99 CENTS ONLY STORES
___________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 13, 1999
___________
To the Shareholders:
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of
Shareholders (the "Annual Meeting") of 99 Cents Only Stores (the
"Company") will be held at the Company's offices located at 4000
Union Pacific Avenue, City of Commerce, California at 10:00 a.m.
(Pacific time) on Thursday, May 13, 1999 for the following
purposes:
1. To elect a Board of eight Directors to hold office
until the next Annual Meeting of Shareholders and until
his or her successor is elected. The persons nominated
by the Board of Directors of the Company (Messrs. W.
Christy, L. Glascott, D. Gold, H. Gold, J. Gold, M.
Holen, E. Schiffer and B. Schwartz) are described in
the accompanying Proxy Statement;
2. To approve an amendment to the Company's 1996 Stock
Option Plan to increase the maximum number of shares of
Common Stock that may be issued pursuant to awards
granted under the plan from 3,125,000 shares to
4,625,000 shares;
3. To transact such other business as may properly come
before the Annual Meeting or any of its adjournments or
postponements.
Only shareholders of record of the Company at the close of
business on March 31, 1999 are entitled to notice of and to vote
at the Annual Meeting and adjournments or postponements thereof.
All shareholders are cordially invited to attend the Annual
Meeting in person. However, to ensure your representation at the
Annual Meeting, you are urged to mark, sign and return the
enclosed Proxy as promptly as possible in the postage pre-paid
envelope enclosed for that purpose. Any shareholder attending
the Annual Meeting may vote in person, even though he or she has
returned a Proxy.
By Order of the Board of Directors,
Eric Schiffer
Assistant Corporate Secretary
City of Commerce, California
April 9, 1999
TO ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, YOU ARE
REQUESTED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AS
PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED ENVELOPE. IF
YOU RECEIVE MORE THAN ONE PROXY CARD BECAUSE YOU OWN SHARES
REGISTERED IN DIFFERENT NAMES OR AT DIFFERENT ADDRESSES, EACH
CARD SHOULD BE COMPLETED AND RETURNED.
99 CENTS ONLY STORES
4000 Union Pacific Avenue
City Of Commerce, California 90023
(323) 980-8145
____________________________
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
To Be Held Thursday, May 13, 1999
Introduction
This Proxy Statement is furnished in connection with the
solicitation of Proxies by the Board of Directors of 99 Cents
Only Stores, a California corporation (the "Company" or "99 Cents
Only Stores"), for use at the 1999 Annual Meeting of Shareholders
(the "Annual Meeting") to be held at the Company's offices at
4000 Union Pacific Avenue, City of Commerce, California, on
Thursday, May 13, 1999, commencing at 10:00 a.m.
At the Annual Meeting, the shareholders of the Company will
vote upon (i) the election of eight directors to hold office
until the next Annual Meeting of Shareholders and until their
respective successors are duly elected and qualified, (ii) a
proposal to amend the Company's 1996 Stock Option Plan to
increase the maximum number of shares of Common Stock that may be
issued pursuant to awards under the plan, and (iii) such other
matters as may properly come before the Annual Meeting or any of
its adjournments or postponements.
A Proxy for use at the Annual Meeting is enclosed. Any
shareholder who executes and delivers such Proxy has the right to
revoke it at any time before it is exercised by delivering to the
Secretary of the Company an instrument revoking it or a duly
executed proxy bearing a later date, or by attending the Annual
Meeting and voting in person. Subject to such revocation, all
shares represented by a properly executed Proxy received in time
for the Annual Meeting will be voted by the Proxy holders in
accordance with the instructions on the Proxy. If no instruction
is specified with respect to a matter to be acted upon, the
shares represented by the Proxy will be voted (i) in favor of the
election of the nominees for director set forth herein, (ii) in
favor of the amendment to the 1996 Stock Option Plan, and (iii)
if any other business is properly presented at the Annual
Meeting, in accordance with the recommendations of the Board of
Directors.
It is anticipated that this Proxy Statement and the
accompanying Proxy will be mailed to shareholders on or about
April 10, 1999.
VOTING PROCEDURES
The close of business on March 31, 1999 has been fixed as
the record date for the determination of shareholders entitled to
notice of and to vote at the Annual Meeting and any postponements
or adjournments thereof. At the record date, 24,804,203 shares
of the Company's Common Stock, no par value (the "Common Stock"),
were outstanding. The Common Stock is the only outstanding class
of securities entitled to vote at the Annual Meeting. At the
record date, the Company had approximately 4,441 shareholders,
which includes 457 shareholders of record.
A shareholder is entitled to cast one vote for each share
held of record on the record date on all matters to be considered
at the Annual Meeting. The election of directors requires the
affirmative vote of a plurality of the shares of Common Stock
present and voting at the Annual Meeting. The amendment of the
1996 Stock Option Plan to increase by 1,500,000 the number of
shares of Common Stock that may be issued pursuant to awards
under the 1996 Stock Option Plan will require the affirmative
vote of a majority of the shares of Common Stock present or
represented and voting on this matter at the Annual Meeting
(which shares voting affirmatively also constitute at least a
majority of the required quorum). Abstentions and broker non-
votes will be included in the number of shares present at the
Annual Meeting for the purpose of determining the presence of a
quorum. Abstentions will be counted toward the tabulation of
votes cast on proposals submitted to shareholders and will have
the same effect as negative votes, while broker non-votes will
not be counted either as votes cast for or against such matters.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
In accordance with the Bylaws of the Company, 99 Cents Only
Stores' directors are elected at each Annual Meeting of
Shareholders and hold office until the next Annual Meeting of
Shareholders and until their successors are elected and
qualified. The Bylaws of the Company provide that the Board of
Directors shall consist of no less than seven and no more than
eleven directors as determined from time to time by the Board of
Directors. The Board of Directors currently consists of eight
directors.
Unless otherwise instructed, the Proxy holders will vote the
Proxies received by them for the nominees named below. If any
nominee is unable or unwilling to serve as a director at the time
of the Annual Meeting or any adjournments thereof, the Proxies
will be voted for such other nominee(s) as shall be designated by
the current Board of Directors to fill any vacancy. The Company
has no reason to believe that any nominee will be unable or
unwilling to serve if elected as a director.
