<PAGE>
THREE D DEPARTMENTS, INC.
DEBTOR - IN - POSSESSION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 12, 1999
To The Stockholders of Three D Departments, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders of Three
D Departments, Inc., a Delaware corporation (the "Company"), will be held at our
Costa Mesa corporate office, 3535 Hyland Avenue, Costa Mesa, on Friday, February
12, 1999, at 11:00 a.m., Pacific Standard Time, for the following purposes:
1. To elect five directors to serve for a term of one year each and
until their respective successors have been elected and qualified; two of whom
shall be elected by the holders of the Company's Class A Common Stock, voting
separately as a class, and three of whom shall be elected by the holders of the
Company's Class B Common Stock, voting separately as a class.
2. To transact such other business as may properly come before the
Meeting and any adjournments thereof.
The close of business on January 19, 1999 has been fixed as the record
date for the determination of stockholders entitled to notice of and to vote at
the Meeting.
You are cordially invited to attend the Meeting in person. IF YOU DO
NOT EXPECT TO BE PRESENT, PLEASE COMPLETE, SIGN AND DATE THE ACCOMPANYING PROXY
AND RETURN IT IN THE ENCLOSED ENVELOPE. It will assist us in controlling
expenses of the Meeting if stockholders who do not expect to attend in person
will return their signed proxies promptly, whether they own a few shares or many
shares.
By Order of the Board of Directors,
Donald Abrams
Chairman of the Board of Directors
Costa Mesa, California
January 22, 1999
<PAGE>
THREE D DEPARTMENTS, INC. PROXY STATEMENT
GENERAL INFORMATION
The enclosed proxy is solicited on behalf of the Board of Directors of
Three D Departments, Inc. (the "Company") for use at the Annual Meeting of
Stockholders to be held on Friday, February 12, 1999, and at any adjournments
thereof. This Proxy Statement and the accompanying proxy are being sent to
stockholders on or about January 22, 1999. Stockholders are requested to
complete, date and sign the proxy and return it promptly to the Company.
Any stockholder executing a proxy has the power to revoke it at any
time before it is voted by filing with the Assistant Secretary of the Company
either a written notice of revocation or a duly executed proxy bearing a later
date. Proxies also may be revoked by any stockholder present at the Meeting who
elects to vote in person. Subject to such revocation, all proxies duly executed
and received by the Company on a timely basis prior to commencement of the
Meeting will be voted in accordance with the directions specified on the proxy.
The Annual Meeting is being called for the purpose of electing five
directors for the 1999 fiscal year. Votes cast by proxy or in person at the
Meeting will be counted by the person(s) appointed by the Company to act as
inspectors of election for the meeting. The inspectors of election will treat
shares represented by proxies that reflect abstentions as shares that are
present and entitled to vote, for purposes of determining the presence of a
quorum and for purposes of determining the outcome of any matter submitted to
the shareholders for a vote. Abstentions, however, do not constitute a vote
"for" or "against" any matter and thus will be disregarded in the calculation of
a plurality or of "votes cast".
The inspectors of election will treat shares referred to as "broker
non-votes" (i.e., shares identified as held by brokers or nominees as to which
instructions have not been received from the beneficial owners or persons
entitled to vote that the broker or nominee does not have discretionary power to
vote on a particular matter) as shares that are present and entitled to vote for
purposes of determining the presence of a quorum. However, for the purposes of
determining the outcome of any matter as to which the broker or nominee has
physically indicated on the proxy that it does not have discretionary authority
to vote, those shares will be treated as not present and not entitled to vote
with respect to that matter (even though those shares are considered entitled to
vote for quorum purposes and may be entitled to vote on other matters).
