CURTIS MATHES HOLDING CORPORATION
10911 Petal Street
Dallas, Texas 75238
(214 503-8880
_________________________
PROXY STATEMENT
PRELIMINARY COPY
_________________________
Annual Meeting of Shareholders
September 19, 1996
INTRODUCTION
This Proxy Statement and the accompanying form of proxy are first
being mailed to shareholders of Curtis Mathes Holding Corporation (the
"Company") on or about August 22, 1996, in connection with the
solicitation of proxies on behalf of the Board of Directors for use at
the Annual Meeting of Shareholders of the Company (the "Annual Meeting")
to be held on Thursday, September 19, 1996, at the offices of the
Company, 10911 Petal Street, Dallas, Texas 75238, commencing at 4:30
P.M., Dallas time, and any postponement or adjournment thereof.
The Company's Annual Report on Form 10-K, without exhibits,
accompanies this Proxy Statement. The Company will furnish a copy of
any exhibit upon payment of the Company's reasonable expenses in
furnishing such exhibit. Requests for a copy of any exhibit should be
addressed to: Billy J. Robinson, Corporate Secretary, Curtis Mathes
Holding Corporation, 10911 Petal Street, Dallas, Texas 75238.
PROXY SOLICITATION
When proxies in the accompanying form are properly executed and
returned, the shares that they represent will be voted at the Annual
Meeting in accordance with the instructions marked thereon. Executed
but unmarked proxies will be voted FOR the election of the nominee for
director named in the proxy, FOR the proposal to amend the Company's
Articles of Incorporation, and FOR the proposal to ratify and approve
the appointment of King, Burns & Company, P.C. as independent auditors
of the Company for its fiscal year ending June 30, 1996. If any other
matters are properly brought before the Annual Meeting, the persons
named in the accompanying proxy will vote the shares represented by such
proxy in accordance with their judgment on those matters. The persons
named as proxies in the accompanying form of proxy were selected by the
Board of Directors.
Any shareholder giving a proxy has the power to revoke it at any
time by written notice given to and received by the Secretary of the
Company prior to the Annual Meeting, or any postponement or adjournment
thereof, or upon request if the shareholder is present at the Annual
Meeting and chooses to vote in person. Whether or not you plan to
attend the Annual Meeting, please sign and date the enclosed proxy and
return it promptly in the accompanying envelope in order to be sure that
your shares will be voted at the Annual Meeting.
<PAGE>
The Company is making the solicitation of proxies and will bear the
expense. In addition to the solicitation of proxies by mail,
solicitation may be made by directors, officers and employees of the
Company by telephone, telecopy, telegraph or in person. No additional
compensation will be paid to such persons for the solicitation of
proxies. To solicit proxies, the Company also will request the
assistance of banks, brokerage houses and other custodians, nominees and
fiduciaries and, upon request, will reimburse such organizations or
individuals for their reasonable expenses in forwarding soliciting
materials to their principals and in obtaining authorization for the
execution of proxies.
VOTING SECURITIES AND RECORD DATE
Only holders of record of shares of the common stock, $0.01 par
value, of the Company (the "Common Stock") as of the close of business
on August 2, 1996 (the "Record Date") are entitled to notice of and to
vote at the Annual Meeting. As of the close of business on the Record
Date, there were 24,311,188 shares of the Common Stock issued and
outstanding. The Common Stock is the only class of voting securities
of the Company issued and outstanding. Each shareholder of record in
this class at the close of business on the Record Date is entitled at
the Annual Meeting to one vote for each share of the Common Stock held.
As provided in the Company's Articles of Incorporation, there is no
cumulative voting.
SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
The following table and the notes thereto set forth certain
information with respect to the beneficial ownership of shares of the
Common Stock, as of the Record Date, by the directors of the Company, by
the executive officers of the Company named in the table under "Summary
Compensation Table," by a shareholder known to the Company to own
beneficially more than five percent of the outstanding shares of the
Common Stock, and by all directors and executive officers of the
Company as a group. Each of the persons listed in the following table
has sole voting and investment power as to all shares indicated except
as set forth in the notes to the table.