The Board of Directors proposes the election of the
following nominees as directors:
William Christy
Lawrence Glascott
David Gold
Howard Gold
Jeff Gold
Marvin Holen
Eric Schiffer
Ben Schwartz
If elected, each nominee is expected to serve until the 2000
Annual Meeting of Shareholders and thereafter until his or her
successor is duly elected and qualified. The eight nominees for
election as directors at the Annual Meeting who receive the
highest number of affirmative votes will be elected.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
ELECTION OF THE NOMINEES LISTED ABOVE.
Information with Respect to Nominees and Executive Officers
The following table sets forth certain information with
respect to the nominees and executive officers of the Company as
of March 31, 1999:
Age Year
at First
Name: March Elect Principal Occupation
31, ed or
1999 Appoi
nted
Direc
tor
Nominees:
David Gold 66 1965 David Gold has been Chairman of
the Board and Chief Executive
Officer of the Company since the
founding of the Company in 1965.
Mr. Gold has over 40 years of
retail experience and 20 years of
wholesale experience.
Howard Gold 39 1991 Howard Gold has been a director of
the Company since 1991. He joined
the Company in 1982 and has served
in various managerial capacities.
He currently serves as Senior Vice
President of Distribution. Mr.
Gold received his B.S. degree from
the University of California at
Los Angeles in 1984.
Eric Schiffer 38 1991 Eric Schiffer has been a director
of the Company since 1991. He
joined the Company in 1992 and has
served in various managerial
capacities. He currently serves as
Senior Vice President of Finance
and Operations and Treasurer.
Prior to joining the Company, from
1987 to 1992, he was employed by
Oxford Partners, a venture capital
firm. Mr. Schiffer received his
B.S.E. degree from Duke University
in 1983 and his M.B.A. from
Harvard Business School in 1987.
Jeff Gold 31 1991 Jeff Gold has been a director of
the Company since 1991. He joined
the Company in 1984 and has served
in various managerial capacities.
He currently serves as Senior Vice
President of Real Estate and
Information Systems. Mr. Gold
received his B.A. degree from the
University of California at
Berkeley in 1989.
William O. 67 1992 William O. Christy has been a
Christy director of the Company since
1992. He was President and Chief
Executive Officer of Certified
Grocers of California from 1977,
until his retirement in 1990. He
has served on numerous trades
association boards including the
executive committee of the
National Grocers Association Board
and Chairman of the Merchant and
Manufacturer Association Board.
Marvin Holen 69 1991 Marvin Holen has been a director
of the Company since 1991. He is
an attorney and in 1960 founded
the law firm of Van Petten &
Holen. He served on the Board of
the Southern Californian Rapid
Transit District from 1976 to 1993
(six of those years as the Board's
President). He served on the Board
of Trustees of California Blue
Shield from 1972 to 1978, on the
Board of United California Savings
Bank from 1992 to 1994 and on
several other corporate, financial
institution and philanthropic
boards of directors.
Ben Schwartz 81 1993 Ben Schwartz has been a director
of the Company since 1993. He was
Chairman of Foods Company Markets,
a supermarket chain, from 1980
until it was acquired in 1987 by
Boys Markets and he retired. Prior
thereto, he served for many years
as its president. He served on the
Board of Directors of Certified
Grocers of California including
four years as Chairman.
Additionally, Mr. Schwartz sits on
a number of industry trades
boards, including the Food
Marketing Institute.
Lawrence 64 1996 Lawrence Glascott has been a
Glascott director of the Company since
October 1996. From 1991 until his
retirement in 1996 he was the
former Vice President - Finance of
Waste Management International an
environmental services Company.
Prior thereto, Mr. Glascott was a
partner at Arthur Andersen LLP and
was the Arthur Andersen LLP
partner in charge of the 99 Cents
Only Stores account for six years.
Additionally, Mr. Glascott was in
charge of the Los Angeles based
Arthur Andersen LLP Enterprise
Group practice for over 15 years.
Other Executive
Officers:
Helen Pipkin 56 Helen Pipkin joined the Company in
1991 and serves as Senior Vice
President of Wholesale Operations.
Prior to joining the Company, from
1985 through 1991, Ms. Pipkin
served as Controller and Manager
of Wholesale and Import Operations
of Cobra Associated International,
a wholesaler of variety
merchandise. Prior to 1985, for
many years, Ms. Pipkin was an
owner, Vice President and
Controller of Markell Imports, a
general merchandise wholesaler.
Andrew Farina 52 Andrew Farina joined the Company
in September 1996 and serves as
Chief Financial Officer. Prior to
joining the Company, from April
1993 through August 1996, Mr.
Farina was Vice President of
Finance of Crown BBK, Inc., a food
brokerage business. Mr. Farina
was employed by a division of Sara
Lee from 1976 through 1988,
ultimately in the capacity of
President. Mr. Farina began his
career with Arthur Andersen LLP.
Certain Key
Employees:
Robert Adams 33 Robert Adams joined the Company in
January 1999 and serves as Vice
President Information Systems.
Prior to joining the Company from
1996 to 1999 Mr. Adams was
Director of Information Systems
for Associated Truck Parts. From
Larry 47 1993 to 1996 Mr. Adams served as
Borenstein Systems Development Manager for
Wet Seal, Inc.
Larry Borenstein joined the
Company in 1984 and currently
serves as Vice President of
Construction and Advertising.
Mr. Borenstein has also served in
various other managerial
capacities within the Company.
Carolyn Brock 48 Carolyn J. Brock joined the
Company in 1994 and currently
serves as Vice President of Human
Resources. During 1993 and 1994,
Ms. Brock was employed by Dodge,
Warren & Peters Consultants, Inc.,
a consulting firm, where she
served as Executive Vice
President. From 1992 to 1993, she
was an owner and the Vice
President of Comp Solutions, a
worker's compensation consulting
firm. From 1990 to 1992, she was
the President of Employers
Management Services, a human
resources consulting firm.
Richard Ennen 46 Richard Ennen joined the Company
in 1998 with the acquisition of
Universal International, Inc. He
currently serves as Chief
Executive Officer of Universal.
Mr. Ennen joined Universal in 1996
serving as President. From 1992 to
1996, he was Director of Retail
Merchandising and Operations for
Holiday Companies, a retail
grocery business located in
Bloomington, Minnesota.
Additionally he served as Vice
President of Operations for
Rodman's Discount Food, Drug &
Appliances in Washington, D.C.
