<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
FABRI-CENTERS OF AMERICA, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FABRI-CENTERS OF AMERICA, INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 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:
/ / 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.
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[FABRI-CENTERS LOGO]
5555 Darrow Road
Hudson, Ohio 44236
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 12, 1996
The Annual Meeting of Shareholders of Fabri-Centers of America, Inc. will
be held at Fabri-Centers Corporate Office, 5555 Darrow Road, Hudson, Ohio, on
Wednesday, June 12, 1996, at 1:00 p.m., local time, for the following purposes:
1. To elect three Directors of the class whose three-year terms of
office will expire in 1999;
2. To consider and act upon a proposal to approve the adoption of the
1996 Stock Option Plan for Non-Employee Directors; and
3. To transact such other business as may properly come before the
meeting.
All shareholders are cordially invited to attend the meeting, although only
those holders of Class A Common Shares of record at the close of business on
April 30, 1996 will be entitled to vote at the meeting.
IF YOU ARE A HOLDER OF CLASS A COMMON SHARES, YOU WILL ALSO FIND ENCLOSED A
PROXY CARD. YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, SIGN, DATE AND RETURN THE
ENCLOSED PROXY IN THE RETURN ENVELOPE PROVIDED FOR THAT PURPOSE, WHETHER OR NOT
YOU EXPECT TO BE PRESENT AT THE MEETING. IF YOU ATTEND THE MEETING, YOU MAY
REVOKE YOUR PROXY AND VOTE YOUR CLASS A COMMON SHARES IN PERSON.
The Proxy Statement accompanies this Notice.
BETTY ROSSKAMM, Secretary
May 10, 1996
By Order of the
Board of Directors
<PAGE> 3
[FABRI-CENTERS LOGO]
5555 Darrow Road
Hudson, Ohio 44236
1996 ANNUAL MEETING OF SHAREHOLDERS
JUNE 12, 1996
THE PROXY AND This Proxy Statement is being mailed on or about May 10, 1996,
SOLICITATION to the shareholders of Fabri-Centers of America, Inc. (the
"Company") in connection with the solicitation by the Board of
Directors of the enclosed form of Proxy for the 1996 Annual Meeting of
Shareholders to be held on June 12, 1996 (the "Annual Meeting"). If you are a
holder of the Company's Class A Common Stock, without par value ("Class A
Common Shares"), you will also find enclosed a proxy card and an envelope in
which to return it. Pursuant to the Ohio General Corporation Law, any holder of
Class A Common Shares signing and returning the enclosed Proxy has the power to
revoke it by giving notice of such revocation to the Company in writing or in
the open meeting before any vote with respect to the matters set forth therein
is taken. The representation in person or by proxy of at least a majority of
the outstanding Class A Common Shares entitled to vote is necessary to provide
a quorum at the Annual Meeting. Properly executed proxies marked "abstain" as
well as proxies held in street name by brokers that are not voted on all
proposals to come before the Annual Meeting ("broker non-votes"), will be
considered "present" for purposes of determining whether a quorum has been
achieved at the Annual Meeting. The nominees for Directors receiving the
greatest number of votes will be elected. As a result, any Class A Common
Shares present in person or by proxy at the Annual Meeting but not voted for
any reason have no impact in the election of Directors, except to the extent
that the failure to vote for an individual may result in another individual
receiving a larger number of votes. The proposal relating to the 1996 Stock
Option Plan must be approved by a majority of the holders of the outstanding
Class A Common Shares. Abstentions and broker non-votes with respect to such
proposal will have the same effect as votes against such proposal.
PURPOSES OF The Annual Meeting has been called for the purposes of (1)
ANNUAL MEETING electing three Directors of the class whose three-year terms
of office will expire in 1999; (2) considering and acting upon
a proposal to approve the adoption of the 1996 Stock Option Plan for
Non-Employee Directors; and (3) transacting such other business as may
properly come before the meeting.
The three persons named in the enclosed Proxy have been selected by the
Board of Directors and will vote Class A Common Shares represented by valid
Board of Directors' Proxies. They have indicated that, unless otherwise
indicated in the enclosed Proxy, they intend to vote for the election of the
nominees listed below and in favor of the proposal to adopt the 1996 Stock
Option Plan for Non-Employee Directors.
The Company has no knowledge of any other matters to be presented at the
Annual Meeting, except the reports of officers on which no action is proposed to
be taken. In the event that other matters do properly come before the Annual
Meeting, the persons named in the Proxy will vote in accordance with their
judgment on such matters.
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VOTING The Board of Directors has fixed the close of business on
SECURITIES April 30, 1996, as the record date for determining
shareholders entitled to notice of, and to vote at, the Annual
Meeting. On that date, the Company had outstanding and
entitled to vote at the Annual Meeting 8,914,835 Class A Common Shares. Each
Class A Common Share entitles the holder to one vote on all matters properly
brought before the meeting. Pursuant to the Amended Articles of Incorporation of
the Company, shares of the Company's Class B Common Stock, without par value
("Class B Common Shares"), do not entitle the holders thereof to vote on any
matter submitted to the shareholders, except in certain circumstances set forth
in the Ohio General Corporation Law, none of which are applicable to the Annual
Meeting (Class A Common Shares and Class B Common Shares are hereafter sometimes
collectively referred to as "Common Stock"). Under the Ohio General Corporation
Law, all of the Class A Common Shares may be voted cumulatively in the election
of Directors if any shareholder gives written notice to the President, a Vice
President or the Secretary of the Company, not less than 48 hours before the
time set for the Annual Meeting, and an announcement of the notice is made at
the beginning of the Annual Meeting by the Chairman or the Secretary or by or on
behalf of the shareholder giving such notice. Cumulative voting permits a
shareholder to (1) cast a number of votes equal to the number of Class A Common
Shares owned by the shareholder multiplied by the number of Directors to be
elected and (2) cast those votes for only one nominee or distribute them among
the nominees. In the event that voting at the election is cumulative, the
persons named in the enclosed Proxy will vote the Class A Common Shares
represented by valid Proxies on a cumulative basis for the election of the
nominees listed below, allocating the votes of such Class A Common Shares in
accordance with their judgment. Shareholders of the Company will not be entitled
to dissenters' rights with respect to any matter to be considered at the Annual
Meeting.
