<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934 (Amendment No. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use by the Commission only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss.
240.14a-12
INTERIORS, INC.
(Name of Registrant as Specified in its Charter)
(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>
INTERIORS, INC.
---------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held December 1, 1998
---------------------------
To Our Stockholders:
You are cordially invited to attend the 1998 Annual Meeting
of Stockholders of Interiors, Inc. (the "Company"), which will be held at the
Company's executive offices, located at 320 Washington Street, Mt. Vernon, New
York, 10553, on Tuesday, December 1, 1998 at 10:00 a.m. (Eastern Standard Time)
for the following purposes:
(a) To elect a Board of three Directors for the ensuing
year;
(b) To consider and vote upon a proposal to approve an
amendment to the Company's 1994 Stock Option and
Appreciation Rights Plan (the "1994 Plan") to
increase the number of shares of the Company's Class
A Common Stock, $.001 par value ("Class A Common"),
reserved for issuance under the 1994 Plan by
2,250,000 shares of Class A Common;
(c) To consider and vote upon a proposal to approve an
amendment to the Company's 1994 Director Stock
Option and Appreciation Rights Plan (the "Directors
Plan") to increase the number of shares of Class A
Common reserved for issuance under the Directors
Plan by 750,000 shares of Class A Common;
(d) To ratify the appointment of Arthur Andersen LLP as
independent auditors for the fiscal year ending June
30, 1999; and
(e) To consider and act upon such other matters as may
properly come before the meeting.
The close of business on October 9, 1998 has been fixed as
the record date for stockholders to receive notice of and to vote at the
meeting or any adjournment or postponement thereof. Holders of one-third of the
outstanding shares of the Company's Class A Common and Class B Common Stock,
$.001 par value per share, must be present either in person or by proxy in
order for the meeting to be held. The proxy is revocable at any time in the
manner set forth on page 1 of the Proxy Statement and will not affect your
right to vote in person in the event you attend the meeting.
By Order of the Board of Directors,
Joan York,
Secretary
October 28, 1998
WHETHER YOU ATTEND THE MEETING OR NOT, YOU ARE REQUESTED TO SIGN
AND DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED
ENVELOPE AT YOUR EARLIEST CONVENIENCE.
<PAGE>
INTERIORS, INC.
ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 1, 1998
------------------------------------
PROXY STATEMENT
------------------------------------
This Proxy Statement is furnished by Interiors, Inc.
("Interiors" or the "Company"), 320 Washington Street, Mt. Vernon, New York,
10553, in connection with the solicitation by the Company's Board of Directors
(the "Board") of proxies to be voted at the Annual Meeting of Stockholders to
be held on Tuesday, December 1, 1998 at 10:00 a.m. (Eastern Standard Time), or
any adjournments or postponements thereof (the "Meeting"). The Board has fixed
the close of business on October 9, 1998 as the record date (the "Record Date")
for determining stockholders entitled to notice of and to vote at the Meeting.
As of that date, 27,404,433 shares of the Company's Class A Common Stock, $.001
par value per share (the "Class A Common"), were issued and outstanding, and
2,355,000 shares of the Company's Class B Common Stock, $.001 par value per
share ("Class B Common"), were issued and outstanding.
Any person giving a proxy has the right to revoke it before
it is exercised. It may be revoked either by filing an instrument of revocation
with the Secretary of the Company or by delivering at the Meeting a duly
executed proxy bearing a later date. It also may be revoked by attending the
Meeting and voting in person.
All expenses incurred in connection with solicitation of the
enclosed proxy will be paid by the Company. In addition to solicitation by
mail, officers, directors and regular employees of the Company, each of whom
will receive no additional compensation for his or her services, may solicit
proxies by mail, telephone, telegraph or personal call. The Company has
requested brokers and nominees who hold stock in their names to furnish this
proxy material to their customers, and the Company will reimburse such brokers
and nominees for their related out-of-pocket expenses.
The approximate date on which this Proxy Statement and the
enclosed proxy are first being sent to the Company's stockholders is on or
about October 28, 1998. A copy of the Company's Annual Report for the fiscal
year ended June 30, 1998 accompanies this Proxy Statement.
VOTING RIGHTS
Each share of Class A Common issued and outstanding on the
Record Date is entitled to one vote, and each share of Class B Common issued
and outstanding on the Record Date is entitled to five votes. Neither the
holders of Class A Common, nor the holders of Class B Common, have the right to
cumulate votes. An affirmative vote of a plurality of the shares of Class A
Common and Class B Common, voting as a single class, present in person or
represented by proxy at the Meeting and entitled to vote thereon, is required
for the election of directors. An affirmative vote of a majority of the shares
of Class A Common and Class B Common, voting as a single class, present in
person or represented by proxy at the Meeting and entitled to vote thereon, is
required for approval of each of Proposal Numbers 2, 3 and 4 being submitted
to the stockholders for consideration. Proxies will be received and tabulated
by the Company's transfer agent. Votes cast in person at the Meeting will be
tabulated by an election inspector appointed by the Company. Abstentions and
"broker non-votes" are each included in the determination of the number of
shares of Class A Common and Class B Common present and voting, with each
tabulated separately. Abstentions are counted in tabulations of the votes cast
on proposals presented to the stockholders, whereas "broker non-votes" are
not counted for purposes of determining whether a proposal has been approved.
Any unmarked proxies, including those submitted by brokers or nominees, will
be voted for the directors nominated and for all proposals submitted herewith.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of October 20, 1998,
certain information as of the date thereof with respect to: (i) all persons
known by the Company to be the beneficial owner of more than 5% of the
shares of Class A Common or the Class B Common, (ii) all directors and
nominees for director, (iii) each executive officer named below and
(iv) all directors and executive officers as a group. The business address
of each of the Company's directors and the named executive officer is the
Company's address unless otherwise stated in the table below.
