SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
GROW BIZ INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions 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>
[LOGO] GROW BIZ
INTERNATIONAL
--------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 3, 2000
---------------------------------
TO THE SHAREHOLDERS OF GROW BIZ INTERNATIONAL, INC.
Notice is hereby given to the holders of the shares of Common Stock of
Grow Biz International, Inc. that the Annual Meeting of Shareholders of the
Company will be held at the Company's corporate offices, 4200 Dahlberg Drive,
Minneapolis, Minnesota on Wednesday, May 3, 2000 at 4:00 p.m. Central Daylight
Time, to consider and act upon the following matters:
1. To set the number of members of the Board of Directors at five.
2. To elect five directors to serve for a term of one year.
3. To ratify the appointment of Arthur Andersen LLP as independent
auditors for the current fiscal year.
4. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Shareholders of record at the close of business on March 13, 2000 will
be entitled to vote at the meeting and adjournments of the meeting.
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. EVEN IF YOU DO NOT
PLAN TO ATTEND THE MEETING, WE URGE YOU TO SIGN, DATE AND RETURN THE PROXY AT
ONCE IN THE ENCLOSED ENVELOPE.
By the Order of the Board of Directors
/s/ David J. Osdoba, Jr.
David J. Osdoba, Jr.
Vice President of Finance and Chief Financial Officer
Dated April 10, 2000
<PAGE>
GROW BIZ INTERNATIONAL, INC.
4200 DAHLBERG DRIVE
MINNEAPOLIS, MINNESOTA 55422-4837
ANNUAL MEETING OF SHAREHOLDERS
MAY 3, 2000
PROXY STATEMENT
GENERAL
The Annual Meeting of Shareholders of Grow Biz International, Inc.
("Company") will be held on Wednesday, May 3, 2000, at 4:00 p.m., Central
Daylight Time, at the Company's corporate offices, 4200 Dahlberg Drive,
Minneapolis, Minnesota, for the purposes set forth in the Notice of Annual
Meeting of Shareholders.
The enclosed proxy is solicited by the Board of Directors of the
Company. Such solicitation is being made by mail and may also be made by
directors, officers and regular employees of the Company personally or by
telephone. Any proxy given pursuant to such solicitation may be revoked by the
shareholder at any time prior to the voting thereof by so notifying the Company
in writing at the above address, attention: Corporate Secretary, or by appearing
in person at the meeting. Shares represented by proxies will be voted as
specified in such proxies, and if no choice is specified, will be voted in favor
of (1) setting the number of members of the Board of Directors at five, (2) the
Board of Directors' nominees named in this proxy statement and (3) the
appointment of Arthur Andersen LLP as independent auditors for the current
fiscal year.
Common stock, no par value per share ("Common Stock"), of which there
were 5,381,119 shares outstanding on the record date, constitutes the only class
of outstanding voting securities issued by the Company. Each shareholder will be
entitled to cast one vote in person or by proxy for each share of Common Stock
held by the shareholder. Only shareholders of record at the close of business on
March 13, 2000 will be entitled to vote at the meeting.
The affirmative vote of the majority of shares present in person, or
represented by proxy, at this Annual Meeting of Shareholders is required to set
the number of directors, elect each director and to approve Arthur Andersen LLP
as independent auditors for the current fiscal year. A quorum is achieved when
51% of the outstanding shares are present in person or by proxy. Shares voted as
abstentions on any matter (or a "withhold authority" vote as to directors) will
be counted as present and entitled to vote for purposes of determining a quorum
and for purposes of calculating the vote with respect to such matter, but will
not be deemed to have been voted in favor of such matter. If a broker submits a
"non-vote" proxy, indicating that the broker does not have discretionary
authority to vote certain shares on a particular matter, those shares will be
counted as present for purposes of determining a quorum, but will not be
considered present and entitled to vote for purposes of calculating the vote
with respect to such matter.
All of the expenses involved in preparing, assembling and mailing this
proxy statement and the material enclosed herewith will be paid by the Company.