Number of Shares
Name and Address Amount and Nature Percent
of Beneficial Owner of Beneficial Ownership of Class
5% Beneficial Owners
Patrick A. Custer 2,381,215(1) 9.75%
P. O. Box 802808
Dallas, Texas 75380-2808
D. Ronald Allen 1,997,665(2) 7.67%
8111 Preston Rd., Suite 550
Dallas, TX 75225-6308
Custer Company, Inc. 2,026,515(3) 8.29%
P.O. Box 802808
Dallas, TX 75380-2808
<PAGE>
Geninvest, S.A. 4,027,333(4) 14.41%
c/o Lewis D. Rowe, Director
P.O. Box 1561
Zephyr House, Mary Street,
Grand Cayman, British West Indies
The Alana Group, Ltd. 1,250,000 5.14%
c/o Trident Trust
P.O. Box 146
Road Town, Tortola BVI
Directors
Edward M. Warren 202,500 0.83%
Patrick A. Custer 2,381,215(1) 9.75%
Billy J. Robinson 65,000(5) 0.27%
Bernard S. Appel 50,000 0.21%
Executive Officers
Patrick A. Custer 2,381,215(1) 9.75%
Billy J. Robinson 65,000(5) 0.27%
All Directors and Executive
Officers as a Group 2,936,315(6) 12.00%
(1) Includes 125,000 shares owned outright by Mr. Custer; 229,500
shares owned by his wife; 100 shares owned by his son; 100 shares
of which Mr. Custer shares beneficial ownership with a minor son;
1,906,515 shares held of record by Custer Company, Inc., a family
trust, over which Mr. Custer exercises voting control; and 120,000
shares issuable to Custer Company, Inc. upon exercise of warrants;
(2) Includes 120,000 shares owned by Winterstone Management Company,
which is controlled by Mr. Allen; 136,865 shares and 805,600 shares
issuable upon exercise of warrants held by Associates Funding
Group, Inc., which is controlled by Mr. Allen; and 935,200 shares
issuable upon exercise of warrants held by QAG, Inc., which is
controlled by Mr. Allen.
(3) Includes 120,000 shares issuable upon exercise of warrants.
(4) Includes 3,627,333 shares issuable upon exercise of warrants.
(5) Includes 50,000 shares which are held in escrow to be earned over
four year term of employment agreement, but over which Mr. Robinson
has voting rights.
(6) Includes 2,698,715 shares beneficially owned by all directors.
Also includes 100,000 shares owned outright by Mr. Katz, 10,000
shares owned by his wife, 10,000 shares held in the name of his
minor daughter, 4,000 shares owned by his father's estate, and
55,000 shares owned by his mother, all of which Mr. Katz is deemed
to be the beneficial owner. Also includes 15,000 shares and 20,000
shares issuable to Mr. Richardson upon exercise of stock options.
Also includes 10,000 shares and 13,600 shares issuable to Mr. Park
upon exercise of stock options.
<PAGE>
ELECTION OF DIRECTORS
Four directors are to be elected at the Annual Meeting to hold
office until the next annual meeting of shareholders or until their
respective successors are duly elected and qualified. All of the
nominees are currently directors of the Company.
The Board of Directors' nominees for the office of director are as
follows:
Name Age Position Held With the Company
Patrick A. Custer(1) 47 Chairman of the Board, President
and Chief Executive Officer
Billy J. Robinson 48 Director, Vice President,
Secretary and General Counsel
Edward M. Warren(1) 55 Director
Bernard S. Appel(1) 64 Director
____________________
(1) Member of the Audit Committee.
Nominees for Director
Patrick A. Custer, 47, is the Chairman of the Board, President and
Chief Executive Officer of the Company. Mr. Custer served as a director
of the Company from 1984 to 1985, and from 1987 until the present. He
served as President and Chief Executive Officer of the Company from 1984
to 1985 and from September, 1992 until the present. From 1986 until
1990, Mr. Custer was an international business consultant for Park
Central Funding (Guernsey), Ltd. From 1978 until 1982, Mr. Custer was a
general securities principal and worked for a major brokerage firm as a
corporate finance specialist and was owner of his own brokerage firm.
