<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. __)
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
APPLEWOODS, INC.
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
ROGER BUOY, CHAIRMAN, APPLEWOODS, INC.
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / No fee required
/ / Fee computed on 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:
<PAGE>
APPLEWOODS, INC.
274 Riverside Avenue
Westport, Connecticut 06881
-----------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 5, 1996
-----------------------------------------------------
To the Stockholders of Applewoods, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Stockholders (the "Annual Meeting") of Applewoods, Inc., a Delaware
corporation (the "Company"), will be held on November 5, 1996, at the
Company's offices located at 274 Riverside Avenue, Westport, CT 06881
at 8:30 a.m., local time, and thereafter as it may from time to time
be adjourned, for the purposes stated below:
1. To elect four (4) directors to the Board of the
Company for a one (1) year term;
2. To ratify the appointment of Price Waterhouse LLP as
the Company's independent certified public
accountants; and
3. To transact such other business as may properly come
before the Annual Meeting or any adjournments
thereof.
All Stockholders are cordially invited to attend the Annual
Meeting. Only those Stockholders of record at the close of business on
October 4, 1996 are entitled to notice of and to vote at the Annual
Meeting and any adjournments thereof. The stock transfer books will
not be closed. A complete list of stockholders entitled to vote at the
Annual Meeting will be available at the Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
October 18, 1996 Roger Buoy, Chairman
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE DATE
AND SIGN THE ENCLOSED FORM OF PROXY AND MAIL IT PROMPTLY IN THE
ENCLOSED ENVELOPE TO AMERICAN STOCK TRANSFER & TRUST COMPANY, 40 WALL
STREET, NEW YORK, NEW YORK 10005.
<PAGE>
APPLEWOODS, INC.
274 Riverside Avenue
Westport, Connecticut 06881
PROXY STATEMENT
INTRODUCTION
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Applewoods, Inc.,
a Delaware corporation (the "Company"), for use at the annual meeting
of the Company's Stockholders to be held at the Company's offices
located at 274 Riverside Avenue, Westport, Connecticut 06881 on
November 5, 1996 at 8:30 a.m., local time, and at any adjournments
thereof (the "Annual Meeting").
The Annual Meeting has been called to consider and take
action on the following proposals: (i) to elect four (4) directors to
the Board of Directors of the Company for a one (1) year term, (ii) to
ratify the appointment of Price Waterhouse LLP as the Company's
independent certified public accountants, and (iii) to transact such
other business as may properly come before the Annual Meeting or any
adjournments thereof. The Company's Board of Directors has taken
unanimous affirmative action with respect to each of the foregoing
proposals and recommends that the Stockholders vote in favor of each
of the proposals. Only holders of record of Common Stock, par value
$.0001 per share, and Series A Preferred Stock, par value $.0001 per
share ("Series A Preferred Stock") of the Company at the close of
business on October 4, 1996 (the "Record Date") will be entitled to
vote at the Annual Meeting.
The principal executive offices of the Company are located at
274 Riverside Avenue Westport, Connecticut 06881 and its telephone
number is (203) 227-4912. The approximate date on which this Proxy
Statement, the proxy card and other accompanying materials are first
being sent or given to Stockholders is October 15, 1996. The Company's
Annual Report on Form 10-KSB for the fiscal year ended June 30, 1996,
including audited financial statements, are being sent to Stockholders
together with this Proxy Statement.
VOTING REQUIREMENTS
The securities of the Company entitled to vote at the meeting
consist of (i) shares of its Common Stock, $.0001 par value per share,
and (ii) shares of its Series A Preferred Stock, each share of which
Common Stock and Series A Preferred Stock is entitled to one vote on
all matters. As of October 4, 1996 (the "Record Date"), there were
outstanding 8,742,000 shares of Common Stock and 249, 911 shares of
Series A Preferred Stock. Only holders of
<PAGE>
shares of Common Stock and Series A Preferred Stock on the Record Date
will be entitled to vote at the Annual Meeting. As of the Record Date,
the Company has approximately 18 holders of record of the Common Stock
and 4 holders of record of Series A Preferred Stock. The presence in
person or by proxy of holders of Common Stock and Series A Preferred
Stock of record of a majority of the shares outstanding and entitled
to vote as of the Record Date shall be required for a quorum to
transact business at the Annual Meeting. If a quorum should not be
present, the Annual Meeting may be adjourned until a quorum is
obtained. The nominees to be selected as a Director named in Proposal
1 must receive a plurality of the eligible votes cast at the Annual
Meeting with respect to such Proposal. The approval of all other
matters to be considered at the Annual Meeting requires the
affirmative vote of a majority of the eligible votes cast at the
Annual Meeting on such matters.
The expense of preparing, printing and mailing this Proxy
Statement, exhibits and the proxies solicited hereby will be borne by
the Company. In addition to the use of the mail, proxies may be
solicited by officers and directors and regular employees of the
Company, without additional remuneration, by personal interviews,
telephone, telegraph or facsimile transmission. The Company will also
request brokerage firms, nominees, custodians and fiduciaries to
forward proxy materials to the beneficial owners of shares of capital
stock held of record and will provide reimbursements for the cost of
forwarding the material in accordance with customary charges.