IF NO SPECIFICATION IS MADE TO THE CONTRARY, PROXIES DULY EXECUTED WITH
RESPECT TO CLASS A COMMON STOCK WILL BE VOTED IN FAVOR OF ALL TWO NOMINEES NAMED
HEREIN FOR ELECTION AS CLASS A DIRECTORS, AND PROXIES DULY EXECUTED WITH RESPECT
TO CLASS B COMMON STOCK WILL BE VOTED IN FAVOR OF ALL THREE NOMINEES NAMED
HEREIN FOR ELECTION AS CLASS B DIRECTORS.
Copies of the Company's Annual Report on Form 10-K for the fiscal year
ended August 1, 1998, are being mailed concurrently with this Proxy Statement to
all stockholders entitled to notice of and to vote at the Meeting. The Annual
Report on Form 10-K is not incorporated in the Proxy Statement and is not to be
considered proxy solicitation material.
The Company's principal executive offices are located at 3535 Hyland
Ave., Costa Mesa, California 92626-1439.
2
<PAGE>
January 19, 1999 has been fixed by the Board of Directors as the record
date for the determination of stockholders entitled to notice of and to vote at
the Meeting and any adjournments thereof. As of January 19, 1999, there were
1,171,494 shares of the Company's Class A Common Stock outstanding and 1,264,455
shares of the Company's Class B Common Stock outstanding. Only stockholders of
record at the close of business on January 19, 1999 are entitled to notice of
and to vote at the Meeting.
VOTES AND VOTING PROCEDURES (1)
At the Annual Meeting the holders of Class A Common Stock, voting
separately as a class, will be entitled to elect directors for two of the five
positions on the Board of Directors, and for this purpose two persons have been
nominated for election to the Board as "Class A Directors." Similarly, the
holders of Class B Common Stock, voting separately as a class, will be entitled
to elect the balance of the directors, being three of the five positions on the
Board, and for this purpose three persons have been nominated for election to
the Board as "Class B Directors."
Directors to represent each class are elected by a plurality of the
votes cast by the shares of that class entitled to vote, at a meeting at which a
majority of the shares of that class entitled to vote are present in person or
by proxy. Signed, unmarked proxy cards are voted in accordance with management's
recommendations.
The Class A shares may be voted with respect to the election of Class A
Directors, but may not be voted with respect to the election of Class B
Directors. Similarly, Class B shares may be voted with respect to the election
of Class B Directors, but may not be voted with respect to the election of Class
A Directors. Separate proxy cards are provided for each class of common stock.
- ------------------
(1) The Company's Certificate of Incorporation provides that, other than the
differences in voting rights discussed above, Class A and Class B shares differ
in the following respects: Quarterly cash dividends, if declared, must be for a
higher amount on Class A shares than on Class B shares. Extra dividends, special
dividends and dividends payable other than in cash, if any, are payable equally
on all shares of both classes. Class B shares may be converted to Class A
shares, share for share, at the option of the holder. Although stock dividends
of either class may be payable on shares of either or both classes, any such
stock dividends which would result in a change in the ratio of the number of
outstanding shares of the two Classes to each other may be subject to regulatory
consent.
PRINCIPAL HOLDERS OF SECURITIES
The following table contains certain information, as of November 27, 1998,
regarding all persons who, to the knowledge of the Company were; 1) beneficial
owners of more than 5% of the outstanding shares of common stock, 2) a director
of the Company, 3) a Named Executive Officers and, 4) all directors and officers
as a group. The persons named had sole voting and investment power with respect
to the shares shown opposite their respective names, unless otherwise indicated.
