<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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 Rule 14a-11(c) or Rule 14a-12
SCHEID VINEYARDS 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.
/ / 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):
-----------------------------------------------------------------------
(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.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
SCHEID VINEYARDS INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 13, 1999
To the Stockholders of
Scheid Vineyards Inc.
The Annual Meeting of Stockholders of Scheid Vineyards Inc. will be held at
2:00 p.m. (local time) on Thursday, May 13, 1999, at the World Trade Club,
located in the World Trade Center, Ferry Building, on the Embarcadero at Market
Street, San Francisco, California 94111-4274, for the following purposes:
1. To elect five Directors, each to serve for a one-year term; and
2. To transact any other business which may properly come before the
meeting and any adjournments or postponements thereof.
A proxy statement containing information for stockholders is annexed hereto
and a copy of the Annual Report of the Company for the fiscal year ended
December 31, 1998 is enclosed herewith.
The Board of Directors has fixed the close of business on April 1, 1999, as
the record date for the determination of stockholders entitled to notice of and
to vote at the meeting.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE DATE AND
SIGN THE ACCOMPANYING PROXY CARD AND RETURN IT PROMPTLY IN THE ENVELOPE ENCLOSED
FOR THAT PURPOSE.
By order of the Board of Directors
[/S/ ALFRED G. SCHEID]
Alfred G. Scheid
Chairman and
Chief Executive Officer
Marina del Rey, California
April 12, 1999
<PAGE>
SCHEID VINEYARDS INC.
13470 Washington Boulevard
Marina del Rey, California 90292
(310) 301-1555
PROXY STATEMENT
GENERAL INFORMATION
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Scheid Vineyards Inc. ("SVI" or the
"Company"), a Delaware corporation, for use only at its Annual Meeting of
Stockholders to be held on Thursday, May 13, 1999, and any adjournments or
postponements thereof (the "Annual Meeting").
Shares may not be voted unless the appropriate signed proxy card is returned
or other specific arrangements are made to have shares represented at the
meeting. Any stockholder of record giving a proxy may revoke it at any time
before it is voted by filing with the Secretary of SVI a notice in writing
revoking it, by duly executing a proxy bearing a later date, or by attending the
Annual Meeting and expressing a desire to revoke the proxy and vote the shares
in person. Stockholders whose shares are held in street name should consult with
their brokers or other nominees concerning procedures for revocation. Subject to
such revocation, all shares represented by a properly executed proxy card will
be voted as directed by the stockholder on the proxy card. IF NO CHOICE IS
SPECIFIED, PROXIES WILL BE VOTED "FOR" THE PERSONS NOMINATED BY THE BOARD OF
DIRECTORS.
In addition to soliciting proxies by mail, Company officers, Directors and
other regular employees, without additional compensation, may solicit proxies
personally or by other appropriate means. The total cost of solicitation of
proxies will be borne by SVI. Although there are no formal agreements to do so,
it is anticipated that SVI will reimburse banks, brokerage houses and other
custodians, nominees and fiduciaries for their reasonable expenses in forwarding
any proxy soliciting materials to their principals.
Only stockholders of record at the close of business on Thursday, April 1,
1999 are entitled to receive notice of and to vote at the Annual Meeting. On
April 1, 1999, SVI had outstanding 2,733,563 shares of Class A Common Stock and
3,374,100 shares of Class B Common Stock, which constituted all of the
outstanding voting securities of SVI. Generally, except with respect to the
election or removal of Directors, the outstanding shares of Class A Common Stock
and Class B Common Stock vote together as a single class, with each outstanding
share of Class A Common Stock on the record date entitled to one vote and each
share of Class B Common Stock outstanding on the record date entitled to five
votes on each matter. With respect to matters on which the Class A Common Stock
and Class B Common Stock vote together as a single class, shares representing a
majority of the votes entitled to be cast in respect of the shares of Common
Stock outstanding on the record date will constitute a quorum.
The holders of the Class A Common Stock, voting as a separate class, are
entitled to elect two of the five Directors, and the holders of the Class B
Common Stock, voting as a separate class, are entitled to elect the remaining
three Directors. Directors elected by the holders of Class A Common Stock and
Class B Common Stock will be voted upon from separate slates of nominees. In the
election of Directors, each share of Class A Common Stock is entitled to one
vote multiplied by the number of Directors to be elected by the holders of the
Class A Common Stock, and each share of Class B Common Stock is entitled to five
votes multiplied by the number of Directors to be elected by the holders of the
Class B Common Stock.
