THE ORLANDO PREDATORS ENTERTAINMENT, INC.
4901 Vineland Road
Orlando, Florida 32811
PROXY STATEMENT AND
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 16, 2002
To the shareholders of The Orlando Predators Entertainment, Inc.:
The Annual Meeting of the shareholders of The Orlando Predators
Entertainment, Inc. (the "Company") will be held at Radisson Plaza Hotel, 60
S.E. Ivanhoe Blvd., Orlando, Florida 32801, at 1:30 P.M. on May 16, 2002, or at
any adjournment or postponement thereof, for the following purposes:
1. To elect four directors of the Company.
2. To transact such other business as may properly come before the
meeting.
Details relating to the above matters are set forth in the attached Proxy
Statement. All shareholders of record of the Company as of the close of business
on April 3, 2002 will be entitled to notice of and to vote at such meeting or at
any adjournment or postponement thereof.
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. IF YOU DO NOT
PLAN TO ATTEND THE MEETING, YOU ARE URGED TO SIGN, DATE AND PROMPTLY RETURN THE
ENCLOSED PROXY. A REPLY CARD IS ENCLOSED FOR YOUR CONVENIENCE. THE GIVING OF A
PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
John Pearce
Secretary
April 8, 2002
PROXY STATEMENT
THE ORLANDO PREDATORS ENTERTAINMENT, INC.
4901 Vineland Road
Orlando, Florida 32811
Telephone: (407) 648-4444
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 16, 2002
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of The Orlando Predators Entertainment, Inc.
(the "Company"), a Florida corporation, of no par value Class A Common Stock to
be voted at the Annual Meeting of Shareholders of the Company ("Annual Meeting")
to be held at 1:30 P.M. on May 16, 2002, or at any adjournment or postponement
thereof. The Company anticipates that this Proxy Statement and the accompanying
form of proxy will be first mailed or given to all shareholders of the Company
on or about April 8, 2002. The shares represented by all proxies that are
properly executed and submitted will be voted at the meeting in accordance with
the instructions indicated thereon. Unless otherwise directed, votes will be
cast for the election of the nominees for directors hereinafter named. The
holders of a majority of the shares represented at the Annual Meeting in person
or by proxy will be required to elect directors and approve any other proposed
matters.
Any shareholder giving a proxy may revoke it at any time before it is
exercised by delivering written notice of such revocation to the Company, by
substituting a new proxy executed at a later date, or by requesting, in person,
at the Annual Meeting, that the proxy be returned.
All of the expenses involved in preparing, assembling and mailing this
Proxy Statement and the materials enclosed herewith and all costs of soliciting
proxies will be paid by the Company. In addition to the solicitation by mail,
proxies may be solicited by officers and regular employees of the Company by
telephone, telegraph or personal interview. Such persons will receive no
compensation for their services other than their regular salaries. Arrangements
will also be made with brokerage houses and other custodians, nominees and
fiduciaries to forward solicitation materials to the beneficial owners of the
shares held of record by such persons, and the Company may reimburse such
persons for reasonable out of pocket expenses incurred by them in so doing.
VOTING SHARES AND PRINCIPAL SHAREHOLDERS
The close of business on April 3, 2002 has been fixed by the Board of
Directors of the Company as the record date (the "record date") for the
determination of shareholders entitled to notice of and to vote at the Annual
Meeting. On the record date, there were outstanding 7,059,110 shares of Class A
Common Stock and 1,000 shares of Class B Common Stock. Each share of Class A
Common Stock entitles the holder thereof to one vote and each share of Class B
1
Common Stock entitles the holder thereof to 10,000 votes on each matter which
may come before the Annual Meeting. Cumulative voting for directors is not
permitted. A majority of the issued and outstanding shares entitled to vote,
represented at the meeting in person or by proxy, constitutes a quorum at any
shareholders' meeting.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information with respect to the
ownership of the Company's Class A and Class B Common Stock as of the record
date, by (i) each person who is known by the Company to own of record or
beneficially more than 5% of the Company's Class A and Class B Common Stock,
(ii) each of the Company's directors and (iii) all directors and officers of the
Company as a group. Unless otherwise indicated, the stockholders listed in the
table have sole voting and investment powers with respect to the shares of Class
A and Class B Common Stock and their addresses are in care of the Company. Each
share of Class B Common Stock votes the equivalent of 10,000 shares of Class A
common stock. Shareholdings include shares issuable under stock options
exercisable within 60 days from the date of this Report.