3
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP (1)
---------------------------------------------
CLASS A CLASS B
COMMON STOCK COMMON STOCK
-------------------- --------------------
NO. OF PERCENT NO. OF PERCENT
NAME OF BENEFICIAL OWNER SHARES OF CLASS SHARES OF CLASS
------------------------ ------- -------- ------- --------
<S> <C> <C> <C> <C>
Donald L. Abrams (Director & Officer) (2) (3) 152,817 12.2% 239,361 16.7%
Steven Kerkstra (Director & Officer) (4) 18,750 1.5% - -
Jay Dawson (Director & Officer) (4) 6,500 0.5% - -
Jennie Daniels (Director) (4) 6,000 0.5% - -
Richard Carr (Director) - - - -
Bernard Abrams (2) 394,584 31.5% 509,246 35.5%
John B. Abrahms 45,616 3.6% 78,384 5.5%
David Kotkin 115,832 9.2% 115,832 8.1%
Joel Diamond (2) 121,632 9.7% - -
All Directors and officers as a group 184,067 14.7% 239,361 16.7%
</TABLE>
(1) Sole voting and investment power unless otherwise stated. Includes 81,250
shares of Class A common stock and 168,769 shares of class B common stock
which could be acquired within 60 days of November 27, 1998 upon the
exercise of stock options.
(2) Bernard Abrams is the father of Donald L. Abrams and the uncle of Joel
Diamond.
(3) Includes 6,000 shares of each class held for minor children; and 133,691
shares of Class B common stock which could be acquired within 60 days of
November 27, 1998 upon the exercise of stock options.
(4) The amount listed represent common stock, which could be acquired within
60 days of November 30, 1998 upon the exercise of stock options.
- ------------------
EXECUTIVE OFFICERS
The following information is provided with respect to each executive
officer of the Company. The Company's executive officers serve at the discretion
of the Board of Directors and are customarily appointed as an officer at the
annual organizational meeting of the Board held immediately following the Annual
Meeting of Stockholders.
INFORMATION WITH RESPECT TO EMPLOYEE DIRECTORS
The following table sets forth information regarding each member of the
Board of Directors who are employees of the Company, including age, present
position with the Company, period serve as a director and other business
experience during the past five years.
4
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR PRINCIPAL OCCUPATION AND OTHER INFORMATION CONCERNING
-------- -----------------------------------------------------
NAME AGE SINCE DIRECTOR
---- --- ----- --------
<S> <C> <C> <C>
Donald Abrams 52 1980 Mr. Abrams was President of the Company from 1983 until
1987. Mr. Abrams was appointed to the position of CEO and
elected Chairman of the Board of Directors in May 1998.
Steven Kerkstra 47 1998 Mr. Kerkstra is a CPA and has been the Chief Operating
Officer since 1997 and Chief Financial Officer and Assistant
Secretary of the Company since 1995. Prior to joining the
Company, Mr. Kerkstra was Vice-President, Finance for
Strouds, Inc., a NASDAQ traded company.
John B. Dawson 51 1998 Mr. Dawson has been Vice-President, General Merchandising
Manager of the Company since November, 1997. Mr. Dawson
was a founding member of Linens Plus, which was acquired
by the Company in 1993. For the last eight years, Mr. Dawson
managed the Linens Plus division, which has been the most
profitable division of the Company.
Jennie Daniels 41 1998 Ms. Daniells is a supervisor of Connecticut stores since 1988
and an employee of the Company since 1981. Ms. Daniells
also served in various positions with Caldor, Inc. and Macys.
</TABLE>
INFORMATION WITH RESPECT TO OFFICERS WHO ARE NOT DIRECTORS
The following table sets forth information regarding each Officer who is not a
member of the Board of Directors, including age, present position with the
Company, period serve as a director and other business experience during the
past five years.
<TABLE>
<CAPTION>
YEAR FIRST
----------
EMPLOYED
--------
BY PRINCIPAL OCCUPATION AND OTHER INFORMATION CONCERNING
-- -----------------------------------------------------
NAME AGE COMPANY OFFICER
---- --- ------- -------
<S> <C> <C> <C>
Ronald Dow 60 1978 Mr. Dow has been employed as Controller of the Company
since 1978 and was appointed to the position of Treasurer in
1989.
Lawrence Bassell 44 1983 Mr. Bassel is Vice President - West Coast Operations and has
been employed by the Company in various positions since
1983 and was appointed to his current position in 1995.
Robert Stephenson 49 1980 Mr. Stephenson is Vice President - East Coast Operations and
has been employed by the Company in various positions since
1980 and was appointed to his current position in 1992.