Proxies given by Stockholders of record for use at the Annual
Meeting may be revoked at any time prior to the exercise of the powers
conferred. In addition to revocation in any other manner permitted by
law, Stockholders of record giving a proxy may revoke the proxy by an
instrument in writing, executed by the Stockholder or his attorney
authorized in writing or, if the Stockholder is a corporation, under
its corporate seal, by an officer or attorney thereof duly authorized,
and deposited either at the corporate headquarters of the Company at
any time up to and including the last business day preceding the day
of the Annual Meeting, or any adjournment thereof, at which the proxy
is to be used, or with the chairman of such Annual Meeting on the day
of the Annual Meeting or adjournment thereof, and upon either of such
deposits the proxy is revoked.
ALL PROXIES RECEIVED WILL BE VOTED IN ACCORDANCE WITH THE
CHOICES SPECIFIED ON SUCH PROXIES. PROXIES WILL BE VOTED IN FAVOR OF A
PROPOSAL IF NO CONTRARY SPECIFICATION IS MADE. ALL VALID PROXIES
OBTAINED WILL BE VOTED AT THE DISCRETION OF THE BOARD OF DIRECTORS
WITH RESPECT TO ANY OTHER BUSINESS THAT MAY COME BEFORE THE ANNUAL
MEETING.
None of the matters to be acted on at the Annual Meeting give rise to
any statutory
2
<PAGE>
right of a Stockholder to dissent and obtain the appraisal of or payment for
such Stockholder's shares.
PROPOSAL ONE
ELECTION OF DIRECTORS
The Company's board presently consists of four (4) directors
whose terms expire at the Annual Meeting. Officers are elected
annually by and serve at the discretion of the Board of Directors.
The Board has nominated four (4) candidates to serve as
directors all of whom are currently directors. The names and
biographical summaries of the four (4) persons who have been nominated
by the Board of Directors to stand for election at the Annual Meeting
have been provided below for your information. The Board of Directors
has proposed that these persons be elected at the Annual Meeting to
serve until the next annual meeting of stockholders. The Proxies will
be voted for the election of the four (4) nominees listed below as
directors of the Company unless otherwise specified on the form
provided. The vote of a majority of the capital stock, present and
constituting a quorum at the Annual Meeting, will be necessary to
elect the directors listed below. If, for any reasons, any of the
nominees shall be unable or unwilling to serve, the Proxies will be
voted for a substitute nominee who will be designated by the Board of
Directors at the Annual Meeting. Stockholders may abstain from voting
by marking the appropriate boxes on the enclosed Proxy. Abstentions
shall be counted separately and shall be used for purposes of
calculating quorum.
Biographical Summaries of Nominees for the Board of Directors
Roger M. Buoy has been the Chief Executive Officer and Chairman of the
Board of the Company since August 1992. From 1983 to 1992, Mr. Buoy
was the President, Chief Executive Officer and founder of Mindscape
International, Inc., ("Mindscape") a developer and publisher of
educational and entertainment software for personal computers and
video game machines. In 1987, Mindscape successfully completed its
initial public offering in 1990. Mindscape was then sold to Software
Toolworks, and subsequently renamed Mindscape and acquired by the
Pierson Group of the United Kingdom. From 1981 to 1983, Mr. Buoy was
the Executive Vice President-Software Publishing and Operations of
Scholastic, Inc., a New York based publisher of educational materials.
Tony E. Swash has been Chief Operating Officer and a Director of the
Company since August 1992. From 1979 to 1992, Mr. Swash was Sales
Director for Ray Engineering Company Ltd. ("Ray Engineering"), a
subsidiary of a British public company. In 1985, Mr. Swash along with
two other directors and two venture capital companies, purchased Ray
Engineering. In
3
<PAGE>
1988, Mr. Swash was instrumental in selling Ray Engineering to an
English public limited company. He remained as the Divisional Managing
Director of Ray Engineering until he resigned to take part in the
purchase of the assets of AIL in 1992.
Josh Gaspero has been a Director of the Company since August 1996. He
is presently Chairman of Joshua Tree Holdings, LLC which has
controlling interests in Adventure Weekend Magazine, Best of Times
Productions and Joshua Lockhard Direct Response Group. Previously he
was Co-Chairman of Readers Digest Young Families from October 1993
until March, 1996. From March 1982 until October, 1993, he was
Co-Chairman and Founder of Joshua Morris Publishing, a company
subsequently purchased by The Readers Digest Association. Prior to
1982, Mr. Gaspero was President and CEO of Harlequin Books North
America. Mr. Gaspero is a 1964 graduate of St. Joseph's University
with a B.A. in Marketing.
Sherman A. Drusin has been a Director of the Company since August,
1996. He has been the Director of Corporate Finance for Sterling
Foster & Co., Inc., an investment banking firm in New York since
March, 1995. In addition, he is President and Director of Preferred
Benefit Plans, Inc. located in Armonk, New York. Previously, he was
Vice President for Corporate Finance for J. Gregory & Company, an
investment banking firm. For 25 years prior to his work in the
investment banking field, Mr. Drusin was CEO, President and Director
of several computer software companies. He currently serves on the
Board of Directors of several organizations which include InTime
Systems International, the Sterling Foster Foundation and the
Make-A-Wish Foundation of Metro New York. Furthermore, he is an
advisor to the Board of Directors of several publicly traded
corporations. Mr. Drusin is a 1964 graduate of Fairleigh Dickinson
University with a B.S. in Economics.
