<PAGE> 1
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:
<TABLE>
<S> <C>
/ / 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
ORCHARD SUPPLY HARDWARE STORES CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
ORCHARD SUPPLY HARDWARE STORES CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
---------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------
(5) Total fee paid:
---------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
---------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
ORCHARD SUPPLY HARDWARE STORES CORPORATION
6450 VIA DEL ORO
SAN JOSE, CALIFORNIA 95119
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 19, 1995
TO THE STOCKHOLDERS OF ORCHARD SUPPLY HARDWARE STORES CORPORATION
The 1995 Annual Meeting of Stockholders (the "1995 Annual Meeting") of
Orchard Supply Hardware Stores Corporation (the "Company") will be held at 2:00
p.m., Pacific Time, on Friday, May 19, 1995 at The Fairmont Hotel, 170 South
Market Street, San Jose, California 95113, for the following purposes:
1. To elect eight Directors of the Company to serve during the ensuing year
and until their successors are elected and qualified.
2. To ratify the appointment of Arthur Andersen LLP as the Company's
independent auditors for the fiscal year ending January 28, 1996.
3. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. Only the stockholders of record at the close
of business on April 6, 1995 will be entitled to notice of and to vote at the
1995 Annual Meeting or any adjournment or postponement thereof.
A copy of the Company's Annual Report to Stockholders for the fiscal year
ended January 29, 1995 is being mailed with this Notice but is not to be
considered part of the proxy soliciting material.
By Order of the Board of Directors
MICHAEL SEDA
Secretary
April 12, 1995
San Jose, California
YOU ARE URGED TO VOTE UPON THE MATTERS PRESENTED AND TO SIGN, DATE AND
PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED. IT IS IMPORTANT FOR
YOU TO BE REPRESENTED AT THE MEETING. PROXIES ARE REVOCABLE AT ANY TIME AND THE
EXECUTION OF YOUR PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ARE
PRESENT AT THE MEETING.
------------------------
REQUESTS FOR ADDITIONAL COPIES OF PROXY MATERIALS SHOULD BE ADDRESSED TO
MICHAEL SEDA, CORPORATE SECRETARY, AT THE OFFICES OF THE COMPANY, 6450 VIA DEL
ORO, SAN JOSE, CALIFORNIA 95119.
<PAGE> 3
ORCHARD SUPPLY HARDWARE STORES CORPORATION
6450 VIA DEL ORO
SAN JOSE, CALIFORNIA 95119
------------------------
PROXY STATEMENT
1995 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 19, 1995
------------------------
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") of Orchard Supply Hardware
Stores Corporation, a Delaware corporation (the "Company"), for use at the 1995
Annual Meeting of Stockholders (the "1995 Annual Meeting") to be held on Friday,
May 19, 1995 at 2:00 p.m., Pacific Time, at The Fairmont Hotel, 170 South Market
Street, San Jose, California 95113, and any adjournment or postponement thereof.
This Proxy Statement and the form of proxy to be utilized at the 1995 Annual
Meeting were mailed or delivered to the stockholders of the Company on or about
April 12, 1995.
MATTERS TO BE CONSIDERED
The 1995 Annual Meeting has been called to (1) elect eight Directors of the
Company to serve during the ensuing year and until their successors are elected
and qualified, (2) ratify the appointment of Arthur Andersen LLP as the
Company's independent auditors for the fiscal year ending January 28, 1996
("fiscal 1995") and (3) transact such other business as may properly come before
the meeting or any adjournment or postponement thereof.
RECORD DATE AND VOTING
The Board has fixed the close of business on April 6, 1995 as the record
date (the "Record Date") for the determination of stockholders entitled to vote
at the 1995 Annual Meeting and any adjournment or postponement thereof. As of
the Record Date, there were outstanding 6,983,400 shares of the Company's Common
Stock.
QUORUM AND VOTING REQUIREMENTS
The holders of record of a majority of the outstanding shares of Common
Stock will constitute a quorum for the transaction of business at the 1995
Annual Meeting. As to all matters, each stockholder is entitled to one vote for
each share of Common Stock held. Abstentions and broker non-votes are counted
for purposes of determining the presence or absence of a quorum for the
transaction of business. The Director nominees who receive the greatest number
of votes at the 1995 Annual Meeting will be elected to the Board of the Company.
Stockholders are not entitled to cumulate votes. Votes against a candidate and
votes withheld have no legal effect. In matters other than the election of
Directors, abstentions are counted as votes against in tabulations of the votes
cast on proposals presented to stockholders, whereas broker non-votes are not
counted for purposes of determining whether a proposal has been approved.
All proxies which are properly completed, signed and returned prior to the
1995 Annual Meeting will be voted. Any proxy given by a stockholder may be
revoked at any time before it is exercised, by filing with the Secretary of the
Company an instrument revoking it, by delivering a duly executed proxy bearing a
later date or by the stockholder attending the 1995 Annual Meeting and
expressing a desire to vote his or her shares in person.
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's capital stock as of February 28, 1995 by (i) each
person who is known by the Company to be the beneficial owner of more than 5% of
any class of the Company's capital stock, (ii) each Director, nominee and
certain executive officers of the Company, individually, and (iii) all Directors
and executive officers as a group:
<TABLE>
<CAPTION>
AMOUNT
BENEFICIALLY PERCENT
TITLE OF CLASS NAME OF BENEFICIAL OWNER(1) OWNED OF CLASS
- -------------------------- ---------------------------------------------- ------------ --------
<S> <C> <C> <C>
Common Stock Freeman Spogli & Co.(2)(3).................... 3,979,043 48.2%
RCM General Corporation(4).................... 560,000 8.0%
Maynard Jenkins(5)............................ 50,192 *
Stephen M. Hilberg(6)......................... 21,472 *
Bradford M. Freeman(2)(3)..................... -- --
Morton Godlas(6).............................. 1,500 *
J. Frederick Simmons(2)(3).................... -- --
Ronald P. Spogli(2)(3)........................ -- --
William E. Walsh(6)........................... 2,000 *
William M. Wardlaw(2)(3)...................... -- --
Matt L. Figel(7).............................. -- --
William A. Hall............................... -- --
Joseph A. DiRocco(6).......................... 8,552 *
Robert A. Lewis(6)............................ 34,722 *
Lee Nemechek(6)............................... 5,096 *
Brad R. Tukey................................. -- --
Directors and Executive Officers as a Group
(15 persons)(2)(3)(6)....................... 4,132,635 49.7%
6% Cumulative Freeman Spogli & Co.(3).......................
