<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by Registrant [X]
Filed by a Party other than
the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
RIVER OAKS FURNITURE, INC.
(Name of Registrant as Specified in Its Charter)
------------------------------
(Name of Person(s) Filing the Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rule 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee previously paid with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration No.:
(3) Filing party:
(4) Date filed:
<PAGE> 2
RIVER OAKS FURNITURE, INC.
JANUARY 5, 1998
TO OUR SHAREHOLDERS:
On behalf of the Board of Directors and management, I invite you to
attend the Annual Meeting of Shareholders of River Oaks Furniture, Inc. to be
held on Friday, January 30, 1998 at 10:00 a.m. local time at the Executive Inn,
1011 North Gloster, Tupelo, Mississippi 38801.
The notice of meeting and proxy statement accompanying this letter
describe the specific business to be acted upon.
In addition to the specific matters to be acted upon, there will be a
report on the progress of the Company and an opportunity for questions of
general interest to the shareholders.
It is important that your shares be represented at the meeting. Whether
or not you plan to attend in person, you are requested to mark, sign, date and
promptly return the enclosed proxy in the envelope provided.
Sincerely yours,
Stephen L. Simons
Chairman of the Board
<PAGE> 3
RIVER OAKS FURNITURE, INC.
3350 MCCULLOUGH BOULEVARD
BELDEN, MISSISSIPPI 38826
NOTICE OF ANNUAL SHAREHOLDERS' MEETING
JANUARY 30, 1998
Notice is hereby given that the Annual Meeting of Shareholders of River
Oaks Furniture, Inc. (the "Company") will be held on Friday, January 30, 1998,
at 10:00 a.m., local time, at the Executive Inn, 1011 North Gloster, Tupelo,
Mississippi 38801 for the following purposes:
1. To elect three nominees as Class I directors of the
Company.
2. To ratify the appointment of Horne CPA Group, PA as the
independent accountants of the Company to audit the Company's
consolidated financial statements for the year ended December 31, 1997.
3. To transact such other business as may properly come before
the meeting or any adjournment thereof.
Shareholders of record at the close of business on November 24, 1997 are
entitled to notice of and to vote at the Annual Shareholders' Meeting.
Belden, Mississippi By order of the Board of Directors,
January 5, 1998
Thomas D. Keenum, Sr.
Secretary
WHETHER YOU EXPECT TO ATTEND THE MEETING OR NOT, PLEASE SIGN, DATE AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENVELOPE PROVIDED,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE> 4
RIVER OAKS FURNITURE, INC.
3350 MCCULLOUGH BOULEVARD
BELDEN, MISSISSIPPI 38826
PROXY STATEMENT
INFORMATION CONCERNING THE SOLICITATION
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of River Oaks Furniture, Inc. (the "Company") of proxies
to be used at the Annual Meeting of Shareholders of the Company to be held on
Friday, January 30, 1998 at 10:00 a.m., local time, at the Executive Inn, 1011
North Gloster, Tupelo, Mississippi 38801, and at any adjournment or adjournments
thereof.
Only the holders of the Company's common stock, $.10 par value per share
(the "Common Stock"), of record at the close of business on November 24, 1997
will be entitled to vote at the Annual Meeting of Shareholders. On such date,
5,605,641 shares of Common Stock were outstanding. Each such shareholder is
entitled to one vote per share held of record on the record date. This Proxy
Statement and the accompanying proxy are first being mailed on or about January
5, 1998.
A majority of the shares of Common Stock, represented in person or by
proxy, is required to constitute a quorum. If a quorum is not present at the
time of the Annual Meeting of Shareholders, or if for any reason the Company
believes that additional time should be allowed for the solicitation of proxies,
the Company may adjourn or postpone the Annual Meeting of Shareholders with or
without a vote of the shareholders. If adjournment is proposed by the Company,
the person named on the enclosed proxy card will vote such shares for which they
have voting authority in favor of adjournment.
All shares of Common Stock represented at the Annual Meeting of
Shareholders by properly executed proxies received prior to or at the Annual
Meeting of Shareholders and not properly revoked will be voted at the Annual
Meeting of Shareholders in accordance with the instructions indicated thereon.
If no specification is made, the proxies will be voted in favor of the matters
listed on the proxy card. Directors must be elected by a plurality of votes cast
by the holders of Common Stock entitled to vote at the Annual Meeting of
Shareholders if a quorum is present. All other matters shall be determined based
upon the vote of the majority of votes cast by the holders of Common Stock
entitled to vote at the Annual Meeting of Shareholders if a quorum is present.
Abstentions and broker non-votes will not have the effect of voting in
opposition to a director or of a vote against the other proposals.
All expenses of the Annual Meeting of Shareholders, including the cost of
soliciting proxies, will be paid by the Company. The Company may reimburse
persons holding shares in their names for others, or holding shares for others
who have the right to give voting instructions, such as brokers, banks,
fiduciaries and nominees, for such persons' reasonable expenses in forwarding
the proxy materials to their principals.
Any shareholder giving a proxy may revoke it by delivering a written
notice of such revocation to the Secretary of the Company at 3350 McCullough
Boulevard, Belden, Mississippi 38826 prior to the Annual Meeting of
Shareholders, by submitting to the Company a more recently dated proxy or by
attending the Annual Meeting of Shareholders and voting at any time before it is
exercised.
In voting by proxy in regard to the election of three nominees as Class I
directors to serve until the 2000 Annual Meeting, or until their successors are
duly elected and qualified, shareholders may vote in favor of all three
nominees, withhold their votes as to all three nominees or withhold their votes
as to specific nominees. If no instructions are indicated, such proxies will be
voted FOR the election of all three nominees as directors.
<PAGE> 5
ROPOSAL 1: ELECTION OF DIRECTORS
INTRODUCTION
The Company's Restated Articles of Incorporation provide that the
Board of Directors shall consist of such number of directors as may be fixed by
action of the Board of Directors, but not less than three nor more than nine.
The current Board of Directors has determined that the Board of Directors shall
consist of nine members. The Company's Bylaws provide that, as long as the Board
of Directors consists of nine members, the Board of Directors shall be divided
into three classes, with three positions authorized in each of Class I, II and
III.
