<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use of the Commissioner Only (as permitted by Rule
14a-6(c)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
THE MAXIM GROUP, INC.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
NOT APPLICABLE
-------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
----
2) Aggregate number of securities to which transaction applies:
-------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
-------------------
5) Total fee paid:
---------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------
2) Form, Schedule or Registration Statement No.:
---------------
3) Filing Party:
------------------------------------
4) Date Filed:
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<PAGE> 2
[MAXIM LETTERHEAD]
November 18, 1998
Dear Stockholder:
A Special Meeting of Stockholders ("Special Meeting") of The Maxim
Group, Inc. (the "Company") will be held on Thursday, December 17, 1998 at
10:00 a.m., local time, at the Company's offices, 210 TownPark Drive, Kennesaw,
Georgia 30144. You are cordially invited to attend.
At the Special Meeting, you will be asked to approve (i) an amendment
to the Certificate of Incorporation of the Company to increase the number of
authorized shares of Common Stock from 25,000,000 shares to 75,000,000 shares
and (ii) an amendment to the 1993 Stock Option Plan of the Company to increase
the number of shares of Common Stock available for grant thereunder from
4,000,000 shares to 5,000,000 shares. The proposed increase in the number of
shares of authorized Common Stock will ensure that additional shares of Common
Stock will be available, if needed, for issuance in connection with any
possible future transactions approved by the Board of Directors, including,
among others, stock splits, stock dividends, acquisitions, financings and other
corporate purposes. The proposed increase in the number of shares available for
grant under the 1993 Stock Option Plan is necessary in light of the recent
acquisition by the Company of the retail store assets and related personnel of
Shaw Industries, Inc., and will ensure the uninterrupted continuation of the
1993 Stock Option Plan.
After reading the Proxy Statement, please promptly mark, sign and
return the enclosed proxy in the prepaid envelope to assure that your shares
will be represented. Your shares cannot be voted unless you date, sign and
return the enclosed proxy or attend the Special Meeting in person. Regardless
of the number of shares you own, your careful consideration of, and vote on,
the matters before our stockholders are important.
We look forward to seeing you at the Special Meeting.
Very truly yours,
/s/ A. J. Nassar
-------------------------------------
A. J. NASSAR
President and Chief Executive Officer
<PAGE> 3
THE MAXIM GROUP, INC.
210 TOWNPARK DRIVE
KENNESAW, GEORGIA 30144
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 17, 1998
The special meeting of shareholders of The Maxim Group, Inc. (the
"Company") will be held on Thursday, December 17, 1998 at 10:00 a.m., at the
principal office of the Company located at 210 TownPark Drive, Kennesaw,
Georgia 30144, for the following purposes:
(1) To approve an amendment to the Certificate of Incorporation of the
Company to increase the number of authorized shares of Common Stock from
25,000,000 shares to 75,000,000 shares;
(2) To approve an amendment to the 1993 Stock Option Plan of the
Company to increase the number of shares available for grant thereunder from
4,000,000 shares to 5,000,000 shares; and
(3) To transact such other business as may properly come before the
meeting or any adjournments or postponements thereof.
Only shareholders of record at the close of business on November 13,
1998 will be entitled to notice of and to vote at the meeting or any
adjournments or postponements thereof.
A Proxy Statement and a proxy solicited by the Board of Directors are
enclosed herewith. Please sign, date and return the proxy promptly. If you
attend the meeting, you may, if you wish, withdraw your proxy and vote in
person.
By Order of the Board of Directors,
/s/ A.J. Nassar
-------------------------------------
A.J. NASSAR
President and Chief Executive Officer
Kennesaw, Georgia
November 18, 1998
PLEASE COMPLETE AND RETURN THE ENCLOSED PROXY PROMPTLY SO THAT YOUR VOTE MAY BE
RECORDED AT THE MEETING IF YOU DO NOT ATTEND PERSONALLY.
<PAGE> 4
THE MAXIM GROUP, INC.
210 TOWNPARK DRIVE
KENNESAW, GEORGIA 30144
SPECIAL MEETING OF SHAREHOLDERS
DECEMBER 17, 1998
-----------------------
PROXY STATEMENT
-----------------------
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of The Maxim Group, Inc. (the "Company")
for the Special Meeting of Shareholders to be held on Thursday, December 17,
1998, and any adjournments or postponements thereof, at the time and place and
for the purposes set forth in the accompanying notice of the meeting. The
expense of this solicitation, including the cost of preparing and mailing this
Proxy Statement, will be paid by the Company. In addition to solicitations by
mail, officers and regular employees of the Company, at no additional
compensation, may assist in soliciting proxies by telephone. This Proxy
Statement and the accompanying proxy are first being mailed to shareholders on
or about November 18, 1998. The address of the principal executive offices of
the Company is 210 TownPark Drive, Kennesaw, Georgia 30144.
Any proxy given pursuant to this solicitation may be revoked by any
shareholder who attends the Special Meeting and gives oral notice of his
election to vote in person, without compliance with any other formalities. In
addition, any proxy given pursuant to this solicitation may be revoked prior to
the Special Meeting by delivering to the Secretary of the Company an instrument
revoking it or a duly executed proxy for the same shares bearing a later date.
Proxies which are returned properly executed and not revoked will be voted and
will be voted in accordance with the shareholder's directions specified thereon.
Where no direction is specified, proxies will be voted for the amendment to the
Certificate of Incorporation and the amendment to the 1993 Stock Option Plan.
Abstentions and broker non-votes will be counted as shares present for purposes
of determining the presence of a quorum but will not be counted as votes cast
for purposes of determining whether the proposal to amend the Certificate of
Incorporation and the proposal to amend the 1993 Stock Option Plan have received
sufficient votes for adoption. Since approval of the amendment to the
Certificate of Incorporation requires the affirmative vote of holders of a
majority of shares outstanding, a shareholder who fails to return a proxy or who
abstains from voting on the proposal in his proxy will have functionally voted
against the proposal. Abstentions and broker non-votes will not be counted as
votes either in favor of or against the proposal to amend the 1993 Stock Option
Plan.
The record of shareholders entitled to vote at the Special Meeting was
taken on November 13, 1998. On that date the Company had outstanding and
entitled to vote 19,238,805 shares of common stock, par value $.001 per share
(the "Common Stock"), with each share entitled to one vote.
<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of the Common Stock as of October 30, 1998, with respect to (i) each
person known by the Company to own beneficially more than 5% of the outstanding
shares of Common Stock, (ii) each of the Company's directors, (iii) the Chief
Executive Officer of the Company and each of the other four most highly
compensated executive officers of the Company during the year ended January 31,
1998, and (iv) all directors and executive officers as a group. Unless
otherwise indicated, each of the stockholders has sole voting and investment
power with respect to the shares beneficially owned.