Directors are elected by a plurality of votes cast. Stockholders may not
cumulate their votes for any one or more nominees for election as Directors;
provided, however, that under Section 2115 of the California Corporations Code
(which is currently applicable to the Company), a stockholder may cumulate votes
in the election of directors if the candidates' names have been placed in
nomination prior to the voting and the stockholder has given notice at the
meeting prior to the voting of the stockholder's intention to cumulate the
stockholder's votes, in which case all stockholders may cumulate their votes.
The affirmative vote of a majority of the voting power present, either in person
or represented by proxy, and
<PAGE>
entitled to vote at the Annual Meeting will be required to approve any other
matters to be voted upon at the Annual Meeting.
Under the General Corporation Law of the State of Delaware: (i) shares that
are subject to abstention or a broker "non-vote" are counted as present and
entitled to vote for purposes of determining the presence or absence of a quorum
for the transaction of business; (ii) neither abstentions nor broker "non-votes"
are counted for purposes of the election of Directors; (iii) abstentions in any
other matter to be voted upon at the Annual Meeting will be considered to be
present but not voting, and thus will have the effect of a "No" vote; and (iv) a
broker "non-vote" in any other matter to be voted upon at the Annual Meeting
will be considered to be not present and not entitled to vote on such matter,
and thus will not be considered in the tabulation of votes on such matter. A
broker "non-vote" occurs when a nominee holding shares for a beneficial owner
does not vote on a particular proposal or matter, and so notifies the Company,
because the nominee does not have discretionary voting power with respect to
that proposal or matter and has not received voting instructions from the
beneficial owner.
Alfred G. Scheid, Scott D. Scheid, Heidi M. Scheid, each an executive
officer and Director of the Company, and Kurt J. Gollnick, an executive officer
of the Company, and certain members of their families, beneficially own
3,374,100 shares of the Company's Class B Common Stock, which, as of April 1,
1999, represents 100% of the voting power of the Class B Common Stock and 86.1%
of the combined voting power of the Class A and Class B Common Stock when such
classes vote together as a single class. The holders of the Class B Common Stock
intend to vote all shares held by them in favor of the persons nominated by the
Board of Directors as the slate for election by the holders of the Class B
Common Stock and the proposals to approve certain amendments to the Company's
Certificate of Incorporation and Bylaws.
It is anticipated that this proxy statement and accompanying proxy card will
first be mailed to stockholders on or about April 12, 1999.
2
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
INFORMATION CONCERNING THE NOMINEES
The Company's Certificate of Incorporation provides that the holders of the
Class A Common Stock, voting as a separate class, are entitled to elect 25% of
the authorized number of Directors, rounded up to the nearest whole number, and
that the holders of the Class B Common Stock, voting as a separate class, are
entitled to elect the remaining Directors. The Board of Directors is currently
composed of five members, thereby entitling the holders of the Class A Common
Stock and Class B Common Stock to elect two and three Directors, respectively.
The Board of Directors has nominated the incumbent Directors to be elected for a
term expiring at the 2000 Annual Meeting of Stockholders, and until, in each
case, such person's successor has been duly elected and qualified or until his
or her earlier death, resignation or removal. Biographical information
concerning the nominees is set forth under the caption "--Directors and
Executive Officers" below. See "Security Ownership of Certain Beneficial Owners
and Management" for information regarding such persons' holdings of Common
Stock.
The Board of Directors has divided the nominees into two slates, one for
election by the holders of the Class A Common Stock and the other for election
by the holders of the Class B Common Stock. Only holders of the specified class
of Common Stock may vote on the respective slates of nominees for Directors. The
slates are as follows:
<TABLE>
<CAPTION>
FOR ELECTION BY THE HOLDERS FOR ELECTION BY THE HOLDERS
OF CLASS A COMMON STOCK OF CLASS B COMMON STOCK
- ------------------------------------------------------ ------------------------------------------------------
<S> <C>
John L. Crary Alfred G. Scheid
Robert P. Hartzell Scott D. Scheid
Heidi M. Scheid
</TABLE>
The Board of Directors has no reason to believe that any of its nominees
will be unable or unwilling to serve if elected. However, should any nominee
named herein become unable or unwilling to accept nomination or election, the
persons named as proxies will vote instead for such other person as the Board of
Directors may recommend.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
ABOVE-NAMED NOMINEES AS DIRECTORS.