The term of the Class I Directors expires at the Annual Meeting of
Shareholders. The Board of Directors has nominated the three individuals named
below as "Class I Nominees" for election as Directors to serve until the 2000
Annual Meeting of Shareholders or until their successors are duly elected and
qualified. All of the nominees are members of the current Board of Directors. If
any nominee or nominees should be unable to accept nomination or election as a
Director, which is not expected, the proxies may be voted with discretionary
authority for a substitute or substitutes designated by the Board of Directors.
Directors are elected by a plurality of the votes cast by the
shares entitled to vote at a meeting at which a quorum is present. The Restated
Articles of Incorporation of the Company prohibit shareholders from cumulating
their votes in the election of Directors. As a result, each shareholder may cast
one vote per share for each nominee.
CLASS I NOMINEES
The following table shows the names, ages and principal
occupations of the nominees to become Class I Directors and the year in which
each nominee was first elected to the Board of Directors.
<TABLE>
<CAPTION>
Name Age Principal Occupation Director Since
- ---- --- -------------------- --------------
<S> <C> <C> <C>
John D. Nail 49 President of the Company 1993
Don D. Murphy 53 General Manager of WBIP Radio 1987
Station
John B. Apple 62 Vice President of Dover Corporation 1993
</TABLE>
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE ELECTION OF ALL OF THE CLASS I NOMINEES TO THE BOARD OF DIRECTORS.
2
<PAGE> 6
CONTINUING DIRECTORS
The persons named below will continue to serve as Directors until
the Annual Meeting of Shareholders in the year indicated or until their
successors are duly elected and qualified. Shareholders are not voting on the
election of the Class II and Class III Directors. The following table shows the
names, ages and principal occupations of each continuing director and the year
in which each was first elected to the Board of Directors.
<TABLE>
<CAPTION>
Name Age Principal Occupation Director Since
- ---- --- -------------------- --------------
<S> <C> <C> <C>
R. Gerald Turner (1) 51 President of Southern Methodist 1993
University
James T. Boone (1) 47 Athletic Director, University of 1997
Mississippi
Johnny C. Walker (1) 51 Chief Operating Officer and Chief 1995
Financial Officer of the Company
Stephen L. Simons (2) 48 Chairman of the Board and Chief 1987
Executive Officer of the Company
Thomas D. Keenum, Sr. (2) 58 Secretary and General Counsel of the 1987
Company; Attorney
A. Douglas Jumper, Sr. (2) 65 President of S&J Steel Builders, Inc. 1993
</TABLE>
- ---------------
(1) Class II Director (term expires at 1998 Annual Meeting of Shareholders)
(2) Class III Director (term expires at 1999 Annual Meeting of Shareholders)
BUSINESS EXPERIENCE OF DIRECTORS
Stephen L. Simons has served as Chairman of the Board of the
Company and Chief Executive Officer since November 1988 and as a director since
inception. Mr. Simons served as President of the Company from August 1987 to
November 1988. Prior to joining the Company, from 1984 to 1987, Mr. Simons
served as Executive Vice President of Finger Furniture Company Incorporated, a
full-service furniture retailer based in Houston, Texas. Prior to 1984, Mr.
Simons held various positions with Finger Furniture.
John D. Nail has served as President of the Company since November
1988 and served as Executive Vice President from August 1987 to November 1988
and as a director since June 1993. Prior to joining the Company, from September
1983 to August 1987, Mr. Nail was General Manager for Westwood Industries of
Tupelo, Mississippi, a custom upholstery furniture manufacturer. From January
1982 to September 1983, Mr. Nail was President of Homan Wood Products,
Incorporated of Fulton, Mississippi.
Johnny C. Walker has served as the Company's Chief Operating
Officer since August 1995 and Chief Financial Officer since August 1993 and as a
director since December 1995. From November 1990 until August 1993, Mr. Walker
was a partner in Walker, Waddill and Associates, a certified public accounting
firm in Dallas, Texas. From November 1985 until November 1990, Mr.
3
<PAGE> 7
Walker served as Executive Vice President of Tony Lama Company, a boot
manufacturer in El Paso, Texas.
Thomas D. Keenum, Sr. has served as General Counsel, Secretary and
a director of the Company since inception. He served as Treasurer of the Company
from its inception until March 1993. Mr. Keenum is a partner in Keenum & Tutor,
P.A., a law firm in Booneville, Mississippi where he has practiced law since
1968. Mr. Keenum is a director of Belmont Homes, Inc., a producer of
manufactured homes in Belmont, Mississippi.
Don D. Murphy has served as a director of the Company since
inception. Mr. Murphy is general manager of WBIP, a radio station in Booneville,
Mississippi owned by Community Broadcast Services of Mississippi, Inc. From 1988
until 1995, Mr. Murphy was Vice President and co-owner of WBIP Broadcasting
Company in Booneville, Mississippi. Mr. Murphy is a director of Belmont Homes,
Inc., a producer of manufactured homes in Belmont, Mississippi.
A. Douglas Jumper, Sr. has served as a director since June 1993.
Mr. Jumper has been the President and co-owner of S&J Steel Builders, Inc. of
Booneville, Mississippi since 1963. Mr. Jumper is a director of Belmont Homes,
Inc., a producer of manufactured homes in Belmont, Mississippi, and of
BancorpSouth, Inc., a bank holding company in Tupelo, Mississippi.
John B. Apple has served as a director since August 1993. Mr.
Apple serves as a Vice President of Dover Corporation in New York, New York. Mr.
Apple served as President and Chief Executive Officer of Dover Elevator
International in Memphis, Tennessee from January 1985 until January 1986. Mr.
Apple serves on the Board of Directors of Dover Elevator International and
National Elevator Industry, Inc.
R. Gerald Turner has served as a director since August 1993. Mr.
Turner has served as President of Southern Methodist University since May 1995.
