SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
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 240.14a-11(c) or 240.14a-12
Regis Corporation
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 12, 1996
------------------------
TO THE SHAREHOLDERS OF REGIS CORPORATION:
The Annual Meeting of the Shareholders of Regis Corporation ("the Company")
will be held at the Minneapolis Institute of Arts, 2400 Third Avenue South,
Minneapolis, Minnesota, on November 12, 1996, commencing at 4 p.m., for the
following purposes:
1. To elect seven directors to serve for a one-year term and until their
successors are elected and qualified; and
2. To consider and vote upon a proposal to amend the Company's Articles of
Incorporation to increase the number of authorized shares of capital
stock, $.05 par value, from 25,000,000 shares to 50,000,000 shares; and
3. To transact such other business, if any, as may properly come before the
Annual Meeting or any adjournment or postponement thereof.
Only holders of record of the Company's Common Stock at the close of
business on October 10, 1996, are entitled to notice of and to vote at the
Annual Meeting or any adjournment or postponement thereof.
A list of shareholders entitled to vote at the Annual Meeting will be
available for examination, for any purpose germane to the Annual Meeting, at the
Company's executive offices located at 7201 Metro Boulevard, Edina, Minnesota,
during ordinary business hours for at least ten days prior to the Annual Meeting
and for the duration of the Annual Meeting itself.
Whether or not you plan to attend the Annual Meeting in person, please fill
in, sign and date the enclosed proxy and mail it promptly. Should you
nevertheless attend the Annual Meeting, you may revoke your proxy and vote in
person. A return envelope, which requires no postage if mailed in the United
States, is enclosed for your convenience.
Remember, if your shares are held in the name of a broker, only your broker
can vote your shares and only after receiving your instructions. Please contact
the person responsible for your account and instruct him/her to execute a proxy
card on your behalf.
By Order of the Board of Directors
Frank E. Evangelist
SECRETARY
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE SIGN THE
PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED
WITHIN THE UNITED STATES.
October 15, 1996
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PROXY STATEMENT
------------------------
ANNUAL MEETING OF SHAREHOLDERS, NOVEMBER 12, 1996
This Proxy Statement is furnished to shareholders of REGIS CORPORATION, a
Minnesota corporation (the "Company"), in connection with solicitation on behalf
of the Company's Board of Directors of proxies for use at the annual meeting of
shareholders to be held on November 12, 1996, and at any adjournment thereof,
for the purposes set forth in the accompanying Notice of Annual Meeting of
Shareholders.
The address of the principal executive office of the Company is 7201 Metro
Boulevard, Minneapolis, Minnesota 55439. This Proxy Statement and form of Proxy
are being mailed to shareholders of the Company on October 15, 1996.
SOLICITATION AND REVOCATION OF PROXIES
The costs and expenses of solicitation of proxies will be paid by the
Company. In addition to the use of the mails, proxies may be solicited by
directors, officers and regular employees of the Company personally or by
telegraph, telephone or letter without extra compensation.
Proxies in the form enclosed are solicited on behalf of the Board of
Directors. Any shareholder giving a proxy in such form may revoke it at any time
before it is exercised. Such proxies, if received in time for voting and not
revoked, will be voted at the annual meeting in accordance with the
specification indicated thereon.
VOTING RIGHTS
Only shareholders of record of the Company's 18,094,755 shares of Common
Stock outstanding as of the close of business on October 10, 1996, will be
entitled to execute proxies or to vote. Each share of Common Stock is entitled
to one vote. A majority of the outstanding shares must be represented at the
meeting, in person or by proxy, to transact business.
2
ELECTION OF DIRECTORS
Seven directors are to be elected at this annual meeting, each to hold
office for one year until the 1997 annual meeting of shareholders. The Board of
Directors has nominated the seven persons named below for election as directors.
All of the nominees are presently directors of the Company.
