-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QWlkyhwVKit4bb8tlp3ssXWcy7iPn8z1ld3LpAcLKajn+BQAExMt5TQZOtL6Rk3U 5rcoBZ3CfchcTkesr8ocUg== 0000950123-01-501419.txt : 20010501 0000950123-01-501419.hdr.sgml : 20010501 ACCESSION NUMBER: 0000950123-01-501419 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010605 FILED AS OF DATE: 20010430 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BIGSTAR ENTERTAINMENT INC /NY CENTRAL INDEX KEY: 0001058430 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-CATALOG & MAIL-ORDER HOUSES [5961] IRS NUMBER: 133995258 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 000-26793 FILM NUMBER: 1616007 BUSINESS ADDRESS: STREET 1: 19 FULTON ST 4TH FL CITY: NEW YORK STATE: NY ZIP: 10038 MAIL ADDRESS: STREET 1: 19 FULTON ST STREET 2: 5TH FL CITY: NEW YORK STATE: NY ZIP: 10038 DEF 14A 1 y46666def14a.txt BIGSTAR ENTERTAINMENT, INC. 1 SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(c)(2)) [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to Rule 14a-12
BIGSTAR ENTERTAINMENT, INC. - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if Other Than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(1) and 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: ------------------------------------------------------------------------ 2 BIGSTAR ENTERTAINMENT, INC. 19 FULTON STREET, 5TH FLOOR NEW YORK, NEW YORK 10038-2100 May 9, 2001 Dear Stockholder: You are cordially invited to attend the Annual Meeting of Stockholders, which will be held at 258 East Montauk Highway, Hampton Bays, New York at 9:00 a.m. on Tuesday, June 5, 2001. The official Notice of Annual Meeting of Stockholders, Proxy Statement and Proxy Card are included with this letter. The matters listed in the Notice of Annual Meeting of Stockholders are described in detail in the Proxy Statement. The vote of every stockholder is important. Whether or not you plan to attend the meeting in person, it is important that your shares be represented and voted at the annual meeting. Accordingly, please date, sign and return the enclosed Proxy Card promptly. No postage is required if the Proxy Card is mailed in the United States. I hope that you will attend the meeting and I look forward to seeing you there. Sincerely, /s/ David Friedensohn DAVID FRIEDENSOHN Chief Executive Officer and Chairman of the Board 3 BIGSTAR ENTERTAINMENT, INC. 19 FULTON STREET, 5TH FLOOR NEW YORK, NEW YORK 10038-2100 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 5, 2001 NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Annual Meeting") of BigStar Entertainment, Inc., a Delaware corporation ("BigStar"), will be held on Tuesday, June 5, 2001, at 9:00 a.m. (local time), at the Indian Cove Restaurant, 258 East Montauk Highway, Hampton Bays, New York, for the following purposes: 1. To elect two Class II directors to the Board of Directors of BigStar; 2. To transact such other business as may properly come before the Annual Meeting or at any adjournment or postponement thereof. Only stockholders of record at the close of business on May 2, 2001 are entitled to notice of, and to vote at, this Annual Meeting and any adjournment or postponement thereof. All stockholders are cordially invited to attend the Annual Meeting. Whether or not you plan to attend the meeting, please promptly complete, sign, date and return the enclosed proxy card in the enclosed envelope to make sure that your shares are represented at the Annual Meeting. No postage is required if the proxy card is mailed in the United States. This will ensure that your shares are voted in accordance with your wishes. Your cooperation is appreciated since a majority of the outstanding shares entitled to vote must be represented, either in person or by proxy, to constitute a quorum for the purposes of conducting business at the Annual Meeting. In the event you decide to attend the Annual Meeting in person, you may, if you desire, revoke your proxy and vote your shares in person. By Order of the Board of Directors, By: /s/ David Friedensohn -------------------------------------- David Friedensohn Chief Executive Officer and Chairman of the Board New York, New York May 9, 2001 YOUR VOTE IS IMPORTANT IF YOU ARE UNABLE TO BE PRESENT PERSONALLY, PLEASE MARK, SIGN AND DATE THE ENCLOSED PROXY CARD, WHICH IS BEING SOLICITED BY THE BOARD OF DIRECTORS, AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. STOCKHOLDERS WHO EXECUTE A PROXY CARD MAY NEVERTHELESS ATTEND THE ANNUAL MEETING, REVISE THEIR PROXY CARD AND VOTE THEIR SHARES IN PERSON. 