SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
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:
/X/ Preliminary Proxy Statement / / Confidential, For Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

Catalina Lighting, Inc.
(Name of Registrant as Specified In Its Charter)

Payment of Filing Fee (Check the appropriate box):

/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (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:

Catalina Lighting, Inc.
18191 N.W. 68th Avenue
Miami, Florida 33015

Telephone: (305) 558-4777

October __, 2001

Dear Catalina Lighting Shareholder:

You are cordially invited to attend a Special Meeting of Shareholders of
Catalina Lighting, Inc. on Wednesday, October 24, 2001, at 9:00 a.m., local
time, at the corporate offices of Catalina Lighting, Inc., 18191 N.W. 68th
Avenue, Miami, Florida, 33015.

The Special Meeting will include a discussion and voting on the matters
described in the accompanying Notice of Special Meeting and Proxy Statement.

Please read the accompanying Notice of Special Meeting and Proxy Statement
carefully. Whether or not you plan to attend, you can ensure that your shares
are represented at the Special Meeting by promptly completing, signing, dating
and returning the enclosed proxy card in the envelope provided.

Sincerely,

-----------------------------
David W. Sasnett
Secretary

CATALINA LIGHTING, INC.
18191 N.W. 68TH AVENUE
MIAMI, FLORIDA 33015

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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 24, 2001
----------------------

The Special Meeting of Shareholders of Catalina Lighting, Inc. (the
"Company") will be held at the Company's corporate offices at 18191 N.W. 68th
Avenue, Miami, Florida 33015 on Wednesday, October 24, 2001, at 9:00 a.m., local
time, to consider and act upon the following matters:

1. To consider and approve the adoption of an amendment to the Company's
Articles of Incorporation increasing the number of shares of Common
Stock that the Company is authorized to issue;

2. To consider and approve the adoption of the Company's Stock Incentive
Plan;

3. To consider and approve the adoption of the Company's Management
Settlement Stock Incentive Plan;

4. To consider and approve the adoption of the Company's Amended and
Restated By-laws, which increase the quorum requirements for meetings
of the Company's shareholders; and

5. To act upon such other matters as may properly come before the meeting
or any adjournments or postponements thereof.

The Board of Directors has established the close of business on
September 21, 2001, as the record date for the determination of the shareholders
entitled to notice of and to vote at the Special Meeting.

WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE TO
ASSURE REPRESENTATION OF YOUR SHARES AT THE MEETING. NO POSTAGE IS NECESSARY IF
MAILED IN THE UNITED STATES.

Your proxy may be revoked at any time prior to the Special Meeting. If you
decide to attend the Special Meeting and wish to change your proxy vote, you may
do so automatically by voting in person at the Special Meeting.

By Order of the Board of Directors,

-----------------------------------
David W. Sasnett
Secretary

Miami, Florida
October __, 2001

TABLE OF CONTENTS

PURPOSE OF MEETING...........................................................................1
VOTING RIGHTS AND SOLICITATION...............................................................1
Voting..............................................................................1
Proxies.............................................................................1
Solicitation of Proxies.............................................................2
Change In Control...................................................................2
PROPOSAL NO. 1...............................................................................3
APPROVAL OF AMENDMENT OF ARTICLES OF INCORPORATION...........................................3
General.............................................................................3
Votes Required......................................................................4
Recommendation of the Board of Directors............................................4
PROPOSAL NO. 2...............................................................................5
APPROVAL OF THE STOCK INCENTIVE PLAN.........................................................5
General.............................................................................5
Description of the Incentive Plan...................................................5
Votes Required......................................................................7
Recommendation of the Board of Directors............................................7
PROPOSAL NO. 3...............................................................................8
APPROVAL OF THE SETTLEMENT PLAN..............................................................8
General.............................................................................8
Description of the Settlement Plan..................................................8
Votes Required......................................................................8
Recommendation of the Board of Directors............................................8
PROPOSAL NO. 4...............................................................................8
APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE BY-LAWS
OF THE COMPANY...............................................................................8
General.............................................................................8
Purposes of the Amended By-laws.....................................................9
Votes Required......................................................................9
Recommendation of the Board of Directors............................................9
NEW PLAN BENEFITS...........................................................................10
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.................................12
COMPENSATION OF EXECUTIVE OFFICERS..........................................................15
Summary Compensation Table.........................................................15
Option Grants During 2000..........................................................16
Option Exercises During 2000 and Year End Option Values............................17
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS..........17
Prior Employment Agreements........................................................17
Termination Agreements and New Employment Agreements...............................18
Compensation Committee Interlocks and Insider Participation........................18
SUBMISSION OF SHAREHOLDER PROPOSALS TO BE INCLUDED IN 2002 PROXY STATEMENT..................19
OTHER MATTERS...............................................................................19

EXHIBIT A - Certificate of Amendment of Articles of Incorporation
EXHIBIT B - Catalina Lighting, Inc. Stock Incentive Plan
EXHIBIT C - Catalina Lighting, Inc. Management Settlement Stock
Incentive Plan
EXHIBIT D - Amended and Restated By-laws of Catalina Lighting, Inc.

CATALINA LIGHTING, INC.
18191 N.W. 68TH AVENUE
MIAMI, FLORIDA 33015

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

PROXY STATEMENT FOR SPECIAL MEETING
OF SHAREHOLDERS
TO BE HELD ON OCTOBER 24, 2001

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

This Proxy Statement is being furnished to the holders of the common
stock, par value $.01 per share (the "Common Stock"), of Catalina Lighting,
Inc., a Florida corporation, in connection with the solicitation by the Board of
Directors of the Company (the "Board of Directors" or the "Board") of proxies to
be voted at a special meeting of shareholders (the "Special Meeting") scheduled
to be held on Wednesday, October 24, 2001, at 9:00 a.m., local time, at the
Company's corporate offices at 18191 N.W. 68th Avenue, Miami, Florida, or at any
adjournment or postponement thereof. This Proxy Statement is being mailed to
shareholders on or about October __, 2001. As used in this Proxy Statement, the
terms "Catalina" and "the Company" refer to Catalina Lighting, Inc. and its
subsidiaries, unless the context otherwise requires.

PURPOSE OF MEETING

The specific proposals to be considered and acted upon at the Special
Meeting are summarized in the accompanying Notice of Special Meeting of
Shareholders. Each proposal is described in more detail in this Proxy Statement.

VOTING RIGHTS AND SOLICITATION

VOTING

Only holders of record of the Common Stock as of the close of business
on September 21, 2001 (the "Record Date") are entitled to notice of and to vote
at the Special Meeting and any adjournment or postponement thereof. On the
Record Date, there were 15,878,247 shares of Common Stock outstanding.

The presence in person or by proxy of the holders of a majority of the
shares of Common Stock outstanding is required to constitute a quorum for the
transaction of business at the Special Meeting. The holders of Common Stock have
one vote for each share held by them as of the Record Date. Adoption and
approval of each of the Amendment to the Articles of Incorporation, the Stock
Incentive Plan, the Management Settlement Stock Incentive Plan and the Amended
and Restated By-laws, require the affirmative vote of a majority of the votes
cast by holders of shares of the Company's Common Stock entitled to vote at the
Special Meeting.

PROXIES

All shares of Common Stock represented by proxies that are properly
signed, completed and returned to the Secretary of the Company at or prior to
the Special Meeting will be voted as specified in the proxy. If a proxy is
signed and returned but does not provide instructions as to the shareholder's
vote, the shares will be voted FOR each of the matters submitted by the Board of
Directors for vote by the shareholders. We are not aware of any business for
consideration at the Special Meeting other than as described in this Proxy
Statement; however, if matters are properly brought before the Special Meeting
or any adjournment or postponement thereof, then the persons appointed as
proxies will have the discretion to vote or act thereon according to their best
judgment. A shareholder giving a proxy has the power to revoke it any time prior
to its exercise by delivering to the Secretary of the Company a written
revocation or a duly executed proxy bearing a later date (although no revocation
shall be effective until notice thereof has been given to the Secretary of the
Company), or by attendance at the meeting and voting his or her shares in
person.

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Under Florida law, proxies marked ABSTAIN are not considered to be cast
votes and thus, although they will count for purposes of determining whether
there is a quorum and for purposes of determining the voting power and number of
shares entitled to vote at the Special Meeting, such abstentions will have no
effect on the approval of any matter to come before the meeting. Broker
non-votes will be counted for purposes of determining whether there is a quorum
at the Special Meeting, but will have no effect on the approval of any matter to
come before the meeting.

SOLICITATION OF PROXIES

All costs of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's directors, officers and regular
employees, without additional remuneration, may solicit proxies by telephone,
telegraph and personal interviews. Copies of solicitation material will be
furnished to brokerage houses, fiduciaries and custodians holding shares in
their names that are beneficially owned by others so that they may forward such
solicitation material to such beneficial owners, and the Company will reimburse
them for reasonable out-of-pocket expenses in connection with the distribution
of proxy solicitation material.

CHANGE IN CONTROL

On July 23, 2001, the Company and Sun Catalina Holdings, LLC, a
Delaware limited liability company ("Sun Catalina"), entered into a transaction
whereby Sun Catalina obtained a controlling interest in the Company in exchange
for providing financing for the Company's operations. The Company and Sun
Catalina executed an Amended and Restated Note Purchase Agreement and an Amended
and Restated Stock Purchase Agreement (collectively, the "Purchase Agreements")
whereby Sun Catalina purchased 8,489,932 shares of the Company's Common Stock,
for $3,000,000 and, for an additional $4,500,000, received a secured promissory
note in the original principal amount of $4,500,000 and a warrant to purchase up
to 3,904,838 shares of Common Stock, which warrant is immediately exercisable.
The secured promissory note issued in connection with the transaction accrues
interest at the rate of 12% per annum and matures on July 23, 2006. However,
pursuant to the terms of the secured promissory note issued to Sun Catalina, if
the Company fails to increase the number of shares of Common Stock that it is
authorized to issue by December 31, 2001, (i) the interest rate on the secured
promissory note will increase by 3% per annum, and (ii) the number of shares
issuable upon exercise of the warrant issued to Sun Catalina will increase by
262,500 shares of Common Stock. In addition, on each date that interest
compounds on the secured promissory note and is not paid in cash, the number of
shares for which the warrant may be exercised will automatically increase in
proportion to the increase in the principal amount of the secured promissory
note after giving effect to the compounded interest. The secured promissory note
may not be prepaid prior to July 23, 2003. A 5% prepayment penalty will be
assessed if the Company elects to prepay the secured promissory note after July
23, 2003.

In connection with the consummation of the transactions contemplated by
the Purchase Agreements, certain shareholders, warrant holders and option
holders of the Company entered into shareholders' and voting agreements with Sun
Catalina, pursuant to which Sun Catalina was granted proxies to vote any shares
of Common Stock held by such security holders. As a result of these
transactions, Sun Catalina beneficially owns, within the meaning of Rule 13d-3
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), 70.0%
of the shares of Common Stock outstanding. Assuming exercise of all options and
warrants issued to third parties in connection with transactions consummated
simultaneously with the consummation of the transactions contemplated by the
Purchase Agreements, the shares of Common Stock owned by Sun Catalina (including
the shares issuable upon exercise of the warrant held by Sun Catalina, but
excluding shares beneficially owned by Sun Catalina by virtue of its right to
vote such shares pursuant to proxies granted by third parties) would constitute
52.5% of the then outstanding shares of Common Stock of the Company.

As a result of these transactions, the Board of Directors was expanded
to nine members, and six individuals designated by Sun Catalina became members
of the Board of Directors. On July 31, 2001, Eric Bescoby (formerly the
president and a director of an affiliate of Sun Catalina) was named chief
executive officer of the Company. In addition, the Board of Directors was
expanded to ten members and Mr. Bescoby became a member of the Board of
Directors. Subsequently, on August 8, 2001, Robert Hersh resigned from the Board
of Directors, leaving the Board of Directors with nine members. Subsequently, on
September 7, 2001, the Board of Directors was expanded to eleven members and
Patrick Sullivan and George Rea were appointed to fill the existing vacancies.

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PROPOSAL NO. 1

APPROVAL OF AMENDMENT OF ARTICLES OF INCORPORATION

GENERAL

On October 3, 2001 the Board of Directors unanimously adopted the
following resolution, subject to shareholder approval, amending the Company's
Articles of Incorporation to increase the authorized number of shares of Common
Stock from 20,000,000 shares to 100,000,000 shares:

RESOLVED, that this Board of Directors has determined that it
is in the best interests of the Company to increase the number of
shares of Common Stock that the Company is authorized to issue, in
order to implement the Purchase Agreements, to give the Company
additional flexibility for other proper corporate purposes that may be
identified in the future, including, without limitation, to raise
equity capital, to adopt additional employee benefit plans or reserve
additional shares for issuance under such plans, and to make
acquisitions through the use of Common Stock, this Board of Directors
hereby proposes that Paragraph 1 of Article III of the Company's
Articles of Incorporation be amended to increase the total number of
shares of Common Stock that the Company is authorized to issue, subject
to approval by the holders of a majority of the outstanding stock of
the Company entitled to vote thereon, so that it shall read in its
entirety:

1. THE AGGREGATE NUMBER OF SHARES WHICH THE CORPORATION SHALL
HAVE AUTHORITY TO ISSUE IS ONE HUNDRED MILLION (100,000,000)
SHARES OF COMMON STOCK HAVING A PAR VALUE OF ONE CENT ($.01)
PER SHARE AND ONE MILLION (1,000,000) SHARES OF PREFERRED
STOCK HAVING A PAR VALUE OF ONE CENT ($.01) PER SHARE.

If the proposed amendment is adopted by the shareholders, the Company
plans to file a Certificate of Amendment to the Articles of Incorporation,
amending Paragraph 1 of Article III as described above, as soon as practicable
following the Special Meeting, to be effective upon such filing. A copy of the
Certificate of Amendment to the Articles of Incorporation is attached as Exhibit
A to this Proxy Statement.

As of August 10, 2001, there were 15,878,247 shares of Common Stock
outstanding (including the shares purchased in connection with the transaction
with Sun Catalina) and 8,532,607 shares of Common Stock reserved for issuance
under options, warrants, contractual commitments and other arrangements
(including the options and warrants granted in connection with the transaction
with Sun Catalina). There are currently no authorized and unissued shares of
Common Stock available for future issuance that are not otherwise reserved for a
specific use. Assuming the approval by the shareholders of this proposal, there
will be 75,589,146 authorized and unissued shares of Common Stock that are not
reserved for any specific use and are available for future issuance.

As a result of the transaction with Sun Catalina and another
subordinated lender and the amendment of the Company's $75 million credit
facility, the Company is obligated to issue warrants to purchase shares in
excess of the number of remaining authorized shares. The Company must therefore
increase the number of shares of Common Stock authorized for issuance. Under
certain contractual provisions, by December 31, 2001, the Company is obligated
to authorize the issuance of the shares of Common Stock issuable upon exercise
of the warrants issued to Sun Catalina, the Company's senior lender (for the $75
million credit facility), and the Company's senior subordinated lender and to
reserve for issuance a sufficient number of authorized but unissued shares of
Common Stock to permit exercise of those warrants. If the Company fails to
authorize the issuance and reservation of such additional shares, then (i) the
interest rate for the Company's $75 million credit facility will be increased by
0.75% per annum, (ii) the interest rate for the promissory notes issued to Sun
Catalina and the other subordinated lender will be increased by 3% per annum
retroactively from July 23, 2001, (iii) the number of shares that Sun Catalina
is entitled to purchase upon exercise of its warrant will increase by 262,500
shares of Common Stock, and (iv) the number of shares that the Company's other
subordinated lender is entitled to purchase upon exercise of its warrant will
increase by 500,000 shares of Common Stock. Although the warrants are
immediately exercisable (including

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the increase in the number of shares described above), the Company can only
issue duly authorized but unissued shares upon exercise of the warrants. Thus,
if the shareholders do not approve the proposed increase in the number of
authorized but unissued shares of Common Stock, then the holders of the warrants
will for all practical purposes be unable to exercise the warrants in full until
such later time as the shareholders have approved an increase in the number of
shares of Common Stock that the Company is authorized to issue.

The additional shares of Common Stock authorized upon adoption of the
proposed amendment will be available for issuance from time to time as
determined by the Board of Directors, without further action by the shareholders
and without first offering the shares to the shareholders. Except with respect
to the shares issuable upon exercise of outstanding options or warrants,
including warrants and options issued in connection with the transactions
consummated simultaneously with the transaction between the Company and Sun
Catalina, the Company has not entered into any agreements to issue any
additional shares of Common Stock. However, from time to time, the Company
considers various fund raising and other transactions that would involve the
issuance of additional shares of Common Stock including, without limitation,
possible future equity financings, rights offerings, stock dividends, stock
splits, or employee benefit programs, or upon exercise of stock options or
warrants.

Although the shareholders are being asked to approve the increase in
the number of authorized shares described above so that, among other things, the
contractual obligations of the Company undertaken in the transactions described
above can be fulfilled without the consequences of non-approval that are also
described above, the shareholders are not being asked to approve those
transactions or the terms of the issuance of securities pursuant to those
transactions, and a vote against approval of the proposed increase will not have
the effect of preventing or reversing those transactions.