The enclosed proxy, unless authority to vote is withheld, will be voted for
the election of the nominees named herein as directors of the Company. In the
event any one or more of such nominees shall unexpectedly become unavailable for
reelection, votes will be cast, pursuant to authority granted by the enclosed
proxy, for such person or persons as may be designated by the Board of
Directors. The following table contains certain information with respect to the
nominees:
NAME AGE POSITION
- - ---------------------- --- -----------------------------------------------------
Myron Kunin 68 Chairman of the Board of Directors
Paul D. Finkelstein 54 President, Chief Executive Officer and Director
Christopher A. Fox 46 Executive Vice President and Director
Frank E. Evangelist 60 Senior Vice President--Finance, Secretary and
Director
Rolf F. Bjelland 58 Director
Van Zandt Hawn 51 Director
Susan S. Hoyt 52 Director
Mr. Kunin is a founder of the Company and has served as a Director since the
Company's formation in 1954. He was elected Chief Executive Officer in 1965 and
held this position until July 1, 1996. He has served as Chairman of the Board of
Directors since 1983. He is Chairman of the Board and holder of the majority
voting power of Curtis Squire, Inc., the Company's principal shareholder. He is
also a director of Nortech Systems Incorporated, and The Cerplex Group, Inc.
Mr. Finkelstein served as President, Chief Operating Officer and a Director
of the Company since December, 1987, and has served as Chief Executive Officer
since July 1, 1996. He is a director of Pet Food Warehouse, Inc.
Mr. Fox was elected Executive Vice President of the Company in August, 1994,
and was Senior Vice President, Real Estate, of the Company from 1988 until
August, 1994. He has served as a Director of the Company since 1989.
Mr. Evangelist served as Treasurer of the Company from 1968 to 1988, was
elected Secretary and a Director in 1986, and Senior Vice President, Finance, in
1987.
Mr. Bjelland was elected a Director of the Company in 1983. Since 1983, Mr.
Bjelland has been the Executive Vice President--Chief Investment Officer of
Lutheran Brotherhood, a fraternal insurance society.
Mr. Hawn was elected a Director of the Company in 1991. He is a managing
director and a founder of Goldner Hawn Johnson & Morrison Incorporated, a
private investment firm.
Ms. Hoyt was elected a Director of the Company in 1995. She is Executive
Vice President of Human Resources of Staples, Inc. From 1991 to 1996, she was
Executive Vice President of Store Operations for the Dayton Hudson Department
Stores Division of Dayton Hudson Corporation.
3
FUNCTIONING OF BOARD AND COMMITTEES
During the fiscal year ended June 30, 1996, the Board of Directors held four
meetings.
The Company has a standing audit committee, presently composed of Messrs.
Bjelland, Hawn and Finkelstein and Ms. Hoyt. The committee held two meetings
during the fiscal year ended June 30, 1996. The committee's primary
responsibilities are to recommend to the Board of Directors the engagement of
the Company's independent auditors, review with the independent auditors the
plan and results of the audit engagement, and review the adequacy of the
Company's internal accounting controls.
The Company has a standing compensation committee composed of Messrs.
Bjelland and Hawn and Ms. Hoyt. The committee's primary responsibilities are to
recommend levels of executive compensation to the Board of Directors and to
consider and recommend the establishment of various compensation plans for the
Company. The compensation committee held two meetings during the last fiscal
year.
The Company does not have a standing nominating committee of the Board of
Directors.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors consists of Messrs.
Hawn and Bjelland and Ms. Hoyt, independent outside Directors. The Compensation
Committee has responsibility for administering Regis' incentive plans and
setting policies that govern annual compensation and long-term incentives for
the principal executive officers of the Company.
The Company's executive compensation policies are intended to permit the
Company to attract and retain talented executives and to align the financial
interests of the Company's management with those of its stockholders.
