AMRE INC, S-4, 1996-03-15

AMRE INC
S-4, 1996-03-15
CONSTRUCTION - SPECIAL TRADE CONTRACTORS

Previous: MFS MULTIMARKET INCOME TRUST, NSAR-B/A, 1996-03-15

Next: FIRST CAROLINA INVESTORS INC, NSAR-B, 1996-03-15

<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 15, 1996.
REGISTRATION NO. 33-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

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

AMRE, INC.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 1761 75-2041737
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>

8585 N. STEMMONS FREEWAY
SOUTH TOWER
DALLAS, TEXAS 75247
TELEPHONE: (214) 658-6300
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

ROBERT M. SWARTZ
PRESIDENT AND CHIEF EXECUTIVE OFFICER
8585 N. STEMMONS FREEWAY
SOUTH TOWER
DALLAS, TEXAS 75247
TELEPHONE: (214) 658-6300
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE FOR REGISTRANT)

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

Copies to:

GARY M. LAWRENCE, P.C. CHARLES D. MAGUIRE, JR., ESQ.
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P. JACKSON & WALKER, L.L.P.
1700 PACIFIC AVENUE, SUITE 4100 901 MAIN STREET, SUITE 6000
DALLAS, TEXAS 75201-4618 DALLAS, TEXAS 75202
(214) 969-2800 (214) 953-6000

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO
THE PUBLIC: AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES
EFFECTIVE.

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

If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
================================================================================================================
Proposed Proposed Maximum
Amount Maximum Aggregate Amount of
Title of each Class of to be Offering Price Offering Price (2) Registration
Securities to be Registered Registered(1) Per Share(2) Fee(3)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value 3,973,471 $15.875 $63,078,852.13 $13,010.31
--------- -------------- ----------
shares
================================================================================================================
</TABLE>
(1) Determined based upon the outstanding Common Stock and options to
purchase Common Stock of Facelifters Home Systems, Inc. as of March
12, 1996.
(2) Estimated solely for the purpose of calculating the registration fee
based upon the average of the high and low sales prices of the
Registrant's Common Stock on March 11, 1996.
(3) Does not include initial payment of $8,741.02 made in connection with
the filing of preliminary proxy materials.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
<PAGE> 2
AMRE, INC.

CROSS-REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K

<TABLE>
<CAPTION>
ITEM
NO. ITEM IN FORM S-4 LOCATION OR HEADING IN PROSPECTUS
- ----- ---------------- ---------------------------------
<S> <C> <C>
A. INFORMATION ABOUT THE TRANSACTION

1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus . . . . . . . . Facing Page of Registration Statement; Cross-
Reference Sheet; Outside Front Cover Page of
Prospectus

2. Inside Front and Outside Back Cover Pages
of Prospectus . . . . . . . . . . . . . . . . . . . . Available Information; Incorporation of
Documents by Reference; Table of Contents

3. Risk Factors, Ratio of Earnings to Fixed Charges
and Other Information . . . . . . . . . . . . . . . . Outside Front Cover Page of Prospectus; Summary;
Risk Factors; Comparative Market Price Data;
Special Factors; Facelifters Consolidated
Financial Statements

4. Terms of the Transaction . . . . . . . . . . . . . . . Summary; Special Factors; The Merger Agreement;
Comparison of Stockholder Rights

5. Pro Forma Financial Information . . . . . . . . . . . Summary; Unaudited Pro Forma Condensed Combined
Financial Statements

6. Material Contacts With the Company Being Acquired . . Summary; Risk Factors; Special Factors; Recent
Developments

7. Additional Information Required For Reoffering by
Persons and Parties Deemed to be Underwriters . . . . Not applicable

8. Interests of Named Experts and Counsel . . . . . . . . Summary; Special Factors; Legal Matters; Experts
9. Disclosure of Commission Position on Indemnification
for Securities Act Liabilities . . . . . . . . . . . . Comparison of Stockholder Rights; Part II of the
Registration Statement

B. INFORMATION ABOUT THE REGISTRANT

10. Information With Respect to S-3 Registrants . . . . . Summary; Risk Factors; Special Factors;
Century 21 License Agreement; The Stockholder
Agreement; AMRE Charter Amendment; Recent
Developments; Management Information of AMRE;
Security Ownership; Executive Compensation;
Certain Relationships and Related Transactions;
Unaudited Pro Forma Condensed Combined Financial
Statements

11. Incorporation of Certain Information by Reference . . Inside front cover page of prospectus

12. Information With Respect to S-2 or S-3
Registrants . . . . . . . . . . . . . . . . . . . . . Not applicable

13. Incorporation of Certain Information by
Reference . . . . . . . . . . . . . . . . . . . . . . Not applicable
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
ITEM
NO. ITEM IN FORM S-4 LOCATION OR HEADING IN PROSPECTUS
- ----- ---------------- ---------------------------------
<S> <C> <C>
14. Information With Respect to Registrants Other
Than S-3 or S-2 Registrants . . . . . . . . . . . . . Not applicable

C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED

15. Information With Respect to S-3 Companies . . . . . . Not applicable

16. Information With Respect to S-2 or S-3 Companies . . . Outside Front Cover Page of Prospectus; Inside
Front Cover Page of Prospectus; Summary;
Comparative Market Price Data; Special Factors;
Facelifters Selected Consolidated Financial and
Operating Data; Facelifters Management's
Discussion and Analysis of Financial Condition
and Results of Operations; Description of
Facelifters Capital Stock; Business of
Facelifters; Recent Developments; Facelifters
Consolidated Financial Statements; Unaudited
Pro Forma Condensed Combined Financial Statements

17. Information With Respect to Companies Other Than
S-3 or S-2 Companies . . . . . . . . . . . . . . . . . Not applicable

D. VOTING AND MANAGEMENT INFORMATION

18. Information if Proxies, Consents or Authorizations
Are to Be Solicited . . . . . . . . . . . . . . . . . Notice of Special Meeting of Stockholders;
Outside Front Cover Page of Prospectus; Summary;
The Meetings; Special Factors; The Merger
Agreement; Recent Developments; Comparison of
Stockholder Rights; Management Information of
AMRE; Security Ownership; Executive Compensation

19. Information if Proxies, Consents or Authorizations
Are not to Be Solicited or in an Exchange Offer . . . Not applicable

20. Indemnification of Directors and Officers . . . . . . Special Factors; Comparison of Stockholder
Rights; Part II of the Registration Statement

21. Exhibits and Financial Statement Schedules . . . . . . Financial Statements; Exhibits

22. Undertakings . . . . . . . . . . . . . . . . . . . . . Part II of the Registration Statement
</TABLE>
<PAGE> 4
[AMRE LOGO] [FACELIFTERS LOGO]

March ___, 1996

Dear Stockholders of AMRE, Inc. ("AMRE") and Facelifters Home Systems, Inc.
("Facelifters"):

Attached is a Notice of Special Meeting of Stockholders for each of
AMRE and Facelifters and an accompanying Joint Proxy Statement/Prospectus which
describes the matters to be acted upon at special meetings of the stockholders
of AMRE and Facelifters. At the respective meetings, stockholders of AMRE and
Facelifters will be asked to consider and vote upon certain proposals related
to the Agreement and Plan of Merger, dated October 31, 1995, as amended (the
"Merger Agreement"), by and among AMRE, AMRE Acquisition, Inc., a wholly owned
subsidiary of AMRE, ("Merger Sub"), Facelifters Home Systems, Inc., a New York
corporation, and Facelifters. The Merger Agreement provides for the merger of
Merger Sub with and into Facelifters (the "Merger"). As the corporation
surviving the Merger, Facelifters will become a direct wholly owned subsidiary
of AMRE. Stockholders are urged to review carefully the attached Joint Proxy
Statement/Prospectus. This document contains a detailed description of the
Merger.

Pursuant to the terms of a stockholder agreement executed in
connection with the Merger Agreement, AMRE has obtained agreements from
affiliates of Facelifters who own approximately 22% of the outstanding
Facelifters Common Stock to vote in favor of the Merger.

In the Merger, each outstanding share of Facelifters Common Stock
(subject to certain provisions with respect to fractional shares) will be
converted into one share of AMRE Common Stock. Based on the number of shares
of Facelifters Common Stock outstanding on March 4, 1996, approximately
3,565,680 shares of AMRE Common Stock are expected to be issued to holders of
Facelifters Common Stock upon consummation of the Merger.

The proposed Merger requires, among other conditions, the approval of
the matters described in the Joint Proxy Statement/Prospectus by the
stockholders of AMRE and Facelifters.

FOR THE REASONS DETAILED IN THE JOINT PROXY STATEMENT/PROSPECTUS, THE
BOARDS OF DIRECTORS OF AMRE AND FACELIFTERS HAVE DETERMINED THAT THE MERGER
AGREEMENT AND THE MERGER ARE IN THE BEST INTERESTS OF AMRE AND FACELIFTERS,
RESPECTIVELY, AND THEIR RESPECTIVE STOCKHOLDERS. THE BOARD OF DIRECTORS OF
AMRE HAS APPROVED THE MERGER AGREEMENT AND RECOMMENDS THAT AMRE'S STOCKHOLDERS
VOTE "FOR" APPROVAL OF THE PROPOSALS TO BE CONSIDERED AT THE AMRE SPECIAL
MEETING AS DESCRIBED IN THE ATTACHED JOINT PROXY STATEMENT/PROSPECTUS. THE
BOARD OF DIRECTORS OF FACELIFTERS HAS APPROVED THE MERGER AGREEMENT AND THE
MERGER AND RECOMMENDS THAT FACELIFTERS' STOCKHOLDERS VOTE "FOR" APPROVAL OF THE
PROPOSALS TO BE CONSIDERED AT THE FACELIFTERS SPECIAL MEETING AS DESCRIBED IN
THE ATTACHED JOINT PROXY STATEMENT/PROSPECTUS.

Your continued support of the new AMRE is greatly appreciated. We and
the rest of the new management team are excited about the prospects that lie
ahead for the combined company. Because of the significance to AMRE and
Facelifters of the proposed Merger, your participation at the special meetings
of stockholders, in person or by proxy, is especially important. Even if you
plan to attend the relevant meeting, please complete, sign and date your proxy
and return it promptly in the enclosed envelope that has been provided for your
convenience. This will not limit your right to vote in person or to attend the
meeting. You may revoke your proxy by following the procedures set forth in
the accompanying Joint Proxy Statement/Prospectus.

Sincerely yours,

ROBERT M. SWARTZ MARK HONIGSFELD
President and Chief Executive Officer Chairman of the Board
AMRE, Inc. and Chief Executive Officer
Facelifters Home Systems, Inc.
<PAGE> 5
AMRE, INC.
8585 N. Stemmons
South Tower
Dallas, Texas 75247

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON APRIL 18, 1996

To the Stockholders of AMRE, Inc.:

NOTICE IS HEREBY GIVEN that a special meeting of stockholders of AMRE,
Inc., a Delaware corporation ("AMRE"), will be held on April 18, 1996,
commencing at 10:00 a.m., local time, at the corporate offices of AMRE, located
at 8585 N. Stemmons Freeway, South Tower, 8th Floor, Dallas, Texas 75247, to
consider and act upon the following matters which are described in more detail
in the accompanying Joint Proxy Statement/Prospectus:

1. To consider and vote, as a single proposal, upon (a)
the proposal to approve and adopt the Agreement and Plan of Merger,
dated as of October 31, 1995, as amended (the "Merger Agreement"),
among AMRE, AMRE Acquisition, Inc. ("Merger Sub"), Facelifters Home
Systems, Inc., a New York corporation, and Facelifters Home Systems,
Inc., a Delaware corporation ("Facelifters"), pursuant to which Merger
Sub will merge with and into Facelifters (the "Merger"), and (b) in
connection with the consummation of the Merger, the issuance by AMRE
of shares of AMRE common stock, par value $0.01 per share ("AMRE
Common Stock"), whereby each outstanding share of Facelifters common
stock, $0.01 par value ("Facelifters Common Stock"), will be converted
into one share of AMRE Common Stock.

2. To consider and vote upon a proposal to approve an
amendment to AMRE's Certificate of Incorporation to increase the
number of authorized shares of AMRE (the "Charter Amendment") in order
to permit the issuance of the additional shares of AMRE Common Stock
to the former holders of Facelifters Common Stock and for other
general corporate purposes.

3. To consider and act upon such other business as may
properly be brought before the meeting or any adjournment or
postponement thereof.

Unless the Charter Amendment is approved by the stockholders of AMRE,
AMRE will not have a sufficient number of authorized shares of AMRE Common
Stock to permit the issuance of the shares of AMRE Common Stock to the
stockholders of Facelifters. Approval of the Charter Amendment is a condition
to closing, and unless the Charter Amendment is approved, the Merger will not
be consummated.

The close of business on March 4, 1996 has been fixed as the record
date for the determination of stockholders entitled to notice of, and to vote
at, the meeting and any adjournment or postponement thereof. Holders of AMRE
Common Stock are not entitled to dissenters' appraisal rights under the
Delaware General Corporation Law in respect of the Merger.

When the proxies are returned properly executed, the shares
represented thereby will be voted in accordance with the indicated
instructions. However, if no instructions have been specified on the returned
proxy, the shares represented thereby will be voted "FOR" approval of the
Merger Agreement, the issuance of the AMRE Common Stock pursuant to the Merger
Agreement and the Charter Amendment. Any stockholder giving a proxy has the
right to revoke it at any time before it is voted by filing, with the Secretary
of AMRE, either an instrument revoking the proxy or a duly executed proxy
bearing a later date. Proxies also may be revoked by attending the meeting and
voting in person.

By Order of the Board of Directors
AMRE, Inc.

C. CURTIS EVERETT
Secretary
March ___, 1996

YOUR VOTE IS IMPORTANT NO MATTER HOW LARGE OR SMALL YOUR HOLDINGS MAY
BE. TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE DATE THE ENCLOSED
WHITE PROXY CARD, WHICH IS SOLICITED BY THE BOARD OF DIRECTORS OF AMRE, SIGN
EXACTLY AS YOUR NAME APPEARS THEREON AND RETURN IMMEDIATELY.
<PAGE> 6
FACELIFTERS HOME SYSTEMS, INC.
One Park Place
621 N.W. 53rd Street, Suite 450
Boca Raton, Florida 33487

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON APRIL 18, 1996

To the Stockholders of Facelifters Home Systems, Inc.:

NOTICE IS HEREBY GIVEN that a special meeting of stockholders of
Facelifters Home Systems, Inc., a Delaware corporation ("Facelifters"), will be
held on April 18, 1996, commencing at 10:00 a.m., local time, at the offices of
the Chairman of the Board of Facelifters, 800 Snediker Avenue, Brooklyn, New
York 11207 to consider and act upon the following matters which are described
in more detail in the accompanying Joint Proxy Statement/Prospectus:

1. To consider and vote upon a proposal to approve and
adopt the Agreement and Plan of Merger, dated as of October 31, 1995,
as amended (the "Merger Agreement"), among Facelifters, Facelifters
Home Systems, Inc., a New York corporation, AMRE, Inc. and AMRE
Acquisition, Inc., pursuant to which each outstanding share of
Facelifters Common Stock, $0.01 par value, will be converted into one
share of AMRE Common Stock, $0.01 par value.

2. To consider and act upon such other business as may
properly be brought before the meeting or any adjournment or
postponement thereof.

The close of business on March 4, 1996 has been fixed as the record
date for the determination of stockholders entitled to notice of, and to vote
at, the meeting and any adjournment or postponement thereof. Holders of
Facelifters Common Stock are not entitled to dissenters' appraisal rights under
the Delaware General Corporation Law in respect of the Merger.

When the proxies are returned properly executed, the shares
represented thereby will be voted in accordance with the indicated
instructions. However, if no instructions have been specified on the returned
proxy, the shares represented thereby will be voted "FOR" approval and adoption
of the Merger Agreement. Any stockholder giving a proxy has the right to
revoke it at any time before it is voted by filing, with the Secretary of
Facelifters, either an instrument revoking the proxy or a duly executed proxy
bearing a later date. Proxies also may be revoked by attending the meeting and
voting in person.

By Order of the Board of Directors
FACELIFTERS HOME SYSTEMS, INC.

DEEDEE HONIGSFELD
Secretary

March ___, 1996

YOUR VOTE IS IMPORTANT NO MATTER HOW LARGE OR SMALL YOUR HOLDINGS MAY
BE. TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE DATE THE ENCLOSED BLUE
PROXY CARD, WHICH IS SOLICITED BY THE BOARD OF DIRECTORS OF FACELIFTERS, SIGN
EXACTLY AS YOUR NAME APPEARS THEREON AND RETURN IMMEDIATELY.
<PAGE> 7
AMRE, INC.

AND

FACELIFTERS HOME SYSTEMS, INC.

JOINT PROXY STATEMENT

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

AMRE, INC. PROSPECTUS

This Joint Proxy Statement/Prospectus is being furnished to holders of
common stock, par value $0.01 per share ("AMRE Common Stock"), of AMRE, Inc., a
Delaware corporation ("AMRE"), in connection with the solicitation of proxies
by the Board of Directors of AMRE for use at a special meeting of stockholders
of AMRE (the "AMRE Special Meeting") to be held on Thursday, April 18, 1996,
commencing at 10:00 a.m., local time, at the corporate offices of AMRE, located
at 8585 N. Stemmons Freeway, South Tower, 8th Floor, Dallas, Texas 75247 and at
any adjournment or postponement thereof.

This Joint Proxy Statement/Prospectus is also being furnished to
holders of common stock, par value $0.01 per share ("Facelifters Common
Stock"), of Facelifters Home Systems, Inc., a Delaware corporation
("Facelifters"), in connection with the solicitation of proxies by the Board of
Directors of Facelifters for use at a special meeting of stockholders of
Facelifters (the "Facelifters Special Meeting") to be held on Thursday, April
18, 1996, at the offices of the Chairman of the Board of Facelifters, 800
Snediker Avenue, Brooklyn, New York 11207, commencing at 10:00 a.m., local
time, and at any adjournment or postponement thereof.

At the AMRE and Facelifters Special Meetings, the stockholders of AMRE
and Facelifters will vote upon the transactions contemplated by the Agreement
and Plan of Merger, dated as of October 31, 1995, as amended (the "Merger
Agreement"), among AMRE, AMRE Acquisition, Inc.("Merger Sub"), Facelifters Home
Systems, Inc., a New York corporation, and Facelifters, pursuant to which
Merger Sub will merge with and into Facelifters (the "Merger" or the
"Facelifters Merger"). Holders of Facelifters Common Stock and AMRE Common
Stock do not have dissenters' appraisal rights in respect of the Merger.

This Joint Proxy Statement/Prospectus also constitutes a prospectus of
AMRE with respect to shares of AMRE Common Stock to be issued in the Merger in
exchange for outstanding shares of Facelifters Common Stock.

Based on the number of shares of Facelifters Common Stock outstanding
on March 4, 1996, approximately 3,565,680 shares of AMRE Common Stock are
expected to be issued to former holders of Facelifters Common Stock upon
consummation of the Merger (assuming that no options to acquire Facelifters
Common Stock are exercised prior to the effective time of the Merger).

The shares of AMRE Common Stock offered hereby have been listed on the
New York Stock Exchange, Inc. (the "NYSE"), subject to notice of issuance and
requisite approvals by Facelifters' and AMRE's stockholders. FOR A DISCUSSION
OF CERTAIN CONSIDERATIONS REGARDING THE BUSINESSES AND OPERATIONS OF AMRE AND
FACELIFTERS THAT SHOULD BE EVALUATED BEFORE VOTING ON THE PROPOSALS DESCRIBED
HEREIN AT THE AMRE SPECIAL MEETING OR THE FACELIFTERS SPECIAL MEETING, SEE
"RISK FACTORS" ON PAGE 28.

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

THE SECURITIES TO BE ISSUED PURSUANT TO THIS JOINT PROXY STATEMENT/
PROSPECTUS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
JOINT PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

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

This Joint Proxy Statement/Prospectus and accompanying forms of proxy
are first being mailed to stockholders of AMRE and Facelifters on or about
March ___, 1996.

The date of this Joint Proxy Statement/Prospectus is March ___, 1996.
<PAGE> 8
AVAILABLE INFORMATION

AMRE and Facelifters are each subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith file reports, proxy statements, information
statements and other information with the Securities and Exchange Commission
(the "Commission"). The reports, proxy statements, information statements and
other information filed by AMRE and by Facelifters with the Commission can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the Commission's Regional Offices at Seven World Trade Center, 13th Floor, New
York, New York 10048 and Citicorp Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Copies of such material also may be obtained
from the Public Reference Section of the Commission, Washington, D.C. 20549, at
prescribed rates. AMRE Common Stock is listed on the NYSE. Reports, proxy and
information statements and other information relating to AMRE can be inspected
at the offices of the NYSE at 11 Wall Street, New York, New York 10005.
Facelifters Common Stock is principally traded on the NASDAQ Stock Market
("NASDAQ"). Reports, proxy statements and other information relating to
Facelifters can be inspected at the offices of NASDAQ, 1735 K Street,
Washington, D.C. 20006.

AMRE has filed with the Commission a Registration Statement on Form
S-4 (together with any amendments thereto, the "Registration Statement") under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the securities to be issued pursuant to the Merger Agreement. This Joint Proxy
Statement/Prospectus does not contain all the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. Statements contained in this Joint
Proxy Statement/Prospectus or in any document incorporated by reference in this
Joint Proxy Statement/Prospectus as to the contents of any contract or other
document referred to herein or therein are not necessarily complete, and in
each instance reference is made to the copy of such contract or other document
filed as an exhibit to the Registration Statement or such other document, each
such statement being qualified in all respects by such reference. The
Registration Statement, including exhibits filed as a part thereof, are
available for inspection and copying at the Commission's offices as described
above.

INCORPORATION OF DOCUMENTS BY REFERENCE

The following documents filed with the Commission by AMRE (File No.
1-9632) and Facelifters (File No. 0-14831) pursuant to the Exchange Act are
incorporated by reference in this Joint Proxy Statement/Prospectus:

1. AMRE's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995;

2. AMRE's Reports on Form 8-K, dated April 28, 1995,
June 19, 1995, October 17, 1995 and October 31, 1995;

3. AMRE's Form 8-A, dated July 16, 1987, as amended by
Amendment No. 1 to Form 8-A dated July 28, 1987;

4. Facelifters Annual Report on Form 10-K for the fiscal
year ended March 31, 1995;

5. Facelifters Quarterly Reports on Form 10-Q for the
quarters ended June 30, 1995, September 30, 1995 and
December 31, 1995;

6. Facelifters Reports on Form 8-K dated October 31,
1995 and January 1, 1996; and

2
<PAGE> 9
7. Facelifters Form 8-A dated April 28, 1994, as amended
by Amendment No. 1 to Form 8-A dated April 29, 1994.

All reports subsequently filed by AMRE or Facelifters pursuant to
Section 13(a) or 15(d) of the Exchange Act after the date of this Joint Proxy
Statement/Prospectus and prior to the date of the AMRE Special Meeting or the
Facelifters Special Meeting shall be deemed to be incorporated by reference in
this Joint Proxy Statement/Prospectus and to be part hereof from the date of
filing of such reports. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Joint Proxy Statement/Prospectus to the extent
that a statement contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so superseded, to constitute a part of this Joint
Proxy Statement/Prospectus.

THIS JOINT PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY
REFERENCE WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. SUCH DOCUMENTS
(OTHER THAN EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY
INCORPORATED BY REFERENCE) ARE AVAILABLE TO ANY PERSON, INCLUDING ANY
BENEFICIAL OWNER, TO WHOM THIS JOINT PROXY STATEMENT/PROSPECTUS IS DELIVERED,
UPON WRITTEN OR ORAL REQUEST, WITHOUT CHARGE, DIRECTED TO MORROW & CO., INC. AT
(800) 662-5200. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS PRIOR TO
THE RESPECTIVE SPECIAL MEETINGS, ANY REQUESTS SHOULD BE MADE BY APRIL 4, 1996.

NO PERSONS HAVE BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS JOINT PROXY
STATEMENT/PROSPECTUS IN CONNECTION WITH THE SOLICITATIONS OF PROXIES OR THE
OFFERING OF SECURITIES MADE HEREBY AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY AMRE,
FACELIFTERS OR ANY OTHER PERSON. THIS JOINT PROXY STATEMENT/PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY
SECURITIES, OR THE SOLICITATION OF A PROXY, IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION IS UNLAWFUL OR TO OR FROM ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION.

3
<PAGE> 10
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page Page
---- ----
<S> <C> <C> <C>
NO APPRAISAL RIGHTS . . . . . . . . . . . . . . . 58
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . 2
THE MERGER AGREEMENT . . . . . . . . . . . . . . . . 59
INCORPORATION OF DOCUMENTS BY REFERENCE . . . . . . . 2 THE MERGER . . . . . . . . . . . . . . . . . . . . 59
EFFECTIVE TIME OF THE MERGER . . . . . . . . . . . 59
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . 6 MANNER AND BASIS OF CONVERTING SHARES . . . . . . 59
GENERAL . . . . . . . . . . . . . . . . . . . . . 6 TERMS OF THE MERGER AGREEMENT . . . . . . . . . . 60
THE PARTIES . . . . . . . . . . . . . . . . . . . 6 MATTERS AFFECTING DIRECTORS, OFFICERS AND EMPLOYEES
REASONS FOR THE MERGER . . . . . . . . . . . . . . 8 OF FACELIFTERS . . . . . . . . . . . . . . . . . 64
THE SPECIAL MEETINGS . . . . . . . . . . . . . . . 10 OTHER MATTERS AFFECTED BY THE MERGER AGREEMENT . . 64
RECOMMENDATIONS OF THE BOARDS OF DIRECTORS OF AMRE
AND FACELIFTERS . . . . . . . . . . . . . . . . 12 CENTURY 21 LICENSE AGREEMENT . . . . . . . . . . . . 65
OPINIONS OF FINANCIAL ADVISORS . . . . . . . . . . 12 FACELIFTERS CENTURY 21 LICENSE AGREEMENT . . . . . 65
THE MERGER AND THE MERGER AGREEMENT . . . . . . . 13 CONGRESSIONAL CENTURY 21 LICENSE AGREEMENT . . . . 66
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN OTHER
PERSONS . . . . . . . . . . . . . . . . . . . . 16 THE STOCKHOLDER AGREEMENT . . . . . . . . . . . . . . 66
INTERESTS OF CERTAIN PERSONS IN THE MERGER . . . . 16
STOCKHOLDER AGREEMENT . . . . . . . . . . . . . . 17 AMRE CHARTER AMENDMENT . . . . . . . . . . . . . . . 67
CHARTER AMENDMENT . . . . . . . . . . . . . . . . 17
RECENT DEVELOPMENTS . . . . . . . . . . . . . . . 17 RECENT DEVELOPMENTS . . . . . . . . . . . . . . . . . 68
MARKETS AND MARKET PRICES . . . . . . . . . . . . 19 POSSIBLE CONGRESSIONAL MERGER . . . . . . . . . . 68
SUMMARY SELECTED HISTORICAL CONSOLIDATED FINANCIAL RESIGNATION OF CHAIRMAN . . . . . . . . . . . . . 68
DATA . . . . . . . . . . . . . . . . . . . . . . 21 AMRE'S FIRST QUARTER OUTLOOK . . . . . . . . . . . 69
SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FACELIFTERS' FOURTH QUARTER OUTLOOK . . . . . . . 70
FINANCIAL DATA . . . . . . . . . . . . . . . . . 23
COMPARATIVE PER SHARE DATA . . . . . . . . . . . . 25 FACELIFTERS SELECTED CONSOLIDATED
FINANCIAL AND OPERATING DATA . . . . . . . . . . . 71
RISK FACTORS . . . . . . . . . . . . . . . . . . . . 28
MANAGEMENT OF COMBINED COMPANY; OPERATING LOSSES . 28 FACELIFTERS MANAGEMENT'S DISCUSSION AND ANALYSIS OF
DEPENDENCE ON THE CENTURY 21 HOME IMPROVEMENTS NAME 28 FINANCIAL CONDITION AND RESULTS OF OPERATIONS. . . 72
NEW MARKETING STRATEGIES . . . . . . . . . . . . . 28 RESULTS OF OPERATIONS . . . . . . . . . . . . . . 72
COSTS RELATING TO BRAND TRANSITION, CONSUMMATION OF LIQUIDITY AND CAPITAL RESOURCES . . . . . . . . . 78
LICENSE AGREEMENT AND THE MERGER . . . . . . . . 29 IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS . . . . . 79
LIQUIDITY . . . . . . . . . . . . . . . . . . . . 29
INTEGRATION OF THE BUSINESS . . . . . . . . . . . 29 DESCRIPTION OF FACELIFTERS CAPITAL STOCK . . . . . . 80
DEPENDENCE ON CENTURY 21 LICENSE AGREEMENT . . . . 30 IN GENERAL . . . . . . . . . . . . . . . . . . . . 80
VOLATILITY OF STOCK PRICE . . . . . . . . . . . . 30 FACELIFTERS COMMON STOCK . . . . . . . . . . . . . 80
SEASONALITY . . . . . . . . . . . . . . . . . . . 30 FACELIFTERS PREFERRED STOCK . . . . . . . . . . . 80
SUSPENSION OF DIVIDENDS . . . . . . . . . . . . . 30 POSSIBLE ANTI-TAKEOVER PROVISIONS . . . . . . . . 80
DILUTION . . . . . . . . . . . . . . . . . . . . . 30
SERVICE MARK AND TRADE NAME INFRINGEMENT CLAIM . . 31 COMPARISON OF STOCKHOLDER RIGHTS . . . . . . . . . . 81
COMPETITION . . . . . . . . . . . . . . . . . . . 31 AUTHORIZED STOCK . . . . . . . . . . . . . . . . . 81
DIRECTORS . . . . . . . . . . . . . . . . . . . . 82
COMPARATIVE MARKET PRICE DATA . . . . . . . . . . . . 32 STOCKHOLDER ACTION BY WRITTEN CONSENT; SPECIAL
AMRE COMMON STOCK . . . . . . . . . . . . . . . . 32 MEETINGS OF STOCKHOLDERS . . . . . . . . . . . . 82
FACELIFTERS COMMON STOCK . . . . . . . . . . . . . 33 AMENDMENT TO CERTIFICATE . . . . . . . . . . . . . 83
AMENDMENT TO BYLAWS . . . . . . . . . . . . . . . 83
THE MEETINGS . . . . . . . . . . . . . . . . . . . . 34 LIABILITY OF DIRECTORS; INDEMNIFICATION . . . . . 83
MATTERS TO BE CONSIDERED AT THE MEETINGS . . . . . 34
VOTING AT MEETINGS; RECORD DATES . . . . . . . . . 34 BUSINESS OF FACELIFTERS . . . . . . . . . . . . . . . 86
AMRE PROXIES . . . . . . . . . . . . . . . . . . . 35 GENERAL . . . . . . . . . . . . . . . . . . . . . 86
FACELIFTERS PROXIES . . . . . . . . . . . . . . . 36 ACQUISITIONS . . . . . . . . . . . . . . . . . . . 87
SOLICITATION OF PROXIES . . . . . . . . . . . . . 36 DISCONTINUED OPERATIONS AND DIVESTITURE . . . . . 88
DIRECT MARKETING AND SALES . . . . . . . . . . . . 88
SPECIAL FACTORS . . . . . . . . . . . . . . . . . . . 37 PURCHASING, MATERIAL AND INSTALLATION . . . . . . 88
BACKGROUND OF THE MERGER . . . . . . . . . . . . . 37 CONSUMER LOAN FINANCING AND NEW BUSINESS SEGMENT . 89
REASONS FOR THE MERGER; RECOMMENDATIONS OF THE EMPLOYEES . . . . . . . . . . . . . . . . . . . . 90
BOARDS OF DIRECTORS . . . . . . . . . . . . . . 39 INDEPENDENT CONTRACTORS . . . . . . . . . . . . . 90
EFFECTS OF THE MERGER . . . . . . . . . . . . . . 41 WARRANTIES . . . . . . . . . . . . . . . . . . . . 90
OPINIONS OF FINANCIAL ADVISORS . . . . . . . . . . 41 DEALERS . . . . . . . . . . . . . . . . . . . . . 90
INTERESTS OF CERTAIN PERSONS IN THE MERGER . . . . 50 COMPETITION . . . . . . . . . . . . . . . . . . . 90
CONVERSION OF FACELIFTERS STOCK OPTIONS . . . . . 53 GOVERNMENT REGULATIONS . . . . . . . . . . . . . . 91
ACCOUNTING TREATMENT . . . . . . . . . . . . . . . 55 TRADEMARKS AND SERVICE MARKS . . . . . . . . . . . 91
CERTAIN FEDERAL INCOME TAX CONSEQUENCES . . . . . 56 SEASONALITY . . . . . . . . . . . . . . . . . . . 91
REGULATORY APPROVALS . . . . . . . . . . . . . . . 58 INFLATION . . . . . . . . . . . . . . . . . . . . 91
FEDERAL SECURITIES LAWS CONSEQUENCES . . . . . . . 58
LISTING ON THE NEW YORK STOCK EXCHANGE . . . . . . 58 MANAGEMENT INFORMATION OF AMRE . . . . . . . . . . . 92
DIRECTORS OF AMRE . . . . . . . . . . . . . . . . 92
</TABLE>

4
<PAGE> 11
<TABLE>
<S> <C>
SECURITY OWNERSHIP . . . . . . . . . . . . . . . . . 95
OWNERSHIP OF AMRE SECURITIES . . . . . . . . . . . 95

EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . 97
SUMMARY COMPENSATION TABLE . . . . . . . . . . . . 97
STOCK OPTIONS . . . . . . . . . . . . . . . . . . 99
COMPENSATION OF DIRECTORS . . . . . . . . . . . . 100
EXECUTIVE SEVERANCE PLAN . . . . . . . . . . . . . 101
EMPLOYMENT AGREEMENTS . . . . . . . . . . . . . . 101
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION . . . . . . . . . . . . . . . . . 101

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . . . 101

INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . . . 102

LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . 102

EXPERTS . . . . . . . . . . . . . . . . . . . . . . . 102

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS . . . . . F-1

MERGER AGREEMENT . . . . . . . . . . . . . . . . Annex A

HONIGSFELD EMPLOYMENT AGREEMENT . . . . . . . . . Annex B

GROSS EMPLOYMENT AGREEMENT . . . . . . . . . . . Annex C

STOCKHOLDER AGREEMENT . . . . . . . . . . . . . . Annex D

FAIRNESS OPINION OF SOUTHWEST
SECURITIES, INC. . . . . . . . . . . . . . . . Annex E

FAIRNESS OPINION OF BEAR, STEARNS
& CO. INC. . . . . . . . . . . . . . . . . . . Annex F
</TABLE>

5
<PAGE> 12

SUMMARY

The following is only a summary of certain information contained
elsewhere in this Joint Proxy Statement/Prospectus and does not purport to be
complete. Reference is made to, and this Summary is qualified in its entirety
by, the more detailed information contained elsewhere in this Joint Proxy
Statement/Prospectus. As used in this Joint Proxy Statement/Prospectus, the
terms "AMRE" and "Facelifters" refer to such corporations, respectively, and,
except where the context otherwise requires, such entities and their respective
predecessors and subsidiaries. All information concerning AMRE included in
this Joint Proxy Statement/Prospectus has been furnished by AMRE, and all
information concerning Facelifters included in this Joint Proxy
Statement/Prospectus has been furnished by Facelifters. Unless otherwise
defined herein, capitalized terms used in this Summary have the meanings
ascribed to them elsewhere in this Joint Proxy Statement/Prospectus. Unless
otherwise indicated, year end financial information and other information
referencing a particular year with respect to AMRE is as of and for the year
ended December 31, and with respect to Facelifters is as of and for the year
ended March 31. Stockholders are urged to read this Joint Proxy
Statement/Prospectus and the Annexes attached hereto in their entirety.

GENERAL

At the AMRE Special Meeting and the Facelifters Special Meeting,
holders of AMRE Common Stock and Facelifters Common Stock will be asked to act
upon proposals related to the Merger of Facelifters with Merger Sub pursuant to
the terms of the Merger Agreement which are more particularly described herein.
A copy of the Merger Agreement is attached hereto and incorporated herein by
reference as Annex A. If the Merger and related proposals are approved by the
requisite votes of such stockholders, Merger Sub will be merged with and into
Facelifters, and Facelifters will become a wholly owned subsidiary of AMRE. For
a description of certain important federal income tax consequences of the
Merger, see "Summary -- The Merger and the Merger Agreement"; "-- Certain
Federal Income Tax Consequences"; and "Special Factors -- Certain Federal
Income Tax Consequences."

As of March 4, 1996, approximately 14,127,457 shares of AMRE Common
Stock were outstanding. If the matters described in this Joint Proxy
Statement/Prospectus are approved by the requisite stockholders of AMRE and
Facelifters, based on the number of shares of Facelifters Common Stock
outstanding on March 4, 1996, AMRE will issue approximately 3,565,680 new
shares of AMRE Common Stock to the former stockholders of Facelifters (assuming
no options to acquire shares of Facelifters Common Stock are exercised prior to
the Effective Time (as defined herein)), and approximately 407,791 shares of
AMRE Common Stock will be reserved for issuance to holders of options to
acquire Facelifters Common Stock.

THE PARTIES

AMRE

AMRE is a direct marketing, in-home sales and installation company
providing quality home improvement products. AMRE commenced business under the
laws of Texas in 1980 and was reincorporated under the laws of Delaware in
February 1987. At December 31, 1995, AMRE had 61 branch offices located in 50
cities in 35 states, and one manufacturing facility. AMRE's principal
executive offices are located at 8585 N. Stemmons Freeway, South Tower, Dallas,
Texas 75247, and its telephone number is (214) 658-6300.

6
<PAGE> 13

From 1981 until December 1995, AMRE generated virtually all of its
revenues through direct consumer marketing and the in-home sales and
installation of certain home improvement products under an annually renewable
license agreement (collectively, the "AMRE Sears License Agreement") between
American Remodeling, Inc., a wholly owned subsidiary of AMRE ("ARI") and Sears,
Roebuck and Co. ("Sears"). ARI, and thereby AMRE, did not renew the AMRE Sears
License Agreement when it expired on December 31, 1995. On October 17, 1995,
TM Acquisition Corp. and Century 21 Real Estate Corporation (collectively
referred to herein as "Century 21"), subsidiaries of HFS Incorporated ("HFS"),
and ARI, entered into a license agreement (the "Century 21 License Agreement"),
pursuant to which Century 21(R) has granted to ARI an exclusive 20 year license
to operate under the name "CENTURY 21 Home Improvements(SM)" ("CENTURY 21 Home
Improvements") for the marketing, sale and installation of certain home
improvement products. ARI also has the right to grant sublicenses under the
Century 21 License Agreement. See "Century 21 License Agreement" and "Risk
Factors -- Dependence on the CENTURY 21 Home Improvements Name"; "-- New
Marketing Strategies"; "-- Dependence on Century 21 License Agreement."

AMRE ACQUISITION, INC.

AMRE Acquisition, Inc. is a wholly owned subsidiary of AMRE that was
formed to facilitate the consummation of the Merger and has conducted no
activities other than in connection with the Merger and the Merger Agreement.
The principal executive offices of AMRE Acquisition, Inc. are located at 8585
N. Stemmons, South Tower, Dallas, Texas, 75247, and its telephone number is
(214) 658-6300.

FACELIFTERS

Facelifters designs, manufactures, markets, sells, and installs,
directly to customers, kitchen cabinet refacing products utilized in kitchen
remodeling. Refacing is a kitchen remodeling technique in which existing
cabinetry framework is retained, but all exposed surfaces are changed.
Facelifters markets these products directly to consumers on an installed basis.
Facelifters presently operates sales and warehouse locations in 13 states and
one manufacturing facility covering 26 geographic markets. Facelifters
commenced business under the laws of the State of New York in 1978 under the
name International Cabinet Company, Inc. and was reincorporated under the laws
of Delaware in December 1995. Facelifters' principal executive offices are
located at One Park Place, Suite 450, 621 N.W. 53rd Street, Boca Raton, Florida
33487, and its telephone number is (407) 997-2557.

From January 1991 until January 1995, Facelifters entered into
annually renewable license agreements with Sears to market and install
Facelifters products and services under the Sears name (collectively, the
"Facelifters Sears License Agreement"). In connection with the transactions
contemplated by the Merger, Facelifters entered into a three- year,
non-cancelable sublicense agreement with ARI, commencing January 1, 1996, to
market kitchen cabinet refacing, kitchen remodeling and any and all products or
services dealing with the kitchen area of the house using the CENTURY 21 Home
Improvements name (the "Facelifters Century 21 License Agreement") in
geographic markets where Facelifters was previously operating under the
Facelifters Sears License Agreement. If the Merger is consummated, the
Facelifters Century 21 License Agreement will be terminated. In the event the
Merger is not consummated for any reason, the Facelifters Century 21 License
Agreement will continue in effect with Facelifters operating as a sublicensee
of AMRE under the Century 21 License Agreement for the remaining term of the
Facelifters Century 21 License Agreement. Facelifters did not renew the
Facelifters Sears License Agreement when it expired on December 31, 1995.
For additional information concerning Facelifters, see "Business of
Facelifters."

7
<PAGE> 14

REASONS FOR THE MERGER

REASONS FOR THE MERGER -- AMRE AND FACELIFTERS

The Boards of Directors of AMRE and Facelifters (the "AMRE Board" and
the "Facelifters Board," respectively) have approved the Merger Agreement and
the Merger and have recommended that their respective stockholders vote "FOR"
approval of the matters described in this Joint Proxy Statement/Prospectus.

The business strategies of both AMRE and Facelifters have been to
achieve growth through aggressive marketing of their respective products.
Facelifters has also focused on growth through the acquisition of smaller
companies engaged in similar operations. In addition, both AMRE and
Facelifters have operated under license agreements with Sears, with revenues
from such license agreements accounting for a significant percentage of annual
revenues.

In connection with entering into the Century 21 License Agreement,
AMRE made a strategic decision to alter significantly the marketing and
distribution focus of its home improvement services. Because of the perceived
opportunities offered by the Century 21 License Agreement, including access to
additional geographic markets and a greater array of home improvement products,
lower licensing fees and the affiliation with Century 21 through the use of the
CENTURY 21 Home Improvements name, Facelifters desired to enter into a
strategic alliance with AMRE. The AMRE Board and the Facelifters Board
considered a combination of the two companies to be the most attractive method
to take advantage of the strengths of each of the companies and to expand the
combined entity's business. The terms of the Merger Agreement and the other
aspects of the Merger were negotiated anticipating the continuing involvement
of the Facelifters organization.

The AMRE Board and the Facelifters Board have recommended that their
respective stockholders approve the matters described in this Joint Proxy
Statement/Prospectus for the following additional reasons:

o the combination of the two companies significantly expands the
geographic market coverage of the combined entity with minimal
overlap; Facelifters operates in 26 geographic markets but
competes with AMRE in only four of these markets.
Accordingly, the combined entity has a minimal number of
possibly redundant facilities or overlapping markets;

o the Merger is expected to facilitate the development and
expansion of the CENTURY 21 Home Improvements name and related
home improvement products by expanding the territories in
which the CENTURY 21 Home Improvements name will initially be
marketed and committing the enhanced resources of the combined
entity to more effectively promote and advertise the CENTURY
21 Home Improvements name;

o the combined entity is expected to have greater revenues and
operating cash flows than either of AMRE or Facelifters on a
stand-alone basis, which is expected to result in enhanced
financial flexibility and improved access to financing on more
favorable terms than are currently available to either company
on a stand-alone basis;

o it is expected that the combination can be accomplished with
minimum disruption to either company's management and
employees; and

o the Merger presents opportunities to realize economies of
scale and operating efficiencies. Economies of scale may
result from the increased buying power of the combined entity

8
<PAGE> 15

which should achieve lower costs for manufacturing, raw
materials, advertising media, printing costs, supplies,
telecommunications and other operating related costs. In
addition, costs associated with television and radio
commercials and direct mail advertising can be spread over
more geographic markets. Operating efficiencies may result
from the integration of certain operations and the elimination
of facilities' costs. While the extent to which these
possible economies of scale and operating efficiencies may be
realized is uncertain, management believes that at least $1.0
million of annual savings will result from these
opportunities.

REASONS FOR THE MERGER -- AMRE

The AMRE Board approved the Merger Agreement and the transactions
contemplated thereby and recommends that its stockholders vote "FOR" approval
of the matters described in this Joint Proxy Statement/Prospectus for the
following additional reasons:

o the combined entity is expected to have enhanced operating
results in the future due to the anticipated operating
efficiencies and economies of scale described above;

o because the Century 21 License Agreement contains a minimum
license fee, it is expected that the anticipated additional
revenue from Facelifters will help maintain the license fees
due under the Century 21 License Agreement at a lower level as
a percentage of contract revenues as compared to AMRE on a
stand-alone basis;

o the addition of Facelifters' telemarketing operations is
expected to improve AMRE's overall marketing operations; and

o the management and operating philosophies of Facelifters are
very similar to those of AMRE, and the addition of
Facelifters' management personnel is expected to strengthen
AMRE's management team.

In reaching these conclusions, the AMRE Board considered, among other
things, (i) the respective geographic markets of AMRE and Facelifters, (ii)
expected operating and financial characteristics of a combined entity, and the
operating efficiencies and economies of scale associated with the combination,
(iii) the experience and performance of Facelifters management, (iv) the
capital structure and financial performance of Facelifters, and (v) the opinion
of Bear, Stearns & Co. Inc. ("Bear Stearns"), financial advisor to AMRE for the
Merger, that, as of the date of such opinion, the consideration to be paid in
the Merger was fair, from a financial point of view, to the public stockholders
of AMRE.

REASONS FOR THE MERGER -- FACELIFTERS

The Facelifters Board approved the Merger Agreement and the
transactions contemplated thereby and recommends that its stockholders vote
"FOR" approval of such matters for the following additional reasons:

o Facelifters will become part of the largest direct marketing,
in-home sales and installation home improvement company in the
United States;

o the combined entity will have a greater total market
capitalization than either company on a stand- alone basis,
which is expected to result in improved liquidity for
Facelifters stockholders;

9
<PAGE> 16

o the Merger will provide Facelifters stockholders with the
opportunity to continue to participate in the home improvement
and kitchen refacing business through the conversion of the
Facelifters stockholders' investment into an investment in a
larger entity with a broader customer base in what is
anticipated to be a tax free transaction;

o the Merger will provide Facelifters with access to a larger
market for its products; and

o the Facelifters Board believes that consummation of the Merger
offers the stockholders of Facelifters enhanced prospects for
long-term growth in the value of their investment in
Facelifters.

The Facelifters Board also considered numerous other factors in
evaluating the Merger and the Merger Agreement, including but not limited to
the following: (i) the historical financial statements, financial projections
and discounted cash flow values of Facelifters and AMRE, (ii) financial data
concerning selected comparable public companies, (iii) comparison of the market
value of the AMRE Common Stock and the Facelifters Common Stock over various
periods of time, (iv) the going concern value of Facelifters on a stand-alone
basis, (v) the possible values of the combined companies, (vi) the
determination by the directors, in light of the comparison between the
Facelifters Sears License Agreement and the apparent opportunities provided by
the Century 21 License Agreement, that the Merger provides Facelifters
stockholders with a more favorable opportunity to continue to participate in
the home improvement and kitchen refacing business through the conversion of
the Facelifters stockholders' investment into an investment in a larger entity
with a broader customer base, (vii) the determination by the directors that a
strategic merger with AMRE provides Facelifters and its stockholders with the
best opportunity for future growth and profitability, (viii) the Merger is
structured so as to permit the Facelifters Board to consider and possibly
accept a superior Acquisition Proposal (as defined herein), and (ix) the
financial advice of Southwest Securities, Inc. ("Southwest") to the effect that
the consideration per share to be paid to the stockholders of Facelifters in
connection with Merger is fair from a financial point of view.

For a discussion of the reasons for the Merger and other factors
considered by the AMRE Board and the Facelifters Board, see "Special Factors --
Reasons for the Merger; Recommendations of the Boards of Directors" and "Risk
Factors."

THE SPECIAL MEETINGS

PURPOSES OF THE MEETINGS

AMRE. The purpose of the AMRE Special Meeting is to consider and
vote, as a single proposal, upon (a) the proposal to approve and adopt the
Merger Agreement and (b) in connection with the consummation of the Merger, the
issuance by AMRE of shares of AMRE Common Stock whereby each outstanding share
of Facelifters Common Stock will be converted into one share of AMRE Common
Stock (the "Exchange Ratio"). AMRE stockholders will also vote upon an
amendment to AMRE's Certificate of Incorporation (the "Charter Amendment") to
increase the number of authorized shares of AMRE Common Stock in order to
permit the issuance of the additional shares of AMRE Common Stock to the former
holders of Facelifters Common Stock and for other general corporate purposes.
Unless the Charter Amendment is approved by the stockholders of AMRE, AMRE will
not have a sufficient number of authorized shares of AMRE Common Stock to
permit the issuance of the shares of AMRE Common Stock to the stockholders of
Facelifters. Approval of the Charter Amendment is a condition to closing, and
unless the Charter Amendment is approved, the Merger will not be consummated.

10
<PAGE> 17

If the matters described in the Joint Proxy Statement/Prospectus are
approved by the requisite stockholder approvals of AMRE and Facelifters and the
Merger is consummated, based on the number of shares of Facelifters Common
Stock outstanding on March 4, 1996, AMRE will issue approximately 3,565,680 new
shares of AMRE Common Stock to the former holders of Facelifters Common Stock.
In addition, AMRE will reserve approximately 407,791 shares of AMRE Common
Stock for issuance upon exercise of outstanding options to acquire Facelifters
Common Stock.

Facelifters. The purpose of the Facelifters Special Meeting is to
consider and vote upon (i) the proposal to approve the Merger Agreement and the
Merger and the consummation of the other transactions contemplated thereby and
(ii) such other matters as may properly be brought before the Facelifters
Special Meeting.

DATE, TIME AND PLACE

AMRE. The AMRE Special Meeting will be held on Thursday, April 18,
1996, at the corporate offices of AMRE, located at 8585 N. Stemmons Freeway,
South Tower, 8th Floor, Dallas, Texas 75247 at 10:00 a.m., local time.

Facelifters. The Facelifters Special Meeting will be held on Thursday,
April 18, 1996, at the offices of the Chairman of the Board of Facelifters, 800
Snediker Avenue, Brooklyn, New York 11207, at 10:00 a.m., local time.

RECORD DATES; SHARES ENTITLED TO VOTE

AMRE. The AMRE Board has established March 4, 1996, as the record date
for the determination of stockholders entitled to notice of and to vote at the
AMRE Special Meeting. Only holders of record of AMRE Common Stock at the close
of business on such date are entitled to vote at the AMRE Special Meeting. On
such date, there were approximately 14,127,457 shares of AMRE Common Stock
outstanding, each of which will be entitled to vote on each matter to be acted
upon or which may properly be brought before the AMRE Special Meeting.

Facelifters. The Facelifters Board has established March 4, 1996, as
the record date for the determination of stockholders entitled to notice of and
to vote at the Facelifters Special Meeting. Only holders of record of
Facelifters Common Stock at the close of business on such date are entitled to
vote at the Facelifters Special Meeting. On such date, there were
approximately 3,565,680 shares of Facelifters Common Stock outstanding, each of
which will be entitled to vote on each matter to be acted upon or which may
properly be brought before the Facelifters Special Meeting.

VOTE REQUIRED

AMRE. The affirmative vote of the holders of a majority of the issued
and outstanding shares of AMRE Common Stock is required to approve the Merger
Agreement, the issuance of the AMRE Common Stock pursuant to the Merger
Agreement and the Charter Amendment.

Facelifters. The affirmative vote of the holders of a majority of the
issued and outstanding shares of Facelifters Common Stock will be required to
approve the Merger Agreement and the Merger.

For additional information concerning the special meetings, see "The
Meetings." For information concerning the security ownership of AMRE and
Facelifters management and certain other persons, see "Special Factors --
Interests of Certain Persons in the Merger" and "Security Ownership."

11
<PAGE> 18
RECOMMENDATIONS OF THE BOARDS OF DIRECTORS OF AMRE AND FACELIFTERS

AMRE

THE AMRE BOARD BELIEVES THAT THE TERMS OF THE MERGER AND THE ISSUANCE
OF SHARES OF AMRE COMMON STOCK PURSUANT TO THE MERGER AGREEMENT ARE FAIR TO,
AND IN THE BEST INTERESTS OF, AMRE AND ITS STOCKHOLDERS. ACCORDINGLY, THE AMRE
BOARD HAS APPROVED THE MERGER AGREEMENT, THE MERGER, THE ISSUANCE OF THE AMRE
COMMON STOCK IN ACCORDANCE WITH THE MERGER AGREEMENT AND THE OTHER TRANSACTIONS
CONTEMPLATED THEREBY AND THE CHARTER AMENDMENT. THE AMRE BOARD RECOMMENDS
THAT HOLDERS OF AMRE COMMON STOCK VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT,
THE ISSUANCE OF THE AMRE COMMON STOCK IN ACCORDANCE WITH THE MERGER AGREEMENT
AND THE CHARTER AMENDMENT. SEE "SPECIAL FACTORS -- REASONS FOR THE MERGER;
RECOMMENDATIONS OF THE BOARDS OF DIRECTORS" AND "RISK FACTORS."

FACELIFTERS

THE FACELIFTERS BOARD BELIEVES THAT THE TERMS OF THE MERGER ARE FAIR
TO, AND IN THE BEST INTERESTS OF, FACELIFTERS AND ITS STOCKHOLDERS.
ACCORDINGLY, THE FACELIFTERS BOARD HAS APPROVED THE MERGER AGREEMENT, THE
MERGER AND THE OTHER TRANSACTIONS CONTEMPLATED THEREBY AND RECOMMENDS THAT
HOLDERS OF SHARES OF FACELIFTERS COMMON STOCK VOTE "FOR" ADOPTION AND APPROVAL
OF THE MERGER AGREEMENT, THE MERGER AND THE TRANSACTIONS CONTEMPLATED THEREBY.
SEE "SPECIAL FACTORS -- REASONS FOR THE MERGER; RECOMMENDATIONS OF THE BOARDS
OF DIRECTORS" AND "RISK FACTORS."

OPINIONS OF FINANCIAL ADVISORS

OPINION OF AMRE FINANCIAL ADVISOR

Bear, Stearns has delivered its written opinion, dated March 14,
1996 (the "Bear Stearns Opinion"), and confirmed as of the date of this Joint
Proxy Statement/Prospectus, to the AMRE Board to the effect that, as of such
date, the Merger is fair, from a financial point of view, to the public
stockholders of AMRE. A copy of such opinion is included as Annex F to this
Joint Proxy Statement/Prospectus. For a more detailed description of the
opinion and information regarding fees and expenses to be paid to Bear Stearns
by AMRE upon consummation of the Merger and Bear Stearns' prior representation
of AMRE, see "Special Factors -- Opinions of Financial Advisors -- AMRE."

OPINION OF FACELIFTERS FINANCIAL ADVISOR

Southwest has delivered its written opinion, dated March 11, 1996,
(the "Southwest Opinion") and confirmed as of the date of this Joint Proxy
Statement/Prospectus, to the Facelifters Board to the effect that, as of such
date, the Merger is fair to the holders of Facelifters Common Stock, from a
financial point of view. A copy of such opinion is included as Annex E to this
Joint Proxy Statement/Prospectus. For a more detailed description of this
opinion and information regarding fees and expenses payable to Southwest, see
"Special Factors -- Opinions of Financial Advisors -- Facelifters."

12
<PAGE> 19

THE MERGER AND THE MERGER AGREEMENT

THE MERGER AGREEMENT

Pursuant to the Merger Agreement, at the Effective Time (as defined
herein), Merger Sub will merge with and into Facelifters, and Facelifters shall
continue as the surviving corporation (the "Surviving Corporation") in the
Merger. Each share of common stock of Merger Sub issued and outstanding
immediately prior to the Effective Time as a result of the Merger shall be
converted in exchange for one newly and validly issued, fully paid and
nonassessable share of common stock of the Surviving Corporation. Under the
terms of the Merger Agreement, each outstanding share of Facelifters Common
Stock will be converted into one share of AMRE Common Stock. No fractional
shares of AMRE Common Stock will be issued. It is anticipated that the
transaction will qualify as a tax-free reorganization under Section 368(a)(1)
and Section 368(a)(2)(E) of the Internal Revenue Code of 1986 (the "Code").
For additional information on the conversion of shares of Facelifters Common
Stock, see "The Merger Agreement -- Manner and Basis of Converting Shares."

CONVERSION OF FACELIFTERS COMMON STOCK

Pursuant to the Merger Agreement, each share of Facelifters Common
Stock will, at the Effective Time and thereafter, with no action on the part of
the holder thereof, be converted into one share of AMRE Common Stock. No
fractional shares of AMRE Common Stock will be issued.

Pursuant to the Merger Agreement, AMRE and Facelifters shall take all
actions necessary to provide that all options (individually a "Facelifters
Option" or collectively, the "Facelifters Options") then outstanding under
Facelifters' stock option plans (collectively, the "Facelifters Stock Option
Plans") shall remain outstanding following the Effective Time and shall be
exercisable for that number of shares of AMRE Common Stock (to the nearest
whole share) which the number of Facelifters shares subject to the option would
have been converted if the option had been exercised at the Effective Time of
the Merger. For additional information on the conversion of Facelifters
Options, see "Special Factors -- Conversion of Facelifters Stock Options."

EXCHANGE OF FACELIFTERS COMMON STOCK FOR AMRE COMMON STOCK

Promptly after consummation of the Merger, The Bank of New York (the
"Exchange Agent") will mail a letter of transmittal with instructions to each
holder of record of Facelifters Common Stock immediately before the Effective
Time for use in exchanging certificates representing shares of Facelifters
Common Stock for certificates representing shares of AMRE Common Stock and cash
in lieu of any fractional shares. Certificates should not be surrendered by
the holders of Facelifters Common Stock until they have received a letter of
transmittal from the Exchange Agent. See "The Merger Agreement -- Manner and
Basis of Converting Shares."

The AMRE Common Stock is listed for trading on the NYSE. The AMRE
Common Stock to be issued in connection with the Merger has been approved for
listing on the NYSE, subject to notice of issuance and approval of the Merger
by Facelifters' and AMRE's stockholders.

13
<PAGE> 20

CONDITIONS TO THE MERGER

Consummation of the Merger is subject to the satisfaction of a number
of conditions, including obtaining requisite stockholder approvals. See "The
Merger Agreement -- Terms of the Merger Agreement"; "-- Conditions to the
Merger"; "-- Additional Conditions to the Obligation of Facelifters"; and
"-- Additional Conditions to the Obligation of AMRE."

EFFECTIVE TIME OF THE MERGER

The Merger will become effective upon the issuance of a Certificate of
Merger by the Secretary of State of Delaware (the "Effective Time"). Assuming
all conditions to the Merger contained in the Merger Agreement are satisfied or
waived prior thereto, it is anticipated that the Effective Time of the Merger
will occur as soon as practicable following the Special Meetings.

TERMINATION OF THE MERGER AGREEMENT

The Merger Agreement is subject to termination at the option of either
of the Boards of Merger Sub or Facelifters if the Merger is not consummated
within 60 days after AMRE files its annual report on Form 10-K for the fiscal
year ended December 31, 1995, and prior to such time upon the occurrence of
certain specified events. Under certain circumstances, Facelifters may become
obligated to pay AMRE a termination fee of $2.0 million in the event the Merger
is not consummated. See "The Merger Agreement -- Terms of the Merger Agreement
- -- Termination."

AMENDMENT TO THE MERGER AGREEMENT AND WAIVER

The Merger Agreement may be amended or supplemented at any time by
agreement of AMRE and Facelifters, or any provision of the Merger Agreement may
be waived at any time by the Board of Directors of the party which is, or the
stockholders which are, entitled to the benefits thereof, by action taken by
their respective Boards of Directors; provided that, after any stockholder
approval is obtained as described herein, no amendment or waiver may be made
which materially adversely affects the rights of the holders of the Facelifters
Common Stock or the AMRE Common Stock without further stockholder approval.
Neither AMRE nor Facelifters has any current intention to seek an amendment to
or waiver of any provision of the Merger Agreement. See "The Merger Agreement
- -- Terms of the Merger Agreement -- Other Matters."

ACCOUNTING TREATMENT

It is the intent of the parties that the transaction be treated as a
pooling of interests for accounting purposes. In that regard, the parties have
agreed to use commercially reasonable efforts to prevent any of their
respective subsidiaries or affiliates from taking any action or failing to take
any action that would jeopardize the treatment of the Merger being accounted
for as a pooling of interests in accordance with generally accepted accounting
principles. The consummation of the Merger, however, is not conditioned upon
the Merger being treated as a pooling of interests for accounting purposes, and
stockholder approval of the Merger will not be resolicited if the Merger is not
treated as a pooling of interests for accounting purposes. For a discussion of
the effect of the application of pooling of interests to this transaction, see
"Special Factors -- Accounting Treatment."

REGULATORY APPROVAL

Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), and the rules promulgated thereunder by the Federal
Trade Commission (the "FTC"), the Merger may not

14
<PAGE> 21

be consummated until notifications have been given and certain information has
been furnished to the FTC and the Antitrust Division of the Department of
Justice (the "Antitrust Division") and specified waiting period requirements
have been satisfied. AMRE and Facelifters filed notification and report forms
under the HSR Act with the FTC and the Antitrust Division on November 22, 1995.
On December 4, 1995, the FTC notified AMRE and Facelifters that early
termination of the HSR Act waiting period had been granted.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

The parties to the Merger have not and do not intend to seek a ruling
from the Internal Revenue Service (the "IRS") as to the federal income tax
consequences of the Merger. Instead, AMRE has obtained the opinion of its
counsel, Akin, Gump, Strauss, Hauer & Feld, L.L.P. ("Akin, Gump"), and
Facelifters has obtained the opinion of its counsel, Jackson & Walker, L.L.P.
("Jackson & Walker"), as to certain of the expected federal income tax
consequences of the Merger, copies of which are attached as exhibits to the
Registration Statement (the "Tax Opinions").

Subject to the conditions, qualifications and assumptions contained
herein, in the certificates of representations from each of AMRE and
Facelifters (individually, a "Certificate of Representation" and collectively,
the "Certificates of Representations") and the Tax Opinions, Akin, Gump has
opined that (i) the Merger will constitute a reorganization within the meaning
of Section 368(a) of the Code; (ii) AMRE, Merger Sub and Facelifters will each
be a party to the reorganization within the meaning of Section 368(b) of the
Code; and (iii) no gain or loss will be recognized by AMRE or Merger Sub as a
result of the Merger.

The Tax Opinions are based on the Code, existing and proposed
regulations thereunder and current administrative rulings and court decisions,
all as of the date of the Tax Opinions and all of which are subject to change,
possibly retroactively. STOCKHOLDERS SHOULD CONSULT THEIR TAX ADVISORS TO
DETERMINE THE TAX CONSEQUENCES OF THE MERGER AND THE ACQUISITION, HOLDING AND
DISPOSITION OF THE SECURITIES OFFERED HEREBY, INCLUDING THE APPLICABILITY AND
EFFECT OF FEDERAL, STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX LAWS WITH
RESPECT TO THEIR OWN PARTICULAR CIRCUMSTANCES. For a discussion of these and
other federal income tax considerations in connection with the Merger, see
"Special Factors -- Certain Federal Income Tax Consequences."

NO APPRAISAL RIGHTS

Holders of Facelifters Common Stock are not entitled to dissenters'
appraisal rights under the Delaware General Corporation Law (the "Delaware
Act") in respect of the Merger. Similarly, holders of AMRE Common Stock are not
entitled to dissenters' appraisal rights under the Delaware Act.

15
<PAGE> 22

SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN OTHER PERSONS

AMRE

As of March 4, 1996, directors and executive officers of AMRE and
their affiliates beneficially owned approximately 6.8% of the outstanding
shares of AMRE Common Stock. See "Security Ownership -- Ownership of AMRE
Securities."

FACELIFTERS

As of March 4, 1996, directors and executive officers of Facelifters
and their affiliates beneficially owned approximately 29% of the outstanding
shares of Facelifters Common Stock. For additional information on share
ownership of Facelifters and Facelifters' directors and officers, see "Special
Factors -- Interests of Certain Persons in the Merger."

INTERESTS OF CERTAIN PERSONS IN THE MERGER

At the Effective Time, Mark Honigsfeld and Murray Gross, each an
executive officer of Facelifters, will enter into employment agreements with
AMRE, each with responsibility for certain of AMRE's operations in connection
with the business formerly conducted by Facelifters. Copies of the form of
employment agreements with each of Messrs. Honigsfeld and Gross are attached
hereto as Annexes B and C.

Certain officers and directors of Facelifters, by virtue of their
share ownership and ownership of Facelifters Options, will receive AMRE Common
Stock upon consummation of the Merger.

The AMRE Board at the Effective Time of the Merger will increase from
10 to 11 members, and the directors of AMRE will elect Murray Gross to fill
such vacancy.

AMRE has agreed, for a period of six years after the Effective Time of
the Merger, to indemnify and advance expenses to current and former officers
and directors of Facelifters with respect to any claims or damages based on or
arising out of the transactions contemplated by the Merger Agreement. AMRE has
also agreed that the Surviving Corporation will indemnify and advance expenses
to current and former officers of Facelifters to the full extent provided under
the Delaware Act for a period of two years; provided, however, that to the
extent that the tangible net book value of the Surviving Corporation at the
time the claim is made is less than the tangible net book value of Facelifters
reflected in the last financial statements of Facelifters filed with the
Commission prior to the Effective Time, AMRE and the Surviving Corporation will
jointly and severally indemnify such parties in an amount up to the tangible
net book value of Facelifters reflected in such financial statement.

Facelifters phased out its manufacturing operations at its facility
located in Brooklyn, New York (the "Brooklyn Facility") and relocated them to
its newer Virginia plant which is equipped and staffed to accommodate the
expanded capacity. Mark Honigsfeld, an executive officer and director of
Facelifters, is the landlord with respect to the Brooklyn Facility. In
December 1995, Facelifters and Mr. Honigsfeld entered into a modification of
the lease agreement pursuant to which the term of the lease was reduced, the
amount of square footage subject to the lease was reduced and Facelifters paid
Mr. Honigsfeld, as landlord, a one time fee of $525,000. See "The Merger
Agreement -- Other Matters Affected by the Merger Agreement."

For a more detailed description of the foregoing transactions, see
"Special Factors -- Background of the Merger"; "-- Interests of Certain
Persons in the Merger" and "-- Effects of the Merger."

16
<PAGE> 23

STOCKHOLDER AGREEMENT

Certain directors, executive officers and stockholders of Facelifters
have entered into a Stockholder Agreement, dated as of December 12, 1995, as
amended (the "Stockholder Agreement") with AMRE pursuant to which each such
stockholder has, among other things, agreed to vote for approval of the Merger
and has granted to AMRE irrevocable proxies to vote his shares in such manner
in the event such stockholder fails to vote as agreed. As of March 4, 1996,
such stockholders of Facelifters beneficially own in the aggregate
approximately 22% of the outstanding shares of Facelifters Common Stock and all
such stockholders are affiliates of Facelifters.

In addition, in the Stockholder Agreement, AMRE has agreed to provide
certain rights with respect to the registration under the Securities Act of the
AMRE Common Stock received by certain Facelifters stockholders in connection
with the Merger. A form of the Stockholder Agreement is attached hereto as
Annex D. See "The Stockholder Agreement."

CHARTER AMENDMENT

If approved by the stockholders of AMRE at the AMRE Special Meeting,
the Charter Amendment would provide for an increase in the number of authorized
shares of AMRE Common Stock from 20 million to 40 million. The additional
shares of AMRE Common Stock generally will be available for issuance without
any requirement for further stockholder approval, unless stockholder action is
required by applicable law or by the rules of the NYSE or of any other stock
exchange on which AMRE's securities may be listed. Although the AMRE Board
will authorize the issuance of additional shares only when it considers doing
so to be in the best interest of AMRE stockholders, the issuance of additional
shares of AMRE Common Stock may, among other things, have a dilutive effect on
earnings and earnings per share of AMRE Common Stock. Shares of AMRE Common
Stock could be issued in various transactions that would make a change in
control of AMRE more difficult or costly and, therefore, less likely. For
example, shares of AMRE Common Stock could be sold privately to purchasers who
might support the AMRE Board in a control contest or to dilute the voting or
other rights of a person seeking to obtain control. Additional shares of AMRE
Common Stock will be issued in connection with the Congressional Merger if it
is consummated, and AMRE has engaged in discussions with several investment
banking firms regarding the possible sale of AMRE securities to raise
additional capital. See "Recent Developments -- Possible Congressional Merger";
"Risk Factors -- Liquidity"; and "AMRE Charter Amendment."

RECENT DEVELOPMENTS

POSSIBLE CONGRESSIONAL MERGER

On December 30, 1995, AMRE, AMRE-Congressional Acquisition, Inc., a
Delaware corporation ("Congressional Merger Sub"), and Congressional
Construction Corporation, a Virginia corporation ("Congressional"), entered
into an Agreement and Plan of Merger (the "Congressional Merger Agreement"),
pursuant to which AMRE, Congressional and Congressional Merger Sub have agreed
to merge Congressional Merger Sub with and into Congressional (the
"Congressional Merger"). As the corporation surviving the Congressional
Merger, Congressional will become a direct wholly owned subsidiary of AMRE.
The obligations of AMRE, Congressional and Congressional Merger Sub to
consummate the Congressional Merger are subject to a number of conditions,
including that the results of AMRE's due diligence review of Congressional
shall be materially satisfactory to AMRE. Since AMRE has not yet completed its
due diligence review, there can be no assurance that the Congressional Merger
will be consummated.

17
<PAGE> 24

If the Congressional Merger is consummated, each outstanding share of
common stock of Congressional, par value $1.00 per share (the "Congressional
Common Stock"), will be converted into 601.2 shares of AMRE Common Stock, and
each outstanding share of preferred stock of Congressional, without par value
(the "Congressional Preferred Stock"), will be converted into 857.14 shares of
AMRE Common Stock. An aggregate of 900,000 shares of AMRE Common Stock are
expected to be issued to holders of Congressional Common Stock and
Congressional Preferred Stock upon consummation of the Congressional Merger. In
connection with the Congressional Merger, AMRE incurred certain nonrecurring
charges in the quarter ended December 31, 1995. For additional information on
the Congressional Merger, see "Recent Developments -- Possible Congressional
Merger" and "Summary -- Selected Unaudited Pro Forma Condensed Combined
Financial Data."

WAGNER RESIGNATION

On December 1, 1995, Ronald I. Wagner announced that he was resigning
as Chairman of the AMRE Board. In connection therewith, Mr. Wagner entered
into certain agreements with AMRE relating to his resignation. As a result,
AMRE incurred a nonrecurring charge to operations of approximately $3.9 million
in the quarter ended December 31, 1995. For additional information on Mr.
Wagner's resignation, see "Recent Developments -- Resignation of Chairman."

ELECTION OF NEW CHAIRMAN

On December 4, 1995, AMRE announced that Mr. John D. Snodgrass had
been selected as the new Chairman of the AMRE Board. For biographical
information on Mr. Snodgrass, see "Management Information of AMRE."

AMRE'S FIRST QUARTER OUTLOOK

While the Sears License Agreement was in effect in 1995, AMRE received
approximately 20% of its leads through employees working in the Sears retail
stores (instore leads). This lead source will have to be replaced under the
Century 21 License Agreement, and to this end AMRE opened in 1996 approximately
100 free standing kiosks in major shopping malls across the country and will
increase its presence at home shows. AMRE also plans to substantially increase
its reliance on telemarketing as a lead source and opened two outbound
telemarketing centers in December 1995, and January 1996, in order to
accomplish this objective. In addition, AMRE is working with Century 21 to
develop a program of lead referrals from the Century 21 real estate broker
network. However, there can be no assurance that AMRE will be successful in
replacing the instore leads and the failure to replace such leads would have an
adverse impact on AMRE's operating results.

Pursuant to the Sears License Agreement, AMRE was required to deliver
to Sears in January 1996, all of the leads it generated under the Sears name
through December 31, 1995. Thus, in January 1996, AMRE had to quickly generate
as many leads as possible and had to do so without instore leads, a major 1995
lead source. The new outbound telemarketing centers, the in-mall program and
the Century 21 lead referral program may not produce any significant amount of
cost-effective leads for several months. Therefore, lead generation in early
1996 will emphasize quick response media, such as television and radio, as well
as telemarketing leads purchased from a third party vendor which will increase
lead generation costs. In addition, AMRE will pay license fees to Sears at the
12% rate on installed revenue resulting from the installation of the December
31, 1995 production backlog of $22.3 million which should occur in the 1996
first quarter. As a result of these factors, AMRE expects to have a
significant decline in installed revenues in the first quarter of 1996, as
compared to the same period of 1995, and will incur a loss from operations.
Furthermore, because of the uncertainties associated with the time and cost to
build awareness of the CENTURY 21 Home Improvements name, AMRE's ability to
generate significant

18
<PAGE> 25

amounts of cost-effective leads and the integration of the companies resulting
from the mergers, it is not possible to estimate when AMRE will return to
profitability.

AMRE's cash and marketable securities totaled $19.1 million at
December 31, 1995. AMRE's management believes that existing cash and
marketable securities, available capacity under its $4.0 million revolving line
of credit with HFS and cash flow from operations will be sufficient to meet the
company's obligations. However, the conversion to the CENTURY 21 Home
Improvements name, as well as the integration of the companies resulting from
the mergers, will require substantial attention from management. In addition,
there can be no assurance that AMRE will successfully integrate the operations
of the individual companies upon consummation of the mergers, or that any of the
benefits expected will be realized. Any delays or unexpected costs incurred in
connection with such integration could have an adverse effect on the combined
company's business, operating results or financial condition in the short term.
To ensure that adequate capital is available to complete the brand name
transition and the mergers, AMRE has engaged in discussions with several
investment banking firms regarding the possible sale of AMRE securities to
raise additional capital. However, there can be no assurance that any
additional sources of capital will be available to AMRE. See "Risk Factors --
New Market Strategies"; "-- Costs Relating to Brand Transition, Consummation of
License Agreement and the Merger"; "-- Integration of the Business"; and
"-- Seasonality."

FACELIFTERS' FOURTH QUARTER OUTLOOK

Facelifters expects to incur a loss in its fourth quarter period
ending March 31, 1996. The loss is expected to be impacted by the following:
(i) costs incurred in connection with the Merger and (ii) as a result of the
conversion to a CENTURY 21 Home Improvements sublicensee, Facelifters was
required to return to Sears all of its leads generated through December 31,
1995 under the Sears name. This totally diminished the bank of leads available
to solicit business beginning in January 1996 which resulted in a reduced
number of contracts which Facelifters could install in the March 31, 1996
quarter to generate revenues.

The result of having fewer leads available from which to solicit
business is a reduction of opportunities to acquire new sales contracts.
Facelifters expects to have difficulty in maintaining an adequate backlog of
new contracts during the fourth quarter to maintain installed sales volumes
consistent with the previous year. At December 31, 1995 the approximate
backlog of contracts available for installation was approximately $7.3 million
as compared to $9.1 million at December 31, 1994. Due to lower volumes in
acquiring new contracts in the fourth quarter, backlog is expected to continue
to diminish. See "Risk Factors -- Costs Relating to Brand Transition,
Consummation of License Agreement and the Merger."

MARKETS AND MARKET PRICES

AMRE Common Stock is traded on the NYSE. Facelifters Common Stock is
principally traded on NASDAQ, although it traded during the period from May 3,
1994 until August 5, 1994 on the American Stock Exchange (the "AMEX"). On
October 31, 1995, the last full trading day prior to the public announcement of
the execution of the Merger Agreement, the last sale price for AMRE Common
Stock was $9 and the last sale price for Facelifters Common Stock was $10 5/8,
and on March __, 1996, the last full trading day for which quotations were
available as of the date of this Joint Proxy Statement/Prospectus, the last
sale price for AMRE Common Stock was _______, and the last sale price for
Facelifters Common Stock was ________.

19
<PAGE> 26

For information relating to market prices of and dividends on AMRE
Common Stock and Facelifters Common Stock, see "Comparative Market Price Data."
STOCKHOLDERS ARE URGED TO OBTAIN CURRENT QUOTATIONS FOR EACH OF THESE
SECURITIES.

Following the Merger, AMRE Common Stock will continue to be traded on
the NYSE. Following the Merger, Facelifters Common Stock will cease to be
traded on NASDAQ and there will be no further market for such stock.

20
<PAGE> 27

SUMMARY SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

The following tables set forth certain selected historical
consolidated financial data for AMRE and Facelifters. The financial data for
the periods indicated have been derived from the AMRE historical consolidated
financial statements incorporated by reference in this Joint Proxy
Statement/Prospectus and from the Facelifters historical consolidated financial
statements included elsewhere in this Joint Proxy Statement/Prospectus. The
information below should also be read in conjunction with AMRE Consolidated
Financial Statements and related notes incorporated by reference in this Joint
Proxy Statement/Prospectus and Facelifters Consolidated Financial Statements
and related notes included elsewhere in this Joint Proxy Statement/Prospectus.

AMRE, INC.

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
For the
Years Ended
-----------------------------------------------------------------------
December 31, December 31, December 31, December 31, December 31,
1995 1994 1993 1992 1991
---------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
Summary of Operations
(For the Period):
Revenue . . . . . . . $271,337 $ 285,930 $ 260,692 $ 274,268 $294,716
Income (loss) from
continuing operations (22,385) 1,459 856 8,240 5,251
Income (loss) from
continuing operations
per share . . . . . (1.73) .11 .07 .59 .37
Weighted average shares 12,903 13,031 13,120 13,928 13,879

Financial Position (At
Period End):
Total assets . . . . . $ 54,314 $ 68,827 $ 70,581 $ 71,289 $ 83,760
Working capital . . . 189 11,862 9,556 8,404 3,849
Long-term debt . . . . 241 -- -- -- --
Stockholders' equity . 13,345 33,410 33,493 34,624 28,535
</TABLE>

21
<PAGE> 28

FACELIFTERS HOME SYSTEMS, INC.
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
For the Nine
Months Ended
December 31, For the Fiscal Years Ended March 31,
-------------------- ----------------------------------------------------
1995 1994 1995 1994 1993 1992 1991
---------- -------- --------- --------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Summary of Operations
(For the Period)
Revenue . . . . . . . . . $ 39,085 $ 28,098 $ 38,765 $ 26,358 $ 20,261 $ 9,229 $ 6,635
Income (loss) from
continuing operations . (1,104) (249) (413) 1,048 147 (1,515) 176
Income (loss) from
continuing operations
per share . . . . . . . (.33) (.08) (.13) .31 .06 (.83) .17
Weighted average shares . 3,391 3,117 3,177 4,161 4,040 1,837 1,134

Financial Position (At
Period End):
Total assets . . . . . . $ 13,046 $ 11,498 $ 12,566 $ 7,892 $ 5,914 $ 4,980 $ 2,799
Working capital . . . . . 1,152 2,769 2,177 1,016 508 507 (187)
Long-term debt . . . . . 1,071 1,083 1,445 866 191 120 184
Stockholders' equity . . 4,417 5,663 5,515 3,504 2,262 1,754 609
</TABLE>

22
<PAGE> 29

SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA

The following selected unaudited pro forma condensed combined
financial data present (1) the Facelifters Merger and (2) the Congressional
Merger, assuming such merger is consummated. The data are presented assuming
the Facelifters Merger and the Congressional Merger will be treated as poolings
of interests for accounting purposes. The Financial Position data reflect the
combined historical data of AMRE, Facelifters and Congressional at December 31,
1995. The unaudited pro forma condensed combined summary of operations data
were derived from the consolidated financial statements of AMRE for the years
ended December 31, 1995, 1994 and 1993; the consolidated financial statements
of Facelifters for the nine months ended December 31, 1995 and 1994 and the
fiscal years ended March 31, 1995, 1994 and 1993; and the financial statements
of Congressional for the twelve months ended December 31, 1995 and 1994, the
nine months ended December 31, 1993, and the fiscal year ended March 31, 1993.
The consolidated financial statements of Facelifters and Congressional have
been recast to a calendar year to conform with AMRE's fiscal year in computing
the unaudited pro forma condensed combined summary of operations data for all
periods presented.

