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Magic Lantern Group Inc · SC 14F1 · Magic Lantern Group Inc · On 3/2/98

Filed On 3/2/98 · SEC File 5-47491 · Accession Number 1005477-98-612

  As Of               Filer                 Filing     On/For/As Docs:Pgs              Issuer               Agent

 3/02/98  Magic Lantern Group Inc           SC 14F1                1:9    Magic Lantern Group Inc           1005477

Statement re: Change in Majority of Directors · Rule 14f-1
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: SC 14F1     Statement re: Change in Majority of Directors          9     56K

Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (RTF, XML, et al.) Certain Transactions Designees, The Employee Benefit Plans The Designees The Transaction Agreements Transaction Agreements, The
1	1st Page
"	The Transaction Agreements
2	The Designees
6	Employee Benefit Plans
8	Certain Transactions

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Sponsored Ads...

STAGE II APPAREL CORP.

-------------------

Information Statement
pursuant to Section 14(f) of
the Securities Act of 1934

-------------------

Introduction

This Information Statement is being mailed to shareholders of Stage II
Apparel Corp. (the "Stage II" or the "Company") in connection with the
appointment to the Company's board of directors (the "Board") of five new
members (the "Designees") to replace the current members of the Board (the
"Board Reconstitution"). The Board Reconstitution will be implemented in
accordance with the terms of a Management Agreement dated February 26, 1998
between the Company and Richard Siskind (the "Management Agreement"), subject to
compliance with Section 14(f) of the Securities Exchange Act of 1934 (the
"Exchange Act"). Section 14(f) of the Exchange Act and Rule 14f-1 thereunder
require information about the Designees and related matters to be filed with the
Securities and Exchange Commission (the "SEC") and mailed to shareholders not
less than ten days prior to the Board Reconstitution.

This Information Statement outlines the terms of the Management Agreement
and related agreements (collectively, the "Transaction Agreements") involving
the sale to Richard Siskind of 1,900,000 shares (the "Control Shares") of the
Company's common stock ("SA Common") held by Jack Clark, Robert Plotkin and
Steven R. Clark, officers, directors and principal shareholders of Stage II (the
"Principal Shareholders"). This Information Statement is being mailed to the
Company's shareholders on or about March 2, 1998. As of that date, Stage II had
outstanding 3,903,267 shares of SA Common Stock.

The Transaction Agreements

The Company has incurred losses over the last several years and has been
seeking to implement strategic changes to reverse the decline in its business.
These efforts have been undertaken with a view in increasing shareholder values
by bringing in a new management team, cutting expenses and adding new apparel
licenses or business lines to the Company's reduced asset base. The transactions
contemplated by the Transaction Agreements (the "Transactions") have been
structured to address these goals.

The Transaction Agreements consist of the Management Agreement, a Stock
Purchase Agreement dated February 26, 1998 among the Company, the Principal
Shareholders and Richard Siskind (the "Stock Purchase Agreement") and several
related agreements to be executed at the closing of the Transactions scheduled
for mid-March 1998 (the "Closing"). The terms of the Transaction Agreements are
summarized below. This summary is not a complete description and is qualified by
reference to the provisions of the Transaction Agreements filed with the SEC as
exhibits to a Current Report of the Company on Form 8-K.

o Management Agreement. The Management Agreement provides for Richard Siskind
to join the Company as president and chief executive officer for a three-year
term commencing at the Closing. As a condition to Closing, Mr. Siskind has
agreed to arrange a new credit facility for the Company (the "New Credit
Facility") to provide Stage II with adequate financial flexibility at lower
costs than its existing facility. In the absence of the Transactions, the
Company would expect to experience increasing pressures from its existing factor
as a result of its deteriorating financial performance. In addition to the New
Credit Facility, Mr. Siskind expects to implement measures to reduce overhead
and add new apparel licenses as part of his strategy for returning the Company
to profitability and increased sales. The Board believes Mr. Siskind's
experience, industry contacts and business plan for the Company will enable it
to complete the turnaround started by its current management. See "The
Designees."

o Stock Purchase Agreement. The Stock Purchase Agreement provides for the
Principal Shareholders to sell their Control Shares to Richard Siskind at the
Closing in consideration for the release of their guaranties of the Company's
indebtedness to its factor and their receipt of options from Mr. Siskind to
reacquire 1,500,000 of the Control Shares (the "Principal Shareholder Options").
The Principal Shareholder Options will be exercisable in one-third cumulative
annual installments at exercise prices ranging from $.50 to $1.50 per share. The
Stock Purchase Agreement also provides for Jack Clark, the founder and Chairman
of the Company, to enter into a new employment agreement with Stage II
contemplating a transitional role for one year at a reduced salary and the
termination of his existing buy-sell agreement with the Company. See "Certain
Transactions."