4 BIGSTAR ENTERTAINMENT, INC. 19 FULTON STREET, 5TH FLOOR NEW YORK, NEW YORK 10038-2100 ------------------------ NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 5, 2001 ------------------------ This proxy statement and the enclosed proxy card are furnished to stockholders of BigStar Entertainment, Inc., a Delaware corporation ("BigStar"), in connection with the solicitation of proxies by the Board of Directors of BigStar (the "Board") for use in voting at the Annual Meeting of Stockholders (the "Annual Meeting"), which will be held at 9:00 a.m. at 258 East Montauk Highway, Hampton Bays, New York, on Tuesday, June 5, 2001, and at any adjournment or postponement thereof. This proxy statement, and the accompanying form of proxy card, are first being mailed to stockholders on or about May 9, 2001. PURPOSE OF THE ANNUAL MEETING The specific proposals to be considered and acted upon at the Annual Meeting are summarized in the accompanying Notice of Annual Meeting of Stockholders. Each proposal is described in more detail in this proxy statement. RECORD DATE AND OUTSTANDING SHARES The Board has fixed the close of business on May 2, 2001 as the record date (the "Record Date") for the determination of stockholders entitled to notice of, and to vote at, the Annual Meeting. Only stockholders of record at the close of business on that date will be entitled to vote at the Annual Meeting. As of May 2, 2001, BigStar had outstanding and entitled to vote 7,956,115 shares of common stock, par value $0.001 per share (the "Common Stock") comprising all of BigStar's issued and outstanding voting stock. BigStar encourages each stockholder to vote and to vote promptly. Voting promptly may save BigStar the expense of a second mailing. REVOCABILITY AND VOTING OF PROXIES Any person signing a proxy card in the form accompanying this proxy statement has the power to revoke it prior to the Annual Meeting or at the Annual Meeting prior to the vote by (i) submitting a later-dated proxy card; (ii) by giving timely written notice to David Friedensohn, Chief Executive Officer and Chairman of the Board of BigStar stating that the proxy card is revoked; or (iii) attending the Annual Meeting and voting in person. Please note, that if a stockholder's shares are held of record by a broker, bank or other nominee and that stockholder wishes to vote at the Annual Meeting, the stockholder must bring to the Annual Meeting a letter from the broker, bank or other nominee confirming that stockholder's beneficial ownership of the shares. Shares represented by each properly executed and returned proxy card will be voted (unless earlier revoked) in accordance with the instructions indicated. If no instructions are indicated on the proxy card, all shares represented by valid proxy cards received pursuant to this solicitation (and not revoked before they are voted) will be voted "FOR" election of each of BigStar's nominees as a director, and, by the proxies in their discretion on any other matters to come before the Annual Meeting, or any postponement or adjournment thereof. VOTING AT THE ANNUAL MEETING Each share of Common Stock outstanding on the Record Date will be entitled to one vote on each matter submitted to a vote of the stockholders, including the election of directors. Cumulative voting by stockholders is not permitted. 5 The presence, in person or by proxy, of the holders of a majority of the votes entitled to be cast by the stockholders entitled to vote at the Annual Meeting is necessary to constitute a quorum. Abstentions and broker "non-votes" are counted as present and entitled to vote for purposes of determining a quorum. A broker "non-vote" occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner. A plurality of the votes cast is required for the election of directors. Abstentions and broker "non-votes" are not counted for purpose of the election of directors. SOLICITATION BigStar will bear the costs of solicitation of proxy cards. Following the mailing of proxy solicitation material, proxy cards may also be solicited by directors, officers and regular employees of BigStar (without special compensation) in person, by telephone or by electronic means. BigStar may reimburse brokerage firms and other persons representing beneficial owners of shares for their expenses in forwarding solicitation material to beneficial owners. BigStar will pay the expenses for the preparation of proxy materials and the solicitation of proxy cards for the Annual Meeting. 2 6 PROPOSAL NO. 1: ELECTION OF DIRECTORS The Amended and Restated By-Laws of BigStar provide that the Board is divided into three classes, denominated Class I, Class II and Class III, the terms of which expire consecutively over a three-year period. At the Annual Meeting, two individuals will be elected as Class II directors for a three-year term until their successors are elected and qualified. The Board of Directors currently has four members; Jeff Soinski and Daniel John Woods, who are Class II Directors and whose terms expire at this Annual Meeting and each of whom is a nominee for election; David Friedensohn, who is a Class III Director and whose term expires at the 2002 annual meeting of stockholders; and I. Martin Pompadur, who is a Class I Director and whose term expires at the 2003 annual meeting of stockholders. Unless