<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/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 Section 240.14a-11(c) or Section
240.14a-12
CERTIFIED GROCERS OF CALIFORNIA, LTD.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
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<PAGE>
PRELIMINARY COPY
ADVISORY BALLOT
Mark up to 12 names, but not more than 12.
The parenthetical letter "N" designates representatives for Northern
California shareholders.
/ / Louis A. Amen
(Incumbent)
/ / William Andronico (N)
/ / John Berberian
(Incumbent)
/ / William C. Evans (N)
/ / Gene A. Fulton
(Incumbent)
/ / Scott Hair
/ / Lyle A. Hughes
(Incumbent)
/ / Darioush Khaledi
(Incumbent)
/ / Mark Kidd (N)
(Incumbent)
/ / Richard L. London
/ / Willard "Bill" MacAloney
(Incumbent)
/ / Jay McCormack
(Incumbent)
/ / Louis Melillo
/ / Morrie Notrica
(Incumbent)
/ / Michael A. Provenzano
(Incumbent)
/ / Gail Gerrard Rice
/ / Allan Scharn
(Incumbent)
/ / Farid (Mike) Shalabi
/ / Jim Stump
(Incumbent)
/ / Milt Thaler
/ / Daniel W. Vengler
/ / Kenneth Young (N)
(Incumbent)
IMPORTANT!
This ballot is not a proxy. At this time we are not asking you for a proxy,
and request that you not send us a proxy.
This ballot is not valid unless returned in the envelope provided. It must be
received by January 19, 1996.
CERTIFIED GROCERS OF CALIFORNIA, LTD.
<PAGE>
PRELIMINARY COPY
CERTIFIED GROCERS OF CALIFORNIA, LTD.
STATEMENT REGARDING ADVISORY BALLOT
The enclosed Advisory Ballot is solicited by the Nominating Committee of the
Board of Directors of Certified Grocers of California, Ltd. (the "Company").
This Statement, and the enclosed Advisory Ballot and Candidates' Statements,
were first mailed to shareholders on or about January 2, 1996. The address of
the principal executive office of the Company is 2601 South Eastern Avenue, Los
Angeles, California 90040.
FUNCTION AND PURPOSE OF THE ADVISORY BALLOT
At the Company's Annual Meeting of Shareholders, presently scheduled for
April 2, 1996, the 15 members of the Company's Board of Directors will be
elected. Twelve directors will be elected by the holders of the Company's Class
A Shares, and three directors will be elected by the holders of the Company's
Class B Shares.
In connection with the Annual Meeting, the Board of Directors will solicit
proxies. However, the enclosed Advisory Ballot is not a proxy, and at this time
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
Pursuant to the Company's Bylaws, the Board of Directors annually appoints a
Nominating Committee to select the 15 persons who will be nominated by the Board
of Directors for election by the shareholders to the Board of Directors. The
enclosed Advisory Ballot is being solicited by the Nominating Committee from the
holders of the Company's Class A Shares to assist the Nominating Committee in
selecting the 12 persons who will be submitted as nominees for election as
directors by the holders of such shares. This Advisory Ballot is not being used
by the Nominating Committee in connection with its selection of the three
persons who will be submitted as nominees for election as directors by the
holders of the Company's Class B Shares.
The Advisory Ballot contains the names of 22 persons, 13 of whom are
incumbent directors and four of whom have been designated as representing
Northern California shareholders. Of the four representing Northern California
shareholders, the Nominating Committee will nominate for election at least two
of these persons whether or not they are among the 12 persons receiving the
highest number of votes on the Advisory Ballot. The two to be nominated will be
those receiving the highest number of votes from among the four persons
designated in the Advisory Ballot as representing Northern California
shareholders. With this exception, it is the policy of the Nominating Committee
to abide by the results of the vote on the Advisory Ballot and to select as
nominees for election to the Board of Directors the 12 persons receiving the
highest number of votes. However, such results are advisory only and are not
binding on the Nominating Committee, and the Nominating Committee may in its
discretion disregard the results, in whole or in part, in making its selection
of nominees.
The Nominating Committee will consider the recommendations of shareholders
concerning persons to be included in the Advisory Ballot, and concerning persons
to be nominated for election by the holders of the Company's Class B Shares. The
Company's Bylaws require that a director be either an employee of the Company, a
shareholder, or that the director be a member of a partnership which is a
shareholder, or an employee of a corporation which is a shareholder. Persons
recommended to the Nominating Committee can be considered ONLY if they satisfy
these requirements. All recommendations must be in writing and must be submitted
to the Nominating Committee on or before September 1 of each year.
Recommendations should be submitted to the Nominating Committee at the address
of the Company's principal executive office set forth above.
1
<PAGE>
ADVISORY BALLOT VOTING RIGHTS AND SOLICITATION
As of December 11, 1995, the Company had outstanding 50,300 Class A Shares
held 100 shares each by 503 shareholders. If you were the holder of record of
Class A Shares on that date, you may vote on the enclosed Advisory Ballot. Set
forth below are the persons named in the Advisory Ballot, all of whom have
consented to being named in the Advisory Ballot. Incumbent directors are denoted
by an asterisk and persons designated as representing Northern California
shareholders are denoted by the parenthetical letter "N".
<TABLE>
<S> <C>
Louis A. Amen* Jay McCormack*
William Andronico (N) Louis Melillo
John Berberian* Morrie Notrica*
William C. Evans (N) Michael A. Provenzano*
Gene A. Fulton* Gail Gerrard Rice
Scott Hair Allan Scharn*
Lyle A. Hughes* Farid (Mike) Shalabi
Darioush Khaledi* James R. Stump*
Mark Kidd* (N) Milt Thaler
Richard L. London Daniel W. Vengler
Willard R. MacAloney* Kenneth Young* (N)
</TABLE>
In voting on the Advisory Ballot, you are entitled to cast one vote each for
up to 12 of the persons named in the Advisory Ballot. While you may vote for
fewer than 12 of the persons named in the Advisory Ballot, if you vote for more
than 12 of the persons named, your Advisory Ballot will be invalidated. In
addition, if you cast more than one vote for any person named in the Advisory
Ballot, only one vote will be counted for that person and the additional votes
will be disregarded.
