<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /x/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
Braun's Fasions Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
BRAUN'S FASHIONS CORPORATION
2400 Xenium Lane North
Plymouth, Minnesota 55441
__________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 11, 1996
__________________
To the Shareholders:
Notice is hereby given that the Annual Meeting of Shareholders of
Braun's Fashions Corporation (the "Company") will be held at 2800 LaSalle
Plaza, 800 LaSalle Avenue, Minneapolis, Minnesota on Wednesday, December 11,
1996 at 3:30 p.m. Central Time for the following purposes as more fully
described in the Proxy Statement accompanying this Notice:
1. To elect two Class 2 directors to serve on the Board of Directors
for a term of three years;
2. To increase the number of shares of Common Stock reserved for
issuance under the Company's 1987 Stock Incentive Plan from 510,000 to
710,000 shares;
3. To ratify the appointment of Price Waterhouse LLP as the Company's
independent auditors for the fiscal year ending March 1, 1997; and
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only shareholders of record at the close of business on October 31,
1996, are entitled to notice of and to vote at the meeting or any adjournment
thereof.
Your attention is directed to the accompanying Proxy Statement for the
text of the matters to be proposed at the meeting and further information
regarding each proposal to be made.
SHAREHOLDERS UNABLE TO ATTEND THE MEETING IN PERSON ARE ASKED TO
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE. IF YOU ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND
VOTE IN PERSON IF YOU WISH.
By Order of the Board of Directors
Nicholas H. Cook
Chairman of the Board
November 4, 1996
Minneapolis, Minnesota
1001100
<PAGE>
BRAUN'S FASHIONS CORPORATION
2400 Xenium Lane North
Plymouth, Minnesota 55441
_____________________
PROXY STATEMENT
_____________________
Annual Meeting of Shareholders - December 11, 1996
INFORMATION CONCERNING SOLICITATION
AND VOTING
This Proxy Statement is furnished by the Board of Directors of
Braun's Fashions Corporation (the "Company") in connection with the
solicitation of proxies to be used at the Annual Meeting of Shareholders (the
"Meeting") of the Company to be held on Wednesday, December 11, 1996, at 3:30
p.m. Central Time, at 2800 LaSalle Plaza, 800 LaSalle Avenue, Minneapolis,
Minnesota, and at all adjournments thereof for the purposes set forth herein
and in the accompanying Notice of Annual Meeting of Shareholders. ANY PROXY
IN WHICH NO DIRECTION IS SPECIFIED WILL BE VOTED IN FAVOR OF EACH OF THE
MATTERS TO BE CONSIDERED. This Proxy Statement and the Notice of Meeting
and Proxy are being mailed to shareholders on or about November 4, 1996.
The close of business on October 31, 1996 has been fixed as the
record date for the determination of shareholders entitled to receive notice
of and to vote at the Meeting. At that date, the Company's outstanding
voting securities consisted of 3,796,512 shares of common stock, par value
$.01 per share (the "Common Stock"). On all matters which will come before
the Meeting, each shareholder or his proxy will be entitled to one vote for
each share of Common Stock of which such shareholder was the holder of record
on the record date. The aggregate number of votes cast by all shareholders
present in person or by proxy at the Meeting will be used to determine
whether a motion is carried. Thus, an abstention from voting on a matter by
a shareholder, while included for purposes of calculating a quorum for the
Meeting, has no effect on the item on which the shareholder abstained from
voting. In addition, although broker "non-votes" will be counted for
purposes of attaining a quorum, they will have no effect on the vote.
Any Proxy given pursuant to this solicitation may be revoked by the
person giving it at any time prior to its use by (i) delivering to the
principal office of the Company a written notice of revocation, (ii) filing
with the Company a duly executed Proxy bearing a later date or (iii)
attending the Meeting and voting in person.
The costs of this solicitation will be borne by the Company. The
Company will request brokerage houses and other nominees, custodians and
fiduciaries to forward soliciting material to beneficial owners of the
Company's Common Stock. The Company will reimburse brokerage firms and other
persons representing beneficial owners for their expenses in forwarding
solicitation materials to beneficial owners.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of October 1, 1996:
(i) by each of the executive officers included in the Summary Compensation
Table set forth under the caption "Executive Compensation;" (ii) by each
director; (iii) by all directors and executive officers of the Company as a
group; and (iv) by each person known to the Company to be the beneficial
owner of more than 5% of the outstanding shares of the Company's Common Stock.
Name Number of Shares Percent of Shares
Beneficially Owned Beneficially Owned
- ---- ------------------ ------------------
Officers and Directors
- ----------------------
Nicholas H. Cook 88,593 2.3
Herbert D. Froemming 50,784(1) *
William J. Prange - *
Marc C. Ostrow 325,447(2)(3) 8.6
James J. Fuld, Jr. 278,947(3)(4) 7.3
Donald D. Beeler 5,000(5) *
Larry C. Barenbaum 5,000(5) *
Other 5% Shareholders
- ---------------------
CIGNA Property & Casualty
Insurance Company 342,921(6) 9.0
The Morgan Stanley
Leveraged Mezzanine Fund L.P. 320,913(7) 8.5
Cowen & Company 346,500(8) 9.1
All directors and executive
officers as group (7 persons) 753,771(9) 19.9
- -------------------------------
*Less than 1%
(1) Includes 16,000 shares issuable pursuant to options granted.
(2) Mr. Ostrow's address is c/o Pennwood Capital Corporation, 477 Madison
Avenue, New York, New York 10022.