Convertible............. 800,000 100%
Preferred Stock
</TABLE>
- ---------------
* Less than 1%
(1) Except as otherwise indicated below, the persons named have sole voting
power and investment power with respect to all shares of capital stock shown
as beneficially owned by them, subject to community property laws where
applicable.
(2) 2,699,043 shares of Common Stock are owned by FS Equity Partners II, L.P.
("FSEP II"). As general partner of FSEP II, Freeman Spogli & Co. ("FS&Co.")
has the sole power to vote and dispose of such shares. Messrs. Freeman,
Simmons, Spogli and Wardlaw and John M. Roth are general partners of FS&Co.,
and as such may be deemed to be the beneficial owners of the shares of the
Company's capital stock indicated as beneficially owned by FS&Co. The
business address of FS&Co., its general partners and FSEP II is 11100 Santa
Monica Boulevard, Suite 1900, Los Angeles, California 90025.
(3) 772,135 shares and 27,865 shares of 6% Cumulative Convertible Preferred
Stock, $.01 par value per share ("Convertible Preferred Stock"), are owned
by FS Equity Partners III, L.P. ("FSEP III") and FS Equity Partners
International, L.P. ("FSEP International"), respectively, and are
convertible into 1,235,416 shares and 44,584 shares of Common Stock,
respectively. As general partner of FS Capital Partners, L.P. ("FS
Capital"), which is general partner of FSEP III, FS Holdings, Inc. ("FSHI")
has the sole power to vote and dispose of the shares owned by FSEP III. As
general partner of FS&Co. International, L.P. ("FS&Co. International"),
which is the general partner of FSEP International, FS International
Holdings Limited ("FS International Holdings") has the sole power to vote
and dispose of the shares owned by FSEP International. Messrs. Freeman,
Simmons, Spogli, Wardlaw and Roth and Charles P. Rullman are the sole
Directors, officers and shareholders of FSHI and FS International Holdings,
and as such may be deemed to be the beneficial owners of the shares of the
Company's capital
2
<PAGE> 5
stock owned by FSEP III and FSEP International. The business address of FSEP
III, FS Capital, FSHI and its sole Directors, officers and shareholders is
11100 Santa Monica Boulevard, Suite 1900, Los Angeles, California 90025 and
the business address of FSEP International, FS&Co. International and FS
International Holdings is c/o Paget-Brown & Company, Ltd., West Winds
Building, Third Floor, Grand Cayman, Cayman Islands, B.W.I.
(4) As reported in a Schedule 13G dated February 9, 1995 filed jointly with the
Securities and Exchange Commission (the "Commission") by RCM Capital
Management ("RCM Capital"), RCM Limited L.P. ("RCM Limited") and RCM General
Corporation ("RCM General"), each has claimed sole voting power with respect
to 485,000 shares of Common Stock and sole dispositive power with respect to
560,000 shares. As the general partner of RCM Limited, which is the general
partner of RCM Capital, RCM General may be deemed to be the beneficial owner
of such shares. RCM Capital is an investment advisor registered under
Section 203 of the Investment Advisors Act of 1940.
(5) 35,920 shares of Common Stock are held by Maynard L. Jenkins, Jr. and Susan
M. Jenkins, Co-Trustees under the Living Trust dated November 10, 1988. The
amount stated includes 4,272 shares of Common Stock covered by options which
are exercisable within 60 days following February 28, 1995.
(6) The amounts stated include 7,512, 1,000, 1,000, 6,762, 2,552, 2,702 and
45,814 shares of Common Stock covered by options which are exercisable
within 60 days following February 28, 1995 with respect to Messrs. Hilberg,
Godlas, Walsh, Lewis, DiRocco and Nemechek and all Directors and executive
officers as a group, respectively.
(7) Mr. Figel is an employee of an affiliate of FS&Co.
PROPOSAL 1 -- ELECTION OF DIRECTORS
Eight Directors are to be elected at the 1995 Annual Meeting to serve until
the next Annual Meeting of stockholders and until their respective successors
have been elected and qualified. In the absence of instructions to the contrary,
proxies covering shares of Common Stock will be voted in favor of the election
of the persons listed below. In the event that any nominee for election as
Director should become unavailable to serve, it is intended that votes will be
cast, pursuant to the enclosed proxy, for such substitute nominee as may be
nominated by the Company. Management has no present knowledge that any of the
persons named will be unavailable to serve.
No arrangement or understanding exists between any nominee and any other
person or persons pursuant to which any nominee was or is to be selected as a
Director or nominee. None of the nominees has any family relationship to any
other nominee or to any executive officer of the Company.
INFORMATION CONCERNING INCUMBENT DIRECTORS AND NOMINEES TO BOARD OF DIRECTORS.
Information is set forth below concerning the incumbent Directors, all of
whom are also nominees for election as Directors, except Messrs. Freeman and
Walsh, who are not standing for re-election, and the year in which each
incumbent Director was first elected as a Director of the Company. Information
is also set forth concerning Messrs. Figel and Hall, the nominees to fill the
positions being vacated by Messrs. Freeman and Walsh. Each nominee has furnished
the information as to his beneficial ownership of Common Stock and Convertible
Preferred Stock as of February 28, 1995 and, if not employed by the Company, the
nominee's principal occupation. Each nominee has consented to being named in
this Proxy Statement as a nominee for Director and has agreed to serve as a
Director if elected.
