<PAGE>
<PAGE>
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT [x]
FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
CHECK THE APPROPRIATE BOX:
[ ] PRELIMINARY PROXY STATEMENT
[x] DEFINITIVE PROXY STATEMENT
[ ] DEFINITIVE ADDITIONAL MATERIALS
[ ] SOLICITING MATERIAL PURSUANT TO RULE 14a-11(c) OR RULE 14a-12
[ ] CONFIDENTIAL, FOR THE USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE
14a-6(e)(2))
QUAKER FABRIC CORPORATION
- --------------------------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
LARRY A. LIEBENOW, PRESIDENT AND CEO
- --------------------------------------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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>
<PAGE>
QUAKER FABRIC CORPORATION
941 GRINNELL STREET
FALL RIVER, MASSACHUSETTS 02721
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 28, 1998
------------------
To: The Stockholders of QUAKER FABRIC CORPORATION
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders of
QUAKER FABRIC CORPORATION (the 'Company') will be held at the corporate offices
of The First National Bank of Boston, 100 Federal Street, Second Floor, Boston,
MA 02110, on May 28, 1998 at 11:00 a.m. for the following purposes:
1. To elect four directors to serve until the next Annual Meeting of
Stockholders and until their successors shall have been elected and
qualified;
2. To ratify the selection of Arthur Andersen LLP as independent
auditors for the Company for the fiscal year ending January 2, 1999; and
3. To transact such other business as may properly be brought before
the meeting and all adjournments thereof.
The Board of Directors has fixed the close of business on April 1, 1998 as
the record date for the determination of stockholders entitled to notice of and
to vote at this meeting. The stock transfer books will not be closed.
By Order of the Board of Directors,
CYNTHIA L. GORDAN
Vice President, Secretary and
General Counsel
Fall River, Massachusetts
April 15, 1998
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN,
AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A PREPAID ENVELOPE IS ENCLOSED FOR THAT PURPOSE.
EVEN IF YOU HAVE VOTED YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND
THE MEETING. PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A
BROKER, BANK OR OTHER NOMINEE AND YOU WISH TO ATTEND AND VOTE AT THE MEETING,
YOU MUST OBTAIN FROM SUCH BROKER, BANK OR OTHER NOMINEE, A PROXY ISSUED IN YOUR
NAME.
<PAGE>
<PAGE>
QUAKER FABRIC CORPORATION
941 GRINNELL STREET
FALL RIVER, MASSACHUSETTS 02721
---------------------------------
PROXY STATEMENT
---------------------------------
ANNUAL MEETING OF STOCKHOLDERS -- MAY 28, 1998
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Quaker Fabric Corporation (the 'Company' or
'Quaker') for the Annual Meeting of Stockholders to be held on May 28, 1998 at
11:00 a.m., local time, at the corporate offices of The First National Bank of
Boston, 100 Federal Street, Second Floor, Boston, MA 02110. This Proxy Statement
and the enclosed form of proxy were first sent to stockholders commencing on or
about April 15, 1998. A copy of the Company's Annual Report for the fiscal year
ended January 3, 1998 ('Fiscal 1997') is being sent to stockholders together
with this Proxy Statement.
The cost of this solicitation will be borne by the Company. In addition to
the use of the mails, proxies may be solicited personally, or by telephone or
telegram, by directors, officers and employees of the Company who will receive
no additional compensation therefor. Arrangements will be made with brokerage
houses and other custodians, nominees and fiduciaries to forward solicitation
materials to beneficial owners of shares held of record by such persons, and the
Company will reimburse such persons for reasonable out-of-pocket expenses
incurred by them in so doing.
A stockholder who executes the accompanying form of proxy may revoke it (i)
by written notice of revocation or a later dated proxy sent to the Company at
941 Grinnell Street, Fall River, Massachusetts 02721, Attn: Cynthia L. Gordan,
Vice President, Secretary and General Counsel, and received by the Company prior
to the vote, or (ii) by personal attendance and withdrawal of the proxy at the
Annual Meeting of Stockholders. All shares represented by valid proxies received
pursuant to the solicitation and prior to the meeting and not revoked before
they are exercised will be voted, and, if a choice is specified with respect to
any matter to be acted upon, the shares will be voted in accordance with such
specification.
VOTING SECURITIES OUTSTANDING
Only stockholders of record at the close of business on April 1, 1998 will
be entitled to vote at the Annual Meeting of Stockholders. As of March 25, 1998,
the Company had outstanding 8,401,407 shares of Common Stock, par value $0.01
per share (the 'Common Stock'), which are the only outstanding voting securities
of the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table describes, as of March 25, 1998, shares of the
Company's Common Stock held by (i) each person who is known by the Company to
own beneficially more than 5% of the outstanding shares of the Company's Common
Stock (and the respective addresses of such beneficial owners), (ii) each
director and nominee for director of the Company, (iii) each of the executive
officers named in the Summary Compensation Table, and (iv) all current directors
and officers of the Company as a group, based on information furnished by the
respective entities and individuals.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
NAME SHARES PERCENT
- ---------------------------------------------------------------------------------- --------- -------
<S> <C> <C>
Nortex Holdings, Inc.(1).......................................................... 2,016,063 23.0%
Anthony Degomes(2)(3)............................................................. 2,022,063 23.0
Larry A. Liebenow(3)(4)........................................................... 2,034,063 23.1
J. Duncan Whitehead(3)(5)......................................................... 2,022,463 23.0
Dimensional Fund Advisors Inc.(6)................................................. 463,500 5.5
FMR Corp.(7)...................................................................... 460,400 5.5
Neumeier Investment Counsel LLC(8)................................................ 478,200 5.7
Sangwoo Ahn(9).................................................................... 62,521 *
Thomas J. Finneran(3)(10)......................................................... 6,000 *
Cynthia L. Gordan(3)(11).......................................................... 66,576 *
Jerry I. Porras(12)............................................................... 1,667 *
Eriberto R. Scocimara(13)......................................................... 5,000 *
All executive officers and directors as a group (12 persons)...................... 2,403,379 26.4
</TABLE>
- ------------
* Less than 1%
(1) Consists of (i) 1,645,704 shares of Common Stock owned directly by Nortex
Holdings, Inc. ('Nortex Holdings') and (ii) 370,359 shares which Nortex
Holdings has the right to acquire upon exercise of the Nortex Option (as
hereinafter defined). The address of Nortex Holdings is 941 Grinnell
Street, Fall River, Massachusetts 02721.