The Company may reimburse banks, brokerage firms and other custodians, nominees
and fiduciaries for reasonable expenses incurred by them in sending proxy
material to beneficial owners of stock. This proxy statement and accompanying
form of proxy are first being mailed to shareholders on or about April 10, 2000.
<PAGE>
ELECTION OF DIRECTORS
(Proposals #1 and #2)
At the meeting, the Board of Directors of the Company is to be elected
to hold office until the 2001 Annual Meeting or until successors are elected and
have qualified. The Bylaws of the Company provide that the number of directors
of the Company shall be fixed by the shareholders, subject to increase by the
Board of Directors. Currently, the authorized size of the Board of Directors is
six. The Board recommends that the shareholders set the number of directors at
five and elect the nominees named below.
Shares represented by executed proxies will be voted, if authority to
do so is not withheld, for the election of the nominees named below, unless one
or more of such nominees should become unavailable for election, in which event
such share shall be voted for the election of such substitute nominees as the
Board of Directors may propose. Each person nominated has agreed to serve if
elected, and the Company knows of no reason why any of the listed nominees would
be unavailable to serve.
INFORMATION CONCERNING NOMINEES:
PRINCIPAL OCCUPATION AND BUSINESS
NAME AND AGE EXPERIENCE FOR PAST FIVE YEARS
------------ ------------------------------
John L. Morgan Mr. Morgan was elected Chairman of the Board and
Age: 58 Chief Executive Officer of the Company in March
2000. He was the founder of Winthrop Resources, a
leasing and finance company, and served as its
President from March 1982 through March 1999. Since
March 1999, Mr. Morgan has served as a private
investor and general partner in Rush River Group,
LLC, an investment company. He will continue in that
capacity.
Kirk A. MacKenzie Mr. MacKenzie was a founder and Executive Vice
Age: 61 President of Winthrop Resources, a leasing and
finance company, from 1982 through March 1999. Since
1999, Mr. MacKenzie has served as a private investor
and general partner in Rush River Group, LLC, an
investment company.
Paul C. Reyelts Mr. Reyelts currently serves as the Senior Vice
Age: 53 President of Finance and Chief Financial Officer of
the Valspar Corporation, a manufacturer of various
coating products. He has held this position since
April 1982.
William D. Dunlap, Jr. Mr. Dunlap has served as Chairman of Campbell Mithun
Age: 61 Esty, an advertising company, since 1996. He also
served as its Chief Executive Officer from 1982
through 1995.
Mark L. Wilson Mr. Wilson currently serves as President of Weisman
Age: 51 Enterprises, Inc., a vending products company. Prior
to his appointment to this position in 1998, Mr.
Wilson was a practicing corporate and mergers and
acquisitions attorney from 1974 to 1999, most
recently as the shareholder and officer of the
Minneapolis law firm The Wilson Group Limited.
2
<PAGE>
INFORMATION CONCERNING NON-NOMINEE EXECUTIVE OFFICERS:
Ted R. Manley Mr. Manley has served as President and Chief
Age: 50 Operating Officer of the Company since July 1999.
From September 1997 until July 1999 he served as
Executive Vice President of Operations. He served as
President of Once Upon A Child(R) from January 1997
until January 1999 and General Manager from July
1994 to January 1997. Mr. Manley was Senior Vice
President of Braun's Fashions Corporation, a women's
retail clothing store chain, from November 1989 to
June 1994.
David J. Osdoba, Jr. Mr. Osdoba has served as Vice President of Finance
Age: 44 and Chief Financial Officer of the Company since
August 1996. From August 1993 through August 1996
Mr. Osdoba served as Corporate Controller of the
Company. Mr. Osdoba was an independent financial and
business consultant from January 1991 through July
1993. He was Chief Financial Officer for Harold
Corporation, a Minneapolis based women's specialty
retailer, from September 1984 to December 1990.
Charles V. Kanan Mr. Kanan has served as President of Play It Again
Age: 48 Sports(R)since January 1994. From December 1990 to
December 1991 Mr. Kanan served as Vice President of
Marketing and from January 1992 to December 1993 he
served as Executive Vice President, of Dahlberg,
Inc.