SECURITY The following table sets forth, as of March 29, 1996, the
OWNERSHIP OF amount of the Company's Common Stock beneficially owned by
MANAGEMENT each of its Directors and nominees for Directors, the Chief
Executive Officer, the four other most highly compensated
executive officers, and all executive officers and Directors
of the Company as a group. Unless otherwise indicated, each of the persons
listed in the following table has sole voting and investment power with respect
to the Common Stock set forth opposite his or her name:
<TABLE>
<CAPTION>
CLASS A COMMON SHARES CLASS B COMMON SHARES
---------------------------------- ----------------------------------
NUMBER OF PERCENT OF NUMBER OF PERCENT OF
NAME OF COMMON SHARES CLASS IF 1% COMMON SHARES CLASS IF 1%
BENEFICIAL OWNER BENEFICIALLY OWNED OR MORE BENEFICIALLY OWNED OR MORE
- ------------------------------ ------------------ ----------- ------------------ -----------
<S> <C> <C> <C> <C>
Alan Rosskamm(1)(2)........... 613,357 6.50% 564,101 6.00%
Alma Zimmerman(1)............. 550,655 5.93% 547,897 5.92%
Betty Rosskamm(1)(3).......... 251,554 2.71% 247,441 2.68%
Robert Norton(1)(4)........... 125,635 1.35% 143,033 1.54%
Jane Aggers (1)(5)............ 115,600 1.24% 129,267 1.39%
Fred Johnson(1)(6)............ 46,689 -- 46,675 --
John Stec(1)(7)............... 27,267 -- 27,249 --
Samuel Krasney(8)............. 19,750 -- 19,750 --
Ira Gumberg(9)................ 21,000 -- 21,000 --
Scott Cowen(10)............... 14,800 -- 14,800 --
Frank Newman(9)............... 15,000 -- 15,000 --
All executive officers and
Directors as a group
(12 persons)................ 1,841,307(1)(11) 19.05%(11) 1,776,213(1)(11) 18.45%(11)
</TABLE>
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(1) With respect to Common Stock beneficially owned by such persons under the
Company's Employees' Savings and Profit Sharing Plan, the shares of Common
Stock included are as of December 31, 1995, the latest date for which
statements are available.
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(2) Includes 144,750 Class A Common Shares and 144,750 Class B Common Shares
subject to stock options granted to Mr. Rosskamm exercisable on or prior to
May 30, 1996, 54,500 Class A Common Shares and 54,500 Class B Common Shares
held as restricted stock under the Company's Executive Incentive Plan, and
an aggregate of 181,751 Class A Common Shares and 181,751 Class B Common
Shares held by his children, spouse, or by Mr. Rosskamm as trustee for the
benefit of family members and charities.
(3) Includes 19,203 Class A Common Shares and 19,203 Class B Common Shares held
by Mrs. Rosskamm as custodian for the benefit of her grandchildren and
50,000 Class A Common Shares and 50,000 Class B Common Shares held by The
Rosskamm Family Partnership, with regard to which Mrs. Rosskamm has sole
voting and dispositive power.
(4) Includes 50,250 Class A Common Shares and 50,250 Class B Common Shares
subject to stock options granted to Mr. Norton exercisable on or prior to
May 30, 1996, 48,250 Class A Common Shares and 48,250 Class B Common Shares
held as restricted stock under the Company's Executive Incentive Plan, and
an aggregate of 2,250 Class A Common Shares and 2,250 Class B Common Shares
owned by Mr. Norton in a fiduciary capacity for the benefit of his children
and his spouse.
(5) Includes 71,250 Class A Common Shares and 71,250 Class B Common Shares
subject to stock options granted to Ms. Aggers exercisable on or prior to
May 30, 1996 and 30,000 Class A Common Shares and 30,000 Class B Common
Shares held as restricted stock under the Company's Executive Incentive
Plan.
(6) Includes 30,750 Class A Common Shares and 30,750 Class B Common Shares
subject to stock options granted to Mr. Johnson exercisable on or prior to
May 30, 1996, 6,000 Class A Common Shares and 6,000 Class B Common Shares
held as restricted stock under the Company's Executive Incentive Plan, and
an aggregate of 1,000 Class A Common Shares and 1,000 Class B Common Shares
owned by Mr. Johnson in a fiduciary capacity for the benefit of his
children.
(7) Includes 19,750 Class A Common Shares and 19,750 Class B Common Shares
subject to stock options granted to Mr. Stec exercisable on or prior to May
30, 1996 and 4,000 Class A Common Shares and 4,000 Class B Common Shares
held as restricted stock under the Company's Executive Incentive Plan.
(8) Includes 17,500 Class A Common Shares and 17,500 Class B Common Shares
subject to stock options granted to Mr. Krasney under the 1988 Stock Option
Plan for Non-Employee Directors exercisable on or prior to May 30, 1996.
(9) Includes 15,000 Class A Common Shares and 15,000 Class B Common Shares
subject to stock options granted to Mr. Gumberg and Mr. Newman under the
1988 Stock Option Plan for Non-Employee Directors exercisable on or prior
to May 30, 1996.
(10) Includes 12,500 Class A Common Shares and 12,500 Class B Common Shares
subject to stock options granted to Mr. Cowen under the 1988 Stock Option
Plan for Non-Employee Directors exercisable on or prior to May 30, 1996.
(11) Includes 376,750 Class A Common Shares and 376,750 Class B Common Shares
subject to stock options granted under the Company's Stock Option Plans and
exercisable on or prior to May 30, 1996 and 142,750 Class A Common Shares
and 142,750 Class B Common Shares of restricted stock awarded under the
Company's Executive Incentive Plan.
SECURITY Unless otherwise indicated, the following table and notes
OWNERSHIP OF thereto set forth information as to the only persons or
CERTAIN BENEFICIAL groups known to the Company, as of March 29, 1996, to be
OWNERS beneficial owners (as defined by the Securities and
Exchange Commission) of more than five percent of the
outstanding Class A Common Shares of the Company. The information provided in
connection with this table has been obtained from the Company's records and a
review of statements filed with the Securities and Exchange Commission. Unless
otherwise indicated, each of the owners
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<PAGE> 6
listed in the following table has sole voting and investment power with respect
to the Class A Common Shares set forth opposite their names:
<TABLE>
<CAPTION>
CLASS A COMMON SHARES
-------------------------------
NUMBER OF
NAME AND ADDRESS COMMON SHARES PERCENT
OF BENEFICIAL OWNERS BENEFICIALLY OWNED OF CLASS
------------------------------------------------------- ------------------ --------
<S> <C> <C>
FMR Corp.(1)(2)........................................ 938,300 10.10%
Edward C. Johnson 3d
82 Devonshire Street
Boston, MA 02109
Mrs. Betty Rosskamm(3)(4).............................. 876,737 9.44%
5555 Darrow Road
Hudson, OH 44236
Manning & Napier Advisors, Inc.(1)..................... 745,325 8.02%
1100 Chase Square
New York, NY 14604
Mr. and Mrs. Justin Zimmerman(3)(5).................... 692,228 7.45%
5555 Darrow Road
Hudson, OH 44236
Mr. Alan Rosskamm (3)(6)............................... 613,357 6.50%
5555 Darrow Road
Hudson, OH 44236
The State Teachers Retirement.......................... 553,900 5.96%
Board of Ohio(STRS)(7)
275 East Broad Street
Columbus, OH 43215
The Capital Group Companies, Inc.(1)(8)................ 525,000 5.65%
333 South Hope Street
Los Angeles, CA 90071
</TABLE>
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(1) The Class A Common Shares listed are reported on a Schedule 13G filed with
the Securities and Exchange Commission with respect to holdings as of
December 31, 1995.
(2) Fidelity Management & Research Company, a wholly owned subsidiary of FMR
Corp. ("Fidelity"), reported beneficial ownership of 728,500 Class A Common
Shares as a result of acting as investment advisor to several investment
funds that hold such Class A Common Shares (the "Funds"). The voting of
these 728,500 Class A Common Shares is directed by each of the Funds' Boards
of Trustees. In addition, Fidelity Management Trust Company, a wholly owned
subsidiary of FMR Corp. ("FMTC"), reported beneficial ownership of 209,800
Class A Common Shares. The voting of these 209,800 Class A Common Shares is
directed by FMR who has sole voting and dispositive power over these shares.
