<PAGE>
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:
---------------------------
<PAGE>
THE MAXIM GROUP, INC.
210 TOWNPARK DRIVE
KENNESAW, GEORGIA 30144
November 12, 1999
Dear Stockholder:
This year's Annual Meeting of Stockholders ("Annual Meeting") of The
Maxim Group, Inc. (the "Company") will be held on Tuesday, December 14, 1999 at
10:00 a.m., local time, at the Company's offices, 210 TownPark Drive, Kennesaw,
Georgia 30144. You are cordially invited to attend.
The Notice of Annual Meeting and a Proxy Statement, which describe the
formal business to be conducted at the Annual Meeting, follow this letter.
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 Annual 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.
A copy of the Company's 1999 Annual Report is also enclosed for your
information.
We look forward to seeing you at the Annual Meeting.
Very truly yours,
/s/ A. J. NASSAR
A. J. NASSAR
President and Chief Executive Officer
<PAGE>
THE MAXIM GROUP, INC.
210 TOWNPARK DRIVE
KENNESAW, GEORGIA 30144
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 14, 1999
The annual meeting of shareholders of The Maxim Group, Inc. (the
"Company") will be held on Tuesday, December 14, 1999 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 elect three (3) directors to serve for a term of three years and
until their successors are elected and qualified;
(2) To approve an amendment to the Certificate of Incorporation of the
Company to change the corporate name to "Flooring America, Inc."; 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 1,
1999 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 12, 1999
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>
THE MAXIM GROUP, INC.
210 TOWNPARK DRIVE
KENNESAW, GEORGIA 30144
ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 14, 1999
-------------------
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 Annual Meeting of Shareholders to be held on Tuesday, December 14, 1999,
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
12, 1999. 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 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 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 election of the nominees
named below as Class III Directors of the Company and for adoption of the
amendment to the Company's Certificate of Incorporation. 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 has
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.
The record of shareholders entitled to vote at the annual meeting was
taken on November 1, 1999. On that date the Company had outstanding and entitled
to vote 19,072,532 shares of common stock, par value $.001 per share (the
"Common Stock"), with each share entitled to one vote.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of the Common Stock as of November 1, 1999, 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) each of the
Named Executive Officers (as defined herein), 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 OF NUMBER OF SHARES PERCENTAGE OF
BENEFICIAL OWNER BENEFICIALLY OWNED(1) TOTAL
---------------- --------------------- ------
<S> <C> <C>
Joseph J. Jillson.............................. 130,000(2) *
Richard A. Kaplan.............................. 110,956 *
Thomas P. Leahey............................... 52,500(3) *
Ronald H. McSwain.............................. 76,900(4) *
A.J. Nassar.................................... 949,628(5) 4.8
J. Michael Nixon............................... 140,000 *
Larry T. Solari................................ 40,000(2) *
Herb Wolk...................................... 200,000 1.0
Mack Hale...................................... 39,758(3) *
Gary F. Brugliera.............................. 10,500(6) *
David E. Cicchinelli........................... 15,000(3) *
H. Stanley Padgett ............................ 138,179(7) *
FMR Corp....................................... 1,284,900(8) 6.7
Julian D. Saul................................. 1,826,984(9) 9.6
Linda Saul Schejola............................ 1,260,000(10) 6.6
Cumberland Associates LLC...................... 1,173,400(11) 6.2
All directors and executive
officers as a group (17 persons)......... 1,882,522(12) 9.4
</TABLE>
*Less than one percent of outstanding shares.
(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
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<PAGE>
19,072,532 shares outstanding as of November 1, 1999, except for certain
parties who hold options to purchase shares which are exercisable within
the next 60 days. The percentages for those parties who hold presently
exercisable options are based upon the sum of 19,072,532 shares plus the
number of shares subject to options held by them which are exercisable
within the next 60 days, as indicated in the following notes.
(2) Includes 20,000 shares of Common Stock subject to stock options
exercisable within the next 60 days.
(3) Represents shares of Common Stock subject to stock options exercisable
within the next 60 days.
(4) Includes 6,000 shares of Common Stock owned by a foundation with respect
to which Mr. McSwain serves as trustee.
(5) Includes 725,000 shares of Common Stock subject to stock options
exercisable within the next 60 days.
(6) Includes 10,000 shares of Common Stock subject to stock options
exercisable within the next 60 days.
(7) Includes 125,002 shares of Common Stock subject to stock options
exercisable within the next 60 days.
(8) According to an amended Schedule 13G dated October 8, 1999 filed with the
Commission by FMR Corp. ("FMR"), Edward C. Johnson 3rd, Abigail P. Johnson
and Fidelity International Limited. 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 999,400 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 999,400 shares owned by the Funds, and (iii) the
power to vote all of the 999,400 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 13,500 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 13,500 shares of Common Stock
owned by such institutional account(s). The Schedule 13G further states
that Fidelity International Limited ("FIL") is the beneficial owner of
272,000 shares of Common Stock of the Company. A partnership controlled by
Edward C. Johnson 3rd and members of his family owns shares of FIL voting
stock with the right to cast approximately 39.89% of the total votes which
may be cast by all holders of FIL voting stock. According to the Schedule
13G, FMR and FIL are separate and independent corporate entities. The
Company makes no representation as to the accuracy or completeness of the
information reported. The address of FMR Corp. is 82 Devonshire Street,
Boston, Massachusetts 02109 and the address of FIL is Pembroke Hall, 42
Crowlane, Hamilton, Bermuda.