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o Stock Options. In consideration for the New Credit Facility to be
arranged by Richard Siskind, the Company will issue to him at the Closing
options to purchase up to 1,500,000 shares of SA Common (the "Mirror Options").
The Mirror Options will be exercisable on the same terms as the Principal
Shareholder Options, but only to the extent that the Principal Shareholder
Options are exercised. In addition to the Mirror Options, Mr. Siskind will
receive options to purchase up to 900,000 shares of SA Common (the "Executive
Options"), exercisable in one-third cumulative annual installments at an
exercise price of $.75 per share. The effectiveness of the Mirror Options and
the Executive Options will be subject to approval by the Company's shareholders
at the annual meeting expected to be held in May 1998.

o Board Reconstitution. The Board Reconstitution contemplated by the
Management Agreement will be implemented in accordance with Rule 14f-1 under the
Exchange Act. See "The Designees." After the Board Reconstitution, the Board
will continue to have at least two independent directors and an audit committee
comprised of a majority of independent directors in accordance with the listing
requirements of the American Stock Exchange.

o Stand Still Protection. As part of the Transactions, Mr. Siskind will agree
that he will not vote his Control Shares or any other shares of SA Common
acquired by him or take any action as a director of the Company to approve a
merger or consolidation of the Company with, or a sale of all or substantially
all the assets of the Company to any of his affiliates (other than a merger or
consolidation of the Company with one of its subsidiaries that does not have the
effect of increasing his percentage ownership in the surviving corporation)
unless (i) the effective consideration per share of SA Common to be received by
other holders of SA Common in the transaction complies in all material respects
with any applicable requirements of New York law regarding the fairness of
transactions between a corporation and a controlling stockholder and (ii) if the
transaction is consummated within three years after the closing of the
Transactions, the consideration to be received in the transaction on an
equivalent per share basis has a value that is not less than $1.00 per share of
SA Common or the transaction is approved by holders (other than Mr. Siskind and
his affiliates) of SA Common representing a majority of the SA Common (other
than shares held by Mr. Siskind and his affiliates) voted on the transaction.

The Designees

This Information Statement includes the information required by Rule 14f-1
under the Exchange Act in connection with the Board Reconstitution. As a
condition to Closing, the Management Agreement provides for the resignation of
the current members of the Board, effective upon expiration of the ten-day
mailing requirement of Rule 14f-1, and their appointment of the Designees. The
Company has been advised by Mr. Siskind that the Designees, in addition to
himself, will be Robert Greenberg, Barry Fertel, Jon Siskind and Beverly
Roseman. A biography of each Designee is set forth below.

Richard Siskind has been in the apparel business for over 30 years,
serving in a variety of roles and positions. By 1977, Mr. Siskind had assumed
the position of president of David Small Industries, Inc. In 1982 he co-founded
Apparel Exchange, Inc., an affiliated company. Both companies sold off-price
men's, women's and children's apparel and reached sales in excess of $100
million by 1989. Mr. Siskind sold both companies in 1989. In 1991 Mr. Siskind
founded R. Siskind and Company ("RSC"). He is a director, sole shareholder and
chief executive officer of RSC, which is in the business of purchasing top brand
name men's and women's apparel and accessories, and redistributing it to a
global clientele of upscale off-price retailers.

Robert Greenberg founded LA Gear, a publicly held footwear company noted
for making athletic footwear fashionable. Mr. Greenberg launched his second
footwear venture with his sons in 1992. At 57, he is the Chairman and CEO of
Skechers USA, Inc., which sells casual lifestyle footwear to major retailers
throughout the United States and in approximately sixty countries. Since its
inception, Skechers, Inc. has become one of the largest privately held footwear
companies in the United States.