(3) With respect to Class A Common Shares beneficially owned by such persons
under the Company's Employees' Savings and Profit Sharing Plan, the Class A
Common Shares included are as of December 31, 1995, the latest date for
which statements are available.
(4) Includes 19,203 Class A Common Shares held by Mrs. Rosskamm as custodian for
the benefit of her grandchildren and 50,000 Class A Common Shares held by
The Rosskamm Family Partnership, with regard to which Mrs. Rosskamm has
voting and dispositive power.
(5) Of the 692,228 Class A Common Shares, Mr. Zimmerman disclaims beneficial
ownership of 550,655 Class A Common Shares beneficially owned by his wife
and Mrs. Zimmerman disclaims beneficial ownership of 141,573 Class A Common
Shares beneficially owned by her husband.
4
<PAGE> 7
(6) Includes 144,750 Class A Common Shares subject to stock options granted to
Mr. Rosskamm exercisable on or prior to May 30, 1996, 54,500 Class A Common
Shares held as restricted stock under the Company's Executive Incentive
Plan, and an aggregate of 181,751 Class A Common Shares held by his
children, spouse, or by Mr. Rosskamm as trustee for the benefit of family
members and charities.
(7) The Class A Common Shares listed are reported on a Schedule 13G filed with
the Securities and Exchange Commission with respect to holdings as of
December 31, 1993. No subsequent amendment to the Schedule 13G has been
filed of record with the Securities and Exchange Commission.
(8) Capital Research and Management Company, a registered investment adviser,
and an operating subsidiary of The Capital Group Companies, Inc., exercised
as of December 29, 1995 investment discretion with respect to 525,000 Class
A Common Shares or 5.65% of outstanding shares of the class, which were
owned by various institutional investors. Such subsidiary has no power to
direct the vote of the above shares.
ELECTION OF The Board of Directors of the Company consists of nine members
DIRECTORS divided into three classes, each consisting of three members.
Since a suitable replacement nominee has yet to be found, a
vacancy will remain in the class of 1997. The proxies solicited hereby will not
be voted for a greater number of persons than the number of nominees named
herein.
In the event of the death of or inability to serve of any of the nominees,
the Proxies will be voted for the election as a Director of such other person as
the Board of Directors may recommend. The Board of Directors has no reason,
however, to anticipate that this will occur.
NOMINEES TO The following table sets forth certain information regarding
THE BOARD the nominees for election as members of the Board of Directors
OF DIRECTORS and Directors whose terms of office will continue after the
Annual Meeting, based upon information furnished to the
Company by such persons, except as otherwise noted, as of
March 31, 1996.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION PAST FIVE YEARS, DIRECTOR
NAME OTHER DIRECTORSHIPS AND AGE SINCE
---- ----------------------------------------------------------- --------
<S> <C> <C>
NOMINEES FOR THE TERM TO EXPIRE IN 1999
Samuel Krasney Managing Partner, ABBA Capital Enterprises since September 1976
(1)(2) 1993; Chairman of the Board, President and Chief Executive
Officer, Banner Aerospace, Inc. from June 1990 to September
1993; Director of Banner Aerospace, Inc., and Waxman
Industries, Inc.; age 71.
Frank Newman President and Chief Executive Officer since February 1996, 1991
(1)(2) Chief Operating Officer July 1993 to February 1996, and
Director of Eckerd Corporation (retail pharmacy stores)
since July 1993; President and Chief Executive Officer, F &
M Distributors prior to July 1993 for more than five years;
age 47.
Betty Rosskamm Senior Vice President and Secretary of the Company for more 1967
than five years; age 67.
</TABLE>
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<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION PAST FIVE YEARS, DIRECTOR
NAME OTHER DIRECTORSHIPS AND AGE SINCE
---- ----------------------------------------------------------- --------
<S> <C> <C>
DIRECTORS WHOSE TERMS EXPIRE IN 1997
Alan Rosskamm Chief Executive Officer of the Company for more than five 1985
years, since April 1993, President, and since July 1992,
Chairman of the Board; prior to July 1992, President of the
Company for more than five years; Director of Charming
Shoppes Inc. (women's apparel retailer); age 46.
Scott Cowen Dean of the Weatherhead School of Management and Professor 1987
(1)(2) of Accounting, Case Western Reserve University, for more
than five years; Director of American Greetings
Corporation, Forest City Enterprises, Inc., LDI
Corporation, Premier Industrial Corporation and Society
National Bank; age 49.
DIRECTORS WHOSE TERMS EXPIRE IN 1998
Robert Norton Vice Chairman since March 1993 and Chief Financial Officer 1989
for more than five years; Executive Vice President from
September 1988 to March 1993; Chief Administrative Officer
from May 1990 to March 1993; age 49. Mr. Norton has
announced his intention to resign as Vice Chairman of the
Board and Chief Financial Officer of the Company on or
about May 31, 1996.
Alma Zimmerman Senior Vice President of the Company for more than five 1967
years; age 83.
Ira Gumberg Chief Executive Officer and President of J.J. Gumberg Co. 1992
(1) (real estate management and development) for more than five
years; Director of Mellon Bank, N.A.; age 42.
</TABLE>
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(1) Member of the Audit Committee, which met twice during the fiscal year ended
January 27, 1996. This Committee is responsible for reviewing with the
independent auditors of the Company the scope and thoroughness of the
auditors' examination, reviewing the adequacy of the Company's systems of
internal accounting controls with the independent auditors and recommending
to the Board of Directors the appointment of independent auditors for the
fiscal year.
(2) Member of the Compensation Committee, which met three times during the
fiscal year ended January 27, 1996. This Committee has the authority to set
the compensation for executive officers of the Company. The Committee also
makes recommendations to the Board of Directors with respect to the adoption
and amendment of incentive compensation plans and administers those plans
approved by the Board of Directors.
Betty Rosskamm is the mother of Alan Rosskamm.
Ira Gumberg, a Director of the Company, is President and a principal
shareholder of J.J. Gumberg Co. J.J. Gumberg Co. owns or manages numerous
shopping centers, approximately 12 of which contain fabric stores of the
Company. All of the leases with respect to such stores were entered into prior
to Mr. Gumberg becoming a Director of the Company.
During the fiscal year ended January 27, 1996, there were four meetings of
the Company's Board of Directors and one special meeting relating to the
Recapitalization Amendment. Each incumbent Director attended at least 75% of the
Board meetings and meetings held by the committees on which he or she served. In
March 1996, the Board of Directors established a nominating committee. The
nominating committee is composed of Mr. Rosskamm, Mr. Newman, Mr. Krasney, Mr.
Cowen, and Mr. Gumberg. Such committee is responsible for recommending for
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<PAGE> 9
nomination on behalf of the Board suitable persons for election as directors
when a vacancy exists on the Board.
COMPLIANCE WITH Based solely upon a review of Forms 3 and 4 and amendments
SECTION 16(A) thereto furnished to the Company with respect to its most
OF THE recent fiscal year, and written representations from reporting
EXCHANGE ACT persons that no Form 5 was required, the Company believes
that, during the fiscal year ended January 27, 1996, all
filing requirements applicable to its executive officers and
Directors were met.