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES PERCENTAGE OF
OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) TOTAL
- ------------------- -------------------- -------------
<S> <C> <C>
A.J. Nassar(2)............................................ 1,220,480 6.0
210 TownPark Drive
Kennesaw, Georgia 30144
Richard A. Kaplan......................................... 930,000 4.8
M.B. Seretean............................................. 677,000 3.5
H. Stanley Padgett(3)..................................... 184,497 *
Thomas P. Leahey(4)....................................... 60,000 *
David E. Cicchinelli...................................... 3,000 *
James W. Inglis........................................... 0 0
J. Michael Nixon.......................................... 115,000 *
Herb Wolk................................................. 200,000 1.0
Julian D. Saul(5)......................................... 1,826,984 9.4
702 Mt. Sinai Road
Dalton, Georgia 30720
Linda Saul Schejola(6).................................... 1,260,000 6.5
Via Bottazzi, 2
15057 Tortona (AI), Italy
FMR Corp.(7).............................................. 1,206,100 6.2
82 Devonshire Street
Boston, Massachusetts 02109
Wellington Management Company, LLP(8)..................... 1,002,700 5.1
75 State Street
Boston, Massachusetts 02109
All directors and executive
officers as a group
(12 persons)(9)......................................... 3,475,856 16.9
</TABLE>
- --------------------
* Less than one percent of outstanding shares
-2-
<PAGE> 6
(1) "Beneficial Ownership" includes shares for which an individual,
directly or indirectly, has or shares voting or investment power or
both and also includes options which are exercisable within sixty days
of the date hereof. Beneficial ownership as reported in the above
table has been determined in accordance with Rule 13d-3 of the
Securities Exchange Act of 1934. The percentages are based upon
19,483,905 shares outstanding as of October 30, 1998, except for
certain parties who hold presently exercisable options to purchase
shares. The percentages for those parties who hold presently
exercisable options are based upon the sum of 19,483,905 shares plus
the number of shares subject to presently exercisable options held by
them, as indicated in the following notes.
(2) Includes 715,480 shares of Common Stock subject to stock options
exercisable within the next 60 days.
(3) Includes 166,320 shares of Common Stock subject to stock options
exercisable within the next 60 days.
(4) Includes 60,000 shares of Common Stock subject to stock options
exercisable within the next 60 days.
(5) According to a Schedule 13G dated October 12, 1998 filed with the
Commission by Mr. Saul, his beneficial ownership (i) includes 18,947
shares owned individually by Mr. Saul and 1,808,037 shares owned by a
trust of which Mr. Saul is the sole trustee, and (ii) excludes 63,016
shares owned by Mr. Saul's spouse, with respect to which he disclaims
beneficial ownership. The Company makes no representation as to the
accuracy or completeness of the information reported.
(6) According to a Schedule 13G dated October 12, 1998 filed with the
Commission by Ms. Schejola, her beneficial ownership includes 12,631
shares owned individually by Ms. Schejola and 1,247,369 shares owned
by a trust of which Ms. Schejola is the sole trustee. The Company
makes no representation as to the accuracy or completeness of the
information reported.
(7) According to a Schedule 13G dated February 14, 1998 filed with the
Commission by FMR Corp. ("FMR"), Edward C. Johnson 3d and Abigail P.
Johnson, Mr. Johnson is the Chairman of FMR and the owner of 12% of
the aggregate outstanding voting stock of FMR and Ms. Johnson is a
director of FMR and the owner of 24.5% of the aggregate outstanding
voting stock of FMR and each may be deemed to be members of a
controlling group with respect to FMR. The Schedule 13G states that
(i) Fidelity Management & Research Company, a registered investment
adviser and a wholly-owned subsidiary of FMR ("Fidelity"), is the
beneficial owner of 956,400 shares of Common Stock as a result of
acting as investment advisor to various registered investment
companies (the "Funds"), (ii) Mr. Johnson, FMR (through its control of
Fidelity) and the Funds each has sole power to dispose of the 956,400
shares owned by the Funds, and (iii) the power to vote all of the
956,400 shares resides with the Board of Trustees of the Funds. The
Schedule 13G further states that (i) Fidelity Management Trust Company
("Fidelity Management"), a wholly-owned subsidiary of FMR and a bank
as defined in Section 3(a)(6) of the Exchange Act, is the beneficial
owner of 249,700 shares of Common Stock as a result of it serving as
investment manager of the institutional account(s) and (ii) each of
Mr. Johnson and FMR (through its control of Fidelity Management) has
sole voting and dispositive power over 249,700 shares of Common Stock
owned by such institutional account(s). The Company makes no
representation as to the accuracy or completeness of the information
reported.
-3-
<PAGE> 7
(8) Based on a Schedule 13G dated January 14, 1998 filed with the
Commission by Wellington Management Company. The Company makes no
representation as to the accuracy or completeness of the information
reported.
(9) Includes an aggregate of 1,032,179 shares of Common Stock subject to
stock options exercisable within the next 60 days.
EXECUTIVE COMPENSATION
The following table provides certain summary information for the
fiscal years ended January 31, 1998 and 1997 and for the ten month transition
period ended January 31, 1996 concerning compensation paid or accrued by the
Company to or on behalf of the Company's Chief Executive Officer and each of
the other four most highly compensated executive officers of the Company (the
"Named Executive Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------------------- ------------
OTHER NUMBER OF
NAME AND ANNUAL OPTIONS OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) AWARDED COMPENSATION
------------------ ---- ------ ----- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C>
A.J. Nassar.................... 1998 $350,012 $265,000 $2,375 275,000 --
President and Chief 1997 229,479 -- 2,295 200,000 --
Executive Officer 1996(2) 165,456 25,000 1,654 142,400 (3) --
James W. Inglis (4)............. 1998 $218,384 $75,000 -- -- --
Chief Operating Officer 1997 175,176 -- 200,000 $116,250(5)
H. Stanley Padgett.............. 1998 $295,000 -- -- 25,000 $ 10,926
Senior Executive 1997(6) 170,200 -- -- -- --
Vice President 1996(7) 284,200 -- -- -- --
Herb Biggers(8)................. 1998 $173,828 $11,250 -- 50,000 --
Chief Operating Officer 1997 51,330 21,250 -- 50,000 $ 5,626
Thomas P. Leahey................ 1998 $ 96,147 $30,000 $1,436 25,000 --
Executive Vice President, 1997 75,762 6,195 1,125 -- --
Finance 1996(2) 58,286 -- -- -- --
</TABLE>
- -------------------------
(1) Represents the Company's matching contribution under its 401(k) plan.
(2) Represents compensation for the ten-month period ended January 31,
1996, which period was the result of a change in the fiscal year end
of the Company from March 31 to January 31.