Barry Fertel has been a partner in the law firm of Roper, Barandes &
Fertel since 1988. His practice is concentrated in the field of commercial
litigation. From 1980 to 1988, Mr. Fertel was an associate and later a partner
of Bell, Kalnick, Klee, Green & Beckman, a New York City law firm. From 1978 to
1980, he was an Assistant Attorney General for the State of New York. He is a
graduate of the State University of New York at Stony Brook and received his law
degree from the State University of New York at Buffalo. Mr. Fertel currently
serves as Vice President of the Board of Education of the New Rochelle School
District.

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Jon Siskind graduated from the University of Hartford in 1991, where he
received his B.A. in Economics. He joined RSC in the same year as an account
executive handling the Northeast and Mid West territories. In 1994, he was
appointed National Sales Manager and given the additional responsibility for
overseeing all sales and distribution. In 1995, he was appointed as RSC's Vice
President of Sales. Jon Siskind is the son of Richard Siskind.

Beverly Roseman joined RSC in 1992 as the Merchandise Manager. In 1995,
Mrs. Roseman was appointed as RSC's Vice President of Buying, Merchandising and
Operations. Mrs. Roseman also oversees the Human Resources, MIS and Operational
divisions of RSC. From 1975 to 1980, Mrs. Roseman worked for R.H. Macy's, first
as trainee and then as a buyer. She was employed from 1980 to 1982 as a buyer
for The Broadway Department Stores in California, from 1982 to 1988 as a buyer
for Marshall's Inc. and from 1988 to 1992 as a Senior Buyer for T.J. Maxx. Mrs.
Roseman is a graduate of Adelphi University.

1997 PROXY INFORMATION

The balance of this Information Statement set forth information
republished from the Company's proxy statement for its 1997 annual meeting of
shareholders. This information is included to satisfy the requirements of Rule
14f-1 under the Exchange Act in connection with the Board Reconstitution.

Directors and Executive Officers

The current directors and executive officers of the Company are as
follows:

· Enlarge/Download Table

Officer of
Stage II
Name Age Position Since
---- --- ------------------------------------------------------------ -----------

Jack Clark............... 70 Chairman of the Board and a director 1982
Steven R. Clark.......... 40 President and a director 1980
Ronald Cohen............. 55 Executive Vice President - Operations and a director 1996
Carl Jenkins............. 54 Executive Vice President - Production and Foreign Operations 1996
Michael Hanrahan......... 38 Treasurer 1997
Eugene Myers............. 72 Director 1990
Robert Plotkin........... 55 Director 1980

A summary of the business experience and background of the Company's
executive officers and directors is set forth below.

Jack Clark has served as the Chairman of the Board and a director of the
Company since 1982. From 1982 through January 1987, he served as a consultant to
the Company and other apparel companies in his capacity as president of J.C.C.
Consulting Corp., with his services since that date provided directly and
exclusively to the Company. Mr. Clark is primarily responsible for the Company's
strategic planning, including product designs and development, manufacturing and
acquisitions. Mr. Clark has been engaged in the apparel business for over 40
years.

Steven R. Clark has been a member of the Company's sales force and served
as a director of the Company since its formation in 1980, and has served as its
President since 1996 and Executive Vice President - Big and Tall Apparel since
1992, prior to which he was Division Head - Big and Tall Apparel. He is the son
of Jack Clark, Chairman of the Board of the Company, and has been engaged in the
apparel business for over 15 years.

Ronald Cohen joined Stage II in 1988 as Director of Operations and was
appointed as Executive Vice President - Operations and a director of Stage II in
1996. He is principally responsible for the Company's computer operations,
import arrangements and sales monitoring. Prior to joining Stage II, Mr. Cohen
served for four years as President of Scottodd, Inc., a consulting company.

Carl Jenkins joined the Company in 1994 as Director of Production and
Foreign Operations and was appointed as Executive Vice President - Production
and Foreign Operations in 1996. Prior to joining Stage II, he served in a
similar position with Townsley for more than five years.

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Michael Hanrahan joined the Company in 1997 as Chief Financial Officer and
Treasurer. From 1994 to 1997, Mr. Hanrahan was Director of Finance at Listeff
Fashions, Inc., prior to which he served as Manager of Financial Reporting at
Bernard Chaus Inc. since 1989. Mr. Hanrahan is a certified public accountant and
a graguate of Seton Hall University.

