SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
TREND LINES, INC
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(Name of Registrant as Specified In Its Charter)
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(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), 14a-6(i)(1), 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:
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2) Aggregate number of securities to which transaction applies:
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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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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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:
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4) Date Filed:
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<PAGE>
Notice of Annual Meeting of Stockholders of
Trend-Lines, Inc.
To Be Held on July 17, 1996
The Annual Meeting of Stockholders of Trend-Lines, Inc. will be held on
July 17, 1996 at 11:00 a.m., local time, at the offices of the Company, 135
American Legion Highway, Revere, Massachusetts 02151 for the following purposes:
1. To elect seven (7) directors to serve for the ensuing year and until
their successors are duly elected.
2. To consider and act upon a proposal to amend the Restated Articles of
Organization of the Company to eliminate certain supermajority voting
provisions, and thereby permit approval of certain actions by holders of a
majority of the outstanding voting power.
3. To consider and act upon a proposal to amend the terms of the Class B
Common Stock to provide that shares of Class B Common Stock surrendered upon
conversion into Class A Common Stock are restored to the status of authorized
but unissued stock, available for reissuance in connection with certain
dividends and other distributions of capital stock.
4 To consider and act upon any matters incidental to the foregoing purposes
and any other matters which may properly come before the Meeting or any
adjourned session thereof.
The Board of Directors has fixed June 5, 1996 as the record date for
determining the stockholders entitled to notice of, and to vote at, the Meeting.
You are cordially invited to attend the Meeting.
By Order of the Board Of
Directors
/s/ Howard L. Levin, Clerk
Howard L. Levin, Clerk
Boston, Massachusetts
June 21, 1996
YOUR VOTE IS IMPORTANT
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TO ASSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE URGED TO VOTE, SIGN, DATE
AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE POSTAGE-PAID
ENVELOPE ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE GIVEN YOUR PROXY, THE PROXY
MAY BE REVOKED AT ANY TIME PRIOR TO EXERCISE BY FILING WITH THE CLERK OF THE
COMPANY A WRITTEN REVOCATION, BY EXECUTING A PROXY WITH A LATER DATE, OR BY
ATTENDING AND VOTING AT THE MEETING.
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<PAGE>
TREND LINES, INC.
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
To Be Held On July 17, 1996
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Trend-Lines, Inc., a Massachusetts
Corporation (the "Company"), with its principal executive offices at 135
American Legion Highway, Revere, Massachusetts 02151 for use at the Annual
Meeting of Stockholders to be held on July 17, 1996, and at any adjournment or
adjournments thereof (the "Meeting"). The enclosed proxy relating to the Meeting
is solicited on behalf of the Board of Directors of the Company and the cost of
such solicitation will be borne by the Company. It is expected that this proxy
statement and the accompanying proxy will be mailed to stockholders on or about
June 21, 1996. Certain of the officers and regular employees of the Company may
solicit proxies by correspondence, telephone or in person, without extra
compensation. The Company may also pay to banks, brokers, nominees and certain
other fiduciaries their reasonable expenses incurred in forwarding proxy
material to the beneficial owners of securities held by them.
Only stockholders of record at the close of business on June 5, 1996 will
be entitled to receive notice of, and to vote at, the Meeting. As of that date,
there were outstanding and entitled to vote 6,252,965 shares of Class A Common
Stock, $.01 par value (the "Class A Common Stock"), and 3,193,943 shares of
Class B Common Stock, $.01 par value (the "Class B Common Stock"), of the
Company.
The holders of Class A Common Stock are entitled to one vote per share, and
the holders of Class B Common Stock are entitled to ten votes per share, with
the holders of both classes of Common Stock voting together as a single class.
The directors of the Company will be elected by a plurality of the votes cast.
Approval of the amendments to the Restated Articles of Organization described in
Proposals No. 2 and 3 require the affirmative vote of two-thirds of the combined
voting power of the outstanding shares of Class A Common Stock and Class B
Common Stock, voting together as a single class.
The enclosed proxy, if executed and returned, will be voted as directed on
the proxy or, in the absence of such direction, for the election of the nominees
as directors and for Proposals No. 2 and 3 below. If any other matters shall
properly come before the Meeting, the enclosed proxy will be voted by the
proxies in accordance with their best judgment. The proxy may be revoked at any
time prior to exercise by filing with the Clerk of the Company a written
revocation, by executing a proxy with a later date, or by attending and voting
at the Meeting.
The Company's Annual Report to Stockholders for the fiscal year ended March
2, 1996, including financial statements audited by Arthur Andersen LLP, is being
mailed to each of the stockholders simultaneously with this proxy statement.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
At the Meeting, seven directors are to be elected to serve until the 1997
Annual Meeting of Stockholders and until their respective successors have been
duly elected and qualified. The persons listed below in the following table have
been nominated by the Nominating Committee of the Board of Directors for
election as directors.
All nominees are currently directors of the Company. It is the intention of
the persons named as proxies to vote for the election of the nominees. In the
unanticipated event that any
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<PAGE>
such nominee should be unable to serve, the persons named as proxies will vote
the proxy for such substitutes, if any, as the Nominating Committee may
designate. The nominees have not been nominated pursuant to any arrangement or
understanding with any person.
The following table sets forth certain information with respect to the
nominees.
<TABLE>
<CAPTION>
Director
Name Age Position Since
<S> <C> <C> <C>
Stanley D. Black(1)(3)....... 59 Chairman of the Board, 1981
President and Chief
Executive Officer
Karl P. Sniady............... 43 Executive Vice President, 1995
Finance and Operations,
Chief Financial Officer
and Director
Ronald L. Franklin(2)(3)..... 50 Vice President, Finance, 1994
Treasurer and Director
John A. McGregor............. 46 Vice President, Golf 1994
Day Merchandising
and Director
Norman W. Zagorsky........... 58 Vice President, Trend- 1994
Lines Merchandising
and Director
Merrill Zenner(1)(2)......... 59 Director 1994
Richard A. Mandell(2)........ 56 Director 1995
</TABLE>
- -------------------
(1) Member of the Company's Compensation and Stock Option Committee.
(2) Member of the Company's Audit Committee.
(3) Member of the Company's Nominating Committee.
Stanley D. Black, founder of the Company, has served as President, Chief
Executive Officer and Chairman of the Board of Directors of the Company since
its organization in 1981.
Karl P. Sniady, a Director of the Company since October, 1995, has been
Executive Vice President of the Company since June 1995. From 1990 to 1995, Mr.
Sniady was Chief Financial Officer of Auto Source, Inc., an automotive
after-market retailer and subsidiary of Canadian Tire. From 1985 to 1990, Mr.
Sniady was Chief Financial Officer of Makro, Inc., a supercenter chain of stores
which was acquired by Kmart.
Ronald L. Franklin, a Director of the Company since May 1994, has been Vice
President, Finance since March 1987. From February 1985 until March 1987, Mr.
Franklin served as Controller of the Company, and he has also served as
Treasurer since April 1994.
-3-
<PAGE>
Norman W. Zagorsky, a Director of the Company since May 1994, has been Vice
President, Trend-Lines Merchandising since March 1987. From January 1984 until
February 1987, Mr. Zagorsky served as General Manager of the Company.
John A. McGregor, a Director of the Company since May 1994, has been Vice
President, Golf Day Merchandising since August 1993. From April 1987 until July
1993, Mr. McGregor served as Vice President, Development of the Company.
Merrill Zenner has served as a Director of the Company since June 1994. For
more than the past five years, Mr. Zenner has been Chairman and Chief Executive
Officer of The Reliable Corporation, a catalog and retail store distributor of
business supplies, which sold its catalog operations in 1994. The remaining
business, Office 1 Superstores, is a retail chain located in the Midwest.
Richard A. Mandell, a Director of the Company since October 1995, has been
Vice President -- Private Investments of Clariden Asset Management (NY) Inc., a
subsidiary of Clariden Bank, a private Swiss bank, since January 1996. From 1982
until June 1995, Mr. Mandell served as a Managing Director of Prudential
Securities Incorporated, an investment banking firm. Mr. Mandell is also a
director of U.S.A. Detergents, Inc. and Sbarro, Inc.
Meetings of the Board of Directors and Committees
The Board of Directors of the Company held seven meetings during the fiscal
year ended March 2, 1996. The Board of Directors acted on one occasion by
unanimous written consent in lieu of special meetings. Each director, except Mr.
Sandleitner, attended at least 75% of the aggregate number of all meetings of
the Board of Directors and committees of which he was a member during such
fiscal year.
The Board of Directors has an Audit Committee, formed in July 1994,
currently composed of Messrs. Zenner, Mandell and Franklin. The functions
performed by this Committee include recommending to the Board of Directors the
engagement of the independent auditors, reviewing the scope of internal controls
and reviewing the implementation by management of recommendations made by the
independent auditors. The Audit Committee met twice in fiscal 1995.