</TABLE>
There are no arrangements or understandings pursuant to which any of the persons
listed in the table above were selected as executive officers.
5
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 of a registered class of the Company's equity securities, to file with
the U.S. Securities and Exchange Commission (SEC) 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 stockholders
are required by SEC regulations to furnish the Company with copies of all
Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company and written representations that no other
reports were required during the fiscal year ended August 1, 1998, its officers,
directors and greater than ten percent beneficial owners complied with all
Section 16(a) filing requirements.
COMMITTEES OF THE BOARD OF DIRECTORS
During the 1998 fiscal year, there were ten (10) meetings of the Board
of Directors. In addition, the Board and/or its Committees are authorized to
adopt resolutions by the unanimous written consent of the members, acting
without a meeting. All directors attended at least 75% of the Board meetings and
all committee meetings that they were scheduled to attend during the year.
ELECTION OF DIRECTORS
At the Annual Meeting, a total of five directors will be elected to
hold office for a term of one year, and until their respective successors have
been duly elected and qualified. The persons named as proxies in the
accompanying proxy card, or their substitutes, intend to vote the shares
represented by each proxy card in favor of the election of the nominees (for the
respective classes of stock) set forth below, unless a contrary direction is
specified on the proxy card. Each nominee has indicated his intention to serve,
if elected. In case any such nominee shall become unavailable for election to
the Board of Directors, an event which is not anticipated, the persons named as
proxies, or their substitutes, will have full discretion and authority, as and
if provided in the proxy card, to vote or refrain from voting for any other
nominee in accordance with their judgement.
The Company's Bylaws authorize a minimum of five and a maximum of
fifteen directors, the exact number of which is established from time to time by
action of the Board. The Company's Bylaws state that no less than 25% of the
members of the Board of Directors shall represent Class A shareholders. Two
nominees will stand for election as Class A Directors and three nominees will
stand for election as Class B Directors. Class A shares may only be voted with
respect to the election of the Class A Directors, and Class B shares may only be
voted with respect to the election of Class B Directors.
NOMINEES FOR ELECTION
Four of the nominees set forth below are currently directors of the
Company and each was elected to the Board of Directors at the last Annual
Meeting of Stockholders. Mr. Richard Carr was elected as a director for Class A
stockholders, in accordance with the Company by-laws, to replace a vacancy
created by the retirement of Mr. Abe Markowicz in May 1998. The following
information furnished with respect to each nominee was obtained from the records
of the Company or from information furnished directly by the nominee.
6
<PAGE>
<TABLE>
NOMINEES FOR ELECTION AS CLASS A DIRECTORS
<CAPTION>
Director
Name of Nominee Age Since Principal Occupation
- --------------- --- ----- --------------------
<S> <C> <C> <C>
Richard Carr 56 1998 Mr. Carr became a member of the Board of Directors in May 1998. Mr.
Carr is Chief Operating Officer of TEC Worldwide, Inc., a wholly owned
subsidiary of Knowledge Universe. The Executive Committee (TEC) is
an international organization dedicated to CEO's and company leaders.
TEC provides ongoing growth and leadership programs, which help
CEO's become more effective in their business. Prior to becoming Chief
Operating Officer of TEC Worldwide, Inc., Mr. Carr was Chairman of
three TEC groups.
John B. Dawson 51 1998 Mr. Dawson has been Vice-President and General Merchandising
Manager of the Company since November, 1997. Mr. Dawson was a
founding member of Linens Plus, which was acquired by the Company
in 1993. Prior to his most recent assignment, Mr. Dawson managed
the Linens Plus division, which has been the most profitable division of
the Company.