The unaudited pro forma condensed combined financial data are not
necessarily indicative of the operating results that would have been achieved
had the Facelifters Merger and the Congressional Merger been in effect on the
date indicated or as of the beginning of the periods presented and should not
be construed as representative of future operations.

23
<PAGE> 30

AMRE, INC.

SELECTED UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
For the Years Ended December 31,
------------------------------------------------
1995 1994 1993
------------- -------------- --------------
AMRE AND FACELIFTERS
<S> <C> <C> <C>
SUMMARY OF OPERATIONS (FOR THE PERIOD):
Revenue . . . . . . . . . . . . . . . . . . . . $ 321,089 $ 320,088 $ 286,466
Income (loss) from continuing operations . . . (23,653) 1,790 2,228
Income (loss) from continuing operations per
share . . . . . . . . . . . . . . . . . . . (1.47) .10 .12
Weighted average shares . . . . . . . . . . . . 16,294 16,208 17,281

FINANCIAL POSITION (AT PERIOD END):
Total assets . . . . . . . . . . . . . . . . . $ 66,660
Working capital . . . . . . . . . . . . . . . . 540
Long-term debt . . . . . . . . . . . . . . . . 1,312
Redeemable preferred stock . . . . . . . . . . 3,000
Stockholders' equity . . . . . . . . . . . . . 16,262

AMRE, FACELIFTERS AND CONGRESSIONAL

SUMMARY OF OPERATIONS (FOR THE PERIOD):
Revenue . . . . . . . . . . . . . . . . . . . . $ 339,907 $ 337,695 $ 299,375
Income (loss) from continuing operations . . . (24,008) 2,025 1,451
Income (loss) from continuing operations
per share . . . . . . . . . . . . . . . . . (1.41) .10 .07
Weighted average shares . . . . . . . . . . . . 17,194 17,108 18,181

FINANCIAL POSITION (AT PERIOD END):
Total assets . . . . . . . . . . . . . . . . . $ 68,121
Working capital . . . . . . . . . . . . . . . . (664)
Long-term debt . . . . . . . . . . . . . . . . 6,120
Redeemable preferred stock . . . . . . . . . . 3,000
Stockholders' equity . . . . . . . . . . . . . 10,519
</TABLE>

24
<PAGE> 31

COMPARATIVE PER SHARE DATA

The following tables set forth certain historical per share data of AMRE and
Facelifters and combined per share data of (i) AMRE and Facelifters, and,
assuming the Congressional Merger is consummated, (ii) AMRE and Congressional
and (iii) AMRE, Facelifters and Congressional on an unaudited pro forma basis
after giving effect to the Facelifters Merger and Congressional Merger as
poolings of interests assuming (i) the issuance of one share of AMRE Common
Stock in the Facelifters Merger in exchange for each share of Facelifters
Common Stock and (ii) the issuance of 900,000 shares of AMRE Common Stock in
the Congressional Merger for all of the outstanding Congressional Preferred
Stock and Congressional Common Stock. This data should be read in conjunction
with the summary selected historical consolidated financial data, the unaudited
pro forma condensed combined financial statements included elsewhere in the
Joint Proxy Statement/Prospectus, AMRE consolidated financial statements and
related notes incorporated by reference in this Joint Proxy
Statement/Prospectus and Facelifters consolidated financial statements and
related notes included elsewhere in this Joint Proxy Statement/Prospectus.

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
------------------------------------------
1995 1994 1993
-------- --------- -------
<S> <C> <C> <C>
HISTORICAL AMRE
Income (loss) from continuing
operations per share . . . . . . . $ (1.73) $ .11 $ .07
Cash dividends declared per share . . $ .06 $ .12 $ .12
Book value per share(1) . . . . . . . $ 1.00
</TABLE>

<TABLE>
<CAPTION>
FOR THE NINE
MONTHS ENDED FOR THE FISCAL
DECEMBER 31, YEARS ENDED MARCH 31,
---------------------- -------------------------------
1995 1994 1995 1994 1993
-------- -------- ------- ------ -------
<S> <C> <C> <C> <C> <C>
HISTORICAL FACELIFTERS
Income (loss) from continuing
operations per share . . . . . . $(.33) $(.08) $(.13) $ .31 $ .06
Cash dividends declared per share . $.015 $.005 $ .01 $ .00 $ .00
Book value per share(1) . . . . . . $1.30 $1.64

</TABLE>

<TABLE>
<CAPTION>
FOR THE
YEARS ENDED DECEMBER 31,
--------------------------------------
1995 1994 1993
---------- ----------- ----------
<S> <C> <C> <C>
AMRE AND FACELIFTERS(2)(3)
PRO FORMA COMBINED
Income (loss) from continuing
operations per share(4) . . . . . $(1.47) $.10 $ .12
Cash dividends declared per share(7) $ .05 $.10 $ .10
Book value per share(4) . . . . . . $ .97
</TABLE>

25
<PAGE> 32

<TABLE>
<CAPTION>
FOR THE
YEARS ENDED DECEMBER 31,
------------------------------------
1995 1994 1993
--------- --------- ----------
<S> <C> <C> <C>
AMRE AND CONGRESSIONAL(2)(3)
PRO FORMA COMBINED
Income (loss) from continuing
operations per share(5) . . . . . $(1.62) $.10 $(.01)
Cash dividends declared per share(8) $ .05 $.11 $ .11
Book value per share(5) . . . . . . $ .53
</TABLE>

<TABLE>
<CAPTION>
FOR THE
YEARS ENDED DECEMBER 31,
---------------------------------------
1995 1994 1993
--------- --------- ----------
<S> <C> <C> <C>
AMRE, FACELIFTERS, AND CONGRESSIONAL(2)(3)
PRO FORMA COMBINED
Income (loss) from continuing
operations per share(6) . . . . . $(1.41) $.10 $ .07

Cash dividends declared per share(9) $ .05 $.09 $ .10
Book value per share(6) . . . . . . $ .60
</TABLE>

(1) The historical book value per share is computed by dividing stockholders'
equity by the number of shares of common stock outstanding on the face of
each company's balance sheet included in Form 10-K or Form 10-Q, as
appropriate, as of the date indicated.

(2) For purposes of the Pro Forma Combined data, equivalent pro forma share
data is the same as the pro forma per share data presented since AMRE
Common Stock is exchanged for Facelifters Common Stock on a one-for-one
basis, and accordingly is not presented.

(3) For purposes of the Pro Forma Combined data, Facelifters and Congressional
data have been recast to a calendar year to conform with AMRE's fiscal
year end for all periods presented.

(4) AMRE and Facelifters Pro Forma Combined per share is computed after giving
effect to the issuance of one share of AMRE Common Stock for each share of
Facelifters Common Stock to effect the Facelifters Merger. For all
periods presented, the earnings (loss) per share from continuing
operations gives effect to the dividends on the AMRE Senior Convertible
Preferred Stock (as defined herein) ($240,000 annually) issued incident to
the Century 21 License Agreement; however, the AMRE Senior Convertible
Preferred Stock was not considered a common stock equivalent for any of
the periods presented.

(5) AMRE and Congressional Pro Forma Combined per share is computed after
giving effect to the issuance of 900,000 shares of AMRE Common Stock for
all of the outstanding shares of Congressional Preferred Stock and
Congressional Common Stock to effect the Congressional Merger. For all
periods presented, the earnings (loss) per share from continuing
operations gives effect to the dividends on the AMRE Senior Convertible
Preferred Stock (as defined herein) ($240,000 annually) issued incident to
the Century 21 License Agreement; however, the AMRE Senior Convertible
Preferred Stock was not considered a common stock equivalent for any of
the periods presented.

26
<PAGE> 33

(6) AMRE, Facelifters and Congressional Pro Forma Combined per share data is
computed after giving effect to the transactions in Footnotes 4 and 5
above.

(7) For purposes of the Pro Forma Combined data, cash dividends per share is
computed by dividing the total cash dividends paid by the Pro Forma shares
outstanding after giving effect to the transactions described in Footnote
4.

(8) For purposes of the Pro Forma Combined data, cash dividends per share is
computed by dividing the total cash dividends paid by the Pro Forma shares
outstanding after giving effect to Footnote 5 described above.

(9) For purposes of the Pro Forma Combined data, cash dividends per share is
computed by dividing the total cash dividends paid by the Pro Forma shares
outstanding after giving effect to Footnotes 4 and 5 described above.

27
<PAGE> 34
RISK FACTORS

The following factors should be considered carefully by the
stockholders of AMRE and Facelifters in connection with voting upon the Merger
and the Merger Agreement. This Joint Proxy Statement/Prospectus contains
certain forward looking statements about the business, operations and financial
condition of AMRE and Facelifters, including various statements contained in
"Summary -- Recent Developments"; "Recent Developments"; and "Facelifters
Management's Discussion and Analysis of Financial Condition and Results of
Operations" and in "Management's Discussion and Analysis of Financial Condition
and Results of Operations" which is incorporated herein by reference from
AMRE's Annual Report on Form 10-K for the year ended December 31, 1995. The
actual results of AMRE and Facelifters could differ materially from those
forward looking statements. The following information sets forth certain
factors that could cause the actual results of each of AMRE and Facelifters
(and AMRE and Facelifters as a combined company) to differ materially from
those contained in the forward looking statements.

MANAGEMENT OF COMBINED COMPANY; OPERATING LOSSES

The integration of the two companies, as well as the conversion to the
CENTURY 21 Home Improvements name, will require substantial attention from
management. In addition, AMRE incurred operating losses for the fourth quarter
and for the 1995 year, and Facelifters incurred operating losses for the nine
month period ending December 31, 1995 and expects to incur a loss for the year
ended March 31, 1996. The diversion of management attention or any other
difficulties encountered in the conversion or transition process or continued
losses by either organization could have an adverse effect on the business,
financial condition and results of operations of the combined company.

DEPENDENCE ON THE CENTURY 21 HOME IMPROVEMENTS NAME

The Sears brand name is widely recognized and accepted in the home
improvement industry and has significant brand name appeal to a wide variety of
customers. Although the CENTURY 21 Home Improvements name was not used in the
home improvement industry before 1996 at which time AMRE began using the name,
AMRE's management believes such brand name will also be well recognized;
however, there can be no assurance that revenues under the CENTURY 21 Home
Improvements name will be similar to or greater than those under the Sears
brand name. In addition, Facelifters did not renew the Facelifters Sears
License Agreement. Facelifters entered into the Facelifters Century 21 License
Agreement, and thus the Facelifters business will be subject to the same risks
as AMRE in operating under the CENTURY 21 Home Improvements name. If the
CENTURY 21 Home Improvements name does not result in advertising response rates
and sales rates equal to or better than those experienced under the Sears brand
name, it will likely have an adverse effect on the business, operating results
and financial condition of the combined company.

NEW MARKETING STRATEGIES

Leads on potential customers are critically important to AMRE's
business, and under the terms of the AMRE Sears License Agreement, AMRE was
required to deliver to Sears all customer leads generated through December 31,
1995. Thus, in January 1996, AMRE had to quickly generate as many leads as
possible.

Under the Sears brand name, AMRE generated 80% of its leads for
potential customers through television, radio, direct mail, telemarketing and
alternative media sources. AMRE now conducts this advertising using the
CENTURY 21 Home Improvements name. There is no way to estimate the time
required to build brand awareness of the CENTURY 21 Home Improvements name or
whether AMRE will receive advertising response rates similar to those
experienced under the Sears brand name. While the AMRE Sears License Agreement
was in effect, AMRE received approximately 20% of its leads through AMRE
employees working in the Sears retail stores. This lead source will have to be
replaced under the Century 21 License Agreement, and to this end AMRE has
opened approximately 100 free standing kiosks in major

28
<PAGE> 35
shopping malls across the country and intends to increase its presence at home
shows. The mall kiosk program required a capital investment of approximately
$750,000 and future annual operating lease rentals are estimated to be $2.0
million for the initial approximately 100 locations. AMRE will periodically
evaluate the in-mall program and may open additional locations during 1996.
AMRE also plans to substantially increase its reliance on telemarketing as a
lead source and has opened two outbound telemarketing centers since December
1995 in order to accomplish this objective. In addition, AMRE is working with
Century 21 to develop a program of lead referrals from the Century 21 real
estate broker network. However, there can be no assurance that AMRE will be
successful in replacing the in-store leads and the failure to replace such
leads will have an adverse impact on the operating results of the combined
company.

COSTS RELATING TO BRAND TRANSITION, CONSUMMATION OF LICENSE AGREEMENT AND THE
MERGER

In an effort to begin operations under the CENTURY 21 Home
Improvements name on January 1, 1996 with an adequate supply of leads, AMRE
incurred significant marketing costs in the quarter ended December 31, 1995 in
order to build brand identity and provide leads under the CENTURY 21 Home
Improvements name. An additional approximately $3.2 million was spent in this
regard. AMRE also incurred a nonrecurring charge to operations of
approximately $5.1 million in the quarter ended December 31, 1995 to reflect
costs associated with consummating the Century 21 License Agreement. In
addition, AMRE and Facelifters expect nonrecurring charges to operations
currently estimated to be $1.5 million during 1996, to reflect costs associated
with combining operations of the two companies. Although management of AMRE
and Facelifters are not aware of any circumstances or conditions that could
make consummation of the Merger or integration of their businesses unusually
difficult, if AMRE and Facelifters encounter unexpected difficulties in the
consummation of the Merger or in the integration of their businesses, the
transaction fees and expenses incident to the Merger, such as legal and
accounting fees, could increase. There can be no assurance that the combined
company will not incur charges in subsequent quarters to reflect additional
costs which could have an adverse effect on AMRE's business, financial
condition and results of operations.

LIQUIDITY

AMRE's cash and marketable securities totaled $19.1 million at
December 31, 1995. AMRE's management believes that existing cash and
marketable securities, available capacity under its $4.0 million revolving line
of credit with HFS and cash flow from operations will be sufficient to meet the
company's obligations. However, the conversion to the CENTURY 21 Home
Improvements name, as well as the integration of the companies resulting from
the Merger, will require substantial attention from management. In addition,
there can be no assurance that AMRE will successfully integrate the operations
of the individual companies upon consummation of the Merger, or that any of the
benefits expected will be realized. Any delays or unexpected costs incurred in
connection with such integration could have an adverse effect on the combined
company's business, operating results or financial condition in the short term.
To ensure that adequate capital is available to complete the brand name
transition and the Merger, AMRE has engaged in discussions with several
investment banking firms regarding the possible sale of AMRE securities to
raise additional capital. However, there can be no assurance that any
additional sources of capital will be available to AMRE. See "Risk Factors --
New Market Strategies"; "-- Costs Relating to Brand Transition, Consummation of
License Agreement and the Merger"; "-- Integration of the Business"; and
"-- Seasonality."

INTEGRATION OF THE BUSINESS

The Merger involves the integration of two companies that have
previously operated independently. As soon as practicable following the
Merger, AMRE intends to integrate certain aspects of the operations of the
combined company, including sales, marketing, finance and administration.
Management estimates that at least $1.0 million of annual savings will result
from this integration; however, there can be no assurance that AMRE will
successfully integrate the operations of Facelifters with those of AMRE or that
all of the benefits expected from such integration will be realized. Any
delays or unexpected costs incurred in

29
<PAGE> 36
connection with such integration could have an adverse effect on the combined
company's business, operating results or financial condition. Furthermore,
there can be no assurance that the operations, management and personnel of the
two companies will be compatible or that AMRE or Facelifters will not
experience the loss of key personnel. AMRE expects to encounter similar
integration issues in the event that the Congressional Merger is consummated.
Among the factors considered by the AMRE Board and the Facelifters Board in
connection with their approval of the Merger Agreement were the opportunities
for economies of scale and operating efficiencies that are expected to result
from the Merger. While AMRE and Facelifters expect to achieve savings in
operating costs as a result of the Merger, there can be no assurance that such
savings will be realized.

DEPENDENCE ON CENTURY 21 LICENSE AGREEMENT

The combined company will market and sell its products under the
Century 21 License Agreement, and its revenues will be dependent upon the
continued existence of such license agreement. AMRE is obligated to make
certain minimum royalty payments under the Century 21 License Agreement. The
license has a 20 year term, but may be terminated earlier by the licensor in
the event of default by AMRE, including the failure to make the minimum royalty
payments as provided therein. If the Century 21 License Agreement is
terminated early, such termination will likely have an adverse effect on AMRE's
business.

VOLATILITY OF STOCK PRICE

The market price for AMRE Common Stock is volatile and could be
subject to additional significant fluctuations in response to variations in
AMRE's operating results and other factors, including among others, investor
perceptions of AMRE and the industry in which it operates, developments in
AMRE's relationship with Century 21 and its customers and general market
conditions. Consequently, there can be no assurance that the market value of
shares of AMRE Common Stock will be maintained subsequent to the Merger.

SEASONALITY

Historically, AMRE's business has been subject to seasonal
fluctuations. Although some products sold by AMRE and Facelifters are interior
products, extreme winter weather conditions can have an adverse effect on
scheduling sales appointments and installations. Products such as siding and
windows usually cannot be installed in inclement weather. In addition, the
home improvements industry is affected by economic factors, including, among
others, interest rates, the availability of financing and general economic
conditions. AMRE has historically incurred losses in the first quarter of the
year, and expects to incur a loss in the first quarter of 1996.

SUSPENSION OF DIVIDENDS

AMRE had paid a quarterly dividend from December 18, 1987 until
September 22, 1995, at which time the quarterly dividend was suspended. AMRE's
ability to pay dividends is restricted under the terms of AMRE's existing
credit agreements. There can be no assurance that AMRE will pay any dividends
in the future.

DILUTION

In connection with the Merger, former Facelifters stockholders will be
issued approximately 3,565,680 shares of AMRE Common Stock and will hold
approximately 25% of the outstanding AMRE Common Stock as of March 4, 1996. In
addition, in the event that the Congressional Merger is consummated, former
Congressional stockholders will be issued 900,000 shares of AMRE Common Stock.
If the Charter Amendment is approved, the AMRE Board shall be able to issue
additional shares of AMRE Common Stock without obtaining prior stockholder
approval. Although the AMRE Board will authorize such issuances only when it
considers doing so to be in the best interest of the stockholders, the issuance
of

30
<PAGE> 37
additional AMRE Common Stock may, among other things, have a dilutive effect on
earnings and earnings per share of AMRE Common Stock and on the voting rights
of holders of shares of AMRE Common Stock. See "AMRE Charter Amendment."

SERVICE MARK AND TRADE NAME INFRINGEMENT CLAIM

AMRE has been named as a defendant in a proceeding filed in the
Superior Court of California by a party who claims ownership of a registered
service mark and trade name styled "21st Century Home Improvements." The
plaintiff alleges, among other things, that the CENTURY 21 Home Improvements
name is an infringement of the plaintiff's trade name and registered mark and
constitutes an unfair business practice. AMRE has been advised by Century 21,
the owner of the CENTURY 21 Home Improvements name, that it gave notice to
counsel for the owner of the "21st Century Home Improvements" mark that the
latter mark infringed on Century 21's federally registered mark. Century 21's
federal registration predates the use of the "21st Century Home Improvements"
mark, and at this time AMRE believes that it is legally entitled to use the
CENTURY 21 Home Improvements name.

COMPETITION

AMRE operates in an industry that is highly fragmented. Although AMRE
believes it is the largest company in the nation involved in the direct
marketing, in-home sales and installation of home improvement products, AMRE
competes with numerous contractors in each of the territories in which it
operates, with reputation, price, workmanship and services being the principal
competitive factors. These contractors typically conduct operations in a
single metropolitan area. In certain of the territories in which it operates,
AMRE also competes against retail stores that may have greater financial or
other resources than AMRE and that sell similar products in the stores as well
as offer installation services, and will compete with contractors that are
Sears licensees.

31
<PAGE> 38
COMPARATIVE MARKET PRICE DATA

AMRE COMMON STOCK

AMRE Common Stock is quoted on the NYSE under the symbol AMM. The
following table sets forth certain information as to the high and low bid price
per share of AMRE Common Stock as quoted on the NYSE for the past two calendar
years. AMRE paid cash dividends during the year ended December 31, 1994, of
$.03 per share for each of the four quarters, totalling $1,542,000. AMRE
suspended its quarterly dividend payments indefinitely beginning with the
quarter ended September 30, 1995. Future dividends will necessarily be
dependent upon business conditions, the earnings and financial position of AMRE
and such other matters as the AMRE Board deems relevant. AMRE's ability to pay
dividends is restricted under the terms of AMRE's existing credit agreements,
and there can be no assurance that AMRE will pay dividends in the future.
AMRE's fiscal year ends on December 31 of each year. On October 31, 1995, the
last full trading day prior to the public announcement of the signing of the
Merger Agreement, the last sale price per share of AMRE Common Stock, as quoted
on the NYSE, was $9.00. On March __, 1996, the last full trading day for which
quotations were available on the date of this Joint Proxy Statement/Prospectus,
the last sale price per share of AMRE Common Stock, as quoted on the NYSE, was
$______. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT QUOTATIONS FOR AMRE COMMON
STOCK.

<TABLE>
<CAPTION>
AMRE COMMON STOCK
--------------------------
Calendar
Year High Low
- -------- ---- ---
<S> <C> <C>
1994
First Quarter . . . . . . . . . . . . . . . . . . . . . $ 4 5/8 $ 3 1/2
Second Quarter . . . . . . . . . . . . . . . . . . . . . $ 4 1/8 $ 3 1/8
Third Quarter . . . . . . . . . . . . . . . . . . . . . $ 4 1/2 $ 3 1/8
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . $ 5 7/8 $ 4

1995
First Quarter . . . . . . . . . . . . . . . . . . . . . $ 5 5/8 $ 4 1/8
Second Quarter . . . . . . . . . . . . . . . . . . . . . $ 4 7/8 $ 3 7/8
Third Quarter . . . . . . . . . . . . . . . . . . . . . $ 4 1/2 $ 3 1/8
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . $15 $ 4 1/4

1996
First Quarter . . . . . . . . . . . . . . . . . . . . . $21 7/8 $14 1/2
(through March 12, 1996)
</TABLE>

32
<PAGE> 39
FACELIFTERS COMMON STOCK

Facelifters Common Stock is quoted on NASDAQ under the symbol FACE.
The following table sets forth certain information as to the high and low bid
prices per share of Facelifters Common Stock as quoted on NASDAQ for the past
two calendar years, except for the period from May 3, 1994 until August 5, 1994,
during which period shares were traded on the AMEX. Facelifters' fiscal year
ends on March 31 of each year. In November 1994, Facelifters declared its
first quarterly dividend of $0.005 per share of Facelifters Common Stock.
Facelifters has continued to make quarterly dividend payments in the same
amount since November 1994. On October 31, 1995, the last full trading day
prior to the public announcement of the signing of the Merger Agreement, the
last sale price per share of Facelifters Common Stock as quoted on NASDAQ was
$10 5/8. On March __, 1996, the last full trading day for which quotations
were available on the date of this Joint Proxy Statement/Prospectus, the last
sale price per share of Facelifters Common Stock as quoted on NASDAQ was $_____.
STOCKHOLDERS ARE URGED TO OBTAIN CURRENT QUOTATIONS FOR FACELIFTERS SHARES.

<TABLE>
<CAPTION>
FACELIFTERS COMMON STOCK
--------------------------
Calendar
Year High Low
- -------- ---- ---
<S> <C> <C>
1994
First Quarter . . . . . . . . . . . . . . . . . . . . . $ 7 $ 5 3/16
Second Quarter . . . . . . . . . . . . . . . . . . . . . $ 5 5/8 $ 4 1/8
Third Quarter . . . . . . . . . . . . . . . . . . . . . $ 7 1/8 $ 4 7/8
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . $ 8 1/2 $ 6 3/8

1995
First Quarter . . . . . . . . . . . . . . . . . . . . . $ 7 3/4 $ 6 7/8
Second Quarter . . . . . . . . . . . . . . . . . . . . . $ 7 3/8 $ 5 7/16
Third Quarter . . . . . . . . . . . . . . . . . . . . . $ 8 1/8 $ 6 3/16
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . $13 1/2 $ 6 9/32

1996
First Quarter . . . . . . . . . . . . . . . . . . . . . $20 7/8 $14 1/2
(through March 12, 1996)
</TABLE>

33
<PAGE> 40
THE MEETINGS

This Joint Proxy Statement/Prospectus is being furnished to the
holders of AMRE Common Stock in connection with the solicitation of proxies by
the AMRE Board for use at the AMRE Special Meeting to be held on April 18,
1996, at the corporate offices of AMRE, located at 8585 N. Stemmons Freeway,
South Tower, 8th Floor, Dallas, Texas 75247, commencing at 10:00 a.m. local
time, and at any adjournment or postponement thereof.

This Joint Proxy Statement/Prospectus is also being furnished to the
holders of Facelifters Common Stock in connection with the solicitation of
proxies by the Facelifters Board for use at the Facelifters Special Meeting to
be held on April 18, 1996, at the offices of the Chairman of the Board of
Facelifters, 800 Snediker Avenue, Brooklyn, New York 11207, commencing at 10:00
a.m. local time, and at any adjournment or postponement thereof.

MATTERS TO BE CONSIDERED AT THE MEETINGS

AMRE. At the AMRE Special Meeting, stockholders of AMRE will consider
and vote upon the proposal to approve and adopt the Merger Agreement and the
issuance by AMRE of shares of AMRE Common Stock whereby each outstanding share
of Facelifters Common Stock will be converted into one share of AMRE Common
Stock. The stockholders of AMRE will also vote as a separate proposal upon the
Charter Amendment and such other matters as may be properly brought before the
AMRE Special Meeting.

Facelifters. At the Facelifters Special Meeting, holders of
Facelifters Common Stock will consider and vote upon the Merger Agreement and
the Merger and such other matters as may properly be brought before the
Facelifters Special Meeting.

Boards of Directors' Recommendations. THE AMRE BOARD HAS APPROVED THE
MERGER AND THE MERGER AGREEMENT, THE ISSUANCE OF THE AMRE COMMON STOCK PURSUANT
TO THE MERGER AGREEMENT AND THE CONSUMMATION OF THE OTHER TRANSACTIONS
CONTEMPLATED THEREBY AND THE CHARTER AMENDMENT, AND RECOMMENDS THAT AMRE'S
STOCKHOLDERS VOTE "FOR" APPROVAL OF THE MATTERS SUBMITTED TO AMRE STOCKHOLDERS
AS DESCRIBED IN THIS JOINT PROXY STATEMENT/PROSPECTUS.

THE FACELIFTERS BOARD HAS APPROVED THE MERGER AND THE MERGER AGREEMENT
AND THE CONSUMMATION OF THE OTHER TRANSACTIONS CONTEMPLATED THEREBY AND
RECOMMENDS THAT FACELIFTERS' STOCKHOLDERS VOTE "FOR" APPROVAL OF THE MATTERS
SUBMITTED TO FACELIFTERS' STOCKHOLDERS AS DESCRIBED IN THIS JOINT PROXY
STATEMENT/PROSPECTUS.

VOTING AT MEETINGS; RECORD DATES

The affirmative vote of the holders of a majority of the issued and
outstanding shares of AMRE Common Stock is required to approve the Merger
Agreement, the issuance of the AMRE Common Stock pursuant to the Merger
Agreement and the Charter Amendment. AMRE is currently authorized to issue 20
million shares of AMRE Common Stock, and as of March 4, 1996 has approximately
14,127,457 shares of AMRE Common Stock outstanding and 4,023,832 shares of AMRE
Common Stock reserved for issuance in connection with certain AMRE plans, the
exercise of options and conversion of AMRE preferred stock. Unless the Charter
Amendment is approved by the stockholders of AMRE, AMRE will not have a
sufficient number of authorized shares of AMRE Common Stock to permit the
issuance of the shares of AMRE Common Stock.

34
<PAGE> 41
to the stockholders of Facelifters. Approval of the Charter Amendment is a
condition to closing, and unless the Charter Amendment is approved, the Merger
will not be consummated. In determining whether the proposal has received the
requisite number of affirmative votes, abstentions and broker non-votes will
have the same effect as a vote against the proposal.

As of March 4, 1996, directors and executive officers of AMRE and
their affiliates beneficially owned approximately 6.8% of the outstanding
shares of AMRE Common Stock. Each of the directors and executive officers has
advised AMRE that he intends to vote or direct the vote of all shares of AMRE
Common Stock over which he has voting control for approval of the Merger
Agreement, the issuance of the AMRE Common Stock in the Merger and the Charter
Amendment.

Facelifters owns no outstanding shares of AMRE Common Stock.

The approval of Facelifters stockholders of the Merger and the Merger
Agreement will require the affirmative vote of the holders of a majority of the
issued and outstanding shares of Facelifters Common Stock. In determining
whether the proposal has received the requisite number of affirmative votes,
abstentions and broker non-votes will have the same effect as a vote against
the proposal.

In connection with consummation of the Merger Agreement, AMRE entered
into the Stockholder Agreement with Mark Honigsfeld, Deedee Honigsfeld and
Murray Gross, all of whom are affiliates of Facelifters, collectively own
approximately 22% of the outstanding shares of Facelifters Common Stock and
have agreed therein to vote in favor of the Merger Agreement and the Merger.
See "The Stockholder Agreement."

AMRE PROXIES

Shares of AMRE Common Stock represented by proxies received by AMRE
prior to or at the AMRE Special Meeting will be voted in accordance with the
instructions contained therein. Shares of AMRE Common Stock represented by
proxies for which no instruction is given will be voted "FOR" the Merger
Agreement, the issuance of the shares of AMRE Common Stock pursuant to the
Merger Agreement and the Charter Amendment.

Holders of AMRE Common Stock are requested to complete, sign and date
the enclosed white proxy card and promptly return it in the postage paid
envelope provided for this purpose in order to ensure that the shares are
voted. A proxy may be revoked at any time prior to the exercise of the
authority granted thereunder. Revocation may be accomplished by the granting
of a later proxy with respect to the same shares or by giving notice thereof to
AMRE in writing at the AMRE Special Meeting at any time prior to the vote on
the matters to be considered. Presence at the AMRE Special Meeting of a
stockholder who signed a proxy does not in itself revoke the proxy.

The AMRE Board is aware of no matters to be presented at the AMRE
Special Meeting other than those described in this Joint Proxy
Statement/Prospectus. If other matters are properly brought before the AMRE
Special Meeting, it is the intention of the persons named in the proxies to
vote the shares to which said proxies relate in accordance with their judgment.

35
<PAGE> 42
FACELIFTERS PROXIES

Facelifters Common Stock represented by proxies received by
Facelifters prior to or at the Facelifters Special Meeting will be voted in
accordance with the instructions contained therein. Facelifters Common Stock
represented by proxies for which no instruction is given will be voted "FOR"
approval of the Merger and Merger Agreement and the other transactions
contemplated thereby.

Holders of Facelifters Common Stock are requested to complete, sign
and date the enclosed blue proxy card and promptly return it in the postage
paid envelope provided for this purpose in order to ensure that their shares
are voted. A proxy may be revoked at any time prior to the exercise of the
authority granted thereunder. Revocation may be accomplished by the granting
of a later proxy with respect to the same shares or by giving notice thereof to
Facelifters in writing or at the Facelifters Special Meeting at any time prior
to the vote on the matters to be considered. Presence at the Facelifters
Special Meeting of a stockholder who signed a proxy does not in itself revoke
the proxy.

The Facelifters Board knows of no matters to be presented at the
Facelifters Special Meeting other than those described in this Joint Proxy
Statement/Prospectus. If other matters are properly brought before the
Facelifters Special Meeting, it is the intention of the persons named in the
proxies to vote the shares to which such proxies relate in accordance with
their judgment.

SOLICITATION OF PROXIES

Morrow & Co., Inc. ("Morrow") has been retained to solicit proxies on
behalf of each of AMRE and Facelifters for an aggregate fee of $8,000 plus out
of pocket expenses. AMRE and Facelifters will each bear the cost of the
solicitation of proxies from their respective stockholders. In addition to
solicitation by Morrow, officers and regular employees of AMRE and Facelifters,
who will receive no compensation in excess of their regular salaries for their
services, may solicit proxies from their respective stockholders by telephone,
telegram or otherwise. AMRE and Facelifters will also reimburse brokers and
other nominees for their reasonable expenses in communicating with the persons
for whom they hold AMRE Common Stock and Facelifters Common Stock,
respectively.

36
<PAGE> 43
SPECIAL FACTORS

BACKGROUND OF THE MERGER

Both AMRE and Facelifters have had a long-standing familiarity with
one another, because both companies have been engaged in the same general line
of home improvement business and both companies have been licensees of Sears,
permitting the companies to market and install their products under the Sears
name. Because of this familiarity, senior management of both companies
recognized that Facelifters' kitchen cabinet refacing business and strength in
marketing would complement AMRE's existing home improvement business.

On October 17, 1995, AMRE announced that it had entered into the
Century 21 License Agreement and was not going to renew the AMRE Sears License
Agreement. At that time, Facelifters began discussions with Sears regarding
expansion of the Facelifters markets under the Facelifters Sears License
Agreement. Facelifters issued a press release regarding these discussions on
October 20, 1995.

On October 21, 1995, a consultant engaged by AMRE contacted
representatives of Facelifters regarding Facelifters' interest in a potential
acquisition of Facelifters by AMRE. Senior management of Facelifters
considered the overture over the weekend of October 21-22, 1995.

On October 23, 1995, Messrs. Mark Honigsfeld and Murray Gross traveled
to Dallas, Texas to meet with senior management of AMRE, including Messrs.
Robert Swartz and Dennis Constantine, as well as Mr. Sheldon Stein, an outside
member of the AMRE Board and a Senior Managing Director of Bear Stearns. At
those meetings, the representatives of the two companies discussed the
historical business of Facelifters.

On October 24, 1995, AMRE held an informal telephonic discussion with
the AMRE Board regarding the potential for a transaction between AMRE and
Facelifters.

On October 24, 1995, Messrs. Stein, Swartz, Constantine, Larry Lattig
and C. Curtis Everett, on behalf of AMRE, and Messrs. Honigsfeld and Gross, on
behalf of Facelifters, entered into more detailed discussions regarding whether
AMRE and Facelifters shared a mutual interest in considering a possible
business combination. The parties generally determined that there was a
framework from which a transaction could be structured and the parties
discussed, more in depth, the feasibility and benefits of a business
combination. In addition, the parties discussed, were such a transaction to be
pursued, the possible structure of a transaction and the type of consideration.
In anticipation of the transaction, the two companies engaged investment
banking firms to render fairness opinions in connection with the proposed
transaction, with AMRE hiring Bear Stearns and Facelifters retaining Southwest.

The Facelifters Board held a special telephonic meeting during the
evening of October 24, 1995. At the meeting, members of Facelifters management
provided a detailed analysis of the discussions that had occurred between
representatives of AMRE and Facelifters. The Facelifters Board unanimously
approved continued negotiations with AMRE.

On October 25, 1995, representatives of the two companies met again
and began to negotiate price for the first time. AMRE made a preliminary
proposal, subject to preliminary due diligence, to acquire Facelifters in a
transaction to be structured as a tax-free reorganization pursuant to which
Facelifters Common Stock would be exchanged for AMRE Common Stock. The
proposal was based on closing trading prices for AMRE Common Stock on the NYSE
and Facelifters Common Stock on NASDAQ on October 24, 1995, which were $8.00
and $9 13/16, respectively. The parties continued arms length negotiations
until, as described below, a firm price was reached on Monday, October 30,
1995. Facelifters informally advised the outside members of the Facelifters
Board of the proposed transaction.

37
<PAGE> 44
On October 25, 1995, AMRE held an informal telephonic review with the
AMRE Board regarding the progress toward an agreement.

On October 26, 1995, senior management teams and financial advisors of
AMRE and Facelifters met to further review operational, marketing and financial
issues and to conduct preliminary due diligence reviews concerning each other.
Representatives of AMRE travelled to Facelifters' corporate headquarters in
Boca Raton, Florida to continue AMRE's financial and operational due diligence
investigation of Facelifters.

On October 27, 1995, attorneys for AMRE delivered the first draft of
the Merger Agreement to Facelifters, together with initial drafts of the
affiliate letter, stockholder and employment agreements. Negotiations with
respect to the terms of such documents continued until October 31, 1995. The
parties conducted expedited due diligence regarding each other throughout this
period.

On October 28, 1995, the AMRE Board held a telephonic meeting and
authorized AMRE management to proceed, subject to completion of due diligence.

On Monday, October 30, 1995, the parties, after completion of AMRE's
preliminary due diligence investigation, agreed on an exchange ratio that would
result in the equivalent of $11.28 per share for Facelifters Common Stock based
on the value of AMRE Common Stock and Facelifters Common Stock at the close of
business on October 24, 1995. The parties agreed that the exchange ratio would
fluctuate, in some circumstances, based upon the price of AMRE Common Stock.
The parties agreed that the final exchange ratio would be determined by
calculating the average closing price per share of AMRE Common Stock on the
NYSE for the 15 trading days prior to the day three trading days before AMRE
requested acceleration of effectiveness of the Registration Statement
containing this Joint Proxy Statement/Prospectus. If the average closing price
of AMRE Common Stock for such period is between $9.50 and $6.50 per share, then
the exchange ratio would be 1.41 shares of AMRE Common Stock for each share of
Facelifters Common Stock. If the average closing price for AMRE Common Stock
on the NYSE for such period is greater than $9.50 per share, then the exchange
ratio would be determined by dividing 11.28 by the sum of (i) the average
closing price of AMRE Common Stock minus 9.50 plus (ii) 8.00. If the average
closing price for AMRE Common Stock on the NYSE for the period is less than
$6.50 but not less than $5.00 per share, then the exchange ratio will be
determined by dividing 11.28 by the difference between (i) 8.00 minus (ii) the
difference between 6.50 minus the average closing price of AMRE Common Stock.
If the average closing price of AMRE Common Stock is less than $5.00 for the
period, then AMRE may terminate the Merger Agreement or proceed with the
transaction at an exchange rate which is determined by dividing $8.20 by the
average closing price.

The Facelifters Board held a special meeting on Tuesday, October 31,
1995 to consider the Merger Agreement. At this meeting, members of
Facelifters' senior management, together with its legal and financial advisors,
reviewed with the Facelifters Board, among other things, the background of the
proposed transaction, the potential benefits of the transaction, including the
benefits to its stockholders of a stock-for-stock tax-free business
combination, a summary of AMRE, financial and valuation analyses of the
transaction and the terms of the proposed agreements. In addition, Southwest
presented an oral opinion that as of such date the Merger was fair from a
financial point of view to the Facelifters stockholders. After extensive
consideration, the Facelifters Board approved the transaction.

On December 12, 1995, AMRE and Facelifters entered into an amendment
to the Merger Agreement that provided that a share of Facelifters Common Stock
would be converted into at least one share of AMRE Common Stock.

Facelifters has not contacted, nor has it received bids from, any
other prospective bidders since the commencement of negotiations with AMRE.

38
<PAGE> 45
REASONS FOR THE MERGER; RECOMMENDATIONS OF THE BOARDS OF DIRECTORS

AMRE and Facelifters. The AMRE Board and the Facelifters Board have
approved the Merger Agreement and the Merger and have recommended that their
respective stockholders vote "FOR" approval of the matters described in this
Joint Proxy Statement/Prospectus.

Upon entering into the Century 21 License Agreement, AMRE made a
strategic decision to alter significantly the marketing and distribution focus
of its home remodeling services. Because of the perceived opportunities
offered by the Century 21 License Agreement, including access to additional
geographic markets and a greater array of home improvement products, lower
licensing fees and the affiliation with Century 21 through the use of the
CENTURY 21 Home Improvements name, Facelifters desired to enter into a
strategic alliance with AMRE. The AMRE Board and Facelifters Board considered
a combination of the two companies to be the most attractive method to take
advantage of the strengths of each of the companies and to expand the combined
entity's business. The terms of the Merger Agreement and the other aspects of
the Merger were negotiated anticipating the continuing involvement of the
Facelifters organization.

o it is expected that the combination can be accomplished with
minimum disruption to either company's management and
employees; and

o the Merger presents opportunities to realize economies of
scale and operating efficiencies. Economies of scale may
result from the increased buying power of the combined entity
which should achieve lower costs for manufacturing, raw
materials, advertising media, printing costs, supplies,
telecommunications and other operating related costs. In
addition, costs associated with television and radio
commercials and direct mail advertising can be spread over
more geographic markets. Operating efficiencies may result
from the integration of certain operations and the elimination
of facilities' costs. While the extent to which these
possible economies of scale and operating efficiencies may be
realized is uncertain,

39
<PAGE> 46
management believes at least $1.0 million of annual savings
will result from these opportunities.

AMRE. The AMRE Board believes that the terms of the Merger are fair
to, and in the best interests of, AMRE and its stockholders. Subject to
various conditions, including stockholder approval of the matters described
herein, the AMRE Board has approved the Merger Agreement, the Merger, the
issuance of the AMRE Common Stock upon consummation of the Merger in accordance
with the Merger Agreement and the other transactions contemplated thereby and
the Charter Amendment, and recommends that its stockholders vote "FOR" approval
of the proposals to be voted on at the AMRE Special Meeting as described in
this Joint Proxy Statement/Prospectus.

The AMRE Board believes that the Merger is in the best interests of
AMRE and its stockholders for the following additional reasons:

o the combined entity is expected to have enhanced operating
results in the future due to the anticipated operating
efficiencies and economies of scale described above;

o the addition of Facelifters' telemarketing operations is
expected to improve AMRE's overall marketing operations; and

o the management and operating philosophies of Facelifters are
very similar to those of AMRE, and the addition of
Facelifters' management personnel is expected to strengthen
AMRE's management team.

In reaching these conclusions, the AMRE Board considered, among other
things, (i) the respective geographic markets of AMRE and Facelifters, (ii)
expected operating and financial characteristics of a combined entity, and the
operating efficiencies and economies of scale associated with the combination,
(iii) the experience and performance of Facelifters management, (iv) the
capital structure and financial performance of Facelifters, and (v) the opinion
of Bear Stearns, financial advisor to AMRE for the Merger, that, as of the date
of such opinion, the consideration to be paid in the Merger was fair from a
financial point of view, to the public stockholders of AMRE. See, however,
"Risk Factors."

Facelifters. The Facelifters Board believes that the terms of the
Merger are fair to, and in the best interests of, Facelifters and its
stockholders. The Facelifters Board has approved, subject to stockholder
approval, the Merger Agreement, the Merger and the transactions contemplated
thereby and recommends that the holders of Facelifters Common Stock vote "FOR"
approval of such matters at the Facelifters Special Meeting.

The terms of the Merger, including the Exchange Ratio, were the result
of arms' length negotiations between Facelifters and AMRE and their respective
representatives. In the course of reaching its decision to approve the Merger,
the Facelifters Board consulted with its professional advisors as well as with
management and considered numerous factors, including but not limited to the
following:

o Facelifters will become part of the largest direct marketing,
in-home sales and installation home improvement company in the
United States;

40
<PAGE> 47
o the combined entity will have a greater total market
capitalization than either company on a stand- alone basis,
which is expected to result in improved liquidity for
Facelifters stockholders;

o the Merger will provide Facelifters with access to a larger
market for its products; and

o the Facelifters Board believes that consummation of the Merger
offers the stockholders of Facelifters enhanced prospects for
long-term growth in the value of their investment in
Facelifters.

The Facelifters Board also considered numerous other factors in
evaluating the Merger and the Merger Agreement, including but not limited to
the following: (i) the historical financial statements, financial projections
and discounted cash flow values of Facelifters and AMRE, (ii) financial data
concerning selected comparable public companies, (iii) comparison of the market
value of the AMRE Common Stock and the Facelifters Common Stock over various
periods of time, (iv) the going concern value of Facelifters on a stand-alone
basis, (v) the possible values of the combined companies, (vi) the
determination by the directors, in light of the comparison between the
Facelifters Sears License Agreement and the apparent opportunities provided by
the Century 21 License Agreement, that the Merger will provide Facelifters'
stockholders with a more favorable opportunity to continue to participate in
the home improvement and kitchen refacing business through the conversion of
the Facelifters stockholders' investment into an investment in a larger entity
with a broader customer base, (vii) the determination by the directors that a
strategic merger with AMRE provides Facelifters and its stockholders with the
best opportunity for future growth and profitability, (viii) the Merger is
structured so as to permit the Facelifters Board to consider and possibly
accept a superior Acquisition Proposal (as defined herein), and (ix) the
financial advice of Southwest to the effect that the consideration per share to
be paid to the stockholders of Facelifters in connection with Merger is fair
from a financial point of view. See, however, "Risk Factors."

EFFECTS OF THE MERGER

Conversion of Facelifters Common Stock. Pursuant to the Merger
Agreement, among other things, Merger Sub will be merged with and into
Facelifters, and Facelifters will become a wholly owned subsidiary of AMRE. In
the Merger, each outstanding share of Facelifters Common Stock will be
converted into one share of AMRE Common Stock. See "The Merger Agreement."

Dilution. Subsequent to the Merger, former Facelifters stockholders
will hold an aggregate of approximately 3,565,680 shares of AMRE Common Stock,
representing approximately 25% of the outstanding AMRE Common Stock as of March
4, 1996, assuming no additional shares of AMRE Common Stock or Facelifters
Common Stock are issued prior to the Effective Time and prior to the
Congressional Merger if it is consummated. In addition, it is expected that
900,000 shares of AMRE Common Stock will be issued to former holders of
Congressional Common and Preferred Stock in connection with the Congressional
Merger if it is consummated.

41
<PAGE> 48
OPINIONS OF FINANCIAL ADVISORS

AMRE.

On October 30, 1995, AMRE agreed to retain Bear Stearns to act as
financial advisor to AMRE and to render an opinion as to the fairness of the
Merger, from a financial point of view, to the stockholders of AMRE. AMRE
engaged Bear Stearns as its financial advisor because Bear Stearns is a
nationally recognized investment banking firm and because of its record and
experience in rendering fairness opinions. Bear Stearns, as part of its
investment banking business, is regularly engaged in the valuation of
businesses and securities, mergers and acquisitions, negotiated underwritings,
secondary distribution of securities, private placements and valuations for
estate, corporate and other purposes.

Prior to this engagement, Bear Stearns advised AMRE in connection with
the licensing of certain rights to the CENTURY 21 Home Improvements Name and
transactions incident thereto. Sheldon I. Stein, a Senior Managing Director of
Bear Stearns, is a director of AMRE.

Pursuant to a letter agreement, dated October 30, 1995, AMRE paid Bear
Stearns a retainer of $100,000 and an additional $200,000 for rendering its
opinion in connection with the Merger, and on consummation of the Merger, will
pay Bear Stearns an additional fee of $150,000. AMRE has also agreed to
reimburse Bear Stearns for its reasonable out-of- pocket expenses, including
the reasonable fees and disbursements of counsel, and to indemnify Bear Stearns
and certain related persons against certain liabilities in connection with the
engagement of Bear Stearns, including certain liabilities under the federal
securities laws.

On March 14, 1996, Bear Stearns delivered the Bear Stearns Opinion
attached hereto as Annex F that the Merger is fair, from a financial point of
view, to the stockholders of AMRE. Stockholders should be aware that Bear
Stearns considered the strategic nature of the Merger to AMRE to be the single
most important factor in reaching their conclusion that the Merger was fair to
AMRE stockholders from a financial point of view. Additionally, as set forth
therein, Bear Stearns relied upon and assumed the accuracy and completeness of
the financial and other information provided to it by AMRE and Facelifters.
With respect to AMRE's and Facelifters' projected financial results, Bear
Stearns assumed that the projections were reasonably prepared on bases
reflecting the best currently available estimates and judgments of the
managements of AMRE and Facelifters as to the expected future performance of
AMRE and Facelifters, respectively. Bear Stearns did not perform any
independent verification of the information or projections provided to it and
Bear Stearns relied upon the assurances of the managements of AMRE and
Facelifters that they are unaware of any facts that would make the information
or projections provided to Bear Stearns incomplete or misleading.

The projections received by Bear Stearns from Facelifters were fiscal
year projections for 1996 and 1997. These projections were prepared by
Facelifters to show possible results of operations assuming that Facelifters
and AMRE continued as Sears licensees, and Bear Stearns made the following
adjustments and modifications to the data provided by Facelifters:

1. Improved the gross margin by 1% for 1996 and 1997 in
connection with the closing of Facelifters' Brooklyn, New York
facility and the anticipated consolidation of manufacturing
facilities.

2 Reduced projected sales by 5% for potential disruption
resulting from changing from the Sears brand name to the
CENTURY 21 Home Improvements name.

3. Adjusted the license fees payable to conform them to the lower
fees payable under the license for the CENTURY 21 Home
Improvements name versus the license fees payable under the
Sears license.

4. Constructed calendar year projections for 1997, 1998, 1999 and
2000 from the fiscal year projections for 1996 and 1997
provided by Facelifters.

It should be noted that the projections received by Bear Stearns from
Facelifters were not prepared by Facelifters in contemplation of the Merger and
did not take into consideration either (i) the major change in marketing focus
that would result from non-renewal of the Sears license and adoption of the
CENTURY 21

42
<PAGE> 49
Home Improvements name or (ii) the lower license fees payable for use of the
CENTURY 21 Home Improvements name as compared to the license fees payable to
Sears. See "Risk Factors - New Marketing Strategies." While the projections
provided by Facelifters gave Bear Stearns a starting point, they were not
determining factors in the conclusions reached by them.

The projections provided to Bear Stearns indicated that Facelifters'
revenue would grow at an annual rate following the Merger that is less than
that experienced between 1992 and 1994, but that Facelifters' projected gross
margins would be slightly higher than those realized between 1992 and 1994.
EBITDA before license fees as a percent of sales for fiscal 1994 and 1995 were
somewhat lower than was projected for fiscal 1996 and 1997, respectively. The
historical financial data excludes the effects of certain items Bear Stearns
considered non-recurring. See "Facelifters Management's Discussion and Analysis
of Financial Condition and Results of Operations."

In arriving at its opinion, Bear Stearns did not perform or obtain any
independent appraisal of the assets of AMRE or Facelifters. The Bear Stearns
Opinion is necessarily based on economic, market and other conditions, and the
information made available to it as of the date of such opinion. The Bear
Stearns Opinion is not a prediction of the future operating results of the
combined company should the Merger be consummated. Bear Stearns further
assumed that the Merger would be accounted for in accordance with the pooling
of interests method of accounting under the requirements of APB No. 16 and
would qualify as a tax-free reorganization under Section 368 (a) of the Code.
Bear Stearns did not consider the effect, if any, of the Congressional Merger
on its analysis. The Bear Stearns Opinion addresses only the fairness of the
Merger, from a financial point of view, and does not constitute a
recommendation to any stockholder of AMRE as to how such stockholder should
vote on the Merger Agreement. Bear Stearns did not recommend what the Exchange
Ratio should be nor the range within which the Exchange Ratio should fall. The
Exchange Ratio in the Merger was determined through arms' length negotiations
between AMRE and Facelifters.

The summary of the Bear Stearns Opinion set forth in this Joint Proxy
Statement/Prospectus is qualified in its entirety by reference to the full text
of such opinion. AMRE STOCKHOLDERS ARE URGED TO, AND SHOULD, READ THE BEAR
STEARNS OPINION CAREFULLY IN ITS ENTIRETY IN CONNECTION WITH THIS JOINT PROXY
STATEMENT/PROSPECTUS FOR ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITS OF THE
REVIEW BY BEAR STEARNS.

In rendering the Bear Stearns Opinion, Bear Stearns, among other
things: (i) reviewed the Joint Proxy Statement/Prospectus in substantially
final form to be sent to the stockholders of AMRE; (ii) reviewed AMRE's Annual
Reports to Stockholders, Annual Reports on Form 10-K and Proxy Statements for
the fiscal years ended December 31, 1991 through 1995, and its Quarterly
Reports on Form 10-Q for the fiscal periods ended April 2, July 2 and October
1, 1995; (iii) reviewed Facelifters' Annual Reports to Stockholders, Annual
Reports on Form 10-K and Proxy Statements, for the fiscal years ended in March
1991 through 1995, its Quarterly Reports on Form 10-Q for the fiscal periods
ended June 30, September 30 and December 31, 1995; (iv) reviewed certain
operating and financial information, including projections, provided to Bear
Stearns by the managements of AMRE and Facelifters relating to their respective
businesses and prospects; (however, as mentioned above the Facelifters
projections reviewed by Bear Stearns were not prepared by Facelifters in
contemplation of the Merger and did not take into consideration either the
major change in marketing focus that would result from non-renewal of the Sears
license and adoption of the CENTURY 21 Home Improvements name or the lower
license fees payable for use of the CENTURY 21 Home Improvements name as
compared to the license fees payable to Sears); (v) met with certain members of
AMRE's and Facelifters' senior managements to discuss their operations,
historical financial statements and future prospects, and their views of the
business, operational and strategic benefits, potential synergies and other
implications of the Merger; (vi) reviewed the pro forma financial impact of the
Merger on AMRE stockholders; (vii) reviewed the historical stock prices and
trading volumes of the common shares of AMRE and Facelifters; (viii) reviewed
publicly available financial information and stock market performance data of
other publicly-held companies which Bear Stearns deemed generally comparable to
AMRE and Facelifters; (ix) reviewed the financial terms of certain other recent
acquisitions of companies which Bear Stearns deemed generally comparable to
AMRE

43
<PAGE> 50
and Facelifters; and (x) conducted such other studies, analyses, inquiries and
investigations as Bear Stearns deemed appropriate.

The following is a brief summary of certain of the financial analyses
used by Bear Stearns in connection with providing its opinion to the AMRE
Board, although stockholders should be aware that Bear Stearns considered the
strategic nature of the Merger to AMRE to be the single most important factor
in reaching their conclusion that the Merger was fair to AMRE stockholders from
a financial point of view. For the Contribution Analysis and Pro Forma
Combination Analysis set forth below, calculations were based on an AMRE stock
price of $16.50 (the closing price on March 13, 1996) and an Exchange Ratio
of 1.00x.

Contribution Analysis. Bear Stearns analyzed the pro forma
contribution of each of AMRE and Facelifters to the combined company, if the
Merger were to be consummated, and reviewed certain historical and estimated
future operating and financial information including, among other things, the
earnings before interest, taxes, depreciation and amortization ("EBITDA"),
earnings before interest and taxes ("EBIT"), revenues and net income of AMRE
and Facelifters, and the pro forma EBITDA, EBIT, revenues, and net income of
the combined company resulting from the Merger based on internal financial
analyses and projections for AMRE and Facelifters prepared by their respective
managements. The contribution analysis did not take into account any potential
synergies or cost savings that might be realized after the Merger and excluded
restructuring and other one time write-offs. The analysis assumed that as to
both Facelifters and AMRE, effective January 1996, their relationship with
Sears would terminate and they would operate under the terms of the Century 21
License Agreement. Such analysis indicated that based on management
projections, as to projected 1996 and 1997 results, AMRE's relative
contribution to the financial results of the combined company would be (i)
82.5% and 82.0%, respectively, of revenues, (ii) 60.1% and 59.8%, respectively,
of EBITDA, (iii) 54.4% and 55.2%, respectively, of EBIT, and (iv) 56.6% and
58.4%, respectively, of net income. Bear Stearns noted that the approximately
79.8% of the pro forma fully diluted number of shares for the combined company
to be owned by existing AMRE stockholders after the Merger is higher than
AMRE's percentage contribution to total pro forma projected EBITDA, EBIT and
net income. Bear Stearns further noted that the contribution analysis did not
consider the different valuation multiples, such as the price-earnings
multiples, that the market ascribed to AMRE and Facelifters both on a current
basis and on a historical basis.

Pro Forma Combination Analysis. Bear Stearns analyzed projected 1996
and 1997 earnings per share for both AMRE and, on a pro forma basis, for the
combined company after the Merger. This analysis was based upon projections
provided by the senior managements of AMRE and Facelifters. Such analysis did
not take into account any potential synergies or cost savings that might be
realized after the Merger and excluded restructuring charges and other one time
write-offs. The analysis assumed that as to both Facelifters and AMRE,
effective January 1996, their relationship with Sears would terminate and they
would operate under the terms of the Century 21 License Agreement. Based on
managements' projections, and after taking into account the Exchange Ratio,
such analysis showed accretion in AMRE's fully diluted earnings per share
resulting from the Merger of 19.5% and 33.1%, for 1996 and 1997, respectively.
Bear Stearns further noted that the combination analysis did not consider the
different valuation multiples, such as the price-earnings multiples, that the
market ascribed to AMRE and Facelifters both on a current basis and on a
historical basis.

Historic Stock Trading Analysis. Bear Stearns reviewed the historical
public trading prices of AMRE Common Stock and Facelifters Common Stock for the
last three years. Bear Stearns also reviewed both the historical ratio of the
public trading price per share of AMRE Common Stock to the public trading price
per share of Facelifters Common Stock on a weekly basis from January 8, 1993 to
October 27, 1995, as well as the daily average public trading prices of AMRE
Common Stock and Facelifters Common Stock over periods ranging from 5 to the
180 days immediately preceding November 1, 1995. Such analysis indicated that
the ratio of the public trading price per share of Facelifters Common Stock to
the public trading price per share of AMRE Common Stock averaged 1.60 for the
180 days preceding November 1, 1995, 1.46 for the 30 days preceding November 1,
1995, and 1.27 for the 5 days preceding November 1, 1995. Bear Stearns noted
that

44
<PAGE> 51
during the 12 months preceding November 1, 1995, the lowest ratio of the weekly
closing price of Facelifters Common Stock to the weekly closing price of AMRE
Common Stock price was 1.15x.

Selected Comparable Companies Analysis. Bear Stearns compared certain
financial information for Facelifters with corresponding publicly available
information of certain other publicly traded companies that Bear Stearns
considered comparable in certain respects to Facelifters. Such comparable
companies included Masco Corp., Owens Corning Fiberglass Corp., Shaw
Industries, Inc., Mohawk Industries, Inc., Cameron Ashley Building Products,
Inc., Morgan Products Ltd., American Woodmark Corp. and Elcor Corp. (the
"Comparable Group"). An analysis of multiples for the Comparable Group yielded
the following range of multiples: (i) market value to 1995 calendar earnings
per share of 6.9x to 23.9x (with a harmonic mean of 16.2x); (ii) market value
to estimated 1996 calendar earnings per share of 7.1x to 14.8x (with a harmonic
mean of 10.7x); (iii) market capitalization to latest twelve months ("LTM")
revenues of 0.3x to 1.3x (with a harmonic mean of 0.9x); and (iv) market
capitalization to LTM EBITDA of 3.6x to 19.3x (with a harmonic mean of 8.9x).
Based upon a price per share of AMRE of $16.50 (the closing price on March 13,
1996) and an Exchange Ratio of 1.00x, the following ratios are implied for
Facelifters: (i) market value to projected 1996 calendar year earnings per
share of 10.8x; and (ii) market capitalization to LTM revenues of 1.1x. In its
analysis, Bear Stearns adjusted Facelifters' projected 1996 earnings per share
to reflect the license fee structure of the Century 21 License Agreement.

Selected Transactions Analysis. Bear Stearns reviewed certain
information relating to five recent acquisitions of companies in the home
improvement or building products industries ("Selected Acquisition
Transactions"). As part of this analysis, Bear Stearns calculated a
transaction value (defined as the offer value plus liquidation value of
preferred stock plus the principal amount of debt less cash and option
proceeds) as a multiple of the respective acquired companies' LTM revenues and
EBITDA. The calculations for the Selected Acquisition Transactions yielded
harmonic mean multiples of 1.1x and 8.2x for LTM revenues and EBITDA compared
to multiples of 1.1x and 24.9x, respectively, based on the transaction value in
the Merger derived from the Exchange Ratio of 1.00x. Bear Stearns noted that
due to the change to the CENTURY 21 Home Improvements name in connection with
the Merger and the consequent reduction in license fees as a percentage of
sales, Facelifters historical EBITDA may not be indicative of future results.

Discounted Cash Flow Analysis. Under this analysis, Bear Stearns
reviewed estimates of future unleveraged cash flows ("Unleveraged Free Cash
Flows" defined as cash flow from operations plus interest expense, net of
related income tax effects, and less capital expenditures) of Facelifters for
the years ended December 31, 1996 through 2000, based on budgets provided by
Facelifters' management for fiscal 1996 and 1997. Among the factors involved
in Bear Stearns' discounted cash flow analysis, Bear Stearns utilized discount
rates of 16.3%, 16.8% and 17.3% (the midpoint of which was determined by
computing the weighted average cost of capital for Facelifters based on its
capital structure as of September 30, 1995 and certain other assumptions) and
(ii) terminal value multiples of 9.0x, 9.5x and 10.0x Facelifters estimated
EBITDA for the year ended December 31, 2000 (the midpoint of which was
determined based on the harmonic mean latest twelve months EBITDA multiple of
the Comparable Companies, as such term is hereinafter defined). This
methodology resulted in a range of imputed equity values per share of $15.50 to
$17.39 on a fully-diluted basis. Bear Stearns noted that this range of imputed
equity values per share was in excess of the effective price per share AMRE was
paying for Facelifters based on the Exchange Ratio. Bear Stearns further noted
that several of the comparable companies were significantly larger than
Facelifters with well-established branded products and might be expected to
trade at a higher multiple of EBITDA than Facelifters. At multiples of 7.0x to
8.0x EBITDA the imputed range of equity values per share would be $12.89 to
$14.69 on a fully-diluted basis.

45
<PAGE> 52
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
portions of the analysis or of the summary set forth above, without considering
the analysis as a whole, could create an incomplete view of the processes
underlying the Bear Stearns Opinion. In arriving at its opinion, Bear Stearns
considered the results of all such analyses. The analyses were prepared solely
for purposes of providing its opinion as to the fairness of the Merger, from a
financial point of view, to the stockholders of AMRE. Analyses based upon
forecasts of future results are not necessarily indicative of actual future
results, which may be significantly more or less favorable than suggested by
such analyses. As described above, the Bear Stearns Opinion and presentation
to the AMRE Board was one of many factors taken into consideration by the AMRE
Board in making its determination to approve the Merger Agreement. The
foregoing summary does not purport to be a complete description of the analysis
performed by Bear Stearns.

Facelifters.

On October 25, 1995, Facelifters retained Southwest to render the
Southwest Opinion to the Facelifters Board as to the fairness of the Merger,
from a financial point of view, to the stockholders of Facelifters.
Facelifters selected Southwest based on the firm's qualifications, expertise
and familiarity with Facelifters. As part of its investment banking business,
Southwest is regularly engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, secondary distribution of securities, private placements,
corporate planning and other purposes. In the ordinary course of business,
Southwest may actively trade the securities of both Facelifters and AMRE for
its own account and the accounts of its customers and, accordingly, may at any
time hold a long or short position in such securities. For its financial
advisory services in connection with the Merger, Facelifters has agreed to pay
Southwest a total of $150,000, consisting of a retainer fee of $25,000, an
additional fee of $50,000 upon the initial presentation to the Facelifters
Board, and an additional $75,000 payable upon delivery of the Southwest
Opinion. Facelifters has also agreed to reimburse Southwest for its
out-of-pocket expenses, including the fees and disbursements of its legal
counsel (the total of both being capped at $10,000), and to indemnify Southwest
and certain related persons against certain liabilities, including liabilities
under securities laws, arising out of its engagement. No portion of the fee
was or is contingent upon the approval of the Merger.

Southwest delivered its oral opinion on October 31, 1995 to the
Facelifters Board (the "Oral Southwest Opinion"), which Oral Southwest Opinion
was subsequently confirmed in writing, that, as of such date and based upon and
subject to the assumptions made and matters considered in, and the limitations
on, the review undertaken by Southwest, the Merger was fair to the stockholders
of Facelifters from a financial point of view. The strong outlook for AMRE
stock, the strategic nature of the Merger and the attractive premium over
Facelifters' stock price prior to the announcement of the Merger were among the
most important factors considered by Southwest in reaching its conclusion that
the Merger was fair to the stockholders of Facelifters from a financial point
of view. Southwest subsequently delivered to the Facelifters Board the
Southwest Opinion to the effect that, as of the date of this Proxy
Statement/Prospectus and based upon and subject to the assumptions made and
matters considered in, and the limitations on, the review undertaken by
Southwest as set forth in the Southwest Opinion, the Merger is fair to
Facelifters from a financial point of view. The Oral Southwest Opinion is
substantially similar to the Southwest Opinion.

A copy of the Southwest Opinion, which sets forth the factors and
considerations, matters considered, procedures followed and the limitations on,
the review undertaken by Southwest, is attached as Annex E to this Joint Proxy
Statement/Prospectus. The summary of the Southwest Opinion set forth in this
Joint Proxy Statement/Prospectus is qualified in its entirety by reference to
the full text of such opinion. STOCKHOLDERS OF FACELIFTERS ARE URGED TO, AND
SHOULD, READ THE SOUTHWEST OPINION IN ITS ENTIRETY.

The Southwest Opinion is directed only to the fairness of the Merger
to Facelifters from a financial point of view, and does not constitute a
recommendation to any Facelifters stockholder as to how such

46
<PAGE> 53
stockholder should vote at the Facelifters Special Meeting. The Exchange Ratio
was determined through negotiations between Facelifters and AMRE and was
approved by the Facelifters Board. Southwest did not provide advice to
Facelifters during the course of such negotiations, nor did Southwest make a
recommendation with respect to what the Exchange Ratio should be or the range
within which the Exchange Ratio should fall. The Southwest Opinion is not a
prediction of the future operating results of the combined company should the
Merger be consummated.

In arriving at the Southwest Opinion, Southwest, among other things:
(i) reviewed AMRE's Annual Reports, Forms 10-K and related financial
information for the five fiscal years ended December 31, 1995 and AMRE's Form
10-Q and the related unaudited financial information for the quarterly periods
ending April 2, July 2 and October 1, 1995; (ii) reviewed Facelifters' Annual
Reports, Forms 10-K and related financial information for the five fiscal years
ended March 31, 1995 and Facelifters' Forms 10-Q and the related unaudited
financial information for the quarterly periods ending June 30, September 30
and December 31, 1995; (iii) reviewed certain information, including financial
forecasts, relating to the business, earnings, cash flow, assets and prospects
of AMRE, Facelifters and the combined businesses furnished to Southwest by AMRE
and Facelifters; (iv) conducted discussions with members of senior management
of AMRE and Facelifters concerning their respective businesses and prospects;
(v) conducted discussions with members of senior management of Facelifters and
AMRE concerning the potential combination effects resulting from the Merger on
the operations of the combined entity; (vi) reviewed the historical market
prices and trading activity for shares of AMRE Common Stock and shares of
Facelifters Common Stock; (vii) compared the results of operations of AMRE and
Facelifters with that of certain companies which Southwest deemed to be
reasonably similar to AMRE and Facelifters; (viii) compared the proposed
financial terms of the transactions contemplated by the Merger Agreement with
the financial terms of certain other mergers and acquisitions which Southwest
deemed to be relevant; (ix) reviewed the Merger Agreement and AMRE's
registration statement on Form S-4, of which this prospectus forms a part, and
supporting documents thereto; and (x) reviewed such other financial studies and
information, performed such other analyses and took into account such other
matters as Southwest deemed necessary.

In preparing the Southwest Opinion, Southwest relied upon the accuracy
and completeness of all information supplied or otherwise made available to it
by AMRE and Facelifters, and Southwest did not independently verify such
information or undertake an independent appraisal of the assets or the
liabilities, contingent or otherwise, of AMRE or Facelifters. Southwest did
not visit any of the facilities of AMRE or Facelifters, and Southwest did not
consider the effects of the Congressional Merger on its analysis.

With respect to the financial forecasts furnished by AMRE and
Facelifters, Southwest assumed that they were reasonably prepared and reflected
the best currently available estimates and judgments of AMRE's or Facelifters'
management as to the expected future financial performance of AMRE or
Facelifters, either on a stand-alone basis or giving effect to the Merger, as
the case may be. It should be noted that the projections Southwest received
from AMRE for fiscal 1996-1998 were prepared in September 1995 in connection
with AMRE's board's deliberations that led to the non-renewal of the Sears
license. Southwest also received the AMRE projections prepared by Bear Stearns
based on the AMRE projections for fiscal 1996-1998 that were extrapolated to
the year 2000. Southwest took AMRE's financial projections at face value,
although they viewed the numbers as highly speculative and tentative given the
dramatic and recent change in the future outlook for the company. Southwest
used the projections as a starting point for their version of the combined
projections for Facelifters and AMRE. In comparing AMRE's historic and
projected financial information, Southwest noted that AMRE's management expects
an increase in the rate of revenue growth after the transition period to the
CENTURY 21 Home Improvements name is complete as compared to historical rates
of growth experienced between 1992 and 1995. The increased growth rate is due
to the opportunity to generate sublicense revenue, access to additional
geographic markets and a greater array of home improvements products which did
not exist as a Sears licensee.

The following is a summary of the analyses performed by Southwest in
connection with the Southwest Opinion. In connection with the Southwest
Opinion, Southwest performed certain procedures, including each

47
<PAGE> 54
of the financial analyses described below, to support its analyses made in
connection with the delivery of its opinion, and reviewed with the management
of Facelifters the financial information on which such analyses were based.

Discounted Cash Flow Analysis. Southwest calculated ranges of equity
value for Facelifters based upon the value, discounted to the present, of its
five-year stream of projected after-tax free cash flow and its projected
calendar year 2001 terminal value based upon a range of multiples and discount
rates of its projected calendar year 2001 EBITDA. In conducting its analysis,
Southwest utilized financial projections of Facelifters on a stand-alone basis.
Southwest utilized discount rates reflecting a weighted average cost of capital
ranging from 15.0% to 20.0% and terminal value multiples of fiscal year 2001
EBITDA ranging from 5.0x to 8.0x. Based on this analysis, Southwest calculated
a range of values of between $6.31 and $10.16 per share of Facelifters Common
Stock. Southwest compared this range of value to the $17.25 market value of
AMRE Common Stock to be received per share of Facelifters Common Stock based on
AMRE's closing price on March 1, 1996.

Southwest also calculated ranges of equity value for AMRE on a
stand-alone basis based upon the value, discounted to the present, of its
five-year stream of projected after-tax free cash flow and its projected
calendar year 2000 terminal value based upon a range of multiples of its
projected calendar year 2000 EBITDA. In conducting its analysis, Southwest
utilized financial projections prepared by the management of AMRE based on
certain operating assumptions and projections. Utilizing the same range of
discount rates and terminal value EBITDA multiples as were applied to
Facelifters, Southwest calculated a range of values of between $10.25 and
$17.59 per share of AMRE Common Stock.

Southwest utilized the discounted cash flow method to calculate
implied exchange ratios based on the relative ranges of value for AMRE and
Facelifters. The comparison of the Facelifters value ranges to the AMRE value
ranges yielded implied exchange ratios of between 0.58 and 0.62 shares of AMRE
Common Stock for each share of Facelifters Common Stock compared to the
Exchange Ratio of 1.0.

Discounted Earnings Per Share Analysis. Southwest calculated ranges
of equity value for Facelifters based upon multiples, discounted to the
present, of its projected fiscal year 1999 earnings per share. In conducting
its analysis, Southwest utilized financial projections of Facelifters as on a
stand alone basis, holding the current number of common shares constant.
Southwest utilized discount rates ranging from 12.0% to 18.0% and multiples of
calendar year 1999 EPS ranging from 8.0x to 14.0x. Based on this analysis,
Southwest calculated a range of values of between $5.00 and $10.22 per share of
Facelifters Common Stock. Southwest compared this range of value to the $17.25
market value of AMRE Common Stock to be received per share of Facelifters
Common Stock based on AMRE's closing price on March 1, 1996.

Southwest also calculated ranges of equity value for AMRE on a
stand-alone basis based upon multiples, discounted to the present, of its
projected calendar year 2000 earnings per share. In conducting its analysis,
Southwest relied upon financial projections prepared by Bear Stearns and
provided by the management of AMRE. Utilizing discount rates ranging from 12%
to 18% and P/E multiples ranging from 12.0 to 20.0, Southwest calculated a
range of values of between $10.91 and $23.60 per share of AMRE Common Stock.

Southwest utilized the discounted earnings per share methodology to
calculate implied exchange ratios based on the relative ranges of value for
AMRE and Facelifters. The comparison of the Facelifters value ranges to the
AMRE value ranges yielded implied exchange ratios of between 0.43 and 0.46
shares of AMRE Common Stock for each share of Facelifters Common Stock compared
to the Exchange Ratio of 1.0.

Analysis of Selected Comparable Publicly Traded Companies. Southwest
compared certain historical and projected financial data of AMRE and
Facelifters with historical and projected financial data of six companies
deemed by Southwest to be reasonably similar to AMRE and Facelifters: Ultrak,
Inc., Dwyer Group, Barefoot Inc., Rollins Inc., Roto Rooter Inc. and Service
Master (collectively, the "Comparable

48
<PAGE> 55
Companies"). Using the data from the above mentioned Comparable Companies,
Southwest calculated a low, high and median equity value per share using the
Comparable Company multiples. The multiples used in this analysis are as
follows: (i) Total Enterprise Value ("TEV") to Trailing Twelve Months ("TTM")
Revenue - TEV equals the market value of common stock on January 29, 1996, plus
total debt, plus preferred stock, less cash and equivalents; TTM Revenue is as
of the twelve months ending the latest reported quarterly period; (ii) TEV to
TTM Earnings Before Interest and Taxes ("EBIT"); (iii) Price to Estimated 1995
Earnings Per Share; (iv) Price to Estimated 1996 Earnings Per Share; (v) Price
to Estimated 1997 Earnings per Share and (vi) Price to Book Value. The
resultant low, high and median multiples as calculated for the Comparable
Companies were then applied to the financial data of Facelifters and AMRE.

Utilizing the TEV to TTM revenue multiple, Southwest calculated a low,
high and median value per share for Facelifters of $9.18, $20.54 and $11.80,
respectively. The total enterprise value to EBIT method yielded a low, high
and median value per share of Facelifters of $5.90, $10.60 and $8.47,
respectively. Price to 1995 EPS resulted in a low, high and median value per
share for Facelifters of $7.99, $12.76 and $10.84, respectively. Facelifters
low, high and median values on the basis of price to 1996 EPS were $3.70, $6.57
and $5.15, respectively. On the basis of price to book value, Facelifters low,
high and median values were $2.01, $6.26 and $4.66, respectively. The average
of the medians of these valuation methods including a 20% control premium
resulted in a per share valuation of $9.82 for Facelifters Common Stock.

Utilizing the TEV to TTM revenue multiple, Southwest calculated a low,
high and median value per share for AMRE of $14.29, $31.97 and $18.36,
respectively. Utilizing AMRE's projections for 1996, the TEV/EBIT multiple
resulted in a low, high and median value per share for AMRE of $3.96, $7.06 and
$5.64. Price to 1996 EPS resulted in a low, high and median value per share
for AMRE of $5.53, $9.82 and $7.69, respectively. Since 1997 estimates for the
comparable companies were not available, Southwest reduced the 1996 Price to
EPS multiples by 15% to approximate 1997 multiples. The resulting AMRE low,
high and median per share valuations were $4.97, $8.83 and $6.91, respectively.
On the basis of price to book value, AMRE's low, high and median values were
$2.44, $7.61 and $5.67, respectively. The average of the medians of these
valuation methods for AMRE resulted in a per share valuation of $8.86.

Based on its analysis, Southwest calculated implied exchange ratios
for the low, high and median equity values of 0.92, 0.87 and 0.92, shares of
AMRE Common Stock for each share of Facelifters Common Stock, respectively,
compared to the Exchange Ratio of 1.0.

No company selected for use in the Analysis of Selected Comparable
Publicly Traded Companies was identical to AMRE or Facelifters. Accordingly,
an analysis of the results of such comparison is not purely mathematical;
rather, it involves complex considerations and judgments concerning differences
in historical and projected financial and operating characteristics of the
Comparable Companies and other factors that could affect the public trading
value of the comparable companies or company to which they are being compared.

Analysis of Combined Projected Financial Results. Southwest analyzed
combined projected income statements for the five years ending December 31,
2000 which were prepared by Bear Stearns and provided to Southwest by the
management of AMRE. Southwest noted that the Merger, based upon the 1.0
Exchange Ratio, would be accretive to Facelifters stockholders in future years.

Relative Contribution Analysis. Southwest analyzed the relative
contribution of Facelifters and AMRE to the combined company on the bases of
calendar 1995 revenues, book value and stand-alone projected calendar 1997 net
income. The contribution analysis did not take into account any potential
synergies or cost savings that might be realized after the Merger and excluded
restructuring charges and other one time write-offs. Such analysis indicated
that based on combined calendar year 1995 revenues, book value and projected
combined calendar year 1997 net income, Facelifters' relative contribution to
the financial results of the combined company would be 15.5%, 24.9% and 22.5%,
respectively. Southwest noted that the pro forma number of shares for the
combined company to be owned by former Facelifters stockholders will be
approximately 21.2% based on the 1.0 Exchange Ratio. Southwest further noted
that the contribution analysis

49
<PAGE> 56
did not consider the different valuation multiples, such as the price-earnings
multiples, that the market ascribed to Facelifters and AMRE both on a current
basis and on a historical basis.

Historical Stock Price Analysis. Southwest reviewed the performance
of the per share daily closing market price and trading volume of Facelifters
Common Stock over the year ended October 30, 1995 (two days prior to the
announcement of the Merger) and the weekly closing market price and total
weekly trading volume for the three years ended October 30, 1995 and compared
such prices with the performance of the Standard & Poor's 500 Index and a
composite index of the Comparable Companies. Southwest also reviewed the
performance of the per share daily and weekly closing market price and trading
volume of AMRE Common Stock over the same period and compared such closing
prices with the performance of the Standard & Poor's 500 Index and a composite
index of the Comparable Companies. In addition, Southwest compared the daily
closing price of Facelifters to the daily closing price of AMRE for the last 52
weeks ended October 30, 1995 and found that, on a closing price basis, the
average ratio of Facelifters' share price to AMRE's share price was 1.32, 1.46,
1.73 and 1.57 for the two week, one month, three month and one-year average,
respectively.