The return envelope accompanying the enclosed Advisory Ballot is marked with
a control number. THE ADVISORY BALLOT WILL NOT BE VALID UNLESS IT IS RETURNED IN
THE ENVELOPE PROVIDED AND THE CONTROL NUMBER IS LEGIBLE. TO BE VALID, THE
ADVISORY BALLOT MUST BE RECEIVED ON OR BEFORE JANUARY 19, 1996.
The Company's independent accountants, Coopers & Lybrand, L.L.P., will
tabulate the vote on the Advisory Ballot.
The cost of soliciting the Advisory Ballots, consisting of the preparation,
printing, handling, mailing and tabulation of the Advisory Ballots, this
Statement and related material, will be paid by the Company.
PRINCIPAL STOCKHOLDERS
As of December 11, 1995, no person is known by the Company to own
beneficially more than five percent (5%) of the outstanding Class A Shares of
the Company, and the only shareholders known by the Company to own beneficially
more than 5% of the outstanding Class B Shares of the Company are Cala Co.,
Alpha Beta Company, Bay Area Warehouse Stores, Inc. and Ralphs Grocery Company,
777 South Harbor Boulevard, La Habra, California 90631 (28,620 Class B Shares or
approximately 7.83% of the outstanding Class B Shares) (Cala Co., Alpha Beta
Company and Bay Area Warehouse Stores, Inc. are wholly owned by Ralphs Grocery
Company which is in turn wholly owned by The Yucaipa Companies, 10000 Santa
Monica Boulevard, Los Angeles, California 90067); and Hughes Markets, Inc.,
14005 Live Oak Avenue, Irwindale, California 91706 (26,106 Class B Shares or
approximately 7.14% of the outstanding Class B Shares).
2
<PAGE>
SECURITY OWNERSHIP AND OTHER INFORMATION CONCERNING
MANAGEMENT AND PERSONS NAMED IN THE ADVISORY BALLOT
The following table sets forth the beneficial ownership of the Company's
Class A Shares and Class B Shares, as of December 11, 1995, by each director or
his affiliated company, including the directors elected by the holders of the
Company's Class B Shares, by each person or his affiliated company named in the
Advisory Ballot who is not a director, and by all directors and such persons as
a group. No officer of the Company owns shares of any class of the Company's
stock.
<TABLE>
<CAPTION>
SHARES OWNED
------------------------------------------------
CLASS A SHARES CLASS B SHARES
-------------------- -------------------------
NAME AND NO. % OF TOTAL NO. % OF TOTAL
AFFILIATED COMPANY SHARES OUTSTANDING SHARES OUTSTANDING
---------------------------------------- ------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Louis A. Amen
Super A Foods, Inc..................... 100 0.20% 9,718 2.66%
William Andronico
Park and Shop Market, Inc. ........... 100 0.20% 3,395 0.93%
John Berberian
Berberian Enterprises, Inc............ 100 0.20% 7,615 2.08%
William C. Evans
Twain Harte Market, Inc. ............. 100 0.20% 395 0.11%
Gene A. Fulton
Jensen's Complete Shopping, Inc. ..... 100 0.20% 1,555 0.43%
Scott Hair
Green Frog Market..................... 100 0.20% 395 0.11%
Lyle A. Hughes
Yucaipa Trading Co., Inc.(1)(2)....... 100 0.20% 0 --
Roger K. Hughes
Hughes Markets, Inc.(1)(3)............ 100 0.20% 26,106 7.14%
Darioush Khaledi
K. V. Mart Co. ....................... 100 0.20% 13,796 3.77%
Mark Kidd
Mar-Val Food Stores, Inc. ............ 100 0.20% 1,787 0.49%
Richard L. London
Major Market, Inc. ................... 100 0.20% 1,579 0.43%
Willard R. MacAloney
Mac Ber, Inc.......................... 100 0.20% 2,523 0.69%
Jay McCormack
Alamo Market(4)....................... 100 0.20% 732 0.20%
Louis Melillo
Louis Foods, Inc...................... 100 0.20% 855 0.23%
Morrie Notrica
Joe Notrica, Inc. .................... 100 0.20% 8,148 2.23%
Michael A. Provenzano
Pro & Son's, Inc. .................... 100 0.20% 672 0.18%
Gail Gerrard Rice
Gerrard's, Inc. ...................... 100 0.20% 1,414 0.39%
Allan Scharn
Gelson's Markets(5)................... 100 0.20% 7,123 1.95%
Farid (Mike) Shalabi
R-Ranch Markets, Inc.................. 100 0.20% 2,438 0.67%
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
SHARES OWNED
------------------------------------------------
CLASS A SHARES CLASS B SHARES
-------------------- -------------------------
NAME AND NO. % OF TOTAL NO. % OF TOTAL
AFFILIATED COMPANY SHARES OUTSTANDING SHARES OUTSTANDING
---------------------------------------- ------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
James R. Stump
Stump's Market, Inc. ................. 100 0.20% 1,866 0.51%
Milt Thaler
T./R. Foods, Inc. .................... 100 0.20% 2,402 0.66%
Daniel W. Vengler
Oak Creek Market, Inc................. 100 0.20% 3,107 0.85%
Michael A. Webb
SavMax Foods, Inc.(3)................. 100 0.20% 8,410 2.30%
Kenneth Young
Jack Young's Supermarkets(6).......... 100 0.20% 2,660 0.73%
------ --- ----------- -----
2,400 4.77% 109,046 29.83%
------ --- ----------- -----
------ --- ----------- -----
<FN>
- ------------------------
(1) Messrs. Lyle A. Hughes and Roger K. Hughes are unrelated.
(2) Mr. Lyle Hughes is also affiliated with Yucaipa Food Fair, Inc. which owns
546 Class B Shares (0.15% of the outstanding Class B Shares).
(3) Elected by holders of Class B Shares.
(4) Mr. McCormack also is affiliated with Glen Avon Food, Inc. which owns 100
Class A Shares and 336 Class B Shares (0.01% of the outstanding Class B
Shares) and Yucaipa Trading Co., Inc. which owns 100 Class A Shares and no
Class B Shares.
(5) These shares are owned by Arden Mayfair, Inc., the parent company of
Gelson's Markets.