Taylor Bond Mr. Bond has served as President of Computer
Age: 38 Renaissance(R)since July 1999. He was President and
a director of Syzygy Corporation, an Ann Arbor,
Michigan-based company that owned and operated a
Computer Renaissance(R)franchise from October 1993
to September 1999. From February 1987 through May
1994 Mr. Bond worked for Dominos Pizza, Inc., most
recently as National Director of Market Research.
MEETING OF THE BOARD OF DIRECTORS AND CERTAIN COMMITTEES
The Board of Directors of the Company has standing Executive, Audit and
Compensation Committees which have a current membership as indicated in the
foregoing section. The Board of Directors has no standing Nominating Committee.
The Executive Committee may exercise all of the powers and authority of
the Board of Directors, except as otherwise provided under the Minnesota
Business Corporation Act. The Executive Committee was formed in December 1993
and held no meetings during fiscal 1999. During 1999, the Executive Committee
consisted of K. Jeffrey Dahlberg, Dennis J. Doyle and Bruce C. Sanborn.
The Audit Committee makes recommendations as to the selection of
auditors and their compensation and reviews with the auditors the scope of the
annual audit, matters of internal control and procedure, the audit results and
reports and other general matters relating to the Company's accounts, records,
controls and financial reporting. The Audit Committee was formed in July 1993
and held one meeting during fiscal 1999. During 1999, the Audit Committee
consisted of Robert C. Pohlad and Randel S. Carlock. Effective May 3, 2000, the
proposed Audit Committee will consist of Paul C. Reyelts, William D. Dunlap, Jr.
and Mark A. Wilson.
3
<PAGE>
The Compensation Committee reviews and recommends to the Board of
Directors the compensation guidelines for executive officers, other key
employees and nonemployee directors and the composition and levels of
participation in incentive compensation plans. The Compensation Committee
administers the Company's 1992 Stock Option Plan including determining the
participants, the number of shares subject to option and the terms and
conditions of exercise. During fiscal 1999, the Compensation Committee held two
meetings. During 1999, the Compensation Committee consisted of Bruce C. Sanborn
and Dennis J. Doyle.
During fiscal 1999, the Board of Directors of the Company met eight
times. All directors attended at least 85% of the meetings of the Board of
Directors and committees of the Board of Directors on which they served.
DIRECTOR COMPENSATION
Each nonemployee director of the Company receives $500 for each board
and committee meeting attended. Effective August 23, 1993, Dennis J. Doyle and
Bruce C. Sanborn, the only nonemployee directors at the time, were each granted
an option to purchase 25,000 common shares at an exercise price of $10.00 per
share. Effective September 24, 1993, the Board of Directors adopted the Stock
Option Plan for Nonemployee Directors ("Directors Plan") which provides for an
automatic grant of an option to purchase 25,000 common shares upon the initial
election as a director. Pursuant to this Plan, Randel S. Carlock and Robert C.
Pohlad were each granted an option to purchase 25,000 common shares at an
exercise price of $15.00 per share. Effective November 21, 1995, the options
granted to Messrs. Carlock and Pohlad were canceled and replacement options to
purchase 25,000 common shares each at $10.00 per share, which was above the
market price on the effective date, were granted separate from the Directors
Plan. All options granted to nonemployee directors expired in 1999.
Each of the nonemployee director nominees will be granted an option to
purchase 25,000 shares of the Company's common stock under the Directors Plan,
effective as of May 3, 2000. These options vest 20% per year and expire at the
end of six years.