(2) Consists of (i) 6,000 shares of Common Stock which Mr. Degomes will have
the right to acquire within the next 60 days pursuant to the 1997 Stock
Option Plan (as hereinafter defined) and (ii) the shares of Common Stock
beneficially owned by Nortex Holdings. See footnote (1). Mr. Degomes owns
12.0% of the outstanding shares of Nortex Holdings and is also an officer
and director of Nortex Holdings and, as such, may be deemed to beneficially
own the shares owned by Nortex Holdings.
(3) The address for the named individual is c/o Quaker Fabric Corporation, 941
Grinnell Street, Fall River, Massachusetts 02721.
(4) Consists of (i) 18,000 shares of Common Stock which Mr. Liebenow will have
the right to acquire within the next 60 days pursuant to the 1997 Stock
Option Plan (as hereinafter defined) and (ii) the shares of Common Stock
beneficially owned by Nortex Holdings. See footnote (1). Mr. Liebenow owns
70.5% of the outstanding shares of Nortex Holdings and is also the
President and a director of Nortex Holdings and, as such, may be deemed to
beneficially own the shares owned by Nortex Holdings.
(5) Consists of (i) 6,000 shares of Common Stock which Mr. Whitehead will have
the right to acquire within the next 60 days pursuant to the 1997 Stock
Option Plan (as hereinafter defined), (ii) 400 shares of Common Stock held
by Mr. Whitehead's children, and (iii) the shares of Common Stock
beneficially owned by Nortex Holdings. See footnote (1). Mr. Whitehead owns
17.5% of the outstanding shares of Nortex Holdings and is also an officer
and director of Nortex Holdings and, as such, may be deemed to beneficially
own the shares owned by Nortex Holdings.
(6) Consists of shares deemed to be beneficially owned by Dimensional Fund
Advisors Inc. ('Dimensional'), a registered investment advisor. Such shares
are held in portfolios of DFA Investment Dimensions Group Inc., a
registered open-end investment company, or in series of the DFA Investment
Trust Company, a Delaware business trust, or the DFA Group Trust and DFA
Participation Group Trust, investment vehicles for qualified employee
benefit plans, all of which Dimensional serves as an investment manager.
Dimensional disclaims beneficial ownership of such shares. The address for
Dimensional is 1299 Ocean Avenue, 11th Floor, Santa Monica, CA 90401.
(7) The address for FMR Corp. is 82 Devonshire Street, Boston, MA 02109.
(8) The address for Neumeier Investment Counsel LLC is 26435 Carmel Rancho
Blvd., Carmel, CA 93923.
(footnotes continued on next page)
2
<PAGE>
<PAGE>
(footnotes continued from previous page)
(9) Includes (i) 50,854 shares of Common Stock owned directly by Mr. Ahn, (ii)
1,667 shares which Mr. Ahn has the right to acquire within the next 60 days
under a stock option agreement between Mr. Ahn and the Company and (iii)
10,000 shares of Common Stock held by his children. Mr. Ahn disclaims
beneficial ownership of the shares owned by his children. The address for
Mr. Ahn is c/o Morgan Lewis Githens & Ahn, Inc., Two Greenwich Plaza,
Greenwich, Connecticut 06830.
(10) Consists solely of shares of Common Stock which Mr. Finneran has the right
to acquire within the next 60 days upon the exercise of options granted
under the 1997 Stock Option Plan (as hereinafter defined).
(11) Consists of (i) 53,087 shares of Common Stock which Ms. Gordan has the
right to acquire upon the exercise of options granted under the 1993 Stock
Option Plan (as hereinafter defined), (ii) 7,489 shares of Common Stock
which Ms. Gordan has the right to acquire upon the exercise of options
granted under the Holdings Options, (as hereinafter defined) and (iii)
6,000 shares which she has the right to acquire within the next 60 days
pursuant to the 1997 Stock Option Plan (as hereinafter defined).
(12) Consists of shares of Common Stock which Mr. Porras has the right to
acquire within the next 60 days upon the exercise of options granted under
a stock option agreement between Mr. Porras and the Company. The address
for Mr. Porras is c/o Stanford University Graduate School of Business,
Stanford, California 94305.
(13) Consists solely of shares of Common Stock which Mr. Scocimara has the right
to acquire within the next 60 days pursuant to a stock option agreement
between Mr. Scocimara and the Company. The address for Mr. Scocimara is c/o
Hungarian-American Enterprise Fund, 666 Steamboat Road, Greenwich,
Connecticut 06830.
------------------------
Except as noted in the footnotes, the Company believes the beneficial
holders listed in the table above have sole voting and investment power
regarding the shares shown as being beneficially owned by them. Except as noted
in the footnotes, none of such shares is known by the Company to be shares with
respect to which the beneficial owner has the right to acquire such shares.
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
executive officers and directors and persons who beneficially own more than 10%
of the Company's Common Stock, to file initial reports of ownership and reports
of changes in ownership with the Securities and Exchange Commission ('SEC').
Executive officers, directors and greater than 10% beneficial owners are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on a review of the copies of such forms furnished to the
Company and written representations from the Company's executive officers and
directors, the Company believes that during Fiscal 1997 all Section 16(a) filing
requirements applicable to its executive officers, directors and greater than
10% beneficial owners were met.