The Board of Directors unanimously recommends a vote FOR the
election of Messrs. Buoy, Swash, Gaspero and Drusin. Unless otherwise
instructed or unless authority to vote is withheld, the enclosed proxy
will be voted FOR the election of the above listed nominees.
4
<PAGE>
Directors and Executive Officers
The names and ages of the directors, executive officers and
significant employees, and promoters of the Company are set forth
below. All of the directors are elected annually.
Name Age Position Held
- -------------------- --- -----------------------------------------
Roger Buoy 50 Chairman of the Board of Directors, Chief
Executive Officer and Director
Tony E. Swash 45 Chief Operating Officer and Director
Terence McAuley 42 Chief Financial Officer and Secretary
Carmen Villalon(1) 43 Director
Armando Araujo(1) 46 Director
Josh Gaspero 54 Director
Sherman A. Drusin 54 Director
(1) Resigned as a director in August, 1996.
Background of Executive Officers and Directors
Roger M. Buoy has been the Chief Executive Officer and Chairman of the
Board of the Company since August 1992. From 1983 to 1992, Mr. Buoy
was the President, Chief Executive Officer and founder of Mindscape
International, Inc., ("Mindscape") a developer and publisher of
educational and entertainment software for personal computers and
video game machines. In 1987, Mindscape successfully completed its
initial public offering in 1990. Mindscape was then sold to Software
Toolworks, and subsequently renamed Mindscape and acquired by the
Pierson Group of the United Kingdom. From 1981 to 1983, Mr. Buoy was
the Executive Vice President-Software Publishing and Operations of
Scholastic, Inc., a New York based publisher of educational materials.
Tony E. Swash has been Chief Operating Officer and a Director of the
Company since August 1992. From 1979 to 1992, Mr. Swash was Sales
Director for Ray Engineering Company Ltd. ("Ray Engineering"), a
subsidiary of a British public company. In 1985, Mr. Swash along with
two other directors and two venture capital companies, purchased Ray
Engineering. In 1988, Mr. Swash was instrumental in selling Ray
Engineering to an English public limited
5
<PAGE>
company. He remained as the Divisional Managing Director of Ray
Engineering until he resigned to take part in the purchase of the
assets of AIL in 1992.
Terence McAuley has served as a part-time Chief Financial Officer for
Applewoods since December 1994, devoting 20 hours per week to the
Company. Since 1988 he has served as an independent consultant to
various companies and from 1984 to 1988 he served as Chief Financial
Officer for ISIS Construction, a building construction company. From
1980 to 1984, he was with the National Trust of Great Britain as an
accountant. Mr. McAuley qualified and worked as a chartered accountant
with Price Waterhouse from 1975 to 1980.
Carmen Villalon was a Director of the Company from April 1994 until
August 1996. Ms. Villalon owns a group of twenty-eight (28) retail
stores throughout the Philippines. Her organization has grown from one
(1) store in 1989 to encompass franchises for major retailers such as
Giordano of Hong Kong and Andy and Karen of Hong Kong. Ms. Villalon is
the exclusive distributor for Applewoods' products throughout the
Philippines and has established five (5) Applewoods' stores, four (4)
in metropolitan Manilla and one (1) in Cebu. Ms. Villalon is a
stockholder of the Company.
Armando Araujo was a Director of the Company from April 1994 until
August 1996. Mr. Araujo has been President of ISC, a translucent soap
manufacturer based in Guatemala, since December 23, 1993 and of Tanisi
International Ltd. since May 31, 1995. He is also President of D'Casa
International a wholesale and retail distributing company in Central
America. He is also a member of the Board of Directors of
Kimberly-Clark (Central America) and Sigma, a major packaging
consortium. Mr. Araujo is the Applewoods' distributor for Latin
America.
Josh Gaspero has been a Director of the Company since August 1996. He
is presently Chairman of Joshua Tree Holdings, LLC which has
controlling interests in Adventure Weekend Magazine, Best of Times
Productions and Joshua Lockhard Direct Response Group. Previously he
was Co-Chairman of Readers Digest Young Families from October 1993
until March, 1996. From March 1982 until October, 1993, he was
Co-Chairman and Founder of Joshua Morris Publishing, a company
subsequently purchased by The Readers Digest Association. Prior to
1982, Mr. Gaspero was President and CEO of Harlequin Books North
America. Mr. Gaspero is a 1964 graduate of St. Joseph's University
with a B.A. in Marketing.
Sherman A. Drusin has been a Director of the Company since August,
1996. He has been the Director of Corporate Finance for Sterling
Foster & Co., Inc., an investment banking firm in New York since
March, 1995. In addition, he is President and Director of Preferred
Benefit Plans, Inc. located in Armonk, New York. Previously, he was
Vice President for Corporate Finance for J. Gregory & Company, an
investment banking firm. For 25 years prior to his work in the
investment banking field, Mr. Drusin was CEO, President and Director
of several
6
<PAGE>
computer software companies. He currently serves on the Board of
Directors of several organizations which include InTime Systems
International, the Sterling Foster Foundation and the Make-A-Wish
Foundation of Metro New York. Furthermore, he is an advisor to the
Board of Directors of several publicly traded corporations. Mr. Drusin
is a 1964 graduate of Fairleigh Dickinson University with a B.S. in
Economics.