(9) 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
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<PAGE>
representation as to the accuracy or completeness of the information
reported. Mr. Saul's address is 702 Mt. Sinai Road, Dalton, Georgia 30720.
(10) 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. Schojola is the sole trustee. The Company makes no
representation as to the accuracy or completeness of the information
reported. Ms. Schejola's address is Via Bottazzi, 2, 15057 Tortona (AI),
Italy.
(11) According to a Schedule 13G dated October 12, 1999 filed with the
Commission by Cumberland Associates LLC ("Cumberland"), its beneficial
ownership (i) includes 1,020,000 shares with respect to which it has
sole voting and dispositive power and 153,200 shares with respect to
which it shares voting and dispositive power, and (ii) excludes 15,500
shares owned by Glenn Krevlin, a member of Cumberland. The Company
makes no representation as to the accuracy or completeness of the
information reported. Cumberland's address is 1114 Avenue of the
Americas, New York, New York 10036.
(12) Includes an aggregate of 929,038 shares of Common Stock subject to stock
options exercisable within the next 60 days.
ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of eight persons.
The Company's Certificate of Incorporation provides that the Board of Directors
shall consist of not less than three nor more than 15 members, the precise
number to be determined from time to time by the Board of Directors. At the
Company's 1996 Annual Meeting of Shareholders held in August 1996, the Board of
Directors was classified into three classes, as nearly equal in number as
possible, each of which, after initial terms of one, two and three years, will
serve for three years, with one class being elected each year. Three Class III
directors are presently standing for election to the Board. The Board of
Directors recommends the election of the three nominees listed below.
Each of the nominees has consented to being named in this Proxy Statement
and to serve as a director of the Company if elected. In the event that any
nominee withdraws or for any reason is not able to serve as a director, the
proxy will be voted for such other person as may be designated by the Board of
Directors, but in no event will the proxy be voted for more than three nominees.
The affirmative vote of a plurality of all votes cast at the meeting by the
holders of the Common Stock is required for the election of the three nominees
standing for election. Management of the Company has no reason to believe that
any nominee will not serve if elected.
The following persons have been nominated by management for election to the
Board of Directors as Class III directors, to serve for a term of three years
and until their successors are elected and qualified:
RICHARD A. KAPLAN, age 54, has served as a Director of the Company since
1989, and has served as Chairman Emeritus of the Company since February 1995
and served as Chairman of the Board of the Company from 1989 to February
1994. Mr. Kaplan founded the Company in 1989. Mr. Kaplan has also served as
President and Chief Executive Officer of Pictometry International, LLC, a
technology company, since August 1999. Mr. Kaplan served as Chairman of the
Board of Worksmart International, Inc., a personnel consulting company, from
1995 to 1998, and as Chairman of the Board of Richland Industries Corp., a
retail floor covering chain based in Rochester, New York, from 1972 to 1995.
RONALD H. MCSWAIN, age 57, has served as Chairman of the Board of the
Company since June 1999. Since 1968, Mr. McSwain has served as the President and
owner of McSwain's Carpets, a retail floorcovering business. Mr. McSwain serves
as a director of Johnson Investment Mutual Fund Trust, an investment company.
-4-
<PAGE>
A.J. NASSAR, age 43, has served as President, Chief Executive Officer and
a Director of the Company since December 1990. From 1986 to 1990, Mr. Nassar
served as Vice President and Chief Operating Officer of Kenny Carpet and
Linoleum, Inc., a multistore retail carpet chain in western New York. He was
previously employed in the carpet manufacturing industry by Trend Carpet Mills
and Queen Carpet Mills, where he was responsible for sales of floor covering
products to floor covering retailers.
The following persons are members of the Board of Directors who are not
standing for election to the Board this year and whose term will continue after
the Annual Meeting of Shareholders.
CLASS I DIRECTORS, SERVING FOR A TERM EXPIRING AT THE 2000 ANNUAL MEETING
OF SHAREHOLDERS:
THOMAS P. LEAHEY, age 38, has served as Executive Vice President, Finance
of the Company since August 1993, as Treasurer since July 1994 and as a
Director of the Company since November 1998. Mr. Leahey was employed by
Wachovia Bank of Georgia, N.A. from September 1991 to August 1993 as a Vice
President in the Corporate Banking Division. Mr. Leahey's banking career
began in January 1984 and included service with Barnett Bank of Central
Florida, N.A. and, from March 1987 to July 1991, with Fleet/Norstar Financial
Group.
J. MICHAEL NIXON, age 54, has served as a Director of the Company since
February 1996. Mr. Nixon has served as the President and co-owner of Q.I.
Corporation, a building materials contractor, since 1967.
HERB WOLK, age 67, has served as a Director of the Company since 1991. Mr.
Wolk is the owner and President of Cadillac Carpet Distributors and has served
in various capacities with that company since 1976.