ANTI-TAKEOVER EFFECTS

The proposal to increase the number of shares of Common Stock that the
Company is authorized to issue could have a potential anti-takeover effect with
respect to the Company, although the Company's management is not presenting the
proposal for that reason and does not presently anticipate using the increased
authorized shares for such a purpose. The potential anti-takeover effect of the
proposed amendment arises because the Company could issue additional shares of
Common Stock, up to the total authorized number, thereby diluting the
shareholdings and related voting rights of then existing shareholders in
proportion to the number of any additional shares issued.

The proposal to increase the number of shares of Common Stock that the
Company is authorized to issue is not in response to any accumulation of stock
or threatened takeover. Rather, the proposal is intended to allow the Company to
meet its contractual obligations and for other corporate purposes, all of which
are described more fully above. The Company currently has no plans to implement
any measures that would have material anti-takeover effects. Neither the
Company's current by-laws nor its Articles of Incorporation contain any material
anti-takeover provisions. In connection with the transaction with Sun Catalina
and another subordinated lender and the amendment of the Company's $75 million
credit facility, the Company issued various secured promissory notes to secure
indebtedness. Upon a subsequent change of control, the holders of the secured
promissory notes would be entitled to declare all amounts payable thereunder
immediately due and, the interest rates provided for in the secured promissory
notes would increase, in the case of the secured promissory notes issued to the
subordinated lenders by 3% per annum, and in the case of the Company's $75
million credit facility by 2% per annum. Also, in connection with the
transaction with Sun Catalina, the Company entered into a ten-year management
services agreement with Sun Catalina providing for the payment of an annual fee
of $500,000. The provisions contained in the secured promissory notes and the
management services agreement may have an anti-takeover effect.

VOTES REQUIRED

The affirmative vote of the holders of a majority of the outstanding
shares of Common Stock of the Company entitled to vote at the Special Meeting is
required for approval of the amendment of the Articles of Incorporation at the
Special Meeting.

RECOMMENDATION OF THE BOARD OF DIRECTORS

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS
VOTE FOR APPROVAL OF THE AMENDMENT OF THE ARTICLES OF INCORPORATION.

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PROPOSAL NO. 2

APPROVAL OF THE STOCK INCENTIVE PLAN

GENERAL

On September 7, 2001 the Board of Directors unanimously approved the
adoption of the Catalina Lighting, Inc. Stock Incentive Plan (the "Incentive
Plan"), and directed that the Incentive Plan be submitted to the shareholders
for approval. Following is a summary of the principal features of the Incentive
Plan:

DESCRIPTION OF THE INCENTIVE PLAN

Purposes. The primary purposes of the Incentive Plan are to promote the
long-term success of the Company and its shareholders by strengthening the
Company's ability to attract and retain employees, officers, directors,
consultants and advisors of outstanding ability and to provide a means to
encourage stock ownership and proprietary interest in the Company. Grants of
awards under the Incentive Plan are consistent with the Company's goal of
providing total employee compensation that is competitive in the marketplace,
recognizing meaningful differences in individual performance, fostering
teamwork, and offering the opportunity to earn above-average rewards when
merited by individual and Company performance.

Eligibility. Directors, officers, employees, consultants and advisors
of the Company and its subsidiaries shall be eligible to participate in the
Plan. The number of shares of Common Stock that may be issued pursuant to the
Incentive Plan will be 2,250,000 shares, subject to adjustment as provided in
the Incentive Plan. The aggregate number of shares of Common Stock that may be
covered by stock option awards granted to any single individual under the
Incentive Plan may not exceed 1,000,000 shares per calendar year, subject to
adjustment as provided in the Incentive Plan.

Types of Awards. Under the Incentive Plan, participants may receive
Incentive Stock Options ("ISO") or Nonqualified Stock Options ("NSO"). A stock
option represents a right to purchase a specified number of shares of Common
Stock during a specified period as determined by the Board of Directors. An ISO
is an option that qualifies as an ISO under Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code") and a NSO is an option that does not so
qualify as an ISO under the Code. The term of any ISO shall not exceed ten years
from the date of grant. The purchase price per share for each stock option shall
be determined by the Board of Directors; provided, however, that such price
shall not, in the case of an ISO, be less than 100% of the Fair Market Value of
a share of Common Stock on the date of grant, subject to certain exceptions.
"Fair Market Value" for all options granted under the Incentive Plan is defined
generally as the closing price of a share of Common Stock on the date of grant
as reported on the OTC Bulletin Board. The shares covered by a stock option may
be purchased by cash, or, if permitted by the Board of Directors, by (i) the
delivery of a promissory note to the Board of Directors containing such terms as
the Board of Directors may determine, (ii) tendering shares of Common Stock,
(iii) third-party cashless exercise transactions or (iv) any combination of
these methods.

Administration. The Compensation Committee of the Board of Directors,
or if no such committee exists, the Board of Directors, has full and exclusive
power to administer and interpret the Incentive Plan and its provisions. This
power includes, but is not limited to, selecting option recipients, establishing
all option terms and conditions, adopting procedures and regulations governing
option grants and making all other determinations necessary or advisable for the
administration of the Incentive Plan. All decisions made by the Compensation
Committee, or if no such committee exists, the Board of Directors, are final and
binding on all persons affected by such decisions.

Changes in Capitalization. If, through or as a result of any
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split, or other similar transaction, the outstanding shares of
Common Stock are increased or decreased or are exchanged for a different number
or kind of shares or other securities of the Company, or additional shares or
new or different shares or other securities of the Company or other non-cash
assets are distributed with respect to such shares of Common Stock or other
securities, adjustments shall be made with respect to (i) the aggregate number
of shares of Common Stock that may be issued under the Incentive Plan, (ii) each

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outstanding award made under the Incentive Plan, and (iii) the exercise price
per share for any outstanding stock options.

Change of Control. Unless otherwise determined by the Board of
Directions, in the event of a "change of control" (as defined below) that the
Board of Directors determines is primarily for cash consideration, all
outstanding options will immediately accelerate and become exercisable upon the
effective date of the change of control. Unless otherwise determined by the
Board of Directors, in the event of a change of control that the Board of
Directors determines is not primarily for cash consideration, the acquiring
corporation shall assume all outstanding options that are not exercisable as of
the effective date of the change of control or replace such outstanding options
with a comparable option or equity equivalent instrument. If the acquiring
corporation fails to assume or replace all outstanding options that are not
exercisable as of the effective date of the change of control, unless otherwise
determined by the Board, the outstanding options shall automatically accelerate
and become exercisable upon the effective date of the change of control. In lieu
of such acceleration, the Board of Directors will have the discretion to require
all holders of options that are exercisable upon the change of control
(including those options that will become exercisable as a consequence of
acceleration triggered by the change of control) to surrender them in exchange
for payment by the Company in cash or in Common Stock, at the discretion of the
Board of Directors, of an amount equal to the amount, if any, by which the
per-share value of the Common Stock subject to unexercised options (determined
by the Board of Directors in good faith, based on the applicable price in the
transaction giving rise to the change of control, and such other considerations
as the Board of Directors deems appropriate) exceeds the exercise price of those
options.

For purposes of the foregoing, "change of control" shall mean the
occurrence of any of the following events:

(a) the acquisition, other than solely from the Company, by any
individual, entity or group (within the meaning of Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act), other than the Company or an
employee benefit plan of the Company, of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of more than 50%
of the combined voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of directors (the
"Voting Securities");

(b) a reorganization, merger, consolidation or recapitalization of the
Company (a "Business Combination"), other than a Business Combination in
which more than 50% of the combined voting power of the outstanding voting
securities of the surviving or resulting entity immediately following the
Business Combination is held by the persons who, immediately prior to the
Business Combination, were the holders of the Voting Securities; or

Tax Withholding. Whenever shares are to be issued or cash is to be paid
under the Incentive Plan, the Company shall have the right to require the
participant to remit to the Company an amount sufficient to satisfy federal,
state, and local tax withholding requirements. Such withholding requirements may
be paid (i) in cash; (ii) in the discretion of the Board of Directors, through
the delivery to the Company of previously-owned shares of Common Stock having an
aggregate Fair Market Value equal to the tax obligation, provided that the
previously owned shares delivered in satisfaction of the withholding obligations
must have been held by the participant for at least six (6) months; or (iii) in
the discretion of the Board of Directors, any combination of these methods.

Federal Income Tax Consequences. In general, under the Code as
presently in effect, a participant will not be deemed to receive any income for
federal income tax purposes at the time an option is granted, nor will the
Company be entitled to a tax deduction at that time. When any part of an option
is exercised, the federal income tax consequences may be summarized as follows:

(a) In the case of an exercise of a NSO, the participant will recognize
ordinary income in an amount equal to the difference between the option
price and the Fair Market Value of the Common Stock on the exercise date.

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(b) In the case of an ISO, there is no tax liability at the time of
exercise. However, the excess of the Fair Market Value of the Common Stock
on the exercise date over the option price is included in the participant's
income for purposes of the alternative minimum tax. If no disposition of
the ISO stock is made before the later of one year from the date of
exercise or two years from the date the ISO is granted, the participant
will realize a long-term capital gain or loss upon sale of the stock; if
the stock is not held for the required period, ordinary income tax
treatment will generally apply to the amount of any gain upon sale or
exercise, whichever is less, and the balance of any gain or loss will be
treated as capital gain or loss (long-term or short-term, depending on
whether the shares have been held for more than one year).

(c) Upon the exercise of a NSO, the Company generally will be allowed
an income tax deduction equal to the ordinary income recognized by the
employee. The Company does not receive an income tax deduction as a result
of the exercise of an ISO, provided that the ISO stock is held for the
required period as described above. If the ISO stock is not held for such
required period and ordinary income tax treatment is applied to the amount
of any gain at sale or exercise by the recipient, the Company generally
will receive an income tax deduction for a corresponding amount.

The foregoing is only a summary of the effect of federal income
taxation upon award recipients and the Company with respect to the grant and
exercise of awards under the Incentive Plan. It does not purport to be complete,
and does not discuss the tax consequences of the employee's death or the
provisions of the income tax laws of any municipality, state or foreign country
in which the employee may reside.

Interested Directors. Because members of the Board of Directors are
eligible to receive awards under the Incentive Plan (some are also eligible to
receive awards in their capacities as executive officers of the Company), each
of them has a personal interest in the approval of the Incentive Plan.

Previous Stock Incentive Plans. Upon approval by the shareholders of
the Incentive Plan and the Settlement Plan described below, there will by no
further issuances by the Company of shares of Common Stock or options to
purchase shares of Common Stock under any other stock incentive plan currently
in effect.

A copy of the proposed form of the Incentive Plan is attached hereto as
Exhibit B.

See the New Plan Benefits Table elsewhere in the Proxy Statement
disclosing the benefits or amounts that will be received by or allocated to
certain individuals.

VOTES REQUIRED

The affirmative vote of a majority of the votes cast by holders of
shares of the Company's Common Stock entitled to vote at the Special Meeting is
required for the approval of the Incentive Plan at the Special Meeting. If such
shareholder approval is not obtained, the Incentive Plan will not go into
effect. If such shareholder approval is obtained, the Incentive Plan will go
into effect retroactively to the date that it was approved by the Board of
Directors.

RECOMMENDATION OF THE BOARD OF DIRECTORS

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS
VOTE FOR APPROVAL OF THE INCENTIVE PLAN.

7
12

PROPOSAL NO. 3

APPROVAL OF THE SETTLEMENT PLAN

GENERAL

On September 7, 2001 the Board of Directors unanimously approved the
adoption of the Catalina Lighting, Inc. Management Settlement Stock Incentive
Plan (the "Settlement Plan") and directed that the Settlement Plan be submitted
to the shareholders for approval. Following is a summary of the principal
features of the Settlement Plan:

DESCRIPTION OF THE SETTLEMENT PLAN

The Settlement Plan is identical to the Incentive Plan as described
above in all material respects, except for the following differences:

Purposes. The primary purposes of the Settlement Plan are to settle the
Company's obligations to certain of the Company's former and current employees
under employment agreements previously entered into between the Company and such
employees and to obtain the agreement of certain former and current employees
not to compete or otherwise engage in practices that may be harmful to the
Company and its subsidiaries.

Eligibility. Certain former and current employees, as determined by the
Board of Directors, shall be eligible to participate in the Plan. The number of
shares of Common Stock which may be issued pursuant to the Settlement Plan will
be 1,569,229 shares, subject to adjustment as provided in the Settlement Plan.
The aggregate number of shares of Common Stock that may be covered by stock
option awards granted to any single individual under the Settlement Plan may not
exceed 750,000 shares per calendar year, subject to adjustment as provided in
the Settlement Plan.

Types of Awards. Under the Settlement Plan, participants may receive
only NSO grants.

A copy of the proposed form of the Settlement Plan is attached hereto
as Exhibit C.

See the New Plan Benefits Table elsewhere in the Proxy Statement
disclosing the benefits or amounts that will be received by or allocated to
certain individuals.

VOTES REQUIRED

The affirmative vote of a majority of the votes cast by holders of
shares of the Company's Common Stock entitled to vote at the Special Meeting is
required for the approval of the Settlement Plan at the Special Meeting. If such
shareholder approval is not obtained, the Settlement Plan will not go into
effect. If such shareholder approval is obtained, the Incentive Plan will go
into effect retroactively to the date that it was approved by the Board of
Directors.

RECOMMENDATION OF THE BOARD OF DIRECTORS

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS
VOTE FOR APPROVAL OF THE SETTLEMENT PLAN.

PROPOSAL NO. 4

APPROVAL OF THE AMENDMENT AND RESTATEMENT
OF THE BY-LAWS OF THE COMPANY

GENERAL

On September 7, 2001 the Board of Directors unanimously approved the
Amended and Restated By-laws of the Company (the "Amended By-laws"), and
directed that the same be submitted to the shareholders for approval at the
Special Meeting. Following is a summary description of the purposes of the
Amended By-laws.

8
13

PURPOSES OF THE AMENDED BY-LAWS

The current by-laws of the Company are being amended and restated in
the form of the Amended By-laws attached hereto as Exhibit D to increase the
quorum requirements for a meeting of the shareholders of the Company.

Currently, the Company's by-laws provide that holders of one-third of
the shares of stock entitled to vote at any meeting of shareholders, present in
person or represented by proxy, shall constitute a quorum for the transaction of
any business at such meeting. The Amended By-laws, in accordance with the
provisions of the Florida Business Corporation Act, increase the quorum
requirement to the holders of a majority of the shares of stock entitled to vote
at the meeting, present in person or represented by proxy, except to the extent
otherwise required by applicable law.

The discussion in this Proxy Statement of the Amended By-laws is
qualified in its entirety by the proposed form of the Amended By-laws attached
hereto as Exhibit D, and which is incorporated herein by reference.

The Amended By-laws also reflect amendments previously approved by the
Board of Directors under authority granted to them by the Company's by-laws and
Florida law but that are not required to be submitted to the shareholders for
their approval.

VOTES REQUIRED

The affirmative vote of a majority of the votes cast by holders of
shares of the Company's Common Stock entitled to vote at the Special Meeting is
required for approval of the Amended By-laws at the Special Meeting.

RECOMMENDATION OF THE BOARD OF DIRECTORS

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS
VOTE FOR APPROVAL OF THE AMENDED BY-LAWS.

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14

NEW PLAN BENEFITS

The following table sets forth certain information regarding benefits
or amounts that will be received by or allocated to each of the following
individuals under the Incentive Plan and the Settlement Plan upon approval by
the Company's shareholders: (i) the Company's Chief Executive Officer and each
of the four other most highly compensated individuals who were executive
officers of the Company at September 30, 2000 (such executive officers are
sometimes collectively referred to herein as the "Named Executive Officers");
(ii) all current executive officers as a group; (iii) all current directors who
are not executive officers as a group; and (iv) all employees, including all
current officers who are not executive officers, as a group:

INCENTIVE PLAN SETTLEMENT PLAN
------------------------------------ ----------------------------------
NAME AND POSITION DOLLAR VALUE ($) NUMBER OF SHARES DOLLAR VALUE ($) NUMBER OF SHARES
----------------- ---------------- ---------------- ---------------- ----------------

Robert Hersh (1) -- -- -0- (6) 461,538
Chairman, CEO and President
Dean Rappaport (2) -- -- -0- (6) 461,538
Executive Vice President and Chief Operating
Officer
Nathan Katz (3) -- -- -0- (6) 461,538
Executive Vice President
David W. Sasnett (4) -0- (6) 150,000 -0- (6) 184,615
Senior Vice President and Chief Financial
Officer
Thomas M. Bluth (5) -- -- -- --
Senior Vice President, Treasurer and
Secretary
Executive Group -0- (6) 150,000 -0- (6) 184,615
Non-Executive Director Group -- -- -- --
Non-Executive Officer Employee Group -- -- -- --

(1) In connection with the transactions with Sun Catalina, Mr. Hersh and the
Company entered into a Termination Agreement and Release dated July 23,
2001, providing for the termination of Mr. Hersh's employment agreement
dated October 1, 1989, as amended, and Mr. Hersh's consulting agreement
dated September 30, 1999, in exchange for, among other things, the
Company's issuance to Mr. Hersh of options to purchase 461,538 shares of
Common Stock at $1.18 per share under the Settlement Plan. Additionally,
the Company and Mr. Hersh entered into an Employment Agreement dated July
23, 2001 providing for a base annual salary of $250,000, the issuance of
options to purchase 100,000 shares of Common Stock at $1.18 per share, and
eligibility for a discretionary bonus of up to 60% of his base salary.
Subsequently, Mr. Hersh submitted his resignation from the Company as an
officer, director, and employee, effective August 8, 2001.