<TABLE>
<CAPTION>
Name and Address of
Beneficial Owner Title of Class Number of Shares Percent of Class (1) (2)
- ---------------- -------------- ---------------- --------------------------
<S> <C> <C> <C>
Michael Levine, Esq. Class A Common 13,750,000(3) 47.99%
as escrow agent Class B Common 1,250,000(4) 53.08%
330 William Street
New York, NY 10838
Class A Common (5) %
Laurie Munn 2,624,350 8.82%
14 Hopke Avenue Class B Common 2,355,000(5) 100%
Hasting, NY 30706
Roger Lourie Class A Common 60,000(6) *
Class B Common -0- 0%
Richard Josephberg Class A Common 40,000(7)(8) *
Class B Common -0- 0%
Max Munn Class A Common -0-(9) 0%
Class B Common -0-(9) 0%
All Executive Officers and Class A Common 100,000(11) *
Directors as a Group Class B Common -0- 0%
(3 persons) (10)
</TABLE>
- ----------------------
* Less than 1%.
(1) Information with respect to beneficial ownership is based upon the
Company's stock records and data supplied to the Company by the
holders.
(2) Beneficial ownership is determined in accordance with rules of the
Securities and Exchange Commission, and includes generally voting
power and/or investment power with respect to securities. Shares of
common stock subject to options, warrants or convertible securities
(including, without limitation, shares of Class B Common) exercisable
within 60 days are deemed outstanding for computing the percentage of
the person holding such options or warrants but are not deemed
outstanding for computing the percentage of any other person. Except
as indicated by footnote, and subject to joint ownership with spouses
and community property laws where applicable, the persons named in the
table above have sole voting and investment power with respect to all
shares of common stock shown as beneficially owned by them.
2
<PAGE>
(3) Represents 12,500,000 shares of Class A Common and 1,250,000 shares of
Class B Common (convertible into 1,250,000 shares of Class A Common)
(collectively, the "Escrow Shares") issued to Mr. Levine as escrow
agent pursuant to the settlement reached by the Company and Ann
Stevens with respect to a prior employment agreement. Ann Stevens, a
former executive of the Company is the beneficial owner of the escrow
shares. The escrow agent and Ms. Stevens may vote the escrow shares
only in the event of the Company's default of its obligations pursuant
to the settlement agreement between the Company and Ms. Stevens. As of
the date hereof, the Company is not in default of its obligations
under such settlement agreement, and, therefore, neither the escrow
agent nor Ms. Stevens has the power to vote or dispose of the Escrow
Shares.
(4) Represents the 1,250,000 Class B Common Escrow Shares.
(5) Represents 2,355,000 shares of Class B Common (convertible into
2,355,000 shares of Class A Common). The foregoing shares of Class B
Common are comprised of the 1,250,000 Class B Common Escrow
Shares which are issuable to Ms. Munn upon exercise of an option to
purchase the Class B Common Escrow Shares granted to Ms. Munn in
January 1998 and 1,105,000 shares of Class B Common provided by
Ms Munn.
(6) Represents (i) 20,000 shares of Class A Common held by Roger Lourie
and (ii) 40,000 shares of Class A Common issuable upon the exercise of
options granted pursuant to existing stock option plans.
(7) Represents 40,000 shares of Class A Common issuable upon the exercise
of options granted pursuant to existing stock option plans.
(8) Does not include 8,200 shares of Class A Common held by Mr.
Josephberg's wife. Mr. Josephberg disclaims ownership of such shares.
(9) Does not include any of the shares held by, or issuable upon exercise
of options held by, Laurie Munn, Mr. Munn's wife (see discussions in
footnote 5). Mr. Munn disclaims beneficial ownership of such shares.
(10) Represents the following shares of Class A Common for the directors of
the Company: (i) 40,000 shares issuable to Roger Lourie upon exercise
of options granted pursuant to existing stock option plans, (ii)
20,000 shares held by Mr. Lourie, and (iii) 40,000 shares issuable to
Richard Josephberg upon exercise of options granted pursuant to
existing stock option plans.
(11) Includes 80,000 shares of Class A Common issuable upon the exercise of
options granted pursuant to existing stock option plans.
There are no material proceedings to which any director,
officer or affiliate of the Company, any owner of record or beneficially of
more than five percent of any class of voting securities of the Company, or any
associate of any such director, officer, affiliate of the Company or security
holder is a party adverse to the Company or any of its subsidiaries or has a
material interest adverse the Company or any of its subsidiaries.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's officers and directors, and persons who own more than ten percent
of a registered class of the Company's equity securities ("Section 16
Participants"), to file reports of ownership and changes in ownership with the
Securities and Exchange Commission. During the most recent fiscal year, none of
the Section 16 Participants complied with the applicable Section 16(a) filing
requirements. The Company believes that all of the Section 16 Participants
intend to comply with all applicable Section 16(a) filing requirements.
3
<PAGE>
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
At the Meeting, it is intended that the persons named in the
proxy will vote for the election of the three nominees listed below, each
director to serve until the next annual meeting or until his or her successor
is elected and qualified. All of the nominees are now members of the Board. THE
BOARD RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE NOMINEES LISTED BELOW.
The persons named in the accompanying proxy intend to vote for the election of
the nominees listed below unless authority to vote for one or more of such
nominees is specifically withheld in the proxy. If any nominee, for any reason
currently unknown, cannot be a candidate for election, proxies will be voted
for the election of a substitute recommended by the Board.
INFORMATION CONCERNING NOMINEES FOR DIRECTOR
The following information is furnished concerning the
Company's nominees for director. All directors hold office until their
resignation, retirement, removal, disqualification, death or until their
successors have been elected and qualified. Vacancies in the existing Board are
filled by majority vote of the remaining directors.
<TABLE>
<CAPTION>
NAME AGE POSITION(S) HELD WITH THE COMPANY
- --------------------------- --------- -------------------------------------------------------------
<S> <C> <C>
Max Munn 54 President, Chief Executive Officer and Director
Roger Lourie* 53 Director
Richard Josephberg* 51 Director
* Member of Audit Committee of the Board.
</TABLE>
Max Munn has served as a director of Interiors since March
1994 and President and intermittently as Chief Financial Officer of
Interiors since September 1995. Since June 1996, Mr. Munn has served
as Chairman of the Board of Decor Group, Inc. Mr. Munn previously held the
positions of Executive Vice n President, Operations and Secretary of Interiors
from 1993 through September 1995. From November 1990 to May n 1993, Mr. Munn
served as a consultant to various companies in the home accessories industry,
including Interiors. n From 1980 to February to 1990, Mr. Munn served as
President and Chief Executive Officer of Collectors' Guild n International,
Inc., a manufacturer and marketer of decorative accessories. Mr. Munn received
a Bachelor of n Architecture degree from the Massachusetts Institute of
Technology and attended graduate school at Columbia University.