(3) Includes 3,333 shares issuable pursuant to options granted.
(4) Mr. Fuld's address is c/o James J. Fuld, Jr. Corp., 605 Third Avenue,
Suite 3500, New York, New York 10158.
(5) Includes 5,000 shares issuable pursuant to options granted.
(6) Does not include shares owned by The Morgan Stanley Leveraged Mezzanine
Fund L.P. (the "Fund") for which CIGNA acts as agent, including the
shares shown in the Table as beneficially owned by the Fund. CIGNA's
address is: c/o CIGNA Investments, Inc., 900 Cottage Road, South Building,
S-307, Bloomfield, Connecticut 06002.
(7) The address of the Fund is: c/o CIGNA Investments, Inc., 900 Cottage Road,
South Building, S-307, Bloomfield, Connecticut 06002.
(8) The address of Cowen & Company is: 1 Financial Square, New York, New York
10005.
(9) This figure includes outstanding shares and options described in the
preceding footnotes.
2
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
GENERAL
The Company's Certificate of Incorporation provides that the Board
of Directors be divided into three classes of directors of as nearly equal
size as possible. The Company's Bylaws further provide that the total number
of directors will be determined exclusively by the Board of Directors.
Directors are elected for a term of three years and the terms are staggered.
Larry C. Barenbaum and Donald D. Beeler are the directors in the class whose
term expires at the Meeting. Management and the Board of Directors have
nominated and recommended that Larry C. Barenbaum and Donald D. Beeler be
reelected as Class 2 directors, to hold office until the 1999 Annual Meeting
of Shareholders and until their respective successors are duly elected and
qualified. Both of the nominees are members of the Board of Directors of the
Company and have served in that capacity since originally elected or
designated as indicated below.
There is no family relationship among the nominees or between any
nominee and any of the Company's other directors.
VOTING INFORMATION
Proxies solicited by the Board of Directors will, unless otherwise
directed, be voted to elect Messrs. Barenbaum and Beeler. The affirmative
vote of the majority of shares of Common Stock present and entitled to vote
at the Meeting is necessary to elect each nominee. A shareholder submitting
a Proxy may vote for all or any of the nominees for election to the Board of
Directors or may withhold his or her vote from all or any of such nominees.
IF A SUBMITTED PROXY IS PROPERLY SIGNED BUT UNMARKED IN RESPECT OF THE
ELECTION OF DIRECTORS, IT IS INTENDED THAT THE PROXY AGENTS NAMED IN THE
PROXY WILL VOTE THE SHARES REPRESENTED THEREBY FOR THE ELECTION OF ALL OF THE
NOMINEES. Both of the nominees have agreed to serve the Company as a
director if elected. However, should any nominee become unwilling or unable
to serve if elected, the Proxy Agents named in the Proxy will exercise their
voting power in favor of such other person as the Board of Directors of the
Company may recommend. The Company's Certificate of Incorporation prohibits
cumulative voting and each director will be elected by a majority of the
voting power of the shares present and entitled to vote at the Meeting.
The table below gives certain information concerning the nominees
and other directors:
<TABLE>
<CAPTION>
Director
Name Age Nominee or Continuing Director in Term Since
- ---- --- -------------------------------------- --------
<S> <C> <C>
Larry C. Barenbaum (1)(2).... 49 Director; nominee with term expiring in 1999 1992
Donald D. Beeler (1)(2)...... 60 Director; nominee with term expiring in 1999 1992
Nicholas H. Cook ............ 56 Director with term expiring in 1998 1987
Marc C. Ostrow (1) .......... 50 Director with term expiring in 1998 1986
Herbert D. Froemming ........ 60 Director with term expiring in 1997 1990
3
<PAGE>
James J. Fuld, Jr.(2) ....... 49 Director with term expiring in 1997 1986
___________________
(1) Member of Compensation Committee
(2) Member of Audit Committee
</TABLE>
NOMINEES AND DIRECTORS
Class 2 Nominees
- ----------------
LARRY C. BARENBAUM has served as a director of the Company since March
1992. From 1986 to November 1991, Mr. Barenbaum was President and Chief
Executive Officer of Lawrence Jewelry Company, a fashion, wholesale jewelry
distribution company he founded in 1970. Since November 1991, Mr. Barenbaum
has been self-employed as President of LCB Enterprises, Inc., a small
business investment and acquisition company specializing in the product
distribution and marketing fields. Mr. Barenbaum also serves on the Board of
Directors of Signal Bank and United Community Bancshares, Inc.
DONALD D. BEELER has served as a director of the Company since March
1992. Since 1986, Mr. Beeler has been Chairman and Chief Executive Officer
of Snyder's Drug Stores, Inc. ("Snyders"), a Minneapolis-based retailer which
operates a chain of 75 stores. In addition, Snyders operates a wholesale
program for FoxMeyer Corporation which supplies over 800 independent
retailers in the United States.
Class 1 Directors
- -----------------
NICHOLAS H. COOK has served the Company in various capacities since
1977. Mr. Cook has been Chairman of the Board since January 1992, Chief
Executive Officer since December 1990, and a director since October 1987.
From December 1990 to June 1994, he also served as the Company's President
and from February 1987 to December 1990, he was a Vice President.
MARC C. OSTROW has served as a director of the Company since 1986.
From November 1986 until November 1991, Mr. Ostrow served as Chairman of the
Board of the Company, and until December 1990, also acted as President (on an
unpaid basis) of Braun's Holding Company, Inc. Since 1979, Mr. Ostrow's
principal occupation has been as Chairman, President and Chief Executive
Officer of Pennwood Capital Corporation ("Pennwood Capital"), a private
venture capital investment and management firm.
