<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/X/ 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/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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/ / 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:
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2) Form, Schedule or Registration Statement No.:
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4) Date Filed:
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<PAGE>
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 6, 1997. 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 15, 1997, 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 17 persons, 10 of whom are
incumbent directors and two of whom have been designated as representing
Northern California shareholders. THE NOMINATING COMMITTEE WILL NOMINATE FOR
ELECTION THESE TWO PERSONS WHETHER OR NOT THEY ARE AMONG THE 12 PERSONS
RECEIVING THE HIGHEST NUMBER OF VOTES ON THE ADVISORY BALLOT. 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 persons receiving the highest number of votes up to the
number of persons to be nominated. 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 23, 1996, the Company had outstanding 47,900 Class A Shares
held 100 shares each by 479 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*
John Berberian* Morrie Notrica*
John T. Fujieki Michael A. Provenzano*
Scott Hair Edward J. Quijada
Darioush Khaledi* Gail Gerrard Rice
Mark Kidd* (N) Farid (Mike) Shalabi
Yong H. Kim James R. Stump*
Richard L. London Kenneth Young* (N)
Willard R. MacAloney*
</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 FEBRUARY 7, 1997.
The Company's independent accountants, Deloitte & Touche, 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 23, 1996 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 Foods,
Inc., Bay Area Warehouse Stores, Inc. and Ralphs Grocery Company, 1100 West
Artesia Boulevard, Compton, California 90220 (24,702 Class B Shares or
approximately 6.78% of the outstanding Class B Shares) (Cala Foods, Inc. 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 (22,739 Class B Shares or approximately 6.24% 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 23, 1996, 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 0.21% 9,613 2.64%
John Berberian
Berberian Enterprises, Inc............ 100 0.21% 7,615 2.09%
Michael A. Bonfante
Nob Hill General Store, Inc. (1)...... 100 0.21% 12,465 3.42%
Harley J. DeLano
Cala Foods, Inc. (1)(2)............... 100 0.21% 24,702 6.78%
John T. Fujieki
Star Markets.......................... 100 0.21% 8,380 2.30%
Scott Hair
Green Frog Market..................... 100 0.21% 395 0.11%
Lyle A. Hughes
Yucaipa Trading Co., Inc.(3)(4)(5).... 100 0.21% 103 0.03%
Roger K. Hughes
Hughes Markets, Inc.(1)(4)............ 100 0.21% 22,739 6.24%
Darioush Khaledi
K. V. Mart Co. ....................... 100 0.21% 15,967 4.38%
Mark Kidd
Mar-Val Food Stores, Inc. ............ 100 0.21% 1,950 0.53%
Yong H. Kim
Koamex General Wholesale, Inc......... 100 0.21% 1,508 0.41%
Richard L. London
Major Market, Inc. ................... 100 0.21% 1,833 0.50%
Willard R. MacAloney
Mac Ber, Inc.......................... 100 0.21% 2,523 0.69%
Jay McCormack
Alamo Market(6)....................... 100 0.21% 732 0.20%
Morrie Notrica
Joe Notrica, Inc. .................... 100 0.21% 8,945 2.45%
Michael A. Provenzano
Pro & Son's, Inc. .................... 100 0.21% 697 0.19%
Edward J. Quijada
Tresierras Brothers Corp.............. 100 0.21% 2,567 0.70%
Gail Gerrard Rice
Gerrard's, Inc. ...................... 100 0.21% 1,414 0.39%
Allan Scharn
Gelson's Markets(3)(7)................ 100 0.21% 6,836 1.87%
Farid (Mike) Shalabi
R-Ranch Markets, Inc.................. 100 0.21% 2,592 0.71%
</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 0.21% 2,131 0.58%
Kenneth Young
Jack Young's Supermarkets(8).......... 100 0.21% 2,660 0.73%
------ --- ----------- -----
2,200 4.59% 138,367 37.94%
------ --- ----------- -----
------ --- ----------- -----
</TABLE>
- ------------------------
(1) Elected by holders of Class B Shares.
(2) These shares are owned by Ralphs Grocery Company and its affiliates, Cala
Foods, Inc. and Bay Area Warehouse Stores, Inc.
(3) These directors will not stand for election at the Annual Meeting.
(4) Messrs. Lyle A. Hughes and Roger K. Hughes are unrelated.
(5) Mr. Lyle Hughes is also affiliated with Yucaipa Food Fair, Inc. which owns
429 Class B Shares (0.12% of the outstanding Class B Shares). Yucaipa
Trading Co., Inc. and Yucaipa Food Fair, Inc. are not affiliated with The
Yucaipa Companies.
(6) Mr. McCormack also is affiliated with Glen Avon Food, Inc. which owns 100
Class A Shares and 361 Class B Shares (0.10% of the outstanding Class B
Shares) and Yucaipa Trading Co., Inc. which owns 100 Class A Shares and 103
Class B Shares (0.03% of the outstanding Class B Shares).
(7) These shares are owned by Arden Mayfair, Inc., the parent company of
Gelson's Markets.
(8) 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. (0.10% of the
outstanding Class B Shares).
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 12/31/96 ELECTED DURING LAST 5 YEARS
- ------------------------------ --------- ------- ---------------------------------------------
<S> <C> <C> <C>
Louis A. Amen 67 1974 President, Super A Foods, Inc.
John Berberian 45 1991 President, Berberian Enterprises, Inc.,
operating Jons Markets
Michael A. Bonfante (1) 55 1995 Chairman, President and CEO, Nob Hill General
Store, Inc.
Harley J. DeLano (1) 59 1995 President, Cala Foods, Inc., Division of
Ralphs Grocery Company
John T. Fujieki 47 -- President and COO, Star Markets since 1995;
formerly Senior Vice President
Scott Hair 41 -- Managing Director, Green Frog Market
Lyle A. Hughes (2)(3) 59 1987 General Manager, Yucaipa Trading Co., Inc.,
operating Super Penny Mart
Roger K. Hughes (1)(3) 62 1985 Chairman of the Board and Director, Hughes
Markets, Inc.
Darioush Khaledi 50 1993 Chairman of the Board and Chief Executive
Officer, K. V. Mart Co., operating Top Valu
Markets and Valu Plus Food Warehouse
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
YEAR
AGE AS OF FIRST PRINCIPAL OCCUPATION
NAME 12/31/96 ELECTED DURING LAST 5 YEARS
- ------------------------------ --------- ------- ---------------------------------------------
<S> <C> <C> <C>
Mark Kidd 46 1992 President, Mar-Val Food Stores, Inc.
Yong H. Kim 55 -- President, Koamex General Wholesale, Inc.
Richard L. London 61 -- President and Chief Executive Officer, Major
Market, Inc.
Willard R. MacAloney 61 1981 President and Chief Executive Officer, Mac
Ber, Inc., operating Jax Market
Jay McCormack 46 1993 Owner-Operator, Alamo Market; Co-owner, Glen
Avon Market
Morrie Notrica 67 1988 President and Chief Operating Officer, Joe
Notrica, Inc., operating The Original 32nd
Street Market
Michael A. Provenzano 54 1986 President, Pro & Son's, Inc., operating
Southland Market; formerly President,
Carlton's Market, Inc.
Edward J. Quijada 49 -- Executive Vice President, Tresierras Brothers
Corp.; formerly Assistant Division Manager,
Procurement & Material, TRW, Inc.
Gail Gerrard Rice 48 -- Executive Vice President, Gerrard's, Inc.,
operating Gerrard's Cypress Center
Allan Scharn(2) 61 1988 President, Gelson's Markets
Farid (Mike) Shalabi 36 -- President and Chief Executive Officer,
R-Ranch Markets, Inc.