CLASS II DIRECTORS, SERVING FOR A TERM EXPIRING AT THE 2001 ANNUAL MEETING
OF SHAREHOLDERS:
JOSEPH J. JILLSON, age 56, has served as a Director of the Company since
November 1998. Mr. Jillson has served as an executive officer and co-owner of
Q.I. Corporation, a building materials contractor, since 1967.
LARRY T. SOLARI, age 57, has served as a Director of the Company since
April 1999. Mr. Solari has served as Chairman of the Board and Chief Executive
Officer of BSI Holdings, Inc., a builder services company, since 1998. Mr.
Solari served as Chairman of the Board and Chief Executive Officer of Sequential
Products, Inc., a manufacturer in the building materials industry, from 1996 to
1997, as President of the Building Materials Group of Domtar, Inc. from 1994 to
1996, and as President of the Construction Products Group of The Owens - Corning
Company from 1989 to 1994. Mr. Solari is a director of Beazer Homes, Inc., a
single family homebuilder, Therma - Tru, Inc. and Pacific Coast Building
Products, Inc.
There are no family relationships between any director or executive
officer and any other director or executive officer of the Company.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, executive officers and persons who own more than 10% of the
outstanding Common Stock of the Company, to file with the Securities and
Exchange Commission reports of changes in ownership of the Common Stock of the
Company held by such persons. Officers, directors and greater than 10%
shareholders are also required to furnish the Company with copies of all forms
they file under this regulation. To the Company's knowledge,
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<PAGE>
based solely on a review of the copies of such reports furnished to the Company
and representations that no other reports were required, during the fiscal year
ended January 31, 1999 all Section 16(a) filing requirements applicable to its
officers, directors and greater than 10% shareholders were complied with, except
for Richard A. Kaplan, a director of the Company, who failed to file on a timely
basis one report relating to one transaction, and A. J. Nassar, the President
and Chief Executive Officer of the Company, who failed to file on a timely
basis one report relating to one transaction.
Although it is not the Company's obligation to make filings pursuant to
Section 16 of the Securities Exchange Act of 1934, the Company has adopted a
policy requiring all Section 16 reporting persons to report monthly to the
Director of Financial Reporting of the Company as to whether any transactions
in the Company's Common Stock occurred during the previous month.
MEETINGS OF THE BOARD OF DIRECTORS
AND COMMITTEES OF THE BOARD
The Board of Directors held 24 meetings during the year ended January 31,
1999. Each director attended at least 75% or more of the aggregate number of
meetings held by the Board of Directors and the committees on which he served.
The Company's Board of Directors has four standing committees -- the Audit
Committee, the Compensation Committee, the Stock Option Committee and the
Directors' Nominating Committee.
The Audit Committee presently consists of Joseph J. Jillson, J. Michael
Nixon and Larry T. Solari. The Audit Committee has been assigned the
principal functions of: (i) recommending the independent auditors; (ii)
reviewing and approving the annual report of the independent auditors; (iii)
approving the annual financial statements; and (iv) reviewing and approving
summary reports of the auditor's findings and recommendations. The Audit
Committee held three meetings during the year ended January 31, 1999.
The Compensation Committee presently consists of Richard A. Kaplan, J.
Michael Nixon and Herb Wolk. The Compensation Committee has been assigned the
functions of approving and monitoring the remuneration arrangements for senior
management. The Compensation Committee held one meeting during the year ended
January 31, 1999.
The Stock Option Committee presently consists of Richard A. Kaplan and
Herb Wolk. The Stock Option Committee has been assigned the functions of
administering the Company's 1993 Stock Option Plan and granting options
thereunder. The Stock Option Committee held four meetings during the year ended
January 31, 1999.
The Directors' Nominating Committee presently consists of Richard A.
Kaplan, A.J. Nassar and Herb Wolk. The Directors' Nominating Committee has been
assigned the functions of making recommendations to the full Board for the
selection of director nominees. The Directors' Nominating Committee did not meet
during the year ended January 31, 1999.
Any shareholder entitled to vote for the election of directors may
nominate a person or persons for election as a director only if written notice
of such shareholder's intention to make any such nomination is given either by
personal delivery or mailed by the United States Mail, postage prepaid,
certified and return receipt requested, to the Secretary of the Company not
later than the later of (i) the close of business on the seventh (7th) calendar
day following the date on which notice of the meeting of shareholders for the
election of directors is first given to shareholders (any such notice of meeting
of shareholders shall not be given earlier than the record date for the meeting
of shareholders) and (ii) a date ninety (90) days prior to the date of the
meeting of shareholders. Each such notice shall set forth: (a) the name and
address of the shareholder
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<PAGE>
who intends to make the nomination and of the person or persons to be nominated;
(b) a representation that the shareholder is a holder of record of stock of the
Company entitled to vote at such meeting and intends to appear in person or by
proxy at the meeting to nominate the person or persons specified in the notice;
(c) a description of all arrangements or understandings between the shareholder
and each nominee and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by the
shareholder; (d) such other information regarding each nominee proposed by such
shareholder as would have been required to be included in a proxy statement
filed pursuant to the proxy rules of the Commission had each nominee been
nominated, or intended to be nominated, by the Board; and (e) the consent of
each nominee to serve as a director of the Company if so elected.