Roger Lourie has served as a director of Interiors since May
1995. Since 1980, Mr. Lourie has been a General Partner of Tremont Associates,
a private equity investment fund, and since 1980 has served as President of
Misty Ridge Associates, another private equity investment fund. Mr. Lourie is
also Chairman of the Board of two Connecticut-based manufacturing concerns. Mr.
Lourie received a B.S. degree in engineering from Rensselaer Polytechnic
Institute of Technology and M.B.A. and M.I.A. degrees from Columbia University
in New York.
Richard Josephberg has served as a director of Interiors
since October 1995. Since 1986, Mr. Josephberg has served as the Chairman of
Josephberg Grosz & Co., Inc., a New York-based investment banking firm
specializing in providing private institutional capital to emerging growth
companies. From 1969 through 1975, Mr. Josephberg served with Goldman Sachs &
Co. Additionally, from 1985 through 1990, Mr. Josephberg served as a member of
the New York Stock Exchange. Mr. Josephberg received a B.B.A. degree from the
University of Cincinnati, and attended the M.B.A. program at Bernard Baruch
Graduate School of Business in New York.
4
<PAGE>
COMMITTEES AND COMPENSATION OF THE BOARD
The Company has standing an Audit Committee. During the
Company's last fiscal year, the Board held eight meetings, and each
director attended at least 75% of all Board meetings and meetings of
Committees on which he served.
Audit Committee
The Audit Committee, consisting of Messrs. Lourie and
Josephberg, met one time during the last fiscal year. The Audit
Committee makes recommendations concerning the engagement of the Company's the
independent auditors, consults with the independent auditors concerning the
audit plan and reviews the comments and the recommendations resulting from the
auditors' report and management letter.
Director's Compensation
Directors receive no cash compensation for their services to
the Company as directors, but are reimbursed for any expenses actually incurred
in connection with attending meetings of the Board. In addition, the Company's
1994 Director Stock Option and Appreciation Rights Plan provides for an annual
grant of options to each director to purchase 10,000 shares of the Company's
Class A Common at fair market value at date of grant. Options are granted to
directors as of the second Monday in May of each year. A more detailed
description of the Company's 1994 Director Stock Option and Appreciation Rights
Plan is contained herein. See "Approval of Amendment to the Company's 1994
Director Stock Option and Appreciation Rights Plan."
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following table sets forth the executive officers of the
Company and their respective ages and positions. Executive officers of the
Company serve at the will of the Board of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION(S) HELD WITH THE COMPANY
- --------------------------- --------- -------------------------------------------------------------------
<S> <C> <C>
Max Munn 54 President, Chief Executive Officer and Director
Dennis D. D'Amore 49 Executive Vice President and President of Decorative Accessories
Division
Joan York 53 Secretary
Richard P. Belensk 43 Executive Vice President, Finance and Administration,
and Chief Financial Officer
Todd R. Langner 43 Executive Vice President of Sales and Marketing
James P. McCorry 53 President of Habitat Solutions, Inc., a division of the Company
</TABLE>
Max Munn. See summary of biographical information above.
Dennis D. D'Amore has served as Executive Vice President of
Interiors and President of Interiors' Decorative Accessories Division since
June 1998. Since March 1997, Mr. D'Amore has served as President and Chief
Financial Officer of Decor Group, Inc. From 1991 through 1996, Mr. D'Amore
served as a consultant to various private and public companies. From 1989 to
1991, Mr. D'Amore served as Vice President of Sales and Marketing for Lasco
Bathware, a division of Tomkins Industries. From 1988 to 1989, Mr. D'Amore
served as President of Colford- D'Amore, a management consulting firm. From
1981 to 1988, Mr. D'Amore has served as Executive Vice President and General
Manager of Water Jet Corporation. Mr. D'Amore holds a Bachelor of
Engineering-Mechanical Degree
5
<PAGE>
from New York University and subsequently received a Masters of Business
Administration in finance from Fairleigh Dickinson University.
Joan York has served as Secretary of Interiors since 1984.
From 1990 to 1994 Ms. York served in various administrative capacities at
Premier New York.
Richard P. Belenski was appointed Executive Vice President,
Finance and Administraiton, and Chief Financial Officer of Interiors effective
October 19, 1998. Mr. Belinski has over 20 years experience in the management
of retail, direct marketing and manufacturing companies. Prior to joining
interiors Mr. Belinski served as Vice President of Finance and Chief Financial
Officer for operating divisions of the J. Crew Group, Inc., an international
catalog and retail company with total revenues of $900 million. Mr. Belinski
has also served as Director of Budgeting and Financial Analysis at Lincoln for
the Performing Arts, Inc. and has held management positions with J.C. Penney
Company, Inc.
Todd R. Langner was appointed Executive Vice President of
Sales and Marketing of Interiors in August 1998. From 1990 to 1998, Mr. Langner
served as President of Troy Lighting, Inc. and Chief Operating Officer since
March 1994. From 1988 to 1990 Mr. Langner served as Vice President Sales and
Marketing for Hinkley Lighting er and President of its subsidiary, LuminArt.
From 1982 to 1988 Mr. Langner served as Vice President Sales, Marketing and
Product Development for Forecast Lighting. From 1979 to 1982 Mr. Langner served
as Marketing Manager of Illuminating Experiences. Mr. Langner holds a Bachelor
of Science Degree in Journalism and Public Relations from the University of
Florida.