Until July 19, 1995, the Board of Directors had a separate Compensation
Committee, formed in July 1994, and a separate Stock Option Committee, formed in
September 1993. On July 19, 1995, the Company's Compensation Committee and Stock
Option Committee were combined into a single Compensation and Stock Option
Committee, composed of Messrs. Black and Zenner. The functions of the
Compensation and Stock Option Committee combined the previous functions of the
Compensation Committee and Stock Option Committee, described below. The
Compensation and Stock Option Committee met once in fiscal 1995.
The Compensation Committee was comprised of Messrs. Black, Zenner and
Ricken until March 11, 1995, when Mr. Ricken resigned as a member of the
committee. The functions of the Compensation Committee included the review of
existing and proposed employment arrangements and making recommendations to the
Board of Directors with respect to all forms of remuneration to any officer or
director of the Company. The Compensation Committee did not meet in fiscal 1995.
The Stock Option Committee was composed of Messrs. Black and Ricken until
March 11, 1995, when Mr. Ricken resigned as a member of the committee. The Stock
Option Committee was responsible for making determinations with respect to all
matters pertaining to the grant of
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<PAGE>
stock options under the Company's stock option plans. The Stock Option Committee
did not meet in fiscal 1995.
The Board of Directors has a Nominating Committee, formed in May 1994,
currently composed of Messrs. Black and Franklin. The Nominating Committee is
responsible for recommending director nominees, Board of Director committee
members and non-management directors' compensation to the Board of Directors.
The Nominating Committee does not have a procedure whereby it will consider
nominees recommended by security-holders. The Nominating Committee did not meet
during fiscal 1995.
Compensation of Directors
Directors who are not full-time employees of the Company receive a fee of
$1,500 for each Board meeting and an additional $500 for each committee meeting
attended. Directors are also entitled to receive reimbursement for traveling
costs and other out-of-pocket expenses incurred in attending Board meetings.
Directors who are not also employees of the Company are eligible to participate
in the Company's 1994 Non-Qualified Stock Option Plan for Non-Employee Directors
(the "1994 Non-Qualified Stock Option Plan"). Non-employee directors are
automatically granted options to purchase 6,000 shares of Class A Common Stock
pursuant to the 1994 Non-Qualified Stock Option Plan upon becoming a director,
and options to purchase 1,000 additional shares in each year thereafter based
upon the formula provisions of such Plan.
Indemnification Agreements
The Company has entered into indemnification agreements with each of its
directors and anticipates that it will enter into similar agreements with any
future directors. Generally, the indemnification agreements attempt to provide
the maximum protection permitted by Massachusetts law with respect to
indemnification of directors.
The indemnification agreements provide that the Company will pay certain
amounts incurred by a director in connection with any civil or criminal action
or proceeding and specifically including actions by or in the name of the
Company (derivative suits) where the individual's involvement is by reason of
the fact that he is or was a director. Such amounts include, to the maximum
extent permitted by law, attorney's fees, judgments, civil or criminal fines,
settlement amounts, and other expenses customarily incurred in connection with
legal proceedings. Under the indemnification agreements, a director will not
receive indemnification if he is found not to have acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best interests of
the Company.
Security Ownership
The following table sets forth certain information as of June 1, 1996 with
respect to the beneficial ownership of the Company's Class A Common Stock and
Class B Common Stock by each nominee for director, each named executive officer
in the Summary Compensation Table under "Executive Compensation" below, all
directors and executive officers as a group, and each person known by the
Company to be the beneficial owner of 5% or more of the Company's Class A Common
Stock or Class B Common Stock. This information is based upon information
received from or on behalf of the named individuals.
-5-
<PAGE>
<TABLE>
<CAPTION>
Class A Common Stock
Name and Shares
Address of Beneficially Percent
Beneficial Owner(1) Owned of Class
- ------------------- ----- ---------
<S> <C> <C>
Stanley D. Black(2)(3)......................... 3,682,588 37.39%
Emilia F. Black(2)(4).......................... 1,993,079 24.43%
Karl P. Sniady................................. -0- --
Ronald L. Franklin (7)......................... 38,304 *
Norman W. Zagorsky (5)(7)...................... 41,254 *
John A. McGregor (7)........................... 11,387 *
Richard A. Mandell............................. -0- --
Merrill Zenner (6)............................. 120,000 1.92%
All directors and executive officers as a group (11
persons) 3,915,348 39.32%
</TABLE>
<TABLE>
<CAPTION>
Class B Common Stock
Name and Shares
Address of Beneficially Percent
Beneficial Owner(1) Owned of Class
- ------------------- ----- ---------
<S> <C> <C>
Stanley D. Black(3)............................ 2,396,059 75.02%
Emilia F. Black(4)............................. 1,269,719 39.75%
All directors and executive officers as a group (11 2,396,059 75.02%
persons)
</TABLE>
- ---------------
* Less than 1% of the outstanding Class A Common Stock.
(1) The persons listed in the tables own of record the shares of Class A
Common Stock and Class B Common Stock listed opposite their respective
names, and have sole voting and investment power with respect to such
shares of Common Stock, unless otherwise indicated. The mailing address
of Stanley D. Black and Emilia F. Black is c/o Trend-Lines, Inc., 135
American Legion Highway, Revere, Massachusetts 02151.
(2) Includes shares of Class B Common Stock which are convertible at any
time into Class A Common Stock on a share-for-share basis.
(3) All such shares are held of record by various trusts created by Mr.
Black and/or his spouse, Emilia F. Black. Mr. Black shares voting and
investment control with Mrs. Black with respect to 88,500 shares of
Class A Common Stock. Mr. Black has sole voting and investment power
with respect to 2,178,284 of the 2,396,059 shares of Class B Common
Stock deemed beneficially owned by him. Mr. Black does not currently
have voting or investment power with respect to the remaining 217,775
shares of Class B Common Stock deemed beneficially owned by him, but has
the right, in his capacity as a settlor of a certain trust, to acquire
such 217,775 shares. Except for these 217,775 shares, Mr. Black
disclaims beneficial ownership of all shares listed as beneficially
owned by Mrs. Black. Of the aggregate 2,396,059 shares of Class B Common
Stock deemed beneficially owned by Mr. Black, 471,835 shares are also
deemed beneficially owned by Mrs. Black. As a result of the Class B
Common Stock having ten votes per share, as of June 1, 1996, Mr. Black
beneficially owned shares representing approximately 63% of the combined
voting power of the outstanding Common Stock.
(4) All such shares are held of record by various trusts created by Mr.
Black and/or his spouse, Emilia F. Black. Mrs. Black shares voting and
investment control with Mr. Black with respect to 88,500 shares of Class
A Common
-6-
<PAGE>
Stock. Emilia F. Black has sole voting and investment power with respect
to 1,015,659 of the 1,269,719 shares of Class B Common Stock deemed
beneficially owned by her. Mrs. Black does not currently have voting or
investment power with respect to the remaining 254,060 shares of Class B
Common Stock deemed beneficially owned by her, but has the right, in her
capacity as a settlor of certain trusts, to acquire such shares. Except
for these 254,060 shares, Mrs. Black disclaims beneficial ownership of
all shares listed as beneficially owned by Mr. Black. Of the aggregate
1,269,719 shares of Class B Common Stock deemed beneficially owned by
Mrs. Black, 471,835 shares are also deemed beneficially owned by Black.
As a result of the Class B Common Stock having 10 votes per share, as of
June 1, 1996, Mrs. Black beneficially owned shares representing
approximately 33% of the combined voting power of the outstanding Common
Stock. (5) Includes 2,050 shares of Class A Common Stock owned by Mr.
Zagorsky's spouse as to which Mr. Zagorsky disclaims beneficial
ownership. (6) All such shares are held of record by two trusts created
by Mr. Zenner and/or his spouse. Mr. Zenner is a beneficiary and trustee
and shares investment control with respect to 63,750 shares held by the
first trust. Mr. Zenner shares investment control with respect to 56,250
shares held by the second trust. (7) Includes the following shares
subject to currently exercisable options: Mr. Franklin --38,304 shares;
Mr. Zagorsky -- 39,204 shares; Mr. McGregor --11,387 shares; all other
executive officers as a group -- 21,815 shares.
-7-
<PAGE>
Executive Compensation
The following Summary Compensation Table sets forth the compensation of the
Company's executive officers as to those fiscal years during which such person's
annual salary and bonus equaled or exceeded $100,000 for services in all
capacities to the Company.
Summary Compensation Table
--------------------------
<TABLE>
<CAPTION>
Annual Compensation
Fiscal Salary ($) Bonus Long Term All Other
Year Ended ($) Compensation Compensation
Awards; ($)(1)
Securities
Underlying
Options
<S> <C> <C> <C> <C> <C>
Stanley D. Black 3/02/96 311,251 0 0 9,338
Chairman of the Board, 2/28/95 290,000 0 0 8,746
President and Chief
Executive Officer
Karl P. Sniady, Executive 3/02/96 92,500(2) 0 45,000 0
Vice President, Finance and
Operations, Chief Financial
Officer
Ronald L. Franklin 3/02/96 104,515 0 0 3,135
Vice President, Finance 2/28/95 100,000 0 44,100 3,166
Norman W. Zagorsky 3/02/96 104,515 0 0 3,135
Vice President 2/28/95 100,000 0 44,100 3,166
Trend-Lines Merchandising
John A. McGregor 3/02/96 103,004 0 0 3,090
Vice President, 2/28/95 100,000 0 22,050 2,992
Golf Day Merchandising
</TABLE>
- -----------------------------------------
(1) These amounts represent contributions by the Company to the Company's 401(k)
Plan for the benefit of the named executive officers.