</TABLE>
7
<PAGE>
<TABLE>
NOMINEES FOR ELECTION AS CLASS B DIRECTORS
<CAPTION>
DIRECTOR PRINCIPAL OCCUPATION AND OTHER INFORMATION CONCERNING
-------- -----------------------------------------------------
NAME AGE SINCE DIRECTOR
---- --- ----- --------
<S> <C> <C> <C>
Donald Abrams 52 1980 Mr. Abrams was President of the Company from 1983 until
1987. Mr. Abrams was appointed to the position of CEO and
elected Chairman of the Board of Directors in May 1998.
Steven Kerkstra 47 1998 Mr. Kerkstra is a CPA and has been the Chief Operating
Officer since 1997 and Chief Financial Officer and Assistant
Secretary of the Company since 1995. Prior to joining the
Company, Mr. Kerkstra was Vice-President, Finance for
Strouds, Inc., a NASDAQ traded company.
Jennie Daniels 41 1998 Ms. Daniells is a supervisor of Connecticut stores since 1988
and an employee of the Company since 1981. Ms. Daniells
also served in various positions with Caldor, Inc. and Macys.
</TABLE>
EXECUTIVE COMPENSATION
DIRECTORS FEES
Each member of the Board of Directors who is not otherwise compensated
as an officer or employee of the Company receives a director's fee at the
current rate of $3,000 per year for attending meetings of the Board and
committees thereof, plus payment of travel expenses related to such attendance.
EXECUTIVE COMPENSATION
The following table discloses compensation received for the three
fiscal years ended August 1, 1998 ("Fiscal1998), August 2, 1997, ("Fiscal 1997")
and August 3, 1996, ("Fiscal 1996"), respectively, by the two individual who
served as the Company's Chief Executive Officer, and by all employees paid in
excess of $100,000 per year.
8
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
----------------------------- ----------------------------------------------
OTHER RESTRICTED
NAME AND FISCAL ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
PRINCIPAL POSITION(1) YEAR SALARY BONUS COMP. AWARDS SARS(2) PAYOUTS COMPENSATION
- --------------------- ---- ------ ----- ----- ------ ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bernard Abrams (3) 1998 $226,103 - $91,667 - - - -
Chairman of the 1997 280,241 -
Board and Chief 1996 275,000 - - - - -
Executive Officer
Donald L. Abrams (3) 1998 $157,695 - - - - - -
Chairman of the 1997 217,614 - - - - - -
Board and Chief 1996 215,753 - - - -
Executive Officer
Steven R. Kerkstra 1998 $126,174 - - - - - -
Chief Operating 1997 125,008 - - - - -
Officer, Chief 1996 63,465 25,000
Financial Officer
and Assistant Secretary
</TABLE>
- --------------------------
(1) Includes the Chief Executive Officer and all other executive officers
earning over $100,000 salary plus bonus.
(2) Mr. Donald Abrams holds incentive stock options granted at various dates to
purchase 158,769 Class B shares at prices in excess of current market. Mr.
Kerkstra holds incentive stock options to purchase 25,000 Class A shares, at
prices in excess of current market.
(3) Mr. Bernard Abrams retired from the Company effective May 1998 and was
replaced by Mr. Donald L Abrams.
9
<PAGE>
<TABLE>
OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
AGGREGATED OPTIONS/SAR EXERCISES IN FISCAL YEAR ENDED AUGUST 1, 1998
AND FISCAL YEAR END AUGUST 1, 1998 OPTIONS/SAR VALUES
<CAPTION>
Number of Securities Value of
Underlying Unexercised Unexercised
Shares Options/SARs at In-the-Money
Acquired on Value August 1, 1998 Options/SARs
Exercise Realized (A) # at August 1, 1998 (A)
Name # ($) Exercisable/Unexercisable ($)
<S> <C> <C> <C> <C>
Bernard Abrams - - - -
Donald L. Abrams - - 133,691/ - -
Steven R. Kerkstra - - 18,750/6,250 -
</TABLE>
(A) No options were in-the-money at the end of the fiscal year and no options
were exercised during the fiscal year ended August 1, 1998.