EXECUTIVE OFFICERS
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME Age Position with the Company
<S> <C> <C>
Ronald H. McSwain................ 57 Chairman of the Board
A.J. Nassar...................... 43 President, Chief Executive Officer and Director
Thomas P. Leahey................. 38 Executive Vice President - Finance, Treasurer and Director
Leonard H. Thill ................ 45 Chief Financial Officer and Secretary
Karen A. McClelland ............. 40 Executive Vice President - Customer Service
Paul D. Bumblauskas ............. 42 Executive Vice President - Operations
Paul R. Renn .................... 44 Executive Vice President - Sales and Marketing
Mack Hale........................ 59 Executive Vice President - Merchandising
Sandra Fowler.................... 37 Executive Vice President - Administration
Michael L. DeGrace............... 54 President - Franchise Divisions
Michael Cherico.................. 41 President - GCO Carpet Outlet Division
Ronald E. Dunn................... 44 President - CarpetsPlus Division
</TABLE>
The executive officers of the Company are appointed by the Board of
Directors and hold office at the pleasure of the Board. See "Election of
Directors" for information with respect to Messrs. McSwain, Nassar and Leahey.
LEONARD H. THILL has served as Chief Financial Officer and Secretary of
the Company since September 1999. Mr. Thill served in various capacities with
the United States Securities and Exchange Commission from 1987 to September
1999, including most recently as Assistant Chief Accountant with the
Commission's Division of Enforcement.
KAREN A. MCCLELLAND has served as Executive Vice President - Customer
Service of the Company since June 1999. Ms. McClelland served as Vice President
- - Retail of the Company from April 1999 to June 1999. Prior to joining the
Company, Ms. McClelland served as President of McClelland Associates, Inc., a
consulting firm, from 1995 to March 1999. Ms. McClelland served as Vice
President of Operations/Technology of Sound Floor Coverings, Inc., a floor
covering retailer, from 1993 to 1994, and was a Senior Manager for the
accounting firm of Price Waterhouse from 1988 to 1993.
PAUL D. BUMBLAUSKAS has served in various capacities with the Company
since June 1998, including most recently as Executive Vice President
- -Operations. Mr. Bumblauskas served as Regional Vice President of Shaw
Industries, Inc., a floor covering manufacturer, from December 1995 to June
1998, as Regional Vice President of Carpetland USA, Inc., a floor covering
retailer, from July 1994 to December 1995, and was a partner with SV
Associates, an accounting firm, from April 1992 to July 1994.
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<PAGE>
PAUL R. RENN has served in various capacities with the Company since
October 1997, including most recently as Executive Vice President - Sales and
Marketing. Mr. Renn served as Sales Manager Southwest Region of Abbey Carpets, a
floor covering cooperative, from April 1995 to October 1995, and as General
Manager - Texas of Carpet Exchange, a floor covering retailer, from September
1989 to March 1995.
MACK HALE has served in various capacities with the Company since May
1993, including Executive Vice President - Merchandising since April 1998. From
January 1992 to May 1993, Mr. Hale served as Executive Vice President of
Unituft, Inc., a floor covering marketing support company. Mr. Hale served as
Vice President of Sales and Director of Marketing of Mohawk Industries, Inc., a
major carpet manufacturer, from 1983 to 1991. At Mohawk, Mr. Hale was
responsible for all marketing and promotional functions. Prior to his employment
at Mohawk, Mr. Hale served as Vice President, Sales of Horizon Industries, Inc.,
a major carpet manufacturer.
SANDRA FOWLER has served as Executive Vice President - Administration of
the Company since September 1993. From 1982 to September 1993, Ms. Fowler served
in various capacities with Shaw Industries, Inc., a floor covering manufacturer,
including Manager of Corporate Accounts, where she acted as the liaison between
that company and its corporate customers in all areas, ranging from sales to
administration.
MICHAEL L. DEGRACE has served as President - Franchise Divisions of the
Company since February 1999. From 1997 to January 1999, Mr. DeGrace served as
Vice President - Sales and Marketing of Image Industries, Inc., which was a
wholly-owned subsidiary of the Company from August 1996 to January 1999. Mr.
DeGrace served as Vice President of Sales and Marketing of Beulieu of America,
Inc., a carpet manufacturer, from 1995 to 1996, and served in various
capacities, including most recently as Regional Vice President, with Shaw
Industries, Inc., a carpet manufacturer, from 1979 to 1995.
MICHAEL CHERICO has served in various capacities with the Company since
1993, including most recently as President of its GCO Carpet Outlet Division.
RONALD E. DUNN has served as President of the Company's CarpetsPlus
Division since September 1998. Mr. Dunn served as Chairman of the Board and
Chief Executive Officer of CarpetsPlus of America, LLC, a national resource
company specializing in the floor covering industry, from 1997 until September
1998. Mr. Dunn served as Vice President of Sales of Mohawk Industries, Inc., a
floor covering manufacturer, from 1990 to 1996.