Merger Premiums Analysis. Southwest reviewed recent merger and
acquisition transactions in order to identify comparable company acquisitions
and concluded that there have been no recent transactions involving companies
deemed comparable to Facelifters. Southwest calculated the premium to several
relevant Facelifters share prices based on AMRE's closing price of $17.25 on
March 1, 1996. The Exchange Ratio of 1.0 resulted in a premium of 165.4% over
the price thirty days prior to the date of the announced Merger (September
29,1995); a premium of 126.2% over the price the day prior to the announcement
of AMRE's Century 21 License Agreement (October 17, 1995); a premium of 93.7%
over the price the day of AMRE's Century 21 License Agreement; and a premium of
62.4% over the price the day prior to the announcement of the Merger.
Southwest compared these premiums to the average premiums offered in all stock
for stock transactions for the trailing four quarters ended June 30, 1995. For
this time period, the average premiums paid in stock-for-stock mergers over the
price of the stock 30 days prior, one week prior and the day prior to the
announcement of the Merger were 42%, 35% and 29%, respectively.

The summary set forth above does not purport to be a complete
description of the analyses performed by Southwest. In arriving at the
Southwest Opinion, Southwest performed a variety of financial analyses, the
material portions of which are summarized above. In addition, Southwest
believes that its analyses must be considered as a whole and that selecting
portions of its analyses and the factors considered by it, without considering
all such analyses and factors, could create a misleading view of the process
underlying its opinion. In performing its analyses, Southwest made numerous
assumptions with respect to industry performance, general business and economic
conditions and other matters, many of which are beyond the control of
Facelifters or AMRE. Any estimates incorporated in the analyses performed by
Southwest are not necessarily indicative of actual past or future results or
values, which may be significantly more or less favorable than such estimates.
In addition, analyses relating to the value of businesses or assets do not
purport to be appraisals or to reflect the prices at which such businesses or
assets may actually be sold. Because such estimates are inherently subject to
uncertainty, neither Southwest, Facelifters nor any other person assumes
responsibility for their accuracy. The preparation of a fairness opinion is a
complex process not necessarily susceptible to partial or summary description.
Southwest did not assign any relative weights to any of its analyses in
preparing the Southwest Opinion.

INTERESTS OF CERTAIN PERSONS IN THE MERGER

Facelifters Stockholders. In considering the recommendation of the
Facelifters Board with respect to the Merger Agreement, stockholders should be
aware that as of February 28, 1996, the following members of the Facelifters
Board were the beneficial owners of the following shares of Facelifters Common
Stock:

50
<PAGE> 57
<TABLE>
<CAPTION>
SHARES OF FACELIFTERS
NAME OF COMMON STOCK PERCENT OF CLASS BENEFICIALLY
BENEFICIAL OWNER BENEFICIALLY OWNED OWNED AS OF FEBRUARY 28, 1996(1)
- ---------------- --------------------- --------------------------------
<S> <C> <C>
Mark Honigsfeld(2) . . . . . . . . . . . . . . . . . . 544,414 14.7%
Murray Gross(3) . . . . . . . . . . . . . . . . . . . . 339,625 9.2%
Deedee Honigsfeld(4) . . . . . . . . . . . . . . . . . 142,746 4.0%
Robert Miner(5) . . . . . . . . . . . . . . . . . . . . 8,000 *
Dr. Harold Lazarus (5) . . . . . . . . . . . . . . . . 5,000 *
</TABLE>

__________________
* Less than one percent
(1) Shares issuable upon exercise of all outstanding options that are
exercisable or will become exercisable as a result of the consummation of
the transactions contemplated by the Merger are deemed to be outstanding
for the purpose of computing the percentage of ownership of persons owning
such options, but are not deemed to be outstanding for the purpose of
computing the percentage of any other person.
(2) Includes 122,500 shares which may be issued upon the exercise of options
granted under Facelifters' 1993 Stock Compensation Plan. Excludes shares
owned by Deedee Honigsfeld, Mr. Honigsfeld's spouse, which are presented
separately in the table above.
(3) Includes 122,500 shares which may be issued upon the exercise of options
granted under the 1993 Stock Compensation Plan. Excludes 15,560 shares
which may be issued to Mr. Steven Gross, Mr. Murray Gross's adult son,
upon the exercise of options granted under the 1993 Stock Compensation
Plan, respectively, to which Mr. Murray Gross disclaims beneficial
ownership.
(4) Excludes shares owned by Mark Honigsfeld, Mrs. Honigsfeld's spouse, which
are presented separately in the table above.
(5) Includes 7,500 and 5,000 shares for Mr. Miner and Dr. Lazarus,
respectively, which may be issued upon the exercise of options granted
under Facelifters' Outside Directors Stock Option Plan.

Messrs. Honigsfeld and Gross and Mrs. Honigsfeld have agreed to vote
their shares of Facelifters Common Stock in favor of the Merger and the Merger
Agreement. See "The Stockholder Agreement."

Employment Agreements. In connection with the consummation of the
Merger, AMRE will enter into employment agreements with each of Mark Honigsfeld
and Murray Gross, the Chief Executive Officer and Chief Operating Officer of
Facelifters, respectively (the "Honigsfeld Employment Agreement" and the "Gross
Employment Agreement," as the case may be).

Honigsfeld Employment Agreement. The Honigsfeld Employment Agreement
provides that Mr. Honigsfeld will be employed by AMRE for an initial term of
three years. Mr. Honigsfeld shall provide services in connection with the
kitchen cabinet refacing business of AMRE as well as such other duties as may
be designated by the Chief Executive Officer of AMRE, at an annual salary of
not less than $400,000 per annum plus bonus and benefits. In the event of a
Change of Control (as defined in the Honigsfeld Employment Agreement), the
Honigsfeld Employment Agreement will be extended to the date which is two years
subsequent to the date immediately prior to the date on which the Change of
Control of AMRE occurred. Upon such Change of Control, Mr. Honigsfeld will,
under certain circumstances in the event of the termination of the agreement,
be entitled to the sum of (i) all accrued vacation pay and (ii) an amount equal
to the greater of (A) two times the amount of Mr. Honigsfeld's annual salary on
the date prior to the Change of Control or (B) if such termination occurs
during the initial term of employment, then an amount equal to the annual
salary remaining to be paid during such term. A copy of the form of the
Honigsfeld Employment Agreement is attached hereto as Annex B.

Gross Employment Agreement. The Gross Employment Agreement provides
that Mr. Gross will be employed as a Vice President of AMRE for an initial term
of two years. Mr. Gross shall provide services in connection with the former
business of Facelifters, as such business may be carried on by the Surviving
Corporation, at an annual salary of not less than $250,000 per annum plus bonus
and benefits. In the event of a Change of Control (as defined in the Gross
Employment Agreement), the Gross Employment Agreement will be extended to the
date which is two years subsequent to the date immediately prior to the date on
which the Change of Control of AMRE occurred. Upon such Change of Control, Mr.
Gross will, under certain circumstances in the event of the termination of the
agreement, be entitled to the sum of (i) all accrued vacation pay and (ii) an
amount equal to the greater of (A) two times the amount of Mr. Gross's annual
salary

51
<PAGE> 58
on the date prior to the Change of Control or (B) if such termination occurs
during the initial term of employment, then an amount equal to the annual
salary remaining to be paid during such term. A copy of the form of the Gross
Employment Agreement is attached hereto as Annex C.

Indemnification of Facelifters' Officers and Directors. From and
after the Effective Time, AMRE has agreed to indemnify, defend and hold
harmless each person who is now, or had been at any time prior to October 31,
1995, or who becomes prior to the Effective Time, an officer or director of
Facelifters or any subsidiary of Facelifters or an employee of Facelifters or
any subsidiary of Facelifters who acts as a fiduciary under any benefit or
pension plan of Facelifters or any subsidiary of Facelifters (collectively, the
"Indemnified Parties") against all losses, claims, damages, costs, expenses
(including attorneys' fees), liabilities or judgments or amounts that are paid
in settlement with the approval of AMRE (which approval shall not be
unreasonably withheld) of or in connection with any threatened or actual claim,
action, suit, proceeding or investigation based on or arising out of, or
pertaining to the Merger Agreement or the transactions contemplated thereby
(the "Indemnified Liabilities"), in each case to the full extent permitted
under the Delaware Act (and AMRE will pay expenses in advance of the final
disposition of any such action or proceeding to each Indemnified Party to the
full extent permitted by law). Without limiting the foregoing, in the event
any such claim, action, suit, proceeding or investigation is brought against
any Indemnified Parties, (i) the Indemnified Parties may retain counsel
satisfactory to them (or them and AMRE and the Surviving Corporation after the
Effective Time) and Facelifters (or after the Effective Time, AMRE and the
Surviving Corporation) shall pay all fees and expenses of such counsel for the
Indemnified Parties promptly as statements therefor are received; and (ii)
Facelifters (or after the Effective Time, AMRE and the Surviving Corporation)
will use all reasonable efforts to assist in the vigorous defense of any such
matter, provided that neither Facelifters, AMRE nor the Surviving Corporation
shall be liable for any settlement effected without its written consent, which
consent, however, shall not be unreasonably withheld. Any Indemnified Party
wishing to claim indemnification under the Merger Agreement, upon learning of
any such claim, action, suit, proceeding or investigation, shall notify AMRE,
but the failure so to notify shall not relieve AMRE from any liability that it
may have under the Merger Agreement, except to the extent such failure
materially prejudices AMRE. The Indemnified Parties as a group may retain only
one law firm to represent them with respect to each such matter unless there
is, under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Indemnified Parties.
The Indemnified Parties and AMRE have agreed that the rights to indemnification
provided pursuant to the Merger Agreement, including provisions relating to
advances of expenses incurred in defense of any action or suit with respect to
matters pertaining to the Merger Agreement or matters contemplated thereby,
will survive the Merger and shall continue in full force and effect for a
period of six years from the Effective Time; provided, however, that all rights
to indemnification in respect to any Indemnified Liabilities asserted or made
within such period shall continue until the disposition of such Indemnified
Liabilities.

From and after the Effective Time, AMRE and the Surviving Corporation
have agreed to indemnify, defend and hold harmless the Indemnified Parties
against all losses, claims, damages, costs, expenses (including attorneys'
fees), liabilities or judgments or amounts that are paid in settlement with the
approval of the Indemnifying Party (which approval shall not be unreasonably
withheld) of or in connection with any threatened or actual claim, action,
suit, proceeding or investigation based in whole or in part or arising in whole
or in part out of the fact that such person is or was a director, officer, or
such employee of Facelifters or any subsidiary of Facelifters that pertains to
any matter existing or occurring at or prior to October 31, 1995 ("Existing
Liabilities"), in each case to the full extent permitted under the Delaware Act
(and AMRE and the Surviving Corporation have agreed to pay expenses in advance
of the final disposition of any such action or proceeding to each Indemnified
Party to the full extent permitted by law). Without limiting the foregoing, in
the event any such claim, action, suit, proceeding or investigation is brought
against any Indemnified Parties after the Effective Time, (i) the Indemnified
Parties may retain counsel satisfactory to them, the Surviving Corporation and
AMRE and AMRE, and the Surviving Corporation shall pay all fees and expenses of
such counsel for the Indemnified Parties promptly as statements therefor are
received; and AMRE and the Surviving Corporation will use all reasonable
efforts to assist in the vigorous defense of any such matter, provided that
neither AMRE nor the Surviving Corporation shall be liable for any settlement
effected

52
<PAGE> 59
without its written consent, which consent, however, shall not be unreasonably
withheld. Any Indemnified Party wishing to claim indemnification under the
Merger Agreement, upon learning of any such claim, action, suit, proceeding or
investigation, shall notify the Surviving Corporation and AMRE, but the failure
so to notify shall not relieve a party from any liability that it may have
under the Merger Agreement, except to the extent such failure materially
prejudices such party. The Indemnified Parties as a group may retain only one
law firm to represent them with respect to each such matter unless there is,
under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Indemnified Parties.
The Indemnified Parties, AMRE and Merger Sub have agreed that all rights to
indemnification, including provisions relating to advances of expenses incurred
in defense of any action or suit with respect to matters occurring prior to the
Effective Time, will survive the Merger and shall continue in full force and
effect for a period of two years from the Effective Time (provided, however,
that all rights to indemnification in respect to any Existing Liabilities
asserted or made with such period shall continue until the disposition of such
Existing Liabilities). Notwithstanding anything to the contrary, the
Indemnified Parties, AMRE and Merger Sub have agreed that (i) if at the time
any claim, action, suit, proceeding or investigation is brought against any of
the Indemnified Parties the tangible net book value of the Surviving
Corporation is equal to or greater than the tangible net book value of the
Surviving Corporation as reflected in the last report filed by Facelifters with
the Commission pursuant to the Exchange Act before the Effective Time, as
adjusted to give effect to the lease termination for Facelifters' Brooklyn
facility if the results of such termination are not reflected in the last
Exchange Act report filed by Facelifters before the Effective Time, then the
Indemnified Parties shall be entitled to be indemnified pursuant to the Merger
Agreement only by the Surviving Corporation and only to the extent of the
Surviving Corporation's tangible net book value; and (ii) if at the time any
claim, action, suit, proceeding or investigation is brought against any of the
Indemnified Parties the tangible net book value of the Surviving Corporation is
less than the tangible net book value of the Surviving Corporation as reflected
in the last Exchange Act report filed by Facelifters before the Effective Time,
as adjusted to give effect to the Brooklyn lease termination referred to above
if the results of such termination are not reflected in the last Exchange Act
report filed by Facelifters before the Effective Time, the Indemnified Parties
shall be entitled to be indemnified pursuant to the Merger Agreement by AMRE
and the Surviving Corporation, but in no event shall the obligations of the
Surviving Corporation and AMRE under the Merger Agreement, in the aggregate,
exceed the tangible net book value of the Surviving Corporation as reflected in
the last Exchange Act report filed by Facelifters before the Effective Time as
adjusted to give effect to the Brooklyn lease termination referred to above.

Additional AMRE Directors Following the Merger. As described under
"The Merger Agreement," Facelifters has the right pursuant to the Merger
Agreement to designate one person to serve as a member of the AMRE Board.
Facelifters has selected Murray Gross as its designee. Pursuant to the Merger
Agreement, the AMRE Board has authorized the increase in the number of persons
constituting the AMRE Board to 11, such increase to be effective upon
consummation of the Merger, and to cause the election of the designee of
Facelifters to fill the vacancy so created.

CONVERSION OF FACELIFTERS STOCK OPTIONS

Pursuant to the Merger Agreement, AMRE and Facelifters have agreed to
take all actions necessary to provide that all Facelifters Options then
outstanding under Facelifters Stock Option Plans shall remain outstanding
following the Effective Time and shall remain exercisable pursuant to the terms
of such plans. The Facelifters' Stock Option Plans provide for the immediate
acceleration and vesting of Facelifters Options granted thereunder in the event
of a Change of Control (as defined therein.) The Merger constitutes such a
Change of Control. At the Effective Time, such Facelifters Options shall, by
virtue of the Merger and without any further action on the part of the
Facelifters or the holder of any such Facelifters Options, be assumed by AMRE
in such manner that AMRE (i) is a corporation "assuming a stock option in a
transaction to which Section 424(a) applies" within the meaning of Section 424
of the Code, or (ii) to the extent that Section 424(a) of the Code does not
apply to any such Facelifters Option, would be such a corporation were Section
424(a) applicable to such option. Each Facelifters Option assumed by AMRE
shall be exercisable upon the same terms and conditions as under the applicable
Facelifters Stock Option Plan and the applicable option agreement

53
<PAGE> 60
issued thereunder, except that (A) each such Facelifters Option shall be
exercisable for that whole number of shares of AMRE Common Stock (to the nearer
whole share) into which the number of shares of Facelifters Common Stock
subject to such Facelifters Option immediately prior to the Effective Time
would be converted pursuant to the Exchange Ratio, and (B) the option exercise
price per share of AMRE Common Stock shall be an amount equal to the option
price per share of Facelifters Common Stock subject to such Facelifters Option
in effect prior to the Effective Time divided by the Exchange Ratio (the price
per share, as so determined, being rounded upward to the nearest full cent).

The following chart sets forth, as of February 28, 1996, the aggregate
number of shares of Facelifters Common Stock issuable to directors and
executive officers of Facelifters upon the exercise of options to purchase
Facelifters Common Stock and the number of shares of AMRE Common Stock which
each such person would be entitled to receive upon exercise of such options for
AMRE Common Stock granted as contemplated in the Merger Agreement, assuming
such persons do not exercise such Facelifters Stock Options to the extent
exercisable prior to the Merger:

54
<PAGE> 61

<TABLE>
<CAPTION>
Number of
Shares of AMRE
Common Stock
Aggregate Number Issuable Upon
of Shares Issuable Weighted Average Exercise of Options
Under Facelifters Exercise Price to Acquire AMRE
Name and Office Options(1) Per Share Common Stock (2)
- --------------- ---------- --------- ----------------
<S> <C> <C> <C>
Mark Honigsfeld
Chairman of the Board and Chief Executive Officer 122,500 $4.97 122,500

Murray Gross
President, Chief Operating Officer and Director 122,500 4.53 122,500

Dr. Harold Lazarus
Director 5,000 7.12 5,000

Robert Miner
Director 7,500 6.42 7,500

Darrell Wolcott
Vice President and Chief Financial Officer 3,060 5.00 3,060

Malcolm Harris
Vice President-Operations 14,000 5.80 14,000

Peter Bulger
Vice President-Sales 20,862 6.22 20,862

Steven S. Gross
Vice President-Marketing 15,560 6.21 15,560

Jeffrey Goldman
Vice President-Manufacturing 2,040 5.00 2,040
----- ---- -----

TOTAL 313,022 $ 5.05 313,022

</TABLE>

(1) As of February 28, 1996 options to purchase 195,940 of such shares of
Facelifters Common Stock were fully vested. The Facelifters' Stock
Option Plans provide for the immediate acceleration and vesting of
Facelifters Options granted thereunder in the event of a Change of
Control (as defined therein). The Merger constitutes such a Change of
Control.
(2) Each Facelifters Option assumed by AMRE shall be exercisable upon the
same terms and conditions as under the applicable Facelifters Stock
Option Plan and the applicable option agreement issued thereunder,
except that (A) each such Facelifters Option shall be exercisable for
that whole number of shares of AMRE Common Stock (to the nearer whole
share) into which the number of shares of Facelifters Common Stock
subject to such Facelifters Option immediately prior to the Effective
Time would be converted pursuant to the Exchange Ratio, and (B) the
option exercise price per share of AMRE Common Stock shall be an
amount equal to the option price per share of Facelifters Common Stock
subject to such Facelifters Option in effect prior to the Effective
Time divided by the Exchange Ratio (the price per share, as so
determined, being rounded upward to the nearest full cent).

ACCOUNTING TREATMENT

The Merger is intended to qualify as a pooling of interests for
accounting and financial reporting purposes. AMRE has received a "pooling
letter" from Arthur Andersen LLP, AMRE's independent public accountants, dated
December 12, 1995, to the effect, subject to customary qualifications, that the
Merger will be treated as a pooling of interests for accounting purposes.
Under this method of accounting, the assets and liabilities of AMRE and
Facelifters will be combined based on the respective carrying values of the
accounts in the historical financial statements of each entity. Results of
operations of the combined company will include income of AMRE and Facelifters
for the entire fiscal period in which the combination occurs and the historical
results of operations of the separate companies for the fiscal years prior to
the Merger will be adjusted to a calendar year to conform with AMRE's fiscal
year and will be combined and reported as the results of operations of the
combined company.

55
<PAGE> 62
Pursuant to the Merger Agreement, AMRE and Facelifters have agreed to
use their commercially reasonable efforts to prevent any of their respective
subsidiaries or affiliates from taking any action, or failing to take any
reasonable action, that would jeopardize the treatment of the Merger as a
pooling of interests. In the event such an action occurred, the Merger would
not qualify as a pooling of interests and, rather, would be accounted for under
the purchase method which would result in the recording of a significant amount
of goodwill (the excess of the value of AMRE Common Stock exchanged in the
Merger over the fair value of the net assets of Facelifters). Depending upon
the amount of goodwill recorded and the amortization period selected, the
future operating income of the combined company would be reduced by $1 to $3
million per year under the purchase method of accounting.

Consummation of the Merger is not conditional upon the Merger being
treated as a pooling of interests for accounting purposes. Certain events may
prevent the Merger from qualifying as a pooling of interests for accounting and
financial reporting purposes. See "The Merger Agreement" and "Special Factors
- -- Federal Securities Laws Consequences."

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

This section is a summary of the material federal income tax
consequences which are expected to result from the Merger and the issuance of
the securities offered by this Joint Proxy Statement/Prospectus. It is
impracticable to comment on all aspects of federal, state, local and foreign
laws that may affect the tax consequences of the transactions contemplated
hereby as they relate to the particular circumstances of each stockholder or
potential stockholder. The federal income tax discussion set forth below
applies only to holders of shares of Facelifters Common Stock who hold such
shares as capital assets. The federal income tax consequences to any
particular stockholder may be affected by matters not discussed below. For
example, certain types of holders (including foreign persons, life insurance
companies, tax exempt organizations and taxpayers who may be subject to the
alternative minimum tax) may be subject to special rules not addressed herein.
Furthermore, the discussion may not be applicable with respect to shares
received pursuant to the exercise of employee stock options or otherwise as
compensation.

This summary is based on the current provisions of the Code, existing
and proposed regulations thereunder and current administrative rulings and
court decisions, all of which are subject to changes that may or may not be
retroactively applied. Many of the provisions of the Code which have been
recently enacted or amended have not been interpreted by the courts or the IRS.

No ruling has been requested from the IRS with respect to any of the
matters discussed herein and thus no assurance can be provided that opinions
and statements set forth herein (which do not bind the IRS or the courts) will
not be challenged by the IRS or would be sustained by a court if so challenged.

THE DISCUSSION SET FORTH BELOW ADDRESSES THE MATERIAL FEDERAL INCOME
TAX CONSEQUENCES OF GENERAL APPLICABILITY WHICH ARE EXPECTED TO RESULT FROM THE
MERGER. STOCKHOLDERS SHOULD CONSULT THEIR TAX ADVISORS TO DETERMINE THE TAX
CONSEQUENCES OF THE MERGER AND THE ACQUISITION, HOLDING AND DISPOSITION OF THE
SECURITIES OFFERED HEREBY, INCLUDING THE APPLICABILITY AND EFFECT OF FEDERAL,
STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX LAWS WITH RESPECT TO THEIR OWN
PARTICULAR CIRCUMSTANCES.

AMRE has obtained the Tax Opinion of its counsel, Akin, Gump, and
Facelifters has obtained the Tax Opinion of its counsel, Jackson & Walker, as
to certain of the expected federal income tax consequences of the Merger,
copies of which are attached as exhibits to the Registration Statement. In
rendering the Tax Opinions, counsel have relied, as to factual matters, solely
on the present and continuing accuracy of (i) the description of the facts
relating to the Merger contained in this Joint Proxy Statement/Prospectus, (ii)
the factual representations contained in the Merger Agreement and related
documents, and (iii) certain factual

56
<PAGE> 63
matters addressed by representations made by certain executive officers of AMRE
and Facelifters, as further described in the Tax Opinions.

Subject to the conditions, qualifications and assumptions contained
herein, in the Certificate of Representations and in the Tax Opinions, Jackson
& Walker has opined that (i) the Merger will constitute a reorganization within
the meaning of Section 368(a) of the Code; (ii) AMRE, Merger Sub and
Facelifters will each be a party to the reorganization within the meaning of
Section 368(b) of the Code; (iii) Facelifters will recognize no gain or loss as
a result of the Merger; (iv) stockholders of Facelifters will recognize no gain
or loss upon receipt of AMRE Common Stock in exchange for their Facelifters
Common Stock in the Merger (except with respect to cash received in lieu of
fractional shares as further discussed below); (v) the adjusted basis of the
AMRE Common Stock received by stockholders of Facelifters in the Merger will be
the same as the adjusted basis of the Facelifters Common Stock surrendered in
exchange therefor (reduced by any amount allocable to fractional share
interests for which cash is received); (vi) the holding period of the AMRE
Common Stock received by the stockholders of Facelifters in the Merger will
include the holding period of the Facelifters Common Stock surrendered in
exchange therefor; and (vii) stockholders of Facelifters who receive cash in
lieu of fractional share interests of AMRE Common Stock in connection with the
Merger will generally, depending on each stockholder's particular
circumstances, recognize a capital gain or loss equal to the difference between
the amount of cash received therefor and the stockholder's adjusted basis in
the fractional share interest (which gain or loss will constitute long-term
capital gain or loss if the fractional share interest has been held for more
than one year at the Effective Time).

Subject to the conditions, qualifications and assumptions contained
herein, in the Certificate of Representations and the Tax Opinions, Akin, Gump
has opined that (i) the Merger will constitute a reorganization within the
meaning of Section 368(a) of the Code; (ii) AMRE, Merger Sub and Facelifters
will each be a party to the reorganization within the meaning of Section 368(b)
of the Code; and (iii) no gain or loss will recognized by AMRE or Merger Sub as
a result of the Merger.

The Tax Opinions represent only such counsels' best judgment as to the
expected federal income tax consequences of the Merger and are not binding on
the IRS. The IRS may challenge the conclusions stated therein and AMRE, Merger
Sub and stockholders of Facelifters may incur the cost and expense of defending
positions taken by them with respect to the Merger.

Federal income tax law requires that a holder of Facelifters Common
Stock provide the Exchange Agent (as defined herein) with its correct taxpayer
identification number, which, in the case of a stockholder who is an
individual, is his or her social security number, or, in the alternative,
establish a basis for exemption from backup withholding. Exempt holders
(including, among others, corporations and certain foreign individuals) are not
subject to these backup withholding and reporting requirements. If the correct
taxpayer identification number or an adequate basis for exemption is not
provided, the stockholder will be subject to withholding of 31% of the cash (if
any) received with respect to dividends paid or the proceeds of a sale,
exchange or redemption of AMRE Common Stock, as the case may be.

To prevent backup withholding, each stockholder must complete the
Substitute Form W-9 provided by the Exchange Agent with the transmittal letter
and certify under penalties of perjury (i) that the taxpayer identification
number provided is correct (or that such stockholder is awaiting a taxpayer
identification number), and (ii) that the stockholder is not subject to backup
withholding because (a) such stockholder is exempt from backup withholding, (b)
the stockholder has not been notified by the IRS that such stockholder is
subject to backup withholding as a result of the failure to report all interest
or dividends, or (c) the IRS has notified such stockholder that it is no longer
subject to backup withholding. The Substitute Form W-9 should be completed,
signed, and returned to the Exchange Agent. In order for a foreign individual
to qualify as an exempt recipient, that stockholder must submit a statement,
signed under penalties of perjury, attesting to that individual's exempt
status. Such statements can be obtained from the Exchange Agent.

57
<PAGE> 64
REGULATORY APPROVALS

Antitrust. Under the HSR Act and the rules promulgated thereunder by
the FTC, the Merger may not be consummated until notifications have been given
and certain information has been furnished to the FTC and the Antitrust
Division and specified waiting period requirements have been satisfied. AMRE
and Facelifters filed notification and report forms under the HSR Act with the
FTC and the Antitrust Division on November 22, 1995. On December 4, 1995, the
FTC notified AMRE and Facelifters that early termination of the HSR Act waiting
period had been granted.

At any time before or after consummation of the Merger, and
notwithstanding that early termination of the HSR Act waiting period has been
granted, the FTC or the Antitrust Division or any state could take such action
under the federal or state antitrust laws as it deems necessary or desirable in
the public interest. Such action could include seeking to enjoin the
consummation of the Merger or seeking divestiture of Facelifters or the
business of AMRE or Facelifters. Private parties may also seek to take legal
action under the antitrust laws under certain circumstances.

Based on information available to them, AMRE and Facelifters believe
that the Merger can be effected in compliance with federal and state antitrust
laws. However, there can be no assurance that a challenge to the consummation
of the Merger on antitrust grounds will not be made or that, if such a
challenge were made, AMRE and Facelifters would prevail, would not be required
to accept certain conditions possibly including certain divestitures in order
to consummate the Merger, or would not incur substantial litigation fees in the
defense of such challenge. See "The Merger Agreement -- Terms of the Merger
Agreement -- Conditions to the Merger."

FEDERAL SECURITIES LAWS CONSEQUENCES

All shares of AMRE Common Stock received or held by Facelifters
stockholders in connection with the Merger will be freely transferable under
the federal securities laws, except that shares of AMRE Common Stock received
or held by persons who are deemed to be "affiliates" (as such term is defined
under the Securities Act) of Facelifters prior to the Merger may be resold by
them only in transactions permitted by the resale provisions of Rule 145
promulgated under the Securities Act (or Rule 144 in the case of such persons
who become affiliates of AMRE) or as otherwise permitted under the Securities
Act. Persons who may be deemed to be affiliates of AMRE or Facelifters
generally include individuals or entities that control, are controlled by, or
are under common control with, such party and may include certain officers and
directors of such party as well as principal stockholders of such party. The
Merger Agreement requires Facelifters to cause each of its affiliates to
execute a written agreement to the effect that such person will not offer or
sell or otherwise dispose of any shares of AMRE Common Stock issued to such
person in or pursuant to the Merger in violation of the Securities Act or the
rules and regulations promulgated thereunder by the Commission.

LISTING ON THE NEW YORK STOCK EXCHANGE

AMRE Common Stock is currently listed for trading on the NYSE and it
is anticipated that such stock will continue to be traded thereon immediately
following consummation of the Merger. The AMRE Common Stock to be issued upon
consummation of the Merger has been approved for listing on the NYSE, subject
to notice of issuance and approval of the Merger by the stockholders of
Facelifters and AMRE.

NO APPRAISAL RIGHTS

Holders of Facelifters Common Stock are not entitled to dissenters'
appraisal rights under the Delaware Act in connection with the Merger. Holders
of AMRE Common Stock are not entitled to dissenters'

58
<PAGE> 65
appraisal rights under the Delaware Act in connection with the matters to be
considered at the AMRE Special Meeting.

THE MERGER AGREEMENT

The following is a brief summary of the material provisions of the
Merger Agreement, the full text of which is attached hereto and incorporated
herein by reference as Annex A. The following discussion is qualified in its
entirety by reference to the Merger Agreement.

THE MERGER

The Merger Agreement provides that, subject to the terms and
conditions thereof, at the Effective Time Merger Sub will be merged with and
into Facelifters, and the separate corporate existence of Merger Sub shall
thereupon cease. Facelifters will be the Surviving Corporation in the Merger
and will continue to be governed by the laws of the State of Delaware, and the
separate corporate existence of Facelifters with all of its rights, privileges,
powers and franchises will continue unaffected by the Merger, except as set
forth in the Merger Agreement. The Merger will have the effect specified in
the Delaware Act.

EFFECTIVE TIME OF THE MERGER

The Merger Agreement provides that the Merger will become effective at
the time a Certificate of Merger is filed with the Secretary of State of
Delaware. It is anticipated that, if the Merger Agreement, including the
issuance of AMRE Common Stock, and the Charter Amendment are adopted and
approved at the AMRE Special Meeting, and the Merger and Merger Agreement are
approved and adopted at the Facelifters Special Meeting, and all other
conditions to the Merger have been satisfied or waived, the Effective Time will
occur on the date of the Special Meetings or as soon thereafter as practicable.

MANNER AND BASIS OF CONVERTING SHARES

At the Effective Time, each outstanding share of Facelifters Common
Stock (other than shares of Facelifters Common Stock held in the treasury of
Facelifters, which shares will be canceled at the Effective Time) will be
converted into one share of AMRE Common Stock.

As soon as practicable following the Effective Time, AMRE will cause
the Exchange Agent to mail to each record holder of Facelifters Common Stock
immediately prior to the Effective Time a letter of transmittal and other
information advising such holder of the consummation of the Merger and for use
in exchanging certificates representing Facelifters Common Stock for
certificates representing AMRE Common Stock and cash in lieu of fractional
shares. Letters of transmittal will also be available following the Effective
Time at the office of the Exchange Agent in New York City. After the Effective
Time, there will be no further registration of transfers on the stock transfer
books of Facelifters of shares of Facelifters Common Stock that were
outstanding immediately prior to the Effective Time. STOCK CERTIFICATES SHOULD
NOT BE SURRENDERED FOR EXCHANGE BY STOCKHOLDERS OF FACELIFTERS PRIOR TO THE
EFFECTIVE TIME AND THE RECEIPT OF A LETTER OF TRANSMITTAL.

No fractional shares of AMRE Common Stock will be issued in the
Merger. Each stockholder of Facelifters entitled to a fractional share as of
the Effective Time shall be entitled to receive a cash payment (without
interest) equal to the fair market value of a fraction of a share of AMRE
Common Stock to which such holder would be entitled. The cash payment in lieu
of a fractional share shall represent such stockholder's proportionate interest
in the net proceeds from the sale by the Exchange Agent on behalf of all such
holders of the aggregate fractional shares of AMRE Common Stock that such
holders would be entitled to receive. Any such sale shall be made by the
Exchange Agent within 10 business days after the date upon

59
<PAGE> 66
which the certificates representing Facelifters Common Stock that would
otherwise result in the issuance of shares of AMRE Common Stock have been
received by the Exchange Agent.

Until such time as a holder of Facelifters Common Stock surrenders his
outstanding stock certificate to the Exchange Agent, together with the letter
of transmittal, the shares of Facelifters Common Stock represented thereby will
be deemed from and after the Effective Time, for all corporate purposes to
evidence the right to receive a certificate representing the number of newly
issued shares of AMRE Common Stock to be issued therefor. The Exchange Agent
shall not be entitled to vote or exercise any rights of ownership with respect
to the shares of AMRE Common Stock held by it from time to time under the
Merger Agreement, except that it shall receive and hold all dividends or other
distributions paid or distributed with respect to such shares for the account
of the persons entitled thereto. Upon surrender of the certificates previously
representing Facelifters Common Stock, the holder thereof will receive one or
more certificates representing the number of shares of AMRE Common Stock which
he is entitled to receive, cash in lieu of any fractional share and the amount
of any dividends or other distributions payable to holders of record of AMRE
Common Stock on or after the Effective Time with respect to such shares,
without interest thereon.

TERMS OF THE MERGER AGREEMENT

The Merger Agreement provides that AMRE and Facelifters shall use all
reasonable efforts to take all actions as may be necessary or appropriate in
order to effect the Merger as promptly as practicable.

Conversion of Facelifters Common Stock; Exchange Ratio. Under the
terms of the Merger Agreement, each share of Facelifters Common Stock will at
the Effective Time be converted into one share of AMRE Common Stock in
accordance with the Exchange Ratio described in the Merger Agreement.

Representations. The Merger Agreement contains customary
representations and warranties of the parties, including such matters as their
organization and capitalization; authorization and validity of the Merger
Agreement; absence of conflict with charter documents or agreements by which
the parties are bound or laws or judgments applicable to the parties;
governmental approvals and third party consents; filings with the Commission
and the accuracy of the information contained therein; financial statements;
the absence of any material adverse changes; payment of taxes; litigation;
employee plans; and broker's fees. The Merger Agreement also contains
representations by Facelifters with respect to real and personal property
holdings and the absence of environmental problems at Facelifters' lease sites.
None of the representations and warranties in the Merger Agreement survive the
Merger.

Conditions to the Merger. Pursuant to the Merger Agreement, the
respective obligations of the parties to effect the Merger will be subject to
the fulfillment at or prior to the Effective Time of the conditions that, among
other things, (i) the Merger Agreement and the consummation of the transactions
contemplated in the Merger Agreement shall have been approved and adopted by
the requisite vote of the stockholders of AMRE and Facelifters, as the case may
be, required by the Delaware Act and the rules and regulations of the NYSE or
NASDAQ, as the case may be; (ii) any applicable waiting period or extension
thereof under the HSR Act relating to the Merger shall have expired or been
terminated; (iii) no provision of any applicable law or regulation and no
judgment, injunction, order or decree shall be in effect that would make the
acquisition of the shares of Facelifters Common Stock by AMRE or the holding by
AMRE of the shares of common stock of the Surviving Corporation illegal, or
otherwise prohibit the consummation of the Merger; (iv) all consents, approvals
and actions by any governmental authority, commission, board or other
regulatory body required to permit the consummation of the Merger shall have
been obtained except for such consents or approvals that would not have a
material adverse effect on Facelifters; (v) a registration statement relating
to AMRE Common Stock shall have been declared effective by the Commission and
all applicable state regulatory authorities and no stop order suspending the
effectiveness of such registration statement shall be in effect; (vi) the
shares of AMRE Common Stock to be issued in the Merger shall have been approved
for listing on the NYSE; (vii) the respective financial advisors of each of
AMRE and Facelifters shall have delivered

60
<PAGE> 67
fairness opinions with respect to the adequacy of the consideration to be
received in the Merger; and (viii) no action shall be pending which has been
filed by any state or federal authority or any other party seeking to enjoin
consummation of the transactions contemplated by the Merger Agreement,
including, but not limited to, the Merger and no injunction shall have been
issued and shall be effective or enforceable or under appeal if the
effectiveness or enforceability thereof has been lifted or stayed by a court or
other authority of competent jurisdiction preventing the Merger, or imposing
conditions on the Merger, which are materially adverse to AMRE, Merger Sub,
Facelifters or any of their stockholders.

Additional Conditions to the Obligation of Facelifters. The
obligation of Facelifters to effect the Merger is also subject to the
fulfillment at or prior to the Effective Time of certain additional conditions,
(unless waived), including, without limitation, (i) Murray Gross shall have
been elected to the Board of Directors of AMRE as of the Effective Time; (ii)
AMRE shall have filed and had declared effective a Form S-8 with respect to the
registration of the shares of AMRE Common Stock issuable upon exercise of
Facelifters options converted into options to purchase shares of AMRE Common
Stock; (iii) AMRE shall have executed and delivered the Honigsfeld and Gross
Employment Agreements; (iv) Facelifters shall have received the opinion of its
counsel, dated the Closing Date and based on customary representations and
assumptions, to the effect that the Merger will be treated for federal income
tax purposes as a reorganization within the meaning of Section 368(a) of the
Code and that Facelifters, AMRE and Merger Sub will each be a party to that
reorganization within the meaning of Section 368(b) of the Code; (v) the AMRE
Common Stock to be issued to Facelifters' stockholders in connection with the
Merger shall have been approved for listing on the NYSE, subject only to
official notice of issuance; and (vi) the stockholders of AMRE shall have
approved the Charter Amendment at the AMRE Special Meeting.

Additional Conditions to the Obligation of AMRE. The obligation of
AMRE to effect the Merger is also subject to the fulfillment at or prior to the
Effective Time of certain additional conditions, (unless waived), including,
without limitation, (i) all of the members of Facelifters' Board of Directors
shall have irrevocably tendered their resignations effective as of the
Effective Time and Facelifters shall have accepted such resignations; (ii) AMRE
shall have received the opinion of its counsel, dated the Closing Date and
based on customary representations and assumptions, to the effect that the
Merger will be treated for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code and that AMRE, Merger Sub and
Facelifters will each be a party to that reorganization within the meaning of
Section 368(b) of the Code; (iii) each holder of Facelifters Options shall have
agreed to the assumption by AMRE of such Facelifters Options in accordance with
the terms of the Merger Agreement; and (iv) Facelifters shall have delivered to
AMRE all necessary consents, authorizations and approvals, so that neither the
execution and delivery of the Merger Agreement nor the consummation of the
transactions contemplated thereby will (a) result in the acceleration or
termination of, or the creation in any party of the right to accelerate,
terminate, modify or cancel, any indenture, contract, lease, sublease, loan
agreement, note or other obligation or liability to which Facelifters is a
party or is bound or to which any of its assets are subject, except for certain
lender and landlord consents as specified in the Merger Agreement, (b) conflict
with, violate or result in a breach of any provision of the charter documents
or bylaws of Facelifters, (c) conflict with or violate any law, rule,
regulation, ordinance, order, writ, injunction or decree applicable to
Facelifters or by which any of its respective properties or assets is bound or
affected or (d) conflict with or result in any breach of or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or result in the creation of any lien, charge or encumbrance on
any of the properties or assets of Facelifters pursuant to any of the terms,
conditions or provisions of any indenture, contract, lease, sublease, loan
agreement, note, permit, license, franchise, agreement or other instrument,
obligation or liability to which Facelifters is a party or by which Facelifters
or any of its assets is bound or affected.

Termination. The Merger Agreement may be terminated at any time prior
to the Effective Time, whether before or after approval by the stockholders of
the parties to the Merger Agreement, (i) by mutual written consent of the
Boards of AMRE, Merger Sub and Facelifters; (ii) by either of the Boards of
Merger Sub or Facelifters if the Effective Time shall not have occurred within
60 days after AMRE files its annual

61
<PAGE> 68
report on Form 10-K for the fiscal year ended December 31, 1995; (iii) if an
order, decree or ruling shall have been issued by a court of competent
jurisdiction or governmental, regulatory or administrative agency, or other
action taken which permanently restrains, enjoins, or otherwise prohibits the
transactions contemplated in the Merger Agreement, and such order, decree,
ruling or action shall have become final and nonappealable; or (iv) by
Facelifters in the event a third party makes a bona fide proposal for an
acquisition of Facelifters for consideration that exceeds $11.28 per share of
Facelifters Common Stock. If the Merger Agreement is terminated pursuant to
clause (iv) of the preceding sentence, Facelifters will be required to pay AMRE
a termination fee of $2,000,000 (the "Termination Fee").

Other Offers. Pursuant to the Merger Agreement, Facelifters has
agreed that it will not, and will not permit any of its officers, directors,
employees, agents and other representatives or those of any of its subsidiaries
to, directly or indirectly, solicit or initiate any prospective buyer or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, an Acquisition Proposal (as defined herein) from any person; provided,
however, that (i) Facelifters may engage in discussions or negotiations with a
third party who, without any solicitation or initiation on the part of
Facelifters, seeks to initiate such discussions or negotiations, (ii)
Facelifters' Board may take and disclose to its stockholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act and (iii)
following receipt of an Acquisition Proposal that is financially superior to
the Merger and reasonably capable of being financed (as determined in each case
in good faith by Facelifters' Board after consultation with its financial
advisors), Facelifters' Board may withdraw, modify or not make its
recommendation for approval of the Merger Agreement and the Merger, provided
further, in each case referred to in the foregoing clauses (i) through (iii)
only to the extent that Facelifters' Board concludes in good faith that such
action is necessary in order for the Facelifters' Board to act in a manner that
is consistent with its fiduciary obligations. "Acquisition Proposal" shall
mean any proposal or offer, other than a proposal or offer by AMRE or any of
its affiliates, for a tender or exchange offer, a merger, consolidation or
other business combination involving Facelifters or any subsidiary of
Facelifters or any proposal to acquire in any manner a substantial equity
interest in, or substantially all of the assets of, Facelifters or any
subsidiary of Facelifters.

Conduct of Facelifters' Business Prior to Merger. Pursuant to the
Merger Agreement, Facelifters has agreed that, among other things, during the
period from the date of the Merger Agreement until the Effective Time, except
in connection with the transactions contemplated by the Merger Agreement and
except as specifically permitted in the disclosure letter executed by
Facelifters in connection with the Merger Agreement (the "Facelifters
Disclosure Letter"), the businesses of Facelifters and each of its subsidiaries
shall be conducted only in the ordinary and usual course of business and
consistent with past practices, and that Facelifters and each of its
subsidiaries shall use all commercially reasonable efforts to maintain and
preserve intact their respective business organizations, assets, prospects,
employees and add advantageous business opportunities, and use best efforts to
keep available the services of their respective officers and employees and to
maintain satisfactory business relationships with suppliers, contractors,
distributors, customers, licensors, licensees and others having significant
business relationships with it. Without limiting the generality of the
foregoing, except as disclosed in the Facelifters Disclosure Letter,
Facelifters has agreed that it will not directly or indirectly, and will not
permit any of its subsidiaries to, do any of the following without the consent
of AMRE: (i) authorize for issuance, issue, sell, pledge, deliver, or agree or
commit to issue, sell, pledge or deliver (whether through the issuance or grant
of options, warrants, commitments, subscriptions, rights to purchase or
otherwise) any capital stock of Facelifters or securities or rights convertible
into or exchangeable for, shares of capital stock or securities convertible
into or exchangeable for such shares; (ii) pledge, dispose of or encumber,
except in the ordinary course of business, any of its assets (including any
indebtedness owed to it or any claims held by it); (iii) amend or propose to
amend its Certificate of Incorporation or bylaws or similar organizational
documents; (iv) split, combine or reclassify any shares of its capital stock or
declare, set aside or pay any dividend or distribution, payable in cash, stock,
property or otherwise, with respect to any of its capital stock; (v) redeem,
purchase or otherwise acquire or offer to redeem, purchase or otherwise acquire
any capital stock of Facelifters; (vi) transfer any assets or liabilities to
any subsidiary; (vii) acquire (by merger, consolidation or acquisition of stock
or assets) any corporation,

62
<PAGE> 69
partnership or other business organization or division thereof or make any
investment either by purchase of stock or securities, contributions to capital,
property transfer or purchase of any amount of property or assets of any other
individual or entity; (viii) acquire any assets for a value in excess of
$25,000 other than in the ordinary course of business; (ix) dispose of any
assets with a value in excess of $25,000 other than in the ordinary course of
business; (x) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee, endorse or otherwise as an accommodation
become responsible for, the obligations of any other individual or entity, make
any loans or advances or enter into any other transaction, except in the
ordinary course of business and consistent with past practice; (xi) authorize,
recommend or propose any change in its capitalization or any release or
relinquishment of any contract right; (xii) authorize or propose any of the
foregoing or enter into or modify any contract, agreement, commitment or
arrangement with respect to any of the foregoing; (xiii) enter into or adopt
any new, or amend any existing, severance or termination benefit arrangements,
consulting agreements, any employment benefit plans, or arrangement, other than
in the ordinary course of business and consistent with past practices; (xiv)
except (x) for arrangements existing prior to October 15, 1995, (y) as required
by law, or (z) as noted in the Facelifters Disclosure Letter or Facelifters
public documents, adopt or amend any bonus, profit sharing, compensation, stock
option, pension, retirement, deferred compensation, employment or other
employee benefit plan, agreement, trust, plan, fund or other arrangement for
the benefit or welfare of any employee or increase or pay any benefit not
required by any existing plan and arrangement; (xv) pay, discharge or satisfy
any claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction in the ordinary course of business and consistent with past
practice of liabilities reflected or reserved against in Facelifters' financial
statements or incurred in the ordinary course of business and consistent with
past practice; (xvi) waive, release, grant or transfer any franchises,
franchise agreements, patents, patent rights, trademarks, trademark rights,
trade names, trade name rights, copyrights or know-how or modify or change in
any respect any existing license, lease, contract franchise, franchise
agreement or other document, other than in the ordinary course of business and
consistent with past practice; or (xvii) make any capital expenditure in excess
of $50,000. Following the execution of the Merger Agreement, AMRE consented to
the issuance to certain Facelifters employees of Facelifters Options to
purchase 19,900 shares of Facelifters Common Stock.

Conduct of AMRE's Business Prior to Merger. AMRE has agreed that,
among other things, during the period from the date of the Merger Agreement
until the Effective Time, except in connection with the transactions
contemplated by the Merger Agreement, the businesses of AMRE and each of its
subsidiaries shall be conducted only in the ordinary and usual course of
business and consistent with past practices, and that AMRE shall use its
commercially reasonable efforts to maintain and preserve intact its business
organization, assets, prospects, employees and advantageous business
relationships, and that neither AMRE nor Merger Sub shall take or cause to be
taken any action which would disqualify the Merger as a tax-free
"reorganization" within the meaning of Section 368(a)(1)(A) and 368(a)(2)(E) of
the Code.

Other Matters. The Merger Agreement may be amended by the parties
thereto, at any time before or after approval of the Merger Agreement and the
transactions contemplated therein by the respective boards of directors or
stockholders of the parties thereto; provided, however, that after any such
approval by the stockholders, no amendment shall be made that changes the form
or reduces the amount of consideration to be paid to the stockholders or that
in any other way materially adversely affects the rights of such stockholders
(other than a termination of the Merger Agreement in accordance with the
provisions thereof) without the further approval of such stockholders. The
Merger Agreement may not be amended except by an instrument in writing signed
on behalf of each of the parties thereto.

Through the Effective Time, each of AMRE and Facelifters is required
to give the other and its representatives reasonable access to all of its
officers, employees, agents, properties, books, contracts, commitments and
records subject to and in accordance with the Merger Agreement.

63
<PAGE> 70
The Merger Agreement provides that each of AMRE and Facelifters shall
use all reasonable efforts to take all such actions as may be necessary or
appropriate in order to effectuate the Merger under the Delaware Act as
promptly as practicable.

MATTERS AFFECTING DIRECTORS, OFFICERS AND EMPLOYEES OF FACELIFTERS

Option Plans. Pursuant to the Merger Agreement, AMRE and Facelifters
have agreed to take all actions necessary to provide that all Facelifters
Options then outstanding under Facelifters Stock Option Plans shall remain
outstanding following the Effective Time and shall remain exercisable pursuant
to the terms of such plans. At the Effective Time, such Facelifters Options
shall, by virtue of the Merger and without any further action on the part of
Facelifters or the holder of any such Facelifters Options, be assumed by AMRE
in such manner that AMRE (i) is a corporation "assuming a stock option in a
transaction to which Section 424(a) applies" within the meaning of Section 424
of the Code, or (ii) to the extent that Section 424(a) of the Code does not
apply to any such Facelifters Option, would be such a corporation were Section
424(a) applicable to such option. Each Facelifters Option assumed by AMRE
shall be exercisable upon the same terms and conditions as under the applicable
Facelifters Stock Option Plan and the applicable option agreement issued
thereunder, except that (A) each such Facelifters Option shall be exercisable
for that whole number of shares of AMRE Common Stock (to the nearer whole
share) into which the number of shares of Facelifters common stock subject to
such Facelifters Option immediately prior to the Effective Time would be
converted pursuant to the Exchange Ratio, and (B) the option exercise price per
share of AMRE Common Stock shall be an amount equal to the option price per
share of Facelifters Common Stock subject to such Facelifters Option in effect
prior to the Effective Time divided by the Exchange Ratio (the price per share,
as so determined, being rounded upward to the nearest full cent). The
Facelifters Stock Option Plans provide for the immediate acceleration and
vesting of Facelifters Options granted thereunder in the event of a Change of
Control (as defined therein.) The Merger constitutes such a Change of Control.

Facelifters Representation on the AMRE Board. Immediately prior to
the Effective Time but after the approval by the requisite vote of Facelifters
stockholders and AMRE stockholders of the Merger Agreement, the Merger and the
transactions contemplated thereby, Facelifters shall be entitled to select the
Facelifters Designee to become a member of the AMRE Board. Mr. Murray Gross is
the Facelifters Designee. See "Special Factors--Interests of Certain Persons in
the Merger -- Additional AMRE Directors Following the Merger."

OTHER MATTERS AFFECTED BY THE MERGER AGREEMENT

Facelifters leased the Brooklyn Facility from Chairman of the Board
Mark Honigsfeld. The lease provided for a base monthly rental of $20,000 plus
annual escalations based on increases in the Consumer Price Index. The
Brooklyn Facility housed a manufacturing plant, the offices of the Chairman and
the New York City area sales, warehouse and installation offices.

Facelifters phased out its manufacturing operations at the Brooklyn
Facility and relocated them to its newer Virginia plant which is equipped and
staffed to accommodate the expanded capacity. Mark Honigsfeld, an executive
officer and director of Facelifters, is the landlord with respect to the
Brooklyn Facility. In December 1995, Facelifters and Mr. Honigsfeld entered
into a modification of the lease agreement pursuant to which the term of the
lease was reduced, the amount of square footage subject to the lease was
reduced, and Facelifters paid Mr. Honigsfeld, as landlord, a one time fee of
$525,000.

64
<PAGE> 71
CENTURY 21 LICENSE AGREEMENT

On October 17, 1995, TM Acquisition Corp. and Century 21 Real Estate
Corporation, subsidiaries of HFS, and ARI, a wholly owned subsidiary of AMRE,
entered into the Century 21 License Agreement, pursuant to which Century 21 has
granted to ARI an exclusive 20 year license to operate under the name "CENTURY
21 Home Improvements" for the marketing, sale and installation of certain home
improvement products. ARI will make royalty payments to Century 21 in initial
amounts equal to the greater of $11 million per year or 3% of revenues, with
the minimum royalty payment increasing during the 20 year term of the Century
21 License Agreement. ARI also has the right to grant sublicenses under the
Century 21 License Agreement. ARI did not renew its license agreement with
Sears when it expired on December 31, 1995.

AMRE made the decision to not renew the AMRE Sears License Agreement
and enter into the Century 21 License Agreement believing that the latter
agreement provides better opportunities for growth and profitability. AMRE
believes that better opportunities for growth are provided by the Century 21
License Agreement because it (i) provides AMRE with additional geographical
markets, including the entire United States, Canada and Mexico, (ii) covers 14
additional products, such as roofing and decks, and (iii) permits AMRE to
sublicense the CENTURY 21 Home Improvements name with respect to those products
and geographic markets. During the year ended December 31, 1995, AMRE paid
license fees to Sears of approximately 12% of revenues under the AMRE Sears
License Agreement, or $32.6 million on revenues of $271.3 million. The Century
21 License Agreement provides for a license fee of 3% of revenues or a minimum
fee beginning at $11.0 million in 1996. Had the Century 21 License Agreement
fee been applicable during this period of time, and assuming sales were
constant during such period, fees under the Century 21 License Agreement would
have been $11.0 million. See also, "Risk Factors."

Concurrently with the execution of the Century 21 License Agreement,
AMRE entered into a Preferred Stock Purchase Agreement (the "Preferred Stock
Purchase Agreement") with HFS pursuant to which HFS purchased 300,000 shares of
AMRE Senior Convertible Preferred Stock, par value $10 per share (the "AMRE
Senior Convertible Preferred Stock"), at $10 per share. The AMRE Senior
Convertible Preferred Stock will pay a quarterly dividend of 8% per annum and
is convertible into AMRE Common Stock. The Preferred Stock Purchase Agreement
also gives HFS the right to designate two members of the AMRE Board.

AMRE and HFS also entered into a Credit Agreement (the "HFS Credit
Agreement") pursuant to which HFS has agreed to provide AMRE with a revolving
credit facility in an amount up to $4.0 million. The HFS Credit Agreement
provides for a commitment fee of 1/2% of the unused portion of the facility
and provides that loans made thereunder carry an interest rate of LIBOR plus 1
1/2%. Under the HFS Credit Agreement, AMRE is subject to certain covenants,
including limitations on indebtedness and liens, limitations on asset
dispositions, restrictions on the payment of dividends, and restrictions on
certain fundamental changes. Loans made under the HFS Credit Agreement will be
guaranteed by subsidiaries of AMRE, including ARI. The HFS Credit Agreement
will expire on October 17, 1998.

The cash received by AMRE from HFS in connection with the purchase of
the AMRE Senior Convertible Preferred Stock and the amounts available under the
HFS Credit Agreement will be available for general corporate purposes,
including the payment of start up marketing expenses associated with the
transition to the CENTURY 21 Home Improvements name and for working capital
purposes immediately after such transition during the first part of 1996.

FACELIFTERS CENTURY 21 LICENSE AGREEMENT

In connection with the Merger Agreement, ARI and Facelifters have
entered into the Facelifters Century 21 License Agreement, a three year,
non-cancelable sublicense agreement pursuant to which Facelifters will have a
sublicense under the Century 21 License Agreement, which will be exclusive for

65
<PAGE> 72
territories in which Facelifters operated under the Facelifters Sears License
Agreement. The Facelifters Century 21 License Agreement provides for the
payment of royalties not to exceed 8% of revenues and is subject to certain
rebates. In the event the Merger is not consummated, the Facelifters Century
21 License Agreement will continue in full force and effect in accordance with
its terms. If the Merger is consummated, the Facelifters Century 21 License
Agreement will be terminated.

CONGRESSIONAL CENTURY 21 LICENSE AGREEMENT

In connection with the Congressional Merger Agreement, ARI and
Congressional have entered into a three year, non-cancelable sublicense
agreement (the "Congressional Century 21 License Agreement") pursuant to which
Congressional will have a sublicense under the Century 21 License Agreement,
which will be exclusive for territories in which it previously operated under
its Sears license agreement. The Congressional Century 21 License Agreement
provides for the payment of royalties not to exceed 8% of revenues subject to
certain rebates or certain guaranteed annual minimums. In the event the
Congressional Merger is not consummated, the Congressional Century 21 License
Agreement will continue in full force and effect in accordance with its terms.
If the Congressional Merger is consummated, the Congressional Century 21
License Agreement will be terminated.

THE STOCKHOLDER AGREEMENT

The following is a brief summary of certain provisions of the
Stockholder Agreement, a form of which is attached as Annex D to this Joint
Proxy Statement/Prospectus. This summary is qualified in its entirety by
reference to the full text of the form of Stockholder Agreement.

Pursuant to the Stockholder Agreement, each of Mark Honigsfeld, Murray
Gross and Deedee Honigsfeld, directors, officers and stockholders of
Facelifters (each a "Stockholder"), who as of March 4, 1996 beneficially owned
in the aggregate 781,785 outstanding shares (the "Voting Shares") of
Facelifters Common Stock or approximately 22% of the total outstanding shares
of Facelifters Common Stock, have agreed that, until the earlier of April 1,
1996 or (a) when AMRE, Merger Sub and the Stockholders mutually consent in
writing to terminate the Stockholder Agreement, or (b) upon termination of the
Merger Agreement by AMRE or Facelifters pursuant to Section 7.1 of the Merger
Agreement (the "Term"), the Stockholder will vote all of his or her shares of
Facelifters Common Stock in favor of the Merger pursuant to the terms of the
Merger and the Merger Agreement, but in the event that a vote for the Merger
does not take place during the Term, then each Stockholder agrees not to vote
in favor of any other Change of Control (as such term is defined in the
Stockholder Agreement) during the Term. No Stockholder is required to vote in
favor of any modification or amendment to the Merger Agreement that would
reduce the Exchange Ratio. Each Stockholder has irrevocably appointed Merger
Sub as Stockholder's attorney-in-fact and proxy to vote or express written
consent in lieu of a vote or meeting with respect to all of his or her Voting
Shares for the purposes set forth above. This proxy expires at the end of the
Term.

The Stockholder Agreement contains the agreement of each of the
Stockholders that, among other things, until the end of the Term he or she (a)
will not transfer or consent to any transfer of any of the Voting Shares, (b)
will not enter into any contract, option or other agreement or understanding
with respect to any transfer of any or all of the Voting Shares, (c) will not
grant any proxy, power of attorney or other authorization in or with respect to
the Voting Shares, except as provided in the Stockholder Agreement, or (d)
deposit the Voting Shares into a voting trust or enter into a voting agreement
or arrangement with respect to the Voting Shares.

In addition, in the Stockholder Agreement AMRE has agreed to provide
certain rights with respect to the registration under the Securities Act of the
AMRE Common Stock received by the Stockholders in connection with the Merger.
At any time during the three year period beginning on October 31, 1995 (the

66
<PAGE> 73
"Registration Period"), the Stockholders owning a majority of the AMRE Common
Stock received by them in the Merger may make a written request for
registration under the Securities Act of all or part of their AMRE Common
Stock. AMRE is required to effect only one of these registrations during the
Registration Period. Except for registrations on Form S-4 and Form S-8 the
Stockholders will also have the right to include their shares of AMRE Common
Stock in any registration of securities under the Securities Act that AMRE
conducts during the Registration Period. AMRE will bear all expenses in
connection with the registration of the AMRE Common Stock, except for
underwriter's discounts, commissions and disbursements of joint counsel for the
Stockholders. The registration rights granted to the Stockholders are subject
to certain conditions and restrictions, including the limitation that an
underwriter of an offering may, if it concludes that the entire number of
shares to be registered cannot be sold, exclude shares owned by the
Shareholders from the offering.

The Stockholder Agreement contains the representations and warranties
of each Stockholder relating to, among other things, (a) ownership of shares by
the Stockholder and (b) the power and authority of the Stockholder to enter
into and perform his or her obligations under the Stockholder Agreement.

AMRE CHARTER AMENDMENT

AMRE is currently authorized to issue 20 million shares of AMRE Common
Stock, and as of March 4, 1996, has approximately 14,127,457 shares of AMRE
Common Stock outstanding and 4,023,832 shares of AMRE Common Stock reserved for
issuance in connection with certain AMRE option plans, the exercise of options
and conversion of AMRE preferred stock. In connection with the transactions
contemplated by the Merger, AMRE will issue or reserve for issuance an
additional 3,973,471 shares of AMRE Common Stock, and as a result, the number
of shares of AMRE Common Stock that are authorized but have not been issued or
reserved for issuance will be more than 20 million. The AMRE Board believes
that the current amount of unreserved shares of AMRE Common Stock available for
issuance in the future is inadequate. Accordingly, the AMRE Board proposes to
amend AMRE's Certificate of Incorporation to increase the authorized number of
shares of AMRE Common Stock by an additional 20 million shares. The
affirmative vote of holders of a majority of the outstanding shares of AMRE
Common Stock is required to approve the Charter Amendment. In the event the
Charter Amendment is not approved, AMRE will not have enough authorized but
unissued shares to issue in connection with the Merger, and the Merger will not
be consummated.

The proposal to increase the number of authorized shares is intended
to increase AMRE's flexibility by increasing the number of shares of AMRE
Common Stock that can be issued without further stockholder approval. The
AMRE Board believes that the adoption of these proposals will enable AMRE to
promptly and appropriately respond to business opportunities, such as
opportunities to raise additional equity capital or to conclude acquisitions
with AMRE Common Stock, and to take corporate action on, for example, stock
splits, stock dividends and employee benefit plans. Given the number of shares
currently available for issuance, AMRE may not be able to effect certain of
these transactions without obtaining stockholder approval for an increase in
the authorized number of shares of AMRE Common Stock. The cost, prior notice
requirements and delay involved in obtaining stockholder approval at the time
that corporate action may become desirable could eliminate the opportunity to
effect the action or reduce the expected benefits.

The additional shares of AMRE Common Stock proposed to be authorized,
together with existing authorized and unissued shares, generally will be
available for issuance without any requirement for further stockholder
approval, unless stockholder action is required by applicable law or by the
rules of the NYSE or of any other stock exchange on which AMRE's securities may
be listed. Although the AMRE Board will authorize the issuance of additional
shares only when it considers doing so to be in the best interest of
stockholders, the issuance of additional AMRE Common Stock may, among other
things, have a dilutive effect

67
<PAGE> 74
on earnings and earnings per share of AMRE Common Stock and on the voting
rights of holders of shares of AMRE Common Stock. AMRE's stockholders do not
have any preemptive rights to subscribe for additional AMRE Common Stock that
may be issued. Shares of AMRE Common Stock could be issued in transactions
that would make a change in control more difficult or costly and, therefore,
less likely. Additional shares of AMRE Common Stock will be issued in
connection with the Congressional Merger if it consummated, and AMRE has
engaged in discussions with investment banking firms regarding the possible
sale of AMRE securities to raise additional capital. See "Recent Developments
- -- Possible Congressional Merger" and "Risk Factors -- Liquidity." AMRE is not
aware of any effort to obtain control of AMRE by a tender offer, proxy contest,
or otherwise.

THE AMRE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSAL TO
AMEND THE AMRE CERTIFICATE OF INCORPORATION.

RECENT DEVELOPMENTS

POSSIBLE CONGRESSIONAL MERGER

On December 30, 1995, AMRE, Congressional Merger Sub, and
Congressional entered into the Congressional Merger Agreement, pursuant to
which AMRE, Congressional and Congressional Merger Sub have agreed to merge
Merger Sub with and into Congressional. As the corporation surviving the
Congressional Merger, Congressional will become a direct wholly owned
subsidiary of AMRE. The obligations of AMRE, Congressional and Congressional
Merger Sub to consummate the Congressional Merger are subject to a number of
conditions, including that the results of AMRE's due diligence review of
Congressional shall be materially satisfactory to AMRE. Since AMRE has not yet
completed its due diligence review, there can be no assurance that the
Congressional Merger will be consummated. If the Congressional Merger is
consummated, each outstanding share of Congressional Common Stock will be
converted into 601.2 shares of AMRE Common Stock and each outstanding share of
Congressional Preferred Stock will be converted into 857.14 shares of AMRE
Common Stock, and an aggregate of 900,000 shares of AMRE Common Stock will be
issued to holders of Congressional Common and Preferred Stock.

RESIGNATION OF CHAIRMAN

On December 1, 1995, Ronald I. Wagner announced that he was resigning
as Chairman of the AMRE Board. On the same date, AMRE and Mr. Wagner entered
into a Separation Agreement (the "Wagner Separation Agreement"), pursuant to
which Mr. Wagner resigned from all positions that he held as a director,
officer or employee of AMRE. The Wagner Separation Agreement has resulted in a
nonrecurring charge to operations of approximately $3.9 million in the quarter
ended December 31, 1995. In connection with the execution of the Wagner
Separation Agreement, AMRE and Mr. Wagner agreed, among other things, as
follows:

1. Mr. Wagner will not compete with AMRE in any of its products
and services under the Century 21 License Agreement anywhere
in North America for a period of five years;

2. Mr. Wagner waived and released AMRE from amounts owed him of
approximately $3,375,000 pursuant to the termination
provisions of his employment agreement with AMRE;

3. In exchange for 1 and 2 above, (a) AMRE shall pay Mr. Wagner
the sum of $500,000, payable in two equal installments in 1997
and 1999; (b) AMRE released Mr. Wagner from his payment
obligation under an outstanding promissory note payable (due
April 1997), plus interest, in the amount of $4,101,824; and
(c) AMRE granted demand and piggy-back registration rights to
Mr. Wagner with respect to 550,000 shares of AMRE Common Stock
covered by currently exercisable options for AMRE Common Stock
held by Mr. Wagner; and

68
<PAGE> 75
4. Mr. Wagner and AMRE agreed to terminate the current lease
under which AMRE leases from Mr. Wagner certain of its
facilities in Chicago, Illinois and enter into a new lease
commencing January 1, 1996 for a term of ten years at an
annual rent beginning at $180,000 for the first two years.

On December 5, 1995, AMRE announced that Mr. John D. Snodgrass was
elected to the Chairmanship vacated by the resignation of Mr. Wagner. For
additional information on Mr. Snodgrass, see "Management Information of AMRE."

AMRE'S FIRST QUARTER OUTLOOK

69
<PAGE> 76
FACELIFTERS' FOURTH QUARTER OUTLOOK

70
<PAGE> 77
FACELIFTERS SELECTED CONSOLIDATED
FINANCIAL AND OPERATING DATA

The following selected consolidated financial information of
Facelifters for each year in the five-year period ended March 31, 1995 is
derived from, and qualified by reference to, Facelifters' Consolidated
Financial Statements and the notes thereto (the "Facelifters Consolidated
Financial Statements"). The consolidated financial data as of March 31, 1991,
1992, 1993, 1994 and 1995, and for the years then ended were derived from the
historical Facelifters Consolidated Financial Statements, which were audited by
Grant Thornton LLP, independent certified public accountants. The consolidated
financial data as of December 31, 1994 and 1995, and for the nine months ended
December 31, 1994 and 1995, were derived from the unaudited historical
consolidated financial statements included elsewhere in this Joint Proxy
Statement/Prospectus. In the opinion of Facelifters, the unaudited
consolidated financial statements reflect all adjustments, which are of a
normal recurring nature, necessary for a fair presentation of the financial
position and results of operations for the unaudited periods. The results of
operations for the nine months ended December 31, 1995 are not necessarily
indicative of the results to be expected for the full year. The selected
financial data should be read in conjunction with "Facelifters Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
with the Facelifters Consolidated Financial Statements included elsewhere in
this Joint Proxy Statement/Prospectus.

FACELIFTERS HOME SYSTEMS, INC.
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
For the Nine
Months Ended
December 31, For the Fiscal Years Ended March 31,
----------------- ------------------------------------------------
1995 1994 1995 1994 1993 1992 1991
------- ------ ------ ------- ------- ------ -----
(unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS:

Net Sales . . . . . . . . . . . . . . . . . . $39,085 $28,098 $38,765 $26,358 $ 20,261 $9,229 $6,635
Cost of sales . . . . . . . . . . . . . . . . 15,182 10,533 14,838 9,856 8,305 4,943 3,889
Selling, general and administrative expenses 23,131 17,821 24,336(1) 15,504 11,754 5,898 2,452
Income (loss) from continuing operations
before extraordinary item . . . . . . . . . (1,104) (249) (413) 1,048 147 (1,515) 152
Net income (loss) . . . . . . . . . . . . . . (1,104) (249) (413) 1,048 496 (1,425) 228
Income (loss) from continuing operations
before extraordinary item per share of
Common and Common Equivalent Stock . . . . (.33) (.08) (.13) .31 .06 (.83) .17
Net income (loss) per share of Common and
Common Equivalent Stock . . . . . . . . . . (.33) (.08) (.13) .31 .19 (.78) .22
- --------------------------------
</TABLE>
(1) Includes $1,852 attributable to adoption of AICPA's SOP 93-7.

Working capital (deficit) . . . . . . $ 1,152 $ 2,769 $ 2,177 $ 1,016 $ 508 $ 507 $ (187)
Total assets . . . . . . . . . . . 13,046 11,498 12,566 7,892 5,914 4,980 2,799
Obligations under capital leases-
excluding current portion . . . . . 319 66 58 101 163 7 48
Other long-term liabilities . . . . 776 1,091 1,459 846 189 219 244
Total liabilities . . . . . . . . . 8,629 5,835 7,051 4,387 3,652 3,210 2,190
Total stockholders' equity . . . . 4,417 5,663 5,515 3,504 2,262 1,754 609
</TABLE>

71
<PAGE> 78
FACELIFTERS MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion is intended to assist in an understanding of
Facelifters' financial position and results of operations for each year in the
three year period ended March 31, 1995 and for the nine months ended December
31, 1994 and 1995. The Facelifters Consolidated Financial Statements, Pro
Forma Financial Statements and the notes thereto included elsewhere herein
contain detailed information that should be referred to in conjunction with
this discussion.

Facelifters is primarily engaged in the direct marketing, design,
sale, manufacture, and installation of laminated and molded cabinet fronts, and
other laminated and wood products directly to consumers. Facelifters currently
operates sales and warehouse locations in 13 states and one manufacturing
facility covering 26 geographic markets. Until January 1, 1996, Facelifters
operated 21 of the locations under the Sears name pursuant to the Facelifters
Sears License Agreement. Since that date, Facelifters has operated those
locations pursuant to the Facelifters Century 21 License Agreement. There can
be no assurance that the results of operations of Facelifters as a sublicensee
of Century 21 will be similar to the results achieved as a licensee of Sears.

Facelifters' Wholesale Division sells kitchen cabinet refacing
products to independent home improvement dealers generally located outside
Facelifters' retail market area. Facelifters had also manufactured and sold
tabletops and bases to restaurant equipment dealers through a network of
independent manufacturer's representatives until March 1993, when Facelifters
discontinued the sale of tabletops and bases and sold the operation to another
company.

RESULTS OF OPERATIONS

Nine months ended December 31, 1995 compared to nine months ended December 31,
1994:

Certain non-recurring costs totaling $1,115,137 were recorded during
the nine months ended December 31, 1995. These include $800,000 for costs
relating to the Merger and costs associated with the brand-name change from
Sears to Century 21; an $85,000 inventory reserve charged to cost of sales; and
$230,137 in non-cash write-offs discussed below under general and
administrative costs.

A special one-time charge of $1,065,340 was taken during the current
period to cover the expected costs of closing the Brooklyn plant. No similar
expense was recorded in the same period last year.

Eleven retail offices were in operation during the nine months ended
December 31,1995 which were not open during the entire period of 1994,
including six which opened during the past nine months. In December 1995,
management determined that as a result of changing brand names from Sears to
Century 21, it would close the two offices which in management's opinion would
not be successful under the CENTURY 21 Home Improvements name. These two
locations represented less than 2% of Facelifters' historical sales. A
provision of $100,000 has been recorded for lease buyouts and other costs
associated with the closing of the two offices, and is included in the $300,000
recorded as costs related to the brand name change.

Complete retail installed sales increased 41% to $38,516,917 from
$27,261,079 in the same period last year largely due to successful efforts to
expand production and installation capacities to the level of newly-acquired
contracts. The number of individual installations increased 40% from last year
while the value of the average job was virtually unchanged. The average time
to complete a new contract was reduced to 58 days from 105 days a year ago.
Same location sales grew 19% over the period ended December 31, 1995. Retail
installed sales accounted for 98% of total sales up from 97% last year.

72
<PAGE> 79
Wholesale sales decreased 32% to $568,411 from $837,189 during the
comparable nine months last year. These sales come from orders placed by a
small number of regular customers and are not actively solicited.

In total, sales for the nine months ended December 31, 1995 increased
39% over the same period of 1994.

Costs of sales, as a percentage of total sales, increased to 38.8%
from 37.5% last year. It is believed that the minor positive and negative
fluctuations noted from period to period result from the timing of those costs
which were being incurred to increase the capacity of the Virginia plant
sufficiently to allow the phase out of the Brooklyn facility.

During the most recent nine months, marketing and selling costs were
36.6% of new contracts acquired and 34.1% of recorded retail installed sales.
Due to the change in the method to account for such costs, together with the
restatement required upon adoption of SOP 93-7, any comparison with prior
period costs would not be meaningful.

Sears fees decreased to 10.2% of total sales during the most recent
nine months from 10.8% a year ago. The percentage of retail installed sales
derived under the Facelifters Sears License Agreement decreased from 84% to 82%
due to increased volumes from Facelifters' four offices which operate with no
Sears license.

On November 1, 1995, Facelifters notified Sears that it would not
renew the Facelifters Sears License Agreement upon its expiration at December
31, 1995.

General and administrative costs rose to 15.4% of sales during the
nine months ended December 31, 1995 from 13.4% last year. The overall increase
in these costs was somewhat higher than the rate of sales growth during the
period due to the expansion of corporate staff departments to accommodate
expected future levels of operations. The quarter ended December 31, 1995
included $230,137 of non-recurring costs primarily related to the write off of
intangibles associated with the original acquisition of the exclusive
distribution rights for the Woodlor line of cabinet fronts.

During the nine months ended December 31, 1995, a net loss of
$1,104,373 or $.33 per share was recorded. Excluding the plant closing charge
and the other one-time expenses recorded during the period, a net profit of
approximately $1,076,000 would have resulted.

For the same period last year, with the restatement for an accounting
change, a loss of $249,314 or $.08 per share was recorded. Before such
restatement, the 1994 period had reflected net income of $1,432,767 or $.41 per
share.

73
<PAGE> 80
The tables below show the volumes of newly-acquired contracts (which
measures the true volume of marketing and sales) and completed contracts (which
measures the level of production and installations) which are eligible for
recording as revenue. Since an average of six to 12 weeks is required to
complete a new contract, significant operating expenses are incurred before any
revenues are realized.

<TABLE>
<CAPTION>
NEW CONTRACTS ACQUIRED FY 1996 FY 1995 FY 1994 FY 1993 FY 1992
<S> <C> <C> <C> <C> <C>
Q1 June 30 $ 11,587,980 $ 10,935,432 $ 6,475,061 $ 4,606,144 $ 1,540,372

Q2 September 30 13,102,941 10,330,454 6,816,548 4,232,731 1,499,566

Q3 December 31 11,105,013 9,585,574 5,415,953 4,263,164 2,465,018

Q4 March 31 N/A 11,351,887 6,922,531 5,927,403 4,190,222

TOTAL CONTRACTS ACQUIRED $ 42,203,347 $ 25,630,093 $ 19,029,412 $ 9,695,178

COMPLETED CONTRACTS

Q1 June 30 $ 11,473,505 $ 7,259,032 $ 6,138,166 $ 3,666,413 $ 1,395,462

Q2 September 30 13,584,530 9,318,908 6,507,251 5,090,402 1,275,377

Q3 December 31 13,458,882 10,683,138 6,522,936 4,900,698 1,959,089

Q4 March 31 N/A 10,459,111 5,722,438 5,150,512 2,984,778

TOTAL CONTRACTS COMPLETED $ 37,720,189 $ 24,890,791 $ 18,808,025 $ 7,614,706
</TABLE>

Facelifters uses the "Completed Contract Method" of accounting when
booking revenue. Thus, no revenue is recognized on any sale until the contract
is installed and satisfactorily completed; this process took approximately 58
days at December 31, 1995. In the interim, new sales are added to the backlog
of orders which are not included in Facelifters' financial statements nor its
results of operations. At December 31, 1995, Facelifters had a backlog of
orders totaling $7,318,720 as compared to $9,146,926 a year ago.

During the nine months ended December 31, 1995, the backlog decreased
$2,720,983 compared to an increase of $3,791,050 during the same period in
1994. Since the acquisition of new contracts continued to grow, increasing by
$4,944,474 over the same period last year, it can be seen that production and
installation levels were dramatically increased to keep pace.

<TABLE>
<CAPTION>
BACKLOG OF NEW CONTRACTS 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
FISCAL YEAR ENDED MARCH 31 $ 10,039,703 5,355,876 4,616,574 4,380,047 1,649,240

PERIOD ENDED DECEMBER 31 $ 7,318,720 9,146,926 4,155,784 3,841,023 3,055,375
</TABLE>

Facelifters expects to incur a loss in its fourth quarter period
ending March 31, 1996. The loss is expected to be impacted by (i) costs
incurred in connection with the Merger and (ii) that as a result of the
conversion to a Century 21 licensee, Facelifters was required to return to
Sears all of its leads generated through December 31, 1995 under the Sears
name. This has totally diminished the bank of leads available to solicit
business beginning in January 1996. This will result in a reduced number of
contracts which Facelifters could install in the March 31, 1996 quarter to
generate revenues.

74
<PAGE> 81
The result of having fewer leads available from which to solicit
business reduced appointments and thus opportunities to acquire new contracts.
Facelifters expects to have difficulty in maintaining an adequate backlog of
new contracts during the March 1996 quarter to maintain installed sales volumes
consistent with the previous year. At December 31, 1995 the approximate
backlog of contracts available for installation was approximately $7.3 million
as compared to $9.1 million at December 31, 1994. Due to lower volumes in
acquiring new contracts in the March 31, 1996 quarter, backlog is expected to
continue to diminish.

Fiscal year ended March 31, 1995, compared to fiscal year ended March 31, 1994

As a result of proceeds received upon the exercise of warrants to
purchase shares of Facelifters Common Stock, Facelifters sharply increased its
marketing budget and reached record levels of new contracts obtained. New
contract acquisitions increased 65% over the prior year while contract
completions rose 52%. As a result, the backlog of contracts in process rose
87%. Thus, the following discussion of recorded costs versus completed sales
does not portray about one-fourth of the growth which will become evident in
the next fiscal year.