(2) Mr. Sniady's annual salary is $130,000. Mr. Sniady was employed by the
Company for only a portion of fiscal 1995.
Mr. Black has not been granted any options to purchase the Company's securities
under the Company's stock option plans.
-8-
<PAGE>
Stock Option Plans
The following two tables set forth certain information with respect to (i)
the number of options granted to named executive officers in the fiscal year
ended March 2, 1996 and (ii) the aggregate number and value of options exercised
and exercisable by the named executive officers during such fiscal year.
OPTIONS GRANTED IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential
Realizable
Value at Assumed
Number of Percent of Annual Rates of
Securities Total Options Exercise Stock Price
Underlying Granted to or Base Appreciation For
Options Employees in Price Expiration Option Term(1)
Name and Principal Granted Fiscal Year $/Share Date 5%($) 10%($)
------------------- ------- ------------ -------- ----- ----- ------
Position
--------
<S> <C> <C> <C> <C> <C> <C>
Stanley D. Black
Chairman of the Board,
President and Chief
Executive Officer 0 - - - - -
Karl P. Sniady, 45,000 29.7% 9.58 6/19/03 205,807.50 493,047.00
Executive Vice President,
Finance and Operations
and Chief Financial
Officer
Ronald L. Franklin
Vice President, Finance 0 - - - - -
Norman W. Zagorsky
Vice President,
Trend-Lines Merchandising 0 - - - - -
John A. McGregor
Vice President,
Golf Day Merchandising 0 - - - - -
</TABLE>
(1) Amounts reported in this column represent hypothetical values that may be
realized upon exercise of the options immediately prior to the expiration of
their term, assuming the specified compounded rates of appreciation of the
Company's Common Stock over the term of the options. These numbers are
calculated based on rules promulgated by the Securities and Exchange Commission.
Actual gains, if any, on stock option exercises and Common Stock holdings are
dependent on the time of such exercise and the future performance of the
Company's Common Stock.
-9-
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUE
<TABLE>
<CAPTION>
Number of Shares of
Common Stock Value of
Underlying Unexercised
Shares Unexercised Options In the Money
Acquired Value at 3/2/96 Option at 3/2/96(1)
Name and Principal Position on Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
- --------------------------- ----------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Stanley D. Black
Chairman of the Board,
President
and Chief Executive Officer 0 $0 0 $0/$0
Karl Sniady, Executive Vice
President, Finance and
Operations and Chief
Financial Officer 0 0 0/45,000 0/0
Ronald L. Franklin
Vice President, Finance 900 9,576 38,304/78,395 53,933/111,958
Norman W. Zagorsky
Vice President,
Trend-Lines Merchandising 0 0 39,204/78,395 55,990/111,958
John A. McGregor
Vice President,
Golf Day Merchandising 6,143 45,028 11,387/53,764 19,722/78,766
</TABLE>
- -----------------------------------------
(1) Based upon the closing price of the Company's Common Stock on March 2, 1996
on the Nasdaq Stock Market of $4.125 per share less the respective option
exercise price.
Compensation Committee Interlocks and Insider Participation
As described above, until July 19, 1995, the Board of Directors had a
separate Compensation Committee and Stock Option Committee. On July 19, 1995,
the Compensation Committee and the Stock Option Committee were combined into a
single Compensation and Stock Option Committee. The Compensation and Stock
Option Committee is responsible for reviewing existing and proposed employment
arrangements and management compensation standards and practices, and for making
recommendations to the Board of Directors with respect to all forms of
remuneration to any officer or director of the Company, including determinations
with respect to all matters pertaining to the grant of stock options under the
Company's stock option plans. No member of the Compensation and Stock Option
Committee is eligible to receive options under the Employee Plan. The
Compensation and Stock Option Committee currently consists of Messrs. Black and
Zenner. Except for Mr. Black, no member of the
-10-
<PAGE>
Compensation and Stock Option Committee is a former or current officer or
employee of the Company.
Compensation and Stock Option Committee Report
The primary objectives of the Compensation and Stock Option Committee in
developing executive compensation policies are to attract, motivate and retain
superior talent to enable the Company to achieve its business objectives and to
align the financial interests of its executive officers with the stockholders of
the Company.
The compensation of executive officers consists primarily of base
compensation, the grant of options under the Employee Plan and participation in
benefit plans generally available to employees. In setting compensation, the
Compensation and Stock Option Committee strives to maintain base compensation
for the Company's executive officers at levels which the Committee believes are
competitive with the compensation of comparable executive officers in similarly
situated companies, while relying upon stock options or, in the case of Mr.
Black, the Chief Executive Officer, his stock ownership, to provide significant
performance incentives.
Each of the executive officers, other than Mr. Black, and all employees are
eligible to receive grants of options under the Employee Plan. The Employee Plan
is used to align a portion of the officer's compensation with the stockholders'
interests and the long term success of the Company. In determining the number of
options to be granted to each executive officer, the Compensation and Stock
Option Committee reviews recommendations provided by Mr. Black and makes a
subjective determination regarding those recommendations based upon the
following criteria: (i) the individual performance and position of
responsibility of the executive officer, (ii) the number of options held by the
executive officer, and (iii) the financial performance of the Company. No
particular weight is given to any of these factors, rather each executive
officer's total compensation package in light of these factors is reviewed as a
whole.
In fiscal 1995, Mr. Black, the Company's President and Chief Executive
Officer, received a base salary of $311,251. The Board has not conducted any
surveys of salaries of chief executive officers, but based upon its experience,
believes that this compensation is comparable to the compensation of chief
executive officers of comparable companies.
Compensation and Stock Option Committee
Stanley D. Black
Merrill Zenner
-11-
<PAGE>
Performance Graph
The following graph compares the cumulative total shareholder return on the
Company's Class A Common Stock with the cumulative total return on the Nasdaq
Stock Market Index (Broad Market Index) and a self-constructed peer group index,
from June 23, 1994 through March 1, 1996, the last trading day of fiscal 1995.
The cumulative total shareholder return is based on $100 invested in Class A
Common Stock of the Company and in the respective indices on June 23, 1994,
including reinvestment of dividends. The stock price performance shown in the
Performance Graph is not necessarily indicative of future stock price
performance.
[Graphic representation of line chart]
Comparison of Five-Year Cumulative Total Returns
Performance Report for
Trend Lines, Inc.
Prepared by the Center for Research in Security Prices
Produced on 05/23/96 including data to 03/01/96
Date Company Index Market Index Peer Index
03/01/91 63.206 35.590
04/02/91 68.165 40.119
05/02/91 68.189 42.775
05/31/91 70.381 47.185
07/02/91 66.489 49.201
08/02/91 70.480 50.182
08/30/91 73.488 55.908
10/02/91 73.611 56.904
11/01/91 75.900 56.249
12/02/91 74.681 60.776
01/02/92 82.682 67.952
01/31/92 87.469 64.147
03/02/92 89.741 66.073
04/02/92 83.827 64.096
05/01/92 81.507 63.263
06/02/92 83.149 70.780
07/02/92 79.339 69.924
07/31/92 82.200 76.458
09/02/92 80.899 79.654
10/02/92 81.004 80.132
11/02/92 86.249 87.180
12/02/92 92.788 92.467
12/31/92 96.175 101.149
02/02/93 100.156 100.882
03/02/93 96.274 97.288
04/02/93 95.045 94.270
04/30/93 93.801 88.804
06/02/93 100.214 98.143
07/02/93 99.909 94.212
08/02/93 100.360 96.553
09/02/93 105.857 91.459
10/01/93 108.215 90.603
11/02/93 111.505 95.212
12/02/93 109.037 100.213
12/31/93 110.359 94.573
02/02/94 113.489 93.419
03/02/94 111.295 98.813
03/31/94 105.732 97.750
05/02/94 105.340 102.909
06/02/94 105.336 106.188
06/23/94 100.000 100.000 100.000
07/01/94 100.952 100.871 100.301
08/02/94 87.619 103.327 97.321
09/02/94 98.095 108.467 105.223
09/30/94 105.714 109.128 102.992
11/02/94 102.857 110.473 109.853
12/02/94 92.381 106.851 108.446
12/30/94 104.762 107.918 105.093
02/02/95 108.571 109.714 109.636
03/02/95 95.238 114.226 101.274
03/31/95 100.000 117.652 101.231
05/02/95 98.095 120.911 90.992
06/02/95 105.714 125.638 91.477
06/30/95 114.268 134.612 91.289
08/02/95 144.762 141.834 100.661
09/01/95 160.952 147.262 91.386
10/02/95 151.429 148.462 88.393
11/02/95 138.572 153.194 89.441
12/01/95 131.429 152.873 95.678
01/02/96 111.429 153.546 102.884
02/02/96 44.286 154.946 97.507
03/01/96 47.143 157.058 96.360
<TABLE>
<CAPTION>
June 23, 1994 March 1, 1996
------------- -------------
<S> <C> <C>
Trend-Lines, Inc. 100.000 47.143
Peer Group 100.000 96.360
Broad Market 100.000 157.058
</TABLE>
- -------------------------
* The Peer Group Index is comprised of the following retail companies: BMC West
Corp. (BMCW), Brookstone, Inc. (BKST), CML Group, Inc. (CML), Eagle Hardware and
Garden, Inc. (EAGL), Hechinger Co., Class A and B (HECH), Home Depot, Inc. (HD),
Lowes Companies, Inc. (LOW), Michaels Stores, Inc. (MIKE), Spiegel, Inc., Class
A (SPGL A A), and Williams Sonoma, Inc. (WSGC). Each of these companies is
publicly traded. The returns of each company have been weighted according to
their respective stock market capitalization for purposes of arriving at a peer
group average.