Number of Shares Percentage
Name Beneficially Owned of Class
---- ------------------ ----------
Eric A. Margenau (1)(2) 997,341 14.8%
Lyle Reigel 150,000 2.2%
Kenneth Levy 2,000 * %
Michael A. Tatoian 0 0 %
Brett L. Bouchy (1)(2) 916,431 13.6%
Riverlux REG 759,294 11.3%
Alan Gagleard (3) 75 7.5%
All directors and officers
as a group 1,257,702 13.4%
(seven persons)
* Less than 1%
(1) Does not include (i) 462.5 shares of Class B Common Stock held by Brett L.
Bouchy which are subject to a voting trust in favor of Eric A. Margenau
until January 2010 or (ii) 462.5 shares of Class B Common Stock held by Dr.
Margenau. There are a total of 1,000 shares of Class B Common Stock
outstanding, each share of which votes the equivalent of 10,000 shares of
Class A Common Stock.
(2) Includes stock options held by Brett L. Bouchy to purchase 787,080 shares
at $2.50 per share. Any shares purchased by Brett L. Bouchy under these
options will be subject to a voting trust in favor of Eric A. Margenau
until January 2010.
(3) Represents shares of Class B Common Stock. Each share of Class B Common
Stock votes the equivalent of 10,000 shares of Class A Common Stock.
2
ELECTION OF DIRECTORS
At the Annual Meeting, the shareholders will elect four directors of the
Company. Cumulative voting is not permitted in the election of directors. In the
absence of instructions to the contrary, the person named in the accompanying
proxy will vote in favor of the election of each of the persons named below as
the Company's nominees for directors of the Company. All of the nominees are
presently members of the Board of Directors, and each of the nominees has
consented to be named herein and to serve if elected. It is not anticipated that
any nominee will become unable or unwilling to accept nomination or election,
but if such should occur, the person named in the proxy intends to vote for the
election in his stead of such person as the Board of Directors of the Company
may recommend.
The following table sets forth certain information regarding each nominee
and each executive officer of the Company.
Officer/Director
Name Age Position Since
---------------------- --- -------- ----------------
Eric A. Margeneau (1) 61 Chairman of the Board of Directors 2000
and Chief Executive Officer
David Berryman 51 President and Chief Operating Officer 2001
John Pearce 34 Vice President, Secretary, Treasurer 2001
and Chief Financial Officer
Lyle Reigel (1)(2) 62 Director 2001
Kenneth Levy (1)(2) 55 Director 2001
Michael A. Tatoian (1)(2) 41 Director 2001
(1) Member of Compensation Committee.
(2) Member of Audit Committee.
Directors are elected at the Company's annual meeting of shareholders and
serve a term of one year or until their successors are elected and qualified.
Officers are appointed by the Board of Directors and serve at the discretion of
the Board of Directors, subject to the bylaws of the Company. Jeffrey L. Bouchy
and James Ross resigned as directors in January 2002.
The Audit Committee reviews the engagement and independence of the
Company's independent accountants, the audit and non-audit fees of the
independent accountants and the adequacy of the Company's internal accounting
controls. The Compensation Committee considers the compensation and incentive
arrangements of the Company's executive officers.
3
The principal occupation of each director and executive officer of the
Company, for at least the past five years, is as follows:
Eric A. Margenau was appointed Chief Executive Officer of the Company in
January 2000. He has been President of United Sports Ventures ("USV") since June
1996. From January 2000 to November 2001, USV had a management agreement with
the Company under which USV provided the services of Dr. Margenau and USV's
staff management to manage the operations of the Company for $3,000 per month.