DIRECTORS' The Company compensates Directors, other than officers who are
COMPENSATION Directors, for their services on the basis of a $16,000 annual
retainer and $1,000 for each day of Board and committee
meetings attended. The Company also maintains the 1988 Stock Option Plan for
Non-Employee Directors (the "Directors Plan"), which provides automatic
one-time grants of options for 15,000 Class A Common Shares to new Non-Employee
Directors as of the date of their initial election and automatic grants of
options for 10,000 Class A Common Shares to each Non-Employee Director upon
completion of five continuous years of service (commencing in 1989) as a
Director. A total of 115,000 Class A Common Shares and 75,000 Class B Common
Shares are currently available for issuance upon the exercise of options
granted or which may be granted under the Directors Plan. Each option will
terminate on the date that is ten years following the date of grant; provided,
that, in the event of the retirement of a Director after more than ten years of
continuous service, the Compensation Committee may accelerate the date on which
any option (outstanding for a period of more than twelve months) becomes
exercisable. When an optionee ceases to be a Director of the Company for any
reason, that optionee shall continue to have the right to exercise an
outstanding option during the three-month period immediately following the date
of termination of such service. If the 1996 Stock Option Plan for Non-Employee
Directors is approved by shareholders at this Annual Meeting, no further grants
will be made under the 1988 Plan.
EXECUTIVE The following table sets forth information relating to the
COMPENSATION annual and long-term compensation for the fiscal years ended
January 27, 1996, January 28, 1995 and January 29, 1994, for
the Chief Executive Officer and the other four most highly compensated
executive officers of the Company:
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SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
---------------------------------
AWARDS
ANNUAL COMPENSATION ---------------------------------
- ------------------------------------------------------------------------------ SECURITIES
OTHER UNDERLYING ALL
ANNUAL OPTIONS/SARS OTHER
COMPEN- RESTRICTED (E) COMPEN-
NAME AND FISCAL SATION STOCK (COMMON SHARES) SATION
PRINCIPAL POSITION YEAR SALARY(A) BONUS(B) (C) AWARD(S)(D) ----------------- (F)
- ---------------------------- ------ --------- -------- -------- ----------- CLASS A CLASS B -------
------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alan Rosskamm 1996 $396,109 $259,994 $ 0 0 50,000 $64,991
Chairman of the Board, 1995 $352,884 $264,663 -- $ 196,875 15,000 15,000 $79,144
President and Chief 1994 $341,346 $103,683 -- $ 0 15,000 15,000 $18,177
Executive Officer
Robert Norton 1996 $333,054 $214,190 $ 0 0 40,000 $16,898
Vice Chairman of 1995 $321,031 $233,273 -- $ 157,500 12,000 12,000 $16,162
the Board and Chief 1994 $301,090 $91,485 -- $ 0 12,000 12,000 $19,145
Financial Officer
Jane Aggers 1996 $294,096 $192,518 $ 0 0 40,000 $17,760
Executive Vice 1995 $246,712 $185,034 -- $ 236,250 12,000 12,000 $19,194
President- 1994 $217,468 $61,860 -- $ 136,250 32,000 32,000 $10,111
Merchandising and
Marketing
Fred Johnson 1996 $179,341 $77,117 $ 0 0 10,000 $2,250
Senior Vice President 1995 $172,404 $83,616 -- $ 63,000 5,000 5,000 $2,342
Management Information 1994 $159,231 $30,660 -- $ 0 10,000 10,000 $3,428
Systems
John Stec 1996 $178,269 $76,656 $ 0 0 10,000 $2,400
Senior Vice President- 1995 $170,000 $94,150 -- $ 63,000 5,000 5,000 $1,808
Real Estate 1994 $171,090 $32,459 -- $ 0 5,000 5,000 $3,444
</TABLE>
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(A) Includes amounts earned but deferred pursuant to Section 401(k) of the
Internal Revenue Code.
(B) Incentive Bonus Compensation is based on individual percentages established
by the Compensation Committee and is based on achievement of pre-established
performance goals. Amounts represent bonuses earned in the current fiscal
year for which payment is not made until the subsequent fiscal year.
(C) Excludes perquisites and other benefits, unless the aggregate amount of such
compensation is greater than the lesser of $50,000 or 10 percent of the
total of annual salary and bonus reported for the named executive officer.
(D) Restricted stock consists of Common Stock issued and delivered to the
recipient at the time the award is made without payment to the Company, but
which are subject to restrictions on transfer for, and forfeiture in the
event of termination of employment prior to the expiration of, a specified
period of time (generally at the end of a period of five years). The amounts
reported in the table represent the market value at the date of grant. For
the fiscal years 1996, 1995, and 1994, the executive officers listed in the
compensation table hold the following numbers of restricted shares,
respectively: Alan Rosskamm -- 0, 12,500, 0 Class A Common Shares and 0,
12,500, 0 Class B Common Shares; Robert Norton -- 0, 10,000, 0 Class A
Common Shares and 0, 10,000, 0 Class B Common Shares; Jane Aggers -- 0,
15,000, 10,000 Class A Common Shares and 0, 15,000, 10,000 Class B Common
Shares; Fred Johnson -- 0, 4,000, 0 Class A Common Shares and 0, 4,000, 0
Class B Common Shares; John Stec -- 0, 4,000, 0 Class A Common Shares and 0,
4,000, 0 Class B Common Shares. The aggregate number and value of the
restricted stock holdings at January 27, 1996 were for Mr. Rosskamm 54,500
Class A Common Shares at $776,625 and 54,500 Class B Common Shares at
$688,063, Mr. Norton 48,250 Class A Common Shares at $687,563 and 48,250
Class B Common Shares at $609,156, Ms. Aggers 30,000 Class A Common Shares
at $427,500 and 30,000 Class B Common Shares at $378,750, Mr. Johnson 6,000
Class A Common Shares at $85,500 and 6,000 Class B Common Shares at $75,750,
and Mr. Stec 4,000 Class A Common Shares at $57,000 and 4,000 Class B Common
Shares at $50,500, without giving effect to the diminution of value
attributable to the restrictions on such shares. Currently, the Company does
not pay cash dividends on its Common Stock; however, from time to time the
Board of Directors may re-examine the issue of dividend payments. The shares
of restricted stock would participate the same as other shares of Common
Stock of the Company regarding dividend payment.
(E) The Company's 1990 Employees Stock Option and Stock Appreciation Rights
Plan, as amended, provides for the award of incentive and non-qualified
stock options which may be Class A Common Shares or Class B Common Shares or
a combination thereof and stock appreciation rights to key employees of the
Company.