4
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding
compensation earned or awarded during each of the last three fiscal years to the
Company's Chief Executive Officer and the other four most highly compensated
executive officers serving as executive officers at the end of fiscal 1999 (the
"Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION ($)
--------------------------------------
LONG-TERM
COMPENSATION
FISCAL OTHER ANNUAL OPTION ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS (#) COMPENSATION
--------------------------- ---- ------ ----- ------------ --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
K. Jeffrey Dahlberg(3) 1999 258,300 - - - 43,323(1)
Chairman of the Board and 1998 200,000 - - - 43,044
Chief Executive Officer 1997 240,000 - - - 46,283
Ronald G. Olson(3) 1999 241,700 - - - 44,154(1)
Vice Chairman 1998 300,000 - - - 42,333
1997 260,000 - - - 45,181
Ted R. Manley 1999 155,000 38,750 - 40,000 9,831(2)
President and Chief Operating 1998 147,000 - - - 6,993
Officer 1997 126,000 90,750 - 10,000 5,610
Charles V. Kanan 1999 142,000 26,625 - 20,000 7,713(2)
President Play It Again Sports 1998 137,500 43,313 - - 7,234
Division 1997 137,500 - - 5,000 6,239
David J. Osdoba, Jr. 1999 135,000 33,750 - 25,000 8,173(2)
Vice President of Finance and 1998 120,000 - - - 6,799
Chief Financial Officer 1997 100,000 40,000 - 10,000 5,497
</TABLE>
- --------------------------------
(1) Includes premiums paid in 1999 by the Company for term life insurance
coverage and the present value of the benefit to the executive of the
remainder of the premiums for split dollar life insurance coverage paid
by the Company on behalf of the named executive as follows: Mr.
Dahlberg - $34,253 and Mr. Olson - $33,031. Also includes 401(k)
Company matching contributions and profit sharing as follows: Mr.
Dahlberg - $9,070 and Mr. Olson - $11,123.
(2) Consists of 401(k) Company matching contributions and profit sharing.
(3) In March 2000, K. Jeffery Dahlberg and Ronald G. Olson resigned their
positions with the Company.
5
<PAGE>
OPTIONS GRANTED DURING FISCAL 1999
The following table provides information relating to options granted to
the Named Executive Officers during the Company's 1999 fiscal year:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
% OF TOTAL PRICE APPRECIATION
OPTIONS GRANTED FOR OPTION TERM
OPTIONS TO EMPLOYEES IN EXERCISE EXPIRATION ------------------------
NAME GRANTED(1) FISCAL YEAR (#/SH) PRICE ($)(2) DATE 5%($)(3) 10%($)(3)
- ---- ---------- ------------------ ------------ ---- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
K. Jeffrey Dahlberg - - - - - -
Ronald G. Olson - - - - - -
Ted R. Manley 40,000 26.7% 4.25 11/17/04 46,800 103,600
Charles V. Kanan 20,000 13.3% 4.25 11/17/04 23,400 51,800
David J. Osdoba, Jr. 25,000 16.7% 4.25 11/17/04 29,250 64,750
</TABLE>
- ----------------------------
(1) The number indicated is the number of common shares that can be
acquired upon exercise of the option. The Company has not granted any
stock appreciation rights. Each option is non-transferable, becomes
exercisable in four annual installments of 25% per year commencing on
the first anniversary of the date of grant, and provides for forfeiture
of any unvested portion upon termination of employment.
(2) Exercise prices are equal to the fair market value at the date of
grant.
(3) The assumed 5% and 10% annual rates of appreciation are hypothetical
rates selected by the Securities and Exchange Commission and are not
intended to, and do not, forecast or assume actual future stock prices.
AGGREGATED OPTION EXERCISES DURING FISCAL 1999 AND FISCAL YEAR-END OPTION VALUES
The following table provides information relating to options exercised
by the Named Executive Officers during fiscal 1999 and the number and value of
options held at fiscal year-end. The Company does not have any outstanding stock
appreciation rights.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
SHARES YEAR-END (#) FISCAL YEAR-END ($)(1)
ACQUIRED ON VALUE ------------ ----------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------ ------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
K. Jeffrey Dahlberg - - - -
Ronald G. Olson - - - -
Ted R. Manley - - 27,500 / 52,500 -
Charles V. Kanan - - 18,750 / 31,250 -
David J. Osdoba, Jr. - - 17,750 / 43,250 -
</TABLE>
- ----------------------------
(1) Options are "in-the-money" if the fair market value of the underlying
shares at fiscal year end is greater than the exercise price. The
amounts set forth represent the difference between the fair market
value of the common shares on December 25, 1999 and the option exercise
price multiplied by the number of shares subject to the option.