He was responsible for structuring and funding IPO's, real estate,
energy companies, and numerous high-tech start-up companies. Mr. Custer
is a graduate of Texas Tech University in Finance and Management, with
additional studies in Electrical Engineering and master studies in
Finance.
Edward M. Warren, 55, has been a director of the Company since
September, 1992. Since 1980, he has been the Registered Principal and
Branch Manager for a major securities firm in Albany New York. He is
also a Financial Consultant, having presented numerous financial
seminars over the years throughout eastern New York and western New
England. He is a co-founder of the Coronado Group, which provides
professional services to the financial community, such as the analysis
of economic and market conditions, review of financial products,
exchange of marketing ideas, and continuing evaluation and
recommendation of asset allocation models. Mr. Warren received his
undergraduate degree from Williams College and holds a Master of Arts
degree from Harvard University.
<PAGE>
Billy J. Robinson, 48, has been a director of the Company since
March, 1994. He has also served as Vice President/General Counsel of
the Company since October, 1993, and as Secretary of the Company since
June, 1994. Mr. Robinson has over seventeen years legal experience,
r e p r e s enting banks and other financial institutions, with a
concentration in commercial transactions and real estate. He was a
shareholder in the law firm of Curry, Curry & Robinson, P.C. from 1980
until February, 1992. From February, 1992 until October, 1993, he
continued his practice as a sole practitioner. Mr. Robinson is admitted
to practice before the United States Supreme Court, the United States
District Court for the Northern District of Texas and the District of
New Mexico, and is licensed to practice before all state courts in Texas
and New Mexico. Mr. Robinson is a certified Mediator in the State of
Texas and is the author of the 1994-95 Real Estate Law Correspondence
Course for the Texas Tech University Paralegal Certification Program.
Bernard S. Appel, 64, has been a director of the Company since
February 21, 1995, when he was appointed by the remaining members of the
Board to the position vacated by Mr. Scheldt. He has enjoyed a career
of 34 years with Radio Shack, holding every key merchandising and
marketing position, culminating with his promotion to president in 1984.
In 1992 he was promoted to Chairman of Radio Shack and Senior Vice
President of Tandy Corporation. Since August, 1993, Mr. Appel has
operated the private consulting firm of Appel Associates, focusing upon
consumer electronics product development, marketing and distribution.
He is a director of IRG Technologies, Inc., a company with a class of
securities registered pursuant to section 12 of the Exchange Act of
1934, and is also a director of several privately held companies. Mr.
Appel also has an arrangement with the Company to provide consulting
services.
Executive Officers
F. Shelton Richardson, Jr., 37, has been Vice President/Chief
Financial Officer of the Company since February 27, 1995. From
February, 1990 to February, 1995 he was Chief Financial Officer of
Captivision, Inc., a consulting firm specializing in electronics and
telecommunications ventures. From January, 1987 to February, 1990 he
was the Controller for the law firm of Ryan & Smith. Mr. Richardson
holds a Bachelor of Science degree in Accounting and Taxation from the
University of Houston and a Master of Business Administration from
Houston Baptist University.
Thomas W. (Bill) Park, 60, has been Vice President/ Chief Operating
Officer of subsidiary Curtis Mathes Corporation (CM) since October 3,
1994; and has been Vice President/ Chief Operating Officer of subsidiary
Curtis Mathes Marketing Corporation (CMMC) since July 1, 1995. He
enjoyed a career of 29 years with CM, before leaving the company in
August, 1993 for a position as Vice President of Benelec Corporation, an
international trading company dealing in electronics, medical supplies,
and other products. From August, 1993 until his return to the company
in 1994, Mr. Park continued to make his knowledge and experience
available to CM as a consultant. During his career with CM, he served
in various positions with the company, beginning as an Office Manager/
Cost Accountant in 1964 and culminating as Executive Vice President in
1985, in which capacity he served until 1993. Mr. Park has traveled
extensively and maintains valuable business contacts in Europe and Asia.