THE FOLLOWING REPORT OF THE BOARD OF DIRECTORS AND THE PERFORMANCE GRAPH THAT
APPEARS IMMEDIATELY AFTER SUCH REPORT SHALL NOT BE DEEMED TO BE SOLICITING
MATERIALS OR TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE
SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934 OR INCORPORATED BY
REFERENCE IN ANY DOCUMENT SO FILED.
COMPENSATION AND STOCK OPTION REPORT ON EXECUTIVE COMPENSATION
The Board of Directors reviewed the Compensation of its Chief Executive
Officer and all others expected to earn, during fiscal 1998, in excess of
$100,000. In reviewing the Compensation policies and business performance of the
Company, the Committee determined the Company would not pay bonuses to its
executives for the fiscal year. In addition, the Committee determined to defer
making any compensation changes indefinitely. The fiscal 1998 salary levels do
not reflect any specific qualitative or quantitative measures of the Company's
performance.
In fiscal 1998, there were no options granted. No options were repriced
during the fiscal year.
The Board of Directors has considered the anticipated tax treatment to the
Company regarding the compensation and benefits paid to the executive officers
of the Company in light of the enactment of Section 162(m) of the Internal
Revenue Code of 1986, as amended. The basic philosophy of the Compensation
Committee is to strive to provide the executive officers of the Company with a
compensation package, which will preserve the deductibility of such payments for
the Company. However, certain types of compensation payments and their
deductibility (e.g. the spread on exercise of non-qualified options) depend upon
the timing of an executive officers vesting or exercise of previously granted
rights. Moreover, interpretations of and changes in the tax laws and other
factors beyond the Compensation Committees control may affect the deductibility
of certain compensation payments. The Compensation Committee will consider
various alternatives to preserving the deductibility of compensation payments
and benefits to the extent reasonably practicable and to the extent consistent
with its other compensation objectives.
10
<PAGE>
SHAREHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return on the Company's Class A and Class B
common stock against the cumulative return on the AMEX Market Index as well as a
Peer Group Index for the five year period from July 31, 1993 through August 1,
1998. The graph assumes that $100 was invested on July 31,1993 in Class A or
Class B common stock and in the other indices, and that all dividends were
reinvested. The Peer Group is Media General Industry Group 529-"Other Importers,
Wholesalers, and Retailers".
[performance graph here]
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On May 6, 1998, the Company entered into a one-year agreement with Mr.
Bernard Abrams, its former Chairman and Director for consulting services. During
fiscal 1998 the Company paid $91,667 for services under this agreement. Mr.
Abrams has received no payments under this agreement since July 30, 1998 the
date the Company filed for bankruptcy protection under Chapter 11 of the U.S.
Code.
In October 1996 the Company sold a residence it owned in West Hartford,
Connecticut to Mr. Bernard Abrams, who is a shareholder, and former officer and
director of the Company, in exchange for a reduction of $180,000 in the note
payable the Company owes to the officer. The Company obtained an independent
appraisal of the property prior to the transaction, reviewed the appraisal with
the Company's executive committee and believes the price is competitive with
those of similar properties. In Fiscal 1997 the Company recorded a gain of
$78,833 in connection with this transaction.
11
<PAGE>
In December 1994, the Company entered into a note agreement to borrow
$500,000 from Mr. Bernard Abrams a shareholder, and former officer and director
of the Company. The agreement provides for interest payable monthly at 10% for
the first eighteen months and interest and principal thereafter. The Company
paid interest expense of $17,048, $29,223, and $54,083 in fiscal 1998, 1997 and
1996, respectively. The agreement was amended on May 6, 1998 which fixed the
amount of the monthly payment including principal and interest to be $16,923
until the debt was fully repaid. . Mr. Abrams has received no payments under
this agreement since July 30, 1998 the date the Company filed for bankruptcy
protection under Chapter 11 of the U.S. Code.