(F) Reflects matching contributions, equal to 50% of a participant's first 4%
under the Company's Employees' Savings and Profit Sharing Plan and amounts
accrued by the Company for potential benefits earned under the Company's
1979 Supplemental Retirement Benefit Plan (the "1979 Plan"). The 1979 Plan
provides benefits, subject to forfeiture, to such employees upon normal
retirement, early retirement or total disability. In fiscal years 1996, 1995
and 1994, the Company had accrued, under the 1979 Plan, for the executive
officers listed in the compensation table, the following amounts,
respectively: Alan Rosskamm -- $0, $0, $13,680; Robert Norton -- $14,648,
$14,648, $14,648; Jane Aggers -- $15,510, $17,448, $5,816; Fred
Johnson -- $0, $0, $0; John Stec -- $0, $0, $0. Mr. Rosskamm's participation
under the 1979 Plan has been terminated and has been replaced with a Split
Dollar Life Insurance arrangement with a trust established by Alan Rosskamm,
pursuant to which the Company and that trust will share in the premium costs
of whole life insurance policies that pay death benefits of not less than
$10 million upon the death of Alan or Barbara Rosskamm (whichever occurs
later). The split-dollar insurance arrangement is structured such that all
premium payments are returned to the Company. The present value of Mr.
Rosskamm's insurance arrangement for fiscal year 1996 is $62,741.
8
<PAGE> 11
OPTION GRANTS TABLE
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information relating to stock option grants
during the last fiscal year for the Chief Executive Officer and the other four
most highly compensated executives of the Company. No grants of Class A Common
Shares were made during the last fiscal year to these individuals.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- ------------------------------------------------------------------------------- POTENTIAL
NUMBER OF REALIZABLE VALUE AT
SECURITIES PERCENT
UNDERLYING OF TOTAL EXERCISE ASSUMED ANNUAL RATES OF
OPTIONS OPTIONS OR BASE STOCK PRICE APPRECIATION
GRANTED GRANTED TO PRICE PER FOR OPTION TERM (4)
(COMMON EMPLOYEES IN COMMON EXPIRATION -------------------------
NAME SHARES) (1) FISCAL YEAR SHARE DATE (3) 5% 10%
- -------------- -------------- ------------ --------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Alan Rosskamm Class B 50,000(2) 12.0% $ 11.50 12/14/2005 $ 361,614 $ 916,402
Robert Norton Class B 40,000(2) 9.6% $ 11.50 12/14/2005 $ 289,292 $ 733,122
Jane Aggers Class B 40,000(2) 9.6% $ 11.50 12/14/2005 $ 289,292 $ 733,122
Fred Johnson Class B 10,000(2) 2.4% $ 11.50 12/14/2005 $ 72,323 $ 183,280
John Stec Class B 10,000(2) 2.4% $ 11.50 12/14/2005 $ 72,323 $ 183,280
</TABLE>
- ---------------
(1) The option holder has the right to pay the exercise price by delivering
previously acquired shares of the Company's Common Stock and to have shares
withheld to satisfy tax withholding requirements in connection with the
exercise of options. Such options become immediately exercisable upon a
Change in Control of the Company, as defined in the option plan. Options are
nontransferable other than by will or the laws of descent and distribution.
(2) Options become exercisable in four equal annual installments commencing
December 15, 1996.
(3) Options were granted for a term of ten years, subject to earlier termination
in certain events related to termination of employment.
(4) The amounts under the columns labeled "5%" and "10%" are included by the
Company pursuant to certain rules promulgated by the Securities and Exchange
Commission and are not intended to forecast future appreciation, if any, in
the price of Class B Common Shares. Such amounts are based on the assumption
that the named persons hold the options granted for their full ten year term
and that the market value of the shares appreciate, in value from the market
value on the date of grant at the 5% and 10% annualized rates.
9
<PAGE> 12
OPTION EXERCISES AND YEAR-END VALUE TABLE
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table provides information relating to aggregate option
exercises during the last fiscal year and fiscal year-end option values for the
Chief Executive Officer and the other four most highly compensated executive
officers of the Company.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE MONEY
OPTIONS AT OPTIONS AT
COMMON JANUARY 27, 1996 JANUARY 27, 1996
SHARES ACQUIRED VALUE ----------------------------- -----------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Alan Rosskamm Class A 0 $0 152,250 31,250 $ 898,516 $ 130,562
Class B 0 $0 152,250 81,250 $ 898,516 $ 130,562
Robert Norton Class A 0 $0 50,250 25,000 $ 187,901 $ 104,450
Class B 0 $0 50,250 65,000 $ 187,901 $ 104,450
Jane Aggers Class A 0 $0 66,000 30,000 $ 297,465 $ 111,237
Class B 0 $0 66,000 70,000 $ 297,465 $ 111,237
Fred Johnson Class A 0 $0 30,125 11,875 $ 134,837 $ 41,800
Class B 0 $0 30,125 21,875 $ 134,837 $ 41,800
John Stec Class A 0 $0 24,625 8,750 $ 101,915 $ 34,612
Class B 0 $0 24,625 18,750 $ 101,915 $ 34,612
</TABLE>
CHANGE OF CONTROL AND EMPLOYMENT AGREEMENTS
The Company has entered into separate agreements (collectively, the
"Agreements") with Alan Rosskamm, Robert Norton and Jane Aggers. The Agreements
are designed to retain the executives and provide for continuity of management
in the event of any actual or threatened change in the control of the Company.
Each agreement only becomes operative upon a "Change in Control" of the Company
(as defined in the Agreements) and only if the executive is then in the employ
of the Company. After a Change in Control, each Agreement becomes, in effect, a
two-year employment agreement, providing a salary, bonus and other employee
benefits at not less than the levels existing prior to the Change in Control. If
the executive is terminated by the Company without "cause" as defined in the
Agreement or terminates his or her employment following a significant change in
his or her duties, the employee will be entitled to receive compensation and
benefits for the balance of the two-year period. The executive is obligated to
endeavor to mitigate damages by seeking comparable employment elsewhere and, to
the extent the employee receives compensation and benefits from another
employer, the foregoing payments and benefits provided by the Company will be
reduced accordingly. In each Agreement, the executive agrees that the employee
will forfeit the foregoing payments and benefits if the employee engages in
competition with the Company during the period that any payments are made or
benefits provided under the Agreement.
On March 19, 1996, Robert Norton announced his intention to resign as Vice
Chairman of the Board and Chief Financial Officer of the Company effective on or
about May 31, 1996. Under the existing employment agreement between Mr. Norton
and the Company, Mr. Norton has agreed not to compete with the Company through
February 28, 2000 and the Company has agreed to provide Mr. Norton, effective
upon termination of his employment, with the following compensation and
benefits: (i) the Company will continue to pay Mr. Norton his current annual
base salary of $335,000 through August 31, 1997; (ii) the Company will continue
to provide Mr. Norton with group health and hospitalization coverage and group
term life insurance until the earlier of August 31, 1997 or the date on which he
first obtains employment that provides such benefits; and (iii) the Company will
transfer to Mr. Norton title to the car leased on his behalf by the Company. Mr.
Norton's employment agreement also provides that, effective upon
10
<PAGE> 13
termination of his employment, stock options to acquire 16,000 Class A Common
Shares and 26,000 Class B Common Shares held by Mr. Norton, previously not
exercisable, will become immediately exercisable for a three-month period
thereafter, and 12,000 Class A Common Shares and 12,000 Class B Common Shares of
restricted stock held by Mr. Norton that currently have not vested will vest,
although the parties are currently discussing certain modifications to this
arrangement. Options and restricted stock held by Mr. Norton that are scheduled
to vest after August 31, 1997 will be forfeited.