Jose Gomez 39 Jose Gomez joined the Company in
1980 and has served in many
different managerial capacities,
most recently as Vice President of
Retail Operations. He has over 20
years of retail experience.
Rachel Heath 27 Rachel Heath joined the Company's
buying staff in 1995 and currently
serves as Vice President of
Buying. Ms. Heath's buying
responsibilities have included
health and beauty care,
confection, grocery and soft
goods. In her current
responsibilities Ms. Heath also
focuses on sourcing and
Kenneth R. 48 development of relationships for
Phipps branded products.
Kenneth R. Phipps joined the
Company in 1993 and serves as Vice
President of Distribution. From
1991 until 1993, Mr. Phipps served
as Director of Operations for SE
Rykoff Inc., a large food
wholesaler. From 1970 to 1991,
Mr. Phipps was employed by Lucky
Stores, Inc., a large grocery
chain, where his responsibilities
included, at various times,
serving as the distribution center
manager at three Lucky's
facilities.
David Gold is the father of Howard Gold and Jeff Gold and the
father-in-law of Eric Schiffer.
Board Meetings and Committees
The Board of Directors held a total of nineteen meetings,
including committee meetings, during the fiscal year ended
December 31, 1998. The Board of Directors has an Audit Committee
and a Compensation Committee. During the fiscal year ended
December 31, 1998, each director during the term of his tenure,
attended all meetings of the Board of Directors held. Each
director also attended all meetings of the committees of the
Board of Directors on which he served.
The Audit Committee met one time and the Compensation
Committee met five times during the fiscal year ended December
31, 1998. The Audit Committee's functions include recommending
to the Board of Directors the engagement of the Company's
independent accountants, discussing the scope and results of the
audit with the accountants, discussing the Company's financial
accounting and reporting principles and the adequacy of the
internal audits with management and reviewing and evaluating the
Company's accounting policies and internal accounting controls.
The Compensation Committee reviews and approves the compensation
of officers and key employees, including the granting of awards
under the Company's stock option plan. The members of the Audit
Committee are Messrs. Christy, Schwartz and Glascott and the
members of the Compensation Committee are Messrs. Christy, Holen
and Glascott. The Company does not have a standing nominating
committee.
Compensation of Directors
Each Director who is not an officer of or otherwise employed
by the Company (an "Outside Director") receives an automatic
annual grant on May 1 of a non-qualified option to purchase 3,000
shares of Common Stock with a per share exercise price equal to
the fair market value of a share of the Company's Common Stock on
the date of grant. In addition, each Outside Director receives
$1,000 per month, plus $500 for each board meeting attended plus
$150 for each committee meeting attended on a day when no board
meeting is held, or $250 for each committee meeting attended as
committee chairperson.
Compensation Committee Interlocks and Insider Participation
The Company has no interlocking relationships involving any
of the members of its Compensation Committee which would be
required by the Securities and Exchange Commission (the
"Commission") to be reported in this Proxy Statement, and no
officer or employee of the Company serves on its Compensation
Committee.
Report of the Compensation Committee on Executive Compensation
The Compensation Committee of the Board of Directors is
responsible for the review and administration of the Company's
various compensation plans, including determining base salaries
for officers and administering the Company's stock option plan
and annual bonus plan.
Compensation Philosophy. The Company's executive
compensation program is designed to (1) provide levels of
compensation that integrate pay and incentive plans with the
Company's strategic goals, so as to align the interests of
executive management with the long-term interests of the
Company's shareholders, (2) attract, motivate and retain
executives of outstanding abilities and experience capable of
achieving the strategic business goals of the Company, (3)
recognize outstanding individual contributions, and (4) provide
compensation opportunities which are competitive to those offered
by other retail companies of similar size and performance. To
achieve these goals, the Company's executive compensation program
consists of three main elements: (i) base salary, (ii) annual
cash bonus and (iii) long-term incentives. Each element of
compensation has an integral role in the total executive
compensation program. Given the current share ownership of
Messrs. David Gold, Howard Gold, Jeff Gold and Eric Schiffer, it
is currently the Company's policy not to award stock options and
not to provide annual incentive bonuses to any of Messrs. David
Gold, Howard Gold, Jeff Gold and Eric Schiffer.
Base Salary. Base salaries are negotiated at the
commencement of an executive's employment with the Company and
are reviewed annually. Base salaries are designed to reflect the
position, duties and responsibilities of each executive officer,
the cost of living in the area in which the officer is located,
the market for base salaries of similarly situated executives at
other companies engaged in businesses similar to that of the
Company and the Company's performance against its financial and
strategic goals. Base salaries are generally designed to be at
the mid-range of salaries of comparable companies. During the
year ended December 31, 1998, David Gold served as the Company's
Chief Executive Officer. Mr. Gold's base salary of $175,000 was
determined based upon his service to the Company, the financial
performance of the Company in the year ended December 31, 1998,
and the salaries received by similarly situated executives at
other companies. See "Executive Compensation -- Summary
Compensation Table."
Annual Cash Bonuses. Executive officers and key members of
management are eligible to receive annual incentive bonuses from
an executive bonus pool in amounts determined at the discretion
of the Board of Directors. The executive bonus pool is calculated
based on the Company's annual performance against a business plan
developed each year by senior management and reviewed and
approved by the Board of Directors. The executive bonus pool is
capped at 3% of the Company's operating profit. Funding of the
bonus pool is determined based on a performance matrix consisting
of three variables: (i) the increase in store sales during the
subject year over stores sales during the immediately preceding
year; (ii) operating income goals; and (iii) the individual
performance of the executives. Individual bonus targets for
executives range from 0% to 25% of the executive's base salary
depending on the level of responsibility and attainment of
individual performance goals. Messrs. David Gold, Howard Gold,
Jeff Gold and Eric Schiffer were not eligible to receive an
annual incentive bonus for 1998.