James R. Stump 58 1982 President, Stump's Market, Inc.
Kenneth Young 52 1994 Vice President, Jack Young's Supermarkets;
Vice President, Bakersfield Food City, Inc.
dba Young's Markets
<FN>
- ------------------------
(1) Elected by holders of Class B Shares.
(2) These directors will not stand for election at the Annual Meeting.
(3) Messrs. Lyle A. Hughes and Roger K. Hughes are unrelated.
</TABLE>
5
<PAGE>
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of seven meetings during
the fiscal year ended August 31, 1996. 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 Lyle A.
Hughes, Mark Kidd 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 three 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 K. Hughes, Darioush Khaledi, Jay
McCormack and James R. Stump, 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 five 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 Mark
Kidd, Jay McCormack, Morrie Notrica and James R. Stump 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 five 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 K. Hughes, Darioush Khaledi, Jay McCormack, James
R. Stump, 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.
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. Mr. McCormack was employed by the Company as a senior sales
representative from November 1975 to May 1986, but has not been employed by the
Company since that time. The Company's President and Chief Executive Officer,
Alfred A. Plamann, is a member of the Board of Directors of K.V. Mart Co., of
which Committee member and director Darioush Khaledi is Chairman and Chief
Executive Officer.
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. The
initial term of the lease expires in October 2007, but may be extended for one
option term expiring in October 2012. Annual rent under the lease is $100,000,
increasing to $110,000 in November 1997. Thereafter, annual rent increases by
$15,000 every five years during the balance of the term, including the extension
term. However, the Company's guaranty is such that the Company's obligation
6
<PAGE>
thereunder is limited to not exceed sixty monthly payments (which need not be
consecutive) of the obligations guaranteed. 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.
The Company has entered into a lease of store premises located in Riverside,
California, which it will in turn sublease on the same terms and conditions to a
corporation to be formed by Mr. MacAloney. The sublease will be for an initial
term of 15 years, but may be extended for three periods of 5 years each and one
period of 4 years and 11 months. Monthly rent during the initial term is
$22,234, increasing to $24,457, $26,903, $29,596 and $32,561 during the
extension terms. Under the sublease, the Company will also receive a monthly fee
from G & M Company equal to 5% of the monthly rent.
GCC 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 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
receives an annual fee from K.V. Mart Co. equal to approximately 5% of the
guarantee amount.
GCC guarantees 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. Since its inception, the highest outstanding principal amount of the loan
has been and is presently $785,000. In consideration of its guaranty, GCC
receives an annual fee from K.V. Mart Co. equal to 5% of the guaranty amount.
In April 1996, the Company guaranteed rent and certain other obligations of
K.V. Mart Co. for a period of seven years under a lease of store premises
located in Lynwood, California. Annual rent under the lease is $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.
In April 1996, the Company guaranteed rent and certain other obligations of
K.V. Mart Co. for a period of seven years under a lease of store premises under
construction in Canoga Park, California. The landlord under the lease is a
corporation in which a family trust established by Mr. Khaledi has an indirect
interest through certain partnerships which in turn have an interest in the
landlord corporation. Annual rent under the lease is $353,976. The lease term
will commence upon the earlier of the opening of the store for business or 180
days after occupancy. The guarantee will become effective upon the commencement
date of the lease. In consideration of its guaranty, the Company will receive an
annual fee from K.V. Mart equal to 5% of the annual rent.
The Company proposes to enter into a guaranty of rent and certain other
obligations of K.V. Mart Co. under a lease of store premises in Los Angeles,
California. The guaranty would be in place during the first fifteen years of the
lease term, which is thirty-four years and eight months. Annual rent under the
lease will be $212,664 during the first twenty months of the lease term;
$332,664 during the next thirty-eight months; $382,560, $439,944, and $505,944,
respectively, during the three succeeding sixty month periods; and thereafter
increasing by 15% every sixty months during the balance of the term. In
consideration of its guaranty, the Company will receive an annual fee from K.V.
Mart Co. equal to 5% of the annual rent.
In December 1995, GCC purchased 10% of the common stock of K.V. Mart Co. for
a purchase price, based upon appraised values, 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. 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 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 has the option to require the repurchase of its shares for any
reason after December 2000,
7
<PAGE>
and until that time has the option to require repurchase upon the occurrence of
certain specified events, including a material breach of the supply agreement
referred to below, changes in management or control, and noncompliance with
financial ratios. After December 1999, the repurchase price is fair market value
as determined by appraisal, and until that time is the greater of a declining
premium over fair market value or the original purchase price of the shares plus
an agreed annual compounded rate of return. K.V. Mart Co. has the option to
repurchase GCC's shares at any time and also in the event of a change in control
of GCC or the Company or a material breach by the Company under the supply
agreement referred to below. In the absence of a change in control or a material
breach under the supply agreement, and until December 1999, the repurchase price
is the greater of a declining premium over fair market value or the original
purchase price of the shares plus an agreed annual compounded rate of return,
and after December 1999 is fair market value. In the event of a change in
control or a material breach under the supply agreement, and until December
1999, the repurchase price is the lesser of a declining discount from fair
market value or the original purchase price of the shares, and after December
1999 is fair market value. In connection with these transactions, K.V. Mart Co.
entered into a seven year supply agreement with the Company whereunder K.V. Mart
Co. is required to purchase a substantial portion of its merchandise
requirements from the Company. Fiscal 1996 purchases totalled approximately
$75,300,000. The supply agreement is 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 guarantees 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 is
$36,075, and the lease term expires in November 1997. In consideration of these
guaranties, the Company receives a fee from Stump's Market, Inc. equal to 5% of
the base monthly rent under these leases.
Since the Company's retail and financial assistance programs are only
available to persons and entities which are patrons of the Company, it is not
possible to assess whether the foregoing transactions are less favorable to the
Company than similar transactions with unrelated third parties. However,
management believes that each such transaction is on terms no more favorable to
the patron than those which would be available to other similar patrons.
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 the Company performance during the preceding fiscal year, and
certain pension, retirement and life insurance benefits.
SALARY
In providing for increases in officer salaries for calendar year 1996, the
Committee took note of continuing process improvements and cost control efforts
implemented by the officer team under the direction of the CEO. The Committee
also recognized the substantial efforts made under the CEO's leadership toward
restructuring of Company operations. Under the Company's newly launched
comprehensive strategic initiative, labeled "C(3)" for "Certified's Commitment
to Customers," an in-depth examination of Company operations, services and
business practices was begun, with a focus on commitment to growth, quality,
cost efficiency and superior service. These efforts resulted in the addition of
significant new customer volume, pricing efficiencies which were passed on to
the Company's membership, substantial savings in operating costs, improved cash
flow management, and improved efficiency of internal operations. As a result,
the Company recorded strong volume gains, produced major improvement in
patronage dividends, and is better positioned to compete for more new business
in the future.
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
8
<PAGE>
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 1996.
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.
Bonuses awarded to the CEO and the named executives are disclosed in the
Summary Compensation Table.
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 Employee's 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 additional contributions for their benefit. The amount of these
additional contributions made during fiscal year 1995 for the benefit of the CEO
and 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
Roger K. Hughes
Jay McCormack
Willard R. MacAloney
James R. Stump
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.
