<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
RAINBOW RENTALS INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: Not
Applicable
(2) Aggregate number of securities to which transaction applies: Not
Applicable
(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): Not
Applicable
(4) Proposed maximum aggregate value of transaction: Not Applicable
(5) Total fee paid: Not Applicable
[ ] 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: Not Applicable
(2) Form, Schedule or Registration Statement No.: Not Applicable
(3) Filing Party: Not Applicable
(4) Date Filed: Not Applicable
- --------------------------------------------------------------------------------
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<PAGE> 2
April 9, 1999
Dear Fellow Shareholder:
It is a pleasure to extend to you a cordial invitation to attend the 1999
Annual Meeting of Shareholders of Rainbow Rentals, Inc. This year's annual
meeting will be held on May 13, 1999.
Shareholders will be asked to approve the election of Directors, to ratify
the appointment of auditors and to approve an amendment to the Rainbow Rentals,
Inc. 1998 Stock Option Plan. In addition, we will present a report on the
operations and activities of the Company. Following the meeting, management will
be pleased to answer your questions about the Company.
Please carefully review the Proxy Statement and then complete and sign the
Proxy and return it promptly to the Company in the enclosed self-addressed
stamped envelope.
I hope you will be able to attend this meeting in person. Whether or not
you expect to attend, I urge you to sign, date and return the enclosed proxy
card so that your shares will be represented.
I look forward to seeing you on May 13th.
Sincerely,
Wayland J. Russell
Chairman of the Board and Chief
Executive Officer
<PAGE> 3
RAINBOW RENTALS, INC.
3711 STARR CENTRE DRIVE
CANFIELD, OHIO 44406
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 13, 1999
The Annual Meeting of Shareholders of Rainbow Rentals, Inc., an Ohio
corporation (the "Company"), will be held at Tippicanoe Country Club, 5870
Tippicanoe Road, Canfield, Ohio on Thursday, May 13, 1999 at 10:00 a.m.
The purpose of the meeting will be to:
1. Elect five (5) Directors for a term expiring in 2000.
2. Ratify the appointment of KPMG LLP as auditors of the Company for
the year ending December 31, 1999.
3. Approve an amendment to the 1998 Stock Option Plan to reserve for
issuance under such plan an additional 200,000 Common Shares of the
Company.
4. Transact such other business as is properly brought before the
meeting.
Only holders of shares of Common Stock of record at the close of business
on March 31, 1999, will be entitled to notice of and to vote at the meeting. A
list of such shareholders will be open for examination by any shareholder at the
meeting.
ALL SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. TO ENSURE
YOUR REPRESENTATION AT THE MEETING, HOWEVER, PLEASE MARK, DATE AND SIGN YOUR
PROXY AND RETURN IT WITHOUT DELAY IN THE ENCLOSED POSTAGE-PAID ENVELOPE. Any
shareholder present at the meeting may withdraw his or her proxy and vote
personally on each matter brought before the meeting.
By Order of the Board of Directors
Michael A. Pecchia
Secretary
Canfield, Ohio
April 9, 1999
<PAGE> 4
RAINBOW RENTALS, INC.
3711 STARR CENTRE DRIVE
CANFIELD, OHIO 44406
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
SOLICITATION AND REVOCABILITY OF PROXIES
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Rainbow Rentals, Inc. (the "Company") for
use at the Annual Meeting of Shareholders to be held at the time and place, and
for the purposes, set forth in the accompanying Notice of Annual Meeting of
Shareholders (the "Annual Meeting"). It is anticipated that the proxy statement
together with the proxy and the 1999 Annual Report to Shareholders will be
mailed to the Company's shareholders commencing on April 6, 1999.
Pursuant to the Ohio General Corporation Law, a person has the power to
revoke its proxy at any time before it is exercised by (1) attending the Annual
Meeting and voting in person, (2) executing and delivering a proxy bearing a
later date, or (3) delivering written notice of revocation to the Secretary of
the Company prior to the Annual Meeting.
The Company will bear the cost of this solicitation of proxies, including
the charges and expenses of brokerage firms and others for forwarding
solicitation materials to beneficial owners of the Company's shares of Common
Stock (the "Common Shares"). In addition, proxies may be solicited by mail,
personal interview, telephone or telegraph by Directors, officers or employees
of the Company without additional compensation therefor.