Class 3 Directors
- -----------------
HERBERT D. FROEMMING has served the Company as President and Chief
Operating Officer since June 1994. Mr. Froemming has been Secretary since
December 1990, and Treasurer since January 1989. From January 1989 until May
1994, Mr. Froemming served as the Company's Chief Financial Officer and, from
March 1992 to June 1994, Mr. Froemming was a Senior Vice President. He has
been a director of the Company since May 1990. From June 1984 until January
1989, Mr. Froemming was self-employed and was affiliated with Sullivan
Associates, Inc. as a turnaround consultant for financially troubled
companies. From September 1978 to June 1984, he was Senior Vice President of
Gamble Skogmo, Inc., a merchandising and financial services conglomerate, and
Wickes Companies, Inc. which acquired Gamble Skogmo in 1980.
4
<PAGE>
JAMES J. FULD, JR. has served as a director of the Company since
1986. From November 1986 to December 1990, he served as Secretary of the
Company. Since December 1979, Mr. Fuld has been the Chairman, President and
sole shareholder of James J. Fuld, Jr. Corp., a private financial and
management consulting firm.
The Company has operated its business as debtor-in-possession under
Chapter 11 of the United States Bankruptcy Code since July 1996. All of the
nominees and directors have served as directors of the Company during this
period.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the fiscal year ended March 2, 1996, the Board of Directors
held three meetings. Each director attended at least 75% of the aggregate
total number of meetings of the Board of Directors plus the total number of
meetings of all committees of the Board on which he served.
The Audit Committee recommends to the Board of Directors the
selection of independent accountants and reviews the activities and reports
of the independent accountants as well as the internal accounting controls of
the Company. The Audit Committee is comprised of Messrs. Fuld, Barenbaum and
Beeler and held two meetings during the last fiscal year.
The Compensation Committee determines the compensation for executive
officers of the Company and establishes the Company's compensation policies
and practices. The Compensation Committee also grants stock options to
employees of the Company, including officers who are not directors of the
Company, pursuant to the Company's Stock Option Plan. The Compensation
Committee is comprised of Messrs. Ostrow, Barenbaum and Beeler and held
three meetings during the last fiscal year.
The Company has no nominating committee or any committee performing
those functions. The Board as a whole performs the functions which would
otherwise be delegated to a nominating committee.
COMPENSATION OF DIRECTORS
The Company compensates directors who are not employed by the
Company or its affiliates $8,000 per year, payable quarterly, plus expenses
for services as a director. In addition, in June 1996, Messrs. Barenbaum and
Beeler were each granted an option to purchase 5,000 shares of Common Stock
at an exercise price of $3.00 per share.
1992 DIRECTOR STOCK OPTION PLAN
Effective March 1, 1992, the Company established the 1992 Director
Stock Option Plan (the "Director Option Plan"), which provides for the
issuance by the Company of a maximum of 40,000 shares of Common Stock to
non-employee directors upon the exercise of options.
The Director Option Plan provides for the automatic grant of
non-qualified options to purchase 10,000 shares of Common Stock, at an
exercise price equal to the fair market value of the shares on the date of
grant, to each non-employee director when such non-employee director becomes
a member of the Board for the first time. Such options will vest over a
three-year period, with one-third of such options becoming exercisable on
each of the first, second and third anniversaries of the date of grant.
Options which expire, or are cancelled or terminated without having been
exercised, may be regranted to other non-employee directors under the
Director Option Plan. The Director Option Plan terminates on March 1, 2002.
In June 1996, options previously granted to each of Messrs. Ostrow,
Fuld, Barenbaum and Beeler under the Director Option Plan to purchase 10,000
shares of Common Stock were repriced with an exercise price of $3.00 per
share, one-third of which vested immediately and the balance over the two
year period commencing in June 1996.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 as amended (the
"Securities Act") requires the Company's officers and directors, and persons
who own more than ten percent of a registered class of the Company's equity
securities, to file reports of ownership on Form 3 and changes in ownership
on Forms 4 or 5 with the Securities and Exchange Commission (the
"Commission") and The NASDAQ Stock Market. Such officers, directors and ten
percent shareholders are also required by the Commission's rules to furnish
the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by
it, or representation from certain reporting persons that no Forms 5 were
required for such persons, the Company believes that during the fiscal year
ended March 2, 1996, all Section 16(a) filing requirements applicable to its
officers, directors and ten percent stockholders were complied with.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Decisions and recommendations regarding the compensation of the
Company's executives are made by a three member Compensation Committee (the
"Committee") composed entirely of non-employee directors. The Committee has
responsibility to review, establish and change compensation programs for the
Company's officers to most accurately reflect the current needs of the
Company and best measure and reward the performances of its executives. The
following is a report of the Compensation Committee of the Company describing
the compensation policies and rationale applicable to the Company's executive
officers with respect to the compensation paid to such executive officers for
the year ended March 2, 1996.
6
<PAGE>
TO THE BOARD OF DIRECTORS:
COMPENSATION PHILOSOPHY
The Company's executive compensation programs are designed to
attract and retain highly qualified executives and to motivate them to
maximize shareholder value by achieving strategic Company goals. The
Committee attempts to balance short and long-term considerations in
appropriately rewarding individuals who are responsible for the Company's
profitability, growth and enhancement of shareholder value. Compensation for
executive officers consists of: (i) base salary, (ii) an annual cash
incentive award, and (iii) a long-term incentive, through a stock option
plan. The Committee strongly believes that management's compensation should
be structured to emphasize the relationship between pay and performance by
placing a portion of compensation at risk and subject to the achievement of
financial goals and objectives. Additionally, such qualitative factors as
leadership skills, planning initiatives, technical skills, and employee
development have been deemed to be important factors to take into account in
considering levels of compensation.