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors ("Committee")
establishes levels of compensation for the Chief Executive Officer and the other
four most highly compensated executive officers, as well as the Company's other
executive officers. The Committee also makes recommendations to the Board of
Directors with respect to the adoption and amendment of incentive compensation
plans and administers those plans approved by the Board of Directors. The
Committee is composed of three non-employee Directors and is accountable to the
Board of Directors on all compensation matters regarding executive officers.
The overall strategy of the Committee is to design and implement
compensation programs that will lead to increases in the Company's return on
shareholders' equity over the long-term. The Committee's strategy is to design a
compensation program that will enable the Company to attract, motivate, and
retain key executives and to establish and maintain a performance and
achievement-oriented environment. The principal elements of this strategy, in
addition to competitive salaries, includes an annual bonus program that is based
on operating profit before taxes and long-term equity incentives whose value is
dependent on the market price of the Company's Common Stock. These elements are
designed to operate on an integrated basis that enhances the Company's long-term
business objectives. They are described separately in more detail below.
Salary
The Compensation Committee strives to provide a competitive total
compensation package that helps to attract and retain the best people in the
industry. Salaries are generally set above the average of the salaries of
comparable officers at companies that are considered comparable. Salary
information about comparable companies is determined by direct reference to
public disclosures made by selected, publiclyheld companies in the specialty
retail industry as well as companies in the fabric and craft industries, with
consideration given to the relative sales volume of such companies. These
companies include many of the companies in the S&P Retail Specialty Index
reflected in the performance graph set forth below. In addition, the
Compensation Committee from time to time obtains additional information about
industry salary levels from a nationally recognized employment consultant who
has significant experience in the retail industry.
In general, base salary and other components of compensation are tiered by
job responsibility, with the Chief Executive Officer, Chief Financial Officer,
and the Executive Vice President-Merchandising and Marketing occupying the top
tier. During the 1996 fiscal year, the Compensation Committee increased the
average base salaries during the annual performance reviews of the top tier by
9.46%.
Bonus
The Compensation Committee places strong emphasis on annual incentive
compensation as a means for building shareholder value over the long term
through consistent annual progress toward improvement in operating profits. The
Company's Key Management Incentive Plan provides a vehicle for the payment of
significant cash bonuses if predetermined levels of operating profit before
taxes are achieved during the year. This operating profit goal is
11
<PAGE> 14
established at a level which exceeds the Company's prior year's operating
profit. Bonuses are not payable under this Plan to the individuals in the top
tier unless the minimum operating profit target is achieved. During the fiscal
year ended January 27, 1996, the Company's operating profit exceeded the minimum
goal. The amount payable under this Plan is scaled up to a specified maximum for
superior profit performance. In addition to the corporate operating profit goal,
the specific award payable to an executive officer is adjusted based on the
degree by which he or she also meets individual performance goals suitable for
the particular position, which are also determined annually in advance by the
Compensation Committee in the case of the Chief Executive Officer, and in all
other cases by the Chief Executive Officer or the supervising executive officer.
The Key Management Incentive Plan is administered in such a way as to focus
the efforts of participants on meeting the expectations of customers and
shareholders through teamwork. The Plan's foundation on overall operating
profits is intended to provide a common objective that all participants share,
thereby linking their interests with those of the Company's shareholders.
The amounts available for award under this Plan are determined annually. In
general, the award potential for the Chief Executive Officer and the next two
most highly compensated executive officers is designed to provide a minimum
bonus, if any bonus is payable for the year, of 25 percent of the individual's
base salary and a maximum bonus of 75 percent. Bonuses for other executive
officers are designed to amount to a smaller percentage of salary.
Stock Options and Restricted Stock
The Compensation Committee also selects the recipients and determines the
level of awards of stock options and restricted stock. The option program
includes approximately 1,120 participants, including not only officers but all
levels of the Company's management through the level of store managers. The
number of shares of Common Stock covered by each award is scaled by the
Compensation Committee in its discretion according to compensation level and job
classification. In exercising this discretion, the Committee took into
consideration the overall number of shares of Common Stock available for grant,
the number of options outstanding, the number of shares exercisable, and the
option price in comparison to the market price for the underlying stock. Options
granted to the Chief Executive Officer during the 1996 fiscal year represented
12.0 percent of all option grants during the year, and grants to the other four
most highly compensated executive officers of the Company amounted to
approximately 24 percent in the aggregate. This broad participation in the stock
option program reflects the Compensation Committee's strong belief that by
providing additional incentives to key employees who have substantial
responsibility for the management and growth of the Company, the best interests
of the shareholders and management will be closely aligned.
Options granted during the 1996 fiscal year vest at the rate of 25 percent
per year. This vesting schedule reflects the Compensation Committee's
determination that options are designed to have a long-term retention effect and
that benefits are realizable over a period of four years.
The Compensation Committee also awards restricted stock as a compensation
vehicle and to attract and retain key executive managers. Generally, awards are
made upon hire or promotion or to recognize superior performance. Currently,
seventeen participants hold an award.
All awards of restricted stock made during the last three fiscal years have
provided for vesting at the end of a period not less than four years and not
more than five years after the date of the award. Since the recipient of such an
award would forfeit all of the shares of Common Stock if he or she were to leave
the Company before the end of the vesting period, the Compensation Committee
believes that these awards are a significant factor in the retention of key
management personnel and induce a long-term view among key executive officers.
Restricted stock is also considered a useful compensation vehicle because, even
after it becomes nonforfeitable, it tends to reinforce the recipient's
commitment to continued growth of the Company and appreciation in the market
price of its Common Stock over the long-term.
12
<PAGE> 15
Effective January 1, 1994, the Omnibus Budget Reconciliation Act of 1993
added Section 162(m) to the Internal Revenue Code. Section 162(m) generally
provides that certain compensation in excess of $1 million per year paid to a
company's chief executive officer and any of its four other highest paid
executive officers is no longer deductible to a company beginning in the 1994
tax year unless the compensation qualifies for an exception. The Committee
recognizes that a portion of the compensation to be paid to its executive
officers in future years may exceed $1 million and therefore, will not be
deductible, however the Committee believes that the benefits of securing the
services of these executive officers outweigh the Company's inability to obtain
a tax deduction for any such compensation.
DISCUSSION OF FISCAL 1996 COMPENSATION FOR THE CHAIRMAN AND CHIEF EXECUTIVE
OFFICER
In considering the compensation for the Chairman and Chief Executive
Officer for fiscal 1996, the Committee reviewed his existing compensation
arrangements and both the Company's and individual's performance during fiscal
1995. The Committee's decisions took into consideration the fact that financial
performance for the year ended January 28, 1995 (fiscal 1995) was improving. The
Committee accordingly made the following determinations regarding Mr. Rosskamm's
compensation for the year ended January 27, 1996 (fiscal 1996):
- Effective March 1, 1995, Mr. Rosskamm's base salary was increased by 13%
from $354,000 to $400,000 based on the Committee's positive assessment of
his performance and contributions during fiscal 1995 as Chairman of the
Board, President and Chief Executive Officer. The average salary increase
for all individuals in the senior management group was 8%.
- Based on the financial performance of the Company for fiscal 1996, the
Committee approved an annual incentive compensation award of $259,994.