9
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
<S> <C> <C> <C> <C> <C>
ANNUAL COMPENSATION
--------------------------------------------------
OTHER
FISCAL ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($) COMPENSATION($) COMPENSATION($)
- ------------------------------ ------ ------------ -------- --------------- ---------------
Alfred A. Plamann 1996 352,500 100,000 840 27,895(2)
President & CEO 1995 322,150 50,000 24,290
1994 236,827 205 31,431
Daniel T. Bane 1996 215,000 55,000 605 14,446(3)
Senior Vice President & CFO 1995 200,000 20,000 195 1,231
1994 21,539
Charles J. Pilliter 1996 183,000 46,500 295 14,459(4)
Senior Vice President 1995 172,000 15,000 13,174
1994 167,577 127 20,591
Corwin J. Karaffa (6) 1996 151,000 30,600 150 6,458(5)
Vice President - Distribution 1995 89,231 7,000
Don W. Hawks (6) 1996 139,500 28,200 203 10,636(7)
Vice President - Marketing 1995 33,750 2,000 41,017
and Procurement
</TABLE>
- ------------------------
(1) It should be noted that while the table presents salary information on a
fiscal year basis, salary is determined by the Company on a calendar year
basis. Thus, salary information with respect to any given fiscal year
reflects salary attributable to portions of two calendar year salary periods
of the Company.
(2) Consists of a $9,135 Company contribution to the Company's Employees'
Sheltered Savings Plan, a $17,500 Company contribution to the Company's
Employees' Excess Benefit Plan and Supplemental Deferred Compensation Plan,
and $1,260 representing the economic benefit associated with the Company
paid premium on the Executive Life Plan.
(3) Consists of a $9,600 Company contribution to the Company's Employees'
Sheltered Savings Plan, a $4,303 Company contribution to the Company's
Employees' Excess Benefit Plan and Supplemental Deferred Compensation Plan,
and $543 representing the economic benefit associated with the Company paid
premium on the Executive Life Plan.
(4) Consists of a $9,300 Company contribution to the Company's Employees'
Sheltered Savings Plan, a $4,717 Company contribution to the Company's
Employees' Excess Benefit Plan and Supplemental Deferred Compensation Plan,
and $442 representing the economic benefit associated with the Company paid
premium on the Executive Life Plan.
(5) Consists of a $6,203 Company contribution to the Company's Employees'
Sheltered Savings Plan, and $255 representing the economic benefit
associated with the Company paid premium on the Executive Life Plan.
(6) Messrs. Karaffa and Hawks became officers of the Company in fiscal 1995.
(7) Consists of a $9,572 Company contribution to the Company's Employees'
Sheltered Savings Plan, a $759 Company contribution to the Company's
Employee Excess Benefit and Supplemental Deferred Compensation Plan, and
$305 representing the economic benefit associated with the Company paid
premium on the Executive Life Plan.
The Company has a 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 is facilitated through the
purchase of life insurance policies, the premiums of which
10
<PAGE>
are 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.
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 August 31, 1996
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.............................. $ 25,984 $ 51,968 $ 67,952 $ 68,936 $ 69,920 $ 71,495
125,000............................... 32,506 65,012 85,018 86,274 87,530 89,539
150,000............................... 39,028 78,056 102,084 103,611 105,139 107,584
175,000............................... 45,278 90,556 115,057 119,861 121,389 123,834
200,000............................... 51,528 103,056 115,057 125,242 135,428 140,084
225,000............................... 57,778 104,871 115,057 125,242 135,428 151,725
250,000............................... 64,028 104,871 115,057 125,242 135,428 151,725
300,000............................... 76,528 104,871 115,057 125,242 135,428 151,725
350,000............................... 89,028 104,871 115,057 125,242 135,428 151,725
400,000............................... 94,685 104,871 115,057 125,242 135,428 151,725
450,000............................... 94,685 104,871 115,057 125,242 135,428 151,725
</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 1996 shall not exceed $84,800 and will be paid over a 15-year
certain benefit. The 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 August 31, 1996, credited
years of service for named officers are: Mr. Plamann, 7 years; Mr. Bane, 2
years; Mr. Pilliter, 20 years; Mr. Karaffa, 1 year; and Mr. Hawks, 12 years.
EXECUTIVE EMPLOYMENT AND TERMINATION AGREEMENT
The Company is a party to an employment contract with Alfred A. Plamann, the
Company's President and Chief Executive Officer. The contract has a three year
term, presently expiring in February 1999, but provides for annual extensions to
the contract if there is mutual agreement. Under the contract, Mr. Plamann
serves as the Company's President and Chief Executive Officer and receives a
base salary, currently $365,000, subject to annual review and upward adjustment
at the discretion of the Board of Directors. Mr. Plamann is also eligible for
annual bonuses at the discretion of the Board of Directors based upon a review
of his performance. The exact formula for future bonuses has not yet been
determined and will be added as an amendment to the contract at a later date.
Additionally, Mr. Plamann will receive employee benefits such as life insurance
and Company pension and retirement contributions.
The contract is terminable at any time by the Company, with or without
cause, and will also terminate upon Mr. Plamann's resignation, death or
disability. Except where termination is for cause or is due to Mr. Plamann's
resignation, death or disability, the contract provides that Mr. Plamann will be
entitled to receive his highest base salary during the previous three years,
plus an annual bonus equal to the average of
11
<PAGE>
the most recent three annual bonus payments, throughout the balance of the term
of the agreement. Mr. Plamann would also continue to receive employee benefits
such as life insurance and Company pension and retirement contributions
throughout the balance of the term of the agreement.
DIRECTOR COMPENSATION
Each director receives a fee of $500 for each regular board meeting
attended, $200 for each committee meeting attended and $200 for attendance at
each board meeting of a subsidiary of the Company on which the director serves.
Prior to April 3, 1996, directors received $300 for each regular board meeting,
$100 for each committee meeting, and $100 for each board meeting of a subsidiary
of the Company. 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>
1991 100 100 100
1992 95.1 104.7 105.6
1993 95.7 117.2 112.3
1994 95.5 120.2 120
1995 97.1 142.1 130.2
1996 98.3 164.9 122
</TABLE>
<TABLE>
<S> <C>
Assumes $100 invested on August 30, 1991 in Company common
stock, S&P 500 Index and Peer Issuers common stock
* Total return assumes reinvestment of dividends
** Fiscal years ended August 29, 1992, August 28, 1993, September 3, 1994, September 2,
1995 and August 31, 1996
</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
12
<PAGE>
available to patrons generally. Except for Ralphs Grocery Company, which with
its affiliated companies accounted for approximately 5.5% of consolidated sales,
during the fiscal year ended August 31, 1996, 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.
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 Foods, Inc. (a patron affiliated with Ralphs Grocery Company) acquired
the stock of Bell Markets, Inc. in June 1989. 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.
Grocers General Merchandise Company ("GM"), a subsidiary, and Food 4 Less
GM, Inc. ("F4LGM"), an indirect subsidiary of Food 4 Less Supermarkets, Inc.,
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
GAD providing for the purchase of general merchandise products from GAD. The
Company is currently in discussions with Ralphs regarding the future of the GAD
partnership.
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.
The Company proposes to lease store locations in Arvin and Delano,
California, which it will in turn sublease on the same rental terms to a
corporation to be formed by director Michael A. Provenzano. The subleases will
have twenty year terms. Annual rent under the Arvin lease will be $165,088
during the first ten years and $166,448 during the balance of the term. Annual
rent under the Delano lease will be $183,334 during the first ten years and
$174,080 during the balance of the term. In addition, under each of these
subleases, the Company will receive an annual fee equal to 5% of the annual
rent.