From April 1984 until May 1995, Mr. Turner served as Chancellor of the
University of Mississippi. Mr. Turner serves on the Board of Directors of
Capstar Broadcasting Partners, Inc., an operator of midsized-market radio
stations based in Austin, Texas; First Mississippi Corp., a chemical and
fertilizer manufacturer in Jackson, Mississippi; Mobile Telecommunications
Technologies, a wireless messaging service in Jackson, Mississippi; and J.C.
Penney Co., Inc., an apparel retailer in Dallas, Texas.
James T. Boone has served as a director since February 1997. Mr.
Boone has served as Athletic Director for the University of Mississippi since
1995. From 1974 to 1994, Mr. Boone served in various capacities with Sunburst
Bank before becoming Chairman and CEO of Sunburst Bank.
Messrs. Keenum and Jumper are first cousins. There are no other
family relationships between any directors or executive officers of the Company.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
During the last fiscal year, the Board of Directors held four
meetings. No director attended less than 75% of the meetings held during 1996.
Additionally, the Board of Directors took one action by unanimous written
consent. Directors not otherwise employed by the Company received an annual fee
of $10,000, $750 plus expenses for each quarterly meeting of the Board of
Directors attended and $250 plus expenses for each quarterly committee meeting
attended. In addition, such directors are eligible to participate in the
Company's Non-Employee Director Stock Option Plan (the "Director Plan").
The Board of Directors has three committees: an Executive
Committee, a Compensation Committee and an Audit Committee. The Board of
Directors does not have a nominating committee. Members of the Executive
Committee during 1996 were Messrs. Simons,
4
<PAGE> 8
Keenum, Apple and Jumper. The Executive Committee is authorized by the Board of
Directors to take all action which may be delegated by the Board of Directors
under the Mississippi Business Corporation Act. During 1996, the Executive
Committee held eight meetings, and each member attended each meeting.
Members of the Compensation Committee during 1996 were Messrs.
Keenum, Jumper, Apple and Chulick. The Compensation Committee was appointed by
the Board of Directors to administer the Company's stock plans and recommend to
the Board of Directors compensation of the Company's executive officers. During
1996, the Compensation Committee held five meetings, and each member attended
each meeting.
Members of the Audit Committee during 1996 were Messrs. Murphy and
Turner. The Audit Committee was appointed by the Board of Directors to recommend
the annual appointment of the Company's auditors, with whom the Audit Committee
reviews the scope of audit and non-audit assignments and related fees,
accounting principles used by the Company in financial reporting, internal
auditing procedures and the adequacy of the Company's internal control
principles. During 1996, the Audit Committee held four meetings, and each member
attended each meeting.
EXECUTIVE OFFICERS
The following table sets forth certain information concerning the
executive officers of the Company, who are elected annually by the Board of
Directors.
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Stephen L. Simons 48 Chairman of the Board and Chief
Executive Officer
John D. Nail 49 President
Johnny C. Walker 51 Chief Operating Officer and Chief
Financial Officer
Thomas D. Keenum, Sr. 58 Secretary
</TABLE>
The business experience of Messrs. Simons, Nail, Walker and Keenum
is set forth above. See "Election of Directors - Business Experience of
Directors."
INVOLVEMENT OF CERTAIN OFFICERS AND DIRECTORS IN CERTAIN LEGAL PROCEEDINGS
On October 4, 1993, the trustees of the Ansin Foundation,
established by a former shareholder of the Company, and an executor of the
estate of the former shareholder of the Company, filed a complaint in the United
States District Court, District of Massachusetts, against the Company and the
Chief Executive Officer and the Secretary of the Company, both of whom are also
Company directors, alleging fraud, breach of fiduciary duty and unfair and
deceptive business practices in connection with the repurchase of the former
shareholder's shares (the "Ansin Litigation"). On April 8, 1996, a verdict was
returned in favor of the Ansin Foundation awarding compensatory damages against
the Company in the amount of $2.3 million. Additionally, compensatory and
punitive damages were awarded against each of the Company's Chief Executive
Officer and Secretary in their individual capacities. The United States Court of
Appeals for the First Circuit affirmed these awards, together with interest
accrued thereon, on February 3, 1997. The Company filed a petition for
certiorari with the United States Supreme Court, which petition was denied on
October 6, 1997. The litigation is, therefore, concluded. Because of this
verdict against the Company, the Company reduced its additional paid-in capital
in the amount of $1,082,000, representing compensatory damages for the amount
that the former shareholder would have received if he had participated in the
Company's initial public offering in September 1993. Additionally, the balance
of the judgment against the Company, $1,357,000, has been charged as an expense
in 1996. The Company satisfied the judgment entered against the Company in the
Ansin Litigation on November 12, 1997.
5
<PAGE> 9
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number of shares held
beneficially, directly or indirectly, as of December 13, 1997, by (i) all
holders of more than 5% of the Company's Common Stock, (ii) all Directors and
nominees for Director, (iii) the Company's Chief Executive Officer and the two
other most highly compensated executive officers of the Company whose total
annual salary and bonus exceeded $100,000 for the year ended December 31, 1996
(these three executive officers being hereinafter referred to as the "Named
Executive Officers") and (iv) all Directors and executive officers as a group,
together with the percentage of the outstanding shares which such ownership
represents.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP (1) PERCENT OF CLASS (2)
- ------------------- --------------------------- --------------------
<S> <C> <C>
Stephen L. Simons (3)........................ 649,580 11.5%
John D. Nail (3)............................. 375,700 6.7%
Johnny C. Walker (3)......................... 80,000 1.4%
Thomas D. Keenum, Sr. (3) (4)................ 398,185 7.1%
A. Douglas Jumper, Sr. (3)................... 490,350 8.7%
Don D. Murphy (3)............................ 403,350 7.1%
John B. Apple (3)............................ 11,325 *
R. Gerald Turner (3)......................... 10,825 *
James T. Boone (3)........................... 18,000 *
Franklin Resources, Inc. (5)................. 394,600 7.0%
Pioneering Management Corp. (6).............. 460,000 8.2%
All directors and executive officers
as a group (9 persons).................... 2,437,315 41.5%
</TABLE>
- ----------------------------- * Indicates less than 1% ownership (1)
Beneficial ownership is deemed to include shares of the Company's Common
Stock which an individual has a right to acquire within 60 days of the
date of this Proxy Statement upon the exercise of options. The table
includes options granted under the Company's Director Plan and 1993
Incentive Stock Plan. The table also includes (a) shares into which
holders of 12% subordinated Convertible Notes (the "Notes") may convert
the Notes, assuming the Notes convert at a price of $2.50 per share; and
(b) shares obtainable by the holders of warrants issued as consideration
for the execution of Letters of Credit by such holders, assuming that
such warrants are exercised at a price of $2.50 per share. These shares
are deemed to be outstanding for the purposes of computing the percentage
ownership of that individual but are not deemed outstanding for the
purposes of computing the percentage of any other person. Unless
otherwise noted in the following footnotes, the persons as to whom
information is given has sole voting and investment power over the shares
of Common Stock shown as beneficially owned. (2) Computation based
upon 5,605,641 shares outstanding on December 13, 1997. (3) The
address for Messrs. Simons, Nail, Keenum, Jumper, and Murphy is 3350
McCullough Boulevard, Belden, Mississippi 38826. (4) Includes 27,500
shares held by the Thomas D. Keenum, Jr. Trust, of which Mr. Keenum, Sr.