VOTING OF PROXIES
Each stockholder is entitled to cast, in person or by proxy, one vote for
each share of Common Stock held by such stockholder at the close of business on
April 1, 1998. Stockholders do not have cumulative voting rights in the election
of directors.
On all matters submitted to the vote of the stockholders as described
herein, a plurality (as to the election of the directors) and a simple majority
(as to other matters) of the votes cast at the Annual Meeting will be
determinative. All proxies in the form enclosed received by management,
including those as to which no preference is indicated, will be voted, in the
absence of instructions to the contrary, for election of the nominees listed
under the next heading as directors of the Company to hold office until the next
Annual Meeting of Stockholders and until their successors shall be duly elected
and
3
<PAGE>
<PAGE>
qualified, for ratification of the appointment of Arthur Andersen LLP as
independent auditors for the Company for the fiscal year ending January 2, 1999
('Fiscal 1998'), and with respect to such other business as may properly come
before the meeting (or any adjournment thereof) in accordance with the judgment
of the persons designated in the proxy. In the unanticipated event that any of
the persons nominated as director cannot be a candidate at the Annual Meeting,
all such proxies received will be voted in favor of such substituted nominee as
shall be designated by the Board of Directors.
With regard to the election of directors, votes may be cast in favor of or
withheld from each nominee; votes that are withheld will be excluded entirely
from the vote and will have no effect. Abstentions may be specified on all
proposals except the election of directors and will be counted as present for
purposes of determining the existence of a quorum regarding the item on which
the abstention is noted. Pursuant to the NASD Rules of Fair Practice, brokers
who hold shares in street name have the authority, in limited circumstances, to
vote on certain items when they have not received instructions from beneficial
owners. A broker will only have such authority if (i) the broker holds the
shares as executor, administrator, guardian, trustee, or in similar
representative or fiduciary capacity with authority to vote, or (ii) the broker
is acting pursuant to the rules of any national securities exchange to which the
broker is also a member. Under applicable Delaware law, a broker non-vote will
have no effect on the outcome of the election of directors.
PROPOSAL 1.
ELECTION OF DIRECTORS
A Board of four directors is to be elected at the Annual Meeting. The Board
of Directors proposes the election of the following four nominees to serve until
the next Annual Meeting and until their successors are duly elected and
qualified:
<TABLE>
<CAPTION>
BEGINNING
YEAR OF SERVICE
NAME AGE POSITIONS/OFFICE AS DIRECTOR
- ----------------------------------- --- ------------------------------------------------- ---------------
<S> <C> <C> <C>
Sangwoo Ahn........................ 59 Chairman of the Board of Directors 1993
Larry A. Liebenow.................. 54 Director, President, and Chief Executive Officer 1989
Jerry I. Porras.................... 59 Director 1997
Eriberto R. Scocimara.............. 62 Director 1993
</TABLE>
All of the nominees are at present members of the Board of Directors. The
Board has no reason to believe that any of the foregoing nominees will not serve
if elected, but if any of them should become unavailable to serve as a director
or are withdrawn from nomination, and if the Board of Directors shall designate
a substitute nominee, the persons named as proxy holders will vote for the
substitute.
Sangwoo Ahn. Mr. Ahn has served as a director of the Company since March
12, 1993 and as Chairman of the Board since May 19, 1993. Mr. Ahn has served as
a general partner of MLGAL and its affiliate, Morgan Lewis Githens & Ahn, Inc.,
an investment banking firm, since 1982. Mr. Ahn also serves as a director of
Gradall Industries, Inc., Kaneb Services, Inc., Kaneb Pipeline Partners, L.P.,
ITI Technologies Inc., PAR Technology Corp., and Stuart Entertainment, Inc.
Larry A. Liebenow. Mr. Liebenow has served as President, Chief Executive
Officer, and a director of the Company since September 1989. From July 1983
until September 1989, Mr. Liebenow was Chairman of the Board and President of
Nortex International, Inc. ('Nortex International'). From September 1971 to July
1983, Mr. Liebenow served as the Chief Operating Officer of Grupo Pliana, S.A.,
a Mexican yarn and upholstery fabric manufacturing concern. Mr. Liebenow is also
a member of Eastern Utilities Associates' Board of Trustees.
Jerry Ignacio Porras. Mr. Porras has served as a director of the Company
since May 21, 1997. Mr. Porras is a professor at Stanford University's Graduate
School of Business, where he has taught varied courses on organizational
behavior and change for the last twenty-five years. Since 1970, Mr. Porras has
been the president of Jerry I. Porras Associates, Inc., a consulting firm which
advises a wide variety of public and private organizations. Mr. Porras is also a
co-owner of Stream Analytics, Inc., a software firm which develops applications
for organizational diagnosis and change management. Mr. Porras also
4
<PAGE>
<PAGE>
serves on the boards of directors of State Farm Life Insurance Company and State
Farm General Insurance Company.
Eriberto R. Scocimara. Mr. Scocimara has served as a director of the
Company since December 14, 1993. Since April 1, 1994, Mr. Scocimara has been the
President and Chief Executive Officer of the Hungarian-American Enterprise Fund,
a private tax-exempt Delaware corporation established pursuant to Federal law
for the purpose of promoting private enterprise in Hungary. Mr. Scocimara has
been the President and Chief Executive Officer of Scocimara & Company, Inc., a
financial consulting firm since 1984. Mr. Scocimara also serves as a director of
Carlisle Companies Incorporated, Cofinec N.V., Euronet Services, Inc., Harrow
Industries, Inc. and Roper Industries, Inc.
During Fiscal 1997, the Board of Directors held seven meetings. Each
continuing director nominated by management for re-election attended at least
75% of the aggregate of such meetings and the meetings of all committees of
which each is a member.