Eugene Myers, age 72, has served as a director of the Company since 1990.
He was a principal shareholder in Sarena Fashions Ltd., a manufacturer of
ladies' intimate apparel, and served as its President from 1984 until 1989. From
1978 through 1987, Mr. Myers also served as President of My-Line Apparel Ltd., a
manufacturer of ladies' intimate apparel. He has been engaged in the apparel
business for over 35 years.

Robert Plotkin, age 55, has served as a director of the Company since its
formation in 1980. He also served as the Company's President until October 1994.
Since that time, he has served as a consultant to the Company. Mr. Plotkin has
been engaged in the apparel business for over 30 years.

Board Classes

The Board is divided into two classes. The Class II directors were elected
at the Company's 1997 annual meeting of shareholders to serve for a two-year
term expiring at the 1999 annual meeting or until their successors are chosen
and have qualified. The Class I directors were elected at the Company's 1996
annual meeting of shareholders to serve for a two-year term expiring at the 1998
annual meeting. The Designees will be assigned to serve as either Class I or
Class II directors at the election of Richard Siskind. See "The Transaction
Agreements--Board Reconstitution"

1996 Board Meetings

During 1996, the Board took action, either at meetings or by consent, on a
total of four occasions. No director attended or participated in fewer than 75%
of these meetings or action by consent.

Committees and Committee Meetings

The Board has an Audit Committee and a Compensation Committee. During 1996
and the first nine months of 1997, both committees are comprised of Eugene Myers
and Stephen J. Jelin, who subsequently retired from the Board. The Audit
Committee is responsible for monitoring and reviewing the financial affairs and
financial statements of the Company and performing related internal financial
review procedures. The Compensation Committee is responsible for evaluating
salary and bonus arrangements for all officers and key employees and for
administering the Company's employee benefit plans. During 1996, each of these
Committees held one meeting. The Board has no other standing committees.

Compensation of Directors

The outside directors of the Company received directors' fees at the rate
of $3,000 per meeting during 1996.

Compensation of Named Executive Officers

The following table sets forth the total remuneration paid during the last
three years to the five most highly compensated executive officers of the
Company.

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Summary Compensation Table

· Enlarge/Download Table

Annual Compensation Long Term Compensation
Name and ------------------- ---------------------- All Other
Principal Position Year Salary Bonus Other(1) Option/SAR Awards (#) Compensation(2)
------------------ ---- ------ ----- -------- --------------------- ---------------

Jack Clark 1996...... $345,000 --- --- --- $ 4,000
Chairman of 1995...... 543,000 --- --- --- 4,000
the Board 1994...... 468,000 --- --- 40,000 4,000

Henry Weiner(3) 1996...... 227,000 --- --- --- 3,000
Executive VP- 1995...... 279,000 --- --- --- 3,000
Spalding 1994...... 229,000 --- --- 20,000 3,000

Ronald Cohen 1996...... 124,000 --- --- --- 3,000
Executive VP- 1995...... 123,000 --- --- --- 3,000
Operations 1994...... 117,000 --- --- 10,000 3,000

Steven R. Clark 1996...... 118,000 --- --- --- 2,000
President 1995...... 121,000 --- --- --- 3,000
1994...... 132,000 --- --- --- 2,000

Stuart Goldman(3) 1996...... 114,000 --- --- --- 1,000
President 1995...... 542,000 --- --- --- 4,000
1994...... 57,000 --- --- 63,000 ---

----------
(1) Perquisites and other benefits did not exceed 10% of any named
officer's total annual salary.
(2) Reflects the Company's contribution to the accounts of the named
executive officers under its Employee Stock Ownership and Salary Deferral Plan.
See "Employee Benefit Plans" below.
(3) Mr. Weiner resigned from his position with the Company in the first
quarter of 1997, and Mr. Goldman was terminated by the Company in April 1996.

Stock Options

The Company maintains two incentive stock option plans (the "ISO Plans").
See "Employee Benefit Plans--Employee Stock Option Plans" below. The following
table sets forth information as of December 31, 1996 on stock options held under
the ISO Plans by the Company's five most highly compensated executive officers
in 1996, none of whom received any option grants or exercised any stock options
during 1996.