Historically, the Company has sought to accomplish its objectives of attracting
and retaining executives by providing for competitive salary levels and
occasional cash bonus awards based upon individual performance, subjectively
determined by the Chairman of the Board. The principal executive officers of the
Company, other than the Chairman, were permitted in 1988 to purchase substantial
numbers of restricted shares of the Company's common stock under agreements
which provide for vesting over time. The loans incurred by such officers for
such purchases were paid from the proceeds of special bonuses to such officers
in 1991, which also included payments of the income taxes incurred by such
officers with respect to such bonuses. As a result of these transactions, and
subsequent grants of stock options, all of the Company's principal executive
officers named in the Summary Compensation Table have substantial ownership
positions in the common stock of the Company, aligning their interests directly
with those of the other stockholders in both the risks and rewards of ownership
of the Company's common stock.
The Company's stock option program provides compensation opportunities that
directly link the interests of management and shareholders, and aid in retaining
key executive officers. Executive officers are eligible for annual grants of
stock options. Individual awards are based on the individual's responsibilities
and performance, ability to impact financial performance and future potential.
These factors are not assigned pre-determined relative weights. All individual
stock option grants for non-executive officers are reviewed and approved by the
Committee. All such grants for executive officers are awarded solely by the
three independent outside directors, based on recommendations of management.
Executive officers receive gains from exercised stock options only to the extent
that the fair market value of the stock has increased since the date of option
grant.
4
At the beginning of each fiscal year, the Compensation Committee reviews
annual salary recommendations for the Company's executives made by the Chief
Executive Officer and approves, with any modifications it deems appropriate,
such recommendations. The annual salary recommendations are made by the Chief
Executive Officer, and approved or modified by the Compensation Committee, based
upon industry practice and national surveys of compensation packages, as well as
evaluations of the individual executive's responsibilities and past and expected
future performance. The independent outside directors of the Compensation
Committee fix the salary of the Chief Executive Officer based on a review of
competitive compensation data, and the outside directors' assessment of his past
performance and their expectation as to his future performance in leading the
Company. No element of the compensation of the principal executive officers
during the year ended June 30, 1996, was variable or determined with reference
to the performance, financial or otherwise, of the Company.
Internal Revenue Code Section 162(m) limits the deductibility of annual
compensation over $1 million paid by a company to an executive officer. The
Compensation Committee currently does not have a policy with respect to Section
162(m) because it is unlikely that such limit will apply to compensation paid by
the Company to any of the Company's executive officers for at least the current
year.
Van Zandt Hawn, Chairman
Rolf F. Bjelland
Susan S. Hoyt
MEMBERS OF THE COMPENSATION COMMITTEE
5
SUMMARY COMPENSATION TABLE
The following table shows, for the fiscal years ended June 30, 1996, 1995
and 1994, the cash compensation paid by the Company, as well as certain other
compensation paid or accrued for those years, to the Company's Chief Executive
Officer, and each of the other four most highly compensated executive officers
of the Company as of June 30, 1996.
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION AWARDS
-------------------------------------
ANNUAL COMPENSATION ALL OTHER
------------------------ OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY($) BONUS($) (#)(1) ($)(2)
- - -------------------------------------------- ------------- --------- ----------- --------- -------------
Myron Kunin 1996 600,000 -- -- 142,111(3)
Chairman of the Board and Chief Executive 1995 600,000 -- -- 151,120(3)
Officer 1994 500,000 -- 150,000 23,070
Paul D. Finkelstein 1996 450,000 -- -- 28,977
President and Chief Operating Officer 1995 400,000 50,000 -- 25,477
1994 315,000 -- 150,000 14,534
Christopher A. Fox 1996 250,000 -- 6,000 16,101
Executive Vice President 1995 225,000 25,000 6,000 14,330
1994 185,000 22,000 45,000 9,551
Frank E. Evangelist 1996 200,000 -- 6,000 12,876
Senior Vice President, Finance and 1995 190,000 10,000 6,000 12,101
Secretary 1994 173,000 -- 45,000 7,982
William E. Halfacre 1996 225,000 -- 6,000 14,488
Senior Vice President, Retail and 1995 175,000 25,000 6,000 11,146
Purchasing 1994 152,500 -- 28,500 7,036
- - ------------------------
(1) All options are adjusted for a 3-for-2 stock split effective May 20, 1996.