(6) Mr. Young also is affiliated with Bakersfield Food City, Inc. dba Young's
Markets which owns 100 Class A Shares and 355 Class B Shares. (0.01% of the
outstanding Class B Shares).
</TABLE>
The following table sets forth the present directors of the Company,
including the directors elected by the holders of the Company's Class B Shares,
the year such directors were first elected to the Board of Directors, those
persons named in the Advisory Ballot who are not directors of the Company, and
certain other information.
<TABLE>
<CAPTION>
YEAR
AGE AS OF FIRST PRINCIPAL OCCUPATION
NAME 12/31/95 ELECTED DURING LAST 5 YEARS
- ------------------------------ --------- ------- ---------------------------------------------
<S> <C> <C> <C>
Louis A. Amen 66 1974 President, Super A Foods, Inc.
William Andronico 38 -- President, Park and Shop Market, Inc.,
Operating Andronico's Market
John Berberian 44 1991 President, Berberian Enterprises, Inc.,
operating Jons Markets
William C. Evans 63 -- President, Twain Harte Market, Inc.
Gene A. Fulton 56 1994 President-Owner, Jensen's Complete Shopping,
Inc., operating Jensen's Finest Foods
Scott Hair 40 -- Managing Director, Green Frog Market
Lyle A. Hughes (1) 58 1987 General Manager, Yucaipa Trading Co., Inc.,
operating Super Penny Mart
Roger K. Hughes (1)(2) 61 1985 Chairman of the Board and Director, Hughes
Markets, Inc.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
YEAR
AGE AS OF FIRST PRINCIPAL OCCUPATION
NAME 12/31/95 ELECTED DURING LAST 5 YEARS
- ------------------------------ --------- ------- ---------------------------------------------
<S> <C> <C> <C>
Darioush Khaledi 49 1993 Chairman of the Board and Chief Executive
Officer, K. V. Mart Co., operating Top Valu
Markets and Valu Plus Food Warehouse
Mark Kidd 45 1992 President, Mar-Val Food Stores, Inc.
Richard L. London 60 -- President and Chief Executive Officer, Major
Market, Inc.
Willard R. MacAloney 60 1981 President and Chief Executive Officer, Mac
Ber, Inc., operating Jax Market
Jay McCormack 45 1993 Owner-Operator, Alamo Market; Co-owner, Glen
Avon Market
Louis Melillo 69 -- President-Owner, Louis Foods Supermarket;
President-Owner Fiesta Farms Market
Morrie Notrica 66 1988 President and Chief Operating Officer, Joe
Notrica, Inc., operating The Original 32nd
Street Market
Michael A. Provenzano 53 1986 President, Pro & Son's, Inc., operating
Southland Market; formerly President,
Carlton's Market, Inc.
Gail Gerrard Rice 47 -- Executive Vice President, Gerrard's, Inc.,
operating Gerrard's Cypress Center
Allan Scharn 60 1988 President, Gelson's Markets
Farid (Mike) Shalabi 35 -- President and Chief Executive Officer,
R-Ranch Markets, Inc.
James R. Stump 57 1982 President, Stump's Market, Inc.
Milt Thaler 70 -- President, T./R. Foods, Inc., operating City
Foods
Daniel W. Vengler 50 -- President, Oak Creek Market, Inc.
Michael A. Webb (2) 38 1992 President and Chief Executive Officer, SavMax
Foods, Inc.
Kenneth Young 51 1994 Vice President, Jack Young's Supermarkets;
Vice President, Bakersfield Food City, Inc.
dba Young's Markets
<FN>
- ------------------------
(1) Messrs. Lyle A. Hughes and Roger K. Hughes are unrelated.
(2) Elected by holders of Class B Shares.
</TABLE>
5
<PAGE>
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of six meetings during
the fiscal year ended September 2, 1995. Each incumbent director who was in
office during such year attended more than 75% of the aggregate of the total
number of meetings of the board and the total number of meetings held by those
committees of the board on which he served.
The Company has an Audit Committee which presently consists of Gene Fulton,
Lyle Hughes and Kenneth Young, who are directors of the Company. Willard R.
MacAloney, Chairman of the Board of Directors, is an ex-officio member of the
Committee. This Committee, which met two times during the Company's last fiscal
year, is primarily responsible for approving and reviewing the services
performed by the Company's independent auditors, reviewing the annual results of
their audit, and reviewing the Company's accounting practices and system of
internal accounting controls.
The Company has a Personnel and Executive Compensation Committee which
presently consists of Louis A. Amen, Roger Hughes, Darioush Khaledi, James R.
Stump and Michael A. Webb, who are directors of the Company. Willard R.
MacAloney, Chairman of the Board of Directors, is an ex-officio member of this
Committee. This Committee, which met two times during the Company's last fiscal
year, is responsible for reviewing salaries and other compensation arrangements
of all officers and for making recommendations to the Board of Directors
concerning such matters.
The Company has a Nominating Committee which presently consists of Gene A.
Fulton, Mark Kidd, Jay McCormack and Morrie Notrica who are directors of the
Company. Willard R. MacAloney, Chairman of the Board of Directors, and Alfred A.
Plamann, President and CEO, are ex-officio members of this Committee. This
Committee, which met two times during the Company's last fiscal year, is
responsible for selecting nominees to be submitted by the Board of Directors to
the shareholders for election to the Board of Directors.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As noted under the caption "Board Meetings and Committees", the Company's
Personnel and Executive Compensation Committee (presently consisting of
Directors Louis A. Amen, Roger Hughes, Darioush Khaledi, James R. Stump, Michael
A. Webb, and ex-officio member and Chairman of the Board, Willard R. MacAloney)
is responsible for reviewing salaries and other compensation arrangements of the
officers of the Company and for making recommendations to the Board of Directors
concerning such matters.
Except for Mr. MacAloney, no member of the Personnel and Executive
Compensation Committee is, or has been at any time in the past, an officer or
employee of the Company or any of its subsidiaries. As Chairman of the Board,
Mr. MacAloney is an officer under the Bylaws of the Company, although he is not
an employee and does not receive any compensation or expense reimbursement
beyond that to which other directors are entitled.
The Company guarantees annual rent and certain other obligations of Mr.