Aggregated Option Exercises In Last Fiscal Year
and Fiscal Year End Option Values

· Download Table

Value of
Shares Number of Unexercised
Acquired Unexercised In-the-Money
on Value Options at Options at
Name Exercise Realized Year End(1) Year End(2)
---- -------- -------- ----------- -----------

Jack Clark........................... None N/A 40,000 N/A
Henry Weiner......................... None N/A 20,000 N/A
Ronald Cohen......................... None N/A 10,000 N/A
Steven R. Clark...................... None N/A --- N/A
Stuart Goldman....................... None N/A --- N/A

----------
(1) All of the stock options are currently exercisable.

(2) The closing price of the Common Stock on the AMEX on December 31, 1996
was below the exercise price of the options.

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Employee Benefit Plans

Stock Option Plans. The ISO Plans maintained by the Company were adopted
in 1987 (the "1987 Plan") and 1994 (the "1994 Plan"), providing for the grant of
options to purchase up to 200,000 shares and 300,000 shares, respectively, of
Common Stock to key employees. The terms of the two ISO Plans are identical,
except for the additional shares of Common Stock covered by the 1994 Plan.

The exercise price for options granted under the ISO Plans is fixed by a
Compensation Committee of the Board at 100% of the market price of the Common
Stock on the date of the grant or 110% of the market price for any optionee who
is a principal shareholder. Each option granted under the ISO Plans is
exercisable for periods of up to ten years from the date of grant, or three
months after termination of employment, with certain exceptions.

At December 31, 1996, options to purchase a total of 140,000 shares at
exercise prices ranging from $27/8 to $65/8 per share were outstanding under the
ISO Plans, and options to purchase 360,000 shares were reserved for future
grants. No options were exercised during 1996, 1995 or 1994.

Employee Stock Ownership and Salary Deferral Plan. In 1994, the Company
converted its Profit Sharing Plan into an Employee Stock Ownership and Salary
Deferral Plan (the "Savings Plan"). Under the Savings Plan, for each dollar
contributed by electing employees to a retirement savings account from up to 12%
of their annual compensation, the Company may contribute up to $.40, subject to
certain limitations under Section 401(k) of the Internal Revenue Code (the
"Code"). The Company's expense for these contributions in 1996, 1995 and 1994
aggregated $38,000, $69,000 and $55,000, respectively.

The Saving Plan also enables the Company to make discretionary
contributions for open market purchases of its Common Stock to be allocated to
the accounts of all employees in proportion to their annual compensation. This
feature was added in 1994 and is intended to qualify for treatment under Section
401(a) of the Code. The Company did not make any discretionary contributions to
the Savings Plan for this purpose in 1996, 1995 or 1994.

Compensation Committee Interlocks and Insider Participation

The Board has a Compensation Committee comprised of Messrs. Jelin and
Myers. Neither one of these directors has ever served as an officer of the
Company or any of its subsidiaries or had any related party transactions with
the Company.

Compensation Committee Report on Executive Compensation

This report was approved in 1997 by the following
members of the Compensation Committee: STEPHEN JELIN EUGENE MYERS

General. In recommending 1996 compensation levels for the Company's
officers, including the Chief Executive Officer and other named executive
officers, the Compensation Committee of the Board applied the Board's
established compensation policies and criteria intended to promote the Company's
overall objective of maximizing shareholder value over time. These procedures
are aimed at maintaining a competitive compensation package to attract and
retain talented personnel while also responding to both individual and corporate
performance measures. Recommendations for 1996 salary levels and long term
compensation were based on evaluations during January 1996 and thereafter.

Compensation Policy. The Company's executive compensation policy is
designed to maintain competitive levels of pay along with equity incentives to
attract and retain qualified executives with interests, as co-owners of the
Company, identical to those of its unaffiliated shareholders. This policy is
implemented through a salary structure augmented by stock option and Savings
Plan participation. The Committee's objective is to integrate these compensation
components with the annual and long term performance of the Company as well as
the achievements and contributions of the individual executives.

While the Committee's goal is to maintain executive compensation at levels
that are competitive with industry peers and linked to corporate performance,
actual compensation in any particular year may be above or below published rates
for competitors. In addition, due to the overall weakness of the retail apparel
market, the Company's compensation levels from year to year may not correlate
directly with various corporate performance measures in a

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particular year. The Committee believes, however, that the Company's
compensation program enables it to balance the relationship between compensation
and performance in the best interests of the shareholders.