(3) Includes options to purchase 40,000 shares of common stock which were
subsequently canceled.
(4) Mr. Inglis resigned from his position as Chief Operating Officer of
the Company in March 1998.
(5) Represents the discount to fair market value in connection with the
purchase by Mr. Inglis of 50,000 shares of Common Stock from the
Company in May 1996.
-4-
<PAGE> 8
(6) Amounts indicated include compensation paid to Mr. Padgett by (i) the
Company and Image subsequent to the acquisition of Image by the
Company on August 30, 1996 and (ii) Image for the period from June 30,
1996 to August 30, 1996.
(7) Represents compensation paid to Mr. Padgett by Image for its fiscal
year ended June 29, 1996.
(8) Mr. Biggers resigned from his position as Chief Operating Officer of
the Company in July 1998.
EMPLOYMENT AGREEMENTS
On June 4, 1997, the Company entered into an Employment Agreement with
A.J. Nassar, pursuant to which Mr. Nassar serves as Chief Executive Officer of
the Company. The Employment Agreement, which was amended on January 1, 1998, is
for a term of three years, expiring on June 4, 2000, and provides for an annual
base salary of $600,000 plus an annual bonus of $200,000 for each fiscal year
in which the Company attains certain earnings targets established by the Board
of Directors. The Employment Agreement will automatically renew unless it is
earlier terminated or either the Company or Mr. Nassar elects not to renew the
Employment Agreement. The Employment Agreement provides for certain severance
payments to be paid to Mr. Nassar in the event of a change in control of the
Company. In the event of a change in control, Mr. Nassar will be entitled,
during the term of his Employment Agreement, to terminate his employment with
the Company and, subject to certain adjustments, to receive a lump sum cash
payment equal to two years' salary, as well as 12 months' provision of employee
benefits and a pro rata portion of his annual bonus. In the event Mr. Nassar is
terminated by the Company without cause, he will receive during the balance of
his term of employment (not to exceed 24 months), the annual base salary which
would otherwise be payable to Mr. Nassar had he remained in the employ of the
Company. In addition, all unvested stock options will become immediately
exercisable and Mr. Nassar will receive 12 months' provision of employee
benefits and a pro rata portion of his annual bonus. The Employment Agreement
contains non-compete and non- solicitation provisions, effective through the
actual date of termination of the Employment Agreement and for a period of two
years thereafter.
On August 30, 1996 and again on July 30, 1997, H. Stanley Padgett
entered into amendments to his employment agreement with Image. Under the
amended agreement, which will expire on July 30, 2000, Mr. Padgett serves as a
Senior Executive Vice President of the Company and as the President and Chief
Executive Officer of Image. Mr. Padgett will be entitled to receive an annual
base salary of $295,000 which is subject to increase at the discretion of the
Compensation Committee, plus certain specified benefits and other benefits
generally available to other senior executive officers of Image. The employment
agreement provides that the Compensation Committee may also grant an annual
bonus to Mr. Padgett. In the event that Mr. Padgett's employment is terminated
without cause, as defined under the agreement, he is entitled to a severance
payment equal to the salary which would be owed to him through the remainder of
the term of the agreement, but in no event less than one year's then-current
salary, as well as a bonus equal to the average of the two prior years' annual
bonuses. In addition, certain benefits shall be continued for a period of six
months, and all unvested options held by Mr. Padgett which would vest in the
year of termination shall vest in full. In the event of termination of Mr.
Padgett's employment for any reason other than cause within 12 months after a
change in control, the Company shall pay Mr. Padgett an amount equal to his
annual base salary as then in effect, in lieu of any other severance payment,
and shall continue certain benefits, including a company automobile and
medical, life and disability insurance, for a period of six months. If Mr.
Padgett's employment is terminated for cause, or if he voluntarily terminates
his employment with Image, he shall not be entitled to a severance payment or
bonus and shall be subject to a one-year noncompetition covenant.
-5-
<PAGE> 9
Termination of employment includes death, disability, voluntary termination by
the employee or involuntary termination by Image with or without cause, which
would include a material change in position or responsibility.
COMPENSATION OF DIRECTORS
Directors of the Company who are compensated as officers of the
Company serve without compensation for their services as directors. All
directors of the Company are reimbursed by the Company for all out-of-pocket
expenses reasonably incurred by them in the discharge of their duties as
directors, including out-of-pocket expenses incurred in attending meetings of
the Board of Directors and of any committees of the Board of Directors. In
addition, from time to time, certain of the Company's outside directors assist
in conducting workshops and orientation sessions for the Company's franchisees,
for which they customarily have been paid consulting fees of $10,000 annually.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following persons served as members of the Compensation Committee
of the Board of Directors during the year ended January 31, 1998: Richard A.
Kaplan, J. Michael Nixon, M.B. Seretean and Herb Wolk. None of the members of
the Compensation Committee has been an officer or employee of the Company or
any of its subsidiaries. Except as set forth herein under "Certain
Transactions," there were no material transactions between the Company and any
of the members of the Compensation Committee during the fiscal year ended
January 31, 1998.
STOCK OPTION PLAN
The Company has adopted a 1993 Stock Option Plan (the "1993 Plan") for
employees who are contributing significantly to the management or operation of
the business of the Company or its subsidiaries as determined by the Company's
Board of Directors or the committee administering the 1993 Plan. The 1993 Plan
provides for the grant of options to purchase up to 4,000,000 shares of Common
Stock (5,000,000 shares if the proposed amendment to the 1993 Plan is approved
at the Special Meeting) at the discretion of the Board of Directors of the
Company or a committee designated by the Board of Directors to administer the
1993 Plan. The option exercise price must be at least 100% (110% in the case
incentive stock options granted to a holder of 10% or more of the Common Stock)
of the fair market value of the Common Stock on the date the option is granted
and the options are exercisable by the holder thereof in full at any time prior
to their expiration in accordance with the terms of the 1993 Plan. Incentive
stock options granted pursuant to the 1993 Plan will expire on or before (1)
the date which is the tenth anniversary of the date the option is granted, or
(2) the date which is the fifth anniversary of the date an incentive stock
option is granted in the event that the option is granted to a key employee who
owns more than 10% of the total combined voting power of all classes of stock
of the Company or any subsidiary of the Company.