-12-
<PAGE>
Certain Relationships And Related Transactions
Stanley D. Black, President and Chief Executive Officer of the Company,
through a certain trust (the "Trust") of which he is a trustee and beneficiary,
leases to the Company approximately 51,000 square feet of office and warehouse
space in Chelsea, Massachusetts. The facility served as the former headquarters
and central warehouse facility for the Company before it moved to its current
headquarters in Revere, Massachusetts. The lease, as amended, expires in 2005
and provides for annual base rent in the amount of approximately $296,000,
payable in advance in monthly installments of $24,600 (approximately $5.80 per
square foot). Under the lease, the Company must pay to the Trust, in addition to
base rent, an amount equal to any increase in the interest rate on the Trust's
first mortgage on the property and must pay to the Trust or third parties, as
appropriate, all utilities, insurance, real estate taxes, maintenance and
operating costs incurred in maintaining, operating, insuring, and repairing the
leased premises. Pursuant to the lease, the Company paid the Trust $350,000,
$350,000 and $390,000 in fiscal 1995, 1994 and 1993, respectively. The lease
provides for annual escalation of the base rent, equal on a percentage basis to
the increase in the Consumer Price Index, but in no event more than 5% per year,
and provides the Company with an option to purchase the leased premises on or
prior to December 31, 1997 at a purchase price of $2.2 million. The Company is
seeking to sublet the 51,000 square feet leased to it by the Trust.
In connection with the Company's acquisition of the Golf Day catalog in
1989, Mr. Black made certain loans to the Company, which were repaid in May
1994.
PROPOSAL NO. 2
AMENDMENT TO THE RESTATED ARTICLES
OF ORGANIZATION TO ELIMINATE CERTAIN SUPERMAJORITY
VOTING PROVISIONS
The Board of Directors has unanimously approved and hereby recommends to
the Company's stockholders that they approve Proposal No. 2 to amend Articles 4
and 6 of the Company's Restated Articles of Organization (the "Restated
Articles") in several respects to eliminate certain supermajority voting
provisions presently in the Restated Articles and to add a provision to the
Restated Articles providing that certain laws requiring a supermajority vote
will not apply to the Company, all so as to permit approval of most actions by
holders of a simple majority of the outstanding voting power of the capital
stock.
Background
Under Massachusetts law, most amendments to the articles of organization of
a corporation, other than those simply changing the number of authorized shares
or their par value, and all mergers and sales of substantially all of the assets
of a corporation require the affirmative vote of at least two-thirds of each
class of stock outstanding and entitled to vote thereon or, if the articles of
organization of the corporation so provide, a greater or lesser proportion, but
not less than a majority of the outstanding shares of each class. The Company's
Restated Articles presently provide for a two-thirds voting requirement in order
to approve those actions. In addition, Chapter 110F of the Massachusetts General
Laws requires a two-thirds stockholder vote for certain "business combinations"
with "interested stockholders," unless a corporation elects to have that chapter
not apply to it. To date, the Company has made no such election. Further, the
Restated Articles include a provision on business combinations with interested
parties generally similar, but not identical to the statutory provisions of
Chapter 110F.
It is the desire of the Board of Directors to reduce these various
"supermajority" voting requirements to a majority in most cases. Accordingly,
the Board of Directors recommends
-13-
<PAGE>
amendment of the Restated Articles to (i) amend Article 4, Paragraph A to
consolidate the provisions on the vote required to change Article 4 and provide
for a majority vote in most cases, (ii) delete the provisions of Article 6,
Paragraphs A and G requiring the affirmative vote of two-thirds of the combined
voting power to amend the By-Laws or to amend Paragraph G on consideration of
the interests of other "stakeholders" in business combinations, (iii) delete
Article 6, Paragraph F on business combinations (and the related definitions in
Article 4, Paragraph H) and insert in lieu thereof a provision that Chapter 110F
shall not apply to the Company and (iv) correct minor errors in cross-references
presently in the Restated Articles. Set forth as Exhibit A to this Proxy
Statement are Articles 4 and 6 as proposed to be amended, marked to indicate the
language to be added and deleted.
The Board of Directors believes the proposed amendments will facilitate
more efficient corporate governance, as approval of certain matters will be
possible by stockholders holding fewer shares than currently is the case. As a
result, holders of a minority of the voting power will no longer be able to
block those actions if they are approved by holders of a majority of the voting
power. Conversely, the holders of a simple majority of the voting power,
including present management, will have the ability to effect certain
transactions that are disadvantageous to holders of a significant minority of
the voting power of the Company that previously would have required a higher
vote.
The officers and directors of the Company currently beneficially own 39.32%
of the outstanding shares of Class A Common Stock, 75.02% of the outstanding
shares of Class B Common Stock and 63% of the total combined voting power of
both classes of Common Stock. If Proposal No. 2 is approved, the officers and
directors of the Company will have an even greater influence on the approval of
certain transactions, which may or may not be in the best interests of
non-management stockholders.
Other than the amendments to the Restated Articles proposed by this Proxy
Statement, the Company is not aware of any proposed transaction, including any
present attempt to acquire control of the Company, the approval of which is
subject to a stockholder vote under the Restated Articles. The future submission
by the Company to stockholders on matters requiring the vote of stockholders as
provided in the Restated Articles is entirely within the discretion of the Board
of Directors.
Changes In Common Stock
Article 4, Part I of the Restated Articles of the Company sets forth the
voting powers, qualifications and other special rights, preferences, limitations
and restrictions on the Common Stock of the Company, including provisions
relating to the voting rights and powers of the Common Stock. At present,
Section A of that Part provides that holders of Class A Common Stock shall be
entitled to one vote per share on all matters to be voted on by stockholders and
holders of Class B Common Stock shall be entitled to ten votes per share of
Class B Common Stock on all matters to be voted on by stockholders. It further
provides that holders of Class A Common Stock and holders of Class B Common
Stock shall vote together as a single class on all matters on which the
stockholders may vote, except when class voting is required by applicable law or
when the holders of Class B Common Stock are specifically entitled to vote as a
separate class as provided for in Section B. Article 4, Part I, Section F(ii)(j)
provides that any amendments to Article 4, Part I must be approved by the
affirmative vote of the holders of at least two-thirds of the combined voting
power of the outstanding shares of Class A Common Stock and Class B Common
Stock, voting together as a single class.
The Board of Directors believes that it is in the best interests of the
Company to amend Article 4, Part I, Section A by (i) designating the present
text as Subparagraph (i), (ii) relocating Article 4, Part I, Section F(ii)(j) to
Section A Subparagraph (ii) to make it clear that changes in
-14-
<PAGE>
the rights and preferences of the Class A Common Stock and Class B Common Stock
still will require an affirmative vote of two-thirds of the total voting power,
and (iii) adding a new Section A Subparagraph (iii) to provide that whenever
Massachusetts law provides for a supermajority vote for a proposed action, but
permits approval by a vote of a lesser proportion (not less than a majority) if
so provided in the articles of organization, the affirmative vote of the holders
of only a majority of the voting power of the outstanding shares of such class
or classes of stock, voting separately or voting together as a single class, as
the case may be, shall be required to approve such proposed action, including
without limitation amendments to the Restated Articles of the Company. Article 4
as proposed to be amended is set forth in Exhibit A hereto.
Amendments to Other Lawful Provisions
Article 6 of the Restated Articles sets forth provisions relating to the
conduct and regulation of the business and affairs of the Company, including
without limitation provisions on (i) amendments to the By-Laws of the Company
(Section A(3)), (ii) approval of certain business combinations (Section F), and
(iii) amendments to the provision on the ability of the Board of Directors to
consider the interests of other constituencies besides stockholders in certain
transactions (Section G). In each of those situations, the amendment or approval
requires the affirmative vote of at least two-thirds of the combined voting
power of the outstanding shares of all Voting Stock (defined to mean all of the
shares of capital stock then outstanding and entitled to vote generally in the
election of directors, voting together as a single class).