Dr. Margenau has been involved in the ownership and operation of minor league
sports teams since 1986. In that time he has owned, operated and/or managed
seven minor league baseball franchises and four minor league hockey franchises.
From 1983 to 1988, he was the executive director of the Center for Sports
Psychology. As a sports psychologist, he has been a consultant to several Major
League Baseball teams.
David Berryman was the President and Chief Executive Officer of Arkansas
Sports Entertainment, which owns the Arkansas River Blades East Coast Hockey
League franchise and the Arkansas Twisters arenafootball2 franchise, from 1998
until he joined the Company in November 2001. After a 20-year career in
professional tennis as a player, coach and promoter, he served as Director of
Off Ice Officials for the South Carolina Stingrays from 1993 to 1995 and was
General Manager of the Louisiana IceGators from 1995 to 1998. He earned a
Bachelor's degree in Business Administration from Memphis State University.
John Pearce earned a Bachelor of Science degree in Accounting from Arizona
State University. He served as the Company's Controller from August 1999 until
he was appointed Vice President and Chief Financial Officer in late 2001. From
1997 to 1999 he was Controller for First Watch Restaurants in Phoenix, Arizona.
From 1995 to 1997, he worked for Docu-Tax, Inc. as a Tax Manager. Mr. Pearce
also served in the U.S. Air Force for 12 years, four years in active duty and
eight years in the U.S. Air Guard.
Lyle Reigel has been the President of U.S. Paper Converters, Inc. (a paper
conversion company) since 1983, the President of Reigel Electric Corp. (a
provider of electric services for commercial construction projects) from 1978 to
2000, and the Vice President of Paget Equipment (a manufacturer of high pressure
vessels) since 1985. He has also owned and managed commercial real estate
properties since 1978.
4
Kenneth Levy was President of Marshall, Alexander & Marshall, an investment
banking and brokerage firm, from October 1994 to March 1997. From March 1997 to
January 2000, he was Managing Director of Janssen/Meyers Associates, LLP, an
investment banking and brokerage firm. Since January 2000, he has been President
of United Network Marketing Systems, Inc., an Internet based marketing firm.
Michael A. Tatoian has been Chief Operating Officer of United Sports
Ventures, an affiliate, since 1995. He has been actively involved in
professional sports management since 1984 including acting as the General
Manager of two minor league baseball teams between 1988 and 1995.
EXECUTIVE COMPENSATION
Summary
None of the Company's executive officers received compensation in excess of
$100,000 for the year ended September 30, 2000 or 2001. The following table
indicates all compensation received the by Company's Chief Executive Officer in
2000 and 2001.
Summary Compensation Table
Annual Compensation (1)
-----------------------
(a) (e) (f)
Name and Principal (b) (c) (d) Stock Other Annual
Position Year Salary($) Bonus($) Options Compensation($)
---------- ---- --------- -------- ------- ---------------
Eric A. Margenau, 2000 68,000(1) 0 150,000 0
Chief Executive 2001 39,000(1) 0 0 0
Officer (1)
(1) Paid to United Sports Ventures, Inc., a company controlled by Dr. Margenau.
The Company's directors do not receive compensation for attending Board
meetings but are reimbursed for all of their out-of-pocket expenses.
1997 Employee Stock Option Plan
In April 1997 the Company's stockholders adopted the Company's 1997
Employee Stock Option Plan (the "Plan"), which provides for the grant of stock
options intended to qualify as incentive stock options and nonqualified stock
options (collectively "stock options") within the meaning of Section 422 of the
United States Internal Revenue Code of 1986 (the "Code"). Stock options are
issuable to any officer, director, key employee or consultant of the Company.