(2) In connection with the transactions with Sun Catalina, Mr. Rappaport and
the Company entered into a Termination Agreement and Release and a
Separation Agreement and Release each of which is dated July 23, 2001,
providing for the termination of Mr. Rappaport's employment agreement dated
October 1, 1989, as amended, and Mr. Rappaport's consulting agreement dated
September 30, 1999, in exchange for, among other things, the Company's
issuance to Mr. Rappaport of options to purchase 461,538 shares of Common
Stock at $1.18 per share under the Settlement Plan.

(3) In connection with the transactions with Sun Catalina, Mr. Katz and the
Company entered into a Termination Agreement and Release and a Separation
Agreement and Release each of which is dated July 23, 2001, providing for
the termination of Mr. Katz's employment agreement dated October 1, 1989,
as amended, and Mr. Katz's consulting agreement dated September 30, 1999,
in exchange for, among other things, the Company's issuance to Mr. Katz of
options to purchase 461,538 shares of Common Stock at $1.18 per share under
the Settlement Plan.

(4) In connection with the transactions with Sun Catalina, Mr. Sasnett and the
Company entered into a Termination Agreement and Release dated July 23,
2001, providing for the termination of Mr. Sasnett's employment agreement
dated October 1, 2000, as amended, in exchange for, among other things, the
Company's issuance to Mr. Sasnett of options to purchase 184,615 shares of
Common Stock at $1.18 per share under the Settlement Plan. In addition, the
Company and Mr. Sasnett entered into an Employment Agreement dated July 23,
2001 providing for, among other things, the issuance of options to purchase
150,000 shares of Common Stock at $1.18 per share under the Incentive Plan.

10
15

(5) Mr. Bluth submitted his resignation from the Company effective December 15,
2000. Pursuant to a consulting agreement, Mr. Bluth will provide consulting
services to the Company through September 30, 2001.

(6) The dollar value is calculated on the basis of the difference between the
option exercise price and the closing price for the Company's Common Stock
as of September 10, 2001 (the latest practicable date), multiplied by the
number of shares of Common Stock for which the options are exercisable. The
closing price of the Company's Common Stock on September 10, 2001 was less
than the option exercise price.

11
16

STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Except as otherwise noted, the following table sets forth certain
information regarding beneficial ownership of the Company's Common Stock as of
August 10, 2001 of: (i) each person known by the Company to own beneficially
more than 5% of the outstanding shares of Common Stock; (ii) each Named
Executive Officer; (iii) all current directors and officers of the Company
listed separately; and (iv) all current directors and executive officers of the
Company as a group. As of August 10, 2001, there were 15,878,247 shares of
Common Stock outstanding. Except as noted, all persons listed below have sole
voting and investment power with respect to their shares of Common Stock.

AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
-----------------------------------------
PERCENTAGE OF
NAME AND ADDRESS OF SHARES OF COMMON STOCK
BENEFICIAL OWNER COMMON STOCK OUTSTANDING
---------------- ------------ -------------

Sun Catalina Holdings, LLC 13,839,912 (1) 70.0%
c/o Sun Capital Partners, Inc.
5200 Town Center Circle, Suite 470
Boca Raton, Florida 33486

Sun Capital Partners II, L.P. 13,839,912 (1) 70.0%
c/o Sun Capital Partners, Inc.
5200 Town Center Circle, Suite 470
Boca Raton, Florida 33486

Sun Capital Advisors II, L.P. 13,839,912 (1) 70.0%
c/o Sun Capital Partners, Inc.
5200 Town Center Circle, Suite 470
Boca Raton, Florida 33486

Sun Capital Partners, LLC 13,839,912 (1) 70.0%
c/o Sun Capital Partners, Inc.
5200 Town Center Circle, Suite 470
Boca Raton, Florida 33486

Rodger R. Krouse 13,839,912 (1) 70.0%
c/o Sun Capital Partners, Inc.
5200 Town Center Circle, Suite 470
Boca Raton, Florida 33486

Marc J. Leder 13,839,912 (1) 70.0%
c/o Sun Capital Partners, Inc.
5200 Town Center Circle, Suite 470
Boca Raton, Florida 33486

Michael H. Kalb -- --
c/o Sun Capital Partners, Inc.
5200 Town Center Circle, Suite 470
Boca Raton, Florida 33486

Clarence E. Terry -- --
c/o Sun Capital Partners, Inc.
5200 Town Center Circle, Suite 470
Boca Raton, Florida 33486

Kevin J. Calhoun -- --
c/o Sun Capital Partners, Inc.
5200 Town Center Circle, Suite 470
Boca Raton, Florida 33486

12
17

C. Deryl Couch -- --
c/o Sun Capital Partners, Inc.
5200 Town Center Circle, Suite 470
Boca Raton, Florida 33486

Brion Wise 9,537 *
c/o Catalina Lighting, Inc.
18191 NW 68th Avenue
Miami, Florida 33015

Howard Steinberg 29,537 *
c/o Catalina Lighting, Inc.
18191 NW 68th Avenue
Miami, Florida 33015

Eric Bescoby -- --
c/o Catalina Lighting, Inc.
18191 NW 68th Avenue
Miami, Florida 33015

Robert Hersh 684,338 (2) 4.2%
6700 SW 88 Terrace
Miami, Florida 33156

Dean Rappaport 463,638 (3) 2.8%
11988 Classic Drive
Coral Springs, Florida 33071

Nathan Katz 929,780 (4) 5.7%
161 Gardner Road
Brookline, Massachusetts 02445

David W. Sasnett 231,281 (5) 1.4%
c/o Catalina Lighting, Inc.
18191 NW 68th Avenue
Miami, Florida 33015

Thomas M. Bluth 2,000 *
15722 Thistlebridge Drive
Rockville, Maryland 20853

All directors and executive officers 14,108,267 (6) 70.5%
as a group (10 persons)

-----------
* Less than 1%

(1) Based upon information set forth in a Schedule 13D filed with the
Securities and Exchange Commission as of August 2, 2001, as amended,
13,839,912 shares may be deemed beneficially owned within the meaning of
Rule 13d-3 of the Exchange Act by Sun Catalina, Sun Capital Partners II,
L.P., a Delaware limited partnership ("Partners LP"), Sun Capital Advisors
II, L.P., a Delaware limited partnership ("Advisors"), Sun Capital
Partners, LLC, a Delaware limited liability company ("Partners LLC"), Marc
J. Leder ("Leder") and Rodger R. Krouse ("Krouse"). Leder and Krouse may
each be deemed to control Sun Catalina, Partners LP, Advisors and Partners
LLC, as Leder and Krouse each own 50% of the membership interests in
Partners LLC, which in turn is the general and managing partner of
Advisors, which in turn is the general and managing partner of Partners LP,
which in turn owns 100% of the membership interests of Sun Catalina.
Partners LP, Advisors, Partners LLC, Leder and Krouse have shared voting
and investment power over these shares. Includes (i) up to 750,000 shares
owned by previous shareholders of Go-Gro Industries Limited assuming that
such shares remain owned by such shareholders, (ii) 222,800 shares owned by
Mr. Hersh and (iii) 468,242 shares owned by Mr. Katz, all of which Sun
Catalina has the power to vote pursuant to irrevocable proxies. Except as
to such shared voting power, Sun

13
18

Catalina, Partners LP, Advisors, Partners LLC, Leder and Krouse disclaim
beneficial ownership of these shares. Also includes warrants to purchase
3,904,838 shares of Common Stock, which will become immediately exercisable
in full upon approval by the shareholders of Proposal No. 1 and the filing
of the Certificate of Amendment of Articles of Incorporation, as more fully
described elsewhere in this Proxy Statement.

(2) Includes 461,538 shares purchasable through the exercise of options, which
will become immediately exercisable in full upon approval by the
shareholders of Proposal No. 1 (at which time a stock option grant
instrument will be issued by the Company) and the filing of the Certificate
of Amendment of Articles of Incorporation, as more fully described
elsewhere in this Proxy Statement. Mr. Hersh has granted a proxy to Sun
Catalina with respect to these shares.

(3) Includes 461,538 shares purchasable through the exercise of options, which
will become immediately exercisable in full upon approval by the
shareholders of Proposal No. 1 (at which time a stock option grant
instrument will be issued by the Company) and the filing of the Certificate
of Amendment of Articles of Incorporation, as more fully described
elsewhere in this Proxy Statement. Mr. Rappaport has granted a proxy to Sun
Catalina with respect to these shares.

(4) Includes 461,538 shares purchasable through the exercise of options, which
will become immediately exercisable in full upon approval by the
shareholders of Proposal No. 1 (at which time a stock option grant
instrument will be issued by the Company) and the filing of the Certificate
of Amendment of Articles of Incorporation, as more fully described
elsewhere in this Proxy Statement. Mr. Katz has granted a proxy to Sun
Catalina with respect to these shares.

(5) Includes 44,666 shares purchasable through the exercise of options, which
are immediately exercisable. Includes 184,615 shares purchasable through
the exercise of options, which will become immediately exercisable in full
upon approval by the shareholders of Proposal No. 1 (at which time a stock
option grant instrument will be issued by the Company) and the filing of
the Certificate of Amendment of Articles of Incorporation, as more fully
described elsewhere in this Proxy Statement. Mr. Sasnett has granted a
proxy to Sun Catalina with respect to these shares.

(6) Includes (i) 13,837,912 shares over which Messrs. Leder and Krouse have
shared voting and investment power, (ii) 2,000 shares owned by Mr. Sasnett
and 229,281 shares purchasable through the exercise of options held by Mr.
Sasnett, (iii) 9,537 shares owned by Mr. Wise, (iv) 29,537 shares owned by
Mr. Steinberg, and (v) no shares owned by Messrs. Kalb, Terry, Calhoun,
Couch, and Bescoby.

14
19

COMPENSATION OF EXECUTIVE OFFICERS

SUMMARY COMPENSATION TABLE

The following table sets forth certain information with respect to the
annual and long-term compensation of the Named Executive Officers. The
information in this table is presented for the three years ended September 30,
2000, 1999 and 1998, respectively.

ANNUAL LONG-TERM
COMPENSATION (1) COMPENSATION AWARDS
---------------------------------------------------------
SECURITIES UNDERLYING ALL OTHER
NAME AND OPTIONS/SARS COMPENSATION
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) (#) ($) (2)
------------------- ----- ---------- --------- --------------------- ------------

Robert Hersh (3) 2000 329,815 -- -- 3,200
Chairman, CEO and 1999 314,109 168,500 -- 2,480
President 1998 299,151 26,190 -- 1,600

Dean Rappaport (4) 2000 296,832 -- -- 3,200
Executive Vice President and 1999 282,697 168,500 212,500 (8) 2,480
Chief Operating Officer 1998 269,235 26,190 -- 22,600 (11)

Nathan Katz (5) 2000 296,832 -- -- 3,200
Executive Vice President 1999 282,697 168,500 162,500 (8) 2,480
1998 269,235 26,190 -- 22,600 (11)

David W. Sasnett (6) 2000 190,000 20,000 15,000 3,200
Senior Vice President and 1999 169,100 20,000 42,000 (9) 2,480
Chief Financial Officer 1998 151,068 15,000 -- 1,549

Thomas M. Bluth (7) 2000 160,000 10,000 15,000 3,200
Senior Vice President, 1999 143,333 45,000 32,500 (10) 2,241
Treasurer and Secretary 1998 132,667 10,000 -- 1,340

-----------
(1) In accordance with the rules of the Securities and Exchange Commission,
other compensation in the form of perquisites and other personal benefits
has been omitted when such perquisites and other personal benefits
constituted less than 10% of the total annual salary and bonus for each of
the named executive officers for such year.

(2) The amounts disclosed in this column for 2000 and 1999 represent the
Company's matching contribution to its 401(k) plan. The amounts disclosed
in this column for 1998 for Messrs. Hersh, Sasnett and Bluth represent the
Company's matching contribution to the 401(k) plan.

(3) In connection with the transactions with Sun Catalina, Mr. Hersh and the
Company entered into a Termination Agreement and Release dated July 23,
2001, providing for the termination of Mr. Hersh's employment agreement
dated October 1, 1989, as amended, and Mr. Hersh's consulting agreement
dated September 30, 1999, in exchange for the Company's payment to Mr.
Hersh of an aggregate of $700,000 payable over three years and for the
Company's issuance to Mr. Hersh of options to purchase 461,538 shares of
Common Stock at $1.18 per share. Additionally, the Company and Mr. Hersh
entered into an Employment Agreement dated July 23, 2001 providing for a
base annual salary of $250,000, the issuance of options to purchase 100,000
shares of Common Stock at $1.18 per share, and eligibility for a
discretionary bonus of up to 60% of his base salary. Subsequently, Mr.
Hersh submitted his resignation from the Company as an officer, director,
and employee, effective August 8, 2001.

(4) In connection with the transactions with Sun Catalina, Mr. Rappaport and
the Company entered into a Termination Agreement and Release and a
Separation Agreement and Release each of which is dated July 23, 2001,
providing for the termination of Mr. Rappaport's employment agreement dated
October 1, 1989, as amended, and Mr. Rappaport's consulting agreement dated
September 30, 1999, in exchange for the Company's payment to Mr. Rappaport
of an aggregate of $700,000 payable over three years and for the Company's
issuance to Mr. Rappaport of options to purchase 461,538 shares of Common
Stock at $1.18 per share.

15
20

(5) In connection with the transactions with Sun Catalina, Mr. Katz and the
Company entered into a Termination Agreement and Release and a Separation
Agreement and Release each of which is dated July 23, 2001, providing for
the termination of Mr. Katz's employment agreement dated October 1, 1989,
as amended, and Mr. Katz's consulting agreement dated September 30, 1999,
in exchange for the Company's payment to Mr. Katz of an aggregate of
$700,000 payable over three years and for the Company's issuance to Mr.
Katz of options to purchase 461,538 shares of Common Stock at $1.18 per
share.

(6) In connection with the transactions with Sun Catalina, Mr. Sasnett and the
Company entered into a Termination Agreement and Release dated July 23,
2001, providing for the termination of Mr. Sasnett's employment agreement
dated October 1, 2000, as amended, in exchange for the Company's payment to
Mr. Sasnett of an aggregate of $280,000 payable over three years and for
the Company's issuance to Mr. Sasnett of options to purchase 184,615 shares
of Common Stock at $1.18 per share. In addition, the Company and Mr.
Sasnett entered into an Employment Agreement dated July 23, 2001 providing
for a base annual salary of $200,000, the issuance of options to purchase
150,000 shares of Common Stock at $1.18 per share, and, after the fiscal
year ending on September 30, 2001, eligibility for a discretionary bonus of
up to 50% of his base salary.

(7) Mr. Bluth submitted his resignation from the Company effective December 15,
2000. Pursuant to a consulting agreement, Mr. Bluth will provide consulting
services to the Company through September 30, 2001.

(8) Represents options granted in prior years that were repriced on
December 11, 1998.

(9) Includes options to purchase 20,000 shares, which options were repriced on
December 11, 1998.

(10) Includes options to purchase 22,500 shares, which options were repriced on
December 11, 1998.

(11) Consists of (i) the Company's $1,600 matching contribution to its 401(k)
plan and $21,000 in connection with the achievement of goals and the
renegotiation of the executive's employment agreement with the Company.

OPTION GRANTS DURING 2000

The following table sets forth the number of shares of the Company's
Common Stock underlying options granted, the exercise price per share and the
expiration date of all options granted to each of the Named Executive Officers
during 2000.

INDIVIDUAL GRANTS POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED ANNUAL
NUMBER OF TOTAL EXERCISE OR RATES OF STOCK
SECURITIES OPTIONS/SARS BASE PRICE APPRECIATION FOR OPTION
UNDERLYING GRANTED TO PER TERM ($) (2)
OPTIONS/SARS EMPLOYEES IN SHARE EXPIRATION -----------------------
GRANTED FISCAL YEAR ($) (1) DATE 5% 10%
------------ ------------ ----------- ---------- ------- --------

EXECUTIVE OFFICER
Robert Hersh.............................. -- -- -- --
Dean Rappaport............................ -- -- -- --
Nathan Katz............................... -- -- -- --
David W. Sasnett.......................... 15,000 3.3% 3.9375 6/4/2010 37,144 94,130
Thomas M. Bluth........................... 15,000 3.3% 3.9375 6/4/2010 37,144 94,130

(1) Represents the fair market value of the Common Stock on the date of grant.
At the time of grant, under the plan, fair market value was defined as the
closing market price of the Common Stock on the New York Stock Exchange.

(2) The potential realizable value is based on the assumed annual rates of
stock price appreciation listed. This information does not represent an
estimate or prediction of the Company's future stock price.