MacAloney as lessee under a lease of store premises located in La Puente,
California. Annual rent under the lease is $62,487, and the lease term expires
in April 1997. The Company also guarantees annual rent and certain other
obligations of G & M Company, Inc., of which Mr. MacAloney is a shareholder,
under a lease of store premises located in Santa Fe Springs, California. Annual
rent under the lease is $82,544, and the lease term expires in October 1997. In
consideration of its guarantees, the Company receives a monthly fee from G & M
Company, Inc. equal to 5% of the base monthly rent under each lease.
Grocers Capital Company ("GCC"), a subsidiary, guarantees a portion of a
loan made by National Consumer Cooperative Bank ("NCCB") to K.V. Mart Co., of
which director Darioush Khaledi is the President and a shareholder, and KV
Property Company, of which director Darioush Khaledi is a general partner. The
term of the loan is eight years, maturing January 1, 2002, and the loan bears
interest at a floating rate based on the commercial loan base rate of NCCB. The
loan is collateralized by certain real and
6
<PAGE>
personal property. The guarantee by GCC is limited to 10% of the $2.1 million
principal amount of the loan. In consideration of its guarantee, GCC will
receive an annual fee from K.V. Mart Co. equal to approximately 5% of the
guarantee amount.
GCC has guaranteed a portion of a $5,000,000 revolving loan made by NCCB to
K.V. Mart Co. in November 1995. The loan has an initial maturity of two years,
with the outstanding balance then converting to a five year term loan. The loan
bears interest at a floating rate based on the commercial loan rate of NCCB. The
loan is collateralized by certain real and personal property of K.V. Mart Co.
The guaranty of GCC is limited to 10% of the outstanding principal amount of the
loan. In consideration of its guaranty, GCC will receive an annual fee from K.V.
Mart Co. equal to 5% of the guaranty amount.
The Company is proposing to enter into a guaranty of rent and certain other
obligations of K.V. Mart Co. under a lease of store premises to be constructed
in Lynwood, California. The guaranty would be for a term of seven years. Annual
rent under the lease will be $408,000. In consideration of its guaranty, the
Company will receive an annual fee from K.V. Mart Co. equal to 5% of the annual
rent.
GCC is proposing to purchase 10% of the common stock of K.V. Mart Co. for a
purchase price of approximately $3,000,000. In connection with this purchase,
K.V. Mart Co., GCC, Mr. Khaledi and the other shareholders of K.V. Mart Co. will
agree that GCC will have certain preemptive rights to acquire additional common
shares, rights to have its common shares included proportionately in any
transfer of common shares by the other shareholders, and rights to have its
common shares included in certain registered public offerings of common stock
which may be made by K.V. Mart Co. In addition, GCC will have certain rights, at
its option, to require that K.V. Mart Co. repurchase GCC's shares, and K.V. Mart
Co. will have certain rights, at its option, to repurchase GCC's shares. In
connection with these transactions, K.V. Mart Co. will enter into a seven year
supply agreement with the Company whereunder K.V. Mart Co. will be required to
purchase a substantial portion of its merchandise requirements from the Company.
The supply agreement will be subject to earlier termination in certain
situations.
The Company guarantees annual rent and certain other obligations of Stump's
Market, Inc., of which director James R. Stump is the President and a
shareholder, as leasee under a lease of store premises located in San Diego,
California. Annual rent under the lease is $26,325, and the lease term expires
in May 1998. The Company also guaranteed annual rent and certain other
obligations of Stump's Market, Inc. as lessee under a lease of store premises at
a second location in San Diego, California. Annual rent under this lease was
$16,350, and the lease term expired in April 1995.
In fiscal 1994, GCC acquired 25,000 shares of preferred stock of SavMax
Foods, Inc. ("SavMax"), of which director Michael A. Webb is the President and a
shareholder. The purchase price was $100 per share. At the time, GCC owned
40,000 shares of preferred stock of SavMax which it acquired in fiscal 1992. As
part of the new purchase of preferred stock, the annual cumulative dividend on
the 65,000 shares of preferred stock owned by GCC was increased from $8.25 per
share to $8.50 per share, payable quarterly. Mandatory partial redemption of
this stock at a price of $100 per share began in 1994 and will continue annually
thereafter for eight years, at which time the stock is to be completely retired.
GCC also purchased from Mr. Webb and another member of his immediate family, 10%
of the common stock of SavMax for a price of $2.5 million. In connection with
this purchase, Mr. Webb, SavMax and GCC agreed that GCC will have certain
preemptive rights to acquire additional common shares, rights to have its common
shares included proportionately in any transfer of common shares by Mr. Webb,
and rights to have its common shares included in certain registered public
offerings of common stock which may be made by SavMax. In addition, GCC has
certain rights, at its option, to require that SavMax repurchase GCC's shares,
and SavMax has certain rights, at its option, to repurchase GCC's shares. In
connection with these transactions, SavMax entered into a seven year supply
agreement with the Company (to replace an existing supply agreement) whereunder
SavMax is required to purchase a substantial portion of its merchandise
requirements from the Company. The supply agreement is subject to earlier
termination in certain situations.
The Company guarantees certain obligations of SavMax under three leases of
market premises located in Sacramento, San Jose and San Leandro, California.
Each of these guaranties relates to the obligation of SavMax to pay base rent,
common area maintenance charges, real estate taxes and insurance during the
7
<PAGE>
initial 20 year terms of these leases. However, the guaranties are such that the
Company's obligation under each of them is limited to an amount equal to sixty
monthly payments (which need not be consecutive) of the obligations guaranteed.
Base rent is $40,482 per month under the Sacramento lease and $56,756 per month
under the San Jose lease, in each case subject to a 7 1/2% increase at the end
of each five years. Base rent is $42,454 per month under the San Leandro lease,
subject to a 10% increase at the end of each five years. In consideration of
these guaranties, the Company receives a monthly fee from SavMax equal to 5% of
the base monthly rent under these leases.