There are no family relationships between the officers and
directors of the Company, except that Roger Buoy and Tony Swash are
second cousins.
Each director of the Company is entitled to receive
reasonable out-of-pocket expenses incurred in attending meetings of
the Board of Directors of the Company. The Directors receive no other
compensation for serving on the Board of Directors. The members of the
Board of Directors intend to meet at least quarterly during the
Company's fiscal year, and at such other times duly called.
Compliance with Section 16(a) of
The Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's directors and executive officers, and persons who own
more than ten percent (10%) of a registered class of the Company's
equity securities, to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of
common stock and other equity securities of the Company. Officers,
directors and greater than ten percent shareholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a)
forms they file.
Except as provided below, to the Company's knowledge, based
solely on its review of the copies of such reports furnished to the
Company during the year ended June 30, 1996, all Section 16(a) filing
requirements applicable to its officers, directors and greater than
ten percent beneficial owners were satisfied.
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<PAGE>
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Summary Compensation Table
The following table shows all the cash compensation paid or to be paid
by the Company to the Chief Executive Officer, one of the Company's
executive officers and a former officer who received in excess of
$100,000 in annual salary and bonus, for the fiscal years ended June
30, 1996 and 1995:
<TABLE>
<CAPTION>
Long Term Compensation
----------------------------------------------------
Annual Compensation Awards Payouts
--------------------------------------- ----------- ----------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Restricted All
Other Stock LTIP Other
Annual Awards Options/ Payouts Compensation
Name and Principal Position Year Salary($) Bonus($) Compensation($) ($) SARs(#) ($) ($)
- ---------------------------- ---- --------- --------- --------------- ---------- -------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Roger Buoy, CEO 1996 $150,000 $ --- $ --- ---- -------- ----------- (1)
1995 --- --- --- ---- -------- ----------- (1)
Tony Swash, COO 1996 $102,774 $ --- $ --- ---- -------- ----------- (1)
1995 --- --- --- ---- -------- ----------- (1)
Terence McAuley, CFO 1996 $36,904 $ --- $ --- ---- 20,000(2) ----------- ---
1995 14,308 --- --- ---- -------- ----------- ---
</TABLE>
- -------------------
(1) Does not include certain automobile expenses and other
prerequisites which in the aggregate do not exceed the lesser
of $50,000 or 10% of the named executive officer's
compensation.
(2) Represents options issued in January 1996.
The following table sets forth certain information with
respect to options granted during the last fiscal year to the
Company's Executive Officers named in the above Summary Compensation
Table.
Aggregate Option/SAR Exercises In Last Fiscal Year And Fiscal Year-End
Option/SAR Values
The following table sets forth certain information with
respect to options exercised during the fiscal year ended June 30,
1996, by the Company's Executive Officers named in the Summary
Compensation Table, and with respect to unexercised options held by
such person at the end of the fiscal year ended June 30, 1996.
<TABLE>
<CAPTION>
(a) b) (c) (d) (e)
Number of Value of
Securities Underlying Unexercised
Unexercised Options/ In-the-Money
SARs at FY-End (#) Options/SARs at
Shares Acquired Value Exercisable/ FY-EndExercisable
Name on Exercise (#) Realized ($) Unexercisable Unexercisable
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Terence McAuley 0 $ 0 0 /20,000 $ 0 /138,750
</TABLE>
9
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Employment Agreements
As of July 1, 1995, the Company entered into a three (3) year
employment agreement with Roger Buoy, pursuant to which Mr. Buoy
serves as the Company's Chief Executive Officer. The agreement
provides for Mr. Buoy to receive a salary of $150,000 per annum during
the first year and an increase of 10% per annum or such greater amount
as determined in the discretion of the Board of Directors based upon
the Company's performance. The agreement also provides for the payment
of a bonus in cash and/or securities to Mr. Buoy to be determined in
the discretion of the Board of Directors. In addition, Mr. Buoy has
been granted the right to purchase four percent (4%) of the
outstanding Common Stock of the Company if the Company has earnings
(excluding expenses incurred in connection with the issuance of
securities to certain shareholders in connection with the Company's
initial public offering (the "Offering") of $1,000,000, $1,750,000 and
$2,650,000, respectively, during any fiscal year falling within the
six (6) year period immediately following the effective date of the
Offering. If the Company has earnings of $4,000,000 in any such fiscal
year, Mr. Buoy will be entitled to acquire the entire twelve percent
(12%) of the shares of Common Stock. The exercise price for such
options shall be $3.00 per share.
As of July 1, 1995, the Company entered into a three (3) year
employment agreement with Tony Swash, pursuant to which Mr. Swash
serves as the Company's Chief Operating Officer. The agreement
provides for Mr. Swash to receive a salary of $150,000 per annum
during the first year and an increase of 10% per annum or such greater
amount as determined in the discretion of the Board of Directors based
upon the Company's performance. The agreement also provides for the
payment of a bonus in cash and/or securities to Mr. Swash to be
determined in the discretion of the Board of Directors. In addition,
Mr. Swash has been granted the right to purchase four percent (4%) of
the outstanding Common Stock of the Company if the Company has
earnings (excluding expenses incurred in connection with the issuance
of securities to certain shareholders in connection with the Company's
initial public offering (the "Offering") of $1,000,000, $1,750,000 and
$2,650,000, respectively, during any fiscal year falling within the
six (6) year period immediately following the effective date of the
Offering. If the Company has earnings of $4,000,000 in any such fiscal
year, Mr. Swash will be entitled to acquire the entire twelve percent
(12%) of the shares of Common Stock. The exercise price for such
options shall be $3.00 per share.