5
The Company's Board of Directors has reserved 3,000,000 shares of Class A
Common Stock for issuance under the Plan. The Plan is administered by the full
Board of Directors, which determines which individuals shall receive stock
options, the time period during which the stock options may be exercised, the
number of shares of Class A Common Stock that may be purchased under each stock
option and the stock option price.
The per share exercise price of incentive stock options may not be less
than the fair market value of the Class A Common Stock on the date the option is
granted. The aggregate fair market value (determined as of the date the stock
option is granted) of the Class A Common Stock that any person may purchase
under an incentive stock option in any calendar year pursuant to the exercise of
incentive stock options may not exceed $100,000. No person who owns, directly or
indirectly, at the time of the granting of an incentive stock option, more than
10% of the total combined voting power of all classes of stock of the Company is
eligible to receive incentive stock options under the Plan unless the stock
option price is at least 110% of the fair market value of the Class A Common
Stock subject to the stock option on the date of the grant.
No incentive stock options may be transferred by an optionee other than by
will or the laws of descent and distribution, and during the lifetime of an
optionee, the stock option may only be exercisable by the optionee. Stock
options may be exercised only if the stock option holder remains continuously
associated with the Company from the date of grant to the date of exercise. The
exercise date of a stock option granted under the Plan cannot be later than ten
years from the date of grant. Any stock options that expire unexercised or that
terminate upon an optionee's ceasing to be employed by the Company become
available once again for issuance. Shares issued upon exercise of a stock option
will rank equally with other shares then outstanding.
As of the record date, 1,831,578 stock options have been granted under the
Plan, exercisable at prices ranging from $1.50 to $2.70 per share.
CERTAIN TRANSACTIONS
In January 1999, the Company issued to Brett L. Bouchy, its then Chief
Executive Officer, non-qualified options to purchase 950,000 shares of its Class
A Common Stock at $4.44 per share until December 2001. The options were issued
in connection with a three year employment agreement executed by the Company and
Mr. Bouchy and provided that 1/3 of the options would vest yearly on the
anniversary date of the employment agreement. Mr. Bouchy terminated his
employment agreement with the Company in January 2000 and exchanged his 950,000
non- qualified options for 817,068 incentive stock options issued under the
Company's 1997 Stock Option Plan, exercisable at $2.50 per share. Any shares
issued upon exercise of the options will be subject to a voting trust in favor
of Eric A. Margenau until January 2010.
6
From January 2000 to November 2001, USV had a management agreement with the
Company under which USV provided the services of Dr. Margenau and USV's staff
management to manage the operations of the Company for $3,000 per month. In
connection with the agreement, the Company issued to USV stock options to
purchase up to 150,000 shares of the Company's Class A Common Stock for $2.50
per share. The Company cancelled the initial stock option and reissued to USV
150,000 stock options exercisable at $2.70 per share when it terminated the
agreement in November 2001.
In February 2002, New Era Growth and Venture Fund (formerly "The Monolith
Limited Partnership") agreed to sell its 925 shares of Class B Common Stock to
Brett L. Bouchy (462.5 shares) and Eric A. Margenau (462.5 shares). Dr. Margenau
has the right to vote Mr. Bouchy's shares until January 2010.
In January 2001, the Company agreed to issue an aggregate of 100,000 shares
of its restricted Class A Common Stock to Jeffrey L. Bouchy and Eric A.
Margenau, officers and directors of the Company, and Brett L. Bouchy, a
principal stockholder of the Company. The shares were issued in consideration of
Messrs. Bouchy, Margenau and Bouchy providing their assets as collateral to
assist the Company in borrowing $1 million to satisfy its obligation under the
IFL Acquisition agreement, which required the Company to advance $1.1 million to
af2 Enterprises, LLC. The Company subsequently reduced the loan to $700,000 and
agreed to issue one additional share of Class A Common Stock for each $10 of
loan balance, on a quarterly basis. A total of 415,444 shares were issued in the
aggregate to these three individuals prior to the loan being repaid in March
2002 comprised of 80,862 shares issued to Jeffrey L. Bouchy, 125,767 shares
issued to Eric A. Margenau and 208,815 shares issued to Brett L. Bouchy.