PURPOSES OF ANNUAL MEETING
The Annual Meeting has been called for the purposes of (1) electing five
(5) Directors whose term of office will expire in 2000; (2) ratifying the
appointment of KPMG LLP as auditors of the Company for 1999; (3) approving an
amendment to the 1998 Stock Option Plan increasing the number of shares issuable
under the Plan from 400,000 to 600,000 Common Shares; and (4) transacting such
other business as may properly come before the meeting.
The three persons named in the enclosed Proxy have been selected by the
Board of Directors and will vote Common Shares represented by valid Board of
Directors' Proxies. They have indicated that, unless otherwise indicated in the
enclosed Proxy, they intend to vote for the election of the Director nominees
named herein and in favor of the proposals listed in Items 2 and 3 above.
VOTING SECURITIES
The close of business on March 31, 1999 has been fixed as the record date
for the determination of holders of record of the Common Shares of the Company
entitled to notice of and to vote at the Annual Meeting. On the record date,
5,925,735 Common Shares were outstanding and eligible to be voted at the Annual
Meeting. A quorum for the transaction of business at the Annual Meeting is a
majority of the outstanding Common Shares. Votes cast by proxy or in person at
the Annual Meeting will be tabulated by the election inspector appointed for the
Annual Meeting. The election of Directors and the proposal to ratify the
appointment of auditors require approval only by a plurality of the votes cast.
The affirmative vote of the holders of a majority of the outstanding Common
Shares is required to approve the amendment to the 1998 Stock Option Plan. As a
consequence, abstentions and broker non-votes will not be counted in determining
the outcome of the vote with respect to election of directors or appointment of
the auditors; however, they will be counted for purposes of determining the
presence of a quorum and will in effect be votes against the proposal to amend
the 1998 Stock Option Plan.
1
<PAGE> 5
INFORMATION REGARDING THE BOARD OF DIRECTORS
GENERAL
The business of the Company is managed under the direction of the Company's
Board of Directors. The number of Directors is currently fixed at five. Each of
the Directors hold office until the next annual meeting or the election and
qualification of their respective successors.
The Board of Directors has established two standing committees: a
Compensation Committee and an Audit Committee.
The Audit Committee has general responsibility for supervision of financial
controls as well as accounting and audit activities of the Company. The Audit
Committee annually reviews the qualifications of the Company's independent
certified public accountants, makes recommendations to the Board of Directors
concerning the selection of the accountants, reviews and approves the services
performed by the accountants, and reviews their fees. The Audit Committee
consists of Messrs. Russell, Burton, and Winfield.
The Compensation Committee has the authority to: (1) administer the
Company's Stock Option Plan; (2) review and monitor key employee compensation
and benefits policies and (3) administer the Company's management compensation
plans. The Compensation Committee consists of Messrs. Russell, Burton, and
Winfield.
The Board of Directors held two meetings in 1998 following the completion
of the initial public offering, while neither of the two Committees met last
year. All of the Directors attended the two meetings held in 1998.
COMPENSATION OF DIRECTORS
The Company pays each outside Director a fee of $10,000 for attendance at
up to four meetings per year, together with reimbursement of out-of-pocket
expenses incurred in connection with the Directors' attendance at such meetings.
In addition, each outside Director receives $2,500 per meeting for each meeting
attended in excess of four per year. No additional compensation is to be paid
for committee meetings held on the same day as a Board of Directors' meeting.
Officers of the Company who are also Directors will receive no additional
compensation for serving as Directors.
Each outside Director of the Company upon their election received a stock
option to purchase 10,000 Common Shares at $10 per share. Such options vest
ratably over a period of three years and expire ten years from date of grant.
2
<PAGE> 6
PROPOSAL ONE
ELECTION OF DIRECTORS
The Board of Directors has nominated Wayland J. Russell, Lawrence S.
Hendricks, Michael J. Viveiros, Brian L. Burton and Ivan J. Winfield to stand
for reelection as Directors until the 2000 Annual Meeting of Shareholders.
At the Annual Meeting, the Common Shares represented by valid Proxies,
unless otherwise specified, will be voted to reelect the Directors. Each
individual nominated for election as a Director of the Company has agreed to
serve if elected. However, if any nominee becomes unable or unwilling to serve
if elected, the Proxies will be voted for the election of such other person as
may be recommended by the Board of Directors. The Board of Directors has no
reason to believe that the persons listed as nominees will be unable or
unwilling to serve.
The Board of Directors recommends that each shareholder vote "FOR" the
Board of Directors' nominees.