Long-Term Incentives. The Company provides its executive
officers with long-term incentive compensation through grants of
awards under the Company's 1996 Stock Option Plan. Under the
1996 Stock Option Plan, the Board of Directors is authorized to
grant any type of award which might involve the issuance of
shares of Common Stock, an option, warrant, convertible security,
stock appreciation right or similar right or any other security
or benefit with a value derived from the value of the Common
Stock. The Compensation Committee of the Board of Directors is
currently responsible for selecting the individuals to whom
grants of awards will be made, the timing of grants, the
determination of the per share exercise price and the number of
shares subject to each award. All awards granted by the
Compensation Committee pursuant to the 1996 Stock Option Plan
have been in the form of stock options. The Compensation
Committee believes that stock options provide the Company's
executive officers with the opportunity to purchase and maintain
an equity interest in the Company and to share in the
appreciation of the value of the Common Stock. The Compensation
Committee believes that stock options directly motivate an
executive to maximize long-term shareholder value. The options
incorporate vesting periods in order to encourage key employees
to continue in the employ of the Company. All options granted in
1998 were granted at the fair market value of the Company's
Common Stock on the date of grant. The Compensation Committee
considers the grant of each option subjectively, considering
factors such as the individual performance of executive officers
and competitive compensation packages in the industry. Messrs.
David Gold, Howard Gold, Jeff Gold and Eric Schiffer were not
eligible to receive stock options for 1998.
Omnibus Budget Reconciliation Act Implications for Executive
Compensation. Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code"), places a limit of $1,000,000 on
the amount of compensation that may be deducted by the Company in
any year with respect to each of the Company's five most highly
paid executive officers. Certain "performance-based"
compensation that has been approved by the Company's shareholders
is not subject to the deduction limit. The Company's 1996 Stock
Option Plan is qualified so that awards under the plan constitute
performance-based compensation not subject to Section 162(m) of
the Code. All compensation paid to the Company's employees in
fiscal 1998 will be fully deductible.
Summary. The Compensation Committee believes that its
executive compensation philosophy of paying the Company's
executive officers by means of base salaries, annual cash bonuses
and long-term incentives (other than Messrs. David Gold, Howard
Gold, Jeff Gold and Eric Schiffer), as described in this report,
serves the interests of the Company and its shareholders.
COMPENSATION COMMITTEE
William Christy
Marvin Holen
Lawrence Glascott
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth, as to the Chief Executive
Officer and as to each of the other four most highly compensated
officers whose compensation exceeded $100,000 during the last
fiscal year (the "Named Executive Officers"), information
concerning all compensation paid for services to the Company in
all capacities during the last three fiscal years or accrued
within the current fiscal year.
Long
Term
Compensa
Fiscal Annua tion
Year l Number All
Name and Principal Ended Compen of Other
Position Decemb sation Securiti Compen
er 31, es sation
Underlyi (b)
Salary ng
Bonus Options(
a)
David Gold 1998 $175,0 $- - $-
00
Chairman of the 1997 175,00 - - -
Board and 1996 0 - - -
Chief Executive 175,00
Officer 0
Andrew Farina (c) 1998 $120,0 $12,00 18,750 $-
00 0
Chief Financial 1997 109,00 14,062 -
Officer 1996 0 4,000 7,031 -
26,000 -
Jose Gomez 1998 $145,6 $25,00 18,750 $-
00 0
Vice President 1997 135,20 23,438 -
of 1996 0 25,000 23,438 -
Retail Operations 125,00
0 25,000
Helen Pipkin 1998 $140,4 $25,00 18,750 $-
00 0
Senior Vice 1997 135,20 23,438 -
President of Wholesale Operations 1996 0 25,000 23,438 -
125,00
0 25,000
Eric Schiffer 1998 $120,0 - - $-
00
Senior Vice 1997 120,00 - 14,062 -
President of 1996 0 - 14,062 -
Operations and 120,00
Finance 0
______________________
(a)Reflects an adjustment, pursuant to the anti-dilution
provisions of the Company's 1996 Stock Option Plan and the
executive's respective stock option agreement, in the number
of shares of Common Stock underlying stock options granted in
1996, 1997 and 1998 as a result of the Company's distribution
in November 1997 and November 1998, of a dividend of 0.25
shares of Common Stock for each share of Common Stock then
outstanding.
(b) During 1998 David Gold reimbursed the Company $966,000 for
premiums paid, in prior years, by the Company on insurance
policies (one of which is "split dollar") insuring the lives of
David and his wife Sherry Gold. Premiums paid by the Company, on
these policies in 1995, 1996 and 1997 were $317,000, $324,000 and
$325,000, respectively.
(c) Mr. Farina joined the Company in September, 1996.
Option Grants in Last Fiscal Year
The following table sets forth certain information regarding
the grant of stock options made during the fiscal year ended
December 31, 1998 to the Named Executive Officers.
OPTION GRANTS
IN LAST FISCAL
YEAR
Name Number Percent Exercis Expir Poten
Of Of Total e Or ation tial
Securi Options Base Reali
ties Granted Price(d Date zable
Underl To ) Value
ying Employee At
Option s In Assum
Grante Fiscal ed
d(b) Year(c) Rate
of
Stock
Price
Appre
ciati
on
for
Optio
n
Term(
a)
5%
10%
David Gold - - $- - $- $-
2.0%
Jose Gomez 18,750 $30.20 $ $
5/12/ 356,1 902,45
08 12 7
Helen Pipkin 18,750 2.0% $30.20 $ $
5/12/ 356,1 902,45
08 12 7
2.0%
Andrew Farina 18,750 $30.20 $ $
5/12/ 356,1 902,45
08 12 7
Eric Schiffer - - - - -
-
_______________________
(a)The potential realizable value is based on the assumption
that the Common Stock appreciates at the annual rate shown
(compounded annually) from the date of grant until the
expiration of the option term. These amounts are calculated
pursuant to applicable requirements of the Commission and do
not represent a forecast of the future appreciation of the
Common Stock.
(b)The option grants set forth on this chart vest in three equal
annual installments beginning on May 12, 1999.
(c)Options covering an aggregate of 917,284 shares were granted
to eligible persons during the fiscal year ended December 31,
1998.
(d)The exercise price and tax withholding obligations related to
exercise may be paid by delivery of already owned shares,
subject to certain conditions. Reflects an adjustment,
pursuant to the anti-dilution provisions of the Company's
1996 Stock Option Plan and the executive's respective stock
option agreement, in the per share exercise price of the
stock options from $37.75 (the market price of a share of
Common Stock on the New York Stock Exchange on the date of
grant) to $30.20 as a result of the Company's distribution in
November 1998 of a dividend of .25 shares of Common Stock for
each share of Common Stock then outstanding.
Stock Options Held at Fiscal Year End
The following table sets forth, for each of the Named
Executive Officers, certain information regarding the number of
shares of Common Stock underlying stock options held at fiscal
year end and the value of options held at fiscal year end based
upon the last reported sales price of the Common Stock on the New
York Stock Exchange on December 31, 1998 ($49.13 per share).