-6-
<PAGE> 10
The following table provides certain information concerning individual
grants of stock options under the 1993 Plan made during the fiscal year ended
January 31, 1998 to the Named Executive Officers:
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
-------------------------------------------------
% OF TOTAL POTENTIAL REALIZABLE
OPTIONS VALUE AT ASSUMED
GRANTED TO EXERCISE OR ANNUAL RATES OF STOCK
OPTIONS EMPLOYEES IN BASE PRICE PRICE APPRECIATION FOR
GRANTED FISCAL ($ PER EXPIRATION OPTION TERM (1)
NAME (#) YEAR SHARE) DATE 5% 10%
---- ---------- ------------ ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
A.J. Nassar................... 175,000(2) 13.5% $11.00 5/01/07 $1,210,621 $3,067,954
200,000(2) 15.3% 13.75 1,729,459 4,382,791
James W. Inglis............... -- -- -- 11/01/07 -- --
H. Stanley Padgett............ 25,000(3) 1.9% 13.75 11/01/07 216,182 547,849
Herb Biggers.................. 50,000(4) 3.8% 11.50 5/01/07 361,614 916,402
Thomas P. Leahey.............. 10,000(4) 0.8% 10.00 5/01/07 62,889 159,374
15,000(3) 1.2% 13.75 11/01/07 129,709 328,709
</TABLE>
- ------------------------------
(1) The dollar amounts under these columns represent the potential
realizable value of each grant of option assuming that the market
price of the Company's Common Stock appreciates in value from the date
of grant at the 5% and 10% annual rates prescribed by the SEC and
therefore are not intended to forecast possible future appreciation,
if any, of the price of the Company's Common Stock.
(2) Options are immediately exercisable.
(3) Options vest in increments of 20% per year commencing on November 1,
1998.
(4) Options in increments of 20% per year commencing on May 1, 1998.
The following table provides certain information concerning options
exercised during fiscal 1998 and the value of unexercised options held by the
Named Executive Officers as of January 31, 1998.
<TABLE>
<CAPTION>
NUMBER OF
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
YEAR END AT FISCAL YEAR-END (A)
----------------- ----------------------
SHARES
ACQUIRED ON VALUE EXER- UNEXER- EXER- UNEXER-
NAME EXERCISE (#) REALIZED ($) CISABLE CISABLE CISABLE CISABLE
- ---- ------------ ------------ ------- ------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
A.J. Nassar......................... -- -- 705,960 19,040 $3,824,852 $103,768
James W. Inglis..................... -- -- 120,000 80,000 690,000 460,000
H. Stanley Padgett.................. 275,000 $4,231,250 166,320 25,000 2,413,010 81,250
Herb Biggers........................ -- -- 10,000 90,000 50,000 475,000
Thomas P. Leahey.................... -- -- 55,000 25,000 620,000 118,750
</TABLE>
- ---------------------------
-7-
<PAGE> 11
(a) Dollar values were calculated by determining the difference between the
closing price of $17.00 per share of common stock, as reported by the New
York Stock Exchange on January 31, 1998, and the exercise price of the
options.
EMPLOYEE RETIREMENT SAVINGS PLAN
The Company has established a savings and profit-sharing plan that
qualifies as a tax-deferred savings plan under Section 401(k) of the Internal
Revenue Code (the "401(k) Plan") for its salaried employees who are at least 21
years old and who have completed one year of service with the Company. Under
the 401(k) Plan, eligible employees may contribute up to 20% of their gross
salary to the 401(k) Plan or $9,500, whichever is less. Each participating
employee is fully vested in contributions made by such employee. The Company
presently matches 25% of the amount contributed by an employee up to 6% of the
employee's salary, but the Company's policy regarding matching contributions
may be changed annually in the discretion of the Board of Directors. All
amounts contributed under the 401(k) Plan are invested in one or more
investment accounts administered by an independent plan administrator.
CERTAIN TRANSACTIONS
As of October 1, 1998, a total of $892,000 was owed to the Company
by A.J. Nassar, the Company's President and Chief Executive Officer. The largest
aggregate amount of indebtedness outstanding from Mr. Nassar to the Company
since the beginning of fiscal 1998 was $1.8 million. All amounts owed by Mr.
Nassar bear interest at an annual rate of 8%. Mr. Nassar has agreed to repay all
outstanding obligations to the Company in five annual installments of $200,000
per year (plus accrued interest) commencing on July 1, 1998 and on each March 1
thereafter until maturity. Certain of the loans made to Mr. Nassar in the past
were done without prior approval of the Board of Directors of the Company, but
were later ratified by the Board. All borrowings were made by Mr. Nassar to fund
certain of his personal expenses. No additional loans will be made by the
Company to Mr. Nassar. The Company may in the future, however, make loans to
other officers and employees in furtherance of proper corporate purposes.
In August 1997, the Company invested $1.0 million in North Atlantic
Acquisition Corp. ("North Atlantic"), a blind pool investment vehicle. A.J.
Nassar, the President and Chief Executive Officer of the Company, is a director
and a shareholder of North Atlantic. At the time of the Company's investment in
North Atlantic, Mr. Nassar owned 14.1% of the outstanding Class A common stock
of North Atlantic. As a result of North Atlantic's initial public offering in
late 1997, Mr. Nassar's percentage of ownership was reduced to 1.7% of the
outstanding shares of Class A common stock.
Kevodrew Realty, Inc. ("Kevodrew"), a company controlled by A.J.
Nassar, leases space to a Company-owned store in Louisville, Kentucky. Payments
by the Company to Kevodrew pursuant to this lease totaled $89,983 in fiscal
1998.
In January 1998, the Company loaned $100,000 to Herb Biggers, who at
the time was serving as the Company's Chief Operating Officer. This loan bears
interest at an annual rate of 8.5%, payable
-8-
<PAGE> 12
monthly, with principal due on demand. This loan was made to Mr. Biggers to
fund certain of his personal expenses. The maximum aggregate amount of
indebtedness outstanding for Mr. Biggers to the Company since the beginning of
fiscal 1998 was $102,000. This loan was repaid by Mr. Biggers in July 1998.
In May 1998, the Company loaned $100,000 to Sandra Fowler, the
Executive Vice President, Administration of the Company. This loan bears
interest at an annual rate of 8.5%, payable monthly, with principal due on
demand. This loan was made to Ms. Fowler to fund certain of her personal
expenses.
In September 1998, the Company loaned $100,000 to David E.
Cicchinelli, the Company's Chief Operating Officer and a director. This loan
bears interest at an annual rate of 8.5%, payable monthly, with principal due
on demand. The loan was made to Mr. Cicchinelli to fund certain of his personal
expenses.
The Company, through its GCO subsidiary, leases two facilities in
Montgomery, Alabama, from Dicky W. McAdams, a former director, who served on
the Board of Directors of the Company from 1991 to August 1997, and the former
Chairman of GCO. One of these facilities is owned directly by Mr. McAdams and
the other facility is owned by a partnership in which Mr. McAdams has a 50%
interest. Lease payments to Mr. McAdams and the partnership totaled $167,568 in
fiscal 1998.