The separate components of the Company's executive compensation program
for 1996 are described below, along with a discussion of the evaluations made by
the Committee in recommending 1996 compensation levels for the five most senior
executive officers.

Annual Compensation. Annual compensation paid to the Company's named
executive officers is limited to base salaries, without any bonus or commission
payments, plus contributions to their accounts under the Company's Savings Plan,
which are generally dependent upon the amount of their own contributions. Salary
levels for the Company's top five executive officers are established by the
Board based on recommendations of the Compensation Committee.

Recommendations by the Compensation Committee for salary levels in 1996
were based on several historical and comparative performance factors. The
Committee also considered comparative compensation and performance data for
various other apparel companies and the performance of each of the Company's
senior officers within his particular area of operating responsibility. Although
the Committee reached favorable evaluations on the basis of these criteria, it
recommended that the Board reduce 1996 salaries below the prior year's level for
those officers in view of the existing competitiveness of their salary levels,
the overall weakness of the retail apparel market at the time of their
deliberations and the cost containment objectives of the Board.

The Compensation Committee's 1996 salary recommendation for Jack Clark,
the Chairman of the Board, was based on similar criteria as well as
considerations of overall corporate leadership, contribution to the Company's
performance and assumption of increased responsibilities. These positive
considerations were offset by the Company's cost containment objectives,
resulting in a 36% reduction in Mr. Clark's 1996 salary compared to his 1995
compensation.

Long Term Compensation. Long term incentives are provided through the
Company's ISO Plans. Options provide executives and other key employees with the
opportunity to establish or increase their equity interest in the Company and to
share in any appreciation in the value of the Common Stock. As a result of Stage
II's disappointing financial results, no options were granted to its five most
highly compensated executive officers during 1996.

Conclusion. The Compensation Committee believes that the executive
compensation policies implemented through its recommendations serve the interest
of the shareholders and the long range goals of the Company.

Performance Graph

The following graph compares the yearly percentage change in the Company's
cumulative total shareholder return with the cumulative return (assuming
reinvestment of dividends) of (i) the Russell 2,000 Index and (ii) an Apparel
Index group as published by Value Line. Inc.

[LINE CHART OMITTED]

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT OF STAGE II

The following table sets forth information on the beneficial ownership of
the Common Stock as of January 31, 1998 by (i) ) each person known by the
Company to own beneficially more than 5% of the outstanding Common Stock, based
on Statements on Schedule 13D filed with the SEC, (ii) the Company's five most
highly compensated executive officers during its last fiscal year, (iii) each
director of the Company and (iv) all directors and executive officers of the
Company as a group. Except as indicated in the footnotes to the table, the named
beneficial owners have sole voting and investment power for the reported shares.

· Enlarge/Download Table

Common Stock
Address of Beneficially Percentage
5% Shareholders 5% Beneficial Owners Owned of Class
--------------- ----------------------------- ------------- -----------

Fortuna Investment Partners, L.P.
Fortuna Capital Management, Inc.
Ronald J. Vannuki......................... 100 Wilshire Boulevard
Santa Monica, CA 90401 425,900(1) 10.9%
Named Executive Officers
and Directors
Jack Clark........................................................................ 1,381,479(2) 35.4
Ronald Cohen...................................................................... 10,000(3) .3
Steven R. Clark................................................................... 169,080 4.3
Eugene Myers ..................................................................... 400 ---
Robert Plotkin.................................................................... 502,363(4) 12.9
All officers and directors
as a group (11 persons).......................................................... 2,108,917(5) 54.0

----------
(1) Based on a Statement on Schedule 13D, reflects shares held directly by
Fortuna Investment Partners, L.P. ("FIP") and indirectly by Fortuna Capital
Management, Inc. ("FCP"), the general partner of FIP, and by Mr. Vannuki, as
President and Chief Executive Officer of FCP. Excludes (i) 700 shares of Common
Stock held in Mr. Vannuki's IRA. See "Certain Transaction."
(2) Includes (I) 13,700 shares owned by Mr. Clark's IRA, (ii) 36,519
shares held by a foundation owned by Mr. Clark, (iii) 400 shares owned by his
wife and (iv) 40,000 shares subject to stock options.
(3) Represents 10,000 shares subject to stock options.
(4) Includes 1,500 shares owned by Mr. Plotkin's IRA, 1,000 shares owned
by his wife and 1,500 shares held by her IRA.
(5) Includes (i) a total of 54,719 shares owned indirectly by officers and
directors of the Company and (ii) an aggregate of 85,000 shares subject to stock
options.

