additional securities that may be issued by the Company, which
means that current stockholders do not have a prior right to purchase any new
issue of capital stock of the Company in order to maintain their proportionate
ownership of the Company.
As of the Record Date, the Company had a total of 2,236,449 shares of Common
Stock issued and outstanding. Additionally, the Company had 4,084,031 shares of
Common Stock potentially needed for issuance consisting of 906,107 shares
reserved for issuance upon exercise of outstanding stock options, 995,000 shares
reserved for future option grants, 467,925 shares reserved for issuance upon
exercise of outstanding warrants, 1,714,999 shares reserved for conversion upon
exercise of outstanding and to be issued Series A Preferred Stock. As of the
Record Date, 20,725 shares of the Company's Preferred Stock, of which 100,000
shares are authorized, were issued or outstanding. No increase in the number of
authorized shares of Preferred Stock of the Company is proposed or anticipated
at the present time.
If approved, the increased number of authorized shares of Common Stock will be
available for issue from time to time for such purposes and consideration as the
Board of Directors may approve, and no further vote of stockholders of the
Company will be required, except as provided under Delaware law or under
applicable stock exchange or stock market rules. The availability of additional
shares for issuance, without the delay and expense of obtaining stockholder
approval at a special meeting, will restore the Company's flexibility to issue
Common Stock to a level that the Board of Directors believes is advisable.
However, except as described above, the Company currently has no specific
commitments or agreements to issue any shares of Common Stock.
Potential Anti-takeover Effect of Authorized Securities
The increase in the authorized Common Stock may facilitate certain anti-takeover
devices that may be advantageous to management if management attempts to prevent
or delay a change of control. The Board of Directors could create impediments to
a takeover or transfer of control of the Company by causing such additional
authorized shares to be issued to a holder or holders who might side with the
Board of Directors in opposing a takeover bid. In this connection, the Board of
Directors could issue shares of Common Stock to a holder that would thereby have
sufficient voting power to assure that certain types of proposals would not
receive the requisite stockholder vote, including any proposal to remove
directors, to accomplish certain business combinations opposed by the Board of
Directors, or to alter, amend or repeal provisions in the Company's Certificate
of Incorporation or Bylaws relating to any such action. Furthermore, the
existence of such shares might have the effect of discouraging any attempt by a
person or entity, through the acquisition of a substantial number of shares of
Common Stock, to acquire control of the Company, since the issuance of such
shares could dilute the Common Stock ownership of such person or entity.
Employing such devices may adversely impact stockholders who desire a change in
management or who desire to participate in a tender offer or other sale
transaction involving the Company. By use of such anti-takeover devices, the
Board of Directors may thwart a merger or tender offer even though stockholders
might be offered a substantial premium over the then current market price of the
Common Stock. At the present time, the Company is not aware of any contemplated
mergers, tender offers or other plans by a third party to attempt to effect a
change in control of the Company, and this proposal is not being made in
response to any such attempt.
The Certificate of Incorporation of the Company authorizes the issuance of
100,000 shares of Preferred Stock, 70,000 of which remain undesignated. The
Board of Directors, within the limitations and restrictions contained in the
Certificate of Incorporation and without further action by the Company's
stockholders, has the authority to issue the undesignated Preferred Stock from
time to time in one or more series and to fix the number of shares and the
relative rights, conversion rights, voting rights, rights and terms of
redemption, liquidation preferences and any other preferences, special rights
and qualifications of any such series. Any issuance of Preferred Stock with
voting rights could, under certain circumstances, have the effect of delaying or
preventing a change in control of the Company by increasing the number of
outstanding shares entitled to vote and increasing the number of votes required
to approve a change in control of the Company.
15
While it may be deemed to have potential anti-takeover effects, the proposed
amendment to increase the authorized Common Stock is not prompted by any
specific effort or takeover threat currently perceived by the Board of
Directors. Moreover, the Board of Directors does not currently intend to propose
additional anti-takeover measures in the foreseeable future.
Board of Directors' Reservation of Rights
The Board of Directors retains the authority to take or to authorize
discretionary actions as may be appropriate to carry out the purposes and
intentions of this proposal, including without limitation editorial
modifications or any other change to the amendment to the Company's Certificate
of Incorporation which the Board of Directors may adopt without stockholder vote
in accordance with the Delaware General Corporation Law.