He holds a Bachelor of Business Administration degree in Finance from
the University of Texas.
<PAGE>
Indebtedness of Management
The Company advanced Mr. Robinson $80,000 pursuant to an employment
arrangement, whereby twenty-five percent of the advance is forgiven for
each year Mr. Robinson remains employed with the Company. If Mr.
Robinson's employment with the Company is terminated for any reason
other than for cause, the remaining balance of the advance will be
forgiven. If Mr. Robinson is terminated subsequent to a change of
control of the Company, such termination would be deemed to be
termination without cause. Pursuant to the agreement, fifty percent of
the advance has been forgiven.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the 1934 Act ("Section 16(a)"), requires the
Company's directors, executive officers and persons who beneficially own
more than 10% of a registered class of the Company's equity securities
("10% Owners") to file reports of beneficial ownership of the Company's
securities and changes in such beneficial ownership with the Securities
and Exchange Commission ("Commission"). Directors, executive officers
and 10% Owners are also required by rules promulgated by the Commission
to furnish the Company with copies of all forms they file pursuant to
Section 16(a).
Based solely upon a review of the copies of the forms filed
pursuant to Section 16(a) furnished to the Company, or written
representations that no year-end Form 5 filings were required for
transactions occurring during Fiscal Year Ended June 30, 1996, the
Company believes that during the fiscal year ended June 30, 1996, all
Section 16(a) filing requirements applicable to its directors, executive
officers and 10% Owners were complied with.
Nominations for Election to the Board of Directors
The Company does not have a nominating committee, The Board of
Directors considers persons who would be eligible or desirable for
membership on the Board of Directors and potential nominees are
solicited. Information is obtained with respect to all such potential
nominees and evaluations are made by the Board of Directors, which then
decides who to nominate for the position of director.
Meetings and Committees of the Board of Directors
During fiscal year ended June 30, 1996, all Board action was taken
by unanimous consent of the Directors, except for a meeting attended by
all Directors on November 15, 1995.
The Audit Committee reviews the scope and results of the Company's
annual audit, receives any suggestions from the independent auditors
concerning improvements in the Company's accounting practices and
procedures, and reviews other professional services furnished by the
independent auditors. The Audit Committee is currently comprised of
Patrick A. Custer, Edward M. Warren, and Bernard S. Appel. There were
no committee meetings held by such committee during the last fiscal
year, although the members consulted on an ongoing basis.
<PAGE>
Until recently, the Company did not have a Compensation Committee,
as such functions were performed by the entire Board of Directors. In
June, 1996, a compensation advisory committee was appointed, consisting
of Patrick A. Custer, Billy J. Robinson, and F. Shelton Richardson, Jr.,
to advise to the Board concerning certain aspects of executive
compensation.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Summary Compensation Table
The following table summarizes the compensation paid over the last
three completed fiscal years to the Company's Chief Executive Officer
and any other executive officer of the Company who received compensation
of $100,000 or more during the fiscal year ended June 30, 1996.
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
All
Other
Name and Year Other Restricted Securities LTIP Compen-
Principal Ended Annual Stock Underlying Payouts sation
Position Jun. 30 Salary($) Bonus($) Compensation($) Award(s)($) Options/SARs(#) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Patrick A. Custer 1996 102,692 -0- 12,000 59,750 -0- -0- -0-
Chairman of the 1995 121,458 -0- 12,308 -0- -0- -0- -0-
Board and CEO 1994 122,876 -0- 12,308 -0- -0- -0- -0-
Billy J. Robinson 1996 72,981 -0- 27,500 79,475 -0- -0- -0-
Vice President, 1995 83,937 -0- 32,776 43,625 -0- -0- -0-
General Counsel 1994 56,667 -0- 16,609 29,083 -0- -0- -0-
</TABLE>
Compensation of Directors
None of the inside Directors are paid compensation as such,
except for services performed in another capacity, such as an executive
officer of the Company. The outside Directors of the Company are paid
$500 per meeting, plus their expenses for attending Board of Director
meetings.