The granting of rights to purchase Common Stock based on the
attainment of specified earnings (as discussed above) will result in
compensation expense to the Company equal to the excess of the fair
market value per share of the Common Stock over the exercise price of
$3 per share multiplied by the number of options granted.
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Stock Option Plans and Agreements
In October 1995, the Board of Directors of the Company
adopted, and the stockholders of the Company approved the adoption of,
the 1995 Stock Plan (hereinafter called the "1995 Plan"). The purpose
of the 1995 Plan is to provide an incentive and reward for those
executive officers and other key employees in a position to contribute
substantially to the progress and success of the Company, to closely
align the interests of such employees with the interests of
stockholders of the Company by linking benefits to stock performance
and to retain the services of such employees, as well as to attract
new key employees. In furtherance of that purpose, the 1995 Plan
authorizes the grant to executives and other key employees of the
Company and its subsidiaries of stock options, restricted stock,
deferred stock, bonus shares, performance awards, dividend equivalent
rights, limited stock appreciation rights and other stock-based
awards, or any combination thereof. The 1995 Plan is expected to
provide flexibility to the Company's compensation methods, after
giving due consideration to competitive conditions and the impact of
federal tax laws.
The maximum number of shares of Common Stock with respect to
which awards may be granted pursuant to the 1995 Plan is initially
1,000,000 shares. Shares issuable under the 1995 Plan may be either
treasury shares or authorized but unissued shares. The number of
shares available for issuance will be subject to adjustment to prevent
dilution in the event of stock splits, stock dividends or other
changes in the capitalization of the Company.
The 1995 Plan will be administered by a committee consisting
of not less than two (2) members of the Board of Directors who are
"disinterested" within the meaning of Rule 16b-3 promulgated under the
Exchange Act and "outside directors" within the meaning of Section
162(m) of the Code (including persons who may be deemed outside
directors by virtue of any transitional rule which may be adopted by
the Internal Revenue Service implementing such Section). The Board
will determine the persons to whom awards will be granted, the type of
award and, if applicable, the number of shares to be covered by the
award. During any calendar year, no person may be granted under the
1995 Plan awards aggregating more than 100,000 shares (which number
shall be subject to adjustment to prevent dilution in the event of
stock splits, stock dividends or other changes in capitalization of
the Company).
In January 1996, the Company issued to certain employees of
the Company options exercisable for an aggregate of 100,000 shares of
Common Stock at an exercise price of $2.50 per share. The options vest
over a period of three (3) years and are exercisable for a period of
eighteen (18) months following the date of vesting.
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<PAGE>
PRINCIPAL STOCKHOLDERS AND
STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth certain information, as of the
Record Date with respect to the beneficial ownership of the
outstanding Common Stock by (i) any holder of more than five (5%)
percent; (ii) each of the Company's officers and directors; and (iii)
the directors and officers of the Company as a group:
Percentage
Shares of (%) of
Name and Address Common Common
of Beneficial Owner Stock Owned Stock
- ------------------- ----------- -----
Roger Buoy(1) 1,545,432(2) 17.1
Tony Swash(1) 1,415,258(3) 15.9
Terence McAuley(1) 0.0 0.0
Josh Gaspero(1) 31,390(4) 0.4
Sherman A. Drusin(1) 0.0 0.0
Tanisi International, Ltd.(5) 540,000 6.2
Carmen Villalon(6) 540,000 6.2
All directors and officers 2,992,080 32.5
as a group (5 persons)(2)(3)(4)
(1) The address of each stockholder shown above is c/o
Applewoods, Inc., 274 Riverside Avenue, Westport, CT 06881.
(2) Includes 285,432 shares of Common Stock issuable upon
conversion of 142,716 shares of Series A Preferred Stock held
by Mr. Buoy.
(3) Includes 155,258 shares of Common Stock issuable upon
conversion of 77,629 shares of Series A Preferred Stock held
by Mr. Swash.
(4) Includes 31,390 shares of Common Stock issuable upon
conversion of 15,695 shares of Series A Preferred Stock held
by Mr. Gaspero.
(5) The address of Tanisi International Ltd. is c/o Charles A.
Schuette, Esq., Ackerman, Senterfitt & Eidson P.A., One
Southeast Third Avenue, 28th Floor, Miami, Florida
33131-1704.
(6) The address of Carmen Villalon is 407 Bonaventure Plaza,
Greenhills, San Juan, Metro Manila, Phillipines.
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<PAGE>
There are no agreements or other arrangements or
understandings known to the Company concerning the voting of the
Common Stock of the Company or otherwise concerning control of the
Company which are not disclosed herein. There are no preemptive rights
applicable to the Company's securities.
