<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT /X/ FILED BY A PARTY OTHER THAN THE REGISTRANT / /
- --------------------------------------------------------------------------------
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act
Rule 0-11:
4) Proposed maximum aggregate value of transaction:
Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / 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: $125
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[GROSSMAN'S LOGO]
GROSSMAN'S INC.
200 UNION STREET
BRAINTREE, MASSACHUSETTS 02184
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 27, 1994
PLEASE TAKE NOTICE that the Annual Meeting of Stockholders of Grossman's
Inc. (the "Company") will be held on Wednesday, April 27, 1994, at 10:30 a.m.,
local time, in the Auditorium, Lobby Floor, The First National Bank of Boston,
100 Federal Street, Boston, Massachusetts, for the following purposes:
1. To elect eleven directors of the Company.
2. To vote upon the approval of Ernst & Young as independent auditors
for the Company for 1994.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof. Management does not know of any other
business to be presented to the Annual Meeting.
Holders of record of the Company's Common Stock at the close of business on
March 2, 1994 are entitled to notice of and to vote at the meeting or any
adjournment thereof. A list of stockholders entitled to vote at the meeting will
be open to examination by stockholders at the meeting and during normal business
hours from April 15, 1994 to the date of the meeting at the offices of Ropes &
Gray, 36th Floor, One International Place, Boston, Massachusetts.
By Order of the Board of Directors
RICHARD E. KENT
Secretary
March 16, 1994
Whether or not you expect to attend the meeting, please complete, date,
sign and return the enclosed proxy, WHICH IS SOLICITED BY MANAGEMENT, in the
enclosed envelope, which does not require postage if mailed in the United
States.
<PAGE> 3
GROSSMAN'S INC.
200 UNION STREET
BRAINTREE, MASSACHUSETTS 02184
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the management of Grossman's Inc. (the "Company") for use at the
Annual Meeting of Stockholders of the Company (the "Annual Meeting") to be held
at The First National Bank of Boston, 100 Federal Street, Boston, Massachusetts,
on Wednesday, April 27, 1994, at 10:30 a.m., local time, and any adjournment
thereof. This Proxy Statement and the related proxy card, together with the
Company's Annual Report (which does not form a part of this Proxy Statement)
including financial statements of the Company for the year ended December 31,
1993, are being sent to the Company's stockholders on or about March 16, 1994.
Please complete, sign, date and return the enclosed proxy. The proxy
solicited hereby may be revoked at any time by executing and delivering a proxy
of a later date, by delivering written notice of revocation to the Secretary of
the Company or by attending the meeting and giving notice of the intention to
vote in person.
Subject to certain restrictions on voting described under the heading
"Restrictions on Accumulation of Common Stock", properly executed, delivered and
unrevoked proxies in the form enclosed will be voted at the Annual Meeting or
any adjournment thereof in accordance with the directions thereon. In the
absence of such directions, the proxy will be voted for the election as
directors of the eleven nominees named below and otherwise in accordance with
the recommendations of management.
Management does not know of any matters other than those set forth herein
which may come before the Annual Meeting. If any other matters are properly
presented to the meeting for action, it is intended that the persons named in
the enclosed form of proxy and acting thereunder will vote in accordance with
their best judgment on such matters.
VOTING SECURITIES
The only class of voting securities of the Company is its Common Stock, par
value $.01 per share ("Common Stock"). The holders of record of the outstanding
shares of Common Stock at the close of business on March 2, 1994 are entitled to
notice of, and to vote at, the Annual Meeting. Holders of Common Stock are
entitled to one vote for each share held on matters properly presented to the
Annual Meeting, except as described below under "Restrictions on Accumulation of
Common Stock."
As of March 2, 1994, there were 25,740,926 shares of Common Stock issued
and outstanding, exclusive of 396,421 shares held as treasury shares.
The holders of a majority of the issued and outstanding shares of Common
Stock, present in person or represented by proxy and entitled to vote, will
constitute a quorum for the transaction of business at the Annual Meeting.
Directors shall be elected by a plurality of the votes cast at the meeting. The
favorable vote of the holders of a majority of the shares of Common Stock,
present in person or represented by proxy and entitled to vote thereon, is
required for the approval of the appointment of Ernst & Young as independent
auditors for the Company for 1994. Under Delaware law and the Company's By-Laws,
an abstention from voting has no effect on the election of directors and has the
effect of a vote against the approval of the independent auditors, even though
persons analyzing the results of the voting may interpret such a vote
differently.
<PAGE> 4
On March 2, 1994, Thomas R. Schwarz and Sydney L. Katz, as trustees under
the Company's Savings Plan for its participating employees, held 21,164 shares
of Common Stock, representing less than 1% of the outstanding Common Stock of
the Company. Shares held by the trustees for the account of employees will be
voted in accordance with written instructions from such employees, and where no
instructions are received, will not be voted.
ELECTION OF DIRECTORS
The Board of Directors has nominated the eleven incumbent directors named
below for election as directors at the Annual Meeting, each to serve until the
next Annual Meeting and until a successor is elected and qualified. Unless
otherwise directed, the proxies named in the accompanying form of proxy intend
to vote for such nominees. If any of the nominees should not be available for
election, the persons named as proxies may vote in their discretion for another
nominee designated by the Board of Directors in such person's place. Management
has no reason to believe that any nominee named below will be unavailable for
election.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES NAMED
BELOW FOR ELECTION AS DIRECTORS.
Except as indicated below, each of the nominees has had the same principal
occupation for the past five years.
RUSSELL COX has been President of Resort Management Inc., a property
management and real estate consulting firm located in Waterville Valley, New
Hampshire, since 1977 and has been a general partner of Real Estate Venture Fund
since 1985. He is a graduate of MIT and Harvard Business School. Mr. Cox has
been a director since 1987 and is age 67.
JOHN R. GREY retired as President of Chevron Corporation in 1985. He
retired as a director of Bank-Americorp and Bank of America NT & SA in 1993. Mr.
Grey is a graduate of Stanford University with a BE degree in Chemical
Engineering. Mr. Grey has been a director since 1987 and is age 71.
MAURICE GROSSMAN continues as an employee of the Company and served as
Chairman of the Board and Chief Executive Officer of the Company from 1986 to
1990 and President from 1987 to 1990, when he retired from such positions. Mr.
Grossman is a graduate of Pennsylvania State University and of Boston University
with an MBA degree. Mr. Grossman has been a director since 1987 and is age 72.