COMMITTEES
The Board has established an Audit Committee, a Compensation Committee and
a Stock Option Committee. The Audit Committee, currently composed of Messrs. Ahn
and Scocimara, meets periodically with management and the Company's independent
accountants to determine the adequacy of internal controls and other financial
reporting matters. The Compensation Committee, currently composed of Messrs.
Ahn, Liebenow and Porras, reviews general policy matters relating to
compensation and benefits of employees generally and has responsibility for
reviewing and approving compensation and benefits for all officers of the
Company. The Stock Option Committee, currently composed of Messrs. Ahn and
Porras, administers the Company's stock option plans.
DIRECTORS' REMUNERATION
For their services as directors of the Company, each of Messrs. Ahn,
Porras, and Scocimara is paid a $15,000 annual retainer and is entitled to
receive a $1,000 fee for each Board and Committee meeting attended.
Effective July 28, 1995, the Company granted to Mr. Scocimara an option,
exercisable at any time prior to April 18, 2005, to purchase 5,000 shares of
Common Stock at an exercise price of $11.00 per share. The option agreement
provides that it will vest in equal annual installments over a three-year
period. For a period of three months following the termination of directorship
for any reason except for cause (as defined in the option agreement), the
optionholder may exercise that portion of the option which was otherwise
exercisable on the date of termination. Upon termination of the directorship for
cause, all unexercised options would be forfeited.
Effective May 21, 1997, the Company granted to each of Messrs. Ahn and
Porras an option, exercisable at any time prior to May 20, 2007, to purchase
5,000 shares of Common Stock at an exercise price of $15.25 per share. The
respective option agreements provide that the options will vest in equal annual
installments over a three-year period. For a period of three months following
the termination of directorship for any reason except for cause (as defined in
each option agreement), the optionholder may exercise that portion of the option
which was otherwise exercisable on the date of termination. Upon termination of
the directorship for cause, all unexercised options would be forfeited.
All directors are reimbursed for all out-of-pocket expenses incurred by
them in connection with their attendance at Board and Committee meetings.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Messrs. Liebenow, Ahn and Porras.
Mr. Liebenow, who is President, Chief Executive Officer and a director of the
Company, participates in all discussions and decisions regarding salaries,
benefits and incentive compensation for all employees of the Company, except
discussions and decisions relating to his own salary, benefits and incentive
compensation.
5
<PAGE>
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the total compensation paid or accrued by
the Company for services rendered during 1995, 1996 and 1997 to the Chief
Executive Officer of the Company and to each of the four other most highly
compensated executive officers of the Company whose total cash compensation for
1997 exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
AWARDS
------------
ANNUAL COMPENSATION(1) SECURITIES
----------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) COMPENSATION($)
- -------------------------------------------------- ---- --------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Larry A. Liebenow ................................ 1997 599,499 50,000(2) 90,000(3) 45,357(4)
President and Chief 1996 575,000 60,000(5) -- 44,982(6)
Executive Officer 1995 574,519 -- -- 43,857(7)
Thomas J. Finneran ............................... 1997 270,172 20,000(8) 30,000(3) 16,600(4)
Vice President -- Sales 1996 272,885 25,000(9) -- 16,150(6)
1995 260,000 -- -- 15,550(7)
Anthony Degomes .................................. 1997 219,095 20,000(8) 30,000(3) 24,233(4)
Vice President -- New Business Development 1996 205,000 25,000(9) -- 24,594(6)
1995 202,500 -- -- 23,572(7)
Cynthia L. Gordan ................................ 1997 185,287 20,000(8) 30,000(3) 10,825(4)
Vice President, Secretary and General Counsel 1996 170,000 25,000(9) -- 10,600(6)
1995 163,654 -- -- 10,150(7)
J. Duncan Whitehead .............................. 1997 182,633 20,000(8) 30,000(3) 24,690(4)
Vice President -- Technology and Development, 1996 170,000 25,000(9) -- 23,867(6)
and Yarn Sales 1995 155,961 -- -- 22,370(7)
</TABLE>
- ------------
(1) The aggregate amount of other annual compensation paid to each of the named
executive officers during 1995, 1996 and 1997 was less than $50,000 and also
less than 10% of the total annual salary and bonus paid to each.
(2) Consists of a bonus paid in 1998 attributable to 1997 operations pursuant to
the terms of the Employment Agreement (as hereinafter defined).
(3) Represents an option to purchase shares of Common Stock granted by the
Company to such officer pursuant to the 1997 Stock Option Plan (as
hereinafter defined). All such options vest over a five-year period which
began on May 21, 1997, the date of grant.
(4) Includes the Company's payment of $34,875, $16,200, $12,450, $10,425 and
$10,425 to cover insurance premiums on the split dollar insurance policies
being used to informally fund the Company's obligations to Messrs. Liebenow,
Finneran and Degomes, Ms. Gordan and Mr. Whitehead, respectively, under the
Company's Retirement Plan (as hereinafter defined); the Company's
contribution of $400 to each of Messrs. Liebenow's and Finneran's, Ms.
Gordan's and Mr. Whitehead's accounts under the Company's 401(k) plan; and
the Company's payment of $10,082, $11,783 and $13,865 in insurance premiums
due with respect to certain personal life and disability insurance policies
owned by Messrs. Liebenow, Degomes and Whitehead, respectively.
(5) Consists of a bonus paid in 1997 attributable to 1996 operations pursuant to
the terms of the Employment Agreement (as hereinafter defined).
(6) Includes the Company's payment of $34,500, $15,750, $12,300, $10,200 and
$9,300 to cover insurance premiums on the split dollar insurance policies
being used to informally fund the Company's obligations to Messrs. Liebenow,
Finneran and Degomes, Ms. Gordan and Mr. Whitehead, respectively, under the
Company's Retirement Plan (as hereinafter defined); the Company's
contribution of $400 to each of Messrs. Liebenow's and Finneran's, Ms.