serves as trustee.
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<PAGE> 10
(5) According to a Form 13G filed with the Commission on February 12, 1997,
Franklin Resources, Inc. reported ownership of the shares listed in the
foregoing table.
(6) According to a Form 13G filed with the Commission on January 28, 1996,
Pioneering Management Corporation reported ownership of the shares listed
in the foregoing table.
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid to or accrued
by or on behalf of the Company's named executive officers for services rendered
in all capacities to the Company for the years ended December 31, 1994, 1995 and
1996.
Summary Compensation Table
The following table summarizes the compensation paid to or
accrued by or on behalf of the Company's Named Executive Officers for services
rendered in all capacities to the Company for the years ended December 31, 1994,
1995 and 1996.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
----------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------- ------ -------
NAME AND OTHER RESTRICTED SECURITIES
PRINCIPAL ANNUAL COM- STOCK UNDERLYING LTIP ALL OTHER
POSITION YEAR SALARY($) BONUS($) PENSATION ($) AWARDS($) OPTIONS (#) PAYOUTS($) COMPENSATION($)
-------- ---- --------- -------- ------------- --------- ----------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Stephen L. Simons 1996 $200,487 -- - 12,500 - -
Chairman of the 1995 225,000 $66,667 - 12,500 - -
Board and Chief 1994 150,000 50,000 - 12,500 - -
Executive Officer
John D. Nail 1996 174,074 -- - - 12,500 - -
President 1995 190,000 $66,667 - - 12,500 - -
1994 140,000 -- - - 14,000 - -
Johnny C. Walker 1996 $146,725 -- - - 12,500 - -
Chief Operating 1995 155,000 $66,667 - - 12,500 - -
Officer and Chief 1994 99,476 -- - - 20,000 - -
Financial
Officer
</TABLE>
7
<PAGE> 11
Option Grants in Last Fiscal Year
The following table sets forth certain information regarding
grants of stock options made to the Named Executive Officers during 1996.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIA-
INDIVIDUAL GRANTS TION FOR OPTION TERM
-------------------------------------------------------------------------- ---------------------------
NUMBER OF PERCENTAGE OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE OR MARKET PRICE
OPTIONS EMPLOYEES IN BASE PRICE ON DATE OF EXPIRATION
NAME GRANTED(1) FISCAL YEAR ($/SH) GRANT($/SH DATE 5%($) 10%($)
---- ---------- ----------- ------ ------------ ---- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Stephen L. Simons 12,500 6.5% $3.00 $3.00 11/14/2001 $10,360 $22,894
John D. Nail 12,500 6.5% $3.00 $3.00 11/14/2001 10,360 22,894
Johnny C. Walker 12,500 6.5% $3.00 $3.00 11/14/2001 10,360 22,894
</TABLE>
- ---------------
(1) Each option may be exercised as to one-fifth of the number of shares
covered by the option during each of the five successive twelve-month
periods beginning on the date of grant.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End
Option Values
The following table provides certain information, with respect to
the Named Executive Officers, concerning the exercise of options during 1996 and
with respect to unexercised options at December 31, 1996.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised Options In-the-Money Options at
at Fiscal Year End (#) Fiscal Year End ($)
-------------------------------- --------------------------
Shares
Acquired Value
Name on Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stephen L. Simons -- -- 37,700 15,300 $0 $0
John D. Nail 37,700 15,300 0 0
Johnny C. Walker 63,500 16,500 0 0
</TABLE>
Employment Agreements
As of December 1, 1995, Messrs. Simons, Nail and Walker entered
into employment agreements with the Company. The agreements provide for base
salaries in the amount of $225,000 for Mr. Simons, $190,000 for Mr. Nail and
$155,000 for Mr. Walker, subject to adjustment by the Compensation Committee.
The agreements also entitle the employees to receive certain insurance and other
benefits and to eligibility for bonuses as determined by the Compensation
Committee.
Each employment agreement expires on December 31, 1998 and may be
terminated by the Company prior to that time for "cause," which is defined to
include the employee's failure to comply with a material term of the agreement,
the employee's engaging in any material misconduct, neglect of duties or failure
to act which materially and adversely affects the business or affairs of the
Company, or upon the employee's conviction of a felony or commission of an act
of dishonesty, fraud or embezzlement against the Company. In the event the
employee is terminated for cause, the Company shall have no further obligation
to make any payments to the employee except for accrued salary or bonus and
unreimbursed expenses as of the termination date. Each agreement will also
terminate if the employee is disabled and unable to perform his assigned duties
for a period of six months.
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<PAGE> 12
In the event the employee is terminated without cause, the Company
will continue to pay the employee his salary and maintain his insurance benefits
for the lesser of 12 months or the remaining term of the agreement.
Additionally, the Company shall pay the employee all accrued bonuses and
unreimbursed expenses as of the termination date.
If, on account of physical or mental disability, the employee
fails or is unable to perform his duties in any material respect for a period of
60 days, the Company shall pay the employee his salary and maintain his
insurance benefits for a period of six months commencing on the date such
disability begins. In the event the employee is unable to perform his duties at
the end of the six-month period, the employment agreement shall automatically
terminate.