16
21

OPTION EXERCISES DURING 2000 AND YEAR END OPTION VALUES

The following table sets forth the aggregate dollar value of all
options exercised and the total number of unexercised options held, on
September 30, 2000, by each of the Named Executive Officers:

NUMBER OF SECURITIES VALUE OF IN-THE-MONEY
UNDERLYING OPTIONS/SARS OPTIONS/SARS
SHARES ACQUIRED VALUE AT FISCAL YEAR END (#) AT FISCAL YEAR END ($)
EXECUTIVE OFFICER ON EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------------- ----------------- ------------ ----------- ------------- ----------- -------------

Robert Hersh................... 45,000 90,000 212,500 2,875 --
Dean Rappaport................. 50,000 106,250 212,500 212,500 --
Nathan Katz.................... 55,000 158,125 162,500 162,500 --
David W. Sasnett............... -- -- 27,333 29,667 26,563 13,125
Thomas M. Bluth................ -- -- 25,833 21,667 22,500 --

(1) The value realized is calculated on the basis of the difference between
the option exercise price and the closing price for the Company's Common
Stock on the date of exercise, multiplied by the number of shares of
Common Stock with respect to which the option was exercised.

(2) The closing price for the Company's Common Stock as reported by The New
York Stock Exchange on September 30, 2000 was $3.4375. Value is calculated
on the basis of the difference between the option exercise price and
$3.4375, multiplied by the number of shares of Common Stock underlying the
option.

EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT
AND CHANGE IN CONTROL ARRANGEMENTS

PRIOR EMPLOYMENT AGREEMENTS

The Company entered into employment agreements (the "Prior Employment
Agreements") with Robert Hersh, Dean Rappaport and Nathan Katz. Commencing
October 1, 1993, the base annual salaries of Messrs. Hersh, Rappaport, and Katz
were $246,112, $221,500 and $221,500, respectively, with annual increases of the
greater of 5% or the percentage increases in the consumer price index published
by the U.S. Department of Labor. Each of the Prior Employment Agreements would
have expired on September 30, 2001. The Prior Employment Agreements each
provided that, unless the employee was terminated for cause, 180 days after an
Acquisition of Control (as defined in the Prior Employment Agreements), the
Company was required to (i) pay to the employee a lump sum payment equal to
three times the sum of the employee's salary for the then current fiscal year
and the bonus payable to the employee for the fiscal year immediately preceding
the current fiscal year, and (ii) continue to provide benefits to the employee
for a three-year period. In addition, if the employee's employment with the
Company were terminated for any reason other than for cause within one year
following an Acquisition of Control, then the employee would have had the
option, for thirty days after the date of such termination of employment, to
enter into a three-year consulting and non-competition agreement for $250,000
per year.

Effective October 1, 2000, the Company entered into an employment
agreement (the "2000 Sasnett Employment Agreement") with David W. Sasnett that
replaced his change in control agreement with the Company. The 2000 Sasnett
Employment Agreement would have expired on September 30, 2001 and provided for
an annual salary of $210,000 and a severance payment equal to (i) the pro rata
portion of Mr. Sasnett's annual salary for the remainder of the agreement term
plus an amount equal to Mr. Sasnett's annual salary and benefits if he was
terminated without "cause", as defined in the agreement or (ii) Mr. Sasnett's
annual salary and annual benefits if the agreement was not renewed upon its
expiration. This employment agreement also provided for a lump sum payment equal
to two times the sum of his annual salary and annual benefits upon an
Acquisition of Control (as defined in the 2000 Sasnett Employment Agreement). If
Mr. Sasnett's employment with the Company would have been terminated for any
reason other than for cause within one year following an Acquisition of Control,
then he would have had the option, exercisable for thirty days after the date of
such termination of employment, to enter into a two-year consulting and
non-competition agreement for $50,000 per year.

17
22

TERMINATION AGREEMENTS AND NEW EMPLOYMENT AGREEMENTS

Each of the Prior Employment Agreements and the 2000 Sasnett Employment
Agreement were terminated as of July 23, 2001 in connection with the
transactions with Sun Catalina. Messrs. Rappaport and Katz terminated their
employment with the Company as of July 23, 2001 pursuant to the terms of the
Termination Agreement and Release and the Separation Agreement and Release
described below. Mr. Sasnett and Mr. Hersh continued their employment with the
Company pursuant to the terms of the Employment Agreements dated July 23, 2001
described below. Mr. Hersh subsequently resigned from the Company as an officer,
director, and employee, effective as of August 8, 2001.

Dean Rappaport. In connection with the transactions with Sun Catalina,
Mr. Rappaport and the Company entered into a Termination Agreement and Release
and a Separation Agreement and Release each of which is dated July 23, 2001,
providing for the termination of Mr. Rappaport's Prior Employment Agreement and
Mr. Rappaport's consulting agreement dated September 30, 1999, in exchange for
the Company's payment to Mr. Rappaport of an aggregate of $700,000 payable over
three years and for the Company's issuance to Mr. Rappaport of options to
purchase 461,538 shares of Common Stock at $1.18 per share.

Nathan Katz. In connection with the transactions with Sun Catalina, Mr.
Katz and the Company entered into a Termination Agreement and Release and a
Separation Agreement and Release each of which is dated July 23, 2001, providing
for the termination of Mr. Katz's Prior Employment Agreement and Mr. Katz's
consulting agreement dated September 30, 1999, in exchange for the Company's
payment to Mr. Katz of an aggregate of $700,000 payable over three years and for
the Company's issuance to Mr. Katz of options to purchase 461,538 shares of
Common Stock at $1.18 per share.

David Sasnett. In connection with the transactions with Sun Catalina,
Mr. Sasnett and the Company entered into a Termination Agreement and Release
dated July 23, 2001, providing for the termination of the 2000 Sasnett
Employment Agreement in exchange for the Company's payment to Mr. Sasnett of an
aggregate of $280,000 payable over three years and for the Company's issuance to
Mr. Sasnett of options to purchase 184,615 shares of Common Stock at $1.18 per
share. Additionally, the Company and Mr. Sasnett entered into an Employment
Agreement dated July 23, 2001 (the "2001 Sasnett Employment Agreement"),
providing for a base annual salary of $200,000, the issuance of options to
purchase 150,000 shares of Common Stock at $1.18 per share, certain fringe
benefits, and, after the fiscal year ending on September 30, 2001, eligibility
for a discretionary bonus of up to 50% of his base salary. The 2001 Sasnett
Employment Agreement provides that, for a term of one year (which renews
automatically for subsequent one year terms, unless terminated), Mr. Sasnett
will serve as Senior Vice President, Chief Financial Officer, Treasurer and
Secretary of the Company.

Robert Hersh. In connection with the transactions with Sun Catalina,
Mr. Hersh and the Company entered into a Termination Agreement and Release dated
July 23, 2001, providing for the termination of Mr. Hersh's Prior Employment
Agreement and Mr. Hersh's consulting agreement dated September 30, 1999, in
exchange for the Company's payment to Mr. Hersh of an aggregate of $700,000
payable over three years and for the Company's issuance to Mr. Hersh of options
to purchase 461,538 shares of Common Stock at $1.18 per share. Additionally, the
Company and Mr. Hersh entered into an Employment Agreement dated July 23, 2001
(the "2001 Hersh Employment Agreement") providing for a base annual salary of
$250,000, the issuance of options to purchase 100,000 shares of Common Stock at
$1.18 per share, certain fringe benefits, and, after the fiscal year ending on
September 30, 2001, eligibility for a discretionary bonus of up to 60% of his
base salary. The 2001 Hersh Employment Agreement provided that, for a term of
one year (which renews automatically for subsequent one year terms, unless
terminated), Mr. Hersh would serve as the President of the Company.
Subsequently, Mr. Hersh submitted his resignation from the Company as an
officer, director, and employee, effective August 8, 2001.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During the fiscal year ended September 30, 2000, the Compensation and
Stock Option Committee of the Board of Directors was composed of Leonard
Sokolow, Ryan Burrow, Howard Steinberg, and Robert Lanzillotti.

18
23

SUBMISSION OF SHAREHOLDER PROPOSALS TO BE INCLUDED IN 2002 PROXY STATEMENT

Shareholder proposals which are requested to be included, pursuant to
Rule 14a-8 under the Exchange Act, in the proxy materials of the Company at its
next Annual Meeting must be received by the Company no later than January 22,
2002 to be eligible for consideration. Such a proposal must comply with
requirements as to form and substance established by applicable laws and
regulations in order to be included in the proxy statement. In the event the
date of the Annual Meeting is advanced by more than 30 days or delayed by more
than 30 days from the anniversary date of the previous year's Annual Meeting,
then notice by the shareholder, in order to be timely, must be delivered not
later than the close of business on the later of the 120th day prior to the
Annual Meeting or the 10th day following the day on which the date of the
meeting is publicly announced. The shareholder's submission must include certain
specified information concerning the proposal or nominee, as the case may be,
and information as to the shareholder's ownership of the Common Stock of the
Company. Proposals or nominations not meeting these requirements will not be
entertained at the next Annual Meeting. If the shareholder does not also comply
with the requirements of Rule 14a-4 under the Exchange Act, the Company may
exercise discretionary voting authority under proxies it solicits to vote in
accordance with its best judgment on any such proposal or nomination submitted
by a shareholder.

OTHER MATTERS

The Board of Directors does not know of any other matters which may
come before the meeting. However, if any other matters are properly presented to
the meeting, it is the intention of the persons named in the accompanying proxy
to vote, or otherwise act, in accordance with their judgment on such matters.

By Order of the Board of Directors

----------------------------------
David W. Sasnett
Secretary

WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, YOU ARE URGED TO
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ACCOMPANYING
ENVELOPE. YOUR PROMPT RESPONSE WILL GREATLY FACILITATE ARRANGEMENTS FOR THE
MEETING. WE APPRECIATE YOUR COOPERATION.

19
24

EXHIBIT A

CERTIFICATE OF AMENDMENT
OF
CATALINA LIGHTING, INC.

Pursuant to the provisions of Section 607.1006 of the Florida Business
Corporation Act (the "FBCA"), the undersigned, Catalina Lighting, Inc., a
Florida corporation (the "Corporation"), by its Chief Executive Officer, does
hereby make and execute this Certificate of Amendment:

(a) The name of the Corporation is Catalina Lighting, Inc.

(b) The board of directors adopted a resolution on July 20, 2001
approving an increase in the number of authorized shares of
the Corporation's Common Stock, par value $.01 per share, from
20,000,000 shares to 100,000,000 shares.

(d) In connection with the increase in authorized Common Stock,
Paragraph 1 of Article III of the Corporation's Articles of
Incorporation is amended in its entirety to read as follows:

1. THE AGGREGATE NUMBER OF SHARES WHICH THE
CORPORATION SHALL HAVE AUTHORITY TO ISSUE IS ONE
HUNDRED MILLION (100,000,000) SHARES OF COMMON STOCK
HAVING A PAR VALUE OF ONE CENT ($.01) PER SHARE AND
ONE MILLION (1,000,000) SHARES OF PREFERRED STOCK
HAVING A PAR VALUE OF ONE CENT ($.01) PER SHARE.

IN WITNESS WHEREOF, this Certificate of Amendment of Catalina Lighting,
Inc. has been executed by Catalina Lighting, Inc., by its Chief Executive
Officer, this ___ day of October, 2001.

CATALINA LIGHTING, INC.

By:
----------------------------------
Name: Eric Bescoby
Title: Chief Executive Officer

EXHIBIT B

CATALINA LIGHTING, INC.
STOCK INCENTIVE PLAN

1. PURPOSE OF THE PLAN.

The purpose of the Catalina Lighting, Inc. Stock Incentive Plan (the
"Plan") is to promote the interests of Catalina Lighting, Inc. (the "Company"),
its subsidiaries and its shareholders by (i) attracting and retaining employees,
officers, directors, consultants and advisors of outstanding ability, (ii)
motivating such persons, by means of performance-related incentives, to achieve
long-range performance goals, and (iii) enabling such persons to participate in
the long-term growth and financial success of the Company and its subsidiaries.
For purposes of this Plan, "subsidiary" shall mean any company (whether a
corporation, partnership, joint venture or other form of entity) in which the
Company, or a corporation in which the Company owns a majority of the shares of
capital stock, directly or indirectly, owns an equity interest of more than
fifty percent (50%), except that solely with respect to determining whether
options issued to employees of a subsidiary may be Incentive Stock Options (as
defined in Section 3) the term "subsidiary" shall have the same meaning as the
term "subsidiary corporation" as defined in Section 424(f) of the Internal
Revenue Code of 1986, as amended (the "Code").

2. ADMINISTRATION.

(a) Subject to the following paragraphs, the Plan shall be administered
by the Company's Board of Directors (the "Board") or by a Compensation Committee
of the Board (the "Compensation Committee"). If the Board delegates to the
Compensation Committee the authority to administer the Plan, the Compensation
Committee shall be empowered to take all actions reserved to the Board under the
Plan. The Board is authorized to interpret the Plan, to prescribe, amend and
rescind rules and regulations to further the purposes of the Plan, and to make
all other determinations necessary for the administration of the Plan. All such
actions by the Board shall be conclusive, final and binding on all recipients of
grants hereunder ("participants").

(b) For so long as the Company's common stock ("Common Stock") is
registered under Section 12 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), any Compensation Committee to which Plan administration is
delegated shall consist solely of Board members who qualify as (i) "Non-Employee
Directors" as defined under Rule 16b-3 under the Exchange Act and (ii) "outside
directors" as defined under Section 162(m) or any successor provision of the
Code and applicable Treasury regulations thereunder, if and to the extent such
qualification is necessary so that grants made under the Plan or the exercise of
rights thereunder will qualify for any tax or other material benefit to
participants or the Company and its subsidiaries under applicable law.

(c) Notwithstanding the foregoing, the Board may, subject to any
limitations or restrictions the Board may impose from time to time, delegate to
the Chief Executive Officer the authority to administer the Plan, including the
authority to grant Options (as defined in Section 3) to employees (other than
the Chief Executive Officer), consultants or advisors of the Company and its
subsidiaries who are not subject, by reason of their position with the Company
or its subsidiaries, to the requirements of Section 16 of the Exchange Act and
who are not expected to be subject to the limitations of Code Section 162(m).

3. GRANTS.

Grants under the Plan may be in the form of options which qualify as
"incentive stock options" within the meaning of Code Section 422 or any
successor provision ("Incentive Stock Options") and options which do not so
qualify ("Nonqualified Options" and, collectively with Incentive Stock Options,
"Options"). Incentive Stock Options may be granted only to employees of the
Company or its subsidiaries. Each grant of an Option shall be designated in the
applicable "Grant Instrument" (as defined in Section 5) as an Incentive Stock
Option or a Nonqualified Option, as appropriate. If, notwithstanding its
designation as an Incentive Stock Option, all or a portion of any Option grant
does not qualify under the Code as an Incentive Stock Option, the portion which
does not so qualify shall be treated for all purposes hereunder as a
Nonqualified Option.

4. SHARES SUBJECT TO THE PLAN.

Subject to adjustment as provided in Section 8, the maximum aggregate
number of shares of Common Stock that may be subject to grants made under the
Plan is 2,250,000. The Common Stock to be offered under the Plan shall be
authorized and unissued Common Stock or issued Common Stock that shall have been
reacquired by the Company and held in its treasury. The Common Stock covered by
any unexercised portion of terminated stock options granted under the Plan may
again be subject to new grants under the Plan. In the event the purchase price
of an Option is paid in whole or in part through the delivery of Common Stock,
only the net number of shares of Common Stock issuable in connection with the
exercise of the Option shall be counted against the number of shares remaining
available for grant under the Plan. No participant shall receive grants in
respect of more than 1,000,000 shares of Common Stock in any calendar year
(subject to adjustment as provided in Section 8).

5. PARTICIPANTS.

The Board shall determine and designate from time to time those
employees, directors, consultants and advisors of the Company or its
subsidiaries who shall be granted Options under the Plan and the number of
shares of Common Stock to be covered by each such Option grant; provided, that
any such consultants or advisors who receive grants under the Plan render bona
fide services to the Company or its subsidiaries that are not in connection with
the offer or sale of securities in a capital-raising transaction. In making its
determinations, the Board shall take into account the present and potential
contributions of the respective individuals to the success of the Company and
its subsidiaries and such other factors as the Board shall deem relevant in
connection with accomplishing the purposes of the Plan. Each grant shall be
evidenced by a written Option agreement or grant form ("Grant Instrument") as
the Board shall approve from time to time.

6. FAIR MARKET VALUE.

For all purposes under the Plan, the term "Fair Market Value" shall
mean, as of any applicable date: (i) if the principal securities market on which
the Common Stock is traded is a national securities exchange or The Nasdaq
National Market ("NNM"), the closing price of the Common Stock on such exchange
or NNM, as the case may be, or if no sale of the Common Stock shall have
occurred on such date, on the next preceding date on which there was a reported
sale; (ii) if the Common Stock is not traded on a national securities exchange
or NNM, the closing price on such date as reported by The Nasdaq SmallCap
Market, or if no sale of the Common Stock shall have occurred on such date, on
the next preceding date on which there was a reported sale; (iii) if the
principal securities market on which the Common Stock is traded is not a
national securities exchange, NNM or The Nasdaq SmallCap Market, the average of
the bid and asked prices reported by the National Quotation Bureau, Inc.; (iv)
if not reported by the National Quotation Board, the closing price of a share of
Common Stock on the date of grant as reported on the OTC Bulletin Board; or (v)
if the price of the Common Stock is not so reported, the Fair Market Value of
the Common Stock as determined in good faith by the Board.