3
<PAGE> 6
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITION WITH THE COMPANY SINCE
- ---------------------- --- ------------------------------------------------ --------
<S> <C> <C> <C>
Maynard Jenkins 52 President, Chief Executive Officer and Director 1989
Stephen M. Hilberg 51 Vice President-Finance, Chief Financial Officer 1989
and Director
Morton Godlas*+ 72 Director 1993
J. Frederick Simmons* 40 Director 1989
Ronald P. Spogli*+ 47 Director 1989
William M. Wardlaw+ 48 Director 1989
Matt L. Figel 35 Nominee for Director --
William A. Hall 63 Nominee for Director --
</TABLE>
- ---------------
* Member of the Compensation Committee.
+ Member of the Audit Committee.
Mr. Jenkins has served as President of the Company and a Director since May
1989 and as Chief Executive Officer since 1986. Before joining the Company, Mr.
Jenkins served as the President and Chief Operating Officer of Pay 'n Save
Corp., a retail drug store chain.
Mr. Hilberg has served as Chief Financial Officer and Vice
President-Finance of the Company since 1981. From 1978 to 1981, Mr. Hilberg
served as the Corporate Controller of Franklin Stores, a retail chain of
discount department and ladies' apparel stores.
Mr. Godlas is a management consultant with more than 45 years of retail
experience. Since 1982, Mr. Godlas has been President and Chief Executive
Officer of M. Godlas, Inc., a retail consulting firm. From 1978 to 1982, Mr.
Godlas was Corporate Senior Vice President-General Merchandise at Lucky Stores,
Inc., a retail supermarket chain.
Mr. Simmons joined FS&Co., a private investment company, in 1986 and became
a general partner in January 1991. Mr. Simmons is also a member of the Board of
Directors of Buttrey Food and Drug Stores Company and EnviroSource, Inc.
Mr. Spogli is a founding partner of FS&Co., which was founded in 1983. Mr.
Spogli is the Chairman of the Board and a Director of EnviroSource, Inc. Mr.
Spogli also serves on the Board of Directors of Mac Frugal's Bargains -
Close-Outs Inc. and Buttrey Food and Drug Stores Company and on the Board of
Representatives of Brylane, L.P.
Mr. Wardlaw joined FS&Co. in March 1988 and became a general partner in
January 1991. Mr. Wardlaw is also a member of the Board of Directors of Buttrey
Food and Drug Stores Company.
Mr. Figel has been employed by FS&Co. (or its affiliates) since 1986. Mr.
Figel is also a member of the Board of Directors of Buttrey Food and Drug Stores
Company.
Mr. Hall founded Sight & Sound Distributing Company, a media and software
distribution company, in 1984 and has served as President and Chief Executive
Officer since that time.
4
<PAGE> 7
THE BOARD OF DIRECTORS
COMMITTEES
The standing committees of the Board are the Audit Committee (the "Audit
Committee") and the Compensation Committee (the "Compensation Committee"). The
Audit Committee, which presently consists of Messrs. Freeman, Godlas, Spogli and
Wardlaw, met once during the fiscal year ended January 29, 1995 ("fiscal 1994").
The Compensation Committee, which presently consists of Messrs. Freeman, Godlas,
Simmons and Spogli, met once during fiscal 1994.
The Audit Committee recommends to the Board the engagement or discharge of
the Company's independent auditors; reviews with the independent auditors the
scope, timing and plan for the annual audit, any non-audit services and the fees
for audit and other services; reviews outstanding accounting and auditing issues
with the independent auditors; and supervises or conducts such additional
projects as may be relevant to its duties. The Audit Committee is also
responsible for reviewing and making recommendations with respect to the
Company's financial condition, its financial controls and accounting practices
and procedures.
The Compensation Committee recommends to the Board compensation policies
and guidelines for the Company's executives and oversees the granting of
incentive compensation, if any, to such persons. The Compensation Committee also
administers the Company's bonus and stock option plans. See "Report of the
Compensation Committee of the Board of Directors."
MEETINGS AND REMUNERATION
During fiscal 1994, the Board held four meetings and took various actions
by written consent. Each incumbent Director attended at least 75% of the
aggregate of (i) the total number of meetings held by the Board during fiscal
1994 and (ii) the total number of meetings held by all committees of the Board
during that period within which he was a Director or member of such committee of
the Board.
Each Director is elected to hold office until the next annual meeting of
stockholders and until his respective successor is elected and qualified. Except
for non-employee Directors of the Company who are not affiliated with FS&Co.
("Outside Directors"), Directors do not receive compensation for service on the
Board or any committee of the Board. All Directors are reimbursed for their
out-of-pocket expenses in serving on the Board and any committee of the Board.
Outside Directors receive $2,500 for each regular Board meeting attended and
$1,500 for each special Board meeting attended. The Company has adopted a stock
option plan for Outside Directors. See "1993 Non-Employee Directors Stock Option
Plan."