Gordan's and Mr. Whitehead's accounts under the Company's 401(k) plan; and
the Company's payment of $10,082,
(footnotes continued on next page)
6
<PAGE>
<PAGE>
(footnotes continued from previous page)
$12,294 and $14,167 in insurance premiums due with respect to certain
personal life and disability insurance policies owned by Messrs. Liebenow,
Degomes and Whitehead, respectively.
(7) Includes the Company's payment of $33,375, $15,150, $11,850, $9,750 and
$8,550 to cover insurance premiums on the split dollar insurance policies
used to informally fund the Company's obligations to Messrs. Liebenow,
Finneran and Degomes, Ms. Gordan and Mr. Whitehead, respectively, under the
Company's Retirement Plan; the Company's contribution of $400 to each of
Messrs. Liebenow's, Finneran's and Whitehead's and Ms. Gordan's accounts
under the Company's 401(k) plan; and the Company's payment of $10,082,
$11,722 and $13,420 in insurance premiums due with respect to certain
personal life and disability insurance policies owned by Messrs. Liebenow,
Degomes and Whitehead, respectively.
(8) Consists of payments made in 1998 to such officer pursuant to the Company's
1997 EIC Plan (as hereinafter defined).
(9) Consists of a bonus paid in 1997 attributable to 1996 operations.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------------------- VALUE AT ASSUMED ANNUAL
NUMBER OF RATE OF STOCK PRICE
SECURITIES APPRECIATION FOR OPTION
UNDERLYING % OF TOTAL EXERCISE TERMS(3)(4)
OPTIONS/SARS OPTIONS/SARS BASE EXPIRATION -----------------------
NAME GRANTED(#)(1) GRANTED(2) PRICE($/SH) DATE 5%($) 10%($)
- ---------------------------------- ------------ ------------ ----------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Larry A. Liebenow................. 90,000 23.6 15.25 05/20/07 863,158 2,187,412
Thomas J. Finneran................ 30,000 7.9 15.25 05/20/07 287,719 729,137
Anthony Degomes................... 30,000 7.9 15.25 05/20/07 287,719 729,137
Cynthia L. Gordan................. 30,000 7.9 15.25 05/20/07 287,719 729,137
J. Duncan Whitehead............... 30,000 7.9 15.25 05/20/07 287,719 729,137
</TABLE>
- ------------
(1) All such options were granted on May 21, 1997 and become exercisable in five
equal annual installments, the first installment becoming exercisable one
year after the date of grant.
(2) During Fiscal 1997, stock options representing an aggregate of 381,000
shares of Common Stock were granted by the Company to all employees as a
group.
(3) Represents gain before income taxes. The fair market value of the Common
Stock on May 21, 1997, the grant date, as determined by the Board of
Directors was $15.25 per share.
(4) The dollar amounts under these columns are the result of calculations at 5%
and 10% rates set by the SEC and, therefore, are not intended to forecast
possible future appreciation, if any, of the Company's Common Stock.
7
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<PAGE>
OPTION/SAR EXERCISES AND HOLDINGS
The following table sets forth certain information concerning the fiscal
year-end value of unexercised options held by the executives named in the
Summary Compensation Table.
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF VALUE OF THE VALUE OF THE
SECURITIES SECURITIES UNEXERCISED IN- UNEXERCISED IN-
UNDERLYING UNDERLYING THE-MONEY THE-MONEY
SHARES OPTIONS/SARS OPTIONS/SARS OPTIONS/SARS OPTIONS/SARS
ACQUIRED AT FY-END(#) AT FY-END(#) AT FY-END($)(1) AT FY-END($)(1)
ON VALUE ------------ -------------- ---------------- ----------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------ ------------ ----------- ------------ -------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Larry A. Liebenow....... -- -- 261,103(2) -- 4,647,633 --
-- -- -- 90,000(3) -- 337,500
Thomas J. Finneran...... 53,087(4) 874,412 -- -- -- --
7,489(5) 78,541 -- -- -- --
-- -- -- 30,000(3) -- 112,500
Anthony Degomes......... -- -- 44,443(2) -- 791,087 --
-- -- -- 30,000(3) -- 112,500
Cynthia L. Gordan....... -- -- 53,087(6) -- 833,679 --
-- -- 7,489(7) -- 84,850 --
-- -- -- 30,000(3) -- 112,500
J. Duncan Whitehead..... -- -- 64,813(2) -- 1,153,671 --
-- -- -- 30,000(3) -- 112,500
</TABLE>
- ------------
(1) Based on a closing sales price of $19.00 per share as quoted on the Nasdaq
National Market on January 2, 1998, the last trading date in Fiscal 1997.
(2) Represents the indicated person's proportionate interest (based upon
ownership of Nortex Holdings shares) in options granted by the Company to
Nortex Holdings (the 'Nortex Option'). The exercise price of the shares
covered by each option is $1.20 per share and the Nortex Option covers a
total of 370,359 shares of Common Stock.
(3) Represents options granted by the Company on May 21, 1997 to certain
executive officers of the Company (the '1997 Stock Option Plan'). The
exercise price of the shares covered by each option is $15.25 per share and
the 1997 Stock Option Plan currently covers a total of 330,000 shares of
Common Stock.
(4) Represents shares acquired upon the exercise of options under the 1993 Stock
Option Plan (as hereinafter defined).
(5) Represents shares acquired upon the exercise of options under the Holdings
Options (as hereinafter defined).
(6) Represents options granted by the Company on April 13, 1993 to certain
executive officers of the Company (the '1993 Stock Option Plan'). The
exercise price of the shares covered by each option is $4.12 per share as to
60% of the shares purchasable upon exercise of the option and $2.06 per
share as to 40% of the shares purchasable upon exercise of the option and
the 1993 Stock Option Plan currently covers a total of 232,261 shares of
Common Stock.