7. GRANTS OF OPTIONS.

(a) Exercise Price of Options. Incentive Stock Options shall be granted
at an exercise price of not less than 100% of the Fair Market Value on the date
of grant; provided, however, that Incentive Stock Options granted to a
participant who at the time of such grant owns (within the meaning of Code
Section 424(d)) more than 10% of the voting power of all classes of stock of the
Company (a "10% Holder") shall be granted at an exercise price of not less than
110% of the Fair Market Value on the date of grant. Nonqualified Options shall
be granted at an exercise price as determined in each case by the Board.

(b) Term and Termination of Options.

(1) The Board shall determine the term within which each
Option may be exercised, in whole or in part, provided that (i) such term shall
not exceed 10 years from the date of grant, (ii) the term of an Incentive Stock
Option granted to a 10% Holder shall not exceed 5 years from the date of grant,
and (iii) the aggregate Fair Market Value (determined on the date of grant) of
Common Stock with respect to which Incentive Stock Options granted to a
participant under the Plan or any other plan of the Company and its subsidiaries
become exercisable for the first time in any single calendar year shall not
exceed $100,000.

(2) Unless otherwise determined by the Board, all rights to
exercise Options shall terminate on the first to occur of (i) the scheduled
expiration date as set forth in the applicable Grant Instrument, (ii) 60 days
following the date of termination of employment for any reason other than the
participant's death or permanent disability (as defined in Code Section
22(e)(3)), (iii) 1 year following the date of termination of employment or
provision of services by reason of the participant's death or permanent
disability (as defined in Code Section 22(e)(3)), or (iv) as may be otherwise
provided in the event of a Change of Control as defined in Section 9; provided,
however, that in the event that a participant ceases to be employed by or to
provide services to the Company and its subsidiaries due to a termination for
"cause" (as defined in Section 7(b)(3)), all rights to exercise Options held by
such participant shall terminate immediately as of the date such participant
ceases to be employed by or to provide services to the Company or its
subsidiaries. Unless otherwise determined by the Board, vesting of Options
ceases immediately upon termination of employment or provision of services for
any reason, and any portion of an Option that has not vested on or before the
date of such termination is forfeited on such date.

(3) As used in this Plan, the term "cause" shall mean (i)
"cause" as defined in any applicable employment or services agreement between
the Company and a participant for purposes of determining whether a termination
of such agreement is for cause or (ii) in the absence of such agreement, a
determination by the Board that the participant has engaged in conduct injurious
to the Company or any of its subsidiaries, including, without limitation,
embezzlement, theft, destruction of property, unethical business conduct,
commission of a felony or any other crime of moral turpitude, dishonesty in the
course of his or her employment or service, the disclosure of trade secrets or
confidential information of the Company or its subsidiaries to persons not
entitled to receive such information, violation of any rule or policy of the
Company that is not cured within 15 days after the participant is given notice
of such violation, breach of any noncompetition or nonsolicitation covenant or
any other agreement between the participant and the Company or a subsidiary, or
any other conduct that is injurious to the Company or any of its subsidiaries.

(c) Payment for Shares. Full payment for shares purchased upon exercise
of Options granted under the Plan shall be made at the time the Options are
exercised in whole or in part. Payment of the purchase price shall be made in
cash or in such other form as the Board may approve, including, without
limitation, (i) by the participant's delivery to the Company of a promissory
note containing such terms as the Board may determine, (ii) by the participant's
delivery to the Company of shares of Common Stock that have been held by the
participant for at least six months prior to exercise of the Options, valued at
the Fair Market Value of such shares on the date of exercise, or (iii) if the
Common Stock is publicly traded, pursuant to a cashless exercise arrangement
with a broker on such terms as the Board may determine; provided, however, that
if payment is made pursuant to clause (i), the then par value of the purchased
shares shall be paid in cash if required by applicable law or otherwise deemed
appropriate by the Board. No shares of Common Stock shall be issued to the
participant until such payment has been made, and a participant shall have none
of the rights of a shareholder with respect to Options held by such participant.

(d) Other Terms and Conditions. The Board shall have the discretion to
determine terms and conditions, consistent with the Plan, that will be
applicable to Options, including, without limitation, performance-based criteria
for acceleration of the date on which certain Options shall become exercisable.
Options granted to the same or different participants, or at the same or
different times, need not contain similar provisions.

(e) Substitution of Options. Options may be granted under the Plan from
time to time in substitution for stock options of other entities ("Acquired
Companies") in connection with the merger or consolidation of an Acquired
Company with the Company or its subsidiaries, the acquisition by the Company or
by its subsidiaries of all

or a portion of the assets of an Acquired Company, or the acquisition of stock
of an Acquired Company such that the Acquired Company becomes a subsidiary of
the Company.

8. ADJUSTMENTS TO REFLECT CAPITAL CHANGES.

The number and kind of shares subject to outstanding Option grants, the
exercise price applicable to Options previously granted, and the number and kind
of shares available subsequently to be granted under the Plan shall be
appropriately adjusted to reflect any stock dividend, stock split, combination
or exchange of shares or other change in capitalization with a similar
substantive effect upon the shares of capital stock subject to the Plan or to
Options granted under the Plan. The Board shall have the sole power and
discretion to determine the nature and amount of the adjustment to be made in
each case. The adjustment so made shall be final and binding on all
participants.

9. DEFINITION OF CHANGE OF CONTROL.

For purposes of this Plan, a "Change of Control" shall mean the
occurrence of any of the following events:

(a) the acquisition, other than solely from the Company, by any
individual, entity or group (within the meaning of Section 13(d)(3) or Section
14(d)(2) of the Exchange Act), other than the Company or an employee benefit
plan of the Company, of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of more than 50% of the combined voting
power of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Voting Securities"); or

(b) a reorganization, merger, consolidation or recapitalization of the
Company (a "Business Combination"), other than a Business Combination in which
more than 50% of the combined voting power of the outstanding voting securities
of the surviving or resulting entity immediately following the Business
Combination is held by the persons who, immediately prior to the Business
Combination, were the holders of the Voting Securities; or

10. CONSEQUENCES OF A CHANGE OF CONTROL.

(a) Unless otherwise determined by the Board, immediately prior to a
Change of Control that is, in the Board's determination, primarily for cash, all
outstanding Options which have been granted under the Plan and which are not
exercisable as of the effective date of the Change of Control shall
automatically accelerate and become exercisable upon the effective date of the
Change of Control; provided, that any exercise of such accelerated Options shall
be contingent upon the actual consummation of the Change of Control.

(b) Unless otherwise determined by the Board, upon a Change of Control
that the Board determines is not primarily for cash as described in subsection
(a) above, each outstanding Option shall be assumed by the Acquiring Corporation
(as defined below) or parent thereof or replaced with a comparable option or
right to purchase shares of the capital stock, or equity equivalent instrument,
of the Acquiring Corporation or parent thereof, or other comparable rights (such
assumed and comparable options and rights, together, the "Replacement Options");
provided, however, that if the Acquiring Corporation or parent thereof does not
intend to grant Replacement Options, then unless otherwise determined by the
Board all outstanding Options which have been granted under the Plan and which
are not exercisable as of the effective date of the Change of Control shall
automatically accelerate and become exercisable immediately prior to the
effective date of the Change of Control; provided, that any exercise of such
accelerated Options shall be contingent upon the actual consummation of the
Change of Control. The term "Acquiring Corporation" means the surviving,
continuing, successor or purchasing corporation, as the case may be.
Notwithstanding anything in the Plan to the contrary, the Board shall have
discretion, in the applicable Grant Instrument or an amendment thereof, to
provide for the acceleration of Options upon a Change of Control. The Board may
determine in its discretion (but shall not be obligated to do so) that in lieu
of the issuance of Replacement Options, all holders of outstanding Options which
are exercisable immediately prior to a Change of Control

(including those that become exercisable under Section 10(a) or this Section
10(b)) will be required to surrender them in exchange for a payment, in cash or
Common Stock as determined by the Board, of an amount equal to the amount (if
any) by which the then Fair Market Value of Common Stock subject to unexercised
Options exceeds the exercise price of those Options, with such payment to take
place as of the date of the Change of Control or such other date as the Board
may prescribe.

(c) Any Options that are not assumed or replaced by Replacement
Options, exercised or cashed out prior to or concurrent with a Change of Control
will terminate effective upon the Change of Control or at such other time as the
Board deems appropriate, unless otherwise expressly provided in any applicable
Grant Instrument.

(d) Notwithstanding anything in the Plan to the contrary, in the event
of a Change of Control, no action described in the Plan shall be taken
(including, without limitation, actions described in subsections (a), (b) and
(c) above) if such actions would make the Change of Control ineligible for
desired accounting or tax treatment and if, in the absence of such actions, the
Change of Control would qualify for such treatment and the Company intends to
use such treatment with respect to such Change of Control.

11. TRANSFERABILITY OF OPTIONS.

Unless otherwise determined by the Board with respect to Nonqualified
Options, Options granted under the Plan shall not be transferable other than by
will or the laws of descent and distribution and are exercisable during a
participant's lifetime only by the participant.

12. RIGHT TO REPURCHASE AND RIGHT TO RECOVER

(a) In the case of any participant whose employment or service
terminates for any reason (including, without limitation, death, disability,
retirement, voluntary resignation or termination, or involuntary termination
with or without cause), except as otherwise provided in any Grant Instrument,
the Company shall have a right, exercisable at any time and from time to time
after such termination, to repurchase from the participant (or any successor in
interest by purchase, gift or other mode of transfer) any shares of Common Stock
issued to such terminated participant under the Plan and still held by the
participant upon the participant's termination of employment or service. Such
repurchase shall be made at the Fair Market Value of the shares of Common Stock
at the time of repurchase unless the participant's employment or service was
terminated for cause (as that term is defined in Section 7(b)(3)) or, in the
Board's determination, the participant has taken any action prior to or
following his termination of employment or service which would have constituted
grounds for a termination for cause, in either of which case such repurchase
shall be made at the lower of the Fair Market Value of the shares of Common
Stock at the time of repurchase or the purchase price paid by the participant
for such shares of Common Stock. With respect to shares of Common Stock
previously issued to a terminated participant under the Plan and no longer held
by the participant upon the participant's termination of employment or service,
to the extent that such participant is terminated for cause or, in the Board's
determination, the participant has taken any action prior to or following his
termination of employment or service which would have constituted grounds for a
termination for cause, in either of which case, the Company shall be entitled to
recover from the participant, a dollar amount equal to the difference between
the exercise price paid by the participant for such shares of Common Stock and
the sale price realized by the participant upon the disposition of for such
shares of Common Stock. This right to repurchase shares of Common Stock or to
recover amounts from a participant shall be exercisable by the Company in
accordance with terms and conditions established by the Board.

(b) The rights of repurchase and recovery under this Section 12 shall
be exercisable by the Company only during the 180-day period following a
participant's termination of employment or service.

13. WITHHOLDING.

The Company shall have the right to deduct any taxes required by law to
be withheld in respect of grants under the Plan from amounts paid to a
participant in cash as salary, bonus or other compensation. In the Board's
discretion, a participant may be permitted to elect to have withheld from the
shares otherwise issuable to the participant, or to tender to the Company, a
number of shares of Common Stock the aggregate Fair Market Value of which does
not exceed the minimum required withholding rate for federal (including FICA),
state and local tax liabilities. Any such election must be in a form and manner
prescribed by the Board.

14. CONSTRUCTION OF THE PLAN.

The validity, construction, interpretation, administration and effect
of the Plan and of its rules and regulations, and rights relating to the Plan,
shall be determined solely by the Board. Any determination by the Board shall be
final and binding on all participants. The Plan shall be governed in accordance
with the laws of the State of Florida, without regard to the conflict of law
provisions of such laws.

15. NO RIGHT TO GRANT; NO RIGHT TO EMPLOYMENT.

No person shall have any claim of right to be granted an Option under
the Plan. Neither the Plan nor any action taken hereunder shall be construed as
giving any employee any right to be retained in the employ of the Company or any
of its subsidiaries or as giving any consultant, advisor or director of the
Company or any of its subsidiaries any right to continue to serve in such
capacity.

16. GRANTS NOT INCLUDABLE FOR BENEFIT PURPOSES.

Income recognized by a participant pursuant to the provisions of the
Plan shall not be included in the determination of benefits under any employee
pension benefit plan (as such term is defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974) or group insurance or other benefit
plans applicable to the participant which are maintained by the Company or any
of its subsidiaries, except as may be provided under the terms of such plans or
determined by resolution of the Board.

17. NO STRICT CONSTRUCTION.

No rule of strict construction shall be implied against the Company,
the Board or any other person in the interpretation of any of the terms of the
Plan, any grant made under the Plan or any rule or procedure established by the
Board.

18. CAPTIONS.

All Section headings used in the Plan are for convenience only, do not
constitute a part of the Plan, and shall not be deemed to limit, characterize or
affect in any way any provisions of the Plan, and all provisions of the Plan
shall be construed as if no captions had been used in the Plan.

19. SEVERABILITY.

Whenever possible, each provision in the Plan and every grant under the
Plan shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of the Plan or any grant under the Plan
shall be held to be prohibited by or invalid under applicable law, then such
provision shall be deemed amended to accomplish the objectives of the provision
as originally written to the fullest extent permitted by law, and all other
provisions of the Plan and every other grant under the Plan shall remain in full
force and effect.

20. LEGENDS.

All certificates for Common Stock delivered under the Plan shall be
subject to such transfer and other restrictions as the Board may deem advisable
under the rules, regulations and other requirements of the Securities and
Exchange Commission, any stock exchange or quotation system upon which the
Common Stock is then listed or quoted and any applicable federal or state
securities laws, and the Board may cause a legend or legends to be put on any
such certificates to make appropriate references to such restrictions.

21. AMENDMENT.

The Board may, by resolution, amend or revise the Plan, except that
such action shall not be effective without shareholder approval if such
shareholder approval is required to maintain the compliance of the Plan and/or
grants made to directors, executive officers or other persons with Rule 16b-3
promulgated under the Exchange Act or any successor rule. The Board may not
modify any Options previously granted under the Plan in a manner adverse to the
holders thereof without the consent of such holders, except in accordance with
the provisions of Sections 8, 10 or 22.

22. MODIFICATION FOR GRANTS OUTSIDE THE U.S.

The Board may, without amending the Plan, determine the terms and
conditions applicable to grants of Options to participants who are foreign
nationals or employed outside the United States in a manner otherwise
inconsistent with the Plan if the Board deems such terms and conditions
necessary in order to recognize differences in local law or regulations, tax
policies or customs.

23. EFFECTIVE DATE; TERMINATION OF PLAN.

Upon approval by the Company's shareholders, the Plan shall be
effective as of September 7, 2001, the date the Plan was approved by the Board.
The Plan shall terminate on September 6, 2011, unless it is earlier terminated
by the Board. Termination of the Plan shall not affect previous grants under the
Plan.

EXHIBIT C

CATALINA LIGHTING, INC.
MANAGEMENT SETTLEMENT STOCK OPTION PLAN

1. PURPOSE OF THE PLAN.

The purpose of the Catalina Lighting, Inc. Management Settlement Stock
Option Plan (the "Plan") is to promote the interests of Catalina Lighting, Inc.
(the "Company"), its subsidiaries and its shareholders by providing for the
grant of options to purchase the Company's common stock for the purposes of (i)
settling the Company's obligations to certain of the Company's former and
current management employees under employment agreements previously entered into
between the Company and such former and current management employees, and (ii)
obtaining the agreement of certain former and current management employees not
to compete or engage in other practices that may be harmful to the Company and
its subsidiaries.

2. ADMINISTRATION.

(b) For so long as the Company's common stock ("Common Stock") is
registered under Section 12 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), any Compensation Committee to which Plan administration is
delegated shall consist solely of Board members who qualify as (i) "Non-Employee
Directors" as defined under Rule 16b-3 under the Exchange Act and (ii) "outside
directors" as defined under Section 162(m) or any successor provision of the
Internal Revenue Code of 1986, as amended (the "Code") and applicable Treasury
regulations thereunder, if and to the extent such qualification is necessary so
that grants made under the Plan or the exercise of rights thereunder will
qualify for any tax or other material benefit to participants or the Company and
its subsidiaries under applicable law.

(c) Notwithstanding the foregoing, the Board may, subject to any
limitations or restrictions the Board may impose from time to time, delegate to
the Chief Executive Officer the authority to administer the Plan, including the
authority to grant Nonqualified Options (as defined in Section 3) to former and
current employees (other than the Chief Executive Officer) of the Company and
its subsidiaries who are not subject, by reason of their position with the
Company or its subsidiaries, to the requirements of Section 16 of the Exchange
Act and who are not expected to be subject to the limitations of Code Section
162(m).

3. GRANTS.

Grants under the Plan shall be in the form of "Nonqualified Options"
(options that do not qualify as "incentive stock options" within the meaning of
Code Section 422 or any successor provision). Each grant of a Nonqualified
Option shall be provided for through a "Grant Instrument" (as defined in
Section 5).