At present, the Company is subject to Chapter 110F of the Massachusetts
General Laws. In general, this statute prohibits a Massachusetts corporation
with more than 200 stockholders from engaging in a "business combination" with
an "interested shareholder" for a period of three years after the date of the
transaction in which the person becomes an interested shareholder, unless (i)
the interested shareholder obtains the approval of the board of directors prior
to becoming an interested shareholder, (ii) the interested shareholder acquires
90% of the outstanding voting stock of the corporation (excluding shares held by
certain affiliates of the corporation) at the time it becomes an interested
shareholder, or (iii) the business combination is approved by both the board of
directors and the holders of two-thirds of the outstanding voting stock of the
corporation (excluding shares held by the interested shareholder). An
"interested shareholder" is a person who, together with affiliates and
associates, owns (or at any time within the prior three years did own) 5% or
more of the outstanding voting stock of the corporation. A "business
combination" includes a merger, a stock or asset sale, and certain other
transactions resulting in a financial benefit to the interested shareholder. A
corporation may at any time elect not to be governed by Chapter 110F, by a vote
of a majority of its shareholders, but such an election would not be effective
for twelve months and would not apply to a business combination with any person
who became an interested shareholder prior to such election. The Company did not
elect not to be governed by the provisions of Chapter 110F. In fact, Article 6,
Section F of the Restated Articles presently contains a provision generally
similar, but not identical to the provisions of Chapter 110F.
For the reasons stated above, the Board of Directors now believes that it
is in the best interests of the Company to (i) amend Article 6, Section A(3) to
reduce the vote of stockholders necessary to amend the By-Laws to an affirmative
vote of the holders of a majority of the combined voting power of the
outstanding shares of Class A Common Stock and Class B Common Stock, voting
together as a single class, (ii) delete Article 6, Section G(e) in its entirety,
such that the voting requirement necessary for an amendment to Section G shall
be effected in accordance with Article 4, Part I, Section A as amended above,
and (iii) delete present Section F in its entirety, delete those definitions in
Section H which were only relevant to the present Section F, and insert a new
Section F electing not to be governed by Chapter 110F. Article 6 as proposed to
be amended is set forth in Exhibit B hereto.
-15-
<PAGE>
The Board of Directors recommends that the
stockholders vote "FOR" Proposal No. 2.
PROPOSAL NO. 3
AMENDMENT TO THE RESTATED ARTICLES
OF ORGANIZATION TO PERMIT SHARES OF CLASS B COMMON STOCK
SURRENDERED UPON CONVERSION TO BE REISSUED IN CONNECTION
WITH CERTAIN DIVIDENDS AND OTHER DISTRIBUTIONS OF CAPITAL STOCK
The Board of Directors unanimously approved, and hereby recommends to the
Company's stockholders that they approve, Proposal No. 3 to amend the Company's
Restated Articles to provide that shares of Class B Common Stock surrendered
upon conversion into Class A Common Stock be restored to the status of
authorized but unissued shares, available to be reissued in connection with
certain dividends and other distributions of capital stock.
Article 4, Part I, Section D of the Restated Articles presently provides
that if a dividend or distribution is made on the Class A Common Stock payable
in shares of Class A Common Stock, then the Company shall also make a
simultaneous dividend or distribution of equal amount on the Class B Common
Stock payable in shares of Class B Common Stock. In August 1995, the Company
declared a three-for-two stock split in the form of a stock dividend of one
share of Class A Common Stock for each two shares of Class A Common Stock
outstanding. The record date for the stock split was August 24, 1995 and the
dividend was paid on September 1, 1995. At the time of the dividend to holders
of Class A Common Stock, with the consent of the holders of the Class B Common
Stock, the Company suspended the corresponding dividend of Class B Common Stock
because there was not a sufficient number of authorized but unissued shares of
Class B Common Stock to effect a three-for-two stock split. Prior to the Class A
Common Stock dividend, each share of Class B Common Stock had been convertible
into one share of Class A Common Stock. As a result of the payment of the Class
A Common Stock dividend without a corresponding Class B Common Stock dividend,
the conversion ratio of the Class B Common Stock was adjusted proportionately,
such that each share of Class B Common Stock became convertible into 1.5 shares
of Class A Common Stock. The suspension of the dividend to holders of Class B
Common Stock, and the corresponding adjustment to the conversion ratio was
agreed to by the holders of the Class B Common Stock with the understanding that
the Company, at the next succeeding annual meeting of stockholders, would seek
to make available additional shares of Class B Common Stock so that the
suspended dividend to holders of Class B Common Stock could be paid.
Article 4, Part I, Section F(ii)(f) of the Restated Articles currently
provides that shares of Class B Common Stock which shall have been converted,
purchased or otherwise reacquired by the Company shall be retired and canceled,
and shall no longer be available for issuance. The Board of Directors recommends
that Section F(ii)(f) of the Restated Articles be amended so that such shares be
restored to the status of authorized but unissued shares, available for reissue
in connection with dividends and other distributions of Class B Common Stock
payable with respect to Class B Common Stock in accordance with the provisions
of Article 4, Part I, Section D referenced above, including without limitation
the payment of the suspended 1995 dividend. After giving effect to the dividend,
each share of Class B Common Stock would once again be convertible into one
share of Class A Common Stock.
As of June 5, 1996, of the 5,000,000 authorized shares of Class B Common
Stock, 3,193,943 shares were issued and outstanding and 1,216,057 shares of
Class B Common Stock had been retired upon conversion into Class A Common Stock.
Thus, under the existing Restated Articles, only 590,000 shares of Class B
Common Stock are available for issuance. Approval of Proposal No. 3 would make
available for dividends or distributions a total of
-16-
<PAGE>
1,806,057 shares of Class B Common Stock, and allow the holders of Class B
Common Stock to receive the previously suspended dividend.
As of June 5, 1996, there were 6,252,965 shares of Class A Common Stock and
3,193,943 shares of Class B Common Stock issued and outstanding. If Proposal No.
3 is adopted, upon payment of the suspended dividend to holders of Class B
Common Stock, and assuming no further issuances of Class A or Class B Common
Stock, there will be 6,252,965 shares of Class A Common Stock and 4,790,914
shares of Class B Common Stock issued and outstanding. As a result, the voting
power of the Class B Common Stock will increase from 83.63% to 88.46% of the
total combined voting power of both classes of Common Stock outstanding. Mr.
Stanley Black, the President and Chief Executive Officer of the Company, his
spouse and certain entities controlled by Mr. Black own all of the outstanding
shares of Class B Common Stock and thus have the ability to elect or remove any
or all of the Company's directors and to control substantially all corporate
actions and otherwise effectively control the Company.
The Board of Directors believes that the proposed amendment is in the best
interests of the Company and the stockholders. The Board believes that having
Class B shares available for issuance will allow the Company greater flexibility
in considering potential future stock dividends and splits. Otherwise, the
holders of Class B Common Stock would have an incentive to oppose any further
stock split or dividend on the Class A Common Stock. However, other than with
respect to the aforementioned corresponding dividend on the Class B Common
Stock, the Board has no current plans to effect such potential actions. Under
Proposal No. 3, Article 4, Part 1, Section D would be amended as set forth in
Exhibit A.
The Board of Directors recommends that the stockholders
vote "FOR" Proposal No. 3.
OTHER MATTERS
Voting Procedures
The votes of stockholders present in person or represented by proxy at the
Meeting will be tabulated by an inspector of elections appointed by the Company.
The seven nominees for directors of the Company who receive the greatest number
of votes cast by stockholders present in person or represented by proxy at the
Meeting and entitled to vote thereon will be elected directors of the Company.
The affirmative vote by the holders of two-thirds of the combined voting power
of the outstanding shares of Class A Common Stock and Class B Common Stock
(voting together as a single class, with the holders of Class A Common Stock
having one vote per share and the holders of Class B Common stock ten votes per
share) is required to approve Proposals No. 2 and 3. Abstentions (including
broker nonvotes) will have no effect on the outcome of the vote for the election
of directors. Abstentions and broker non-votes will be counted as present in
determining whether the quorum requirement is satisfied, and will have the same
effect as a vote against Proposals No. 2 and 3.
Independent Auditors
The Board of Directors has appointed Arthur Andersen LLP as the independent
auditors to audit the Company's consolidated financial statements for the fiscal
year ending March 1, 1997. Such firm has served continuously in that capacity
since 1988.
A representative of Arthur Andersen LLP will be at the Meeting and will be
available to respond to appropriate questions.
-17-
<PAGE>
Reporting Under Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than 10% of the
Company's Class A Common Stock, to file reports of ownership and changes in
ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission and
the Nasdaq Stock Market. Executive officers, directors and greater than 10%
stockholders are required to furnish the Company with copies of all Forms 3, 4
and 5 they file.