(2) Represents the dollar value of shares of the Company and cash allocated to
such officers pursuant to the Company's Executive Stock Award Plan, based on
the average purchase price for such shares.
(3) Includes life insurance premiums on life of Mr. Kunin in amounts of $103,471
for 1996 and $112,905 for 1995.
6
STOCK OPTION GRANTS
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth for each of the named executives the stock
options granted by the Company in the fiscal year ended June 30, 1996 and the
potential value of these stock options and stock appreciation rights determined
pursuant to Securities and Exchange Commission requirements.
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED ANNUAL
------------------------------ RATES OF STOCK PRICE
% OF TOTAL APPRECIATION FOR OPTION
OPTIONS OPTIONS GRANTED EXERCISE OR TERM
GRANTED TO EMPLOYEES IN BASE PRICE EXPIRATION ------------------------
NAME (#)(1) FISCAL YEAR ($/SH) DATE 5%($)(2) 10%($)(2)
- - -------------------------------------------- ----------- --------------- ------------- ----------- ----------- -----------
Myron Kunin................................. 0
Paul D. Finkelstein......................... 0
Christopher A. Fox.......................... 6,000 2.8% 17.67 3/7/06 66,676 168,964
Frank E. Evangelist......................... 6,000 2.8% 17.67 3/7/06 66,676 168,964
William E. Halfacre......................... 6,000 2.8% 17.67 3/7/06 66,676 168,964
- - ------------------------
(1) All options are adjusted for a 3-for-2 stock split effective May 20, 1996.
(2) The hypothetical potential appreciation shown in these columns reflects the
required calculations at annual rates of 5% and 10% set by the Securities
and Exchange Commission, and therefore is not intended to represent either
historical appreciation or anticipated future appreciation of the Company's
Common Stock price.
STOCK OPTION EXERCISES AND OPTION VALUES
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth for each of the named executive officers the
value realized from stock options exercised during the fiscal year ended June
30, 1996 and the number and value of exercisable and unexercisable stock options
held at June 30, 1996.
NUMBER OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL OPTIONS AT FISCAL
YEAR-END(#)(1) YEAR-END($)(2)
--------------------- -------------------
SHARES ACQUIRED VALUE REALIZED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE $ UNEXERCISABLE UNEXERCISABLE
- - ---------------------------------- --------------- --------------- --------------------- -------------------
Myron Kunin....................... 0 0 30,000/120,000 677,400/2,709,600
Paul D. Finkelstein............... 0 0 30,000/120,000 712,500/2,850,000
Christopher A. Fox................ 0 0 10,200/46,800 236,400/1,027,108
Frank E. Evangelist............... 0 0 10,200/46,800 236,400/1,027,108
William E. Halfacre............... 12,000 133,675 8,700/28,800 200,460/599,158
- - ------------------------
(1) All options are adjusted for a 3-for-2 stock split effective May 20, 1996.
(2) Value of unexercised in-the-money-options is determined by multiplying the
difference between the exercise price per share and $31.25, the closing
price per share on June 30, 1996, by the number of shares subject to such
options.
7
DIRECTOR COMPENSATION
Each director who is not an employee of the Company (Messrs. Bjelland and
Hawn and Ms. Hoyt) received fees of $15,000 during the last fiscal year. The
Company during the last fiscal year also granted to each such director options
to purchase 4,500 shares of common stock at an exercise price of $17.67 per
share.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the officers
and directors of Regis, and persons who own more than 10% of a registered class
of the Regis equity securities, to file reports of ownership and changes in
ownership with the Commission. Such officers, directors and shareholders are
required by the Commission's regulations to furnish the Company with copies of
all such reports.
To the knowledge of Regis, based solely on a review of copies of reports
filed with the Commission during the fiscal year ended June 30, 1996, all
applicable Section 16(a) filing requirements were complied with.