COMPONENTS OF COMPENSATION
BASE COMPENSATION - It is the Company's policy to pay competitive
base compensation to its executive officers, as measured against the norms
for similar positions in companies of similar size and characteristics. The
Committee annually reviews and, if appropriate, adjusts executive officers'
salaries based on an evaluation of each officer's performance as well as the
performance of the Company as a whole. In making individual base salary
recommendations, the Committee considers the executive's sustained
performance against his or her individual job responsibilities including,
where appropriate, the impact of such performance on the business results of
the Company, as well as the executive's experience, management and leadership
ability and potential for advancement, his or her compensation history and
the Company's performance.
CASH INCENTIVE AWARDS - To encourage performance and to provide a
direct link with executive compensation, the Company pays annual cash bonuses
in accordance with the Braun's Management Bonus Plan (the "Plan"). Under the
Plan, bonuses are primarily based on the Company's performance as measured
against the Company's business plan and historical results. Annual pre-tax
earnings targets are set by the Committee based on the Company's pre-tax
earnings budget and other objective criteria as approved by the Committee.
Actual annual incentive payments are based upon a pre-bonus, pre-tax earnings
performance formula. The Committee may also make discretionary bonuses based
on individual achievement.
LONG-TERM INCENTIVE COMPENSATION - The Committee believes that
granting stock options to executive officers and key employees provides an
incentive for them to make decisions which are in the long-term best interest
of the Company. In determining stock option grants, the Committee considers
the executive's contribution to the Company's performance and his or her
anticipated future contributions toward meeting the Company's long-term
strategic goals, as well as industry practice.
7
<PAGE>
CHIEF EXECUTIVE OFFICER'S COMPENSATION
The compensation of Nicholas H. Cook, the Company's Chief Executive
Officer, consisted only of his base salary under his employment agreement
which was $231,000 in fiscal 1996, unchanged from his salary in fiscal 1995.
Mr. Cook did not receive a bonus last year nor in fiscal 1995 and was not
awarded any additional stock options. At present prices none of the vested
options held by Mr. Cook could be profitably exercised.
April 19, 1996 Members of the Compensation Committee
Marc C. Ostrow, Chairman
Larry C. Barenbaum
Donald D. Beeler
SUMMARY COMPENSATION TABLE
The following table sets forth, the cash and noncash compensation
for each of the last three fiscal years awarded to or earned by the Chief
Executive Officer of the Company and the other two executive officers whose
compensation exceeded $100,000 for such fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
_________________________________________________________________________________________________________________
Annual Compensation Long-Term
Compensation
-------------------------------------------------- ---------------------------
Other Annual Awards All Other
Name and Fiscal Salary Bonus Compensation Options Compensation
Principal Position Year ( $ ) ( $ )(1) ( $ )(2) ( # )(3) ( $ )(4)
- ------------------ ------ ------- ---------- ------------ ---------------------------
<S> <C> <C> <C> <C> <C> <C>
Nicholas H. Cook 1996 231,000 -- -- 0 435
Chairman, Chief 1995 231,000 -- -- 0 403
Executive Officer 1994 231,000 -- -- 0 370
- ---------------------------------------------------------------------------------------------------------------
Herbert D. Froemming 1996 200,000 -- -- 0 1,770
President, Chief 1995 193,000 -- -- 10,000 1,616
Operating Officer 1994 176,000 -- -- 0 1,679
- ---------------------------------------------------------------------------------------------------------------
William J. Prange (5) 1996 165,000 -- -- 0 1,144
Senior Vice President, 1995 133,558 -- -- 50,000 --
General Merchandising
Manager
_______________________________________________________________________________________________________________
</TABLE>
(1) Reflects bonus earned during the fiscal year.
(2) "Other Annual Compensation" includes the following, to the extent that
the aggregate amount thereof exceeds the lesser of $50,000 or 10% of the
total annual salary and bonus reported for the individual: personal
benefits received by the named individuals and amounts reimbursed the
individuals during the year for payment of taxes.
(3) In June 1996 (fiscal 1997), to retain and motivate key employees and
management and with a view towards aligning the interests of management
with the Company's shareholders, the Compensation Committee issued
additional stock options to key employees and management and reset the
exercise prices and vesting schedules on certain existing stock options.
Messrs. Cook, Froemming and Prange received additional options for 10,000,
10,000 and 35,000 shares, respectively, resulting in total outstanding
options to such individuals of 87,600, 103,600 and 85,000 options,
respectively. Of these options, Messrs. Cook, Froemming and Prange were
granted 43,800, 43,800 and 42,500 options, respectively, at an exercise
price of $2.00 per share, which vest over three years commencing in June
1998. In addition, Messrs. Cook, Froemming and Prange were granted
43,800, 43,800 and 42,500 options, respectively, at an exercise price of
$4.00 per share, which vest over three years commencing in June 1997. Mr.
Froemming also holds 16,000 options which were not repriced.
8
<PAGE>
(4) "All Other Compensation" includes the following amounts contributed by
the Company during the fiscal year under the Company's Retirement Savings
Plan for each of the named officers: $1,125, $1,019 and $1,124 for Mr.