LEO KAHN has been a partner of United Properties, a real estate
partnership, since 1985, and Chairman of the Executive Committee of the Board of
Staples, Inc., since 1988. He also serves as Chairman of the Board of New
England Audio, Inc. and is a director of Pueblo Inc., Milton's Inc. and Big V
Supermarkets, Inc. From 1985 to 1988 he was Chairman of the Board of Staples,
Inc. Mr. Kahn is a graduate of Harvard College and of Columbia University with
an MS degree. Mr. Kahn has been a director since 1987 and is age 77.
SYDNEY L. KATZ has been Executive Vice President, Chief Financial Officer
and Treasurer of the Company for more than five years and has been a director
since February 1, 1994. Mr. Katz is a graduate of the University of Connecticut
with a B.S. degree, is a certified public accountant and is age 52.
W. WALLACE MCDOWELL, JR. has been Managing Director of MLGAL Partners, a
leveraged acquisition firm, since 1991. From 1983 to 1990, Mr. McDowell was
Chairman and Chief Executive Officer of Prospect Group, Inc, a diversified
holding company. Mr. McDowell is a director of Jack Morton Productions, Inc.,
Children's Discovery Centers, Inc., U.S. HomeCare, Inc. and serves as Chairman
of the Board of ITI Technologies, Inc. He is a graduate of Princeton University
and received his MBA from the University of Virginia. Mr. McDowell has been a
director of the Company since 1993 and is 57 years of age.
2
<PAGE> 5
STEPHEN B. ORESMAN has been the owner and President of Saltash Ltd., a
management consulting firm, since 1991. He was a partner and Vice President of
The Canaan Group Ltd., another management consulting firm, from 1988 to 1991.
Prior to that time he was with the consulting firm Booz, Allen & Hamilton for 19
years. He is a member of the Board of Directors of Cleveland Cliffs Inc.,
Technology Solutions Company, TriNet Corporate Realty Trust, Inc. and Oseris
Therapeutics, Inc. Mr. Oresman is a graduate of Amherst College and Harvard
Business School. Mr. Oresman has been a director since 1991 and is age 61.
THOMAS R. SCHWARZ has been Chairman of the Board and Chief Executive
Officer of the Company since September 1990. He served as President of the
Company from June 1990 to September 1990. Upon the resignation of Mr. Bruce
Weitz as President in October of 1991, Mr. Schwarz assumed the duties of
President of the Company. From 1983 until 1990 he was the President and Chief
Operating Officer of Dunkin' Donuts Incorporated. He is a member of the Board of
Directors of The Timberland Company. Mr. Schwarz is a graduate of Williams
College and Harvard Business School. Mr. Schwarz has been a director since 1990
and is age 57.
ROBERT K. SWANSON is Chairman of the Board of RKS, Inc., an investment and
marketing consulting firm in Phoenix, Arizona. He was Chairman and Chief
Executive Officer of Del E. Webb Corporation, a diversified company located in
Phoenix, Arizona, engaged in the management and development of real estate and
leisure operations, from 1981 to 1987, when he retired from that position. He
graduated from the University of South Dakota and studied at the University of
Melbourne as a Fulbright Scholar. Mr. Swanson has been a director since 1987 and
is age 61.
HAROLD TANNER is President of Tanner & Co., Inc., an investment banking
firm in New York. He serves as a director of TIG Holdings, Inc. and as a member
of the Advisory Board of Warburg, Pincus Capital Company, L.P. He was a Managing
Director of Salomon Brothers Inc. from 1980 to 1987. He is a graduate of Cornell
University with a BS degree and of Harvard Business School and is a Trustee of
Cornell University. Mr. Tanner has been a director since 1987 and is age 61.
DR. ABRAHAM ZALEZNIK is the Konosuke Matsushita Professor of Leadership
Emeritus at Harvard Business School and heads a private consulting practice. He
was a Professor at Harvard Business School from 1947 to 1990. He has written
extensively on motivation, executive relations, the psychology of business and
leadership. He serves on the Boards of Ogden Corporation, American Greetings
Corporation, Le Chateau Stores, Ltd., TJX Cos. Inc., and The Timberland Company.
He holds a DCS degree from Harvard University, is a graduate of Boston
Psychoanalytic Institute and is certified in the practice of psychoanalysis by
the American Psychoanalytic Association. Dr. Zaleznik has been a director since
1987 and is age 70.
BOARD MEETINGS; COMMITTEES
The Board of Directors met four times in 1993. In 1993 each of the current
directors who were then in office attended at least 75% of the aggregate number
of meetings of the Board of Directors.
The Company's Board of Directors has four standing committees. The
committee memberships are indicated in the list of directors, nominees and
executive officers on page 6 hereof.
COMMITTEES OF THE BOARD OF DIRECTORS
Executive Committee
The Executive Committee may exercise all the powers and authority of the
Board of Directors in the management of the property, affairs and business of
the Company during the intervals between the meetings
3
<PAGE> 6
of the Board of Directors, to the extent permitted by the By-Laws of the Company
and applicable law. The Executive Committee met five times in 1993, and each
member of the Committee or an alternate attended all of the meetings of the
Committee.
Audit and Finance Committee
The Audit and Finance Committee recommends to the Board of Directors the
engagement of independent auditors for the year, subject to approval by the
stockholders of the Company, reviews with the auditors the plan and scope of the
audit engagement, reviews the annual financial statements of the Company and the
management letter, monitors the Company's system of internal control and its
accounting and reporting practices, reviews compliance with the conflict of
interest policy and other policies of the Company, reviews the capital structure
of the Company and advises the Board of Directors with respect to capital
expenditure programs, dividend policies, equity and debt securities, financial
planning and capital and operating budgets for the Company. The Audit and
Finance Committee met four times in 1993, and each member of the Committee
attended at least 75% of the meetings of the Committee.
Compensation, Stock Option and Employee Benefits Committee
The Compensation, Stock Option and Employee Benefits Committee (the
"Compensation Committee") reviews and recommends to the Board of Directors
compensation for senior management of the Company and the adoption, amendment
and implementation of incentive compensation plans, stock option plans,
retirement programs and other employee benefit plans and programs for the
Company. The Compensation Committee met four times in 1993 and each member of
the Committee attended all of the meetings of the Committee except that Mr.
Oresman, who was appointed to the Committee in April of 1993, attended one of
the two meetings held after his appointment to the Committee.
Nominating Committee
The Nominating Committee reviews the composition and organization of the
Board of Directors of the Company and recommends to the Board of Directors
individuals to fill Board vacancies. The Nominating Committee met twice in 1993,
and all of the members attended both meetings. Recommendations from stockholders
will be considered by the Committee and should be sent to the Secretary of the
Company.