otherwise instructed, the proxy holders will vote the proxy cards received by them for the nominees named below, all of whom are presently directors of BigStar. If any nominee is unable or declines to serve as a director at the time of the Annual Meeting, the proxy cards will be voted for any nominee designated by the present Board of Directors to fill the vacancy. It is not expected that any nominee will be unable or will decline to serve as a director. If stockholders properly nominate persons other than BigStar's nominees for election as directors, the proxy holders will vote all proxy cards received by them to assure the election of as many of BigStar's nominees as possible, with the proxy holder making any required selection of specific nominees to be voted for. The term of office of each person elected as a director will continue until the 2004 annual meeting of stockholders or until his earlier death, resignation or removal. There is no family relationship between any director and any other director or executive officer of BigStar. RECOMMENDATION THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE ELECTION OF MESSRS. SOINSKI AND WOODS AS DIRECTORS. DIRECTOR INFORMATION The following provides information about each nominee and continuing director, including data on their business backgrounds and the names of public companies and other selected entities for which they also serve as directors. The information concerning the directors and their security holdings has been furnished to us by each director. JEFF SOINSKI, age 39, has been the Chief Executive Officer of Mad Dogs & Englishmen, an advertising agency headquartered in New York City since January 2000. From 1992 until 1999, Mr. Soinski served as the President and Chief Executive Officer of ViroTex Corporation, a pharmaceutical development company which was sold to Atrix Laboratories, Inc., a Nasdaq-traded pharmaceutical company focused on advanced drug delivery. Mr. Soinski has an AB degree from Dartmouth College. DANIEL JOHN WOODS, age 40, has been the Chief Technology Officer of CapitalThinking, Inc., a web-based financial services applications and technology company, since September 1999. From 1998 until September 1999, Mr. Woods served as the Vice President and Chief Technology Officer of TheStreet.com, a Nasdaq-traded web-based provider of original, timely, comprehensive and financial news, commentary and information aimed at helping readers make informed investment decisions. Previously, from 1996 until 1998, Mr. Woods served as a software applications manager for Pathfinder, a division of Time Warner, Inc. Mr. Woods has an MS degree from the Columbia University Graduate School of Journalism and a BS degree in Computer Science from the University of Michigan. DIRECTOR TO CONTINUE IN OFFICE UNTIL THE 2002 ANNUAL MEETING (CLASS III) DAVID FRIEDENSOHN, age 39 -- Mr. Friedensohn has served as Chairman and Chief Executive Officer of BigStar since its formation in March 1998. Prior to joining BigStar, Mr. Friedensohn served as the Chief 3 7 Executive Officer of SonicNet, which was sold in December 1997 as part of Paradigm Music Entertainment to TCI Music, an affiliate of Tele-Communications, Inc. Mr. Friedensohn previously held the positions of Vice President, Business Development and General Manager of the Wildflower Partners Fund at Prodigy from October 1995 until January 1997 and was Chairman of the Board and President of SonicNet from January 1996 to January 1997. Prior to working at Prodigy, Mr. Friedensohn served as the President of GB Investment Corp., a consulting company to the entertainment industry. Mr. Friedensohn received a Bachelor of Arts from Dartmouth College in 1983 and a Masters in Business Administration from Columbia University Graduate School of Business in 1987. DIRECTOR TO CONTINUE IN OFFICE UNTIL THE 2003 ANNUAL MEETING (CLASS I) I. MARTIN POMPADUR, age 64 -- Mr. Pompadur has served as a director of BigStar since June 1999. He has served as Chairman of News Corporation Europe since January 2000, and an Executive Vice President of News Corporation and a member of News Corporation's Executive Management Committee since June 1998. Since 1988, Mr. Pompadur has also served as the President and Chief Executive Officer of RP Companies and is currently the Chairman, Chief Executive Officer and Chief Operating Officer of a number of private and public limited partnerships, which operate television stations, radio stations and cable television systems. From 1977 to 1982, Mr. Pompadur served as the President of Ziff Corporation. From 1960 to 1977, Mr. Pompadur held various positions with American Broadcasting Companies, including General Manager of the Television Network, Vice President of the Broadcast Division and President of the Leisure Activities Group. Mr. Pompadur was also elected to ABC's board of directors. Mr. Pompadur received a Bachelor of Arts from Williams