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
13
<PAGE>
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 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 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 three five-year
options and one four year and eleven month option to extend. The premises
contain approximately 20,500 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 addition, during the
initial term there is additional rent of $1.75 per square foot for amortization
of leasehold improvements. In connection with its sublease of the premises, the
Company will 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 $240,000. 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 $327,000.
Since the Company's retail and financial assistance programs are only
available to persons and entities which are patrons of the Company, it is not
possible to assess whether the foregoing transactions are less favorable to the
Company than similar transactions with unrelated third parties. However,
management believes that each such transaction is on terms no more favorable to
the patron than those which would be available to other similar patrons.
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. Karraffa 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.
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
December 4, 1997. 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 6, 1997
ROBERT M. LING, JR., 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 AUGUST 31, 1996, 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
<PAGE>
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)
/ / John Berberian
(Incumbent)
/ / John T. Fujieki
/ / Scott Hair
/ / Darioush Khaledi
(Incumbent)
/ / Mark Kidd (N)
(Incumbent)
/ / Yong H. Kim
/ / Richard L. London
/ / Willard "Bill" MacAloney
(Incumbent)
/ / Jay McCormack
(Incumbent)
/ / Morrie Notrica
(Incumbent)
/ / Michael A. Provenzano
(Incumbent)
/ / Edward J. Quijada
/ / Gail Gerrard Rice
/ / Farid (Mike) Shalabi
/ / Jim Stump
(Incumbent)
/ / 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 February 7, 1997.
CERTIFIED GROCERS OF CALIFORNIA, LTD.
<PAGE>
CERTIFIED
CERTIFIED GROCERS OF CALIFORNIA, LTD.
CANDIDATES' STATEMENTS
1997 ADVISORY BALLOT
<PAGE>
CANDIDATES' STATEMENTS
- -------------------------------------------------------------------------------
[PHOTO] LOUIS A. AMEN
(INCUMBENT)
SUPER A FOODS, INC.
LOS ANGELES & ORANGE COUNTIES
For the past 22 years, Mr. Amen has served on the board of directors of
Certified Grocers and is a past chairman of the board. Currently, Mr. Amen
is a member of the Administrative, Personnel and Executive Compensation and
Credit Committees. In addition, Mr. Amen is chairman of Grocers and
Merchants Insurance Service and Springfield Insurance Company, two
subsidiaries of Certified, and is a director serving on the board for
Grocers Specialty Company and Springfield Insurance Company, Ltd., also
subsidiaries of Certified Grocers. Mr. Amen is a director and past chairman
of California Grocers Association.
Mr. Amen is the owner-operator of Super A Foods with 10 stores. He has
been actively involved in the food industry for over 53 years and a Certified
member of 44 years.
[PHOTO] JOHN BERBERIAN
(INCUMBENT)
BERBERIAN ENTERPRISES, INC.
DBA
JONS MARKETS
LOS ANGELES
Mr. Berberian is currently a member of Certified's Board of Directors
where he serves on the Retail Development Committee. Mr. Berberian also
serves as a member of the board of Grocers Specialty Company, Grocers
General Merchandise Company and Grocers Equipment Company, three of
Certified's subsidiaries.
Mr. Berberian is the owner and president of Jons Markets which operates
11 successful independent stores. Because it is a family-owned chain, Mr.
Berberian has acquired experience in all phases of retail operation.
Since 1977 when he opened his first store, Mr. Berberian has been an
active member of Certified and has worked closely with them. As Jons Markets
grew to 11 stores in a relatively short time, Mr. Berberian has learned how
valuable Certified is to its members and is sensitive to the many problems
facing independents today.
Mr. Berberian believes that his past experience as a Certified board
member will enable him to make a positive contribution to the Certified
membership.
<PAGE>
CANDIDATES' STATEMENTS
- -------------------------------------------------------------------------------
[PHOTO] JOHN T. FUJIEKI
STAR MARKETS, LTD.
HONOLULU, HAWAII
Being so far away from major suppliers and surrounded by the Pacific
Ocean, Mr. Fujieki believes Star Markets has had to devise many creative
approaches to their business strategies.
It is Mr. Fujieki's belief that retailers in Hawaii have had to re-think
nearly everything they do because of increased competition from large
national discount chains. He also believes they have had to constantly
evaluate and re-evaluate their operations to maintain a competitiveness in
their marketplace. Mr Fujieki feels strongly that shipping and lead time,
systems technology and ECR are major components in their business processes,
and that these processes are integrally connected to all of their creative
strategies.
By being part of Certified's distinguished governing body, Mr. Fujieki
hopes to bring fresh perspectives to the board to ensure equitable and
competitive services and resources to all members.
Star Markets is honored to be part of the Certified Grocers family. Mr.
Fujieki believes it would be a privilege and a personal accomplishment to
serve on Certified's Board of Directors.
[PHOTO] SCOTT HAIR
GREEN FROG MARKET
BAKERSFIELD
Mr. Hair has operated Green Frog Market, a second generation family
store, since its founder's death in 1988. He is a graduate of Cal State
Bakersfield, where he majored in biology. He has successfully administered
over the succession of a family business from the founding generation to it's
second generation owners.
Mr. Hair is a past president and current director of the Kern County
Independent Grocers Association, and has chaired the local AFL-CIO roundtable
for labor and management. Mr. Hair currently serves as chairman of the
Business Retention Committee of the Kern County Council on Competitiveness,
and is a director of the Cal State Bakersfield Roadrunner Club.
Mr. Hair believes the current board of Certified has done a good job of
directing the reorganization of Certified Grocers. He feels Certified needs
to further develop the C3 partnership program for smaller volume stores, and
encourages management in their pursuit of resolving smaller store issues.
Mr. Hair thinks the technological advan cement of the company and its members
is the best remedy for the loss of sales support to the independents.
Mr. Hair welcomes your support of his candidacy, and for any questions or
comments you may have, please call him at 805-322-8420.
<PAGE>
CANDIDATES' STATEMENTS
- -------------------------------------------------------------------------------
[PHOTO] DARIOUSH KHALEDI
(INCUMBENT)
K.V. MART CO.
DBA
TOP VALU MARKETS &
VALU PLUS FOOD WAREHOUSES
Mr. Khaledi, chairman and chief executive officer of K.V. Mart Co.,
opened the first Top Valu Market in Torrance in 1977, and has been a member
of Certified Grocers from that time forward. Mr. Khaledi now operates 11 Top
Valu Markets and 7 Valu Plus Warehouse Markets.
Mr. Khaledi was elected to the board for a fifth time last year, and
plays a major role in the re-engineering of Certified Grocers. He is the 2nd
vice chairman, chairman of Grocers Capital Company and the Personnel and
Executive Compensation Committee, and an active member of the Administrative,
Finance and Retail Development Committees, as well as a director of Grocers
Equipment Company and Grocers Specialty Company.
Mr. Khaledi was honored five times by the Progressive Grocers Magazine,
and serves on the board of directors for the Food Marketing Institute,
California Grocers Association, and the Food Industry Insurance Association.
In October 1996, he was installed as the Chairman of the Board of Directors
of the California Grocers Association, for the 1996-97 term. Mr. Khaledi
maintains a high visibility in the industry and is very involved in industry
issues, at the local, state and national levels.
Mr. Khaledi graduated with a Masters Degree in Civil Engineering from
Tehran Polytechnic in 1968. He also graduated from the University of Southern
California's Effective Management Program in 1981 and the Cornell University
Food Executive Program in July 1995. In July 1996, Mr. Khaledi won the
National Entrepreneur of the Year Award in the Retail/Wholesale Distribution
Division.