James J. McCorry was appointed President of Habitat
Solutions, Inc., a recently formed division of Interiors, in July 1998. Since
1996, Mr. McCorry has served as the Executive Vice President, Chief Operating
Officer and Chief Financial Officer of Plaid Clothing Group, Inc. From 1994
through 1995, Mr. McCorry served as the Senior Vice President, Chief Financial
and Chief Operating Officer of Warnaco Group, Inc., Warners/Intimates Group. In
addition, Mr. McCorry served as the Chief Financial Officer and Vice President
of Operations and Administration of Sara Lee Corp., Aris Isotoner Division.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the aggregate cash
compensation paid for services rendered to the Company during the last three
fiscal years by the Company's executive officers. Mr. Munn was the only
executive officer of the Company who had a base salary in excess of $100,000 in
the fiscal year ended June 30, 1998. Mr. Munn has voluntarily canceled all
options granted to him through the date hereof. See "Employment Arrangements"
for a description of certain options which have been previously granted to Mr.
Munn.
<TABLE>
<CAPTION>
Annual Compensation(1)
---------------------------------------
Name and Fiscal Year Salary
Principal Position ($)
- ---------------------------------------------------------------------
<S> <C> <C>
Max Munn 1998 150,000
President, Chief 1997 109,610
Executive Officer 1996 144,230
- ----------------------
</TABLE>
(1) Does not include certain automobile expenses and other perquisites
which in the aggregate do not exceed the lesser of $50,000 or 10% of
the named executive officer's compensation. See "Employment
Arrangements" for a description of the Company's employment agreement
with Mr. Munn.
6
<PAGE>
EMPLOYMENT ARRANGEMENTS
Effective January 1, 1998, the Company entered into a
five-year employment agreement (the "Agreement") with Mr. Munn. The Agreement
provides for an annual base salary of $165,000 commencing January 1, 1998 with
annual increases of 10%. In addition, the Agreement grants Mr. Munn an option
to purchase for a period of seven years from the date of the Agreement term:
(i) 250,000 shares, at 50 cents per share, of either, at Mr. Munn's direction,
Class A Common or Class B Common, (ii) an additional 150,000 shares for each of
the second through fifth years of the Agreement (a total of 600,000 shares) at
55 cents per share for the second year, 61 cents per share for the third years,
68 cents per share for the fourth year and 75 cents per share for the fifth
year, and (iii) 150,000 shares of the Company's Series A 10% Cumulative
Convertible Preferred Stock at $2.50 a share. The Agreement also provides Mr.
Munn with life insurance and the use of an automobile. Presently, Mr. Munn
draws an annual salary of $165,000.
STOCK OPTION PLANS
1994 Stock Option and Appreciation Rights Plan. For a
detailed description of the Company's 1994 Stock Option and Appreciation Rights
Plan, see "Approval of Amendment to the Company's 1994 Stock Option and
Appreciation Rights Plan."
1994 Director Stock Option and Appreciation Rights Plan. For
a detailed description of the Company's 1994 Director Stock Option and
Appreciation Rights Plan, see "Approval of Amendment to the Company's 1994
Director Stock Option and Appreciation Rights Plan."
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
From time to time, the Company has entered into transactions
with parties related to the Company. The Company believes that all transactions
with related parties were entered into on terms no more or less favorable to
the Company than could have been obtained from unrelated third parties.
In July 1996, the Company issued an aggregate of 50,000
shares of Class A Common in a private placement to Ann Stevens, a former
executive of the Company and sister of the Company's President and Chief
Executive Officer, pursuant to the Company's June 30, 1996 settlement with Ms.
Stevens (the "Stevens Settlement"). Pursuant to the Stevens Settlement the
Company placed into escrow 1,250,000 shares of Class B Common (the "Escrow
Shares") with Michael Levine, Esq., attorney of Ms. Stevens, as escrow agent.
Pursuant to the terms of the Stevens Settlement, in November 1997, February
1998 and September 1998, the Company added an aggregate of 12,500,000 shares of
Class A Common to the Escrow Shares. The Escrow Shares are being held as
security for certain obligations of the Company under the Stevens Settlement.
Upon satisfaction of such obligations, the Escrow Shares will be returned to
the Company (subject to an option to purchase the Escrow Shares granted to
Laurie Munn, as described below).
In September 1996, the Company issued 10,000 shares of Class
A Common to an outside director of the Company, and 10,000 shares of Class A
Common to various individuals named by another outside director of the Company,
in consideration of services performed by such outside directors on behalf of
the Company.
On January 9, 1998, the Company granted an option to purchase
the Class B Common Escrow Shares to Laurie Munn, wife of the Company's
President and Chief Executive Officer, in consideration for the guarantee by
Ms. Munn of certain obligations of the Company to certain creditors of the
Company. The option to purchase the Escrow Shares expires the later of January
9, 2001, or 24 months following the termination of the Escrow Voting Share
Agreement, pursuant to which such Escrow Shares are held in escrow. In the
event that Ms. Munn exercises the option, Ms. Munn must pay $500 in cash, and
execute and deliver a secured promissory note for $500,000 with interest on the
unpaid principal balance at the rate of 6.5% per annum, with interest and
unpaid principal amount to be paid in five equal annual installments commencing
on the first anniversary of the exercise of the option.
On March 5, 1998, the Company issued an aggregate of 730,000
shares of Class B Common in a private placement to Laurie Munn for an aggregate
purchase price of $511,000 and in consideration for the guarantee
7
<PAGE>
by Ms. Munn of certain obligations of the Company to United Credit Corporation
and other creditors of the Company.
In July 1998, the Company issued an aggregate of 125,000
shares of Class B Common in a private placement to Laurie Munn in consideration
for the guarantee by Ms. Munn of certain obligations of the Company related to
the acquisition of Troy Lighting, Inc. and the acquisition of Windsor Art, Inc.
On July 31,1998, the Company issued 44,431 shares of Class A
Common to James J. McCorry in consideration of Mr. McCorry joining the Company
as President of the Habitat Solutions division of the Company and for the
performance of certain services on behalf of the Company. The exercise price of
the options is equal to the closing price of the Class A Common on July 31,
1998.
During the year ended June 30, 1998, the Company advanced Max
Munn amounts aggregating $77,000. These amounts were repaid subsequent to year
end.
The Company will not permit loans or other transactions among
the Company and the officers, directors, principal shareholders, or affiliates
of any of them for other than bona fide business purposes or on terms no less
favorable than could be obtained from third parties, unless approved by a
majority of the disinterested directors and the independent directors, if any,
of the Company.