CERTAIN TRANSACTIONS
On August 5, 1992, each of Roger Buoy and Tony Swash acquired
at par value one (1) ordinary share for 1 pound each in the share
capital of Filbuk 290 Limited ("Filbuk"), the predecessor of AIL. On
August 6, 1992 (i) each of Roger Buoy and Tony Swash acquired at par
value thirty-nine (39) ordinary shares of 1 pound each in the share
capital of Filbuk and (ii) Ian Mitchell acquired, at par, value forty
(40) ordinary shares for 1 pound each in the share capital of Filbuk.
On August 6, 1992, AIL issued certain Fixed Rate Unsecured Loan Notes
due 2002, at an interest rate of one percent (1%) per annum above
LIBOR to (i) Roger Buoy in exchange for an aggregate loan of
approximately $400,000 and (ii) Tony Swash in exchange for a loan of
approximately $400,000. On August 6, 1992, Filbuk acquired the assets
of AIL from the receiver for aggregate purchase price of approximately
$926,000 and on August 10, 1992, Filbuk changed its name to Applewoods
International Limited.
On June 28, 1993, each of Roger Buoy and Tony Swash acquired
at par value twenty (20) ordinary shares for 1 pound each in the share
capital of AIL from Ian Mitchell, the founder of AIL.
On April 21, 1994, Carmen Villalon, a previous director of
the Company who resigned in August 1996, made an advance payment of
$100,000 to AIL in respect of future sums due for future shipments of
Applewoods' products, of which approximately $38,000 remains
outstanding.
On April 29, 1994, (i) each of Roger Buoy and Tony Swash
acquired at par value ten (10) ordinary shares for 1 pound each in the
share capital of AIL and (ii) ISC International Ltd. ("ISC") acquired
at par value thirty (30) ordinary shares for 1 pound each in the share
capital of AIL.
On April 29, 1994, ISC made an interest-free, unsecured loan
of approximately $107,000, to AIL. Armando Araujo, a previous director
of the Company who resigned in August 1996, is the President of ISC.
On April 29, 1994, AIL, ALA, Mr. Buoy and Mr. Swash entered
into an Assignment of Trade Marks, Name and Intellectual Property
pursuant to which ALA acquired all of AIL's right, title and interest
in, to and under certain of AIL's trade marks and know-how in Latin
America (the "Latin American Trade Marks").
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On April 29, 1994, AIL, ALA, ISC Mr. Buoy and Mr. Swash
entered into an Exclusive License Agreement (the "License Agreement")
pursuant to which ALA licensed use of the Latin American Trade Marks
to ISC for $50,000 and (ii) AIL licensed ISC to exclusively sell AIL's
products in Latin America. Accordingly, ISC was the exclusive licensee
of the Company's products in Latin America but has now assigned its
interest to Tanisi (see below).
On April 29, 1994, AIL and ISC entered into a Machinery and
Supply Agreement pursuant to which AIL agreed to sell certain
machinery to ISC at fair market value and ISC agreed to supply soaps
to AIL for a ten (10) year period (renewable for a further ten (10)
years) at the lowest price at which ISC supplies soaps to its
customer. The sale of the machinery was substantially completed during
the year ended June 30, 1995 and was concluded in August, 1995.
On April 29, 1994, ISC made an advance payment of $100,000 to
AIL in respect of future sums due pursuant to the License Agreement,
of which approximately $37,000 remains outstanding.
On June 13, 1994, Carmen Villalon acquired at par value
thirty (30) ordinary shares for 1 pound each in the share capital of
AIL and made an interest free, unsecured loan of approximately
$158,000 to AIL.
As of July 1, 1995, the Company entered into a three (3) year
employment agreement with Roger Buoy, pursuant to which Mr. Buoy
serves as the Company's Chief Executive Officer. The agreement
provides for Mr. Buoy to receive a salary of $150,000 per annum during
the first year and an increase of 10% per annum or such greater amount
as determined in the discretion of the Board of Directors based upon
the Company's performance. The agreement also provides for the payment
of a bonus in cash and/or securities to Mr. Buoy to be determined in
the discretion of the Board of Directors. In addition, Mr. Buoy has
been granted the right to purchase four percent (4%) of the
outstanding Common Stock of the Company if the Company has earnings
(excluding expenses incurred in connection with the issuance of
securities to certain shareholders of the Company in connection with
the Company's initial public offering (the "Offering") of $1,000,000,
$1,750,000 and $2,650,000, respectively, during any fiscal year
falling within the six (6) year period immediately following the
effective date of the Offering. If the Company has earnings of
$4,000,000 in any such fiscal year, Mr. Buoy will be entitled to
acquire the entire twelve percent (12%) of the shares of Common Stock.
The exercise price for such options shall be $3.00 per share.
As of July 1, 1995, the Company entered into a three (3) year
employment agreement with Tony Swash, pursuant to which Mr. Swash
serves as the Company's Chief Operating Officer. The agreement
provides for Mr. Swash to receive a salary of $150,000 per annum
during the first year and an increase of 10% per annum or such greater
amount as determined
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in the discretion of the Board of Directors based upon the Company's
performance. The agreement also provides for the payment of a bonus in
cash and/or securities to Mr. Swash to be determined the discretion of
the Board of Directors. In addition, Mr. Swash has been granted the
right purchase four percent (4%) of the outstanding Common Stock of
the Company if the Company has earnings (excluding expenses incurred
in connection with the issuance of securities to certain shareholders
of the Company in connection with the Company's initial public
offering (the "Offering") of $1,000,000, $1,750,000 and $2,650,000,
respectively, during any fiscal year falling within the six (6) year
period immediately following the effective date of the Offering. If
the Company has earnings of $4,000,000 in any such fiscal year, Mr.