[PHOTO] MARK KIDD
(INCUMBENT)
MAR-VAL FOOD STORES, INC.
CENTRAL VALLEY
Mr. Kidd is the owner and president of Mar-Val Food Stores, a family-run
company in the Central Valley.
Mr. Kidd is presently a director on the Certified Board and serves as a
member of the Audit, Finance, Nominating and Retail Development Committees.
He is the chairman of Grocers Equipment Company and a director of Grocers and
Merchants Insurance Service and Springfield Insurance Company. He is
actively involved in all aspects of the grocery industry. Mr. Kidd has been
involved in the grocery business for 29 years, beginning in his high school
years. He then went on to graduate from Bringham Young University and
returned to California to begin to build onto the company business.
Mr. Kidd has served on the board of directors of Northern California
Grocers Association, becoming chairman in 1984. He has served on the board
of directors of California Grocers Association, and has served on the board
of directors of National Grocers Association. He is active in his community
and church affairs. Mr. Kidd feels that in dependent grocers need to work
together in combating the competition of the major chains.
Mr. Kidd welcomes your ideas and asks for your support.
<PAGE>
CANDIDATES' STATEMENTS
- -------------------------------------------------------------------------------
[PHOTO] YONG H. KIM
KOAMEX GENERAL WHOLESALE, INC.
INDUSTRY
As president of Koamex, Inc., Mr. Kim has been involved in the grocery
industry for over 18 years, ten of which have been spent as a member of
Certified Grocers.
During Mr. Kim's term, Koamex has expanded from a single store operation
of 40,000 square feet to one of nine locations consisting of over 400,000
square feet.
The growth of Koamex has been successful due to the fact that they were
able to identify their market needs within the community.
It is this ability that Mr. Kim hopes to bring with him to the Certified
Grocers Board of Directors, if elected. It is his belief that there are
tremendous opportunities both at home and abroad. In addition, one of Mr.
Kim's immediate goals would be to entice non-member grocers into doing
business with Certified. A second goal, if elec ted, would be to get more
involved with the export division and explore possibilities in the Far East.
In closing, Mr. Kim believes that his experience in the grocery industry
and with Certified Grocers makes him an ideal candidate for appointment to
the board of directors.
[PHOTO] RICHARD L. LONDON
MAJOR MARKET, INC.
ESCONDIDO
As president and chief executive officer of Major Market, Mr. London put
together an aggressive, talented team and started the highly successful
company eight years ago in North San Diego County. Currently they have two
high volume stores, one in Fallbrook and the other in Escondido. Extensive
expansion plans are scheduled concentrating on North San Diego County. The
Escondido store was designed by Mr. London and features a full service french
bakery, food service "court" complete with Chinese and Mexican kitchens and a
barbecue mesquite grill. The store is very unique in concept and design from
the fresh fruits and vegetables to the fresh service seafood and butcher shop.
Beginning his grocery career with Vons Companies in 1952, Mr. London
progressed through the ranks to senior vice president in 1983; third in
command of approximately 180 stores. He served on the board of directors and
the executive, real estate and store planning committees while at Vons. He
currently serves on the board of directors for Major Market.
Mr. London was recently elected to serve on the board of directors for
California Grocers Association.
As Certified moves further into the challenging 90's, Mr. London's
commitment to excellence and innovative contributions will be an invaluable
asset to the entire Certified organization.
<PAGE>
CANDIDATES' STATEMENTS
- -------------------------------------------------------------------------------
[PHOTO] WILLARD "BILL" MacALONEY
(INCUMBENT)
MAC BER, INC.
DBA
JAX MARKETS
LOS ANGELES & ORANGE COUNTIES
Mr. MacAloney is the current chairman of the board for Certified and, as
chairman, he is an ex-officio member of all board committees and ex-officio
director of all Certified subsidiaries. He participates in all Certified
programs. Mr. MacAloney is also the first member of Certified to convert one
of his markets into an Apple Market, whic h is Certified's banner store
program.
In addition to his Certified responsibilities and the operation of his
four successful Jax Markets, Mr. MacAloney is vice chairman of the Food
Marketing Institute (FMI) of Washington, D.C., and a board member of the
California Grocers Association (CGA) and Western Association of Food Chains
(WAFC).
Mr. MacAloney believes the board of directors should be the driving force
in establishing Certified's future for the success of the independents. A
strong co-op is fundamental to the survival of independent grocers in our
changing marketplace. Mr. MacAloney is accustomed to getting results even
through the most difficult times; he feels that this is the time to have
board members who can do the same.
[PHOTO] JAY McCORMACK
(INCUMBENT)
ALAMO MARKET, 29 PALMS
GLEN AVON MARKET, GLEN AVON
Mr. McCormack has been the owner-operator of the Alamo Market since 1986,
and is co-owner of Glen Avon Market which opened in 1993. He worked for
Certified Grocers from 1975 to 1986, acquiring a working knowledge of the
co-op and its members.
Mr. McCormack has served you on Certified's Board since July 1992, and is
the 1st vice chairman. Mr. McCormack chairs the Retail Development and
Finance Committees, and serves on the Administrative, Personnel and Executive
Compensation and Nominating Committees. Mr. McCormack is a director of
Grocers Capital Company and Grocers Equipment Company, two subsidiaries of
Certified.
Mr. McCormack believes the board is ultimately responsible for the
successful operation of Certified Grocers. He believes the company should
focus on four major objectives:
1. Control and reduce Certified's gross margin, which translates into the
retailers cost of goods;
2. Control and reduce Certified's expenses as a percentage of sales;
3. Increase volume through Retail Development; and
4. Provide a satisfactory patronage dividend return to members.
Mr. McCormack welcomes the opportunity to serve you. Please call him
with comments or concerns at 619-367-7216.
<PAGE>
CANDIDATES' STATEMENTS
- -------------------------------------------------------------------------------
[PHOTO] MORRIE NOTRICA
(INCUMBENT)
JOE NOTRICA, INC.
DBA
THE ORIGINAL 32ND STREET MARKET
LOS ANGELES
Mr. Notrica is president and sole operating officer of one of the largest
independent markets in Los Angeles. Under his direction, The Original 32nd
Street Market has expanded from 1,800 to 50,000 square feet and is still
growing. In addition, he has opened four additional stores.
In his more than 45 years in the food industry, Mr. Notrica has been
active in every phase of the business from the buying of produce and other
department commodities, to the complex areas of accounting, payroll and other
corporate functions. Mr. Notrica is an innovator whose 16 checkstand
scanning registers have attracted interest from r etailers as far away as New
Zealand, Japan and Finland.
Mr. Notrica has received resolutions from the Los Angeles City Council
and the California State Assembly for his civic affairs activity. He has
also received the Progressive Grocers Merchandising Award for 1985-1986 and
the Mexican American Grocers Association Retailer of the Year Award for 1987.
A member of the Certified Board of Dire ctors, he serves as chairman of the
Nominating Committee, and is a member of the Credit, Finance and Retail
Development Committees, and the boards of Grocers and Merchants Insurance
Service, Grocers General Merchandise Company, Grocers Specialty Company and
the Springfield Insurance Companies. He is also a director of California
Grocers Associati on, and serves on the board of directors for the Mexican
American Grocers Association. He believes that the retail food industry is a
"people business" and he's involved.
[PHOTO] MICHAEL A. PROVENZANO
(INCUMBENT)
PRO & SON'S, INC.