6
<PAGE>
COMPLIANCE WITH SECTION 16(a)
Section 16(a) of the 1934 Act requires the Company's directors,
executive officers and persons who own more than ten percent of the Common Stock
of the Company to file with the Securities and Exchange Commission
("Commission") initial reports of beneficial ownership and reports of changes in
beneficial ownership of common shares of the Company. Directors, officers and
greater than ten percent shareholders are required by the regulations of the
Commission to furnish the Company with copies of all Section 16(a) reports they
file. The Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 25, 1999, all Form
3, Form 4 and Form 5 filing requirements were met, except Form 4s were filed
late for K. Jeffrey Dahlberg for the months of February 1999 and May 1999 and a
Form 4 was filed late for Taylor Bond for the month of September 1999.
COMPENSATION COMMITTEE REPORT
COMPENSATION COMMITTEE CHARTER. The purpose of the Compensation
Committee of the Board of Directors is to oversee compensation of officers, key
employees and nonemployee directors of the Company. The Committee's policy is to
insure that compensation programs contribute directly to the success of the
Company including enhanced share value. The Compensation Committee is comprised
of two members of the Board of Directors, neither of who is an employee of the
Company.
EXECUTIVE COMPENSATION POLICIES AND PROGRAMS. The Company's executive
compensation programs are designed to attract and retain qualified executives
and to motivate them to maximize shareholder investment by achieving strategic
Company goals. There are three basic components to the Company's executive
compensation program: base pay, annual incentive bonus and long-term,
equity-based incentive compensation in the form of stock options. Each component
is established in light of individual and Company performance, comparable
compensation programs in the Minneapolis/Saint Paul metropolitan area, equity
among employees and cost effectiveness.
Base Pay. Base pay is designed to be competitive, although
conservative, as compared to salary levels for equivalent positions at
comparable companies in the Minneapolis/Saint Paul metropolitan area.
The executive's actual salary within this competitive framework depends
on the individual's performance, responsibilities, experience,
leadership and potential future contribution. The initial
recommendation, with respect to salary of all executive officers, was
made by the Chief Executive Officer and the Chairman of the Board.
Annual Incentive Bonus. In addition to base pay, each
executive is eligible to receive an annual cash bonus. For fiscal 1999,
the bonus for certain executives was tied directly to the earnings per
share of the Company. The bonus for the other executives was tied to
specific performance criteria which were weighted based on the
importance of such criteria to the specific job. The Committee believes
that it is not in the best interests of the Company to identify the
specific earnings measures. Executives were eligible for a bonus of up
to 100% of their base pay.
Long-Term, Equity-Based Incentive Compensation. The long-term,
equity-based compensation program is tied directly to shareholder
return. Under the current program, long-term incentive compensation
consists of stock options that generally do not fully vest until after
four years. Stock options are awarded with an exercise price equal to
the fair market value of the Company's common shares on the date of
grant. Accordingly, the executive is rewarded only if the shareholders
receive the benefit of appreciation in the price of the Common Stock.
7
<PAGE>
Because long-term options vest over time, the Company
periodically (generally once each year) grants new options to provide
continuing incentives for future performance. The size of the previous
grants and the number of options held are considered by the Stock
Option Committee, but are not entirely determinative of future grants.
Each executive's annual grants are based upon the individual's
performance, responsibilities, experience, leadership and potential
future contribution and any other factors deemed relevant by the
Committee.
Stock options are designed to align the interests of the
Company's executives with those of shareholders by encouraging
executives to enhance the value of the Company and, hence, the price of
the Common Stock and the shareholders' investment. In addition, through
deferred vesting, this component of the compensation system is designed
to create an incentive for the executive to remain with the Company.
ANNUAL REVIEWS. Each year the Compensation Committee reviews its
executive compensation polices and programs and determines what changes, if any,
are appropriate for the following year. In addition, the Committee reviews the
individual performance of the Chief Executive Officer and the Chairman of the
Board.