AGGREGATED OPTIONS EXERCISED IN THE LAST FISCAL YEAR AND YEAR-END
VALUES
Number of Number of Value of
Securities Securities Unexercised
Underlying Underlying In-the-Money
Exercised Unexercised Options
Options at Options at At
December 31,
December 31, 1998 December 31, 1998 1998(a)
Name Shares Value Exercisab Unexerci Exercis Unexercis
Realized le sable able able
David Gold 0 $0 0 0 $0 $0
Jose Gomez 0 0 23,438 42,188 931,596 1,231,490
Helen Pipkin 23,438 548,452 0 42,188 0 1,231,490
Andrew Farina 0 0 9,375 30,469 352,966
777,877
Eric Schiffer 0 0 14,063 14,063 558,964
525,940
___________________
(a) Based on the last reported sale price of the Common Stock on
the New York Stock Exchange on December 31, 1998 ($49.13)
less the option exercise price.
CERTAIN TRANSACTIONS WITH
DIRECTORS AND EXECUTIVE OFFICERS
As of March 31, 1999, the Company leased 13 of its 67 store
locations and a parking lot associated with one of these stores
from certain members of the Gold family and their affiliates (the
"Shareholders"). Annual rental expense for the facilities owned
by the Shareholders or their affiliates was approximately $1.8
million, $2.0 million and $2.2 million in 1996, 1997 and 1998,
respectively. The Company believes that such leases and
contracts are no less favorable to the Company than those an
unrelated party would have provided after arm's-length
negotiations. It is the Company's current policy not to enter
into real estate transactions with the Shareholders or their
affiliates, except with respect to the renewal or modification of
existing leases and occasions where such transactions are
determined to be in the best interests of the Company. Moreover,
all real estate transactions between 994 Only Stores and the
Shareholders will require the unanimous approval of the
independent directors on the Company's Board of Directors and a
determination by such independent directors that such
transactions are the equivalent of a negotiated arm's-length
transaction with a third party. There can be no guarantee that
the Company and the Shareholders or their affiliates will be able
to agree on renewal terms for the properties currently leased by
the Company from the Shareholders, or, if such terms are agreed
to, that the independent directors on the Board of Directors will
approve such terms.
During 1998 David and Sherry Gold reimbursed the Company
$966,000 for premiums paid by the Company, in previous years, on
a policies insuring the lives both David and Sherry Gold.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934,
requires the Company's executive officers, directors, and persons
who own more than ten percent of a registered class of the
Company's equity securities to file reports of ownership and
changes in ownership with the Commission. Executive officers,
directors and greater-than-ten percent shareholders are required
by the Commission's regulations to furnish the Company with all
Section 16(a) forms they file. Based solely on its review of the
copies of the forms received by it and written representations
from certain reporting persons that they have complied with the
relevant filing requirements, the Company believes that, during
the year ended December 31, 1998, all the Company's executive
officers, directors and greater-than-ten percent shareholders
complied with all Section 16(a) filing requirements, except that
Ben Schwartz filed a late Form 4 with respect to shares
transferred to relatives during 1998.
PERFORMANCE GRAPH
The following graph sets forth the percentage change in
cumulative total shareholder return of the Company=s Common Stock
during the period from May 23, 1996 (the date of commencement of
the Company=s initial public offering) to December 31, 1998,
compared with the cumulative returns of the S&P Small Cap 600
Index and the Russell 2000 Index. The Comparison assumes $100
was invested on May 23, 1996 in the Common Stock and in each of
the foregoing indices. The stock price performance on the
following graph is not necessarily indicative of future stock
price performance.
COMPARISON OF CUMULATIVE RETURN AMONG
99 CENTS ONLY STORES, THE S&P SMALL CAP 600 INDEX
AND THE RUSSELL 2000 INDEX
PROPOSAL NO. 2
PROPOSAL TO AMEND THE 1996 STOCK OPTION PLAN
General
The Board of Directors has approved an amendment (the
"Amendment") to the 1996 Stock Option Plan (the "Stock Plan") to
increase the number of shares of Common Stock available for
issuance under the Stock Plan from 3,125,000 shares to 4,625,000
shares. The Amendment is being submitted to the Shareholders for
approval.
The Board of Directors approved the Amendment to ensure that
a sufficient number of shares are available for issuance under
the Stock Plan. At March 25, 1999, 748,669 shares remained
available for grants of awards under the Stock Plan. The Board
of Directors believes that the ability to grant stock-based
awards is important to the future success of the Company. The
grant of stock options and other stock-based awards can motivate
high levels of performance and provide an effective means of
recognizing employee contributions to the success of the Company.
In addition, stock-based compensation can be valuable in
recruiting and retaining key personnel who are in great demand as
well as rewarding and providing incentives to its current
employees. The increase in the number of shares available for
awards under the Stock Plan will enable the Company to continue
to realize the benefits of granting stock-based compensation.
Further, it is the Company's current policy to give to all
employees (except David Gold, Howard Gold, Jeff Gold and Eric and
Karen Schiffer), full-time or part-time, with tenure of more than
six months with the Company, an annual grant of stock options.
On November 12, 1998, upon the Company's distribution of a
dividend of 0.25 shares of Common Stock for each share of Common
Stock then outstanding, the number of shares of Common Stock
available for issuance under the Stock Plan was automatically
increased pursuant to the terms of the Stock Plan from 2,500,000
shares to 3,125,000 shares. In addition, as a result of the
stock dividend, proportionate adjustments were made to the number
of shares of Common Stock underlying awards then outstanding
under the Stock Plan and to the maximum number of shares with
respect to which awards may be granted to any participant in the
Stock Plan in any fiscal year.
As of March 25, 1999, the last reported sales price of the
Common Stock on the New York Stock Exchange was $41.13 per share.
Summary of the Stock Plan
Purpose. The purpose of the Stock Plan is to advance the
interests of the Company and its shareholders by strengthening
the Company's ability to obtain and retain the services of the
types of employees, consultants, officers and directors who will
contribute to the Company's long term success and to provide
incentives which are linked directly to increases in stock value
which will inure to the benefit of all shareholders of the
Company.