Based solely on the Company's review of the copies of such Forms it has
received and written representations from certain reporting persons that they
were not required to file Forms 5 for specified fiscal years, the Company
believes that all of its officers, directors and greater than 10% stockholders
complied with all Section 16(a) filing requirements applicable to them during
the Company's fiscal year ended March 2, 1996, except that Emilia F. Black, a
beneficial owner of more than 10% of the Company's Class A Common Stock, failed
to file a Form 4, Statement of Changes of Beneficial Ownership of Securities,
with respect to the sale of 1,000,000 shares of the Company's Class A Common
Stock in connection with a public offering. Mrs. Black reported this sale on a
Form 5, Annual Statement of Beneficial Ownership of Securities, filed with
respect to the fiscal year ended March 2, 1996.
Other Proposed Action
The Board of Directors knows of no matters which may come before the
Meeting other than the election of directors and the proposed amendments to the
Restated Articles of Organization set forth in Proposal Nos. 2 and 3 above.
However, if any other matters should properly be presented to the Meeting, the
persons named as proxies shall have discretionary authority to vote the shares
represented by the accompanying proxy in accordance with their own judgment.
Stockholder Proposals
Proposals which stockholders intend to present at the Company's 1997 Annual
Meeting of Stockholders and wish to have included in the Company's proxy
materials must be received by the Company no later than February 15, 1997.
Incorporation By Reference
To the extent that this Proxy Statement has been or will be specifically
incorporated by reference into any filing by the Company under the Securities
Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, the
sections of the Proxy Statement entitled "Compensation Committee Report" and
"Performance Graph" shall not be deemed to be so incorporated, unless
specifically otherwise provided in any such filing.
Annual Report on Form 10-K
Copies of the Company's Annual Report on Form 10-K for the fiscal year
ended March 2, 1996 as filed with the Securities and Exchange Commission are
available to stockholders without charge upon written request addressed to
Stanley D. Black, President, Trend-Lines, Inc. at 135 American Legion Highway,
Revere, Massachusetts 02151.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, STOCKHOLDERS
ARE URGED TO FILL IN, SIGN AND RETURN THE ACCOMPANYING FORM OF PROXY IN THE
ENCLOSED ENVELOPE.
-18-
<PAGE>
EXHIBIT A
TREND-LINES, INC.
RESTATED ARTICLES OF ORGANIZATION
CONTINUATION PAGES
ARTICLE 4
----------
If more than one class is authorized, a description of each of the
different classes of stock with, if any, the preferences, voting powers,
qualifications, special or relative rights or privileges as to each class
thereof and any series now established.
The classes of capital stock of the Corporation authorized by Article 4
shall have the voting powers, qualifications and relative participating,
optional or other special rights and preferences, limitations or restrictions as
set forth in this Article 4.
PART I - COMMON STOCK
---------------------
A. General Voting Rights and Powers.
(i) Subject to the rights and preferences of the holders of the Preferred
Stock and any other class of stock ranking senior to the Common Stock, the
holders of shares of Class A Common Stock shall be entitled to one vote per
share on all matters to be voted on by stockholders, and holders of shares of
Class B Common Stock shall be entitled to ten votes per share on all matters to
be voted on by stockholders. The holders of Class A Common Stock and Class B
Common Stock shall vote together as a single class on all matters on which the
stockholders may vote, except when class voting is required by applicable law or
when the holders of Class B Common Stock shall be entitled to vote as a separate
class in accordance with Section B of this Part I.
(ii) Notwithstanding anything contained in these Restated Articles of
Organization to the contrary, the affirmative vote of the holders of at least
two-thirds of the combined voting power of the outstanding shares of Class A
Common Stock and Class B Common Stock, voting together as a single class, shall
be required to amend this Part I, or to adopt any provision inconsistent
herewith.
(iii) Subject to the rights and preferences of the Preferred Stock and any
other class of stock ranking senior to Common Stock and subject to Subparagraph
(ii) above, the vote of a majority of the combined voting power of all classes,
voting as a single class, or of each class entitled as a matter of law or under
these Restated Articles of Organization to vote as a separate class, shall be
sufficient to approve any action to (i) amend these Articles of Organization or
the By-laws of the Corporation, or (ii) approve any agreement of merger or
consolidation of the Corporation with or into another corporation or any sale,
lease or exchange of substantially all of the assets of the Corporation,
notwithstanding any provision of law or of the Articles of Organization that
would otherwise require a greater vote in the absence of this provision.
B. Special Voting Power of Class B Common Stock. In addition to the foregoing
voting power and any rights provided by law, so long as any Class B Common Stock
shall be outstanding, the Corporation shall not, without first obtaining the
affirmative vote or written
<PAGE>
consent of the holders of not less than a majority of the voting power of
then-outstanding shares of Class B Common Stock, given in writing or by vote at
a meeting, consenting or voting (as the case may be) separately as a class: (i)
amend or appeal any provision of, or add any provision to, the Corporation's
Restated Articles of Organization or By-Laws if such action would alter or
change the preferences, rights, privileges or powers of, or the restrictions
provided for the benefit of, the Class B Common Stock; (ii) authorize or issue
any new or existing class or classes or series of capital stock having any
voting power superior to or on a parity with any voting power of the Class B
Common Stock, or authorize or issue shares of stock of any class or any bonds,
debentures, notes or other obligations convertible into or exchangeable for, or
having option rights to purchase, any shares of the capital stock of the
Corporation having any voting power superior to or on a parity with the voting
power of the Class B Common Stock; and (iii) reclassify any Class A Common Stock
into shares having any voting power superior to or on a parity with the voting
power of the Class B Common Stock.
C. No Preemptive Rights. Subject to the provisions of Section F of this Part II
in respect of Class B Common Stock, no holder of Class A Common Stock or Class B
Common Stock shall have any rights, preemptive or other, to subscribe for or to
acquire any capital stock of the Corporation solely by reason of the ownership
or holding of any such Class A Common Stock or Class B Common Stock.
D. Dividends and Other Distributions. Subject to the rights and preferences of
the holders of the Preferred Stock and any other class of stock ranking senior
to the Common Stock, the holders of Class A Common Stock and Class B Common
Stock shall be entitled to dividends when, as and if declared and paid to the
holders of Class A Common Stock and Class B Common Stock; provided that
dividends must be paid on both the Class A Common Stock and the Class B Common
Stock at any time that dividends are paid on either class. Any dividend so
declared and payable in cash, capital stock of the Corporation (other than Class
A Common Stock or Class B Common Stock) or other property shall be paid equally,
share for share, on the Class A Common Stock and the Class B Common Stock.
Dividends and distributions payable in shares of Class A Common Stock may be
paid only on shares of Class A Common Stock and dividends and distributions
payable in shares of Class B Common Stock may be paid only on shares of Class B
Common Stock. If a dividend or distribution payable in Class A Common Stock is
made on the Class A Common Stock, the Corporation shall also make a simultaneous
dividend or distribution on the Class B Common Stock. If a dividend or
distribution payable in Class B Common Stock is made on the Class B Common
Stock, the Corporation shall also make a simultaneous dividend or distribution
on the Class A Common Stock. Pursuant to any such dividend or distribution, each
share of Class A Common Stock will receive a number of shares of Class A Common
Stock equal to the number of shares of Class B Common Stock payable on each
share of Class B Common Stock and each share of Class B Common Stock will
receive a number of Class B Common Stock equal to the number of shares of Class
A Common Stock payable on each share of Class A Common Stock.
E. Liquidation Rights. In the event of the liquidation, dissolution or winding
up of the Corporation and subject to the rights and preferences of the holders
of the Preferred Stock and any other class of stock ranking senior to or on a
parity with the Common Stock, the holders of the shares of Class A Common Stock
and Class B Common Stock shall be entitled to share ratably, share for share, in
all assets remaining after payment of all debts and other liabilities of the
Corporation available for distribution.
F. Conversion of Class B Common Stock.
<PAGE>
(i) Each share of Class B Common Stock may be converted, at the option of
the holder, at any time into one fully-paid and non-assessable share of
Class A Common Stock in the manner and subject to adjustment as set forth
in Subparagraph (ii) of this Section F.
(ii) The Class B Common Stock shall be converted into Class A Common Stock
in the following manner:
(a) A holder of Class B Common Stock shall give written notice to
the Corporation by mail of its desire to convert all or a portion of the
shares of Class B Common Stock owned by such holder. Such notice shall be
accompanied by certificates, duly endorsed for conversion, evidencing the
number of shares of Class B Common Stock such holder desires to convert.
The Corporation will, as soon as practicable thereafter, deliver to such
holder or to such holder's nominee or nominees, a certificate or
certificates for the appropriate number of shares of Class A Common Stock,
a certificate representing the balance, if any, of the shares of Class B
Common Stock tendered by the surrendered certificate or certificates but
not converted to Class A Common Stock.