CHIEF EXECUTIVE OFFICER. The Chief Executive Officer's compensation is
established by the Compensation Committee based on a subjective consideration of
his performance and the extent to which the Company achieves its strategic and
economic goals established at the beginning of the year and his current level of
compensation in comparison with the level of compensation paid the chief
executive officers of comparable companies in the Minneapolis/Saint Paul
metropolitan area. The Chief Executive Officer is eligible for an annual
incentive bonus tied directly to the earnings of the Company. No bonus was paid
for fiscal 1999. The Compensation Committee also considers the Chief Executive
Officer's level of compensation as it relates to other executive officers of the
Company and to the Company's employees in general.
LIMITS ON DEDUCTIBLE COMPENSATION PAYABLE TO EXECUTIVE OFFICERS. The
Omnibus Reconciliation Act of 1993 added Section 162(m) to the Internal Revenue
Code of 1986, as amended (the "Code") limiting corporate deductions to
$1,000,000 for certain compensation paid the chief executive officer and each of
the four other most highly compensated executives of publicly held companies.
The Company does not believe it will pay "compensation" within the meaning of
Section 162(m) to such executive officers in excess of $1,000,000 in the
foreseeable future. Therefore, the Company does not have a policy at this time
regarding qualifying compensation paid to its executive officers for
deductibility under Section 162(m), but will formulate a policy if compensation
levels ever approach $1,000,000.
The foregoing report is submitted by Dennis J. Doyle and Bruce C.
Sanborn, the members of the Compensation Committee.
COMPENSATION COMMITTEE INTERLOCKS
The 1999 Compensation Committee of the Board of Directors consists of
two nonemployee directors, Dennis J. Doyle and Bruce C. Sanborn. Prior to
November 1999, Mr. Sanborn was the Chief Executive Officer of North Central Life
Insurance Company and K. Jeffrey Dahlberg, the Company's Chairman, served on the
Board of North Central Life Insurance Company.
8
<PAGE>
STOCK PERFORMANCE GRAPH
Shown below is a line graph comparing the yearly dollar change in the
cumulative total shareholder return on the Company's Common Stock as against the
cumulative total return of the NASDAQ Total Return Index and the NASDAQ Retail
Stock Index. The graph and table assume the investment of $100 on December 31,
1994 in the Company's Common Stock and in the NASDAQ Total Return Index and the
NASDAQ Retail Stock Index.
COMPARISON OF CUMULATIVE TOTAL RETURN SINCE
DECEMBER 31, 1994
<TABLE>
<CAPTION>
----------- ----------- ------------ ----------- ----------- ------------
12/94 12/95 12/96 12/97 12/98 12/99
----------- ----------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Grow Biz $100 $90.5882 $82.3529 $113.5341 $127.0588 $36.4706
- --------------------- ----------- ----------- ------------ ----------- ----------- ------------
NASDAQ (US) 100 141.3349 173.8922 213.0731 300.2478 542.4304
- --------------------- ----------- ----------- ------------ ----------- ----------- ------------
NASDAQ Retail 100 110.1445 131.3059 154.7396 187.5897 181.5008
- --------------------- ----------- ----------- ------------ ----------- ----------- ------------
</TABLE>
APPOINTMENT OF INDEPENDENT AUDITORS
(Proposal #3)
Based on the recommendation of the Audit Committee, the Board of
Directors has voted to retain Arthur Andersen LLP to serve as independent
auditors for the Company for fiscal year 2000 and is submitting its appointment
of such firm to the shareholders for ratification. Arthur Andersen LLP has
served as the Company's independent auditors since 1992. If the appointment is
not ratified, the Board of Directors will reconsider its selection.
Representatives from Arthur Andersen LLP will be present at the meeting, will
have the opportunity to make a statement if they desire and will be available to
respond to appropriate questions.