Compensation Committee Interlocks and Insider Participation
Mr. Custer, Mr. Robinson, and Mr. Richardson participated in
advising the Company's Board of Directors concerning certain aspects of
executive officer compensation during the last completed fiscal year.
Mr. Custer is Chairman of the Board, President and Chief Executive
Officer of the Company; Mr. Robinson is Vice President, Secretary,
General Counsel, and a director; and Mr. Richardson is Vice President,
Chief Financial Officer.
<PAGE>
Board of Directors Report on Executive Compensation
Executive Compensation
The Company has structured its executive compensation program
within the financial framework of the Company with a goal of attracting
and retaining high-quality executive talent. The executive compensation
program consists generally of base salary and employee benefits. The
Company reviews its compensation programs periodically and compares its
pay practices with other similar companies and with companies staffed
with similarly-skilled executives. During the first fiscal quarter of
each year, the Company reviews salary increases for the current year
and, considering the Company's financial performance and each executive
officer's perceived contribution to that performance, salaries are set
accordingly.
Chief Executive Officer
For the year ended June 30, 1996, Mr. Custer received $114,692 and
restricted stock awards valued at $59,750 for his services as President
and Chief Executive Officer of the Company. The factors the Company
considered in setting his compensation include Mr. Custer's leadership
in restructuring the Company, his contribution to the strategic focus of
the Company, and the Company's financial performance during fiscal year
ended June 30, 1995 and 1996.
Patrick A. Custer (Chairman) Edward M. Warren
Bernard S. Appel Billy J. Robinson
F. Shelton Richardson, Jr.
The foregoing report is not incorporated by reference in any prior
or future filings of the Company under the Securities Act of 1933, as
amended (the "1933 Act"), or under the Securities Exchange Act of 1934,
as amended (the "1934 Act"), unless the Company specifically
incorporates the report by reference and the report shall not otherwise
be deemed filed under such Acts.
Performance Graph
The following graph compares total stockholder returns of the
Company since December 31, 1992 to two indices: a Composite Market
Index which includes the NASDAQ Market (the "Broad Market") and the
companies classified under S.I.C. code 3651 for consumer electronics
(Household Audio and Video Equipment) (the "Industry Index"). The total
return for the Company's stock and for each index assumes the
reinvestment of dividends, although dividends have never been declared
on the Company's stock. The Broad Market tracks the aggregate price
performance of equity securities of all companies traded on the various
exchanges, including the NASDAQ Market. The Industry Index tracks the
aggregate price performance of equity securities of companies traded on
the various exchanges, including the NASDAQ Market, which are grouped
under S.I.C. code 3651 for consumer electronics (Household Audio and
Video Equipment.)
<PAGE>
The graph should be viewed in the context of the disposition of
Southwest Memory, Inc. by the Company in December, 1994, and the
consolidation of its primary business operations into the Curtis Mathes
Corporation subsidiary. As a result, the indications of the graph may
not necessarily indicate future performance of the Company.
Comparison of Cumulative Total Return on Investment
Since December 31, 1992(1)
1/1/93 6/30/93 6/30/94 6/30/95 6/30/96
Curtis
Mathes 100.00 200.00 576.00 138.00 276.00
SIC Code 100.00 120.64 179.75 148.15 182.14
NASDAQ
Market 100.00 111.94 122.75 143.96 181.22
(1) For a meaningful comparison of the Company's stock performance with
that of similar companies, December 31, 1992 was chosen as the
beginning date for the comparison. Characterization of the primary
business activity of the Company as consumer electronics began with
the acquisition of Southwest Memory, Inc. in December, 1992.
Before then, the Company was essentially dormant and comparison of
the performance of its stock before that date would have limited
application.
The foregoing graph is not incorporated in any prior or future
filings of the Company under the 1933 Act or the 1934 Act, unless the
Company specifically incorporates the graph by reference, and the graph
shall not otherwise be deemed filed under such Acts.