Richard A. Kaplan and Herb Wolk, directors of the Company, and Ronald
McSwain, a former director of the Company, own or owned floor covering
retailers which are franchisees of the Company. The following table sets forth
for the periods indicated, the amounts paid to the Company by the franchisees
controlled by these directors and rebates received by these franchisees. Rebate
payments to these franchisees by the Company represent a pass through of volume
rebates paid by various floor covering manufacturers to the Company.
<TABLE>
<CAPTION>
FISCAL 1996 FISCAL 1997 FISCAL 1998
------------------------- ------------------------- -------------------------
AMOUNTS PAID AMOUNTS PAID AMOUNTS PAID
NAME TO COMPANY REBATES TO COMPANY REBATES TO COMPANY REBATES
- ------------------------ ----------- --------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Richard A. Kaplan........ $ 55,187 $ 35,909 $ -- $ -- $ -- $ --
Ronald McSwain........... 242,550 206,453 330,602 210,113 465,048 231,743
Herb Wolk................ 47,604 26,863 61,485 25,553 134,384 72,903
--------- --------- -------- -------- -------- --------
Total............... $345,341 $269,225 $392,087 $235,666 $599,432 $304,646
========= ========= ======== ======== ======== ========
</TABLE>
The ability of the Company to enter into future transactions with
affiliates is limited by the terms of its Senior Notes and Credit Facility.
-9-
<PAGE> 13
PROPOSAL TO AMEND CERTIFICATE OF INCORPORATION
TO INCREASE AUTHORIZED COMMON STOCK
On October 10, 1998, the directors approved an amendment to Article IV
of the Company's Certificate of Incorporation, as amended (the "Certificate of
Incorporation"), to increase the number of authorized shares of Common Stock of
the Company from 25,000,000 to 75,000,000 shares. In connection therewith, the
following resolution will be introduced at the Special Meeting:
RESOLVED: That Article IV of the Certificate of Incorporation of the
Company shall be amended by deleting the first two paragraphs thereof in their
entirety and replacing them as follows:
"The Corporation shall have authority to issue 76,000,000 shares of
capital stock, which shall be divided into classes and shall have the following
designations, preferences, limitations and relative rights:
A. Common Stock. One class shall consist of 75,000,000 shares of
common stock having a par value of $.001 per share, designated "Common
Stock." Subject to the rights of the holders of Preferred Stock, the
holders of Common Stock shall be entitled to elect all of the members
of the Board of Directors of the Corporation, and such holders shall
be entitled to vote as a class on all matters required or permitted to
be submitted to the shareholders of the Corporation."
The Board of Directors recommends that shareholders approve the
proposed amendment to the Company's Certificate of Incorporation because it
considers the proposal to be in the best long-term and short-term interests of
the Company, its shareholders and its other constituencies. In August 1998, the
Company issued 3,150,000 shares of Common Stock in connection with its
acquisition of the retail store assets of Shaw Industries, Inc. As a result of
this transaction, the number of shares of Common Stock which remained available
for issuance was substantially reduced. The proposed increase in the number of
shares of authorized Common Stock will ensure that additional shares of Common
Stock will be available, if needed, for issuance in connection with any
possible future transactions approved by the Board of Directors, including,
among others, stock splits, stock dividends, acquisitions, financings and other
corporate purposes.
The Board of Directors believes that the availability of the
additional shares of Common Stock for such purposes without delay or the
necessity for a special shareholders' meeting (except as may be required by
applicable law or regulatory authorities or by the rules of any stock exchange
on which the Company's securities may then be listed) will be beneficial to the
Company by providing it with the flexibility required to consider and respond
to future business opportunities and needs as they arise. The availability of
additional authorized shares of Common Stock will also enable the Company to
act promptly when the Board of Directors determines that the issuance of
additional shares of Common Stock is advisable. It is possible that shares of
Common Stock may be issued at a time and under circumstances that may increase
or decrease earnings per share and increase or decrease the book value per
share of shares presently held. The Company does not have any immediate
agreements, arrangements, commitments or understandings with respect to the
issuance of any of the additional shares of Common Stock which would be
authorized by the proposal to increase the number of authorized shares.
On October 30, 1998, 19,483,905 shares of Common Stock were issued and
outstanding and approximately 3,200,000 shares of Common Stock were reserved
for issuance under outstanding stock
-10-
<PAGE> 14
options or reserved for the payment of contingent consideration in connection
with certain acquisitions made by the Company.
It should be noted that the availability of additional shares could
render more difficult or discourage a takeover attempt. For example, additional
shares of Common Stock could be issued and sold to purchasers who oppose a
takeover bid which is not in the best long-term and short-term interests of the
Company, its shareholders and its other constituencies or could be issued to
increase the aggregate number of outstanding shares of Common Stock and thereby
dilute the interest of parties attempting to obtain control of the Company. In
connection with any issuance of shares of Common Stock, the Board of Directors
is required to determine that such issuance would be in the best long-term and
short-term interests of the Company, its shareholders and its other
constituencies. The Board of Directors is presently unaware of any specific
effort to accumulate the shares of Common Stock of the Company or obtain
control of the Company.
The approval of the holders of a majority of the issued and
outstanding shares of Common Stock of the Company is required for the adoption
of the proposed amendment to the Certificate of Incorporation. THE BOARD OF
DIRECTORS RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS APPROVE THE PROPOSED
AMENDMENT TO THE CERTIFICATE OF INCORPORATION.
AGENDA ITEM TWO
PROPOSAL TO AMEND 1993 STOCK OPTION PLAN
GENERAL
On July 30, 1993, the Board of Directors of the Company adopted a 1993
Stock Option Plan (as amended, the "1993 Plan") for eligible officers,
directors and key employees of the Company. The 1993 Plan provides for the
grant of both incentive and non-qualified stock options. The purpose of the
1993 Plan is to encourage and enable eligible directors, officers and key
employees of the Company and its subsidiaries to acquire proprietary interests
in the Company and its subsidiaries through the ownership of common stock of
the Company and to provide motivation for participating directors, officers and
key employees to remain in the employ of and to give greater effort on behalf
of the Company.
Under the terms of the 1993 Plan, the Stock Option Committee of the
Board of Directors may grant options to purchase shares of Common Stock to
officers, directors and employees of the Company or of a subsidiary of the
Company.
As of October 30, 1998, the Company had granted options to purchase
shares of Common Stock pursuant to the 1993 Plan as follows: (i) each Named
Executive Officer (A.J. Nassar: 1,077,400 shares; James W. Inglis: 200,000
shares; H. Stanley Padgett: 101,318 shares; Herb Biggers: 100,000 shares; and
Thomas P. Leahey: 130,000 shares); (ii) all current executive officers as a
group: 1,985,615 shares; (iii) all current directors who are not executive
officers as a group: 590,000 shares; and (iv) all employees, including all
current officers who are not executive officers, as a group: 3.4 million
shares.