The Company guarantees certain obligations of SavMax under two leases of
market premises located in Ceres and Vacaville, California. The leases have
initial terms expiring in January 2005 and April 2007, respectively. Base
monthly rent under the Ceres lease is presently $32,175, increasing to $34,425
in January of 2000. Base monthly rent under the Vacaville lease is presently
$29,167, increasing by $25,000 per year in April of 1997 and 2002. In
consideration of these guaranties, the Company will receive a monthly fee from
SavMax equal to 5% of the base monthly rent under these leases.
The Company leases certain market premises located in Sacramento and
Vallejo, California, and in turn subleases these premises to SavMax. The
Sacramento sublease provides for a term of 20 years and the Vallejo sublease
provides for a term of 10 years. Neither sublease contains options to extend,
although SavMax has the option under each sublease to acquire the Company's
interest under its lease on the condition that the Company is released from all
further liability thereunder. The term of the Sacramento sublease commenced in
September of 1994. The Sacramento premises consist of approximately 50,000
square feet and annual base rent under the sublease is at the following per
square foot rates: $8.00 during years 1 and 2; $8.40 during years 3 through 5;
$8.82 during years 6 through 10; $9.26 during years 11 through 15; and, $9.72
during years 16 through 20. The term of the Vallejo sublease commenced in
September of 1995 and annual base rent under the sublease is $279,000. In
addition, under each of these subleases, the Company receives monthly an
additional amount equal to 5% of the base monthly rent.
The Company is proposing to lease certain market premises to be constructed
and located in Los Banos, California, which it in turn will sublease to Maxco
Foods, Inc. ("Maxco"), a corporation of which SavMax is a shareholder. The
sublease to Maxco would provide for a term of 20 years, without options to
extend, although Maxco will have the option to acquire the Company's interest
under its lease on the condition that the Company is released from all further
liability thereunder. The premises will consist of approximately 50,000 square
feet and annual base rental under the sublease is as follows: $390,000 during
years 1 through 5; $424,125 during years 6 through 10; $461,236 during years 11
through 15; and, $501,594 during years 16 through 20. In addition, the Company
will receive monthly an additional amount equal to 5% of the base monthly rent.
In connection with this transaction, Maxco will enter into a seven year supply
agreement with the Company whereunder Maxco would be required to purchase a
substantial portion of its merchandise requirements from the Company. The supply
agreement will be subject to earlier termination in certain situations.
With respect to the Los Banos sublease, GCC is proposing to make a seven
year equipment loan in the amount of $1,620,000, a five year inventory loan in
the amount of $675,000 and a five year deposit fund loan in the amount of
$350,000 to Maxco. The equipment and inventory loans will bear interest at prime
plus 3%, and the deposit fund loan will bear interest at prime plus 2%. The
loans will be secured by a security interest in all of the equipment, fixtures
and inventory at the Los Banos store and by personal guarantees. In addition, in
certain events, SavMax is required to assume the obligations of Maxco under the
loans, the sublease of the Los Banos premises and the obligations of Maxco under
its supply agreement with the Company.
8
<PAGE>
REPORT OF PERSONNEL AND EXECUTIVE COMPENSATION COMMITTEE ON EXECUTIVE
COMPENSATION
The principal components of the Company's executive compensation program
consist of an annual salary, an annual cash bonus the payment of which is
dependent upon Company performance during the preceding fiscal year, and certain
pension, retirement and life insurance benefits.
SALARY
In determining officer salaries, including that of the Chief Executive
Officer (CEO), the Personnel and Executive Compensation Committee's policy is to
set salaries at levels which recognize officer performance, are commensurate
with the responsibilities assigned to the various officer positions, and will
enable the Company to attract and retain highly qualified executives for its
officer positions.
In considering officer salaries for calendar year 1994, the Committee took
note of the on-going cost reduction efforts implemented by the officer group
under the direction of the CEO. These efforts were undertaken in response to the
significant volume declines experienced by the Company as a result of a
reduction in purchases by certain large retailers who commenced
self-distribution programs or were acquired by chains already engaged in
self-distribution. These efforts resulted in the consolidation of Company
operations into fewer facilities and substantial savings in payroll expenses
through significant reductions in the number of employees.
The Committee's procedure in approving officers' salaries, including that of
the CEO, involves meeting in closed session and without the CEO or other
management personnel being present. In addition to the considerations mentioned
above, this process, which is subjective in nature, centers on the Committee's
consideration of the CEO's evaluation of each individual officer based on the
CEO's perception of their performance in accordance with individual officer
responsibilities as defined by personal and organizational goals and objectives,
the relative value and importance of individual officer contribution toward
organizational success, relative levels of officer responsibilities and changes
in the scope of officer responsibilities, and officer accomplishments and
contributions during the preceding fiscal year. The Committee also reviews and
discusses the salary recommendations made by the CEO for each officer. These
recommendations do not include any recommendation as to the CEO's salary, and
the Committee sets the CEO's salary based on its assessment of his performance
in light of the foregoing policies and considerations. The salaries as approved
by the Committee are submitted to the Board of Directors, which made no changes
in the salaries submitted for 1994.
ANNUAL BONUSES
In recognition of the relationship between Company performance and
enhancement of shareholder value, Company officers may be awarded annual cash
bonuses. Bonuses are paid from a bonus pool which is created if the Company has
achieved an established minimum level of net income for the preceding fiscal
year. The amount of the bonus pool is calculated as a percentage of net income,
with the percentage varying depending on the level of net income as a percentage
of net sales. Amounts in the bonus pool are allocated among the Company's
officers by the CEO, subject to the approval of the Board of Directors. The CEO
does not participate in the bonus pool. However, a bonus may be awarded to the
CEO in an amount determined by the Board of Directors based on its evaluation of
the CEO's performance during the preceding fiscal year.
As disclosed in the Summary Compensation Table, no bonuses have been awarded
to the CEO and the named executives during the periods reported, and no bonuses
have been awarded to the other officers of the Company during those periods.
BENEFITS
Consistent with the objective of attracting and retaining qualified
executives, the compensation program includes the provision of pension benefits
to Company employees, including officers, under the Company's defined benefit
pension plan, which is described in connection with the Pension Plan Table. In
addition, Company employees, including officers, may defer income from their
earnings through voluntary contributions to the Company's Employees' Sheltered
Savings Plan adopted pursuant to Section 401(k) of the Internal Revenue Code and
the Company's Employees' Excess Benefit Plan, which is a nonqualified plan. In
the case of those officers who elect to defer income under these plans, the
Company makes
9
<PAGE>
additional contributions for their benefit. The amount of these additional
contributions made during fiscal year 1995 for the benefit of the CEO and the
other named executive officers is set forth in the footnotes to the Summary
Compensation Table. The Company also provides additional retirement benefits to
its officers pursuant to an Executive Salary Protection II, which is described
in connection with the Pension Plan Table.