DIRECTORS AND EXECUTIVE OFFICERS
The following sets forth certain information as of April 1, 1999 with regard
to each of the Directors and executive officers of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------------------------ --- ------------------------------------------------------------
<S> <C> <C>
Alfred G. Scheid(1)......................................... 67 Chairman of the Board of Directors and Chief Executive
Officer
Scott D. Scheid............................................. 38 Vice President, Chief Operating Officer and Director
Heidi M. Scheid(2).......................................... 35 Vice President Finance, Chief Financial Officer, Treasurer,
Secretary and Director
Kurt J. Gollnick............................................ 40 Vice President Vineyard Operations
John L. Crary(1)(2)......................................... 45 Director
Robert P. Hartzell(1)(2).................................... 64 Director
</TABLE>
- ------------------------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
3
<PAGE>
ALFRED G. SCHEID, the Company's Chairman of the Board and Chief Executive
Officer, was one of the founders of the Company in 1972 and has served
continuously as its Chief Executive Officer since that time. Mr. Scheid has been
engaged full-time in the business of SVI since 1988, when he became the sole
owner of the Company. Prior to 1988, Mr. Scheid had other business affairs
outside SVI. Mr. Scheid is a founder of the California Association of Winegrape
Growers, a trade association that represents the interests of California wine
grape producers and has served as its chairman. He is also a founder of Monterey
County Vintners and Growers Association, a trade association composed primarily
of wine grape and wine producers. Mr. Scheid is a graduate of the Harvard
Graduate School of Business, and is the father of Scott D. Scheid and Heidi M.
Scheid.
SCOTT D. SCHEID became Chief Operating Officer and a Director of the Company
in 1997. Mr. Scheid joined the Company in 1986 as Vice President and has been
engaged full-time in the business of the Company since that time. Prior to
joining SVI, he was employed as an options trader with E.F. Hutton & Company
Inc. Mr. Scheid was recently elected as a director of the California Association
of Winegrape Growers, and he previously has served as a director of Monterey
County Vintners and Growers Association. Mr. Scheid holds a B.A. degree in
economics from Claremont Men's College.
HEIDI M. SCHEID became the Company's Vice President Finance, Chief Financial
Officer, Treasurer and a Director in 1997. Ms. Scheid joined the Company in 1992
as Director of Planning after serving as a senior valuation analyst at Ernst &
Young, LLP for two years. Prior to that, she was an associate with Interven
Partners, a venture capital firm. Ms. Scheid was recently elected as director
and treasurer of Wine Market Council, a wine industry association aimed at
expanding the American wine consumer base. Ms. Scheid holds an M.B.A. degree
from the University of Southern California.
KURT J. GOLLNICK has been the Company's Vice President Vineyard Operations
since 1997. Mr. Gollnick joined SVI in 1988 as General Manager, Vineyard
Operations. For seven years prior to joining the Company, Mr. Gollnick was a
vineyard manager for Thornhill Ranches of Santa Maria, California, where he
managed 1,200 acres of vineyards. He has served as a director of the California
Association of Winegrape Growers from 1989 through 1997 and was recently elected
as a director of the Monterey County Vintners & Growers Association. Mr.
Gollnick has also served as president of the Central Coast Grape Growers and
Monterey Grape Growers Associations. Mr. Gollnick holds a B.S. degree in
agricultural economics from the California Polytechnic State University San Luis
Obispo.
JOHN L. CRARY became a Director of the Company in 1997. Currently, Mr. Crary
is founder and chairman of The Lassen Companies, Inc., a privately held cleaning
products manufacturing and distribution company, and he is President of Juniper
Capital LLC, a privately held financial advisory and investment firm. Since
1988, Mr.Crary has been a corporate financial advisor and venture capital
investor active with companies in various high technology as well as basic
industries. Previously, Mr. Crary was an investment banker in the corporate
finance department of E.F. Hutton & Company Inc., which he joined in 1979. Mr.
Crary has been a consultant to SVI and its predecessors since 1993 in connection
with financial matters, acquisitions and business strategy. Mr. Crary is also a
director of a number of private companies. Mr. Crary is a graduate of the
University of California at Irvine and the Columbia University Graduate School
of Business.