(b) If, prior to the date on which all shares of Class B Common
Stock are converted, the Corporation shall (1) pay a dividend in shares of
Class A Common Stock or make a distribution in shares of Class A Common
Stock, (2) subdivide its outstanding Class A Common Stock, (3) combine its
outstanding Class A Common Stock into a smaller number of shares of Class
A Common Stock or (4) issue by reclassification of its Class A Common
Stock other securities of the Corporation, the right to convert shall
thereupon be adjusted, or, if necessary, amended, such that the number of
shares of Class A Common Stock receivable upon conversion of the shares of
Class B Common Stock immediately prior thereto shall be adjusted so that
the holder shall be entitled to receive, upon the conversion of such
shares of Class B Common Stock, the kind and number of shares of Class A
Common Stock or other securities of the Corporation which it would have
owned or would have been entitled to receive after the happening of any of
the events described above had the Class B Common Stock been converted
immediately prior to the happening of such event or any record date with
respect thereto. Any adjustment made pursuant to this subparagraph (b)
shall become effective immediately after the effective date of such event
and such adjustment shall be retroactive to the record date, if any, for
such event. Except as provided in this subparagraph (c), no adjustment
with respect to any ordinary dividends (made out of current earnings) on
shares of Class A Common Stock shall be made.
(c) If, prior to the date on which the shares of Class B Common
Stock are converted, the Corporation shall (1) reorganize, reclassify or
otherwise change the number of outstanding shares of Class A Common Stock,
(2) consolidate with or merge with or into another "Person" (as defined in
Section H of Article 6 hereof) resulting in a reclassification,
conversion, exchange or cancellation of outstanding shares of Class A
Common Stock, (3) sell or otherwise transfer all or substantially all of
the assets of the Corporation, then a holder of Class B Common Stock shall
thereafter have the right to convert such shares of Class B Common Stock
into the kind and amount of stock, securities or assets, if any, such
holder would have been entitled to receive upon such reorganization,
reclassification, consolidation, merger, sale or transfer had such holder
converted its shares of Class B Common Stock into Class A Common Stock
immediately prior to such transaction.
(d) If a holder of Class B Common Stock has delivered notice to the
Corporation of its desire to convert all or a portion of its shares of
Class B Common Stock and
<PAGE>
certificates, duly endorsed for conversion in respect of such shares, then
all shares of Class B Common Stock so tendered to the Corporation shall be
deemed to be no longer outstanding and, notwithstanding the failure of the
Corporation to issue the Class A Common Stock, such holder shall be
deemed, for all purposes, to be a holder of the number of shares of Class
A Common Stock into which the shares of Class B Common Stock were
converted and such holder is entitled to receive pursuant to the terms of
this Section F in each case as of the close of business on the date on
which such conversion notice is delivered.
(e) The Corporation shall not, by amendment of its Restated
Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed under this
Section F by the Corporation but shall at all times in good faith assist
in the carrying out of all the provisions of this Section F. The
Corporation shall at all times reserve and keep available out of its
authorized but unissued Class A Common Stock the full number of shares of
Class A Common Stock deliverable upon the conversion of all the then
outstanding shares of Class B Common Stock and shall take all such action
and obtain all such permits or orders as may be necessary to enable the
Corporation to validly and legally issue fully paid and non-assessable
shares of Class A Common Stock upon the conversion of Class B Common
Stock. The Corporation shall obtain prior to or concurrently with the
first issuance of the Class B Common Stock, and shall use its best efforts
to maintain for as long as any shares of Class B Common Stock shall be
outstanding, the authorization for the listing of shares of Class A Common
Stock issuable upon conversion of the Class B Common Stock on the Nasdaq
Stock Market National Market and on any national securities exchange on
which the Class A Common Stock is listed for trading, as applicable. The
Corporation shall pay any and all transfer, stamp and other like taxes
that may be payable in respect of the issuance or delivery of shares of
Class A Common Stock on conversion of the Class B Common Stock.
(f) Shares of Class B Common Stock which shall have been converted,
purchased or otherwise reacquired by the Corporation shall be restored to
the status of authorized but unissued shares and shall be available for
reissuance in the circumstances permitted by Part I, Section D, or to
remedy any prior deficient dividend thereunder.
(g) In the event of a "Transfer Event" (as defined in paragraph (h)
of this Section F(ii)) in respect of any share of Class B Common Stock,
such share shall be automatically converted into one share of Class A
Common Stock as at the time of the Transfer Event in the same manner and
subject to the same adjustments as set forth in paragraphs (a) through
(f), inclusive, of this Section F(ii) as if written notice thereof had
been given to the Corporation thereunder.
(h) For purposes of this Section F, (1) a "Transfer Event" in
respect of a specific holder includes or shall be deemed to have occurred
upon (i) any sale, assignment, transfer, pledge or other disposition,
including by gift, devise, intestacy, operation of law or otherwise, of
any of the shares of the Class B Common Stock by such holder other than to
Stanley D. Black or Emilia F. Black or to a "Controlled Person" (as
defined below) of either of them, (ii) the holder of Class B Common Stock
voluntarily files a petition under any bankruptcy or insolvency law or a
petition for the appointment of a receiver, or makes an assignment for the
benefit of creditors, (iii) the holder of Class B Common Stock is subject
involuntarily to such a petition or assignment or any creditor or other
Person
<PAGE>
obtains an attachment or other legal or equitable interest in any
shares of the Class B Common Stock of such holder, and such involuntary
petition, assignment or attachment is not discharged within 90 days after
creation, or (iv) if the holder of Class B Common Stock is required to
transfer any such shares by reason of a judgment, court order or decree
from which no appeal may be taken or by operation of law; (2) "Person"
shall have the meaning set forth in Section H of Article 6 hereof; (3) a
"Controlled Person" shall mean with respect to a specified holder any
Person which is, directly or indirectly, controlled by or under direct or
indirect common control with such specified holder. For the purpose of
this definition, "Control" when used with respect to any Person means the
sole or shared power to vote, or to direct the voting of, and/or the sole
or shared power to dispose of, or to direct the disposition of, shares of
Class B Common Stock, directly or indirectly, through ownership, proxy, or
any contract, arrangement, understanding, relationship, or otherwise; and
the term "controlled" shall have meanings correlative to the foregoing.
(i) Determinations with respect to Transfer Events described in
subparagraph (h) of this Section F(ii) shall be made by majority vote of
the entire Board of Directors of the Corporation.
PART II - PREFERRED STOCK
(i) The 1,000,000 shares of Preferred Stock (the "Preferred Stock") may
consist of one or more series. The Board of Directors is hereby empowered
to establish and designate, from time to time, the different series for
the shares of Preferred Stock and the variations in the relative rights
and preferences as between the different series as provided in paragraph
(ii) below. In the event that at any time the Board of Directors shall
have established and designated one or more series of Preferred Stock
consisting of a number of shares less than all of the authorized number of
shares of Preferred Stock, the remaining authorized shares of Preferred
Stock shall be deemed to be shares of an undesignated series of Preferred
Stock until designated by the Board of Directors as being a part of a
series previously established or a new series then being established by
the Board of Directors.
(ii) Subject to the provisions of this Article 4, the Board of Directors
is authorized to establish one or more series of Preferred Stock and, to
the extent now or hereafter permitted by the laws of the Commonwealth of
Massachusetts, to fix and determine the preferences, voting powers,
qualifications and special or relative rights or privileges of each series
including, but not limited to:
(a) the number of shares to constitute such series and the
distinctive designation of such series;
(b) the dividend rate on the shares of such series and preferences,
if any, and the special and relative rights of such shares of such
series as to dividend;
(c) whether or not the shares of such series shall be redeemable,
and, if redeemable, the price, terms and manner of redemption;
(d) the preferences, if any, and the special and relative rights of
the shares of such series upon liquidation of the Corporation;
(e) whether or not the shares of such series shall be subject to
the operation of a sinking or purchase fund and, if so, the terms
and provisions of such fund;
<PAGE>
(f) whether or not the shares of such series shall be convertible
into shares of any other class or of any other series of the same
or any other class of stock of the Corporation and, if so, the
conversion price or ration and other conversion rights;
(g) the conditions under which the shares of such series shall have
separate voting rights or no voting rights; and
(h) such other designations, preferences and relative,
participating, optional or other special rights and qualifications,
limitations or restrictions of such series to the full extent now
and hereafter by the laws of the Commonwealth of Massachusetts.
<PAGE>
ARTICLE 6
Other lawful provisions, if any, for the conduct and regulation of the
business and affairs of the Corporation, for its voluntary dissolution, or for
limiting, defining, or regulating the powers of the Corporation, or of its
directors or stockholders, or of any class of stockholders:
A. For the conduct and regulation of the business and affairs of the
Corporation, and in further limitation, definition and regulation of the powers
of the Corporation and of its directors and of its stockholders or any class
thereof, as the case may be, it is further provided that:
(1) The business of the Corporation shall be conducted by the
officers of the Corporation under the supervision of the Board of
Directors.