Froemming in 1996, 1995 and 1994, respectively, and $1,031 for Mr. Prange
for 1996. Insurance premiums were paid on behalf of each named executive
officer in the amount of $435 for Mr. Cook, $645 for Mr. Froemming and
$113 for Mr. Prange in 1996, $403 for Mr. Cook and $597 for Mr. Froemming
in 1995, and $370 for Mr. Cook and $555 for Mr. Froemming in 1994.
(5) Mr. Prange became employed by the Company in April 1994 and has a base
salary of $165,000.
No stock options were granted to the individuals named in the
Summary Compensation Table during the year ended March 2, 1996. Stock
options were granted to these individuals in fiscal 1997 (ending March 1,
1997) as discussed in Note 3 to the Summary Compensation Table.
The following table sets forth, for each of the executive officers
named in the Summary Compensation Table above, the year-end value of
unexercised options.
Option Exercises and Value of Options at End of Fiscal 1996
<TABLE>
<CAPTION>
_________________________________________________________________________________________________________________
Number of Unexercised Value of Unexercised
Shares Options at End of In-the-Money Options
Acquired Fiscal 1996 (#) at End of Fiscal 1996 (1)
on Value ----------------------------- -----------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ------------------------ -------- -------- ----------- ------------- ----------- -------------
(#) ($)(1)
--- ------
<S> <C> <C> <C> <C> <C> <C>
Nicholas H. Cook (2) -- N/A 58,060 19,540 $0 $0
- ----------------------------------------------------------------------------------------------------------------------
Herbert D. Froemming (2) -- N/A 74,060 19,540 $16,990 $0
- ----------------------------------------------------------------------------------------------------------------------
William J. Prange (2) -- N/A 10,000 40,000 $0 $0
______________________________________________________________________________________________________________________
</TABLE>
(1) Value based on market value of the Company's Common Stock on March 2, 1996
less the exercise price.
(2) See also options granted and repriced to Messrs. Cook, Froemming and
Prange in June 1996, summarized in Note 3 to the Summary Compensation
Table.
EMPLOYMENT AGREEMENTS
In December 1991, the Company entered into three-year employment
agreements with Messrs. Cook and Froemming (the "Employment Agreements"). In
fiscal 1996, the Employment Agreements provided for annual base salaries to
Messrs. Cook and Froemming of $231,000 and $200,000, respectively. Although
the original term of the Employment Agreements expired December 19, 1994, the
Employment Agreements further provide for one-year automatic extensions if
the Employment Agreements are not terminated by the Company or the executive.
The Employment Agreements also provide that Messrs. Cook and Froemming are
entitled to certain severance benefits in the event that their employment is
terminated by the Company "without cause" or by such executive following a
"change of control" (both as defined in the Employment Agreements). In such
cases, the executive would receive his salary for one year following notice
of termination, less any cash compensation earned by the executive by other
reemployment during the period. In addition, the executive would continue to
be eligible for any option plans adopted by the Company during such period
and would have 180 days following such period in which to exercise all
options previously granted. The Employment Agreements provide for a
continuation of salary payments and other benefits thereunder in the event of
disability of the executive (reduced by any disability insurance benefits
received by such
9
<PAGE>
executive) or death (up to the benefit of any life insurance policies
obtained by the Company with respect to such executive). In addition, the
Employment Agreements provide for the executives' retention of their life
insurance policies at no cost to the executives in the event of retirement.
Each of the Employment Agreements contains a covenant not to compete with the
Company for (i) the period during which they receive severance benefits in
the event of their termination by the Company "without cause" or at their
election upon a "change of control," and (ii) a period of one year in the
event of their termination for any other reason.
MANAGEMENT BONUS PLAN
Effective March 1990, the Company established the Braun's Management
Bonus Plan (the "Bonus Plan") under which certain key management employees of
the Company, including all executive officers, are eligible to receive annual
bonuses. Bonuses under the Bonus Plan are based on (a) a comparison of
targeted pre-tax earnings (as determined on an annual basis by the
Compensation Committee) to the Company's actual pre-tax earnings and (b) a
comparison of targeted individual or department performance objectives to
actual performance. In the event that actual pre-tax earnings are less than
or equal to the hurdle rate based on a percentage of targeted pre-tax
earnings set by the Compensation Committee from time-to-time, no bonuses are
paid by the Company. There were no bonuses paid to any of the executive
officers named in the Summary Compensation Table for fiscal 1996.
SECTION 401(K) PLAN
Effective March 3, 1991, the Company established the Braun's
Fashions, Inc. Retirement Savings Plan, a voluntary tax deferred retirement
plan qualified under Section 401(k) of the Internal Revenue Code of 1986, as
amended (the "401(k) Plan"). Pursuant to the 401(k) Plan, eligible employees
(employed at the Company for more than one year) may elect to contribute up
to 16% of their compensation, subject to limitations under the Internal
Revenue Code, to the 401(k) Plan. The Company is permitted to make
discretionary matching contributions of up to 25% of the first 6% of the
participant's pre-tax contributions. Matching contributions vest at a rate
of 25% per year. Neither employee nor Company contributions to the 401(k)
Plan are taxable to the employee until such amounts are distributed to the
employee, and Company contributions are tax deductible by the Company at the
time of contribution. The Company made a contribution for fiscal 1996 in the
amount of $28,188, including $1,125 on behalf of Mr. Froemming and $1,031 on
behalf of Mr. Prange.