4. SHARES SUBJECT TO THE PLAN.

Subject to adjustment as provided in Section 8, the maximum aggregate
number of shares of Common Stock that may be subject to grants made under the
Plan is 1,569,229. The Common Stock to be offered under the Plan shall be
authorized and unissued Common Stock or issued Common Stock that shall have been
reacquired by the Company and held in its treasury. The Common Stock covered by
any unexercised portion of terminated stock options granted under the Plan may
again be subject to new grants under the Plan. In the event the purchase price
of a Nonqualified Option is paid in whole or in part through the delivery of
Common Stock, only the net number of shares of Common Stock issuable in
connection with the exercise of the Nonqualified Option shall be counted against
the number of shares remaining available for grant under the Plan. No
participant shall receive grants in respect of more than 750,000 shares of
Common Stock in any calendar year (subject to adjustment as provided in Section
8).

5. PARTICIPANTS.

The Board shall determine and designate from time to time those former
and current employees of the Company or its subsidiaries who shall be granted
Nonqualified Options under the Plan and the number of shares of Common Stock to
be covered by each such Nonqualified Option grant; provided, that grants made
under the Plan to former and current employees shall not be in connection with
the offer or sale of securities in a capital-raising transaction. In making its
determinations, the Board shall take into account such factors as the Board
shall deem relevant in connection with accomplishing the purposes of the Plan.
Each grant shall be evidenced by a written Nonqualified Option agreement or
grant form ("Grant Instrument") as the Board shall approve from time to time.

6. FAIR MARKET VALUE.

For all purposes under the Plan, the term "Fair Market Value" shall
mean, as of any applicable date, (i) if the principal securities market on which
the Common Stock is traded is a national securities exchange or The Nasdaq
National Market ("NNM"), the closing price of the Common Stock on such exchange
or NNM, as the case may be, or if no sale of the Common Stock shall have
occurred on such date, on the next preceding date on which there was a reported
sale; (ii) if the Common Stock is not traded on a national securities exchange
or NNM, the closing price on such date as reported by The Nasdaq SmallCap
Market, or if no sale of the Common Stock shall have occurred on such date, on
the next preceding date on which there was a reported sale; (iii) if the
principal securities market on which the Common Stock is traded is not a
national securities exchange, NNM or The Nasdaq SmallCap Market, the average of
the bid and asked prices reported by the National Quotation Bureau, Inc.; (iv)
if not reported by the National Quotation Board, the closing price of a share of
Common Stock on the date of grant as reported on the OTC Bulletin Board; (v) if
the price of the Common Stock is not so reported, the Fair Market Value of the
Common Stock as determined in good faith by the Board.

7. GRANTS OF OPTIONS.

(a) Exercise Price of Nonqualified Options. Nonqualified Options shall
be granted at an exercise price as determined in each case by the Board.

(b) Term and Termination of Nonqualified Options. The Board shall
determine the term within which each Nonqualified Option may be exercised, in
whole or in part, provided that such term shall not exceed 10 years from the
date of grant. Unless otherwise determined by the Board, all rights to exercise
Nonqualified Options shall terminate on the scheduled expiration date as set
forth in the applicable Grant Instrument.

(c) Payment for Shares. Full payment for shares purchased upon exercise
of Nonqualified Options granted under the Plan shall be made at the time the
Nonqualified Options are exercised in whole or in part. Payment of the purchase
price shall be made in cash or in such other form as the Board may approve,
including, without limitation, (i) by the participant's delivery to the Company
of a promissory note containing such terms as the Board may determine, (ii) by
the participant's delivery to the Company of shares of Common Stock that have
been held by the participant for at least six months prior to exercise of the
Nonqualified Options, valued at the Fair Market

Value of such shares on the date of exercise, or (iii) if the Common Stock is
publicly traded, pursuant to a cashless exercise arrangement with a broker on
such terms as the Board may determine; provided, however, that if payment is
made pursuant to clause (i), the then par value of the purchased shares shall be
paid in cash if required by applicable law or otherwise deemed appropriate by
the Board. No shares of Common Stock shall be issued to the participant until
such payment has been made, and a participant shall have none of the rights of a
shareholder with respect to Nonqualified Options held by such participant.

(d) Other Terms and Conditions. The Board shall have the discretion to
determine terms and conditions, consistent with the Plan, that will be
applicable to Nonqualified Options. Nonqualified Options granted to the same or
different participants, or at the same or different times, need not contain
similar provisions.

8. ADJUSTMENTS TO REFLECT CAPITAL CHANGES.

The number and kind of shares subject to outstanding Option grants, the
exercise price applicable to Nonqualified Options previously granted, and the
number and kind of shares available subsequently to be granted under the Plan
shall be appropriately adjusted to reflect any stock dividend, stock split,
combination or exchange of shares or other change in capitalization with a
similar substantive effect upon the shares of capital stock subject to the Plan
or to Options granted under the Plan. The Board shall have the sole power and
discretion to determine the nature and amount of the adjustment to be made in
each case. The adjustment so made shall be final and binding on all
participants.

9. DEFINITION OF CHANGE OF CONTROL.

For purposes of this Plan, a "Change of Control" shall mean the
occurrence of any of the following events:

(a) the acquisition, other than solely from the Company, by any
individual, entity or group (within the meaning of Section 13(d)(3) or Section
14(d)(2) of the Exchange Act), other than the Company or an employee benefit
plan of the Company, of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of more than 50% of the combined voting
power of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Voting Securities"); or

(b) a reorganization, merger, consolidation or recapitalization of the
Company (a "Business Combination"), other than a Business Combination in which
more than 50% of the combined voting power of the outstanding voting securities
of the surviving or resulting entity immediately following the Business
Combination is held by the persons who, immediately prior to the Business
Combination, were the holders of the Voting Securities; or

10. CONSEQUENCES OF A CHANGE OF CONTROL.

(a) Unless otherwise determined by the Board, immediately prior to a
Change of Control that is, in the Board's determination, primarily for cash, all
outstanding Nonqualified Options which have been granted under the Plan and
which are not exercisable as of the effective date of the Change of Control
shall automatically accelerate and become exercisable upon the effective date of
the Change of Control; provided, that any exercise of such accelerated Options
shall be contingent upon the actual consummation of the Change of Control.

(b) Unless otherwise determined by the Board, upon a Change of Control
that the Board determines is not primarily for cash as described in subsection
(a) above, each outstanding Nonqualified Option shall be assumed by the
Acquiring Corporation (as defined below) or parent thereof or replaced with a
comparable option or right to purchase shares of the capital stock, or equity
equivalent instrument, of the Acquiring Corporation or parent thereof, or other
comparable rights (such assumed and comparable options and rights, together, the
"Replacement Options"); provided, however, that if the Acquiring Corporation or
parent thereof does not intend to grant Replacement Options, then unless
otherwise determined by the Board all outstanding Nonqualified Options which
have been

granted under the Plan and which are not exercisable as of the effective date of
the Change of Control shall automatically accelerate and become exercisable
immediately prior to the effective date of the Change of Control; provided, that
any exercise of such accelerated Options shall be contingent upon the actual
consummation of the Change of Control. The term "Acquiring Corporation" means
the surviving, continuing, successor or purchasing corporation, as the case may
be. Notwithstanding anything in the Plan to the contrary, the Board shall have
discretion, in the applicable Grant Instrument or an amendment thereof, to
provide for the acceleration of Nonqualified Options upon a Change of Control.
The Board may determine in its discretion (but shall not be obligated to do so)
that in lieu of the issuance of Replacement Options, all holders of outstanding
Nonqualified Options which are exercisable immediately prior to a Change of
Control (including those that become exercisable under Section 10(a) or this
Section 10(b)) will be required to surrender them in exchange for a payment, in
cash or Common Stock as determined by the Board, of an amount equal to the
amount (if any) by which the then Fair Market Value of Common Stock subject to
unexercised Nonqualified Options exceeds the exercise price of those
Nonqualified Options, with such payment to take place as of the date of the
Change of Control or such other date as the Board may prescribe.

(c) Any Nonqualified Options that are not assumed or replaced by
Replacement Options, exercised or cashed out prior to or concurrent with a
Change of Control will terminate effective upon the Change of Control or at such
other time as the Board deems appropriate, unless otherwise expressly provided
in any applicable Grant Instrument.

(d) Notwithstanding anything in the Plan to the contrary, in the event
of a Change of Control, no action described in the Plan shall be taken
(including, without limitation, actions described in subsections (a), (b) and
(c) above) if such actions would make the Change of Control ineligible for
desired accounting or tax treatment if, in the absence of such actions, the
Change of Control would qualify for such treatment and the Company intends to
use such treatment with respect to such Change of Control.

11. TRANSFERABILITY OF OPTIONS.

Unless otherwise determined by the Board, Nonqualified Options granted
under the Plan shall not be transferable other than by will or the laws of
descent and distribution and are exercisable during a participant's lifetime
only by the participant.

12. WITHHOLDING.

13. CONSTRUCTION OF THE PLAN.

14. NO RIGHT TO GRANT; NO RIGHT TO EMPLOYMENT.

No person shall have any claim of right to be granted a Nonqualified
Option under the Plan. Neither the Plan nor any action taken hereunder shall be
construed as giving any employee any right to be retained in the employ of the
Company or any of its subsidiaries or as giving any consultant, advisor or
director of the Company or any of its subsidiaries any right to continue to
serve in such capacity.

15. GRANTS NOT INCLUDABLE FOR BENEFIT PURPOSES.

16. NO STRICT CONSTRUCTION.

17. CAPTIONS.

18. SEVERABILITY.

19. LEGENDS.

20. AMENDMENT.

The Board may, by resolution, amend or revise the Plan, except that
such action shall not be effective without shareholder approval if such
shareholder approval is required to maintain the compliance of the Plan and/or
grants made to directors, executive officers or other persons with Rule 16b-3
promulgated under the Exchange Act or any successor rule. The Board may not
modify any Nonqualified Options previously granted under the Plan in a manner
adverse to the holders thereof without the consent of such holders, except in
accordance with the provisions of Sections 8, 10 or 21.

21. MODIFICATION FOR GRANTS OUTSIDE THE U.S.

The Board may, without amending the Plan, determine the terms and
conditions applicable to grants of Nonqualified Options to participants who are
foreign nationals or employed outside the United States in a manner otherwise
inconsistent with the Plan if the Board deems such terms and conditions
necessary in order to recognize differences in local law or regulations, tax
policies or customs.

22. EFFECTIVE DATE; TERMINATION OF PLAN.

EXHIBIT D

AMENDED AND RESTATED

BY-LAWS

CATALINA LIGHTING, INC.

(a Florida Corporation)

ARTICLE 1

DEFINITIONS

As used in these by-laws, unless the context otherwise requires, the
term:

1.1. "Articles of Incorporation" means the articles of incorporation of
the Corporation, as amended, supplemented or restated from time to time.

1.2. "Assistant Secretary" means an Assistant Secretary of the
Corporation.

l.3. "Assistant Treasurer" means an Assistant Treasurer of the
Corporation,

1.4. "Board" means the Board of Directors of the Corporation.

1.5. "Business Corporation Act" means the Florida Business Corporation
Act, as amended from time to time.

1.6. "By-laws" means the by-laws of the Corporation, as amended
from time to time.

1.7. "Chief Executive Officer" means the Chief Executive Officer of the
Corporation.

1.8. "Corporation" means CATALINA LIGHTING, INC.

1.9. "Directors" means directors of the Corporation.

1.10. "President" means the President of the Corporation.

1.11. "Secretary" means the Secretary of the Corporation.

1.12. "Shareholders" means shareholders of the Corporation.

1.13. "Tota1 number of directors" means the total number of directors
determined in accordance with Section 607.0803 of the Business Corporation Act
and Section 3.2 of the By-laws.

1.14. "Treasurer" means the Treasurer of the Corporation.

1.15. "Vice President" means Vice President of the Corporation.

1.16. "Whole Board" means the total number of Directors of the
Corporation.

ARTICLE 2

SHAREHOLDERS

2.1. PLACE OF MEETINGS. Every meeting of shareholders shall be held at
the principal office of the Corporation or at such other place within or without
the state of Florida as shall be specified or fixed in the notice of such
meeting or in the waiver of notice thereof.

2.2. ANNUAL MEETING. A meeting of shareholders shall be held annually
for the election of directors and the transaction of other business at such hour
and on such day as may be determined by the Board and designated in the notice
of meeting.

2.3. DEFERRED MEETING FOR ELECTION OF DIRECTORS, ETC. If the annual
meeting of shareholders of the election of directors and the transaction of
other business is not held during the period specified in Section 2.2, the Board
shall call a meeting of shareholders for the election of directors and the
transaction of other business as soon thereafter as convenient.

2.4. OTHER SPECIAL MEETINGS. A special meeting of shareholders (other
than a special meeting for the election of directors), unless otherwise
prescribed by statute, may be called at any time by a majority vote of the Board
or by the Chief Executive Officer or by the Secretary. At any special meeting of
shareholders only such business may be transacted as is related to the purpose
or purposes of such meeting set forth in the notice thereof given pursuant to
Section 2.6 of the By-laws.

2.5. FIXING RECORD DATE. For the purpose of determining the
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or for the purpose of determining shareholders entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of stock, or for the purpose of any other lawful action, the Board
may fix, in advance, a date as the record date for any such determination of
shareholders. Such date shall not be more than sixty nor less than ten days
before the date of such meeting, nor more than sixty days prior to any other
action. If no such record date is fixed:

2.5.1 The record date for determining shareholders entitled to
notice of or to vote at a meeting of shareholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held;

2.5.2 The record date for determining shareholders entitled to
express consent to corporate action in writing without a meeting shall not be
more than ten days from the date upon which the resolution fixing the record
date is adopted by the Board of Directors; provided that any shareholder of
record seeking to have the shareholders authorize or take corporate action by
written consent shall deliver to the Secretary of the Corporation a notice
setting forth the information required under Section 2.15 of these By-Laws
respecting such proposed corporate action and requesting that the Board of
Directors fix a record date for purposes of determining shareholders entitled to
express consent to corporate action in writing, and the Board of Directors shall
promptly, but in all events within ten days after the date on which such a
request is received, adopt a resolution fixing the record date; provided,
further, that if no record date is set by the Board within ten days of the date
on which a notice and request meeting the requirements of this Section 2.5.2 is
received, the record date for determining shareholders entitled to express
consent to corporate action in writing without a meeting, when no prior action
of the Board of Directors is required by law, shall be the first date on which a
signed written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation in accordance with applicable law, or, if prior
action by the Board of Directors is required by law, shall be at the close of
business on the day on which the Board of Directors adopts the resolution taking
such prior action;

2.5.3 The record date for determining shareholders for any
purpose other than those specified in Sections 2.5.1 and 2.5.2 shall be at the
close of business on the day on which the Board adopts the resolution relating
thereto.

A determination of shareholders entitled to notice of or to vote at any
meeting of shareholders is effective for any adjournment of the meeting unless
the Board fixes a new record date for the adjourned meeting. If any meeting of
shareholders is adjourned to a date more than 120 days after the date fixed for
the original meeting, the Board shall fix a new record date for the adjourned
meeting.

2.6. NOTICE OF MEETINGS OF SHAREHOLDERS. Except as otherwise provided
in Sections 2.5 and 2.7 of the By-laws, whenever under the Business Corporation
Act or the Articles of Incorporation or the By-laws, shareholders are required
or permitted to take any action at a meeting, written notice shall be given
stating the place, date and hour of the meeting and, in the case of a special
meeting, the purpose or purposes which the meeting is called. A copy of the
notice of any meeting shall be given, personally or by mail, not less than ten
nor more than sixty days before the date of the meeting, to each shareholder
entitled to notice of or to vote at such meeting. If mailed, such notice shall
be deemed to be given when deposited in the United States mail, with postage
prepaid, directed to the shareholder at his address as it appears on the records
of the Corporation. An affidavit of the Secretary or an Assistant Secretary or
of the transfer agent of the Corporation that the notice required by this
section has been given shall, in the absence of fraud, be prima facie evidence
of the facts stated therein. When a meeting is adjourned to another time or
place, notice need not be given of the adjourned meeting if the time and place
thereof are announced at the meeting at which the adjournment is taken, and at
the adjourned meeting any business may be transacted that might have been
transacted at the meeting as originally called. If, however, after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each shareholder of record entitled to
vote at the meeting.

2.7. WAIVERS OF NOTICE. Whenever notice is required to be given to any
shareholder under any provision of the Business Corporation Act or the Articles
of Incorporation or the By-laws, a written waiver thereof, signed by the
shareholder entitled to notice, whether before or after the time stated therein,
shall be deemed equivalent to notice. Attendance of a shareholder at a meeting
shall constitute a waiver of notice of such meeting, except when the shareholder
attends a meeting for the express purpose of objecting, which must occur at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the shareholders need be
specified in any written waiver of notice.

2.8. LIST OF SHAREHOLDERS. The Secretary shall prepare and make, or
cause to be prepared and made, at least ten days before every meeting of
shareholders, a complete list of the shareholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
shareholder and the number of shares registered in the name of each shareholder.
Such list shall be open to the examination of any shareholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any shareholder who is
present.