(7) Represents options with an exercise price of $7.67 per share granted by
Nortex Holdings on April 13, 1993 to certain executive officers of the
Company (the 'Holdings Options'). The Holdings Options cover a total of
22,467 shares of Common Stock currently held by Nortex Holdings.
EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT AGREEMENTS
The Company is a party to an Employment Agreement, amended as of February
24, 1997 (the 'Employment Agreement'), with Larry A. Liebenow pursuant to which
Mr. Liebenow serves as President and Chief Executive Officer of the Company on a
full-time basis for the period ending March 12, 2002, subject to an automatic
three-year extension unless terminated by the Company upon one year's prior
notice.
Mr. Liebenow may terminate the Employment Agreement at any time upon three
months' prior notice. The Employment Agreement provides for a base salary of
$600,000 (effective January 1, 1997), subject to annual increases as may be
determined by the Board, as well as certain benefits and reimbursement of
expenses. The Employment Agreement provides for annual bonuses in such amounts
as the Board shall determine. Pursuant to the Employment Agreement, the Company
has the right to terminate Mr. Liebenow's employment only for cause (as defined
in the Employment Agreement). Upon voluntary termination of employment by Mr.
Liebenow, termination of his employment for cause (other than conviction of a
crime involving moral turpitude) or termination of his employment for any other
reason (other than conviction of a crime involving moral turpitude), Mr.
Liebenow will receive a lump sum payment equal to three times his prior year's
base salary plus any bonus paid or payable with respect to the prior year. If
the Employment Agreement had terminated as of January 3, 1998,
8
<PAGE>
<PAGE>
Mr. Liebenow would have been entitled to receive $1,980,000. The Employment
Agreement also provides for the continuation of his salary through March 12,
2002 in the event Mr. Liebenow dies or becomes disabled or incapacitated. In
addition, the Employment Agreement prohibits Mr. Liebenow from disclosing or
using any confidential information of the Company or competing with the Company
during the period of his employment and for one year thereafter.
The Company has entered into severance agreements with three of its
executive officers, including Mr. Finneran and Ms. Gordan. Pursuant to these
agreements, in the event Mr. Finneran's employment is terminated without cause,
Mr. Finneran will be entitled to receive an amount equal to one year's base
salary (based on his highest annual base salary) payable monthly in arrears and,
for the one year period following his termination date, will be further entitled
to continue to participate in each of the fringe benefit programs offered by the
Company to its employees generally. In the event Ms. Gordan or the other Company
officer with a similar agreement is terminated without cause, Ms. Gordan and
such other officer will be entitled to receive an amount equal to six months'
base salary (based on their respective highest annual base salaries) payable
monthly in arrears and, for the six month period following his or her
termination date, will be further entitled to continue to participate in each of
the fringe benefit programs offered by the Company to its employees generally.
If the employment relationship of each executive officer with a severance
agreement had terminated on January 3, 1998, Mr. Finneran and Ms. Gordan would
have been entitled to receive $270,000, and $92,500 respectively, and the three
executive officers as a group would have been entitled to receive $452,500.
INCENTIVE COMPENSATION PLAN
The Company's annual executive incentive compensation plans (the 'EIC
Plans'), in which all the Company's Vice Presidents participate, are designed to
encourage the executives to work effectively together as a team and to establish
a clear relationship between the Company's financial performance and overall
executive compensation levels. The Compensation Committee bases the formula for
the EIC Plan bonus pools on a percentage (which, in the last three years, has
ranged from 3 to 7%) of the amount by which the Company's Adjusted Pre-tax
Income during the applicable EIC Plan year exceeds the preceding year's Adjusted
Pre-tax Income, subject to a maximum bonus pool equal to 25% of the aggregate
base salaries paid to all EIC Plan participants during the applicable EIC Plan
year. Each EIC Plan participant's actual allocable share of the bonus pool is
determined by Quaker's President and reviewed by the Compensation Committee. The
formulas resulted in a bonus pool of approximately $160,000 for EIC Plan year
1997 and no bonus pools for EIC Plan years 1995 and 1996. No payments are
permitted under the EIC Plan to participants who resigned or were terminated for
cause during the applicable EIC Plan year. Pro rata distributions would have
been made with respect to any participant who died, retired, or whose employment
was terminated without cause during the applicable EIC Plan year.
It is anticipated that the Company will continue, annually, to establish
executive incentive compensation plans similar to those described above.
DEFERRED COMPENSATION PLAN
On July 16, 1992, the Company established a Deferred Compensation Plan (the
'Retirement Plan'), for the benefit of all of the Company's executive officers.
Pursuant to the provisions of the Retirement Plan, the Company has agreed to
provide certain benefits to each plan participant based on the value of
accumulated contributions made under the Retirement Plan on their behalf and
split-dollar variable life insurance contracts insuring the lives of each plan
participant have been purchased to informally fund its obligations under the
Retirement Plan. Among the benefits provided to each plan participant are a
pre-retirement death benefit, a monthly retirement benefit payable over a
15-year period beginning at age 65 for a participant who terminates employment
after attaining age 55 and completing at least five years of plan participation,
and certain other amounts payable pursuant to the provisions of the Retirement
Plan in the event a plan participant's employment with the Company is terminated
prior to attaining age 55 and completing five years of plan participation. The
Company has established an irrevocable 'grantor' trust for the purpose of
accumulating the amounts needed to pay benefits under the Retirement Plan and to
hold the variable life insurance contracts. The Company has
9
<PAGE>
<PAGE>
agreed to make annual contributions to the trust in an amount equal to 6% of the
base salaries of all plan participants (or such higher amount as the Board of
Directors may determine). The assets of the trust will be considered to be
assets of the Company for purposes of satisfying the claims of the Company's
general creditors.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The report of the Compensation Committee shall not be deemed incorporated
by reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
The Company's executive compensation program is based on the philosophy
that a performance-based program that encourages ownership in the Company and
provides management with meaningful economic incentives to improve the Company's
financial performance will ensure both an annual and a long-term perspective by
the management team. With this in mind, the program objectives are:
To provide a competitive compensation program in order to attract,
motivate, reward, and retain qualified personnel for positions of
substantial responsibility.