In the event the employee is terminated upon a "change-in-control"
(as defined in the employment agreements), the employee shall immediately be
paid his accrued salary, bonus and other benefits provided under the employment
agreement. In addition, Employee shall be paid as severance compensation three
times his annual salary in equal monthly installments through the remaining term
of the employment agreement and an amount equal to his average annual bonus for
the two years immediately preceding the termination. The officer may elect to
receive from the Company his severance payment (calculated as provided above) in
a lump sum. Notwithstanding the foregoing, the Company is not required to pay
the officer any amount which is not deductible for federal income tax purposes.
Under the agreements, the employees may not, during the term of
the agreement and for a period of 36 months thereafter, directly or indirectly,
unless the employee is terminated without cause, (i) operate, develop or own any
interest, other than the ownership of less than 5% of the equity securities of a
publicly traded company, in any business which has significant (viewed in
relation to the business of the Company) activities relating to the ownership,
management or operation of, or consultation regarding, the manufacture of
furniture or related businesses (a "Furniture Manufacturer"); (ii) compete with
the Company or its subsidiaries and affiliates in the operation or development
of any Furniture Manufacturer within the continental United States; (iii) be
employed by or consult with any Furniture Manufacturer; (iv) interfere with any
past, present or prospective relationship between the Company and any customer,
client, employee or supplier or (v) solicit any employee of the Company to leave
their employment with the Company or hire any such employee to work for a
Furniture Manufacturer.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Keenum, a member of the Compensation Committee, serves as
Secretary of the Company but is not compensated in such capacity. There are no
other relationships among the Company's executive officers and any entity
affiliated with any of the members of the Compensation Committee that require
disclosure under applicable rules promulgated by the Securities and Exchange
Commission (the "Commission").
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report is submitted by the Compensation Committee pursuant to
rules established by the Commission with respect to compensation policies
applicable to the Company's executive officers and with respect to the basis for
Mr. Simons' compensation as Chief Executive Officer for 1996. The Compensation
Committee is responsible for establishing and administering the Company's
executive compensation philosophy, policies and programs. Each member of the
current Compensation Committee is an outside director, except for Mr. Keenum,
who is Secretary of the Company.
Compensation Philosophy. The Compensation Committee believes that,
while familiar indicators of success such as stock price and earnings per share
are important, there are numerous criteria to evaluate in assessing the skill
with which the executive officers are performing their duties. The Company's
executive compensation policies are designed to motivate and retain
9
<PAGE> 13
senior management by providing levels of compensation which relate to past and
anticipated individual and Company performance and to base a portion of each
executive officer's compensation package on the financial performance of the
Company in the form of bonuses tied to financial performance and the granting of
stock options. The compensation policies and programs utilized by the
Compensation Committee generally consist of (i) tying total compensation to the
Company's performance, (ii) aligning base salary and bonus amounts for the
Company's executive officers with annual compensation paid to executive officers
of companies comparable in size and performance to the Company, and (iii)
providing long-term compensation in the form of stock options to encourage the
executive officers to increase shareholder value. The compensation program of
the Company currently consists of (i) base salary and annual incentive
compensation in the form of cash bonuses and (ii) long-term compensation in the
form of stock options.
During 1996, the Compensation Committee commissioned a comparative
analysis of the compensation paid to the Company's executive officers in 1995
with the compensation paid to executive officers of a peer group of 10 furniture
manufacturers and retailers of either a similar size or with similar financial
performance as the Company. The analysis of the peer group compared salary,
bonus and other non-stock compensation on a dollar-for-dollar basis and as a
percentage of revenues, operating income, earnings before interest and taxes and
earnings before interest, taxes, depreciation and amortization. The Company
utilized the comparative data in establishing the bonuses paid and stock options
granted to the Company's executive officers in 1996 and intends to use it in the
future for all forms of compensation.
The Compensation Committee intends to structure future
compensation so that executive compensation paid by the Company is fully
deductible in accordance with Section 162(m) of the Internal Revenue Code of
1986, as amended. Section 162(m), which was enacted in 1993, generally disallows
a tax deduction to public companies for compensation over $1 million paid to
certain executive officers unless certain conditions are met.
Salary. Pursuant to each executive's employment agreement, the
Compensation Committee determines increases in compensation on an annual basis.
The Compensation Committee's policy in determining the appropriate annual salary
for executives is to consider the executive's contribution to the success of the
Company and the amount of responsibility vested in the executive's position. In
establishing the base salaries of the Company's executive officers for 1996, the
Compensation Committee made a subjective determination that the salaries of the
executive officers should be less than their 1995 levels to reflect the
Company's overall performance.
Performance Bonus. The Compensation Committee believes that a
portion of executive compensation should be "at risk." The Compensation
Committee believes that the performance bonus motivates the executives to
increase the Company's revenues and net income, which should result in increased
shareholder value. The performance bonus is subjective, but the Compensation
Committee considers the performance of the Company during the year, especially
with respect to the benchmarks set forth above. In determining the performance
bonuses for 1996, the Compensation Committee emphasized the 11.5% decrease in
sales and an 871.7% decrease in net income because of the Compensation
Committee's belief that the executive officers performed admirably in the face
of difficult market conditions and that the decrease in net income was primarily
attributable to factors beyond the control of the Company's executive officers.
The Compensation Committee also considered the additional duties of the
Company's executive officers in managing the Company as a result of the
resignation of a key employee, the death of the Company's best salesman, the
reorganization of a key division, the implementation of new information systems
and difficult conditions in the furniture market as a whole. No specific
relative weighting of these factors was used. The Compensation Committee made a
subjective determination to pay no performance bonus in 1996 to the Company's
executive officers.
10
<PAGE> 14
The amount earned under the performance bonus by each Named
Executive Officer in 1993, 1994, 1995 and 1996 is as follows:
<TABLE>
<CAPTION>
1993 1994 1995 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Stephen L. Simons $11,000 $50,000 $66,667 --
John D. Nail 15,000 -- 66,667 --
Johnny C. Walker -- -- 66,667 --
</TABLE>
Stock Options. The Company's long-term compensation strategy
includes the grant of stock options, which the Compensation Committee believes
rewards the executives for their efforts to improve long-term stock performance.