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<PAGE>
EXECUTIVE COMPENSATION
The following table provides certain summary information for the fiscal
years ended January 31, 1999, 1998 and 1997 concerning compensation paid or
accrued by the Company to or on behalf of the Company's Chief Executive Officer
and each of the other five most highly compensated executive officers of the
Company during the year ended January 31, 1999 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
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.................... 1999 $600,000 $1,920,012 $27,591(2) 250,000 $ --
President and Chief 1998 350,012 265,000 10,750(2) 275,000 --
Executive Officer 1997 229,479 -- 10,670(2) 200,000 --
David E. Cicchinelli........... 1999(3) 177,884 152,707 -- 450,000 --
Chief Operating Officer
Thomas P. Leahey............... 1999 108,839 37,000 1,633 50,000 --
Executive Vice President - 1998 96,147 30,000 1,436 25,000 --
Finance 1997 75,762 6,195 1,125 -- --
Mack Hale...................... 1999(4) 140,768 10,000 1,962 25,000 --
Executive Vice President -
Merchandising
Gary F. Brugliera.............. 1999(5) 119,231 -- -- 75,000 --
Executive Vice President and
Chief Financial Officer
H. Stanley Padgett............. 1999(6) 297,180 -- -- -- 2,180
Senior Executive 1998 295,000 -- -- 25,000 10,926
Vice President 1997(7) 170,200 -- -- -- --
</TABLE>
- ---------------------
(1) Except as otherwise indicated, represents the Company's matching
contribution under its 401(k) plan.
(2) Includes auto allowance and other perquisites, in addition to the
Company's matching contribution under its 401(k) plan.
(3) Mr. Cicchinelli joined the Company in May 1998 and became its Chief
Operating Officer in July 1998. Mr. Cicchinelli resigned effective April
12, 1999.
(4) Mr. Hale became an executive officer of the Company in April 1998.
(5) Mr. Brugliera joined the Company in June 1998 and resigned effective
September 21, 1999.
(6) Mr. Padgett resigned effective January 29, 1999.
(7) Amounts indicated include compensation paid to Mr. Padgett by (i) the
Company and Image Industries, Inc. 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.
-9-
<PAGE>
EMPLOYMENT AGREEMENTS
A.J. NASSAR. 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.
LEONARD H. THILL. On September 27, 1999, the Company entered into an
Employment Agreement with Leonard H. Thill, pursuant to which Mr. Thill serves
as Chief Financial Officer of the Company. The Employment Agreement is for a
term of three years, expiring on September 27, 2002, and provides for an annual
base salary of $225,000 plus an annual bonus of up to 50% of his base salary if
the Company attains certain operating and financial goals established by the
Company's executive management team and the Compensation Committee of its Board
of Directors. The Employment Agreement will automatically renew unless it is
earlier terminated or either the Company or Mr. Thill elects not to renew the
Employment Agreement. In the event Mr. Thill is terminated by the Company
without cause, he will receive, for a period of 12 months thereafter, the annual
base salary which would otherwise be payable to Mr. Thill had he remained in the
employ of the Company. In addition, all unvested stock options will become
immediately exercisable. The Employment Agreement contains non-solicitation
provisions, effective through the actual date of termination of the Employment
Agreement and for a period of three years thereafter.
H. STANLEY PADGETT. 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, Mr. Padgett served as a Senior Executive Vice
President of the Company and as the President and Chief Executive Officer of
Image. Mr. Padgett's employment agreement was assigned to Aladdin Carpets on
January 29, 1999, in connection with the sale of Image. At the same time, Mr.
Padgett resigned all positions with the Company and Image.
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. Certain of the Company's
outside directors have also been granted options to purchase shares of common
stock of the Company. 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.
-10-
<PAGE>
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, 1999: 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, 1999.
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 5,000,000 shares of Common
Stock 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. 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.
The following table provides certain information concerning individual
grants of stock options under the 1993 Plan made during the fiscal year ended
January 31, 1999 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................... 250,000(2) 20.1 $14.25 10/14/06 $1,700,925 $4,074,025
David E. Cicchinelli.......... 250,000(3) 20.1 15.13 6/6/08 2,378,793 6,028,325
200,000(2) 16.7 14.25 10/14/06 1,360,740 3,259,220
Thomas P. Leahey.............. 50,000(2) 4.2 14.25 10/14/06 340,185 814,805
Mack Hale..................... 25,000(4) 2.1 14.25 10/14/06 170,093 407,403
Gary F. Brugliera............. 50,000(5) 4.2 15.75 6/22/08 495,254 1,255,072
25,000(4) 2.1 14.25 10/14/06 170,093 407,403
H. Stanley Padgett............ -- -- -- -- -- --
</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.
-11-
<PAGE>
(2) Options vest on July 31, 2006; provided, however, that options vest on
April 30, 2000 if the closing price of the Company's common stock is
greater than $25.00 per share for any period of ten consecutive trading
days prior to April 30, 2000.
(3) Options vest in increments of 20% per year beginning on June 16, 1999 and
on each June 16 thereafter until fully vested. These options terminated
upon the resignation of Mr. Cicchinelli in April 1999.
(4) Options vest on July 31, 2006; provided, however, that options vest in
increments of 25% per year beginning on April 30, 2000 and on each April
30 thereafter until fully vested if the closing price of the Company's
common stock is greater than $25.00 per share for any period of ten
consecutive trading days prior to April 30, 2000.
(5) Options vest in increments of 20% per year beginning on June 22, 1999 and
on each June 22 thereafter until fully vested.