See "Employment Arrangements" above for a description of the
present employment agreement with Max Munn, President and Chief Executive
Officer of the Company. Mr. Munn may be deemed to be a "parent" or "promoter"
of the Company, as that term is defined in the Securities Act.
APPROVAL OF AMENDMENT TO THE
COMPANY'S 1994 STOCK OPTION AND APPRECIATION RIGHTS PLAN
(PROPOSAL NO. 2)
The Company's 1994 Stock Option and Appreciation Rights Plan
(the "1994 Plan") was adopted by the Board on June 20, 1994 and subsequently
approved by the stockholders. The 1994 Plan initially reserved an aggregate of
250,000 shares of Class A Common for issuance upon the exercise of options
under the 1994 Plan. As of October 20, 1998, the Company had only 42,500 shares
of Class A Common available for grant to new and existing employees.
The stockholders are being asked to approve an amendment to
the 1994 Plan at the Meeting to increase the shares of Class A Common reserved
for issuance under the 1994 Plan by 2,250,000 shares of Class A Common,
bringing the total shares of Class A Common reserved for issuance under the
1994 Plan to 2,500,000. Approval of the amendment to the 1994 Plan requires the
affirmative vote of a majority of the shares of Class A Common and Class B
Common, voting together as a single class. THE BOARD RECOMMENDS A VOTE FOR THE
APPROVAL OF THE AMENDMENT TO THE 1994 PLAN. Proxies solicited by the Board will
be voted for this proposal unless a vote against the proposal or abstention is
specifically indicated.
The following description of the 1994 Plan is qualified in
its entirety by reference to the full text of the 1994 Plan.
The purpose of the 1994 Plan is to induce persons who are
officers, employees and consultants (none of whom is also a director) of the
Company or any of its subsidiaries who are in a position to contribute
materially to the Company's prosperity to remain with the Company, to offer
such persons incentives and rewards in recognition of their contributions to
the Company's progress, and to encourage such persons to continue to promote
the best interests of the Company. Accordingly, the 1994 Plan provides for
options which qualify as incentive stock options under
8
<PAGE>
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") to be
issued to employees of the Company, as well as non-qualified stock options to
be issued to both employees and non-employees of the Company. The 1994 Plan
also provides for grants of stock appreciation rights in connection with the
grant of options under the 1994 Plan.
The 1994 Plan provides that it be administered (the "1994
Plan Administrator") by (i) the Board, if each member of the Board is a
"disinterested person" for the purposes of the 1994 Plan within the meaning of
such term under Rule 16b-3 promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or (ii) in the discretion of the Board,
by a committee of not less than two members of the Board, each of whom is a
disinterested person." A "disinterested person" within the meaning of Rule
16b-3 promulgated under the Exchange Act is a person who has not been granted
or awarded equity securities (within the meaning of the Exchange Act) under the
1994 Plan or any other plan of the Company or any affiliate thereof at any time
within one year prior to such person's service as a member of the 1994 Plan
Administrator or during such service, except as otherwise permitted by Rule
16b- 3(c) promulgated under the Exchange Act.
The 1994 Plan Administrator has complete discretion to select
the eligible individuals who are to receive grants of either "incentive stock
options" or "non-qualified stock options." Only officers, employees and
consultants of the Company or any of its subsidiaries may be granted
non-qualified stock options granted under the 1994 Plan. Only employees
(including officers who are also employees) of the Company or any of its
subsidiaries may be granted incentive stock options under the 1994 Plan and
under the Federal tax laws. The exercise price of incentive stock options
granted under the 1994 Plan may not be less than 100% of the fair market value
of the Class A Common on the date of grant. With respect to any participant who
owns stock possessing more than 10% of the voting rights of the Company's
outstanding capital stock, the exercise price of any incentive stock option
granted must equal 110% or more of the fair market value of the Class A Common
on the grant date. Under the terms of the 1994 Plan, the aggregate fair market
value (as of the respective date or dates of grant) of the shares of Class A
Common for which option grants may for the first time become exercisable as
incentive stock options under any and all stock option plans of the Company and
under the Federal tax laws in a single calendar year may not exceed $100,000
per optionee.
The term of any option granted under the 1994 Plan shall be
determined by the 1994 Plan Administrator in its sole discretion; provided,
however, that the maximum term of any incentive stock option granted to an
employee holding stock possessing 10% or less of the voting rights of the
Company's outstanding capital stock or any non-qualified stock option shall be
ten years after the date the option is granted, and the maximum term of any
incentive stock option granted to an employee holding stock possessing more
than 10% of the voting rights of the Company's outstanding capital stock shall
be five years after the date the option is granted.
Options granted under the 1994 Plan may be immediately
exercisable for the full number of shares purchasable thereunder or may become
exercisable in cumulative increments over a period of months or years as
determined by the 1994 Plan Administrator. The exercise price may be paid in
cash or by certified bank check or, if permitted by the 1994 Plan
Administrator, with shares of the Company's Class A Common having a fair market
value on the exercise date equal to the aggregate exercise price.
Options are evidenced by stock option agreements between the
Company and the respective optionees. These agreements must conform to the 1994
Plan. The 1994 Plan Administrator may include such terms, consistent with the
1994 Plan, as it determines in its discretion.
In the event of certain sales, mergers, consolidations,
recapitalizations, reclassifications, stock splits, combinations of shares or
dividend payments in capital stock, pursuant to which the outstanding shares of
Class A Common of the Company is increased, decreased, changed into or
exchanged for a different number or kind of shares or other securities of the
Company or of another corporation, the 1994 Plan Administrator will make
appropriate adjustments to (i) the number and kind of shares of Class A Common
for the purchase of which options may be granted under the 1994 Plan and (ii)
the number and kind of shares as to which outstanding options, or portions
thereof then unexercised, shall be exercisable.
All rights to exercise options terminate no later than 90
days after the optionee ceases his or her service or employment with the
Company, as the case may be, for any reason other than cause, death or
disability. In the case
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<PAGE>
of termination of such service or employment by reason of cause, all option
rights of the optionee, both accrued and future, under any outstanding option
shall terminate immediately. In the case of termination of such service or
employment by reason of disability, the optionee may exercise his or her
options at any time prior to the expiration of such option or within one year
following the date the optionee ceases such service or employment, whichever
period of time is shorter, but only to the extent such option could have been
exercised at the date of such termination. In the case of termination of such
service or employment by reason of death, the optionee (or transferee) may
exercise his or her option at any time prior to the expiration of such option
or within three years following the date of death, whichever period is shorter,
but only to the extend such option could have been exercised at the date of
death.