CERTAIN TRANSACTIONS

The Company is a party to a 1992 buy-sell agreement with Jack Clark, a
director and officer of the Company, providing for the Company's repurchase of
the shares of Common Stock by his estate in the event of his death. The purchase
price for any shares repurchased under the agreement will be the average of the
closing prices of the Common Stock on its principal trading market during the
five trading days preceding the date of Mr. Clark's death or the book value per
share of the Common Stock as reflected in the Company's most recent periodic
report filed with the Securities and Exchange Commission prior to the date of
death, whichever is greater. The Company maintains insurance policies on the
life of Mr. Clark covering $5.4 million of its repurchase commitment under the
agreement at premiums aggregating approximately $2.3 million over a period of
seven years, with corresponding cash surrender values estimated to reach
approximately $2 million by the end of that period. To the extent not covered by
these policies, the Company will have the option to fund the balance of any
repurchase commitment with a promissory note payable over three years with
interest at a market rate. Mr. Clark will have the option, upon the sale of his
entire interest in the Company, to purchase its insurance policies on his life
at their prevailing cash surrender value. Mr. Clark's new employment agreement
included in the Transaction Agreements provides for the termination of the
buy-sell agreement. See "The Transaction Agreements--Stock Purchase Agreement."

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On March 5, 1996, the Company entered into an agreement (the "Consulting
Agreement") with AMP Consulting Services, Inc. ("AMP"), Fector Detwiler & Co.,
Inc. ("FDC") and Fortuna Capital Management Company ("FCM"), providing for
various consulting and financial advisory services and the issuance of
performance-based options (the "Options"). FCM is a principal shareholder of the
Company. See "Principal Shareholders." Anthony M. Pisano, the principal
shareholder of AMP, served as Chief Financial Officer of the Company during the
first half of 1997.

The advisory services provided under the Consulting Agreement included (i)
a review of the Company's operations to consider ways of increasing the
efficiency and financial performance of the Company's existing apparel business,
(ii) the evaluation of strategic opportunities to either expand or divest the
current business and acquire new businesses within or outside the apparel
industry and to develop profitable strategies for the resulting enterprise and
(iii) the identification of potential transactions to implement the recommended
strategic plan. The Consulting Agreement had a term ending September 1, 1996,
subject to earlier termination or extension by the Company.

In connection with the Consulting Agreement, the Company granted Options
to AMP, FDC and FCM to purchase 200,000 shares, 100,000 shares and 200,000
shares, respectively, of its Common Stock at $31/8 per share, exercisable only
if specified performance goals were met (a "Qualifying Event"). In addition,
Jack Clark, the Company's Chairman of the Board, issued Options to FDC and FCM
to purchase 434,000 shares and 866,000 shares, respectively, of Common Stock
owned by him upon the occurrence of a Qualifying Event at an exercise price of
$4 3/4 per share. The FDC and FCM Options expired on March 1, 1997, and the AMP
Options expired on May 1, 1997.

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Dates Referenced Herein and Documents Incorporated By Reference

		Referenced-On Page
This SC 14F1 Filing	Date	First	Last	Other Filings

	3/5/96	9
	9/1/96	9
	12/31/96	5	6	NT 10-K, 10-K
	3/1/97	9
	5/1/97	9
	1/31/98	8
	2/26/98	1		8-K
Filed On / Filed As Of	3/2/98	1		8-K

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Magic Lantern Group Inc · SC 14F1 · Magic Lantern Group Inc · On 3/2/98

Filed On 3/2/98 · SEC File 5-47491 · Accession Number 1005477-98-612

Statement re: Change in Majority of Directors · Rule 14f-1Filing Table of Contents

Document Table of Contents

Dates Referenced Herein and Documents Incorporated By Reference

Statement re: Change in Majority of Directors · Rule 14f-1
Filing Table of Contents