The following table provides certain information concerning options
exercised during fiscal 1999 and the value of unexercised options held by the
Named Executive Officers as of January 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
FISCAL YEAR END AT FISCAL YEAR-END (1)
----------------------- ----------------------------
ACQUIRED ON VALUE EXER- UNEXER- EXER- UNEXER-
NAME EXERCISE (#) REALIZED ($) CISABLE CISABLE CISABLE CISABLE
- ---- ------------ ------------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
A.J. Nassar................... -- $ -- 715,480 259,520 $7,907,311 $2,199,184
David E. Cicchinelli......... -- -- 15,000 450,000 129,375 3,548,750
Thomas P. Leahey.............. 12,500 210,156 46,500 71,000 777,188 688,875
Mack Hale..................... 10,000 172,500 36,380 35,517 601,034 290,629
Gary F. Brugliera............. -- -- -- 75,000 -- 553,125
H. Stanley Padgett............ -- -- 171,320 -- 3,438,435 --
</TABLE>
- ---------------------------
(1) Dollar values were calculated by determining the difference between the
closing price of $22.625 per share of common stock on January 29, 1999,
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.
-12-
<PAGE>
CERTAIN TRANSACTIONS
As of October 1, 1999, a total of $935,000 was owed to the Company by A.J.
Nassar, the Company's President and Chief Executive Officer. During fiscal 1999,
loans totaling $850,326 were made to Mr. Nassar by the Company. These loans
accrued interest at an annual rate of 9-1/4% and were repaid by Mr. Nassar
during fiscal 1999. The largest aggregate amount of indebtedness outstanding
from Mr. Nassar to the Company since the beginning of fiscal 1999 was $1.5
million. All amounts currently 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 annual installments of $200,000 per year (plus accrued interest) on
each March 1 until maturity. In connection therewith, the Board of Directors of
the Company has approved the payment to Mr. Nassar of an annual bonus in an
amount sufficient to allow Mr. Nassar to pay the annual installments on this
loan. 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.
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 accrued
interest at an annual rate of 8.5%, payable 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 from Mr.
Biggers to the Company since the beginning of fiscal 1999 was $102,000. Upon the
termination of Mr. Biggers' employment in June 1998, the Company repurchased
certain stock options previously granted to Mr. Biggers for $453,000, which
represents the aggregate spread between the fair market value of the Company's
common stock on that date and the exercise price of these stock options. In July
1998, Mr. Biggers used a portion of the proceeds from this transaction to repay
his debt to the Company.
In May 1998, the Company loaned $100,000 to Sandra Fowler, the Executive
Vice President Administration of the Company. This loan accrued 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. This loan was
repaid by Ms. Fowler in December 1998.
In September 1998, the Company loaned $100,000 to David E. Cicchinelli,
who at the time was serving as 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. As of October 1, 1999, $109,000, including
accrued interest, remained outstanding on this loan.
Herb Wolk and Ronald H. McSwain, directors of the Company, each own a
floor covering retailer which is a franchisee of the Company. During fiscal
1999, Mr. Wolk's floor covering company paid less than $1,000 to the Company for
miscellaneous items and received $128,000 in rebates and other consideration
from the Company. During fiscal 1999, Mr. McSwain's floor covering company paid
$11,000 to the Company for various services and received $567,000 in rebates and
other consideration from the Company.
Julian D. Saul, who owns 9.6% of the outstanding shares of common stock of
the Company, serves as President and a director of Shaw Industries, Inc., one of
the Company's suppliers of floor covering products. During fiscal 1999, the
Company purchased approximately $84 million of floor covering products from Shaw
and received approximately $12 million of rebates and other vendor support
payments from Shaw. In addition, in connection with the acquisition of the
retail store assets of Shaw in August 1998, the Company issued to Shaw a
promissory note in the principal amount of $18 million. This note is due
November 1999 and bears interest at a rate equal to the rate paid by the Company
on its senior credit facility. Approximately $12 million remained outstanding on
this note as of October 1, 1999.
The ability of the Company to enter into future transactions with
affiliates is limited by the terms of its senior subordinated notes and senior
credit facility.
-13-
<PAGE>
STOCKHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total stockholder return on the Company's Common Stock against
the cumulative total return of the Standard & Poor's 500 Index and the Standard
& Poor's Retail Composite Index for the period commencing on March 30, 1994 and
ending January 29, 1999 (the "Measuring Period"). The graph assumes that the
value of the investment in the Company's Common Stock and each index was $100 on
March 31, 1994. The yearly change in cumulative total return is measured by
dividing the sum of the cumulative amount of dividends for each fiscal year,
assuming dividend reinvestment, and the change in share price between the
beginning and end of the Measuring Period, by (ii) the share price at the
beginning of the Measuring Period. The Company has not paid any cash dividends.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG THE MAXIM GROUP, INC.
COMMON STOCK, S&P 500 INDEX AND S&P RETAIL COMPOSITE INDEX
<TABLE>
<CAPTION>
MEASUREMENT
PERIOD (FISCAL YEAR THE MAXIM S&P RETAIL
COVERED) GROUP, INC. S&P 500 INDEX COMPOSITE INDEX
------------------- ----------- ------------- ---------------
<S> <C> <C> <C>
March 31, 1994 100 100 100
March 31, 1995 103 116 101
January 31, 1996* 78 150 101
January 31, 1997 138 189 121
January 30, 1998 140 240 180
January 29, 1999 189 318 294
</TABLE>
* On January 13, 1996, the Company changed its fiscal year end from March 31 to
January 31.