Administration. The Stock Plan must be administered by a
committee of the Board of Directors of the Company (the
"Committee") consisting of two or more directors, each of whom
shall be a "disinterested person," as that term is defined in
Rule 16b-3(c) of the Rules and Regulations (the "Rules") of the
Commission under the Securities Exchange Act of 1934, as amended,
an "outside director" for purposes of Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code") and the
regulations of the Internal Revenue Service adopted thereunder,
as such Rules and such Section and regulations may from time to
time be amended or interpreted, and a director who is not also
an employee of the Company. Members of the Committee serve at
the pleasure of the Company's Board of Directors. The Stock Plan
is currently administered by the Compensation Committee of the
Board of Directors.
Subject to the provisions of the Stock Plan, the Committee
has full and final authority to (i) to select from among eligible
directors, officers, employees and consultants, those persons to
be granted awards under the Stock Plan, (ii) to determine the
type, size and terms of individual awards to be made to each
person selected, (iii) to determine the time when awards will be
granted and to establish objectives and conditions (including,
without limitation, vesting and performance conditions), if any,
for earning awards, (iv) to amend the terms or conditions of any
outstanding award, subject to applicable legal restrictions and
to the consent of the other party to such award, (v) to authorize
any person to execute, on behalf of the Company, any instrument
required to carry out the purposes of the Stock Plan, and (vii)
to make any and all other determinations which the Committee
determines to be necessary or advisable in the administration of
the Stock Plan. The Committee has full power and authority to
administer and interpret the Stock Plan and to adopt, amend and
revoke such rules, regulations, agreements, guidelines and
instruments for the administration of the Stock Plan and for the
conduct of its business as the Committee deems necessary or
advisable.
Eligibility. Any person who is an officer, employee or
consultant of the Company, or any of its subsidiaries (a
"Participant"), is eligible to be considered for the grant of
awards under the Stock Plan. Directors of the Company who are
not employees ("non-employee directors") are only entitled to
receive automatic grants of awards under the Stock Plan as
discussed below. No Participant may receive in any fiscal year
awards representing more than 125,000 shares of Common Stock,
subject to adjustment as provided in the Stock Plan. It is the
Company's policy to give to all employees (except David Gold,
Chief Executive Officer of the Company, Howard Gold, Senior Vice
President of Distribution, Jeff Gold, Senior Vice President of
Real Estate and Information Systems, Eric Schiffer Senior Vice
President of Operations and Finance and Karen Schiffer, Senior
Buyer), full-time or part-time, with tenure of more than six
months with the Company, an annual grant of stock options.
Mandatory Grants to Non-Employee Directors. Each non-
employee director of the Company who is serving on the Board of
Directors as of the date of each annual meeting of shareholders
(or any special meeting in lieu of the annual meeting) is
entitled to receive a ten year non-statutory stock option to
purchase 3,000 shares of Common Stock, with a per share exercise
price equal to the fair market value (as determined pursuant to
the Stock Plan) of a share of Common Stock on the day of grant.
Types of Awards. Awards authorized under the Stock Plan may
consist of any type of arrangement with a Participant that, by
its terms, involves or might involve or be made with reference to
the issuance of shares of the Company's Common Stock, or a
derivative security with an exercise or conversion price related
to the Common Stock or with a value derived from the value of the
Common Stock. Awards are not restricted to any specified form or
structure and may include sales, bonuses and other transfers of
stock, restricted stock, stock options, reload stock options,
stock purchase warrants, other rights to acquire stock or
securities convertible into or redeemable for stock, stock
appreciation rights, phantom stock, dividend equivalents,
performance units or performance shares, or any other type of
award which the Committee shall determine is consistent with the
objectives and limitations of the Stock Plan. An award may
consist of one such security or benefit, or two or more of them
in tandem or in the alternative.
Consideration. The Common Stock or other property
underlying an award may be issued for any lawful consideration as
determined by the Committee, including, without limitation, a
cash payment, services rendered, or the cancellation of
indebtedness. An award may provide for a purchase price of the
Common Stock or other property at a value less than the fair
market value of the Common Stock or other property on the date of
grant. In addition, an award may permit the recipient to pay the
purchase price of the Common Stock or other property or to pay
such recipient's tax withholding obligation with respect to such
issuance, in whole or in part, by delivering previously owned
shares of capital stock of the Company or other property, or by
reducing the number of shares of Common Stock or the amount of
other property otherwise issuable pursuant to such award.
Termination of Awards. All awards granted under the Stock
Plan expire ten years from the date of grant, or such shorter
period as is determined by the Committee. No option is
exercisable by any person after such expiration. If an award
expires, terminates or is canceled, the shares of Common Stock
not purchased thereunder shall again be available for issuance
under the Stock Plan.
Amendment and Termination of the Stock Plan. The Committee
may amend the Stock Plan at any time, may suspend it from time to
time or may terminate it without approval of the shareholders;
provided, however, that shareholder approval is required for any
amendment which materially increases the number of shares for
which awards may be granted, materially modifies the requirements
of eligibility, or materially increases the benefits which may
accrue to recipients of awards under the Stock Plan. However, no
such action by the Board of Directors or shareholders may
unilaterally alter or impair any award previously granted under
the Stock Plan without the consent of the recipient of the award.
In any event, the Stock Plan shall terminate on March 19, 2006
(ten years following the date it was approved by the Company's
shareholders) unless sooner terminated by action of the Board of
Directors.
Federal Income Tax Consequences for Stock Options
As of March 31, 1999, the only type of award granted by the
Company under the Stock Plan has been stock options. The
following is a general discussion of the principal tax
considerations for both "incentive stock options" within the
meaning of Section 422 of the Code ("Incentive Stock Options")
and non-statutory stock options ("Non-statutory Stock Options"),
and is based upon the tax laws and regulations of the United
States existing as of the date hereof, all of which are subject
to modification at any time. The Stock Plan does not constitute
a qualified retirement plan under Section 401(a) of the Code
(which generally covers trusts forming part of a stock bonus,
pension or profit-sharing plan funded by the employer and/or
employee contributions which are designed to provide retirement
benefits to participants under certain circumstances) and is not
subject to the Employee Retirement Income Security Act of 1974
(the pension reform law which regulates most types of privately
funded pension, profit sharing and other employee benefit plans).