COMPENSATION OF DIRECTORS
Each director who is not an employee of the Company receives an annual fee
of $15,000 and an attendance fee of $500 for each meeting at which he is present
in person. The Chairman of each committee of the Board of Directors other than
an employee receives an annual fee of $1,000, and each member of a committee
other than an employee receives an attendance fee of $500 for each meeting at
which he is present in person. Directors are reimbursed for expenses incurred in
performing their duties. In addition, Mr. Tanner received $10,000 and Dr.
Zaleznik received $12,000 for consulting services in 1993.
STANDSTILL AGREEMENT
From 1991 to 1993, Mr. Jay H. Shidler served as a director. Mr. Shidler has
been the Managing Partner of The Shidler Group, which engages in securities and
real estate financing and investment, corporate financial services and
sale/leaseback financings, since 1970. He is a Director and officer of Shidler
Investment Corporation, Holman/Shidler Investment Corporation, Holman/Shidler
Corporate Capital, Inc. and various related entities engaging in securities and
real estate financing and investments, corporate financial services and
sale/lease-back financings.
4
<PAGE> 7
In May-October 1990, Jay H. Shidler and Robert W. Holman, Jr. (the
"Shidler/Holman Group") unsuccessfully solicited written consents of
stockholders of the Company seeking to remove the directors then in office and
to elect their designees. On February 22, 1991, Mr. Shidler delivered notice to
the Company under the Company's By-Laws of his intention to nominate himself and
Mr. Holman for election as directors at the 1991 Annual Meeting of Stockholders.
In order to avoid the diversion of management time and resources and the expense
of a proxy contest, on March 13, 1991, the Company entered into a Standstill
Agreement (the "Standstill Agreement") with Messrs. Shidler and Holman and Mr.
Stephen B. Oresman, pursuant to which the Board of Directors agreed to nominate
as directors a representative of the Shidler/Holman Group and a second person
not financially affiliated with the Shidler/Holman Group. On March 13, 1991, the
Board of Directors increased its size by two members and elected Messrs. Shidler
and Oresman as directors.
The Standstill Agreement provides that, so long as Mr. Shidler and Mr.
Holman together beneficially own at least 2.5% of the outstanding Common Stock,
the Board of Directors will nominate Mr. Shidler (or another person designated
by Mr. Shidler and Mr. Holman and acceptable to the Nominating Committee of the
Board) and Mr. Oresman (or another independent person mutually acceptable to Mr.
Shidler and Mr. Holman and the Nominating Committee of the Board) for election
as directors through the 1995 Annual Meeting of Stockholders. Under the
Agreement, Mr. Shidler has designated, and the Nominating Committee of the Board
of Directors has approved, Mr. McDowell as a nominee as a director of the
Company.
The Agreement requires that Mr. Oresman remain financially independent of
Messrs. Shidler and Holman during the term of the Agreement, which continues
until the day following the Company's 1996 Annual Meeting, except as permitted
by the members of the Board of Directors, other than directors designated
pursuant to the Standstill Agreement.
In September 1992, Mr. Oresman was elected as a director of TriNet
Corporate Realty Trust, Inc., which may be deemed an affiliate of Mr. Shidler,
with the consent of the Board of Directors of the Company.
In the Standstill Agreement, Messrs. Shidler, Holman and Oresman have
agreed that they and their affiliates and associates will not (a) acquire
additional shares of Common Stock which would increase their aggregate holdings
above 9.9% of the outstanding Common Stock; (b) solicit or participate in any
solicitation of proxies or consents of stockholders of the Company; (c) initiate
or encourage any stockholder proposals; (d) enlarge the Shidler/Holman Group to
include any other persons or participate in or encourage the formation of any
other group of stockholders; (e) enter into any voting trust or similar
arrangement with respect to shares of Common Stock beneficially owned by them;
(f) publicly announce or make any proposal or offer for the acquisition of any
securities or material assets of the Company; or (g) by communication with
stockholders or otherwise, seek to influence or control the Company or its
management, business, policies or affairs except at Board meetings in the
capacity of directors of the Company. Mr. McDowell is also subject to clause (g)
above. Messrs. Shidler, Holman and Oresman have also agreed to vote and give
consents with respect to all shares of Common Stock owned by them and their
affiliates and associates in accordance with, and only in accordance with, the
recommendations of the Board of Directors, and have agreed not to sell or
otherwise dispose of Common Stock beneficially owned by them except in market
transactions in compliance with the volume limitations and other requirements of
Rule 144 under the Securities Act of 1933, to any person or group who, together
with its affiliates and associates, would own less than 1% of the outstanding
Common Stock, or in certain other specified transactions. Each party paid its
own expenses incurred in connection with the Standstill Agreement and the
consent solicitation.
5
<PAGE> 8
<TABLE>
OWNERSHIP BY MANAGEMENT OF EQUITY SECURITIES
The following table sets forth the beneficial ownership, reported to the
Company as of February 1, 1994, of Common Stock of the Company, including shares
as to which the right to acquire ownership exists by the exercise of stock
options, within the meaning of Rule 13d-3 to the Securities and Exchange Act, of
each director and nominee, the chief executive officer, the other executive
officers of the Company and such persons as a group.
<CAPTION>
NUMBER OF
SHARES OF PERCENT OF
COMMON STOCK CLASS(2)
------------ ----------
<S> <C> <C>
Russell Cox(6)............................................ 6,000 *
Robert L. Flowers(3)...................................... 43,250 *
John R. Grey(5)(7)........................................ 16,000 *
Maurice Grossman(3)(8).................................... 213,000 *
Leo Kahn(5)(6)............................................ 1,000 *
Alan T. Kane.............................................. 80,000 *
Sydney L. Katz(3)......................................... 138,750 *
Richard E. Kent(3)........................................ 44,500 *
W. Wallace McDowell, Jr.(6)............................... --0-- *
Stephen B. Oresman(7)..................................... 1,000 *
Thomas R. Schwarz(3)(5)................................... 516,500 1.9%
Robert K. Swanson(7)(8)................................... 2,500 *
Harold Tanner(5)(6)(8).................................... 30,000 *
Dr. Abraham Zaleznik(7)(8)................................ 1,000 *
---------
All of the directors and the above
executive officers as a group (14 persons).............. 1,093,500 4.1%
---------
---------
<FN>
- ---------------
Information with respect to stock ownership has been furnished by the persons
named.
(1) The persons named have sole voting and investment power with respect to
shares listed, except as described under "Standstill Agreement."
(2) Asterisks indicate beneficial ownership of less than 1% of the outstanding
Common Stock.