DBA
SOUTHLAND MARKET
ONTARIO
Mr. Provenzano has worked for 38 years in the grocery industry. He is a
graduate of Cal Poly Pomona, where he majored in business. He received a
food industry scholarship to USC, and was nominated to the roster of
Outstanding Young Men of America.
Mr. Provenzano serves on the Retail Development Committee, and is a
director for Grocers and Merchants Insurance Service, Grocers General
Merchandise Company, Grocers Specialty Company, and the Springfield Insurance
Companies, five of Certified's subsidiaries. He is past chairman of the
California Grocers Association and again selected to serve as director on
that board. Representing the independents, Mr. Provenzano serves as a
committee member to the Food Marketing Institute (FMI).
Mr. Provenzano purchased Southland Market in 1979. In 1987 it was voted
as one of the top independents across the United States.
As an independent, he recognizes the needs of retail operators in our
changing marketplace and will offer his best efforts to represent you on the
board. He welcomes your questions. You may call him at 909-984-8711.
<PAGE>
CANDIDATES' STATEMENTS
- -------------------------------------------------------------------------------
[PHOTO] EDWARD J. QUIJADA
TRESIERRAS BROTHERS CORPORATION
SAN FERNANDO AND SANTA CLARITA VALLEYS
Mr. Quijada is the executive vice president of Tresierras Bros.
Corporation, a family-owned business serving the communities surrounding its
four supermarkets and bakery for over 52 years.
Mr. Quijada has over 24 years of management experience including 16 years
with TRW Inc. Space and Defense, a high technology firm, in Redondo Beach.
While at TRW he held management positions of increasing responsibility,
culminating with a position as assistant division manager of procurement and
material. He is currently a Supply Corps Captain (06) in the United States
Naval Reserve with over 25 years of service. He is the Commanding Officer of
a 40 person Naval Reserve unit in San Diego whose mission is to provide
Logistics support to the Navy's aircraft carrier and amphibious ready
battlegroups.
Mr. Quijada has served on the board of directors of Valley Pride
Development Corporation, Loyola Marymount University's Mexican-American
Alumni Association and TRW's Career Opportunities for Youth, Inc. He holds a
Bachelors and Masters Degree in Business Administration from Loyola Marymount
University.
This experience and education, plus his active role in all aspects of the
management of his company, offer a unique and fresh perspective to the
problems and concerns of independent operators. Mr. Quijada brings honesty,
integrity, professionalism, vision and commitment to growth to the Certified
Board of Directors.
[PHOTO] GAIL GERRARD RICE
GERRARDS MARKETS, INC.
REDLANDS, SAN BERNARDINO COUNTY
Gail Gerrard Rice is co-owner and executive vice-president of Gerrards
Markets in Redlands, a family-owned business with 65 years of successful
operation. She joined the business in 1974 and has been involved in all
aspects of store management since.
Ms. Rice served as president of the Redlands Chamber of Commerce from
1992 to 1994, was named Business Woman of the Year in 1993 by the Redlands
Chapter of ABWA and was a 1995 honoree of the University of Redlands Town and
Gown for contributions to the business community. She is a graduate of
Chapman College (now Chapman University) in Orange.
Ms. Rice's two stores have supported Certified Grocers throughout the
years in all departments. She understands that the future of the independent
operator in California is tied to the success of Certified and that the core
value of a cooperative wholesaler is to provide product at the lowest
possible cost to keep its members competitive. Additionally, Certified must
continue with its aggressive support of independent stores by offering the
latest in technology, such as the new inter-active order system now in use.
As a potential board member, she believes that Certified is the only
viable alternative for the independent operator today and that Certified's
strength must be enhanced through results-oriented management.
<PAGE>
CANDIDATES' STATEMENTS
- -------------------------------------------------------------------------------
[PHOTO] FARID "MIKE" SHALABI
R RANCH MARKETS, INC.
LOS ANGELES AND ORANGE COUNTY
Mr. Shalabi is the president and chief executive officer of the R-Ranch
Market Corporate Group, one of the fastest growing, quality-oriented grocery
organizations in Southern California, which specializes in inner-city
locations. Mr. Shalabi's philosophy as an executive is to treat friends,
employees and associates as he does his family, and channel all his
considerable energies, talents and abilities towards making this a better
world for them to prosper in. Mr. Shalabi believes that Certified Grocers
ranks in the highest levels of these considerations, and has been an active
and productive member of Certified for many years. He is asking for your
vote to appoint him as a mem ber of the board of directors of Certified
Grocers.
Mr. Shalabi would like to implement creative and aggressive programs that
will enhance the bottom line of Certified and believes there are many
opportunities to bring in higher gross and higher velocity product lines and
creative programs that will help the members of Certified to better their
stores and increase their sales. He pledges to apply his skills, unlimited
enthusiasm and business expertise to enhance and further interests within the
community. If elected to the board, Mr. Shalabi promises to represent the
members with fairness, honesty and boundless concern.
[PHOTO] JAMES R. STUMP
(INCUMBENT)
STUMP'S MARKET, INC.
SAN DIEGO
Currently, Mr. Stump is a member of Certified's Board of Directors and
serves on the Administrative, Personnel and Executive Compensation,
Nominating and Retail Development Committees. He is also a member of the
board for Grocers Capital Company, Grocers and Merchants Insurance Service,
Grocers Equipment Company and the Springfield Insurance Companies, five of
Certified's subsidiaries.
Mr. Stump has worked in the grocery industry for 42 years, 22 of them
with a chain operation where he rose to the post of district manager
responsible for 22 stores. He has spent the past 20 years developing and
operating his own stores. He is president of Stump's Market, Inc., San Diego.
Mr. Stump believes because of his experience in both chain store and
single-store operations he can relate to the problems and opportunities of
each. He feels strongly that areas as large as San Diego and Imperial
Counties should have representation on the board.
<PAGE>
CANDIDATES' STATEMENTS
- -------------------------------------------------------------------------------
[PHOTO] KENNETH YOUNG
(Incumbent)
JACK YOUNG'S SUPERMARKETS
DBA
YOUNG'S MARKETS
VISALIA
Mr. Young is vice president and a stockholder of Young's Markets, a
family-run company that has been a member of Certified Grocers since 1950 (46
years). Young's Markets operates five supermarkets and one convenience store
located in Visalia and Bakersfield. Mr. Young has been involved in food
retailing since 1960. Mr. Young is experienced in all phases of the business
including operations, purchasing, advertising, personnel, accounting, data
processing and real estate.
Mr. Young holds a Masters Degree in Accounting from UCLA and a B.S.
Degree from USC's Food Distribution Program (1967-1968). Mr. Young is a
supporter of Future Business Leaders of America in high school and is now a
professional member of FBLA. Mr. Young is married and has a son and a
daughter (twins) both 19 years old.
Mr. Young currently serves as a member of Certified's Board of Directors
and is the chairman of the Audit Committee and Grocers Specialty Company, a
subsidiary of Certified.
Mr. Young feels that an aggressive, efficient wholesaler is tantamount to
the survival of the independent operators and vice-versa. The wholesaler
must provide products and services at competitive prices. Independent
operators must support their wholesaler to maintain or increase the
wholesaler's sales volume so that the wholesaler can operate more
efficiently. A co-op must be run like any other business, it must be run
efficiently as possible to produce profits for its members.
<PAGE>
CERTIFIED
CERTIFIED GROCERS OF CALIFORNIA LTD.
- -------------------------------------------------------------------------------
January 6, 1997
RE: ELECTION OF DIRECTORS'
Dear Certified Shareholder:
A Nominating Committee has been appointed by the Board of Directors of
Certified Grocers of California, Ltd., to select nominees for election as
Directors for the 1997 Board of Directors.