Completed installed retail sales increased 52% to $37,720,189 during
the year ended March 31, 1995, from $24,890,790 during the prior year. The
increase was the result of a 39% sales growth in "same-location" sales, and the
addition of seven new market areas opened since March 31, 1994 that produced
revenues during the year. An increase of 5% in the average unit sale,
together with a 44% increase in the number of completed installations,
accounted for the overall growth. Retail installed sales accounted for 97% of
Facelifters' total sales during the year ended March 31, 1995, an increase from
94% a year ago.

Wholesale sales declined to $1,044,478 during the year ended March
31, 1995, from $1,467,397 a year ago. These sales represent orders placed by a
small number of regular customers, and are not actively solicited.

In total, net sales for the period increased 47% to $38,764,667 from
$26,358,187 the previous year.

Cost of sales increased 51% in 1995 over 1994, and as a percentage of
net sales, these costs increased from 37% to 38%. This increase is principally
attributed to costs incurred in the start-up of manufacturing activities at the
new plant in Charles City, Virginia.

The business of Facelifters is characterized by the need to
continually generate prospective customer leads. Accordingly, marketing and
selling expenses constitute a substantial portion of Facelifters' total costs.

In 1994, the American Institute of Certified Public Accountants issued
Statement of Position 93-7 "Reporting on Advertising Costs" ("SOP 93-7").
Facelifters' lead acquisition activities do not fully meet the definition of
"direct response advertising" under SOP 93-7. Thus, Facelifters can no longer
defer its lead acquisition costs. All lead acquisition costs are now expensed
as incurred. The rule is effective for years beginning after June 15, 1994,
with earlier application encouraged. Subsequent to March 31, 1995, Facelifters
elected to adopt SOP 93-7 as of the beginning of its fiscal year ended March
31, 1995.

This accounting change required that $1,851,712 of prepaid advertising
costs be removed from current assets on Facelifters's balance sheet and the
same amount was reflected in marketing and selling costs on the statement of
operations which adversely affects earnings for the fiscal year.

On an ongoing basis, as costs are expensed as incurred, the
application of this accounting change may negatively impact earnings during
those periods when Facelifters is aggressively striving for sales growth, and
may yield a positive effect on earnings during any period where marketing
activity is reduced.

Excluding the effect of the adoption of SOP 93-7, marketing and
selling costs rose 46%, in fiscal year 1995 over 1994, and as a percentage of
total sales, these costs declined from 34% to 33%. This result is

75
<PAGE> 82
attributed to a management decision to increase its use of lower-cost outbound
telemarketing activity and decrease the use of higher-cost direct mail.

License fees as a percentage of sales were virtually unchanged,
declining in fiscal year 1995 to 10.8% from 10.9% the prior year. During the
year ended March 31, 1995, 85% of retail sales were made under the Facelifters
Sears License Agreement as compared to 88% in 1994.

General and administrative costs increased 42% during the year ended
March 31, 1995, but as a percentage of net sales, these costs declined from
14.2% to 13.7%. Management expects this trend to continue as rising sales do
not require proportionately higher increases in staffing levels.

A net operating loss of $413,151 was recorded for the year ended March
31, 1995. Excluding the effect of adopting SOP 93-7, net income would have
been $1,438,561 as compared to $1,048,318 in 1994, an increase of 37%.

Fiscal year ended March 31, 1994, compared to fiscal year ended March 31, 1993

Retail installed sales increased 32% to $24,890,790 during the year
ended March 31, 1994, from $18,808,025 during the prior year. This result was
achieved even though 10 working days were lost due to winter storms in January
and February 1994. The increase was the result of a 29% sales growth in market
areas served throughout both years, together with $586,000 in added sales from
offices which opened during the 1994 fiscal year. An average 10% increase in
the average unit sale accounted for approximately 30% of the increase in
existing markets. Retail installed sales accounted for 94.4% of total sales
during the year ended March 31, 1994, up from 92.8% in the previous year.

Wholesale sales were virtually unchanged at $1,467,397 for the year
ended March 31, 1994, from $1,453,242 in the previous year. These sales
represent orders placed by a small group of existing customers; no marketing
effort is made to obtain or increase such orders. These results exclude fiscal
1993 sales from the tabletop division which was sold on March 31, 1993, and
which have been reclassified as "Discontinued Operations."

In total, net sales for the year ended March 31, 1994, increased 30%
to $26,358,187 from $20,261,267 in the previous year.

Cost of sales was up 19% in 1994 over 1993, but as a percentage of net
sales, these costs declined from 41% to 37% due primarily to (i) productivity
increases associated with increased volume and higher margins on installed
sales and (ii) an average 10% increase in the average unit sale.

Marketing and selling costs were up 30%, which correlate to the growth
in sales from 1993 to 1994. As a percentage of total sales, these costs were
virtually unchanged at 34%.

Sears license fees were up 53% in 1994 over 1993, and as a percentage
of net sales, they increased from 9.3% to 10.9%. In 1994, 88% of retail
installed sales were made under Sears licenses, as compared to 90% in 1993 due
to the addition of two offices with no Sears license. During the years 1993
and 1994, the license fee was changed from time to time.

General and administrative costs increased 22% in 1994 over 1993, but
as a percentage of net sales, these costs declined from 15.2% to 14.3%.
Executive performance bonuses were $198,650 in 1994, an increase from $69,521
in 1993. Excluding this item, general and administrative costs only grew 18%
against a 30% sales growth.

76
<PAGE> 83
Interest and other income increased from $61,813 in 1993 to $177,995
in 1994 due to (i) rental income in 1994 from subleasing a portion of the
Brooklyn Plant, and (ii) an increase in funds invested in short-term
securities.

As a result of all of the foregoing, net income for the year ended
March 31, 1994, increased 111% over 1993.

Fiscal year ended March 31, 1993 compared to fiscal year ended March 31, 1992

Retail installed sales increased 147% to $18,808,025 during the year
ended March 31, 1993 from $7,614,706 during the prior year. The increase was
the result of a 46% sales growth in market areas served throughout both years,
together with $1,513,948 in added sales from offices which were not in
operation a full 12 months in 1992, and $6,999,836 in added sales in market
areas obtained through acquisition late in fiscal 1992. Retail installed sales
accounted for 92.8% of Facelifters' total sales during the year ended March 31,
1993, up from 82.5% of the previous year. All the increase not attributable to
expanding in new markets was the result of Facelifters' lead-acquisition
campaign utilizing television, direct mail and telemarketing, and an
approximate 10% price increase put into effect in Facelifters' third fiscal
quarter.

Wholesale sales decreased 10% to $1,453,242 during the year ended
March 31, 1993 from $1,614,116 during the prior year. Both years' results
exclude sales from the Tabletop Division now being reported as "Discontinued
Operations". The decrease follows the trend established in 1990 to focus on
retail installed sales for future growth.

In total, net sales for the year ended March 31, 1993 increased 120%
to $20,261,267 from $9,228,822 the previous year.

Cost of sales was up 68% in 1993 over 1992 due to increased sales, but
as a percentage of net sales, these costs declined from 53.6% to 41.0%.
Factors contributing to the overall improvement in gross margin included (i) an
average 10% price increase implemented in 1993, and (ii) an increase in the
percentage of total sales derived from retail installed sales as opposed to
wholesale sales. The effect of this ratio is further described below.

Marketing and selling costs increased 144% in 1993 over 1992, and as a
percentage of net sales, these costs rose from 30.3% to 33.7%. As retail
installed sales account for an increasingly greater percentage of net sales,
these costs as a percentage of net sales will increase while costs of sales as
a percentage of net sales, will decrease due to the differences in the way
wholesale sales are priced and marketed as compared to retail installed sales.

Sears fees were up 82% in 1993 from 1992, but as a percentage of net
sales, they decreased from 11.2% to 9.3%. In 1993, 90% of retail installed
sales were made under Sears licenses, down from 96% in 1991 due to the addition
of two markets which are operated as Facelifters and which did not have the
Sears license. Total sales derived under Sears licenses increased 134% from
1992 to 1993, but for a portion of the current year the fee rate was
temporarily reduced by Sears.

From September 1, 1992 through February 28, 1993, Sears reduced its
license fees from 15% of sales to 8%. This temporary reduction was given to
help Facelifters defray certain costs associated with Sears' new selling policy
which required elimination of negotiated sales practices. The change caused
Facelifters to incur one-time costs related to retraining, reprinting of sales
materials and development of special sales incentive programs.

General and administrative costs increased 47% in 1993 over 1992 while
as a percentage of net sales, these costs decreased from 22.4% to 15%. Such
costs thus returned to their pre-1992 level; in 1992 these

77
<PAGE> 84
costs had increased as Facelifters increased its administrative support to
accommodate the doubling of sales volume expected and realized in 1993.

On March 31, 1993, Facelifters sold its tabletop manufacturing
business; accordingly all revenues and expenses generated by that segment of
its business have been reclassified as "discontinued operations". Sales from
these operations were $1,131,442 in the year ended March 31, 1993 as compared
to $997,875 the prior year. Discontinued operations, including the gain on the
sale of this business and before applicable income taxes, contributed $287,409
to Facelifters' net income in 1993 and $136,675 in 1992.

Extraordinary income for the year ended March 31, 1993 consisted of a
$159,400 tax benefit from loss- carryforwards.

As a result of all the foregoing, a profit of $495,825 was recorded
for the year ended March 31, 1993 compared to a loss of $1,425,246 in 1992.

LIQUIDITY AND CAPITAL RESOURCES

During the year ended March 31, 1995, approximately $2,460,000 was
obtained from the issuance of new shares of Facelifters Common Stock pursuant
to the exercise of outstanding common stock purchase warrants and employee
stock options. Facelifters drew $550,000 against a $2,000,000 revolving line
of credit arranged with the European American Bank of New York and $765,000 was
obtained from a $900,000 equipment line from Central Fidelity Bank of Richmond,
Virginia and the Virginia Economic Development Revolving Loan Fund.
Additionally, a $500,000 line of credit for asset purchases from KeyCorp
Leasing was obtained subsequent to March 31, 1995.

Approximately $1,000,000 of these new funds were invested in
short-term U.S. Government securities, approximately $604,000 was utilized to
purchase substantially all of the assets of Cabinet Masters of California, Inc.
("CMSC"), and about $1,080,000 was used to purchase new equipment and fixtures,
the majority of which was for the new Virginia plant. The balance was used to
fund a 65% increase in new customer orders. There were significant increases
in prepaid sales commissions and inventories and, since a greatly increased
portion of retail installed sales were financed with third-party lenders, the
receivables which are pending such funding increased dramatically.

The $1,104,373 net operating loss recorded in the nine months ended
December 31, 1995 included approximately $1,310,000 of non-cash charges not
affecting Facelifters' liquidity. Thus, an increase of $392,000 in accounts
receivable and a decrease of $455,000 in customer deposits was funded from
current operations.

Approximately $1,271,000 of additions were made to plant and equipment
assets. Of this amount, $50,000 was financed by the County of Charles City,
Virginia (for a $74,276 plant parking lot paving contract) and $382,000 was
financed on a capital lease from KeyCorp Leasing. The balance was funded with
the $745,000 proceeds from a matured U. S. Treasury Bill, only $168,000 of
which was reinvested in marketable securities.

At December 31, 1995, Facelifters held $3,251,000 in cash and
marketable securities, had a $1,000,000 revolving line of credit from European
American Bank in New York of which $130,000 was unused, and had used only
$382,000 of a $500,000 capital equipment lease commitment. It had commitments
to purchase approximately $50,000 of capital assets.

As a result of the effect of adopting SOP 93-7, Facelifters was not in
compliance with certain financial covenants relating to the loans with European
American Bank and Central Fidelity Bank, at March 31, 1995 and December 31,
1995.

78
<PAGE> 85
Facelifters received a waiver, until March 31, 1996, from Central
Fidelity Bank for the instances of noncompliance that existed at September 30,
1995. As of February 13, 1996, Central Fidelity Bank had not reviewed the
covenants at December 31, 1995 and had not updated their waiver. European
American Bank has informed Facelifters that in the event the Merger is
consummated, the loan will be called on that date. Accordingly, the notes
payable subject to covenants where non-compliance existed are classified as
current liabilities at December 31, 1995. Facelifters paid off its loan with
European American Bank in full prior to the Merger in March 1996.

Facelifters believes that the liquid funds now held, its established
lines of credit and cash generated from operations are all fully adequate to
fund its commitments and provide the liquidity and capital needs of Facelifters
at current levels of operations. Facelifters is continuing to evaluate its
facility requirements and the costs associated therewith.

A new wholly owned subsidiary, Home Financial Acceptance Corp.
("HFAC"), has been formed to finance customer contracts, thereby limiting the
need for third-party lenders. A $12,000,000 Warehouse Line of Credit is in
process of negotiation with a lender at an anticipated floating rate of 2% over
LIBOR. It is anticipated that the line of credit will require that the new
finance subsidiary be capitalized with a minimum of $2,400,000. HFAC has been
actively pursuing required state lending licenses, but no decision has been
reached as to the role of HFAC after consummation of the Merger.

IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS

The American Institute of Certified Public Accountants has recently
issued Statement of Position 94-6 "Disclosure of Certain Significant Risks and
Uncertainties," ("SOP 94-6"). SOP 94-6 requires entities to disclose specified
information, including a description of certain risks and uncertainties under
four new disclosures. The statement is effective for fiscal years ending after
December 15, 1995. Facelifters does not expect the implementation of SOP 94-6
to have a material effect on its financial position or results of operations.

The Financial Accounting Standards Board ("FASB") issued Statement of
Financial Accounting Standards No. 107, "Disclosures About Fair Value of
Financial Instruments," ("SFAS 107"). SFAS 107 requires all entities to
disclose the estimated fair value of assets and liabilities considered to be
financial instruments. The statement is effective for fiscal years ending
after December 15, 1995, for entities with total assets less than $150 million.
Facelifters does not expect the implementation of SFAS 107 to have a material
effect on its financial position or results of operations.

The FASB has also recently issued Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of," ("SFAS 121"). SFAS 121 establishes
guidance for when to recognize and how to measure impairment losses of
long-lived assets and certain identifiable intangible assets, such as goodwill.
The statement is effective for fiscal years beginning after December 15, 1995.
Facelifters does not expect the implementation of SFAS 121 to have a material
effect on its financial position or results of operations.

79
<PAGE> 86
DESCRIPTION OF FACELIFTERS CAPITAL STOCK

IN GENERAL

Facelifters' authorized capital stock consists of 20,000,000 shares of
Facelifters Common Stock, of which, as of March 4, 1996, 3,565,680 shares are
outstanding, and 1,000,000 shares of preferred stock, par value $0.01
("Facelifters Preferred Stock"), of which no shares are issued or outstanding
as of the date hereof. All outstanding shares of Facelifters Common Stock are
fully paid and non-assessable and are not subject to future calls or
assessment. The Facelifters Common Stock is listed on NASDAQ. The Transfer
Agent and Registrar for the Facelifters Common Stock is American Stock Transfer
& Trust Co., New York, New York.

The following is a summary of the terms of the Facelifters Common
Stock and the Facelifters Preferred Stock which does not purport to be complete
and is subject to and qualified in its entirety by reference to the Facelifters
Certificate.

FACELIFTERS COMMON STOCK

Holders of Facelifters Common Stock are entitled to one vote per share
in the election of directors and on all other matters submitted to a vote of
stockholders and do not have cumulative voting rights. Holders of a majority
of the shares of Facelifters Common Stock entitled to vote in any election of
directors may elect each of the directors standing for election.

Holders of Facelifters Common Stock are entitled to receive ratably
such dividends, if any, as may be declared by the Facelifters Board out of
funds legally available therefor, subject to any preferential dividend rights
of outstanding Facelifters Preferred Stock.

Upon the liquidation, dissolution or winding up of Facelifters, the
holders of Facelifters Common Stock are entitled to receive ratably the net
assets of Facelifters available after payment of all debts and other
liabilities, subject to the prior rights of any outstanding Facelifters
Preferred Stock. Holders of Facelifters Common Stock have no preemptive,
subscription, redemption or conversion rights.

FACELIFTERS PREFERRED STOCK

The Facelifters Board has the authority, without further approval or
action by the stockholders, to issue shares of Facelifters Preferred Stock in
one or more series and to fix the rights, preferences, privileges and
restrictions thereof, including dividend rights, conversion rights, voting
rights, terms of redemption, liquidation preferences, sinking fund terms and
the number of shares constituting any additional series of Facelifters
Preferred Stock or the designation of such series.

POSSIBLE ANTI-TAKEOVER PROVISIONS

The Facelifters authorized capital stock consists of 20,000,000 shares
of Facelifters Common Stock and 1,000,000 shares of Facelifters Preferred
Stock, all of which are undesignated. The authorized but unissued Facelifters
Preferred Stock may be given voting rights and privileges and issued by the
Facelifters Board in one or more transactions. Such rights and privileges, when
exercised, may make it more difficult for a stockholder or any group of
stockholders to obtain control of Facelifters.

The Facelifters Bylaws provide that special meetings of stockholders
of Facelifters may be called by the Facelifters Board, the Chairman of the
Facelifters Board, the President or the Chief Executive Officer of Facelifters.
This provision makes it impossible for stockholders to call a special meeting
and take actions opposed by the Facelifters Board.

80
<PAGE> 87
The Facelifters Bylaws provide that an action required or permitted to
be taken at any annual or special meeting of the stockholders of Facelifters
may be taken in writing by the consent of holders of not less than the minimum
number of shares required to approve such action had such a meeting occurred.
This provision makes it difficult for stockholders to initiate or effect an
action by written consent, and thereby effect an action opposed by the
Facelifters Board.

Section 203 of Delaware General Corporation Law

Both AMRE and Facelifters are subject to Section 203 of the Delaware
Act ("Section 203"). Section 203 provides, with certain exceptions, that a
Delaware corporation may not engage in any of a broad range of business
combinations with a person, or an affiliate or associate of such person, who is
an "interested stockholder" for a period of three years after the date such
person became an interested stockholder, unless: (i) the transaction resulting
in a person becoming an interested stockholder, or the business combination, is
approved by the board of directors of the corporation before the person becomes
an interested stockholder, (ii) the interested stockholder acquired 85% or more
of the outstanding voting stock of the corporation in the same transaction that
makes such person an interested stockholder (excluding shares owned by the
persons who are both officers and directors of the corporation, and shares held
by certain employee stock ownership plans) or (iii) on or after the date the
person becomes an interested stockholder, the business combination is approved
by the corporation's board of directors and by the holders of at least 66 2/3%
of the corporation's outstanding voting stock at an annual or special meeting,
excluding the shares owned by the interested stockholder. Under Section 203,
an "interested stockholder" is defined as any person who is (i) the owner of
15% or more of the outstanding voting stock of the corporation or (ii) an
affiliate or associate of the corporation who was the owner of 15% or more of
the outstanding voting stock of the corporation at any time within the
three-year period immediately prior to the date on which it is sought to be
determined whether such person is an interested stockholder.

By restricting the ability of Facelifters to engage in business
combinations with an interested person, the application of Section 203 to
Facelifters may provide a barrier to hostile or unwanted takeovers. Neither
AMRE nor Facelifters has opted out of Section 203 of the Delaware Act.

COMPARISON OF STOCKHOLDER RIGHTS

If the Merger is consummated, all stockholders of Facelifters
immediately prior to the Effective Time will become stockholders of AMRE. The
following is a summary of the material differences between the respective
rights of holders of the capital stock of AMRE and the rights of holders of the
capital stock of Facelifters. These differences arise from the various
provisions of the AMRE Certificate of Incorporation, as amended (the "AMRE
Certificate"), the AMRE Bylaws, the Facelifters Certificate of Incorporation
(the "Facelifters Certificate") and the Facelifters Bylaws. THIS SUMMARY IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE DELAWARE ACT, THE AMRE
CERTIFICATE AND AMRE BYLAWS, AND THE FACELIFTERS CERTIFICATE AND FACELIFTERS
BYLAWS.

AUTHORIZED STOCK

The AMRE Certificate authorizes the AMRE Board to issue up to 20
million shares of AMRE Common Stock and up to one million shares of AMRE
preferred stock in one or more series and with such voting powers and
designations, preferences, limitations and relative rights as may be designated
by the AMRE Board. If approved by the stockholders of AMRE at the AMRE Special
Meeting, the Charter Amendment would increase the number of authorized shares
of AMRE Common Stock from 20 million to 40 million. As of March 4, 1996,
approximately 14,127,457 shares of AMRE Common Stock and 300,000 shares of AMRE
Senior Convertible Preferred Stock were issued and outstanding. The Merger
Agreement provides that AMRE will issue approximately 3,565,680 shares of AMRE
Common Stock in connection with the Merger (assuming no Facelifters Options are
exercised prior to the Effective Time).

81
<PAGE> 88
The Facelifters Certificate authorizes the Facelifters Board to issue
up to 20 million shares of Facelifters Common Stock and up to 1 million shares
of Facelifters Preferred Stock (none of which has been issued). As of March 4,
1996, 3,565,680 shares of Facelifters Common Stock are issued and outstanding.

DIRECTORS

Number and Term. Pursuant to the AMRE Certificate and AMRE Bylaws,
the number of directors of AMRE shall not be less than three nor more than 12
and shall be determined from time to time in accordance with the AMRE Bylaws by
resolution of the AMRE Board or of AMRE stockholders. The AMRE Bylaws provide
that the AMRE Board is divided into three classes of directors serving
staggering three-year terms, and that each director shall hold office for the
term of office for which he is elected and until his successor is elected and
qualified. The Facelifters Bylaws provide that the number of directors shall
at no time be less than one nor greater than 15 and shall be fixed from time to
time exclusively by resolutions adopted by the Facelifters Board. The
Facelifters Board is not divided into classes.

Resignation and Removal. The AMRE Bylaws provide that any director
may resign at any time upon giving written notice to AMRE. The AMRE Bylaws
further provide that, at any meeting of stockholders called expressly for the
purpose of removing a director or directors, any director or the entire AMRE
Board may be removed, with or without cause, by a vote of the holders of a
majority of the shares then entitled to vote at an election of directors. The
Facelifters Bylaws provide substantially the same resignation and removal
provisions, except that directors may be removed at any duly convened annual or
special meeting. The Delaware Act provides that directors serving on
classified boards, such as the AMRE Board, may not be removed without cause.

Vacancies. The AMRE Bylaws provide that vacancies may be filled by
the affirmative vote of a majority of the remaining directors, though less than
a quorum, and that the directors so chosen shall hold office for the unexpired
term of his predecessor in office. Any directorship to be filled by reason of
an increase in the number of directors may be filled by the affirmative vote of
a majority of the directors, and directors so chosen shall hold office until
their successors are duly elected and qualified.

The Facelifters Bylaws provide that vacancies and newly created
directorships may be filled by a majority vote of the remaining director(s),
though less than a quorum, or by the requisite vote of the stockholders at an
annual meeting of the stockholders or at a special meeting of the stockholders
called for that purpose. Directors so elected will hold office until their
successors are duly elected and qualified.

STOCKHOLDER ACTION BY WRITTEN CONSENT; SPECIAL MEETINGS OF STOCKHOLDERS

Section 228 of the Delaware Act states that unless otherwise provided
in the certificate of incorporation, any stockholder action may be taken
without a meeting if a consent in writing, setting forth the action so taken,
is signed by the holders of outstanding shares having not less than the minimum
number of votes which would be necessary to authorize or take the action at a
meeting at which all shares entitled to vote were present and voted. The AMRE
Certificate does not prohibit the taking of actions by AMRE stockholders by
written consent in conformance with Section 228. The AMRE Bylaws also provide
that special meetings of stockholders may be called by the President, the AMRE
Board or stockholders owning AMRE capital stock representing 35% of all shares
of AMRE capital stock entitled to vote thereat.

The Facelifters Certificate provides that an action required or
permitted to be taken at any annual or special meeting of the stockholders of
Facelifters may be taken in writing by the consent of holders of not less than
the minimum number of shares required to approve such an action at a meeting of
stockholders. The Facelifters Certificate and Facelifters Bylaws also provide
that special meetings of stockholders may be called by the Facelifters Board,
the Chairman of the Board, the President or the Chief Executive Officer of
Facelifters.

82
<PAGE> 89
AMENDMENT TO CERTIFICATE

In order to amend a corporation's certificate of incorporation, the
Delaware Act requires recommendation of the corporation's board of directors
and, unless such corporation's certificate of incorporation provides for a
greater vote, approval by each of (i) a majority of the votes entitled to be
cast on the amendment by each voting group with respect to which the amendment
creates dissenters' rights; and (ii) a majority of the votes cast by every
other voting group entitled to vote on the amendment.

Article 10 of the AMRE Certificate provides that AMRE reserves the
right to amend, alter, change or repeal any provision contained in the AMRE
Certificate in the manner now or hereafter prescribed by the laws of the State
of Delaware.

Pursuant to the Facelifters Certificate, Facelifters reserves the
right to amend, alter, change or repeal any provision contained in the
Facelifters Certificate in the manner prescribed by statute.

AMENDMENT TO BYLAWS

The AMRE Certificate provides that the AMRE Board is expressly
authorized to alter, amend or repeal the AMRE Bylaws and to adopt new Bylaws,
subject, however, to repeal or change by the affirmative vote of the holders of
80% of the outstanding shares of AMRE capital stock entitled to vote thereon.
The AMRE Bylaws provide that the AMRE Bylaws may be altered, amended, repealed
or replaced by the affirmative vote of the majority of the AMRE Board at any
regular or special meeting of the AMRE Board, subject to repeal or change at
any regular or special meeting of stockholders at which a quorum is present or
represented by the affirmative vote of not less than 80% of the shares entitled
to vote at such meeting, voting together as a single class, and present or
represented thereat, provided notice of the proposed repeal or change is
contained in the notice of such meeting of stockholders. The Facelifters
Bylaws may be altered, amended or repealed at any meeting of the stockholders
by a majority vote of the shares represented and entitled to vote at such
meeting, provided notice is given and a quorum is present, and the Facelifters
Board may, by majority vote of those present at any meeting at which a quorum
is present, amend the Facelifters Bylaws or enact other bylaws.

LIABILITY OF DIRECTORS; INDEMNIFICATION

Under the AMRE Certificate, a director of AMRE shall not be liable to
AMRE or its stockholders for monetary damages for breach of fiduciary duty as a
director, to the fullest extent permitted by the Delaware Act. The Facelifters
Certificate also limits the liability of directors of Facelifters to
Facelifters or its stockholders for monetary damages for breach of fiduciary
duty as a director to the fullest extent permitted by the Delaware Act.
Specifically, a director of Facelifters or AMRE will not be personally liable
for monetary damages for breach of a director's fiduciary duty as a director,
except for liability resulting from (i) any breach of the director's duty of
loyalty to the respective corporation or its stockholders, (ii) acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) unlawful payments of dividends or unlawful
stock repurchases or redemptions as provided in Section 174 of the Delaware Act
or (iv) any transaction from which the director derived an improper personal
benefit. These provisions do not limit the rights of AMRE or Facelifters or
their respective stockholders, in appropriate circumstances, to seek equitable
remedies such as injunctive or other forms of non-monetary relief. The
inclusion of the above provisions in the AMRE Certificate and the Facelifters
Certificate may have the effect of reducing the likelihood of derivative
litigation against directors, and may discourage or deter stockholders or
management from bringing a lawsuit against directors for breach of their duty
of care, even though such an action, if successful, might otherwise have
benefitted the respective corporation and its stockholders.

Section 145 of the Delaware Act provides in part that a corporation
shall have the power to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding (other than an action by or in the right of the corporation)
by reason of the fact that

83
<PAGE> 90
such person is or was a director, officer, employee or agent of the corporation
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation, and with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. Similar indemnity is authorized for such persons against
expenses (including attorneys' fees) actually and reasonably incurred in
defense or settlement of any threatened, pending or completed action or suit by
or in the right of the corporation, if such person acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation, and provided further that (unless a court of competent
jurisdiction otherwise provides) such person shall not have been adjudged
liable to the corporation. Any such indemnification may be made only as
authorized in each specific case upon a determination by the stockholders or
disinterested directors that indemnification is proper because the indemnitee
has met the applicable standard of conduct. Where an officer or a director is
successful on the merits or otherwise in the defense of any action referred to
above, the corporation must indemnify him against the expenses which such
officer or director actually or reasonably incurred.

Article 9 of the AMRE Certificate and Article 11 of the AMRE Bylaws
provide for indemnification of directors and officers, and Section 11.8 of the
AMRE Bylaws provides for the authority to purchase insurance with respect to
indemnification of directors and officers. Article X of the Facelifters
Certificate and Article 6 of the Facelifters Bylaws provide similar benefits to
Facelifters directors and officers.

Article 11 of the AMRE Bylaws provides that AMRE shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (whether or not by or in the right of
AMRE) by reason of the fact that he is or was or has agreed to become a
director, officer, employee or agent of AMRE, or is or was serving or has
agreed to serve at the request of AMRE as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, or by reason of any action alleged to have been taken or omitted in
such capacity, against costs, charges, expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred by him or on his behalf in connection with such action, suit or
proceeding to the fullest extent permitted by Delaware law. Article X of the
Facelifters Certificate and Article 6 of the Facelifters Bylaws provide similar
benefits to Facelifters directors and officers.

The right to indemnification under Article 11 of the AMRE Bylaws is a
contract right which includes, with respect to directors, officers, employees
and agents, the right to be paid by AMRE the costs, charges and expenses
incurred in defending a civil or criminal action, suit or proceeding in advance
of its disposition; provided, however, that the payment of such costs, charges
and expenses incurred by a director or officer in his capacity as a director
and officer (and not in any other capacity in which service was or is rendered
by such person while a director or officer) in advance of the final disposition
of such action, suit or proceeding shall be made only upon delivery to AMRE of
an undertaking, by or on behalf of such director or officer, to repay all
amounts so advanced if it shall ultimately be determined that such director or
officer is not entitled to be indemnified under Article 11 of the AMRE Bylaws
or otherwise. Article X of the Facelifters Certificate and Article 6 of the
Facelifters Bylaws provide similar benefits to Facelifters directors and
officers, but also require a written affirmation by such person of his good
faith belief that he has met the applicable standard of conduct necessary for
indemnification.

Indemnification agreements have been entered into between AMRE and
each director of AMRE which contractually obligate AMRE to provide to the
directors (i) indemnification, (ii) insurance and (iii) additional
indemnification. Facelifters has also entered into indemnification contracts
with its directors.

84
<PAGE> 91
Pursuant to Section 259 of the Delaware Act, after the Effective Time,
all debts, liabilities and duties of Facelifters, including its obligations to
indemnify its directors and officers, may be enforced against the Surviving
Corporation.

The Merger Agreement also provides for indemnification of Facelifters'
officers and directors under certain circumstances by AMRE and/or the Surviving
Corporation. See "Special Factors -- Interests of Certain Persons in the
Merger -- Indemnification of Facelifters' Officers and Directors."

85
<PAGE> 92
BUSINESS OF FACELIFTERS

GENERAL

Facelifters markets, sells, designs, manufactures and installs
directly to consumers, kitchen cabinet refacing products utilized in kitchen
remodeling in 26 geographic markets. Refacing is a kitchen remodeling
technique in which existing cabinetry framework is retained but all exposed
surfaces are changed. Under the Facelifters cabinet refacing system, doors,
drawers, and drawer fronts are replaced, and all exposed cabinet surfaces are
covered with matching laminate. In addition, matching valances and molding,
replacement sinks, faucets, counter tops, additional or replacement cabinets,
space organizers, lazy susans and slide-out shelving can be provided by
Facelifters. In addition to marketing, selling, and installing cabinet
refacing, Facelifters has begun to market, sell and install exterior home
improvement products in the South Bend and Ft. Wayne, Indiana areas.

Facelifters provides homeowners and other customers with a wide
selection of styles and colors to renovate their kitchens at a lower cost and
more quickly and conveniently than through traditional remodeling methods. The
cost of most installations range in price from $3,000 to $9,000, generally less
than one-half the cost of replacing existing cabinetry in comparable style and
quality. Installation is usually completed within three days, as compared to
between two and four weeks for traditional remodeling methods, and is usually
commenced six to 12 weeks after an agreement is entered into between
Facelifters and its customer.

In 1978, Facelifters commenced business under the laws of the State of
New York. In December 1995, stockholders of Facelifters approved the
consolidation of Facelifters and two of its subsidiaries with a wholly owned
Delaware subsidiary of Facelifters for the purpose of reincorporating the
consolidated company into Delaware.

In January 1991, Facelifters entered into the Facelifters Sears
License Agreement. In connection with the transactions contemplated by the
Merger, Facelifters entered into the Facelifters Century 21 License Agreement,
a three- year, non-cancelable sublicense agreement with ARI, commencing January
1, 1996, to market kitchen cabinet refacing, kitchen remodeling and any and all
products or services dealing with the kitchen area of the house using the
CENTURY 21 Home Improvements name in geographic markets where Facelifters was
previously operating under the Facelifters Sears License Agreement. As a
result of entering into the Facelifters Century 21 License Agreement,
Facelifters notified Sears that it would not renew the Facelifters Sears
License Agreement when it expired on December 31, 1995.

Facelifters markets its products directly to homeowners on an
installed basis. For the fiscal year ended March 31, 1995, Facelifters' retail
installed sales division accounted for $37,720,189 or 97.3% of sales.
Management believes that Facelifters is one of the largest enterprises engaged
in the marketing, sale, manufacturing and installation of cabinet refacing
products directly to consumers. Facelifters also sells its products to
independent dealers for resale in designated market areas throughout the United
States. Independent dealers provide the Facelifters cabinet refacing system to
homeowners in these areas using materials and products purchased from
Facelifters. Beginning in January 1991 through January 1995, Facelifters
entered into annually renewable license agreements with Sears to market and
install Facelifters' products and services under the Sears name. Prior to the
cancellation of the Facelifters Sears License Agreement, Facelifters' license
agreements with Sears included Metropolitan New York City, Long Island,
Rockland County and Westchester County, New York; Tampa Bay, Orlando,
Jacksonville and Ft. Lauderdale, Florida; the State of Maryland; District of
Columbia; Northern, Southern and Eastern Virginia; Atlanta, Georgia; Fairfield
County, Connecticut; Dallas, Houston, Austin and San Antonio, Texas;
Birmingham, Alabama; Nashville, Tennessee; and the South Bend and Ft. Wayne,
Indiana markets. Facelifters currently operates five branch offices as
Facelifters covering the Boston, Massachusetts; Southern New Jersey,
Philadelphia, Pennsylvania and Delaware Valley; Central and Northern New
Jersey; Providence, Rhode Island; and Los Angeles, California markets.

86
<PAGE> 93
In its cabinet refacing business, Facelifters offers various door and
drawer front styles all of which are available in several colors. Facelifters
manufactures cabinets, doors, drawer fronts, valances, molding and shelving
from fiberwood furniture core, a stiff, strong and virtually warp-free
composite material. Facelifters covers all surfaces and edges of the core with
Formica(TM), Wilsonart or like-brand laminates, which material is also used in
the home to cover all other exposed cabinet surfaces. Facelifters also
contracts manufacturing of polyurethane molded doors and drawer fronts and
certain other products to other manufacturers. Facelifters products are often
custom cut to size, sculpted, and routed by both manually-operated and
computer-controlled machinery. Facelifters products carry a limited warranty
for a two to five-year period. Prior to 1995 Facelifters provided customers
with a lifetime limited warranty on its laminated products against delamination
and surface discoloration. In 1995 the Company reduced the time period offered
under Facelifters' warranty to accommodate Sears' policy on warranties.
Products utilized for other services such as vinyl siding, replacement windows,
roofing and fencing are produced by reputable manufacturers who specialize in
such items and have national or regional distribution.

ACQUISITIONS

Effective December 2, 1991, Facelifters acquired 100% of the issued
and outstanding stock of Kitchen Craft, Inc. and merged it into a newly created
wholly owned subsidiary, Facelifters Mid-Atlantic, Inc. In January 1992
Facelifters Mid-Atlantic, Inc. was awarded the Sears license to sell, furnish
and install cabinet refacing products in the Maryland, Northern and South
Eastern Virginia and Washington D.C. markets.

Effective January 7, 1992, Facelifters purchased substantially all of
the assets of Neillco, Inc. and Fine Fabricators, Inc. and placed them in a
newly formed majority owned subsidiary, Facelifters of Delaware Valley, Inc.
Neillco, Inc. was a kitchen cabinet refacing contractor serving the greater
Philadelphia - Southern New Jersey - Delaware Valley markets whose business is
being continued by Facelifters. No Sears license is held for this territory
where sales are made under the Facelifters name. Fine Fabricators, Inc. was a
manufacturer of kitchen countertops that sold its products both to Neillco,
Inc. and to non-related contractors. As of April 1, 1992, the manufacturing
assets of Fine Fabricators were transferred to Facelifters, with Facelifters of
Delaware Valley, Inc. operating solely as a kitchen cabinet refacing
contractor. The former sole shareholder of Neillco, Inc. and Fine Fabricators.
Inc., Neil Fine, was retained as President of the new subsidiary. As of January
7, 1992, and prior to March 1, 1993, Mr. Fine held a minority interest in
Facelifters of Delaware Valley, Inc. On March 1, 1993, Facelifters purchased
the minority interest from Mr. Fine. In December 1994, Mr. Fine's employment
agreement expired and was not renewed.

Effective April 1, 1992, Facelifters purchased substantially all of
the assets of Saduco Industries, Inc., an exclusive distributor of Woodlor
brand polyurethane cabinet doors and drawer fronts manufactured by Jasper
Plastics, a division of Kimball International. Facelifters previously purchased
these products through Saduco Industries, Inc. Effective with this
acquisition, Facelifters began purchasing these products on an exclusive basis
directly from Jasper Plastics. In December 1995, Facelifters determined to
phase out the Woodlor brand product line.

Effective September 2, 1994, Facelifters purchased substantially all
of the assets of CMSC and placed them in a separate wholly owned subsidiary,
Facelifters West, Incorporated. CMSC had been in the kitchen cabinet refacing
business in Southern California since 1977. Shortly before the acquisition,
CMSC began to sell, furnish and install kitchen cabinet refacing for HomeBase,
a home improvement warehouse chain in the Western Region of the United States.
A license agreement required a license fee to be paid on all sales made to
customers whose sales are generated through the HomeBase store or names
obtained through marketing under the HomeBase name.

In January, 1995, management of Facelifters determined that it was not
in Facelifters' best interests to continue the license arrangement with
HomeBase and therefore Facelifters gave HomeBase notice to terminate the
license effective March 1, 1995. Facelifters has continued to operate in
Southern California under the Facelifters name.

87
<PAGE> 94
DISCONTINUED OPERATIONS AND DIVESTITURE

On March 31, 1993, Facelifters sold substantially all of the assets,
except accounts receivable, attributable to its commercial tabletop and base
business to FCD Tabletops, Inc. For the fiscal year ended March 31, 1993, sales
for this division represented approximately $1.1 million or 5% of total
Facelifters' sales as compared to approximately $20.3 million in cabinet
refacing products sales. The divestiture generated cash and reduced
Facelifters' investment in inventory and receivables. The sale of this business
segment is consistent with management's objective to continue its increased
focus on retail installed sales of specialty home improvement products.

DIRECT MARKETING AND SALES

Facelifters' principal marketing activities are conducted through
television, direct mail advertising, and telemarketing. Direct mailings and
telemarketing solicitation are made to homeowners whose demographic profiles
and homes fall within certain criteria, including age and income of the
homeowner, home value, age of home and length of residency. To maintain the
efficiency of its marketing, Facelifters uses its internally developed computer
software to monitor responses and sales.

The marketing activities of Facelifters center on telephone marketing
operations. Facelifters' telemarketing personnel follow scripts prepared by
Facelifters. Telephone personnel conduct outbound telemarketing and answer
inquiries generated by advertising activities and schedule in-home sales
presentations. Direct sellers are used as sales representatives. The direct
sellers use Facelifters' in-home sales presentation and sales kit, which
includes presentation book, photos, video materials, sample products and other
sales materials. Most sales result from the initial in-home presentation.
Results of in-home presentations are tabulated on a daily basis. Such
information provides data upon which Facelifters may evaluate each direct
seller's performance with respect to sales as it relates to a percentage of
in-home presentations, cancellation rates and average dollar amounts of sales
and commissions earned.

Generally, within two weeks after a sales agreement is entered into,
the customer's kitchen or other home improvement project is measured for
ordering pursuant to Facelifters' specified procedures. Measurements are
entered on systematized forms to facilitate manufacturing at which time the
order is forwarded to various suppliers including Facelifters' manufacturing
facility in Charles City, Virginia. Products are usually ready for shipment
within three weeks after receipt of an order. If necessary, replacement or
service parts are usually shipped within five working days after Facelifters
receives a request. Installation, which generally occurs six to 12 weeks after
the agreement is signed, is performed by independent contractors (except for
Southern California, which utilizes Facelifters' employed installers) skilled
in cabinet refacing and kitchen cabinet installation or in the installation of
exterior products such as replacement windows, siding, roofing and fencing and
is usually completed within three to five days.

PURCHASING, MATERIAL AND INSTALLATION

Kitchen Cabinet Refacing, Custom Countertops and Cabinets. Facelifters
manufactures laminated cabinet fronts, countertops, and cabinets which are
faced with high pressure laminate in its new manufacturing facility in Charles
City, Virginia. Raw materials used in the manufacturing and installation
process are purchased from several suppliers which are negotiated periodically.
Management believes such materials are available from numerous suppliers at
competitive prices.

Replacement Windows, Siding, Soffit and Fascia, Roofing and Fencing.
Materials used in the sale and installation of replacement windows, vinyl
siding, soffit and fascia, roofing, fencing, and related products are purchased
from unaffiliated reputable manufacturers with national or regional
distribution in markets where Facelifters operates such business.

88
<PAGE> 95
Installations. Except for certain skilled labor employees who perform
service work and all California installations, independent contractors perform
all of Facelifters' installations. The independent contractor obtains the work
order with specifications, drawings and materials from one of Facelifters'
regional facilities. On average, installations are completed in three to five
days at which time the independent contractor obtains a certificate of
completion from the customer and returns to Facelifters completed documentation
and all excess materials supplied by Facelifters.

CONSUMER LOAN FINANCING AND NEW BUSINESS SEGMENT

The majority of Facelifters' business is sold to consumers with
financing arranged through a third-party lender. Facelifters' target market is
a homeowner living in a single family home. This customer usually has a good
credit rating and substantial equity in the home. Facelifters' retail customers
pay for installation of home improvement products and services in cash or by
financing. If paid for by cash, the terms to those customers generally consist
of four equal installments with the first payment made at the time the sales
contract is signed and the final payment upon completion of the work. Payments
are also accepted on MasterCard, Visa or Discover cards, or by third-party
financing, primarily a revolving unsecured line of credit arranged by
Facelifters. In most third-party lender transactions, the customer executes
some form of retail installment contract or credit application, which is
assigned to a lender. Facelifters assumes some recourse liability in certain
of these transactions which is limited to enforcement of Facelifters' product
warranty, in addition to normal representations and warranties regarding
material and workmanship. The third-party lenders fund the full amount of the
balance due without recourse to Facelifters following installation, upon
receipt of a properly executed completion certificate.

For the fiscal year ended March 31, 1995, approximately 80% of
Facelifters' retail installed sales were paid for through third-party lender
financing as compared to 53% during the fiscal year ended March 31, 1994. In
some of these sales, Facelifters receives a small initial deposit from the
customer upon entering into a contract with Facelifters. The balance is paid by
the lender directly to Facelifters upon satisfactory completion of the
installation. During each of Facelifters' last three fiscal years, Facelifters
received payments in excess of 99% of the amounts due under these sales
contracts. During Facelifters' latest fiscal year ended March 31, 1995,
approximately $30.0 million of Facelifters' newly acquired contracts resulted
in such transactions as compared to $13.0 million in the previous year.

Facelifters generates loan demand by offering to arrange some type of
loan for its customers. Approximately 72% of customers who apply have an
excellent credit standing ("First Line Deals"), and financing can be arranged
on a non- recourse unsecured revolving basis or a closed end installment
contract. Another 15% have acceptable credit and can be financed on an
unsecured, closed end installment contract. The next 8% can be financed on a
closed end secured basis. Although this 8% group may have some blemishes on
their credit, they are generally homeowners with substantial equity. The
remaining 5% are not considered creditworthy. The amount financed, after down
payments, averages $5,000. Most loans are written for a term of 84 months with
an annual percentage rate of 15.9% to 16.9%. Although the loans are written
with an average term of 84 months, these loans are usually paid off within 24
months.

Facelifters believes that it can greatly increase its finance income
by originating these loans and handling them in two ways; (i) pooling the
revolving type loans and selling them in the secondary market, and (ii)
packaging the closed end installment loans and selling them for a commission to
various lenders. To accommodate this business segment Facelifters has recently
established HFAC. HFAC has been registered to do business as a direct lender
in all of the states in which Facelifters operates. Additionally, HFAC is
required to obtain certain state lending licenses. HFAC has been actively
pursuing these licenses, but no decision has been reached as to the role of
HFAC after consummation of the Merger.

89
<PAGE> 96
EMPLOYEES

At March 31, 1995, Facelifters either employed or had representing its
products, on a full or part-time basis, approximately 587 associates, including
132 telemarketing, 180 direct sellers, 113 manufacturing employees, and 162
management and administrative personnel. In addition, Facelifters had working
arrangements with approximately 177 independent contracting companies.
Facelifters believes that labor relations with its employees have been good in
the past and does not expect this assessment to change.

INDEPENDENT CONTRACTORS

Except for warranty and other service work and all California sales
installations, independent contractors ("Contractors") perform all of
Facelifters' installations. Contractors employ their own craftspersons and are
required to maintain their own vehicles, equipment, tools, licenses, workers
compensation coverage and general liability insurance. Contractors assume full
financial risk in their performance of an installation, and enter into a
written agreement with Facelifters upon meeting Facelifters' and Sears'
qualifications as an authorized contractor for Facelifters. Contractors obtain
a work order, which specifies all work to be performed pursuant to the sales
agreement, and materials at Facelifters' nearest branch office. Installations
are generally completed within three to five work days, at which time the
Contractor obtains a certificate of completion from the customer and returns
all documentation and excess materials to Facelifters. The Contractor is paid
by Facelifters upon satisfactory completion of each job, at which time
Facelifters receives an invoice for services from the Contractor and a customer
signed completion certificate. Fees for each installation are paid to the
Contractor by Facelifters, based upon an amount negotiated between Facelifters
and the Contractor. When new construction and remodeling is on the rise,
recruiting of contractors becomes more challenging. Facelifters believes it can
stay competitive in its recruiting efforts and that there are an adequate
number of qualified contractors available to Facelifters to satisfy anticipated
needs.

WARRANTIES

Facelifters provides each customer with a 12-month limited warranty
covering defective materials and workmanship and an extended limited warranty
of between two to five years on its materials. Facelifters requires its
Contractors to correct defective workmanship for a 12-month period. To date,
Facelifters has not experienced significant warranty claims.

DEALERS

In addition to its own retail installed sales business, Facelifters
sells its kitchen products on a wholesale basis to approximately 15
independently-owned and operated dealers throughout the United States.
Wholesale sales of kitchen products accounted for approximately 2.7%, 5.6%, 7%,
17%, and 30% of Facelifters' total sales from continuing operations for the
fiscal years ended March 31, 1995, 1994, 1993, 1992, and 1991, respectively.
This decrease is attributable to Facelifters' decision to concentrate on retail
installed sales. All of Facelifters' sales of tabletops and bases were
conducted through wholesale distribution. Financial information included herein
for tabletops and bases are shown as Discontinued Operations.

COMPETITION

Facelifters' business is in an industry that is highly fragmented.
Facelifters believes it is one of the largest companies in the United States
involved in the marketing, manufacturing and installation of kitchen cabinet
refacing products directly to the consumer. Facelifters competes with numerous
contractors in each of its market areas. The principal competitive factors are
reputation, price, workmanship and service. In certain of the territories in
which it operates, Facelifters also competes against home centers and retail
stores which are part of larger organizations than Facelifters.

90
<PAGE> 97
GOVERNMENT REGULATIONS

Facelifters' retail operations are subject to a Federal Trade
Commission rule which provides for a "cooling off " period for in-home sales.
This rule requires an in-home seller to inform the buyer of his right to cancel
the transaction at any time prior to midnight of the third business day after
the date of the sales transaction. Many states have (but the states in which
Facelifters currently conducts retail business have not) supplemented this rule
by extending the time period in which the buyer may cancel. Under the Sears
relationship customer satisfaction is guaranteed and therefore under certain
circumstances customers may elect to cancel orders at any time for a full
refund.

Generally, Facelifters' activities and the activities of its direct
sellers and Contractors are subject to various federal and state laws and
regulations and municipal ordinances relating to, among other things, in-home
sales, consumer financing, advertising, the licensing of home improvement
contractors, and zoning regulations. Facelifters has procedures designed to
comply with such laws and regulations.

TRADEMARKS AND SERVICE MARKS

The name "Facelifters" is registered as a trademark and service mark
with the United States Patent and Trademark Office. While Facelifters formerly
marketed its products under the Sears name, and currently markets its products
under the CENTURY 21 Home Improvements name, in the majority of its trade
areas, Facelifters considers its name "Facelifters" important to its business.

SEASONALITY

Facelifters' operating results are subject to moderate seasonal
fluctuations. Home improvement activity, and therefore Facelifters' newly
acquired contracts for the same market areas, are historically higher during
the first and fourth quarters of Facelifters' fiscal year. Although cabinet
refacing is an interior product, extreme weather conditions, as experienced in
the winter of 1993/1994, can have a negative effect in scheduling appointments
for new sales and for installations. Home improvement products such as siding,
roofing, fencing and replacement windows are usually not installable during
extreme weather conditions.

INFLATION

Inflation has recently been at low levels, and Facelifters does not
anticipate inflation to materially impact its future operations; indeed, rising
home prices often increase the demand for improvements of existing homes.
Sharply rising interest rates, which are not presently forecasted, could be a
negative influence on Facelifters sales since the majority of Facelifters'
customers, as do many homeowners, finance home improvements.

91
<PAGE> 98
MANAGEMENT INFORMATION OF AMRE

DIRECTORS OF AMRE

Current Directors. Listed below are the names and ages of, and
certain other information about, all of the current directors of AMRE.

<TABLE>
<CAPTION>
NAME AGE POSITIONS
---- --- ---------
<S> <C> <C>
John D. Snodgrass . . . . . . . . . . . . 39 Chairman of the Board of Directors

Robert M. Swartz . . . . . . . . . . . . 43 President, Chief Executive Officer and Director

Ronald L. Bliwas . . . . . . . . . . . . 53 Vice Chairman of the Board of Directors

Dennis S. Bookshester . . . . . . . . . . 57 Director

Arthur P. Frigo . . . . . . . . . . . . . 54 Director

Stephen P. Holmes . . . . . . . . . . . . 39 Director

Jack L. McDonald . . . . . . . . . . . . 62 Director

David L. Moore . . . . . . . . . . . . . 40 Director

Robert W. Pittman . . . . . . . . . . . . 42 Director

Sheldon I. Stein . . . . . . . . . . . . 42 Director
</TABLE>

Set forth below is a description of the backgrounds of each of the
directors of AMRE.

Mr. John D. Snodgrass has served as a director of AMRE since December
1995 when he was appointed as Chairman of the AMRE Board of Directors after Mr.
Ronald I. Wagner resigned from that position. Mr. Snodgrass serves as
President and Chief Operating Officer of HFS, Inc., a franchiser of hotels and
the parent entity of Century 21 Real Estate Corporation. Prior to joining HFS,
Mr. Snodgrass held the position of President and Chief Operating Officer of
Days Inns of America, Inc., a hotel company. He currently serves as a director
of HFS and National Gaming Corp.

Mr. Robert M. Swartz joined AMRE in July 1995 and was appointed to the
position of President and member of the Board of Directors. In November 1995,
Mr. Swartz was appointed to the position of Chief Executive Officer. Prior to
July 1995, Mr. Swartz was employed by Recognition International Inc., a $220
million supplier of electronic document systems where he most recently served
as Senior Vice President of Recognition and President of the Worldwide Systems
Group. He served as Senior Vice President and Chief Financial Officer of
Recognition International from 1992 to 1994, and as Vice President, Chief
Financial Officer and Treasurer from November 1990 until 1992. Prior to
joining Recognition, he held several financial and operations positions with
Nashua Corporation of Nashua, New Hampshire, a supplier of office supplies and
computer products.

Mr. Ronald L. Bliwas has served as a director of AMRE since June 1987
and also serves as the Vice Chairman of the Board of Directors. Since January
1982 he has served as President, Chief Executive Officer and a director of A.
Eicoff & Company, the direct advertising division of Ogilvy & Mather.

92
<PAGE> 99
Mr. Dennis S. Bookshester has served as a director of AMRE since
August 9, 1991. From December 1990 through May 1991 he served as President and
Chief Executive Officer of Zale Corporation, a specialty retailer of jewelry.
For more than five years prior thereto he was employed by Carson Pirie Scott &
Company, Inc., a retailer of general merchandise, in various capacities, most
recently as Chairman and Chief Executive Officer of the retail division. At
present, Mr. Bookshester is self-employed as a business consultant. He also
serves as a director of Evans, Inc., Playboy Enterprises, Inc., Fruit of the
Loom, Inc. and Sundance Homes, Inc.

Mr. Arthur P. Frigo has served as a director of AMRE since August 9,
1991. From 1977 to 1989 he served as Chief Executive Officer of Super-Cut,
Inc., a manufacturer of industrial diamond products. During the period 1978 to
1982 he also served as President of Megadiamond, Inc., a manufacturer of
man-made diamonds. Since 1988 he has served as Chief Executive Officer of M.B.
Walton Company, a manufacturer and marketer of consumer products.

Mr. Stephen P. Holmes was appointed as a director of AMRE on November
15, 1995. Since July 1990 he has served as Executive Vice President and Chief
Financial Officer of HFS, the parent company of Century 21 Real Estate
Corporation. Prior to July 1990, he was employed by The Blackstone Group,
serving as Managing Director. He currently serves as a director of HFS and
National Gaming Corp.

Mr. Jack L. McDonald has served as a director of AMRE since April 1,
1992. From July 1978 to January 1985 he served as President and Chief
Operating Officer of Centex Corporation, a company engaged in the home
building, cement, oil and gas and general construction industries, where he had
been employed since 1966. Since 1985 he has been self- employed as a business
consultant. He also serves as a director of American Homestar Corporation,
Bally's Grand, Inc., Triangle Pacific Corporation and U. S. Home Corporation.

Mr. David L. Moore was appointed as a director of AMRE on November 15,
1995 in connection with the transactions contemplated by the Century 21 License
Agreement. Since May 19, 1992 he has served as Chief Executive Officer of
Garden State Exterior Remodeling, Inc., a company involved in the installation
and sale of remodelling products. From December 1, 1990 until May 19, 1992, he
was the Chief Executive Officer of Garden State Brickface & Stucco Company.
Mr. Moore was an officer of Garden State Brickface & Stucco Company when it
filed for bankruptcy on March 15, 1991.

Mr. Robert W. Pittman was appointed as a director of AMRE on November
15, 1995 in connection with the transactions contemplated by the Century 21
License Agreement. Since September 1995, Mr. Pittman has served as Managing
Partner and Chief Executive Officer of Century 21 Real Estate Corporation. From
1990 to September 1995, he served as Chief Executive Officer and President of
Time Warner Enterprises, and from December 1991 to September 1995, he was
Chairman and Chief Executive Officer of Six Flags Entertainment. Mr. Pittman
also previously served as President and Chief Executive Officer of MTV
Networks, Inc. and President and Chief Executive Officer of Quantum Media, Inc.
He currently serves as a director of 3DO, HFS Incorporated and America Online,
Inc.

Mr. Sheldon I. Stein has served as a director of AMRE since April 1,
1992. He is a Senior Managing Director of Bear, Stearns & Co., Inc., an
investment banking firm, and is in charge of its Southwest Corporate Finance
Department. Prior to joining Bear, Stearns & Co., Inc. in August 1986, Mr.
Stein was a partner in the Dallas law firm of Hughes & Luce. He also serves as
a director of Cinemark USA, Inc., Fresh America Corporation, the Men's
Wearhouse, Inc. and Tandycrafts, Inc.

Designees for Directors. As described under "Special
Factors -- Interests of Certain Persons in the Merger -- Additional AMRE
Directors Following the Merger," Facelifters has the right pursuant to the
Merger Agreement to designate one person to serve as a member of the AMRE
Board, and such designee may also be appointed to serve on the various
committees of the AMRE Board. Facelifters has selected Murray Gross as its
designee. Pursuant to the Merger Agreement, the AMRE Board has authorized the
increase in

93
<PAGE> 100
the number of persons constituting the AMRE Board to eleven, such increase to
be effective upon consummation of the Merger, and to cause the election of the
designee of Facelifters to fill the vacancy so created. Set forth below is the
name and age of and certain other information about such designee for director
of the AMRE Board.

Mr. Murray Gross, age 57, joined Facelifters in May 1987 as Executive
Vice President and Director and has been President of Facelifters since January
1990. Mr. Gross has been involved in the home improvement industry for 31
years. In 1963, Mr. Gross founded Busy Beaver Remodelers as a subsidiary of
Busy Beaver Home Centers, Inc., a Pittsburgh, Pennsylvania home center chain.
Mr. Gross served as Executive Vice President of Busy Beaver Remodelers from
1963 until 1979, and as President from 1979 until 1981. From August 1981 to
September 1983, Mr. Gross was employed at Home Craftsman Co. in Dallas, Texas
("HCC"), and from September 1983 to January 1987, Mr. Gross was Executive Vice
President, Chief Operating Officer and a Director of HCC.

94
<PAGE> 101
SECURITY OWNERSHIP

OWNERSHIP OF AMRE SECURITIES

The following table sets forth certain information, with respect to
the beneficial ownership of AMRE Common Stock, as of February 23, 1996, by (i)
all persons who are known by AMRE to be beneficial owners of 5% or more of such
stock, (ii) each director of AMRE, (iii) certain executive officers and (iv)
all executive officers and directors of AMRE as a group. Unless otherwise
noted, the persons named below have sole voting and investment power with
respect to such shares. No effect has been given to shares reserved for
issuance under outstanding stock options except where otherwise indicated.

<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED AND
PERCENTAGE OF OUTSTANDING
SHARES AS OF FEBRUARY 23, 1996
---------------------------------------
BENEFICIAL PERCENT
NAME AND ADDRESS OF OWNER OR IDENTITY OF GROUP OWNERSHIP OF CLASS
- ---------------------------------------------- --------- --------
<S> <C> <C>
DIRECTORS

Robert M. Swartz . . . . . . . . . . . . . . . . . . . . . . . . . 2,200 (2)
John D. Snodgrass . . . . . . . . . . . . . . . . . . . . . . . . . 0
Ronald L. Bliwas . . . . . . . . . . . . . . . . . . . . . . . . . 60,900(1) (2)(3)
Dennis S. Bookshester . . . . . . . . . . . . . . . . . . . . . . . 20,000(1) (2)(3)
Arthur P. Frigo . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000(1) (2)(3)
Stephen P. Holmes . . . . . . . . . . . . . . . . . . . . . . . . . 0
Jack L. McDonald . . . . . . . . . . . . . . . . . . . . . . . . . 16,000(1) (2)(3)
David L. Moore . . . . . . . . . . . . . . . . . . . . . . . . . . 762,000(1)(4) 5.4%
Robert W. Pittman . . . . . . . . . . . . . . . . . . . . . . . . . 0
Sheldon I. Stein . . . . . . . . . . . . . . . . . . . . . . . . . 15,000(1) (2)(3)

EXECUTIVE OFFICERS

Keith L. Abrams . . . . . . . . . . . . . . . . . . . . . . . . . . 29,487(1) (2)
C. Curtis Everett . . . . . . . . . . . . . . . . . . . . . . . . . 12,500(1) (2)
John S. Vanecko . . . . . . . . . . . . . . . . . . . . . . . . . . 11,931(1) (2)
Daniel A. Grandon . . . . . . . . . . . . . . . . . . . . . . . . . 15,833(1) (2)

All Directors and Executive Officers as a group (18 persons) . . . 960,851(1)(3) 6.8%

OTHER 5% STOCKHOLDERS

Janus Capital Corporation and Thomas H. Bailey . . . . . . . . . . 1,303,100(5) 9.2%
100 Fillmore Street, Suite 300
Denver, Colorado 80206-4923
Pioneering Management Corp. . . . . . . . . . . . . . . . . . . . . 1,221,900(6) 8.6%
60 State Street
Boston, Massachusetts 02114
Ronald I. Wagner . . . . . . . . . . . . . . . . . . . . . . . . . 1,135,954(7) 8.0%
45 Masland
Dallas, Texas 75248
Brinson Partners, Inc. . . . . . . . . . . . . . . . . . . . . . . 1,036,888(8) 7.3%
209 South LaSalle
Chicago, Illinois 60604
</TABLE>

95
<PAGE> 102
<TABLE>
<S> <C> <C>
Matthew L. Feshbach and Stockbridge Partners . . . . . . . . . . . 955,946(9) 6.8%
425 Sherman Avenue, Suite 200
Palo Alto, California 94306
Montgomery Asset Management, L.P. . . . . . . . . . . . . . . . . . 833,800(10) 5.9%
600 Montgomery Street
San Francisco, California 94111
</TABLE>

(1) The numbers and percentages of shares of AMRE Common Stock owned by
directors and nominees, and by all directors and officers as a group,
as shown in the table, assume that outstanding options to purchase
shares of AMRE Common Stock, which are exercisable within 60 days of
February 23, 1996, had been exercised as follows: Mr. Bliwas -- 52,500
shares; Mr. Bookshester -- 15,000 shares; Mr. Frigo -- 15,000 shares;
Mr. McDonald -- 15,000 shares; Mr. Moore - 400,000 shares; Mr. Stein
-- 15,000 shares; Mr. Abrams - 29,487 shares; Mr. Everett -12,500
shares; Mr. Vanecko -11,931 shares; Mr. Grandon - 8,333; and all
directors and executive officers as a group (including such
individuals) -- 574,751 shares.

(2) Less than 1% of the outstanding shares of AMRE Common Stock.

(3) Does not include 269,314 shares of AMRE Common Stock (1.9% of the
outstanding shares of AMRE Common Stock) subject to a voting trust
agreement pursuant to which certain outside directors of AMRE have
shared voting power with respect to such shares of AMRE Common Stock.
Including such shares, the directors and executive officers of AMRE as
a group, assuming the exercise of outstanding options as set forth in
Note 1 above, have voting rights with respect to 8.7% of the
outstanding shares of AMRE Common Stock.

(4) Includes 162,000 shares that Green Street Partners, L.P. was obligated
to buy upon closing of the transactions incident to the Century 21
License Agreement. Mr. Moore controls the general partner of Green
Street Partners, L.P.

(5) Beneficial ownership of these shares of AMRE Common Stock is shown as
of February 13, 1996. As stated in Schedule 13G dated February 13,
1996, filed with the Commission jointly by Janus Capital Corporation
and Thomas H. Bailey, both Janus Capital Corporation and Mr. Bailey
have shared voting power and shared dispositive power with respect to
these shares. However, the schedule includes a disclaimer by Janus
Capital Corporation that although, as investment manager of certain
managed portfolios, it may be deemed to be the beneficial owner of
such shares, it disclaims any ownership with respect to the right to
receive any dividends from, or the proceeds from the sale of, such
shares. The schedule includes an additional disclaimer by Mr. Bailey
to the effect that he specifically disclaims beneficial ownership over
such shares and further disclaims any ownership with respect to the
right to receive any dividends from, or the proceeds from the sale of,
such shares.

(6) Beneficial ownership of these shares of AMRE Common Stock is shown as
of January 3, 1996. As stated in Schedule 13G dated January 3, 1996,
filed with the Commission, Pioneering Management Corporation had sole
voting power and shared dispositive power with respect to these
shares.

96
<PAGE> 103
(7) On March 1, 1996, Mr. Wagner sold 550,000 shares of AMRE Common Stock.
If such shares had been sold as of February 23, 1996, Mr. Wagner would
have beneficially owned 4.1% of the outstanding shares of AMRE Common
Stock. The 1,135,954 shares shown does not include 133,375 shares of
AMRE Common Stock owned by Joy B. Wagner, Mr. Wagner's ex-wife, who
has sole power to direct their disposition, and Mr. Wagner disclaims
beneficial ownership of such shares. Mr. Wagner is the former
Chairman of the Board of AMRE. He resigned from such position on
December 1, 1995.

(8) Beneficial ownership of these shares of AMRE Common Stock is shown as
of February 9, 1996. As stated in Schedule 13G dated February 9,
1996, filed with the Commission by Brinson Partners, Inc., on behalf
of itself, Brinson Trust Company, Brinson Holdings, Inc., SBC Holding
(USA), Inc. and Swiss Banking Corporation. Brinson Partners, Inc.,
Brinson Holdings, Inc., SBC Holding (USA), Inc. and Swiss Banking
Corporation have shared voting power and shared dispositive power with
respect to all 1,036,888 shares of AMRE Common Stock. Brinson Trust
Company, a wholly owned subsidiary of Brinson Partners, Inc., has
shared voting power and shared dispositive power with respect to
273,450 shares of AMRE Common Stock. Brinson Partners, Inc. is a
wholly owned subsidiary of Brinson Holdings, Inc. Brinson Holdings,
Inc. is a wholly owned subsidiary of SBC Holding (USA), Inc. SBC
Holding (USA), Inc. is a wholly owned subsidiary of Swiss Banking
Corporation.

(9) Beneficial ownership of these shares of AMRE Common Stock is shown as
of February 8, 1996. As stated in Schedule 13D dated February 8, 1996,
filed with the Commission, Matthew L. Feshbach has sole voting power
and sole dispositive power with respect to 910,946 of these shares.
The Schedule 13D also stated that Stockbridge Partners has sole voting
power and sole dispositive power with respect to 45,000 of these
shares. The options referred to in the preceding sentence were not
options issued by AMRE.

(10) Beneficial ownership of these shares of AMRE Common Stock is shown as
of January 31, 1996. As stated in Schedule 13G dated January 31,
1996, filed with the Commission, Montgomery Asset Management, L.P. has
sole voting power with respect to 683,600 of such shares and sole
dispositive power with respect to 833,800 of such shares.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth the total cash and non-cash
compensation for the stated periods for each Chief Executive Officer of AMRE
during the fiscal year ended December 31, 1995, the four most highly compensated
executive officers who were serving as executive officers at December 31, 1995
and one individual who would have been included among the four most highly
compensated executive officers but for the fact that he was not serving as an
executive officer at December 31, 1995.

97
<PAGE> 104
SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
AWARDS
-----------
ANNUAL COMPENSATION SECURITIES
--------------------------------- UNDERLYING
OTHER ANNUAL OPTIONS ALL OTHER
NAME AND COMPENSATION (IN SHARES) COMPENSATION
PRINCIPAL POSITION YEAR(1) SALARY BONUS(2) (3) (4) (5)
- -------------------------- ------- ------ --------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Robert M. Swartz 1995 $152,945 $100,000 $ --- 500,000 $ -0-
- President
- Chief Executive Officer

V. James Sardo 1995 121,692 -0- --- -0- 524,152(9)
- President 1994 231,231 75,000 53,370(7) 375,000 5,371
- Chief Executive Officer

Ronald I. Wagner (11) 1995 456,350 -0- --- -0- 11,023(11)
- Chairman 1994 426,942 -0- --- 550,000 10,038
1993 439,499 -0- 73,843(6) -0- 7,828

Keith L. Abrams 1995 235,796 -0- --- 10,000 7,366
- Vice President-Business 1994 234,300 -0- --- 10,000 7,034
Development 1993 217,268 -0- --- -0- 6,860

Robert E. Horton, Jr. 1995 187,783 -0- --- 16,000 14,038(10)
- Vice President-Marketing 1994 179,080 15,000 --- 34,000 1,764
1993 55,774 -0- 19,637(7) 15,000(8) 1,107

C. Curtis Everett 1995 185,942 -0- --- 12,500 9,526
- Vice President-Law 1994 177,373 -0- --- 37,500 8,632
- Secretary 1993 147,536 -0- --- -0- 8,142
- General Counsel

Daniel A. Grandon 1995 183,419 -0- --- 25,000 2,906
- Vice President-Sales 1994 162,570 -0- --- 25,000 2,296
and Installation 1993 109,544 39,500 --- 15,000 1,077
</TABLE>

__________________________

(1) The employment of Messrs. Swartz, Sardo, Horton and Grandon commenced
in July 1995, April 1994, August 1993 and July 1993, respectively.
Mr. Wagner continued as Chairman of the Board following the election
in April 1994 of Mr. Sardo as President and Chief Executive Officer.
Mr. Sardo left AMRE in April 1995. Mr. Horton left AMRE on December
31, 1995.

(2) No bonuses were paid pursuant to AMRE's Management Incentive Plan for
the fiscal years ended December 31, 1993, 1994 and 1995. Mr. Sardo
was paid a bonus for 1994 in accordance with his employment agreement
as an incentive for him to accept his position with AMRE. Mr. Horton
was paid a bonus in 1994 in accordance with his offer of employment as
an incentive for him to accept his position with AMRE. Mr. Swartz was
paid a bonus for 1995 in accordance with his employment agreement as
an incentive for him to accept his position with AMRE. Mr. Grandon
was paid a bonus for 1993 in accordance with his offer of employment
as an incentive for him to accept his position with AMRE.

(3) The table includes such other annual compensation which exceeded, in
the aggregate, the lesser of either $50,000 or 10% of salary.

(4) The option awards for 1994 included options granted in exchange for
surrendered options as follows: Wagner--550,000; Sardo--375,000;
Horton--15,000; Everett--30,000 and Grandon--15,000.

(5) The amounts shown include life and disability insurance premiums paid
by AMRE on behalf of the respective executive officers and AMRE
contributions to the Savings Investment Plan for the benefit of the
respective executive officers, as shown below.

98
<PAGE> 105
<TABLE>
<CAPTION>
LIFE/DISABILITY SAVINGS INVESTMENT PLAN
INSURANCE (401(K) PLAN)
------------------------------------- -----------------------------------
1993 1994 1995 1993 1994 1995
--------- --------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Robert M. Swartz . . . . $ --- $ --- $ -0- $ --- $ --- $ -0-
Ronald I. Wagner . . . . 7,202 7,694 8,696 2,323 2,344 2,327
V. James Sardo . . . . . --- 5,371 10,178 --- -0- -0-
Keith L. Abrams . . . . . 4,555 4,736 5,068 2,305 2,298 2,298
Robert E. Horton, Jr. . . 1,007 1,114 1,241 -0- 650 2,310
C. Curtis Everett . . . . 5,929 6,338 7,216 2,213 2,294 2,310
Daniel A. Grandon . . . . 1,077 1,082 1,095 --- 1,214 1,811
</TABLE>

(6) Includes $70,000 paid in 1993 for personal financing planning and the
preparation and filing of personal income tax returns in accordance
with Mr. Wagner's employment agreement.

(7) Includes relocation expenses in the amounts of $26,617 and $18,598 for
Messrs. Sardo and Horton, respectively. The amount shown for Mr.
Sardo also includes a country club membership fee in the amount of
$26,753.

(8) Represents options granted to Messrs. Horton and Grandon in 1993, and
subsequently cancelled and re-granted in 1994.

(9) Includes severance payments in the aggregate amount of $513,975.

(10) Includes payments of $10,487 for accrued vacation.

(11) See also "Recent Developments - Resignation of Chairman."

STOCK OPTIONS

The following table sets forth the number of shares of AMRE Common
Stock subject to options held by the executive officers named in the Summary
Compensation Table above.

AGGREGATED UNEXERCISED OPTIONS
AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY
ACQUIRED ON VALUE OPTIONS AT OPTIONS AT
EXERCISE REALIZED DECEMBER 31, 1995 DECEMBER 31, 1995(1)
----------- -------- ------------------------------- ---------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
--------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert M. Swartz . . --- --- -0- 500,000 -0- $5,250,000

Ronald I. Wagner . . --- --- 550,000 -0- 6,118,750 -0-
V. James Sardo . . . --- --- -0- -0- -0- -0-
Keith L. Abrams . . . --- --- 69,487 16,667 682,080 175,420
Robert E. Horton, Jr. 11,333 $113,330 -0- -0- -0- -0-
C. Curtis Everett . . --- --- 12,500 37,500 139,063 404,688
Daniel A. Grandon . . --- --- 8,333 41,667 92,704 438,545
</TABLE>

_________________

(1) The closing price for AMRE Common Stock as reported by the New York
Stock Exchange on December 29, 1995, (the last trading day in 1995)
was $14.625. Value is calculated on the basis of the difference
between the option exercise price of "in-the-money" options and
$14.625 multiplied by the number of shares of AMRE Common Stock
subject to the options.

99
<PAGE> 106
The following table sets forth information with respect to options
granted during 1995 to the executive officers named in the Summary Compensation
Table above. The table also shows the value of the options at the end of the
ten year option term if the stock price were to appreciate annually by 5% and
10%, respectively. There is no assurance that the stock price will appreciate
at those rates. The table also indicates that if the stock price does not
appreciate there will be no increase in the potential realizable value of the
options.

OPTIONS GRANTED IN 1995

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------- POTENTIAL REALIZABLE VALUE
PERCENT OF AT ASSUMED ANNUAL
NUMBER OF TOTAL OPTIONS RATES OF STOCK PRICE
UNDERLYING GRANTED TO APPRECIATION
SECURITIES EMPLOYEES FOR OPTION TERM(2)
OPTIONS IN EXERCISE EXPIRATION --------------------------
NAME GRANTED(1) 1995 PRICE DATE 0% 5% 10%
---- ---------- ------ ----- ---- ------------------- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Robert M. Swartz . . . . . . . . 500,000 73.89 4.125 06/1/05 -0- $1,297,000 $3,287,000
V. James Sardo . . . . . . . . . -0- --- --- --- --- --- ---
Ronald I. Wagner . . . . . . . . -0- --- --- --- --- --- ---
Keith L. Abrams . . . . . . . . . 10,000 1.48 4.50 10/11/05 -0- 28,000 72,000
Robert E. Horton, Jr. . . . . . . 16,000 2.36 4.50 10/11/05 -0- 45,000 115,000
C. Curtis Everett . . . . . . . . 12,500 1.85 4.50 10/11/05 -0- 35,000 90,000
Daniel A. Grandon . . . . . . . . 25,000 3.69 4.50 10/11/05 -0- 71,000 179,000
</TABLE>

_________________

(1) All options granted to the named officers, other than Mr. Swartz, were
granted on October 11, 1995, under the direction of the Stock Option
Plan Committee of the AMRE Board. The options granted to Mr. Swartz
were granted pursuant to the terms of his employment agreement and
become exercisable in cumulative annual increments of one-fourth
commencing on June 1, 1996. The options granted to Messrs. Abrams,
Horton, Everett and Grandon become exercisable in cumulative annual
increments of one-third commencing on October 11, 1996. All options
were granted with an exercise price equal to 100% of the market price
for AMRE Common Stock on the date of grant of such stock options and
are exercisable for a period of ten years from the date of grant.

(2) These amounts represent certain assumed rates of appreciation only.
Actual gains, if any, on stock option exercises and AMRE Common Stock
holdings are dependent on the future performance of the AMRE Common
Stock and overall stock market conditions. There can be no assurance
that the values reflected in this table will be achieved.

If the price of the AMRE Common Stock appreciates, the value of the
AMRE Common Stock held by stockholders of AMRE will also increase. For
example, the market value of the 14,127,457 outstanding shares of AMRE Common
Stock on March 12, 1996, was approximately $236,635,000 based upon the market
price on that date. If the price per share of AMRE Common Stock increases by
5% per year, the market value on March 12, 2001 of the same number of shares
would be approximately $385,453,000. If the price per share of AMRE Common
Stock increases by 10% per year, the market value on March 12, 2006 of the same
number of shares would be approximately $613,770,000.

COMPENSATION OF DIRECTORS

In 1995 each outside director received annual compensation of $20,000
plus an additional $2,000 for each AMRE Board meeting attended and for
attendance at other meetings, such as committee meetings,

100
<PAGE> 107
involving members of the AMRE Board which were held on a day when no AMRE Board
meeting was held. Cash compensation paid to outside directors for the fiscal
year ended December 31, 1995, amounted to an aggregate of $269,944. Directors
who are employees of AMRE are not compensated for attending meetings of the
AMRE Board.

EMPLOYMENT AGREEMENTS

AMRE had an employment agreement with Ronald I. Wagner for a term
ending May 31, 1997 (the "Wagner Employment Agreement"). The Wagner Employment
Agreement provided for a base salary at the rate of $500,000 per annum, and
contemplated annual increases. In addition, Mr. Wagner was eligible for an
annual cash bonus in an amount determined by the AMRE Board. The Wagner
Employment Agreement also provided for the payment to Mr. Wagner of an amount
equal to three times his highest aggregate annual salary and cash bonus
established during the term of the Wagner Employment Agreement in the event of
a termination by him of his employment for "good reason," which includes a
"change in control" of AMRE, as defined in the Wagner Employment Agreement. AMRE
and Ronald I. Wagner entered into the Wagner Separation Agreement on December
1, 1995, the date that Mr. Wagner announced that he was retiring as Chairman of
the AMRE Board. See "Recent Developments -- Resignation of Chairman."

Amre has an employment agreement with Robert M. Swartz for a term of
two years from any given date (the "Swartz Employment Agreement"). The Swartz
Employment Agreement provides for salary at the rate of $300,000 per annum. In
addition, Mr. Swartz is eligible for an annual cash bonus opportunity of at
least 100% of his annual salary. The Swartz Employment Agreement also provides
for a minimum bonus of $100,000 to be paid for the fiscal year ended December
31, 1995. Upon termination by Mr. Swartz of his employment for "good reason"
following a "change in control" of AMRE, as defined in the Swartz Employment
Agreement, such agreement provides for the payment to him of all accrued
vacation pay and an amount equal to 299% of his base salary in effect on the
date prior to the change of control plus an amount equal to 299% of any
additional payments to which he would have been entitled had he been terminated
by AMRE for other than "good cause" as defined in the Swartz Employment
Agreement. Such additional payments include a pro rata share (based upon the
portion of the year for which he was employed) of any bonus to which he would
have been entitled had he been employed as of the end of the then current
fiscal year.

Certain members of senior management of AMRE, including Messrs.
Abrams, Everett and Grandon, are participants in an Executive Severance Plan.
This plan provides for the payment of an amount equal to one year's
compensation to a participant if the employment of the participant is
terminated by AMRE without "cause" or by the participant due to an "adverse
change in conditions," as defined in the Executive Severance Plan. In addition,
any participant, without regard to length of service, will receive an amount
equal to two years compensation if the employment of the participant is
terminated by AMRE without "cause" or by the participant for "good reason"
following a "change in control," as defined in the Executive Severance Plan.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Sheldon I. Stein, a member of AMRE's Compensation Committee, is a
Senior Managing Director of Bear Stearns, an investment banking firm, and is
in charge of its Southwest Corporate Finance Department. During the fiscal year
ended December 31, 1995, AMRE paid fees to Bear Stearns in the amount of
$178,018. Such fees include $100,000 of the fees to be received by Bear
Stearns for rendering the Bear Stearns Opinion that the Merger is fair, from a
financial point of view, to the public stockholders of AMRE. See "Special
Factors -- Opinions of Financial Advisors."