Additionally, the grants are intended to align the financial interests of
management with those of the Company's shareholders. In awarding the stock
options to the executives in 1996, the Compensation Committee considered the
same subjective factors as set forth above with respect to salary. The size of
the option grants, which was subjectively determined, was slightly smaller than
the size of previous grants. In determining the size of the grants, the
Compensation Committee attempted to provide the executive officers with an
opportunity for significant long-term compensation, the scope of which is
entirely dependent upon the improvement in the Company's long-term stock
performance. In this manner, the Compensation Committee also attempted to induce
the executive officers to continue their service with the Company in a difficult
furniture market.
Chief Executive Officer's Compensation. Pursuant to Mr. Simons'
employment agreement, the Compensation Committee determines increases in Mr.
Simons' compensation on an annual basis. In establishing the compensation for
Mr. Simons for 1995, the same approach applicable to all executive officers was
utilized. In establishing Mr. Simons' base salary for 1996, the Compensation
Committee made a subjective determination based upon the Company's revenues and
net income from 1994 to 1995 and the corresponding increase in Mr. Simons'
management duties. Mr. Simons' salary for 1996 represented an 11% decrease from
his salary for 1995.
In establishing Mr. Simons' bonus and grant of stock options for
1996, the Compensation Committee made a subjective determination based on the
factors generally applicable to all executive officers. Although no specific
relative weighting of these factors was used, the Compensation Committee
emphasized the additional sales duties that Mr. Simons assumed as a result of
the death of the Company's leading salesman and the resignation of the Company's
Senior Vice President of Marketing and Sales in the second and third quarters,
respectively, of 1996.
Compensation Committee:
John B. Apple
A. Douglas Jumper, Sr.
Thomas D. Keenum, Sr.
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<PAGE> 15
COMPENSATION OF DIRECTORS
Directors not otherwise employed by the Company receive an annual
fee of $10,000, $750 plus expenses for each quarterly meeting of the Board of
Directors attended and $250 plus expenses for each quarterly committee meeting
attended. In addition, non-employee Directors are entitled to receive options
pursuant to the Director Plan. The Director Plan provides for the granting of
non-qualified stock options to each Director of the Company who is not also
either an employee or officer of the Company (a "Non-Employee Director"). The
material features of the Director Plan are described below.
The Director Plan authorizes the issuance of up to 50,000 shares
of Common Stock pursuant to options having an exercise price equal to the fair
market value of the Common Stock on the date the options are granted. The
Director Plan contains provisions providing for adjustment of the number of
shares available for option and subject to unexercised options in the event of
stock splits, dividends payable in Common Stock, business combinations or
certain other events.
The Director Plan provides for the grant on January 1 of each year
(the "Grant Date") of options to purchase 500 shares to each Non-Employee
Director serving the Company on the Grant Date. The price at which each share of
Common Stock covered by an option may be purchased upon exercise of such option
is the fair market value of the share on the Grant Date of such option. On
October 1, 1997, the fair market value of a share of Common Stock subject to the
options was $2.00.
On January 1, 1996, the Company granted options to purchase an
aggregate of 2,500 shares of Common Stock under the Director Plan at an exercise
price per share of $6.25, the fair market value, as described above, of the
Common Stock on January 1, 1996, the last trading date prior to the Grant Date.
Messrs. Apple, Franks, Jumper, Murphy and Turner, the Non-Employee Directors on
such date, were each granted options to purchase 500 shares.
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<PAGE> 16
COMPARATIVE PERFORMANCE GRAPH
The Commission requires the Company to include a line graph
which compares the yearly percentage change in cumulative total shareholder
return on the Company's Common Stock with (a) the performance of a broad equity
market indicator, and (b) the performance of a published industry index or peer
group. The following graph compares the yearly percentage change in the return
on the Company's Common Stock since the Company's initial public offering with
the cumulative total return on the CRSP Index for Nasdaq Stock Market Companies
and the CRSP Index for NYSE/AMEX/Nasdaq furniture and fixture companies. The
graph assumes the investment on August 27, 1993 of $100 in the Company's Common
Stock and that all dividends were reinvested at the time they were paid.
<TABLE>
<CAPTION>
Measurement Period River Oaks
(Fiscal Year Covered) Furniture Nasdaq Market Peer Group
<S> <C> <C> <C>
08/27/93 100.00 100.00 100.00
12/31/93 107.81 106.36 112.83
12/31/94 71.87 103.97 94.60
12/31/95 39.06 147.03 119.10
12/31/96 19.53 180.85 154.48
</TABLE>
13
<PAGE> 17
CERTAIN TRANSACTIONS
S&J Steel Builders, Inc. ("S&J"), which is 50% owned by Mr.
Jumper, a shareholder and director of the Company, has constructed substantially
all of the Company's facilities in Mississippi. Each contract between S&J and
the Company is on a cost plus 7.5% basis. The amounts paid to S&J for the
construction of such facilities was $4,900,000 for the year ended December 31,
1996.
On May 6, 1996, the Company entered into two promissory notes in
the amounts of $5,650,000 and $100,000, respectively, with the Bank of
Mississippi (the "BOM Construction Loans") which replaced previous promissory
notes to the Bank of Mississippi in the combined amount of $5,250,000. The
proceeds of the BOM Construction Loans have been used for construction of a
centralized fabric storage, cutting and distribution center. The BOM
Construction Loans are secured by the land and the building constructed thereon,
all office furniture located at the facility, and, at the option of the Bank of
Mississippi, the Company's deposits on hand at the bank. The BOM Construction
Loans mature on May 6, 2001 and May 1, 1997, respectively and bear interest at
the prime rate as established by the Bank of Mississippi (8.6% at September 30,
1997). The Loan that matured on May 1, 1997 was satisfied. At December 31, 1996,
outstanding borrowings under the BOM Construction Loans were $5,474,000. Mr.
Jumper is a member of the board of directors of BancorpSouth, Inc., the parent
of the Bank of Mississippi.