-11-
<PAGE> 15
DESCRIPTION OF PROPOSED AMENDMENT
On October 10, 1998, the Board of Directors of the Company adopted an
amendment to the 1993 Plan which would increase the number of shares of the
Company Common Stock available for grant thereunder to 5,000,000 shares from
4,000,000 shares. As of October 30, 1998, less than 1,000 shares of Common
Stock remained available for grant under the 1993 Plan. Further, as a result of
the Company's recent acquisition of the retail store assets of Shaw Industries,
Inc., the Company anticipates that it will be granting options to purchase
shares of Common Stock to new employees who joined the Company in connection
with this acquisition. The proposed increase in the number of authorized shares
would ensure the uninterrupted continuation of the 1993 Plan. The Board of
Directors recommends that shareholders vote FOR the proposed amendment. The
affirmative vote of a majority of the shares of the Company Common Stock
represented in person or by proxy at the Annual Meeting is necessary for the
approval of the amendment to the 1993 Plan.
DESCRIPTION OF 1993 PLAN
Effective Date. The effective date of the 1993 Plan is July 30,1993.
The 1993 Plan shall remain in effect until all shares subject to or which may
become subject to the 1993 Plan shall have been purchased pursuant to options
granted under the 1993 Plan, provided that options under the 1993 Plan must be
granted within ten (10) years from the effective date.
Shares Subject to the 1993 Plan. The shares of the Company's common
stock available for issuance under the 1993 Plan may, at the election of the
Board of Directors, be either treasury shares or shares originally issued for
such purpose. The maximum number of shares which shall be reserved and made
available for sale under the 1993 Plan shall be 4,000,000 shares of Common
Stock (5,000,000 shares if the amendment to the 1993 Plan is approved by the
shareholders of the Company at the Special Meeting). Any shares subject to an
option which for any reason expires or is terminated may again be subject to an
option under the 1993 Plan.
Persons Eligible to Participate in the 1993 Plan. Under the 1993 Plan,
options may be granted only to officers, directors and key employees of the
Company or its subsidiaries.
Administration of the 1993 Plan. The 1993 Plan shall be administered
by the Board of Directors or by a committee comprised of no fewer than two (2)
members appointed by the Board of Directors of the Company from among its
members (the "Committee"). Members of the Committee shall be "non-employee
directors" as such term is defined under Rule 16b-3 under the Securities
Exchange Act of 1934, as amended. Subject to the provisions of the 1993 Plan,
the Board of Directors or the Committee has the authority to determine the
employees to whom options shall be granted and to determine exercise prices,
vesting requirements, the term of and the number of shares covered by each
option.
Exercise Price, Terms of Exercise and Payment for Shares. Each option
granted under the 1993 Plan will be represented by an Option Agreement which
shall set forth the terms particular to that option, including the number of
shares covered by the option, the exercise price, the term of the option and
any vesting requirements.
The exercise price of options granted under the 1993 Plan will be
determined by the Committee, but in no event shall be less than 100% of the
Average Market Price of the common stock on the date of the grant of the
option. The term Average Market Price is defined in the 1993 Plan to be the
average of the high bid and low ask prices as of the close of business for the
Company's shares of common stock in the over-the-counter market, as reported by
the National Association of Securities Dealers, Inc.,
-12-
<PAGE> 16
Automated Quotation System (or other national quotation service). If the
Company's common stock is registered on a national securities exchange, then
Average Market Price shall mean the closing price of the Company's common stock
on such national securities exchange. If the Company's Common Stock is not
traded in the organized markets, then the price shall be the fair market value
of the common stock as determined in good faith by the Board of Directors or
the Committee, but in no case less than the par value of such stock.
Options may be exercised in whole or in part by the optionee, but in
no event later than ten (10) years from the date of the grant. Any incentive
stock option granted under the 1993 Plan to an individual who owns more than
10% of the total combined voting power of all classes of stock of the Company
or a subsidiary may not be purchased at a price less than 110% of the market
price on the day the option is granted, and no such option may be exercised
more than five (5) years from the date of grant. The purchase price for the
shares shall be paid in cash or shares of common stock of the Company, or a
combination of both. Upon payment, the Company will deliver stock certificates
for such shares to the optionee.
Termination of Service. In the event that a holder of an option
granted under the 1993 Plan ceases to be a director or employee of the Company
or any subsidiary of the Company for any reason other than his death or total
and permanent disability, any incentive stock option or unexercised portion
thereof, which is otherwise exercisable on the date of such termination, shall
expire three (3) months from the date of such termination. Any incentive stock
options which are not exercisable on the date of such termination shall
immediately terminate.
Upon the death or total and permanent disability of the holder of an
option, any incentive stock option or unexercised portion thereof which is
otherwise exercisable shall expire within one year of the date of such death or
disability. Any incentive stock options which were not exercisable on the date
of such death or disability shall be immediately exercisable for a period of
one year.
Options granted under the 1993 Plan are exercisable during the
lifetime of the optionee only by the optionee. All options granted under the
1993 Plan are non-transferable except by will or under the laws of descent and
distribution.
Reorganization and Recapitalization. In case the Company is merged or
consolidated with another corporation and the Company is not the survivor, or
in case the Company is acquired by another corporation, or in case of a
separation, reorganization, recapitalization or liquidation of the Company, the
Board of Directors of the Company shall either make appropriate provision for
the protection of any outstanding options, including without limitation the
substitution of appropriate stock of the Company or of the merged, consolidated
or otherwise reorganized corporation which will be issuable in respect of the
shares of the Common Stock of the Company, or upon written notice to the
optionee, provide that the option must be exercised within 60 days or it will
be terminated.
In the event that dividends are payable in Common Stock of the Company
or in the event there are splits, subdivisions or combinations of shares of
Common Stock of the Company, the number of shares available under the 1993 Plan
will be increased or decreased proportionately, as the case may be, and the
number of shares deliverable upon the exercise thereafter of any option
theretofore granted will be increased or decreased proportionately, as the case
may be, without change in the aggregate purchase price.
-13-
<PAGE> 17
Limitation on Number of Shares That May be Purchased. For incentive
stock options granted under the 1993 Plan, the aggregate fair market value
(determined at the time the option was granted) of the shares with respect to
which incentive stock options are exercisable for the first time by an optionee
during any calendar year shall not exceed $100,000.