1993 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
Non-employee Directors of the Company, excluding Directors who are
affiliated with FS&Co., are eligible to participate in the 1993 Non-Employee
Directors Stock Option Plan (the "Non-Employee Directors Plan"). Participants in
the Non-Employee Directors Plan may be granted options to purchase shares of the
Company's Common Stock at a purchase price determined by the Compensation
Committee. Options granted under the Non-Employee Directors Plan are not
intended to qualify for treatment as incentive stock options under Section 422
of the Internal Revenue Code of 1986, as amended (the "Code"). In no event shall
such purchase price be less than 85% of the fair market value of the underlying
shares at the time the option is granted, or less than 110% of the fair market
value in the case of any participant who owns capital stock possessing more than
10% of the total combined voting power or value of all classes of capital stock
of the Company or its subsidiaries. Up to 10,000 shares of the Company's Common
Stock may be issued under the Non-Employee Directors Plan upon the exercise of
options granted thereunder, which options vest and become exercisable in annual
installments of 20% per year over five years. As of February 28, 1995, options
covering 10,000 shares of Common Stock had been granted under the NonEmployee
Directors Plan, none of which had been exercised.
5
<PAGE> 8
EXECUTIVE OFFICERS, COMPENSATION AND OTHER INFORMATION
EXECUTIVE OFFICERS
Set forth in the table below are the names, ages and current offices held
by all executive officers of the Company.
<TABLE>
<CAPTION>
EXECUTIVE
OFFICER
NAME AGE POSITION WITH THE COMPANY SINCE
- ------------------- --- ---------------------------------------------------------------------
<S> <C> <C> <C>
Maynard Jenkins 52 President, Chief Executive Officer and Director 1986
Robert J. Wittman 50 Executive Vice President and Chief Operating Officer 1995
Stephen M. Hilberg 51 Vice President-Finance, Chief Financial Officer and Director 1981
William G. Collard 57 Vice President-Distribution 1986
Joseph A. DiRocco 45 Vice President-Marketing 1986
Robert A. Lewis 49 Vice President-Merchandising and General Merchandise Manager 1986
Carolyn J. McInnes 50 Vice President-Human Resources 1986
Lee Nemechek 61 Vice President-Stores 1990
</TABLE>
Executive officers of the Company are elected by and serve at the
discretion of the Board. Other than Mr. Jenkins, no arrangement exists between
any executive officer and any other person or persons pursuant to which any
executive officer was or is to be selected as an executive officer. See
"Employment Agreement." None of the executive officers has any family
relationship to any nominee for Director or to any other executive officer of
the Company. Set forth below is a brief description of the business experience
for the previous five years of all executive officers except Messrs. Jenkins and
Hilberg. See "Information Concerning Incumbent Directors and Nominees to Board
of Directors."
Mr. Wittman has served as Executive Vice President and Chief Operating
Officer of the Company since January 1995. Mr. Wittman served as Vice
President-Merchandising and Marketing for Aikenhead's Home Improvement
Warehouse, a retail home improvement warehouse chain, from 1991 to 1994 and as
Regional Director of Merchandising for Homequarters Warehouse, a retail home
improvement warehouse chain, from 1989 to 1991. Mr. Wittman has over 20 years of
experience in the retail industry, with particular emphasis in the home
improvement segment.
Mr. Collard has served as Vice President-Distribution of the Company since
1986. Mr. Collard joined the Company in 1979 and has over 30 years of
warehousing and distribution experience. Prior to joining the Company, Mr.
Collard served for seven years as the Operations Supervisor for Fleming Foods, a
wholesale grocery distribution company, and for nine years as the Warehouse
Foreman for Louis Stores, a retail grocery chain. Mr. Collard is currently
responsible for the Company's warehouse and distribution activities.
Mr. DiRocco has served as Vice President-Marketing of the Company since
1986. From 1983 to May 1986, Mr. DiRocco worked in the marketing and advertising
departments of the Company. Mr. DiRocco joined the Company in 1983 and has over
15 years of marketing experience in the retail industry.
Mr. Lewis has served as Vice President-Merchandising and General
Merchandise Manager of the Company since 1986. Mr. Lewis began his career at the
Company in 1961 and is responsible for all aspects of the Company's
merchandising and buying program.
Ms. McInnes has served as Vice President-Human Resources of the Company
since 1986. Ms. McInnes joined the Company in 1979 as Director of Training. She
is responsible for all of the Company's training, personnel, wage and benefits
related matters.
Mr. Nemechek joined the Company in March 1987 as a Regional Manager and was
promoted to Vice President-Stores in July 1990. Prior to joining the Company,
Mr. Nemechek had over 30 years of experience in grocery and general merchandise
retailing. Mr. Nemechek is responsible for all aspects of store operations.
6
<PAGE> 9
COMPENSATION
The following table sets forth information concerning the annual and
long-term compensation for services in all capacities to the Company paid or
accrued by the Company for each of the fiscal years in the three year period
ended January 29, 1995 to (i) the President and Chief Executive Officer, (ii)
each of the four other most highly compensated executive officers of the Company
and (iii) a former executive officer who would have been among the most highly
compensated executive officers had he not left the Company during fiscal 1994:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------------------
AWARDS
------------------------
ANNUAL COMPENSATION SECURITIES PAYOUTS
--------------------------------------- RESTRICTED UNDERLYING -------
OTHER ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARDS SARS PAYOUTS COMPENSATION
PRINCIPAL POSITIONS YEAR ($) ($)(1)(2)(3) ($) ($) (#)(4) ($) ($)(5)
- ------------------------- ---- ------- ------------ ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Maynard Jenkins.......... 1994 325,000 240,351 -- 0 -- 0 9,956
President and Chief 1993 318,000 330,701 -- 0 7,500 0 18,795
Executive Officer 1992 299,578 286,747 -- 0 12,045 0 23,597
Stephen M. Hilberg....... 1994 123,031 21,752 -- 0 -- 0 10,028
Vice President-Finance 1993 119,054 43,504 -- 0 4,500 0 13,353
and Chief Financial 1992 117,484 39,287 -- 0 -- 0 10,741
Officer
Robert A. Lewis.......... 1994 106,116 18,735 -- 0 -- 0 9,166
Vice President- 1993 102,319 37,470 -- 0 3,000 0 10,577
Merchandising and 1992 101,923 34,623 -- 0 -- 0 8,959
General Merchandise
Manager
Joseph A. DiRocco........ 1994 96,804 17,146 -- 0 -- 0 13,135
Vice President- 1993 93,692 34,292 -- 0 3,000 0 14,989
Marketing 1992 92,704 31,860 -- 0 -- 0 12,839
Lee Nemechek............. 1994 89,654 15,538 -- 0 -- 0 7,927
Vice President-Stores 1993 84,384 31,075 -- 0 4,000 0 10,259
1992 81,654 28,770 -- 0 -- 0 8,172
Brad R. Tukey(6)......... 1994 70,654 -- -- 0 -- 0 79,542
Formerly Executive Vice 1993 86,442 38,667 -- 0 5,500 0 3,567
President 1992 -- -- -- 0 -- 0 --
</TABLE>
- ---------------
(1) Amounts shown include compensation earned and received by executive officers
as well as amounts earned but deferred at the election of those officers.