Swash will be entitled to acquire the entire twelve percent (12%) of
the shares of Common Stock. The exercise price for such options shall
be $3.00 per share.
In June 1995, ISC assigned to Tanisi, all of its right, title
and interest in, to and under all of its shares in AIL and ALA and all
agreements between ISC and AIL (other than the Machinery and Supply
Agreement described above).
In September, 1995, the Company borrowed an aggregate of
$500,000 from eleven (11) unaffiliated lenders (the "Bridge Lenders").
In exchange for making loans to the Company, each Bridge Lender
received (i) a promissory note (each a "Bridge Note") and (ii) the
right, commencing on the effective date of the Offering, to receive
Bridge Units. Each of the Bridge Units is comprised of one (1) share
of Common Stock, one (1) Class A Warrant and one (1) Class B Warrant.
Each of the Bridge Notes was repaid at the closing of the Offering.
The promissory notes were paid with interest at the rate of eight
percent (8%) per annum.
In October 1995, Applewoods Delaware, AIL and ALA entered
into a Share Exchange Agreement, pursuant to which Applewoods Delaware
acquired immediately prior to the effective date of the Offering all
of the outstanding capital stock of AIL and ALA in exchange for
1,800,000 shares of Common Stock (the "Acquisition Shares") of the
Company. Both Roger Buoy, the Company's Chief Executive Officer and
Tony Swash, the Company's Chief Operating Officer, exchanged their
respective thirty five percent (35%) interests in AIL and ALA and
Carmen Villalon, a previous director of the Company, and Tanisi
International Ltd., a company under the common control of Armando
Araujo, a previous director of the Company, exchanged their respective
fifteen percent (15%) interests in AIL and ALA, in each case in
exchange for a pro rated number of the Acquisition Shares. In
addition, as capital contributions to the Company both Roger Buoy and
Tony Swash cancelled indebtedness owed to them by AIL in the amount of
approximately $411,000 and $413,000, respectively and Carmen Villalon
and Tanisi International Ltd. cancelled indebtedness owed to them by
AIL in the amount of approximately $154,000 and $104,000,
respectively.
In October 1995, the Company entered into certain
subscription agreements, pursuant to which, immediately prior to the
effective date of the Offering, the Company issued (i) 142,716
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shares of Series A Preferred Stock to Roger Buoy, in exchange for the
cancellation of loans made by Mr. Buoy to AIL in the aggregate
principal amount of approximately $714,000 (or $5.00 per share), (ii)
77,629 shares of Series A Preferred Stock to Tony Swash in exchange
for the cancellation of loans made by Mr. Swash to AIL in the
aggregate principal amount of approximately $388,000 (or $5.00 per
share), (iii) 15,695 shares of Series A Preferred Stock to Josh
Gaspero, a director of the Company, in exchange for the cancellation
of loans made by Mr. Gaspero to AIL in the aggregate principal amount
of approximately $78,000 (or $5.00 per share) and (iv) 13,871 shares
of Series A Preferred Stock to Tim Kelly in exchange for the
cancellation of loans made by Mr. Kelly to AIL in the aggregate
principal amount of approximately $69,000 (or $5.00 per share). The
number of shares of Series A Preferred Stock issued for the
cancellation of indebtedness was based on the terms of the Series A
Preferred Stock and the offering price of the Common Stock into which
the Series A Preferred Stock is convertible.
In October, 1995, the Company entered into a Consulting
Agreement with SK Fullfillment Consulting, Inc. ("SK Fullfillment")
pursuant to which the Company issued to SK Fullfillment 400,000 shares
of Common Stock in exchange for marketing and distribution consulting
services. The number of shares issued to SK Fulfillment were
determined by negotiation between the Company and SK Fulfillment. SK
Fullfillment has agreed that for a period of two year(s) it will
consult with the Company regarding the marketing and distribution of
the Company's products in the United States. Stanley Krasnoff is the
founder and sole stockholder of SK Fulfillment.
In October, 1995, the Company entered into a Consulting Agreement
with Valjean Systems, Inc. pursuant to which the Company issued to
Valjean Systems, Inc. 80,000 shares of Common Stock in exchange for
marketing and merchandising consulting services. The number of shares
issued to Valjean Systems, Inc. were determined by negotiation between
the Company and Valjean Systems, Inc. Valjean Systems, Inc. has agreed
that for a period of two year(s) it will consult with the Company
regarding the marketing and merchandising of the Company's products in
the Western United States. Diane Waldman is the founder and sole
stockholder of Valjean Systems, Inc.
In April, 1996, the Company completed a public offering of
2,400,000 shares of Common Stock at $5.00 per share for an aggregate
of $6,000,000. An additional 360,000 shares were sold for gross
proceeds of $900,000 to the underwriter to cover over-allotments. In
addition, the underwriter received an option, for a nominal fee, to
acquire 240,000 shares of Common Stock at an exercise price of $4.00
per share. The option expires in April 2001.