(3) Stock beneficially owned includes shares which may be acquired upon the
exercise of outstanding options as follows: Mr. Flowers -- 43,250 shares;
Mr. Grossman -- 200,000 shares; Mr. Kane -- 75,000; Mr. Katz -- 128,750
shares; Mr. Kent -- 42,500 shares; Mr. Schwarz -- 503,500 shares; and the
group -- 993,000 shares.
(4) The percentage of outstanding Common Stock held by all directors and
executive officers as a group has been calculated on the basis of 25,635,926
shares of Common Stock outstanding on February 1, 1994, plus 993,000 shares
of Common Stock subject to currently exercisable stock options held by such
group.
(5) Member of the Executive Committee of the Board of Directors. Mr. Kahn is an
alternate member of the Executive Committee.
(6) Member of the Audit and Finance Committee of the Board of Directors.
(7) Member of the Compensation, Stock Option and Employee Benefits Committee of
the Board of Directors.
(8) Member of the Nominating Committee of the Board of Directors.
</TABLE>
Mr. Grossman, a director, was late in filing his report on Form 4 with the
Securities and Exchange Commission to record his purchase of 3,000 shares of
Common Stock in December 1993.
6
<PAGE> 9
COMPENSATION OF EXECUTIVE OFFICERS
<TABLE>
COMPENSATION OF EXECUTIVE OFFICERS
The following tables sets forth information with respect to compensation
paid to or accrued on behalf of the chief executive officer and each of the four
other most highly paid executive officers of the Company (the "Named Executive
Officers") for services to the Company in 1993.
SUMMARY COMPENSATION TABLE
<CAPTION> LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------
NAME AND --------------------- OPTION ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS AWARDS(#) COMPENSATION(2)
- ------------------ ---- -------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Thomas R. Schwarz............. 1993 $612,696 --0-- --0-- $ 520
Chairman and 1992 587,500 $318,000 414,000 520
Chief Executive Officer 1991 527,083 300,000 --0-- 260
Alan T. Kane.................. 1993 $472,067(1) --0-- 300,000 --0--
Executive Vice President 1992 --0-- --0-- --0-- --0--
and President and 1991 --0-- --0-- --0-- --0--
Chief Executive Officer
Eastern Division
Sydney L. Katz................ 1993 $274,400 $ 75,000 --0-- $ 520
Executive Vice President, 1992 265,000 113,400 140,000 520
Chief Financial Officer 1991 239,807 99,100 --0-- 358
and Treasurer
Robert L. Flowers............. 1993 $182,476 --0-- --0-- $ 520
Executive Vice President -- 1992 184,400 $ 64,400 53,000 520
Real Estate and 1991 176,613 32,200 --0-- 390
Assistant Secretary
Richard E. Kent............... 1993 $157,976 $ 7,000 --0-- $ 520
Vice President, Secretary 1992 159,650 42,800 50,000 520
and General Counsel 1991 152,770 27,900 --0-- 390
<FN>
- ---------------
(1) Mr. Kane was first employed by the Company on February 15, 1993. His salary
for 1993 includes a guaranteed bonus for 1993 of $150,000 payable September
1, 1994.
(2) All Other Compensation refers to Company contributions to accounts of the
Named Executive Officers under the Company's Savings Plan.
</TABLE>
7
<PAGE> 10
<TABLE>
The table below sets forth information with respect to stock options
granted to the Named Executive Officers in 1993. The options listed below are
reflected in the Summary Compensation Table above. No stock appreciation rights
were granted by the Company in 1993.
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------
% OF
TOTAL POTENTIAL REALIZABLE
OPTIONS VALUE AT ASSUMED
GRANTED ANNUAL
TO RATES OF STOCK PRICE
EMPLOYEES APPRECIATION FOR
IN EXERCISE OPTION TERM
OPTIONS FISCAL PRICE EXPIRATION ---------------------
NAME GRANTED YEAR ($/SH) DATE 5% $ 10% $
---- ------- ------ -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Alan T. Kane...................... 300,000 32.8 $4.375 2/3/03 $826,900 $2,086,900
<FN>
- ---------------
The option granted to Mr. Kane was granted on February 16, 1993 and becomes
exercisable in four equal installments beginning February 16, 1994. In the event
of a change in control, as defined in the option agreement, the options become
exercisable immediately.
</TABLE>
<TABLE>
The table below sets forth information with respect to the number and value
of unexercised options held by the Named Executive Officers of the Company on
December 31, 1993. No stock options or stock appreciation rights were exercised
by such persons in 1993, and there are no outstanding Stock Appreciation Rights.
YEAR-END OPTION VALUES
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS IN-THE-MONEY OPTIONS
SHARES AT DECEMBER 31, 1993 AT DECEMBER 31, 1993
ACQUIRED ON VALUE ---------------------- ----------------------
NAME EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
Thomas R. Schwarz...... --0-- -- 310,500 503,500 $ 275,000 --0--
Alan T. Kane........... --0-- -- --0-- 300,000 --0-- --0--
Sydney L. Katz......... --0-- -- 128,750 136,250 64,453 $21,484
Robert L. Flowers...... --0-- -- 43,250 49,750 20,625 6,875
Richard E. Kent........ --0-- -- 42,500 47,500 20,625 6,875
</TABLE>
EMPLOYMENT AGREEMENTS
The Company has an employment agreement with Mr. Schwarz, providing for his
employment as Chairman of the Board and Chief Executive Officer of the Company
for a three-year rolling term until 2001 when he attains age 65. His annual base
salary under the agreement is $625,200, effective January 1, 1993. Incentive
bonuses, in accordance with the Company's incentive bonus policy as determined
by the Board of Directors, were not awarded to any corporate officers for
services in 1993. In the event of termination of Mr. Schwarz's employment
without cause, he would be entitled to a lump sum severance payment equal to the
base salary payable during the three year remaining term or earlier expiration
of the agreement (the "Severance Payment"). Following a "change in control", as
defined in the agreement, Mr. Schwarz may terminate his employment upon his good
faith determination of a diminution of his duties and responsibilities and
receive the Severance Payment. An irrevocable grantor trust assures satisfaction
of the Company's obligations upon a change in control, subject to the claims of
creditors.
8
<PAGE> 11
The Company also has employment agreements with the four other officers of
the Company. The agreements provide for employment for a two-year rolling term.