Consequences to Employees: Incentive Stock Options. No
income is recognized for federal income tax purposes by an
optionee at the time an Incentive Stock Option is granted, and,
except as discussed below, no income is recognized by an optionee
upon his or her exercise of an Incentive Stock Option. If the
optionee makes no disposition of the Common Stock received upon
exercise within two years from the date such option was granted
or one year from the date such option is exercised, the optionee
will recognize mid-term or long-term capital gain or loss when he
or she disposes of his or her Common Stock depending on the
length of the holding period. Such gain or loss generally will
be measured by the difference between the exercise price of the
option and the amount received for the Common Stock at the time
of disposition.
If the optionee disposes of the Common Stock acquired upon
exercise of an Incentive Stock Option within two years after
being granted the option or within one year after acquiring the
Common Stock, any amount realized from such disqualifying
disposition will be taxable as ordinary income in the year of
disposition to the extent that (i) the lesser of (a) the fair
market value of the shares on the date the Incentive Stock Option
was exercised or (b) the fair market value at the time of such
disposition exceeds (ii) the Incentive Stock Option exercise
price. Any amount realized upon disposition in excess of the
fair market value of the shares on the date of exercise will be
treated as long-term, mid-term or short-term capital gain,
depending upon the length of time the shares have been held.
The use of stock acquired through exercise of an Incentive
Stock Option to exercise an Incentive Stock Option will
constitute a disqualifying disposition if the applicable holding
period requirement has not been satisfied.
For alternative minimum tax purposes, the excess of the fair
market value of the stock as of the date of exercise over the
exercise price of the Incentive Stock Option is included in
computing that year's alternative minimum taxable income.
However, if the shares are disposed of in the same year, the
maximum alternative minimum taxable income with respect to those
shares is the gain on disposition. There is no alternative
minimum taxable income from a disqualifying disposition in
subsequent years.
Consequences to Employees: Non-statutory Stock Options. No
income is recognized by a holder of Non-statutory Stock Options
at the time Non-statutory Stock Options are granted under the
Stock Plan. In general, at the time shares of Common Stock are
issued to a holder pursuant to exercise of Non-statutory Stock
Options, the holder will recognize ordinary income equal to the
excess of the fair market value of the shares on the date of
exercise over the exercise price.
A holder will recognize gain or loss on the subsequent sale
of Common Stock acquired upon exercise of Non-statutory Stock
Options in an amount equal to the difference between the selling
price and the tax basis of the Common Stock, which will include
the price paid plus the amount included in the holder's income by
reason of the exercise of the Non-statutory Stock Options.
Provided the shares of Common Stock are held as a capital asset,
any gain or loss resulting from a subsequent sale will be short-
term, mid-term or long-term capital gain or loss depending upon
the length of time the shares have been held.
Consequences to the Company: Incentive Stock Options. The
Company will not be allowed a deduction for federal income tax
purposes at the time of the grant or exercise of an Incentive
Stock Option. There are also no federal income tax consequences
to the Company as a result of the disposition of Common Stock
acquired upon exercise of an Incentive Stock Option if the
disposition is not a disqualifying disposition. At the time of a
disqualifying disposition by an optionee, the Company will be
entitled to a deduction for the amount received by the optionee
to the extent that such amount is taxable to the optionee as
ordinary income.
Consequences to the Company: Non-Statutory Stock Options.
Generally, the Company will be entitled to a deduction for
federal income tax purposes in the year and in the same amount as
the optionee is considered to have realized ordinary income in
connection with the exercise of Non-statutory Stock Options.
Required Vote
The approval of the Amendment requires the affirmative vote
of a majority of the shares of Common Stock present or
represented and voting on this matter at the Annual Meeting
(which shares voting affirmatively also constitute at least a
majority of the required quorum). Thus, abstentions and broker
non-votes can have the effect of preventing approval of the
Amendment where the number of affirmative votes, though a
majority of the votes cast, does not constitute a majority of the
quorum.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS VOTE "FOR" THE APPROVAL OF THE AMENDMENT TO THE 1996
STOCK OPTION PLAN.
OTHER INFORMATION
Principal Shareholders
The following table sets forth as of March 31, 1999 certain
information relating to the ownership of the Common Stock by (i)
each person known by the Company to be the beneficial owner of
more than five percent of the outstanding shares of the Company's
Common Stock, (ii) each of the Company's directors, (iii) each of
the Named Executive Officers, and (iv) all of the Company's
executive officers and directors as a group. Except as may be
indicated in the footnotes to the table and subject to applicable
community property laws, each such person has the sole voting and
investment power with respect to the shares owned. The address of
each person listed is in care of the Company, 4000 Union Pacific
Avenue, City of Commerce, California 90023.
Names and Number of
Addresses Shares(a) Percen
t
of
Class
David Gold 8,642,430 34.9%
(b)(e)
Sherry Gold 8,642,430 34.9%
(c)(e)
Howard Gold 5,578,743 22.5%
(d)(e)
Jeff Gold 5,578,743 22.5%
(d)(e)
Eric and Karen 5,602,185 22.6%
Schiffer (e)(f)
Au Zone 4,691,373 18.9%
Investments #3,
LLC(e)
William O. 14,531
Christy (g) *
Marvin Holen 23,125
(h) *
Ben Schwartz 28,999
(I) *
Lawrence 6,719
Glascott (j) *
Helen Pipkin 23,424
(k) *
Andrew 20,307
Farina(m) *
All of the
Company's
executive 11,444,924 46.2%
officers and
directors as a
group (11
persons)(n)
____________________________________
* Less than 1%
(a)Beneficial ownership is determined in accordance with the
rules of the Securities and Exchange Commission that deem
shares to be beneficially owned by any person who has or
shares voting or investment power with respect to such
shares. Unless otherwise indicated, the persons named in this
table have sole voting and sole investment power for all
shares shown as beneficially owned, subject to community
property laws where applicable.
(b)Includes 1,975,451 shares owned by Sherry Gold, David Gold's
spouse, and 4,691,373 shares controlled through Au Zone
Investments #3, LLC, a California limited liability company
("Au Zone").
(c)Includes 1,975,451 shares owned by David Gold, Sherry Gold's
spouse, and 4,691,373 shares controlled through Au Zone.
(d)Includes 4,691,373 shares controlled through Au Zone and
23,440 shares reserved for issuance upon exercise of stock
options which are or will become exercisable on or before
May 30, 1999.
(e)Au Zone is the general partner of Au Zone Investments #2,
L.P., a California limited partnership (the "Partnership").