Effective with the closing of the offering, the Company
entered into a three-year consulting agreement with the underwriter.
The consulting fee of $100,000 is being charged to operations ratably
over the term of the agreement.
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On July 15, 1996 ALA assigned all its right, title and
interest in, to and under the Latin American Trade Marks to the
Company and ALA was then dissolved.
With respect to each of the foregoing transactions, the
Company believes that the terms of such transactions were as fair to
the Company as could be obtained from an unrelated third party. Future
transactions with affiliates will be on terms not less favorable than
could be obtained from unaffiliated parties and will be approved by a
majority of the independent and/or disinterested members of the board
of directors.
PROPOSAL TWO
RATIFICATION OF SELECTION OF THE FIRM OF PRICE WATERHOUSE LLP AS
INDEPENDENT PUBLIC ACCOUNTANTS FOR THE COMPANY
The Board of Directors upon recommendation of the members of the Audit
Committee, concluded that the continued engagement of Price Waterhouse
LLP as the Company's independent public accountants for the 1996
fiscal year was in the best interests of the Company. The Board of
Directors recommends that Stockholders ratify its choice of Price
Waterhouse LLP.
The Board of Directors unanimously recommends a vote FOR the
ratification of the selection of Price Waterhouse LLP as independent
public accountants for the Company. Unless marked to the contrary,
proxies received from Stockholders will be voted in favor of the
proposed amendment.
OTHER PROPOSED ACTION
The Board of Directors does not intend to bring any other matters
before the meeting, nor does the Board of Directors know of any
matters which other persons intend to bring before the meeting. If,
however, other matters not mentioned in this Proxy Statement properly
come before the Annual Meeting, the persons named in the accompanying
form of Proxy will vote thereon in accordance with the recommendation
of the Board of Directors.
STOCKHOLDER PROPOSALS AND SUBMISSIONS
If any Stockholder wishes to present a proposal for inclusion in the
proxy materials to be solicited by the Company's Board of Directors
with respect to the next Annual Meeting of Stockholders, that proposal
must be presented to the Company's secretary prior to June 30, 1997.
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WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, PLEASE
SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY. YOUR VOTE IS IMPORTANT.
IF YOU ARE A STOCKHOLDER OF RECORD AND ATTEND THE ANNUAL MEETING AND
WISH TO VOTE IN PERSON, YOU MAY WITHDRAW YOUR PROXY AT ANY TIME PRIOR
TO THE VOTE.
APPLEWOODS, INC.
October 18, 1996 By:____________________________
Roger Buoy,
Chief Executive Officer
APPLEWOODS, INC. PROXY
Applewoods, Inc.
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PLEASE CLEARLY INDICATE A RESPONSE BY CHECKING EITHER THE PROXY
(THE "PROXY") [FOR] OR [AGAINST] BOX NEXT TO EACH OF THE TWO (2)
PROPOSALS
The undersigned hereby appoint(s) Mr. Roger Buoy with the
power of substitution and resubstitution to vote any and all shares of
capital stock of Applewoods, Inc. (the "Company") which the
undersigned would be entitled to vote as fully as the undersigned
could do if personally present at the Annual Meeting of the Company,
to be held on November 5, 1996, at 8:30 A.M. local time, and at any
adjournments thereof, hereby revoking any prior proxies to vote said
stock, upon the following items more fully described in the notice of
any proxy statement for the Annual Meeting (receipt of which is hereby
acknowledged):
1. ELECTION OF DIRECTORS
VOTE
/ / FOR ALL nominees listed below EXCEPT as marked to the
contrary below
/ / WITHHOLD AUTHORITY to vote for ALL nominees listed
below (INSTRUCTION: To withhold authority to vote
for any individual nominee strike a line through the
nominee's name below.)
/ / ABSTAIN
2. RATIFY APPOINTMENT
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/ / FOR Price Waterhouse LLP
/ / WITHHOLD AUTHORITY
/ / ABSTAIN
THIS PROXY WILL BE VOTED AS SPECIFIED ABOVE; UNLESS OTHERWISE
INDICATED, THIS PROXY WILL BE VOTED FOR ELECTION OF THE FOUR (4)
NOMINEES NAMED IN ITEM 1, AND PRICE WATERHOUSE LLP AS AUDITOR IN ITEM
2.
In his discretion, the Proxy is authorized to vote upon such
other business as may properly come before the meeting.
Please mark, sign date and return this Proxy promptly using the
accompanying postage pre-paid envelope. THIS PROXY IS SOLICITED ON
BEHALF OF THE BOARD OF DIRECTORS OF INTERIORS, INC.
Dated:______________________________
____________________________________
Signature
____________________________________
Signature if jointly owned:
____________________________________
Print name:
Please sign exactly as the name appears on your
stock certificate. When shares of capital stock
are held by joint tenants, both should sign. When
signing as attorney, executor, administrator,
trustee, guardian, or corporate officer, please
include full title as such. If the shares of
capital stock are owned by a corporation, sign in
the full corporate name by an authorized officer.
If the shares of capital stock are owned by a
partnership, sign in the name of the partnership
by an authorized officer.
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PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY PROMPTLY
IN THE ENCLOSED ENVELOPE
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