College in 1955 and a law degree from the University of Michigan in 1958. MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS During 2000, the Board of Directors held eight meetings and acted six times by unanimous consent. During 2000, no director attended fewer than 75% of the number of meetings of the Board or each committee of the board of which he was a member held during the period he served on the Board. The only committees of the Board of Directors are the Audit Committee and the Compensation Committee. The Board does not have a nominating or similar committee. The Audit Committee is presently comprised of Jeff Soinski and Daniel John Woods. The duties and responsibilities of the Audit Committee include (a) recommending to the Board the appointment of BigStar's independent public accountants and any termination of engagement, (b) reviewing the plan and scope of independent audits, (c) reviewing BigStar's significant accounting policies and internal controls, (d) having general responsibility for all related auditing matters, and (e) reporting its recommendations and findings to the full Board. The Board has adopted a written charter for the Audit Committee, a copy of which is attached as Appendix A to this proxy statement. The Audit Committee is composed of outside directors who are not officers or employees of BigStar or its subsidiaries. In the opinion of the Board and as "independent" is defined under the standards of the National Association of Securities Dealers, these directors are independent of management and free of any relationships that would interfere with their exercise of independent judgement as members of the Audit Committee. The Audit Committee met on four occasions during 2000. The Compensation Committee is presently comprised of Jeff Soinski and Daniel John Woods. The Compensation Committee reviews and approves the compensation of BigStar's executive officers and administers the 1999 Amended and Restated 1999 Employee Stock Option and Incentive Plan (the "Plan"). The Compensation Committee met on seven occasions during 2000. DIRECTOR COMPENSATION Directors currently receive cash compensation from BigStar for their service as members of the Board, are reimbursed for certain expenses in connection with their attendance at Board and committee meetings. Each Non-employee director receives the following compensation for his service as a director: (i) $10,000 per 4 8 year payable quarterly in arrears; (ii) $1,000 for attending any meeting for the Board plus reasonable out-of-pocket expenses incurred in connection with such meeting; (iii) $1,000 for attending any meeting of any committee of the Board plus reasonable out-of-pocket expenses incurred in connection therewith; and (iv) upon appointment to the Board, a one-time grant of options for 35,000 shares of Common Stock at an exercise price equal to the fair market value of the underlying Common Stock on the date of grant. These options shall vest monthly over one year subject to acceleration upon certain capital transactions and shall expire five (5) years from the date of grant. Additionally, from time to time, certain directors of BigStar have received additional grants of options and warrants to purchase shares of BigStar's Common Stock pursuant to the Plan. All options granted to directors after the date in which BigStar has been traded on the OTC Bulletin Board shall have an exercise price equal to the closing bid price of BigStar's Common Stock as quoted by the OTC Bulletin Board. Accordingly, some non-employee directors received options to purchase 35,000 shares of Common Stock on April 12, 2000 at $2.75 per share and others on October 5, 2000 at $0.4375 per share. EXECUTIVE OFFICERS The following table sets forth certain information with respect to the executive officers of BigStar:
NAME AGE POSITION - ---- --- -------- David Friedensohn.................... 39 Chairman of the Board and Chief Executive Officer David Levitsky(1).................... 39 Executive Vice President -- Strategy Planning and Secretary Robert S. Yingling(2)................ 39 Chief Financial Officer Frederic Bien(3)..................... 39 Chief Technology Officer Edward Catto(4)...................... 37 Vice President -- Marketing