Any increase in annual salary during the employment term increases the minimum
annual salary under the agreements. The current minimum annual salaries under
the agreements for Messrs. Kane, Katz, Flowers and Kent are $425,000, $280,000,
$186,200 and $161,200, respectively. In addition, the agreements provide for
severance pay upon involuntary termination without cause in an amount equal to
one year's annual salary plus any bonus received within the preceding 12-month
period, provided, Mr. Kane's agreement provides for double such amount once he
moves his permanent residence to Eastern Massachusetts provided such change of
residence occurs prior to February 15, 1995. Upon a "change in control" of the
Company, as defined in each agreement, during the term thereof or within two
years thereafter, and an involuntary termination without cause or a constructive
termination, as defined in each agreement, the officer so terminated under the
agreements is entitled to severance pay equal to 200% of the greater of (i) of
the sum of his base annual salary plus any bonus received within the preceding
12 months and (ii) the average of the sum of annual base salary plus bonuses
paid during the three twelve-month periods preceding the termination date. Mr.
Kane is entitled to a guaranteed bonus for 1993 of $150,000 under his employment
agreement; subsequent bonuses will be based on performance. In addition, Mr.
Kane was granted a ten-year non-qualified stock option to acquire 300,000
shares, exercisable in four annual installments, at $4.375 per share.
The Company has an amended and restated employment agreement with Maurice
Grossman, a Director and formerly Chairman of the Board, President and Chief
Executive Officer of the Company. Beginning January 1, 1991, the agreement
provides for Mr. Grossman to serve as an employee in a consulting capacity until
September 8, 1994, with compensation declining from $409,062 in 1991 to $327,250
in 1992, $245,438 in 1993 and to an annual rate of $163,625 in 1994. In
addition, the amended agreement provides for the payment upon his involuntary
termination, other than for cause, for an amount equal to the present value of
compensation payable pursuant to the amended agreement and for certain
additional payments in the event of a "change in control", as defined in the
amended agreement.
RETIREMENT PLANS
The Company has a non-contributory defined benefit pension plan (the
"Pension Plan"), which covers substantially all of its employees, and an ERISA
Excess Plan (the "EEP") to preserve certain benefits for employees whose
retirement benefits under the Pension Plan are affected by limitations imposed
by the Internal Revenue Code.
9
<PAGE> 12
<TABLE>
The following table shows the estimated annual benefits payable upon
retirement at age 65 under the Pension Plan as supplemented by the EEP for
services performed and compensation earned through December 31, 1993 on a 100%
straight-life annuity basis to persons in specified remuneration and years-of-
service classifications. The straight-life annuity benefit is approximately 110%
of the 10-year certain benefit. Such benefits reflect a reduction for annual
earnings below $12,156 to recognize in part the Company's cost of Social
Security benefits related to credited service under the Pension Plan.
<CAPTION>
YEARS OF SERVICE
ANNUAL -------------------------------------------------------------------------
COMPENSATION 10 YRS. 15 YRS. 20 YRS. 25 YRS. 30 YRS. 35 YRS.
- ------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$ 50,000 $ 6,610 $ 9,805 $ 13,000 $ 16,196 $ 19,391 $ 22,586
$ 100,000 $ 13,755 $ 20,409 $ 27,062 $ 33,716 $ 40,370 $ 47,023
$ 150,000 $ 20,900 $ 31,012 $ 41,124 $ 51,237 $ 61,349 $ 71,461
$ 200,000 $ 28,045 $ 41,615 $ 55,186 $ 68,757 $ 82,328 $ 95,899
$ 250,000 $ 35,189 $ 52,219 $ 69,248 $ 86,277 $103,307 $120,336
$ 300,000 $ 42,334 $ 62,822 $ 83,310 $103,798 $124,286 $144,774
$ 350,000 $ 49,479 $ 73,425 $ 97,372 $121,318 $145,265 $169,211
$ 400,000 $ 56,624 $ 84,029 $111,434 $138,839 $166,244 $193,649
$ 500,000 $ 70,913 $105,236 $139,558 $173,880 $208,202 $242,524
$ 600,000 $ 85,203 $126,447 $167,682 $208,921 $250,160 $291,399
$ 700,000 $ 99,492 $147,649 $195,805 $243,962 $292,118 $340,275
$ 800,000 $113,782 $168,856 $223,929 $279,003 $334,076 $389,150
$ 900,000 $128,072 $190,062 $252,053 $314,044 $376,034 $438,025
$ 1,000,000 $142,361 $211,269 $280,177 $349,085 $417,992 $486,900
$ 1,100,000 $156,651 $232,476 $308,301 $384,126 $459,950 $535,775
$ 1,200,000 $170,940 $253,682 $336,424 $419,167 $501,909 $584,651
</TABLE>
Reference earnings ("Reference Earnings") covered by the Pension Plan and
EEP include all direct compensation payments, including overtime, bonuses,
commissions and similar payments. Reference Earnings for any year are determined
by reference to payments made during the year, whereas compensation set forth in
the Summary Compensation Table on page 7 hereof is determined by reference to
payments, whether made during the year or thereafter, for services during the
year. In 1993, Reference Earnings for the Named Executive Officers were
substantially (within a 10% variance) the same as the annual compensation
(salary and bonus) reported in the Summary Compensation Table.
Benefits are based upon the average of the highest five of the last ten
years for service prior to 1991 and upon annual reference earnings for each year
thereafter. The Summary Compensation Table on page 7 hereof does not include the
value of retirement benefits earned in 1993.
As of December 31, 1993, the years of credited service for the individuals
named in the Cash Compensation Table above were: Thomas R. Schwarz, 3 years,
Alan T. Kane, one year, Sydney L. Katz, 10 years, Robert L. Flowers, 24 years,
and Richard E. Kent, 23 years. For purposes of the portion of the Pension Plan
formula determined on a final average pay basis for service prior to 1991,
supplemented by the EEP, the covered compensation for service prior to 1991 of
Messrs. Katz, Flowers, and Kent are $201,840, $169,558 and $184,823,
respectively. Messrs. Flowers and Kent received lump sum benefits under the
Pension Plan at age 65 in 1991 and 1994, respectively. The benefits for Messrs.
Schwarz and Kane, employed in 1990 and 1993, respectively, are based entirely on
annual reference earnings for each year of service.
Mr. Grossman does not participate in the EEP and is presently receiving an
annual retirement benefit of $124,147. Mr. Flowers and Mr. Kent accrue benefits
under the Pension Plan during employment reflecting the increase in their
respective lump sum benefits attributable to such service.
10
<PAGE> 13
REPORT OF COMPENSATION COMMITTEE ON ANNUAL COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
composed of the following independent outside directors:
John R. Grey
Stephen B. Oresman
Robert K. Swanson
Dr. Abraham Zaleznik, Chairman
The Committee is responsible for determining executive compensation, including
salaries, bonus awards and stock options.