Amendment and Termination of the 1993 Plan. With respect to any shares
of stock at the time not subject to options, the Board of Directors may at any
time and from time to time, terminate, modify or amend the 1993 Plan in any
respect, except that no such modification or amendment shall be made absent the
approval of the shareholders of the Company to: (i) increase the maximum number
of shares for which options may be granted under the 1993 Plan; (ii) reduce the
option price or waiting period; (iii) extend the period during which options
may be granted or exercised; (iv) change the class of employees eligible for
incentive stock options; (v) otherwise materially modify the requirements as to
eligibility for participation in the 1993 Plan; or (vi) otherwise materially
increase the benefits accruing to participants under the 1993 Plan.
With the consent of the affected optionee, the Board of Directors or
the Committee may amend outstanding option agreements in a manner consistent
with the 1993 Plan.
FEDERAL INCOME TAX CONSEQUENCES
Incentive Stock Options. All incentive stock options granted or to be
granted under the 1993 Plan which are designated as incentive stock options are
intended to be incentive stock options as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code").
Under the provisions of Section 422 of the Code, neither the holder of
an incentive stock option nor the Company will recognize income, gain,
deduction or loss upon the grant or exercise of an incentive stock option. An
optionee will be taxed only when the stock acquired upon exercise of his
incentive stock option is sold or otherwise disposed of in a taxable
transaction. If at the time of such sale or disposition the optionee has held
the shares for the required holding period (two years from the date the option
was granted and one year from the date of the transfer of the shares to the
optionee), the optionee will recognize long-term capital gain or loss, as the
case may be, based upon the difference between his exercise price and the net
proceeds of the sale. However, if the optionee disposes of the shares before
the end of such holding period, the optionee will recognize ordinary income on
such disposition in an amount equal to the lesser of:
(a) gain on the sale or other disposition; or
(b) the amount by which the fair market value of the shares on the
date of exercise exceeded the option exercise price, with any excess gain being
capital gain, long-term or short-term, depending on whether or not the shares
had previously been held for more than one year on the date of sale or other
taxable disposition.
The foregoing discussion and the reference to capital gain or loss
treatment therein assume that the option shares are a capital asset in the
hands of the optionee. A sale or other disposition which results in the
recognition of ordinary income to the optionee will also result in a
corresponding income tax deduction for the Company.
-14-
<PAGE> 18
The 1993 Plan permits an optionee to pay all or part of the purchase
price for shares acquired pursuant to exercise of an incentive stock option by
transferring to the Company other shares of the Company's common stock owned by
the optionee. Section 422 of the Code provides that an option will continue to
be treated as an incentive stock option even if an optionee exercises such
incentive stock option with previously acquired stock of the corporation
granting the option. Accordingly, except as noted below with respect to certain
"statutory option stock," an optionee who exercises an incentive stock option
in whole or in part by transferring to the Company shares of the Company's
common stock will recognize no gain or loss upon such exercise. The optionee's
basis in the shares so acquired will be equal to the optionee's cost basis in
the shares surrendered (plus, in the case of payment of the purchase price in a
combination of cash and surrendered shares, the amount of any cash paid).
Section 424(c)(3) of the Code provides that if "statutory option
stock" is transferred in connection with the exercise of an incentive stock
option, and if the holding period requirements under Section 422(a)(1) of the
Code are not met with respect to such statutory option stock before such
transfer, then ordinary income will be recognized as a result of the transfer
of statutory option stock. However, the incentive stock option stock acquired
through the exchange of statutory option stock will still qualify for favorable
tax treatment under Section 422 of the Code.
Incentive stock options offer two principal tax benefits: (1) the
possibility of converting ordinary income into capital gain to the extent of
the excess of fair market value over option price at the time of exercise, and
(2) the deferral of recognition of gain until disposition of the stock acquired
upon the exercise of the option.
At present, the maximum tax rate on capital gains is generally 20% for
assets held for more than 12 months, while the maximum tax rate on ordinary
income is 39.6%. Thus, the conversion of ordinary income into capital gain
produces some tax benefit for certain taxpayers. However, the benefit of income
deferral generally provided by incentive stock options is reduced for some
taxpayers since the excess of the fair market value of shares acquired through
the exercise of an incentive stock option over the exercise price is taken into
account in computing an individual taxpayer's alternative minimum taxable
income. Thus, the exercise of an incentive stock option could result in the
imposition of an alternative minimum tax liability.
In general, an option granted under the 1993 Plan which is designated
as an incentive stock option will be taxed as described above. However, in some
circumstances an option which is designated as an incentive stock option will
be treated as a non-qualified stock option and the holder taxed accordingly.
For example, a change in the terms of an option which gives the employee
additional benefits may be treated as the grant of a new option. Unless all the
criteria for treatment as an incentive stock option are met on the date the
"new option" is considered granted (such as the requirement that the exercise
price of the option be not less than the fair market value of the stock as of
the date of the grant), the option will be treated and taxed as a non-qualified
stock option.
Non-Qualified Stock Options. All options granted or to be granted
under the 1993 Plan which do not qualify as incentive stock options are
non-statutory options not entitled to special tax treatment under Section 422
of the Code.
A participant in the 1993 Plan will recognize taxable income upon the
grant of a non-qualified stock option only if such option has a readily
ascertainable fair market value as of the date of the grant. In such a case,
the recipient will recognize taxable ordinary income in an amount equal to the
excess of
-15-
<PAGE> 19
the fair market value of the option as of such date over the price, if any,
paid for such option. No income would then be recognized on the exercise of the
option, and when the shares obtained through the exercise of the option are
disposed of in a taxable transaction, the resulting gain or loss would be
capital gain or loss (assuming the shares are a capital asset in the hands of
the optionee). However, under the applicable Treasury Regulations, the
non-qualified stock options issued under the 1993 Plan will not have a readily
ascertainable fair market value unless at the time such options are granted
similar options of the Company are actively traded on an established market.
The Company presently has no such actively traded options.
Upon the exercise of a non-statutory option not having a readily
ascertainable fair market value, the optionee recognizes ordinary income in an
amount equal to the excess of the fair market value of the shares on the date
of exercise over the option exercise price for those shares. The Company is not
entitled to an income tax deduction with respect to the grant of a
non-statutory stock option or the sale of stock acquired pursuant thereto. The
Company generally is permitted a deduction equal to the amount of ordinary
income the optionee is required to recognize as a result of the exercise of a
non-statutory stock option.
The 1993 Plan permits the Committee to allow an optionee to pay all or
part of the purchase price for shares acquired pursuant to an exercise of a
non-statutory option by transferring to the Company other shares of the
Company's Common Stock owned by the optionee. If an optionee exchanges
previously acquired Common Stock pursuant to the exercise of a non-qualified
stock option, the Internal Revenue Service has ruled that the optionee will not
be taxed on the unrealized appreciation of the shares surrendered in the
exchange. In other words, the optionee is not taxed on the difference between
his or her cost basis for the old shares and their fair market value on the
date of the exchange, even though the previously acquired shares are valued at
the current market price for purposes of paying all or part of the option
price.