Personnel and Executive Compensation Committee Members
Darioush Khaledi, Chairman
Louis A. Amen
Willard R. MacAloney
James R. Stump
Michael A. Webb
EXECUTIVE OFFICER COMPENSATION
The following table sets forth information respecting the compensation paid
during the Company's last three fiscal years to the President and Chief
Executive Officer (CEO) and to certain other executive officers of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------------------------------------
OTHER
FISCAL ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) COMPENSATION($)
- ------------------------------ ------ ------------ -------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Alfred A. Plamann 1995 322,150 0 24,290(2)
President & CEO 1994 236,827 205 31,431
1993 164,800 310 25,419
Donald W. Dill(1) 1995 147,047 167 175,169(3)
Senior Vice President 1994 163,366 576 38,127
1993 153,346 1,016 37,392
Daniel T. Bane(1) 1995 200,000 195 1,231(4)
Senior Vice President & CFO 1994 21,539 0 0
1993 0 0 0
Charles J. Pilliter 1995 172,000 0 13,174(5)
Senior Vice President 1994 167,577 127 20,591
1993 151,924 188 18,241
Donald G. Grose 1995 147,000 357 11,232(6)
Senior Vice President 1994 143,760 438 31,700
1993 135,116 955 30,372
<FN>
- ------------------------
(1) Mr. Dill retired July 27, 1995 and Mr. Bane joined the Company July 26,
1994.
(2) Consists of a $6,392 Company contribution to the Company's Employees'
Sheltered Savings Plan, and a $17,898 Company contribution to the Company's
Employees' Excess Benefit Plan.
(3) Consists of $162,000 in severance benefits (representing 52 weeks of salary
paid in accordance with the Company's past practices), a $3,466 Company
contribution to the Company's Employees' Sheltered Savings Plan, and a
$9,703 Company contribution to the Company's Employees' Excess Benefit
Plan.
(4) Consists of a $385 Company contribution to the Company's Employees'
Sheltered Savings Plan, and a $846 Company contribution to the Company's
Employees' Excess Benefit Plan.
(5) Consists of a $3,467 Company contribution to the Company's Employees'
Sheltered Savings Plan, and a $9,707 Company contribution to the Company's
Employee Excess Benefit Plan.
(6) Consists of a $7,158 Company contribution to the Company's Employees'
Sheltered Savings Plan, and a $4,074 Company contribution to the Company's
Employees' Excess Benefit Plan.
</TABLE>
10
<PAGE>
In September 1994, the Board of Directors authorized a new supplemental
executive pension plan (effective January 4, 1995) which provides retirement
income based on each participant's final salary and years of service with the
Company. The plan, called the Company's Executive Salary Protection Plan II
("ESPP II"), provides additional post-termination retirement income based on
each participant's final salary and years of service with the Company. The
funding of this benefit will be facilitated through the purchase of life
insurance policies, the premiums of which will be paid by the Company and
participant contributions. The Company also has a defined benefit pension plan
covering its non-union and executive employees. Benefits under the defined
benefit plan are equal to credited service times the sum of 95% of earnings up
to the covered compensation amount plus 1.45% of earnings in excess of the
covered compensation amount. The covered compensation is based on IRS Tables.
ESPP II supersedes and replaces the Executive Salary Protection Plan I
("ESPP I"). Under ESPP I, Certified purchased life insurance policies for
certain officers. Upon reaching age 65 (or upon termination, if earlier), the
employee was given the cash surrender value of the policy, plus any additional
income taxes incurred by the employee as a result of such distribution.
The following table sets forth the estimated annual benefits under the
defined benefit plan and the ESPP II plan which qualifying officers with
selected years of service would receive if they had retired on September 2, 1995
at the age of 65.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
----------------------------------------------------------------
REMUNERATION 5 YEARS 10 YEARS 15 YEARS 20 YEARS 25 YEARS 33 YEARS
- ------------------------------------------------ --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
$100,000...................................... $ 26,008 $ 52,016 $ 68,024 $ 69,032 $ 70,040 $ 71,653
125,000....................................... 32,530 65,060 85,090 86,370 87,650 89,697
150,000....................................... 39,052 78,104 89,455 91,007 92,559 95,042
175,000....................................... 45,302 87,904 89,455 91,007 92,559 95,042
200,000....................................... 51,552 87,904 89,455 91,007 92,559 95,042
225,000....................................... 57,802 87,904 89,455 91,007 92,559 95,042
250,000....................................... 64,052 87,904 89,455 91,007 92,559 95,042
300,000....................................... 76,552 87,904 89,455 91,007 92,559 95,042
350,000....................................... 86,352 87,904 89,455 91,007 92,559 95,042
400,000....................................... 86,352 87,904 89,455 91,007 92,559 95,042
450,000....................................... 86,352 87,904 89,455 91,007 92,559 95,042
</TABLE>
The Company's ESPP II is designed to provide a retirement benefit up to 65%
of a participant's final compensation, based on a formula which considers an
executive's final compensation and years of service. Remuneration under ESPP II
is based upon an executive's highest annual base wage during the previous three
completed years, which includes his or her annual salary as determined by the
Board of Directors plus an automobile allowance with a 4% annual increase. The
benefit is subject to an offset of the annual benefit which would be received
from the defined benefit plan, calculated as a single life annuity at age
sixty-two. To qualify for participation in the benefit, the executive must
complete three years of service as an officer elected by the Board of Directors
of the Company. Executives will vest at a rate of 5% per year with all years of
continuous service credited. The ESPP II maximum annual benefit upon retirement
for calendar 1995 shall not exceed $84,800 and will be paid over a 15-year
certain benefit. This maximum benefit will increase annually thereafter at the
rate of 6%. Lesser amounts are payable if the executive retires before age
sixty-five. The maximum annual amount payable by years of service is reflected
within the table at the compensation level of $450,000. As of September 2, 1995,
credited years of service for named officers are: Mr. Plamann, 6 years; Mr.