2.9. QUORUM OF SHAREHOLDERS; ADJOURNMENT. At each meeting of
shareholders, the holders of a majority of the shares of stock entitled to vote
at the meeting, present in person or represented by proxy, shall constitute a
quorum for the transaction of any business at such meeting, except to the extent
otherwise required by applicable law. Where a separate vote by a class or
classes of shareholders is required, the holders of a majority of the shares of
such class or classes then outstanding, present in person or represented by
proxy, shall constitute a quorum entitled to take such action with respect to
the vote on that matter, except to the extent otherwise required by applicable
law. The chairman of the meeting or the holders of a majority of the shares of
stock present in person or represented by proxy at any meeting of shareholders,
including an adjourned meeting, whether or not a quorum is present, may adjourn
such meeting to another time and place.

2.10. VOTING; PROXIES. Unless otherwise provided in the Articles of
Incorporation every shareholder of record shall be entitled at every meeting of
shareholders to one vote for each share of capital stock standing in his name on
the record of shareholders determined in accordance with Section 2.5 of the
By-laws. If the Articles of Incorporation provide for more or less than one vote
for any shares, on any matter, every reference in the By-laws or the Business
Corporation Act to a majority or other proportion of stock shall refer to such
majority or other

proportion of the votes of such stock. The provisions of Section 607.0721 of the
Business Corporation Act shall apply in determining whether any shares of
capital stock may be voted and the persons, if any, entitled to vote such
shares; but the Corporation shall be protected in treating the persons in whose
names shares of capital stock stand on the record of shareholders as owners
thereof for all purposes. At any meeting of shareholders (at which a quorum is
present to organize the meeting), all matters, except as otherwise provided by
law or by the Articles of Incorporation or by the By-laws, shall be decided by a
majority of the votes cast at such meeting by the holders of shares present in
person or represented by proxy and entitled to vote thereon, whether or not a
quorum is present when the vote is taken. All elections of directors shall be by
written ballot unless otherwise provided in the Articles of Incorporation. In
voting on any other question on which a vote by ballot is required by law or is
demanded by any shareholder entitled to vote, the voting shall be by ballot.
Each ballot shall be signed by the shareholder voting or by his proxy, and shall
state the number of shares voted. On all other questions, votes may be cast
orally. Every shareholder entitled to vote at a meeting of shareholders or to
express consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for him by proxy. The validity and
enforceability of any proxy shall be determined in accordance with Section
607.0722 of the Business Corporation Act.

2.11. SELECTION AND DUTIES OF INSPECTORS AT MEETINGS OF SHAREHOLDERS.
The Board, in advance of any meeting of shareholders, may appoint one or more
inspectors to act at the meeting or any adjournment thereof. If inspectors are
not so appointed, the person presiding at such meeting may, and on the request
of any shareholder entitled to vote thereat shall, appoint one or more
inspectors. In case any person appointed fails to appear or act, the vacancy may
be filled by appointment made by the Board in advance of the meeting or at the
meeting by the person presiding thereat. Each inspector, before entering upon
the discharge of his duties, shall take and sign an oath faithfully to execute
the duties of inspector at such meeting with strict impartiality and according
to the best of his ability. The inspector or inspectors shall determine the
number of shares outstanding and the voting power of each, the shares
represented at the meeting, the existence of a quorum, the validity and effect
of proxies, and shall receive votes, ballots or consents, hear and determine all
challenges and questions arising in connection with the right to vote, count and
tabulate all votes, ballots or consents, determine the result, and do such acts
as are proper to conduct the election or vote with fairness to all shareholders.
On request of the person presiding at the meeting or any shareholder entitled to
vote thereat, the inspector or inspectors shall make a report in writing of any
challenge, question or matter determining by him or them and execute a
certificate of any fact found by him or them. Any report or certificate made by
the inspector or inspectors shall be prima facie evidence of the facts stated
and of the vote as certified by him or them.

2.12. ORGANIZATION. At every meeting of shareholders, the Chairman of
the Board, or in the absence of the Chairman of the Board, the Chief Executive
Officer, or in the absence of the Chief Executive Officer and the Chairman of
the Board, the President, or in the absence of the President and the Chairman of
the Board and the Chief Executive Officer, a Vice President, and in case more
than one Vice President shall be present, the Vice President designated by the
Board (or in the absence of any such designation, the most senior Vice
President, based on age, present), shall act as chairman of the meeting. The
Secretary, or in his absence one of the Assistant Secretaries, shall act as
secretary of the meeting.

2.13. ORDER OF BUSINESS. The order of business at all meetings of
shareholders shall be as determined by the chairman of the meeting.

2.14. WRITTEN CONSENT OF SHAREHOLDERS WITHOUT A MEETING. Unless
otherwise provided in the Articles of Incorporation, any action required by the
Business Corporation Act to be taken at any annual or special meeting of
shareholders of the Corporation, or any action which may be taken at any annual
or special meeting of such shareholders, may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth the
action so taken, shall be signed by the holders of outstanding stock having not
less than the minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon were
present and voted. Notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
shareholders who have consented in writing in accordance with the Business
Corporation Act.

2.15. NOMINATIONS AND SHAREHOLDER BUSINESS.

(a) To be properly brought before an annual meeting of shareholders,
nominations of persons for election to the Board of Directors of the Corporation
and the proposal of business to be considered by the shareholders at an annual
meeting of shareholders must be either (i) specified in the notice of meeting
(or any supplement thereto) given by or at the direction of the Board of
Directors (or any duly authorized committee thereof), (ii) otherwise properly
brought before the annual meeting by or at the direction of the Chief Executive
Officer, the Chairman of the Board of Directors or by vote of a majority of the
full Board of Directors, or (iii) otherwise brought before the annual meeting by
any shareholder of the Corporation who is a shareholder of record on the date of
the giving of the notice provided for in Section 2.5 who is entitled to vote at
the meeting and who complied with the notice procedures set forth in this
Section 2.15.

(b) For nominations or other business to be properly brought before an
annual meeting by a shareholder under this Section 2.15, the shareholder must
have given timely notice thereof in writing to the Secretary of the Corporation
and such business must be a proper subject for shareholder action under the
Business Corporation Act. To be timely, a shareholder's notice must be delivered
to the Secretary at the principal executive offices of the Corporation not less
than 120 days prior to the first anniversary of the date of the Corporation's
release of proxy materials to shareholders in connection with the previous
year's annual meeting; provided, however, that in the event the Corporation did
not conduct an annual meeting the previous year or if the date of the annual
meeting is advanced by more than 30 days or delayed by more than 30 days from
such anniversary date, then notice by the shareholder, in order to be timely,
must be delivered not later than the close of business on the later of the 120th
day prior to the annual meeting or the 10th day following the day on which the
date of the meeting is publicly announced. Such shareholder's notice must set
forth (i) as to each person whom the shareholder proposes to nominate for
election or reelection as a director all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
directors, or is otherwise required, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(including such person's written consent to being named in the proxy statement
as a nominee and to serving as a director if elected); (ii) as to any other
business that the shareholder proposes to bring before the meeting, a brief
description of the business desired to be brought before the meeting, the
reasons for conducting such business at the meeting and any material interest in
such business of such shareholder and the beneficial owner, if any, on whose
behalf the proposal is made; and (iii) as to the shareholder giving the notice
and the beneficial owners, if any, on whose behalf the nomination or proposal is
made (A) the name and address of such shareholder, as they appear on the
Corporation's books, and of such beneficial owner, (B) the number of shares of
the Corporation which are owned (beneficially or of record) by such shareholder
and such beneficial owner, (C) a description of all arrangements or
understandings between such shareholder and such beneficial owner and any other
person or persons (including their names) in connection with the proposal of
such business by such shareholder and any material interest of such shareholder
and of such beneficial owner in such business, and (D) a representation that
such shareholder or its agent or designee intends to appear in person or by
proxy at the annual meeting to bring such business before the meeting.

(c) Only such business may be conducted at a special meeting of
shareholders as has been brought before the meeting pursuant to the
Corporation's notice of meeting. Nominations of persons for election to the
Board of Directors may be made at a special meeting of shareholders at which
directors are to be elected pursuant to the Corporation's notice of meeting (i)
by or at the direction of the Board of Directors or (ii) by any shareholder of
the Corporation who is a shareholder of record at the time of giving the notice
required by this Section 2.15, who is entitled to vote at the meeting and who
complies with the notice procedures set forth in this Section 2.15. Nominations
by shareholders of persons for election to the Board of Directors may be made at
such a special meeting of Shareholders if the shareholder's notice required by
this Section 2.15 is delivered to the Secretary at the principal executive
offices of the Corporation not later than the close of business on the later of
the 120th day prior to such special meeting or the 10th day following the day on
which public announcement is first made of the date of the special meeting and
of the nominees proposed by the Board of Directors to be elected at such
meeting.

(d) Only those persons who are nominated in accordance with the
procedures set forth in this Section 2.15 will be eligible for election as
directors at any meeting of shareholders. Only business brought before the
meeting in accordance with the procedures set forth in this Section 2.15 may be
conducted at a meeting of shareholders. The chairman of the meeting has the
power and duty to determine whether a nomination or any business proposed to be
brought before the meeting was made in accordance with the procedures set forth
in this Section 2.15 and, if any

proposed nomination or business is not in compliance with this Section 2.15, to
declare that such defective proposal shall be disregarded.

(e) For purposes of this Section 2.15, "public announcement" shall
include disclosure in a press release reported by the Dow Jones News Service,
Associated Press, Business Wire, PR Newswire or comparable national news service
or in a document publicly filed by the Corporation with the Securities and
Exchange Commission pursuant to the Exchange Act.

(f) Notwithstanding the foregoing provisions of this Section 2.15, a
shareholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth in this Section 2.15. Nothing in this Section 2.15 shall be deemed to
remove any obligation of shareholders to comply with the requirements of Rule
14a-8 under the Exchange Act with respect to proposals requested to be included
in the Corporation's proxy statement pursuant to said Rule 14a-8.

ARTICLE 3

DIRECTORS

3.1. GENERAL POWERS. Except as otherwise provided in the Articles of
Incorporation, the business and affairs of the Corporation shall be managed by
or under the direction of the Board. The Board may adopt such rules and
regulations, not inconsistent with the Articles of Incorporation or the By-laws
or applicable laws, as it may deem proper for the conduct of its meetings and
the management of the Corporation. In addition to the powers expressly conferred
by the By-laws, the Board may exercise all powers and perform all acts which are
not required, by the By-laws or the Articles of Incorporation or by law, to be
exercised and performed by the shareholders.

3.2. NUMBER; QUALIFICATION; TERM OF OFFICE. The Board shall consist of
one or more members. The total number of directors may be changed from time to
time by action of the shareholders or by action of the Board. Directors need not
be shareholders. Each director shall hold office until his successor is elected
and qualified or until his earlier death, resignation or removal.

3.3. ELECTION. Directors shall, except as otherwise required by law or
by the Articles of Incorporation, be elected by a plurality of the votes cast at
a meeting of shareholders by the holders of shares entitled to vote in the
election.

3.4. NEWLY CREATED DIRECTORSHIPS AND VACANCIES. Unless otherwise
provided in the Articles of Incorporation, created directorships resulting from
an increase in the number of directors and vacancies occurring in the Board for
any other reason, including the removal of directors without cause, may be
filled by vote of a majority of the directors then in office, although less than
a quorum, or by a sole remaining director, or may be elected by a plurality of
the votes cast by the holders of shares of capital stock entitled to vote in the
election at a special meeting of shareholders called for that purpose. A
director elected to fill a vacancy shall be elected to hold office until his
successor is elected and qualified, or until his earlier death, resignation or
removal.

3.5. RESIGNATIONS. Any director may resign at any time by written
notice to the Corporation. Such resignation shall take effect at the time
therein specified, and, unless otherwise specified, the acceptance of such
resignation shall not be necessary to make it effective.

3.6. REMOVAL OF DIRECTORS. Subject to the provisions of Section
607.0842 of the Business Corporation Act, any or all of the directors may be
removed with or without cause, by the holders of a majority of the shares then
entitled to vote at an election of directors.

3.7. COMPENSATION. Each director, in consideration of his service as
such, shall be entitled to receive from the Corporation such amount per annum or
such fees for attendance at directors' meetings, or both, as the Board may from
time to time determine, together with reimbursement for the reasonable expenses
incurred by him in connection with the performance of his duties. Each director
who shall serve as a member of any committee of directors in consideration of
his serving as such shall be entitled to such additional amount per annum or
such fees

for attendance at committee meetings, or both, as the Board may from time to
time determine, together with reimbursement for the reasonable expenses incurred
by him in the performance of his duties. Nothing contained in this section shall
preclude any director from serving the Corporation or its subsidiaries in any
other capacity and receiving proper compensation therefor.

3.8. PLACE AND TIME OF MEETINGS OF THE BOARD. Meetings of the Board,
regular or special, may be held at any place within or without the State of
Florida. The times and places for holding meetings of the Board may be fixed
from time to time by resolution of the Board or (unless contrary to resolution
of the Board) in the notice of the meeting.

3.9. ANNUAL MEETINGS. On the day when and at the place where the annual
meeting of shareholders for the election of directors is held, and as soon as
practicable thereafter, the Board may hold its annual meeting, without notice of
such meeting, for the purposes of organization, the election of officers and the
transaction of other business. The annual meeting of the Board may be held at
any other time and place specified in a notice given as provided in Section 3.11
of the By-laws for special meetings of the Board or in a waiver of notice
thereof.

3.10. REGULAR MEETINGS. Regular meetings of the Board may be held at
such times and places as may be fixed from time to time by the Board. Unless
otherwise required by the Board, regular meetings of the Board may be held
without notice. If any day fixed for a regular meeting of the Board shall be a
Saturday or Sunday or a legal holiday at the place where such meeting is to be
held, then such meeting shall be held at the same hour at the same place on the
first business day thereafter which is not a Saturday, Sunday or legal holiday.

3.11. SPECIAL MEETINGS. Special meetings of the Board shall he held
whenever called by the Chairman of the Board, the Chief Executive Officer or the
Secretary or by any two or more directors. Notice of each special meeting of the
Board shall, if mailed, be addressed to each director at the address designated
by him for that purpose or, if none is designated, his last known address at
least two (2) days before the date on which the meeting is to held; or such
notice shall be sent to each director at least twenty-four (24) hours before the
date and time at which the meeting is to held at such address by telecopy,
telegraph, cable, wireless or personal delivery. Every such notice shall state
the time and place of the meeting but need not state the purpose of the meeting,
except to the extent required by law. If mailed, each notice shall be deemed
given when deposited, with postage thereon prepaid, in the United States mail.
Such mailing shall be by first class mail.

3.12. ADJOURNED MEETINGS. A majority of the directors present at any
meeting of the Board, including an adjourned meeting, whether or not a quorum is
present, may adjourn such meeting to another time and place. Notice of any
adjourned meeting of the Board need not be given to any director whether or not
present at the time of the adjournment. Any business may be transacted at any
adjourned meeting that might have been transacted at the meeting as originally
called.

3.13. WAIVER OF NOTICE. Whenever notice is required to be given to any
director or member of a committee of directors under any provision of the
Business Corporation Act or of the Articles of Incorporation or By-laws, a
written waiver thereof, signed by the person entitled to notice, whether before
or after the time stated therein, shall be deemed equivalent to notice.
Attendance of a person at a meeting shall constitute a waiver of notice of such
meeting, except when the person attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
directors, or members of a committee of directors, need be specified in any
written waiver of notice.

3.14. ORGANIZATION. At each meeting of the Board, the Chairman of the
Board, or in the absence of the Chairman the Chief Executive Officer, or in the
absence of both the Chairman and the Chief Executive Officer, a chairman chosen
by a majority of the directors present, shall preside. The Secretary shall act
as secretary at each meeting of the Board. In case the Secretary shall be absent
from any meeting of the Board, an Assistant Secretary shall perform the duties
of secretary at such meeting; and in the absence from any such meeting of the
Secretary and Assistant Secretaries, the person presiding at the meeting may
appoint any person to act as secretary of the meeting.

3.15. QUORUM OF DIRECTORS. A majority of the total number of directors
shall constitute a quorum for the transaction of business or any specified item
of business at any meeting of the Board.

3.16. ACTION BY THE BOARD. All corporate action taken by the Board or
any committee thereof shall be taken at a meeting of the Board, or of such
committee, as the case may be, except that any action required or permitted to
be taken at any meeting of the Board, or of any committee thereof, may be taken
without a meeting if all members of the Board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board or committee. Members of the Board, or any
committee designated by the Board, may participate in a meeting of the Board, or
of such committee, as the case may be, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and participation in a meeting pursuant to this
Section 3.16 shall constitute presence in person at such meeting. Except as
otherwise provided by the Articles of Incorporation or by law, the vote of a
majority of the directors present (including those who participate by means of
conference telephone or similar communications equipment) at the time of the
vote, if a quorum is present at such time, shall be the act of the Board.

ARTICLE 4

COMMITTEES OF THE BOARD

The Board may, by resolution passed by a majority of the Whole Board,
designate one or more committees, each committee to consist of one or more of
the directors of the Corporation. The Board may designate one or more directors
as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum may unanimously appoint another member of the Board to
act at the meeting in the place of any such absent or disqualified member. Any
such committee, to the extent provided in the resolution of the Board, shall
have and may exercise all the powers and authority of the Board in the
management of the business and affairs of the Corporation, and may authorize the
seal of the Corporation to be affixed to all papers which may require it; but no
such committee shall have the power or authority reserved to the Board of
Directors by the Business Corporation Act.