This represents 66% of Mr. Rosskamm's salary, which represents the upper
quintile of the range of payments under the Key Management Incentive
Plan, because the Company's operating profit of approximately $27,900,000
exceeded the goal for fiscal year 1996 under the plan, which was
established prior to the start of fiscal 1996.
- The Committee awarded Mr. Rosskamm stock options for 50,000 Class B
Common Shares. This represented 12% of the total number of shares awarded
to all employees during fiscal 1996.
- As part of his overall compensation package Mr. Rosskamm is provided a
split dollar life insurance arrangement for Mr. Rosskamm and his wife,
which replaced the Supplemental Retirement Plan provided by the Company
to Mr. Rosskamm in fiscal 1995.
The foregoing report on fiscal year 1996 executive compensation was
submitted by the Compensation Committee and shall not be deemed to be
"soliciting material" or to be "filed" with the Securities and Exchange
Commission or subject to Regulation 14A promulgated by the Securities and
Exchange Commission or Section 18 of the Exchange Act. The names of the
Directors who serve on the Compensation Committee are set forth below:
COMPENSATION COMMITTEE
SAMUEL KRASNEY (Chairman)
SCOTT COWEN
FRANK NEWMAN
13
<PAGE> 16
PERFORMANCE Set forth below is a line graph comparing the yearly
GRAPH percentage change in the cumulative shareholder return, which
includes the reinvestment of cash dividends (if applicable),
of the Company's Class A Common Shares and Class B Common
Shares with the cumulative total return of the S&P Composite -- 500 Stock Index
and the S&P Retail Specialty Index for the Company as of January 31, (the date
nearest the end of the Company's fiscal year for which index data is readily
available) for each of the Company's last five years.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
S&P COM-
MEASUREMENT PERIOD FCA CLASS A FCA CLASS B POSITE - 500 S&P SPE-
(FISCAL YEAR COVERED) COMMON SHARES COMMON SHARES INDE X CIALTY INDEX
<S> <C> <C> <C> <C>
1991 100 100 100 100
1992 216 216 123 135
1993 86 86 136 178
1994 92 92 153 174
1995 86 86 154 173
1996 143 129 213 161
</TABLE>
* ASSUMES $100 INVESTED ON JANUARY 31, 1991 IN EACH OF THE COMPANY'S CLASS A
COMMON SHARES AND CLASS B COMMON SHARES, S&P COMPOSITE -- 500 STOCK INDEX &
S&P RETAIL SPECIALTY INDEX AND THAT ALL DIVIDENDS WERE REINVESTED.
<PAGE> 17
APPROVAL OF THE The Board of Directors adopted on March 13, 1996, subject
1996 STOCK OPTION to the approval of the Company's shareholders, the 1996
PLAN FOR NON- Stock Option Plan for Non-Employee Directors (the "Plan")
EMPLOYEE to assist the Company in continuing to attract and retain
DIRECTORS highly-qualified non-employee directors. The principal
provisions of the Plan are summarized below; however, the
summary is qualified by reference to the complete text of the Plan.
Shareholders may obtain a copy of the Plan by writing to Mr. Alan Rosskamm,
Chairman, Fabri-Centers of America, Inc., 5555 Darrow Road, Hudson, Ohio 44236.
Upon approval of the Plan by the Company's shareholders, no additional option
grants will be made under the 1998 Stock Option Plan for Non-Employee Directors
(the "Predecessor Plan").
The Plan is to be administered by a committee consisting not less than two
directors of the Company (the "Committee"). No member of the Committee may
participate in the Plan.
Each director of the Company who is not an employee of the Company or any
of its subsidiaries is eligible to participate in the Plan. Each newly elected
non-employee director shall automatically be granted, on the date of his or her
election to the Board of Directors, an option to purchase 7,500 Class A Common
Shares and an option to purchase 7,500 Class B Common Shares.
Each continuing non-employee director of the Company shall automatically be
granted, upon approval of the Plan and at the end of each Year (as defined in
the Plan) thereafter, an option to purchase the number of Class A Common Shares
and Class B Common Shares of the Company as follows:
(i) 2,000 Class A Common Shares for each continuous Year of service as
a non-employee director completed through and including February 1, 1997
less the number of shares of the Company's Common Stock originally
purchasable upon exercise of any options awarded to such director for
continuous service under the Predecessor Plan and the Plan; and
(ii) 1,500 Class A Common Shares and 1,500 Class B Common Shares for
each continuous Year of service as a non-employee director completed after
February 1, 1997 less the number of shares of the Company's Common Stock
originally purchasable upon exercise of any options awarded to such
director for continuous service under the Plan.
The option price for any option granted pursuant to the Plan shall be equal
to the fair market value of a share of Common Stock on the date the option is
granted. For purposes of the Plan, a Year shall be the period beginning on the
date of each Annual Meeting of Shareholders held on or after June 5, 1989 and
ending on the date of the next succeeding Annual Meeting of Shareholders.
A total of 124,000 Class A Common Shares and 100,000 Class B Common Shares
are available for issuance upon the exercise of options granted under the Plan.
This number is subject to adjustment in the event of a merger, consolidation,
reorganization, recapitalization, stock dividend, stock split, exchange of
shares or other change in the corporate structure of the Company.
All options granted under the Plan will have an exercise price equal to
100% of the fair market value of the shares of Common Stock on the date the
option is granted. Payment of the option price may be made in cash, by delivery
of shares of the Company's Common Stock (taken at their fair market value on the
date of exercise), or partly in cash, and partly in shares of the Company's
Common Stock at the election of the optionee. No option granted under the Plan
may be exercised prior to the completion of one year of continuous service as a
director of the Company after the date of grant. Options granted under the Plan
shall become exercisable in installments of one-fourth of the total shares of
the Company's Common Stock subject to the option upon completion of each of four
successive one-year periods of continuous service after
15
<PAGE> 18
the date of grant. Each option shall terminate on the date that is ten years
following the date of grant.
In the event of a Change of Control of the Company (as defined in the
Plan), any outstanding option or any portion of an outstanding option becomes
immediately exercisable.
When an optionee ceases to be a director of the Company for any reason,
that optionee shall continue to have the right to exercise an outstanding option
during the three-month period immediately following the date of termination of
such service.
A director who is granted an option under the Plan will realize no income,
and the Company will be entitled to no deduction, for federal income tax
purposes, at the time of the grant. When a stock option is exercised, the
optionee will realize ordinary income, and the Company will be entitled to a
deduction, in an amount equal to the excess of the fair market value of the
shares of Common Stock at the date of exercise over the option price.
Disposition of shares of the Company's Common Stock acquired by exercise of a
stock option will result in either a short-term or long-term capital gain or
loss, depending on the holding period and tax basis of such shares.
If the Plan becomes effective, and if the director nominees listed under
"Election of Directors" are elected at the Annual Meeting, the following persons
will be granted an option to purchase the following Class A Common Shares, as of
the effective date of the Plan. Additional grants of options for 1,500 Class A
Common Shares and 1,500 Class B Common Shares will be granted on each
anniversary of service as a continuing non-employee director.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING OPTIONS
GRANTED ON THE
EFFECTIVE DATE
OF THE PLAN
---------------------
CLASS A COMMON SHARES
---------------------
<S> <C>
Scott Cowen 4,000
Samuel Krasney 4,000
Frank Newman 8,000
Ira Gumberg 8,000
All Non-Employee Directors 24,000
as a Group (4 persons)
</TABLE>
Approval of the Plan requires the affirmative vote of the holders of at
least a majority of the Class A Common Shares represented at the meeting and
entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE 1996 STOCK
OPTION PLAN FOR NON-EMPLOYEE DIRECTORS.