Bane, 1 year; Mr. Dill, 37 years; Mr. Gross, 14 years; and Mr. Pilliter, 19
years.
11
<PAGE>
DIRECTOR COMPENSATION
Each director receives a fee of $300 for each regular board meeting
attended, $100 for each committee meeting attended and $100 for attendance at
each board meeting of a subsidiary of the Company on which the director serves.
In addition, directors are reimbursed for Company related expenses.
CUMULATIVE TOTAL SHAREHOLDER RETURN
The following graph sets forth the five year cumulative total shareholder
return on the Company's common stock as compared to the cumulative total return
for the same period of the S&P 500 Index and Peer Issuers consisting of Spartan
Stores, Inc. and Roundy's, Inc. Like the Company, Spartan Stores and Roundy's
are retailer-owned wholesale grocery distributors. While Spartan Stores pays a
dividend on its stock, the Company and Roundy's do not. The shares of the
Company and the Peer Issuers are not traded on any exchange and there is no
established public market for such shares. The price of the Company's shares
during each of its fiscal years is the book value of such shares as of the end
of the prior fiscal year.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG THE COMPANY, S&P 500 INDEX AND PEER ISSUERS**
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
COMPANY S&P 500 PEER ISSUERS
<S> <C> <C> <C>
1990 100 100 100
1991 94.1 122.6 104.9
1992 89.5 128.4 110.8
1993 90.1 143.7 117.8
1994 89.9 147.4 125.9
1995 91.4 174.2 136.6
</TABLE>
<TABLE>
<S> <C>
Assumes $100 invested on August 31, 1990 in Company
common stock, S&P 500 Index and Peer Issuers common
stock
* Total return assumes reinvestment of dividends
** Fiscal years ended August 31, 1991, August 29,
1992, August 28, 1993, September 3, 1994 and
September 2, 1995
</TABLE>
TRANSACTIONS WITH MANAGEMENT AND PERSONS
NAMED IN THE ADVISORY BALLOT
All directors of the Company and all persons named in the Advisory Ballot
who are not directors (or the firms with which such directors and persons are
affiliated) purchase groceries, related products and store equipment from the
Company or its subsidiaries in the ordinary course of business at prices and on
terms available to patrons generally. During the fiscal year ended September 2,
1995, no director of the Company or person named in the Advisory Ballot who is
not a director (nor the firms with which such directors and persons are
affiliated) accounted for in excess of 5% of the Company's consolidated sales.
12
<PAGE>
In September 1992, the Company guaranteed the obligations of Mar-Val Food
Stores, Inc., of which director Mark Kidd is the President and a shareholder,
under a lease of market premises located in Valley Springs, California. The
guarantee is of the obligations of Mar-Val Food Stores, Inc. to pay base rent,
common area costs, real estate taxes and insurance during the initial fifteen
year term of the lease. Base rent under the lease is $10,080 per month. The
Company's total obligation under the guarantee, however, is limited to the sum
of $736,800. In consideration of its guarantee, the Company receives a monthly
fee from Mar-Val Food Store, Inc. equal to 5% of the base monthly rent under the
lease.
The Company leases its produce warehouse to Joe Notrica, Inc., of which
director Morrie Notrica is the President and a shareholder. The lease is for a
term of five years expiring in November 1998 and contains an option to extend
for an additional five year period. Monthly rent during the initial term is
$24,000. If the option to extend is exercised, rent during the option period
will be the lesser of fair rental value or the monthly rent during the initial
term as adjusted to reflect the change in the Customer Price Index during the
initial term.
Cala Co. (a patron affiliated with Alpha Beta Company) acquired the stock of
Bell Markets, Inc. in June 1989. The Company guaranteed the payment by Cala Co.
of certain promissory notes in favor of the selling shareholders. The promissory
notes mature in June 1996 and total $8 million; however, the Company's guaranty
obligation is limited to $4 million. In addition, and in connection with the
acquisition, the Company guaranteed the lease obligations of Bell Markets, Inc.
during a 20-year period under a lease relating to two retail grocery stores
located in San Francisco, California. Annual rent under the lease is $327,019.
In the event the Company's guaranty is ever called upon, the Company has the
right to receive an assignment of the lease relating to the locations.
Concurrently with the foregoing transactions, Bell Markets, Inc. entered into a
5-year agreement to purchase a substantial portion of its merchandise
requirements from the Company.
Grocers General Merchandise Company ("GM"), a subsidiary, and Food 4 Less
GM, Inc. ("F4LGM"), an indirect subsidiary of Ralphs Grocery Company, are
parties to a joint venture agreement. Under the agreement, GM and F4LGM are
partners in a joint venture partnership known as Golden Alliance Distribution
("GAD"). The partnership was formed for the purpose of providing for the shared
use of the Company's general merchandise warehouse located in Fresno,
California, and each of the partners has entered into a supply agreement with
Golden Alliance Distribution providing for the purchase of general merchandise
products from Golden Alliance Distribution.
The Company guarantees certain obligations under a sublease of market
premises located in Pasadena, California, and under which Berberian Enterprises,
Inc., of which Director John Berberian is the President and a shareholder, is
the sublessor. The guaranty is of the obligations of the sublessee to pay
minimum rent, common area costs, real estate taxes and insurance during the
first seven years of the term of the sublease, which commenced in September
1995. Minimum rent under the sublease is $10,000 per month. In consideration of
its guaranty, the Company receives a monthly fee from the sublessee equal to 5%
of the monthly amounts guaranteed.
On February 1, 1995, GCC made a loan of $69,000 to Corwin J. Karaffa, the
Company's Vice President-Distribution. The loan was for the purpose of assisting
Mr. Karaffa in acquiring a home in connection with his becoming employed by the
Company. The loan bears interest at 8% per annum and is secured by a second deed
of trust on the home. The loan has a term of eight years, with interest only
payable during the first five years.