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total shareholder return on
the Common Stock of the Company since March 31, 1992 (the date of the
Company's initial public offering) to the cumulative total shareholder return
over such period of (i) the NASDAQ Stock Market index and (ii) the NASDAQ
Retail Trade index. The information contained in this graph shall not be
deemed to be "soliciting material" or to be "filed" with the Securities and
Exchange Commission, nor shall such information be incorporated by reference
into any future filing under the Securities Act or the Exchange Act, except
to the extent that the Company specifically incorporates it by reference into
any such filing.
10
<PAGE>
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total shareholder return on the
Common Stock of the Company since March 31, 1992 (the data of the Company's
initial public offering) to the cumulative total shareholder return over such
period of (i) the NASDAQ Stock Market (U.S. Companies) index and (ii) the
NASDAQ Retail Trade index. The information contained in this graph shall not
be deemed to be "soliciting material" or to be "filed" with the Securities
and Exchange Commission nor shall such information be incorporated by
reference into any future filing under the Securities Act or the Exchange
Act, except to the extent that the Company specifically incorporates it by
reference into any such filing.
[GRAPH]
<TABLE>
<CAPTION>
3/31/92 2/27/93 2/26/94 2/25/96 3/2/96
------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
Braun's Fashions Corporation 100 157 98 37 24
NASDAQ Stock Market
(U.S. Companies) 100 112 131 134 184
NASDAQ Retail Trade 100 88 96 90 105
</TABLE>
11
<PAGE>
PROPOSAL TWO
PROPOSAL TO INCREASE THE NUMBER OF SHARES AUTHORIZED
FOR ISSUANCE UNDER THE 1987 STOCK INCENTIVE PLAN
PROPOSED AMENDMENT
In June 1996, the Company's Board of Directors adopted, subject to
shareholder approval, an amendment to the Company's 1987 Stock Incentive Plan
(the "Incentive Plan") increasing the number of shares of Common Stock
authorized for issuance under the Incentive Plan by 200,000 shares to
710,000 shares. The Board of Directors believes that stock options
have been, and will continue to be, an important compensation element in
attracting and retaining key employees. As of July 1, 1996, no shares of
Common Stock remained available for future grants of stock options under the
Incentive Plan. The Board of Directors believes that the increase in
authorized shares is necessary because of the need to continue to make awards
under the Incentive Plan to attract and retain key employees.
SUMMARY OF INCENTIVE PLAN
The purpose of the Incentive Plan is to aid the Company in
maintaining and developing management personnel capable of assuring the
future success of the Company, to offer such personnel incentives to put
forth maximum efforts for the success of the Company's business and to afford
such personnel an opportunity to acquire a proprietary interest in the
Company. All key employees of the Company are eligible to receive awards
under the Incentive Plan. The Incentive Plan terminates in 1997, and no
awards may be made after such date. However, unless otherwise expressly
provided in the Incentive Plan, any option granted may extend beyond the
termination date of the Incentive Plan.
The Incentive Plan permits the granting of: (a) stock options,
including "Incentive Stock Options" meeting the requirements of Section 422
of the Code ("Incentive Stock Options") and (b) stock options that do not
meet such requirements ("Nonqualified Stock Options"). The Incentive Plan is
administered by a committee of the Board of Directors consisting exclusively
of three or more nonemployee directors (the "Committee"). The Committee has
the authority to establish rules for the administration of the Incentive
Plan; to select the key employees to whom options are granted; to determine
the number of shares of Common Stock covered by such options; and to set the
terms and conditions of such options. Determinations and interpretations
with respect to the Incentive Plan are in the sole discretion of the
Committee, whose determinations and interpretations are binding on all
interested parties. The Committee may delegate to one or more officers the
right to grant options with respect to individuals who are not subject to
Section 16(b) of the Securities Act.
The exercise price per share under any stock option cannot be
less than 100% of the fair market value of the Company's Common
Stock on the date of the grant of such option. Determinations of
fair market value under the Incentive Plan are made in accordance
with methods and procedures established by the Committee. For
purposes of the Incentive Plan, the fair market value of shares of
Common Stock on a given date is (i) the last sales price of the
shares as reported on The NASDAQ Stock Market, if the shares are
then being quoted on The NASDAQ
12
<PAGE>
Stock Market or (ii) the closing price of the shares on such date on a
national securities exchange, if the shares are then being traded on a
national securities exchange.
No option granted under the Incentive Plan may be assigned,
transferred, pledged or otherwise encumbered by the individual to whom it is
granted, otherwise than by will, by designation of a beneficiary, or by laws
of descent and distribution. Each option is exercisable during such
individual's lifetime, only by such individual, or, if permissible under
applicable law, by such individual's guardian or legal representative. If
any shares of Common Stock subject to any options are not purchased or are
forfeited, the shares previously used for such options become available for
future grants under the Incentive Plan.
If any dividend or other distribution, recapitalization, stock
split, reverse stock split, reorganization, merger, consolidation, split-up,
combination, repurchase, or exchange of shares of Common Stock or other
securities of the Company, issuance of warrants or other rights to purchase
shares of Common Stock or other securities of the Company, or other similar
corporate transaction or event affects the shares of Common Stock so that an
adjustment is appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the
Incentive Plan, the Committee may, in such manner as it deems equitable,
adjust (a) the number and type of shares (or other securities or property)
which thereafter may be made the subject of options, (b) the number and type
of shares (or other securities or property) subject to outstanding options,
and (c) the exercise price with respect to any option. The Committee may
correct any defect, supply any omission, or reconcile any inconsistency in
the Incentive Plan or any option agreement in the manner and to the extent it
shall be deemed desirable to carry the Incentive Plan into effect.