No Dissenters' Rights
Under Delaware law, stockholders are not entitled to dissenters' rights of
appraisal with respect to the proposal to amend the Company's Certificate of
Incorporation.
The Board of Directors recommends a vote FOR this proposal.
PROPOSAL 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, acting on the recommendation of the Audit Committee, has
appointed Feldman Sherb & Co., P.C., as the independent public accountants for
the Company for the fiscal year ending September 27, 2002. The Board of
Directors requests that the shareholders ratify the appointment. If the
shareholders do not ratify the appointment, the Board of Directors will consider
the selection of another public accounting firm for fiscal year 2002 and future
years. One or more representatives of Feldman Sherb & Co., P.C. may attend the
Annual Meeting and, if so, will have an opportunity to make a statement if they
so desire, and would be available to answer questions.
Fees for services performed by Feldman Sherb & Co., P.C. during the fiscal year
2001 relating to the audit of the consolidated annual financial statements and
preparation of Federal and state income tax returns were approximately $118,000.
Fees for other audit related services in 2001 aggregated approximately $10,000.
The Proxyholders intend to vote the shares represented by proxy in favor of the
ratification of the appointment of Feldman Sherb & Co., P.C. as independent
accountants, except to the extent a shareholder votes against or abstains from
voting on this proposal.
The Board of Directors recommends a vote FOR the ratification of the appointment
of Feldman Sherb & Co., P.C. as independent public accountants for the Company
in fiscal year 2002.
OTHER BUSINESS
Management knows of no business to be brought before the Annual Meeting of
Shareholders other than that set forth herein. However, if any other matters
properly come before the meeting, it is the intention of the persons named in
the proxy to vote such proxy in accordance with their judgment on such matters.
Even if you plan to attend the meeting in person, please execute, date and
return the enclosed proxy promptly. Should you attend the meeting, you may
revoke the proxy by voting in person. A postage-paid, return-addressed envelope
in enclosed for your convenience. Your cooperation in giving this your prompt
attention will be appreciated.
By Order of the Board of Directors
Robert H. Daskal
Acting Secretary
16
PROXY CARD (front)
OLYMPIC CASCADE FINANCIAL CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
OLYMPIC CASCADE FINANCIAL CORPORATION.
The undersigned stockholder of Olympic Cascade Financial Corporation (the
Company ) hereby constitutes and appoints Steven B. Sands, Martin S. Sands and
Mark Goldwasser, attorney and proxy of the undersigned, with power of
substitution, to attend, vote and act for the undersigned at the Annual Meeting
of Shareholders of the Company, a Delaware corporation, to be held on March 12,
2002 at 10:00 A.M. local time at 120 Broadway, 27th Floor, New York, New York
10271, and at any adjournments thereof, with respect to the following:
Proposals:
1. Election of Directors:
[ ] FOR all nominees listed below (except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below
INSTRUCTION: To withhold authority to vote for any individual nominee, strike a
line through nominee's name in the list below.
Steven B. Sands Martin S. Sands
2. To approve the adoption of an amendment to the Certificate of Incorporation
to increase the number of authorized shares of Common Stock from 6,000,000
shares to 60,000,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To ratify the appointment of Feldman Sherb & Co., P.C. as independent public
accountants of the Company for the fiscal year ending September 27, 2002.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(To be continued and signed on reverse side)
PROXY CARD (back)
This proxy will be voted as directed, but if no direction is indicated, it will
be voted FOR the election of the nominees named in proposal 1 and FOR proposals
2 and 3 as described herein.
The Board of Directors recommends voting in favor of each of the three
proposals.
PLEASE DATE, SIGN AND MAIL AT ONCE IN THE ENCLOSED POSTAGE PAID ENVELOPE.
Signature: ___________________________________
Date: _______________________________________
Signature: ___________________________________
(if held jointly)
Note: Please sign exactly as your name appears hereon. If signing as attorney,
executor, administrator, trustee, guardian or the like, please give your full
title as such. If signing for a corporation, please give your title.