ASSUMES $100 INVESTED ON MARCH 30, 1994 IN THE MAXIM GROUP, INC. COMMON
STOCK, S&P 500 INDEX AND S&P RETAIL COMPOSITE INDEX
-14-
<PAGE>
REPORT OF COMPENSATION AND STOCK OPTION COMMITTEES
ON EXECUTIVE COMPENSATION
During the year ended January 31, 1999, the Compensation Committee of the
Board of Directors was comprised of four non-employee members of the Board and
the Stock Option Committee of the Board of Directors was comprised of two
non-employee members of the Board. The Compensation Committee is responsible
for: (i) setting the Company's compensation philosophy and policies; (ii) review
and approval of pay recommendations for the executive officers of the Company;
and (iii) initiation of all compensation actions for the Chief Executive Officer
of the Company. The Stock Option Committee has the authority to grant stock
options under the Company's 1993 Stock Option Plan (the "1993 Plan") and is
responsible for setting the terms and administering the 1993 Plan.
The Company's compensation policies have been designed to align the
financial interests of the Company's management with those of its shareholders,
and reflect the nature of the Company by taking into account the Company's
operating environment and the expectations for continued growth and enhanced
profitability. Compensation for each of the Company's executive officers
consists of a base salary and in certain instances, discretionary bonuses and
stock options. The Company does not currently provide executive officers with
other long term incentive compensation other than the ability to contribute
their earnings to the Company's 401(k) Plan.
The Compensation Committee's philosophy is that a substantial portion of
an executive's compensation should be based directly upon the value of long-term
incentive compensation in the form of stock option awards. The Compensation
Committee believes that providing executives with the opportunities to acquire
significant stakes in the growth and prosperity of the Company (through grants
of stock options), while maintaining other elements of the Company's
compensation program at conservative levels, will enable the Company to attract
and retain executives with the outstanding management abilities and
entrepreneurial spirit which are essential to the Company's ongoing success.
Furthermore, the Compensation Committee believes that this approach to
compensation motivates executives to perform to their full potential.
The Compensation Committee is responsible for reviewing salary
recommendations for the Company's executives and then approves such
recommendations, with any modifications it deems appropriate. The annual salary
recommendations are made under the ultimate direction of the Chief Executive
Officer, based on peer group and national industry surveys of total compensation
packages, as well as evaluations of the individual executive's past and expected
future performance. The base salary of the Chief Executive Officer is set by the
terms of his employment agreement with the Company.
The amount of any annual bonus to be paid to executive officers is
determined based upon a review of competitive compensation data and the
executive officer's overall compensation package, as well as an evaluation of
such factors as individual performance, increases in the Company's revenue, net
income, net income per share and market penetration, as well as the executive's
contribution to the Company's performance. In recognition of the Chief Executive
Officer's efforts during the year ended January 31, 1999 in, among other things,
selling the Company's manufacturing operations, he was awarded bonuses
totaling $1.9 million.
Stock options represent a substantial portion of compensation for the
Company's executive officers, including the Chief Executive Officer. Stock
options are granted at the prevailing market price on the date of grant, and
will only have value if the Company's stock price increases. Generally, grants
vest in equal amounts over a period of five years (although certain special
types of grants may vest either immediately or over a shorter period) and
executives must be employed by the Company at the time of vesting in order to
exercise the options. Grants of stock options generally are based upon the level
of the executive's position with the Company and an evaluation of the
executive's past and expected future performance. The Compensation Committee
believes that dependence on stock options for a significant portion of
executives' compensation more closely aligns such executives' interests with
those of the Company's shareholders, since the ultimate value of such
compensation is linked directly to stock price.
-15-
<PAGE>
During the year ended January 31, 1999, the Stock Option Committee granted
the Chief Executive Officer options to purchase 250,000 shares of the Company's
Common Stock. In addition, options to purchase 450,000 shares of Common Stock
were granted to the Company's new Chief Operating Officer during the year. Other
members of senior management received stock options to purchase an aggregate of
215,000 shares of Common Stock. All of the options granted to the Chief
Executive Officer, as well as a substantial portion of the options granted to
the other executive officers, vest in July 2006, with earlier vesting in April
2000 if the closing price of the Company's Common Stock is greater than $25.00
per share for any period of ten consecutive trading days prior to April 30,
2000. Each of these stock option awards were based upon an evaluation of
individual performance criteria and is consistent with the philosophy of
providing incentives based on the Company's future performance.
The Compensation Committee continually evaluates the Company's
compensation policies and procedures with respect to executives, including
examining what modifications, if any, should be implemented to further
link executive compensation with both individual and Company performance.