The enclosed Advisory Ballot is being solicited by the Nominating Committee
from the holders of Certified's Class A shares. This is being done to assist
the Nominating Committee in selecting the 12 persons who will be nominated by
the Board of Directors for election by the holders of the Class A shares. In
selecting candidates for the Advisory Ballot, the Nominating Committee has
reviewed names suggested by shareholders, as well as those provided by
Certified's management. The individuals appearing on the Advisory Ballot have
been contacted to determine their willingness to have their names placed on
the Advisory Ballot and each has consented.
The Nominating Committee and the Board of Directors took action in 1992 to
ensure that there will be Class A representation of Northern California
shareholders among those nominated for election to the Board of Directors.
Accordingly, the Nominating Committee will place in nomination for election
to the Board of Directors a minimum of two (2) names from the candidates
representing Northern California on the Advisory Ballot.
We are also enclosing an information statement regarding the Advisory Ballot
as well as individual statements by each of the persons named in the Advisory
Ballot. You should carefully review these materials before voting on the
Advisory Ballot.
The Advisory Ballot contains the names of 17 persons, 10 of whom are
incumbent Directors. In addition, 2 persons represent Northern California,
both of whom are incumbents. As the holder of Class A shares of Certified,
you are entitled to vote for up to 12 names on the Advisory Ballot -- one
vote for each name selected. While you may vote for fewer than 12 persons
named in the Advisory Ballot, your Advisory Ballot will be invalidated if you
vote for more than 12 of the named persons. 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.
Deloitte & Touche, L.L.P. and independent outside auditing firm, will tally
the votes.
To assure accuracy and accountability, Deloitte & Touche, L.L.P. has
requested that the control number appearing on the enclosed return envelope
not be removed.
<PAGE>
Certified Shareholder
January 6, 1997
Page Two
THE ADVISORY BALLOT WILL NOT BE VALID UNLESS IT IS RETURNED IN THE ENVELOPE
PROVIDED AND THE CONTROL NUMBER IS LEGIBLE. IN THE EVENT THAT YOU ABSOLUTELY
CAN NOT FIND THE RETURN ENVELOPE, WE ASK THAT YOU NOTIFY MARY KAY DELGADO AT
(213) 723-7476, EXT. 4640.
The Advisory Ballot is your opportunity to express your choice for nominees
for election as Directors by the holders of Class A shares. YOUR VOTE IS VERY
IMPORTANT and we urge you to please vote your preference and return your
Advisory Ballot so it is received by Deloitte & Touche, L.L.P. on or before
February 7, 1997.
THE NOMINATING COMMITTEE
Morrie Notrica, Chairman
Mark Kidd
Jay McCormack
Jim Stump
Bill MacAloney (Ex-Officio Member)
Alfred A. Plamann (Ex-Officio Member)
PLEASE NOTE: The 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.
<PAGE>
[LETTERHEAD OF JONS]
JOHN BERBERIAN
Fellow Certified Member:
I am currently a member of Certified's Board of Directors where I serve on the
Finance and Retail Development Committees. I also serve as a member of the Board
of Grocers Specialty Company, Grocers General Merchandise Company and Grocers
Equipment Company, three of Certified subsidiaries.
I am the owner and president of Jons Marketplace which operates 11 successful
stores. Because it is a family-owned chain, I have acquired experience in all
phases of retail operation.
Since my first store was opened in 1977, I have been an active member of
Certified and have worked closely with them. As Jons Marketplace grew to 11
stores in a relatively short time, I have learned how valuable Certified is to
its members and am sensitive to the many problems facing independents today.
I believe that my past experience as a Certified Board member will enable me to
make a positive contribution to the Board. If reelected to the Board, I promise
to continue to help maintain Certified as a strong wholesaler especially during
these challenging economic times. I feel that with a strong organization we will
be able to effectively compete in this market.
If you concur that Certified has the potential to become a stronger
organization, then I solicit you to support me for election to the Board of
Directors of Certified Grocers of California, Ltd.
Sincerely,
/s/ JOHN BERBERIAN
- --------------------------------------
John Berberian
<PAGE>
[LETTERHEAD OF JONS]
JOHN BERBERIAN
Fellow Certified Member:
As you already know, I am campaigning for reelection to Certified's Board of
Directors. I began in the retail grocery industry in 1977 and have developed my
company into a successful eleven-store supermarket chain.
Over the past few years, I have made significant contributions toward several
positive modifications at Certified in response to your overwhelming concerns. I
am and will continue to be actively involved with Certified's policies and
programs that will benefit all of us as members to enable ourselves to stay
competitive during these difficult economic times. I believe that with your
support and my past experience as a Board member, we can help keep Certified a
strong wholesaler. Therefore, if you support a strong Certified organization,
then I respectfully request that you vote for my reelection to the Board of
Directors of Certified Grocers of California, Ltd.
Thank you.
Sincerely,
/s/ JOHN BERBERIAN
- --------------------------------------
John Berberian
President
/sm
<PAGE>
Dear Certified Member,
As a candidate for the Certified Board of Directors I felt it was necessary for
me to write to you concerning my candidacy. The 200 words allowed in the
candidates statement does not provide an ample opportunity for me to reintroduce
myself or my objectives in running for the Certified Board, so that's the
purpose of this letter. I think before you cast a vote for me or any other
candidate for the board you deserve to know, why they are running, what their
qualifications are, and what their ideology is, in relationship to Certified
Grocers and the grocery industry. So, whether you vote for me or not please take
a minute to consider the following information and ideas when you cast your
ballot for the Certified Board.
I am 41 years old, a fourth generation Californian, and through marriage to my
wife Mary Charles, represent a second generation grocery family in Bakersfield.
I attended Kern County Schools and in 1984 I graduated from Cal State
Bakersfield with a Bachelors of Science degree in biology. I started working in
the grocery industry in 1978 and have operated the Green Frog Market as managing
director since its founder, Charlie Everett, died in July of 1988. In 1988
Charlie Everett selected me to manage all of his businesses and after his death
I managed the succession of our families' businesses to the next generation. I
am a past president of, and currently on the board of directors for the Kern
County Independent Grocers Association. I currently chair the business retention
committee for the Kern County Council on Competitiveness for the county board of
supervisors. As the owner of a union shop I was selected to serve and later
chair the AFL-CIO round table for labor and management in Kern County. I am on
the board of directors of the Cal State Bakersfield Roadrunners club. Our store
is a member of the California Grocers Association and the Northern California
Grocers Association.
My objective in running for the board of directors is that through my
acquaintances within the industry I have been encouraged to continue a pursuit
of a board membership at Certified. Quite frankly I am very willing to speak up
and make sure all sides are heard when I am involved in business issues. I hope
to bring that approach and the following perspectives to the Certified Board if
I am elected to serve.
The company management is on the right track when it acknowledges that the
smaller stores represent a significant and necessary part of Certified's volume,
but our smaller stores don't necessarily represent the trends of the industry or
even all of the independents. Certified as a wholesaler must compete against
companies that are using larger formats of stores to drive their volume and
profitability at their store owned warehouse level. Certified must be able to
supply both the larger independent seeking growth and the smaller independents
who are satisfied with their market position. We as retail owners of Certified
must, in return, have high volume cost effective stores or lower volume highly
efficient stores. For the smaller stores the only way this efficiency can be
achieved is through improved technology and understanding at both the wholesale
and, most importantly, the retail levels.