The Board of Directors may amend, alter or discontinue the Incentive
Plan at any time, provided that shareholder approval must be obtainable for
any change that (i) absent such shareholder approval, would cause Rule 16b-3
as promulgated by the Securities and Exchange Commission under the Securities
Act, to become available with respect to the Incentive Plan; (ii) requires
the approval of the Company's shareholders under any rules or regulations of
the National Association of Securities Dealers, Inc. or any securities
exchange applicable to the Company; or (iii) requires the approval of the
Company's shareholders under the Internal Revenue Code (the "Code") in order
to permit Incentive Stock Options to be granted under the Incentive Plan.
The following is a summary of the principal federal income tax
consequences generally applicable to options under the Incentive Plan. The
grant of an option is not expected to result in any taxable income for the
recipient. The holder of an Incentive Stock Option generally will have no
taxable income upon exercising the Incentive Stock Option (except that a
liability may arise pursuant to the alternative minimum tax), and the Company
will not be entitled to a tax deduction when an Incentive Stock Option is
exercised. Upon exercising a Nonqualified Stock Option, the optionee must
recognize ordinary income equal to the excess of the fair market value of the
shares of the Common Stock acquired on the date of exercise over the exercise
price, and the Company will be entitled at that time to a tax deduction for
the same amount. The tax consequences to an optionee upon a disposition of
shares acquired through the exercise of an option will depend on how long the
shares have been held and upon whether such shares were acquired by
exercising an Incentive Stock Option or by exercising a Nonqualified Stock
Option. Generally, there will be no tax consequences to the Company in
connection with disposition of shares acquired under an option, except that
the Company may be entitled to a tax deduction in the case of a disposition
of shares acquired under an Incentive Stock Option before the applicable
Incentive Stock Option holding periods set forth in the Code have been
satisfied.
Special rules apply in the case of individuals subject to Section
16(b) of the Securities Act. In particular, under current law, unless a
special election is made pursuant to the Code, shares received pursuant to
the exercise of a stock option may be treated as restricted as to
transferability and subject to a substantial risk of forfeiture for a period
of up to six months after the date of exercise. Accordingly, the amount of
any ordinary income recognized, and the amount of the Company's tax
deduction, may be determined as of the end of such period.
Common Stock acquired under the Incentive Plan is freely tradeable,
except when acquired by "affiliates" of the Company. Certain directors and
officers may be deemed to be "affiliates" as that term is defined under the
Securities Act of 1933, as amended (the "Act"). Common Stock acquired under
the Incentive Plan by an affiliate may only be re-offered or resold under an
effective registration statement, under Rule 144 or under another exemption
from the registration requirements of the Act.
BOARD RECOMMENDATION AND SHAREHOLDER VOTE REQUIRED
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO
AMEND THE INCENTIVE PLAN. The affirmative vote of a majority of
the shares of Common Stock present and entitled to vote is
necessary to approve the proposal. Proxies solicited by the Board
of Directors will, unless otherwise directed, be voted to approve
the proposal. Shares held by persons who abstain from voting on
the proposal and broker "non-votes" will not be voted for or
against the proposal. Shares held by persons abstaining will be
counted in determining whether a quorum is present for the purpose
of voting on the proposal but broker non-votes will not be counted
for this purpose.
14
<PAGE>
PROPOSAL THREE
RATIFICATION AND APPROVAL OF THE
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors selected the accounting firm of Price
Waterhouse LLP to serve as its independent auditor for the fiscal year Ending
March 1, 1997. Price Waterhouse LLP has audited the Company's financial
statements since the fiscal year ended March 2, 1991. A proposal to ratify
that appointment will be presented at the Meeting. Representatives of Price
Waterhouse LLP are expected to be present at the Meeting. They will have an
opportunity to make a statement if they desire to do so and will be available
to respond to appropriate questions from shareholders.
BOARD RECOMMENDATION AND SHAREHOLDER VOTE REQUIRED
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
SELECTION OF THE INDEPENDENT AUDITOR. Ratification of the selection requires
the affirmative vote by a majority of the shares of Common Stock present or
represented at the Meeting. Shares held by persons who abstain from voting
on the proposal and broker "non-votes" will not be voted for or against the
proposal. Shares held by persons abstaining will be counted in determining
whether a quorum is present for purposes of voting on the proposal but broker
non-votes will not be counted for this purpose. If the appointment is not
ratified by the shareholders, the Board of Directors is not obligated to
appoint other auditors, but the Board of Directors will give consideration to
such unfavorable vote.
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Any shareholder proposals intended to be presented at the Company's
next annual meeting of shareholders must be received by the Company at its
office located at 2400 Xenium Lane North, Plymouth, Minnesota 55441 on or
before January 31, 1997 to be considered for inclusion in the Company's proxy
statement and form of proxy relating to such meeting.
OTHER MATTERS
A copy of the Company's Annual Report on Form 10-K for the year
ended March 2, 1996, was previously mailed to shareholders.
15
<PAGE>
All properly executed proxies delivered pursuant to this
solicitation and not revoked will be voted at the Meeting in accordance with
the directions given. In voting by proxy in regard to the election of the
two Class 2 directors to serve until the 1999 Annual Meeting of Shareholders,
shareholders may vote in favor of both nominees or withhold their votes as to
both nominees or withhold their votes as to specific nominees. With respect
to other items to be voted upon, shareholders may vote in favor of the item
or against the item or may abstain from voting. Shareholders should specify
their choices on the enclosed Proxy. Any Proxy in which no direction is
specified will be voted in favor of each of the matters to be considered.