INDEPENDENT PUBLIC ACCOUNTANTS
Current Appointment
King, Burns & Company, P.C. has been appointed to serve as the
principal accountant for the current year, subject to ratification of
such appointment by the shareholders. King, Burns & Company, P.C. has
served as the Company's independent public accountants since October,
1994.
A representative of King, Burns & Company, P.C. is expected to be
present at the shareholders meeting and will have an opportunity to make
a statement if they desire to do so and are expected also to be
available to respond to appropriate questions.
Former Accountant
As reported by the Company in its Amended Current Report on Form 8-
K/A dated November 15, 1994, the client-auditor relationship between the
Company and Hein + Associates LLP ended, with the approval of the
Company's Audit Committee, by mutual agreement as of October 26, 1994.
The change in certifying accountant became necessary when the former
accountant advised the Company that it would be unable to complete the
audit of the Company's financial statements for fiscal year ended June
30, 1994, as explained in more detail below.
<PAGE>
T h e former accountant's report on the Company's financial
statements for either of the past two fiscal years contained no adverse
opinion, no disclaimer of opinion, and was not qualified or modified as
to uncertainty, audit scope, or accounting principles. During the
Company's two most recent fiscal years and the subsequent interim period
preceding termination of the relationship, there were no disagreements
with the former accountant on any matter of accounting principles or
p r actices, financial statement disclosure, or auditing scope or
procedure. There were, however, unresolved differences of opinion on
the accounting for certain transactions as specified below.
During fiscal year ended June 30, 1994, without prior consultation
with its former accountant, the Company reported certain transactions in
a manner the Company believed to be appropriate for a fair statement of
results for the periods presented. After subsequent review by the
former accountant, the Company was advised that the former accountant
believed it would be necessary to report in a different manner two real
estate sales in which gains of $155,000 and $275,000, respectively, were
recorded; and the sale of 20% of a subsidiary in which a gain of
approximately $699,000 was recorded. Because these sales were made to
parties that are, in the former accountant's opinion, related to the
Company, the Company was advised that it would be necessary to defer
recognition of those gains pending either (I) final resolution of the
transactions with the parties or (ii) consummation of the transactions
with other parties that are not related to the Company.
The Company was further advised that the former accountant would
require additional information to evaluate a series of transactions
related to another subsidiary, in which income of $690,000 was
recognized and an investment in $2,240,000 of preferred stock of the
subsidiary following the sale was recorded as an asset of the Company.
The information was required for the former accountant to evaluate the
propriety of the gain recognition in these series of transactions. In
addition, the former accountant advised the Company that it believed the
preferred stock of the subsidiary should not be recorded as an asset of
the Company, but should be reflected as a reduction in stockholders'
equity because the primary asset of the former subsidiary following the
series of transactions was an investment in the Company's preferred
stock.
Obtaining the additional information would have required a review
or an audit of the financial statements of an entity that had invested
in the Company and had participated in several transactions with the
Company, including the series of transactions mentioned in the
immediately preceding paragraph. The Company furnished to the former
accountant all information within its control, but was unable to obtain
the required additional information from the investor. The former
accountant advised the Company that, without the additional information,
it would be unable to complete the audit.
The former accountant further advised the Company that the
accounting for several transactions, including those mentioned above,
had not, in the former accountant's opinion, been properly processed
through the Company's system of internal controls and that condition
could impact the Company's financial statements. The former accountant
also advised the Company that, to satisfy its reporting responsibility
under generally accepted auditing standards, additional work would be
necessary to understand the cause of certain accounting errors that the
former accountant perceived the Company had made.
<PAGE>
The Company provided the former accountant with a copy of the Form
8-K/A, prior to filing, and requested the former accountant to furnish
the Company with a letter addressed to the Commission stating whether it
agreed with the statements made therein and, if not, stating the
respects in which it did not agree. The former accountant's letter,
confirming agreement with the statements made in the Form 8-K/A, is
attached hereto as Exhibit "99.1."