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Commencing in October 1988, with its acquisition of Cabinet Magic,
Inc., AMRE began leasing certain of its facilities in Chicago, Illinois from
Ronald I. Wagner. This lease was for a term of 10 years expiring in 1998 and
provided for annual payments of approximately $165,000. Upon Mr. Wagner's
resignation as Chairman of the AMRE Board, Mr. Wagner and AMRE agreed to
terminate the original lease and enter into a new lease commencing January 1,
1996 for a term of ten years at an annual rent beginning at $180,000 for the
first two years.

AMRE made loans against the receipt of collateralized promissory notes
to certain executive officers of AMRE in fiscal 1990 and 1991, which loans are
due on April 30, 1997. As of January 1, 1993, new notes were issued in
modification of and substitution for the initially issued notes to increase the
principal amount by the amount of interest due for the year ended December 31,
1992. As of January 1, 1994, new notes were issued in modification of and
substitution for the January 1, 1993 notes to increase the principal amount by
the amount of interest due for the year ended December 31, 1993. As of April
30, 1994, new notes were issued in modification of and substitution for the
January 1, 1994 notes to increase the principal amount by the amount of
interest due for the four months ended April 30, 1994, and to decrease the
interest rate from 7% to 5.88% compounded annually. At January 1, 1995,
principal and accrued interest on the loans to Messrs. Wagner and Abrams
amounted to $3,895,922.30 and $486,990.31, respectively. Upon Mr. Wagner's
resignation as Chairman of the AMRE Board on December 1, 1995, AMRE and Mr.
Wagner entered into the Wagner Separation Agreement in which AMRE agreed, among
other things, to offset amounts owed to Mr. Wagner under the Wagner Employment
Agreement by releasing Mr. Wagner's payment obligation under the outstanding
promissory note payable, plus interest, in the amount of $4,101,824. Mr.
Abrams paid all principal and accrued interest on his promissory note on
February 2, 1996.

101
<PAGE> 108
Ronald L. Bliwas, a director of the Company and Vice Chairman of the
AMRE Board, is the President, Chief Executive Officer and a director of A.
Eicoff & Company, a direct advertising agency. AMRE has retained A. Eicoff &
Company for direct response television advertising since 1985. In this
capacity, A. Eicoff & Company has the responsibility for producing television
commercials and purchasing television air time for AMRE. Payments made by AMRE
to A. Eicoff & Company during the fiscal year ended December 31, 1995,
including reimbursement of payments for purchased television time and
development of television commercials for the Company by A. Eicoff & Company,
were approximately $5,933,000.

During the fiscal year ended December 31, 1995, AMRE paid fees in the
amount of $178,018 to Bear, Stearns & Co., Inc. an investment banking firm in
which Sheldon I. Stein, a director of AMRE, is a Senior Managing Director and
is in charge of its Southwest Corporate Finance Department.

David Moore was appointed as a director of AMRE on November 15, 1995.
As consideration for services provided by Mr. Moore in connection with the
negotiation of the Century 21 License Agreement and related transactions, AMRE
(i) issued options to purchase 200,000 shares of AMRE Common Stock at $5.00 per
share and options to purchase 200,000 shares of AMRE Common Stock at $5.50 per
share to Mr. Moore on October 17, 1995; (ii) issued 200,000 shares of AMRE
Common Stock to Mr. Moore on October 17, 1995; (iii) guaranteed a $900,000 cash
payment to Mr. Moore; (iv) granted a sublicense to a corporation controlled by
Mr. Moore to operate under the trademarks granted under the Century 21 License
Agreement and (v) sold to designees of Mr. Moore, Gregory Kiernan and Green
Street Partners, L.P., 38,000 shares and 162,000 shares, respectively, at a
price of $5.00 per share on February 16, 1996, and December 29, 1995,
respectively.

INDEPENDENT ACCOUNTANTS

Representatives of Arthur Andersen LLP, AMRE's independent
accountants, are expected to be present at the AMRE Special Meeting with the
opportunity to make a statement if they so desire. Such representatives are
also expected to be available to respond to appropriate questions.

Representatives of Grant Thornton LLP, Facelifters' independent
accountants, are expected to be present at the Facelifters Special Meeting with
the opportunity to make a statement if they so desire. Such representatives
are also expected to be available to respond to appropriate questions.

LEGAL MATTERS

The validity of the securities to be issued in connection with the
Merger will be passed upon for AMRE by Akin, Gump, Strauss, Hauer & Feld,
L.L.P., 1700 Pacific Avenue, Suite 4100, Dallas, Texas 75201.

EXPERTS

The consolidated financial statements of AMRE, Inc., incorporated by
reference in this Joint Proxy Statement/Prospectus, have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report with
respect thereto, and is incorporated herein by reference in reliance upon the
authority of said firm as experts in giving said report.

The consolidated annual financial statements of Facelifters Home
Systems, Inc. included in this Joint Proxy Statement/Prospectus have been
audited by Grant Thornton LLP, independent certified public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said report.

102
<PAGE> 109
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

FACELIFTERS HOME SYSTEMS, INC.

<TABLE>
<CAPTION>
Page
<S> <C>
Report of Independent Certified Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . F-2
Consolidated Balance Sheets as of March 31, 1994 and 1995 and
December 31, 1995 (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3
Consolidated Statements of Operations for the Years Ended
March 31, 1993, 1994 and 1995 and for the Nine Month Periods Ended
December 31, 1994 and 1995 (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-4
Consolidated Statement of Stockholders' Equity for the Years Ended March 31,
1993, 1994 and 1995 and for the Nine Month Period Ended December 31, 1995 (unaudited) . . . . . . F-5
Consolidated Statement of Cash Flows for the Years Ended March 31, 1993,
1994 and 1995 and for the Nine Month Periods Ended December 31, 1994 and 1995 (unaudited) . . . . F-6
Notes to Consolidated Financial Statements for the Years Ended March 31, 1993,
1994 and 1995 and for the Nine Month Periods Ended December 31, 1994 and 1995 (unaudited) . . . . F-7

AMRE, INC.

Unaudited Pro Forma Condensed Combined Balance Sheet as of
December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-23
Unaudited Pro Forma Condensed Combined Statements of
Operations for the Year Ended December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . F-25
Unaudited Pro Forma Condensed Combined Statements of
Operations for the Year Ended December 31, 1994 . . . . . . . . . . . . . . . . . . . . . . . . F-27
Unaudited Pro Forma Condensed Combined Statements of
Operations for the Year Ended December 31, 1993 . . . . . . . . . . . . . . . . . . . . . . . . F-29
Notes to Unaudited Pro Forma Condensed Combined Financial Statements . . . . . . . . . . . . . . . F-31
</TABLE>

F-1
<PAGE> 110

REPORT OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders
Facelifters Home Systems, Inc.

We have audited the accompanying consolidated balance sheets of Facelifters
Home Systems, Inc. and Subsidiaries as of March 31, 1995 and 1994, and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the three years in the period ended March 31, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Facelifters Home Systems, Inc. and Subsidiaries as of March 31, 1995 and 1994,
and the consolidated results of their operations and their consolidated cash
flows for each of the three years in the period ended March 31, 1995, in
conformity with generally accepted accounting principles.

As discussed in Note 7 to the consolidated financial statements, the Company
changed its method of accounting for lead acquisition costs for the year ended
March 31, 1995.

GRANT THORNTON LLP

Fort Lauderdale, Florida
June 16, 1995

F-2
<PAGE> 111
FACELIFTERS CONSOLIDATED FINANCIAL STATEMENTS

FACELIFTERS HOME SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
MARCH 31,
DECEMBER 31, -------------------------------
1995 1995 1994
------------ ----------- ------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
- ------
Current assets:
- --------------
Cash . . . . . . . . . . . . . . . . . . . . . . . . $ 2,211,703 $ 983,561 $ 556,960
U.S. Treasury Securities available for sale, at market
value which approximates cost (Note 1H) . . . . . . --- 737,842 ---
----------- ----------- ------------
Total cash and cash equivalents . . . . . . . . . . . 2,211,703 1,721,403 556,960
Marketable securities, at market value which
approximates cost in 1995 and lower of
cost or market in 1994 (1H) . . . . . . . . . . . . 1,039,251 819,685 475,556
Accounts receivable (net of allowances of $137,000,
$95,000 and $12,000 at December 31, 1995, March 31,
1995 and March 31, 1994, respectively) (Note 13) . . 2,873,609 2,481,769 1,079,791
Inventories (Notes 1B, 4 and 13) . . . . . . . . . . . 1,596,047 1,710,337 778,084
Prepaid expenses and other current
assets (Notes 1E and 15) . . . . . . . . . . . . . 964,218 977,006 1,565,887
----------- ----------- ------------
Total current assets . . . . . . . . . . . . . . . 8,684,828 7,710,200 4,456,278
Property and equipment, at cost - net of accumulated
depreciation and amortization (Notes 1C, 3, 6,
13 and 20) . . . . . . . . . . . . . . . . . . . . 3,391,401 3,163,399 2,522,596
Goodwill, net of accumulated amortization of $449,711,
$220,616 and $136,926 at December 31, 1995,
March 31, 1995 and March 31, 1994,
respectively (Notes 1F and 2) . . . . . . . . . . . 731,893 960,988 507,543
Other assets (Note 17) . . . . . . . . . . . . . . . . 237,394 731,386 405,333
----------- ----------- ------------
Total assets . . . . . . . . . . . . . . . . . . . . . $13,045,516 $12,565,973 $ 7,891,750
=========== =========== ============

LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
- -------------------
Notes payable (Note 13) . . . . . . . . . . . . . . . $ 1,471,342 $ 651,305 $ 103,129
Accounts payable . . . . . . . . . . . . . . . . . . . 1,778,480 1,776,366 1,076,716
Accrued expenses and other current
liabilities (Note 15) . . . . . . . . . . . . . . . 3,654,493 2,076,674 1,129,569
Customer deposits (Note 1D) . . . . . . . . . . . . . 529,513 984,076 1,052,185
Obligations under capital leases due within
one year (Note 6) . . . . . . . . . . . . . . . . . 99,230 45,090 62,176
Due to officers (Note 5) . . . . . . . . . . . . . . . --- --- 16,667
----------- ----------- ------------
Total current liabilities . . . . . . . . . . . . . . 7,533,058 5,533,511 3,440,442
----------- ----------- ------------
Noncurrent liabilities:
- ----------------------
Notes payable (Notes 13) . . . . . . . . . . . . . . . 752,030 1,387,048 765,062
Obligations under capital leases (Note 6) . . . . . . 319,146 58,050 101,412
Other liabilities . . . . . . . . . . . . . . . . . . 24,248 72,248 80,556
----------- ----------- ------------
Total noncurrent liabilities . . . . . . . . . . . . . 1,095,424 1,517,346 947,030
----------- ----------- ------------
Total liabilities . . . . . . . . . . . . . . . . . . 8,628,482 7,050,857 4,387,472
----------- ----------- ------------

Commitments and contingencies (Notes 9 and 14) --- --- ---

Stockholders' Equity
- --------------------
Preferred stock, $.01 par value; authorized - 1,000,000
shares; issued and outstanding - none . . . . . . . --- --- ---
Common stock, $.01 par value; authorized - 20,000,000
shares; issued and outstanding - 3,398,548 and
3,366,583 and 2,560,885 shares at December 31, 1995,
March 31, 1995 and March 31, 1994, respectively . . 33,985 33,666 25,609
Additional paid-in capital (Note 18) . . . . . . . . . 8,815,094 8,758,163 6,308,793
Accumulated deficit . . . . . . . . . . . . . . . . . (4,432,045) (3,276,713) (2,830,124)
------------ ------------ ------------
Total stockholders' equity . . . . . . . . . . . . . . 4,417,034 5,515,116 3,504,278
----------- ----------- ------------
Total liabilities and stockholders' equity . . . . . . $13,045,516 $12,565,973 $ 7,891,750
=========== =========== ============
</TABLE>

The accompanying notes are an integral part of the
consolidated financial statements.

F-3
<PAGE> 112
FACELIFTERS HOME SYSTEMS, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
(unaudited)
Nine-month period ended For the Years Ended,
December 31, March 31,
--------------------------- --------------------------------
1995 1994 1995 1994 1993
----------- -------- -------- ------- -----
<S> <C> <C> <C> <C> <C>
Continuing Operations:
- ---------------------
Net sales . . . . . . . . . . . . . . . . . . . 39,085,328 $28,098,268 38,764,667 $26,358,187 20,261,267

Costs and expenses:
Cost of sales . . . . . . . . . . . . . . . 15,181,992 10,533,147 14,837,729 9,855,821 8,305,371
Provision for plant closing (Note 20) . . . 1,065,340 --- --- --- ---
Merger and other non-recurring costs
(Note 19) . . . . . . . . . . . . . . . . . 800,000 --- --- --- ---
Marketing & selling (Notes 1E and 7) . . . . 13,117,452 11,002,589 14,838,470 8,903,808 6,834,155
License fees (Note 14) . . . . . . . . . . . 3,995,620 3,044,829 4,199,780 2,868,349 1,878,215
General and administrative . . . . . . . . . 6,017,794 3,773,135 5,297,998 3,731,448 3,041,490
Interest . . . . . . . . . . . . . . . . . . 160,714 85,295 138,418 60,938 41,433
---------- ----------- ---------- ----------- ----------
40,338,912 28,438,995 39,312,395 25,420,364 20,100,664
---------- ----------- ---------- ----------- ----------

Net sales less costs and expenses . . . . . . . (1,253,584) (340,727) (547,728) 937,823 160,603

Interest and other income . . . . . . . . . . . 222,211 166,213 211,077 177,995 61,813
---------- ----------- ---------- ----------- ----------

Income (Loss) from continuing operations
before provision for income taxes . . . . . (1,031,373) (174,514) (336,651) 1,115,818 222,416
Provision for income taxes . . . . . . . . . . 73,000 74,800 76,500 67,500 75,700
---------- ----------- ---------- ----------- ----------

Income (Loss) from continuing operations . . . (1,104,373) $ (249,314) $(413,151) $ 1,048,318 $ 146,716
----------- ----------- ---------- ----------- ----------
Discontinued operations:
- -----------------------
Income from tabletop division, less
applicable income tax provision . . . . . . --- --- --- --- 76,100
Gain on disposal of tabletop division,
less $58,500 provision for income taxes . . --- --- --- --- 113,609
---------- ----------- ---------- ----------- ----------
Net income from discontinued operations . . . . --- --- --- --- 189,709
---------- ----------- ---------- ----------- ----------

Extraordinary item (Note 8):
- ---------------------------
Tax benefit from loss-carryforward . . . . . . --- --- --- --- 159,400
---------- ----------- ---------- ----------- ----------

Net income (loss) . . . . . . . . . . . . . . . (1,104,373) $ (249,314) $ (413,151) $ 1,048,318 $ 495,825
=========== =========== ========== =========== ==========

Income (loss) per share of common and common
- --------------------------------------------
equivalent stock (Note 10)
--------------------------
From continuing operations . . . . . . . . . $ (0.33) $ (0.08) $ (0.13) $ 0.31 $ 0.06
From discontinued operations . . . . . . . . --- --- --- --- 0.07
From extraordinary item . . . . . . . . . . --- --- --- --- 0.06
---------- ----------- ---------- ----------- ----------

Net income (loss) per share of common
and common equivalent stock . . . . . . . . $ (0.33) $ (0.08) $ (0.13) $ 0.31 $ 0.19
=========== =========== ========== =========== ==========

Weighted average shares outstanding . . . . . . 3,390,815 3,117,286 3,177,247 4,160,706 4,039,618
</TABLE>

The accompanying notes are an integral part of the
consolidated financial statements.

F-4
<PAGE> 113
FACELIFTERS HOME SYSTEMS, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
Common Stock Treasury Stock
------------------ Additional ----------------------------------
Shares Paid-In Accumulated Shares
(000) Amount Capital Deficit (000) Amount Total
------- ------- ---------- ----------- ------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance - March 31, 1992 . . 2,531 $25,315 $6,126,110 (4,374,267) 108 $ (22,915) $ 1,754,243

ISO options exercised . . --- --- 7,560 --- (12) 120 7,680
Treasury shares issued for
professional services . --- --- 4,160 --- (4) 40 4,200
Net income . . . . . . . . --- --- --- 495,825 --- --- 495,825
------- ------- ---------- ---------- ------- --------- -----------

Balance - March 31, 1993 . . 2,531 25,315 6,137,830 (3,878,442) 92 (22,755) 2,261,948

Warrants exercised . . . . 30 294 120,937 --- --- --- 121,231
ISO options exercised . . --- --- 28,276 --- (80) 22,630 50,906
Treasury shares issued for
compensation . . . . . . --- --- 21,750 --- (12) 125 21,875
Net income . . . . . . . . --- --- --- 1,048,318 --- --- 1,048,318
------- ------- ---------- ---------- ------- --------- -----------

Balance - March 31, 1994 . . 2,561 25,609 6,308,793 (2,830,124) --- --- 3,504,278

Warrants exercised or
retired . . . . . . . . 543 5,431 2,207,472 --- --- --- 2,212,903
ISO options exercised . . 262 2,626 241,898 --- --- --- 244,524
Net loss . . . . . . . . . --- --- --- (413,151) --- --- (413,151)
Cash dividends paid . . . --- --- --- (33,438) --- --- (33,438)
------- ------- ---------- ---------- ------- --------- -----------

Balance - March 31, 1995 . . 3,366 33,666 8,758,163 (3,276,713) --- --- 5,515,116

ISO options exercised
(unaudited) . . . . . . 32 319 56,931 --- --- --- 57,250
Net loss (unaudited) . . --- --- --- (1,104,373) --- --- (1,104,373)
Cash dividends paid
(unaudited) . . . . . . . --- --- --- (50,959) --- --- (50,959)
------- ------- ---------- ---------- ------- --------- -----------

Balance - December 31, 1995
(unaudited) . . . . . . . 3,398 $33,985 $8,815,094 (4,432,045) --- $ --- $ 4,417,034
======= ======= ========== =========== ======= ========= ===========
</TABLE>

The accompanying notes are an integral part of the
consolidated financial statements.

F-5
<PAGE> 114
FACELIFTERS HOME SYSTEMS, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine month period ended
December 31, For the Years Ended March 31,
------------------------- -------------------------------------
1995 1994 1995 1994 1993
----------- --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
- ------------------------------------
Net income (loss) . . . . . . . . . . . . . . . . $(1,104,373) $ (249,314) $ (413,151) $ 1,048,318 $ 495,825

Less gain on sale of Tabletop Division . . . . . --- --- --- --- (166,987)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization of fixed assets 475,998 194,587 463,799 299,572 226,600
Amortization of intangibles . . . . . . . . . 261,595 79,037 110,357 89,467 77,233
Discount accretion . . . . . . . . . . . . . . --- (3,324) (1,547) (2,809) (4,327)
Straight line accrued rent . . . . . . . . . . (56,000) (6,000) (8,000) (8,000) (8,000)
Leaseholds abandoned . . . . . . . . . . . . . 437,461 --- 9,896 --- 2,500
Compensation paid in treasury stock . . . . . --- --- --- 21,875 ---
Loss on sale of securities . . . . . . . . . . --- --- --- 47,073 ---
Provision for plant closing . . . . . . . . . 146,209 --- --- --- ---
Changes in assets and liabilities
Increase in accounts receivable . . . . . . . (391,840) (1,647,072) (1,392,978) (324,018) (139,166)
Decrease (increase) in inventories . . . . . . 114,290 (785,880) (916,253) (93,400) (39,814)
Decrease (increase) in prepaid expenses and other
current assets . . . . . . . . . . . . . . . 12,788 561,464 588,881 (236,841) (143,983)
Decrease (increase) in other assets . . . . . 461,492 26,860 (326,053) 28,079 8,460
Decrease in due from officers . . . . . . . . . --- --- --- --- 45,868
Increase in accounts payable . . . . . . . . . 2,114 586,618 699,650 34,839 176,883
Increase in accrued expenses and other
current liabilities . . . . . . . . . . . . 1,569,611 427,226 934,322 141,649 362,098
Decrease in customer deposits . . . . . . . . (454,563) (213,226) (68,109) (20,684) (154,200)
Decrease in other liabilities . . . . . . . . --- (308) (308) (419) (9,071)
----------- --------- ---------- --------- ---------
Cash provided by (used in) operating
activities . . . . . . . . . . . . . . . . 1,474,782 (1,029,332) (319,494) 1,024,701 729,919
----------- --------- ---------- --------- ---------
Cash flows from investing activities:
- ------------------------------------
Net acquisition expenditures . . . . . . . . . . --- (604,255) (604,255) --- (205,172)
Purchase of U.S. Treasury securities and marketable
equity securities . . . . . . . . . . . . . . (219,566) (2,343,026) (1,642,301) (1,580,274) (353,402)
Sale or redemption of U.S. Treasury securities . --- 1,298,172 1,299,719 1,235,377 927,237
Purchase of depreciable assets . . . . . . . . . (839,709) (471,790) (1,086,262) (836,314) (180,595)
Sale of equipment . . . . . . . . . . . . . . . . --- --- --- --- 4,277
Sale of Tabletop Division . . . . . . . . . . . . --- --- --- --- 52,667
Collection of note receivable . . . . . . . . . . 30,010 35,867 48,307 41,021 ---
Collection of loans to officers . . . . . . . . . --- --- --- 2,853 ---
----------- --------- ---------- --------- ---------
Cash (used in) provided by investing
activities . . . . . . . . . . . . . . . . . (1,059,275) (2,120,899) (2,033,099) (1,178,358) 245,012
----------- --------- ---------- --------- ---------
Cash flows from financing activities:
- ------------------------------------
Bank loans . . . . . . . . . . . . . . . . . . . 540,000 1,092,800 --- --- ---
Cash dividends paid . . . . . . . . . . . . . . . (50,959) (16,667) (33,438) --- ---
Net proceeds from warrants exercised or redeemed --- 2,212,903 2,212,903 6,947 ---
Stock options exercised . . . . . . . . . . . . . 57,250 211,899 244,524 50,906 11,880
Proceeds from notes payable . . . . . . . . . . . --- --- 1,615,502 --- ---
Repayment of notes due to officers . . . . . . . --- (16,667) (16,667) (79,781) (169,711)
Repayment of capital leases . . . . . . . . . . . (66,517) (44,770) (60,448) (56,512) (91,677)
Repayment of notes payable . . . . . . . . . . . (404,981) (390,714) (445,340) (72,000) (125,789)
----------- --------- ---------- --------- ---------
Cash (used in) provided by financing
activities . . . . . . . . . . . . . . . . . 74,793 3,048,784 3,517,036 (150,440) (375,297)
----------- --------- ---------- --------- ---------

Net increase (decrease) in cash and cash
equivalents . . . . . . . . . . . . . . . . . . 490,300 (101,447) 1,164,443 (304,097) 599,634
Cash and cash equivalents - beginning of period . 1,721,403 556,960 556,960 861,057 261,423
----------- --------- ---------- --------- ---------
Cash and cash equivalents - end of period . . . . $ 2,211,703 $ 455,513 $1,721,403 $ 556,960 $ 861,057
=========== ========= ========== ========= =========

Supplemental information:
- ------------------------
Interest paid . . . . . . . . . . . . . . . . $ 160,714 $ 85,295 $ 138,653 $ 60,938 $ 42,864
=========== ========= ========== ========= =========
Income taxes paid . . . . . . . . . . . . . . $ 83,556 $ --- $ 54,866 $ 4,258 $ ---
=========== ========= ========== ========= =========
</TABLE>

SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

Facelifters entered into capital leases on equipment for $381,753 during the
nine months ended December 31, 1995 and $246,035 in 1993.

Facelifters issued a note for $216,000 in connection with its 1993 acquisition
and accepted a $265,000 note in connection with the sale of its Tabletop
Division.

Facelifters acquired land and building in 1994 and financed $796,191 of the
purchase price with the seller.

The accompanying notes are an integral part of the
consolidated financial statements.

F-6
<PAGE> 115
FACELIFTERS HOME SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995, 1994, AND 1993, AND NINE MONTHS ENDED DECEMBER 31, 1995 AND 1994
(INFORMATION WITH RESPECT TO THE NINE MONTHS ENDED
DECEMBER 31, 1995 AND 1994 IS UNAUDITED)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The consolidated balance sheet of Facelifters Home Systems, Inc. and
Subsidiaries ("Facelifters") as of December 31, 1995, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the nine month periods ended December 31, 1995 and 1994 are unaudited.
However, in the opinion of management, all adjustments (consisting only of
normal recurring accruals) necessary for a fair presentation of consolidated
financial position, results of operations, and consolidated cash flows for the
unaudited periods have been made.

A. Description of business and principles of consolidation

The consolidated financial statements include the accounts of
Facelifters and its subsidiaries. All significant intercompany accounts and
transactions have been eliminated. Operating results for the nine-month period
ended December 31, 1995 are not necessarily indicative of the results which may
be expected for the year ended March 31, 1996.

Facelifters' Retail Division sells and installs kitchen remodeling
products to consumers in various geographic areas throughout the United States,
primarily in the East, with a number of locations in the South and Southwest.
Facelifters' Wholesale Division sells kitchen remodeling products to
independent home improvement contractors located outside of its own retail
market areas.

B. Inventories

Inventories are stated at the lower of cost or market using the
first-in, first-out method.

C. Depreciation and amortization

Depreciable assets are recorded at cost. Depreciation is provided over
useful lives of such assets using the straight-line method. Amortization of
leasehold improvements is provided using the straight-line method, over the
shorter of the term of the lease or its useful life.

Maintenance and repairs are expensed as incurred. Major renewals and
betterments are capitalized.

D. Recognition of revenue

Wholesale sales are recognized upon shipment of goods from
Facelifters' plant, with no provision for returns since selling terms prohibit
returned merchandise. For its retail operations, Facelifters recognizes revenue
on the completed contract method.

Progress payments received from customers are recorded as a liability
under "Customer Deposits" until the contracts are completed.

E. Lead acquisition costs and advertising expenses

Facelifters uses direct-response oriented media advertising, including
television, direct mail and telemarketing to identify homeowners interested in
its kitchen remodeling products and services in order to produce sales in its
Retail Division. Historically, since "sales" thus derived will not become
recorded revenues until all contracted work is completed, such lead acquisition
costs were assigned to contracts obtained and

F-7
<PAGE> 116
FACELIFTERS HOME SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995, 1994, AND 1993, AND NINE MONTHS ENDED DECEMBER 31, 1995 AND 1994
(INFORMATION WITH RESPECT TO THE NINE MONTHS ENDED
DECEMBER 31, 1995 AND 1994 IS UNAUDITED)

charged to expense in the period that revenue from those contracts was
recognized, which generally occurred within a six- to twelve-week period.
Accordingly, lead acquisition costs were capitalized when incurred and expense
recognition was deferred until the period of associated contract completion.
The American Institute of Certified Public Accountants issued Statement of
Position 93-7 ("SOP 93-7"), "Reporting on Advertising Costs," which is
effective for fiscal years beginning after June 15, 1994, with earlier
application encouraged. SOP 93-7 requires that Facelifters's lead acquisition
costs be expensed as they are incurred. Facelifters elected early adoption of
SOP 93-7 as of the beginning of the fiscal year ended March 31, 1995. In
connection therewith, all capitalized lead acquisition costs were expensed with
the implementation of SOP 93-7, and such lead acquisition costs will be
expensed as they are incurred in the future.

For the fiscal year ended March 31, 1995 and the nine months ended
December 31, 1995 and 1994, advertising expenses, including lead acquisition
costs, were expensed as incurred. For the fiscal years ended March 31, 1994
and 1993, advertising expenses including lead acquisition costs, were
capitalized with the expense deferred until the period of associated contract
completion. Lead acquisition costs and advertising expenses for the nine
months ended December 31, 1995 and 1994 and for the fiscal years ended March
31, 1995, 1994 and 1993, were $7,374,312 and $7,614,524 and $10,063,506,
$5,109,308 and $3,728,659, respectively.

F. Goodwill

Goodwill results from corporate acquisitions accounted for using the
purchase method of accounting and includes the excess of cost over the fair
market value of the net assets of the acquired businesses. As of December 31,
1995 and March 31, 1995, substantially all goodwill is being amortized over
periods of up to ten years. On an ongoing basis, management reviews the
valuation and amortization of goodwill. As part of this review, Facelifters
considers both the current and future levels of net income generated by the
related subsidiaries and the continuing value of intangible assets acquired to
determine whether impairment has occurred. Any write-downs of goodwill due to
impairment are charged to operations at the time that impairment is identified
by management.

During the quarter ended December 31, 1995 management decided to phase
out the Woodlor line of cabinet fronts. A write-down of approximately $155,000
was taken for the goodwill associated with the original acquisition of the
exclusive distribution rights for the Woodlor line of cabinet fronts.

The Financial Accounting Standards Board has recently issued SFAS
121, "Accounting for the Impairment of Long- Lived Assets and for Long-Lived
Assets to Be Disposed Of." SFAS 121 establishes guidance for when to recognize
and how to measure impairment losses of long-lived assets and certain
identifiable intangible assets, such as goodwill. The statement is effective
for fiscal years beginning after December 15, 1995. Facelifters does not
expect the implementation of SFAS 121 to have a material effect on Facelifters'
financial position or results of operations.

G. Cash Equivalents

For purposes of the statement of cash flows, Facelifters considers all
highly liquid debt instruments purchased with an original maturity of 90 days
or less to be cash equivalents.

H. Marketable Equity Securities and U.S. Treasury Securities Available for
Sale.

In accordance with Statement of Financial Accounting Standards No. 115
("SFAS 115") "Accounting for Certain Investments in Debt and Equity
Securities", marketable equity securities and U.S. Treasury securities
available for sale are carried at fair value (market value), inclusive of
unrealized gains and/or losses,

F-8
<PAGE> 117
FACELIFTERS HOME SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995, 1994, AND 1993, AND NINE MONTHS ENDED DECEMBER 31, 1995 AND 1994
(INFORMATION WITH RESPECT TO THE NINE MONTHS ENDED
DECEMBER 31, 1995 AND 1994 IS UNAUDITED)

and net of discount accretion and premium amortization computed using the level
yield method. Any net unrealized gains and losses will be reflected as a
separate component to stockholders' equity, net of applicable deferred taxes.
Gains and losses on the sale of securities are recognized using the specific
identification method.

Securities are designated for the available for sale portfolio at the
time of purchase.

Prior to Facelifters' adoption of SFAS 115, effective April 1, 1994,
marketable equity securities were carried at the lower of cost or market value,
determined in the aggregate. Any net unrealized losses would have been
recognized in a valuation allowance and a corresponding separate component to
stockholders' equity.

I. Reclassifications

Certain balances in the fiscal year 1993, 1994, and 1995 and nine
months ended December 31, 1994 consolidated financial statements have been
reclassified to conform with the nine months ended December 31, 1995
presentation.

NOTE 2 - ACQUISITIONS AND DIVESTITURE:

Effective April 1, 1992, Facelifters purchased substantially all of
the assets of Saduco Industries, Inc. for a $338,172 note payable, of which
$72,000 and $144,000 was unpaid at March 31, 1994 and 1993, respectively. The
note was paid in full during the 1995 fiscal year. Saduco Industries was an
exclusive distributor of Woodlor brand cabinet doors and drawer fronts
manufactured by Jasper Plastics, a division of Kimball International. Assets,
principally inventories, totaling $39,952 were acquired. Of the excess costs,
$50,000 represents a non-compete agreement which was being amortized over its
five-year life and $248,220 represents goodwill under the purchase method which
was being amortized over ten years. Since this was an acquisition of a supplier
of materials to Facelifters, it was integrated into the operations of
Facelifters without retaining any separate identity. During the quarter ended
December 31, 1995, Facelifters determined to discontinue and phase out the
Woodlor brand product line. Accordingly, Facelifters incurred approximately
$240,000 in expenses relating to the discontinuance of the Woodlor brand
product line in the quarter ended December 31, 1995, representing $85,000 of
inventory obsolescence reserves and $155,000 to write-off the goodwill and the
non-compete agreement associated with the Saduco Industries acquisition.

On March 31, 1993, Facelifters sold its Tabletop Division to FCD
Tabletops, Inc. for $412,783 which included a $265,000 five year note
receivable due in equal monthly installments. The sale included the existing
customer base, distribution network, machinery and inventories attributable to
this segment of Facelifters business, but excluded existing accounts
receivables. After deducting $150,680 book value of assets sold and related
selling expenses, a nonrecurring pretax gain of $166,987 was recorded from the
sale. Another $10,000 representing a one-year consulting contract was deferred
and taken into income over the 12 months ended March 31, 1994. The contract of
sale also provides for possible future revenues to Facelifters equal to 10% of
those annual sales through March 31, 1998 which exceed an agreed base amount
determined by historical sales levels and future anticipated growth. No such
amounts were due to Facelifters at March 31, 1995. The principal balance due on
the note receivable was $145,663, $175,262 and $223,979 at December 31, 1995,
March 31, 1995 and March 31, 1994, respectively.

F-9
<PAGE> 118
FACELIFTERS HOME SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995, 1994, AND 1993, AND NINE MONTHS ENDED DECEMBER 31, 1995 AND 1994
(INFORMATION WITH RESPECT TO THE NINE MONTHS ENDED
DECEMBER 31, 1995 AND 1994 IS UNAUDITED)

FCD Tabletops, Inc. sub-leased office and production space and
certain services, within Facelifters' Brooklyn plant for 12 months at $9,387
per month. This lease was not renewed at March 31, 1994.

Effective September 2, 1994, Facelifters purchased substantially all
of the assets of Cabinet Masters of Southern California, Inc. and placed them
in a separate wholly-owned subsidiary, Facelifters West, Inc. CMSC had been in
the kitchen cabinet refacing business in southern California since 1977. The
total cost of the acquisition was approximately $604,000 of which approximately
$67,000 was assigned to specific tangible assets. The remaining goodwill of
approximately $537,000 is being amortized over its estimated economic life of
10 years.

Prior to the acquisition, CMSC had begun to sell, furnish and install
kitchen cabinet refacing in southern California for HomeBase, a chain of home
improvement warehouses in that market. A license agreement required a fee to
be paid on all sales made to customers generated through HomeBase stores or
obtained through marketing under the HomeBase name. In January, 1995,
Facelifters determined that it was not in its best interests to continue the
license arrangement with HomeBase and gave notice to terminate the license
effective March 1, 1995. Facelifters continues to operate in this region under
the Facelifters name.

NOTE 3 - PROPERTY AND EQUIPMENT:

<TABLE>
<CAPTION>
(unaudited)
December 31, March 31,
-------------- ---------------------------- Estimated
1995 1995 1994 Life in Years
-------------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
Property and equipment at cost
Land . . . . . . . . . . . . . . . . $ 50,000 $ 50,000 $ 50,000 ---
Buildings . . . . . . . . . . . . . . 1,345,365 1,082,012 892,758 39
Machinery and equipment . . . . . . . 1,432,053 1,229,542 803,521 5
Furniture and office equipment . . . . 2,091,498 1,589,034 1,226,899 3-10
Leasehold improvements . . . . . . . . 26,199 991,574 1,000,035 3-15
Vehicles . . . . . . . . . . . . . . . 140,744 149,005 141,196 3-5
-------------- ------------ ------------
5,085,859 5,091,167 4,114,409
Less:
Accumulated depreciation
and amortization . . . . . . . . . 1,549,458 1,927,768 1,591,813
Reserve for abandonment . . . . . . 145,000 --- ---
-------------- ------------ ------------
$ 3,391,401 $ 3,163,399 $ 2,522,596
============== ============ ============
</TABLE>

Depreciation and amortization expense of $463,799, $299,572 and
$226,600 was recorded for the years ended March 31, 1995, 1994 and 1993,
respectively, and $475,998 and $194,587 for the nine months ended December
31, 1995 and 1994, respectively.

F-10
<PAGE> 119
FACELIFTERS HOME SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995, 1994, AND 1993, AND NINE MONTHS ENDED DECEMBER 31, 1995 AND 1994
(INFORMATION WITH RESPECT TO THE NINE MONTHS ENDED
DECEMBER 31, 1995 AND 1994 IS UNAUDITED)

NOTE 4 - INVENTORIES:

Inventories at December 31, 1995, March 31, 1995, and March 31, 1994
are summarized as follows:

<TABLE>
<CAPTION>
(Unaudited)
December 31, March 31,
------------ ---------------------------
1995 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Raw materials . . . . . . . . . . . . . . . . . . 739,817 924,631 486,548
Work in progress . . . . . . . . . . . . . . . . 802,001 729,334 251,694
Finished goods . . . . . . . . . . . . . . . . . 54,229 56,372 39,842
------------- ------------ -----------
$ 1,596,047 $ 1,710,337 $ 778,084
============= ============ ===========
</TABLE>

NOTE 5 - RELATED PARTY TRANSACTIONS:

The following summarizes transactions between Facelifters and its
executive officers:

A. Facelifters leases its Brooklyn, New York facility from the
Chief Executive Officer and Chairman of the Board Mark Honigsfeld, under a
15-year lease executed April 1, 1987. The lease currently provides for a base
monthly rental of $20,480 with an escalation for any month in which the prime
lending rate exceeds 9 1/2%. Beginning April 1, 1995, the base rent is subject
to a 2% increase. Facelifters had also agreed to pay $4,493 per month through
June 30, 1994 to Mr. Honigsfeld for certain leasehold improvements he provided.

Facelifters has initiated a plan to phase-out its manufacturing
operations at the Brooklyn facility now that its new Virginia plant is equipped
and staffed to accommodate the expanded capacity. In connection with the
phase out of its manufacturing operations at the Brooklyn facility, Facelifters
and Mr. Honigsfeld have reached an agreement in principle pursuant to which
Facelifters paid Mr. Honigsfeld $525,000 to terminate the Brooklyn facility
lease in lieu of Facelifters making the remaining payments due under the lease
after April 1, 1996, which total approximately $1,580,000.
See Note 20 for additional information relative to the closing of the Brooklyn
plant.

To provide for an orderly transition of its phase-out plan,
Facelifters executed a new one-year lease with Mr. Honigsfeld,
commencing with Facelifters' new fiscal year beginning April 1, 1996, with
rents of $18,000 per month for six months and $7,500 per month for the final
six months.

B. At the beginning of fiscal year 1992, Facelifters was indebted
to Mr. Honigsfeld for $360,221. During that year, he advanced Facelifters an
additional $84,036 and Facelifters repaid him $322,107 which included $200,000
from the proceeds of the August 1991 additional public offering. At March 31,
1992, Mr. Honigsfeld held a note from Facelifters dated August 14, 1991 in the
original principal amount of $200,000 payable approximately $5,555 per month
for 36 months plus interest at 2% over prime, with an unpaid principal balance
of $161,111.

During fiscal years 1995, 1994, and 1993, there were no new advances
to Facelifters by Mr. Honigsfeld and at March 31, 1995, his note was paid in
full. The note was collateralized by a blanket security interest in all of the
parent corporation's otherwise unencumbered assets.

F-11
<PAGE> 120
FACELIFTERS HOME SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995, 1994, AND 1993, AND NINE MONTHS ENDED DECEMBER 31, 1995 AND 1994
(INFORMATION WITH RESPECT TO THE NINE MONTHS ENDED
DECEMBER 31, 1995 AND 1994 IS UNAUDITED)

NOTE 6 - OBLIGATIONS UNDER CAPITAL LEASES AND INSTALLMENT DEBT:

At December 31, 1995, March 31, 1995 and March 31, 1994, obligations
under capital leases consisted of capitalized leases for machinery and
equipment and furniture, office and computer equipment due to various lenders,
payable in equal monthly installments aggregating $11,484, $6,937 and $6,940
respectively, including interest, ranging from 9% to 19% per annum. The leases
generally contain a bargain purchase option payable at the end of the lease.
The leases mature at various dates between January, 1996 and August, 2001, and
are collateralized by assets under leases having a net book value of $424,815,
$123,014 and $172,220 at December 31, 1995, March 31, 1995 and March 31, 1994,
respectively.

Future minimum lease payments under the capital leases, together with
the present value of the net minimum lease payments at December 31, 1995 and
March 31, 1995, are as follows:

<TABLE>
<CAPTION>
December 31, 1995 March 31, 1995
(unaudited)
<S> <C> <C>
FY 1996 $ 34,451 56,631
FY 1997 137,806 41,321
FY 1998 116,631 23,590
FY 1999 96,484 --
FY 2000-2001 128,827 --
----------- ----------
Total minimum lease payments 514,199 121,542
Less: amount representing interest (95,823) (18,402)
----------- ----------
Present value of minimum lease payments 418,376 103,140
Less: current portion (99,230) (45,090)
----------- ----------
Noncurrent portion $ 319,146 $ 58,050
=========== ==========
</TABLE>

Depreciation of $78,235 and $36,905 and $49,206, $49,206 and
$64,462 was recognized on the assets securing capital leases during the nine
months ended December 31, 1995 and 1994 and the years ended March 31, 1995,
1994 and 1993, respectively.

NOTE 7 - MARKETING AND SELLING COSTS

The major portion of marketing and selling costs relate to those
marketing activities undertaken to acquire new retail contracts. For the years
ended March 31, 1994 and 1993, these lead acquisition costs were deferred and
not expensed until the related contracts were completed and recorded as
revenue.

For the year ended March 31, 1995, Facelifters adopted the American
Institute of Certified Public Accountants "Statement of Position" 93-7 which
relates to accounting for advertising. Adoption of this SOP requires that
Facelifters' lead acquisition costs be expensed as incurred. As a result,
$1,851,712 (the acquisition costs of the backlog of contracts held but not yet
complete at March 31, 1995) was recorded as additional marketing expense in
1995. The change in accounting had the effect of reducing net income for the
year ended March 31, 1995 and the nine months ended December 31, 1994 by
$1,851,712 or $0.54 per share and $1,682,081 or $0.49 per share,
respectively.

NOTE 8 - INCOME TAXES:

Effective April 1, 1993, Facelifters adopted the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("SFAS No. 109"). SFAS No. 109 requires recognition of deferred tax
assets and liabilities for the expected future tax consequences of events that
have been included in the financial statements or tax returns. Under this
method, deferred tax assets and liabilities are determined based on the
temporary difference between the financial statement and tax basis of assets
and liabilities using

F-12
<PAGE> 121
FACELIFTERS HOME SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995, 1994, AND 1993, AND NINE MONTHS ENDED DECEMBER 31, 1995 AND 1994
(INFORMATION WITH RESPECT TO THE NINE MONTHS ENDED
DECEMBER 31, 1995 AND 1994 IS UNAUDITED)

enacted tax rates in effect for the year in which the differences are expected
to reverse. The adoption of SFAS No. 109 had no material impact on the
consolidated financial statements.

For years ended prior to March 31, 1994, Facelifters accounted for
income taxes in accordance with Accounting Principles Board Opinion No. 11.
Facelifters provided for income taxes on transactions in the period they
entered into the determination of net income irrespective of when they were
recognized for income tax purposes. In the statement of operations, applicable
income taxes were deducted from operating income; any tax benefit resulting
from a net operating loss carryforward was shown as an extraordinary item in
the period in which it was realized.

As of December 31, 1995 and March 31, 1995, Facelifters has a
net operating loss carryforward of approximately $3,470,000 and $2,700,000,
respectively, for income tax purposes. Such net loss carryforwards expire in
various years through the year 2007. Facelifters' issuance of stock and
warrants in August, 1991 resulted in a change in ownership as defined in
Section 382 of the Internal Revenue Code. Accordingly, Facelifters' ability to
utilize approximately $2,136,000 of the loss carryforward is subject to an
estimated annual limitation of $400,000. Facelifters also has unused job
credits of approximately $31,000.

Since all Federal income taxes which would otherwise apply to
Facelifters' net income for the periods included in the Statements of
Operations are offset by available net operating loss carryforwards, the only
tax expense recognized in the operating statements for those periods relates to
state and local income taxes in those jurisdictions where no net operating loss
carryforwards exist or where such carryforwards do not completely offset the
tax liability.

The components of the net deferred tax asset (liability) at December
31, 1995 and March 31, 1995 and 1994 were:

<TABLE>
<CAPTION>
December 31,1995
(unaudited) March 31, 1995 March 31, 1994
---------------- -------------- --------------
<S> <C> <C> <C>
Loss carryforwards $1,214,000 $ 921,000 $1,207,000
Tax credit carryforwards 31,000 31,000 31,000
Deferred inventory reserve 45,000 22,000 27,200
Deferred goodwill amortization 54,000 47,000 --
Other deferred expenses 211,000 20,000 (324,533)
---------- ---------- ----------
Net total 1,555,000 1,041,000 940,667
Less valuation allowance (1,555,000) (1,041,000) (940,667)
---------- ---------- ----------
Net deferred tax asset (liability) $ --- $ --- $ ---
========== ========== ==========
</TABLE>

SFAS No. 109 requires a valuation allowance against the net deferred
tax assets if, based on the weight of available evidence, it is more likely
than not that some or all of the net deferred tax assets may not be realized.
The valuation allowances at December 31, 1995 and March 31, 1995 and 1994
primarily pertain to uncertainties with respect to future utilization of net
operating loss carryforwards. The valuation allowances for net deferred tax
assets increased by approximately $514,000 for the nine months ended December
31, 1995 and $100,000 for the year ended March 31, 1995.

NOTE 9 - COMMITMENTS AND CONTINGENCIES:

A. Employment agreements

As of October 1, 1993 Facelifters entered into employment agreements
(the "1993 Employment Agreements") with Facelifters' two key executive officers
which are in effect for a period of three years from the date of execution, and
are automatically extended one additional year upon the anniversary date so
that the unexpired term of the agreements as of the anniversary date shall
always be three years unless either party

F-13
<PAGE> 122
FACELIFTERS HOME SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995, 1994, AND 1993, AND NINE MONTHS ENDED DECEMBER 31, 1995 AND 1994
(INFORMATION WITH RESPECT TO THE NINE MONTHS ENDED
DECEMBER 31, 1995 AND 1994 IS UNAUDITED)

thereto notifies the other in writing that such party does not desire to so
extend the term of the agreements. The base salary to be received by Messrs.
Mark Honigsfeld, Facelifters' Chairman of the Board and Chief Executive
Officer, and Murray Gross, Facelifters' President and Chief Operating Officer,
is $218,400 and $188,500, respectively. Under the terms of the 1993 Employment
Agreements, the base salary is to be adjusted upwards annually based upon the
greater of either; (i) reported cost of living increases, (ii) a graduated
formula ranging between 0 and 20% based on Facelifters' growth in annual net
sales or (iii) Facelifters' net profits before income taxes and executive
bonuses. Messrs. Mark Honigsfeld and Murray Gross will each earn bonuses under
the 1993 Employment Agreements which commenced April 1, 1993 as follows: 5% of
Facelifters' Earnings Before Taxes and Executive Bonuses ("EBTEB") when
Facelifters earns more than $250,000 but less than $500,000; 6% of Facelifters'
EBTEB when Facelifters earns more than $500,000 but less than $1,000,000; 7
1/2% of Facelifters's EBTEB when Facelifters earns $1,000,000 or more but less
than $1,500,000 and 10% of Facelifters' EBTEB when Facelifters earns $1,500,000
or more. The agreements provide a provision which protects these bonuses
against unusual losses Facelifters may incur as a result of start-up costs for
a new business entity or for non- cash losses as a result of an accounting
change or other non recurring type losses. All decisions on executive
compensation and bonuses are reviewed by and subject to the approval of the
Executive Compensation Committee which includes two outside directors of
Facelifters and by the full board of directors. Should Facelifters undergo a
change of control, Messrs. Mark Honigsfeld and Murray Gross shall be entitled
to receive all benefits to which they are entitled under the unexpired portion
of the agreements. For the fiscal year ended March 31, 1995, Messrs. Mark
Honigsfeld and Murray Gross voluntarily forgave 58% or $278,371 of their
bonuses to which they were entitled under the terms of their employment
agreements.

For the years ended March 31, 1995 and 1994, $200,000 and $265,251,
respectively, was earned for bonuses under existing employment agreements.

During the nine months ended December 31, 1995 and 1994, $200,000 and
$376,875, respectively, was accrued for bonuses under existing employment
agreements.

B. Operating leases

Facelifters leases its main facilities from Facelifters' Chief
Executive Officer under the terms set forth in Note 5. Facelifters also leases
office/warehouse facilities in several locations throughout the country.

Future minimum rents to be paid under the leases at March 31, 1995
are as follows:

<TABLE>
March 31, 1995
--------------
<S> <C>
FY 1996 $ 986,039
FY 1997 942,813
FY 1998 755,887
FY 1999 508,369
FY 2000 442,905
FY 2001-2002 701,707
-----------
$ 4,337,720
===========
</TABLE>

Rent expense of $903,430 and $788,393 and $812,053, $705,238 and
$577,348 was charged to operations for the nine months ended December 31, 1995
and 1994 and for the years ended March 31, 1995, 1994 and 1993, respectively.

During the nine months ended December 31, 1995, Facelifters leased
offices in Fort Lauderdale, Florida and Providence, Rhode Island. The lease
terms were three years at an average annual rental of

F-14
<PAGE> 123
FACELIFTERS HOME SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995, 1994, AND 1993, AND NINE MONTHS ENDED DECEMBER 31, 1995 AND 1994
(INFORMATION WITH RESPECT TO THE NINE MONTHS ENDED
DECEMBER 31, 1995 AND 1994 IS UNAUDITED)

$18,636 for the Fort Lauderdale lease and five years at an average annual
rental of $36,021 for the Providence lease.

C. Equipment purchase/financing commitments

Facelifters has an outstanding commitment for the purchase of
approximately $500,000 of furniture, fixtures and equipment and, subsequent to
March 31, 1995, has received a commitment for a $500,000 line of credit to
finance the purchase of such assets.

During the nine months ended December 31, 1995, Facelifters entered
into capital leases on equipment and utilized $381,753 of the outstanding
commitment.

D. Legal Proceedings

In the ordinary course of business, Facelifters is involved in legal
proceedings, none of which, in the opinion of management, will materially
affect Facelifters's financial position or results of operations.

NOTE 10 - INCOME (LOSS) PER SHARE OF COMMON STOCK:

For the year ended March 31, 1995, loss per share of common and
common equivalent stock was computed using weighted average shares outstanding
of 3,177,247.

For 1994 and 1993, income per share of common and common equivalent
stock was adjusted, using the modified treasury stock method, for interest
expense eliminated and interest income earned on the assumed proceeds from the
exercise of common stock equivalents in excess of 20% of Facelifters'
outstanding common stock. The weighted average number of shares used in the
computation of income per share was 4,160,706 and 4,039,618 shares in 1994 and
1993, respectively.

For the nine month periods ended December 31, 1995 and 1994,
respectively, loss per share of common and common equivalent stock was
calculated based on loss the weighted average number of shares outstanding,
since the treasury stock method was anti-dilutive. The weighted average number
of shares used in the computation of loss per share was 3,390,815 and
3,117,286 respectively.

NOTE 11 - STOCK OPTION PLANS:

Facelifters has instituted five stock option plans, the first in
fiscal 1986 (the "1985 Option Plan") reserving 31,250 shares of common stock,
the second in fiscal 1990 (the "1989 Option Plan") reserving 500,000 shares of
common stock, the third in fiscal year 1993 (the "1993 Stock Compensation
Plan") reserving 300,000 shares of common stock, the fourth (the "Outside
Directors Option Plan") reserving 100,000 shares of common stock and the fifth
(the "Qualified Employee Stock Purchase Plan") reserving 250,000 shares of
common stock. During fiscal 1995, an additional 300,000 shares were reserved
for the 1993 stock compensation plan.

The stock option plans provide for an option price to be determined
when an option is granted, but not less than 110% of its market value for
options granted to individuals holding more than 10% of the combined voting
power of all classes of Company stock, or 100% of its market value for all
other individuals.

F-15
<PAGE> 124
FACELIFTERS HOME SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995, 1994, AND 1993, AND NINE MONTHS ENDED DECEMBER 31,1995 AND 1994
(INFORMATION WITH RESPECT TO THE NINE MONTHS ENDED
DECEMBER 31, 1995 AND 1994 IS UNAUDITED)

The term of each option shall not be more than 5 years for those individuals
owning more than 10% of the combined voting power, nor more than 10 years for
all others.

The following table summarizes options granted and/or exercised during
the years ended March 31, 1993, 1994 and 1995. At March 31, 1993, 1994 and
1995, 324,000, 498,209 and 313,625 options, respectively, were eligible for
exercise under the terms of the various option plans.

<TABLE>
<CAPTION>
(1) (2) (3) (4) (5) (6) (7) (8) (9)
$4.56- $6.50-
-------- -------
$8.00 $2.16 $.64 $.704 $1.75 $2.75 $3.02 $5.02 $7.50 TOTAL
------ ------- ------- ------- -------- ------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Outstanding 3/31/92 . 4,375 24,750 173,125 137,500 339,750
Granted . . . . . . . 182,500 182,500
Exercised . . . . . . (12,000) (12,000)
Canceled . . . . . . (5,000) (5,000)
------ ------- -------- ------- -------- --------
Outstanding 3/31/93 . 4,375 24,750 156,125 137,500 182,500 505,250
Previously reported
as canceled in error 1,250 1,250
Granted . . . . . . . 37,500 37,500 71,000 7,000 153,000
Exercised . . . . . . (79,541) (79,541)
Canceled . . . . . . (3,750) (3,750)
------ ------- ------- ------- -------- ------- ------- -------- ------- --------
OUTSTANDING 3/31/94 . 625 24,750 77,834 137,500 182,500 37,500 37,500 71,000 7,000 576,209
Granted . . . . . . . 100,000 80,400 180,400
Exercised . . . . . . (24,750) (65,334) (137,500) (35,000)
(262,584)
Canceled . . . . . . (1,800) (2,200) (4,000)
------ ------- ------- ------- -------- ------- ------- -------- ------- --------
OUTSTANDING 3/31/95 . 625 -- 12,500 -- 147,500 37,500 37,500 169,200 85,200 490,025
====== ======= ======= ======= ======== ======= ======= ======== ======= ========
</TABLE>
- -------------------------
(1) Expire 7/23/1996 - 1985 Option Plan
(2) Expire 5/18/1997 - 1985 Option Plan
(3) Expire 1/11/2000 - 1989 Option Plan
(4) Expire 1/11/1995 - 1989 Option Plan
(5) Expire 10/5/2002 - 1989 Option Plan (except 2,000 from 1985 Option Plan)
(6) Expire 3/31/2003 - 1993 Stock Compensation Plan
(7) Expire 3/31/1998 - 1993 Stock Compensation Plan
(8) 6,000 from 1993 Stock Compensation Plan expire 7/1/2003; 5,000 from Outside
Directors Option Plan expire 9/9/2003 50,000 from 1993 Stock Compensation
Plan expire 6/22/2004 50,000 from 1993 Stock Compensation Plan expire
6/22/1999
(9) 7,000 from 1993 Stock Compensation Plan expire 2/1/2004 5,500 from 1993
Stock Compensation Plan expire 9/16/2004 46,500 from 1993 Stock
Compensation Plan expire 8/24/2004 5,000 from Outside Directors Option Plan
expire 9/12/2004 23,400 from 1993 Stock Compensation Plan expire 2/1/2005

During the nine months ended December 31, 1995, Facelifters granted the
following options under its 1993 Stock Compensation Plan: 35,000 shares at
$7.00 per share; 35,000 shares at $6.38 per share; and 7,500 shares at $7.25
per share. Facelifters also granted 5,000 shares at $7.25 per share under its
Outside Directors Option Plan. During this period, 9,000 shares at $5.00 per
share were cancelled from the 1993 Stock Compensation Plan.

During the nine months ended December 31, 1995, 17,500 shares at $1.75 per
share and 12,500 shares at $.64 per share previously granted under the 1989
Stock Option Plan and 1,965 shares at $5.00 previously granted under the 1993
Stock Compensation Plan were exercised.

NOTE 12 - DISCONTINUED OPERATIONS:

In March 1993, Facelifters sold all of its assets (except accounts
receivable) attributable to its Tabletop Division to FCD Tabletops Inc. Sales
of $1,131,442, for the fiscal year ended March 31, 1993, are not included in
the statement of operations; the net income from this business segment is
included as Discontinued Operations.

F-16
<PAGE> 125
FACELIFTERS HOME SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995, 1994, AND 1993, AND NINE MONTHS ENDED DECEMBER 31,1995 AND 1994
(INFORMATION WITH RESPECT TO THE NINE MONTHS ENDED
DECEMBER 31, 1995 AND 1994 IS UNAUDITED)

NOTE 13 - NOTES PAYABLE:

The following liability for notes payable existed at December 31,
1995, March 31, 1995 and March 31, 1994:

<TABLE>
<CAPTION>
(unaudited)
December 31,
------------ March 31, March 31,
1995 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Acquisition of Saduco Industries;
3 years @ 8% payable $6,000 monthly plus interest . . . $ --- $ --- $ 72,000
Lease/Purchase of land and building in Charles City County,
Va.; 15 years @ 7% payable $7,156 monthly including
interest . . . . . . . . . . . . . . . . . . . . . . . . 787,409 762,369 796,191
Purchase of machinery and equipment:
5 years @ 8.2% payable $10,411 monthly
including interest . . . . . . . . . . . . . . . . . 288,501 725,984 ---
7 years @ 6% payable $3,798 monthly including interest . 277,462 --- ---
Revolving line of credit - $1,000,000 limit at
December 31, 1995 and $2,000,000 limit at March 31,
1995 and 1994 - European American Bank @ 10% interest. 870,000 550,000 ---
---------- ----------- -----------
Total notes payable . . . . . . . . . . . . . . . . . 2,223,372 2,038,353 868,191

Less portion due within one year . . . . . . . . . . . . (1,471,342) (651,305) (103,129)
---------- ------------ -----------
Long term notes payable . . . . . . . . . . . . . . . $ 752,030 $ 1,387,048 $ 765,062
========== =========== ===========
</TABLE>

Future principal payments on these obligations as of December 31, 1995
and March 31, 1995 are as follows:

<TABLE>
<CAPTION>
December 31, 1995
(unaudited) March 31, 1995
----------------- --------------
<S> <C> <C>

FY 1996 $ 1,444,577 $ 651,305
FY 1997 36,002 109,688
FY 1998 38,604 118,565
FY 1999 41,395 128,165
FY 2000 44,387 462,223
FY 2001 - 2009 618,407 568,407
------------ ------------
$ 2,223,372 $ 2,038,353
============ ============
</TABLE>

The note payable to Saduco Industries was unsecured. The note payable
to European American Bank is collateralized by Facelifters' accounts receivable
and inventory. The indebtedness to the County of Charles City, Va. is
collateralized by 7.55 acres of land improved with a 70,000 sq. ft. building,
having a net book value of approximately $1,337,000 and $892,000 at December
31, 1995 and March 31, 1995, respectively. The equipment loan is payable to
Central Fidelity Bank of Richmond, Virginia, and the Industrial Development
Authority of Charles City, Virginia, and is collateralized by machinery and
equipment, having a net book value of approximately $600,000 and $689,000 at
December 31, 1995 and March 31, 1995, respectively. The bank loans each require
compliance with certain financial covenants.

F-17
<PAGE> 126
FACELIFTERS HOME SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995, 1994, AND 1993, AND NINE MONTHS ENDED DECEMBER 31,1995 AND 1994
(INFORMATION WITH RESPECT TO THE NINE MONTHS ENDED
DECEMBER 31, 1995 AND 1994 IS UNAUDITED)

Facelifters received a waiver, until March 31, 1996, from Central
Fidelity Bank for the instances of noncompliance that existed at December 31,
1995. Since the waiver does not extend for at least one year beyond December
31, 1995, the entire debt has been classified as current at December 31, 1995.

European American Bank has not issued a waiver to Facelifters for the
instances of noncompliance that existed at December 31, 1995 and has informed
Facelifters that in the event the Merger is consummated, the loan will be
called on that date. This debt is classified as a current liability at March
31, 1995 and December 31, 1995.

NOTE 14 - FACELIFTERS SEARS LICENSE AGREEMENT:

Prior to December 31, 1995, Facelifters conducted direct consumer
marketing of its products in twenty of twenty-four sales locations under the
Facelifters Sears License Agreement. The Facelifters Sears License Agreement
covered specific territories and gave Facelifters the right to market and
install kitchen cabinet refacing and countertops under the Sears brand name in
those territories. During the term of the Facelifters Sears License Agreement,
Facelifters could not sell or install similar products in those territories
under any other retailer's name without Sears written consent. The Facelifters
Sears License Agreement was renewable annually and could be terminated by
either Facelifters or Sears, without cause, upon six months written notice.

The Facelifters Sears License Agreement provided for license fees to
Sears, equal to 15% of Facelifters's contract revenues from sales in the
licensed territories. The Facelifters Sears License Agreement also provided for
an additional fee of 1% of the sales price for each sale made pursuant to a
customer referral from Sears, which Sears remitted to the Sears salesperson who
originated the customer referral. Retail installed sales procured in
territories outside of the Sears licensed market areas and any of Facelifters'
wholesale sales were not subject to Sears license fees. As of September 1,
1992 and through February 28, 1993 Sears license fees were reduced from 15% to
8%. This temporary reduction in license fees was given to Sears licensees to
help defray certain costs associated with Sears' new selling policy which was
implemented on November 1, 1992. The new selling policy required the
elimination of negotiated sales practices and requires Sears licensees to sell
its products and services under a fixed pricing program.

As of June 1, 1993 license fees to Sears were reduced from 15% to 13%.
Management of Facelifters believes that this reduction in license fees was
attributable to Sears' decision to provide licensees with an incentive to
strive for higher sales volume. New markets under the Sears license which were
granted in 1994 carried a 10.5% license fee through March 31, 1995. Licenses
for Small Market Multiple Products territories carry a 10% fee.

The license agreements gave Sears the right to settle, at
Facelifters's expense and without its consent, any warranty claims against
Sears by Facelifters's customers. The license arrangement also required
Facelifters to maintain a warranty fund account in a commercial bank which at
March 31, 1995 totaled $21,439 (included in Other Assets in the Consolidated
Balance Sheet). These funds were intended to be used for unresolved customer
service complaints between Facelifters and Sears. Sears had the right to
withdraw funds from this account to cover any claims against Sears by customers
of Facelifters if not remedied by Facelifters. Sears had neither settled any
warranty claims without Facelifters's consent nor ever withdrew any funds from
Facelifters's warranty fund account.

The Facelifters Sears License Agreement was not renewed when it
expired on December 31, 1995. (See Note 19.)

F-18
<PAGE> 127
FACELIFTERS HOME SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995, 1994, AND 1993, AND NINE MONTHS ENDED DECEMBER 31, 1995 AND 1994
(INFORMATION WITH RESPECT TO THE NINE MONTHS ENDED
DECEMBER 31, 1995 AND 1994 IS UNAUDITED)

From September 2, 1994 to March 1, 1995, Facelifters held a license
agreement with HomeBase (See Note 2) in Southern California to receive leads
generated by HomeBase stores. The license provided for a 12% fee to be paid to
Home Base for all sales resulting from the use of its name. These fees totaled
$105,718 through March 31, 1995. Facelifters elected to terminate the license
effective March 1, 1995.

NOTE 15 - PREPAID EXPENSES AND OTHER CURRENT ASSETS/ACCRUED EXPENSES AND OTHER
CURRENT LIABILITIES:

Prepaid expenses and other current assets at December 31, 1995, March
31, 1995 and March 31, 1994 are summarized as follows:

<TABLE>
<CAPTION>
(unaudited)
December 31, March 31,
------------ ----------------------------
1995 1995 1994
------------ ------------ -----------
<S> <C> <C> <C>
Prepaid lead costs (Note 7) $ --- $ --- $1,091,908
Prepaid commissions 408,648 779,396 204,622
Other current assets 555,570 197,610 269,357
----------- ----------- ----------
$ 964,218 $ 977,006 $1,565,887
=========== =========== ==========
</TABLE>

Accrued expenses and other current liabilities at December 31, 1995, March 31,
1995 and March 31, 1994 are summarized as follows:

<TABLE>
<CAPTION>
December 31, March 31,
------------ ----------------------------
1995 1995 1994
------------ ------------ -----------
<S> <C> <C> <C>
Accrued payroll and payroll taxes . . . . . . . . . . . . . $ 644,384 $ 305,902 $ 320,780
Accrued worker's compensation premiums . . . . . . . . . . --- 58,110 ---
Accrued professional fees . . . . . . . . . . . . . . . . . 461,738 63,000 46,000
Accrued commissions . . . . . . . . . . . . . . . . . . . . 175,876 214,065 92,701
Accrued state income and other taxes . . . . . . . . . . . 125,564 115,748 89,283
Accrued Sears fees . . . . . . . . . . . . . . . . . . . . 1,499,710 799,931 278,605
Accrued unemployment taxes . . . . . . . . . . . . . . . . 27,889 94,152 65,670
Accrued executive bonuses . . . . . . . . . . . . . . . . . 200,000 200,000 164,900
Accrued employee benefits . . . . . . . . . . . . . . . . . 205,050 --- ---
Other accrued expenses . . . . . . . . . . . . . . . . . . 314,282 225,766 71,630
----------- ----------- ----------
$ 3,654,493 $ 2,076,674 $1,129,569
=========== =========== ==========
</TABLE>

NOTE 16 - SEGMENTS:

Prior to March 31, 1993 Facelifters operated in two principal business
segments: kitchen remodeling products and services, and the manufacture of
restaurant tabletops. The entire tabletops segment was sold on March 31, 1993.

NOTE 17 - OTHER ASSETS:

Included in other assets at December 31, 1995 was $153,383 of security
deposits for office leases or utilities and $46,703 in down payments made with
orders to acquire new equipment. At March 31, 1995, and 1994, respectively,
these amounts were $149,214 and $25,816 for security deposits and $395,766 and
$0 for down payments.

F-19

<PAGE> 128
FACELIFTERS HOME SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995, 1994, AND 1993, AND NINE MONTHS ENDED DECEMBER 31, 1995 AND 1994
(INFORMATION WITH RESPECT TO THE NINE MONTHS ENDED
DECEMBER 31, 1995 AND 1994 IS UNAUDITED)

NOTE 18 - WARRANTS:

As a part of a public offering in August 1991, Facelifters issued
1,236,250 warrants entitling the holder to purchase one share of its common
stock for each warrant at $4.12 per share from August 6, 1992 to August 6, 1993
and at $5.50 per share thereafter until their expiration on August 6, 1994.
These warrants were callable by Facelifters under certain conditions.

Additionally, in August 1991, Facelifters issued warrants to the
underwriter of the public offering for 115,000 units at $3.30 per unit. Each
unit consisted of one share of common stock and one warrant identical to those
described above.

In October 1992, Facelifters issued private warrants to a NASD firm
engaged in stock brokerage and financial consulting, giving the holder the
right to purchase 100,000 shares of Facelifters' common stock at prices ranging
from $2.25 to $4.00 per share, depending on the number of shares purchased.
The warrants were exercisable for a period of three years. In January 1993,
Facelifters issued warrants under the same terms and conditions, for the
purchase of 25,000 shares of its common stock, to a firm engaged in financial
public relations.

In March 1994, Facelifters filed a registration statement on Form S-1
with the Securities and Exchange Commission to register (i) 1,206,825 shares
underlying outstanding publicly-held warrants; (ii) 29,425 shares issued August
12, 1993 upon exercise of publicly-held warrants; (iii) 125,000 shares
underlying private warrants, and (iv) 230,000 shares underlying underwriters
warrants. The cost of this registration was $148,014, which was charged
against additional paid-in capital.

In April 1994, all 125,000 private warrants were exercised for a total
of $365,000 and all 115,000 of the underwriter warrants were exercised for
$379,500. In May, 1994, Facelifters called for redemption of the 1,321,825
then outstanding public warrants. A total of 303,114 warrants were exercised
for $1,667,127 and another 1,014,201 warrants were redeemed by Facelifters at
$.05 each or $50,710. The remaining 4,510 warrants can be redeemed at $.05
each until May 12, 1996.

As a result of all the foregoing transactions, Facelifters'
stockholders' equity was increased $2,212,903.

NOTE 19 - MERGER (UNAUDITED)

On November 1, 1995, Facelifters announced that it had entered into a
merger agreement ("Merger" with AMRE, Inc. ("AMRE"). Subject to stockholder
and regulatory approvals, the Merger is expected to be consummated in the first
half of 1996.

Facelifters notified Sears of its intention to not renew its license
agreement upon expiration on December 31, 1995. In connection with the
transactions contemplated by the Merger, Facelifters entered into a three-year,
non- cancelable sublicense agreement with American Remodeling, Inc., a wholly
owned subsidiary of AMRE, commencing January 1, 1996, to operate under the name
"CENTURY 21 Home Improvements" for the marketing, sale and installation of
certain home improvement products. The sublicense agreement is exclusive for
all geographic markets where Facelifters was previously operating under the
Facelifters Sears License Agreement except in geographic areas where both
Facelifters and American Remodeling, Inc. conducted operations. Facelifters
operated under the Facelifters Sears License Agreement

F-20
<PAGE> 129
FACELIFTERS HOME SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995, 1994, AND 1993, AND NINE MONTHS ENDED DECEMBER 31, 1995 AND 1994
(INFORMATION WITH RESPECT TO THE NINE MONTHS ENDED
DECEMBER 31, 1995 AND 1994 IS UNAUDITED)

in all except five of its 26 geographic markets. Effective January 1, 1996,
Facelifters began marketing its products and services under the sublicense
agreement. The license fee under such sublicense agreement is not to exceed 8%
of revenues and is subject to certain rebates. Facelifters competes with AMRE
in five of these 26 geographic markets. If the Merger is consummated this
sublicense agreement is to be terminated shortly thereafter.

Facelifters incurred additional non-recurring costs of approximately
$500,000 in the fiscal quarter ended December 31, 1995 in connection with the
Merger and approximately $300,000 in expenses in connection with the change
from the Sears brand name to the CENTURY 21 Home Improvements name, including
$100,000 of expenses in connection with the closing of two sales/installation
locations as discussed below.

In December 1995, Facelifters determined to close two
sales/installation locations due to management's belief that these two markets
will not perform well under the CENTURY 21 Home Improvements name. These
locations represented less than 2% of Facelifters' historical sales.

NOTE 20 - PROVISION FOR PLANT CLOSING (UNAUDITED)

In September 1995, Facelifters decided to phase-out its Brooklyn plant
and consolidate all manufacturing at the Virginia facility. Accordingly, it
recorded a $1,065,340 provision in September, 1995 to cover expected costs
associated with the plant closing. These costs include buy-out of the lease
($525,000), abandonment of leasehold improvements ($437,000), impairment in the
values of redundant machinery and fixtures and other costs directly related to
the plant closing ($103,340).

F-21
<PAGE> 130
UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS

The following unaudited pro forma condensed combined financial
statements present the Facelifters Merger and the Congressional Merger. The
statements are presented assuming the Facelifters Merger and the Congressional
Merger will be accounted for as poolings of interests.

The unaudited pro forma condensed combined balance sheet reflects the
combined historical consolidated balance sheets of AMRE, Facelifters and
Congressional as of December 31, 1995. The unaudited pro forma condensed
combined statements of operations are based on the consolidated financial
statements of AMRE for the fiscal years ended December 31, 1995, 1994 and 1993;
the consolidated financial statements of Facelifters for the nine months ended
December 31, 1995 and 1994 and the fiscal years ended March 31, 1995, 1994 and
1993; and the financial statements of Congressional for the years ended
December 31, 1995 and 1994, the nine months ended December 31, 1993, and the
fiscal year ended March 31, 1993. The consolidated financial statements of
Facelifters and Congressional have been recast to a calendar year to conform
with AMRE's fiscal year for all periods presented. In addition, Facelifters'
method of accounting for lead acquisition costs has been conformed to AMRE's
method for all periods presented.

For all applicable periods presented in the pro forma condensed
combined statements of operations, shares used in the computation of earnings
per common and common equivalent shares give effect to the Exchange Ratio for
the Facelifters Merger and the conversion rates for the Congressional Common
and Preferred Stock pursuant to the Congressional Merger.

The unaudited pro forma condensed combined financial statements are
not necessarily indicative of the results that would have been achieved had the
Facelifters Merger or the Congressional Merger occurred on the date indicated
or as of the beginning of the periods presented and should not be construed as
representative of future operations. These pro forma condensed combined
financial statements should be read in conjunction with the related historical
consolidated financial statements and notes thereto of AMRE incorporated by
reference in this Joint Proxy Statement/Prospectus and the historical
consolidated financial statements of Facelifters included elsewhere in this
Joint Proxy Statement/Prospectus.