The Company's executive compensation programs are designed to correlate
with performance and stockholder value creation. In this connection, the Company
has developed a compensation strategy and specific executive variable
compensation plans that allocate a significant portion of an executive's total
compensation upon achievement of specified financial goals as set forth in the
income plans for the operations of the Company. The objectives of the
compensation strategy are to attract and retain the highest level of executive
talent, to motivate the executives to achieve the goals defined by the Company's
business strategies, to link executive and stockholder interests through equity
based plans and to provide a compensation package that recognizes competitive
practice, individual contributions as well as the financial results of
operations.
Each year the Committee conducts a thorough review of the Company's
executive compensation programs. In this connection, the Committee avails itself
periodically of a report from independent compensation consultants assessing the
effectiveness of the Company's compensation programs and comparing the Company's
executive compensation, corporate performance and stock price appreciation to a
peer group of public retail corporations with annual revenues ranging from $300
million to $6 billion that represent the Company's competition for executive
positions. The companies included in the retail peer group are not necessarily
companies included in the market indices set forth on the Comparative Stock
Performance Chart on Page 14 of this Proxy Statement. This is reflective of the
fact that the market indices contain organizations which are considerably
larger, and in some cases, in very different sectors of the retail market than
is the Company. The Committee targets a competitive level of the executive
market as reported by the compensation consultants, but allows deviations from
that target to reflect the acquisition cost of new hires and/or exceptional
contributions to initiatives by the Company to increase stockholder value.
The Committee sets policies for and determines the compensation of all of
the corporate officers, including the Named Executive Officers. The Committee
and Mr. Schwarz jointly review the individual performance of each of the
executives other than Mr. Schwarz.
The key elements of the Company's executive compensation package are base
salary, annual bonus and stock options. The Committee's policies with respect to
each of these elements, including the bases for the compensation awarded to Mr.
Schwarz, are discussed below. In addition, the Committee considers the full
compensation package offered by the Company to the executive group, including
pension benefits, supplemental retirement benefits, severance plans, employment
agreements, insurance and other benefits.
The Company does not anticipate that compensation to any executive officer
for 1994 will exceed $1 million for purposes of IRS Revenue Rule 162(m).
However, the Committee will be evaluating its policy in regards to qualifying
its annual and long-term incentive program in terms of the deductibility cap in
future years.
11
<PAGE> 14
BASE SALARIES
Base salaries for new executive officers are determined by evaluating the
responsibilities of the position and the experience of the individual, with
reference to the marketplace for executive talent, including a comparison to
base salaries for comparable positions with other corporations. Annual salary
adjustments are determined by evaluating the performance of the Company and of
each executive officer with consideration to any new responsibilities of such
officer. In the case of corporate officers with responsibility for operating
divisions, the financial results of the division are considered in the context
of economic and competitive factors. The Committee also grants appropriate
consideration to such non-financial performance measures as the quality of work,
business relationships and department efficiency.
With respect to the base salary for Mr. Schwarz in 1994, the Committee
considered a number of financial and non-financial factors. The Company did not
meet its 1993 profit goals, or achieve targeted improvement in the market price
of the Company's stock. However, considerable success in terms of the expansion
of the Western Division, progress in developing and implementing an integrated,
automated replenishment system, and the initiation of a results oriented
corporate culture was achieved. On balance, the Committee in its normal cycle
elected not to increase Mr. Schwarz's base salary until such time as Company
financial performance further improves.
ANNUAL BONUS
The Company's executive officers are eligible for an annual cash bonus
awarded by reference to an operating income plan for the Company and, where
appropriate, for a division of the Company. Each executive officer is assigned a
target bonus expressed as a percentage of base salary. Target bonus levels for
all executives, including the Chief Executive Officer, are periodically
evaluated by the Committee to ensure that they represent competitive pay
opportunities for comparable executives in the retail industry. In 1993, such
target percentage rates ranged from 25% to 50% for executive officers of the
Company, with Mr. Schwarz assigned a 50% opportunity. Mr. Kane, first employed
by the Company on February 15, 1993, was guaranteed a bonus equal to 40% of his
base salary for 1993 under his employment agreement. Bonuses for executive
officers are awarded as a percentage of the target bonus, ranging from 0% to
125% of the target bonus upon achievement of scaled percentages of the
applicable operating income plan.
In 1993, the Company did not achieve its corporate operating income plan,
and accordingly no incentive bonuses were paid for services in 1993 under the
Plan (exclusive of Mr. Kane's guaranteed bonus) to any executive officer of the
Company, including the Chief Executive Officer. This contrasts to Mr. Schwarz's
1992 annual bonus award of $318,000.
Special bonus awards for 1993 include special awards of $75,000 for Mr.
Katz to recognize extraordinary services by Mr. Katz in connection with the
restructuring of the Company's term debt and revolving credit during 1993 and
$7,000 to Mr. Kent for extraordinary services in connection with the debt
restructuring. Such special bonus awards are considered by the Committee to be
non-recurring and outside the criteria typically utilized in considering pay
competitiveness.
STOCK OPTIONS
Under the Company's 1986 Non-Qualified Stock Option Plan, as amended, stock
options are granted from time to time to key employees, including executive
officers, of the Company. The Committee sets guidelines for the size of stock
option awards based upon competitive practice, base salary and other factors,
including contributions to initiatives adopted by the Company to increase
stockholder value, similar to the factors considered in setting base salary.
12
<PAGE> 15
Stock options are designed to align the interests of executives with those
of the stockholders, as part of the compensation objectives of the Company.
Stock options are granted with an exercise price equal to the market price of
the Company's common stock on the date of grant. The options generally vest over
four years. Accordingly, the full benefit of the options is realized only when
stock price appreciation occurs over an extended period.
The Committee has endeavored to motivate executives by granting options
that present executives an opportunity for significant gains commensurate with
gains in stockholder values.
In 1993, the only stock option granted to Executive Officers was the
Non-Qualified Stock Option granted to Alan T. Kane when he was employed by the
Company as an Executive Vice President in February of 1993. Mr. Schwarz did not
receive any stock options for 1993 (see table for "Option Grants in Last Fiscal
Year" on Page 8).
CONCLUSION
The programs described above correlate a significant portion of the
Company's executive compensation to individual and corporate performance and
stock price appreciation. The absence of annual bonus awards under the Plan, or
stock option grants in 1993 illustrate the sensitivity of the Company's
executive pay program to financial performance. The Committee intends to
continue the policy of linking executives' compensation to corporate performance
and improvement in stockholder values, recognizing that economic factors beyond
management's control may result in imbalances for particular periods but that
consistent improvement in corporate performance over the long term will inure to
the mutual benefit of the Company's executives and its stockholders.