General. The 1993 Plan is not qualified under Section 401(a) of the
Code and is not subject to the provisions of the Employee Retirement Income
Security Act of 1974.
The preceding discussion is based upon federal tax laws and
regulations in effect on the date of this Proxy Statement, which are subject to
change, and upon an interpretation of the statutory provisions of the Code, its
legislative history and related income tax regulations. Furthermore, the
foregoing is only a general discussion of the federal income tax consequences
of the 1993 Plan and does not purport to be a complete description of all
federal income tax aspects of the 1993 Plan. Option holders may also be subject
to state and local taxes in connection with the grant or exercise of options
granted under the 1993 Plan and the sale or other disposition of shares
acquired upon exercise of the options. Each employee receiving a grant of
options should consult with his or her personal tax advisor regarding federal,
state and local consequences of participating in the 1993 Plan.
The approval of the holders of a majority of the shares of the Company
Common Stock present and voting at the Special Meeting is necessary to approve
the proposed amendment to the 1993 Plan. THE BOARD OF DIRECTORS RECOMMENDS THAT
SHAREHOLDERS APPROVE THE PROPOSED AMENDMENT TO THE 1993 PLAN.
-16-
<PAGE> 20
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by the Company (File No.
1-13099) with the Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934, as amended, are incorporated herein by this reference:
(1) The Company's Annual Report on Form 10-K for the fiscal year
ended January 31, 1998;
(2) The Company's Amendment No. 1 on Form 10-K/A dated June 26,
1998 to its Annual Report on Form 10-K for the fiscal year
ended January 31, 1998;
(3) The Company's Quarterly Report on Form 10-Q for the quarter
ended April 30, 1998;
(4) The Company's Quarterly Report on Form 10-Q for the quarter
ended July 31, 1998;
(5) The Company's Current Report on Form 8-K/A dated October 23,
1998 (Amendment No. 1 to Current Report on Form 8-K dated
August 9, 1998); and
(6) The description of the Company's Common Stock contained in
the Company's Registration Statement on Form 8-A as filed
with the Commission on August 12, 1993 and as amended by
Amendment No. 1 on Form 8-A/A as filed with the Commission on
August 26, 1993.
Any statements contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes hereof to the extent that a statement contained herein (or in any
other subsequently filed document which also is incorporated by reference
herein) modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed to constitute a part hereof except as so
modified or superseded. All information appearing in this Proxy Statement is
qualified in its entirety by the information and financial statements
(including notes thereto) appearing in the documents incorporated herein by
reference, except to the extent set forth in the immediately preceding
statement.
This Proxy Statement incorporates by reference certain documents
concerning the Company that are not presented herein or delivered herewith.
Copies of any such documents, other than exhibits to such documents that are
not specifically incorporated by reference therein, are available without
charge to any person, including any beneficial owner, to whom this Proxy
Statement is delivered upon written or oral request, to the Secretary, The
Maxim Group, Inc., 210 TownPark Drive, Kennesaw, Georgia 30144.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP has served as independent auditors of the Company
for the fiscal year ended January 31, 1998. Representatives of Arthur Andersen
LLP are expected to be present at the shareholders' meeting and will have the
opportunity to make a statement if they desire to do so and to respond to
appropriate questions.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the Company's
1999 Annual Meeting of Stockholders must be received at the Company's principal
executive offices by January 30, 1999 in order to be eligible for inclusion in
the Company's proxy statement and form of proxy for that meeting.
With respect to any such proposals received by the Company after April
19, 1999, the persons named in the form of proxy solicited by management in
connection with the 1999 annual meeting of shareholders of the Company will
have discretionary authority to vote on any such shareholder proposals in
accordance with their judgment of what is in the best interests of the Company.
-17-
<PAGE> 21
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before
the Special Meeting. However, if other matters should come before the Special
Meeting it is the intention of the persons named in the enclosed form of Proxy
to vote the Proxy in accordance with their judgment of what is in the best
interest of the Company.
By Order of the Board of Directors,
/s/ A.J. Nassar
-------------------------------------
A.J. NASSAR
President and Chief Executive Officer
Kennesaw, Georgia
November 18, 1998
-18-
<PAGE> 22
EXHIBIT A
THE MAXIM GROUP, INC.
210 TOWNPARK DRIVE
KENNESAW, GEORGIA 30144
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE 1998 SPECIAL MEETING OF SHAREHOLDERS.
The undersigned hereby appoints A.J. Nassar and Thomas P. Leahey or either of
them, with power of substitution to each, the proxies of the undersigned to
vote the Common Stock of the undersigned at the Special Meeting of Shareholders
of THE MAXIM GROUP, INC. to be held on December 17, 1998, at 10:00 a.m. at 210
TownPark Drive, Kennesaw, Georgia 30144, and any adjournments or postponements
thereof:
THE BOARD OF DIRECTORS FAVORS A VOTE "FOR" THE PROPOSALS LISTED ON THE REVERSE
SIDE AND UNLESS INSTRUCTIONS TO THE CONTRARY ARE INDICATED IN THE SPACE
PROVIDED, THIS PROXY WILL BE SO VOTED.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE
NOTE: Please date and sign this Proxy exactly as name(s) appear(s) on reverse
side. When signing as an attorney, trustee, executor, administrator or
guardian, please give your title as such. If a corporation or partnership, give
full name by authorized officer. In the case of joint tenants, each joint owner
must sign.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ---------------------------------- -----------------------------------
- ---------------------------------- -----------------------------------
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<PAGE> 23
|X| PLEASE MARK VOTES
AS IN THIS EXAMPLE
<TABLE>
<S> <C> <C> <C> <C>
__________________________________________ 1. To approve an amendment to For Against Abstain
the Certificate of Incorporation [ ] [ ] [ ]
THE MAXIM GROUP, INC. of the Company to increase the
__________________________________________ number of authorized shares of
Common Stock from 25,000,000
shares to 75,000,000 shares.
For Against Abstain
Mark box at right if an address change or [ ] 2. To approve an amendment to the [ ] [ ] [ ]
comment has been noted on the reverse 1993 Stock Option Plan of the
side of this card. Company to increase the number
of shares of Common Stock avail-
able for grant thereunder from
RECORD DATE SHARES: 4,000,000 shares to 5,000,000 shares.
3. To transact such other business incidental to the conduct of the
Special Meeting as may properly come before the Special Meeting
or any adjournments or postponements thereof.
</TABLE>
Please be sure to sign and date this Proxy. Date:_________
- ------------------------------------------------------
Shareholder sign here Co-owner sign here
DETACH CARD DETACH CARD