(2) The number of directors which shall constitute the entire Board
of Directors shall be fixed by, or in the manner provided in, the
By-Laws of the Corporation. The "entire" Board of Directors means
the total number of directors (assuming no vacancies) which the
Corporation would have under or pursuant to the By-Laws in effect
at the time such number is to be determined. No election of
Directors need be by written ballot.
(3) The By-Laws of the Corporation may provide that the Board of
Directors of the Corporation may make, amend or repeal the By-Laws
at any time in whole or in part by a majority vote of the
"Continuing Directors" (as defined in Section H below), except with
respect to any provision thereof which by law or the By-Laws
requires action by the stockholders. The stockholders may also
make, amend or repeal the By-Laws by the affirmative vote of the
holders of a majority of the shares of "Voting Stock" (as defined
in Section H below) then outstanding. In no event shall any
amendment to the By-Laws provide for the classification of
Directors of the Corporation for staggered terms pursuant to the
provisions of subsection (b) of Section 50A of the Massachusetts
Business Corporation Law be effective unless the same shall be set
forth in an amendment to these Restated Articles of Organization or
in a By-Law adopted by the Board of Directors by a majority vote of
the entire Board of Directors.
B. The Corporation may be a general or limited partner in any business
enterprise which the Corporation would have power to conduct by itself.
C. The Corporation may, to the fullest extent permitted by Section 67 of
the Massachusetts Business Corporation Law, as same may be amended and
supplemented, indemnify any and all persons whom it shall have power to
indemnify under said section from and against any and all of the expenses,
liabilities or other matters referred to in or covered by said section, and the
indemnification provided for herein shall not be deemed exclusive of any other
rights to which a person indemnified may be entitled under any By-Law,
agreement, vote of stockholders or disinterested Directors of otherwise, both as
to action in his official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has ceased to be
Director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
D. From time to time any of the provisions of these Restated Articles of
Organization may be amended, altered or repealed, and other provisions
authorized by the laws of the
<PAGE>
Commonwealth of Massachusetts at the time in force may be added or inserted in
the manner and at the time prescribed by said laws, and all rights at any time
conferred upon the stockholders of the Corporation by these Restated Articles of
Organization are granted subject to the provisions of this Section D of this
Article 6.
E. No Director shall be personally liable to the Corporation or its
stockholders for monetary damages for any breach of fiduciary duty by such
Director as a Director. Notwithstanding the foregoing sentence, a director shall
be liable to the extent provided by applicable law (i) for breach of the
Director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Sections 61 and 62 of the Massachusetts
Business Corporation Law or (iv) for any transaction from which the director
derived an improper personal benefit. No amendment to or repeal of this Section
E of Article 6 shall apply to or have any effect on the liability or alleged
liability of any director of the Corporation for or with respect to any acts or
omissions of such Director occurring prior to such amendment.
F. The provisions of Chapter 110F of the Massachusetts General Laws shall
not apply to the Corporation.
G. The Board of Directors of the Corporation, when evaluating any offer of
another person to (a) purchase or exchange any securities or property for any
outstanding equity securities of the Corporation, (b) merge or consolidate the
Corporation with another corporation, or (c) purchase or otherwise acquire all
or substantially all of the properties and assets of the Corporation, shall in
connection with the exercise of its judgment in determining what is in the best
interests of the Corporation and its stockholders, give due consideration not
only to the price or other consideration being offered, but also to all other
relevant factors, including without limitation, the interests of the
Corporation's employees, suppliers, creditors and customers, the economy of the
state, region and nation, community and societal considerations, and the
long-term and short-term interests of the Corporation and its stockholders,
including the possibility that these interests may be better served by the
continued independence of the Corporation.
<PAGE>
H. Definitions
The following definitions shall apply for the purpose of Article 4 and
this Article 6:
(a) "Affiliate" shall have the meaning given such term in Rule 12b-2 under
the Exchange Act.
(b) "Continuing Director" shall mean any member of the Board of Directors
who is not an Affiliate of any Related Person and who was a member of the Board
of Directors prior to the time that any such Related Person became a Related
Person, and any successor of a Continuing Director who is unaffiliated with any
Related Person and is recommended to succeed a Continuing Director by a majority
of the Continuing Directors then on the Board of Directors. Notwithstanding the
above, a majority of the then existing Continuing Directors can deem a new
director to be a Continuing Director, even though such person is Affiliated with
a Related Person.
(c) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, from time to time.
(d) "Person" shall mean any individual, firm, partnership, joint venture,
joint stock company, trust, business trust, corporation, unincorporated
association or other entity of whatsoever nature.
(e) "Related Person" shall mean any Person (other than the Corporation,
any Subsidiary or any individual who was as stockholder of the Corporation on
May 1, 1994 which, together with such Person's Affiliates and Associates and
with any other Person (other than the Corporation, any Subsidiary or any
individually who was a stockholder of the Corporation on May 1, 1994) with which
such Person or they have entered into any agreement, arrangements or
understanding with respect to acquiring, holding or disposing of Voting Stock,
acquires beneficial ownership (as defined in Rule 13d-3 of the Exchange Act,
except that such term shall include any Voting Stock which such person has the
right to acquire, whether or not such right may be exercised within 60 days),
directly or indirectly of more than 5% of the voting power of the outstanding
Voting Stock after May 1, 1994.
(f) "Subsidiary" shall mean any corporation in which a majority of the
capital stock entitled to vote generally in the election of directors is owned,
directly or indirectly, by the Corporation.
(g) "Voting Stock" shall mean all of the then outstanding shares of the
capital stock of the Corporation entitled to vote generally in the election of
directors.
<PAGE>
DETACH HERE TRE1
PROXY
TREND LINES, INC.
1996 ANNUAL MEETING OF STOCKHOLDERS JULY 17,1996
The undersigned hereby appoints Stanley D. Black and Ronald L. Franklin,
and each of them acting singly, with full power of substitution, proxies to
represent the undersigned at the 1996 Annual Meeting of Stockholders of TREND
LINES, INC. to be held July 17, 1996 at 11:00 a.m. at the offices of the
Company, 135 American Legion Highway, Revere, Massachusetts 02151, and at any
adjournment or adjournments thereof, to vote in the name and place of the
undersigned, with all powers which the undersigned would possess if personally
present, all of the shares of TREND LINES, INC. standing in the name of the
undersigned upon the matters set forth in the Notice of and Proxy Statement for
the meeting in accordance with the instructions on the reverse side and upon
such other business as may properly come before the meeting.
THE BOARD RECOMMENDS AN AFFIRMATIVE VOTE ON ALL PROPOSALS SPECIFIED.
SHARES WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THE SHARES
REPRESENTED WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND FOR THE ADOPTION OF
THE PROPOSED AMENDMENTS TO THE RESTATED ARTICLES OF ORGANIZATION, ALL AS SET
FORTH IN THE PROXY STATEMENT.
PLEASE DATE AND SIGN THIS PROXY IN THE SPACE PROVIDED AND RETURN IT IN THE
ENCLOSED ENVELOPE, WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON.
PLEASE VOTE, DATE, AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED
ENVELOPE.
Please sign this proxy exactly as your name appears on the books of the
Company. Joint owners should each sign personally. Trustees and other
fiduciaries should indicate the capacity in which they sign, and where more than
one name appears, a majority must sign. If a corporation, this signature should
be that of an authorized officer who would state his or her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ------------------------------------ ---------------------------------------
- ------------------------------------ ---------------------------------------
- ------------------------------------ ---------------------------------------
<PAGE>
TREND LINES, INC.
Dear Stockholder:
Please take note of the important information enclosed with this Proxy Ballot.
There are a number of issues related to the management and operation of the
Company that require your immediate attention and approval. These are discussed
in the attached proxy material.
Your vote counts, and you are strongly encouraged to exercise your right to vote
your shares.
Please mark the boxes on the proxy card to indicate how your shares shall be
voted. Then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope.
Your vote must be received prior to the Annual Meeting of Stockholders to be
held on July 17, 1996.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Trend Lines, Inc.
DETACH HERE
[X] Please mark votes as in this example.
1. Election of Directors
Nominees: Stanley D. Black, Karl P. Sniady, Ronald L.
Franklin, John A. McGregor, Norman W. Zagorsky, Merrill Zenner and Richard
Mandell
[ ] FOR [ ] WITHHOLD
[ ]
-------------------------------------
For all nominees except as noted above
2. To amend the Restated Articles of Organization to eliminate certain
supermajority voting provisions.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To amend the Restated Articles of Organization to provide that shares of
Class B Common Stock converted into shares of Class A Common Stock are restored
to the status of authorized but unissued stock, available for reissuance in
connection with certain dividends and other distributions of capital stock.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
MARK HERE FOR ADDRESS
CHANGE AND NOTE AT LEFT [ ]
MARK HERE IF YOU PLAN
TO ATTEND THE MEETING [ ]
MARK HERE FOR COMMENTS
AND NOTE OF REVERSE [ ]
Please be sure to sign and date this Proxy.
Signature: _________________________________