13
<PAGE> 16
<TABLE>
COMPARATIVE STOCK PERFORMANCE
Set forth below is a line graph comparing the performance of the Company's
Common Stock against the S&P Composite -- 500 Stock Index and the S&P Specialty
Retail Composite Index for the five-year period commencing January 1, 1989 and
ending December 31, 1993.
COMPARISON OF CUMULATIVE TOTAL RETURN
FISCAL YEAR ENDING DECEMBER 31
<CAPTION>
MEASUREMENT PERIOD GROSSMAN'S S&P RETAIL
(FISCAL YEAR COVERED) INC. S&P 500 SPECIALTY
<S> <C> <C> <C>
1988 100.00 100.00 100.00
1989 88.89 131.69 125.94
1990 37.78 127.60 124.33
1991 46.67 166.47 188.96
1992 77.78 179.15 252.89
1993 53.55 197.21 251.78
</TABLE>
APPROVAL OF INDEPENDENT AUDITORS
The Board of Directors has appointed Ernst & Young as independent auditors
for the Company to examine its consolidated financial statements for the 1994
fiscal year and requests stockholders to approve such appointment.
Representatives of Ernst & Young will be present at the Annual Meeting and will
have an opportunity to make a statement if they so desire and to respond to
appropriate questions from stockholders.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF ERNST & YOUNG
AS INDEPENDENT AUDITORS.
14
<PAGE> 17
<TABLE>
PRINCIPAL STOCKHOLDERS
The following table sets forth the name and address of each person known to
the Company to own beneficially more than 5% of the Common Stock as of February
1, 1994, the number of shares beneficially owned and the percentage so owned:
<CAPTION>
PERCENTAGE
OF
SHARES BENEFICIALLY
NAME AND ADDRESS OF BENEFICIAL OWNER OUTSTANDING OWNED SHARES
------------------------------------ ----------- ------------
<S> <C> <C>
Manufacturers Hanover Trust Company(1)....................... 1,349,734 5.3%
270 Park Avenue
New York, NY 10017
The Shidler Group (Jay H. Shidler and Robert W. Holman,
Jr.)(2) .................................................... 1,341,600 5.3%
810 Richards Street
Suite 1000
Honolulu, HI 97813
- ---------------
<FN>
(1) In June 1987, a number of creditors of the Company's predecessor, Evans
Products Company ("Evans"), including Manufacturers Hanover Trust Company
(the "Holders"), who had received shares of Common Stock and debentures or
notes of the Company in connection with the reorganization of Evans under
Chapter 11 of the Bankruptcy Code, filed a statement on Schedule 13D (the
"1987 Schedule 13D") under the Securities Exchange Act of 1934 ("Exchange
Act"), disclosing that they beneficially owned in the aggregate
approximately 75% of the outstanding shares of the Company's Common Stock.
Each of the Holders was party to a registration rights agreement, which
imposed restrictions on the transfer of its shares of Company Common Stock,
but each Holder disclaimed that this agreement constituted a sharing of the
power of disposition of such shares or that it was therefore a member of a
"group" within the meaning of the Ex change Act. The restrictions on
transfer under the registration rights agreement expired in January 1988,
and several Holders have provided the Company with opinions of counsel to
the effect that such Holders do not have a control relationship with the
Company and are not acting as members of a group. Certain of the Holders
have sold all or a substantial portion of the Company Common Stock and/or
debentures originally held by them.
On May 8, 1989, Bank of America NT&SA filed an amendment to the 1987
Schedule 13D, stating that it was no longer in a position where it might be
deemed to share dispositive power with respect to the shares of Common Stock
held by the other Holders or to be a member of a group. Although the 1987
Schedule 13D has not been amended by any other Holder, the Company does not
believe that the Holders should presently be deemed to constitute a group
within the meaning of the Exchange Act.
(2) Based on Schedule 13D under the Securities Exchange Act of 1934 dated March
13, 1991, filed with the Securities and Exchange Commission on March 14,
1991. Pursuant to the terms of the Standstill Agreement described above,
Messrs. Shidler and Holman have agreed to certain restrictions upon the
acquisition of additional shares of Common Stock by them and their
affiliates and associates, and have also agreed to vote all shares of Common
Stock beneficially owned by them and their affiliates and associates for the
election of directors nominated by the Board of Directors and upon all other
matters in accordance with the recommendations of the Board of Directors.
Mr. Shidler disclaims beneficial ownership in such shares, except for the
947,540 shares held by Shidler Equities L.P.
</TABLE>
CERTAIN TRANSACTIONS
In October 1990, the Company entered into a revolving credit agreement with
four banks, including Manufacturers Hanover Trust Company. The agreement
provided for short-term borrowings of up to $48 million subject to certain
limitations. Manufacturers Hanover Trust Company had committed to loan up to
$4.8 million pursuant to such agreement. On December 15, 1993, the Company
replaced the revolving credit agreement with a new three year Loan and Security
Agreement, providing for credit of up to $60 million (including $15 million for
Letters of Credit), subject to certain limitations. Manufacturers Hanover Trust
Company is not a lender under the new financing.
In August 1988 and June 1991, the Company entered into financing
transactions with Chemical Bank (which is under common control with
Manufacturers Hanover Trust Company as a result of the merger of their
respective holding companies in 1993), pursuant to which Chemical Bank provided
approximately $1.94 million and $8 million, respectively, of mortgage financing
secured by one store owned by the Company in Massachusetts and five stores in
New York, respectively.
15
<PAGE> 18
In February 1993, the Company entered into another financing transaction
with Chemical Bank pursuant to which Chemical Bank provided $6.15 million of
mortgage financing secured by the Company's distribution center in Manchester,
Connecticut.
RESTRICTIONS ON ACCUMULATION OF COMMON STOCK
In order to assist in protecting certain tax benefits, Article Ninth of the
Company's Restated Certificate of Incorporation contains provisions restricting
the acquisition of shares of Common Stock by any person (including any
partnership, corporation or other entity), and provides that shares accumulated
in excess of the prescribed number shall not have voting rights.