9
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
RATIFICATION OF THIS APPOINTMENT.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS,
DIRECTORS AND EXECUTIVE OFFICERS
SECURITY OWNERSHIP
The following table sets forth the number of shares of Common Stock
beneficially owned by (i) each person known by the Company to own 5% or more of
the outstanding shares of Common Stock, (ii) each Named Executive Officer, (iii)
each director of the Company, (iv) each director nominee and (v) all directors
and executive officers as a group. All persons named in the table have sole
voting and investment power with respect to all shares of Common Stock owned,
unless otherwise noted. The number of shares listed is as of March 24, 2000
unless otherwise noted.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
BENEFICIALLY OWNED OUTSTANDING SHARES
------------------ ------------------
<S> <C> <C>
K. Jeffrey Dahlberg 1,363,225(1) 25.3%
455 North Ferndale Drive
Wayzata, MN 55391
Ronald G. Olson 1,347,668(2) 25.0%
3400 Fox Street
Long Lake, MN 55356
John L. Morgan 566,600(5) 10.5%
4200 Dahlberg Drive
Minneapolis, MN 55422
Sheldon T. Fleck 680,800(3) 12.2%
1400 International Centre
900 Second Avenue South
Minneapolis, MN 55402
Kirk A. MacKenzie 210,000(6) 3.9%
Paul C. Reyelts 0 0.0%
William D. Dunlap, Jr. 0 0.0%
Mark L. Wilson 0 0.0%
Ted R. Manley 23,579(3) 0.4%
Charles V. Kanan 22,600(3) 0.4%
David J. Osdoba, Jr. 26,045(3) 0.5%
Dennis J. Doyle 15,000 0.3%
Bruce C. Sanborn 15,100(4) 0.3%
Robert C. Pohlad 0 0.0%
Randel S. Carlock 0 0.0%
All directors and executive officer as a group
(10 persons) 2,154,721(3) 38.2%
</TABLE>
10
<PAGE>
- ----------------------------
(1) Includes 279,250 shares held in trust for minor children.
(2) Includes 17,900 shares held by Mr. Olson's adult children and 111,600
shares held in trust for these children and 1,500 shares held by Mr.
Olson's wife. Mr. Olson disclaims beneficial ownership of these shares.
(3) Includes the following shares which may be acquired within 60 days
through the exercise of stock options or warrants: Mr. Manley - 22,500;
Mr. Osdoba - 23,000; Mr. Kanan - 20,000; Mr. Fleck - 200,000; and all
directors and executive officers as a group - 65,500.
(4) Includes 100 shares held by Mr. Sanborn's son. Mr. Sanborn disclaims
beneficial ownership of these shares.
(5) Includes 140,000 shares owned by Rush River LLC, in which Mr. Morgan is
a general partner, and 4,300 shares held by Mr. Morgan's wife.
(6) Includes 140,000 shares owned by Rush River LLC, in which Mr. MacKenzie
is a general partner.
CHANGE IN CONTROL
On March 22, 2000, John L. Morgan, Chief Executive Officer and a
director nominee, Kirk A. MacKenzie, a director nominee, and their associates
acquired 700,000 shares of Common Stock from K. Jeffrey Dahlberg, the Company's
former Chief Executive Officer, in a private transaction at a purchase price of
$7.00 per share. These shares were acquired for cash using personal funds of the
acquirers and represent 13.0% of the shares of Common Stock outstanding as of
March 24, 2000. In connection with this transaction, K. Jeffrey Dahlberg
resigned his position as Chairman and Chief Executive Officer. As a result of
the acquisition, Messrs. Morgan and McKenzie beneficially own approximately
10.5% and 3.9% of the Company's outstanding shares of Common Stock. Prior to the
acquisition, Mr. Dahlberg beneficially owned approximately 38.3% of the
Company's outstanding shares of Common Stock.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1999, two Play It Again Sports(R) franchises, two Once Upon A
Child(R) franchises and one Computer Renaissance(R) franchise, owned by
relatives of K. Jeffrey Dahlberg, paid $64,524 in royalties to the Company and
purchased $256,407 of merchandise through the Company's buying group.
In November 1999, the Company engaged Sheldon T. Fleck, a shareholder
of the Company, to act as a non-exclusive financial advisor to the Company.
Under the engagement agreement, Mr. Fleck provided services to the Company in
the areas of strategic planning and business development through February 29,
2000. On March 22, 2000, the Company issued a warrant to Mr. Fleck to purchase
200,000 shares of the Company's common stock, exercisable immediately for a
period of eight years at an exercise price of $6.00 per share. Mr. Fleck owns
approximately 12.2% of the outstanding shares of the Company's common stock as
of March 24, 2000.