(2) Represents payments made to executive officers pursuant to the Company's
Performance Bonus Plan (defined below) and bonuses paid to Maynard Jenkins
of $100,000 for each of fiscal 1992 and fiscal 1993 and $125,000 for fiscal
1994 pursuant to his employment agreement. See "Employment Agreement."
(3) The Company has instituted a bonus plan (the "Performance Bonus Plan")
covering senior management (the President and seven Vice Presidents) which
provides for annual bonus payments based upon the Company's performance
against annually established target levels. For fiscal 1993 and 1992, annual
bonus payments were based on the targets in effect for those years. For
fiscal 1994, although no bonus was payable under the annually established
targets, the Compensation Committee concluded that senior management merited
bonuses based on its performance in managing the significant expansion
undertaken during the year. See "Report of the Compensation Committee of the
Board of Directors."
(4) Represents options granted under the Company's 1993 Stock Option Plan (the
"1993 Plan") with the exception of options to purchase 12,045 shares of
Common Stock made outside any stock option plan to Maynard Jenkins on April
15, 1992 pursuant to a Nonqualified Stock Option Agreement. The options
granted under the 1993 Plan were granted at fair market value on the date of
the grant at an exercise price of $17.10 per share, were for a term of ten
years and vest in four equal annual installments commencing on November 19,
1993. The options granted to Maynard Jenkins under the Nonqualified Stock
Option Agreement were granted at (fair market value] as of the date of the
grant at an exercise price of $8.33 per share, expire May 15, 2002 and are
only exercisable upon the occurrence of certain mergers, consolidations,
business combinations, asset sales, tender offers, exchange offers or
liquidations involving the Company (an "Extraordinary Corporate Event").
7
<PAGE> 10
(5) For Mr. Jenkins, amount listed for fiscal 1994 includes: (i) $2,250 matching
contributions to the Company's 401(k) plan, (ii) $3,707 profit-sharing
payments, (iii) $3,000 supplemental income bonus, (iv) $621 automobile
allowance and (v) $378 in payments toward group life insurance plan. For Mr.
Hilberg, amount listed for fiscal 1994 includes: (i) $2,250 matching
contributions to the Company's 401(k) plan, (ii) $3,707 profit-sharing
payments, (iii) $3,000 supplemental income bonus, (iv) $693 automobile
allowance and (v) $378 in payments toward group life insurance plan. For Mr.
Lewis, amount listed for fiscal 1994 includes: (i) $2,195 matching
contributions to the Company's 401(k) plan, (ii) $3,593 profit-sharing
payments, (iii) $3,000 supplemental income bonus and (iv) $378 in payments
toward group life insurance plan. For Mr. DiRocco, amount listed for fiscal
1994 includes: (i) $2,008 matching contributions to the Company's 401(k)
plan, (ii) $3,208 profit-sharing payments, (iii) $3,000 supplemental income
bonus, (iv) $4,550 automobile allowance and (v) $368 in payments toward
group life insurance plan. For Mr. Nemechek, amount listed for fiscal 1994
includes: (i) $1,850 matching contributions to the Company's 401(k) plan,
(ii) $2,046 profit-sharing payments, (iii) $3,000 supplemental income bonus,
(iv) $690 automobile allowance and (v) $340 in payments toward group life
insurance plan. For Mr. Tukey, amount listed for fiscal 1994 includes: (i)
$3,000 supplemental income bonus, (ii) $2,538 automobile allowance, (iii)
$158 in payments toward group life insurance plan and (iv) $73,846 in
severance payments. Itemized disclosure of amounts of other compensation in
fiscal 1993 and fiscal 1992 is not required.
(6) Mr. Tukey resigned from the Company in May 1994.
EMPLOYMENT AGREEMENT
Mr. Jenkins is party to an employment agreement which provides for a base
annual salary of not less than $275,000 per year and bonuses and fringe benefits
determined from time to time by the Company. In April 1992, Mr. Jenkins'
employment agreement was amended to provide for an additional $100,000 bonus to
be paid to him annually and in September 1994 Mr. Jenkins' employment agreement
was further amended to raise the additional bonus to $125,000 to be paid to him
annually. Except in the event of termination of employment for cause, death or
disability, the current term of Mr. Jenkins' employment agreement will expire on
December 31, 1995. The employment agreement shall automatically renew for a two
year term on each expiration date until notice of termination is given by the
Company. Upon termination of employment for death or disability, Mr. Jenkins is
entitled to a severance payment equal to six months of his salary. Upon
termination of employment other than for cause, death or disability, Mr. Jenkins
is entitled to a severance payment consisting of two years' base salary, the
target bonus applicable to the earning year in progress at the date of
termination and the $125,000 bonus for the year in progress at the date of
termination.
STOCK OPTIONS
No options were granted by the Company during fiscal 1994.