Unless terminated earlier by the Board, the 1994 Plan
terminates on June 20, 2004, and no options may be granted thereunder after
such date. Options outstanding on the date of termination of the 1994 Plan
expire in accordance with their terms.
The Board may, from time to time, insofar as is permitted by
law, suspend or discontinue the 1994 Plan with respect to any shares of Class A
Common not subject to options at that time, or revise or amend the 1994 Plan in
any respect whatsoever, except that, without the approval of the stockholders
of the Company, no such revision or amendment may (i) increase the number of
shares of Class A Common subject to the 1994 Plan, (ii) change the authority of
the 1994 Plan Administrator to administer the 1994 Plan, (iii) extend the
maximum term of the options granted under the 1994 Plan, (iv) decrease the
minimum exercise price of incentive stock options, (v) change the exercise
price of outstanding options under the 1994 Plan, or (vi) modify the class of
individuals eligible to participate in the 1994 Plan.
The 1994 Plan Administrator may, insofar as is permitted by
law and subject to the 1994 Plan, modify an option or, once an option is
exercisable, may accelerate the date or dates at which it may be exercised, may
extend or renew outstanding options and may accept the surrender of outstanding
options (to the extent not theretofore exercised) and authorize the granting of
new options in substitution therefor (to the extent not theretofore exercised).
However, without the consent of the optionee, the 1994 Plan Administrator
cannot modify an option to alter or impair any rights or obligations under any
option theretofore granted.
The Code provides favorable tax treatment for incentive stock
options. Incentive stock options are subject to certain requirements which are
set forth in the 1994 Plan. Generally, upon the grant of an incentive stock
option and upon the exercise of the incentive stock option during employment or
within three months after termination of employment, the optionee will not
realize any income. However, any appreciation in the value of the shares from
the date of grant will generally be an item of adjustment at the time of
exercise in determining the optionee's potential liability for alternative
minimum tax. The alternative minimum tax may produce a higher tax than the
regular income tax applicable to the optionee.
The sale or disposition of Class A Common purchased upon
exercise of an incentive stock option is generally a taxable event. The
optionee will realize a gain or loss in an amount equal to the difference
between his or her basis (normally the exercise price) in the Class A Common
and the proceeds from the sale or disposition. If Class A Common acquired
pursuant to an incentive stock option is not sold or otherwise disposed of
within two years from the date of grant of the incentive stock option and is
held for at least one year after exercise of the incentive stock option (the
"Holding Period"), any gain or loss resulting from the sale or disposition of
the Class A Common will be treated as long-term capital gain or loss. If Class
A Common acquired upon exercise of an incentive stock option is disposed of
prior to the expiration of the Holding Period (a "Disqualifying Disposition"),
the excess of the fair market value of the Class A Common on the date of
exercise over the exercise price will be treated as ordinary income. However,
any additional gain will be taxed as capital gain. If an optionee disposes of
the Class A Common more than one year after the date of exercise, such capital
gain or loss will be treated as long-term capital gain or loss.
The Company normally is not entitled to a deduction with
respect to incentive stock options. However, in the event of a Disqualifying
Disposition, the Company will be entitled to deduct the ordinary income
realized by the optionee. Optionees must notify the Company of any
Disqualifying Dispositions.
No taxable income will be realized by an optionee upon the
grant of a non-qualified stock option. Upon exercise of a non-qualified stock
option, the optionee must include in his or her income the excess of the fair
10
<PAGE>
market value of the Class A Common on the date of exercise over the exercise
price. The Company may deduct this amount. An optionee's new basis in the Class
A Common acquired upon exercise of a non-qualified stock option will generally
be the fair market value of the shares of Class A Common on the date of
exercise. Upon a subsequent disposition of such shares of Class A Common, the
optionee will ordinarily realize a capital gain or loss to the extent of any
intervening appreciation or depreciation. If an optionee disposes of the Class
A Common more than one year after the date of exercise, such capital gain or
loss will be treated as long-term capital gain or loss.
Optionees who are officers, directors or 10% stockholders of
the Company, and thus subject to Section 16(b) of the Exchange Act, should be
aware of significant tax consequences under Section 83 of the Code.
The summary contained herein of the effect of Federal income
taxation upon optionees and the Company with respect to the grant and exercise
of options under the 1994 Plan does not purport to be complete, and does not
discuss the income tax laws of any state, foreign country or municipality in
which an optionee may reside.
APPROVAL OF AMENDMENT TO THE
COMPANY'S 1994 DIRECTOR STOCK OPTION AND APPRECIATION RIGHTS PLAN
(PROPOSAL NO. 3)
The Company's 1994 Director Stock Option and Appreciation
Rights Plan (the "Director Plan") was adopted by the Board on June 20, 1994 and
subsequently approved by the stockholders. The Director Plan initially reserved
an aggregate of 250,000 shares of Class A Common for issuance upon the exercise
of options under the Director Plan. As of October 20, 1998, the Company had
only 170,000 shares of Class A Common available for grant to new and existing
directors of the Company or any of its subsidiaries.
The stockholders are being asked to approve an amendment to
the Director Plan at the Meeting to increase the shares of Class A Common
reserved for issuance under the Director Plan by 750,000 shares of Class A
Common, bringing the total shares of Class A Common reserved for issuance under
the Director Plan to 1,000,000. Approval of the amendment to the Director Plan
requires the affirmative vote of a majority of the shares of Class A Common and
Class B Common, voting together as a single class. THE BOARD RECOMMENDS A VOTE
FOR THE APPROVAL OF THE AMENDMENT TO THE DIRECTOR PLAN. Proxies solicited by
the Board will be voted for this proposal unless a vote against the proposal or
abstention is specifically indicated.
The following description of the Director Plan is qualified
in its entirety by reference to the full text of the Director Plan.