Mr. Keenum, a shareholder, director and officer of the Company, is
a partner with the law firm of Keenum and Tutor, P.A., which has performed
certain legal services for the Company. Fees paid to the firm by the Company
were less than 5% of the firm's gross revenues for its last full fiscal year.
On September 29, 1995, the Company purchased its manufacturing
facility in New Albany, Mississippi for $3,380,000 from Four Star Realty, Inc.
("Four Star"), a company whose shareholders include Messrs. Keenum, Sr., Jumper,
Sr. and Murphy, each of whom is a director of the Company. Concurrently
therewith, the Company sold one of its facilities in Pontotoc, Mississippi to
Four Star for $1,425,000. The purchase price for each facility was based upon
independent appraisals.
On February 26, 1996, the Company entered into a promissory note
in the amount of $82,500 with Johnny C. Walker, the Chief Operating Officer,
Chief Financial Officer and a Director of the Company. Mr. Walker used the
proceeds of this loan to purchase 22,000 shares of the Company's common stock
from the Company at $3.75 per share. The loan matured on February 26, 1997, bore
interest at 8 1/4%, and was unsecured. On February 26, 1997, the Company and Mr.
Walker entered into a promissory note bearing the same principal and interest
rate. This loan will mature on February 26, 1998.
On November 12, 1997, Messrs. Keenum, Apple, Simons, Boone,
Turner, Murphy, and Jumper purchased 12% Subordinated Convertible Notes Due
November 12, 1998 in principal amounts of $280,000, $50,000, $50,000, $100,000,
$10,000, $230,000 and $280,000, respectively (the "Subordinated Notes"). The
Subordinated Notes are convertible prior to repayment into shares of the
Company's Common Stock at $2.50 per share, as the same may be adjusted, bear
interest at the rate of 12% per annum, with such interest being payable
semi-annually on each first day of May and first day of November following the
date of issuance of the Subordinated Notes. The Subordinated Notes, together
with all accrued and unpaid interest thereon, are to be repaid by the Company on
or before November 12, 1998. The Subordinated Notes contain certain events of
default, including the failure of the Company to pay any interest or principal
amount of the Subordinated Notes when due and the default and acceleration of
any debt senior to the Subordinated Debt, which includes all of the Company's
current credit facilities and borrowings.
On November 10, 1997, and as consideration for the execution of
Letters of Credit in favor of BNYFC by Messrs. Simons, Keenum, Jumper and
Murphy, the Company executed warrants for the purchase by such individuals of
28,000 shares each of the Common Stock of the Company,
14
<PAGE> 18
respectively (the "Warrants"). The Warrants are exercisable, in whole or in
part, at any time prior to 5:00 p.m. on November 9, 2002, for the lesser of (i)
$2.50 per share or (ii) the closing bid price per share of the Common Stock of
The Company on the first day it is relisted for trading on Nasdaq or any
national exchange. The Warrants contain antidilution protections and piggyback
and demand registration rights. No assurance can be given, however, that the
Company will be able to successfully obtain the relisting of it Common Stock.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers, directors and persons who own more than 10% of a
registered class of the Company's securities to file reports of ownership and
changes in ownership with the Commission. Officers, directors and greater than
ten-percent shareholders are required by the Commission to furnish the Company
with copies of all Section 16(a) forms they file. Based solely on a review of
copies of such forms received by it, or written representations from certain of
the Company's directors and executive officers that no other reports were
required, the Company notes that Messrs. Simons, Nail and Walker were each
granted options to purchase 12,500 of the Company's common stock on November 14,
1996, but failed to report timely their acquisition of such options on Form 4,
and that Mr. Apple acquired 1,000 shares of the Company's common stock on
December 3, 1996, but failed to report timely his acquisition of such shares on
Form 4. Each of Messrs. Simons, Nail, Walker and Apple subsequently reported
their transactions on Form 5.
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Horne CPA Group, PA ("Horne") has served as the Company's
independent accountants since June 10, 1997. Subject to ratification by the
shareholders, the Board of Directors has appointed Horne as the Company's
independent accountants for the current fiscal year and to prepare the Company's
audited financial statements for the year ended December 31, 1997. If the
appointment of Horne is not approved by the shareholders, the matter will be
referred to the Audit Committee for further review.
Representatives of Horne are expected to be present at the Annual
Meeting of Shareholders. Such representatives will have the opportunity to make
a statement if they desire and will be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT THE
SHAREHOLDERS VOTE FOR THE RATIFICATION OF HORNE CPA GROUP, PA AS INDEPENDENT
ACCOUNTANTS OF THE COMPANY TO AUDIT THE COMPANY'S CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1997.
RESIGNATION OF BDO SEIDMAN, LLP
By letter dated June 5, 1997, BDO Seidman, LLP resigned as the
Company's independent certified public accountants. The reports of BDO on the
Company's financial statements for the two years preceding the resignation of
BDO did not contain an adverse opinion or disclaimer of an opinion, nor were
they qualified or modified as to uncertainty, audit scope, or accounting
principles. During the Company's two most recent fiscal years, and the
subsequent interim period preceding the resignation of BDO, there were no
disagreements with BDO on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure.
15
<PAGE> 19
On June 10, 1997, the Company retained Horne CPA Group, PA as the
Company's independent certified public accountants and, by letter dated such
date, also authorized BDO to respond fully to the informational requests of
Horne.
As previously described, following the Company's discovery that
certain of the Company's accounts were out of balance, the Board of Directors of
the Company, together with its outside legal counsel and BDO, undertook a
comprehensive analysis of certain of the Company's accounts and its accounting
reconciliation procedures for the fiscal year ended December 31, 1996, and prior
fiscal years.
During this analysis, the Board of Directors instructed the
Company's management to make freely available to BDO all of the Company's books,
records and employees. No restrictions were placed on BDO's access to the
Company's books, records or employees. In this regard, the Company believes that
it worked diligently to provide BDO with all information requested by BDO in
connection with the ongoing comprehensive analysis of the Company's accounts and
accounting reconciliation procedures. During this analysis, the Company believes
that it made available to BDO all of its employees, and all of its books and
records with respect to the Company's fiscal years ended December 31, 1996,
1995, 1994 and 1993.