8
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total shareholder return on the
Company's stock for the period beginning July 1, 1991 until June 30, 1996 with
the cumulative total return of the Standard and Poor's 500 Stock Index and the
cumulative total return of a peer group index (the "Peer Group") constructed by
the Company. The comparison assumes the initial investment of $100 in the
Company's common stock, the S&P 500 Index, and the Peer Group on July 1, 1991
and that dividends, if any, were reinvested.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
REGIS S&P PEER GROUP
1991 100.00 100.00 100.00
1992 62.01 113.41 91.00
1993 77.01 128.87 84.67
1994 104.01 130.68 90.15
1995 154.00 164.75 91.21
1996 376.46 207.59 117.84
The Peer Group includes the following companies in the retail specialty
business based upon total weighted market capitalization: Ann Taylor Stores
Corporation; Deb Shops, Inc.; Gantos, Inc.; The Gap, Inc.; The Limited, Inc.;
Merry-Go-Round Enterprises, Inc.; Musicland Stores Corporation; Perfumania,
Inc.; and Supercuts, Inc. The members of the Peer Group were selected by the
Company because they operate in a similar retail environment and are primarily
located in shopping malls with operations which extend over a wide geographic
area.
9
EMPLOYMENT ARRANGEMENTS
The Company has entered into unfunded deferred compensation agreements with
its executive officers (excluding Mr. Kunin). Each of these agreements provides
that (a) if such executive officer becomes disabled while employed by the
Company, the Company will pay to such executive officer $60,000 per year
($100,000 per year in the case of Mr. Finkelstein) during each year that such
executive officer remains disabled until the earlier to occur of age 65 or
death, and (b) upon retirement after 20 years' service with the Company or after
reaching age 65, or death, while disabled or employed by the Company, such
executive officer or his designated beneficiary will receive the annual deferred
compensation amount for 15 years. Payments are further conditioned upon the
officers not rendering services for any competitor of the Company during the
period of the payments. The Company carries insurance on the lives of each of
the persons covered by deferred compensation agreements, is entitled to the case
values and the death proceeds from these policies, and may, but is not required
to, use cash values or death proceeds from these policies to pay deferred
compensation.
The Company has entered into an unfunded salary continuation agreement with
Myron Kunin, its Chairman, providing that upon the death of Mr. Kunin, the
Company shall pay to his wife, if she survives him, $300,000 annually for the
remainder of her life, subject to adjustment based on any increases in the
Consumer Price Index from July 1, 1995.
10
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of September 30, 1996, the ownership of
Common Stock of the Company by each shareholder who is known by the Company to
own beneficially more than 5% of the outstanding shares of the Company, by each
director, by each executive officer identified in the Summary Compensation
Table, and by all executive officers and directors as a group. The parties
listed in the table have the voting and investment powers with respect to the
shares indicated.
NUMBER OF SHARES
BENEFICIALLY PERCENT OF
NAME OF BENEFICIAL OWNER OR IDENTITY OF GROUP OWNED(2) CLASS
- - ------------------------------------------------------------------------------------ ----------------- -----------
Curtis Squire, Inc.................................................................. 6,019,925 32.7%
7201 Metro Boulevard
Minneapolis, MN 55439
Myron Kunin (1)
Fidelity Management Research Corp................................................... 1,279,250 7.0%
82 Devonshire Street
Boston, MA 02109
Paul D. Finkelstein................................................................. 372,000 2.0%
Christopher A. Fox.................................................................. 60,700 *
Frank E. Evangelist................................................................. 70,950 *
William E. Halfacre................................................................. 10,952 *
Rolf F. Bjelland.................................................................... 11,250 *
Van Zandt Hawn...................................................................... 15,375 *
Susan S. Hoyt....................................................................... 1,125 *
All executive officers and directors as a group (nine persons) (3).................. 6,563,677 35.7%
- - ------------------------
* less than 1%
(1) Myron Kunin, Chairman of the Company's Board of Directors, owns a majority
of the voting stock of Curtis Squire, Inc. and thereby has sole voting and
investment power with respect to all shares of the Company owned by Curtis
Squire, Inc.
(2) Includes the following shares not currently outstanding but deemed
beneficially owned because of the right to acquire them pursuant to options
exercisable within 60 days as follows: 30,000 shares by each of Messrs.