NOMINEES FOR TERMS TO EXPIRE IN 2000
<TABLE>
<CAPTION>
DIRECTOR
NAME OF DIRECTOR AGE PRINCIPAL OCCUPATION PAST FIVE YEARS, OTHER DIRECTORSHIPS SINCE
---------------- --- --------------------------------------------------------- --------
<S> <C> <C> <C>
Wayland J. Russell 47 Chairman of the Board and Chief Executive Officer since 1986
February 1997, having previously served as the Company's
President since its inception in 1986.
Lawrence S. Hendricks 41 Chief Operating Officer since February, 1997, having 1986
previously served as Vice President for Store Operations
since the Company's inception in 1986.
Michael J. Viveiros 43 President since February 1997, having previously served 1986
as Vice President since the Company's inception in 1986.
Brian L. Burton 58 President of Vertical Merchandising Systems, Inc., a 1998
distributor of impulse merchandising systems to
supermarkets, for over five years.
Ivan J. Winfield 64 Mr. Winfield has served since September 1995 as an 1998
Associate Professor at Baldwin-Wallace College,
Cleveland, Ohio, and as a business consultant. Prior
thereto, Mr. Winfield was Managing Partner of Coopers &
Lybrand, Cleveland, Ohio from 1978 to 1994. He is a
director of Boykin Lodging Co., HMI Industries, Inc.,
International Total Services, Inc. and OfficeMax, Inc.
</TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 31, 1999
with respect to the beneficial ownership of the Common Shares. Unless otherwise
indicated below, the persons named below have the sole voting and investment
power with respect to the number of Common Shares set forth opposite their
names. All
3
<PAGE> 7
information with respect to beneficial ownership has been furnished by the
respective Director, officer or 5% or greater shareholder, as the case may be.
<TABLE>
<CAPTION>
NAMES AND, WHERE NECESSARY, BENEFICIALLY OWNED
ADDRESSES OF BENEFICIAL OWNERS (1) NUMBER OF SHARES PERCENTAGE
- ---------------------------------- ---------------- ------------------
<S> <C> <C>
Wayland J. Russell.......................................... 2,534,375 42.8%
Lawrence S. Hendricks....................................... 548,240 9.3%
Michael J. Viveiros......................................... 255,620 4.3%
Ivan J. Winfield............................................ 2,000 *
Brian L. Burton............................................. 500 *
All Current Directors and Executive Officers of the Company
(6 Persons)............................................... 3,340,735 56.4%
</TABLE>
- ---------------
* Less than one percent
(1) Unless otherwise indicated, the address of all persons listed above is c/o
Rainbow Rentals, Inc., 3711 Starr Centre Drive, Canfield, Ohio 44406
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Act of 1934 requires the Company's
Directors, executive officers, and persons who own 10% or more of the Company's
Common Shares to file reports of ownership and changes of ownership with the
Securities and Exchange Commission and the Company. Based upon a review of these
filings and written representations from such individuals, the Company
understands that all such filers have adhered to all applicable filing
requirements.
EXECUTIVE OFFICERS' COMPENSATION
The following table sets forth certain information with respect to the
compensation earned during the years ended December 31, 1998 and December 31,
1997, respectively, by the Chief Executive Officer and all other named executive
officers of the Company whose annual salary and bonus exceeded $100,000:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION ---------------------------
------------------- OTHER ANNUAL OPTION ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) AWARDS(#) COMPENSATION(2)
- --------------------------- ---- --------- ------- --------------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Wayland J. Russell......... 1998 $306,075 $ -0- $31,779 $ 1,844
Chief Executive Officer 1997 278,250 14,000 26,284 0 1,071
Lawrence S. Hendricks...... 1998 229,556 -0- 19,841 1,478
Chief Operating Officer 1997 208,687 10,500 17,612 0 917
Michael J. Viveiros........ 1998 229,556 -0- 23,508 1,490
President 1997 208,687 10,500 23,048 0 917
</TABLE>
- ---------------
(1) Includes the value of perquisites reported as taxable wages, including for
1998 the Company's annual business retreat cruise ($5,600 per individual)
and personal travel and use of country clubs. For Messrs. Russell, Hendricks
and Viveiros, the value of personal travel and country club use were $6,477
and $7,406; $3,018 and $5,778; and $4,920 and $8,104, respectively.