STOCK OPTION COMMITTEE COMPENSATION COMMITTEE
Richard A. Kaplan Richard A. Kaplan
Herb Wolk J. Michael Nixon
Herb Wolk
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, THAT MIGHT INCORPORATE FUTURE FILINGS,
INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE FOREGOING REPORT OF
COMPENSATION AND STOCK OPTION COMMITTEES ON EXECUTIVE COMPENSATION AND THE
STOCKHOLDER RETURN PERFORMANCE GRAPH SHALL NOT BE INCORPORATED BY REFERENCE INTO
ANY SUCH FILINGS.
-16-
<PAGE>
PROPOSAL TO AMEND CERTIFICATE OF INCORPORATION
TO CHANGE CORPORATE NAME
On June 9, 1999, the Board of Directors of the Company approved an
amendment to Article I of the Company's Certificate of Incorporation, as amended
(the "Certificate of Incorporation"), to change the corporate name of the
Company to "Flooring America, Inc." In connection therewith, the following
resolution will be introduced at the Annual Meeting:
RESOLVED: That Article I of the Certificate of Incorporation of the
Company shall be amended by deleting the text thereof in its entirety and
replacing it as follows: "The name of the Corporation is Flooring America, Inc."
The proposal to change the Company's corporate name is part of the
Company's strategy of marketing itself as a true national retailer, which
includes changing the name of its retail floor covering stores to a single brand
operating under the name "Flooring America." The Company currently operates
under a number of different retail trade names and concepts, including
CarpetMAX, New York Carpet World, The Carpet Exchange and Carpetland USA (the
"Maxim Brands"). In an effort to reconcile territorial conflicts between
Company-owned stores and stores operated by franchisees under the "CarpetMAX"
trade name, Maxim will focus on becoming a national retailer. The Company
believes that the new name will also help ensure that customers focus on
flooring products rather than the multiple identities of the Maxim Brands. Store
conversions from Maxim Brands to Flooring America commenced in October 1999 and
are expected to extend through September 2000. To further support the
consolidation to one brand, the Company intends to offer its CarpetMAX
franchisees the opportunity to convert their CarpetMAX stores to franchised
Flooring America outlets pursuant to a franchise agreement similar to the
current CarpetMAX franchise agreement, but with additional obligations and
restrictions placed upon the franchisee more consistent with a typical franchise
agreement. The Company intends to build brand name awareness for Flooring
America stores through community involvement, charitable acts and grass roots
advertising efforts. To that end, the Company has become a corporate sponsor for
the Special Olympics and has chosen Cathy Rigby to act as its national
spokesperson.
Although changing the corporate name is not a precondition to the
rebranding of the Company's stores to the Flooring America concept, changing the
corporate name will help to more closely identify the Company with its retail
stores.
In accordance with Delaware corporate law, if approved by the
shareholders, the proposed amendment will become effective upon the filing of a
Certificate of Amendment relating thereto with the Secretary of State of
Delaware, which will occur as promptly as practicable following the Annual
Meeting. Assuming this proposal is adopted, it will not be necessary for
shareholders to surrender stock certificates. Instead, when certificates are
presented for transfer, new certificates bearing the new name will be issued.
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.
-17-
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP has served as independent auditors of the Company for
the fiscal year ended January 31, 1999. 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. The Company has not selected its independent accountants
for the 2000 fiscal year. The Company anticipates that the independent
accountants who will examine and report on the Company's consolidated financial
statements for the year ending February 5, 2000 will be selected during the
fourth quarter of the current fiscal year.
ANNUAL REPORT ON FORM 10-K
The Company's Annual Report for the year ended January 31, 1999 on Form
10-K as filed with the Securities and Exchange Commission, is available to
shareholders who make written request therefor to the Company, Attention: Chief
Financial Officer at 210 TownPark Drive, Kennesaw, Georgia 30144. Copies of
exhibits and basic documents filed with that report or referenced therein will
be furnished to shareholders of record upon request.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the Company's 2000
annual meeting must be received at the Company's principal executive offices by
February 15, 2000 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
17, 2000, the persons named in the form of proxy solicited by management in
connection with the 2000 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 interest of the Company.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
annual meeting. However, if other matters should come before the annual 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 12, 1999
-18-
<PAGE>
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 1999 ANNUAL 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 Annual Meeting of Shareholders of THE
MAXIM GROUP, INC. to be held on December 14, 1999, 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>
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
____________________________________________
THE MAXIM GROUP, INC.
____________________________________________
CONTROL NUMBER:
RECORD DATE SHARES:
Please be sure to sign and date this Proxy. Date:_______________
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Shareholder sign here Co-owner sign here
DETACH CARD
1. To elect three (3) directors
to serve for a term of three
years and until their
successors are elected and
qualified.
FOR ALL WITH- FOR ALL
NOMINEES HOLD EXCEPT
Richard A. Kaplan / / / / / /
Ronald H. McSwain
A. J. Nassar
INSTRUCTION: To withhold authority to vote for any individual
nominee mark the "For All Except" box and write that nominee's name
in the space provided below.
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2. To approve an amendment to the Certificate of Incorporation of
the Company to change the corporate name to "Flooring
America, Inc."
FOR / / AGAINST / / ABSTAIN / /
3. To transact such other business incidental to the conduct of the
Annual Meeting as may properly come before the Annual Meeting
or any adjournments or postponements thereof.
Mark box at right if an address change or comment has been
noted on the reverse side of this card / /
DETACH CARD