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<PAGE> 11
The following table sets forth information concerning the aggregate number
of options exercised by each of the executive officers named in the "Summary
Compensation Table" during fiscal 1994 and outstanding options held by each such
officer as of January 29, 1995.
OPTION EXERCISES AND YEAR END VALUE TABLE
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
JANUARY 27, 1995(#)(1) JANUARY 27, 1995($)(2)
---------------------- ----------------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- --------------------------- --------------- ----------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
Maynard Jenkins............ -- -- 14,272 / 15,795 -- / --
Stephen M. Hilberg......... -- -- 7,512 / 2,250 -- / --
Robert A. Lewis............ -- -- 6,762 / 1,500 -- / --
Joseph A. DiRocco.......... -- -- 2,552 / 1,500 -- / --
Lee Nemechek............... -- -- 2,702 / 2,000 -- / --
Brad R. Tukey.............. -- -- -- / -- -- / --
</TABLE>
- ---------------
(1) Represents options granted under the 1993 Plan, under the Company's Amended
1989 Nonqualified Stock Option Plan (the "1989 Plan") and to Maynard Jenkins
pursuant to a Nonqualified Stock Option Agreement. See "Summary Compensation
Table."
(2) As of January 27, 1995 there were no options having positive "in-the-money"
values.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On February 25, 1994 the Company sold to FSEP III, an affiliate of FS&Co.,
800,000 shares of Convertible Preferred Stock with an aggregate liquidation
preference of $20.0 million, resulting in proceeds to the Company of $19.4
million (net of $150,000 of transaction costs). On March 16, 1994 FSEP III sold
27,865 shares of Convertible Preferred Stock to FSEP International. See
"Security Ownership of Certain Beneficial Owners and Management."
The Company, FSEP II, FSEP III and FSEP International have entered into a
Management Rights Agreement, effective as of January 1, 1995, pursuant to which
FSEP III can substantially participate in, or substantially influence the
conduct of, the management of the Company and its business.
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board is comprised of Messrs. Freeman,
Godlas, Simmons and Spogli. The Compensation Committee establishes the general
compensation policies of the Company, establishes the compensation plans and
specific compensation levels for executive officers and administers the 1989
Plan, the Non-Employee Directors Plan and the 1993 Plan.
The following is the Compensation Committee's report submitted to the Board
addressing the compensation of the Company's executive officers for fiscal 1994.
COMPENSATION POLICY
The Company's executive compensation policy is designed to establish an
appropriate relationship between executive pay and the Company's annual
performance, its long term growth objectives and its ability to attract and
retain qualified executive officers. The Compensation Committee attempts to
achieve these goals by integrating competitive annual base salaries with (a)
bonuses based on corporate performance and on the achievement of specified
performance objectives through the Performance Bonus Plan and (b) stock
9
<PAGE> 12
options through the 1989 Plan and the 1993 Plan. The Compensation Committee
believes that cash compensation in the form of salary and bonus provides company
executives with short term rewards for success in operations, and that long term
compensation through the award of stock options encourages growth in management
stock ownership which leads to expansion of management's stake in the long term
performance and success of the Company.
Base Salary. For fiscal 1994, the Compensation Committee approved the base
salaries of the executive officers based on (i) salaries paid to executive
officers with comparable responsibilities employed by companies with comparable
businesses, (ii) performance and profitability of the Company in fiscal 1993 and
(iii) individual performance reviews for fiscal 1993, which was the most
important factor. In its survey of comparable executive officer salaries, the
Compensation Committee relied on information regarding salaries paid to
executive officers in the Company's Peer Group Index (as defined below), where
such information was available, and to a lesser extent, salaries paid to
executive officers in the retail industry in general. The Compensation Committee
was able to obtain salary information for five of the seven companies in the
Peer Group Index. See "Company Performance." The Compensation Committee adjusted
the salary information it collected to take into account varying sales volume
and geographic regions of the companies involved. For fiscal 1994, executive
officers generally received raises in their annual base salary, with the largest
raise of $5,000 going to each of Messrs. Tukey and Nemechek.
Bonuses. Annual incentives under the Performance Bonus Plan for the
President and Chief Executive Officer and the other named executive officers are
intended to reflect the Company's belief that management's contribution to
stockholder returns (via increasing stock price) comes from maximizing earnings
and the quality of those earnings. Awards under the Performance Bonus Plan are
based largely on the attainment of annually established target levels of
specified operating results, and the target bonus is determined as a percentage
of the recipient's base salary. For fiscal 1993 and 1992, targets were based on
"EBDIT" (earnings before depreciation, amortization of deferred charges, LIFO
adjustment, interest and income taxes) and "Free Cash Flow" (EBDIT minus capital
expenditures and plus or minus the change in working capital). For fiscal 1994,
the Compensation Committee based the targets on the Company's operating income
(earnings before interest, income taxes and extraordinary items), reflecting the
Compensation Committee's belief that an earnings-based approach more
appropriately reflects contributions to stockholder value for a public company
than a cashflow-based approach. For fiscal 1994, participants in the Performance
Bonus Plan were assigned target bonus amounts ranging from 20% to 30% of the
base salaries paid to such persons. The President and Chief Executive Officer's
target reflects the maximum of these percentages. The varying percentages
reflect the Compensation Committee's belief that, as an executive officer's
duties and responsibilities in the Company increase, he or she will be
increasingly responsible for the performance of the Company. If performance
exceeds the target levels, senior management receives a percentage of the excess
amount and if performance does not meet the specified performance targets,
bonuses are reduced accordingly. For fiscal 1994, the operating income targets
established by the Compensation Committee at the beginning of the year were not
met. However, the Compensation Committee determined that in retrospect the
targets were unrealistic in light of greater than expected competition from the
large warehouse home center chains and certain elements related to the Company's
expansion into the Southern California market. In light of the performance by
senior management in connection with its successful implementation of the
largest expansion program in the Company's history, in which the Company's
number of stores was increased by approximately 33% and the Company expanded its
operations into Southern California for the first time, the Compensation
Committee determined that partial bonuses were merited. See "Summary
Compensation Table."