We as owners of Certified Grocers have to do our part at the retail level to
make our company a more profitable entity. Certified should be the catalyst that
brings the high volume multi-store, and the smaller volume single store
independents into a profitable partnership and equilibrium. As a member of the
board of directors at Certified Grocers, and a small grocer myself, I will work
to bring that partnership and equilibrium between the diverse interests of the
Certified membership. Above all please use your advisory ballot to select the
people who you feel are going to be best able to direct your company, and should
you feel that I am one of those people I welcome your comments and support.
Sincerely yours,
Scott Hair
<PAGE>
[LETTER OF KOAMEX GENERAL WHOLESALE, INC.]
<TABLE>
<S> <C>
To: Certified Member
From: Yong H. Kim
</TABLE>
Please allow me to introduce myself. My name is Yong H. Kim. I have been a
member of Certified Grocers for the past 10 years. I am currently President and
Chief Operating Officer of Koamex General Wholesale, Inc. We have been in
business in the Los Angeles area for 18 years.
I have 8 years of export and import experience with the Pacific Rim and other
Asian countries. I am actively involved in the growth of the Asian community in
the Southern California area. The Asian community is the fastest growing
population segment in Southern California.
I would like to share my knowledge and business contacts with all Certified
members to help all of us grow our respective businesses.
/s/ YONG H. KIM
- --------------------------------------
Yong H. Kim
<PAGE>
[LETTERHEAD OF ALAMO MARKET]
<TABLE>
<S> <C>
PHOTO
</TABLE>
Dear Fellow Certified Member,
My name is Jay McCormack and I have been serving you on the Certified board
since 1992. I am writing to ask for your support in the upcoming board election.
Over the past 3 years, I have worked with Certified's board and management
to focus our company on 4 major objectives:
1. Reduce the cost of goods to the retailer.
2. Reduce Certified's expense as a percentage to sales.
3. Provide a reasonable patronage dividend return.
4. Increase the independent market share through retail development and
retail support.
I believe these strategies are critical to our future.
I currently serve you as first vice-chairman of the board and I pledge to
work very hard to insure our companies success. Please contact me at (619)
367-7216 with your comments or questions.
Your vote is sincerely appreciated!
Sincerely,
Jay McCormack
<PAGE>
EDWARD J. QUIJADA CAMPAIGN LETTER
December 19, 1996
Fellow Certified Member:
I am the Executive Vice President of Tresierras Bros. Corporation which recently
celebrated its 52nd anniversary. My responsibilities include managing all
aspects of this expanding family run business of four supermarkets and a bakery.
Tresierras Bros. Corporation has always been a loyal member and strong supporter
of Certified.
I can bring to Certified over 24 years of management experience including 16
years with TRW, Inc. Space and Defense and over 25 years of U.S. Navy
experience. I am currently a Naval Reserve Supply Corps Captain (06) and the
Commanding Officer of a 40 person Naval Reserve unit in San Diego which provides
aviation supply support to the U.S. Naval Pacific Fleet's aircraft carrier and
amphibious ready battle groups in the event of a contingency or war.
Excellence is needed from Certified for us to remain competitive and profitable.
Although I believe good progress has been made these past two years to improve
and streamline Certified's operation, much remains to be done. A good example is
the strategic initiative called C3 known as "Certified's Commitment to
Customers" which, in my view, was a major step in the right direction. Certified
must be responsive and totally focused on satisfying the needs of all its
members.
I have proven leadership skills plus the vision necessary to develop Certified's
long term goals and objectives. In addition, I understand how to do the
strategic planning necessary to achieve them. I have a Bachelors and Masters
Degree in Business Administration from Loyola Marymount University.
I am confident my UNIQUE BACKGROUND, EDUCATION and PERSPECTIVE can help make a
difference in making Certified a stronger, more efficient and effective
organization. I firmly believe what we need on the Board are FRESH IDEAS and NEW
WAYS of looking at problems and concerns. Finally, I am COMMITTED to helping
Certified GROW because I believe this is necessary to ensure the members have an
organization with the necessary strength to support them into the next
millennium.
Very Truly Yours,
Edward J. Quijada
Executive Vice President
<PAGE>
[LETTERHEAD OF RANCH MARKETS]
Dear Fellow Member of Certified Grocers:
I, Mike Shalabi, have been nominated to run for office as a Member of the
Certified Grocers Board of Directors. This letter is to ask for your vote.
Most of you already know me, or have heard of me; as a Member of Certified
Grocers, as past President of Modern Independent Grocers (MIG), among other
business oriented activities that give me the sense of values and understanding
of your functions and problems and their ultimate and caring solutions.
However, it is your duty, your responsibility, to express yourself as an
individual in voting for the person of your choice, and not allow someone else
to substitute and usurp your rights by voting a proxy. I am asking for your vote
so that I may represent and accurately reflect your needs and attitudes.
For a better and brighter future, I am asking you to mark your Ballot selecting
Mike Shalabi as a Member of the Certified Grocers Board of Directors.
I sincerely thank you in advance for the privilege of being elected to serve you
in this important office.
/s/ FARID (MIKE) SHALABI
- --------------------------------------
Farid (Mike) Shalabi, President/CEO
R-Ranch Markets Corporate Group
December 1996
<PAGE>
January 6, 1997
Dear Certified Grocers Member:
As a member of Certified Grocers, you are the reason for Certified Grocers'
existence. The Board of Directors is there to serve its members.
I am running for re-election to the Board of Directors of Certified representing
Northern California.
My third year serving on the Board of Directors of Certified has been exciting
for me as well as for Certified. The programs to reduce costs, increase
efficiency and accountability are working. Certified is on track to becoming an
aggressive, efficient wholesaler. The future looks bright.
I feel that an aggressive, efficient wholesaler is tantamount to the survival of
the independent operators.
As a member of the Board of Directors of Certified, I will always work for you.
You are the reason that Certified Grocers exists. If you have any questions or
suggestions, please call me at (209) 625-9252.
Thank you for your support.
Sincerely,
Kenneth Young
Vice President
P.S. PLEASE VOTE AND SEND IN YOUR ADVISORY BALLOT BY FEBRUARY 7, 1997. You do
not have to cast all 12 votes. Just vote for people that you feel would do a
good job for you. You can send in your ballot even if you only vote for one
person.
<PAGE>
K E N N E T H Y O U N G
January 6, 1997
Mr. Young is Vice President and a stockholder of Young's Markets, a family run
company that has been a member of Certified Grocers since 1950 (46 years).
Young's Markets operates five supermarkets and one convenience store located in
Visalia and Bakersfield. Mr. Young has been involved in food retailing since
1960. Mr. Young is experienced in all phases of the business including
operation, purchasing, advertising, personnel, accounting, data processing, and
real estate.
Mr. Young holds a Masters Degree in Accounting from U.C.L.A. and a B.S. Degree
from U.S.C.'s Food Distribution Program. (1967-1968) Mr. Young is an supporter
of Future Business Leaders of America in high school and is now a professional
member of FBLA. Mr. Young is married and has a son and a daughter both 19 years
old (twins).
Mr. Young currently serves as a member of Certified's Board of Directors and is
Chairman of the Audit Committee and is Chairman of Grocers Specialty Company, a
subsidiary of Certified.
Mr. Young feels that an aggressive, efficient wholesaler is tantamount to the
survival of the independent operators and vice versa. The wholesaler must
provide products and services at competitive prices. Independent operators must
support their wholesaler to maintain or increase the wholesaler's sales volume
so that the wholesaler can operate more efficiently. A Co-op must be run like
any other business, it must be run efficiently as possible to produce profits
for its members.