- --------------- (1) Mr. Levitsky resigned from BigStar in December 2000. (2) Mr. Yingling resigned from BigStar in January 2001. (3) Mr. Bien resigned from BigStar in October 2000. (4) Mr. Catto has not been employed with BigStar since October 2000. 5 9 EXECUTIVE COMPENSATION The following table sets forth the compensation earned for services rendered to BigStar in all capacities for the years ended December 31, 2000, 1999 and 1998 by BigStar's Chief Executive Officer and its four next most highly compensated executive officers who earned more than $100,000 during the fiscal years ended December 31, 2000, 1999 and 1998 (collectively, the "Named Executive Officers"). SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION AWARDS ------------ SECURITIES ANNUAL COMPENSATION UNDERLYING ------------------- OPTIONS/SARS NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (#)(1) - --------------------------- ---- -------- ------- ------------ David Friedensohn Chairman of the Board and Chief Executive Officer......................................... 2000 $200,000 $40,000 194,000(2) 1999 160,000 -- 194,000 1998 120,000 $90,000 -- David Levitsky(3) Executive Vice President -- Strategic Planning and Secretary....................................... 2000 154,500 -- -- 1999 140,000 25,000 48,500 1998 90,000 -- -- Robert S. Yingling(4) Chief Financial Officer......................... 2000 183,120 25,000 -- 1999 90,000 70,000 107,000 1998 -- -- -- Frederic Bien(5) Chief Technology Officer........................ 2000 55,883 80,000 -- 1999 -- -- -- 1998 -- -- -- Edward Catto(6) Vice President, Marketing....................... 2000 125,880 5,000 -- 1999 -- -- -- 1998 -- -- --
- --------------- (1) Options were granted under BigStar's Plan and generally vest 25% beginning one year subsequent to the date of grant with the remaining 75% vesting monthly during the following 36 months. (2) Mr. Friedensohn's options granted in 1999 were repriced in 2000. (3) Mr. Levitsky resigned from BigStar in December 2000. (4) Mr. Yingling resigned from BigStar in January 2001. (5) Mr. Bien resigned from BigStar in October 2000. (6) Mr. Catto has not been employed with BigStar since October 2000. 6 10 OPTION GRANTS IN LAST FISCAL YEAR The following table sets forth certain information with respect to stock options granted to the Named Executive Officers during the fiscal year ended December 31, 2000. BigStar has never granted any stock appreciation rights. Except for certain options granted to Mr. Friedensohn at above market value in accordance with the Plan, the exercise price per share of each option was equal to the fair market value of the Common Stock on the date of grant as determined by the Board. OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE % OF TOTAL VALUE AT ASSUMED NUMBER OF OPTIONS ANNUAL RATES OF STOCK SECURITIES GRANTED TO EXERCISE PRICE APPRECIATION FOR UNDERLYING EMPLOYEES IN OR BASE OPTION TERM(1) OPTIONS FISCAL PRICE ---------------------- NAME GRANTED(#)(1) YEAR(2) ($/SH) EXPIRATION DATE 5%($) 10%($) - ---- ------------- ------------ -------- ---------------- --------- ---------- David Friedensohn.......... 109,445 6.38% $ 1.00 March 14, 2004 $21,653 $ 46,277 84,555 4.93% $ 1.00 March 14, 2004 $16,729 $ 35,752 David Levitsky(3).......... 48,500 2.83% $ 1.00 January 1, 2004 $ 9,031 $ 19,204 Robert S. Yingling(4)...... 8,730 0.51% $ 1.00 January 31, 2009 $ 4,487 $ 10,897 88,710 5.17% $ 1.00 March 31, 2009 $46,909 $114,567 8,290 0.48% $ 1.00 March 31, 2009 $ 4,384 $ 10,706 Frederic Bien(5)........... 50,000 2.91% $ 2.00 May 14, 2010 $62,889 $159,374 50,000 2.91% $ 1.00 May 14, 2010 $30,654 $ 77,238 Edward Catto(6)............ 6,000 0.35% $4.125 March 30, 2010 $15,565 $ 39,445 6,000 0.35% $ 1.00 July 16, 2010 $ 3,773 $ 9,562 38,000 2.21% $ 1.00 October 20, 2009 $21,820 $ 54,201 6,000 0.35% $ 1.00 March 30, 2010 $ 3,631 $ 9,124
- --------------- (1) Based on options to purchase an aggregate of 1,716,145 shares of Common Stock granted under the Plan by BigStar in the year ended December 31, 2000 to employees, consultants and directors of BigStar. (2) Based upon the exercise price, which was equal to the fair market value on the date of grant, and annual appreciation at the rate stated on such price through the expiration date of the options. Amounts represented hypothetical gains that could be achieved for the options if exercised at the end of the term. The assumed 5% and 10% rates of stock price appreciation are provided in accordance with the rules of the Securities and Exchange Commission (the "Commission") and do not represent BigStar's estimate or projection of the future stock price. Actual gains, if any, are contingent upon the continued employment of the Named Executive Officer through the expiration date, as well as being dependent upon the general performance of the Common Stock. The potential realizable values have not taken into account amounts required to be paid for federal income taxes. (3) Mr. Levitsky resigned from BigStar in December 2000. (4) Mr. Yingling resigned from BigStar in January 2001. (5) Mr. Bien resigned from BigStar in October 2000. (6) Mr. Catto has not been employed by BigStar since October 2000. 7 11 FISCAL YEAR-END OPTION VALUES The following table sets forth information with respect to the Named Executive Officers concerning exercisable and unexercisable options held as of December 31, 2000. No options were exercised during fiscal 2000 by any of the officers. No stock appreciation rights were exercised during 2000 and no stock appreciation rights were outstanding as of December 31, 2000.