The purpose of the Director Plan is to induce persons who are
directors of the Company or any of its subsidiaries who are in a position to
contribute materially to the Company's prosperity to remain with the Company,
to offer such persons incentives and rewards in recognition of their
contributions to the Company's progress, and to encourage such persons to
continue to promote the best interests of the Company. Accordingly, the
Director Plan provides for options which qualify as incentive stock options
under Section 422 of the Code to be issued to employees of the Company, as well
as non-qualified stock options to be issued to both employees and non-employees
of the Company. The Director Plan also provides for grants of stock
appreciation rights in connection with the grant of options under the Director
Plan.
The Director Plan provides for both non-discretionary grants
("Non-Discretionary Grants") and discretionary grants ("Discretionary Grants")
of options. Directors of the Company shall be granted non-qualified stock
options on a non-discretionary basis in accordance with a formula set forth in
the Director Plan. Generally, each director of the Company shall receive a
yearly grant of a non-qualified stock option to purchase 10,000 shares of Class
A Common at an exercise price equal to the fair market value per share of Class
A Common on the date of such grant. Each such option shall be exercisable
immediately and for ten years from the date of grant unless sooner terminated
11
<PAGE>
under the terms of the Director Plan. The exercise price of each such option
may be paid in cash or by certified bank check or, if permitted by the Director
Plan Administrator (as defined below), with shares of the Company's Class A
Common having a fair market value on the exercise date equal to the aggregate
exercise price.
With respect to Discretionary Grants under the Director Plan,
all determinations concerning the selection of persons eligible to receive
awards and with respect to the timing, pricing and amount of an award shall be
made by an administrator (the "Director Plan Administrator") which shall be
either (i) the Board, if each member of the Board is a disinterested person, or
(ii) in the discretion of the Board, by a committee of not less than two
members of the Board, each of whom is a disinterested person.
Other than Non-Discretionary Grants, the Director Plan
Administrator has complete discretion to select the eligible individuals who
are to receive grants of either incentive stock options or non-qualified stock
options. Only directors who are also employees of the Company or any of its
subsidiaries are eligible for grants of incentive stock options under the
Director Plan and Federal tax laws. Directors of Company or any of its
subsidiaries, whether or not such director is also employee, are eligible for
non-qualified stock options under the Director Plan.
The exercise price of incentive stock options granted under
the Director Plan may not be less than 100% of the fair market value of the
Class A Common on the date of grant. With respect to any participant who owns
stock possessing more than 10% of the voting rights of the Company's
outstanding capital stock, the exercise price of any incentive stock option
granted must equal 110% or more of the fair market value of the Class A Common
on the grant date. Under the terms of the Director Plan, the aggregate fair
market value (as of the respective date or dates of grant) of the shares of
Class A Common for which option grants may for the first time become
exercisable as incentive stock options under any and all stock option plans of
the Company and under the Federal tax laws in a single calendar year may not
exceed $100,000 per optionee. The exercise price of non-qualified stock options
granted under the Director Plan, other than Non-Discretionary Grants, is
determined by the Director Plan Administrator.
The term of any option granted under the Director Plan, other
than Non-Discretionary Grants, shall be determined by the Director Plan
Administrator in its sole discretion; provided, however, that the maximum term
of any incentive stock option granted to a director holding stock possessing
10% or less of the voting rights of the Company's outstanding capital stock or
any non-qualified stock option shall be ten years after the date the option is
granted, and the maximum term of any incentive stock option granted to a
director holding stock possessing more than 10% of the voting rights of the
Company's outstanding capital stock shall be five years after the date the
option is granted.
Options granted under the Director Plan, with the exception
of Non-Discretionary Grants of options, may be immediately exercisable for the
full number of shares purchasable thereunder or may become exercisable in
cumulative increments over a period of months or years as determined by the
Director Plan Administrator. The exercise price may be paid in cash or by
certified bank check or, if permitted by the Director Plan Administrator, with
shares of the Company's Class A Common having a fair market value on the
exercise date equal to the aggregate exercise price.
Options are evidenced by stock option agreements between the
Company and the respective optionees. These agreements must conform to the
Director Plan. With respect to Discretionary Grants, the Director Plan
Administrator may include such terms, consistent with the Director Plan, as it
determines in its discretion.
In the event of certain sales, mergers, consolidations,
recapitalizations, reclassifications, stock splits, combinations of shares or
dividend payments in capital stock, pursuant to which the outstanding shares of
Class A Common of the Company is increased, decreased, changed into or
exchanged for a different number or kind of shares or other securities of the
Company or of another corporation, the Director Plan Administrator will make
appropriate adjustments to (i) the number and kind of shares of Class A Common
for the purchase of which options may be granted under the Director Plan and
(ii) the number and kind of shares as to which outstanding options, or portions
thereof then unexercised, shall be exercisable.
All rights to exercise options terminate no later than 90
days after the optionee ceases his or her service or employment with the
Company for any reason other than cause, death or disability. In the case of
termination of such
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<PAGE>
service or employment by reason of cause, all option rights of the optionee,
both accrued and future, under any outstanding option shall terminate
immediately. In the case of termination of such service or employment by reason
of disability, the optionee may exercise his or her options at any time prior
to the expiration of such option or within one year following the date the
optionee ceases such service or employment, whichever period of time is
shorter, but only to the extent such option could have been exercised at the
date of such termination. In the case of termination of such service or
employment by reason of death, the optionee (or transferee) may exercise his or
her option at any time prior to the expiration of such option or within three
years following the date of death, whichever period is shorter, but only to the
extend such option could have been exercised at the date of death.
Unless terminated earlier by the Board, the Director Plan
terminates on June 20, 2004, and no options may be granted thereunder after
such date. Options outstanding on the date of termination of the Director Plan
expire in accordance with their terms.
The Board may, from time to time, insofar as is permitted by
law, suspend or discontinue the Director Plan with respect to any shares of
Class A Common not subject to options at that time, or revise or amend the
Director Plan in any respect whatsoever, except that, without the approval of
the stockholders of the Company, no such revision or amendment may (i) increase
the number of shares of Class A Common subject to the Director Plan, (ii)
change the authority of the Director Plan Administrator to administer the
Director Plan, (iii) extend the maximum term of the options granted under the
Director Plan, (iv) decrease the minimum exercise price of incentive stock
options, (v) change the exercise price of outstanding options under the
Director Plan, or (vi) modify the class of individuals eligible to participate
in the Director Plan.