Stock Options. Options under the Company's 1993 Plan were granted to the
executive officers of the Company, including the President and Chief Executive
Officer, as well as 100 other employees of the Company, in November 1993. The
number of options that each executive officer or employee was granted was based
primarily on the executive's or employee's ability to influence the Company's
long term growth and profitability. The Compensation Committee believes that
option grants afford a desirable long term compensation method because they
closely ally the interests of management with stockholder value and that grants
of options are the best way to directly link the financial interests of
management with those of stockholders. The vesting provisions of options granted
under the 1993 Plan are designed to encourage longevity of employment
10
<PAGE> 13
with the Company. As the Compensation Committee shifted to an annual grant cycle
in March of each year, after the preparation of the Company's operating results
for the fiscal year, no options were granted in fiscal 1994.
COMPENSATION OF PRESIDENT AND CHIEF EXECUTIVE OFFICER
The Compensation Committee believes that Mr. Jenkins, the Company's
President and Chief Executive Officer, provides valuable services to the Company
and that his compensation should therefore be competitive with that paid to
executives at comparable companies. In addition, the Compensation Committee
believes that an important portion of his compensation should be based on
Company performance. In fiscal 1994, Mr. Jenkins received no increase in his
annual base salary but did receive a $25,000 increase in his guaranteed bonus.
See "Employment Agreement." The increase was determined to be appropriate by the
Compensation Committee based on (i) comparable chief executive compensation
within the Company's Peer Group Index, where such information was available, and
to a lesser extent, within the retail industry in general, each as adjusted for
varying sales volumes and geographic region, (ii) improvements in the Company's
performance and profitability in fiscal 1993 and (iii) a review of his
individual performance in fiscal 1993. See "Company Performance." However, the
baseline target bonus payable to Mr. Jenkins under the Performance Bonus Plan
was not raised as a percentage of his base salary for fiscal 1994. Although
operating income targets under the Performance Bonus Plan were not met in fiscal
1994, for his leadership in connection with the successful implementation of the
Company's expansion program Mr. Jenkins was paid a bonus of $115,351.
INTERNAL REVENUE CODE SECTION 162(M)
Under Section 162 of the Code, the amount of compensation paid to certain
executives that is deductible with respect to the Company's corporate taxes is
limited to $1,000,000 annually. It is the current policy of the Compensation
Committee to maximize, to the extent reasonably possible, the Company's ability
to obtain a corporate tax deduction for compensation paid to executive officers
of the Company to the extent consistent with the best interests of the Company
and its stockholders.
The foregoing report has been furnished by Messrs. Freeman, Godlas, Simmons
and Spogli.
11
<PAGE> 14
COMPANY PERFORMANCE
The following graph shows a comparison of cumulative total returns for the
Company, the Nasdaq Market Index and a Company-constructed Peer Group Index (as
defined below) for the period during which the Company's Common Stock has been
registered under Section 12 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). The Company-constructed Peer Group Index includes the
following companies: Eagle Hardware & Garden, Inc., Grossman's Inc., Hechinger
Company, Home Depot, Inc., Lowe's Companies, Payless Cashways, Inc., and Wolohan
Lumber Company. Primary Standard Industrial Classification ("SIC") code was not
a principal factor used in selecting the companies for the Peer Group Index. The
Company competes directly with the companies in its Peer Group Index in
substantially all product categories with the exception of lumber and building
materials. Because the other companies in the Peer Group Index sell lumber and
building materials, they are placed in a different primary SIC code even though
lumber and building materials comprise only approximately one-third of those
companies' businesses. Consequently, the Company believes that the companies
selected, although not from the Company's SIC code, operate businesses
comparable to the Company and provide the most accurate comparison to the
Company's performance. None of the other companies in the Company's primary SIC
code are substantial companies in the Company's market, with the exception of
Ernst Home Center, Inc., which operates a business comparable to the Company but
which has been excluded from the Peer Group Index because it has been publicly
traded for less than a full year. The Peer Group Index has been weighted for
market capitalization at each data point.
COMPARISON OF CUMULATIVE TOTAL RETURN*
<TABLE>
<CAPTION>
MEASUREMENT PERIOD ORCHARD SUPPY PEER GROUP NASDAQ MARKET
(FISCAL YEAR COVERED) HARDWARE INDEX INDEX
<S> <C> <C> <C>
MARCH 31, 1993 100.00 100.00 100.00
JANUARY 30, 1994 100.00 93.75 120.70
JANUARY 29, 1995 54.39 110.39 114.06
</TABLE>
ASSUMES $100 INVESTED ON MARCH 31, 1993.
*TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS.
12
<PAGE> 15
PROPOSAL 2 -- RATIFICATION OF THE APPOINTMENT OF
ARTHUR ANDERSEN LLP AS INDEPENDENT ACCOUNTANTS
The Audit Committee of the Board has selected Arthur Andersen LLP as
independent public accountants to audit the consolidated financial statements of
the Company and its consolidated subsidiaries for the year ending January 28,
1996. Arthur Andersen LLP has audited the Company's financial statements
annually since 1986. A member of that firm is expected to be present at the 1995
Annual Meeting, will have an opportunity to make a statement if so desired, and
will be available to respond to appropriate questions. If the stockholders do
not ratify the selection of Arthur Andersen LLP, if it should decline to act or
otherwise become incapable of acting, or if its employment is discontinued, the
Audit Committee will appoint independent public accountants for fiscal 1995.
Proxies solicited by the Board will be voted in favor of ratification unless
stockholders specify otherwise.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE
FOR RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE COMPANY'S
INDEPENDENT ACCOUNTANTS FOR THE FISCAL YEAR 1995.
COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act ("Section 16(a)") requires the Company's
Directors and certain of its officers, and persons who own more than 10% of a
registered class of the Company's equity securities (collectively, "Insiders"),
to file reports of ownership and changes in ownership with the Commission.
Insiders are required by Commission regulations 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
written representations from certain reporting persons that no Forms 5s were
required for those persons, the Company believes that its Insiders complied with
all applicable Section 16(a) filing requirements for fiscal 1994, with the
exception of Mr. Wittman, who filed a late Form 3 to report his becoming an
executive officer of the Company. Mr. Wittman owns no securities of the Company
and has had no other transactions to report.
OTHER BUSINESS
The Company is not aware of any other business to be presented at the 1995
Annual Meeting. All shares represented by Company proxies will be voted in favor
of the proposals of the Company described herein unless otherwise indicated on
the form of proxy. If any other matters properly come before the meeting,
Company proxy holders will vote thereon according to their best judgment.
SUBMISSION OF STOCKHOLDER PROPOSALS
Any stockholder who wishes to present a proposal for action at the 1996
Annual Meeting and who wishes to have it set forth in the corresponding proxy
statement and identified in the corresponding form of proxy prepared by
management must notify the Company no later than December 13, 1995 in such form
as required under the rules and regulations promulgated by the Commission.
13
<PAGE> 16
ANNUAL REPORTS
A COPY OF THE 1995 ANNUAL REPORT TO STOCKHOLDERS (WHICH INCLUDES THE
COMPANY'S ANNUAL REPORT ON FORM 10-K) IS BEING MAILED TO EACH STOCKHOLDER OF
RECORD TOGETHER WITH THIS PROXY STATEMENT. THE COMPANY HAS ALSO FILED WITH THE
COMMISSION ITS ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED JANUARY 29,
1995. THIS REPORT CONTAINS INFORMATION CONCERNING THE COMPANY AND ITS
OPERATIONS. A COPY OF THIS REPORT WILL BE FURNISHED TO STOCKHOLDERS WITHOUT
CHARGE UPON REQUEST IN WRITING TO KRIS MCMULLEN AT 6450 VIA DEL ORO, SAN JOSE,
CALIFORNIA 95119. SUCH REPORTS ARE NOT A PART OF THE COMPANY'S SOLICITING
MATERIAL.
PROXIES AND SOLICITATION
Proxies for the 1995 Annual Meeting are being solicited by mail directly
and through brokerage and banking institutions. The Company will pay all
expenses in connection with the solicitation of proxies. In addition to the use
of mails, proxies may be solicited by Directors, officers and regular employees
of the Company personally or by telephone. The Company may reimburse brokers and
other persons holding stock in their names, or in the names of nominees, for
their expenses in sending proxy materials to principals and obtaining their
proxies (plus paying fees of up to $5,000 to Chemical Bank for soliciting such
proxies from brokers and other persons holding stock in their names or in the
names of nominees).
All stockholders are urged to complete, sign and promptly return the
enclosed proxy card.
By Order of the Board of Directors
MICHAEL SEDA
Secretary
San Jose, California
April 12, 1995
14
<PAGE> 17
COMMON STOCK PROXY BOARD OF DIRECTORS
ORCHARD SUPPLY HARDWARE STORES CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE COMPANY.
The undersigned hereby appoints Maynard Jenkins or Stephen M. Hilberg, or either
of them, the true and lawful attorneys and proxies of the undersigned, with full
power of substitution to vote all shares of the Common Stock, $.01 par value per
share ("Common Stock"), of ORCHARD SUPPLY HARDWARE STORES CORPORATION, which the
undersigned is entitled to vote at the Annual Meeting of the Stockholders of
ORCHARD SUPPLY HARDWARE STORES CORPORATION, to be held at 2:00 P.M., Pacific
Time, on May 19, 1995 at The Fairmont Hotel, 170 South Market Street, San Jose,
California and any and all adjournments thereof, on the proposals set forth
below and any other matters properly brought before the Meeting.
SEE REVERSE
SIDE
<PAGE> 18
------ /X/ Please mark
COMMON your choices
like this
THE DIRECTORS RECOMMEND A VOTE FOR ALL NOMINEES LISTED IN PROPOSAL 1 AND
APPROVAL OF PROPOSAL 2.
1. ELECTION OF DIRECTORS FOR ALL NOMINEES WITHHOLD
LISTED BELOW (EXCEPT AUTHORITY
AS MARKED TO THE TO VOTE FOR
CONTRARY BELOW) ALL NOMINEES
/ / / /
(INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through the nominee's name below):
Matt L. Figel Morton Godlas William A. Hall
Stephen M. Hilberg Maynard Jenkins J. Frederick Simmons
Ronald P. Spogli William M. Wardlaw
2. Proposal to ratify the appointment of Arthur FOR AGAINST ABSTAIN
Andersen LLP as the Company's independent / / / / / /
auditors for the fiscal year ending
January 28, 1996.
3. Such other matters as may properly come before the meeting.
Unless a contrary direction is indicated,
this Proxy will be voted FOR all nominees
listed in Proposal 1 and FOR approval of
Proposal 2; if specific instructions are
indicated, this Proxy will be voted in
accordance therewith.
All Proxies to vote at said Meeting or
any adjournment heretofore given by the
undersigned are hereby revoked. Receipt of
Notice of Annual Meeting and Proxy Statement
dated April 12, 1995, is hereby
acknowledged.
Please mark, sign, date and return this
Proxy in the accompanying prepaid envelope.
Signature(s)_____________________________________ Date__________________, 1995
Please sign exactly as your name(s) appears hereon. When signing as attorney,
executor, administrator, trustee, guardian, or corporate officer, please include
full title.