To serve as a management tool in focusing and directing the energies and
efforts of key executives toward achieving individual and corporate
objectives.
To provide a long-term incentive for the executive to continue providing
service to the Company by linking the success and prosperity of the
individual to the success and prosperity of the Company.
The Compensation Committee achieves these objectives through annual
performance reviews and related adjustments to the base salaries of the
Company's executives, through cash bonuses awarded pursuant to the Company's
annual incentive compensation plans, and through the Retirement Plan and stock
option plans.
Generally, when new executives are recruited by the Company, salary offers
are based upon a review of the current salaries of the candidates, an assessment
of their relative qualifications and a judgment of what salary would be required
to hire a selected candidate. Thereafter, annual increases in each executive's
salary are based upon the Company's overall performance, as well as upon an
evaluation of the executive's individual performance. The performance measures
used for performance evaluation purposes include both subjective measures, such
as the attainment of agreed-upon departmental or corporate objectives, and
various quantitative measures, such as the attainment of sales, productivity, or
expense goals.
In addition, while the performance measures used to evaluate each
executive's performance vary from executive to executive, depending upon the
executive's specific corporate responsibilities, they are, in every case, a
function of the Company's strategy, business plan, and operating objectives for
the year. For example, the performance criteria used to measure the performance
of the Company's vice president of manufacturing include, but are not limited
to, production in accordance with the Company's manufacturing plan for the
period, operation of the Company's manufacturing equipment at overall efficiency
levels consistent with the Company's productivity and cost of goods sold goals,
maintaining departmental staffing levels at or below the Company's employment
level objectives, and the selection and maintenance of equipment and facilities
appropriate to the production of the Company's products.
The annual salary increases awarded to the Company's executives are
generally higher, on a percentage basis, in years when the Company's overall
performance has been good, and lower in those years when the Company's overall
performance has not been as good. In addition, the Compensation Committee takes
various external factors into consideration when reviewing the annual increases
to be awarded to the Company's executives. These external factors include an
evaluation of general economic conditions, the rate of inflation, and market
demand for executives with skills comparable to those of the Company's senior
managers.
10
<PAGE>
<PAGE>
The Company's annual executive incentive compensation plans are designed to
encourage the Company's executives to work effectively together as a team to
maximize the Company's profitability. The 1997 Executive Incentive Compensation
Plan (the '1997 EIC Plan') provided for a bonus pool equal to 5% of the amount
by which the Company's 1997 Adjusted Pre-Tax Income exceeded the Company's 1996
Adjusted Pre-Tax Income, subject to a maximum contribution equal to 25% of the
aggregate base salaries paid to all 1997 EIC Plan participants during 1997. The
bonus paid to each individual executive depended upon the Compensation
Committee's evaluation of his or her individual performance during the period.
Based on the formula in the 1997 EIC Plan, a bonus pool of approximately
$160,000 resulted.
The Retirement Plan provides a benefit which vests over five years and is
based on accumulated contributions to the Plan over the executive's entire
period of service. The level of contributions for any year is determined by a
formula based on the executive's base salary for that year. This Plan is
intended to provide each executive with an incentive to remain with the Company
and to perform in a manner which will result in continuing salary increases.
The stock option plans offer the Company's executives an incentive to
perform in a manner which will result in an increasing price for the Company's
stock, since the value of the options granted pursuant to these plans is
directly related to the value of the Company's common stock. Options vest over a
period of five years and, therefore, provide each executive with an incentive to
remain with the Company. In determining the persons who are to receive options,
the Compensation Committee considers the person's position, responsibilities,
years of service, and accomplishments, as well as the individual's present and
future value to the Company, the anticipated length of his future service, and
other relevant factors. Options were granted to the Company's executives under
the 1993 Stock Option Plan and the 1997 Stock Option Plan (as herein defined) to
provide each with a direct stake in the success of the Company and to support
the Company's efforts to attract and retain qualified employees.
Pursuant to the terms of the Employment Agreement, the Company's
Compensation Committee reviews Mr. Liebenow's salary annually and concurrently
determines what cash bonus, if any, should be paid to him with respect to the
Company's performance during the fiscal year immediately preceding the review
date. These reviews take place shortly after the Company's audited financial
statements for the prior fiscal year become available and the salary increases
and bonuses awarded to Mr. Liebenow are based on the Compensation Committee's
evaluation of the Company's operating and financial performance under Mr.
Liebenow's leadership during the review period, as measured by revenues and net
income for the review period compared to (i) the business plan for the review
period and, (ii) revenues and net income for the period immediately prior to the
review period. In February 1997, Mr. Liebenow's base salary was increased in
accordance with the criteria set forth above and his bonus for Fiscal 1997 was
determined by the Compensation Committee and deemed to be appropriate, from a
total compensation standpoint, in light of the Company's financial performance
during the period.