In general, Article Ninth, as modified and extended by the Board of
Directors, provides that no person may, voluntarily or involuntarily, acquire
any shares of Common Stock on or prior to December 31,1996 (or such later date
as may be determined by the Board of Directors), if the number of shares
actually and constructively owned by such person (except for shares issued in
1986 to creditors of Evans pursuant to Evans' reorganization plan under Chapter
11 of the Federal Bankruptcy Code) would be more than 5% of the outstanding
Common Stock on any date (any such excess shares being herein called "Excess
Shares"). For the purposes of this provision, shares are deemed to be
constructively owned by a person if they are considered to be owned by such
person under the constructive ownership rules of section 318 of the Internal
Revenue Code of 1954, except that subsections (a)(2)(C) and (a)(3)(C) of such
section 318 shall be applied by substituting "5 percent" for "50 percent". Under
this provision, shares may be deemed to be constructively owned by a person if
such person holds an option to acquire such shares, if such shares are owned by
certain family members or by a partnership in which such person is a partner, by
a trust or estate of which such person is a beneficiary or by a corporation in
which such person owns 5% or more of the stock, and, in case such person is
itself a partnership, trust, estate or corporation, shares may be deemed to be
constructively owned by such person if they are owned (including shares
constructively owned) by any partner, beneficiary or 5% or greater stockholder,
as the case may be.
In case any person attempts to acquire Excess Shares, voluntarily or
involuntarily, such Excess Shares shall be deemed transferred to the Company or
a third party designated by the Company, in either case as trustee (the
"Trustee"), and the purported owner shall have no right to vote such Excess
Shares or to receive dividends thereon or any other rights with respect thereto,
except the right to receive from the net proceeds realized by the Trustee from
the sale of such Excess Shares and certain other funds that may be available to
the Trustee (or to retain from the proceeds of any disposition thereof by the
purported owner, as agent for the Trustee), an amount not in excess of the
amount paid by such purported owner for such Excess Shares, plus broker's
commissions.
Pursuant to such Article Ninth, any holder of shares of Common Stock is
obligated to notify the Company immediately of any purported acquisition of
Excess Shares and to furnish to the Company all information reasonably requested
by it with respect to all shares of Common Stock actually or constructively
owned by such holder.
Under such Article Ninth, the Board of Directors of the Company is
authorized to extend the period of effectiveness of the above-described
restrictions beyond December 31, 1996, increase the 5% percentage referred to
above, or modify the definition of constructive ownership of shares, if
necessary or desirable to preserve the federal income tax net operating loss or
investment tax credit carryforwards of the Company. Any such determination by
the Board of Directors will be filed with the Secretary of the Company, and
copies will be mailed to the stockholders of the Company.
16
<PAGE> 19
The foregoing restrictions on acquisition of shares of Common Stock may be
waived by the Board of Directors of the Company and are not applicable to an
acquisition of more than 50% of the outstanding shares of Common Stock for cash
consideration pursuant to any tender offer for all of the outstanding shares of
Common Stock, merger or other business combination in which all holders of such
outstanding shares are given the opportunity to participate. The Board of
Directors has waived such restrictions with respect to shares of Common Stock
acquired and held by the Shidler/Holman Group or Mr. Oresman in compliance with
the Standstill Agreement described above.
STOCKHOLDER PROPOSALS
It is anticipated that the 1995 Annual Meeting of Stockholders will be held
on April 26, 1995. In accordance with regulations issued by the Securities and
Exchange Commission, stockholder proposals intended for presentation at that
meeting must be received by the Secretary of the Company no later than November
17, 1994, if such proposals are to be considered for inclusion in the Company's
Proxy Statement.
PROXY SOLICITATION
The expense of preparing, printing and mailing this Proxy Statement, and
the proxy solicited hereby, will be borne by the Company. In addition to the use
of the mails, proxies may be solicited by officers, Directors and regular
employees of the Company, without additional remuneration, by personal
interviews, telephone, telegraph or otherwise. The Company will also request
brokerage firms, nominees, custodians and fiduciaries to forward proxy materials
to the beneficial owners of shares held of record and will provide reimbursement
for the cost of forwarding such materials in accordance with customary charges.
The Company has retained Georgeson & Co., Inc. to aid in the solicitation of
proxies, including soliciting proxies from brokerage firms, banks, nominees,
custodians and fiduciaries. The fees of such firm are estimated at $8,000 plus
out-of-pocket costs and expenses.
By Order of the Board of Directors
RICHARD E. KENT
Secretary
March 16, 1994
17
<PAGE> 20
GROSSMAN'S INC.
ANNUAL MEETING OF STOCKHOLDERS, APRIL 27, 1994
P PROXY SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF GROSSMAN'S INC.
R
O The undersigned hereby appoints Thomas R. Schwarz, Alan T. Kane and Sydney
L. Katz, and each of them, proxies of the undersigned, with power of
X substitution to each, to vote all shares of Common Stock of Grossman's Inc.
(the "Company") that the undersigned is entitled to vote at the Annual
Y Meeting of Stockholders of the Company to be held at The First National Bank
of Boston, 100 Federal Street, Boston, Massachusetts, on April 27, 1994, at
10:30 A.M., and at any adjournment thereof, on all matters coming before the
meeting, as indicated on the reverse side hereof.
Election of Directors: NOMINEES:
Russell Cox, John R. Grey, Maurice Grossman, Leo Kahn, Sydney L. Katz, W.
Wallace McDowell, Jr., Stephen B. Oresman, Thomas R. Schwarz, Robert K.
Swanson, Harold Tanner, and Dr. Abraham Zaleznik
PLEASE SIGN AND DATE THIS PROXY ON THE REVERSE SIDE AND RETURN IT PROMPTLY IN
THE ENCLOSED ENVELOPE.
-----------
SEE REVERSE
SIDE
-----------
/X/ PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
This Proxy, when properly executed, will be voted in the manner directed herein
by the undersigned stockholder. The Board of Directors favors a vote FOR
election of the nominees listed on the reverse side hereof and FOR the other
proposal. If no contrary instructions are indicated, this Proxy will be voted
FOR Proposals one and two.
<TABLE>
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR Proposals 1 and 2.
- --------------------------------------------------------------------------------
<CAPTION>
FOR WITHELD FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C> <C> <C>
1. ELECTION OF / / / / 2. APPROVAL OF ERNST & / / / / / /
DIRECTORS (See YOUNG AS INDEPENDENT
reverse). AUDITORS.
/ / __________________________________ 3. OTHER MATTERS. In their discretion, the proxies are authorized to
For all nominees except as noted above to vote upon such other matters as may properly come before the
meeting.
MARK HERE
FOR ADDRESS / /
CHANGE AND
NOTE AT LEFT
Please sign name(s) exactly as printed hereon. Joint owners should
each sign. When signing as attorney, executor, adminstrator, trustee
or guardian, give full title as such. If a corporation, sign in full
corporate name by President or other authorized officer. If a partnership,
sign in partnership name by authorized person.
PLEASE MARK, SIGN AND DATE THIS PROXY AND Signature: __________________________________________ Date _________________
RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE
Signature: __________________________________________ Date _________________
</TABLE>