In fiscal 1993, GCC acquired one hundred fifty (150) shares of preferred
stock and three hundred thousand (300,000) shares of common stock of Major
Market, Inc. ("MMI"), of which nominee Richard L. London is the President and a
shareholder, for a price of approximately $1.5 million. In December 1994, GCC
finalized an agreement with MMI whereunder MMI repurchased all of the preferred
stock and two hundred eighty-two thousand six hundred (282,600) shares of the
common stock for a price of $2.7 million, of which $2,580,000 is represented by
a seven-year promissory note from MMI to GCC. The promissory note bears interest
at prime plus two percent, adjusted quarterly, and is secured by the assets of
MMI. As additional security, GCC received a guarantee from Mr. London and a
pledge of his shares in MMI. In connection with this repurchase, Mr. London,
MMI, GCC and certain other shareholders of MMI agreed
13
<PAGE>
that GCC will have certain preemptive rights to acquire additional common
shares, rights to have its common shares included proportionately in any
transfer of common shares by Mr. London, and rights to have its common shares
included in certain registered public offerings of common stock which may be
made by MMI. In addition, GCC will have certain rights, at its option, to
require that MMI repurchase GCC's shares, and MMI will have certain rights, at
its option, to repurchase GCC's shares. In connection with these transactions,
MMI entered into a seven-year supply agreement with the Company (to replace an
existing supply agreement) whereunder MMI is required to purchase a substantial
portion of its merchandise requirements from the Company. The supply agreement
is subject to earlier termination in certain situations.
In fiscal 1995, the Company leased certain market premises to be constructed
and located in Los Angeles, California, and which the Company subleases to Hafsa
Corporation, of which nominee Farid (Mike) Shalabi is the President and a
shareholder. The term of the lease is fifteen years, with four five-year options
to extend. The premises are expected to contain approximately 20,000 square
feet. Base rent during the initial term will be $9.00 per square foot,
increasing by 15% during the first option period and 5% during each of the three
remaining option periods. In connection with its sublease of the premises to
R-Ranch Markets, the Company would receive monthly an additional rent equal to
5% of the base monthly rent.
In June 1993, Grocers Specialty Company ("GSC"), a subsidiary, sold a former
cash and carry location in Los Angeles, California, to a group of purchasers,
including a trust of which Mr. Shalabi is a trustee. The total purchase price
was approximately $495,000, of which approximately $300,000 was paid by means of
a ten year promissory note bearing annual interest at 9 1/2%. The note is
secured by a deed of trust on the location. The balance presently outstanding
under the note is approximately $352,000. In September 1994, GSC also sold a
former cash and carry location in Los Angeles, California, to a group of
purchasers, including a trust of which Mr. Shalabi is a trustee. The total
purchase price was $550,000, of which $440,000 was paid by means of a seven year
promissory note bearing annual interest at 8%. The note is secured by a deed of
trust on the location. The balance presently outstanding under the note is
approximately $275,000.
In July 1995, GCC entered into an agreement with Park and Shop Market, Inc.
("Park and Shop"), of which nominee William Andronico is the President and a
shareholder, under which GCC agreed to provide advances to Park and Shop of up
to $2,500,000. The advances are available until December 31, 2000, and must be
in minimum amounts of $500,000. Each advance must be repaid within five years of
the date of the advance and bears interest at the rate of prime plus 1 1/2%,
payable quarterly in arrears. Advances are available to finance new store
expansion. Amounts advanced by GCC are subordinated to specified bank debt not
to exceed $8,500,000 in amount. Advances totaling $1,500,000 have been made and
are presently outstanding. In connection with this transaction, Park and Shop
entered into a supply agreement providing for the purchase by Park and Shop of a
substantial portion of its merchandise requirements from the Company. The term
of the supply agreement if five years, subject to extension each time an advance
is made.
GCC guarantees a portion of a line of credit between NCCB and Park and Shop.
The line consists of a $3,300,000 term loan and a $3,800,000 advancing term loan
each maturing on October 1, 2002. Until October 1, 2000, the term loan bears
interest at a fixed rate based on U.S. Treasury Security yields, at which time
it converts to a floating rate based on LIBOR. Advances under the advancing term
loan are available until September 20, 1996. Advances are at a fixed or floating
rate, at the option of Park and Shop, but convert to a floating rate of interest
on October 1, 2000. GCC has agreed to subordinate its loan to Park and Shop
described in the preceding paragraph to the loans from NCCB. The loans are
collateralized by certain leasehold improvements and personal property. The
guaranty by GCC is limited to 10% of the outstanding principal balance of the
loans, but the guaranty does not become effective so long as the principal
amount of GCC's loan to Park and Shop discussed in the preceding paragraph is
$500,000 or more. In consideration of its guaranty, GCC will receive an annual
fee from Park and Shop equal to 3.75% of the guaranty amount.
Certain other transactions involving other directors of the Company are
described beginning at page 6 under the caption "Compensation Committee
Interlocks and Insider Participation."
14
<PAGE>
SHAREHOLDER PROPOSALS FOR NEXT YEAR'S ANNUAL MEETING
Under the present rules of the Securities and Exchange Commission (the
"Commission"), and in view of the presently anticipated date of the Company's
Proxy Statement for this year's Annual Meeting of Shareholders, the deadline for
shareholders to submit proposals to be considered for inclusion in the Company's
Proxy Statement for next year's Annual Meeting of Shareholders is expected to be
October 5, 1996. Such proposals may be included in next year's Proxy Statement
if they comply with certain rules and regulations promulgated by the Commission.
Such proposals should be submitted to the Corporate Secretary of the Company at
the address of the Company's principal executive office shown on the first page
of this Statement.
BY ORDER OF THE NOMINATING
COMMITTEE OF THE BOARD OF
DIRECTORS
Dated: January 2, 1996
DAVID A. WOODWARD, CORPORATE SECRETARY
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K TO THE SECURITIES AND
EXCHANGE COMMISSION FOR THE FISCAL YEAR ENDED SEPTEMBER 2, 1995, EXCLUDING
EXHIBITS, MAY BE OBTAINED WITHOUT CHARGE BY WRITING TO THE CORPORATE SECRETARY
OF THE COMPANY AT THE ADDRESS OF THE COMPANY'S PRINCIPAL EXECUTIVE OFFICE SHOWN
ON THE FIRST PAGE OF THIS STATEMENT.
15
