<PAGE> 1
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 Section 240.14a-11(c) or ss.240.14a-12
Richman Gordman 1/2 Price Stores, 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.
- ---
$500 per each party to the controversy pursuant to Exchange Act Rule
- --- 14a-6(i)(3)
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
1) Title of each class of securities to which transaction applies:_________
2) Aggregate number of securities to which transaction applies:____________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:________________________
5) Total fee paid:_________________________________________________________
Fee paid previously with preliminary materials
- ---
Check box if any part of the fee is offset as provided by Exchange Act
- ---
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:_________________________________________________
2) Form, Schedule or Registration Statement No.:___________________________
3) Filing Party:___________________________________________________________
4) Date Filed:_____________________________________________________________
<PAGE> 2
[1/2 PRICE LOGO]
12100 WEST CENTER ROAD
OMAHA, NEBRASKA 68144
[May 26, 1998]
To the Shareholders of Richman Gordman 1/2 Price Stores, Inc:
Our Corporation will hold a Special Meeting of Shareholders (the
"Special Meeting") on June 25, 1998, at the Corporation's offices at 12100 West
Center Road, Omaha, Nebraska.
A Notice of the meeting, a Proxy and Proxy Statement containing
information about matters to be acted upon are enclosed. Also enclosed is the
Corporation's Annual Report for its fiscal year ended January 31, 1997. Holders
of Common Stock are entitled to vote at the Special Meeting on the basis of one
vote for each share held. IF YOU ATTEND THE SPECIAL MEETING, YOU RETAIN THE
RIGHT TO VOTE IN PERSON EVEN THOUGH YOU PREVIOUSLY MAILED THE ENCLOSED PROXY.
It is important that your shares be represented at the meeting whether
or not you are personally in attendance, and I urge you to review carefully the
Proxy Statement and sign, date and return the enclosed Proxy at your earliest
convenience.
Very truly yours,
Paul M. Bass, Jr.
Chairman of the Board
<PAGE> 3
[1/2 PRICE LOGO]
12100 WEST CENTER ROAD
OMAHA, NEBRASKA 68144
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 25, 1998
To the Shareholders of Richman Gordman 1/2 Price Stores, Inc:
NOTICE IS HEREBY GIVEN that a Special Meeting of the Shareholders of
Richman Gordman 1/2 Price Stores, Inc., a Delaware corporation (the
"Corporation"), will be held on June 25, 1998, at 10:00 a.m., central time, at
12100 West Center Road in Omaha, Nebraska, for the following purposes:
1. To approve a proposed amendment to the Corporation's Amended and
Restated Certificate of Incorporation; and
2. To transact such other business as may properly come before the
meeting and any adjournment thereof.
Only holders of shares of the Series A Common Stock and the Series B
Option Common Stock of the Corporation of record at the close of business on May
13, 1998, will be entitled to notice of, and to vote at, the meeting and any
adjournment thereof.
By Order of the Board of Directors
Michael A. Mallaro,
Secretary
Omaha, Nebraska
[May 26, 1998]
YOUR OFFICERS AND DIRECTORS DESIRE THAT ALL SHAREHOLDERS BE PRESENT OR
REPRESENTED AT THE SPECIAL MEETING. EVEN IF YOU PLAN TO ATTEND IN PERSON, PLEASE
DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ENCLOSED POSTAGE-PREPAID
ENVELOPE AT YOUR EARLIEST CONVENIENCE SO THAT YOUR SHARES MAY BE VOTED. IF YOU
DO ATTEND THE SPECIAL MEETING, YOU RETAIN THE RIGHT TO VOTE EVEN THOUGH YOU
MAILED THE ENCLOSED PROXY. THE PROXY MUST BE SIGNED BY EACH REGISTERED HOLDER
EXACTLY AS THE STOCK IS REGISTERED.
<PAGE> 4
[1/2 PRICE LOGO]
12100 WEST CENTER ROAD
OMAHA, NEBRASKA 68144
PROXY STATEMENT
FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 25, 1998
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Richman Gordman 1/2 Price Stores, Inc., a Delaware
corporation (the "Corporation"), of proxies to be voted at the Special Meeting
of Shareholders to be held on June 25, 1998, or any adjournment thereof. The
date on which this Proxy Statement and the enclosed form of proxy are first
being sent or given to shareholders of the Corporation is on or about [May 26,
1998].
PURPOSES OF THE MEETING
The Special Meeting of the Shareholders is to be held for the purposes
of (1) approving a proposed amendment to the Corporation's Amended and Restated
Certificate of Incorporation (the "Certificate of Incorporation") (see AMENDMENT
OF CERTIFICATE OF INCORPORATION); and (2) transacting such other business as may
properly come before the meeting or any adjournment thereof.
On January 24, 1998, the Creditors' Committee under the Debtors' First
Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code for
Richman Gordman Stores, Inc., Richman Gordman Department Stores, Inc., and 1/2
Price Stores, Inc. (the "Plan") granted its 1998 Creditors' Committee Waiver.
The purpose of the 1998 Creditors' Committee Waiver was to waive certain
provisions of the Plan to extend the time for payment of a portion of the
Corporation's remaining obligation to the unsecured creditors (the "Creditors")
for up to approximately one year, and to extend the time for the exercise of the
option (the "Option") with respect to the Series B Option Common Stock to
correspond with the final payment. The Corporation requested the 1998 Creditors'
Committee Waiver in order to provide additional liquidity for the Corporation
during the current fiscal year. Because the Corporation's Certificate of
Incorporation also reflects the terms of the Option, the Corporation has
proposed the amendment to the Certificate of Incorporation in order to make the
terms of the Option consistent both in the Plan and in the Certificate of
Incorporation. For a complete discussion of this proposal, please see AMENDMENT
OF CERTIFICATE OF INCORPORATION.
For the proposed amendment to the Corporation's Certificate of
Incorporation to be approved by the shareholders, the proposed amendment must
receive the favorable vote of the holders of two-thirds (2/3) of the
Corporation's Common Stock, as well as the favorable vote of the holders of a
majority of the Corporation's Series B Option Common Stock, voting as a class.
<PAGE> 5
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
APPROVAL OF THE PROPOSED AMENDMENT TO THE CORPORATION'S AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION.
VOTING AT THE MEETING
The record date for holders of Common Stock entitled to notice of, and
to vote at, the Special Meeting of Shareholders is the close of business on May
13, 1998, at which time the Corporation had outstanding and entitled to vote at
the meeting 26,895,000 shares of Common Stock, consisting of 16,695,000 shares
of Series A Common Stock and 10,200,000 shares of Series B Option Common Stock.
The presence, in person or by proxy, of the holders of a majority of the
shares of Common Stock outstanding and entitled to vote at the Special Meeting,
and a majority of the shares of Series B Option Common Stock outstanding and
entitled to vote at the Special Meeting, are necessary to constitute a quorum.
Abstentions and shares held by brokers, banks, other institutions and nominees
that are voted on any matter at the Special Meeting are included in determining
the presence of a quorum for the transaction of business at the commencement of
the Special Meeting and on those matters for which the broker, nominee or
fiduciary has authority to vote. In deciding all questions, a shareholder shall
be entitled to one vote, in person or by proxy, for each share of Common Stock
held in his name at the close of business on the record date.
Each proxy delivered to the Corporation, unless the shareholder
otherwise specifies therein, will be voted FOR the approval of the proposed
amendment to the Corporation's Certificate of Incorporation. In each case where
the shareholder has appropriately specified how the proxy is to be voted, it
will be voted in accordance with his specification. As to any other matter or
business which may be brought before the meeting, a vote may be cast pursuant to
the accompanying proxy in accordance with the judgment of the person or persons
voting the same, but neither management nor the Board of Directors of the
Corporation knows of any such other matter or business. Any shareholder has the
power to revoke his proxy at any time insofar as it is then not exercised by
giving notice of such revocation, either personally or in writing, to the
Secretary of the Corporation or by the execution and delivery to the Corporation
of a new proxy dated subsequent to the original proxy.
DISSENTERS' RIGHTS OF APPRAISAL
Pursuant to Section 262(c) of the Delaware General Corporation Law,
shareholders of a Delaware corporation have appraisal rights as a result of an
amendment to the corporation's certificate of incorporation only if so provided
in the certificate of incorporation. The Corporation's Certificate of
Incorporation does not grant dissenting shareholders appraisal rights under
these circumstances.
2
<PAGE> 6
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of April 15, 1998, there were 26,895,000 shares of the Corporation's
Common Stock outstanding, consisting of 16,695,000 shares of Series A Common
Stock, and 10,200,000 shares of Series B Option Common Stock. The following
table sets forth certain information as of April 15, 1998, with respect to the
Common Stock ownership of: (i) those persons or groups (as that term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) who
beneficially own more than 5% of the Common Stock; (ii) each Director of the
Corporation (except that those Directors who are the beneficial owners of no
shares of Common Stock are not listed in the table); (iii) the Corporation's
named executive officers (as that term is defined in Item 402(a) of Reg. S-K)
identified as such in the Corporation's Annual Report for its fiscal year ended
January 31, 1998 (except that the named executive officers who are the
beneficial owners of no shares of Common Stock are not listed in the table); and
(iv) all Officers and Directors of the Corporation, 16 in number, as a group:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Amount and Nature
Title of Class and Name of Beneficial of Beneficial Percent Percent
Series Owner Ownership of Class of Series
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, R.G. Stock Trust, 16,200,000 Shares(1) 60.23% 97.04%
Series A Jeffrey J. Gordman,
Trustee
12100 West Center
Road, Omaha,
Nebraska 68144
- ----------------------------------------------------------------------------------------------
Common Stock, Jeffrey J. Gordman 16,200,000 Shares(2) 60.23% 97.04%
Series A 12100 West Center
Road, Omaha,
Nebraska 68144
- ----------------------------------------------------------------------------------------------
</TABLE>
- -------------
(1)The 16,200,000 shares of Series A Common Stock are the property of
the R.G. Stock Trust created by Dan Gordman. Mr. Jeffrey J. Gordman is sole
trustee of the trust and as such, has exclusive voting and investment power with
respect to all shares held by the trust. The three beneficiaries of the trust
are Mr. Jeffrey J. Gordman, Mr. Nelson T. Gordman and Mr. Jerome P. Gordman, all
of whom are currently members of the Corporation's Board of Directors. Mr.
Jeffrey J. Gordman is also a named executive officer of the Corporation.
(2)As sole trustee of the R.G. Stock Trust, Mr. Gordman has exclusive
voting and investment power with respect to the shares held by the trust. As a
beneficiary of the trust with a 35% interest, Mr. Gordman in his individual
capacity is the beneficial owner of 5,670,000 shares of Series A Common Stock,
as well as an additional 4,860,000 shares of Series A Common Stock, representing
the 30% beneficial interest in the trust of his father, Mr. Jerome P. Gordman.
3
<PAGE> 7
<TABLE>
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, Nelson T. Gordman 5,670,000 Shares(3) 21.08% 33.96%
Series A 10777 North 60th St.
Omaha, Nebraska
68152
- ----------------------------------------------------------------------------------------------
Common Stock, Jerome P. Gordman 4,860,000 Shares(4) 18.07% 29.11%
Series A 9925 Essex Drive
Omaha, Nebraska
60603
- ----------------------------------------------------------------------------------------------
Common Stock, Norman J. 495,000 Shares 1.84% 2.96%
Series A Farrington(5)
- ----------------------------------------------------------------------------------------------
Common Stock, All Officers and 16,695,000 62.07% 100.00%
Series A Directors as a group
- ----------------------------------------------------------------------------------------------
Common Stock, Harris Trust & 3,123,459 Shares 11.61% 30.62%
Series B Option Savings Bank
200 West Monroe St.
P.O. Box 755
Chicago, Illinois
60603
- ----------------------------------------------------------------------------------------------
Common Stock, Nelson T. Gordman 632,939 Shares(6) 2.35% 6.20%
Series B Option 10777 North 60th St.
Omaha, Nebraska
68152
- ----------------------------------------------------------------------------------------------
</TABLE>
- -------------
(3)Mr. Gordman is the beneficial owner of 5,670,000 shares of Series A
Common Stock as a beneficiary in the R.G. Stock Trust with a 35% interest.
(4)Mr. Gordman is the beneficial owner of 4,860,000 shares of Series A
Common Stock as a beneficiary of the R.G. Stock Trust with a 30% interest.
(5)Mr. Farrington is a named executive officer of the Company.
(6)Through his interest in Gordman family entities which are the
registered owners of shares of Series B Option Common Stock, Mr. Gordman is the
beneficial owner of 632,939 shares of Series B Option Common Stock.
4
<PAGE> 8
<TABLE>
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, Jerome P. Gordman 56,326 Shares(7) 0.21% 0.55%
Series B Option 9925 Essex Drive
Omaha, Nebraska
60603
- ----------------------------------------------------------------------------------------------
Common Stock, All Officers and 689,265 Shares 2.56% 6.76%
Series B Option Directors as a group
- ----------------------------------------------------------------------------------------------
</TABLE>
AMENDMENT OF CERTIFICATE
OF INCORPORATION
Background
The proposed amendment to the Corporation's Certificate of
Incorporation would amend the provisions of Paragraph 6 of the Corporation's
Certificate of Incorporation. Paragraph 6 concerns the terms of the Series B
Option Common Stock, and the conditions under which the option may be exercised
by the Company or the Gordman Designee. As it exists, Paragraph 6 is derived
from the provisions of the Debtors' First Amended Joint Plan of Reorganization
Under Chapter 11 of the Bankruptcy Code for Richman Gordman Stores, Inc.,
Richman Gordman Department Stores, Inc., and 1/2 Price Stores, Inc. (the
"Plan").
On June 17, 1992, Richman Gordman Stores, Inc., Richman Gordman
Department Stores, Inc., and 1/2 Price Stores, Inc. (collectively, the
"Debtors"), filed for protection under the United States Bankruptcy Code in the
United States Bankruptcy Court for the District of Nebraska (the "Court"). On
October 5, 1993, the Court confirmed the Plan. In part, the Plan provided for
the incorporation of the Corporation as the successor in interest to the
Debtors, and the issuance of the Corporation's Common Stock to former
shareholders and management and to unsecured creditors (the "Creditors"). The
Plan also provided for additional annual cash payments to the Creditors. The
term of the Plan was to extend until the later of September 15, 1998, or payment
in full of all amounts due under the Plan.
Pursuant to Section 10.03 of the Plan, the shares of Common Stock
issued to Creditors are subject to an option (the "Option") to purchase
exercisable by the Corporation or Dan Gordman or his designee. Dan Gordman's
designee for this purpose is the trustee of the R.G. Stock Trust, Mr. Jeffrey J.
Gordman. Jeff Gordman is currently a Director of the Corporation, as well as the
Corporation's President and Chief Executive Officer. In order to distinguish
those shares of Common Stock subject to the Option from those shares not subject
to the Option, the Corporation's
- -------------
(7)Through his interest in Gordman family entities which are the
registered owners of shares of Series B Option Common Stock, Mr. Gordman is the
beneficial owner of 56,326 shares of Series B Option Common Stock.
5
<PAGE> 9
Board of Directors designated the shares of Common Stock issued to former
shareholders and management the "Series A Common Stock," and designated those
shares of Common Stock issued to Creditors the "Series B Option Common Stock."
Section 10.03 of the Plan provided that the Option was exercisable with respect
to all record holders of the Series B Option Common Stock as of February 2,
1998, provided that all amounts due under the Plan had been paid to Creditors as
of that date. This date was selected to correspond with the date the final
payment to Creditors was anticipated to be escrowed pursuant to the Plan.
The exercise price of the Option was set in the Plan as fair market
value of the stock on February 2, 1998, less payments of Excess Cash Balance
made to Creditors during the term of the Plan. Although the Corporation made
Excess Cash Balance payments following fiscal years 1993 and 1994, the
Corporation's cash position during fiscal year 1995 was such that all of the
prior Excess Cash Balance payments were utilized to make a portion of the
minimum payment to Creditors for fiscal year 1995. There have been no Excess
Cash Balance payments since the end of fiscal year 1994, and accordingly, there
have been no Excess Cash Balance payments which would result in a reduction from
fair market value with respect to the Option exercise price.
The mechanics for exercising the Option were also specified in Section
10.03 of the Plan. To exercise the Option, the Corporation was to appoint within
30 days following receipt of its fiscal year 1997 audited financial statements
an independent appraiser, to be mutually acceptable to a majority of the
Corporation's Directors who were appointed by the Creditors, as well as a
majority of those Directors who were appointed by Dan Gordman or his successor.
The appraiser was to determine fair market value of the Common Stock, giving
consideration to factors such as net cash flow, market multiples of similar
companies, liquidity and other relevant factors. Within 30 days after receiving
the appraisal, the Corporation was required to elect whether to exercise the
Option in whole or in part. To the extent that the Corporation did not elect to
exercise the Option in its entirety, Dan Gordman or his designee would have 30
days in which to elect to exercise the Option. Payment of the exercise price by
the Corporation and/or Dan Gordman or his designee was to occur within 120 days
and 180 days, respectively, after receipt of the appraisal. The provisions of
Section 10.03 of the Plan regarding the Option and exercise mechanics are
included in the Corporation's Certificate of Incorporation as Paragraph 6.
The Plan also provided that the Creditors' Committee, as representative
of the Corporation's Creditors, was to continue in existence throughout the term
of the Plan for the following primary purposes: (i) monitoring compliance with
the Plan; (ii) monitoring defaults, if any, and granting waivers and
modifications to the Plan; and (iii) exercising rights and duties expressly
granted in the Plan.
On January 24, 1998, the Creditors' Committee granted its Waiver of
Creditors' Committee of Deferred Payment of 1998 Minimum Payment (the "1998
Creditors' Committee Waiver") to extend the time for payment of a portion of the
final Plan payment to Creditors for up to approximately one year. In accordance
with the 1998 Creditors' Committee Waiver, the Corporation escrowed a payment to
Creditors in the amount of $1,967,000 on January 31, 1998, and this amount was
disbursed to Creditors on March 18, 1998. The 1998 Creditors' Committee Waiver
also deferred
6
<PAGE> 10
the remaining $1.8 million obligation to Creditors and scheduled this obligation
with interest at the rate of 12% per annum to be escrowed in three installments
of $200,000 principal plus interest at the end of each of April, July and
October, 1998, with the final $1.2 million principal plus interest to be
escrowed on January 31, 1999, and disbursed to Creditors not later than March
15, 1999.
The 1998 Creditors' Committee Waiver also affected the provisions of
Section 10.03 of the Plan concerning the Option exercise provisions. The Plan
and the Corporation's Certificate of Incorporation provided that the Option
could be exercised following the scheduled final payment. With the extension of
the date for final payment provided in the 1998 Creditors' Committee Waiver, the
Option terms required amendment to coordinate with the extended payment date.
Accordingly, the 1998 Creditors' Committee Waiver amended the record date with
respect to the Option exercise from February 2, 1998, to the first business day
following payment in escrow of the balance of the $1.8 million obligation to
Creditors. Pursuant to the 1998 Creditors' Committee Waiver, the appointment of
the appraiser is to occur within 30 days after the record date as affected by
the 1998 Creditors' Committee Waiver. The 1998 Creditors' Committee Waiver
preserved the remaining provisions of Section 10.03, including the time periods
in which the Corporation and the Gordman designee have in which to elect to
exercise the Option, the Option exercise payment periods and procedures, and
other related provisions, except that such periods run from the first business
day following payment of the remaining obligation to Creditors.
Purposes and Effects of
Proposed Amendment
The proposed Amendment to the Corporation's Amended and Restated
Certificate of Incorporation (the "Amendment") was approved by the Corporation's
Board of Directors on May 11, 1998. The full text of the Amendment, marked to
show changes from the existing Paragraph 6, is set forth in "APPENDIX A --
PROPOSED AMENDMENT," attached hereto and made a part hereof by this reference.
In Appendix A, the language proposed to be added to Paragraph 6 of the
Corporation's Amended and Restated Certificate of Incorporation appears as
underscored, and the language proposed to be removed from Paragraph 6 appears in
brackets. The following discussion of the Amendment is qualified in its entirety
by the Amendment as set forth in Appendix A, and shareholders are strongly
encouraged to refer to specific language of the Amendment.
The purpose of the Amendment is to amend Paragraph 6 of the
Corporation's Amended and Restated Certificate of Incorporation. As discussed in
full above, Paragraph 6 concerns the Option and the exercise mechanics, and was
included in the Certificate of Incorporation to reflect the provisions of
Section 10.03 of the Plan concerning the special characteristics of the Series B
Option Common Stock.
The Corporation's Board of Directors requested the 1998 Creditors'
Committee Waiver in order to provide additional liquidity for the Corporation
during the current fiscal year. The Corporation's Board of Directors approved
the Amendment and recommended that it be submitted to shareholders for their
approval in order to harmonize the provisions of the Certificate of
7
<PAGE> 11
Incorporation with the provisions of Section 10.03 of the Plan, as affected by
the 1998 Creditors' Committee Waiver.
Under the provisions of the Amendment, the first business day following
payment in escrow of the remaining obligation to Creditors is defined as the
"Valuation Date." The Option is exercisable with respect to those Series B
Option Common Stock shareholders of record on the Valuation Date. In order to
exercise the Option, the Company must appoint an independent appraiser within 30
days after the Valuation Date, who will appraise the value of the Class B Option
Common Stock as of the Valuation Date. In order to exercise the Option, the
Corporation must give notice to shareholders of the Series B Option Common Stock
within 30 days following receipt of the appraisal (the "Valuation Delivery
Date"). If the Corporation does not elect to exercise the Option within the
30-day period, the Gordman designee will have 30 days in which to elect to
exercise the Option. If the Option is exercised by the Corporation and/or the
Gordman designee, the exercise price must be paid to shareholders within 120
and/or 180 days, respectively, following the Valuation Delivery Date.
As noted above, pursuant to the 1998 Creditors' Committee Waiver, the
final payment of the remaining obligation to Creditors is due to be escrowed on
January 31, 1999, and paid to Creditors not later than March 15, 1999. Thus, if
the final payment is escrowed on January 31, 1999, then the Valuation Date would
be February 1, 1999. However, the Creditors also hold a junior mortgage and
security interest on portions of the property comprising the Corporation's
Distribution Center. The Corporation is currently evaluating a mortgage of these
portions of the Distribution Center, but as of the date of this Proxy Statement,
the Corporation has not entered into any definitive agreement for this purpose.
If the Corporation were to effect such a transaction before February 1, 1999, it
is contemplated that the remaining obligation to Creditors would be paid at such
time, which would result in the Valuation Date arising before February 1, 1999.
There can be no assurances that the Corporation will determine to effect a
mortgage of these portions of the Distribution Center.
The shares of Series B Option Common Stock are not currently listed for
trading on any securities exchange, and no active market currently exists for
shares of the Series B Option Common Stock. In addition, no active market is
expected to develop for the Series B Option Common Stock over the foreseeable
future, regardless of whether or not the proposed Amendment is approved by
shareholders.
Purposes and Effect of
Shareholder Approval
Paragraph 10 of the Corporation's Amended and Restated Certificate of
Incorporation provides that the affirmative vote of the holders of 2/3 of the
outstanding shares of the Common Stock shall be required to amend the Amended
and Restated Certificate of Incorporation. In addition, under Delaware law, the
Amendment will require the affirmative vote of the holders of a majority of the
issued and outstanding shares of the Series B Option Common Stock, voting as a
class.
8
<PAGE> 12
As is indicated above, the Corporation's Board of Directors recommends
that shareholders vote FOR the approval of the Proposed Amendment. The
Directors' recommendation is based upon its belief that Paragraph 6 of the
Corporation's Certificate of Incorporation and Section 10.03 of the Plan (from
which Paragraph 6 was derived) should be consistent and both reflect the
provisions of the 1998 Creditors' Committee Waiver, providing for exercise of
the Option upon escrow of payment in full of the balance of the deferred
remaining minimum obligation to Creditors.
Interest of Certain Persons in
Proposal to be Acted Upon
As indicated above, the purpose of the proposed Amendment is to
harmonize the provisions of Paragraph 6 of the Corporation's Certificate of
Incorporation with the provisions of Section 10.03 of the Plan as affected by
the 1998 Creditors' Committee Waiver. The Board of Directors requested the 1998
Creditors' Committee Waiver in order to give the Corporation additional
liquidity during the current fiscal year. Although that is the basis for the
Board's recommendation of the Amendment, the approval of the Amendment may
benefit several Officers and Directors of the Corporation personally.
As discussed above, Jeffrey J. Gordman is a Director, President and
Chief Executive Officer of the Corporation, as well as the trustee of the R.G.
Stock Trust (and thus the Gordman designee). As a beneficiary of the R.G. Stock
Trust with a 35% interest, Jeff Gordman has an indirect pecuniary interest in
5,670,000 shares of the Series A Common Stock. Mr. Nelson Gordman and Mr. Jerome
Gordman, both Directors of the Corporation, have 35% and 30%, respectively,
beneficial interests in the R.G. Stock Trust, representing indirect pecuniary
interests in 5,670,000 and 4,860,000 shares, respectively, of the Series A
Common Stock. Because Jeff Gordman as Dan Gordman's designee has a subordinate
option to purchase the Series B Option Common Stock, approval of the Amendment
would benefit these Officers and Directors to the extent that the Option is not
exercised by the Corporation.
In addition, Mr. Norman Farrington, who is an executive officer of the
Corporation, is the beneficial owner of 495,000 shares of Series A Common Stock.
Mr. Lance Graves, who is also an executive officer of the Corporation, is deemed
to be the beneficial owner of 250,000 shares of Series A Common Stock subject to
presently exercisable stock options. Messrs. James Cooke, Norm Farrington, Dean
Williamson, Michael Mallaro, Martin Kresge and Ronald Hall, each executive
officers of the Corporation, are also each the beneficial owners of options to
acquire 25,000 shares of the Series A Common Stock. These options are
exercisable upon vesting, and vest in annual 20% increments commencing September
1, 1998. If the Option were exercised by the Corporation and the repurchased
shares of Series B Option Common Stock were retired, each of these beneficial
owners of Series A Common Stock, or options to purchase Series A Common Stock,
would be benefitted to the extent that their proportionate ownership interest in
the Corporation increased.
Lastly, Messrs. Nelson and Jerome Gordman, both Directors of the
Corporation, are the beneficial owners of 632,939 shares and 56,326 shares,
respectively, of the Series B Option
9
<PAGE> 13
Common Stock through their interest in Gordman family partnerships which are the
registered owners of such shares. To the extent that the Option were exercised
by the Corporation or the Gordman designee, these beneficial owners would also
be benefitted because their shares of Series B Option Common Stock would be
purchased.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE PROPOSED
AMENDMENT TO THE CORPORATION'S CERTIFICATE OF INCORPORATION.
OTHER BUSINESS
The Board of Directors knows of no other business to be presented for
action at the Special Meeting. If any matters do come before the Special Meeting
on which action can properly be taken, it is intended that the proxies shall
vote in accordance with the judgment of the person or persons exercising the
authority conferred by the proxy at the Special Meeting.
SHAREHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
The Corporation's next Annual Meeting is scheduled to be held on August
21, 1998 (the "1998 Annual Meeting"). Because the composition of the
Corporation's Board of Directors has been set by the Plan for the past several
years, the Corporation has not elected Directors or proposed other matters
requiring shareholder voting in connection with previous years' Annual Meetings.
In addition, because the term of the Plan will extend beyond the scheduled date
of the 1998 Annual Meeting, shareholders will not vote for the election of
Directors at the 1998 Annual Meeting. Accordingly, the Corporation does not
anticipate that it will solicit proxies with respect to the 1998 Annual Meeting.
Under the rules of the Securities and Exchange Commission, any
shareholder proposal to be considered by the Corporation for inclusion in the
proxy material, if any, for the 1998 Annual Meeting must be received by the
Secretary of the Corporation, 12100 West Center Road, Omaha, Nebraska 68144, a
reasonable time before the solicitation is made. The submission of a proposal
does not guarantee its inclusion in the proxy statement or presentation at the
1998 Annual Meeting unless certain securities laws requirements are met.
EXPENSES OF SOLICITATION OF PROXIES
In addition to the use of the mails, proxies may be solicited by
personal interview and telephone by directors, officers and other employees of
the Corporation, who will not receive additional compensation for such services.
The Corporation has employed ChaseMellon
10
<PAGE> 14
Shareholder Services to aid in the solicitation of proxies at an estimated fee
of $5,500. The Corporation will also request brokerage houses, nominees,
custodians and fiduciaries to forward soliciting materials to the beneficial
owners of stock held of record by them and will reimburse such persons for
forwarding materials. The cost of soliciting proxies will be borne by the
Corporation.
ANNUAL REPORT
The Annual Report to Shareholders covering the fiscal year ended January
31, 1998, accompanies this proxy statement, but is not deemed a part of the
proxy soliciting material, except to the extent that portions of the Annual
Report have been incorporated herein.
PLEASE DATE, SIGN AND RETURN THE PROXY AT YOUR EARLIEST CONVENIENCE IN
THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED FOR MAILING IN THE UNITED STATES.
A PROMPT RETURN OF YOUR PROXY WILL BE APPRECIATED AS IT WILL SAVE THE EXPENSE OF
FURTHER MAILINGS AND TELEPHONE SOLICITATIONS.
BY ORDER OF THE BOARD OF DIRECTORS
MICHAEL A. MALLARO,
SECRETARY
OMAHA, NEBRASKA
MAY 25, 1998
11
<PAGE> 15
APPENDIX A
PROPOSED AMENDMENT
6. Common Stock Repurchase Option.
a. For the purposes of this Certificate of Incorporation:
(1) The term "Allowed Class 3 Claims" means claims held
by unsecured creditors classified in Classes 3A, 3B, or 3C
pursuant to the Plan against the Debtors (as defined in the
Plan) which have been deemed allowed under the Bankruptcy Code
or which have been allowed pursuant to the Plan or by the court
which has confirmed the Plan.
(2) The term "Creditors' Committee" shall mean the
Official Unsecured Creditors' Committee appointed pursuant to
Section 1102 of the Bankruptcy Code or which have been allowed
pursuant to the Plan or by the court which has confirmed the
Plan with respect to the Debtors under the Plan.
(3) The term "Cumulative Minimum Payment" shall mean
the Corporation's contractual obligation to make unconditional
minimum payments of stated principal and stated interest plus
any contingent interest as set forth in Section 6.02 of the Plan
to Holders of Class 3 Claims from the Effective Date (as defined
in the Plan) to the time of computation.
(4) The term "Disqualified Stock" shall have the
meaning assigned in Section 108(a)(10)(B) of the Code.
(5) Other capitalized terms used in this Certificate of
Incorporation and not separately defined in this Certificate of
Incorporation shall have the meaning ascribed to those terms in
the Plan.
b. Upon receipt of a favorable ruling from the Internal Revenue
Service prior to the end of Fiscal Year 1993 (or at such later date as
shall be approved by the Creditors' Committee) concluding that
subjecting the common stock distributed to holders of Allowed Class 3
Claims (the "Creditors' Stock") to the option and the related purchase
adjustment for Excess Cash Balance paid to the holders of Allowed Class
3 Claims described immediately below (the "Option") would not cause the
Creditors' Stock to be "Disqualified Stock", the Corporation and A.D.
(Dan) Gordman or his Designee shall be entitled to exercise the Option,
as provided in this Article 6 and the Plan, to purchase all or a portion
of the Creditors' Stock
<PAGE> 16
at the time and in the manner more specifically described below. If the
Internal Revenue Service does not rule favorably prior to the end of
Fiscal Year 1993 (or at such later date as shall be approved by the
Creditors' Committee), the Plan shall not grant the Option. The Option
may be exercised with respect to all or a portion of the Creditors'
Stock but may not be exercised unless the Cumulative Minimum Payment has
been made. As more particularly provided below, the Corporation shall
have the right to exercise the Option prior to A.D. (Dan) Gordman or his
Designee.
c. Subject to the credit for Excess Cash Balance described
below, the exercise price of the Option with respect to all of the
Creditors' Stock (the "Purchase Price") shall be the price, on [February
2, 1998] the business day immediately following the payment in full of
the Cumulative Minimum Payment (the "Valuation Date"), at which the
Creditors' Stock would change hands between a willing buyer and a
willing seller, each having a reasonable knowledge of the facts and
neither being under any compulsion to act, as determined according to
customary valuation methodologies, including, without limitation,
analysis of the net cash flow and market multiples of comparable
companies, analysis of comparable stock sales, and consideration of
whether the Creditors' Stock is or is not publicly traded as of
[February 2, 1998] the Valuation Date. Within 30 days following the
[receipt by the Corporation of the Fiscal 1997 audited financials]
Valuation Date, an investment banker to be mutually agreed upon by (a)
at least a majority of members of the Corporation's Board of Directors
at the time of such agreement which were selected by the Creditors'
Committee or were the successors to directors selected by the Creditors'
Committee pursuant to Section 10.01 of the plan, and (b) at least a
majority of members of the Corporation's Board of Directors at the time
of such agreement which were selected by A.D. (Dan) Gordman or his
Designee or were the successors to directors selected by A.D. (Dan)
Gordman or his Designee pursuant to Section 10.01 of the Plan, shall be
engaged by and at the expense of the Corporation to determine the
Purchase Price of the Creditors' Stock as of [February 2, 1998] the
Valuation Date (the "Valuation"). The investment banker shall deliver
the final Valuation to A.D. (Dan) Gordman (or his Designee) and the
Corporation. Delivery of the final Valuation shall be deemed to occur on
the day when such Valuation has been mailed to all parties required by
Section 10.03 of the Plan (the "Valuation Delivery Date"). The
investment banker who prepares the Valuation shall be the final arbiter
of the date of the Valuation Delivery Date.
d. The Excess Cash Balance, if any, previously paid to the
holders of Allowed Class 3 Claims ("Paid Excess Cash Balance") shall be
a credit against, and shall reduce, the exercise price for the Option
whether or not (i) the Option is exercised with respect to all or a
portion of the Creditors' Stock, and (ii) the holder of any Creditors'
Stock with respect to which the Option is exercised received such Excess
Cash Balance. To the extent that the Option is exercised with respect to
less than all shares of the Creditors' Stock, the Option shall be
exercised Pro Rata with respect to all shares of Creditors' Stock, and
the exercise price for such Pro Rata share of Creditors' Stock shall be
(i) that percentage of the Purchase Price equal to the percentage of all
Creditors' Stock which such Creditors' Stock represents (the "Pro Rata
Purchase Price"), minus (ii) Paid Excess Cash Balance up to the amount
of the Pro Rata
A-2
<PAGE> 17
Purchase Price, provided, however, that any Paid Excess Cash Balance
which the Corporation applies as a credit and reduction against the Pro
Rata Purchase Price for Creditors' Stock with respect to which the
exercise price is actually paid may not be applied as a credit and
reduction by A.D. (Dan) Gordman or his Designee against the Pro Rata
Purchase Price for Creditors' Stock pursuant to A.D. (Dan) Gordman's or
his Designee's exercise (if any) of the Option.
e. Notice of intent to exercise the Option with respect to any
Creditors' Stock and the amount of such Creditors' Stock must be given
to the holders of the Creditors' Stock who were record holders as of
[February 2, 1998] the Valuation Date (the "Option Record Holders")
within 60 days following the Valuation Delivery Date. Exercise of the
Option with respect to any Creditors' Stock must be completed within 120
days following the expiration of such 60 day period. Exercise of the
Option with respect to any Creditors' Stock shall be deemed completed
upon the mailing by the party exercising the Option (or the agent of
such party) of the full exercise price with respect to such Creditors'
Stock. Notwithstanding the foregoing sentence, the giving of notice of
intent to exercise the Option with respect to all or a part of the
Creditors' Stock within 60 days following the Valuation Delivery Date
shall be deemed completion of the exercise of the Option to the extent
of the Paid Excess Cash Balance to be utilized by the party giving such
notice.
f. If the Corporation intends to exercise the Option with
respect to all or a portion of the Creditors' Stock, it shall give
written notice, not later than 30 days after the Valuation Delivery
Date, to (i) A.D. (Dan) Gordman (or his Designee) at the address of the
Corporation, and (ii) the Option Record Holders. If the Corporation
fails to give such notice within such period with respect to any
Creditors' Stock, the Corporation shall no longer be entitled to
exercise the Option with respect to such Creditors' Stock except upon
the express written consent of A.D. (Dan) Gordman (or his Designee) and
subject to the 60 day notice period for Option Record Holders described
above. If A.D. (Dan) Gordman (or his Designee) shall not have been given
notice by the Corporation of its intent to exercise the Option with
respect to any Creditors' Stock within 30 days after the Valuation
Delivery Date, then A.D. (Dan) Gordman (or his Designee) shall be
entitled to exercise the Option with respect to such Creditors' Stock by
giving notice to the Corporation and the Option Record Holders within 60
days after the Valuation Delivery Date of its intent to exercise the
Option and the amount of Creditors' Stock against which it intends to
exercise the Option. The Corporation shall be obligated to provide A.D.
(Dan) Gordman (or his Designee) a list of the Option Record Holders on
or before 30 days after the Valuation Delivery Date.
g. If the Corporation has timely given notice to A.D. (Dan)
Gordman (or his Designee) and the Option Record Holders of its intent to
exercise the Option with respect to any Creditors' Stock but has not
mailed the full exercise price in cash with respect to such Creditors'
Stock to the Option Record Holders by 120 days after the Valuation
Delivery Date, then, except upon the express written consent of A.D.
(Dan) Gordman (or his Designee), the Corporation shall no longer be
entitled to exercise the Option with respect to such Creditors' Stock
and A.D. (Dan) Gordman (or his Designee) shall be entitled to exercise
the Option with respect to such Creditors' Stock and apply Paid Express
Cash Balance to the same extent as
A-3
<PAGE> 18
intended by the Corporation within 180 days after the Valuation Delivery
Date. The Corporation shall give notice to A.D. (Dan) Gordman (or his
Designee) at the address of the Corporation of its mailing of the full
exercise price in cash to the Option Record Holders with respect to
Creditors' Stock against which the Corporation has exercised the Option
within 3 business days of such mailing.
h. If a favorable ruling is obtained from the Internal Revenue
Service as described above, the Creditors' Stock shall be marked with a
legend indicating that it is subject to the Option more particularly
described in Section 10.03 of the Plan.
A-4
<PAGE> 19
DETACH HERE
PROXY
RICHMAN GORDMAN 1/2 PRICE STORES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Special Meeting of Stockholders to be
held on June 25, 1998
The undersigned stockholder of Richman Gordman 1/2 Price Stores, Inc.,
a Delaware corporation (the "Corporation"), hereby acknowledges receipt of the
Notice of Annual Meeting of Stockholders and Proxy Statement dated May 26, 1998,
and hereby appoints Jeffrey J. Gordman and Michael A. Mallaro, or either or both
of them, proxies and attorneys-in-fact with full power of substitution to each
for and in the name of the undersigned, with all powers the undersigned would
possess if personally present to vote the Common Stock of the undersigned in the
Corporation at the Special Meeting of its stockholders to be held June 25, 1998
at 12100 West Center Road, Omaha, Nebraska at 10:00 a.m., local time, or any
adjournment or postponement thereof. any of such attorneys or substitutes shall
have and may exercise all of the powers of said attorneys-in-fact hereunder.
- ----------- -----------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- ----------- -----------
<PAGE> 20
DETACH HERE
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE STOCKHOLDER, IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL
NO.1 AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY COME BEFORE
THE MEETING.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU INSTRUCT THE PROXIES TO VOTE FOR
PROPOSAL 1.
1. To approve the proposed amendment to the Corporation's Certificate of
Incorporation.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment or
postponement thereof.
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING
THE ENCLOSED ENVELOPE.
Please sign exactly as name appears at left. When shares
are held in more than one name, including joint tenants,
each party should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give
full title as such.
Signature: Date:
--------------------------------------------- -----------------
Signature: Date:
--------------------------------------------- -----------------