In May 1990, the Company entered into a lease agreement consisting of
12,000 square feet of a 280,000 square foot shopping center in which several
former officers and directors of the Company have an ownership. The spouses
and/or other family members of Messrs. John B. Abrahms, David Kotkin and Bernard
Abrams own an aggregate of 41% interest in the shopping center. During fiscal
1998, 1997, and 1996, the Company paid approximately $161,000, $170,000, and
$153,000 respectively, in rent for such space. Management believes the terms of
the lease are competitive with those available for similar properties. The
commitment remaining under this lease, which expires on May 31, 2005, is
$981,000.
In May 1992, Mr. Donald Abrams an officer, director and stockholder of
the Company entered into a note agreement with the Company to borrow $37,107.
The agreement provides for interest to accrue at 8.5% annually for four years
with principal and interest due in May 1995. In May 1997, the Company agreed to
extend the note maturity until such time as the officer received any proceeds
from the sale of Company stock, at which time the note would be fully repaid. In
May 1995, the Company also increased the interest on the note to 10.75% per
annum. The outstanding balance at August 1, 1998 is $70,883 and is included in
receivables.
Mr. John B Abrahms, a stockholder of the Company is the principal
stockholder of an insurance agency used by the Company. During fiscal 1998, 1997
and 1996, the Company paid insurance premiums on insurance policies issued
through this agency of $22,962, $93,163, and $383,874, respectively. Management
believes that such premiums are competitive with those charged by unrelated
insurance brokers.
INDEPENDENT ACCOUNTANTS
BDO, Seidman, LLP audited the financial statements for the year ended
August 1, 1998, Price Waterhouse, LLP has audited the financial statements of
the Company for the previous 29 fiscal years. A representative from BDO,
Seidman, LLP is expected to be available at the Annual Meeting in person and
will have an opportunity to make a statement if he desires and will be available
to respond to appropriate questions from stockholders.
STOCKHOLDER PROPOSALS
In order to be considered by the Company for inclusion in its proxy
material for the next Annual Meeting, stockholder proposals must be received by
the Company no later than September 6, 1999, and should be submitted to the
Assistant Secretary, Three D Departments, Inc., P.O. Box 19773, Irvine, CA
92713-9773.
12
<PAGE>
OTHER MATTERS
GENERAL
Pursuant to the Securities Exchange Act of 1934, the Company is
required to file an Annual Report with the Securities and Exchange Commission
("SEC") on Form 10-K containing certain prescribed information, including
financial statements and financial statement schedules. The Company has filed
this report with the SEC for the fiscal year ended August 1, 1998. THE COMPANY
WILL FURNISH COPIES OF THE REPORT TO STOCKHOLDERS INCLUDING BENEFICIAL OWNERS OF
SHARES, WITHOUT CHARGE, UPON WRITTEN REQUEST SUBMITTED TO STEVEN R. KERKSTRA,
CFO, THREE D DEPARTMENTS, INC., P.O. BOX 19773, IRVINE, CA 92713-9773.
The cost of preparing this Proxy Statement and of soliciting proxies
will be borne by the Company. Proxies may be solicited by mail, personal
interview, telephone and telegraph. Directors, officers and regular employees of
the Company may solicit proxies by such methods without additional remuneration.
Banks, brokerage houses and other institution nominees and fiduciaries will be
requested to forward the soliciting material to their principals and to obtain
authorizations for the execution of proxy cards, and will, upon request, be
reimbursed for reasonable expenses incurred.
As of the date of this Proxy Statement, the Company does not intend to
present, and has not been informed that any other person intends to present, any
business not specified in this Proxy Statement for action at the Meeting. If any
other business is properly presented for consideration at the Meeting, proxies
will be voted on such matters in accordance with the judgement of the person or
persons to the extent authorized to vote the proxies.
Your cooperation in giving this matter your immediate attention and
returning your proxies will be appreciated.
By Order of the Board of Directors
/s/ Donald Abrams
DONALD ABRAMS
Chairman of the Board of Directors
January 22, 1999
13
<PAGE>
- --------------------------------------------------------------------------------
PROXY
CLASS A
Common Stock
THREE D DEPARTMENTS, INC.