ARTICLE 5

OFFICERS

5.1. OFFICERS. The Board shall elect such officers as it may determine.

5.2. VACANCIES. A vacancy in an office because of death, resignation,
removal, disqualification or any other cause may be filled in the manner
prescribed in the By-laws for the regular election or appointment to such
office.

5.3. COMPENSATION. Salaries or other compensation of the officers may
be fixed from time to time by the Board. No officer shall be prevented from
receiving a salary or other compensation by reason of the fact that he is also a
director.

5.4. CHAIRMAN OF THE BOARD. The Chairman of the Board shall, if
present, preside at all meetings of the shareholders and at all meetings of the
Board.

5.5. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall be the
chief executive officer of the Corporation and shall have general supervision
over the business of the Corporation, subject, however, to the control of the
Board and of any duly authorized committee of directors. He may, with the
Secretary or the Treasurer or an Assistant Secretary or Assistant Treasurer,
sign certificates for shares of capital stock of the Corporation. He may sign
and execute in the name of the Corporation deeds, mortgages, bonds, contracts
and other instruments, except in cases where the signing and execution thereof
shall be expressly delegated by the Board or by the By-laws to some other
officer or agent of the Corporation, or shall be required by law otherwise to be
signed or executed; and

in general, he shall perform all duties incident to the office of Chief
Executive Officer and such other duties as from time may be assigned to him by
the Board.

5.6. PRESIDENT. The President shall have such duties as assigned by the
Chief Executive Officer and the Board and of any duly authorized committee of
directors. He may, with the Secretary or the Treasurer or an Assistant Secretary
or Assistant Treasurer, sign certificates for shares of capital stock of the
Corporation. He may sign and execute in the name of the Corporation deeds,
mortgages, bonds, contracts and other instruments, except in cases where the
signing and execution thereof shall be expressly delegated by the Board or by
the By-laws to some other officer or agent of the Corporation, or shall be
required by law otherwise to be signed or executed; and in general, he shall
perform all duties incident to the office of President and such other duties as
from time may be assigned to him by the Board or the Chief Executive Officer.

5.7. VICE PRESIDENTS. At the request of the Chief Executive Officer or,
in his absence, the President or, in his absence, at the request of the Board,
the Vice President shall (in such order as may be designated by the Board or, in
the absence of any such designation, in order of seniority based on age) perform
all of the powers of and be subject to all restrictions upon the President. Any
Vice President may also, with the Secretary or the Treasurer or an Assistant
Secretary or an Assistant Treasurer, sign certificates for shares of capital
stock of the Corporation; may sign and execute in the name of the Corporation
deeds, mortgages, bonds, contracts or other instruments authorized by the Board,
except in cases where the signing and execution thereof shall be expressly
delegated by the Board or by the By-laws to some other officer or agent of the
Corporation, or shall be required by law otherwise to be signed or executed; and
shall perform such other duties as from time to time may be assigned to him by
the Board or by the President.

5.8. SECRETARY. The Secretary, if present, shall act as secretary of
all meetings of the shareholders and of the award, and shall keep the minutes
thereof in the proper book or books to be provided for that purpose; he shall
see that all notices required to be given by the Corporation are duly given and
served; he may, with the President or a Vice President, sign certificates for
shares of capital stock of the Corporation; he shall be custodian of the seal of
the Corporation and may seal with the seal of the Corporation, or a facsimile
thereof, all certificates for shares of capital stock of the Corporation and all
documents the execution of which on behalf of the Corporation under its
corporate seal is authorized in accordance with the provisions of the By-laws;
he shall have charge of the stock ledger and also of the other books, records
and papers of the Corporation, and shall see that the reports, statements and
other documents required by law are properly kept and filed; and shall, in
general, perform all the duties incident to the office of Secretary and such
other duties as from time to time may be assigned to him by the Board or by the
President.

5.9. TREASURER. The Treasurer shall have charge and custody of, and be
responsible for, all funds, securities and notes of the Corporation; receive and
give receipts for moneys due and payable to the Corporation from any sources
whatsoever; deposit all such moneys in the name of the Corporation in such
banks, trust companies or other depositories as shall be selected in accordance
with these By-laws; against proper vouchers, cause such funds to be disbursed by
checks or drafts on the authorized depositories of the Corporation signed in
such manner as shall be determined in accordance with any provisions of the
By-laws, and be responsible for the accuracy of the amounts of all moneys to
disbursed; regularly enter or cause to be entered in books to be kept by him or
under his supervision a record of moneys paid by him for the account of the
Corporation; have the right to require, from time to time, reports or statements
giving such information as he may desire with respect to any and all financial
transactions of the Corporation from officers or agents transacting the same;
render to the President or the Board, whenever the President or the Board,
respectively, shall require him so to do, an account of the financial condition
of the Corporation and of all his transactions as Treasurer; exhibit at all
reasonable times his books of account and other records to any of the directors
upon application at the office of the Corporation where such books and records
are kept; in general, perform all the duties incident to the office of Treasurer
and such other duties as from time to time may be assigned to him by the Board
or by the President; and have the power to sign, with the President or a Vice
President, certificates for shares of capital stock of the Corporation.

5.10. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. Assistant
Secretaries and Assistant Treasurers shall perform such duties as shall be
assigned to them by the Secretary or by the Treasurer, respectively, or by the
Board, the Chief Executive Officer or the President. Assistant Secretaries and
Assistant

Treasurers may, with the Chief Executive Officer, President or a Vice President,
sign certificates for shares of capital stock of the Corporation.

5.11. OTHER OFFICERS. The Board may from time to time elect such other
officers as the business of the Corporation may require, including a Chief
Financial Officer and a Chief Operating Officer, each of whom shall hold office
for such period, have such authority, and perform such duties as are provided
from time to time by the Board, the Chief Executive Officer or the President.

5.12. RESIGNATIONS. Any officer may resign at any time by giving
written notice of resignation to the Board or to the Chief Executive Officer or
the President of the Corporation. Any such resignation shall take effect at the
date of the receipt of such notice or at any later time specified therein and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.

5.13. REMOVAL. Any officer, employee or agent of the Corporation may be
removed, either for or without cause, by the Board or other authority which
elected or appointed such officer, employee or agent.

ARTICLE 6

CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.

6.1. EXECUTION OF CONTRACTS. The Board may authorize any officer,
employee or agent, in the name and on behalf of the Corporation, to enter into
any contract or execute and satisfy any instrument, and any such authority may
be general or confined to specific instances, or otherwise limited.

6.2. LOANS. The President or any other officer, employee or agent
authorized by the By-laws or by the Board may effect loans and advances at any
time for the Corporation from any bank, trust company or other institutions or
from any firm, corporation or individual and for such loans and advances may
make, execute and deliver promissory notes, bonds or other certificates or
evidences of indebtedness of the Corporation and, when authorized by the Board
so to do, may pledge and hypothecate or transfer any securities or other
property of the Corporation as security for any such loans or advances. Such
authority conferred by the Board may be general or confined to specific
instances or otherwise limited.

6.3. CHECKS, DRAFTS, ETC. All checks, drafts and other orders for the
payment of money out of the funds of the Corporation and all notes or other
evidences of indebtedness of the Corporation shall be signed on behalf of the
Corporation in such manner as shall from time to time be determined by
resolution of the Board.

6.4. DEPOSITS. The funds of the corporation not otherwise employed
shall be deposited from time to time to the order of the Corporation in such
banks, trust companies or other depositories as the Board may select or as may
be selected by an officer, employee or agent of the Corporation to whom such
power may from time to time be delegated by the Board.

ARTICLE 7

STOCKS AND DIVIDENDS

7.1. CERTIFICATES REPRESENTING SHARES. The shares of capital stock of
the Corporation shall be represented by certificates in such form (consistent
with the provisions of section 607.0625 of the Business Corporation Act) as
shall be approved by the Board, Such certificates shall be signed by the Chief
Executive Officer, the President or a Vice President and by the Secretary or an
Assistant Secretary and may be sealed with the seal of the Corporation or a
facsimile thereof. The signatures of the officer upon a certificate may be
facsimiles, if the Certificate is countersigned by a transfer agent or registrar
other than the Corporation itself or its employee. In case any officer, transfer
agent or registrar who has signed or whose facsimile signature has been placed
upon any certificate shall have ceased to be such officer, transfer agent or
registrar before such certificate is issued, such certificate may, unless
otherwise ordered by the Board, be issued by the Corporation with the same
effect as if such person were such officer, transfer agent or registrar at the
date of issue.

7.2. TRANSFER OF SHARES. Transfers of shares of capital stock of the
Corporation shall be made only on the books of the Corporation by the holder
thereof or by his duly authorized attorney appointed by a power of attorney duly
executed and filed with the Secretary or a transfer agent of the Corporation,
and on surrender of the certificate or certificates representing such shares of
capital stock property endorsed for transfer and upon payment of all necessary
transfer taxes. Every certificate exchanged, returned or surrendered to the
Corporation shall be marked "Cancelled," with the date of cancellation, by the
Secretary or an Assistant Secretary or the transfer agent of the Corporation. A
person in whose name shares of capital stock shall stand on the books of the
Corporation shall be deemed the owner thereof to receive dividends, to vote as
such owner and for all other purposes as respects the Corporation. No transfer
of shares of capital stock shall be valid as against the Corporation, its
shareholders and creditors for any purpose, except to render the transferee
liable for the debts of the Corporation to the extent provided by law, until
such transfer shall have been entered on the books of the Corporation by an
entry showing from and to whom transferred.

7.3. TRANSFER AND REGISTRY AGENTS. The Corporation may from time to
time maintain one or more transfer offices or agents and registry offices or
agents at such place or places as may be determined from time to time by the
Board.

7.4. LOST, DESTROYED, STOLEN AND MUTILATED CERTIFICATES. The holder of
any shares of capital stock of the Corporation shall immediately notify the
Corporation of any loss, destruction, theft or mutilation of the certificate
representing such shares, and the Corporation may issue a new certificate to
replace the certificate alleged to have been lost, destroyed, stolen or
mutilated. The Board may, in its discretion, as a condition to the issue of any
such new certificate, require the owner of the lost, destroyed, stolen or
mutilated certificate, or his legal representatives, to make proof satisfactory
to the Board of such loss, destruction, theft or mutilation and to advertise
such fact in such manner as the Board may require, and to give the Corporation
and its transfer agents and registrars, or such of them as the award may
require, and to give the Corporation and its transfer agents and registrars, or
such of them as the Board may require, a bond in such form, in such sums and
with such surety or sureties as the Board may direct, to indemnify the
Corporation and its transfer agents and registrars against any claim that may be
made against any of them on account of the continued existence of any such
certificate so alleged to have been lost, destroyed, stolen or mutilated and
against any expense in connection with such claim.

7.5. REGULATIONS. The Board may make such rules and regulations as it
may deem expedient, not inconsistent with the By-laws or with the Articles of
Incorporation, concerning the issue, transfer and registration of certificates
representing shares of its capital stock.

7.6. DIVIDENDS, SURPLUS, ETC. Subject to the provisions of the Articles
of Incorporation and of the law, the Board:

7.6.1 May declare and pay dividends or make other
distributions on the outstanding shares of capital stock in such amounts and at
such time or times as, in its discretion, the condition of the affairs of the
Corporation shall render advisable;

7.6.2 May use and apply, in its discretion any of the surplus
of the Corporation in purchasing or acquiring any shares of capital stock of the
Corporation, or purchase warrants therefor, in accordance with law, or any of
its bonds, debentures, notes, script or other securities or evidences of
indebtedness;

7.6.3 May set aside from time to time out of such surplus or
net profits such sum or sums as, in its discretion, it may think proper, as a
reserve fund to meet contingencies, or for equalizing dividends or for the
purpose of maintaining or increasing the property or business of the
Corporation, or for any purpose it may think conducive to the best interests of
the Corporation.

ARTICLE 8

INDEMNIFICATION

8.1. INDEMNIFICATION OF OFFICERS AND DIRECTORS. The Corporation shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that he
is or was a director or an officer of the Corporation, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding to the fullest extent and in the manner set forth in and permitted by
the Business Corporation Act, and any other applicable law, as from time to time
in effect, if such officer or director acted in good faith and in a manner he or
she reasonably believed to be in, or not opposed to, the best interests of the
Corporation and, with respect to any criminal action or proceeding, had no
reason to believe his or her conduct was unlawful. Such right of indemnification
shall not be deemed exclusive of any other rights to which such director or
officer may be entitled apart from the foregoing provisions. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not adhere to the applicable standard of care
set forth above. The foregoing provisions of this Section 8.1 shall be deemed to
be a contract between the Corporation and each director and officer who serves
in such capacity at any time while this Article 8 and the relevant provisions of
the Business Corporation Act and other applicable laws if any, are in effect,
and any repeal or modification thereof shall not affect any rights or
obligations then existing with respect to any state of facts then or theretofore
existing or any action, suit or proceeding theretofore or thereafter brought or
threatened based in whole or in part upon any such state of facts.

8.2. INDEMNIFICATION OF OTHER PERSONS. The Corporation may indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative by reason of the fact that he is or
was an employee or agent of the Corporation, or is or was serving at the request
of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding to the extent and in the manner set forth in and
permitted by the Business Corporation Act, and any other applicable law, as from
time to time in effect. Such right of indemnification shall not be deemed
exclusive of any other rights to which any such person may be entitled apart
from the foregoing provisions.

8.3. INSURANCE. The Corporation shall have the power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of Section 8.1 and 8.2
of the By-laws or under Section 607.014 of the Business Corporation Act or any
other provision of law.

8.4 SEVERABILITY. If this Article 8 or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each person as to costs, charges and
expenses (including attorneys' fees), judgment, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative, including an action by or in the
right of the Corporation, to the fullest extent permitted by any applicable
portion of this Article 8 that shall not have been invalidated and to the
fullest extent permitted by applicable law.

8.5 SUBROGATION. In the event of payment of indemnification, the
Corporation shall be subrogated to the extent of such payment to any right of
recovery such person may have and such person, as a condition of receiving
indemnification from the Corporation, shall execute all documents and do all
things that the Corporation may deem necessary or desirable to perfect such
right of recovery, including the execution of such documents necessary to enable
the Corporation to effectively enforce any such recovery.

8.6 ADVANCE PAYMENT OF EXPENSES. Expenses (including attorneys' fees)
incurred by a person who is or was a director or an officer of the Corporation
in defending a civil or criminal proceeding shall be paid by the Corporation in
advance of the final disposition of such proceeding to the extent permitted by
the Business Corporation Act.

ARTICLE 9

BOOKS AND RECORDS

9.1. BOOKS AND RECORDS. The Corporation shall keep correct and complete
books and records of account and shall keep minutes of the proceedings of the
shareholders, the Board and any committee of the Board. The Corporation shall
keep at the office designated in the Articles of Incorporation or at the office
of the transfer agent or registrar of the Corporation, a record containing the
names and addresses of all shareholders, the number and class of shares held by
each and the dates when they respectively became the owners of record thereof.

9.2. FORM OF RECORDS. Any records maintained by the Corporation in the
regular course of its business, including its stock ledger, books of account,
and minute books, may be kept on, or be in the form of, punch cards, magnetic
tape, photographs, microphotographs, or any other information storage device,
provided that the records so kept can be converted into clearly legible written
form within a reasonable time. The Corporation shall so convert any records so
kept upon the request of any person entitled to inspect the same.

9.3. INSPECTION OF BOOKS AND RECORDS. Except as otherwise provided by
law, the Board shall determine from time to time whether, and, if allowed, when
and under what conditions and regulations, the accounts, books, minutes and
other records of the Corporation, or any of them, shall be open to the
inspection of the shareholders.

ARTICLE 10

SEAL

The Board may adopt a corporate seal which shall be in the form of a
circle and shall bear the full name of the Corporation, the year of its
incorporation and the word "Florida."

ARTICLE 11

FISCAL YEAR

The fiscal year of the Corporation shall be determined, and may be
changed, by resolution of the Board.

ARTICLE 12

VOTING OF SHARES HELD

Unless otherwise provided by resolution of the Board, the President
may, from time to time, appoint one or more attorneys or agents of the
Corporation, in the name and on behalf of the Corporation, to cast the votes
which the Corporation may be entitled to cast as a shareholder or otherwise in
any other corporation, any of whose shares or securities may be held by the
Corporation, at meetings of the holders of stock or other securities of such
other corporation, or to consent in writing to any action by any such other
corporation, and may instruct the person or persons so appointed as to the
manner of casting such votes or giving such consent, and may execute or cause to
be executed on behalf of the Corporation and under its corporate seal, or
otherwise, such written proxies, consent, waiver or other instruments as he may
deem necessary or proper in the premises or the President may himself attend any
meeting of the holders of the stock or other securities of any such other
corporation and thereat vote or exercise any or all other powers of the
Corporation as the holder of such stock or other securities of such other
corporation.

ARTICLE 13

AMENDMENTS

The By-laws may be altered, amended, supplemented or repealed, or new
By-laws may be adopted, by vote of a majority of holders of shares of the
Corporation's capital stock entitled to vote in the election of directors. The
By-laws may be altered, amended, supplemented or repealed, or new By-laws may be
adopted, by a majority vote of the Board. Any By-laws adopted, altered, amended,
or supplemented by the Board may be altered, amended, or supplemented or
repealed by the shareholders entitled to vote thereon.