Newly Engaged Accountant
As reported by the Company in its Current Report on Form 8-K dated
November 4, 1994, a new independent accountant, King, Burns & Company,
P.C., was engaged as of October 31, 1994 as the principal accountant to
audit the registrant's financial statements beginning with fiscal year
ended June 30, 1994. Prior to engaging that accountant, neither the
Company (nor anyone on its behalf) consulted the newly engaged
accountant regarding (I) either: the application of accounting
principles to a specified transaction, either completed or proposed; or
the type of audit opinion that might be rendered on the Company's
financial statements; or (ii) any matter that was either the subject of
a disagreement or a reportable event.
The Company provided the newly engaged accountant with a copy of
the Form 8-K, prior to filing, requested the accountant to review the
disclosures contained therein, and to furnish the Company with a letter
a d d r e s sed to the Commission containing any new information,
clarification of the Company's expression of its views, or the respects
in which it did not agree with the statements made by the Company
therein. The accountant elected not to furnish such a letter, stating
that it had nothing to add to the disclosures contained therein.
AMENDMENT OF ARTICLES OF INCORPORATION
Increase in Authorized Securities
The additional securities to be authorized by amendment of the
Articles of Incorporation of the Company consist of the Company's common
shares, $0.01 par value, (the "Common Stock"). The Company is currently
authorized to issue 40,000,000 of such shares and seeks by shareholder
approval to increase the authorized shares by another 40,000,000 shares,
to a total of 80,000,000 authorized common shares. Once authorized, the
Company's Board of Directors will approve or disapprove each proposed
future issuance of common shares, without further authorization by
shareholders.
As of the close of business on August 2, 1996, there were
24,311,188 shares of the Common Stock issued and outstanding. The
Company is further committed to issue approximately an additional
17,086,104 shares of Common Stock upon the exercise of currently
outstanding warrants and upon conversion of currently outstanding
convertible preferred stock. The increase in the number of authorized
shares is necessary for the Company to fulfill its obligation to these
outstanding interests, and to provide the Company with the added
flexibility of being able to offer equity participations in joint
ventures with other companies and to pursue possible acquisitions of
other companies in the future. Although the increase in authorized
shares would initially appear to have a dilutive effect upon current
shareholders, management believes that shareholders will ultimately reap
a greater benefit in the value of their investment.
<PAGE>
QUORUM AND REQUIRED VOTE
A majority of the issued and outstanding shares of Common Stock,
represented in person or by proxy, will constitute a quorum for the
transaction of business at the Annual Meeting. An affirmative vote of a
majority of the shareholders represented in person or by proxy at a
meeting at which a quorum is present is required for approval of a
matter or for election of a director. Voting will be by written ballot.
Under Texas law and under the Company's Articles of Incorporation
and Bylaws, shares of the Common Stock represented in person or by proxy
at the Annual Meeting which abstain from voting on any matter are
considered as being represented at the Annual Meeting and entitled to
vote on that matter. Such shares are therefore counted for the purpose
of establishing a quorum and also for establishing the minimum number of
votes required to approve any matter. As a result, such an abstention
from voting has the same legal effect as a vote "AGAINST" the matter
even though the shareholder or interested parties analyzing the results
of the voting may interpret such a vote differently. "Broker non-votes"
and proxies that simply withhold the authority to vote are not
considered as being represented at the Annual Meeting and are therefore
not counted in establishing a quorum or the minimum number of votes
required to approve any matter.
DATE OF SUBMISSION OF SHAREHOLDER PROPOSALS
Any shareholder who intends to present a proposal for action at the
next annual meeting of shareholders must forward a copy of such proposal
to the Secretary of the Company. Any such proposal must be received by
the Company for inclusion in its proxy statement and form of proxy
relating to that meeting by May 20, 1997. Shareholder proposals may be
excluded from the Company's proxy statement pursuant to Rule 14a-8
promulgated under the Securities Exchange Act of 1934, as amended,
provided certain conditions are met.