(2) Included in this column are matching and profit sharing contributions under
the Company's 401(K) plan to Messrs. Russell, Hendricks and Viveiros in the
amounts of $1,670, $1,458, and $1,470, respectively, in 1998, with the
balance attributable to premiums on group term life insurance policies in
excess of $50,000 per individual.
4
<PAGE> 8
STOCK OPTIONS
No options were granted to any of the Executive Officers listed in the
Summary Compensation Table pursuant to the Company's 1998 Stock Option Plan
during 1998, nor do any of such individuals hold any options.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The following information will not be deemed incorporated by reference by
any general statement incorporating by reference this proxy statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent that the Company specifically incorporates this
information by reference, and will not otherwise be deemed filed under such
Acts.
The Compensation Committee of the Board of Directors was established in
June, 1998 upon completion of the Company's initial public offering. Prior to
the offering, executive compensation decisions were made by the Board of
Directors of the Company, consisting of Messrs. Russell, Hendricks, and Viveiros
and Michael A. Pecchia, the Company's Chief Financial Officer. Therefore, the
Compensation Committee did not establish executive compensation levels for 1998.
Executive compensation recommendations and determinations will be made for 1999
by the Compensation Committee.
Wayland J. Russell, Chairman
Brian L. Burton
Ivan J. Winfield
CERTAIN TRANSACTIONS
The Company's headquarters facility is leased from an entity owned by the
three executive officers named in the Summary Compensation Table under a
ten-year triple-net lease, with three two-year options. In 1998, the rental
amount was $98,465. The Company believes that the rental is at market rate and
that the other provisions of the lease are on terms no less favorable to the
Company than could be obtained from unrelated parties. The Company has adopted a
policy that future transactions with affiliates, if any, will be on terms no
less favorable than could be obtained from unrelated parties.
For several years, the Company has made significant contributions to
charitable organizations, including organizations for which directors and
officers serve or have served as trustees or officers. The aggregate amount of
charitable contributions was approximately $230,000 in 1998.
Mr. Russell and his spouse had guaranteed the Company's credit facility
prior to the Company's initial public offering. As a result of the offering, the
guaranty was released.
5
<PAGE> 9
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the cumulative total shareholder
return on the Company's Common Shares against the cumulative total return of the
Nasdaq U.S. composite index (the "Nasdaq of Composite Index") and a group
consisting of publicly-traded rental -- purchase companies (the "Industry
Group") from the date of the Company's initial public offering in June 1998
through December 31, 1998. The graph assumes that $100.00 was invested on June
4, 1998 in the Common Shares of the Company, the Nasdaq Composite Index and the
Industry Group and assumes reinvestment of dividends. The Industry Group
consists of Rent Way, Inc., Aaron Rents, Inc. and Rent-A-Center, Inc. The stock
price performance shown on the following graph is not necessarily indicative of
future price performance.
The stock price performance graph below shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into and filing under the Securities Act of 1933, as amended or under
the Securities Exchange Act of 1934, as amended, except to the extent that the
Company specifically incorporates this information by reference and shall not
otherwise be deemed filed under such Acts.
[GRAPH]
<TABLE>
<CAPTION>
RAINBOW RENTALS, INC. PEER GROUP NASDAQ COMPOSITE
--------------------- ---------- ----------------
<S> <C> <C> <C> <C>
6/5/98 100 100 100
12/31/98 98.75 105.07 123.27
</TABLE>
6
<PAGE> 10
PROPOSAL TWO
INDEPENDENT AUDITORS
The Board of Directors, upon the recommendation of the Audit Committee, has
selected KPMG LLP as auditors for the year ending December 31, 1999. The Board
of Directors requests the ratification of the appointment of KPMG LLP by the
shareholders at the Annual Meeting. The Board of Directors recommends that each
shareholder vote "FOR" ratification of KPMG LLP as auditors for 1999.
KPMG LLP has audited the Company's financial statements for each year since
the year ended December 31, 1991. Representatives of KPMG LLP are expected to be
present at the meeting with the opportunity to make a statement if they desire
to do so, and are expected to be available to respond to appropriate questions.
PROPOSAL THREE
APPROVAL OF THE AMENDMENT TO
1998 STOCK OPTION PLAN
INTRODUCTION
On February 16, 1999, the Board of Directors approved, subject to
shareholder approval, an amendment to the Rainbow Rentals, Inc. 1998 Stock
Option Plan (the "Plan"). The amendment to the Plan increases the number of
shares of Common Stock reserved for issuance thereunder from 400,000 shares to
600,000 shares. The amendment is summarized below.