VALUE OF UNEXERCISED NUMBER OF UNDERLYING IN-THE-MONEY OPTIONS UNEXERCISED AT DECEMBER 31, 2000($) ---------------------------- ---------------------------- NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE - ---- ----------- ------------- ----------- ------------- David Friedensohn............................. 84,875 109,107 0 0 David Levitsky(1)............................. 0 0 0 0 Robert S. Yingling(2)......................... 68,007 37,723 0 0 Frederic Bien(3).............................. 0 0 0 0 Edward Catto(4)............................... 11,083 38,917 0 0
- --------------- (1) Mr. Levitsky resigned from BigStar in December 2000 (2) Mr. Yingling resigned from BigStar in January 2001. (3) Mr. Bien resigned from BigStar in October 2000. (4) Mr. Catto has not been employed by BigStar since October 2000. EMPLOYMENT AGREEMENTS In March 1999, BigStar entered into an employment agreement with David Friedensohn. The agreement provides for Mr. Friedensohn to be employed as Chief Executive Officer of BigStar for an unspecified period of time. As a result, either BigStar or Mr. Friedensohn may terminate the employment relationship at any time. Pursuant to the agreement, BigStar shall nominate Mr. Friedensohn to serve on the Board. The agreement obligates BigStar to pay Mr. Friedensohn an annual salary of $200,000 in 2000 and $250,000 in 2001. BigStar will also pay Mr. Friedensohn a guaranteed bonus of $40,000 in 2000 and $150,000 in 2001. In addition, Mr. Friedensohn was granted options to purchase 194,000 shares of Common Stock at an exercise price of $4.12 per share pursuant to the Plan. On July 17, 2000, the Compensation Committee of the Board approved an adjustment to the exercise price to be equal to the closing price of BigStar's Common Stock on July 17, 2000 for all options held by BigStar's employees, including BigStar's executive officers and certain consultants. The closing price of BigStar's Common Stock on July 17, 2000 was $1.00. The options vest in equal installments over 48 months and are exercisable until the earlier of five years or 90 days after Mr. Friedensohn's termination of employment. If terminated without cause, Mr. Friedensohn will be entitled to severance pay equal to two years of his then current base salary. 8 12 COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION This report on the compensation policies, components and decisions of BigStar for 2000 with respect to its executive officers is presented by the Compensation Committee of the Board, which is currently composed of two members: Jeff Soinski and Daniel John Woods. All current members of the Compensation Committee are outside directors as defined by Section 162(m) ("Section 162(m)") of the Internal Revenue Code of 1986, as amended (the "Code"). The Compensation Committee administers BigStar's stock option and incentive plans and consults generally with management on matters concerning executive compensation. EXECUTIVE COMPENSATION PHILOSOPHY BigStar's compensation philosophy for executive officers is to relate compensation to the attainment of corporate and individual goals and increases in stockholder value. The executive compensation policies of the Compensation Committee are designed to provide a total compensation package that is competitive and enables BigStar to attract, motivate, reward and retain key executives and employees who contribute to BigStar's long-term success. Executive compensation policies seek to reward the achievement of BigStar's short-term and long-term strategic goals, by linking executive officer compensation and stockholder interests through grants of awards under the stock option plans and by recognizing individual contributions to BigStar's performance. The compensation of BigStar's Named Executive Officers in 2000 consisted of base salaries, bonuses and stock options. 2000 EXECUTIVE COMPENSATION The compensation of BigStar's executive officers, including the Chief Executive Officer, consists of a combination of salary, incentive bonuses, stock options and the participation in various other plans, such as BigStar's 401(k) plan and medical and dental plans. Base Salary. Salaries for executive officers for 2000 were determined by the Compensation Committee on an individual basis. Annual Incentive Awards. BigStar's executive officers are eligible for cash bonus awards. Awards under this program are based on individual performance objectives and on the attainment of specific company performance measures established each year. Long-Term Incentive Awards. The Compensation Committee believes that equity-based compensation in the form of stock options links the interests of executives with the long-term interests of BigStar's stockholders and encourages executives to remain in BigStar's employ. BigStar grants stock options in accordance with the Plan. Grants are awarded based on a number of factors, including the individual's level of responsibility, the amount and term of options already held by the individual, the individual's contributions to the achievement of BigStar's financial and strategic objectives, and industry practices and norms. CHIEF EXECUTIVE OFFICER COMPENSATION David Friedensohn's base salary for 2000 was $200,000 with a bonus of $40,000 in accordance with his employment agreement. In 2001, Mr. Friedensohn will receive a base salary of $250,000 and a bonus of $150,000 in accordance with his employment agreement. In March 1999, Mr. Friedensohn was granted 194,000 options to purchase BigStar's Common Stock with an exercise price of $4.12. These options were later repriced at $1.00. THE COMPENSATION COMMITTEE /s/ Jeff Soinski /s/ Daniel John Woods 9 13 TEN-YEAR OPTION/SAR REPRICINGS
NUMBER OF SECURITIES MARKET PRICE LENGTH OF UNDERLYING OF STOCK AT EXERCISE PRICE ORIGINAL OPTION OPTIONS/SARS TIME OF AT TIME OF NEW TERM REMAINING REPRICED OR REPRICING OR REPRICING OR EXERCISE AT DATE IF AMENDED AMENDMENT AMENDMENT PRICE REPRICING OR NAME DATE (#) ($) ($) ($) AMENDMENT - ---- ------------- ------------ ------------ -------------- -------- --------------- David Friedensohn(1)....... July 17, 2000 194,000 1.00 4.12 1.00 2 years, 10 months
- --------------- (1) No other Named Executive Officer besides Mr. Friedensohn has been employed with BigStar in the preceding 30 days, and pursuant to the Plan, owns any BigStar options. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION None. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND MANAGEMENT The following table sets forth certain information regarding the beneficial ownership of the Common Stock as of April 29, 2001 of (i) each person known by BigStar to beneficially own more than 5% of the Common Stock, (ii) each director or director nominee of BigStar, (iii) each executive officer of BigStar for whom information is given in the Summary Compensation Table in this proxy statement, and (iv) all directors and executive officers of BigStar as a group.