Kunin and Finkelstein, 10,200 shares by each of Messrs. Fox and Evangelist,
9,600 shares by Mr. Halfacre, 14,625 shares by Mr. Hawn; 11,250 shares by
Mr. Bjelland; 1,125 shares by Ms. Hoyt; and 140,350 shares by all directors
and executive officers as a group.
(3) Includes shares held by Curtis Squire, Inc.
11
INDEPENDENT ACCOUNTANTS
The Board of Directors has selected the firm of Coopers & Lybrand L.L.P. as
the Company's independent accountants for the year ended June 30, 1996 and for
the current year ending June 30, 1997. A representative of Coopers & Lybrand
L.L.P. is expected to be present at the Annual Meeting, will have an opportunity
to make a statement if he or she desires to do so, and is expected to respond to
appropriate questions.
PROPOSALS OF SHAREHOLDERS
Proposals of shareholders intended to be presented at the Company's next
annual meeting of shareholders must be received by the Secretary of the Company
at the Company's executive offices, 7201 Metro Boulevard, Minneapolis, Minnesota
55439, no later than June 2, 1997.
ANNUAL REPORT
The Company's Annual Report for the fiscal year ended June 30, 1996 is being
mailed to Company shareholders with this Proxy Statement.
The Company will furnish without charge to any shareholder submitting a
request a copy of the Company's Form 10-K Annual Report for the year ended June
30, 1996 to the Securities and Exchange Commission, including the financial
statements and schedules thereto. Such request should be directed to Frank E.
Evangelist, Secretary of the Company, at its address stated herein.
AMENDMENT TO ARTICLES OF INCORPORATION
The Company proposes to amend its Articles of Incorporation to increase the
aggregate number of authorized shares of capital stock, par value $.05, from
25,000,000 shares to 50,000,000 shares. On October 10, 1996, there were
outstanding 18,094,755 shares of Common Stock and there were reserved for
issuance 1,515,168 shares of Common Stock upon exercise of stock options under
the Company's 1991 Stock Option Plan. An aggregate of 4,920,590 shares of the
Company's Common Stock will be issuable upon consummation of the merger with
Supercuts, Inc., schedule to occur on or about October 25, 1996. Therefore,
following consummation of the merger, the Company would have less than 470,000
authorized, unissued and undesignated shares. As a result, the Board of
Directors has determined that it is appropriate to increase the number of shares
of the Company's authorized capital stock, $.05 par value, from 25,000,000
shares to 50,000,000 shares.
Although the Company has no present plans, agreements or understandings
regarding the issuance of the proposed additional shares other than as a result
of the Supercuts merger, the Board of Directors believes that adoption of the
amendment is advisable because it will provide the Company with greater
flexibility in connection with possible future financing transactions,
acquisitions of other companies or business properties, stock dividends or
splits, employee benefit plans, and other proper corporate matters, to issue
shares without the expense and delay of a special meeting of shareholders. Such
a delay might deprive the Company of the flexibility the Board of Directors
views as important in facilitating the effective use of the shares of the
Company's capital Stock. Except as otherwise required by applicable law,
authorized but unissued shares of capital stock may be designated and issued at
such time, for such purposes, and for such consideration as the Company's Board
of Directors may determine to be appropriate, without further authorization by
shareholders.
12
Since the issuance of additional shares of capital stock, other than on a
pro rata basis to all current shareholders, would dilute the ownership interest
of a person seeking to obtain control of the Company, such issuance could be
used to discourage a change in control of the Company by making it more
difficult or costly. The Company is not aware of anyone seeking to accumulate
its Common Stock to obtain control of the Company and has no present intention
to use the additional authorized shares to deter a change in control.
The Board of Directors unanimously recommends that shareholders vote FOR the
proposal to approve the amendment to the Company's Articles of Incorporation
increasing the number of shares of the Company's authorized capital stock, $.05
par value, from 25,000,000 to 50,000,000 shares.
13