OTHER MATTERS
Management of the company does not know of any other matters to be
presented for action by the shareholders at the Annual Meeting. If,
however, any other matters not now known are properly brought before the
meeting, the persons named in the accompanying proxy will vote such
proxy in accordance with their own judgment on such matters.
ALL PROXIES IN THE ACCOMPANYING FORM (EXHIBIT 99.2) PROPERLY
EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY SHAREHOLDERS. IF NO
DIRECTION IS GIVEN, SUCH PROXIES PROPERLY EXECUTED WILL BE VOTED
"FOR" ALL NOMINEES AND "FOR" ALL PROPOSALS SET FORTH HEREIN.
By Order of the Board of Directors,
/s/ Billy J. Robinson
Billy J. Robinson
Secretary
August 12, 1996
Dallas, Texas
EXHIBIT 99.1
HEIN + ASSOCIATES LLP
Certified Public Accountants and Consultants
with offices in Denver, Houston and Los Angeles.
Telephone (214) 458-2296 Fax (214) 788-4943
12770 Coit Road, Suite 1150
Dallas, Texas 75251
November 15, 1994
Securities and Exchange Commission
450 5th Street, N.W.
Washington, D.C. 10549
We have read Item 4 of the Curtis Mathes Holding Corporation Form 8-K as
amended by Form 8-K/A (Commission File Number 2-93668-FW) dated November
15, 1994, and concur with the statements made therein as they relate to
us.
Very truly yours,
/s/ Hein + Associates LLP
HEIN + ASSOCIATES LLP
cc: Curtis Mathes Holding Corporation
Member of MOORES ROWLAND INTERNATIONAL with associated firms throughout
the world.
Exhibit 99.2
Form of Proxy
CURTIS MATHES HOLDING CORPORATION
PROXY SOLICITED BY DIRECTORS FOR ANNUAL MEETING
September 19, 1996
The undersigned, having received the Notice of Annual Meeting,
Proxy Statement, and Annual Report on Form 10-K for the year ended June
30, 1996, hereby appoint(s) Neal J. Katz and Thomas W. (Bill) Park and
each of them, proxies to represent the undersigned, with full power of
substitution, at the Annual Meeting of Shareholders of Curtis Mathes
Holding Corporation, to be held on Thursday, September 19, 1996, at 4:30
P.M., Dallas time, at 10911 Petal Street, Dallas, Texas 75238, and at
any and all postponements or adjournments thereof:
The directors recommend a vote FOR the election of all
nominees and a vote FOR all of the proposals.
1. Election of Directors: Patrick A. Custer, Edward M. Warren,
Billy J. Robinson, and Bernard S. Appel
FOR all nominees listed above [ ] WITHHOLD AUTHORITY [ ]
(except as marked to the contrary above) to vote for all nominees listed
above
Instruction: To withhold authority to vote for any individual nominee,
strike a line through the name of nominee in the list above. Unless
authority to vote for all the foregoing nominees is withheld, this proxy
will be deemed to confer authority to vote for every nominee whose name
is not struck.
2. To ratify the appointment of King, Burns, and Company, P.C. as the
Company's independent auditors for the fiscal year ended June 30,
1996.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. To amend the Articles of Incorporation to increase authorized
common shares to 80,000,000.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. In their discretion, the proxies are authorized to vote upon such
other business that may properly come before the meeting.
Unless otherwise specified in the squares provided, the proxies
shall vote FOR the election of all of the nominees listed in Proposal #1
above, FOR Proposal #2, and FOR Proposal #3.
(continued and to be signed on reverse side.)
<PAGE>
(continued from other side)
Please sign exactly as name appears below.
Dated: ________________________
W h e n shares are held by joint
tenants, both should sign. When
signing as attorney, executor,
administrator, trustee or guardian
please give full title as such. If a
corporation, please sign in full
corporate name by President or other
authorized person. If a partnership,
please sign in full partnership name
by authorized person.
______________________________
(Signature)(Title)
______________________________
(Signature if held jointly)
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE
