<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:
Preliminary Proxy Statement
- ---
Confidential, for Use of the Commission Only (as permitted by
- --- Rule 14a-6(e)(2)
X Definitive Proxy Statement
- ---
Definitive Additional Materials
- ---
Soliciting Material Pursuant to Section 240.14a-11(c) or Section 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
[LOGO]
12100 WEST CENTER ROAD
OMAHA, NEBRASKA 68144
September 29, 1998
To the Shareholders of Richman Gordman 1/2 Price Stores, Inc:
Our Corporation will hold its Annual Meeting of Shareholders (the "Annual
Meeting") on October 29, 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. Unless you were a shareholder of
record on May 13, 1998, also enclosed is the Corporation's Annual Report for its
fiscal year ended January 31, 1997. Shareholders of record on May 13, 1998, were
provided with the Annual Report on or about May 27, 1998.
Holders of Common Stock are entitled to vote at the Annual Meeting on the
basis of one vote for each share held. IF YOU ATTEND THE ANNUAL 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,
/s/ Jeffrey J. Gordman
Jeffrey J. Gordman,
President and Chief Executive Officer
<PAGE> 3
[LOGO]
12100 WEST CENTER ROAD
OMAHA, NEBRASKA 68144
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 29, 1998
To the Shareholders of Richman Gordman 1/2 Price Stores, Inc:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Shareholders of
Richman Gordman 1/2 Price Stores, Inc., a Delaware corporation (the
"Corporation"), will be held on October 29, 1998, at 10:00 a.m., central time,
at 12100 West Center Road in Omaha, Nebraska, for the following purposes:
1. To elect seven Directors to serve until the 1999 Annual Meeting of
Shareholders or until their respective successors shall be elected and
qualified; 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 September
18, 1998, will be entitled to notice of, and to vote at, the meeting and any
adjournment thereof.
By Order of the Board of Directors
/s/ Michael A. Mallaro
Michael A. Mallaro,
Secretary
Omaha, Nebraska
September 29, 1998
YOUR OFFICERS AND DIRECTORS DESIRE THAT ALL SHAREHOLDERS BE PRESENT OR
REPRESENTED AT THE ANNUAL 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 ANNUAL 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
[LOGO]
12100 WEST CENTER ROAD
OMAHA, NEBRASKA 68144
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 29, 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 Annual Meeting of
Shareholders to be held on October 29, 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 September
29, 1998.
PURPOSES OF THE MEETING
The Annual Meeting of the Shareholders is to be held for the purposes of:
(1) electing seven Directors to serve until the 1999 Annual Meeting of
Shareholders or until their respective successors shall be elected and qualified
(see ELECTION OF DIRECTORS); and (2) transacting such other business as may
properly come before the meeting or any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
ELECTION AS DIRECTORS OF THE PERSONS NAMED UNDER ELECTION OF DIRECTORS.
VOTING AT THE MEETING
The record date for holders of Common Stock entitled to notice of, and
to vote at, the Annual Meeting of Shareholders is the close of business on
September 18, 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 Annual Meeting is
necessary to constitute a quorum. Abstentions and shares held by brokers, banks,
other institutions and nominees that are voted on any matter at the Annual
Meeting are included in determining the presence of a quorum for the transaction
of business at the commencement of the Annual Meeting and on those matters for
which the broker, nominee or fiduciary has authority to vote. In deciding all
questions, a shareholder shall
<PAGE> 5
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. To be elected a
Director, each nominee must receive the favorable vote of the holders of a
plurality of the votes cast.
Each proxy delivered to the Corporation, unless the shareholder otherwise
specifies therein, will be voted FOR the election as Directors of the persons
named under ELECTION OF DIRECTORS. 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.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information as of September 18,
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 and nominee for Director of the Corporation (except that those
Directors and nominees 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) (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. As of September 18, 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. Presently exercisable options to purchase an additional
103,800 shares of Series A Common Stock were also outstanding as of September
18, 1998. The number of shares of Common Stock shown as owned below assumes the
exercise of all presently exercisable options held by such person or group, and
the percentage shown assumes the exercise of such options by such person or
group, but assumes that no options held by others are exercised. Unless
otherwise indicated below, the persons named below have sole voting and
investment powers with respect to the number of shares set forth opposite their
respective names.
[Remainder of page intentionally left blank]
2
<PAGE> 6
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Title of Class and Name of Beneficial Amount and Nature Percent Percent
Series Owner of Beneficial of Class of Series
- ------ ----- Ownership -------- ---------
---------
- -----------------------------------------------------------------------------------------
<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
- -----------------------------------------------------------------------------------------
Common Stock, Nelson T. Gordman 5,670,000 Shares(3) 21.08% 33.96%
Series A 10777 North 60th St.
Omaha, Nebraska
68152
- -----------------------------------------------------------------------------------------
</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. In addition, all
of the issued and outstanding shares of Series B Option Common Stock are subject
to an option (the "Option") to purchase by the Corporation, and to the extent
not exercised by the Corporation, by the trust. The Option is presently
exercisable; however, beneficial ownership of the shares of Series B Option
Common Stock has not been attributed to the trust or the beneficiaries of the
trust because as of the date of this Proxy Statement it is unclear to what
extent, if any, the Corporation will elect to exercise the Option.
(2) As sole trustee of the R.G. Stock Trust, Mr. Jeffrey J. 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. Jeffrey J. 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) Mr. Nelson T. 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.
3
<PAGE> 7
<TABLE>
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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. 500,000 Shares 1.86% 2.99%
Series A Farrington(5)
- -----------------------------------------------------------------------------------------
Common Stock, James H. Cooke(6) 5,000 Shares 0.02% 0.03%
Series A
- -----------------------------------------------------------------------------------------
Common Stock, Edward D. 5,000 Shares 0.02% 0.03%
Series A Williamson(7)
- -----------------------------------------------------------------------------------------
Common Stock, All Officers and 16,725,000 Shares(8) 62.12% 100%
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
- -----------------------------------------------------------------------------------------
</TABLE>
- ---------------
(4) Mr. Jerome P. 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 Corporation. The
500,000 shares of Series A Common Stock shown as beneficially owned by Mr.
Farrington include 5,000 shares of Series A Common Stock which are subject to
presently exercisable options.
(6) Mr. Cooke is a named executive officer of the Corporation. The 5,000
shares of Series A Common Stock shown as beneficially owned by Mr. Cooke consist
solely of shares subject to presently exercisable options.
(7) Mr. Williamson is a named executive officer of the Corporation. The
5,000 shares of Series A Common Stock shown as beneficially owned by Mr.
Williamson consist solely of shares subject to presently exercisable options.
(8) Includes 30,000 shares subject to presently exercisable options.
4
<PAGE> 8
<TABLE>
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, Nelson T. Gordman 632,939 Shares(9) 2.35% 6.20%
Series B Option 10777 North 60th St.
Omaha, Nebraska
68152
- -----------------------------------------------------------------------------------------
Common Stock, Jerome P. Gordman 56,326 Shares(10) 0.21% 0.55%
Series B Option 9925 Essex Drive
Omaha, Nebraska
60603
- -----------------------------------------------------------------------------------------
Common Stock, All Officers and
Series B Option Directors as a group 689,265 Shares 2.56% 6.76%
- -----------------------------------------------------------------------------------------
</TABLE>
PROPOSAL 1
ELECTION OF DIRECTORS
Paragraph 7 of the Corporation's Amended and Restated Certificate of
Incorporation (the "Certificate of Incorporation") provides that the composition
of the Corporation's Board of Directors shall be determined by Section 10.01 of
the Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code filed
by the Corporation's predecessor entities (the "Plan") until the Corporation
shall have made all required minimum payments to creditors pursuant to Section
6.02(c) of the Plan. As of July 15, 1998, all such minimum payments have been
made. Consistent with the Corporation's successful completion of the Plan, Paul
M. Bass, Jr., Paul Buxbaum and Philip Scheipe, each of whom was appointed to be
a Director while the Corporation was operating under the terms of the Plan, are
retiring as of the date of the Annual Meeting. On August 21, 1998, the
Corporation's Board of Directors determined to decrease the number of Directors
from eight to seven effective as of the date of the Annual Meeting, and
nominated Janice D. Stoney and Stewart M. Kasen to fill the two resulting
vacancies.
The Corporation's Board of Directors consists of a single class of
Directors, each of which is elected to serve a one-year term. Seven Directors
are proposed to be elected at the Annual Meeting to serve until the 1999 Annual
Meeting of Shareholders or until their respective successors shall be elected
and qualified. The persons named in the accompanying form of proxy intend to
vote such proxy for the election of the nominees named below as Directors of the
Corporation to serve until
- -----------------------
(9) Through his interest in Gordman family entities which are the
registered owners of shares of Series B Option Common Stock, Mr. Nelson T.
Gordman is the beneficial owner of 632,939 shares of Series B Option Common
Stock.
(10) Through his interest in Gordman family entities which are the
registered owners of shares of Series B Option Common Stock, Mr. Jerome P.
Gordman is the beneficial owner of 56,326 shares of Series B Option Common
Stock.
5
<PAGE> 9
the 1999 Annual Meeting of Shareholders or until their respective successors
shall be elected and qualified, unless otherwise properly indicated on such
proxy. If any nominee shall become unavailable for any reason, the persons named
in the accompanying form of proxy are expected to consult with the Board of
Directors of the Corporation in voting the shares represented by them at the
Annual Meeting. The Board of Directors has no reason to doubt the availability
of any of the nominees and no reason to believe that any of the nominees will be
unable or unwilling to serve the entire term for which election is sought.
To be elected a Director, each nominee must receive the favorable vote of
the holders of plurality of the votes cast. The names of the nominees, along
with certain information concerning them, are set forth below.
NOMINEES
JEFFREY J. GORDMAN
Mr. Jeffrey J. Gordman, age 34, has been a Director of the Corporation
since 1993, and President and Chief Executive Officer of the Corporation since
1996. At the Corporation, Mr. Gordman previously held positions in
merchandising, store operations and information technology. In addition, Mr.
Gordman designed the Planning and Allocation function for 1/2 Price Stores,
including the organization structure and business processes, and oversaw its
implementation in 1994. Prior to joining the Corporation in 1990, Mr. Gordman
was a mergers and acquisitions analyst for Shearson Lehman Brothers, a New
York-based investment banking firm now known as Lehman Brothers. Mr. Gordman
graduated cum laude from the Wharton School at the University of Pennsylvania in
1986 with a B.S. in Economics. Mr. Gordman also earned a Masters of Management
at the Sloan School, Massachusetts Institute of Technology in 1990. Mr. Gordman
is the son and nephew, respectively, of Mr. Jerome P. Gordman and Mr. Nelson T.
Gordman, both Directors of the Corporation.
JEROME P. GORDMAN
Mr. Jerome P. Gordman, age 60, has been a Director of the Corporation since
1993. Mr. Gordman has 32 years of department store and specialty store
experience. He joined Richman Gordman in 1962 after active duty with the Army as
a lieutenant. He helped develop the Corporation into a five-state retailer
during his 23 years with Richman Gordman. He rose to Chief Operating Officer of
Richman Gordman Department Stores and Executive Vice President of Richman
Gordman Stores. In 1984, Mr. Gordman joined Kalico's, Inc., a specialty store,
as its President. After the closing of Kalico's, Inc. in 1997, Mr. Gordman
became the Managing Partner of Gordman Properties Company, a company with
diversified real estate holdings in Nebraska and Iowa. Mr. Gordman graduated
from the Wharton School at the University of Pennsylvania with a B.S. in
Economics. Mr. Gordman is the father of Jeffrey J. Gordman, a Director,
President and Chief Executive Officer of the Corporation, and the brother of
Nelson T. Gordman, a Director of the Corporation.
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<PAGE> 10
NELSON T. GORDMAN
Mr. Nelson T. Gordman, age 58, has been a Director of the Corporation since
1993. Mr. Gordman is also currently involved in real estate development and
management. He was previously President and COO of Richman Gordman Department
Stores and of Richman Gordman Stores, the parent company of both Richman Gordman
Department Stores and 1/2 Price Stores. Mr. Gordman joined the Corporation in
1962 after completing studies at the University of Pennsylvania's Wharton School
and, in various capacities, participated in and directed Richman Gordman's
growth to 30 stores, five states and $250 million in annual sales volume. Mr.
Gordman is the uncle of Jeffrey J. Gordman, a Director, President and Chief
Executive Officer of the Corporation, and the brother of Jerome P. Gordman, a
Director of the Corporation.
STEWART M. KASEN
Mr. Stewart Kasen, age 59, is a nominee for Director of the Corporation.
Mr. Kasen has been President and Chief Executive Officer of Factory Card Outlet
Corp. since May, 1998, the Chairman of its Board of Directors since April 1997,
and a Director of that company since September 1996. From 1989 to May 1996, Mr.
Kasen was an officer of Best Products Co., a chain of catalog showrooms, serving
as that company's Chairman, President and Chief Executive Officer from 1991 to
1996, and its President and Chief Operating Officer from 1989 to 1991. Best
Products Co. filed a Chapter 11 bankruptcy petition in January, 1991, which was
confirmed in June 1994. Best Products Co. subsequently filed a Chapter 11
bankruptcy petition on September 24, 1996. Mr. Kasen also serves as a Director
of Markel Corporation, O'Sullivan Industries Holdings Inc., K2 Inc.,
Elder-Beerman Stores Corp., and The Bibb Company.
SETH J. LEHR
Mr. Seth J. Lehr, age 42, has been a Director of the Corporation since
1996. Mr. Lehr is a Managing Director, Corporate Finance with Legg Mason, Inc.,
a New York Stock Exchange-listed regional investment banking firm. Mr. Lehr
specializes in general corporate finance with an emphasis on the retail,
apparel, merchandising and consumer products industries. Mr. Lehr began his
investment banking career with The First Boston Corporation and Goldman, Sachs &
Co. Mr. Lehr then became a vice president of Shearson Lehman Brothers. Mr. Lehr
graduated with honors from the University of Pennsylvania and received an MBA
from The Wharton School of the University of Pennsylvania.
THOMAS J. NOONAN, JR.
Mr. Thomas J. Noonan, Jr., age 59, has been a Director of the Corporation
since 1993. Mr. Noonan's principal business experience over the past
approximately ten years has been managing and advising troubled and
underperforming businesses. In this regard he is presently an Executive
Vice-President and Chief Financial Officer of Herman's Sporting Goods, Inc., a
specialty sporting goods retailer in the process of liquidation. Previously, he
had served as a Managing Director of Taggart/Fasola Group, a manager of troubled
and underperforming businesses, and as a Director and Executive Vice President
of Intrenet, Inc. Previously, Mr. Noonan served as Vice President-Finance
7
<PAGE> 11
for Pilot Freight Carriers, Inc., Senior Vice President-Finance for Purolator
Courier Corporation, and a number of line and financial positions with Airco,
Inc. Mr. Noonan holds a B.S. degree from Fordham University and an M.B.A. from
St. John's University.
JANICE D. STONEY
Ms. Janice D. Stoney, age 58, is a nominee for Director of the Corporation.
Ms. Stoney retired in 1992 from her position as Executive Vice President, Total
Quality System, of US WEST Communications, Inc., an affiliate of US WEST, Inc.
Ms. Stoney worked for US WEST, Inc. and its predecessor company from 1959 to
1992, holding positions of increasing responsibility, including President -
Consumer Division of US WEST, Inc. and CEO of Northwestern Bell. Ms. Stoney has
been a Director of Guarantee Life Company since 1994, a Director of Premark
International, Inc. since 1989, and a Director of Whirlpool Corporation since
1987.
OFFICERS
LANCE GRAVES
Mr. Lance Graves, age 48, is the Executive Vice President of Merchandising
and Marketing. He joined the Corporation in January, 1998 after 22 years in the
retail business. He previously held senior merchandising positions with QVC,
Ames Department Stores and Mervyns Department Stores. Mr. Graves holds a
bachelors degree from the University of Nebraska and an M.B.A. from the
University of Michigan.
JAMES H. COOKE
Mr. James H. Cooke, age 49, is the Vice President, Stores. He joined the
Corporation in 1987 after a sixteen year career with an Ohio-based discount
chain. While with that company, he served in a variety of operational positions.
Prior to that time, Mr. Cooke served in the United States Air Force. He is a
graduate of Ohio University.
MICHAEL A. MALLARO
Mr. Michael A. Mallaro, age 35, is the Vice President of Finance and Chief
Financial Officer. He joined the Corporation in June, 1997. Prior to joining the
Corporation, he spent 12 years with the accounting firm Deloitte & Touche. He
was selected for admission to that firm's ownership as an audit partner in 1997,
but declined the invitation prior to joining the Corporation. He holds the
C.P.A. and C.M.A. designations and has a bachelors degree from the University of
Iowa.
MARTIN KRESGE
Mr. Martin Kresge, age 46, joined the 1/2 Price Stores in August, 1997 as
Vice President of Marketing. He has over 20 years of retail marketing
experience, 16 as the top marketing executive. Most recently, he was the Vice
President of Marketing for Lil' Things, a start-up superstore concept
specializing in baby and juvenile products which filed bankruptcy reorganization
proceedings in
8
<PAGE> 12
June 1997. Prior to that he was director of advertising and sales promotion for
Leewards Creative Crafts. He earned his undergraduate degree from the University
of Colorado and an M.B.A. from the University of Michigan.
RONALD K. HALL
Mr. Ronald K. Hall, age 55, is the Vice President of Operations for the
Corporation. Prior to joining the Corporation in May 1994, he completed a
29-year career as a Colonel in the United States Air Force. His last assignment
was as Deputy Director, Command, Control, Communications, Computers and
Intelligence for the United States Strategic Command at Offutt Air Force Base,
Nebraska. In that position, he had responsibility for an annual budget of over
$150 million while providing computer and communications support to the nation's
nuclear war planners. From May 1994 until February 1997, he was Director of
Systems Planning and Development in the Information Technology Department of the
Corporation. Mr. Hall holds a BS in Industrial Engineering from North Dakota
State University and an MS degree in Systems Analysis from the Air Force
Institute of Technology.
NORMAN J. FARRINGTON
Mr. Norman J. Farrington, age 50, is the Vice President, Chief Information
Officer for the Corporation. He received a B.S. and a M.S. in Computer Science
from Iowa State University. For a period of nine years, he owned and operated a
successful computer consulting business. Prior to joining the Corporation in
1984, Mr. Farrington was on the faculty at Iowa State University teaching
computer science. He has earned the professional designations of Certified Data
Processor and Certified Systems Professional. Mr. Farrington is responsible for
the development and information strategy and support systems.
EDWARD D. WILLIAMSON
Mr. Edward D. Williamson, age 44, is the Vice President of Human Resources
for the Corporation and is responsible for the human resources policy, training,
benefits and compensation. Prior to joining the Corporation in October of 1989,
he originated and directed the human resources department of Grisanti's, a
restaurant chain, during the company's national expansion phase. Mr. Williamson
received a B.G.S. degree in general administration from the University of
Nebraska at Omaha, and currently holds the certification of Senior Professional
in Human Resources (SPHR).
COMMITTEES
The Board of Directors has three standing committees: the Executive
Committee, the Compensation Committee and the Audit Committee. The Corporation
does not have a Nominating Committee and does not have any established
procedures for consideration of nominees for Director recommended by
shareholders.
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<PAGE> 13
THE EXECUTIVE COMMITTEE
Mr. Paul M. Bass, Mr. Noonan and Mr. Jeffrey Gordman are presently members
of the Executive Committee. The Executive Committee is intended generally to
function on behalf of the Board of Directors when the Board cannot be convened.
THE COMPENSATION COMMITTEE
Mr. Paul Buxbaum, Mr. Philip Scheipe, Mr. Bass and Mr. Lehr are presently
members of the Compensation Committee. The primary functions of the Compensation
Committee have been negotiating the employment agreement with the Corporation's
President and Chief Executive Officer, Mr. Jeffrey J. Gordman, monitoring
employment agreements with vice presidents, including considering changes to
base salary and contract extensions, monitoring the bonus program for vice
presidents, monitoring and approving grant awards pursuant to the 1997 Stock
Option Plan and reviewing compensation for additional officers that may be hired
in the future.
THE AUDIT COMMITTEE
Mr. Noonan, Mr. Scheipe and Mr. Nelson Gordman are presently members of the
Audit Committee. The Audit Committee is responsible for recommending selection
of the independent auditors of the Corporation and reviewing audit results. The
Committee has the authority to engage and retain its own professionals.
During the Corporation's fiscal year 1997, six meetings of the Board of
Directors were held. In addition, no meetings of the Executive Committee, one
meeting of the Compensation Committee and one meeting of the Audit Committee
were held. Each of the Directors attended at least 75% of the meetings of the
Board of Directors and 75% of the meetings held by the committees of the Board
on which that Director served, except that Mr. Buxbaum did not attend two
meetings of the Board of Directors and one meeting of the Compensation
Committee.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Of the four current members of the Compensation Committee, none are
executive officers of the Corporation, and no reportable interlocks exist with
respect to any such current members.
SECTION 16(a) REPORTING DELINQUENCIES
Section 16 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Corporation's officers and directors and holders
of 10% or more of the outstanding shares of the Corporation's Common Stock
(together, the "Reporting Persons") to file reports on Forms 3, 4 and 5
regarding their transactions in the Corporation's Common Stock. Based solely
upon its review of the Corporation's records, copies of such Forms sent to the
Corporation and/or written statements from Reporting Persons that no Form 5 was
required, the Corporation believes that all Reporting
10
<PAGE> 14
Persons have appropriately filed all forms required to be filed during Fiscal
Year 1997 pursuant to Section 16(a) of the Exchange Act, except that Mr. Lance
Graves, Mr. Ronald Hall, Mr. Martin Kresge, and Mr. Michael Mallaro each filed
late his respective Form 3; Mr. Lance Graves filed late a Form 4 with respect to
a transaction in January, 1998; and Mr. James Cooke, Mr. Edward Williamson, Mr.
Ronald Hall, Mr. Martin Kresge, Mr. Michael Mallaro, and Mr. Norman Farrington
each filed late his respective Form 5 following the completion of the
Corporation's fiscal year 1997.
RELATED PARTY TRANSACTIONS
Related Party Leases
--------------------
The following table describes facilities that the Corporation leases from
entities owned or controlled by Mr. Nelson Gordman and Mr. Jerome Gordman (both
Directors of the Corporation).
<TABLE>
<CAPTION>
APPROXIMATE
FLOOR AREA ANNUAL
LOCATION (SQUARE FEET) RENT DESCRIPTION
- -------- ------------- ---- -----------
<S> <C> <C> <C>
Omaha, NE 98,700 $450,288 Corporate Headquarters(1)
Omaha, NE 163,300 676,710 Distribution Center(2)
Bellevue, NE 100,000 701,060 Store Location(3)
Grand Island, NE 91,400 215,023 Store Location(4)
LaVista, NE 81,200 269,540 Store Location(5)
Omaha, NE 103,200 628,161 Store Location(6)
Lincoln, NE 101,400 175,226 Store Location(7)
</TABLE>
- ---------------
(1) Lease expires July 31, 2009 with a single option to renew for twenty years.
(2) The Distribution Center is composed of a total of 267,000 square feet
(excluding internal mezzanine space of 111,400 square feet). Prior to July
15, 1998, the Corporation owned 103,700 square feet of the Distribution
Center and the land beneath this portion ("Building 1") and leased
approximately 82,000 square feet ("Building 2") and approximately 81,000
square feet ("Building 3") from Gordman Properties Company, a partnership
owned by Jerome and Nelson Gordman, both of whom are Directors of the
Corporation. On July 15, 1998, the Corporation purchased Building 2 and
Building 3 from Gordman Properties Company. For a complete discussion of
this transaction, please see "Distribution Center Financing" below. The
following summarizes the terms of the leases and other agreements between
the Corporation and Gordman Properties Company which were effective prior
to the Corporation's purchase of Building 2 and Building 3 of the
Distribution Center. The lease for Building 2 was scheduled to expire April
30, 2003; Gordman Properties Company also owned the underlying land. The
Corporation had four five-year options to extend the term of the Building 2
lease. The lease for Building 3 was scheduled to expire July 31, 1999. The
land under Building 3 was owned by the Corporation and leased to Gordman
Properties Company for a term also scheduled to expire July 31, 1999.
11
<PAGE> 15
Under the terms of these agreements, upon expiration of the Building 3
leases, the Corporation would own both the building and land for Building
3. Building 3 is being subleased to a third party effective in fiscal 1998.
The Corporation and Gordman Properties Company were also parties to an
Option Agreement giving the Corporation the option to purchase Building 2
and its underlying real estate at the end of the term or any option term at
fair market value. If the Corporation failed to exercise its purchase
option on Building 2, Gordman Properties Company had the option to purchase
Building 1 and/or Building 3 from the Corporation at fair market value. The
Corporation and Gordman Properties Company were also parties to a
Distribution Center Option Agreement which allowed the Corporation to
purchase Building 2 for $2,850,000 should it choose to do so in connection
with a financing transaction, such as a sale-leaseback; the option was
scheduled to expire on June 30, 1998.
(3) Lease expires October 31, 2000, with three renewal options of five years
each.
(4) Lease expires February 28, 2001, with no renewal options.
(5) Lease expires July 31, 2005, with ten renewal options of five years each.
(6) Lease expires July 31, 2003, with one renewal options of five years.
(7) Lease expires October 31, 2010, with a first privilege to negotiate a
second twenty year term.
During the bankruptcy proceedings, the Corporation conducted an extensive
review of all locations. As a result, many locations owned by Gordman family
members and other lessors were closed and the leases rejected as being
unsuitable. Also during the bankruptcy proceedings, an independent third party
analyzed the terms of remaining leases with Gordman family enterprises. While
some leases were found to be above market and others below, the portfolio as a
whole was found to be comparable to those from unaffiliated parties in
comparable real estate markets.
As a result of the bankruptcy proceedings, four Gordman family partnerships
("Gordman Partnerships") received unsecured claims of $3,697,749, relating to
the rejection of three store leases. Pursuant to these allowed unsecured claims,
the Gordman Partnerships received the same treatment accorded other Class 3
Unsecured Claims under the Plan, namely Series B Option Common Stock, cash
payments and the right to future cash payments to Creditors.
Additional Related Party Issues
During fiscal year 1996, the Corporation's claim against the Dan Gordman
estate (the "Estate") approximating $77,000 and arising from a loan from the
Corporation to Mr. Dan Gordman was settled pursuant to an Estate Claim
Settlement Agreement (the "Estate Claim Agreement") between the Corporation and
the Estate dated December 13, 1996. In accordance with the Estate Claim
Agreement, the Estate paid the Corporation approximately $43,000 and agreed to
pay up to an additional $34,000 from any dividends paid before April 15, 1999,
on shares of the Corporation's Common Stock owned by the Estate. Also during
fiscal year 1996, pursuant to an Agreement Regarding Dan Gordman Fund among the
Estate of Esther Gordman, the Dan Gordman Fund and
12
<PAGE> 16
the Corporation, dated December 13, 1996, the Corporation agreed to pay to the
Dan Gordman Fund approximately $347,000, arising out of the personal portion of
an insurance policy on the life of Dan Gordman, which was paid to one of the
Corporation's Creditors, Harris Bank, pursuant to a collateral assignment of the
policy. As of the date of this Proxy Statement, the Corporation has made all
payments to the Dan Gordman Fund required by Agreement Regarding Dan Gordman
Fund.
Distribution Center Financing
-----------------------------
The Corporation's Distribution Center in Omaha, Nebraska, is comprised of
three buildings. Prior to July 15, 1998, only one of these buildings was owned
by the Corporation. The remaining two buildings were owned by Gordman Properties
Company, a partnership owned and controlled by Nelson and Jerome Gordman, both
Directors of the Corporation. Please see note 2 on page 11 above.
On July 15, 1998, the Corporation consummated a mortgage on its
Distribution Center. The Corporation obtained a mortgage loan from Patrician
Financial Company Limited Partnership, an unaffiliated lender, which is secured
by a deed of trust with respect to the Distribution Center. To facilitate
obtaining the mortgage financing, the Corporation (through a wholly-owned
subsidiary) purchased from Gordman Properties Company its interest in the
buildings and land comprising the Distribution Center. The total price paid by
the Corporation to purchase the interest of Gordman Properties Company in the
Distribution Center was $3,121,400. Of this amount, approximately $271,400
represented the unpaid principal balance and accrued interest under a mortgage
loan with respect to Building 3 of the Distribution Center, and approximately
$2,850,000 represented the purchase price paid by the Corporation for Building 2
of the Distribution Center and the land under Building 2. Nelson and Jerome
Gordman, through Gordman Properties Company, each had a 46.67% interest in
Building 3, and a 45% interest in Building 2 and the land under Building 2.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
EMPLOYMENT AGREEMENT WITH MR. JEFFREY GORDMAN
On February 1, 1997, the Corporation entered into an employment agreement
with Jeffrey J. Gordman, the Corporation's President and Chief Executive
Officer. The following describes the terms and conditions of Mr. Gordman's
employment agreement:
BASE SALARY. Mr. Gordman's employment agreement provides for an annual
base salary of $250,000, subject to such increases and bonuses as the
Compensation Committee of the Corporation's Board of Directors may from
time to time determine.
TERMINATION OF AGREEMENT AND SEVERANCE. Mr. Gordman's employment agreement
provides for an initial term of three years, with annual extensions upon
each anniversary of the date thereof if neither the Corporation nor Mr.
Gordman gives notice of nonextension. The employment agreement with Mr.
Gordman provides for termination for cause upon 15 days' written notice and
opportunity to be heard at a Board of Directors meeting. The employment
13
<PAGE> 17
agreement further provides that Mr. Gordman or the Corporation may
terminate the agreement with or without cause upon 30 days' written notice.
If Mr. Gordman's employment is terminated by the Corporation without cause,
the employment agreement provides for severance payments equal to the
then-present value of his then-current base salary and benefits for the
remainder of the term of the employment agreement. If Mr. Gordman's
employment is terminated by the Corporation for nonperformance, Mr. Gordman
shall receive severance payments equal to his then-current base salary and
benefits for the lesser of 12 months or the remaining term of the
Agreement. If Mr. Gordman's employment is terminated by the Corporation for
dishonesty or if Mr. Gordman resigns, Mr. Gordman shall receive base salary
and benefits only through the termination date.
EXECUTIVE BENEFITS. Mr. Gordman's employment agreement also provides
that he is entitled to the following executive benefits: (i) contribution
by the Corporation to 401(k) plans on terms applicable to other senior
management; and (ii) all other then current executive benefits offered
by the Corporation. Mr. Gordman is also entitled to at least four weeks of
paid vacation per year.
NONCOMPETITION: Trade Secrets. The employment agreement contains a covenant
against competition with the Corporation for a period of one year within 50
miles of the Corporation's corporate offices and its stores if Mr.
Gordman's employment is terminated for cause. The employment agreement also
prohibits Mr. Gordman from disclosing or benefiting from the Corporation's
trade secrets during the term of the agreement and at all times thereafter.
Mr. Gordman is also prohibited by the employment agreement from hiring any
employees of the Corporation within one year after the termination of his
employment with the Corporation.
BONUS PROGRAM AND EMPLOYMENT AGREEMENTS FOR VICE PRESIDENTS
All of the Corporation's Vice Presidents (except Mr. Edward D. Williamson) are
parties to employment agreements. These employment agreements provide for one to
three-year terms, with a minimum base salary level for each of the three years.
The employment agreements provide for severance payments in an amount equal to
the greater of then-current salary for six months or for the remainder of the
fiscal year during which notice is given in the event of termination for any
reason other than expiration of the term of the employment agreement or the Vice
President's misconduct or breach of the employment agreement. The employment
agreements also provide for a review and possible extension not less than one
year prior to expiration.
The Compensation Committee of the Board of Directors has adopted an Officer
Incentive Program for fiscal 1998. In accordance with their employment
agreements, all of the Vice Presidents participate in this bonus program.
Bonuses for fiscal 1998 will be earned if the Corporation realizes net income in
excess of $1 million for the year. Vice Presidents as a group were paid bonuses
for fiscal 1997 totaling $30,000.
The Vice Presidents also participate in certain employee benefits, including
health insurance and a 401(k) plan. In Fiscal Year 1997, the Corporation made
matching contributions equal to 25% of
14
<PAGE> 18
each employee's contribution, but not in excess of 4% of the employee's
compensation, and expects to do the same in fiscal 1998.
COVENANT NOT TO COMPETE
Pursuant to the Plan, Mr. Nelson Gordman, a Director, has executed a covenant
not to compete anywhere in the United States with the Corporation in exchange
for payments of $125,000 per annum through October 1998.
DIRECTORS
Currently, the Chairman of the Corporation's Board of Directors receives an
annual fee of $25,000, and all other Directors receive an annual fee of $20,000.
Each Director also receives $1,500 per board meeting attended. Directors
attending board meetings by telephone receive $750 per meeting. Members of
committees receive $1,000 per committee meeting attended. Committee members
attending committee meetings by telephone receive $500 per meeting. Directors
who are also officers or employees of the Corporation do not receive Directors
fees. Such Directors, however, are reimbursed for expenses related to meeting
attendance. The Board of Directors has adopted a policy requiring members to
attend at least 75% of all meetings each year in order to receive compensation
as a Director.
OFFICERS COMPENSATION
The following table summarizes the compensation of the Chief Executive Officer
and the four additional most highly compensated officers during the Fiscal Years
1997, 1996 and 1995:
<TABLE>
<CAPTION>
Long-Term Compensation
Annual Compensation ----------------------
Name ------------------------------ Other Annual Securities underlying All Other
And Position Year(1) Salary Bonus Compensation(2) Payout Options (#) Compensation(3)
- ------------ ------- ------ ----- --------------- ------ ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Jeffrey J. Gordman 1995 $ 93,644 $ 15,000 $ 49 -0- -0- -0-
Director, President, and 1996 $145,222 $ -0- $ 150 -0- -0- $ 1,336
Chief Executive Officer 1997 $225,071 $ 50,000 $1,044 -0- -0- $ 2,251
James Cooke 1995 $160,000 $ 29,000 $4,641 -0- -0- -0-
V.P. Stores 1996 $180,718 $ -0- $1,635 -0- -0- $ 1,335
1997 $181,620 $ 5,000 $3,957 -0- 25,000 $ 1,814
Don DeGraeve 1995 $ 60,061 $ 10,000 $ 123 -0- -0- -0-
Former V.P. of 1996 $171,697 $ 10,000 $1,772 -0- -0- -0-
Merchandising 1997 $182,738 $ 34,000 $2,390 -0- 25,000 -0-
Norm Farrington 1995 $ 95,659 $ 17,000 $3,238 -0- -0- -0-
V.P. Information 1996 $111,928 $ -0- $3,263 -0- -0- -0-
Technology 1997 $121,648 $ 5,000 $3,179 -0- 25,000 $ 1,213
Dean Williamson 1995 $112,717 $ 21,000 $3,238 -0- -0- $ 860
V.P. Human Resources 1996 $117,642 $ -0- $3,264 -0- -0- $ 949
1997 $116,370 $ 5,000 $3,179 -0- 25,000 $ 1,164
John Simkins 1995 $114,803 $ 10,000 $3,238 -0- -0- -0-
Former V.P. 1996 $118,073 $ -0- $3,212 -0- -0- -0-
of Distribution 1997 $121,576 $ -0- $3,024 -0- 25,000 -0-
</TABLE>
15
<PAGE> 19
(1) Represents Fiscal Years commencing in January or February of the stated
year.
(2) "Other Annual Compensation" is primarily in the form of, life
insurance, reimbursement of health and dental insurance, health club
memberships, value of company-paid automobiles, etc.
(3) "All Other Compensation" represents 401(k) matching contributions made
by the Corporation.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential realizable value at assumed annual rates Alternative to (f),
Individual Grants of stock appreciation for option term (g) and (h) value
----------------- ------------------------------------- -----------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
% of total
options granted
Number of during year to Exercise Expiration 0% 5% 10% Grant date
Name Options (#) all employees Price/share Date ($) ($) ($) present value(1)
- ---- ----------- ------------- ----------- ---- --- --- --- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jim Cooke 25,000 2.9% $0.051 Sept 2007 $0 $801 $2,032 -0-
Don DeGraeve 25,000 2.9% $0.051 NA(2) $0 $801 $2,032 -0-
Norm Farrington 25,000 2.9% $0.051 Sept 2007 $0 $801 $2,032 -0-
Dean Williamson 25,000 2.9% $0.051 Sept 2007 $0 $801 $2,032 -0-
John Simkins 25,000 2.9% $0.051 NA(2) $0 $801 $2,032 -0-
</TABLE>
(1) The Corporation's stock is not traded on any exchange and there is no active
trading of the stock. The Corporation had an independent appraiser value the
stock on September 12, 1997, upon granting of these options for purposes of
determining the exercise price thereof. The valuation at that time was estimated
at $0.51 per share. As of the date of this Proxy Statement, no subsequent
valuations have been completed and thus no incremental value is disclosed in
this table
(2) These options were forfeited by the recipient upon termination of employment
in fiscal 1997.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE ELECTION AS
DIRECTORS OF THE PERSONS NAMED UNDER ELECTION OF DIRECTORS.
OTHER BUSINESS
The Board of Directors knows of no other business to be presented for
action at the Annual Meeting. If any matters do come before the Annual 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 Annual Meeting.
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
The Corporation's next Annual Meeting is expected to be held the week of
August 16, 1999 (the "1999 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
for the 1999 Annual Meeting must be received by the Secretary of the
Corporation, 12100 West Center Road, Omaha, Nebraska 68144, a reasonable time
before the Corporation first mails its proxy materials with respect to the 1999
Annual Meeting. The submission of a proposal does not guarantee its inclusion in
the proxy statement or presentation at the 1999 Annual Meeting unless certain
securities laws requirements are met.
16
<PAGE> 20
A shareholder who intends to present at the 1999 Annual Meeting a proposal
that is not discussed in the Corporation's proxy materials for such meeting
should notify the Corporation of such proposal a reasonable time before the
Corporation first mails its proxy materials with respect to the 1999 Annual
Meeting. If the Corporation does not receive notice from such shareholder a
reasonable time before it first mails its proxy materials, the proxies of the
Corporation's Board of Directors will have discretionary authority to vote on
such proposal at the 1999 Annual Meeting.
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 Shareholder Services to aid in the
solicitation of proxies at an estimated fee of $3,500, plus reasonable out of
pocket expenses. 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
On or about May 27, 1998, the Corporation mailed to shareholders of record
as of May 13, 1998, its proxy statement with respect to certain matters which
were acted upon a Special Meeting held on June 25, 1998, and the Corporation's
Annual Report to Shareholders for its fiscal year ended January 31, 1998 (the
"1997 Annual Report"). Accordingly, the Corporation has not enclosed an
additional copy of the 1997 Annual Report with this Proxy Statement delivered to
those shareholders of record as of September 18, 1998, who were also
shareholders of record as of May 13, 1998. The Corporation has enclosed a copy
of the 1997 Annual Report with this Proxy Statement delivered to all other
shareholders. The 1997 Annual Report accompanies or precedes this Proxy
Statement, but is not deemed a part of the proxy soliciting material.
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
/s/ MICHAEL A. MALLARO
MICHAEL A. MALLARO,
SECRETARY
OMAHA, NEBRASKA
SEPTEMBER 29, 1998
17
<PAGE> 21
DETACH HERE
- --------------------------------------------------------------------------------
PROXY
RICHMAN GORDMAN 1/2 PRICE STORES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS TO BE
HELD ON OCTOBER 29, 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 September
29, 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 Annual Meeting of its stockholders to
be held October 29, 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 SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
- ------------- -------------
<PAGE> 22
DETACH HERE
- --------------------------------------------------------------------------------
[ X ] PLEASE MARK
VOTES AS IN
THIS EXAMPLE
1. To elect seven Directors to 2. In their discretion, the proxies
serve until the 1999 Annual are authorized to vote upon
Meeting of Stockholders or such other business as may
until their respective properly come before the meeting
successors shall be elected or any adjournment or postponement
and qualified. thereof.
NOMINEES: Jeffrey J. Gordman,
Jerome P. Gordman, Nelson T. THIS PROXY WHEN PROPERLY EXECUTED
Gordman, Stewart M. Kasen, WILL BE VOTED IN THE MANNER
Seth J. Lehr, Thomas J. Noonan,Jr., DIRECTED HEREIN BY THE STOCKHOLDER.
Janice D. Stoney. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR PROPOSAL
FOR WITHHELD NO. 1 AND AS SAID PROXIES DEEM
ALL [ ] [ ] FROM ALL ADVISABLE ON SUCH OTHER MATTERS
NOMINEES NOMINEES AS MAY COME BEFORE THE MEETING.
[ ]
-----------------------------------
INSTRUCTION: To withheld authority to MARK HERE FOR ADDRESS CHANGE AND
vote for any individual nominee, write NOTE AT LEFT [ ]
that nominee's name on the space
provided above. MARK HERE IF YOU PLAN TO ATTEND
THE MEETING [ ]
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:
---------------- ------------- ---------------- -----