F-22
<PAGE> 131
AMRE, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
DECEMBER 31, 1995
(IN THOUSANDS)

<TABLE>
<CAPTION>
PRO FORMA AMRE AND
ADJUSTMENTS FACELIFTERS
AMRE FACELIFTERS TO REFLECT PRO FORMA
DECEMBER 31, 1995 DECEMBER 31, 1995 FACELIFTERS MERGER COMBINED
----------------- ----------------- ------------------ -----------
(A)
<S> <C> <C> <C> <C>
Cash and cash equivalents . . . . . $ 10,658 $ 2,212 $ - $ 12,870
Marketable securities . . . . . . . 8,484 1,039 - 9,523
Accounts receivable . . . . . . . . 10,242 2,874 - 13,116
Inventories . . . . . . . . . . . . 5,612 1,596 - 7,208
Prepaid expenses and other . . . . 2,921 964 - 3,885
----------- ----------- ------------ -----------

Total current assets . . . 37,917 8,685 - 46,602

Property, plant, & equipment,
net . . . . . . . . . . . 5,630 3,392 - 9,022
Goodwill . . . . . . . . . . . 9,036 732 (500) 9,268
Notes receivable . . . . . . . . . 469 - - 469
Other assets . . . . . . . . . . . 1,262 237 (200) 1,299
----------- ----------- ------------ -----------

Total assets . . . . . . . $ 54,314 $ 13,046 $ (700) $ 66,660
=========== =========== ============ ===========

Accounts payable . . . . . . . . . 14,147 1,779 - 15,926
Accrued expenses . . . . . . . . . 6,771 3,655 - 10,426
Notes payable . . . . . . . . . . . 50 1,471 - 1,521
Other accrued liabilities . . . . . 16,760 629 800 18,189
----------- ----------- ------------ -----------

Total current liabilities . 37,728 7,534 800 46,062

Long-term debt & capital
lease obligations . . . . . . 241 1,071 - 1,312
Other liabilities . . . . . . . . . - 24 - 24
----------- ----------- ------------ -----------

Total liabilities . . . . . 37,969 8,629 800 47,398

Redeemable preferred stock . . . . 3,000 - - 3,000

Stockholders' equity
Convertible preferred stock . - - - -
Common stock . . . . . . . . . 146 34 - 180
Additional paid-in capital . . 25,486 8,815 - 34,301
Retained earnings . . . . . . (1,986) (4,432) (1,500) (7,918)
----------- ----------- ------------ -----------
23,646 4,417 (1,500) 26,563
Less: Treasury stock . . . (10,301) - - (10,301)
Unearned ESOP
compensation . . . . - - - -
----------- ----------- ------------ -----------

Total stockholders' equity. 13,345 4,417 (1,500) 16,262
----------- ----------- ------------ -----------

Total liabilities & stockholders'
equity . . . . . . . . . . . $ 54,314 $ 13,046 $ (700) $ 66,660
=========== =========== ============ ===========
</TABLE>

(See accompanying Notes)

F-23
<PAGE> 132
AMRE, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
DECEMBER 31, 1995
(IN THOUSANDS)
(CONTINUED FROM PREVIOUS PAGE)

<TABLE>
<CAPTION>
PRO FORMA AMRE,
ADJUSTMENTS FACELIFTERS AND
TO REFLECT CONGRESSIONAL
CONGRESSIONAL CONGRESSIONAL PRO FORMA
DECEMBER 31, 1995 MERGER COMBINED
----------------- ------------ ---------------
(B)
<S> <C> <C> <C>
Cash and cash equivalents . . . . . . $ 307 $ - $ 13,177
Marketable securities . . . . . . . . - - 9,523
Accounts receivable . . . . . . . . . 590 - 13,706
Inventories . . . . . . . . . . . . . 162 - 7,370
Prepaid expenses and other . . . . . 133 - 4,018
----------- ----------- ------------

Total current assets . . . . . . 1,192 - 47,794

Property, plant, & equipment,
net . . . . . . . . . . . . . . . . 269 - 9,291
Goodwill . . . . . . . . . . . . . . - - 9,268
Notes receivable . . . . . . . . . . - - 469
Other assets . . . . . . . . . . . . - - 1,299
----------- ----------- ------------

Total assets . . . . . . . . . . $ 1,461 $ - $ 68,121
=========== =========== ============

Accounts payable . . . . . . . . . . 772 - 16,698
Accrued expenses . . . . . . . . . . 712 - 11,138
Notes payable . . . . . . . . . . . . 624 - 2,145
Other accrued liabilities . . . . . . 38 250 18,477
----------- ----------- ------------

Total current liabilities . . . . 2,146 250 48,458

Long-term debt & capital
lease obligations . . . . . . . . . 4,808 - 6,120
Other liabilities . . . . . . . . . . - - 24
----------- ----------- ------------

Total liabilities . . . . . . . . 6,954 250 54,602

Redeemable preferred stock . . . . . - - 3,000

Stockholders' equity
Convertible preferred stock . . . . 1 (1) -
Common stock . . . . . . . . . . . 1 8 189
Additional paid-in capital . . . . - (8) 34,293
Retained earnings . . . . . . . . . (174) (250) (8,342)
----------- ----------- ------------
(172) (251) 26,140

Less: Treasury stock . . . . . . (1) 1 (10,301)
Unearned ESOP
compensation . . . . . . . (5,320) - (5,320)
----------- ----------- ------------

Total stockholders' equity . . . (5,493) (250) 10,519
----------- ----------- ------------

Total liabilities & stockholders'
equity . . . . . . . . . . . . . . $ 1,461 $ - $ 68,121
=========== =========== ============
</TABLE>

(See accompanying Notes)

F-24
<PAGE> 133
AMRE, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS AMRE AND
TO REFLECT FACELIFTERS
AMRE FACELIFTERS FACELIFTERS PRO FORMA
DECEMBER 31, 1995 DECEMBER 31, 1995 MERGER COMBINED
----------------- ----------------- ----------- -----------
<S> <C> <C> <C> <C>
Contract revenues . . . . . . . . . . . $ 271,337 $ 49,752 $ - $ 321,089

Less: Contract costs . . . . . . . . . 88,451 19,487 - 107,938
Marketing & selling . . . . . . 123,339 16,953 - 140,292
License fees . . . . . . . . . . 32,576 5,151 - 37,727
General and administrative . . . 41,707 7,614 - 49,321
Provision for plant closing . . - 1,065 - 1,065
Nonrecurring charges . . . . . . 11,000 800 - 11,800
------------ ------------ ----------- -----------

Total expenses . . . . . . 297,073 51,070 - 348,143

Operating income (loss) . . . . . . . . (25,736) (1,318) - (27,054)

Other income (loss) . . . . . . . . . . 1,828 125 - 1,953
------------ ------------ ----------- -----------

Income (loss) before income taxes . . . (23,908) (1,193) - (25,101)

Income taxes . . . . . . . . . . . . . (1,523) 75 - (1,448)
------------ ------------ ----------- -----------

Income (loss) from continuing
operations . . . . . . . . . . . $ (22,385) $ (1,268) $ - $ (23,653)
============ ============ =========== ===========

Earnings (loss) per share
from continuing operations . . . $ (1.75) $ (0.37) $ (1.47)
============ ============ ===========

Income (loss) applicable to
common stockholders (D) . . . . $ (22,625) $ (1,268) $ - $ (23,893)
============ ============ =========== ===========

Weighted avg. shares outstanding (E) . 12,903 3,391 - 16,294
============ ============ =========== ===========
</TABLE>

(See accompanying Notes)

F-25
<PAGE> 134
AMRE, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(CONTINUED FROM PREVIOUS PAGE)

Less: Contract costs . . . . . . . . . 7,373 - 115,311
Marketing & selling . . . . . . 7,303 - 147,595
License fees . . . . . . . . . . 2,486 - 40,213
General and administrative . . . 1,565 - 50,886
Provision for plant closing . . - - 1,065
Nonrecurring charges . . . . . . - - 11,800
------------ ------------ -----------

Total expenses . . . . . . 18,727 - 366,870
------------ ------------ -----------

Operating income (loss) . . . . . . . . 91 - (26,963)

Other income (loss) . . . . . . . . . . (351) - 1,602
------------ ------------ -----------

Income (loss) before income taxes . . . (260) - (25,361)

Income taxes . . . . . . . . . . . . . (95) - (1,353)
------------ ------------ -----------

Income (loss) from continuing
operations . . . . . . . . . . . $ (355) $ - $ (24,008)
============ ============ ===========

Earnings (loss) per share
from continuing operations . . . $ (355) $ (1.41)
============ ===========

Income (loss) applicable to
common stockholders (D) . . . . $ (355) $ - $ (24,248)
============ ============ ===========

Weighted avg. shares outstanding (E) . 1 899 17,194
============ ============ ===========
</TABLE>

(See accompanying Notes)

F-26
<PAGE> 135
AMRE, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1994
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS AMRE AND
TO REFLECT FACELIFTERS
AMRE FACELIFTERS FACELIFTERS PRO FORMA
DECEMBER 31, 1994 DECEMBER 31, 1994 MERGER COMBINED
----------------- ----------------- ----------- ---------------
<S> <C> <C> <C> <C>
Contract revenues . . . . . . . . . . . $ 285,930 $ 34,158 $ - $ 320,088

Less: Contract costs . . . . . . . . . 93,100 13,087 - 106,187
Marketing & selling (C) . . . . 117,383 13,275 (826) 129,832
License fees . . . . . . . . . . 34,166 3,685 - 37,851
General and administrative . . . 40,244 4,623 - 44,867
------------ ------------- ----------- -----------

Total expenses . . . . . . 284,893 34,670 (826) 318,737
------------ ------------- ----------- -----------

Operating income (loss) . . . . . . . . 1,037 (512) 826 1,351

Other income (expense) . . . . . . . . 1,516 81 - 1,597
------------ ------------- ----------- -----------

Income (loss) before income taxes . . . 2,553 (431) 826 2,948

Income taxes . . . . . . . . . . . . . 1,094 64 - 1,158
------------ ------------- ----------- -----------

Income (loss) from
continuing operations . . . . . $ 1,459 $ (495) $ 826 $ 1,790
============ ============= =========== ===========

Earnings (loss) per share from continuing
operations . . . . . . . . . . . $ 0.09 $ (0.16) $ 0.10
============ ============= ===========

Income (loss) applicable to
common stockholders (D) . . . . $ 1,219 $ (495) $ 826 $ 1,550
============ ============= =========== ===========

Weighted avg. shares outstanding (E) . 13,031 3,177 - 16,208
============ ============= =========== ===========
</TABLE>

(See accompanying Notes)

F-27
<PAGE> 136
AMRE, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1994
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(CONTINUED FROM PREVIOUS PAGE)

<TABLE>
<CAPTION>
PRO FORMA AMRE,
ADJUSTMENTS FACELIFTERS AND
TO REFLECT CONGRESSIONAL
CONGRESSIONAL CONGRESSIONAL PRO FORMA
DECEMBER 31, 1994 MERGER COMBINED
----------------- --------------- ------------
<S> <C> <C> <C>
Contract revenues . . . . . . . . . . . $ 17,607 $ - $ 337,695

Less: Contract costs . . . . . . . . . 6,488 - 112,675
Marketing & selling (C) . . . . 5,581 - 135,413
License fees . . . . . . . . . . 2,289 - 40,140
General and administrative . . . 2,640 - 47,507
------------ ------------- -----------

Total expenses . . . . . . 16,998 - 335,735
------------ ------------- -----------

Operating income (loss) . . . . . . . . 609 - 1,960

Other income (expense) . . . . . . . . (335) - 1,262
------------ ------------- -----------

Income (loss) before income taxes . . . 274 - 3,222

Income taxes . . . . . . . . . . . . . 39 - 1,197
------------ ------------- -----------

Income (loss) from
continuing operations . . . . . $ 235 $ - $ 2,025
============ ============= ===========

Earnings (loss) per share from continuing
operations . . . . . . . . . . . $ 235 $ 0.10
============ ===========

Income (loss) applicable to
common stockholders (D) . . . . $ 235 $ - $ 1,785
============ ============= ===========

Weighted avg. shares outstanding (E) . 1 899 17,108
============ ============= ===========
</TABLE>

(See accompanying Notes)

F-28
<PAGE> 137
AMRE, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1993
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS AMRE AND
TO REFLECT FACELIFTERS
AMRE FACELIFTERS FACELIFTERS PRO FORMA
DECEMBER 31, 1993 DECEMBER 31, 1993 MERGER COMBINED
----------------- ----------------- ----------- ----------
<S> <C> <C> <C> <C>
Contract revenues . . . . . . . . . . . $ 260,692 $ 25,774 $ - $ 286,466

Less: Contract costs . . . . . . . . . 78,112 9,376 - 87,488
Marketing & selling (C) . . . . 112,362 8,600 58 121,020
License fees . . . . . . . . . . 30,136 2,716 - 32,852
General and administrative . . . 44,506 3,612 - 48,118
------------ ------------- ----------- -----------

Total expenses . . . . . . 265,116 24,304 58 289,478
------------ ------------- ----------- -----------

Operating income (expense) . . . . . . (4,424) 1,470 (58) (3,012)

Other income (loss) . . . . . . . . . . 2,533 110 - 2,643
------------ ------------- ----------- -----------

Income (loss) before income taxes . . . (1,891) 1,580 (58) (369)

Income taxes . . . . . . . . . . . . . (2,747) 150 - (2,597)
------------ ------------- ----------- ----------

Income (loss) from
continuing operations . . . . . $ 856 $ 1,430 $ (58) $ 2,228
============ ============= =========== ===========

Earnings (loss) per share from continuing
operations . . . . . . . . . . . $ 0.05 $ 0.34 $ 0.12
============ ============= ===========

Income (loss) applicable to
common stockholders (D) . . . . $ 616 $ 1,430 $ (58) $ 1,988
============ ============= =========== ===========

Weighted avg. shares outstanding (E) . 13,120 4,161 - 17,281
============ ============= =========== ===========
</TABLE>

(See accompanying Notes)

F-29
<PAGE> 138
AMRE, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1993
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(CONTINUED FROM PREVIOUS PAGE)

<TABLE>
<CAPTION>
PRO FORMA AMRE,
ADJUSTMENTS FACELIFTERS AND
TO REFLECT CONGRESSIONAL
CONGRESSIONAL CONGRESSIONAL PRO FORMA
DECEMBER 31, 1993 MERGER COMBINED
----------------- --------------- -----------
<S> <C> <C> <C>
Contract revenues . . . . . . . . . . . $ 12,909 $ - $ 299,375

Less: Contract costs . . . . . . . . . 5,002 - 92,490
Marketing & selling (C) . . . . 4,458 - 125,478
License fees . . . . . . . . . . 1,802 - 34,654
General and administrative . . . 2,197 - 50,315
------------ ------------- -----------

Total expenses . . . . . . 13,459 - 302,937
------------ ------------- -----------

Operating income (loss) . . . . . . . . (550) - (3,562)

Other income (loss) . . . . . . . . . . (167) - 2,476
------------ ------------- -----------

Income (loss) before income taxes . . . (717) - (1,086)

Income taxes . . . . . . . . . . . . . 60 - (2,537)
------------ ------------- -----------

Income (loss) from
continuing operations . . . . . $ (777) $ - $ 1,451
============ ============= ===========

Earnings (loss) per share from continuing
operations . . . . . . . . . . . $ (777) $ 0.07
============ ===========

Income (loss) applicable to
common stockholders (D) . . . . $ (777) $ - $ 1,211
============ ============= ===========

Weighted avg. shares outstanding (E) . 1 899 18,181
============ ============= ===========
</TABLE>

(See accompanying Notes)

F-30
<PAGE> 139
AMRE, INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS

NOTE 1 - BASIS OF PRESENTATION

The unaudited pro forma condensed combined statements of operations
are based on the consolidated financial statements of AMRE for the years ended
December 31, 1995, 1994 and 1993; the consolidated financial statements of
Facelifters for the nine months ended December 31, 1995 and 1994 and the fiscal
years ended March 31, 1995, 1994 and 1993; and the financial statements of
Congressional for the years ended December 31, 1995 and 1994, the nine months
ended December 31, 1993, and the fiscal year ended March 31, 1993. The
consolidated financial statements of Facelifters and Congressional have been
recast to a calendar year to conform with AMRE's fiscal year in computing the
unaudited pro forma condensed combined statements of operations for all periods
presented. Facelifters financial data for the twelve months ended December 31,
1995 was computed by subtracting the nine months ended December 31, 1994 from
the twelve months ended March 31, 1995 and adding the result to the nine months
ended December 31, 1995. Facelifters financial data for the twelve months
ended December 31, 1994, was computed by subtracting the three months ended
March 31, 1995 from the twelve months ended March 31, 1995 and adding the
result to the three months ended March 31, 1994. Facelifters financial data
for the twelve months ended December 31, 1993 was computed by subtracting the
three months ended March 31, 1994 from the twelve months ended March 31, 1994
and adding the result to the three months ended March 31, 1993. Congressional
financial data for the twelve months ended December 31, 1993 was computed by
subtracting the nine months ended December 31, 1992 from the twelve months
ended March 31, 1993 and adding the result to the nine months ended December
31, 1993.

The unaudited pro forma condensed balance sheet is based on the
combined historical consolidated balance sheets of AMRE, Facelifters and
Congressional as of December 31, 1995, and upon the adjustments and assumptions
described below.

The unaudited pro forma condensed combined statements of operations do
not reflect all expenses expected to be incurred by AMRE and Facelifters in
connection with the Facelifters Merger, all expenses expected to be incurred by
AMRE and Congressional in connection with the Congressional Merger, or the
effect of cost savings, if any, which may be realized after the consummation of
the Facelifters Merger and Congressional Merger.

NOTE 2 - UNAUDITED PRO FORMA ADJUSTMENTS

Unaudited Pro Forma Condensed Combined Balance Sheet

(A) Pro Forma Adjustments to Reflect Facelifters Merger -

AMRE and Facelifters expect to incur additional nonrecurring charges
to operations currently estimated at approximately $1.5 million in 1996, to
reflect the remaining costs associated with combining the operations of the two
companies, primarily the closing of duplicate facilities and write-off of other
assets of $700,000 and remaining transaction fees and costs incident to the
Merger of approximately $800,000. The estimated charges of $1.5 million are
reflected in the unaudited pro forma condensed combined balance sheet. No pro
forma tax benefits have been reflected as a result of AMRE's tax position.
This preliminary estimate is subject to change based upon additional
information.

The unaudited pro forma condensed combined balance sheet reflects the
issuance of one (1) share of AMRE Common Stock for each share of Facelifters
Common Stock in the Facelifters Merger, therefore, the historical combined
common stock and paid-in capital account balances have been adjusted to reflect
the

F-31
<PAGE> 140
number of shares assumed to be issued and for the differences in par value per
common share of AMRE and Facelifters. The impact of this adjustment does not
result in a change to the total combined stockholders' equity.

(B) Pro Forma Adjustments to Reflect Congressional Merger -

AMRE and Congressional expect to incur additional nonrecurring charges
to operations currently estimated at approximately $250,000 in the quarter
ended March 31, 1996, to reflect the remaining transaction costs. The
estimated charge is reflected in the unaudited pro forma condensed combined
balance sheet. No pro forma tax benefits have been reflected as a result of
AMRE's tax position. This preliminary estimate is subject to change based upon
additional information.

The unaudited pro forma condensed combined balance sheet reflects the
issuance of 900,000 shares of AMRE Common Stock for all of the outstanding
shares of Congressional Common Stock and Congressional Preferred Stock to
effect the Congressional Merger; therefore, the historical combined common
stock, preferred stock and paid-in capital account balances have been adjusted
to reflect the number of shares assumed to be issued and for differences in par
value per common share of AMRE and Congressional. The impact of this
adjustment does not result in a change to the total combined stockholders'
equity.

Unaudited Pro Forma Condensed Combined Statements of Operations

The unaudited pro forma condensed combined statements of operations
reflect an adjustment to conform the Facelifters' method of accounting for
capitalized lead acquisition costs to AMRE's method of expensing such costs as
incurred for all periods presented. No pro forma tax provisions or benefits
have been reflected as a result of AMRE's and Facelifters' tax positions.

(D) Income (loss) Applicable to Common Stockholders -

Income (loss) applicable to common stockholders represents income
(loss) from continuing operations less the 8% annual dividends on the AMRE
Senior Convertible Preferred Stock.

(E) Earnings (loss) per Share and Weighted Average Shares Outstanding -

Weighted average shares outstanding reflect (i) the issuance of one
(1) share of AMRE Common Stock for each share of Facelifters Common Stock to
effect the Facelifters Merger, and (ii) the issuance of 601.20 shares of AMRE
Common Stock for each share of Congressional Common Stock and 857.14 shares of
AMRE Common Stock for each share of Congressional Preferred Stock to effect the
Congressional Merger. For all periods presented, the earnings (loss) per share
from continuing operations gives effect to the dividends on the AMRE Senior
Convertible Preferred Stock ($240,000 annually) issued incident to the new
license agreement; however, the AMRE Senior Convertible Preferred Stock was not
considered a common stock equivalent for any of the periods presented.

F-32
<PAGE> 141
ANNEX A

AGREEMENT AND PLAN OF MERGER

dated as of October 31, 1995,

among

AMRE, Inc.

AMRE Acquisition, Inc.,

Facelifters Home Systems, Inc., a Delaware corporation

and Facelifters Home Systems, Inc., a New York corporation
<PAGE> 142
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
AGREEMENT AND PLAN OF MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE 1

THE MERGER, EFFECTIVE TIME, EXCHANGE RATIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Effect of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Consummation of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Certificate of Incorporation; Bylaws; Directors and Officers . . . . . . . . . . . . . . . . . . . . 2
1.5 Conversion of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.6 Exchange of Certificates Representing Company Common Stock . . . . . . . . . . . . . . . . . . . . . 6
1.7 Adjustment of Exchange Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.8 Director Nominee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

ARTICLE 2

REPRESENTATIONS AND WARRANTIES OF AMRE AND MERGER SUB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.1 Organization, Good Standing, Power, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.2 Authorized Capitalization of AMRE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.4 Other Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.5 Effect of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.6 SEC Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.7 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.8 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.9 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.10 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.11 Patents, Trademarks, Franchises, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.12 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.13 Stockholder Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.14 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.15 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.16 Historic Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND COMPANY SUB . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.1 Organization, Good Standing, Power, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.2 Authorized Capitalization of the Company and Company Sub . . . . . . . . . . . . . . . . . . . . . . 16
3.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.4 Other Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.5 Effect of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
<PAGE> 143
<TABLE>
<S> <C>
3.6 SEC Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.7 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.8 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.9 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.10 Environmental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.11 Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.12 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.13 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.14 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.15 Patents, Trademarks, Franchises, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.16 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.17 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.18 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.19 Transactions with Related Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.20 Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.21 Stockholder Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.22 Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.23 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

ARTICLE 4

CONDUCT OF BUSINESS PENDING THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.1 Conduct of Business by the Company Pending the Merger . . . . . . . . . . . . . . . . . . . . . . . 26
4.2 Interim Operations of AMRE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

ARTICLE 5

ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.1 Registration Statement and Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.2 Letter to the Company's Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.3 Letters of AMRE's Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.4 Company Board Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.5 AMRE Board Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.6 Consent of Stockholders of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.7 Consent of Stockholders of AMRE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.8 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.9 Additional Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.10 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.11 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.12 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.13 Information for Other Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.14 Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.15 Sub-License Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.16 Company Reincorporation in Delaware . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.17 Affiliate Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.18 Pooling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
</TABLE>

ii
<PAGE> 144
<TABLE>
<S> <C>
5.19 Stockholders Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.20 Documentation; Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.21 Director and Officer Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.22 Listing Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.23 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.24 Tax Free Reorganization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.25 Lease Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.26 Home Financial Acceptance Corp . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

ARTICLE 6

CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.1 Conditions to Obligation of Each Party to Effect the Merger . . . . . . . . . . . . . . . . . . . . 37
6.2 Additional Conditions to the Obligation of the Company . . . . . . . . . . . . . . . . . . . . . . . 39
6.3 Additional Conditions to the Obligations of AMRE and Merger Sub . . . . . . . . . . . . . . . . . . 40

ARTICLE 7

TERMINATION, AMENDMENT AND WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.3 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.4 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.5 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

ARTICLE 8

GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.1 Nonsurvival of Representations, Warranties and Agreements . . . . . . . . . . . . . . . . . . . . . 43
8.2 Public Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

AGREEMENT AND PLAN OF MERGER SIGNATURE PAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1

EXHIBITS

A. Honigsfeld Employment Agreement
B. Gross Employment Agreement
C. Sub-License Agreement
D-1. Company Affiliate Letter
D-2 AMRE Affiliate Letter
E. Stockholders Agreement
</TABLE>

iii
<PAGE> 145
AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (the "AGREEMENT"), dated as of
October 31, 1995, by and among AMRE, Inc., a Delaware corporation ("AMRE"),
AMRE Acquisition, Inc., a Delaware corporation and a newly formed, wholly owned
subsidiary of AMRE ("MERGER SUB"), Facelifters Home Systems, Inc., a New York
corporation (the "COMPANY"), and Facelifters Home Systems, Inc., a Delaware
corporation and a wholly-owned subsidiary of the Company ("COMPANY SUB"). The
Company, Company Sub and Merger Sub are hereinafter collectively referred to as
the "CONSTITUENT CORPORATIONS".

PRELIMINARY STATEMENTS

A. AMRE, as the sole stockholder of Merger Sub, and the
respective Boards of Directors of Merger Sub, and the Company and Company Sub,
have each approved the merger of Merger Sub into the Company in accordance with
the Delaware General Corporation Law (the "DELAWARE LAW"), the New York
Business Corporation Law ("NEW YORK LAW") and the provisions of this Agreement.
The Boards of Directors of AMRE, the Company and Company Sub have directed that
the Merger, as hereinafter defined, be submitted for approval by their
respective stockholders.

B. It is intended that for federal income tax purposes the merger
provided for herein shall qualify as a reorganization within the meaning of
Section 368 of the Internal Revenue Code of 1986, as amended (the "CODE").

C. Provided that it will not prevent, delay or in any manner
adversely effect the ability of the parties to consummate the Merger, the
Company intends to reconvene its annual meeting of stockholders on or before
November 30, 1995 in order to effect, prior to the mailing of the Joint Proxy
Statement/Prospectus referred to in Section 5.1 below, the reincorporation (the
"REINCORPORATION") of the Company from the State of New York to the State of
Delaware through the merger of the Company with and into Company Sub, as
contemplated in the Company's proxy materials for its annual meeting of
stockholders held August 9, 1995 and adjourned as to that proposal.

D. If the Reincorporation is effected, then all references in
this Agreement to the "Company" shall for all purposes be deemed to be the
constituent corporation participating in the Merger that is the surviving
corporation under Delaware Law. If the Reincorporation is not effected, then
all references to the "Company" shall be references to the corporation defined
as such in the first paragraph of this Agreement.

E. If the Reincorporation is effected, all references hereafter
to "APPLICABLE LAW" shall mean the Delaware Law, and otherwise such reference
shall be to New York Law.

NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and for other good, valid and binding consideration,
the receipt and sufficiency of

1
<PAGE> 146

which are hereby acknowledged, AMRE, Merger Sub, the Company and Company Sub
hereby agree as follows:

STATEMENT OF AGREEMENT

ARTICLE 1

THE MERGER, EFFECTIVE TIME, EXCHANGE RATIO

1.1 The Merger. At the Effective Time (as defined in Section 1.3
hereof), in accordance with this Agreement and Applicable Law, Merger Sub shall
be merged (such merger being herein referred to as the "MERGER") with and into
the Company, the separate existence of Merger Sub shall cease, and the Company
shall continue as the surviving corporation. The Company hereinafter sometimes
is referred to as the "SURVIVING CORPORATION."

1.2 Effect of the Merger. When the Merger has been effected, the
Surviving Corporation shall thereupon and thereafter possess all the rights,
privileges, powers and franchises as well of a public as of a private nature,
and be subject to all the restrictions, disabilities and duties of each of the
Constituent Corporations; and all and singular, the rights, privileges, powers
and franchises of each of the Constituent Corporations and all property, real,
personal and mixed, and all debts due to either of the Constituent Corporations
on whatever account, as well for stock subscriptions as all other things in
action or belonging to each of such corporations shall be vested in the
Surviving Corporation; and all property, rights, privileges, powers and
franchises, and all and every other interest shall be thereafter as effectually
the property of the Surviving Corporation as they were of the respective
Constituent Corporations, and the title to any real estate vested by deed or
otherwise, in any of such Constituent Corporations, shall not revert or be in
any way impaired by reason of the Merger; but all rights of creditors and all
liens upon any property of any of the Constituent Corporations shall be
preserved unimpaired, and all debts, liabilities and duties of the respective
Constituent Corporations shall thenceforth attach to the Surviving Corporation,
and may be enforced against it to the same extent as if such debts, liabilities
and duties had been incurred or contracted by it.

1.4 Certificate of Incorporation; Bylaws; Directors and Officers.
The Certificate of Incorporation and bylaws of the Surviving Corporation shall
be identical with the Certificate of Incorporation and bylaws of the Company as
in effect immediately prior to the Effective Time.

2
<PAGE> 147

Such documents shall be amended and restated immediately after the Effective
Time. The directors of Merger Sub immediately prior to the Effective Time
shall be the initial directors of the Surviving Corporation and shall serve
until their successors have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the
Surviving Corporation's Certificate of Incorporation and bylaws and the
Applicable Law. The officers of Merger Sub immediately prior to the Effective
Time shall be the initial officers of the Surviving Corporation and shall serve
until their successors have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the
Surviving Corporation's Certificate of Incorporation and bylaws and Applicable
Law.

1.5 Conversion of Securities. At the Effective Time, by virtue of
the Merger and without any action on the part of AMRE, Merger Sub, the Company
or the holder of any of the shares (the "SHARES") of common stock, par value
$0.01 per share, of the Company (the "COMPANY COMMON STOCK"):

(a) Each Share issued and outstanding immediately
prior to the Effective Time (other than Shares held in the treasury of
the Company) shall be canceled and retired and be converted as follows
into that number of validly issued, fully paid and non-assessable
shares of $0.01 par value common stock of AMRE (the "AMRE COMMON
STOCK") determined as follows (the "EXCHANGE RATIO"):

(i) If the Average Price (as hereafter
defined) of the AMRE Common Stock is $9.50 or less but not
less than $6.50, then each of the Shares shall be converted
into 1.41 shares of AMRE Common Stock.

(ii) If the Average Price of the AMRE Common
Stock is more than $9.50, then each of the Shares shall be
converted into that number of shares of AMRE Common Stock
determined by multiplying by the following formula:

11.28
------------------
8.00 + (N - 9.50)

Where: N = the Average Price of the
----- AMRE Common Stock

(iii) If the Average Price of the AMRE Common
Stock is less than $6.50 but not less than $5.00, then each of
the Shares shall be converted into that number of shares of
AMRE Common Stock determined by multiplying by the following
formula:

11.28
----------------------
8.00 - (6.50 - N)

Where: N = the Average Price of the
----- AMRE Common Stock

3
<PAGE> 148

(iv) If the Average Price of the AMRE Common
Stock is less than $5.00, then on the date the Average Price
is determined AMRE may (A) terminate this Agreement by giving
the Company a notice of termination (an "AMRE TERMINATION
NOTICE"); or (B) give the Company a notice stating that AMRE
elects to proceed with the transactions contemplated by this
Agreement (the "LOW PRICE CLOSING NOTICE"). If AMRE gives the
Low Price Closing Notice, then each of the Shares shall be
converted into the number of shares of AMRE Common Stock
determined by multiplying by the following formula:

8.20
---------------------
N

Where: N = the Average Price of the
----- AMRE Common Stock

If AMRE elects to give the AMRE Termination Notice, then this
Agreement shall immediately terminate, and neither party
hereto shall have any further liability or obligation to the
other under or as a result of this Agreement other than the
obligation to enter into the sub-license agreement referred to
in Section 5.15 below. AMRE shall give the AMRE Termination
Notice or the Low Price Closing Notice by telecopy as provided
in Section 8.3 below at the telephone facsimile number
indicated therein. In the event that AMRE shall not have
given either the AMRE Termination Notice or the Low Price
Closing Notice within five business days after the date the
Average Price is determined to be less than $5.00, then AMRE
shall be deemed to have given the AMRE Termination Notice.

(v) As used herein, "AVERAGE PRICE" means the
average closing price per share of AMRE Common Stock on the
New York Stock Exchange for the fifteen trading days prior to
the day three trading days before AMRE requests acceleration
of effectiveness of the Registration Statement containing the
Joint Proxy Statement/Prospectus referred to in Section 5.1
below. AMRE shall promptly give the Company notice (the
"AVERAGE PRICE NOTICE") of the amount of the Average Price of
the AMRE Common Stock. The Average Price Notice shall be
delivered by telecopy as provided in Section 8.3 below at the
telephone facsimile number indicated therein.

(b) Each Share which is issued and outstanding
immediately prior to the Effective Time and which is held in the
treasury of the Company shall be canceled and retired, and no payment
shall be made with respect thereto.

(c) As a result of the Merger and without action on
the part of the holder thereof, all Shares shall cease to be
outstanding and shall be cancelled and returned and shall cease to
exist, and each holder of a certificate (a "CERTIFICATE") formerly
representing any Shares shall thereafter cease to have any rights with
respect to such Shares, except the right to receive, without interest,
certificates representing AMRE

4
<PAGE> 149

Common Stock and cash for fractional interests of the AMRE Common
Stock in accordance with Section 1.5(d) upon the surrender of such
Certificate.

(d) Notwithstanding Section 1.5 hereof, in lieu of
the issuance of fractional shares of AMRE Common Stock, each holder of
record of issued and outstanding Shares as of the Effective Time shall
be entitled to receive a cash payment (without interest) equal to the
fair market value of a fraction of a share of AMRE Common Stock to
which such holder would be entitled but for this provision. The cash
payment in lieu of a fractional share shall represent such holder's
proportionate interest in the net proceeds from the sale by the
Exchange Agent (as hereinafter defined) on behalf of all such holders
of the aggregate fractional shares of AMRE Common Stock that such
holders would be entitled to receive but for this Section 1.5(d). Any
such sale shall be made by the Exchange Agent within ten (10) business
days after the date upon which the Certificates (as hereinafter
defined) that would otherwise result in the issuance of shares of AMRE
Common Stock have been received by the Exchange Agent.

(e) At the Effective Time, all options (individually
a "Company Option" or collectively, the "Company Options") then
outstanding under the Company's stock option plans (collectively, the
"Company Stock Option Plans") shall remain outstanding following the
Effective Time and shall remain exercisable pursuant to the terms of
such plans (subject to the waiver of rights under the reload feature
of such Company Stock Option Plans reflected in the Stockholders
Agreement in the form of Exhibit E attached hereto). At the Effective
Time, such Company Options shall, by virtue of the Merger and without
any further action on the part of the Company or the holder of any
such Company Options, be assumed by AMRE in such manner that AMRE (i)
is a corporation "assuming a stock option in a transaction to which
Section 424(a) applies" within the meaning of Section 424 of the Code,
or (ii) to the extent that Section 424(a) of the Code does not apply
to any such Company Option, would be such a corporation were Section
424(a) applicable to such option. Each Company Option assumed by AMRE
shall be exercisable upon the same terms and conditions as under the
applicable Company Stock Option Plan and the applicable option
agreement issued thereunder, except that (A) each such Company Option
shall be exercisable for that whole number of shares of AMRE Common
Stock (to the nearer whole share) into which the number of Shares
subject to such Option immediately prior to the Effective Time would
be converted under this Section 1.5, and (B) the option exercise price
per share of AMRE Common Stock shall be an amount equal to the option
price per Share subject to such Company Option in effect prior to the
Effective Time divided by the Exchange Ratio (the price per share, as
so determined, being rounded upward to the nearest full cent).

(f) At the Effective Time, each share of Common
Stock, par value $0.01 per share, of Merger Sub issued and outstanding
immediately prior to the Effective Time as a result of the Merger
shall be converted in exchange for one newly and validly issued, fully
paid and nonassessable share of Common Stock of the Surviving
Corporation.

5
<PAGE> 150

1.6 Exchange of Certificates Representing Company Common Stock.

(a) As of the Effective Time, AMRE shall deposit, or
shall cause to be deposited, with an exchange agent selected by AMRE,
which shall be AMRE's Transfer Agent or such other party reasonably
satisfactory to Company (the "EXCHANGE AGENT") for the benefit of the
holders of the Shares, for exchange in accordance with this Article 1,
certificates representing the shares of AMRE's Common Stock issued in
exchange for the Shares.

(b) Promptly after the Effective Time, AMRE shall
cause the Exchange Agent to mail to each holder of record of Shares
(i) a letter of transmittal which shall specify that delivery shall be
effective, and risk of loss and title to such Shares shall pass, only
upon delivery of the certificates formerly representing such Shares to
the Exchange Agent in accordance with the instructions specified in
clause (ii) of this sentence and which shall be in such form and have
such other provisions as AMRE and the Exchange Agent may reasonably
specify and (ii) instructions for use in affecting the surrender of
such certificates in exchange for certificates representing shares of
AMRE Common Stock. Upon surrender of a Certificate for cancellation
to the Exchange Agent together with such letter of transmittal, duly
executed and completed in accordance with the instructions thereto,
the holder of the shares formerly represented by such Certificate
shall be entitled to receive in exchange therefor a certificate
representing that number of shares of AMRE Common Stock determined
pursuant to Section 1.5(a) above and unpaid dividends and
distributions, if any, which such holder has the right to receive in
respect of the Certificates surrendered pursuant to the provisions of
this Article 1, after giving effect to any required tax withholdings,
and the Certificates so surrendered shall forthwith be cancelled. In
the event of a transfer of ownership of Company Common Stock which is
not registered in the transfer records of the Company, a certificate
representing the proper number of shares of AMRE Common Stock may be
issued to such a transferee if the certificate formerly representing
such Company Common Stock is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such
transfer and to evidence that any applicable stock transfer taxes have
been paid.

(c) Notwithstanding any other provisions of this
Agreement, no dividends or other distributions declared after the
Effective Time on AMRE Common Stock shall be paid with respect any of
the Shares until such certificate formerly representing the Shares is
surrendered for exchange as provided herein. Subject to the effect of
applicable laws, following surrender of any such certificate, there
shall be paid to the holder of the certificates representing whole
shares of AMRE Common Stock issued in exchange therefor, without
interest, (i) at the time of such surrender, the amount of dividends
or other distributions with a record date after the Effective Time
theretofore payable with respect to such whole shares of AMRE Common
Stock and not paid, less the amount of any withholding taxes which may
be required thereon, and (ii) at the appropriate payment date, the
amount of dividends or other distributions, with a record date after
the Effective Time but prior to surrender and with a payment date
subsequent to surrender, payable

6
<PAGE> 151

with respect to such whole shares of AMRE Common Stock, less the
amount of any withholding taxes which may be required thereon.

(d) At or after the Effective Time, there shall be no
transfers on the stock transfer books of Company of the Shares which
were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Company, they
shall be cancelled and exchanged for certificates of shares of AMRE
Common Stock deliverable in respect thereof pursuant to this Agreement
in accordance with the procedures set forth in this Section 1.6.
Certificates surrendered for exchange by any person constituting an
"affiliate" of Company for purposes of Rule 145(c) under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), shall not
be exchanged until AMRE has received the executed letter from such
person as provided in Section 5.17 below.

(e) None of AMRE, the Company, the Exchange Agent or
any other person shall be liable to any former holder of Shares for
any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.

(f) In the event any certificate representing Shares
of Company Common Stock shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming
such certificate to be lost, stolen or destroyed and, if required by
AMRE, the posting by such person of a bond in such reasonable amount
as AMRE may direct as indemnity against any claim that may be made
against it with respect to such certificate, the Exchange Agent will
issue in exchange for such lost, stolen or destroyed certificate the
shares of AMRE Common Stock and unpaid dividends and distributions on
shares of AMRE Common Stock deliverable in respect thereof pursuant to
this Agreement.

1.7 Adjustment of Exchange Ratio. In the event that, subsequent
to the date of this Agreement but prior to the Effective Time, the outstanding
shares of AMRE Common Stock or Company Common Stock, respectively, shall have
been changed into a different number of shares or a different class as a result
of a stock split, reverse stock split, stock dividend, subdivision,
reclassification, split, combination, exchange, recapitalization or other
similar transaction, the Exchange Ratio shall be appropriately adjusted.

1.8 Director Nominee. At the Effective Time, AMRE shall take such
action as is necessary in order to enable one individual designated by the
Company to be elected to AMRE's Board of Directors (the "DESIGNEE"). The
Company has selected as the Designee Murray Gross.

7
<PAGE> 152

ARTICLE 2

REPRESENTATIONS AND WARRANTIES OF
AMRE AND MERGER SUB

Except as set forth in the disclosure letter delivered herewith (the
"AMRE DISCLOSURE LETTER") and the AMRE Reports (as defined herein), AMRE and
Merger Sub jointly and severally represent and warrant to the Company and
Company Sub the following:

2.1 Organization, Good Standing, Power, etc.

(a) Each of AMRE and Merger Sub is a corporation
duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, and has the requisite corporate power
and authority to carry on its business as now conducted. Each of AMRE
and Merger Sub is duly qualified as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the
character of its properties owned or leased or the nature of its
activities makes such qualification necessary, except where the
failure to be so qualified would not have a material adverse effect on
AMRE or Merger Sub. As used in this Agreement, the term "material
adverse effect" means, with respect to any entity, a material adverse
effect on the financial condition, properties, business or results of
operations of such entity and its subsidiaries taken as a whole, or on
the ability of such entity to perform its obligations hereunder or to
consummate the transactions contemplated hereby, whether or not caused
by management of such entity. Copies of the Certificate of
Incorporation and bylaws of each of AMRE and Merger Sub heretofore
delivered to the Company or its representatives by AMRE are true and
complete as of the date hereof. Each of such Certificate of
Incorporation and bylaws is in full-force and effect, and neither AMRE
nor Merger Sub is in violation or breach of any of the provisions of
its Certificate of Incorporation or bylaws.

(b) Each of AMRE and Merger Sub has the requisite
corporate power and authority to enter into this Agreement and,
subject to obtaining stockholder approval of the Merger, to perform
its obligations hereunder. The execution and delivery of this
Agreement by AMRE and Merger Sub and the consummation by AMRE and
Merger Sub of the transactions contemplated hereby have been duly
authorized by the Board of Directors of each of AMRE and Merger Sub
and no other corporate proceedings on the part of AMRE or Merger Sub
are necessary for the execution and delivery of this Agreement by AMRE
or Merger Sub, and, subject to obtaining stockholder approval of the
Merger and an increase in the number of AMRE's authorized shares, the
consummation by AMRE and Merger Sub of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by AMRE
and Merger Sub and, subject to obtaining stockholder approval of the
Merger and assuming that it has been duly executed and delivered by
the Company, constitutes a legal, valid and binding obligation of each
of AMRE and Merger Sub, enforceable against AMRE and Merger Sub in
accordance with its terms except as enforcement thereof may be limited
by liquidation, conservatorship, bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the

8
<PAGE> 153

enforcement of creditor's rights generally from time to time in effect
and except that equitable remedies are subject to judicial discretion.

2.2 Authorized Capitalization of AMRE. The authorized capital
stock of AMRE consists of 20,000,000 shares of AMRE Common Stock and 1,000,000
shares of preferred stock, par value $0.10 per share (the "AMRE PREFERRED
STOCK"). As of October 31, 1995, there were 13,049,822 shares of AMRE Common
Stock and no shares of AMRE Preferred Stock issued and outstanding. AMRE has
no outstanding bonds, debentures, notes or other obligations the holders of
which have the right to vote (or which are convertible into or exercisable for
securities having the right to vote) with the stockholders of AMRE on any
matter. All issued and outstanding shares of AMRE Common Stock are duly
authorized, validly issued, fully paid, nonassessable and free of preemptive
rights. Except as disclosed in the AMRE Reports (as hereinafter defined), (i)
there are no outstanding or authorized subscriptions, options, warrants, calls,
rights (including any preemptive rights), commitments, or other agreements of
any character whatsoever which obligate or may obligate AMRE to issue or sell
any additional shares of its capital stock or any securities convertible into
or evidencing the right to subscribe for any shares of its capital stock or
securities convertible into or exchangeable for such shares, (ii) there are no
outstanding or authorized stock appreciation, phantom stock, profit
participation or similar plans or contracts or rights with respect to AMRE or
any of its subsidiaries which are effective as of the date hereof or which have
been executed or agreed to as of the date hereof with an effective date after
the date hereof, and (iii) there are no stockholders' agreements, voting
trusts, proxies or other agreements or understandings with respect to the
voting of the capital stock of AMRE or any of its subsidiaries to which AMRE or
any of its subsidiaries is or are a party which are presently effective or have
been executed or agreed to as of the date hereof and provide for an effective
date after the date hereof or to which any officer or director of AMRE or any
stockholder owned or controlled by such officer or director is or will be a
party in accordance with the terms hereof.

2.3 Subsidiaries. AMRE owns directly or indirectly each of the
outstanding shares of capital stock of each of AMRE's direct or indirect
subsidiaries (each an "AMRE SUBSIDIARY"). Each of the outstanding shares of
capital stock of each of the AMRE Subsidiaries is duly authorized, validly
issued, fully paid and nonassessable, and all such outstanding shares or other
ownership interests are owned, directly or indirectly, by AMRE free and clear
of all liens, pledges, security interests, claims or other encumbrances other
than liens imposed by local law which are not material.

2.4 Other Interests. Except for interests in AMRE Subsidiaries,
neither AMRE nor any AMRE Subsidiary owns, directly or indirectly, any interest
or investment (whether equity or debt) in any corporation, partnership, joint
venture, business, trust or entity other than investments in short term
investment securities.

2.5 Effect of Agreement. The execution, delivery and performance
of this Agreement by AMRE and the consummation by AMRE of the transactions
contemplated hereby will not require any notice to, filing with, or the
consent, approval or authorization of any person or governmental authority,
except for filings required under the Hart- Scott-Rodino Act, the Securities
Act, the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") and
state

9
<PAGE> 154

"Blue Sky" filings. Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will (i) result in the
acceleration or termination of, or the creation in any party of the right to
accelerate, terminate, modify or cancel, any material indenture, contract,
lease, sublease, loan agreement, note or other obligation or liability to which
AMRE is a party or is bound or to which any of its assets are subject which
would have a material adverse effect on AMRE, (ii) conflict with, violate or
result in a breach of any provision of the charter documents or bylaws of AMRE,
(iii) conflict with or violate any law, rule, regulation, ordinance, order,
writ, injunction or decree applicable to AMRE or by which any of its properties
or assets is bound or affected which conflict or violation would result in a
material adverse effect on AMRE or (iv) conflict with or result in any breach
of or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or result in the creation of any lien,
charge or encumbrance on any of the properties or assets of AMRE pursuant to
any of the terms, conditions or provisions of any indenture, contract, lease,
sublease, loan agreement, note, permit, license, franchise, agreement or other
instrument, obligation or liability to which AMRE is a party or by which AMRE
or any of its assets is bound or affected which would have a material adverse
effect on AMRE.

2.6 SEC Documents. AMRE has filed each report, proxy statement or
information statement (as defined in Regulation 14C under the Exchange Act)
required of it since March 31, 1993, (including exhibits and any amendments
thereto) filed with the Securities and Exchange Commission (the "SEC")
(collectively, the "AMRE REPORTS"). As of their respective dates, (i) the AMRE
Reports complied as to form in all material respects with the applicable
requirements of the Securities Act, the Exchange Act, and the rules and
regulations thereunder, and (ii) the AMRE Reports did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in the light
of the circumstances under which they were made, not misleading. Each of the
consolidated balance sheets of AMRE included in the AMRE Reports (including the
related notes and schedules) has been prepared in accordance with generally
accepted accounting principles consistently applied, or, if unaudited, in
accordance with applicable published accounting requirements of the SEC, and
fairly presents the consolidated financial position of AMRE and AMRE's
Subsidiaries as of its date, and each of the consolidated statements of income,
changes in stockholders' equity and cash flows of AMRE included in the AMRE
Reports (including any related notes and schedules, and together with the
consolidated balance sheets of AMRE, the "AMRE FINANCIAL STATEMENTS") has been
prepared in accordance with generally accepted accounting principles
consistently applied, or, if unaudited, in accordance with applicable published
accounting requirements of the SEC, and fairly presents the results of
operations, changes in stockholders' equity or cash flows, as the case may be,
of AMRE and AMRE's Subsidiaries for the periods set forth therein (subject, in
the case of unaudited statements, to normal year-end audit adjustments which
would not cause a material adverse effect on AMRE). Neither AMRE nor any of
the AMRE Subsidiaries has any material liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) that would be required to
be reflected on, or reserved against in, a balance sheet of AMRE or in the
notes thereto, prepared in accordance with generally accepted accounting
principles consistently applied, except liabilities arising in the ordinary
course of business since July 2, 1995 (the "BALANCE SHEET DATE"). The balance
sheet of AMRE for July 2, 1995 and the related consolidated statements of
income for the period ended July 2, 1995 are hereafter referred to as

10
<PAGE> 155

the "JULY AMRE FINANCIALS". All material agreements, contracts and other
documents required to be filed as exhibits to any of the AMRE Reports have been
so filed. AMRE has timely filed all reports and other filings required to be
filed with the SEC under the rules and regulations of the SEC. Any financial
statements prepared for filing with the SEC by AMRE subsequent to the date of
the July AMRE Financials or the date hereof, including but not limited to its
year ended December 31, 1995 audited financial statements (but only to the
extent the same are required to be filed with the SEC prior to the Effective
Time) (the "SUBSEQUENT AMRE FINANCIALS"), have been, or if not yet filed, will
be, prepared in accordance with generally accepted accounting principles
consistently applied (in the case of audited statements) and in accordance with
applicable published accounting requirements of the SEC (in the case of
unaudited statements), consistently applied, will fairly represent the
financial condition, and will accurately set forth in all material respects the
results of the combined operations, of AMRE and the AMRE Subsidiaries for the
periods covered thereby.

2.7 Absence of Certain Changes or Events. Except as disclosed in
the AMRE Reports and, and except for changes arising from the public
announcement of the transactions contemplated by this Agreement, since June 30,
1995, AMRE has conducted its business only in the ordinary course of business
and there has not been (i) any material change in AMRE or any development or
combination of developments of which any of its executive officers has actual
knowledge which has resulted or is reasonably likely to result in a material
adverse effect on AMRE; (ii) any declaration, setting aside or payment of any
dividend or other distribution with respect to its capital stock, except for
dividends paid and to be paid in accordance with AMRE's past practice and at a
level no greater than $0.03/per share per quarter; (iii) any material change in
its accounting principles, practices or methods; (iv) any termination by AMRE
of the employment of any department head or officer of AMRE or entered into (A)
any written employment agreement or (B) any oral employment agreement not
terminable without penalty by any party thereto upon 60 days notice; (v) any
material increase in the rate of compensation or bonus payments payable or to
become payable to any of AMRE's officers or directors (including, without
limitation, any payment of or promise to pay any bonus or special
compensation); (vi) any purchase, redemption, issuance, sale or other
acquisition or disposition of any of its shares of capital stock or other
equity securities, or agreement to do so, or any grant of any options, warrants
or other rights to purchase or convert any obligation into any shares of AMRE's
capital stock or any evidence of indebtedness or other securities; (vii) any
transaction between AMRE and any Affiliate (as defined in Rule 12b-2 under the
Exchange Act) of AMRE; and (viii) any agreement entered into by AMRE to do any
of the things set out in (i)-(vii) above.

2.8 Taxes. AMRE has timely filed or caused to be timely filed
(including allowable extensions) all federal, state, local, foreign and other
tax returns for income taxes, sales taxes, withholding taxes, employment taxes,
property taxes, franchise taxes and all other taxes of every kind whatsoever
which are required by law to have been filed for its tax years ended prior to
the date of this Agreement or requests for extensions have been timely filed.
All of the tax returns that have been filed accurately reflect in all material
respects the facts regarding the income, deductions, credits, assets,
operations, activities and all other matters and information required to be
shown thereon. AMRE has paid or caused to be paid all taxes, assessments,
fees, penalties and other governmental charges which have become due pursuant
to said returns and

11
<PAGE> 156

all other taxes, assessments, fees, penalties and other governmental charges
which have become due and payable. AMRE has not filed or entered into any
election, consent or extension agreement that extends the applicable statute of
limitations with respect to its liability for taxes, except as set forth in the
AMRE Reports. The provisions for income and other taxes reflected in the
balance sheet included in the AMRE Reports make adequate provision for all
accrued and unpaid taxes of AMRE, whether or not disputed, and AMRE has made
and will continue to make adequate provision for such taxes on its books and
records until the Effective Time, including any taxes arising from the
transactions contemplated by this Agreement; provided, however, no provision
has been made or will be made in the AMRE Financial Statements or the
Subsequent AMRE Financials for any taxes resulting from any tax election made
by the Surviving Corporation subsequent to the Effective Time. AMRE is not
party to any action or proceeding pending or, to its knowledge, threatened by
any governmental authority for assessment or collection of taxes; no unresolved
claim for assessment or collection of such taxes has been asserted against
either of them, and no audit or investigation by state or local government
authorities is under way. There is and will be no further liability for any
such taxes, whether by future deficiency assessments or otherwise, and no
material interest or penalties accrued or accruing with respect thereto.

2.9 Legal Proceedings. Except as set forth in the AMRE Reports,
there are no claims, actions, suits, arbitrations, grievances, proceedings or
investigations pending or, to the best knowledge of AMRE and Merger Sub,
threatened against AMRE or Merger Sub, at law, in equity, or before any
federal, state, municipal or other governmental or nongovernmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, and
there are no outstanding or unsatisfied judgments, orders, decrees or
stipulations to which AMRE or Merger Sub is a party, which involve the
transactions contemplated herein or which would have a material adverse effect
upon AMRE or Merger Sub. Neither AMRE nor Merger Sub is currently engaged in
or contemplating any legal action to recover moneys due to them or damages
sustained by them. Neither AMRE nor Merger Sub is in violation of or in
default with respect to any applicable judgment, order, writ, injunction or
decree, which would have a material adverse effect upon AMRE or Merger Sub.

2.10 Labor Matters. Neither AMRE nor any of the AMRE Subsidiaries
is a party to, or bound by, any collective bargaining agreement, contract or
other agreement or understanding with a labor union or labor organization. To
the knowledge of AMRE, there is no unfair labor practice or labor arbitration
proceeding pending. To the knowledge of AMRE, there are no organizational
efforts with respect to the formation of a collective bargaining unit presently
being made or threatened involving employees of AMRE or any of the AMRE
Subsidiaries.

2.11 Patents, Trademarks, Franchises, etc. All agreements related
to patents, trademarks, franchises and other similar rights listed in the AMRE
Disclosure Letter are valid and enforceable, AMRE has performed all obligations
imposed upon it thereunder, and AMRE is not in default thereunder, nor is there
any event which with notice or lapse of time, or both, would constitute a
default thereunder by AMRE or, to the knowledge of AMRE, any other party
thereto. Except as set forth in the AMRE Disclosure Letter, AMRE has not
received notice that any party to any such agreement intends to cancel,
terminate or refuse to renew the same or to exercise or decline to exercise any
option or other right thereunder.

12
<PAGE> 157

2.12 Employee Benefit Plans. All material employee benefit plans,
as defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), all arrangements providing compensation, severance
or other benefits to any employee or director or former employee or director of
AMRE, the AMRE Subsidiaries or ERISA Affiliate (as defined below) of AMRE (the
"AMRE BENEFIT PLANS") are set forth in the AMRE Disclosure Letter or in the
AMRE Reports. Unless otherwise disclosed in the AMRE Disclosure Letter, to the
extent applicable, AMRE Benefit Plans comply, in all material respects, with
the requirements of ERISA and the Code, and any AMRE Benefit Plan intended to
be qualified under Section 401(a) of the Code has been determined by the
Internal Revenue Service (the "IRS") to be so qualified or AMRE has submitted
or is in the process of submitting a timely determination letter request to the
IRS with respect to any such AMRE Benefit Plan. Neither AMRE nor any ERISA
Affiliate of AMRE (during the period of its affiliated status and prior
thereto, to its knowledge) maintains, contributes to or has in the past
maintained or contributed to any benefit plan which is covered by Title IV of
ERISA or Section 412 of the Code. Neither any AMRE Benefit Plan nor AMRE has
incurred any liability or penalty under Section 4975 of the Code or Section
502(i) of ERISA. Each AMRE Benefit Plan has been maintained and administered
in all material respects in compliance with its terms and with ERISA and the
Code to the extent applicable thereto. There are no pending or anticipated
claims against or otherwise involving any of AMRE Benefit Plans and no suit,
action or other liability (excluding claims for benefits incurred in the
ordinary course of AMRE Benefit Plan activities) has been brought against or
with respect to any such AMRE Benefit Plan, except for any of the foregoing
which would not have a material adverse effect on AMRE. All contributions
required to be made as of the date hereof to AMRE Benefit Plans have been made
or provided for. All required contributions to AMRE Benefit Plans have been
timely made. Neither AMRE nor any ERISA Affiliate of AMRE has contributed to,
or been required to contribute to, any "multiemployer plan" (as defined in
Sections 3(37) and 4001(a)(3) of ERISA). Except for benefits as may be
required to be provided under applicable provisions of federal or state law,
there are no plans or arrangements which provides or has any liability to
provide life insurance or medical or other employee welfare benefits to any
employee or former employee upon his retirement or termination of employment.
The execution of, and performance of the transactions contemplated in, this
Agreement will not (either alone or upon the occurrence of any additional or
subsequent events) constitute an event under any AMRE Benefit Plan that will or
may result in any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect to any employee. The only
severance agreements or severance policies applicable to AMRE or any of the
AMRE Subsidiaries are the agreements and policies specifically referred to in
the AMRE Disclosure Letter (and, in the case of such agreements, the form of
which is attached to the AMRE Disclosure Letter).

For purposes of this Agreement "ERISA AFFILIATE" means any business or
entity which is a member of the same "controlled group of corporations," is
under "common control" or is a member of an "affiliated service group" with an
entity within the meanings of Sections 414(b), (c) or (m) of the Code, or
required to be aggregated with the entity under Section 414(o) of the Code, or
is under "common control" with the entity, within the meaning of Section
4001(a)(14) of ERISA, or any regulations promulgated or proposed under any of
the foregoing Sections.

13
<PAGE> 158

2.13 Stockholder Information. None of the information to be
distributed to stockholders of AMRE and the Company in connection with the
Merger nor any amendments or supplements of or to any of the foregoing which is
provided by AMRE (collectively, the "AMRE STOCKHOLDER INFORMATION"), will
between the date the AMRE Stockholder Information is first mailed to
stockholders and the Effective Time, contain any statement which, at such time
and in light of the circumstances under which it is made, will be false or
misleading with respect to any fact, or will omit to state any fact necessary
in order to make the statements therein not false or misleading.

2.14 Full Disclosure. No information furnished, or to be
furnished, by either AMRE or Merger Sub or their representatives in connection
with this Agreement (including, but not limited to, the AMRE Reports and all
information in the Schedules hereto) is, or will be, false or misleading and
such information includes all facts required to be stated therein or necessary
to make the statements therein not misleading. No representation or warranty
by or on behalf of AMRE or the AMRE Subsidiaries contained in this Agreement,
and no statement contained in any certificate, list, exhibit, or other
instrument furnished or to be furnished to AMRE pursuant hereto contains or
will contain any untrue statement of a material fact, or omits or will omit to
state any material facts which are necessary in order to make the statement
contained herein or therein, in light of the circumstances under which they are
made, not misleading.

2.15 Capital Stock. The shares of Common Stock of Merger Sub are
validly issued, fully paid and nonassessable and are owned directly by AMRE,
free and clear of all liens, claims and encumbrances. The issuance and
delivery by AMRE of shares of AMRE Common Stock in connection with the Merger
have been duly and validly authorized by all necessary corporate action on the
part of AMRE except for approval of its stockholders contemplated by this
Agreement.

2.16 Historic Business. In the Merger, Merger Sub will transfer
"substantially all" of its assets (within the meaning of Revenue Procedure
77-37, Section 3.01, 1977-2 C.B. 568) to the Surviving Corporation. AMRE has
no plan or intention to (i) cause or permit the Surviving Corporation to issue
any additional shares of stock, (ii) reacquire any of the shares of AMRE Common
Stock issued in the Merger, (iii) liquidate the Surviving Corporation, (iv)
cause or permit the merger of the Surviving Corporation with another
corporation, (v) sell or otherwise dispose of the stock of the Surviving
Corporation, or (vi) cause or permit the Surviving Corporation to sell or
otherwise dispose of any of its assets (except for dispositions of assets made
in the ordinary course of business and transfers of assets or shares of the
Surviving Corporation's stock permitted by the provisions of Treasury
Regulation Section 1.368-2(j)(4). Following the Merger, the Surviving
Corporation will continue the Company's and Merger Sub's historic business or
use a significant portion of their historic business assets in a business
(within the meaning of Treasury Regulation Section 1.368-1(d)).

14
<PAGE> 159

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND COMPANY SUB

Except as set forth in the disclosure letter delivered at or prior to
the execution hereof (the "COMPANY DISCLOSURE LETTER") or the Company Reports
(as hereinafter defined), each of the Company and Company Sub represents and
warrants to AMRE and Merger Sub as follows in Section 3.1 through Section 3.23,
inclusive:

3.1 Organization, Good Standing, Power, etc.

(a) The Company and Company Sub are corporations duly
organized, validly existing and in good standing under the laws of
their respective states of incorporation, and have the requisite
corporate power and authority to carry on their businesses as now
conducted. The Company and Company Sub are each duly qualified as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of their respective properties owned
or leased or the nature of their activities makes such qualification
necessary except where the failure to be so qualified would not have a
material adverse effect on the Company or Company Sub. Copies of the
Certificate of Incorporation and bylaws of the Company and Company Sub
heretofore delivered to AMRE and Merger Sub or their representatives
by the Company and Company Sub are true and complete as of the date
hereof. Each of such Certificate of Incorporation and bylaws is in
full-force and effect, and neither the Company nor Company Sub is in
violation or breach of any of the provisions of its respective
Certificate of Incorporation or bylaws.

(b) The Company and Company Sub have the requisite
corporate power and authority to enter into this Agreement and,
subject to obtaining stockholder approval of the Merger, to perform
their respective obligations hereunder. The execution and delivery of
this Agreement by each of the Company and Company Sub and the
consummation by each of the Company and Company Sub of the
transactions contemplated hereby have been duly authorized by the
Board of Directors of the Company and Company Sub and no other
corporate proceedings on the part of the Company are necessary for the
execution and delivery of this Agreement by the Company or Company
Sub, and, subject to obtaining stockholder approval of the Merger, the
consummation by the Company and Company Sub of the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by each of the Company and Company Sub and, subject to
obtaining any necessary stockholder approval of the Merger and
assuming that it has been duly executed and delivered by AMRE and
Merger Sub, constitutes a legal, valid and binding obligation of each
of the Company and Company Sub, enforceable against the Company and
Company Sub in accordance with its terms except as enforcement thereof
may be limited by liquidation, conservatorship, bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditor's rights generally from time to time in effect
and except that equitable remedies are subject to judicial discretion.

15
<PAGE> 160

3.2 Authorized Capitalization of the Company and Company Sub.

(a) The authorized capital stock of the Company
consists of 15,000,000 shares of Company Common Stock, par value $0.01
per share, and 1,000,000 shares of preferred stock, par value $0.01
per share (the "COMPANY PREFERRED STOCK"). As of October 15, 1995,
there were 3,396,572 shares of Company Common Stock and no shares of
Company Preferred Stock issued and outstanding. The Company has no
outstanding bonds, debentures, notes or other obligations the holders
of which have the right to vote (or which are convertible into or
exercisable for securities having the right to vote) with the
stockholders of the Company on any matter. All issued and outstanding
shares of Common Stock are duly authorized, validly issued, fully
paid, nonassessable and free of preemptive rights. Except as
disclosed in the Company Reports or the Company Disclosure Letter, (i)
there are no outstanding or authorized subscriptions, options,
warrants, calls, rights (including any preemptive rights),
commitments, or other agreements of any character whatsoever which
obligate or may obligate the Company to issue or sell any additional
shares of its capital stock or any securities convertible into or
evidencing the right to subscribe for any shares of its capital stock
or securities convertible into or exchangeable for such shares, (ii)
there are no outstanding or authorized stock appreciation, phantom
stock, profit participation or similar plans or contracts or rights
with respect to the Company or any of its subsidiaries which are
effective as of the date hereof or which have been executed or agreed
to as of the date hereof with an effective date after the date hereof,
and (iii) there are no stockholders' agreements, voting trusts,
proxies or other agreements or understandings with respect to the
voting of the capital stock of the Company or any of its subsidiaries
to which the Company or any of its subsidiaries is or are a party
which are presently effective or have been executed or agreed to as of
the date hereof and provide for an effective date after the date
hereof or to which any officer or director of the Company or any
stockholder owned or controlled by such officer or director is or will
be a party in accordance with the terms hereof.

(b) The authorized capital stock of Company Sub
consists of 19,000,000 shares of common stock, par value $0.01 per
share ("COMPANY SUB COMMON STOCK"), and 1,000,000 shares of preferred
stock, par value $0.01 per share (the "COMPANY SUB PREFERRED STOCK").
As of October 31, 1995, there were 1,000 shares of Company Sub Common
Stock and no shares of Company Sub Preferred Stock issued and
outstanding. Company Sub has no outstanding bonds, debentures, notes
or other obligations the holders of which have the right to vote (or
which are convertible into or exercisable for securities having the
right to vote) with the stockholders of the Company Sub on any matter.
All issued and outstanding shares of Common Stock are duly authorized,
validly issued, fully paid, nonassessable and free of preemptive
rights. Except as disclosed in the Company Sub Disclosure Letter, (i)
there are no outstanding or authorized subscriptions, options,
warrants, calls, rights (including any preemptive rights),
commitments, or other agreements of any character whatsoever which
obligate or may obligate the Company Sub to issue or sell any
additional shares of its capital stock or any securities convertible
into or evidencing the right to subscribe for any shares of its
capital stock or securities convertible into or exchangeable for such
shares, (ii) there are no

16
<PAGE> 161

outstanding or authorized stock appreciation, phantom stock, profit
participation or similar plans or contracts or rights with respect to
the Company Sub or any of its subsidiaries which are effective as of
the date hereof or which have been executed or agreed to as of the
date hereof with an effective date after the date hereof, and (iii)
there are no stockholders' agreements, voting trusts, proxies or other
agreements or understandings with respect to the voting of the capital
stock of the Company Sub or any of its subsidiaries to which the
Company Sub or any of its subsidiaries is or are a party which are
presently effective or have been executed or agreed to as of the date
hereof and provide for an effective date after the date hereof or to
which any officer or director of the Company Sub or any stockholder
owned or controlled by such officer or director is or will be a party
in accordance with the terms hereof.

3.3 Subsidiaries. Except as set forth in the Company Disclosure
Letter, the Company owns directly or indirectly each of the outstanding shares
of capital stock (or other ownership interests having by their terms ordinary
voting power to elect a majority of directors or others performing similar
functions with respect to such subsidiary of the Company) of each of the
Company's direct or indirect subsidiaries (each a "COMPANY SUBSIDIARY"). Each
of the outstanding shares of capital stock of each of the Company Subsidiaries
(that are corporations) is duly authorized, validly issued, fully paid and
nonassessable, and all such outstanding shares or other ownership interests are
owned, directly or indirectly, by the Company free and clear of all liens,
pledges, security interests, claims or other encumbrances other than liens
imposed by local law which are not material.

3.4 Other Interests. Except for interests in the Company
Subsidiaries, neither the Company nor any Company Subsidiary owns, directly or
indirectly, any material interest or investment (whether equity or debt) in any
corporation (including but not limited to AMRE), partnership, joint venture,
business, trust or entity other than investments in short term investment
securities.

3.5 Effect of Agreement. The execution, delivery and performance
of this Agreement by the Company and Company Sub and the consummation by each
of the Company and Company Sub of the transactions contemplated hereby will not
require any notice to, filing with, or the consent, approval or authorization
of any person or governmental authority, except for filings required under the
Hart-Scott-Rodino Act and the Exchange Act. Neither the execution and delivery
of this Agreement nor the consummation of the transactions contemplated hereby
will (i) except as set forth in the Company Disclosure Letter, result in the
acceleration or termination of, or the creation in any party of the right to
accelerate, terminate, modify or cancel, any indenture, contract, lease,
sublease, loan agreement, note or other obligation or liability to which the
Company or Company Sub is a party or is bound or to which any of their
respective assets are subject which event would have a material adverse effect
on the Company or Company Sub, (ii) conflict with, violate or result in a
breach of any provision of the charter documents or bylaws of the Company or
Company Sub, (iii) conflict with or violate any law, rule, regulation,
ordinance, order, writ, injunction or decree applicable to the Company or to
Company Sub or by which any of their respective properties or assets is bound
or affected which conflict or violation would result in a material adverse
effect on the Company or Company Sub or (iv) conflict with or result in any
breach of or constitute a default (or an event which with

17
<PAGE> 162

notice or lapse of time or both would become a default) under, or result in the
creation of any lien, charge or encumbrance on any of the properties or assets
of the Company or Company Sub pursuant to any of the terms, conditions or
provisions of any indenture, contract, lease, sublease, loan agreement, note,
permit, license, franchise, agreement or other instrument, obligation or
liability to which the Company or Company Sub is a party or by which the
Company, Company Sub or any of their respective assets is bound or affected
which would have a material adverse effect on the Company.

3.6 SEC Documents. The Company has delivered to AMRE each
registration statement, report, proxy statement or information statement (as
defined in Regulation 14C under the Exchange Act) prepared by it since March
31, 1993, (including exhibits and any amendments thereto) filed with the SEC
(collectively, the "COMPANY REPORTS"). As of their respective dates, (i) the
Company Reports complied as to form in all material respects with the
applicable requirements of the Securities Act, the Exchange Act, and the rules
and regulations thereunder, and (ii) the Company Reports and any Private
Placement Memorandums of Company did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. Each of the
consolidated balance sheets of Company included in the Company Reports
(including the related notes and schedules) has been prepared in accordance
with generally accepted accounting principles consistently applied, or, if
unaudited, in accordance with applicable published accounting requirements of
the SEC, and fairly presents the consolidated financial position of Company and
the Company's Subsidiaries as of its date, and each of the consolidated
statements of income, changes in stockholders' equity and cash flows of Company
included the Company Reports (including any related notes and schedules, and
together with the consolidated balance sheets of the Company, the "COMPANY
FINANCIAL STATEMENTS") has been prepared in accordance with generally accepted
accounting principles consistently applied, or, if unaudited, in accordance
with applicable published accounting requirements of the SEC, and fairly
presents the results of operations, changes in stockholders' equity or cash
flows, as the case may be, of the Company and the Company's Subsidiaries for
the periods set forth therein (subject, in the case of unaudited statements, to
normal year-end audit adjustments which would not cause a material adverse
effect on the financial condition, business, operations, liquidity, property,
or assets of the Company and the Company Subsidiaries considered as a single
enterprise). Neither the Company nor any of the Company Subsidiaries has any
material liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) that would be required to be reflected on, or reserved
against in, a balance sheet of the Company or in the notes thereto, prepared in
accordance with generally accepted accounting principles consistently applied,
except liabilities arising in the ordinary course of business since June 30,
1995 (the "BALANCE SHEET DATE"). The balance sheet of the Company for March
31, 1995 and the related consolidated statements of income for the period ended
March 31, 1995 are hereafter referred to as the "MARCH COMPANY FINANCIALS".
All material agreements, contracts and other documents required to be filed as
exhibits to any of the Company Reports have been so filed. The Company has
timely filed all reports, registration statements and other filings required to
be filed with the SEC under the rules and regulations of the SEC. Any
financial statements prepared for filing with the SEC by the Company subsequent
to the date of the March Company Financials or the date hereof, including but
not limited to its year ended March 31, 1996 audited financial statements (but
only to the

18
<PAGE> 163

extent the same are required to be filed with the SEC prior to the Effective
Time) (the "SUBSEQUENT COMPANY FINANCIALS"), have been, or if not yet filed,
will be, prepared in accordance with generally accepted accounting principles
consistently applied (in the case of audited statements) and in accordance with
applicable published accounting requirements of the SEC (in the case of
unaudited statements), consistently applied, will fairly represent the
financial condition, and will accurately set forth in all material respects the
results of the combined operations, of the Company and the Company Subsidiaries
for the periods covered thereby.

3.7 Absence of Certain Changes or Events. Except as disclosed in
the Company Reports, and the Company Financial Statements, the Company
Disclosure Letter or as required to effect the Reincorporation and except for
changes arising from the public announcement of the transactions contemplated
by this Agreement, since June 30, 1995, the Company has conducted its business
only in the ordinary course of business and there has not been (i) any material
change in the Company or any development or combination of developments of
which any of its executive officers has actual knowledge which has resulted or
is reasonably likely to result in a material adverse effect on the Company;
(ii) any declaration, setting aside or payment of any dividend or other
distribution with respect to its capital stock, except for quarterly dividends
paid and to be paid in accordance with the Company's past practice and at a
level no greater than $0.005 per share; (iii) any material change in its
accounting principles, practices or methods; (iv) any termination by the
Company of the employment of any department head or officer of the Company or
entered into (A) any written employment agreement or (B) any oral employment
agreement not terminable without penalty by any party thereto upon 60 days
notice; (v) any material increase in the rate of compensation or bonus payments
payable or to become payable to any of the Company's officers or directors
(including, without limitation, any payment of or promise to pay any bonus or
special compensation); (vi) any purchase, redemption, issuance, sale or other
acquisition or disposition of any of its shares of capital stock or other
equity securities, or agreement to do so, or any grant of any options, warrants
or other rights to purchase or convert any obligation into any shares of the
Company's capital stock or any evidence of indebtedness or other securities;
(vii) any transaction between the Company and any Affiliate (as defined in Rule
12b-2 under the Securities Exchange Act of 1934, as amended) of the Company;
and (viii) any agreement entered into by the Company.

3.8 Taxes. Except as disclosed in the Company Disclosure Letter,
the Company has timely filed or caused to be timely filed (including allowable
extensions) all material federal, state, local, foreign and other tax returns
for income taxes, sales taxes, withholding taxes, employment taxes, property
taxes, franchise taxes and all other taxes of every kind whatsoever which are
required by law to have been filed for its tax years ended prior to the date of
this Agreement or requests for extensions have been timely filed. All of the
tax returns that have been filed accurately reflect in all material respects
the facts regarding the income, deductions, credits, assets, operations,
activities and all other matters and information required to be shown thereon.
The Company has paid or caused to be paid all taxes, assessments, fees,
penalties and other governmental charges which have become due pursuant to said
returns and all other taxes, assessments, fees, penalties and other
governmental charges which have become due and payable. The Company has not
filed or entered into any election, consent or extension agreement that extends
the applicable statute of limitations with respect to its liability for taxes,

19
<PAGE> 164

except as set forth in the Company Disclosure Letter or except as would not
have a material adverse effect on the Company.

3.9 Real Property.

(a) The Company Reports and the Company Disclosure
Letter contain a complete and accurate list of all real property owned
or, to the extent material, leased by the Company (the "SECTION 3.9
PROPERTY"). Except as otherwise disclosed in the Company Disclosure
Letter and except for liens for taxes not yet due and payable, the
Section 3.9 Property owned by the Company is free and clear of all
liens, mortgages, pledges, security interests, conditional sales
agreements, charges, encumbrances (except to the extent that the
existence of such encumbrance would not materially affect the
Company's use of such property) and other adverse claims or interests
of any nature whatsoever. All improvements on the Section 3.9
Property are in good condition and repair, reasonable wear and tear
excepted.

(b) Except as disclosed in the Company Reports or the
Company Disclosure Letter, there are no material existing leases,
subleases, tenancies, licenses, contracts or other agreements relating
to the Section 3.9 Property to which the Company is a party (the
"LEASES").

(c) Except as disclosed in the Company Reports or the
Company Disclosure Letter, (i) each of the Leases to the Company of
the Section 3.9 Property is valid, and neither the Company nor, to the
knowledge of the Company, any other party thereto is in default
thereunder, nor is there any event which with notice or lapse of time,
or both, would constitute a default thereunder by the Company or, to
the knowledge of the Company, any other party thereto except where
such default would not result in a material adverse effect on the
Company and (ii) the Company has not received notice that any party to
any Lease intends to cancel, terminate or refuse to renew the same or
to exercise or decline to exercise any option or other right
thereunder.

3.10 Environmental. Except for those matters that (i) would not
have a material adverse effect on the Company, (ii) are in compliance with
applicable law, or (iii) are disclosed in the Company Reports or the Company
Disclosure Schedule:

(a) The Company has not used, stored, treated,
transported, manufactured, handled, produced or disposed of any
Hazardous Materials (as defined hereafter) on, under, at, or from, any
of the owned, leased or operated properties or assets described in the
Company Disclosure Letter, or otherwise, in any manner which violated
any applicable Environmental Law (as defined hereafter) and to the
Company's knowledge no prior owner or operator of such property or
asset of any tenant, subtenant, prior tenant or prior subtenant
thereof has used Hazardous Materials on, from or affecting such
property or asset, or otherwise, in any manner which violated any
applicable Environmental Law.

20
<PAGE> 165

(b) There have been no Releases (as defined hereafter) of
any Hazardous Material on, under, at, or from any of the owned, leased
or operated properties or assets described in the Company Disclosure
Letter or otherwise.

(c) The Company does not have any liabilities assessed,
no written claims have been received by the Company and no currently
outstanding citations or notices of violation have been received by
the Company, which in the case of any of the foregoing have been or
are imposed by reason of or based upon any alleged violation of any
applicable Environmental Laws, including, but not limited to, any such
liabilities relating to or arising out of or attributable, in whole or
in part, to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, presence or handling of any Hazardous
Materials by the Company at any of the Section 3.9 Property or
otherwise.

(d) There are no actions by any governmental authority
or third party pending under any Environmental Laws to which the
Company is a party alleging a violation of Environmental Law, nor are
there any decrees, or orders, or other administrative or judicial
requirements, outstanding under any Environmental Law with respect to
the Company.

(e) The real property currently used, owned or leased by
the Company contains no regulated underground storage tanks, or
regulated underground piping associated with underground storage
tanks, used currently or in the past as such tanks are defined in RCRA
or comparable state law.

(f) The Company has obtained and is in compliance with
all material permits and licenses that are required under
Environmental Laws, and is in material compliance with all terms and
conditions of such permits and licenses.

(g) Definitions:

(1) as used herein, the term "HAZARDOUS MATERIALS"
means chemicals, materials or substances which are defined as
or included in the definition of "hazardous substances,"
"hazardous wastes," "toxic pollutants," "pollutants,"
"contaminants," or words of similar import under any
Environmental Law; or other chemical, material, substance or
waste, exposure to which is prohibited, limited or regulated
under any Environmental Law;

(2) the term "ENVIRONMENTAL LAWS" means all federal,
state and local laws, rules and regulations applicable to the
Company and its properties relating to pollution or protection
of human health or the environment (including, without
limitation, ambient air, surface water, groundwater, land
surface or subsurface strata), including, without limitation,
laws and regulations relating to Releases or threatened
Releases of Hazardous Materials, or otherwise relating to the
manufacture, processing, distribution, use treatment, storage,
disposal, transport or handling of Hazardous Materials; and

21
<PAGE> 166

(3) the term "RELEASES" means any release, spill,
emission, leaking, injection, deposit, disposal, discharge,
dispersal, leaching or migration into the atmosphere, soil
surface water, groundwater or property in violation of
Environmental Law.

3.11 Personal Property.

(a) Except as otherwise described in the Company Reports
or the Company Disclosure Letter, all of the Company's personal
property (the "SECTION 3.11 PROPERTY") is (i) free and clear of all
liens, other than liens for taxes not yet due and payable, mortgages,
pledges, security interests, conditional sales agreements, charges,
encumbrances and other adverse claims or interests of any nature
whatsoever, and (ii) is in good operating condition and repair,
reasonable wear and tear excepted. The Section 3.11 Property, taken
as a whole, is reasonably fit and usable for the purposes for which it
is being used, reasonably sufficient for all current operations and
business of the Company and conforms with all applicable ordinances,
regulations and laws except where the failure to conform would not
have a material adverse effect on the Company.

(b) The inventory of the Company as reflected by the
March Company Financials and the inventory as the same shall exist on
the date hereof, other than the reserve established for the inventory
reflected in the March Company Financials, consisted and will consist
of items which were and will be of the usual quality and quantity
necessary for the normal conduct of the business of the Company and is
reasonably expected to be usable or saleable within a reasonable
period of time in the ordinary course of the business of the Company.
With respect to inventory in the hands of suppliers for which the
Company is committed as of the date hereof, such inventory is
reasonably expected to be usable in the ordinary course of the
business of the Company as presently being conducted.

3.12 Contracts. Except as disclosed in the Company Reports or the
Company Disclosure Letter, all contracts and leases referred to in the Company
Disclosure Letter are valid and enforceable, the Company has performed all
obligations imposed upon them thereunder, and the Company nor, to the knowledge
of the Company, any other party thereto is in default thereunder, nor is there
any event which with notice or lapse of time, or both, would constitute a
default thereunder by the Company or, to the knowledge of the Company, any
other party thereto.

3.13 Legal Proceedings. Except as set forth in the Company Reports
or the Company Disclosure Letter, there are no claims, actions, suits,
arbitrations, grievances, proceedings or investigations pending or, to the best
knowledge of the Company, threatened against the Company, at law, in equity, or
before any federal, state, municipal or other governmental or nongovernmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, and there are no outstanding or unsatisfied judgments, orders, decrees
or stipulations to which the Company is a party, which involve the transactions
contemplated herein or which would have a material adverse effect upon the
Company. Except as set forth in the Company Disclosure Letter, the Company is
not presently engaged in or contemplating any legal action

22
<PAGE> 167

to recover moneys due to them or damages sustained by them. The Company is not
in violation of or in default with respect to any applicable judgment, order,
writ, injunction or decree, which would have a material adverse effect upon the
Company.

3.14 Labor Matters. Except as set forth in the Company Reports or
the Company Disclosure Letter, neither the Company nor any of the Company
Subsidiaries is a party to, or bound by, any collective bargaining agreement,
contract or other agreement or understanding with a labor union or labor
organization. To the knowledge of the Company, there is no unfair labor
practice or labor arbitration proceeding pending. To the knowledge of the
Company and except as set forth in the Company Disclosure Letter, there are no
organizational efforts with respect to the formation of a collective bargaining
unit presently being made or threatened involving employees of Company or any
of the Company Subsidiaries.

3.15 Patents, Trademarks, Franchises, etc. All patents and
trademarks owned by the Company and registered in the U.S. Patent and Trademark
Office have been duly issued or registered therein, all such registrations have
been validly issued and all are in full force and effect. The Company in its
operations does not infringe any valid patent, trademark, trade name, service
mark or copyright of any other person or entity. All agreements related to
patents, trademarks, franchises and other similar rights listed in the Company
Disclosure Letter are valid and enforceable, the Company has performed all
obligations imposed upon it thereunder, and the Company is not in default
thereunder, nor is there any event which with notice or lapse of time, or both,
would constitute a default thereunder by the Company or, to the knowledge of
the Company, any other party thereto. Except as set forth in the Company
Disclosure Letter, the Company has not received notice that any party to any
such agreement intends to cancel, terminate or refuse to renew the same or to
exercise or decline to exercise any option or other right thereunder.

3.16 Insurance. Since January 1, 1993 neither the Company nor any
of the Company Subsidiaries has been denied coverage by any insurance carrier
or has failed or currently fails to maintain any insurance coverage which may
be required by the laws of the states in which the Company or the Company
Subsidiaries do business. The premiums due on the insurance which covers
calendar year 1994 have been paid in full (or are not delinquent) and the
premiums due for the period from January 1, 1995 to the Effective Time have
been or will be paid in full as and when due. All such insurance complies in
all material respects with the terms of each of its leases and each of the
mortgages, deeds of trust, service agreements with third parties and/or loan
agreements to which Company or any of the Company Subsidiaries is a party.

3.17 Employees. Except as disclosed in the Company Reports and as
reflected in the Company Financial Statements, the Company is not a party to
any:

(i) management, employment or other contract
providing for the employment or rendition of executive
services;

(ii) contract for the employment of any
employee which is not terminable by the Company on 30 days'
notice;

23
<PAGE> 168

(iii) bonus, incentive, deferred compensation,
severance pay, pension, profit-sharing, retirement, stock
purchase, stock option, employee benefit or similar plan,
agreement or arrangement (including without limitation
Christmas bonuses and similar year end bonuses); or

(iv) any other employment contract or other
compensation agreement or arrangement affecting or relating to
current or former employees of the Company.