The Company believes the terms of the above transactions were fair,
reasonable and consistent with terms that could be obtained from nonaffiliated
third parties. Transactions with affiliates of the Company require approval of a
majority of the disinterested members of the Company's Board of Directors. If a
material amount, the Company's securities (other than stock options under the
Company's 1997 Employee Stock Option Plan) may not be issued to management,
promoters or their respective associates or affiliates without obtaining a
fairness opinion from a qualified brokerage firm or appraiser.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
AJ. Robbins, P.C., Denver, Colorado, conducted the audit of the Company's
financial statements for the year ended September 30, 2001. It is the Company's
understanding that this firm is obligated to maintain audit independence as
prescribed by the accounting profession and certain requirements of the
Securities and Exchange Commission. As a result, the directors of the Company do
not specifically approve, in advance, non-audit services provided by the firm,
nor do they consider the effect, if any, of such services on audit independence.
7
PROPOSALS OF SHAREHOLDERS FOR PRESENTATION
AT NEXT ANNUAL MEETING OF SHAREHOLDERS
Any shareholders of record of the Company who desires to submit a proper
proposal for inclusion in the proxy materials relating to the next annual
meeting of shareholders must do so in writing and it must be received at the
Company's principal executive offices prior to the Company's fiscal year end.
The proponent must be a record or beneficial shareholder entitled to vote at the
next annual meeting of shareholders on the proposal and must continue to own the
securities through the date on which the meeting is held.
OTHER BUSINESS
Management of the Company is not aware of any other matters which are to be
presented to the Annual Meeting, nor has it been advised that other persons will
present any such matters. However, if other matters properly come before the
meeting, the individual named in the accompanying proxy shall vote on such
matters in accordance with his best judgment.
The above notice and Proxy Statement are sent by order of the Board of
Directors.
John Pearce
Secretary
April 8, 2002
9
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY
FOR THE ANNUAL MEETING OF SHAREHOLDERS OF
THE ORLANDO PREDATORS ENTERTAINMENT, INC.
TO BE HELD MAY 16, 2002
The undersigned hereby appoints Eric A. Margenau as the lawful agent and
Proxy of the undersigned (with all the powers the undersigned would possess if
personally present, including full power of substitution), and hereby authorizes
him to represent and to vote, as designated below, all the shares of Class A
Common Stock of The Orlando Predators Entertainment, Inc. held of record by the
undersigned on April 3, 2002, at the Annual Meeting of Shareholders to be held
May 16, 2002, or any adjournment or postponement thereof.
1. ELECTION OF DIRECTORS
[ ] FOR the election as a director of all nominees listed below (except
as marked to the contrary below).
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below.
NOMINEES: Eric A. Margenau, Lyle Reigel, Kenneth Levy and Michael A. Tatoian
INSTRUCTION: To withhold authority to vote for individual nominees, write their
names in the space provided below.
2. In his discretion, the Proxy is authorized to vote upon any matters which may
properly come before the Annual Meeting, or any adjournment or postponement
thereof.
It is understood that when properly executed, this proxy will be voted in
the manner directed herein by the undersigned shareholder. WHERE NO CHOICE IS
SPECIFIED BY THE SHAREHOLDER THE PROXY WILL BE VOTED FOR THE ELECTION OF THE
DIRECTORS NAMED IN ITEM 1 ABOVE.
The undersigned hereby revokes all previous proxies relating to the shares
covered hereby and confirms all that said Proxy may do by virtue hereof.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should 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.
Dated:
--------------------- --------------------------------------------
Signature
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
--------------------------------------------
Signature, if held jointly
PLEASE CHECK THIS BOX IF YOU INTEND TO BE PRESENT AT THE ANNUAL MEETING OF
SHAREHOLDERS. _____
2j.0402.temp
2