The Partnership is the registered owner of 4,691,373 shares
of Common Stock. The limited partners of the Partnership are
David Gold, Sherry Gold, Howard Gold, Jeff Gold and Karen
Schiffer. Each of the limited partners of the Partnership
owns a 20% interest in Au Zone.
(f)Includes 4,691,373 shares controlled through Au Zone and
46,876 shares reserved for issuance upon exercise of stock
options which are or will become exercisable on or before
May 30, 1998.
(g)Includes 13,750 shares of Common Stock reserved for issuance
upon exercise of stock options which are or will become
exercisable on or before May 30, 1999.
(h)Includes 18,438 shares of Common Stock reserved for issuance
upon exercise of stock options which are or will become
exercisable on or before May 30, 1999.
(i)Includes 9,062 shares of Common Stock reserved for issuance
upon exercise of stock options which are or will become
exercisable on or before May 30, 1999.
(j)Includes 5,938 shares of Common Stock reserved for issuance
upon exercise of stock options which are or will become
exercisable on or before May 30, 1999.
(k)Includes 21,862 shares of Common Stock reserved for issuance
upon exercise of stock options which are or will become
exercisable on or before May 30, 1999.
(l)Includes 20,307 shares of Common Stock reserved for issuance
upon exercise of stock options which are or will become
exercisable on or before May 30, 1999.
(m)Includes (i) 1,975,451 shares owned by Sherry Gold, the
spouse of David Gold, (ii) 4,691,373 shares controlled
through Au Zone and (iii) 162,812 shares of Common Stock
reserved for issuance upon exercise of stock options which
are or will become exercisable on or before May 30, 1999.
SHAREHOLDER PROPOSALS
Any shareholder who intends to present a proposal at the next
Annual Meeting of Shareholders for inclusion in the Company's
Proxy Statement and Proxy form relating to such Annual Meeting
must submit such proposal to the Company at its principal
executive offices by December 15, 1999.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, independent public accountants, were
selected by the Board of Directors to serve as independent public
accountants of the Company for the year ended December 31, 1998
and have been selected by the Board of Directors to serve as
independent public accountants for the fiscal year ending
December 31, 1999. Representatives of Arthur Andersen LLP are
expected to be present at the Annual Meeting, and will be
afforded the opportunity to make a statement if they desire to do
so, and to be available to respond to appropriate questions from
shareholders.
SOLICITATION OF PROXIES
The expenses of preparing, assembling, printing and mailing
this Proxy Statement and the materials used in the solicitation
of Proxies will be borne by the Company. It is contemplated that
the Proxies will be solicited through the mails, but officers,
directors and regular employees of the Company may solicit
Proxies personally. Although there is no formal agreement to do
so, the Company may reimburse banks, brokerage houses and other
custodians, nominees and fiduciaries for their reasonable
expenses in forwarding the Proxy materials to shareholders whose
stock in the Company is held of record by such entities. In
addition, the Company may use the services of individuals or
companies it does not regularly employ in connection with the
solicitation of Proxies if management determines it advisable.
ANNUAL REPORT ON FORM 10-K
THE COMPANY'S ANNUAL REPORT ON FORM 10-K, WHICH HAS BEEN
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE YEAR
ENDED DECEMBER 31, 1998, WILL BE MADE AVAILABLE TO SHAREHOLDERS
WITHOUT CHARGE UPON WRITTEN REQUEST TO 99 CENTS ONLY STORES, 4000
UNION PACIFIC AVENUE, CITY OF COMMERCE, CALIFORNIA 90023,
ATTENTION: CHIEF FINANCIAL OFFICER.
ON BEHALF OF THE BOARD OF DIRECTORS
Eric Schiffer
Assistant Corporate Secretary
City of Commerce, California 90023
April 9, 1999
99 CENTS ONLY STORES
4000 UNION PACIFIC AVENUE
CITY OF COMMERCE, CALIFORNIA 90023
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF 99
CENTS ONLY STORES
The undersigned, a shareholder of 99 CENTS ONLY STORES, a
California corporation, (the "Company") hereby appoints David
Gold and Eric Schiffer, and each of them, the proxy of the
undersigned, with full power of substitution, to attend, vote and
act for the undersigned at Company's Annual Meeting of
Shareholders (the "Annual Meeting"), to be held on May 13, 1999,
and at any of its postponement or adjournments, to vote and
represent all of the shares of the Company which the undersigned
would be entitled to vote, as follows:
(Please sign and date on the reverse side)
Please mark
X your
Votes as in The Board of Directors recommends a WITH vote on Proposal
this example 1 and a FOR vote on Proposal 2.
using dark
ink only.
WITHOUT
Authority
WITH to FO AGAI ABS
ELECTION OF Vote for 2 The approval of the R NST TAI
DIRECTORS, the . amendment to the 99 N
As provided nominees Cents Only Stores 1996
in the ---- listed Stock Option Plan (the
Company's -- below. "Stock Plan") to
Proxy increase the number of -- ----
Statement: ------ shares of the -- - ---
Company's common stock - --
reserved for issuance
under the Stock Plan
from 3,125,000 to
4,625,000 shares.
1
.
(Instructions: To withhold
authority for a nominee, line
through or otherwise strike
out the name of the nominee
below)
The undersigned hereby revokes any
other proxy to vote at the annual
meeting, and hereby ratifies and
confirms all that the proxy holder may
lawfully do by virtue hereof. As to any
business that may properly come before
the Annual Meeting and any of its
postponement or adjournments, the proxy
holder is authorized to vote in
accordance with its best judgement.
This Proxy will be voted in
accordance with the instructions set
forth above. This Proxy will be treated
as a GRANT OF AUTHORITY TO VOTE FOR the
election of the directors named and the
amendment to the 1996 Stock Option Plan,
and as the proxy holder shall deem
advisable on such other business as may
come before the Annual Meeting, unless
otherwise directed.
The undersigned acknowledges receipt of a copy of the Notice of Annual
Meeting and accompanying Proxy Statement dated April 9, 1999 relating
to the Annual Meeting.
_______________________________________________________
Date:_________________
Signature(s) of Shareholder(s) (See Intructions Below)
The signature(s) hereon should correspond exactly with the name(s) of
the shareholder(s) appearing on the Stock Certificate. If stock is
jointly held, all joint owners should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as
such. If signer is a corporation, please sign the full corporation name
and give title of signing officer.