3.18 Employee Benefit Plans. All material employee benefit plans,
as defined in Section 3(3) of ERISA, all arrangements providing compensation,
severance or other benefits to any employee or director or former employee or
director of the Company, the Company Subsidiaries or ERISA Affiliate of the
Company (the "COMPANY BENEFIT PLANS") are listed in the Company Disclosure
Letter. Unless otherwise disclosed in the Company Disclosure Letter, to the
extent applicable, the Company Benefit Plans comply, in all material respects,
with the requirements of ERISA and the Code, and any Company Benefit Plan
intended to be qualified under Section 401(a) of the Code has been determined
by the IRS to be so qualified or the Company has submitted or is in the process
of submitting a timely determination letter request to the IRS with respect to
any such Company Benefit Plan. Except as set forth in the Company Disclosure
Letter, neither the Company nor any ERISA Affiliate of the Company (during the
period of its affiliated status and prior thereto, to its knowledge) maintains,
contributes to or has in the past maintained or contributed to any benefit plan
which is covered by Title IV of ERISA or Section 412 of the Code. Neither any
Company Benefit Plan nor the Company has incurred any liability or penalty
under Section 4975 of the Code or Section 502(i) of ERISA. Each Company
Benefit Plan has been maintained and administered in all material respects in
compliance with its terms and with ERISA and the Code to the extent applicable
thereto. There are no pending or anticipated claims against or otherwise
involving any of the Company Benefit Plans and no suit, action or other
liability (excluding claims for benefits incurred in the ordinary course of
Company Benefit Plan activities) has been brought against or with respect to
any such Company Benefit Plan, except for any of the foregoing which would not
have a material adverse effect on the Company. All contributions required to
be made as of the date hereof to Company Benefit Plans have been made or
provided for. All required contributions to Company Benefit Plans have been
timely made. Neither the Company nor any ERISA Affiliate of the Company has
contributed to, or been required to contribute to, any "multiemployer plan" (as
defined in Sections 3(37) and 4001(a)(3) of ERISA). Except for benefits as may
be required to be provided under applicable provisions of federal or state law
and except as set forth in the Company Disclosure Letter, there are no plans or
arrangements which provides or has any liability to provide life insurance or
medical or other employee welfare benefits to any employee or former employee
upon his retirement or termination of employment. The execution of, and
performance of the transactions contemplated in, this Agreement will not
(either alone or upon the occurrence of any additional or subsequent events)
constitute an event under any Company Benefit Plan that will or may result in
any payment (whether of severance pay or otherwise), acceleration, forgiveness
of indebtedness, vesting, distribution, increase in benefits or obligation to
fund benefits with respect to any employee. The only severance agreements or
severance policies applicable to the Company or any of the Company Subsidiaries
are the agreements and policies specifically referred to in the Company Reports
or in the Company Disclosure Letter.

24
<PAGE> 169

3.19 Transactions with Related Parties. Except for transactions
disclosed in the Company Disclosure Letter or in the Company Reports there have
been no loans or other transactions between the Company and any officer,
director or stockholder of the Company. Except as disclosed in the Company
Disclosure Letter or in the Company Reports, neither the Company, any officer
or director of the Company nor any spouse or child of any such person owns or
has any interest in, directly or indirectly, any real or personal property
owned by or leased to the Company or any copyrights, patents, trademarks,
service marks, trade names or trade secrets licensed by the Company.

3.20 Brokerage. Except as set forth in the Company Disclosure
Letter, the Company has not retained any broker or finder in connection with
the transactions contemplated by this Agreement.

3.21 Stockholder Information. None of the information to be
distributed to stockholders of the Company in connection with the Merger nor
any amendments or supplements of or to any of the foregoing which is provided
by the Company (collectively, the "STOCKHOLDER INFORMATION"), will between the
date the Stockholder Information is first mailed to stockholders and the
Effective Time, contain any statement which, at such time and in light of the
circumstances under which it is made, will be false or misleading with respect
to any fact, or will omit to state any fact necessary in order to make the
statements therein not false or misleading.

3.22 Laws. Except for environmental laws, which are covered in
Section 3.10 hereof, and as specifically set forth in the Company Disclosure
Letter, the Company has complied in all material respects with all laws, rules,
regulations, ordinances, codes, licenses, clearances, permits, franchises,
grants, authorizations, easements, consents, certificates and orders relating
to any of its properties or applicable to its business, including, but not
limited to, labor, equal employment opportunity, occupational safety and
health, consumer protection, environmental, securities and antitrust laws and
regulations except where the failure to be in compliance would not have a
material adverse effect on the Company. The Company has all contractors
licenses required for it to conduct its business except where the failure to be
in compliance would not have a material adverse effect on the Company. The
Company is not in material violation of any applicable zoning, building or
environmental regulation, ordinance or other law, order, regulation,
restriction or requirement relating to its operations or properties, whether
such properties are owned or leased, and no governmental body or other person
has claimed that any such violation exists, or called attention to the need for
any work, repairs, construction, alterations or installation on or in
connection with the properties of the Company, except for such violations that
would not have a material adverse effect on the Company. As of the date
hereof, the Board of Directors of the Company has approved the Merger pursuant
to the relevant provisions of Applicable Law.

3.23 Full Disclosure. No information furnished, or to be
furnished, by either the Company or any of the stockholders to AMRE or Merger
Sub or their representatives in connection with this Agreement (including, but
not limited to, the Company Reports and all information in the Schedules
hereto) is, or will be, false or misleading and such information includes all
facts required to be stated therein or necessary to make the statements therein
not

25
<PAGE> 170

misleading. No representation or warranty by or on behalf of Company or the
Company Subsidiaries contained in this Agreement, and no statement contained in
any certificate, list, exhibit, or other instrument furnished or to be
furnished to AMRE pursuant hereto contains or will contain any untrue statement
of a material fact, or omits or will omit to state any material facts which are
necessary in order to make the statement contained herein or therein, in light
of the circumstances under which they are made, not misleading.

ARTICLE 4

CONDUCT OF BUSINESS PENDING THE MERGER

4.1 Conduct of Business by the Company Pending the Merger. The
Company covenants and agrees that, prior to the Effective Time, unless AMRE and
Merger Sub shall otherwise agree in writing or as otherwise expressly
contemplated by this Agreement:

(a) To the extent reasonably practicable taking into
account any operational matters that may arise that are attributable
to the pendency of the Merger, the business of the Company shall be
conducted only in, and the Company shall not take any action except
in, the ordinary course of business and consistent with past
practices, and the Company shall use its commercially reasonable
efforts to maintain and preserve its business organization, assets,
prospects, employees and advantageous business relationships;

(b) The Company shall not, directly or indirectly, do any
of the following except as appropriate for the reincorporation of the
Company in the State of Delaware: (i) authorize for issuance, issue,
sell, pledge, deliver, or agree or commit to issue, sell, pledge or
deliver (whether through the issuance or grant of options, warrants,
commitments, subscriptions, rights to purchase or otherwise) any
capital stock of the Company or securities or rights convertible into
or exchangeable for, shares of capital stock or securities convertible
into or exchangeable for such shares; (ii) pledge, dispose of or
encumber, except in the ordinary course of business, any assets of the
Company (including any indebtedness owed to it or any claims held by
it); (iii) amend or propose to amend its Certificate of Incorporation
or bylaws or similar organizational documents; (iv) split, combine or
reclassify any shares of its capital stock or declare, set aside or
pay any dividend or distribution, payable in cash, stock, property or
otherwise, with respect to any of its capital stock; (v) redeem,
purchase or otherwise acquire or offer to redeem, purchase or
otherwise acquire any capital stock of the Company; (vi) transfer any
assets or liabilities to any subsidiary; or (vii) authorize or propose
any of the foregoing or enter into any contract, agreement, commitment
or arrangement to do any of the foregoing; provided, however, that
nothing in this Section 4.1(b) shall prohibit the Company from issuing
any capital stock of the Company upon the exercise of outstanding
options;

26
<PAGE> 171

or securities, contributions to capital, property transfer or purchase
of any amount of property or assets of any other individual or entity;
(ii) acquire any assets for a value in excess of $25,000 other than in
the ordinary course of business; (iii) dispose of any assets with a
value in excess of $25,000 other than in the ordinary course of
business; (iv) incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee, endorse or otherwise as an
accommodation become responsible for, the obligations of any other
individual or entity, make any loans or advances or enter into any
other transaction, except in the ordinary course of business and
consistent with past practice; (v) authorize, recommend or propose any
change in its capitalization or any release or relinquishment of any
contract right; or (vi) authorize or propose any of the foregoing or
enter into or modify any contract, agreement, commitment or
arrangement with respect to any of the foregoing;

(d) The Company shall not enter into or adopt any new, or
amend any existing, severance or termination benefit arrangements,
consulting agreements, any employment benefit plans, or arrangement,
other than in the ordinary course of business and consistent with past
practices;

(e) Except (i) for arrangements existing prior to October
15, 1995, (ii) as required by law, or (iii) or as noted in the Company
Disclosure Letter or the Company Reports, the Company (except for
salary increases or other employee benefit arrangements in the
ordinary course of business) shall not adopt or amend any bonus,
profit sharing, compensation, stock option, pension, retirement,
deferred compensation, employment or other employee benefit plan,
agreement, trust, plan, fund or other arrangement for the benefit or
welfare of any employee or increase or pay any benefit not required by
any existing plan and arrangement;

(f) The Company shall not pay, discharge or satisfy any
claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction in the ordinary course of business and
consistent with past practice of liabilities reflected or reserved
against in the Company's Financial Statements or incurred in the
ordinary course of business and consistent with past practice;

(g) The Company shall not waive, release, grant or
transfer any franchises, franchise agreements, patents, patent rights,
trademarks, trademark rights, trade names, trade name rights,
copyrights or know-how or modify or change in any respect any existing
license, lease, contract franchise, franchise agreement or other
document, other than in the ordinary course of business and consistent
with past practice;

(h) The Company shall use its best efforts to preserve
its business organization intact, to keep available the services of
its current officers and key employees and to maintain satisfactory
relationships with licensors, licensees, suppliers, contractors,
distributors, customers and others having significant business
relationships with the Company;

27
<PAGE> 172

(i) The Company shall not make any capital expenditure in
excess of $50,000.

4.2 Interim Operations of AMRE. AMRE covenants and agrees as to
itself and the AMRE Subsidiaries that, from and after the date hereof and until
the Effective Time (except as the Company shall otherwise agree or except as
otherwise contemplated by this Agreement), neither AMRE nor Merger Sub shall
take or cause to be taken any action which would disqualify the Merger as a
tax-free "reorganization" within the meaning of Section 368(a)(1)(A) and
368(a)(2)(E) of the Code. AMRE and the Company shall each deliver customary
representations for purposes of the delivery of the opinions referenced in
Sections 6.2(g) and 6.3(g). Except as disclosed in the AMRE Reports, to the
extent reasonably practicable taking into account any operational matters that
may arise that are attributable to the pendency of the Merger, the business of
AMRE shall be conducted only in, and AMRE shall not take any action except in
the ordinary course of business, and AMRE shall use its commercially reasonable
efforts to maintain and preserve its business organization, assets, prospects,
employees and advantageous business relationships.

ARTICLE 5

ADDITIONAL AGREEMENTS

5.1 Registration Statement and Proxies. AMRE and the Company
shall cooperate and promptly prepare and AMRE shall file with the SEC as soon
as practicable a Joint Proxy and Registration Statement on Form S-4 (the "FORM
S-4") under the Securities Act, with respect to the AMRE Common Stock issuable
in the Merger, a portion of which Joint Proxy and Registration Statement shall
serve as the proxy statement with respect to the meetings of the stockholders
of AMRE and the Company in connection with the Merger (the "JOINT PROXY
STATEMENT/PROSPECTUS"). The respective parties will cause the Joint Proxy
Statement/Prospectus and the Form S-4 to comply as to form in all material
respects with the applicable provisions of the Securities Act, the Exchange Act
and the rules and regulations thereunder. AMRE shall use all reasonable
efforts, and the Company will cooperate with AMRE, to have the Form S-4
declared effective by the SEC as promptly as practicable. AMRE shall use its
best efforts to obtain, prior to the effective date of the Form S-4, all
necessary state securities law or "Blue Sky" permits or approvals required to
carry out the transactions contemplated by this Agreement and will pay all
expenses incident thereto. AMRE agrees that the Joint Proxy
Statement/Prospectus and each amendment or supplement thereto at the time of
mailing thereof and at the time of the meetings of stockholders of AMRE and the
Company, or, in the case of the Form S-4 and each amendment or supplement
thereto, at the time it is filed or becomes effective, will not include an
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; provided,
however, that the foregoing shall not apply to the extent that any such untrue
statement of a material fact or omission to state a material fact was made by
AMRE in reliance upon and in conformity with written information concerning the
Company furnished to AMRE by the Company specifically for use in the Joint
Proxy Statement/Prospectus. The Company agrees that the written information
concerning the Company provided by it for inclusion in the Joint Proxy

28
<PAGE> 173

Statement/Prospectus and each amendment or supplement thereto, at the time of
mailing thereof and at the time of the meetings of the stockholders of AMRE and
the Company, or, in the case of written information concerning the Company
provided by the Company for inclusion in the Form S-4 or any amendment or
supplement thereto, at the time it is filed or becomes effective, will not
including an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the Statements therein,
in light of the circumstances under which they were made, not misleading. No
amendment or supplement to the Joint Proxy Statement/Prospectus or the Form S-4
nor any request for acceleration thereof will be made by AMRE or the Company
without the approval of the other party, except as required by law. AMRE will
advise the Company, promptly after its receives notice, of the time when the
Form S-4 or any post effective supplement or amendment thereto has become
effective the issuance of any stop order, the suspension of the qualification
of the AMRE Common Stock issuable in connection with the Merger for offering or
sale in any jurisdiction, any request by the SEC for amendment of the Joint
Proxy Statement/Prospectus or the Form S-4 or requests by the SEC for
additional information and will promptly provide the Company with copies of any
responses filed by AMRE to SEC comments on the Form S-4.

5.2 Letter to the Company's Accountants. The Company shall use
its best efforts to cause to be delivered to AMRE a letter of Grant Thornton &
Co., the Company's independent public accountants, dated a date within two
business days before the date on which the Form S-4 shall become effective and
addressed to AMRE and the Company, in form and substance reasonably
satisfactory to AMRE and customary in scope and substance of letters delivered
by independent public accountants in connection with registration statements
similar to the Form S-4.

5.3 Letters of AMRE's Accountants. AMRE shall use its best
efforts to cause to be delivered to the Company a letter of Arthur Andersen &
Co., AMRE's independent public accountants, dated a date within two business
days before the date on which the Form S-4 shall become effective and addressed
to AMRE and the Company, in form and substance reasonably satisfactory to the
Company and customary in scope and substance of letters delivered by
independent public accountants in connection with registration statements
similar to the Form S-4.

5.4 Company Board Recommendation. Subject to Section 5.10 hereof,
the Stockholder Information shall contain the recommendation of the Board of
Directors of the Company in favor of the Merger and the Board of Directors
shall recommend that the stockholders of the Company adopt the Merger
Agreement, it being understood that the failure of the Board of Directors of
the Company to make such recommendations shall not be deemed a breach of this
Agreement if the Board determines, after consultation with and advice from
counsel, that it cannot, consistent with its fiduciary duties, make such
recommendations.

5.5 AMRE Board Recommendation. The Joint Proxy
Statement/Prospectus shall contain the recommendation of the Board of Directors
of AMRE in favor of the Merger, the proposed amendment to amend the Certificate
of Incorporation of AMRE to increase the number of AMRE's authorized shares and
the consummation of the transactions contemplated thereby and shall recommend
that the stockholders of AMRE approve and consent to such proposals and

29
<PAGE> 174

shall recommend that the stockholders of AMRE adopt the Merger Agreement, it
being understood that the failure of the Board of Directors of AMRE to make
such recommendations shall not be deemed a breach of this Agreement if the
Board of Directors of AMRE determines, after consultation with and advice from
counsel, that it cannot, consistent with its fiduciary duties, make such
recommendations.

5.6 Consent of Stockholders of the Company. Subject to Section
5.10 hereof, the Company shall use commercially reasonable efforts to take all
action necessary, in accordance with Applicable Law and its Certificate of
Incorporation and bylaws, to transmit the Joint Proxy Statement/Prospectus to
its stockholders and obtain its stockholders' approval of the Merger as
promptly as reasonably practicable. The Company shall use commercially
reasonable efforts to secure the consent of its stockholders required by law to
effect the Merger.

5.7 Consent of Stockholders of AMRE. AMRE shall transmit the
Joint Proxy Statement/Prospectus to its stockholders and shall use its best
efforts to take all action necessary to obtain its stockholders' approval to
the Merger and the proposal to amend it Certificate of Incorporation to
increase the authorized amount of shares of AMRE Common Stock issuable to 40
million (40,000,000) shares, as promptly as reasonably practicable.

5.8 Expenses. All expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses whether or not the Merger is consummated.

5.9 Additional Agreements. Subject to the terms and conditions
herein provided, each of the parties hereto agrees (i) to use all reasonable
efforts to take, or cause to be taken, all actions and (ii) to use all
reasonable efforts to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement and to cooperate with each other in
connection with the foregoing, (iii) to use all reasonable efforts to obtain
all necessary waivers, consents and approvals from other parties to material
loan agreements, leases and other contracts and to notify each of the other
parties hereto of any request for prepayment with respect thereto; provided
however, all reasonable efforts with respect to obtaining waivers, consents and
approvals under loan agreements does not obligate the parties hereto to make
any prepayment on any such loan, (iv) to use all reasonable efforts to obtain
all necessary consents, approvals and authorizations as are required to be
obtained under any federal, state, local or foreign law or regulations, (v) to
defend all lawsuits or other legal proceedings challenging this Agreement or
the consummation of the transactions contemplated hereby, (vi) to use all
reasonable efforts to lift or rescind any injunction or restraining order or
other order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby, (vii) to use all reasonable efforts to effect
all necessary registrations and filings and submissions of information required
or requested by governmental authorities; and (viii) to use all reasonable
efforts to cause the Merger to be treated as a "pooling of interests."

5.10 No Solicitation. From and after the date hereof, the Company
will not, and will not permit any of its officers, directors, employees, agents
and other representatives or those of any Company Subsidiary (collectively, the
"COMPANY REPRESENTATIVES") to, directly or

30
<PAGE> 175

indirectly, solicit or initiate any prospective buyer or the making of any
proposal that constitutes, or may reasonably be expected to lead to, an
Acquisition Proposal (as defined herein) from any person; provided, however,
that, notwithstanding any other provision of this Agreement, (i) the Company
may engage in discussions or negotiations with a third party who (without any
solicitation or initiation, directly or indirectly, by or with the Company or
any Company Representatives after the date of this Agreement) seeks to initiate
such discussions or negotiations and may furnish such third party information
concerning the Company and its business, properties and assets, (ii) the
Company's Board of Directors may take and disclose to the Company's
stockholders a position contemplated by Rule 14e-2(a) promulgated under the
Exchange Act and (iii) following receipt of an Acquisition Proposal that is
financially superior to the Merger and reasonably capable of being financed (as
determined in each case in good faith by the Company's Board of Directors after
consultation with the Company's financial advisors), the Board of Directors of
the Company may withdraw, modify or not make its recommendation referred to in
Section 5.4 or terminate this Agreement in accordance with Section 7.1(d), but
in each case referred to in the foregoing clauses (i) through (iii) only to the
extent that the Board of Directors of the Company shall conclude in good faith
that such action is necessary in order for the Board of Directors of the
Company to act in a manner that is consistent with its fiduciary obligations
under applicable law. The Company shall immediately cease and cause to be
terminated any existing solicitation, initiation, encouragement, activity,
discussion or negotiation with any parties conducted heretofore by the Company
or any Company representatives with respect to any Acquisition Proposal
existing on the date hereof. The Company will promptly notify AMRE of any
inquiries or developments related to any of the above or any such requests for
such information or the receipt of any Acquisition Proposal, including the
identity of the person or group engaging in such discussions or negotiations,
requesting such information or making such Acquisition Proposal, and (unless
the Board of Directors of the Company concludes such disclosure is inconsistent
with its fiduciary obligations under applicable law) the material terms and
conditions of any Acquisition Proposal. As used in this Agreement,
"Acquisition Proposal" shall mean any proposal or offer, other than a proposal
or offer by AMRE or any of its affiliates, for a tender or exchange offer, a
merger, consolidation or other business combination involving the Company or
any Company Subsidiary or any proposal to acquire in any manner a substantial
equity interest in, or substantially all of the assets of, the Company or any
Company Subsidiary.

5.11 Notification of Certain Matters. Each party will promptly
give written notice to the other parties upon becoming aware of the occurrence
or failure to occur, or impending or threatened occurrence or failure to occur,
of any event that would cause or constitute, or would be likely to cause or
constitute, a breach of any of its representations, warranties or covenants
contained in this Agreement and will use all reasonable efforts to prevent or
promptly remedy the occurrence or failure. No such notification shall limit or
affect the representations, warranties, covenants or conditions or remedies of
the parties hereunder.

5.12 Access to Information.

(a) The Company and AMRE and their respective officers,
directors, employees and agents shall afford the officers, employees
and agents of the other parties hereto complete access at all
reasonable times to their respective officers, employees,

31
<PAGE> 176

agents, properties, facilities, books, records and contracts and those
of their respective subsidiaries (including the Company Subsidiaries)
and shall furnish the other parties hereto all financial, operating
and other data and information as the other parties hereto through
their officers, employees or agents, may reasonably request. Each
party hereto shall hold and will cause their respective
representatives to hold in strict confidence all documents and
information concerning the other parties hereto (and the Company
Subsidiaries) furnished to other parties hereto in connection with the
transactions contemplated by this Agreement (except to the extent that
such information can be shown to have been (i) previously known by the
party to whom the information was disclosed (or their respective
Affiliates) prior to its disclosure to the party to whom the
information was disclosed, (ii) in the public domain through no fault
of the party to whom the information was disclosed or (iii) later
lawfully acquired by the party to whom the information was disclosed
(or their respective affiliates) from other sources, and will not
release or disclose such information to any other person, except in
connection with this Agreement to (i) their respective auditors,
attorneys, financial advisors and other consultants or advisors or
(ii) responsible financial institutions, partnerships and individuals
after the disclosing party, has made reasonable efforts to cause such
financial institutions, partnerships and individuals to agree to be
bound by the provisions of this Section 5.12 as if the reference to
the disclosing party herein were to them (it being understood that
such persons shall be informed by the disclosing party of the
confidential nature of such information and shall be directed by the
disclosing party to treat such information confidentially); provided
that the disclosing party and their respective representatives may
provide such documents and information in response to judicial or
administrative process or applicable governmental laws, rules,
regulations, orders or ordinances, but only that portion of the
documents or information which, on the advice of counsel, is legally
required to be furnished, and provided that the disclosing party
notifies the non-disclosing party of its obligation to provide such
information prior to such disclosure and fully cooperates with the
non-disclosing party to protect the confidentiality of such documents
and information under applicable law. If the transactions
contemplated by this Agreement are not consummated, the parties shall
return to each other all copies of written information furnished to
them by the other parties hereto or their respective affiliates,
agents, representatives or advisers.

(b) Any schedule which is not attached hereto at the time
that AMRE and Merger Sub execute this Agreement shall not be
subsequently attached hereto or incorporated herein unless such
schedule is acceptable to AMRE and Merger Sub.

5.13 Information for Other Filings. The parties represent to each
other that the information provided and to be provided by AMRE, Merger Sub and
the Company, respectively, for use in any document to be filed with any other
governmental agency or authority in connection with the transactions
contemplated hereby shall, at the respective times such documents are filed
with the governmental agency or authority and on the Effective Date be true and
correct in all material respects and shall not omit to state any material fact
required to be stated therein or necessary in order to make such information
not false or misleading, and the Company, AMRE and Merger Sub each agree to so
correct any such information provided by it for use in such documents that
shall have become false or misleading.

32
<PAGE> 177

5.14 Employment Agreements. At the Effective Time, AMRE shall
enter into employment agreements with each of Mark Honigsfeld and Murray Gross
substantially in the forms attached hereto as Exhibits A and B (respectively,
the "HONIGSFELD AND GROSS EMPLOYMENT AGREEMENTS").

5.15 Sub-License Agreement. No later than the mailing of the Joint
Proxy Statement/Prospectus, AMRE and the Company shall have entered into a
Sub-License Agreement containing the terms and conditions contained in Exhibit
C attached hereto and such other terms and conditions as the parties hereto may
mutually agree. In the event AMRE and the Company disagree on whether a
particular term should be included in the Sub-License Agreement or what
provisions should be included in any section of the Sub-License Agreement, the
parties agree to submit such disagreement to Mr. Dave Yoho of Dave Yoho &
Associates, 10803 W. Main St., Fairfax, Virginia for arbitration. (AMRE and
the Company acknowledge Mr. Dave Yoho has a son by the same name who is
employed by Dave Yoho & Associates, and it is the intention of AMRE and the
Company that the elder Dave Yoho act as the arbitrator of disputes between the
parties). The decision(s) made by Dave Yoho regarding the inclusion or
non-inclusion of any term or provision in the Sub-License shall be final and
binding on each of AMRE and the Company for all purposes. Each party shall
bear its own expenses in connection with the arbitration of any dispute,
including attorney's fees, witness expenses and expenses of presenting the
case, but all fees of Dave Yoho and/or Dave Yoho & Associates shall be divided
and paid equally by AMRE and the Company. If this Agreement is terminated
pursuant to Section 7.1(d) hereof, the obligations of AMRE and the Company
under this Section 5.15 shall remain in full force and effect.

5.16 Company Reincorporation in Delaware. Provided that such
action will not prevent, delay or in any manner adversely affect the ability of
the parties to consummate the Merger, the Company shall cause the Company to
become a Delaware corporation no later than three business days prior to the
mailing of the Joint Proxy Statement/Prospectus.

5.17 Affiliate Letters.

(a) Prior to the Effective Time, the Company shall
deliver to AMRE a list (the "COMPANY AFFILIATE LIST") of names and
addresses of those persons who, as of the date of this Agreement, were
in the reasonable judgment of the Company, "affiliates" (each such
person, an "AFFILIATE OF THE COMPANY") of the Company within the
meaning of Rule 145 of the rules and regulations promulgated under the
Securities Act and under the SEC guidelines and interpretations
applicable to Pooling of Interests. The Company Affiliate List will
be updated as appropriate from time to time, up to and including the
Effective Time. The Company shall provide AMRE such information and
documents as AMRE shall reasonably request for purposes of reviewing
such list. The Company shall deliver or cause to be delivered to
AMRE, concurrently with the execution of this Agreement and when
necessary from time to time between the date hereof and the Effective
Time, from each Affiliate of the Company identified in the Company
Affiliate List, an Affiliate Letter in the form attached hereto as
Exhibit D-1 (the "COMPANY AFFILIATE LETTER"). AMRE shall be entitled
to place legends as specified in such Affiliate Letters on the
certificates evidencing any AMRE Common Stock to be received by each
Affiliate of the

33
<PAGE> 178

Company, pursuant to the terms of this Agreement, and to issue
appropriate stop transfer instructions to the transfer agent for the
AMRE Common Stock, consistent with the terms of such Company Affiliate
Letters.

(b) At least ten (10) days prior to the date of the
meeting of AMRE's stockholders contemplated by this Agreement, AMRE
shall deliver to the Company a list of names and addresses of those
persons who were, in AMRE's reasonable judgment, at the record date
for such meeting, Affiliates of AMRE. AMRE shall provide the Company
such information and documents as the Company shall reasonably request
for purposes of reviewing such list. AMRE shall use all reasonable
efforts to deliver or cause to be delivered to the Company, prior to
the Effective Time from each of the Affiliates of AMRE identified in
the foregoing list (as the same may be supplemented or as aforesaid),
Affiliates Letters in the form attached hereto as Exhibit D-2 (the
"AMRE AFFILIATE LETTER").

5.18 Pooling. From and after the date hereof and until the
expiration of the Restricted Period (as defined below), AMRE and the Company
shall use commercially reasonable efforts to prevent any of its or their
Subsidiaries or Affiliates (as defined in Section 5.17) from taking any action,
or failing to take any reasonable action, that would jeopardize the treatment
of the Merger as a "pooling of interests." For purposes hereof, the Restricted
Period shall mean the period commencing on the date hereof and terminating on
the date on which thirty days of combined operations are publicly announced by
AMRE. Notwithstanding any other terms of this Agreement to the contrary, it
shall not be a condition precedent to the consummation of the transactions
contemplated by this Agreement that the Merger shall be treated as a "pooling
of interests" under applicable accounting standards.

5.19 Stockholders Agreement. The Affiliates of the Company shall
enter into the Stockholders Agreement attached hereto as Exhibit E.

5.20 Documentation; Registration. AMRE shall take all corporate
action necessary to reserve for issuance a sufficient number of shares of AMRE
Common Stock for delivery upon exercise of the options provided in the Company
Options. Promptly following the Effective Time of the Merger, AMRE shall file
a Registration Statement covering the shares of AMRE Common Stock issuable upon
the exercise of the assumed Company Options. AMRE will use its reasonable
efforts to cause such shares to be registered under the Securities Act and to
maintain such registration in effect until the exercise or termination of all
such Company Options.

5.21 Director and Officer Indemnification.

(a) From and after the Effective Time, AMRE shall
indemnify, defend and hold harmless each person who is now, or has
been at any time prior to the date hereof, or who becomes prior to the
Effective Time, an officer or director of the Company or any Company
Subsidiary or an employee of the Company or any Company subsidiary who
acts as a fiduciary under any benefit or pension plan of the Company
or any Company Subsidiary (the "INDEMNIFIED PARTIES") against all
losses, claims, damages,

34
<PAGE> 179

costs, expenses (including attorneys' fees), liabilities or judgments
or amounts that are paid in settlement with the approval of AMRE
(which approval shall not be unreasonably withheld) of or in
connection with any threatened or actual claim, action, suit,
proceeding or investigation based on or arising out of, or pertaining
to this Agreement or the transactions contemplated hereby (the
"INDEMNIFIED LIABILITIES"), in each case to the full extent permitted
under the Delaware Law (and AMRE will pay expenses in advance of the
final disposition of any such action or proceeding to each Indemnified
Party to the full extent permitted by law). Without limiting the
foregoing, in the event any such claim, action, suit, proceeding or
investigation is brought against any Indemnified Parties, (i) the
Indemnified Parties may retain counsel satisfactory to them (or them
and AMRE and the Surviving Corporation after the Effective Time) and
the Company (or after the Effective Time, AMRE and the Surviving
Corporation) shall pay all fees and expenses of such counsel for the
Indemnified Parties promptly as statements therefor are received; and
(ii) the Company (or after the Effective Time, AMRE and the Surviving
Corporation) will use all reasonable efforts to assist in the vigorous
defense of any such matter, provided that neither the Company, AMRE
nor the Surviving Corporation shall be liable for any settlement
effected without its written consent, which consent, however, shall
not be unreasonably withheld. Any Indemnified Party wishing to claim
indemnification under this Section 5.21(a), upon learning of any such
claim, action, suit, proceeding or investigation, shall notify AMRE,
but the failure so to notify shall not relieve AMRE from any liability
that it may have under this Section 5.21(a), except to the extent such
failure materially prejudices AMRE. The Indemnified Parties as a
group may retain only one law firm to represent them with respect to
each such matter unless there is, under applicable standards of
professional conduct, a conflict on any significant issue between the
positions of any two or more Indemnified Parties. The Indemnified
Parties and AMRE agree that the rights to indemnification provided
pursuant to this Section 5.21(a), including provisions relating to
advances of expenses incurred in defense of any action or suit with
respect to matters pertaining to this Agreement or matters
contemplated hereby, shall survive the Merger and shall continue in
full force and effect for a period of six years from the Effective
Time; provided, however, that all rights to indemnification in respect
to any Indemnified Liabilities asserted or made with such period shall
continue until the disposition of such Indemnified Liabilities.

(b) From and after the Effective Time, AMRE and the
Surviving Corporation shall, indemnify, defend and hold harmless the
Indemnified Parties against all losses, claims, damages, costs,
expenses (including attorneys' fees), liabilities or judgments or
amounts that are paid in settlement with the approval of the
indemnifying party (which approval shall not be unreasonably withheld)
of or in connection with any threatened or actual claim, action, suit,
proceeding or investigation based in whole or in part on the arising
in whole or in part out of the fact that such person is or was a
director, officer, or such employee of the Company or any Company
Subsidiary that pertains to any matter existing or occurring at or
prior to the date hereof ("Existing Liabilities"), in each case to the
full extent permitted under the Delaware Law (and AMRE and the
Surviving Corporation will pay expenses in advance of the final
disposition of any such action or proceeding to each Indemnified Party
to the full extent permitted by law). Without limiting the foregoing,
in the event any such claim, action, suit, proceeding or

35
<PAGE> 180

investigation is brought against any Indemnified Parties after the
Effective Time, (i) the Indemnified Parties may retain counsel
satisfactory to them, the Surviving Corporation and AMRE and AMRE and
the Surviving Corporation shall pay all fees and expenses of such
counsel for the Indemnified Parties promptly as statements therefor
are received; and AMRE and the Surviving Corporation will use all
reasonable efforts to assist in the vigorous defense of any such
matter, provided that neither AMRE nor the Surviving Corporation shall
be liable for any settlement effected without its written consent,
which consent, however, shall not be unreasonably withheld. Any
Indemnified Party wishing to claim indemnification under this Section
5.21(b), upon learning of any such claim, action, suit, proceeding or
investigation, shall notify the Surviving Corporation and AMRE, but
the failure so to notify shall not relieve a party from any liability
that it may have under this Section 5.21(b), except to the extent such
failure materially prejudices such party. The Indemnified Parties as
a group may retain only one law firm to represent them with respect to
each such matter unless there is, under applicable standards of
professional conduct, a conflict on any significant issue between the
positions of any two or more Indemnified Parties. The Indemnified
Parties, AMRE and Merger Sub agree that all rights to indemnification,
including provisions relating to advances of expenses incurred in
defense of any action or suit with respect to matters occurring prior
to the Effective Time, shall survive the Merger and shall continue in
full force and effect for a period of two years from the Effective
Time (provided, however, that all rights to indemnification in respect
to any Existing Liabilities asserted or made with such period shall
continue until the disposition of such Existing Liabilities).
Notwithstanding anything to the contrary contained herein, the
Indemnified Parties, AMRE and Merger Sub agree that (i) if at the time
any claim, action, suit, proceeding or investigation is brought
against any of the Indemnified Parties the tangible net book value of
the Surviving Corporation is equal to or greater than the tangible net
book value of the Surviving Corporation as reflected in the last
Company Report filed before the Effective Time, as adjusted to give
effect to the lease termination referred to in Section 5.25 if the
results of such termination are not reflected in the last Company
Report filed before the Effective Time, then the Indemnified Parties
shall be entitled to be indemnified pursuant to this Section 5.21(b)
only by the Surviving Corporation and only to the extent of the
Surviving Corporation's tangible net book value; and (ii) if at the
time any claim, action, suit, proceeding or investigation is brought
against any of the Indemnified Parties the tangible net book value of
the Surviving Corporation is less than the tangible net book value of
the Surviving Corporation as reflected in the last Company Report
filed before the Effective Time, as adjusted to give effect to the
lease termination referred to in Section 5.25 if the results of such
termination are not reflected in the last Company Report filed before
the Effective Time, the Indemnified Parties shall be entitled to be
indemnified pursuant to this Section 5.21(b) by AMRE and the Surviving
Corporation, but in no event shall the obligations of the Surviving
Corporation and AMRE under this Section 5.21(b), in the aggregate,
exceed the tangible net book value of the Surviving Corporation as
reflected in the last Company Report filed before the Effective Time
as adjusted to give effect to the lease termination referred to in
Section 5.25 below.

5.22 Listing Application. AMRE shall prepare and submit to the
NYSE a listing application covering AMRE Common Stock to be issued in
connection with the Merger and

36
<PAGE> 181

issuable upon exercise of the Company Options and shall use its reasonable
efforts to obtain, prior to the Effective Time, approval for the listing of
such AMRE Common Stock upon official notice of issuance.

5.23 Public Announcements. AMRE and Merger Sub, on the one hand,
and the Company, on the other hand, will consult with each other before issuing
any press release or otherwise making any public statements with respect to the
transactions contemplated by this Agreement, and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by applicable law or by obligations pursuant to any listing
agreement with any national securities exchange or transaction reporting
system.

5.24 Tax Free Reorganization. AMRE shall not, and AMRE shall not
permit Surviving Corporation to, take any action which would disqualify the
Merger as a tax free "reorganization" within the meaning of Section
368(a)(1)(A) and Section 368(a)(2)(E) of the code, and AMRE and Surviving
Corporation agree to report the Merger for tax purposes as a tax free
"reorganization."

5.25 Lease Termination. Prior to December 31, 1995, the Company
agrees to terminate the lease agreement for its principal offices and its
manufacturing facility in Brooklyn, New York, and in connection therewith shall
pay no more than $525,000 (the "TERMINATION PAYMENT"). The Termination Payment
shall be paid in full prior to December 31, 1995.

5.26 Home Financial Acceptance Corp. Prior to the Effective Time
the Company agrees that Home Financial Acceptance Corp. ("HFAC") shall conduct
no business or operations beyond obtaining lending licenses it would be
required to have to begin operations and that it shall have no contractual
commitment which is not cancelable without cost to HFAC, AMRE or the Company.

ARTICLE 6

CONDITIONS

6.1 Conditions to Obligation of Each Party to Effect the Merger.
The obligations of each party to effect the Merger shall be subject to the
fulfillment at or prior to the Effective Time of the following conditions:

(a) the Merger shall have been approved and adopted by
the requisite consent of the stockholders of each of AMRE and the
Company required by applicable law or by the applicable regulations of
any stock exchange;

(b) any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the
Hart-Scott-Rodino Act shall have expired or been terminated;

37
<PAGE> 182

(c) no preliminary or permanent injunction or other
order, decree or ruling issued by a court of competent jurisdiction or
by a governmental, regulatory or administrative agency or commission
nor any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority shall be in effect that would
make the acquisition or holding directly or indirectly by AMRE of the
shares of Common Stock of the Surviving Corporation illegal or
otherwise prevent the consummation of the Merger. In the event any
such order or injunction shall have been issued, each party agrees to
use its reasonable efforts to have any such injunction lifted or order
reversed;

(d) the Form S-4 shall have become effective and shall be
effective at the Effective Time, and no stop order suspending
effectiveness of the Form S-4 shall have been issued;

(e) all consents, authorizations, orders and approvals of
(or filings or registrations with) any governmental commission, board
or other regulatory body required in connection with the execution,
delivery and performance of this Agreement shall have been obtained or
made, except for filings in connection with the Merger and any other
documents required to be filed after the Effective Time and except
where the failure to have obtained or made any such consent,
authorization, order, approval, filing or registration would not have
a material adverse effect on the Company; provided, however, that for
the purposes of this Section 6.1(e), the failure of the Company to
obtain the consent of (i) lenders under credit agreements disclosed in
the Company Reports or (ii) landlord's consents under any leases
disclosed in the Company Disclosure Letter or the Company Reports
shall not be considered to have a material adverse effect on the
Company;

(f) Bear, Stearns & Co. Inc. shall have advised AMRE and
Merger Sub in writing that the Merger is fair from a financial point
of view;

(g) Southwest Securities, Inc. shall have advised the
Company in writing that the Merger is fair from a financial point of
view;

(h) the AMRE Common Stock to be issued to Company
stockholders in connection with the Merger shall have been approved
for listing on the NYSE, subject only to official notice of issuance;
and

(i) no action shall be pending which has been filed by
any state or federal authority or any other party seeking to enjoin
consummation of the transactions contemplated by this Agreement,
including, but not limited to, the Merger and no injunction shall have
been issued and shall be effective or enforceable or under appeal if
the effectiveness or enforceability thereof has been lifted or stayed
by a court or other authority of competent jurisdiction, preventing
the Merger, or imposing conditions on, the Merger which are materially
adverse to AMRE, Merger Sub, the Company or any of their stockholders.

38
<PAGE> 183

6.2 Additional Conditions to the Obligation of the Company. The
obligation of the Company to effect the Merger is also subject to the
fulfillment at or prior to the Effective Time of the following conditions
(unless waived):

(a) each of AMRE and Merger Sub shall in all material
respects have performed each obligation and agreement and complied
with each covenant to be performed and complied with by it hereunder
on or prior to the Effective Time;

(b) the representations and warranties of AMRE and Merger
Sub in this Agreement shall be true and correct in all material
respects when made and at the Effective Time with the same force and
effect as though made at such time, except as affected by the
transactions contemplated hereby;

(d) AMRE and Merger Sub shall have furnished to the
Company a certificate, dated the Effective Date, signed by a
responsible officer of each of AMRE and Merger Sub, to the effect that
all conditions set forth in Section 6.2(a) and (b) have been
satisfied;

(e) AMRE shall have filed and had declared effective a
Form S-8 with respect to the registration of the shares of AMRE Common
Stock issuable upon exercise of Company Options converted into options
to purchase shares of AMRE Common Stock pursuant to Section 1.5(e)
hereof;

(f) AMRE and Merger Sub shall have executed and delivered
the Honigsfeld Employment Agreement and the Gross Employment
Agreement;

(g) the Company shall have received the opinion of
counsel to the Company dated the Closing Date and based on customary
representations and assumptions, to the effect that the Merger will be
treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code and that the Company, Merger Sub
and AMRE will each be a party to that reorganization within the
meaning of Section 368(b) of the Code;

(h) the AMRE Common Stock to be issued to the Company
stockholders in connection with the Merger shall have been approved
for listing on the NYSE, subject only to official notice of issuance;

(i) the Company shall have received a copy of the
resolutions of the Board of Directors of AMRE and Merger Sub
authorizing the execution, delivery and performance of the Agreement
and the consummation of the transactions contemplated hereby and a
copy of the resolutions or other consent of the stockholders of AMRE
approving the Merger, all certified by the Secretary of AMRE on the
Effective Date.

39
<PAGE> 184

Such certificates shall state that the resolutions set forth therein
have not been amended, modified, revoked or rescinded as of the date
of such certificates;

(j) the Company shall have received a certificate of the
Secretary of AMRE dated the Effective Date, as to the incumbency and
signature of the officers of AMRE executing this Agreement and any
certificate, agreement or other documents to be delivered pursuant
hereto, together with evidence of the incumbency of such Secretary;
and

(k) AMRE's Certificate of Incorporation shall have been
amended as provided in Section 5.5 hereof.

6.3 Additional Conditions to the Obligations of AMRE and Merger
Sub. The obligations of AMRE and Merger Sub to effect the Merger are also
subject to the fulfillment at or prior to the Effective Time of the following
conditions (unless waived):

(a) the Company shall in all material respects have
performed each obligation and agreement and complied with each
covenant to be performed and complied with by it hereunder on or prior
to the Effective Time;

(b) the representations and warranties of the Company in
this Agreement shall be true and correct in all material respects when
made and at the Effective Time with the same force and effect as
though made at such time, except as affected by the transactions
contemplated hereby;

(c) the Company shall have furnished to AMRE and Merger
Sub a certificate, dated the Effective Date, signed by a responsible
officer of the Company, to the effect that all conditions set forth in
Section 6.3(a) and (b) have been satisfied;

(d) the Company shall have provided or made available to
AMRE and Merger Sub or their designated representatives the
information and documents as specified in Section 5.12 for review by
AMRE and its agents and representatives;

(e) all of the members of the Company's Board of
Directors shall have irrevocably tendered their resignations effective
as of the Effective Time and the Company shall have accepted such
resignations;

(f) AMRE shall have received the opinion of its counsel,
dated the Closing Date and based on customary representations and
assumptions, to the effect that the Merger will be treated for federal
income tax purposes as a reorganization within the meaning of Section
368(a) of the Code and that AMRE, Merger Sub and the Company will each
be a party to that reorganization within the meaning of Section 368(b)
of the Code;

(g) AMRE and Merger Sub shall have received a copy of the
resolutions of the Board of Directors of the Company authorizing the
execution, delivery and

40
<PAGE> 185

performance of the Agreement and the consummation of the transactions
contemplated hereby and a copy of the resolutions or other consent of
the stockholders of the Company approving the Merger, all certified by
the Secretary of the Company on the Effective Date. Such certificates
shall state that the resolutions set forth therein have not been
amended, modified, revoked or rescinded as of the date of such
certificates;

(h) AMRE and Merger Sub shall have received a certificate
of the Secretary of the Company dated the Effective Date, as to the
incumbency and signature of the officers of the Company executing this
Agreement and any certificate, agreement or other documents to be
delivered pursuant hereto, together with evidence of the incumbency of
such Secretary;

(i) AMRE and Merger Sub shall have received a certificate
of good standing from the state where the Company is incorporated;

(j) each holder of Company Options shall have agreed to
the assumption by AMRE of such Company Options in accordance with the
terms of Section 1.5(e) hereof; and

(k) the Company shall have delivered to AMRE and Merger
Sub all necessary consents, waivers, authorizations and approvals, so
that neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result
in the acceleration or termination of, or the creation in any party of
the right to accelerate, terminate, modify or cancel, any indenture,
contract, lease, sublease, loan agreement, note or other obligation or
liability to which the Company is a party or is bound or to which any
of their assets are subject, (ii) conflict with, violate or result in
a breach of any provision of the charter documents or bylaws of the
Company, or any Stockholder, (iii) conflict with or violate any law,
rule, regulation, ordinance, order, writ, injunction or decree
applicable to the Company or by which any of their respective
properties or assets is bound or affected or (iv) conflict with or
result in any breach of or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or
result in the creation of any lien, charge or encumbrance on any of
the properties or assets of the Company pursuant to any of the terms,
conditions or provisions of any indenture, contract, lease, sublease,
loan agreement, note, permit, license, franchise, agreement or other
instrument, obligation or liability to which the Company is a party or
by which the Company or any of its assets is bound or affected;
provided, however, that for the purposes of this Section 6.3(k), the
failure of the Company to obtain the consent of (i) lenders under
credit agreements disclosed in the Company Reports or (ii) landlord's
consents under any leases disclosed in the Company Disclosure Letter
or the Company Reports shall not be considered to have a material
adverse effect on the Company or be required as a condition to Closing
by AMRE or Merger Sub.

41
<PAGE> 186

ARTICLE 7

TERMINATION, AMENDMENT AND WAIVER

7.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time whether before or after approval of the Merger by
the stockholders :

(a) by mutual written consent of the Boards of Directors
of AMRE, Merger Sub and the Company;

(b) by either of the Boards of Directors of Merger Sub or
the Company if the Effective Time shall not have occurred on or before
April 1, 1996; provided, however, that the right to terminate under
this Section 7.1(b) shall not be available to any party whose failure
to fulfill any obligation under this Agreement has been the cause of,
or resulted in, the failure of the Effective Time to occur on or
before such date;

(c) if a court of competent jurisdiction or governmental,
regulatory or administrative agency or commission shall have issued an
order, decree or ruling or taken any other action (which order, decree
or ruling the parties hereto shall use all reasonable efforts to
lift), in each case permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement, and such
order, decree, ruling or other action shall have become final and
nonappealable;

(d) by the Company in the event a third party makes a
bona fide proposal for an acquisition of the Company for consideration
that exceeds $11.28 per share of Company Common Stock.

The date on which this Agreement is terminated pursuant to any
of the foregoing subsections of this Section 7.1 is herein referred to
as the "TERMINATION DATE."

7.2 Effect of Termination. Except as set forth in Sections 5.4,
5.12(a) and 5.15, upon the termination of this Agreement pursuant to Section
7.1, this Agreement shall forthwith become null and void, except that nothing
herein shall relieve any party from liability for any breach of this Agreement
prior to such termination.

7.3 Fees and Expenses. In the event the Company terminates this
Agreement pursuant to Section 7.1(d), the Company shall, within 15 business
days of termination, pay AMRE a fee equal to $2,000,000.

7.4 Amendment. This Agreement may be amended by the parties
hereto, at any time before or after approval of the Merger by the stockholders
of the Company, but, after any such approval, no amendment shall be made that
changes the form or reduces the amount of consideration to be paid to the
stockholders of the Company or that in any other way materially adversely
affects the rights of such stockholders (other than a termination of this
Agreement in accordance with the provisions hereof) without the further
approval of such stockholders. This

42
<PAGE> 187

Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.

7.5 Waiver. At any time prior to the Effective Time, any term,
provision or condition of this Agreement may be waived in writing (or the time
for performance of any of the obligations or other acts of the parties hereto
may be extended) by the party that is entitled to the benefits thereof.

ARTICLE 8

GENERAL PROVISIONS

8.1 Nonsurvival of Representations, Warranties and Agreements.
All representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall be deemed to the extent
expressly provided herein to be conditions to the Merger and shall not survive
the Merger; provided, however, the agreements contained in Article 1 and
Sections 4.2, 5.8, 5.9, 5.15, 5.19, 5.20, 5.21, 5.24, 7.3 and 8.5 shall
survive.

8.2 Public Statements. So long as this Agreement is in effect,
neither the Company nor AMRE shall, or shall permit any of its subsidiaries to,
issue or cause the publication of any press release or other announcement with
respect to the Merger or this Agreement without consulting with and obtaining
the consent of the other parties; provided, however, that such consent shall
not be required where such release or announcement is required by applicable
law.

8.3 Notices. All notices and other communications hereunder shall
be in writing and, except where notice is specifically required to be given by
telecopier or facsimile shall be deemed to have been duly given if delivered
personally, mailed by certified mail (return receipt requested) or sent by
cable, telegram, telecopier or telex to the parties at the following addresses
or at such other addresses as shall be specified by the parties by like notice:

(a) if to AMRE or Merger Sub to each of:

AMRE, Inc.
8586 N. Stemmons Freeway
South Tower, Suite 102
Dallas, TX 75247
Fax No. (214) 658-6101
Attn: President and General Counsel

with a copy to:

Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1700 Pacific Avenue, Suite 4100
Dallas, TX 75201
Fax No. (214) 969-4343

43
<PAGE> 188

Attn: Gary M. Lawrence, P.C.

(b) if to the Company:

Facelifters Home Systems, Inc.
One Park Place
621 N.W. 53rd Street, Suite 450
Boca Raton, FL 33487
Fax No. (407) 997-2842
Attn: Murray Gross, President

and

Facelifters Home Systems, Inc.
800 Snediker Ave.
Brooklyn, NY 11207-7606
Fax No. (516) 569-7639
Attn: Mark Honigsfeld

with a copy to:

Jackson & Walker, L.L.P.
901 Main Street, Suite 6000
Dallas, TX 75202
Fax No. (214) 953-5822/5823
Attn: Charles D. Maguire, Jr.

Notice so given shall (in the case of notice so given by mail)
be deemed to be given and received in the fourth calendar day after
posting and (in the case of notice so given by cable, telegram,
telecopier, telex or personal delivery) on the date of actual
transmission or (as the case may be) personal delivery.

8.4 Closing. The Closing of the transactions contemplated by this
Agreement shall take place at Akin, Gump, Strauss, Hauer & Feld,
L.L.P., 1700 Pacific Avenue, Suite 4100, Dallas, Texas 75201, or such
other place as the parties may agree, as soon as practicable after the
satisfaction or waiver of the conditions set forth in Section 6.

8.5 Miscellaneous. This Agreement (including the documents and
instruments referred to herein) constitutes the entire agreement and
supersedes all other prior agreements and undertakings, both written
and oral, among the parties, or any of them, with respect to the
subject matter hereof; except with respect to Sections 5.14, 5.19,
5.20 and 5.21 is not intended to confer upon any other person any
rights or remedies hereunder, shall not be assigned; and shall be
governed in all respects, including validity, interpretation and
effect, by the internal laws of the State of Delaware without giving
effect, to the principles of conflict of laws thereof. This Agreement
may be executed in one or more counterparts which together shall
constitute a single agreement. If any

44
<PAGE> 189

provision of this Agreement shall be held to be illegal, invalid or
unenforceable under any applicable law, then such contravention or
invalidity shall not invalidate the entire Agreement. Such provision
shall be deemed to be modified to the extent necessary to render it
legal, valid and enforceable, and if no such modification shall render
it legal, valid and enforceable, then this Agreement shall be
construed as if not containing the provision held to be invalid, and
the rights and obligations of the parties shall be construed and
enforced accordingly.

[Signature Page Follows]

45
<PAGE> 190

AGREEMENT AND PLAN OF MERGER SIGNATURE PAGE

IN WITNESS WHEREOF, AMRE, Merger Sub, the Company and the Company Sub
have caused this Agreement to be executed as of the date first written above.

AMRE, INC.

By: /s/ Robert M. Swartz
-------------------------------------------------
Name: Robert M. Swartz
--------------------------------------
Title: President
------------------------------------

AMRE ACQUISITION, INC.

By: /s/ Robert M. Swartz
-------------------------------------------------
Name: Robert M. Swartz
--------------------------------------
Title: President
------------------------------------

FACELIFTERS HOME SYSTEMS, INC.,
a New York corporation

By: /s/ Murray H. Gross
-------------------------------------------------
Name: Murray H. Gross
--------------------------------------
Title: President
------------------------------------

FACELIFTERS HOME SYSTEMS, INC.,
a Delaware corporation

By: /s/ Murray H. Gross
-------------------------------------------------
Name: Murray H. Gross
--------------------------------------
Title: President
------------------------------------

S-1
<PAGE> 191
ANNEX B

EMPLOYMENT AGREEMENT

THIS AGREEMENT, made as of ____________________, 199__, (the "date of
this Agreement") is by and between AMRE, Inc., a Delaware corporation ("AMRE"),
and Mark Honigsfeld, of Woodmere, New York ("Honigsfeld").

W I T N E S S E T H:

WHEREAS, AMRE, AMRE Acquisition, Inc., a Delaware corporation and
wholly-owned subsidiary of AMRE ("Merger Sub"), and Facelifters Home Systems,
Inc., a Delaware corporation ("Facelifters"), have entered into an Agreement
and Plan of Merger dated October 31, 1995, pursuant to which Merger Sub will
merge with and into Facelifters (the "Merger");

WHEREAS, Honigsfeld previously served as the Chairman of the Board and
Chief Executive Officer of Facelifters; and

WHEREAS, AMRE wishes to hire Honigsfeld in the capacity of Business
Consultant in order to secure Honigsfeld's services in connection with the
kitchen cabinet refacing business of AMRE and its wholly owned subsidiaries as
well as such other duties as may be designated by the Chief Executive Officer
of AMRE;

WHEREAS, in connection with the execution of this Agreement Honigsfeld
has agreed to terminate his existing employment agreement with Facelifters;

NOW, THEREFORE, in consideration of the covenants and mutual
agreements contained herein, AMRE and Honigsfeld agree as follows:

1. Employment. AMRE agrees to employ Honigsfeld as its Business
Consultant and Honigsfeld agrees to serve in such capacity on the terms and
conditions hereinafter set forth.

2. Term.

(a) Term of Agreement. The initial term of this Agreement
(the "Initial Term") shall commence on the Effective Date of the Merger, and
shall end at midnight on the third anniversary of such date (the "Expiration
Date").

(b) Term of Employment. The period from the Effective
Date of the Merger to the first to occur of (i) the Expiration Date or (ii) the
date on which Honigsfeld's employment is terminated pursuant to paragraph 5 or
paragraph 6 is hereinafter referred to as the "Term of Employment".
<PAGE> 192
(c) Extension of Term. In the event AMRE elects not to
extend the term of this Agreement past the Expiration Date, AMRE shall provide
written notice to Honigsfeld no later than 12 months prior to the Expiration
Date. If AMRE does not provide written notice to Honigsfeld as provided in the
previous sentence, the Term of Employment and the Expiration Date shall be
extended automatically for successive periods of one year upon the same terms
as existed for the previous year of the Term of Employment (each such
successive one year period is hereafter referred to as a "Renewal Term").

3. Services. During the Term of Employment, Honigsfeld will
devote his full business time to the business and affairs of AMRE and such
other members of the AMRE Group as may be requested by the Chief Executive
Officer of AMRE, and shall use his best efforts, skills and abilities to
promote the interests of AMRE; provided, however, that Honigsfeld may, from
time to time, engage in such other pursuits, including (without limitation)
personal, legal, financial and business affairs, provided, in each case, that
such pursuits do not interfere with the proper performance of duties and
obligations under the terms hereof and do not create any actual or intentional
conflict of interest. For the purposes of this Agreement, the term "AMRE
Group" means all corporations or other business organizations, with respect to
any one of which AMRE possesses the ability, directly or through any
intervening medium, to elect a majority of the Board of Directors (or persons
filling similar functions).

4. Compensation and Benefits.

(a) Salary. During the Term of Employment, AMRE shall pay
to Honigsfeld such annual salary as the Board of Directors of AMRE from time to
time may determine, but such annual salary shall in no event be less than
$400,000 per year. AMRE agrees to pay Honigsfeld's annual salary to Honigsfeld
in accordance with the usual and customary procedures for the payment of
compensation to salaried employees of AMRE, but in any event to make such
payment in not less than monthly installments.

(b) Additional or Incentive Compensation. During the
first year of the Term of Employment, Honigsfeld shall participate in an
incentive compensation plan to be adopted by AMRE's Board of Directors which
will be based on the quantity and aggregate value of new sub-license agreements
that may be entered into in connection with the former Facelifters' operations.
The parties hereto acknowledge that the estimated value of such bonus during
the first year of the Term of Employment is expected to be approximately
$250,000, but shall in no event be less than $100,000 nor more than $500,000.
Honigsfeld shall not be entitled to any compensation in addition to his annual
salary after the first year of the Term of Employment except as may otherwise
be mutually agreed by the parties hereto.

(c) Employee Benefits (General). During the Term of
Employment, Honigsfeld shall be entitled to receive benefits and perquisites
ordinarily provided to executive officers of AMRE, including a monthly
automobile allowance of $750.00, and eligibility to participate in all employee
welfare benefit plans or employee pension benefit plans (within the meaning of
the Employee Retirement Income Security Act of 1974) from time to time
maintained by AMRE. Honigsfeld shall be entitled to participate in all such
plans or programs on terms no less favorable than those generally available to
executive officers of AMRE and at a level of

B-2
<PAGE> 193
participation commensurate with his position as Business Consultant of AMRE and
with his level of compensation.

(d) Executive Supplemental Life and Disability Insurance.
Subject to the limits and provisions referred to in the next sentence, during
the Term of Employment, in addition to all other group term life or benefits
provided under any AMRE sponsored group life insurance plan (if any), AMRE
shall (i) maintain, at no cost (except recognition, if applicable, of imputed
income for tax purposes) to Honigsfeld, Executive Supplemental Life Insurance
in an amount equal to 300% of Honigsfeld's annual salary, (ii) maintain
Executive Long Term Disability Insurance which will provide a benefit equal to
55% of Honigsfeld's monthly base salary and (iii) make available for purchase
by Honigsfeld at his sole expense Executive Long Term Disability Insurance
which will provide a benefit equal to 20% of Honigsfeld's monthly base salary.
The types of policies, the identity of the carriers and the exact terms,
limitation, underwriting specifications and benefits of each of such coverages
shall be no less favorable than the coverages provided by AMRE to its other
executive officers. Any coverage for Honigsfeld by the insurance described in
this paragraph 4(d) shall be subject to Honigsfeld meeting the insurance
carrier's underwriting requirements. AMRE shall arrange for and submit such
application or other information required with respect to such insurance
coverage promptly upon the commencement of the Term of Employment. Should this
Employment Agreement be terminated under the terms of paragraph 5(a)(iii), AMRE
shall continue the payment of his salary to his designated beneficiary for a
period of up to one year or until such time that the Executive Supplemental
Life Insurance benefit is paid to his designated beneficiary, in which case
AMRE may deduct from the insurance benefit an amount equal to the salary
advanced to Honigsfeld's beneficiary after the time of his death until the
payment of the insurance benefit.

(e) Vacation. Honigsfeld shall accrue paid vacation at
the rate of 10 hours of paid vacation for each calendar month he is employed
during the Term of Employment, subject to a maximum accrual of 120 hours at any
time. Hours of vacation accrued for any period of less than a full calendar
month shall be prorated. Honigsfeld shall not be required to use paid vacation
time for the purpose of celebrating religious holidays.

(f) Annual Physical Examination. During the Term of
Employment, to the extent not covered by any insurance plan maintained by AMRE,
AMRE shall reimburse Honigsfeld for the cost of one comprehensive annual
physical examination during each calendar year by a physician of Honigsfeld's
choosing.

(g) Expenses. AMRE shall pay or reimburse Honigsfeld upon
submission of vouchers by him, and approval thereof by the Chief Executive
Officer or Chief Financial Officer of AMRE, for all entertainment, travel,
meal, hotel accommodation and miscellaneous expenses reasonably incurred by him
in the interest of AMRE's business and in accordance with current AMRE policy
during the Term of Employment.

5. Termination of Employment Other Than in Connection With a
Change of Control of AMRE.

(a) Termination by AMRE for Good Cause. AMRE may
terminate Honigsfeld's employment prior to the Expiration Date for good cause
only upon compliance with

B-3
<PAGE> 194
the requirement of this paragraph 5(a). "Good Cause" for termination by AMRE
shall mean only (i) the willful engagement by Honigsfeld in misconduct which is
materially injurious to AMRE, monetarily or otherwise, (ii) Honigsfeld's
physical or mental disability, if such disability results in Honigsfeld's
receiving permanent disability payments pursuant to a group or individual
disability insurance policy maintained by AMRE on behalf of Honigsfeld, or
(iii) Honigsfeld's death. For purposes of this paragraph 5(a), no act or
failure to act on Honigsfeld's part shall be considered "willful" unless done,
or omitted to be done, in bad faith and without reasonable belief that the
action or omission was in the best interest of AMRE. Notwithstanding the
foregoing, Honigsfeld shall not be deemed to have been terminated for good
cause within the meaning of clause (i) of the preceding sentence without (i)
reasonable notice to Honigsfeld setting forth the reasons for AMRE's intention
to terminate for good cause, (ii) an opportunity for Honigsfeld, together with
his counsel, to be heard before the Board of Directors of AMRE, and (iii)
written notice from the Board of Directors of AMRE finding that in the good
faith opinion of such Board, Honigsfeld was guilty of the conduct set forth
above and specifying the particulars thereof in detail. In the event of the
termination of Honigsfeld's employment in accordance with the conditions of
this paragraph 5(a), the Term of Employment shall end, all of Honigsfeld's
obligations pursuant to this Agreement (except for those provided in paragraphs
8, 9 and 10, if termination is for a reason other than death) shall end and
AMRE's obligations to pay compensation to Honigsfeld pursuant to paragraph 4
shall cease on the effective date of termination.

(b) Termination by AMRE Other Than for Good Cause. AMRE
may terminate Honigsfeld's employment prior to the Expiration Date for any
reason other than Good Cause upon providing not less than 30 days' prior
written notice to Honigsfeld specifying the effective date of termination. If
AMRE terminates Honigsfeld's employment other than for Good Cause under
paragraph 5(a) prior to the public announcement of, or actual or deemed
knowledge of AMRE of, any actual or proposed transaction which results,
directly or indirectly, in a change of control of AMRE, as defined in paragraph
6, the Term of Employment shall end on the effective date of termination, but
AMRE shall provide, as a severance benefit to Honigsfeld and as liquidated
damages for breach by AMRE of its otherwise applicable obligations thereunder,
each of the following: (i) within three (3) days of the effective date of
termination, a lump sum cash payment equal to the sum of all accrued vacation
pay and monthly cash payments which would, except for the termination have been
paid to Honigsfeld as salary under paragraph 4(a) through the Expiration Date,
(ii) not later than the date on which incentive compensation for the fiscal
year in which Honigsfeld's termination of employment occurs (the "Current
Fiscal Year") would be paid to Honigsfeld if he were employed on the last day
of the Current Fiscal Year, an amount equal to the product of (a) the incentive
compensation which would have been paid to Honigsfeld if he were still employed
on the last day of the Current Fiscal Year, and (b) a fraction, the numerator
of which is the number of days in the Current Fiscal Year through the effective
date of termination and the denominator of which is 365; provided, however,
that if the effective date of termination occurs on or before October 31, 1996,
such amount payable pursuant to this cause (ii) shall not be less than One
Hundred Thousand Dollars ($100,000.00), and (iii) continuation of all life,
health, disability insurance benefits then in effect and described in paragraph
4 through the period ending on the Expiration Date.

B-4
<PAGE> 195
(c) Substantial Change in Conditions, Authority or
Responsibilities. If AMRE, during the Term of Employment, but prior to the
public announcement of, or actual or deemed knowledge of AMRE of, any actual or
proposed transaction which results, directly or indirectly, in a Change of
Control of AMRE, as defined in paragraph 6, makes any substantial change in
Honigsfeld's employment conditions, authority or job responsibilities which
would constitute "Good Reason", within the meaning of paragraph 6(c), if a
Change of Control of AMRE had then occurred, then Honigsfeld may elect to
terminate his employment in accordance with the procedures set forth in
paragraph 6(b) and such employment will be deemed terminated by AMRE without
Good Cause and the severance benefits specified in paragraph 5(b) shall apply.

(d) Termination by Honigsfeld. Honigsfeld may terminate
his employment at any time on or after the effective date of this Agreement
upon providing 30 days' prior written notice to AMRE stating the effective date
of termination. In any such event, all obligations of AMRE to Honigsfeld under
this Agreement and all obligations of Honigsfeld to AMRE (except those provided
for in paragraphs 7 through 10) shall cease and the Term of Employment shall
end on the specified effective date of termination.

(e) Mitigation. AMRE's termination of Honigsfeld's
employment under paragraph 5(b) or 5(c) shall immediately relieve Honigsfeld of
all obligations under this Agreement (except for those provided in paragraphs 7
through 10), shall not obligate Honigsfeld to seek other employment and shall
not be construed to require the application of any compensation which
Honigsfeld may earn in any such other employment to reduce AMRE's obligation to
provide severance benefits as provided herein. Honigsfeld's right to receive
severance benefits hereunder shall not be subject to voluntary or involuntary
sale, pledge, hypothecation, transfer or assignment by Honigsfeld, nor shall
Honigsfeld, by virtue of such right, acquire any right, title or interest in
particular assets of AMRE and such right shall be no greater than the right of
any unsecured general creditor of AMRE.

6. Change of Control of AMRE. In the event of a Change of Control
of AMRE, the following provisions of this Agreement shall apply notwithstanding
any other terms or conditions of this Agreement:

(a) Extension of Term of Agreement. Upon the change of
control of AMRE, the Expiration Date referred to in paragraph 2(a)
shall be changed to the date which is two (2) years subsequent to the
date immediately prior to the date on which the change of control of
AMRE occurred.

(b) Termination of Employment by Honigsfeld for Good
Reason. Honigsfeld's employment may be terminated by Honigsfeld during
the Term of Employment for Good Reason if, (i) within 90 days of the
date of occurrence of a triggering event (as defined below),
Honigsfeld notifies AMRE in writing of his intention to treat such
event as Good Reason, (ii) within 30 days following receipt of such
notice provided for in (i), AMRE fails to cure the triggering event,
and (iii) within 60 days following the expiration of the 30-day period
described in (ii), Honigsfeld voluntarily terminates his employment by
giving written notice to AMRE.

B-5
<PAGE> 196
(c) Good Reason. For purposes of this Agreement, "Good
Reason" shall mean the occurrence of one or more of the following
events subsequent to the public announcement of, or actual or deemed
knowledge of AMRE of, any actual or proposed transaction which
results, directly or indirectly, in a Change of Control of AMRE (each
of which shall be a "triggering event"):

(i) the assignment to Honigsfeld of any duties
materially inconsistent in any respect with Honigsfeld's
position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as
contemplated by paragraph 3 of this Agreement, or any other
action by AMRE which results in a material diminution in such
position, authority, duties or responsibilities, excluding for
this purpose an isolated, insubstantial and inadvertent action
not taken in bad faith and which is remedied by AMRE promptly
after receipt of notice thereto given by Honigsfeld;

(ii) any failure by AMRE to materially comply with
any of the provisions of paragraph 4 of this Agreement, other
than an isolated, insubstantial and inadvertent failure not
occurring in bad faith and which is remedied by AMRE promptly
after receipt of notice thereof given by Honigsfeld, unless
AMRE agrees to fully compensate Honigsfeld for any such
reduction;

(iii) Honigsfeld is required to locate his office
more than 50 miles from the current location of Woodmere, New
York, excluding business travel reasonably consistent with the
amount of travel required of him prior to such relocation;

(iv) any purported termination by AMRE of
Honigsfeld's employment otherwise than as expressly permitted
by this Agreement;

(v) any failure of any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of
AMRE to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that AMRE would be
required to perform it if no such succession had taken place;
or

(vi) AMRE's request that Honigsfeld perform an
illegal, or wrongful act in violation of AMRE's code of
conduct policies.

(d) Severance Benefit on Termination by Honigsfeld for
Good Reason. Upon termination of Honigsfeld's employment by Honigsfeld
pursuant to paragraph 6(b) or by AMRE for a reason other than Good
Cause subsequent to the public announcement of, or AMRE's actual or
deemed knowledge of, any actual or proposed transaction which results,
directly or indirectly, in a Change of Control of AMRE, all
obligations of AMRE to Honigsfeld under this Agreement and all
obligations of Honigsfeld to AMRE (except those provided for in
paragraphs 7 through 10) shall cease and the Term of Employment shall
end and AMRE shall pay to Honigsfeld within 10 days of such
termination of employment, the sum of (i) all accrued vacation pay and
(ii) an amount

B-6
<PAGE> 197
equal to the greater of (A) two times the amount of Honigsfeld's
annual salary on the date prior to the Change of Control or (B) if
such termination occurs during the Initial Term, then an amount equal
to the annual salary remaining to be paid during the Initial Term
pursuant to paragraph 4(a). In the event the cash settlement payment
payable under this paragraph 6(d), either alone or together with any
other payments which Honigsfeld has the right to receive from AMRE,
would constitute an "excess parachute payment" (as defined in Section
280G of the Internal Revenue Code of 1986, as amended), such cash
settlement amount shall be increased to an amount sufficient to
provide Honigsfeld, after satisfaction of all federal excise taxes and
federal and state income taxes attributable to such increases in
amount, a net amount equal to such cash settlement amount calculated
as described above and before any such excise tax.

(e) Definition of Change of Control of AMRE. For the
purpose of this Agreement, a "Change of Control of AMRE" shall be
deemed to have occurred:

(i) When any "person" as defined in Section
3(a)(9) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and as used in Sections 13(d) and 14(d)
thereof, including a "group" as defined in Section 13(d) of
the Exchange Act, excluding any employee benefit plan
sponsored or maintained by AMRE or any subsidiary of AMRE
(including any trustee of such plan acting as trustee),
directly or indirectly, becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act, as amended from
time to time), of securities of AMRE representing:

(A) 30% or more of the combined voting power of
AMRE's then outstanding securities with
respect to the election of the directors of
AMRE; or

(B) 20% or more of such combined voting power if
such person thereby becomes the largest
stockholder of AMRE; or

(ii) When, during any period of 24 consecutive
months, the individuals who, at the beginning of such period,
constitute the Board of Directors of AMRE (the "Incumbent
Directors") cease for any reason other than death to
constitute at least a majority thereof, provided, however,
that a director who was not a director at the beginning of
such 24-month period shall be deemed to have satisfied such
24-month requirement (and be an Incumbent Director) if such
director was elected by, or on the recommendation of or with
the approval of, at least a majority of the directors who then
qualified as Incumbent Directors either actually (because they
were directors at the beginning of such 24-month period) or by
prior operation of this provision; or

B-7
<PAGE> 198
least 60% of the combined voting power of the surviving
entity's then outstanding securities with respect to the
election of the directors of such entity solely by reason of
such transaction.

The foregoing notwithstanding, the acquisition by Ronald I. Wagner, or
by a "Group" as defined above of which Ronald I. Wagner is a member, of
securities of AMRE representing up to a maximum of 40% of the combined voting
power of AMRE's then outstanding securities with respect to the election of the
directors of AMRE shall not constitute a "Change of Control of AMRE".

7. Restrictions on Investments and Competing Activities.

(a) Except to the extent permitted by the last sentence
of this paragraph 7(a) and by paragraph 7(b), during the Term of Employment,
Honigsfeld will not hold or acquire (whether by purchase, gift or otherwise)
any direct or beneficial interest in any securities (debt or equity) of, or any
other interest in, any corporation (domestic or foreign) or any other business
organization engaged, directly or indirectly, in any business competitive with
that conducted by AMRE or any member of the AMRE Group nor will Honigsfeld
himself (whether in an individual capacity or as a member of a partnership or
otherwise) engage, directly or indirectly, in any business competitive with
that conducted by AMRE or any member of the AMRE Group. The restrictions on the
investment activities of Honigsfeld, set forth in the first sentence of this
subparagraph (a), do not apply to investments in debt securities of any
corporation, if such debt securities are traded on a national securities
exchange, or to investments in equity securities of any corporation, if such
equity securities are traded on a national securities exchange, provided that
the aggregate holdings (direct and beneficial) of Honigsfeld, his spouse and
minor children in equity securities of such corporation do not, at any time,
equal 1% or more of the outstanding equity securities of such corporation.

(b) Honigsfeld agrees that, in addition to the
restrictions imposed by paragraph 7(a), he will conduct his respective
investment activities in strict compliance with any and all policies with
respect thereto now or hereafter established by AMRE (and any other member of
the AMRE Group that employs Honigsfeld), and Honigsfeld further agrees to
render, and cause to be rendered, any and all such reports with respect thereto
as may be required by AMRE or any such other member of the AMRE Group. The
foregoing notwithstanding, an isolated, insubstantial and inadvertent action
not taken in bad faith and which is remedied by Honigsfeld promptly after
receipt of notice of any failure to comply with such policies shall not
constitute a violation of the provisions of this subparagraph.

8. Confidentiality. Honigsfeld agrees and acknowledges that the
trade secrets of AMRE and the AMRE Group, as such secrets may exist from time
to time, are valuable, special and unique assets of AMRE and the AMRE Group,
and that access to and knowledge of such secrets are essential to the
performance of Honigsfeld's duties hereunder. Honigsfeld will not, in whole or
in part, for his own purposes or for the benefit of any person, firm,
corporation or other entity (except AMRE or any member of the AMRE Group)
disclose to any person, firm, corporation, association or any other entity, any
such trade secrets or any other confidential or secret information with respect
to the business of AMRE or the AMRE Group (including, without limitation, any
such information with respect to customers), nor will Honigsfeld make

B-8
<PAGE> 199
use of any such trade secrets or other confidential or secret information for
his own purposes or for the benefit of any person, firm, corporation or other
entity (except AMRE or any member of the AMRE Group) under any circumstances
during or after the Term of Employment; provided, however, that after the Term
of Employment these restrictions shall not apply to such trade secrets or
confidential or secret information which are then in the public domain (so long
as Honigsfeld was not responsible, directly or indirectly, for permitting such
trade secrets or confidential or secret information to enter the public domain
without AMRE's consent).

9. Covenants Not to Solicit or Interfere.

(a) In the event Honigsfeld's employment is terminated by
AMRE other than for Good Cause as provided in paragraph 5(a) hereof
and other than by AMRE in accordance with the provisions of paragraph
6(d), Honigsfeld shall not compete with AMRE or any member of the AMRE
Group in the business of AMRE or the AMRE Group in any geographic area
in which AMRE (or such member of the AMRE Group) is actively engaged
in such business on the date Honigsfeld's employment hereunder
terminates for a period beginning on the date Honigsfeld's employment
terminates and ending on what would be the Expiration Date as defined
in paragraph 2 above had the Agreement not been earlier terminated.

(b) In the event Honigsfeld's employment is terminated
for Cause as provided in paragraph 5(a) hereof, or if Honigsfeld
terminates this Agreement pursuant to paragraph 5(d) hereof, for a
period of 12 months from the effective date of Honigsfeld's
termination of employment for Cause, Honigsfeld will not compete with
AMRE or any member of the AMRE Group in the business of AMRE or the
AMRE Group in any geographic area in which AMRE (or such member of the
AMRE Group) is actively engaged in such business on the date
Honigsfeld's employment hereunder terminates.

(c) If Honigsfeld terminates his employment pursuant to
paragraph 6(b) hereof or if AMRE terminates Honigsfeld's employment
for a reason other than Good Cause subsequent to the announcement of,
or AMRE's actual or deemed knowledge of, any actual or proposed
transaction which results, directly or indirectly in a change of
control of AMRE, Honigsfeld shall not compete with AMRE or any member
of the AMRE Group in the business of AMRE or the AMRE Group in any
geographic area in which AMRE (or such member of the AMRE Group) is
actively engaged in such business on the date Honigsfeld's employment
terminates for a period equal to the greater of (i) two years or (ii)
if such termination occurs during the Initial Term, then a period
ending when the Initial term would have expired were it not for such
earlier termination.

(d) The term "compete", as used herein, means to engage
in competition, directly or indirectly (including, without limitation,
to conduct the business of AMRE or the AMRE Group for any customer
with which Honigsfeld had any significant business contacts during his
employment hereunder), either as a proprietor, partner, employee,
agent, consultant, director, officer, controlling stockholder or in
any other capacity or manner whatsoever. It is the desire and intent
of the parties that the provisions of this paragraph 9 shall be
enforced to the fullest extent permissible under the laws and public
policies applied in each jurisdiction in which enforcement is sought.
Accordingly, if, and

B-9
<PAGE> 200
to the extent that, any portion of this paragraph 9 shall be
adjudicated to be invalid or unenforceable, this paragraph 9 shall be
deemed amended to delete therefrom or reform the portion thus
adjudicated to be invalid or unenforceable, such deletion or
reformation to apply only with respect to the operation of this
paragraph 9 in the particular jurisdiction in which such adjudication
is made.

10. Injunctive Relief. Honigsfeld acknowledges and agrees that a
breach or threatened breach of the provisions of paragraphs 7, 8 or 9 may cause
irreparable injury to AMRE and any member of the AMRE Group, and that, as a
result of such breach AMRE, or any member of the AMRE Group, as the case may
be, shall be entitled, among and in addition to other remedies available at law
or in equity, to an injunction restraining Honigsfeld from continuing the
activity causing such breach. Such remedy shall not be exclusive and shall be
in addition to any other remedy AMRE or any such member of the AMRE Group may
be entitled.

11. Miscellaneous.

(a) Notices. Any notice required or permitted to be given
under this Agreement shall be deemed to have been received when delivered in
person or mailed, postage prepaid, by certified mail addressed, in the case of
Honigsfeld, to his last known residence as provided by him to AMRE, or, in the
case of AMRE, to its principal office.

(b) Benefits and Obligations. This Agreement shall be
binding upon, shall inure to the benefit of, and shall be enforceable by AMRE
and its respective successors and assigns, and Honigsfeld, his heirs, assigns
or legal representatives; provided, however, that the obligations of Honigsfeld
contained herein may not be delegated or assigned.

(c) Entire Agreement; Amendment. This Agreement
constitutes the entire agreement between the parties with respect to the
subject matter hereof and may only be amended by an agreement in writing signed
by all of the parties hereto.

(d) Waiver. The failure of any party hereto to insist, in
any one or more instances, upon performance of any of the terms and conditions
of this Agreement, shall not be construed as a waiver or relinquishment of any
right granted hereunder or of the future performance of any such term, covenant
or condition.

(e) Severability. In the event that any portion of this
Agreement may be held to be invalid or unenforceable for any reason, the
parties hereto agree that said invalidity or unenforceability shall not affect
the other portions of this Agreement and that the remaining covenants, terms
and conditions or portions thereof shall remain in full force and effect and
any court of competent jurisdiction may so modify the objectionable provision
as to make it valid and enforceable.

(f) Governing Laws. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York.

B-10
<PAGE> 201
(g) Captions. The captions contained in this Agreement
are for the convenience of AMRE and Honigsfeld and shall not be deemed or
construed as in any way limiting or extending the language of the provisions to
which such captions refer.