The Company leases from PIAS Holdings, a general partnership owned by
K. Jeffrey Dahlberg and Ronald G. Olson, certain real property which houses a
Company-owned retail store located at 3505 Hennepin Avenue, Minneapolis,
Minnesota. Pursuant to this lease, the Company is obligated to make lease
payments of $5,500 per month through September 2000. During fiscal 1999, the
Company made payments of $66,000 under this lease.
11
<PAGE>
SHAREHOLDER PROPOSALS
Any stockholder proposal intended to be considered for inclusion in the
proxy statement for presentation at the 2001 Annual Meeting must be received by
the Company by December 12, 2000. The proposal must be in accordance with the
provisions of Rule 14a-8 promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934. Stockholders who intend to present a
proposal at the 2001 Annual Meeting without including such proposal in the
Company's proxy statement must provide the Company notice of such proposal no
later than February 25, 2001. If any matters properly come before our 2001
Annual Meeting, but we did not receive notice of it prior to February 25, 2001,
the persons named in our proxy card for that Annual Meeting will have the
discretion to vote the proxies on such matters in accordance with their best
judgment. The Company reserves the right to reject, rule out of order, or take
other appropriate action with respect to any proposal that does not comply with
these and other applicable requirements.
ANNUAL REPORTS
The Company's 1999 Annual Shareholder Report, which includes the
Company's Annual Report on Form 10-K filed with the Securities and Exchange
Commission, is being mailed with this proxy statement to shareholders entitled
to notice of the Annual Meeting.
OTHER MATTERS
The Board of Directors knows of no other matters to be presented at the
meeting. In the event any other business is presented at the meeting, the
persons named in the enclosed proxy will have authority to vote on that business
in accordance with their judgment.
By the Order of the Board of Directors
/s/ David J. Osdoba, Jr.
David J. Osdoba, Jr.
Vice President of Finance and Chief Financial Officer
12
<PAGE>
GROW BIZ INTERNATIONAL, INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 3, 2000
4:00 P.M.
GROW BIZ INTERNATIONAL, INC.
4200 DAHLBERG DRIVE
MINNEAPOLIS, MN 55422
[LOGO]
GROW BIZ 4200 DAHLBERG DRIVE
INTERNATIONAL MINNEAPOLIS, MN 55422 PROXY
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL MEETING
ON MAY 3, 2000.
The shares of stock you hold in your account or in a dividend reinvestment
account will be voted as you specify below.
IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED "FOR" ITEMS 1, 2, AND 3.
By signing the proxy, you revoke all prior proxies and appoint John L. Morgan
and David J. Osdoba, Jr., and each of them, with full power of substitution, to
vote your shares on the matters shown on the reverse side and any other matters
which may come before the Annual Meeting and all adjournments.
SEE REVERSE FOR VOTING INSTRUCTIONS.
<PAGE>
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
we've provided or return it to Grow Biz International, Inc., c/o Shareowner
Services(SM), P.O. Box 64873, St. Paul, MN 55164-0873.
[ARROW] PLEASE DETACH HERE [ARROW]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3.
I. Approving setting the number of members of the Board of Directors at five;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
II. Authority to vote for the election of John L. Morgan, William D. Dunlap,
Jr., Kirk A. MacKenzie, Paul C. Reyelts and Mark L. Wilson as directors of
the Company until the 2001 Annual Meeting. You may withhold authority to
vote for a nominee by lining through his name;
[ ] GRANT [ ] WITHHOLD
III. Ratifying the appointment of Arthur Andersen LLP as independent auditors
for the current fiscal year;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
IV. In their discretion, upon such other business as may properly come before
the meeting, all as set out in the Notice of Annual Meeting of Shareholders
and Proxy Statement dated April 10, 2000, receipt of which is hereby
acknowledged.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.
Address Change? Mark Box [ ] Indicate changes below:
Date ____________________________
_________________________________________
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Signature(s) in Box
Stockholder must sign exactly as the name
appears at left. When signed as a corporate
officer, executor, administrator, trustee,
guardian, etc., please give full title as
such. Both joint tenants must sign.