NUMBER OF SHARES NAME OF BENEFICIAL OWNER BENEFICIALLY HELD(1) PERCENT OF CLASS - ------------------------ -------------------- ---------------- David Friedensohn(2)........................................ 1,298,404 16.1% I. Martin Pompadur(3)....................................... 41,319 * Jeff Soinski(4)............................................. 33,471 * Daniel John Woods(5)........................................ 28,683 * All directors and executive officers as a group (4 persons).................................................. 1,401,878 17.4% BS Acquisition Group LLC(6) 1385 Broadway Suite 1407 New York, NY 10018........................................ 900,200 11.3%
- --------------- * Less than one percent of the outstanding Common Stock. (1) Unless otherwise indicated, the address for each listed director or officer is c/o BigStar Entertainment, Inc., 19 Fulton Street, 5th Floor, New York, New York 10038-2100. As used in this table, "beneficial ownership" means the sole or shared power to vote or direct the voting or to dispose or direct the disposition of any security. For purposes of this table, a person is deemed to be the beneficial owner of securities that can be acquired within 60 days from April 29, 2001 through the exercise of any option or warrant. Shares of Common Stock subject to options or warrants that are currently exercisable or exercisable within 60 days are deemed outstanding for computing the ownership percentage of the person holding such options or warrants, but are not deemed outstanding for computing the ownership percentage of any other person. The amounts and percentages are based upon 7,956,115 shares of Common Stock outstanding as of April 29, 2001. (2) Includes 113,180 shares beneficially owned by Mr. Friedensohn issuable upon the exercise of options to purchase Common Stock. (3) Represent 41,319 shares of Common Stock beneficially owned by Mr. Pompadur issuable upon the exercise of options to purchase Common Stock. 10 14 (4) Includes 31,971 shares of Common Stock beneficially owned by Mr. Soinski issuable upon the exercise of options to purchase Common Stock. (5) Includes 28,183 shares of Common Stock beneficially owned by Mr. Woods issuable upon the exercise of options to purchase Common Stock. (6) Based solely on information contained in Schedule 13G/A dated April 4, 2001 filed with the Commission. Ruben Azrak is the sole managing member of BS Acquisition Group LLC, a Delaware limited liability company. CERTAIN TRANSACTIONS On April 12, 2000, Stuart Goldfarb, William Lansing, Marleen McDaniel, I. Martin Pompadur and D. Jonathan Merriman, all directors or former directors of BigStar, were each granted stock options under the Plan to purchase 35,000 shares of Common Stock at an exercise price equal to $2.75 per share, exercisable at any time prior to April 12, 2005. The options vest monthly over a 12-month period. In December 2000, BigStar repurchased 802,758 shares of Common Stock from Storie Partners, a former principal stockholder. In February 2001, BigStar repurchased the 1,428,571 shares of Common Stock from ValueVision, a former principal stockholder. BigStar has entered into indemnification agreements with its officers and directors containing provisions which may require BigStar, among other things, to indemnify its officers and directors against certain liabilities that may arise by reason of their status or service as officers or directors, other than liabilities arising from willful misconduct of a culpable nature, and to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified. 11 15 PERFORMANCE MEASUREMENT COMPARISON BigStar completed its initial public offering on August 2, 1999, at which time BigStar's Common Stock first became publicly traded. COMPARISON OF 17 MONTH CUMULATIVE TOTAL RETURN* AMONG BIGSTAR ENTERTAINMENT, INC., THE NASDAQ STOCK MARKET (U.S.) INDEX AND THE JP MORGAN H & Q INTERNET 100 INDEX [BAR GRAPH TO COME] STOCKHOLDER PROPOSALS Stockholder proposals to be presented at the 2002 Annual Meeting of Stockholders, for inclusion in BigStar's proxy statement and form of proxy relating to that meeting, must be received by BigStar at its offices in New York, New York, addressed to the Secretary, not later than January 10, 2002. Such proposals must comply with BigStar's Amended and Restated Bylaws and the requirements of Regulation 14A of the Securities Exchange Act of 1934. In addition, Rule 14a-4 of the 1934 Act governs Securities Exchange Act of 1934 use of its discretionary proxy voting authority with respect to a stockholder proposal that is not addressed in the proxy statement. With respect to BigStar's 2002 Annual Meeting, if BigStar is not provided notice of a stockholder proposal prior to March 26, 2002, BigStar will be allowed to use its discretionary voting authority when the