3535 HYLAND AVE. SUITE 200
COSTA MESA, CA. 92626-1439
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS - FEBRUARY 12, 1999
The undersigned hereby appoints Steven Kerkstra, Donald L. Abrams and any
of them, as attorneys and proxies (Proxies) of the undersigned, with full powers
of substitution, and hereby authorizes them to represent and to vote all shares
which the undersigned would be entitled to vote if personally present of the
Class A Common Stock of Three D Departments, Inc., at the Annual Meeting of
Stockholders to be held on February 12, 1999, and any adjournments thereof. Said
Proxies are authorized to vote upon the following proposals, as designated on
the reverse hereof, and upon all other matters as may properly come before the
Meeting, in their discretion.
(PLEASE SIGN AND DATE ON THE REVERSE SIDE)
- --------------------------------------------------------------------------------
/ / Please mark
/ X / your votes
/ / as this
ELECTION OF DIRECTORS: FOR WITHHELD
Richard Carr; John B. Dawson / / / /
/ / / /
/ / / /
INSTRUCTION: TO WITHHOLD / / / /
/ / / /
/ / / /
AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE
LINE BELOW.
- ---------------------------
If you intend to attend the Annual / /
Meeting of Stockholders in person, / /
please indicate here. / /
DISCRETIONARY AUTHORITY IS HEREBY
CONFERRED AS TO ALL OTHERS MATTERS
WHICH MAY COME BEFORE THE MEETING
AND ANY ADJOURNMENTS THEREOF.
This proxy when properly executed will be
voted by the Proxies in the manner directed
by the undersigned stockholder. If no direction
is given, this Proxy will be voted FOR ALL
NOMINEES LISTED .
Signature(s)_______________________________________ Date___________________
NOTE: Please sign as name appears hereon, joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such
- --------------------------------------------------------------------------------
14
<PAGE>
- --------------------------------------------------------------------------------
PROXY
CLASS B
Common Stock
THREE D DEPARTMENTS, INC.
3535 HYLAND AVE. SUITE 200
COSTA MESA, CA. 92626-1439
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS - FEBRUARY 12, 1999
The undersigned hereby appoints Steven Kerkstra, Donald L. Abrams and any
of them, as attorneys and proxies (Proxies) of the undersigned, with full powers
of substitution, and hereby authorizes them to represent and to vote all shares
which the undersigned would be entitled to vote if personally present of the
Class B Common Stock of Three D Departments, Inc., at the Annual Meeting of
Stockholders to be held on February 12, 1999, and any adjournments thereof. Said
Proxies are authorized to vote upon the following proposals, as designated on
the reverse hereof, and upon all other matters as may properly come before the
Meeting, in their discretion.
(PLEASE SIGN AND DATE ON THE REVERSE SIDE)
- --------------------------------------------------------------------------------
/ / Please mark
/ X / your votes
/ / as this
ELECTION OF DIRECTORS: FOR WITHHELD
Donald L. Abrams;
Steven R. Kerkstra; Jennie Daniells. / / / /
/ / / /
/ / / /
INSTRUCTION: TO WITHHOLD / / / /
/ / / /
/ / / /
AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE
LINE BELOW.
- ---------------------------
If you intend to attend the Annual / /
Meeting of Stockholders in person, / /
please indicate here. / /
DISCRETIONARY AUTHORITY IS HEREBY
CONFERRED AS TO ALL OTHERS MATTERS
WHICH MAY COME BEFORE THE MEETING
AND ANY ADJOURNMENTS THEREOF.
This proxy when properly executed will be
voted by the Proxies in the manner directed
by the undersigned stockholder. If no direction
is given, this Proxy will be voted FOR ALL
NOMINEES LISTED .
Signature(s)_______________________________________ Date___________________
NOTE: Please sign as name appears hereon, joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such
- --------------------------------------------------------------------------------
15