INDEPENDENT Arthur Andersen LLP have been appointed as the Company's
AUDITORS independent auditors for the fiscal year ending February 1,
1997. A representative of Arthur Andersen LLP is expected to
be present at the Annual Meeting with an opportunity to make a statement if he
desires to do so and to answer appropriate questions with respect to that
firm's examination of the Company's financial statements and records for the
fiscal year ended January 27, 1996.
PROXY The Company will bear the expense of preparing, printing and
SOLICITATION mailing this Proxy Statement. In addition to solicitation by
mail, officers and regular employees of the Company may
solicit by telephone the return of Proxies. The Company will request brokers,
banks and other custodians, nominees and fiduciaries to send Proxy material to
beneficial owners and will, upon request, reimburse them for their expense.
16
<PAGE> 19
SHAREHOLDERS' The deadline for shareholders to submit proposals to be
PROPOSALS considered for inclusion in the Proxy Statement for the 1997
Annual Meeting of Shareholders is expected to be February 1,
1997.
ANNUAL The Company's Annual Report for the fiscal year ended January
REPORT 27, 1996, including financial statements of the Company and
the report thereon of Arthur Andersen LLP, is being mailed to
holders of Class A Common Shares with this Notice of Annual Meeting and Proxy
Statement.
BETTY ROSSKAMM,
Secretary
By order of the Board of Directors
May 10, 1996
<PAGE> 20
FABRI-CENTERS OF AMERICA, INC.
BOARD OF DIRECTORS PROXY
P ANNUAL MEETING, JUNE 12, 1996
R
O
X At the Annual Meeting of Shareholders of the Company to be held
Y on June 12, 1996, and at any adjournment, Alma Zimmerman,
Alan Rosskamm, and Scott Cowen, or any one of them, is hereby
authorized to represent me and thereat to vote my shares on the
following:
<TABLE>
<S> <C>
1. Election of Directors. The nominees of the Board of Directors to (change of address)
the class whose term of office will expire in 1999 are:
--------------------------------------
Samuel Krasney, Betty Rosskamm, and Frank Newman --------------------------------------
--------------------------------------
2. Adoption of the 1996 Stock Option Plan for Non-Employee Directors. --------------------------------------
--------------------------------------
(If you have written in the above space,
please mark the corresponding box on the
reverse side of this card.)
PLEASE DATE AND SIGN EXACTLY AS THE NAMES APPEAR ON THE FACE OF THE
PROXY AND RETURN BY MAIL PROMPTLY IN THE ENCLOSED ENVELOPE, WHICH
REQUIRES NO POSTAGE.
SHARES REPRESENTED BY PROPERLY EXECUTED PROXIES WILL BE VOTED AS
SPECIFIED. UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE
VOTED FOR THE ELECTION AS DIRECTORS OF THE NOMINEES LISTED
ABOVE AND FOR THE PROPOSAL TO ADOPT THE 1996 STOCK OPTION PLAN FOR
NON-EMPLOYEE DIRECTORS.
SEE REVERSE
SIDE
- --------------------------------------------------------------------------------
Please sign and detach card above and place in envelope provided.
</TABLE>
<PAGE> 21
<TABLE>
<S> <C> <C>
[X] PLEASE MARK YOUR SHARES IN YOUR NAME
VOTES AS IN THIS
EXAMPLE.
1. Election of FOR WITHHELD 2. Adoption of the FOR AGAINST ABSTAIN
Directors 1996 Stock
(see reverse) [ ] [ ] Option Plan for [ ] [ ] [ ]
Non-Employee
(INSTRUCTIONS: To withhold authority to vote for any Directors.
individual nominee(s), write the name(s) of the nomi- (see reverse)
nee(s) in the space provided below.)
_______________________________________________________
Change
of [ ]
Address
Attend [ ]
Meeting
SIGNATURE(S) ___________________________________________ DATE __________________
SIGNATURE(S) ___________________________________________ DATE __________________
Please give title when signing as executor, administrator, trustee, attorney
or other representative. If shares are registered in the names of joint
tenants or trustees, each joint tenant or trustee should sign.
- ------------------------------------------------------------------------------------------------------------------------------------
Please sign and detach card above and place in envelope provided.
</TABLE>
<PAGE> 22
CONFIDENTIAL VOTING INSTRUCTIONS
TO: SOCIETY NATIONAL BANK, TRUSTEE UNDER THE FABRI-CENTERS OF AMERICA, INC.
EMPLOYEES' SAVINGS AND PROFIT-SHARING PLAN
Pursuant to the provisions of the Fabri-Centers of America, Inc.
Employees' Savings and Profit-Sharing Plan, the undersigned, as a
participant in or beneficiary of the Plan, having received the
Notice and accompanying Proxy Statement for the Annual Meeting
of Shareholders of the Company to be held on June 12, 1996, hereby
directs the Trustee to vote (in person or by proxy) shares of Common
Stock of the Company credited to the undersigned's account under the
Plan on the record date for the Meeting, and at any adjournment
thereof, on the following:
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<CAPTION>
<S> <C>
1. Election of Directors. The nominees of the Board of Directors to the class
whose term of office will expire in 1999 are:
(change of address)
Samuel Krasney, Betty Rosskamm, and Frank Newman
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2. Adoption of the 1996 Stock Option Plan for Non-Employee Directors. --------------------------------------------
--------------------------------------------
--------------------------------------------
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(If you have written in the above space,
please mark the corresponding box on the
reserve side of this card.)
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PLEASE SIGN AND DATE EXACTLY AS THE NAME APPEARS ABOVE AND RETURN BY MAIL
PROMPTLY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE.
SHARES REPRESENTED BY PROPERLY EXECUTED PROXIES WILL BE VOTED AS
SPECIFIED. UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED
FOR THE ELECTION AS DIRECTORS OF THE NOMINEES LISTED ABOVE AND
FOR THE PROPOSAL TO ADOPT THE 1996 STOCK OPTION PLAN FOR
NON-EMPLOYEE DIRECTORS. SEE REVERSE
SIDE
- --------------------------------------------------------------------------------
Please sign and detach card above and place in envelope provided.
<PAGE> 23
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<S> <C> <C>
[X] PLEASE MARK YOUR SHARES IN YOUR NAME
VOTES AS IN THIS
EXAMPLE.
1. Election of FOR WITHHELD 2. Approval of FOR AGAINST ABSTAIN
Directors the 1996 Stock
(see reverse) [ ] [ ] Option Plan for [ ] [ ] [ ]
Non-Employee
(INSTRUCTIONS: To withhold authority to vote for any Directors.
individual nominee(s), write the name(s) of the nomi- (see reverse)
nee(s) in the space provided below.)
_______________________________________________________
Change
of [ ]
Address
Attend [ ]
Meeting
SIGNATURE(S) ___________________________________________ DATE __________________
These confidential voting instructions will be seen only by authorized
personnel of the Trustee.
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Please sign and detach card above and place in envelope provided.
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