proposal is raised at the meeting, without any discussion of the matter in the proxy statement. SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934 and the rules thereunder requires BigStar's officers and directors, and persons who own more than 10% of a registered class of BigStar's equity securities, to file 12 16 certain reports regarding ownership of, and transactions in, BigStar's securities with the Securities and Exchange Commission and The Nasdaq Stock Market, Inc. Based solely on a review of copies of such reports furnished to BigStar, or written representations that no reports were required, BigStar believes that its executive officers and directors have complied with the Section 16(a) requirements except that Form 4 statements for October 2000 for Mr. Jeff Soinski and Mr. Daniel John Woods which were filed late. REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS The Audit Committee hereby reports as follows: 1. The Audit Committee has reviewed and discussed the audited financial statements with BigStar's management. 2. The Audit Committee has discussed with Arthur Andersen, LLP, BigStar's independent accountants, the matters required to be discussed by SAS 61 (Communication with Audit Committees). 3. The Audit Committee has received the written disclosures and the letter from Arthur Andersen, LLP required by Independence Standards Board Standard No. 1 (Independent Discussions with Audit Committees), and has discussed with Arthur Andersen, LLP their independence. 4. Based on the review and discussion referred to in paragraphs (1) through (3) above, the Audit Committee recommended to the Board of BigStar, and the Board has approved, that the audited financial statements be included in BigStar's Annual Report on Form 10-K for the fiscal year ended December 31, 2001, for filing with the Commission. /s/ Jeff Soinski /s/ Daniel John Woods AUDIT AND NONAUDIT FEES For the fiscal year ended December 31, 2000, fees for services provided by Arthur Andersen, LLP were as follows: A. Audit $59,000 B. Financial Information Systems Design and Implementation $ 0 C. All Other Fees $51,940
13 17 OTHER MATTERS At the date of this proxy statement, management was not aware that any matters not referred to in this proxy statement that would be presented for action at the Annual Meeting. If any other matters should come before the Annual Meeting, the persons named in the accompanying proxy card will have discretionary authority to vote all proxies in accordance with their best judgment, unless otherwise restricted by law. A COPY OF BIGSTAR'S FORM 10-K REPORT FOR FISCAL YEAR 2000, CONTAINING INFORMATION ON OPERATIONS, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, IS AVAILABLE UPON REQUEST. PLEASE WRITE TO: BIGSTAR ENTERTAINMENT, INC. 19 FULTON STREET, 5TH FLOOR NEW YORK, NEW YORK 10038-2100 BY ORDER OF THE BOARD OF DIRECTORS /s/ David Friedensohn David Friedensohn Chief Executive Officer and Chairman of the Board Dated: May 9, 2001 14 18 BIGSTAR ENTERTAINMENT, INC. ANNUAL MEETING OF SHAREHOLDERS - JUNE 5, 2001 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF BIGSTAR ENTERTAINMENT, INC. The undersigned hereby appoints David Friedensohn as Proxy, with full power to appoint a substitute, to represent and to vote, with all the powers the undersigned would have if personally present, all the shares of Common Stock, $0.001 par value per share, of BigStar Entertainment, Inc. (the "Company") held of record by the undersigned on May 2, 2001 at the Annual Meeting of Stockholders to be held on June 5, 2001 or any adjournment or adjournments thereof. [ ] FOR ALL THE NOMINEES LISTED BELOW [ ] WITHHOLD AUTHORITY (except as marked to the contrary below) to vote for all nominees listed below Jeff Soinski Daniel John Woods (INSTRUCTIONS: To withhold authority for any individual nominees, write that nominee's name in the space below.) In his discretion, the Proxy is authorized to vote upon other business as may come before the meeting. 19 This proxy, when properly executed, will be voted in the manner directed herein by the undersigned stockholder. If no direction is made, the Proxy will be voted FOR Proposal 1. Dated: _________________________ , 2001 _______________________________________ (Signature) _______________________________________ (Signature) PLEASE SIGN HERE Please date this proxy and sign your name exactly as it appears hereon. Where there is more than one owner, each should sign. When signing as an agent, attorney, administrator, executor, guardian, or trustee, please add your title as such. If executed by a corporation, the proxy should be signed by a duly authorized officer who should indicate his office. PLEASE DATE, SIGN, AND MAIL THIS PROXY CARD IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. -----END PRIVACY-ENHANCED MESSAGE-----