The Director Plan Administrator may, insofar as is permitted
by law and subject to the Director Plan, modify an option or, once an option is
exercisable, may accelerate the date or dates at which it may be exercised, may
extend or renew outstanding options and may accept the surrender of outstanding
options (to the extent not theretofore exercised) and authorize the granting of
new options in substitution therefor (to the extent not theretofore exercised).
However, without the consent of the optionee, the Director Plan Administrator
cannot modify an option to alter or impair any rights or obligations under any
option theretofore granted.
The effect of Federal income taxation upon directors of the
Company with respect to the grant and exercise of incentive stock options and
non-statutory stock options under the Director Plan is identical to the effect
of Federal income taxation on related options granted under the 1994 Plan. For
a summary of such income tax effect, see "Approval of Amendment to the
Company's 1994 Stock Option and Appreciation Rights Plan." However, such
summary does not purport to be complete, and does not discuss the income tax
laws of any state, foreign country or municipality in which an optionee may
reside. Additionally, Directors of the Company are subject to Section 16(b) of
the Exchange Act and, thus, should be aware of significant tax consequences
under Section 83 of the Code.
APPOINTMENT OF AUDITORS
(PROPOSAL NO. 4)
The firm of Arthur Andersen LLP, independent auditors, has
been the Company's independent auditors since October 9, 1990 and
has been selected by the Board to serve as its independent auditors for the
fiscal year ending June 30, 1999.
The independent auditors meet periodically with the Audit
Committee of the Board. The members of the Audit Committee are Richard
Josephberg and Roger Lourie.
Professional services performed by Arthur Andersen LLP for
the fiscal year ended June 30, 1998 consisted of an audit of the financial
statements of the Company, consultation on interim financial information,
services related to filings with the Securities and Exchange Commission,
meetings with the Company's Audit Committee, and consultation on various
matters relating to accounting and financial reporting.
13
<PAGE>
The Audit Committee approved in advance or ratified each of
the major professional services provided by Arthur Andersen LLP and considered
the possible effect of each such service on the independence of that firm.
Representatives of Arthur Andersen LLP are expected to be
present at the meeting with the opportunity to make a statement, if they
desire, and will be available to respond to appropriate questions during the
Meeting.
THE BOARD RECOMMENDS A VOTE FOR RATIFICATION.
OTHER MATTERS
Management knows of no other business to be presented at the
Meeting. If other matters do properly come before the meeting, or any
adjournments or postponements thereof, it is the intention of the persons named
in the proxy to vote on such matters according to their best judgment.
STOCKHOLDER INFORMATION
ANY PERSON FROM WHOM PROXIES FOR THE MEETING ARE SOLICITED
MAY OBTAIN, IF NOT ALREADY RECEIVED, FROM THE COMPANY, WITHOUT CHARGE, A COPY
OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB, AS AMENDED, FOR THE 1998 FISCAL
YEAR BY WRITTEN REQUEST ADDRESSED TO THE COMPANY, 320 WASHINGTON STREET, MT.
VERNON, NEW YORK, 10553, ATTENTION: INVESTOR RELATIONS DEPARTMENT. THE ANNUAL
REPORT ON FORM 10-KSB, AS AMENDED, IS NOT SOLICITING MATERIAL AND IS NOT
INCORPORATED IN THIS DOCUMENT BY REFERENCE.
STOCKHOLDER PROPOSALS
Proposals by stockholders to be presented at the Company's
1999 annual meeting must be received by the Company no later than 120 days
prior to December 1, 1999, in order to be considered for inclusion in the
Company's proxy statement and form of proxy for such meeting.
By Order of the Board of Directors,
Joan York,
Secretary
Dated: October 28, 1998
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<PAGE>
INTERIORS, INC.
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 1, 1998
Max Munn and Joan York, and each of them, with full power of
substitution, are hereby authorized to represent and to vote the shares of
Class A Common Stock, $.001 par value, and Class B Common Stock, $.001 par
value, of Interiors, Inc. held of record by the undersigned on October 9, 1998,
as directed and, in their discretion, on all other matters which may properly
come before the Annual Meeting of Stockholders to be held on December 1, 1998,
and at any adjournment or postponement thereof, as if the undersigned were
present and voting at the meeting.
Whether or not you expect to attend the meeting, you are urged to
execute and return this proxy, which may be revoked at any time prior to its
use.
The shares represented by this proxy will be voted as directed by the
stockholder. WHERE NO DIRECTION IS GIVEN WHEN THE DULY EXECUTED PROXY IS
RETURNED, SUCH SHARES WILL BE VOTED FOR ALL PROPOSALS.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES
NAMED IN PROPOSAL NO. 1, FOR PROPOSAL NO. 2, FOR PROPOSAL NO. 3 AND FOR
PROPOSAL NO. 4.
<TABLE>
<CAPTION>
<S> <C> <C>
PROPOSAL NO. 1:
ELECTION OF DIRECTORS: 1) Max Munn, 2) Roger Lourie and 3) Richard Josephberg
[ ] For All Nominees [ ] Withhold All Nominees
</TABLE>
To withhold authority to vote for any individual nominee(s), write the
nominee's names on the space(s) provided below:
- -------------------------------------------------------------------------------
PROPOSAL NO. 2:
APPROVAL OF AMENDMENT TO FOR [ ] AGAINST [ ] ABSTAIN [ ]
1994 STOCK OPTION AND
APPRECIATION RIGHTS PLAN.
PROPOSAL NO. 3:
APPROVAL OF AMENDMENT TO FOR [ ] AGAINST [ ] ABSTAIN [ ]
1994 DIRECTOR STOCK OPTION AND
APPRECIATION RIGHTS PLAN.
PROPOSAL NO. 4:
RATIFICATION OF APPOINTMENT FOR [ ] AGAINST [ ] ABSTAIN [ ]
OF ARTHUR ANDERSEN LLP AS
INDEPENDENT AUDITORS.
Dated___________________, 1998 _________________________
Signature
Dated___________________, 1998 _________________________
Signature if held jointly
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