Prior to BDO's resignation, on May 29, 1997, the Board of
Directors of the Company, through its outside counsel, requested, in writing,
information from BDO regarding any accounting issues that BDO believed should be
resolved before the Company could receive BDO's audit report on the Company's
financial statements. By letter dated June 4, 1997, BDO responded in part that
"[t]hese matters raise grave concerns about the integrity of the accounting
records. . . All of the above puts us in a position making it impossible for us
to get comfortable with the systems, the books and records, or the people
involved with the systems at this point."
By letter dated June 17, 1997, BDO advised the Company that it had
withdrawn its opinions on the 1990, 1991, 1992, 1993, 1994 and 1995 annual
financial statements of the Company. Also by letter dated June 17, 1997, BDO
stated that:
Item 304(a)(1)(v) of Regulation S-K requires disclosure of events
wherein the former accountant has advised the registrant that the
internal controls necessary for the registrant to develop reliable
financial statements do not exist. In that regard, at a meeting on
March 17, 1997, representatives of BDO Seidman, LLP verbally
communicated three material weaknesses in internal controls to the
audit committee of the Company's Board of Directors relating to
the following areas:
- Journal entries were noted where there was
insufficient documentation supporting the entries
and no evidence of approval.
- Factor receivable reconciliations were not completed on
a timely basis.
- Factor receivable reconciliations were not reviewed by
an official who was not involved in the reconciliation
process.
Based on the Company's review, the Company has concluded that
these actions were not taken to conceal any misappropriation of the Company's
assets, and that no other employees were involved.
On August 6, 1997, the Company filed a complaint in the Circuit Court of
Lee County, Mississippi, against BDO Seidman, LLP ("BDO"), the Company's former
independent accountants, alleging, among other things, professional malpractice,
negligence, breach of contract and breach of professional responsibilities and
fiduciary duties. The Company is seeking actual damages in the
16
<PAGE> 20
amount of not less than $30,000,000, together with punitive damages, from BDO.
On September 5, 1997, BDO removed the case to the United States District Court
for the Northern District of Mississippi, Eastern Section. On September 15,
1997, the Company filed an amended complaint to add a count for defamation.
BDO's Answer and Counterclaim were served on the Company on October 20, 1997.
The Counterclaim alleges breach of contract, fraud, and breach of the covenant
of good faith and fair dealing. No assurance can be given that the Company will
prevail on any of these allegations or that it will ultimately recover any
damages, actual or punitive, from BDO.
OTHER MATTERS
SHAREHOLDERS' PROPOSALS FOR NEXT ANNUAL MEETING OF SHAREHOLDER
Shareholders' proposals intended to be presented at the next
Annual Meeting of Shareholders must be received by the Company within a
reasonable time prior to the solicitation of proxies for the Annual Meeting of
Shareholders for the fiscal year ended December 31, 1997 for inclusion in the
Company's proxy statement and form of proxy relating to that meeting. The
Company currently anticipates soliciting such proxies in May 1998.
MISCELLANEOUS
The Board of Directors, at the time of the preparation of this
Proxy Statement, knows of no business to come before the meeting other than that
referred to herein. If any other business should come before the meeting, the
persons named in the enclosed Proxy will have discretionary authority to vote
all proxies in accordance with the recommendation of the Board of Directors.
UPON THE WRITTEN REQUEST OF ANY RECORD HOLDER OR BENEFICIAL OWNER
OF COMMON STOCK ENTITLED TO VOTE AT THE ANNUAL MEETING OF SHAREHOLDERS, THE
COMPANY, WITHOUT CHARGE, WILL PROVIDE A COPY OF ITS ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 1996, TOGETHER WITH THE FINANCIAL STATEMENT
SCHEDULES, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. REQUESTS SHOULD
BE DIRECTED TO JOHNNY C. WALKER, CHIEF OPERATING OFFICER AND CHIEF FINANCIAL
OFFICER, RIVER OAKS FURNITURE, INC., 3350 MCCULLOUGH BOULEVARD, BELDEN,
MISSISSIPPI 38826.
BY ORDER OF THE BOARD OF DIRECTORS,
Belden, Mississippi Thomas D. Keenum, Sr.
January 5, 1998 Secretary
17
<PAGE> 21
Appendix A
PROXY
RIVER OAKS FURNITURE, INC.
ANNUAL MEETING OF SHAREHOLDERS
JANUARY 30, 1998
The undersigned hereby appoints Stephen L. Simons and Thomas D.
Keenum, Sr., or either of them, with power of substitution, as Proxies to vote
all stock of River Oaks Furniture, Inc. owned by the undersigned at the Annual
Meeting of Shareholders to be held at the Executive Inn, 1011 North Gloster,
Tupelo, Mississippi, at 10:00 a.m. on January 30, 1998, and any adjournment
thereof, on the following items of business and such other business as may
properly come before the meeting.
1. _____FOR THE ELECTION AS CLASS I DIRECTORS OF ALL NOMINEES
LISTED BELOW (EXCEPT AS MARKED TO THE CONTRARY BELOW)
_____WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES LISTED
BELOW
John D. Nail, Don D. Murphy, John B. Apple
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEES, WRITE THEIR NAMES IN THE SPACE
PROVIDED BELOW.
----------------------------------------------------------------
2. Proposal to ratify the appointment of Horne CPA Group, PA
as the independent public accountants of the Company to
audit the Company's consolidated financial statements for
the year ended December 31, 1997.
_____FOR _____AGAINST _____ABSTAIN
3. In their discretion, upon such other matters as may
properly come before the meeting or any adjournment
thereof.
<PAGE> 22
RIVER OAKS FURNITURE, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS.
This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned shareholder. If no direction is made, this
proxy will be voted for all nominees and for all Proposals.
Please sign exactly as name appears below. When signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such. If a corporation, please sign in full corporate name by President or
other authorized officer. If a partnership, please sign in partnership name by
authorized person.
Dated: _______________, 1998 ------------------------------------
Signature of Shareholder
------------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE
PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