Compensation Committee
SANGWOO AHN
LARRY A. LIEBENOW
JERRY I. PORRAS
11
<PAGE>
<PAGE>
PERFORMANCE GRAPH
The Performance Graph below shall not be deemed incorporated by reference
by any general statement incorporating by reference this Proxy Statement into
any filing under the Securities Act of 1933 or under the Securities Exchange Act
of 1934, except to the extent the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
COMPARISON OF CUMULATIVE TOTAL RETURN
OF
QUAKER FABRIC CORPORATION
WITH
THE NASDAQ MARKET INDEX (NMS INDUSTRIALS) AND A PEER GROUP INDEX
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
11/16/93 01/01/94 12/31/94 12/30/95 01/04/97 01/03/98
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Quaker Fabric Corporation........................ $100 $ 116.67 $ 106.25 $ 72.92 $ 115.63 $ 158.33
Peer Group....................................... 100 109.00 71.86 75.61 70.75 99.45
NASDAQ........................................... 100 103.36 108.52 140.76 174.92 213.97
</TABLE>
The above graph compares the cumulative total stockholder return for the
Company's Common Stock for the period beginning November 16, 1993 (the first
trading day following the Company's initial public offering) and ending January
3, 1998 with the comparable returns of two indexes. The first index is the
NASDAQ Market Index (NMS Industrials) and the second is a peer group consisting
of companies which were formed for purposes similar to that of the Company
(Burlington Industries Equity, Inc. (NYSE symbol 'BUR'), Collins & Aikman
Corporation ('C&A') (NYSE symbol 'CKC'), Culp Inc. (NASDAQ symbol 'CULP'), and
Johnston Industries, Inc. (NYSE symbol 'JII'). C&A is represented in the graph
beginning on July 7, 1994 and ending on January 4, 1997. C&A sold its division,
Mastercraft, during 1997; as a result, C&A is no longer included in the
Company's peer group).
For the purposes of this comparison, the cumulative total stockholder
return of each issuer within the peer group has been weighted according to the
respective issuer's stock market capitalization at the beginning of the period
(November 16, 1993). This comparison assumes $100 invested on November 16, 1993
in the Company's Common Stock and $100 invested in each of the indexes. This
comparison also assumes that all dividends have been reinvested.
12
<PAGE>
<PAGE>
PROPOSAL 2.
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors has appointed the firm of Arthur Andersen LLP,
independent accountants, to be the independent auditors of the accounts of the
Company for Fiscal 1998 and recommends to stockholders that they vote for
ratification of that appointment.
Representatives of Arthur Andersen LLP are expected to be present at the
Annual Meeting and will have an opportunity to make a statement if they so
desire and will be available to respond to appropriate questions.
OTHER MATTERS
As of the date of this Proxy Statement, the Company is not aware of any
other matters to be brought before the Annual Meeting. However, if other matters
do come before the meeting, it is the intention of the persons named in the
accompanying form of proxy to vote such proxy in accordance with their judgment
on such matters.
STOCKHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING
Any stockholder of the Company who desires to present a proposal at the
1999 Annual Meeting of Stockholders for inclusion in the proxy statement and
form of proxy relating to that meeting must submit the proposal to the Company
at its principal executive offices on or before December 17, 1998.
By Order of the Board of Directors
CYNTHIA L. GORDAN,
Vice President, Secretary and
General Counsel
April 15, 1998
13
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<PAGE>
1234-PS-98
<PAGE>
<PAGE>
APPENDIX 1
PROXY CARD
DETACH HERE
PROXY
QUAKER FABRIC CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 28, 1998
The undersigned stockholder of QUAKER FABRIC CORPORATION (the "Company")
hereby appoints Larry A. Liebenow and Cynthia L. Gordan, and either of them the
attorneys and proxies of the undersigned, with full power of substitution, to
vote on behalf of the undersigned all the shares of Common Stock of the Company,
which the undersigned is entitled to vote at the Annual Meeting of Stockholders
of the Company to be held at the corporate offices of The First National Bank
of Boston, 100 Federal Street, Second Floor, Boston, MA 02110 on May 28, 1998 at
11:00 A.M. and at all adjournments thereof, hereby revoking any proxy heretofore
given with respect to such stock; and the undersigned authorizes and instructs
said proxies to vote as follows on the reverse side.
NOTE: PROXIES THAT ARE MARKED ABSTAIN WILL BE COUNTED AS PRESENT AT THE
MEETING.
- ----------- -----------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- ----------- -----------
<PAGE>
<PAGE>
DETACH HERE
PLEASE MARK
[X] VOTES AS IN
THIS EXAMPLE.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE VOTED AS
DIRECTED HEREIN, IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE
DIRECTORS NAMED IN PROPOSAL 1, FOR PROPOSAL 2, AND IN ACCORDANCE WITH THE
DISCRETION OF THE PROXY HOLDERS RESPECTING SUCH OTHER MATTERS AS MAY PROPERLY
COME BEFORE THE MEETING.
<TABLE>
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS: FOR AGAINST ABSTAIN
NOMINEES: SANGWOO AHN, LARRY A. LIEBENOW, 2. PROPOSAL TO APPROVE THE [ ] [ ] [ ]
JERRY I. PORRAS, ERIBERTO R. SCOCIMARA. APPOINTMENT OF ARTHUR
[ ] FOR [ ] WITHHELD ANDERSEN LLP as independent
ALL FROM ALL auditors of the Company for
NOMINEES NOMINEES fiscal 1998.
[ ] _______________________________________________ 3. In their discretion, the holders of this proxy are authorized
INSTRUCTIONS: To withhold authority to vote for any to vote upon such other matters as may properly come before the
individual nominee(s), write that nominee's name in meeting.
the space provided above.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
PLEASE DATE AND SIGN EXACTLY AS YOUR NAME(S) APPEAR(S) HEREON. IF
SHARES ARE HELD JOINTLY, EACH JOINT OWNER MUST SIGN. EXECUTORS,
ADMINISTRATORS, TRUSTEES, ETC., SHOULD SO INDICATE WHEN SIGNING
AND WHEN MORE THAN ONE EXECUTOR, ETC. IS NAMED, A MAJORITY MUST
SIGN. IF SIGNING FOR A CORPORATION, PLEASE SIGN FULL CORPORATE
NAME BY DULY AUTHORIZED OFFICER.
</TABLE>
Signature:________________ Date:_________ Signature:________________ Date:______
<PAGE>