The Board of Directors does not intend to bring any matters before
the Meeting other than as stated in this Proxy Statement and is not aware
that any other matters will be presented for action at the Meeting. Should
any other matters be properly presented, the person named in the enclosed
form of Proxy will vote the Proxy with respect thereto in accordance with
their best judgment, pursuant to the discretionary authority granted by the
Proxy.
BY ORDER OF THE BOARD OF DIRECTORS
Dated: November 4, 1996
16
1080407-1
<PAGE>
PROXY
BRAUN'S FASHIONS CORPORATION
ANNUAL MEETING OF SHAREHOLDERS - DECEMBER 11, 1996
The undersigned hereby appoints Nicholas H. Cook and Herbert D.
Froemming, and each of them, with full power of substitution as proxies and
agents (the "Proxy Agents") in the name of the undersigned, to attend the
Annual Meeting of Shareholders of Braun's Fashions Corporation to be held at
2800 LaSalle Plaza, 800 LaSalle Avenue, Minneapolis, Minnesota on Wednesday,
December 11, 1996 at 3:30 p.m. Central Time, or any adjournment thereof, and
to vote the number of shares of Common Stock of the Company that the
undersigned would be entitled to vote, and with all the power the undersigned
would possess, if personally present, as follows:
1. ELECTION OF DIRECTORS
/ / FOR all nominees listed / /WITHHOLD authority
below (except as marked to to vote for all nominees
the contrary). listed below.
(TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
CLASS 2 NOMINEES
----------------
LARRY C. BARENBAUM
DONALD D. BEELER
2. PROPOSAL TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK
RESERVED FOR ISSUANCE under the Company's 1987 Stock Incentive Plan from
510,000 to 710,000 shares.
/ /FOR / /AGAINST / /ABSTAIN
3. PROPOSAL TO RATIFY THE APPOINTMENT OF PRICE WATERHOUSE LLP
as the Company's independent auditor for the Company's current fiscal year.
/ /FOR / /AGAINST / /ABSTAIN
4. In their discretion, the Proxy Agents are authorized to vote
on such other business as may properly come before the meeting or any
adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED AND RETURNED TO THE COMPANY WILL
BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
<PAGE>
UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1,2 AND 3.
PLEASE DATE AND SIGN the enclosed proxy exactly as the name(s)
appears herein and return promptly in the accompanying envelope. If the
shares are held by joint tenants or as community property, both shareholders
should sign.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY.
Receipt of Notice of Annual Meeting of Shareholders and Proxy
Statement dated November 4, 1996 is hereby acknowledged by the undersigned.
Dated: _________, 1996
________________________________ _______________________________
Signature Signature
________________________________ _______________________________
Name, typed or printed Name, typed or printed
__________________________ ___________________________
Tax identification or Tax identification or
social security number social security number
-2-
<PAGE>
PROXY
BRAUN'S FASHIONS CORPORATION
ANNUAL MEETING OF SHAREHOLDERS - DECEMBER 11, 1996
The undersigned hereby appoints Nicholas H. Cook and Herbert D. Froemming,
and each of them, with full power of substitution as proxies and agents (the
"Proxy Agents") in the name of the undersigned, to attend the Annual Meeting of
Shareholders of Braun's Fashions Corporation to be held at 2800 LaSalle Plaza,
800 LaSalle Avenue, Minneapolis, Minnesota on Wednesday, December 11, 1996 at
3:30 p.m. Central Time, or any adjournment thereof, and to vote the number of
shares of Common Stock of the Company that the undersigned would be entitled to
vote, and with all the power the undersigned would possess, if personally
present, as follows.
<TABLE>
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS / / FOR all nominees listed below / / WITHHOLD authority
(EXCEPT AS MARKED TO THE TO VOTE FOR ALL NOMINEES LISTED
CONTRARY). BELOW.
</TABLE>
(TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH
THE NOMINEE'S NAME IN THE LIST BELOW.)
CLASS 2 NOMINEES
LARRY C. BARENBAUM
DONALD D. BEELER
<TABLE>
<S> <C> <C> <C>
2. PROPOSAL TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK RESERVED FOR ISSUANCE under the Company's
1987 Stock Incentive Plan from 510,000 to 710,000 shares.
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
<TABLE>
<S> <C> <C> <C>
3. PROPOSAL TO RATIFY THE APPOINTMENT OF PRICE WATERHOUSE LLP as the Company's independent auditor for
the Company's current fiscal year.
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
<TABLE>
<S> <C> <C> <C>
4. In their discretion, the Proxy Agents are authorized to vote on such other business as may properly
come before the meeting or any adjournment thereof.
</TABLE>
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED AND RETURNED TO THE COMPANY WILL BE VOTED
IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION
IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3.
PLEASE DATE AND SIGN the enclosed proxy exactly as the name(s) appears
herein and return promptly in the accompanying envelope. If the shares are held
by joint tenants or as community property, both shareholders should sign.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY.
Receipt of Notice of Annual Meeting of Shareholders and Proxy Statement
dated November 4, 1996 is hereby acknowledged by the undersigned.
Dated _______________________, 1996
<TABLE>
<S> <C>
- ------------------------------------------------- -------------------------------------------------
Signature Signature
- ------------------------------------------------- -------------------------------------------------
Name, typed or printed Name, typed or printed
- ------------------------------------------------- -------------------------------------------------
Tax identification or Tax identification or
social security number social security number
</TABLE>