(h) Termination of Existing Employment Agreement.
Upon the execution of this Agreement Honigsfeld's existing employment agreement
with Facelifters dated October 1, 1993 and amended on March 27, 1995, shall
immediately terminate and be of no further force or effect, and all payments
due thereunder, other than incentive compensation or bonuses which shall,
within thirty days from the date hereof be paid pro rata as of the end of the
month of the closing of the Merger, are waived and released.

IN WITNESS WHEREOF, AMRE has caused this Agreement to be executed by
its officer thereunto duly authorized, and Honigsfeld has hereunto set his
hand, all as of the day, month and year first above written.

AMRE, INC.

By:
--------------------------------
Robert M. Swartz
President

-----------------------------------
Mark Honigsfeld

B-11
<PAGE> 202
ANNEX C

EMPLOYMENT AGREEMENT

THIS AGREEMENT, made as of ____________, 1995, (the "date of this
Agreement") is by and between AMRE, Inc., a Delaware corporation ("AMRE"), and
Murray Gross, of Boca Raton, Florida ("Gross").

W I T N E S S E T H:

WHEREAS, Gross previously served as the President and Chief Operating
Officer of Facelifters; and

WHEREAS, AMRE wishes to hire Gross in order to secure Gross's services
in connection with the former business of Facelifters, as such business may be
carried on by the surviving entity in the Merger;

WHEREAS, in connection with the execution of this Agreement, Gross has
agreed to terminate his existing employment agreement with Facelifters;

NOW, THEREFORE, in consideration of the covenants and mutual
agreements contained herein, AMRE and Gross agree as follows:

1. Employment. AMRE agrees to employ Gross as an executive
officer in the capacity of vice president and Gross agrees to serve in such
capacity on the terms and conditions hereinafter set forth.

2. Term.

(a) Term of Agreement. The initial term of this Agreement
(the "Initial Term") shall commence on the effective date of the Merger, and
shall end at midnight on the second anniversary of such date (the "Expiration
Date").

(b) Term of Employment. The period from the effective
date of the Merger to the first to occur of (i) the Expiration Date or (ii) the
date on which Gross's employment is terminated pursuant to paragraph 5 or
paragraph 6 is hereinafter referred to as the "Term of Employment".

C-1
<PAGE> 203
3. Services. During the Term of Employment, Gross will devote his
full business time to the business and affairs of AMRE and such other members
of the AMRE Group as may be requested by the Chief Executive Officer of AMRE,
and shall use his best efforts, skills and abilities to promote the interests
of AMRE; provided, however, that Gross may, from time to time, engage in such
other pursuits, including (without limitation) personal, legal, financial and
business affairs, provided, in each case, that such pursuits do not interfere
with the proper performance of duties and obligations under the terms hereof
and do not create any actual or intentional conflict of interest.

4. Compensation and Benefits.

(a) Salary. During the Term of Employment, AMRE shall pay
to Gross such annual salary as the Board of Directors of AMRE from time to time
may determine, but such annual salary shall in no event be less than $250,000
per year. AMRE agrees to pay Gross's annual salary to Gross in accordance with
the usual and customary procedures for the payment of compensation to salaried
employees of AMRE, but in any event to make such payment in not less than
monthly installments.

(b) Additional or Incentive Compensation. During the Term
of Employment, Gross shall participate in an incentive compensation plan
consistent with incentive compensation plans provided to other executive
officers of AMRE with positions and compensation equivalent to Gross. In
addition, during the first year of the Term of Employment, Gross shall be
entitled to an incentive bonus based on performance criteria to be mutually
agreed upon by AMRE and Gross, but shall in no event be less than $100,000 nor
more than $250,000. After the first year of the Term of Employment, Gross will
participate in the AMRE incentive compensation plan in which other AMRE
executives who report directly to the Chief Executive Officer of AMRE
participate.

(c) Employee Benefits (General). During the Term of
Employment, Gross shall be entitled to receive benefits and perquisites
ordinarily provided to executive officers of AMRE, including a monthly
automobile allowance of $750.00, protection under an officer's and director's
liability insurance policy and eligibility to participate in all employee
welfare benefit plans or employee pension benefit plans (within the meaning of
the Employee Retirement Income Security Act of 1974) from time to time
maintained by AMRE. Gross shall be entitled to participate in all such plans
or programs on terms no less favorable than those generally available to
executive officers of AMRE and at a level of participation commensurate with
his position as Business Consultant of AMRE and with his level of compensation.
In the event that AMRE relocates Gross to any location other than that of his
present office, he shall be entitled to the benefits of AMRE's executive
relocation benefit package.

C-2
<PAGE> 204
purchase by Gross at his sole expense Executive Long Term Disability Insurance
which will provide a benefit equal to 20% of Gross's monthly base salary. The
types of policies, the identity of the carriers and the exact terms,
limitation, underwriting specifications and benefits of each of such coverage
shall be no less favorable than the coverage provided by AMRE to its other
executive officers. Any coverage for Gross by the insurance described in this
paragraph 4(d) shall be subject to Gross meeting the insurance carrier's
underwriting requirements. AMRE shall arrange for and submit such application
or other information required with respect to such insurance coverage promptly
upon the commencement of the Term of Employment. Should this Agreement be
terminated under the terms of paragraph 5(a)(iii), AMRE shall continue the
payment of his salary to his designated beneficiary for a period of up to one
year or until such time that the Executive Supplemental Life Insurance benefit
is paid to his designated beneficiary, in which case AMRE may deduct from the
insurance benefit an amount equal to the salary advanced to Gross's beneficiary
after the time of his death until the payment of the insurance benefit.

(e) Vacation. Gross shall accrue paid vacation at the
rate of 10 hours of paid vacation for each calendar month he is employed during
the Term of Employment, subject to a maximum accrual of 120 hours at any time.
Hours of vacation accrued for any period of less than a full calendar month
shall be prorated. Gross shall not be required to use paid vacation time for
the purpose of celebrating religious holidays.

(f) Annual Physical Examination. During the Term of
Employment, to the extent not covered by any insurance plan maintained by AMRE,
AMRE shall reimburse Gross for the cost of one comprehensive annual physical
examination during each calendar year by a physician of Gross's choosing.

(g) Expenses. AMRE shall pay or reimburse Gross upon
submission of vouchers by him, and approval thereof by AMRE's Chief Executive
Officer or Chief Financial Officer, for all entertainment, travel, meal, hotel
accommodation and miscellaneous expenses reasonably incurred by him in the
interest of AMRE's business and in accordance with current AMRE policy during
the Term of Employment.

5. Termination of Employment Other Than in Connection With a
Change of Control of AMRE.

(a) Termination by AMRE for Good Cause. AMRE may
terminate Gross's employment prior to the Expiration Date for good cause only
upon compliance with the requirements of this paragraph 5(a). "Good Cause" for
termination by AMRE shall mean only (i) the willful engagement by Gross in
misconduct which is materially injurious to AMRE, monetarily or otherwise, (ii)
Gross's physical or mental disability, if such disability results in Gross's
receiving permanent disability payments pursuant to a group or individual
disability insurance policy maintained by AMRE on behalf of Gross, or (iii)
Gross's death. For purposes of this paragraph 5(a), no act or failure to act
on Gross's part shall be considered "willful" unless done, or omitted to be
done, in bad faith and without reasonable belief that the action or omission
was in the best interest of AMRE. Notwithstanding the foregoing, Gross shall
not be deemed to have been terminated for Good Cause within the meaning of
clause (i) of the preceding sentence without (i) reasonable notice to Gross
setting forth the reasons for AMRE's

C-3
<PAGE> 205
intention to terminate for Good Cause, (ii) an opportunity for Gross, together
with his counsel, to be heard before the Board of Directors of AMRE, and (iii)
written notice from the Board of Directors of AMRE finding that in the good
faith opinion of such Board, Gross was guilty of the conduct set forth above
and specifying the particulars thereof in detail. In the event of Gross's
employment in accordance with the conditions of this paragraph 5(a), the Term
of Employment shall end, all of Gross's obligations pursuant to this Agreement
(except for those provided in paragraphs 8, 9 and 10, if termination is for a
reason other than death) shall end and AMRE's obligations to pay compensation
to Gross pursuant to paragraph 4 shall cease on the effective date of
termination.

(b) Termination by AMRE Other Than for Good Cause. AMRE
may terminate Gross's employment prior to the Expiration Date for any reason
other than Good Cause upon providing not less than 30 days prior written notice
to Gross specifying the effective date of termination. If AMRE terminates
Gross's employment other than for Good Cause under paragraph 5(a) prior to the
public announcement of, or actual or deemed knowledge of AMRE, of, any actual
or proposed transaction which results, directly or indirectly, in a change of
control of AMRE, as defined in paragraph 6, the Term of Employment shall end on
the effective date of termination, but AMRE shall provide, as a severance
benefit to Gross, and as liquidated damages for breach by AMRE of its otherwise
applicable obligations thereunder, each of the following: (i) within three (3)
days of the effective date of termination, a lump sum cash payment equal to the
sum of all accrued vacation pay and monthly cash payments which would, except
for the termination have been paid to Gross as salary under paragraph 4(a)
through the Expiration Date, (ii) not later than the date on which incentive
compensation for the fiscal year in which Gross's termination of employment
occurs (the "Current Fiscal Year") would be paid to Gross if he were employed
on the last day of the Current Fiscal Year, an amount equal to the product of
(a) the incentive compensation which would have been paid to Gross if he were
still employed on the last day of the Current Fiscal Year and (b) a fraction,
the numerator of which is the number of days in the Current Fiscal Year through
the effective date of termination and the denominator of which is 365;
provided, however, that if the effective date of termination occurs on or
before October 31, 1996, such amount payable pursuant to this cause (ii) shall
not be less than One Hundred Thousand Dollars ($100,000.00), (iii) within three
days of the effective date of termination; a lump sum cash payment equal to the
payment of the automobile allowance monthly payments described in paragraph
4(c) which would, except for the termination, have been paid to Gross through
the expiration date and (iv) continuation of all life, health, disability
insurance benefits then in effect and described in paragraph 4 through the
period ending on the Expiration Date.

(c) Substantial Change in Conditions, Authority or
Responsibilities. If AMRE, during the Term of Employment, but prior to the
public announcement of, or actual or deemed knowledge of AMRE of, any actual or
proposed transaction which results, directly or indirectly, in a Change of
Control of AMRE, as defined in paragraph 6, makes any substantial change in
Gross's employment conditions, authority or job responsibilities which would
constitute "Good Reason", within the meaning of paragraph 6(c), if a Change of
Control of AMRE had then occurred, then Gross may elect to terminate his
employment in accordance with the procedures set forth in paragraph 6(b) and
such employment will be deemed terminated by AMRE without Good Cause and the
severance benefits specified in paragraph 5(b) shall apply.

C-4
<PAGE> 206
(d) Termination by Gross. Gross may terminate his
employment at any time on or after the effective date of this Agreement upon
providing 30 days' prior written notice to AMRE stating the effective date of
termination. In any such event, all obligations of AMRE to Gross under this
Agreement and all obligations of Gross to AMRE (except those provided for in
paragraphs 7 through 10) shall cease and the Term of Employment shall end on
the specified effective date of termination.

(e) Mitigation. AMRE's termination of Gross's employment
under paragraph 5(b) or 5(c) shall immediately relieve Gross of all obligations
under this Agreement (except for those provided in paragraphs 7 through 10),
shall not obligate Gross to seek other employment and shall not be construed to
require the application of any compensation which Gross may earn in any such
other employment to reduce AMRE's obligation to provide severance benefits as
provided herein. Gross's right to receive severance benefits hereunder shall
not be subject to voluntary or involuntary sale, pledge, hypothecation,
transfer or assignment by Gross, nor shall Gross, by virtue of such right,
acquire any right, title or interest in particular assets of AMRE and such
right shall be no greater than the right of any unsecured general creditor of
AMRE.

6. Change of Control of AMRE. In the event of a Change of Control
of AMRE, the following provisions of this Agreement shall apply notwithstanding
any other terms or conditions of this Agreement:

(b) Termination of Employment by Gross for Good Reason.
Gross's employment may be terminated by Gross during the Term of
Employment for Good Reason if, (i) within 90 days of the date of
occurrence of a triggering event (as defined below), Gross notifies
AMRE in writing of his intention to treat such event as Good Reason,
(ii) within 30 days following receipt of such notice provided for in
(i), AMRE fails to cure the triggering event, and (iii) within 60 days
following the expiration of the 30-day period described in (ii), Gross
voluntarily terminates his employment by giving written notice to
AMRE.

(c) Good Reason. For purposes of this Agreement, "Good
Reason" shall mean the occurrence of one or more of the following
events subsequent to the public announcement of, or actual or deemed
knowledge of AMRE of, any actual or proposed transaction which
results, directly or indirectly, in a Change of Control of AMRE (each
of which shall be a "triggering event"):

(i) the assignment to Gross of any duties
materially inconsistent in any respect with Gross's position
(including status, offices, titles and reporting
requirements), authority, duties or responsibilities as
contemplated by paragraph 3 of this Agreement, or any other
action by AMRE which results in a material diminution in such
position, authority, duties or responsibilities, excluding for
this purpose an isolated, insubstantial and inadvertent action
not taken in bad faith and

C-5
<PAGE> 207
which is remedied by AMRE promptly after receipt of notice
thereto given by Gross;

(ii) any failure by AMRE to materially comply with
any of the provisions of paragraph 4 of this Agreement, other
than an isolated, insubstantial and inadvertent failure not
occurring in bad faith and which is remedied by AMRE promptly
after receipt of notice thereof given by Gross, unless AMRE
agrees to fully compensate Gross for any such reduction;

(iii) except for relocating to the Dallas, Texas
metropolitan area, Gross is required to locate his office more
than 50 miles from the current location of Boca Raton,
Florida, excluding business travel reasonably consistent with
the amount of travel required of him prior to such relocation;

(iv) any purported termination by AMRE of Gross's
employment otherwise than as expressly permitted by this
Agreement;

(vi) AMRE's request that Gross perform an illegal,
or wrongful act in violation of AMRE's code of conduct
policies.

(d) Severance Benefit on Termination by Gross for Good
Reason. Upon termination of Gross's employment by Gross pursuant to
paragraph 6(b) or by AMRE for a reason other than Good Cause
subsequent to the public announcement of, or AMRE's actual or deemed
knowledge of, any actual or proposed transaction which results,
directly or indirectly, in a Change of Control of AMRE, all
obligations of AMRE to Gross under this Agreement and all obligations
of Gross to AMRE (except those provided for in paragraphs 7 through
10) shall cease and the Term of Employment shall end and AMRE shall
pay to Gross within 10 days of such termination of employment, the sum
of (i) all accrued vacation pay and (ii) an amount equal to the
greater of (A) two times the amount of Gross's annual salary on the
date prior to the Change of Control or (B) if such termination occurs
during the Initial Term, then an amount equal to the annual salary
remaining to be paid during the Initial Term pursuant to paragraph
4(a). In the event the cash settlement payment payable under this
paragraph 6(d), either alone or together with any other payments which
Gross has the right to receive from AMRE, would constitute an "excess
parachute payment" (as defined in Section 280G of the Internal Revenue
Code of 1986, as amended), such cash settlement amount shall be
increased to an amount sufficient to provide Gross, after satisfaction
of all federal excise taxes and federal and state income taxes
attributable to such increases in amount, a net amount equal to such
cash settlement amount calculated as described above and before any
such excise tax.

C-6
<PAGE> 208
(e) Definition of Change of Control of AMRE. For the
purpose of this Agreement, a "Change of Control of AMRE" shall be
deemed to have occurred:

(A) 30% or more of the combined voting power of
AMRE's then outstanding securities with
respect to the election of the directors of
AMRE; or

(B) 20% or more of such combined voting power if
such person thereby becomes the largest
stockholder of AMRE; or

(iii) The occurrence of a transaction requiring
stockholder approval of the acquisition of AMRE by an entity
other than AMRE or a 50% or more owned subsidiary of AMRE
through purchase of assets, or by merger, or otherwise, except
in the case of a transaction pursuant to which, immediately
after the transaction, AMRE's stockholders immediately prior
to the transaction own at least 60% of the combined voting
power of the surviving entity's then outstanding securities
with respect to the election of the directors of such entity
solely by reason of such transaction.

C-7
<PAGE> 209
7. Restrictions on Investments and Competing Activities.

(a) Except to the extent permitted by the last sentence
of this paragraph 7(a) and by paragraph 7(b), during the Term of Employment,
Gross will not hold or acquire (whether by purchase, gift or otherwise) any
direct or beneficial interest in any securities (debt or equity) of, or any
other interest in, any corporation (domestic or foreign) or any other business
organization engaged, directly or indirectly, in any business competitive with
that conducted by AMRE or any member of the AMRE Group nor will Gross himself
(whether in an individual capacity or as a member of a partnership or
otherwise) engage, directly or indirectly, in any business competitive with
that conducted by AMRE or any member of the AMRE Group. The restrictions on the
investment activities of Gross, set forth in the first sentence of this
subparagraph (a), do not apply to investments in debt securities of any
corporation, if such debt securities are traded on a national securities
exchange, or to investments in equity securities of any corporation, if such
equity securities are traded on a national securities exchange, provided that
the aggregate holdings (direct and beneficial) of Gross, his spouse and minor
children in equity securities of such corporation do not, at any time, equal 1%
or more of the outstanding equity securities of such corporation.

(b) Gross agrees that, in addition to the restrictions
imposed by paragraph 7(a), he will conduct his respective investment activities
in strict compliance with any and all policies with respect thereto now or
hereafter established by AMRE (and any other member of the AMRE Group that
employs Gross), and Gross further agrees to render, and cause to be rendered,
any and all such reports with respect thereto as may be required by AMRE or any
such other member of the AMRE Group. The foregoing notwithstanding, an
isolated, insubstantial and inadvertent action not taken in bad faith and which
is remedied by Gross promptly after receipt of notice of any failure to comply
with such policies shall not constitute a violation of the provisions of this
subparagraph.

8. Confidentiality. Gross agrees and acknowledges that the trade
secrets of AMRE and the AMRE Group, as such secrets may exist from time to
time, are valuable, special and unique assets of AMRE and the AMRE Group, and
that access to and knowledge of such secrets are essential to the performance
of Gross's duties hereunder. Gross will not, in whole or in part, for his own
purposes or for the benefit of any person, firm, corporation or other entity
(except AMRE or any member of the AMRE Group) disclose to any person, firm,
corporation, association or any other entity, any such trade secrets or any
other confidential or secret information with respect to the business of AMRE
or the AMRE Group (including, without limitation, any such information with
respect to customers), nor will Gross make use of any such trade secrets or
other confidential or secret information for his own purposes or for the
benefit of any person, firm, corporation or other entity (except AMRE or any
member of the AMRE Group) under any circumstances during or after the Term of
Employment; provided, however, that after the Term of Employment these
restrictions shall not apply to such trade secrets or confidential or secret
information which are then in the public domain (so long as Gross was not
responsible, directly or indirectly, for permitting such trade secrets or
confidential or secret information to enter the public domain without AMRE's
consent).

9. Covenants Not to Solicit or Interfere. For a period of 12
months from the effective date of Gross's termination of employment, Gross will
not compete with AMRE or any

C-8
<PAGE> 210
member of the AMRE Group in the business of AMRE or the AMRE Group in any
geographic area in which AMRE (or such member of the AMRE Group) is actively
engaged in such business on the date Gross's employment hereunder terminates.
The term "compete", as used herein, means to engage in competition, directly or
indirectly (including, without limitation, to conduct the business of AMRE or
the AMRE Group for any customer with which Gross had any significant business
contacts during his employment hereunder), either as a proprietor, partner,
employee, agent, consultant, director, officer, controlling stockholder or in
any other capacity or manner whatsoever. It is the desire and intent of the
parties that the provisions of this paragraph 9 shall be enforced to the
fullest extent permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought. Accordingly, if, and to the extent
that, any portion of this paragraph 9 shall be adjudicated to be invalid or
unenforceable, this paragraph 9 shall be deemed amended to delete therefrom or
reform the portion thus adjudicated to be invalid or unenforceable, such
deletion or reformation to apply only with respect to the operation of this
paragraph 9 in the particular jurisdiction in which such adjudication is made.

10. Injunctive Relief. Gross acknowledges and agrees that a breach
or threatened breach of the provisions of paragraphs 7, 8 or 9 may cause
irreparable injury to AMRE and any member of the AMRE Group, and that, as a
result of such breach AMRE, or any member of the AMRE Group, as the case may
be, shall be entitled, among and in addition to other remedies available at law
or in equity, to an injunction restraining Gross from continuing the activity
causing such breach. Such remedy shall not be exclusive and shall be in
addition to any other remedy AMRE or any such member of the AMRE Group may be
entitled.

11. Miscellaneous.

(a) Notices. Any notice required or permitted to be given
under this Agreement shall be deemed to have been received when delivered in
person or mailed, postage prepaid, by certified mail addressed, in the case of
Gross, to his last known residence as provided by him to AMRE, or, in the case
of AMRE, to its principal office.

(b) Benefits and Obligations. This Agreement shall be
binding upon, shall inure to the benefit of, and shall be enforceable by AMRE
and its respective successors and assigns, and Gross, his heirs, assigns or
legal representatives; provided, however, that the obligations of Gross
contained herein may not be delegated or assigned.

C-9
<PAGE> 211
covenants, terms and conditions or portions thereof shall remain in full force
and effect and any court of competent jurisdiction may so modify the
objectionable provision as to make it valid and enforceable.

(f) Governing Laws. This Agreement shall be governed by
and construed in accordance with the laws of the State of Texas.

(g) Captions. The captions contained in this Agreement
are for the convenience of AMRE and Gross and shall not be deemed or construed
as in any way limiting or extending the language of the provisions to which
such captions refer.

(h) Termination of Existing Employment Agreement.
Upon the execution of this Agreement, Gross' existing employment agreement with
Facelifters dated October 1, 1993 and amended on March 27, 1995 shall
immediately terminate and be of no further force or effect, and all payments
due thereunder, other than incentive compensation or bonuses which shall,
within thirty days from the date hereof be paid pro rata as of the end of the
month of the closing of the Merger, are waived and released.

IN WITNESS WHEREOF, AMRE has caused this Agreement to be executed by
its officer thereunto duly authorized, and Gross has hereunto set his hand, all
as of the day, month and year first above written.

AMRE, INC.

By:
----------------------------
Robert M. Swartz
President

-------------------------------
Murray Gross

C-10
<PAGE> 212
ANNEX D

STOCKHOLDER AGREEMENT

THIS STOCKHOLDER AGREEMENT (this "AGREEMENT") dated as of October 31,
1995 is by and between the undersigned stockholders of Facelifters Home
Systems, Inc., a New York corporation (the "COMPANY") (each such stockholder a
"STOCKHOLDER") and AMRE, Inc., a Delaware corporation ("AMRE").

PRELIMINARY STATEMENTS

A. Concurrently herewith, AMRE, AMRE Acquisition, Inc., a
wholly-owned subsidiary of AMRE ("MERGER SUB"), and the Company, are entering
into an Agreement and Plan of Merger of even date herewith (the "MERGER
AGREEMENT"), pursuant to which, and subject to the terms and conditions
contained therein, Merger Sub will be merged with and into the Company (the
"MERGER").

B. As a condition to their willingness to enter into the Merger
Agreement, AMRE has required that each of the certain Stockholders, who
collectively own more than 30% of the outstanding common stock of the Company
(collectively, the "SIGNATORY STOCKHOLDERS"), enter into, and each of the
Signatory Stockholders has agreed to enter into, this Agreement or an agreement
in the same form as this Agreement (together, the "STOCKHOLDER AGREEMENTS").

C. The Board of Directors of the Company has, prior to the
execution of the Merger Agreement and the Stockholder Agreements, approved the
Merger Agreement and the Merger.

D. Terms used but not defined in this Agreement shall have the
meaning as set forth for such term in the Merger Agreement.

WHEREAS, AMRE and Merger Sub will enter into the Merger Agreement in
part in reliance on each Stockholder's representations, warranties and
agreements set forth in this Agreement;

NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained in this Agreement and other good and valuable
consideration the receipt and sufficiency of which are hereby approved, and
intending to be legally bound hereby, it is agreed as follows:

STATEMENT OF AGREEMENT

1. AGREEMENT TO SUPPORT MERGER. Each Stockholder agrees during
the Term (as hereinafter defined), subject to the terms of Section 3 hereto, to
vote any and all shares of the Company's common stock $0.01 par value per Share
(the "COMMON STOCK") listed on Exhibit A attached hereto (the "SHARES") held by
such Stockholder in favor of the Merger pursuant to the terms of the Merger and
the Merger Agreement, but in the event that a vote for the Merger does not take
place during the Term, then Stockholder agrees not to vote in favor of any
other Change of Control (as hereinafter defined) during the Term; provided,
however, no stockholder

D-1
<PAGE> 213
shall be required to vote in favor of any modification or amendment to the
Merger Agreement which would reduce the Exchange Ratio.

2. PROXY WITH RESPECT TO THE SHARES. During the Term, each
Stockholder hereby irrevocably appoints Merger Sub as Stockholder's
attorney-in-fact and proxy, with full power of substitution, to vote or to
express written consent in lieu of a vote or meeting with respect to all of the
Shares which Stockholder is entitled to vote at any meeting of stockholders
(whether annual or special and whether or not an adjourned meeting) of the
Company, or pursuant to written action taken in lieu of any such meeting or
otherwise, in such manner as to cause the Merger and the Merger Agreement to be
approved and the right to vote against any other transaction or proposal which
would constitute a Change of Control; provided, however, this proxy shall not
be used to vote in favor of any modification or amendment to the Merger
Agreement which would reduce the Exchange Ratio. During the Term, this proxy
is irrevocable, is coupled with an interest sufficient in law to support an
irrevocable proxy and is granted in consideration of and as an inducement to
cause AMRE and Merger Sub to enter into the transactions contemplated by this
Agreement and the Merger Agreement. During the Term, this proxy shall revoke
any other proxy granted by Stockholder at any time with respect to the Shares
and during the Term, no subsequent proxies will be given with respect thereto
by Stockholder. "CHANGE OF CONTROL" shall mean any action or agreement that
would impede, interfere with, delay, postpone or attempt to discourage the
Merger, including but not limited to, (a) any extraordinary corporate
transaction (other than the Merger), such as a merger, other business
combination, reorganization or liquidation involving Company, (b) a sale or
transfer of a material amount of assets of Company or any of its subsidiaries,
(c) any change in the management or board of directors of Company, except as
otherwise agreed to in writing by AMRE, or (d) any material change in the
present capitalization of Company. The duration of the proxy granted under
this Section 2 (the "TERM") will continue until the earlier of April 1, 1996 or
(a) when AMRE, Merger Sub and Stockholder mutually consent in writing to
terminate this Agreement, or (b) upon the termination of the Merger Agreement
by AMRE or Company pursuant to Section 7.1 of the Merger Agreement.

3. CONDITION TO STOCKHOLDER'S OBLIGATIONS. The obligations of
the parties to perform under this Agreement upon its execution and thereafter
shall be subject to the additional condition that there shall be no preliminary
or permanent injunction or other order issued by any court of competent
jurisdiction in effect which prohibits (i) this Agreement, or (ii) the Merger.
Each Stockholder and AMRE agree not to seek any such injunction or order and
shall use their respective reasonable best efforts to oppose and shall seek the
immediate lifting of any such injunction or order.

4. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS. Each
Stockholder, solely on behalf of such Stockholder, represents and warrants to
AMRE as follows:

4.1 OWNERSHIP OF SHARES. On the date hereof, the Shares
listed on Exhibit A opposite the Stockholder's name are all of the shares of
the Company's Common Stock currently beneficially and of record owned by the
Stockholder and options to acquire Company Stock. Except as set forth on
Exhibit A, Stockholder does not have any rights to acquire any additional
shares of the Company's capital stock. Stockholder currently has, and at the
closing of the Merger will have, good, valid and marketable title to the Shares
listed on Exhibit A

D-2
<PAGE> 214
opposite the Stockholder's name, free and clear of all liens, encumbrances,
restrictions, options, warrants, rights to purchase and claims of every kind
(other than the encumbrance created by this Agreement).

4.2 POWER; BINDING AGREEMENT. Stockholder has the full
legal right, power and authority to enter into and perform all of Stockholder's
obligations under this Agreement.

5. EXPENSES. Except as provided in Section 6(h), each party
hereto will pay all of its expenses in connection with the transactions
contemplated by this Agreement, including, without limitation, the fees and
expenses of its counsel and other advisers.

6. CERTAIN COVENANTS OF AMRE. AMRE agrees to provide each
Stockholder the following registration rights:

(a) DEMAND REGISTRATION. At any time prior to three
years from the date hereof, the Signatory Stockholders owning a majority of the
AMRE common stock issued to the Signatory Stockholders in the Merger may make a
written request for registration ("DEMAND REGISTRATION") under the Securities
Act of 1933, as amended (the "SECURITIES ACT") of all or a part of the common
stock of AMRE received pursuant to the Merger Agreement (the "REGISTRABLE
SECURITIES"). Subject to the provisions of this paragraph, AMRE shall not be
obligated to effect more than one such Demand Registration. Notwithstanding
the foregoing, (i) AMRE shall not be obligated to effect a registration
pursuant to this Section 6(a) during the period starting with the date ninety
(90) days prior to AMRE's estimated date of filing of, and ending on a date 180
days following the effective date of, a registration statement pertaining to an
underwritten public offering of Common Stock for the account of AMRE, and (ii)
if AMRE is required to effect a registration pursuant to this Section 6(a) and
AMRE furnishes to the Signatory Stockholders a certificate signed by the
President of AMRE stating that in the good faith judgment of the Board of
Directors of AMRE it would be materially adverse to AMRE and its stockholders
for such registration statement to be filed on or before the date such filing
would otherwise be required hereunder and it is therefore necessary to defer
the filing of such registration statement, then AMRE shall have the right to
defer such filing for a period not to exceed 90 days after receipt of the
request for such registration from the Signatory Stockholders; provided that
during such time AMRE may not file a registration statement for securities to
be issued and sold for its own account other than on Form S-8, S-4 or any
successor similar forms or any other form not available for registering the
Registrable Securities for sale to the public. AMRE shall at all times use
commercially reasonable efforts to register such Registrable Securities. A
registration will not count as a Demand Registration until it has become
effective, unless the cause of such failure shall be in part attributable to
actions of any of the Signatory Stockholders. If any Demand Registration is in
the form of an underwritten offering, AMRE shall have the right to designate
the underwriter(s) with the approval of the Signatory Stockholders, which
approval shall not be unreasonably withheld or delayed.

If a requested registration pursuant to this Section 6(a)
involves an underwritten offering, and the managing underwriter shall advise
AMRE in writing that, in its opinion, the number of securities requested to be
included in such registration exceeds the number which can be sold in such
offering, then the Registrable Securities requested to be registered pursuant
to this Section 6(a) shall either (i) be reduced to the number of Registrable
Securities which AMRE

D-3
<PAGE> 215
is so advised can be sold in (or during the time of) such offering, or, (ii) in
the alternative, the Signatory Stockholders holding a majority of the
Registrable Securities may elect to cancel the Demand Registration, which shall
not then count as a Demand Registration hereunder.

(b) PIGGY-BACK REGISTRATION. If, at any time prior to
three years from the date hereof, AMRE proposes to register any of its
securities under the Securities Act (other than by a registration on Form S-8,
S-4 or any successor similar forms or any other form not available for
registering the Registrable Securities for sale to the public and other than
pursuant to Section 6(a) hereof), whether for sale for its own account or other
security holders, AMRE will, each such time, at least 30 days prior to filing
the registration statement, give written notice to the Signatory Stockholders
of its intention to do so and upon the written request of any of the Signatory
Stockholders made within 15 days after the receipt of any such notice (which
request shall specify the Registrable Securities intended to be disposed of by
each of the Signatory Stockholders), AMRE will use commercially reasonable
efforts to affect the registration under the Securities Act of all Registrable
Securities which AMRE has been so requested to register by each of the
Signatory Stockholders; provided, however, that if at any time after giving
written notice of its intention to register any securities and prior to the
effective date of the registration statement filed in connection with such
registration, AMRE shall determine for any reason not to register or to delay
registration of such securities, AMRE may, at its election, give written notice
of such determination to each of the Signatory Stockholders who have requested
registration of any Registrable Securities and, thereupon, (i) in the case of a
determination not to register, shall be relieved of its obligation to register
any Registrable Securities in connection with such registration, and (ii) in
the case of a determination to delay registering, shall be permitted to delay
registering any Registrable Securities being registered pursuant to this
Section 6(b) for the same period as the delay in registering such other
securities.

(c) PRIORITY IN PIGGY-BACK REGISTRATIONS. If (i) a
registration pursuant to Section 6(c) involves an underwritten offering of the
securities so being registered, whether or not for sale for the account of
AMRE, to be distributed (on a firm commitment basis) by or through one or more
underwriters, whether or not the Registrable Securities so requested to be
registered for sale for the account of any of the Signatory Stockholders are
also to be included in such underwritten offering, and (ii) the managing
underwriter of such underwritten offering shall inform in writing AMRE and each
of the Signatory Stockholders who have requested registration of any
Registrable Securities of its belief that the number of securities requested to
be included in such registration exceeds the number which can be sold in (or
during the time of) such offering, then AMRE may include in such offering all
securities proposed by AMRE to be sold for its own account and all securities
proposed to be sold by any other holders of AMRE securities exercising demand
registration rights (if any) and may decrease the number of Registrable
Securities and other securities of AMRE that are requested to be included in
such registration by decreasing the Registrable Securities requested to be
included in such registration (pro rata among all the holders of Registrable
Securities requesting such registration on the basis of the number of shares of
such securities held by such holder immediately prior to the filing of the
registration statement with respect to such registration). AMRE shall not be
required under this Section 6(c) to include any of the Registrable Securities
in such underwriting unless the Signatory Stockholder owning such Registrable
Securities accepts the terms of the underwriting as determined by AMRE and the
underwriters selected by AMRE.

D-4
<PAGE> 216
(d) PROCEDURES. If and whenever AMRE is required to use
commercially reasonable efforts to effect the registration of any Registrable
Securities under the Securities Act as provided in Sections 6(a) or 6(b)
hereof, AMRE will, subject to the limitations provided herein:

(i) promptly prepare and as soon as reasonably
practicable file with the Securities and Exchange Commission (the
"SEC") the requisite registration statement to effect such
registration and thereafter, subject to the provisions of Section 6
hereof, use reasonable efforts to cause such registration statement to
become promptly effective;

(ii) promptly prepare and file with the SEC such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep
such registration statement effective and to comply with the
provisions of the Securities Act with respect to the disposition of
all securities covered by such registration statement until such time
as all of such securities have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof set
forth in such registration statement; provided, however, that AMRE
shall not in any event be required to keep the registration statement
effective for a period of more than three months after such
registration statement becomes effective; and provided, further that
AMRE may delay the filing or suspend the effectiveness of any
registration under this Agreement, or without suspending such
effectiveness instruct the Signatory Stockholders not to sell any
Registrable Securities included in any such registration, if (A) AMRE
shall have determined that AMRE would be required to disclose any
action taken or proposed to be taken by AMRE in good faith, including
without limitation the acquisition or divestiture of assets, which
disclosure would adversely effect AMRE or on such actions, or (B)
required by law, to update the prospectus relating to any such
registration to include updated financial statements (a "SUSPENSION
PERIOD") by providing the Signatory Stockholders with written notice
of such Suspension Period and the reasons therefor. Each Stockholder
agrees to maintain such reason as is disclosed by AMRE in strict
confidence. In addition, AMRE shall not be required to keep any
registration effective, or may without suspending such effectiveness,
instruct the Signatory Stockholders who have Registrable Securities
included in such registration not to sell such securities, during any
period which AMRE is instructed, directed, ordered or otherwise
requested by any governmental agency or self-regulatory organization
to stop or suspend such trading or sales ("SUPPLEMENTAL EXTENSION
PERIOD"). In the event of a Suspension Period or Supplemental
Extension Period, the period during which any registration under this
Agreement is to remain effective pursuant to this Section 6(d) shall
be tolled until the end of any such Suspension Period or Supplemental
Extension Period;

(iii) furnish to each of the Signatory Stockholders
who have Registrable Securities included in the registration statement
such number of conformed copies of such registration statement and of
each such amendment and supplement thereto (in each case including all
exhibits), such number of copies of the prospectus contained in such
registration statement (including each preliminary prospectus and any
summary prospectus) and any other prospectus filed under Rule 424
under the Securities Act, and such other documents, as such Signatory
Stockholders may reasonably request;

D-5
<PAGE> 217
(iv) use reasonable efforts to register or qualify
all Registrable Securities and other securities covered by such
registration statement under such other securities or blue sky laws of
such jurisdiction as each seller thereof shall reasonably request and
to keep such registration or qualification in effect for 90 days as
such registration statement remains in effect (provided, however, that
AMRE shall not in any event be required to keep such registration or
qualification in effect for a period of more than three months after
such registration or qualification becomes effective), and further
provided that (anything in this Agreement to the contrary
notwithstanding with respect to the bearing of expenses) if any
jurisdiction in which the securities shall be qualified shall require
that expenses incurred in connection with the qualification of the
securities in that jurisdiction be borne by the Signatory Stockholders
who have Registrable Securities included in the registration
statement, then such expenses shall be payable by such Signatory
Stockholders, to the extent required by such jurisdiction; and

(v) use reasonable efforts to list all
Registrable Securities covered by such registration statement on any
securities exchange on which any of AMRE's Common Stock is then
listed.

(e) STOCKHOLDER INFORMATION REQUIREMENTS. It shall be a
condition precedent to the obligations of AMRE to take any such action with
respect to registering a Stockholder's Registrable Securities pursuant to this
Section 6 that the Stockholder furnish AMRE in writing such information
regarding the Stockholder, the Registrable Securities and the distribution of
such securities as AMRE may from time to time request in writing within ten
days of such request. If a Stockholder fails to provide AMRE with any such
information, AMRE may exclude the Stockholder's Registrable Securities from the
registration statement.

(f) REQUESTED UNDERWRITTEN OFFERINGS. If requested by
the underwriters for any underwritten offering of Registerable Securities
pursuant to a registration requested under Section 6 hereof, AMRE will enter
into an underwriting agreement with such underwriters for such offering, such
agreement to contain such customary representations and warranties, covenants
and indemnities by AMRE and such other terms as are generally required in
agreements of this type. The Signatory Stockholders who have Registrable
Securities included in the registration statement will cooperate with AMRE in
the negotiation of the underwriting agreement. If requested by the
underwriters of any underwritten offering pursuant to a registration under
Section 6 hereof, each of the Signatory Stockholders who does not have
Registrable Securities included in the registration statement agrees to enter
into an agreement with such underwriters not to sell its shares Common Stock
for a period of time (not to exceed 360 days) after the effectiveness of a
registration statement equal to the period of time which the sellers of
securities in such registration have agreed not to sell their shares after the
effectiveness of such registration statement. Each of the Signatory
Stockholders who has Registrable Securities included in the registration
statement shall be a party to such underwriting agreement.

(g) INCIDENTAL UNDERWRITTEN OFFERINGS. If AMRE at any
time proposes to register any of its securities under the Securities Act as
contemplated by Section 6(b) hereof and such securities are to be distributed
by or through one or more underwriters, AMRE will, if requested by any of the
Signatory Stockholders as provided in Section 6(b) hereof and subject to the
provisions of Section 6(c) hereof, use reasonable efforts to arrange for such
underwriters

D-6
<PAGE> 218
to include all the Registrable Securities to be offered and sold by such
Signatory Stockholders to be distributed by such underwriters, provided that
such Signatory Stockholders have accepted the terms of the underwriting as
determined hereunder and the Underwriter(s) selected by AMRE. In such event,
such Signatory Stockholders shall be a party to the underwriting agreement
between AMRE and such Underwriters.

(h) EXPENSES AND INDEMNIFICATION. All expenses incurred
by AMRE in connection with the registration of Registrable Securities pursuant
to Section 6(a) or 6(b) hereof, including without limitation, all registration
and qualification fees, printers' costs and fees and disbursements of counsel
for AMRE, but not including underwriter's discounts, commissions and
disbursements of joint counsel for the Signatory Stockholders, shall be paid by
AMRE. In connection with any public offering of Registrable Securities
pursuant to this Section, AMRE agrees to indemnify each of the Signatory
Stockholders who have Registrable Securities included in the registration
statement to the same extent as AMRE indemnifies any underwriter participating
therein. In connection with any underwritten public offering, each of the
Signatory Stockholders who have Registrable Securities included in the
registration statement shall indemnify AMRE, but only to the same extent that
an underwriter participating therein indemnifies AMRE and, in any event, only
with respect to information provided by each of the Signatory Stockholders.

7. NOTICES. All notices or other communications required or
permitted hereunder shall be in writing (except as otherwise provided herein)
and shall be deemed duly given when received by delivery in person, by
telecopy, telex or telegram or by certified mail, postage prepaid, or by an
overnight courier service, addressed as follows:

If to AMRE or Merger Sub:

AMRE, Inc.
8585 North Stemmons Freeway
SouthTower, Suite 102
Dallas, Texas 75247
Telephone: (214) 658-6300
Fax: (214) 658-6101
Attention: Robert M. Swartz, President

with copies to:

AMRE, Inc.
8585 North Stemmons Freeway
SouthTower, Suite 102
Dallas, Texas 75247
Telephone: (214) 658-6335
Fax: (214) 658-6101
Attention: C. Curtis Everett

D-7
<PAGE> 219
If to Stockholder:

To the address set forth on the signature page hereto.

8. ENTIRE AGREEMENT; AMENDMENT. This Agreement, together with
the documents expressly referred to herein, constitute the entire agreement
among the parties hereto with respect to the subject matter contained herein
and supersede all prior agreements and understanding among the parties with
respect to such subject matter. This Agreement may not be modified, amended,
altered or supplemented except by an agreement in writing executed by the party
against whom such modification, amendment, alteration or supplement is sought
to be enforced.

9. ASSIGNS. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns,
but neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto without the prior
written consent of the other parties, except that Merger Sub may assign any or
all of its rights and obligations hereunder to AMRE or any direct or indirect
wholly-owned subsidiary of AMRE without the consent of any Stockholder, but no
such transfer shall relieve Merger Sub of its obligations under this Agreement
if such subsidiary does not perform the obligations of Merger Sub hereunder.

10. GOVERNING LAW. This Agreement, and all matters relating
hereto, shall be governed by, and constituted in accordance with the laws of
the State of Delaware without giving effect to the principles of conflicts of
laws thereof.

11. RESTRICTIONS ON TRANSFER. Each Stockholder agrees with, and
covenants to, AMRE and Merger Sub as follows:

(a) For as long as the Merger Sub holds the proxy and
power of attorney granted pursuant to Section 2 above, each Stockholder shall
not (i) transfer (which terms shall include, without limitation, for the
purposes of this Agreement, any sale, gift, pledge, alienation, assignment or
other disposition, directly or indirectly, by operation of law, in connection
with any merger or otherwise (collectively, a "TRANSFER")), or consent to any
Transfer of, any or all of the Shares or any interest therein, except pursuant
to the Merger, (ii) enter into any contract, option or other agreement or
understanding with respect to any Transfer of any or all of the Shares or any
interest therein, (iii) grant any proxy, power of attorney or other
authorization in or with respect to the Shares, except for this Agreement, or
(iv) deposit the Shares into a voting trust or enter into a voting agreement or
arrangement with respect to the Shares.

(b) Following the Merger, Stockholder agrees not to
Transfer any shares of Common Stock (as defined in the Merger Agreement)
received in exchange for the Shares pursuant to the Merger except as follows:
(i) pursuant to an effective registration statement under the Securities Act or
(ii) subject to receipt of an opinion of counsel satisfactory to AMRE that such
a Transfer is permissible under the Securities Act.

(c) There is no plan or intention by the Stockholder to
sell, exchange or otherwise dispose of the Shares of AMRE received by the
Stockholder in the Merger.

D-8
<PAGE> 220
12. CHANGE IN STATE OF INCORPORATION. The parties hereto
expressly acknowledge that, provided it will not prevent, delay or in any
manner adversely affect the ability of the parties to consummate the Merger,
the Company intends, prior to its mailing of the Joint Proxy
Statement/Prospectus, to change its state of incorporation from New York to
Delaware, as previously contemplated in the Company's proxy materials for its
annual meeting of stockholders held August 9, 1995. Provided that such
reincorporation will not prevent, delay or in any manner adversely affect the
parties ability to consummate the Merger, each Stockholder hereby agrees to
take all action that may be necessary to effect such reincorporation, including
voting the Shares of Common Stock held by such Stockholder in favor of such
reincorporation if so required. Each Stockholder and AMRE expressly
acknowledge and agree that if the reincorporation occurs, then the term
"Company" shall mean and refer to the constituent corporation to the
reincorporation that is the surviving corporation under Delaware law (the
"Survivor") and the terms "Common Stock" and "Shares" shall respectively refer
to the common stock of the Survivor and the common stock of the Survivor owned
by the Stockholders.

13. COMPANY STOCK OPTIONS. Each Stockholder executing an
Employment Agreement with AMRE in connection with the Merger agrees to waive
and release the benefit of any reload provisions with respect to any Company
options previously granted to such Stockholder pursuant to any Company stock
option or other incentive compensation plan.

14. CERTAIN EVENTS. Each Stockholder agrees that this Agreement
and the obligations hereunder shall attach to the Stockholder's Shares and
shall be binding upon any person or entity to which legal or beneficial
ownership of Stockholder's Shares shall pass, whether by operation of law or
otherwise, including without limitation, such Stockholder's heirs, guardians,
administrators or successors. In the event of any stock split, stock dividend,
merger, reorganization, recapitalization or other change in the capital
structure of the Company affecting the Shares, or the acquisition of additional
shares of Company Common Stock or other voting securities of the Company by
Stockholder, the number of Shares listed in Exhibit A set forth opposite the
Stockholders Name shall be adjusted appropriately and this Agreement and the
obligations hereunder shall attach to any additional shares of Company Common
Stock or other voting securities of the Company issued to or acquired by such
Stockholder.

15. STOCKHOLDER CAPACITY. No person executing this Agreement who
is or becomes during the term hereof a director of Company makes any agreement
or understanding herein in his or her capacity as a director. Each Stockholder
is executing this Agreement solely in his or her capacity as the record and
beneficial owner of his or her Shares. The parties hereto acknowledge and
agree that none of the provisions herein set forth shall be deemed to restrict
or limit any fiduciary duty, the undersigned or any partner of the undersigned
or any of their respective affiliates may have as a member of the Board of
Directors or executive officer of Company, or as counsel to Company; provided,
that no such duty shall excuse any Stockholder from his or her obligation as a
stockholder of Company to vote the Shares, to the extent that they may be so
voted, as herein provided and to otherwise comply with the terms and conditions
of this Agreement.

16. ENFORCEMENT. Each Stockholder agrees that irreparable damage
would occur and that AMRE and Merger Sub would not have any adequate remedy at
law in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms

D-9
<PAGE> 221
or were otherwise breached. It is accordingly agreed that AMRE and Merger Sub
shall be entitled to an injunction or injunctions to prevent breaches or
threatened breaches by any Stockholder or Company of this Agreement and to
enforce specifically the terms and provisions of this Agreement in any court of
the United States located in the State of Delaware or in Delaware state court,
this being in addition to any other remedy to which AMRE and/or Merger Sub may
be entitled at law or in equity. In addition, each of the parties hereto
irrevocably and unconditionally (i) consents to be subject to the personal
jurisdiction of any federal court located in the State of Delaware or any
Delaware state court in the event any dispute arises out of this Agreement or
any of the transactions contemplated hereby, (ii) agrees that such party will
not attempt to deny or defeat the personal jurisdiction of such courts by
motion or other request for leave from any such court, (iii) agrees that such
party shall not bring any action relating to this Agreement or any of the
transactions contemplated hereby in any court other than a federal court
sitting in the State of Delaware or a Delaware state court and (iv) that
service of process may also be made on such party by prepaid certified mail
with a proof of mailing receipt validated by the United States Postal Service
constituting evidence of valid service, and that service made pursuant to (iv)
above shall have the same legal force and effect as if served upon such party
personally within the State of Delaware.

17. APPROVAL OF MERGER. Each of the Stockholders agree that, by
execution and delivery of this Agreement, such Stockholder consents to and
approves the Merger to the same extent and with the same force and effect as if
such Stockholder had consented to, approved and voted for the Merger at a
formal meeting of the Company's stockholders duly called and held for the
purpose of acting upon the proposal to approve the Merger; provided that this
section shall not constitute a consent or approval of any modification or
amendment to the Merger Agreement that would reduce the Exchange Ratio.

IN WITNESS WHEREOF, AMRE has caused this Agreement to be executed by
its duly authorized officer and the Stockholder has executed this Agreement as
of the date and year first above written.

AMRE, INC.

By: /s/ Robert M. Swartz
-----------------------------
Name: Robert M. Swartz
---------------------------
Title: President
--------------------------

D-10
<PAGE> 222
<TABLE>
<CAPTION>
STOCKHOLDERS NUMBER OF SHARES
<S> <C>
Mark Honigsfeld 478,714, plus 122,500 option shares
- ----------------------------------------- -------------------------------------------
Printed Name

/s/ Mark Honigsfeld
- -----------------------------------------
Signature

800 Snediker Avenue
- -----------------------------------------
Brooklyn, NY 11207-7606
- -----------------------------------------
Address

Murray Gross 137,625 plus 235,000 option shares
- ----------------------------------------- -------------------------------------------
Printed Name

/s/ Murray Gross
- -----------------------------------------
Signature

621 NW 53d St.
- -----------------------------------------
Boca Raton, FL 33487
- -----------------------------------------
Address

Deedee Honigsfeld 158,606, plus 0 option shares
- ----------------------------------------- -------------------------------------------
Printed Name

/s/ Deedee Honigsfeld
- -----------------------------------------
Signature

800 Snediker Avenue
- -----------------------------------------
Brooklyn, NY 11207-7606
- -----------------------------------------
Address

</TABLE>

D-11
<PAGE> 223
ANNEX E

March 11, 1996

Board of Directors
Facelifters Home Systems, Inc.
621 N.W. 53 Street, Suite 450
Boca Raton, Florida 33487

Gentlemen:

You have asked our opinion (the "Opinion") as to the fairness, from a financial
point of view, to the holders of common stock, par value $0.01 per share
("Facelifters Common Stock"), of Facelifters Home Systems, Inc., a Delaware
Corporation ("Facelifters" or the "Company") of the consideration to be
received in the proposed merger of AMRE Acquisition, Inc., ("Merger Sub") a
Texas corporation and wholly owned subsidiary of AMRE, Inc. ("AMRE"), a
Delaware Corporation, with and into Facelifters. Such proposed merger (the
"Merger") is pursuant to the terms of an Agreement and Plan of Merger dated as
of October 31, 1995 by and among Facelifters, AMRE and Merger Sub (the
"Agreement"). The Agreement provides that upon consummation of the Merger,
shareholders of Facelifters will receive validly issued, fully paid and
non-assessable shares of $0.01 par value common stock of AMRE (the "AMRE Common
Stock") as determined by the exchange ratio (the "Exchange Ratio") and spelled
out in the Agreement.

As a usual part of our investment banking business, Southwest Securities, Inc.
("Southwest") is engaged in the valuation of businesses and securities in
connection with mergers and acquisitions, underwritings and distributions of
listed and unlisted securities, private placements and valuations. Southwest,
through its parent Southwest Securities Group, Inc., is a publicly-held
transaction processing, investment banking and securities brokerage firm
(SWST-NASDAQ).

For purposes of the Opinion set forth herein, we have taken into account such
accepted financial and investment banking procedures and considerations we
deemed relevant. Among other things, we have:

(i) reviewed the Agreement and the Joint Proxy Statement/Prospectus, in
substantially final form to be sent to the stockholders of
Facelifters, and the supporting documents thereto;
<PAGE> 224
Board of Directors
March 11, 1996
Page 2

(ii) reviewed Facelifters' Annual Reports to Stockholders, Annual Reports
on Form 10-K and related financial information for the five fiscal
years ended March 1995; Quarterly Reports on Form 10-Q for the periods
ended June 30, September 30 and December 31, 1995 and certain other
relevant financial and operating data made available to us from
published sources;

(iii) reviewed AMRE's Annual Reports to Stockholders, Annual Reports on Form
10-K and related financial information for the five fiscal years ended
December 1995; Quarterly Reports on Form 10-Q for the periods ended
April 2, July 2 and October 1, 1995 and certain other relevant
financial and operating data made available to us from published
sources;

(iv) reviewed certain internal financial and operating information
(including financial projections) prepared by the management of
Facelifters and AMRE as well as pro forma consolidated financial
projections provided by AMRE;

(v) discussed with the senior management of both Facelifters and AMRE
their business, operations, assets, financial condition and future
prospects and their views as to the potential benefits and
implications of the Merger;

(vi) reviewed reported market prices, price/earnings ratios and trading
statistics of the common stock of Facelifters and AMRE and certain
other comparable publicly-traded companies;

(vii) compared Facelifters and AMRE from a financial point of view with
certain other comparable publicly-traded companies;

(viii) reviewed the terms, to the extent publicly available, of certain
comparable acquisition transactions; and

(ix) reviewed all public announcements made by the Company and AMRE in the
prior nine months;

(x) performed such other analyses and examinations and considered such
other factors as we deemed appropriate.

In connection with our Opinion, we were not authorized to, and consequently,
did not solicit any alternative proposals for a merger or acquisition of
Facelifters. We have not independently verified the accuracy or completeness
of the information considered in the foregoing review, and for purposes of the
Opinion set forth herein we have assumed and relied upon the accuracy and

<PAGE> 225
Board of Directors
March 11, 1996
Page 3

completeness of all such information. We relied upon the management of both
companies as to the reasonableness and achievability of the financial
projections provided to us and referred to in (iv) above. We did not make an
independent evaluation or appraisal of the respective assets or liabilities of
Facelifters or AMRE or any subsidiary. No opinion is expressed as to the
fairness of the Merger to the AMRE shareholders.

It should be noted that this Opinion is based, in part, on economic, market and
other conditions as in effect on, and information made available to us as of,
the date hereof, and does not represent an opinion as to what value AMRE Common
Stock actually will have to Facelifters shareholders if and when the Merger is
consummated. Such actual value could be affected by changes in such market
conditions, general economic conditions and other factors which generally
influence the price of securities.

Based upon and subject to the foregoing, we are of the opinion that as of the
date hereof, the merger is fair, from a financial point of view, to the
shareholders of Facelifters.

Sincerely,

/s/ Southwest Securities, Inc.

SOUTHWEST SECURITIES, INC.
<PAGE> 226

[LETTERHEAD OF BEAR, STEARNS & CO. INC.]

March 14, 1996

Board of Directors
AMRE, Inc.
8585 N. Stemmons Freeway
South Tower, Suite 102
Dallas, Texas 75247

Dear Sirs:

We understand that AMRE, Inc. ("AMRE") has agreed pursuant to a merger
agreement dated October 31, 1995 (the "Merger Agreement"), that AMRE
Acquisition, Inc., a wholly-owned subsidiary of AMRE, will merge with and into
Facelifters Home Systems, Inc. (the "Merger"). Each share of Facelifters will
be converted into one share of AMRE common stock. You have provided us with
the proxy statement/prospectus, which includes the Merger Agreement, in
substantially the form to be sent to the shareholders of AMRE (the "Proxy
Statement").

You have asked us to render our opinion as to whether the Merger is fair, from
a financial point of view, to the public stockholders of AMRE.

In the course of our analyses for rendering this opinion, we have:

1. reviewed the Proxy Statement;

2. reviewed AMRE's Annual Reports to stockholders and Annual
Reports on Form 10-K for the fiscal years ended December 1991
through 1995, and its Quarterly Reports on Form 10-Q for the
periods ended April 2, July 2 and October 1, 1995;

3. reviewed Facelifters' Annual Reports to stockholders and
Annual Reports on Form 10-K for the fiscal years ended March
1991 through 1995, and its Quarterly Reports on Form 10-Q for
the periods ended June 30, September 30, 1995, and December
31, 1995;

4. reviewed certain operating and financial information,
including projections, provided to us by management of AMRE
and Facelifters relating to their respective businesses and
prospects;

5. met with certain members of senior management of AMRE and
Facelifters to discuss operations, historical financial
statements and future prospects of their respective companies;

<PAGE> 227
March 14, 1996
Page 2

6. reviewed the historical prices and trading volumes of the
common stock of AMRE and Facelifters;

7. reviewed publicly available financial data and stock market
performance data of companies which we deemed generally
comparable to AMRE and Facelifters;

8. reviewed the terms of recent acquisitions of companies which
we deemed generally comparable to Facelifters; and

9. conducted such other studies, analyses, inquiries and
investigations as we deemed appropriate.

In the course of our review, we have relied upon and assumed the accuracy and
completeness of the financial and other information provided to us by AMRE and
Facelifters. With respect to AMRE's and Facelifters' projected financial
results, we have assumed that they have been reasonably prepared on bases
reflecting the best currently available estimates and judgments of the
managements of AMRE and Facelifters as to the expected future performance of
AMRE and Facelifters, respectively. We have not assumed any responsibility for
the information or projections provided to us and we have further relied upon
the assurances of the managements of AMRE and Facelifters that they are unaware
of any facts that would make the information or projections provided to us
incomplete or misleading. In arriving at our opinion, we have not performed or
obtained any independent appraisal of the assets of AMRE and Facelifters. Our
opinion is necessarily based on economic, market and other conditions, and the
information made available to us, as of the date hereof. We further assumed
that the Merger would be accounted for in accordance with the pooling of
interests method of accounting under the requirements of APB No. 16 and would
qualify as a tax-free reorganization under Section 368 (a) of the Internal
Revenue Code. We did not consider the effect, if any, of the proposed merger
of AMRE with Congressional Construction Corporation on our analysis.

Based on the foregoing, it is our opinion that the Merger is fair, from a
financial point of view, to the public stockholders of AMRE.

We have acted as financial advisor to AMRE in connection with the Merger and
will receive a fee for such services, payment of a significant portion of which
is contingent upon the consummation of the Merger.

Very truly yours,

BEAR, STEARNS & CO. INC.

<PAGE> 228
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the Delaware General Corporation Law empowers a
corporation to indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding by reason of the fact that he is or was serving at the request of
the corporation as a director, officer, employee or agent of another
corporation or enterprise. Section 145 also allows a corporation to purchase
and maintain insurance on behalf of any such person.

Article 9 of the AMRE's Certificate and Article 11 of the AMRE's
Bylaws, which provide for indemnification of directors and officers and for the
authority to purchase insurance with respect to indemnification of directors
and officers, are incorporated herein by reference.

The Delaware Act was amended in 1986 to provide that Delaware
corporations may amend their certificates of incorporation to relieve directors
of monetary liability for breach of their fiduciary duty, except under certain
circumstances, including breach of the director's duty of loyalty, acts or
omissions not in good faith or involving intentional misconduct and a knowing
violation of law or any transaction from which the director derived improper
personal benefit. Article 9 of the AMRE Certificate provides that, to the
fullest extent permitted by the Delaware Act, AMRE's directors shall not be
liable to AMRE or its stockholders for monetary damages for breach of their
fiduciary duties as a director.

Finally, individual Indemnification Agreements have been entered into
between AMRE and each director of AMRE which contractually obligate AMRE to
provide to the directors (i) indemnification, (ii) insurance and (iii)
additional indemnification. The Indemnification Agreements are for an
unspecified period of time and are intended to indemnify and hold harmless each
director to the fullest extent permitted or authorized by applicable law and
the AMRE Bylaws. The form of such Indemnification Agreements is contained in
Exhibit 10.19.

II-1
<PAGE> 229
ITEM 21. EXHIBITS

Exhibit No. Title

2.1 - Agreement and Plan of Merger dated as of October 31, 1995 among
AMRE, Facelifters Home Systems, Inc., a New York corporation,
Facelifters and Merger Sub (incorporated by reference to Exhibit
7.1 to AMRE's Current Report on Form 8-K dated October 31, 1995).

2.2 - Amendment No. 1 dated December 12, 1995 to Agreement and Plan of
Merger dated as of October 31, 1995 among AMRE, Facelifters Home
Systems, Inc., a New York corporation, Facelifters and Merger Sub
(incorporated by reference to Exhibit 2.3 to AMRE's Annual Report
on Form 10-K for the fiscal year ended December 31, 1995).

2.3* - Amendment No. 2 dated February 12, 1996 to Agreement and Plan of
Merger dated as of October 31, 1995 among AMRE, Facelifters Home
Systems, Inc., a New York Corporation, Facelifters and Merger Sub,
as amended.

2.4 - Agreement and Plan of Merger, dated as of December 30, 1995, among
AMRE, Congressional Merger Sub and Congressional (incorporated by
reference to Exhibit 2.1 to AMRE's Annual Report on Form 10-K for
the fiscal year ended December 31, 1995).

3.1 - Certificate of Incorporation of AMRE, as amended (incorporated by
reference to Exhibit 3.1 to AMRE's Annual Report on Form 10-K for
the fiscal year ended April 30, 1989).

3.2 - Bylaws of AMRE, as amended (incorporated by reference to Exhibit
3.2 to AMRE's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993).

4.1 - Rights Agreement, dated as of November 13, 1992, by and between
AMRE and The Bank of New York, as successor Rights Agent to The
Frost National Bank of San Antonio (incorporated by reference to
Exhibit 1 to AMRE's Registration Statement on Form 8-A, dated
November 19, 1992).

5* - Opinion regarding legality.

8.1* - Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P. regarding tax
matters.

8.2* - Opinion of Jackson & Walker, L.L.P. regarding tax matters.

10.1 - Stock Option Plan of AMRE, as amended (incorporated by reference to
Exhibit 10.1 to AMRE's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994).

10.2 - AMRE Savings Investment Plan, dated September 30, 1990, restating
and retitling AMRE's Profit Sharing Plan, as amended (incorporated
by reference to Exhibit 10.2 to AMRE's Quarterly Report on Form
10-Q for the quarterly period ended October 31, 1990).

10.3 - Amendment No. 1 to AMRE Savings Investment Plan, effective as of
October 1, 1990 (incorporated by reference to Exhibit 10.3 to
AMRE's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993).

10.4 - Amendment No. 2 to AMRE Savings Investment Plan, effective as of
January 1, 1993 (incorporated by reference to Exhibit 10.5 to
AMRE's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993).

10.5 - Amendment No. 3 to AMRE Savings Investment Plan, effective as of
January 1, 1994 (incorporated by reference to Exhibit 10.5 to
AMRE's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994).

II-2
<PAGE> 230
10.6 - Amendment No. 4 to AMRE Savings Investment Plan, effective as of
January 1, 1994, (incorporated by reference to Exhibit 10.1 to
AMRE's Quarterly Report on Form 10-Q for the quarterly period ended
September 25, 1994).

10.7 - AMRE Savings Investment Trust Agreement, dated September 30, 1990
(incorporated by reference to Exhibit 10.18 to AMRE's Quarterly
Report on Form 10-Q for the quarterly period ended October 31,
1990).

10.8 - Welfare Benefits Plan for Employees of AMRE, dated April 24, 1990,
as amended (incorporated by reference to Exhibit 10.15 to AMRE's
Annual Report on Form 10-K for the fiscal year ended April 30,
1990).

10.9 - Amendment No. 1 to Welfare Benefits Plan for Employees of AMRE
(incorporated by reference to Exhibit 10.16 to AMRE's Annual Report
on Form 10-K for the fiscal year ended April 30, 1991).

10.10 - Amendment No. 2 to Welfare Benefits Plan for Employees of AMRE
(incorporated by reference to Exhibit 10.19 to AMRE's Transition
Report on Form 10-K for the transition period ended December 31,
1991).

10.11 - Amendment No. 3 to Welfare Benefits Plan for Employees of AMRE
(incorporated by reference to Exhibit 10.9 to AMRE's Annual Report
on Form 10-K for the fiscal year ended December 31, 1993).

10.12 - Amendment No. 4 to Welfare Benefits Plan for Employees of AMRE
(incorporated by reference to Exhibit 10.12 to AMRE's Annual Report
on Form 10-K for the fiscal year ended December 31, 1994).

10.13 - Welfare Benefits Trust for Employees of AMRE, dated April 24, 1990
as amended (incorporated by reference to Exhibit 10.24 to AMRE's
Annual Report on Form 10-K for the fiscal year ended April 30,
1990).

10.14 - Amendment No. 1 to Welfare Benefits Trust for Employees of AMRE
(incorporated by reference to Exhibit 10.17 to AMRE's Annual Report
on Form 10-K for the fiscal year ended April 30, 1991).

10.15 - AMRE Flexible Benefits Plan, as restated effective January 1, 1993
(incorporated by reference to Exhibit 10.12 to AMRE's Annual Report
on Form 10-K for the fiscal year ended April 30, 1990).

10.16 - Stock Option Agreement dated as of May 11, 1994, between AMRE and
Ronald I. Wagner (incorporated by reference to Exhibit 10.3 to
AMRE's Quarterly Report on Form 10-Q for the quarterly period ended
June 26, 1994).

10.17 - Form of Stock Option Agreements dated as of May 11, 1994, between
AMRE and each of the outside Directors of AMRE, which are identical
except for the names of the Directors (incorporated by reference to
Exhibit 10.4 to AMRE's Quarterly Report on Form 10-Q for the
quarterly period ended June 26, 1994).

II-3
<PAGE> 231
10.18 - Form of Stock Option Agreements dated as of May 11, 1994, between
AMRE and the outside Directors of AMRE, which are identical except
for names, the dates of respective grants of options surrendered,
the number of shares subject to the surrendered options and the
number of shares subject to the respective options being granted
(which information and exhibit are incorporated by reference to
Exhibit 10.5 to AMRE's Quarterly Report on Form 10-Q for the
quarterly period ended June 26, 1994).

10.19 - License Agreement dated as of January 1, 1995, between AMRE and
Sears for the sale and installation of siding, overhang and trim
kitchen cabinet refacing, exterior coating and replacement windows
(incorporated by reference to Exhibit 10.25 to the Annual Report on
Form 10-K for the fiscal year ended December 31, 1994).

10.20 - Form of Indemnification Agreements between AMRE and the Directors
of AMRE, which are identical except for names and dates
(incorporated by reference to Exhibit 10.27 to AMRE's Annual Report
on Form 10-K for the fiscal year ended April 30, 1990).

10.21 - Management Incentive Plan for AMRE (incorporated by reference to
Exhibit 10.19 to AMRE's Annual Report on Form 10-K for the fiscal
year ended April 30, 1991).

10.22 - Lease dated October 11, 1988 between Cabinet Magic, Inc. and Ronald
I. Wagner (incorporated by reference to Exhibit 10.21 to AMRE's
Annual Report on Form 10-K for the fiscal year ended April 30,
1991).

10.23 - Lease dated November 12, 1991 between AMRE, as Tenant, and Twin
Towers Investment Partnership, as Landlord, with respect to AMRE's
corporate headquarters in Dallas, Texas (incorporated by reference
to Exhibit 10.18 to AMRE's Transition Report on Form 10-K for the
transition period ended December 31, 1991).

10.24 - Promissory Note of Keith L. Abrams dated as of April 30, 1994, in
the principal amount of $468,499.35, together with related Stock
Pledge Agreement dated January 31, 1995 (incorporated by reference
to Exhibit 10.37 to the Annual Report on Form 10-K for the fiscal
year ended December 31, 1994).

10.25 - Description of options granted outside of the AMRE Stock Option
Plan (incorporated by reference to Exhibit 10.29 to AMRE's Annual
Report on Form 10-K for the fiscal year ended December 31, 1992).

10.26 - Form of Executive Severance Plan for Senior Management Positions
between AMRE and certain executives of AMRE, including Keith
Abrams, Robert E. Horton, Jr., and Curtis Everett, which agreements
are identical except for names and dates (incorporated by reference
to Exhibit 10.30 to AMRE's Annual Report on Form 10-K for the
fiscal year ended December 31, 1992).

10.27 - Merchant Agreement dated as of July 27, 1993 between AMRE and
Household Bank (Illinois), N.A. (incorporated by reference to
Exhibit 10.1 to AMRE's Quarterly Report on Form 10-Q for the
quarterly period ended September 26, 1993).

10.28 - Merchant Agreement Between AMRE and American General Financial
Center, effective July 1, 1993, as amended January 25, 1994
(incorporated by reference to Exhibit 10.38 to AMRE's Annual Report
on Form 10-K for the fiscal year ended December 31, 1993).

II-4
<PAGE> 232
10.29 - License Agreement, dated October 17, 1995, among TM Acquisition
Corp. and Century 21 Real Estate Corporation and ARI (incorporated
by reference to Exhibit 7.1 to AMRE's Current Report on Form 8-K
dated October 17, 1995).

10.30 - Preferred Stock Purchase Agreement, dated October 17, 1995, between
AMRE and HFS (incorporated by reference to Exhibit 7.2 to AMRE's
Current Report on Form 8-K dated October 17, 1995).

10.31 - Credit Agreement, dated October 17, 1995, between AMRE and HFS
(incorporated by reference to Exhibit 7.3 to AMRE's Current Report
on Form 8-K dated October 17, 1995).

10.32 - Letter Agreement, dated October 17, 1995, between AMRE and David
Moore (incorporated by reference to Exhibit 7.4 to AMRE's Current
Report on Form 8-K dated October 17, 1995).

10.33 - $5.00 Stock Option Agreement, dated October 17, 1995, between AMRE
and David Moore (incorporated by reference to Exhibit 7.5 to AMRE's
Current Report on Form 8-K dated October 17, 1995).

10.34 - $5.50 Stock Option Agreement, dated October 17, 1995, between AMRE
and David Moore (incorporated by reference to Exhibit 7.6 to AMRE's
Current Report on Form 8-K dated October 17, 1995).

10.35 - Stock Purchase Agreement between David Moore or his designees and
AMRE (incorporated by reference to Exhibit 7.7 to AMRE's Current
Report on Form 8-K dated October 17, 1995).

10.36 - Amendment No. 1 to the AMRE, Inc. Savings Investment Trust
(incorporated by reference to Exhibit 10.1 to AMRE's Quarterly
Report on Form 10-Q for the quarterly period ended July 2, 1995).

10.37 - Amended and Restated Merchant Agreement between Household Bank
(Illinois), N.A. and AMRE dated April 24, 1995 (incorporated by
reference to Exhibit 10.2 to AMRE's Quarterly Report on Form 10-Q
for the quarterly period ended July 2, 1995).

10.38 - Separation Agreement dated December 1, 1995 between AMRE and Ronald
Wagner (incorporated by reference to Exhibit 10.38 to AMRE's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995).

10.39 - Amendment No. 1 to Stockholder Agreement between AMRE and the
stockholders of Facelifters signatory thereto (incorporated by
reference to Exhibit 10.39 to AMRE's Annual Report on Form 10-K for
the fiscal year ended December 31, 1995).

10.40 - Employment Agreement, dated as of June 1, 1995, by and between AMRE
and Robert M. Swartz (incorporated by reference to Exhibit 10.1 to
the Current Report on Form 8-K filed June 19, 1995).

10.41 - Stock Option Agreement, dated as of June 1, 1995, between AMRE and
Robert M. Swartz (incorporated by reference to Exhibit 10.2 to the
Current Report on Form 8-K filed June 19, 1995).

11 - Statement regarding computation of per share earnings (incorporated
by reference to Exhibit 11 to AMRE's Annual Report on Form 10-K for
the fiscal year ended December 31, 1995.

23.1 - Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P.(included in
the Exhibit 5 and Exhibit 8.1 opinions filed herewith).

II-5
<PAGE> 233
23.2 - Consent of Jackson & Walker, L.L.P. (included in the Exhibit 8.2
opinion filed herewith).

23.3* - Consent of Arthur Andersen LLP.

23.4* - Consent of Grant Thornton LLP.

23.5* - Consent of Bear, Stearns & Co. Inc.

23.6* - Consent of Southwest Securities, Inc.

23.7* - Consent of Murray Gross.

99.1 - Stipulation of Settlement among plaintiffs in the Litigation and
AMRE, Steven D. Bedowitz, Robert Levin and Dennie D. Brown
(incorporated by reference to Exhibit 1 to the Current Report on
Form 8-K filed February 4, 1993).

99.2 - Final judgment and order approving settlement of the Litigation
(incorporated by reference to Exhibit 2 to the Current Report on
Form 8-K filed February 4, 1993).

99.3* - AMRE Form of Proxy Card.

99.4* - Facelifters Form of Proxy Card.

__________________________
* Filed herewith.

ITEM 22. UNDERTAKINGS.

1. The undersigned registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder through
use of a prospectus which is a part of this registration statement, by any
person or party who is deemed to be an underwriter within the meaning of Rule
145(c), the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other Items of the applicable form.

2. The registrant undertakes that every prospectus (i) that is
filed pursuant to paragraph (1) immediately preceding, or (ii) that purports to
meet the requirements of section 10(a)(3) of the Act and is used in connection
with an offering of securities subject to Rule 415, will be filed as a part of
an amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

3. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense

II-6
<PAGE> 234
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.

4. The undersigned registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the Joint Proxy
Statement/Prospectus pursuant to Items 4, 10(b), 11, or 13 herein, within one
business day of receipt of such request, and to send the incorporated documents
by first class mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of the
Registration Statement through the date of responding to the request.

5. The undersigned registrant hereby undertakes to supply by
means of a post-effective amendment all information concerning a transaction,
and the company being acquired involved therein, that was not the subject of
and included in the Registration Statement when it became effective.

6. The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to section 13(a) or section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to section 15(d) of
the Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

II-7
<PAGE> 235
SIGNATURES

Pursuant to the requirements of the Securities Act, the Registrant has
duly caused this Registration Statement on Form S-4 to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Dallas, State of
Texas, on March ___, 1996.

AMRE, INC.

By: /s/ Robert M. Swartz
-------------------------------------
Robert M. Swartz
President and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL BY THESE PRESENTS, that each of the undersigned hereby
constitutes and appoints each of Robert M. Swartz and C. Curtis Everett, and
each or any of them, his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him and on his behalf and in his
name, place and stead, in any and all capacities, to sign, execute, and file
with the Securities and Exchange Commission and any state securities regulatory
board or commission any documents relating to the proposed issuance and
registration of the securities offered pursuant to this Registration Statement
on Form S-4 under the Securities Act of 1933, as amended, including any and all
amendments relating thereto, with all exhibits and any and all documents
required to be filed with respect thereto and any regulatory authority,
granting unto said attorney, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same as fully to all intents and purposes
as he might or could do if personally present, hereby ratifying and confirming
all that said attorney-in-fact and agent, or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C> <C>

/s/ John D. Snodgrass Chairman of the Board March , 1996
- ------------------------------------------------------ and Director ---
John D. Snodgrass

/s/ Robert M. Swartz Chief Executive Officer March , 1996
- ------------------------------------------------------ and Director ---
Robert M. Swartz

/s/ Ronald L. Bliwas Director March , 1996
- ------------------------------------------------------ ---
Ronald L. Bliwas
</TABLE>

S-1
<PAGE> 236
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>

/s/ Dennis S. Bookshester Director March , 1996
- ------------------------------------------------------ ---
Dennis S. Bookshester

/s/ Arthur P. Frigo Director March , 1996
- ------------------------------------------------------ ---
Arthur P. Frigo

/s/ Stephen P. Holmes Director March , 1996
- ------------------------------------------------------ ---
Stephen P. Holmes

/s/ Jack L. McDonald Director March , 1996
- ------------------------------------------------------ ---
Jack L. McDonald

/s/ David L. Moore Director March ___, 1996
- ------------------------------------------
David L. Moore

/s/ Robert W. Pittman Director March , 1996
- ------------------------------------------------------ ---
Robert W. Pittman

/s/ Sheldon I. Stein Director March , 1996
- ------------------------------------------------------ ---
Sheldon I. Stein

/s/ John S. Vanecko Principal Financial and March , 1996
- ------------------------------------------ Accounting Officer ---
John S. Vanecko
</TABLE>

S-2
<PAGE> 237
INDEX TO EXHIBITS

EXHIBIT NO. DESCRIPTION
- ----------- -----------

2.4 - Agreement and Plan of Merger, dated as of December 30, 1995, among
AMRE, Congressional Merger Sub and Congressional.

3.1 - Certificate of Incorporation of AMRE, as amended (incorporated by
reference to Exhibit 3.1 to AMRE's Annual Report on Form 10-K for
the fiscal year ended April 30, 1989).

3.2 - Bylaws of AMRE, as amended (incorporated by reference to Exhibit
3.2 to AMRE's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993).

5* - Opinion regarding legality.

8.1* - Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P. regarding tax
matters.

8.2* - Opinion of Jackson & Walker, L.L.P. regarding tax matters.

10.1 - Stock Option Plan of AMRE, as amended (incorporated by reference to
Exhibit 10.1 to AMRE's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994).

<PAGE> 238
10.6 - Amendment No. 4 to AMRE Savings Investment Plan, effective as of
January 1, 1994, (incorporated by reference to Exhibit 10.1 to
AMRE's Quarterly Report on Form 10-Q for the quarterly period ended
September 25, 1994).

10.9 - Amendment No. 1 to Welfare Benefits Plan for Employees of AMRE
(incorporated by reference to Exhibit 10.16 to AMRE's Annual Report
on Form 10-K for the fiscal year ended April 30, 1991).

10.11 - Amendment No. 3 to Welfare Benefits Plan for Employees of AMRE
(incorporated by reference to Exhibit 10.9 to AMRE's Annual Report
on Form 10-K for the fiscal year ended December 31, 1993).

10.12 - Amendment No. 4 to Welfare Benefits Plan for Employees of AMRE
(incorporated by reference to Exhibit 10.12 to AMRE's Annual Report
on Form 10-K for the fiscal year ended December 31, 1994).

10.14 - Amendment No. 1 to Welfare Benefits Trust for Employees of AMRE
(incorporated by reference to Exhibit 10.17 to AMRE's Annual Report
on Form 10-K for the fiscal year ended April 30, 1991).

10.15 - AMRE Flexible Benefits Plan, as restated effective January 1, 1993
(incorporated by reference to Exhibit 10.12 to AMRE's Annual Report
on Form 10-K for the fiscal year ended April 30, 1990).

<PAGE> 239
10.18 - Form of Stock Option Agreements dated as of May 11, 1994, between
AMRE and the outside Directors of AMRE, which are identical except
for names, the dates of respective grants of options surrendered,
the number of shares subject to the surrendered options and the
number of shares subject to the respective options being granted
(which information and exhibit are incorporated by reference to
Exhibit 10.5 to AMRE's Quarterly Report on Form 10-Q for the
quarterly period ended June 26, 1994).

10.21 - Management Incentive Plan for AMRE (incorporated by reference to
Exhibit 10.19 to AMRE's Annual Report on Form 10-K for the fiscal
year ended April 30, 1991).

<PAGE> 240
10.29 - License Agreement, dated October 17, 1995, among TM Acquisition
Corp. and Century 21 Real Estate Corporation and ARI (incorporated
by reference to Exhibit 7.1 to AMRE's Current Report on Form 8-K
dated October 17, 1995).