PURPOSE OF THE AMENDMENT
The Company adopted the Plan in 1998, prior to the initial public offering,
to advance the interests of the Company and its shareholders by encouraging and
enabling directors and key employees of the Company to acquire or increase
financial interests in the Company through the stock options granted under the
Plan. As of December 31, 1998, the Company had options with respect to 306,200
shares outstanding to approximately 90 employees and only 93,800 shares remained
available for issuance pursuant to additional options to be granted the Plan.
The Board of Directors of the Company believes that it is in the best
interests of the Company to increase the number of shares of the Company's
Common Stock reserved for issuance under the Plan to 600,000 shares, an increase
of 200,000 shares. The Board of Directors of the Company believes that the
success of the Company is greatly dependent upon its ability to attract and
retain key personnel of outstanding ability who are motivated to exert their
best efforts on behalf of the Company and that the Plan has been effective in
achieving this goal. In the opinion of the Board of Directors of the Company,
the authorization of the additional shares will give the Company sufficient
stock reserved for issuance under the Plan to allow the Company to attract and
retain employees, including employees of recently completed acquisitions and
employees of potential acquisition candidates, which will contribute to the
successful conduct of the Company's operations.
At March 31, 1999, the Company estimates that approximately 110 persons, of
which four are executive officers are currently eligible to participate in the
Plan. On March 31, 1999, the closing market price of the Company's Common Stock
was $10.00 per share.
The Plan is administered by the Company's Compensation Committee
("Committee").
Options granted under the Plan represent rights to purchase Common Shares
of the Company within a fixed period of time and at a specified price per share
(the "Exercise Price"), which will be determined by the Committee but shall be
no less than the market price of the Common Shares of the Company on the date of
grant of the option.
Options granted under the Plan become vested and exercisable as determined
by the Committee, generally at 20% per year increments. Options terminate at the
end of ten years following the date of grant, subject to earlier termination in
certain circumstances. Pursuant to the Plan, in the event of a "change of
control" of the Company,
7
<PAGE> 11
the Committee in its discretion may declare that all outstanding options become
exercisable immediately and shall terminate if not exercised prior to the
control change. Options may be exercised with cash or, at the sole discretion of
the Committee, by delivery of shares of Common Stock of the Company owned by the
option holder.
The options granted under the Plan are, during the lifetime of the
optionee, exercisable only by the optionee (or by an appointed guardian or legal
representative) and, except as otherwise determined by the Board of Directors,
in its discretion, are not transferable or assignable in whole or in part except
by will or by the laws of descent and distribution. In general, the unexercised
portion of any option granted under the Plan will terminate upon the earlier to
occur of (i) the expiration of the option in accordance with its terms
(anticipated normally to be ten years) or (ii) the expiration of three months
from the date of termination of the option holder's employment.
The Board of Directors has the right at any time to terminate or amend the
Plan, but no such action may terminate options already granted or otherwise
affect the rights of any optionee under an outstanding option without the
optionee's consent. Without shareholder approval, the Board may not amend the
Plan to (i) increase the total number of shares of stock subject to option
(except for an adjustment of shares for stock splits, stock dividends or the
like, (ii) change or modify the class of eligible participants, or (iii)
materially increase the benefits accruing to Plan participants. Unless the Plan
is terminated earlier by the Board, no options may be granted under the Plan
after May 1, 2008.
The Common Shares to be issued upon exercise of options granted under the
Plan are expected to be registered under the Securities Act of 1933, as amended
(the "Act"). Therefore, shares received by optionees upon exercise of the
options will be freely transferable; provided that officers, directors and other
"affiliates" of the Company must also comply with the resale restrictions of
Rule 144 promulgated under the Act.
FEDERAL INCOME TAX CONSEQUENCES
There are no federal income tax consequences to an optionee or to the
Company on the granting of options. Generally, when an optionee exercises a
non-qualified stock option, the optionee recognizes income in the amount of the
aggregate fair market value of the shares received upon exercise, less the
aggregate amount paid of those shares, and the Company may deduct as an expense
the amount of income so recognized by the optionee, provided that the Company
satisfies certain tax withholding requirements. The holding period of the
acquired shares begins upon the exercise of the option, and the optionee's basis
in the shares is equal to the fair market value of the acquired shares on the
date of exercise.
VOTE REQUIRED AND RECOMMENDATION OF THE BOARD
Approval of the Plan as amended requires the affirmative vote of the
holders of a majority of the Company's outstanding Common Shares present in
person or by proxy and voting at the meeting. The Board of Directors recommends
a vote "FOR" this proposal.
OTHER MATTERS
The Board of Directors of the Company is not aware that any matters other
than those listed in the Notice of Meeting is to be presented for action at the
meeting. If any of the Board's nominees is unavailable for election as a
Director or any other matter should properly come before the meeting, it is
intended that votes will be cast pursuant to the Proxy in respect thereto in
accordance with the best judgment of the person or persons acting as proxies.
8
<PAGE> 12
SHAREHOLDERS' PROPOSALS
The deadline for shareholders to submit proposals to be considered for
inclusion in the Proxy Statement for the 2000 Annual Meeting of Shareholders is
expected to be December 9, 1999.
MICHAEL A. PECCHIA
Secretary
By Order of the Board of Directors
April 9, 1999
9
<PAGE> 13
RAINBOW RENTALS, INC.
3711 STARR CENTRE DRIVE
CANFIELD, OHIO 44406
The undersigned, a holder of shares of Common Stock of Rainbow
Rentals, Inc., an Ohio corporation (the "Company"), hereby appoints
WAYLAND J. RUSSELL, LAWRENCE S. HENDRICKS and MICHAEL J. VIVEIROS, and
each of them, the proxies of the undersigned, each with full power of
substitution, to attend, represent and vote for the undersigned, all of
the shares of the Company which the undersigned would be entitled to
vote, at the Annual Meeting of Stockholders of the Company to be held on
May 13, 1999, and any adjournments thereof, as follows:
1. The election of five members to the Board of Directors to hold office
for a one-year term and until their successors are duly elected and
qualified, as provided in the Company's Proxy Statement:
<TABLE>
<S> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for all nominees listed
below
</TABLE>
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH OR OTHERWISE STRIKE OUT HIS OR HER NAME BELOW)
Wayland J. Russell, Lawrence S. Hendricks, Michael J. Viveiros, Brian L.
Burton and Ivan J. Winfield.
2. The ratification of the appointment of KPMG LLP as the Company's
auditors for the year ending December 31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Approve an amendment to the 1998 Stock Option Plan to reserve for the
issuance under the Plan an additional 200,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Upon such other matters as may properly come before the meeting or
any adjournments thereof.
THE UNDERSIGNED HEREBY REVOKES ANY OTHER PROXY TO VOTE AT SUCH
ANNUAL MEETING, AND HEREBY RATIFIES AND CONFIRMS ALL THAT SAID ATTORNEYS
AND PROXIES, AND EACH OF THEM, MAY LAWFULLY DO BY VIRTUE HEREOF. WITH
RESPECT TO MATTERS NOT KNOWN AT THE TIME OF THE SOLICITATIONS HEREOF,
SAID PROXIES ARE AUTHORIZED TO VOTE IN ACCORDANCE WITH THEIR BEST
JUDGMENT.
(Continued, and to be signed, on the other side)
P
R
O
X
Y
(Continued from the other side.)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN ACCORDANCE WITH THE
INSTRUCTIONS ON THE OTHER SIDE HEREOF, IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR THE ELECTION OF THE FIVE DIRECTORS NAMED IN
PROPOSAL 1, FOR THE ADOPTION OF PROPOSALS 2 AND 3, AND AS SAID PROXIES
SHALL DEEM ADVISABLE ON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE
THE MEETING.
THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF A COPY OF THE NOTICE OF ANNUAL
MEETING AND ACCOMPANYING PROXY STATEMENT DATED APRIL 9, 1999 RELATING TO
THE ANNUAL MEETING AND THE 1998 ANNUAL REPORT TO SHAREHOLDERS.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
Date:________________, 1999
----------------------------
Signature(s) of
Shareholder(s)
The signature(s) hereon
should correspond exactly
with the name(s) of the
Shareholder(s) appearing on
the Share Certificate. If
stock is jointly held, all
joint owners should sign.
When signing as attorney,
executor, administrator,
trustee or guardian, please
give full title as such. If
signer is a corporation,
please sign the full
corporate name, and give
title of signing officer.
THIS PROXY IS SOLICITED BY
THE BOARD OF DIRECTORS OF
RAINBOW RENTALS, INC.
Proxy Card