ROBERT P. HARTZELL became a Director of the Company in 1997. Mr. Hartzell is
the owner of Harmony Vineyards, a producer of premium Zinfandel wine grapes near
Lodi, California. From 1978 to 1996, Mr. Hartzell was President of the
California Association of Winegrape Growers. For six years during this period,
Mr. Hartzell also served on the Agricultural Policy Advisory Committee to the
U.S. Secretary of Agriculture and the U.S. Trade Representative in connection
with the General Agreement on Trade and Tariffs negotiations. Mr. Hartzell has
also served as Deputy Director of the California Department of Food and
Agriculture. Mr. Hartzell holds a B.S. degree from the University of California
at Davis.
Officers serve at the discretion of the Board of Directors.
4
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on a review of reports on Forms 3, 4 and 5 and amendments
thereto filed with the Securities and Exchange Commission and furnished to the
Company, there was one failure to file such a report on a timely basis by a
Director, officer or beneficial owner of more than 10% of SVI's Class A Common
Stock. Robert P. Hartzell, a Director of SVI, failed to timely report the open
market purchase by his wife of 600 shares of Class A Common Stock on February
20, 1998. This purchase was reported on a Form 5 filed with the Securities and
Exchange Commission in February 1999.
BOARD OF DIRECTORS, COMMITTEES AND COMPENSATION
Directors are elected to serve a one-year term and until their successors
are duly elected and qualified. The Company pays each non-employee Director an
annual fee of $5,000 and meeting fees at the rate of $500 for each Board meeting
attended in person and reimburses such Director for all expenses incurred by him
in his capacity as a Director of the Company. No fees are paid for participation
in telephonic meetings of the Board of Directors or its committees or actions
taken in writing. The Board of Directors held four meetings in 1998.
Under the Company's 1997 Stock Option/Stock Issuance Plan (the "Plan"), each
individual who was serving as a non-employee Director on the date the
underwriting agreement for the Company's initial public offering was executed
(July 24, 1997) received an option grant on such date for 10,000 shares of Class
A Common Stock, provided such individual had not been in the prior employ of the
Company. Such option grants were made to each of Messrs. Crary and Hartzell.
Each individual who first becomes a non-employee Director in the future will
receive a 10,000-share option grant on the date such individual joins the Board,
provided that such individual has not been in the prior employ of the Company
and has not previously received an option grant from the Company in his or her
capacity as a non-employee Director. In addition, at each Annual Meeting of
Stockholders, each non-employee Director with at least six months' service who
is to continue to serve as a non-employee Director after the Annual Meeting
receives an additional option grant to purchase 2,500 shares of Class A Common
Stock, whether or not such individual has been in the prior employ of the
Company.
Each automatic option grant to a non-employee Director has or will have a
term of 10 years, subject to earlier termination following the optionee's
cessation of Board service. The initial 10,000-share option grant becomes or
will become exercisable in a series of four successive equal annual installments
over the optionee's period of Board service. Each additional 2,500-share option
grant becomes or will become exercisable upon the optionee's completion of one
year of Board service measured from the grant date. However, each outstanding
option will immediately vest upon (i) certain changes in the ownership or
control of the Company or (ii) the death or disability of the optionee while
serving as a Director.
The Board of Directors has appointed an Audit Committee and a Compensation
Committee. The members of the Audit Committee are Messrs. Crary and Hartzell and
Ms. Scheid. Responsibilities of the Audit Committee include reviewing financial
statements and consulting with the independent auditors concerning the Company's
financial statements, accounting and financial policies and internal controls
and reviewing the scope of the independent auditors' activities and fees. The
members of the Compensation Committee are Messrs. Crary, Hartzell and Alfred G.
Scheid. The Company's Compensation Committee establishes and reviews salary,
bonus and other forms of compensation for officers of the Company, provides
recommendations to the Board of Directors for the salaries and incentive
compensation of the employees and consultants of the Company, reviews training
and human resources policies and makes recommendations to the Board of Directors
regarding such matters. The Company has no nominating committee or committee
performing similar functions. The Audit Committee held one meeting in 1998, and
the Compensation Committee held one meeting in 1998.
5
<PAGE>
Each Director attended at least 75% of the total number of the meetings held
of the Board of Directors and each committee thereof on which such Director
served during the fiscal year ended December 31, 1998.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP
The following table sets forth certain information as of April 1, 1999, with
respect to persons known by the Company to be beneficial owners of more than
five percent of either the Company's Class A Common Stock or the Company's Class
B Common Stock, as well as beneficial ownership of such classes of Common Stock
by the executive officers and Directors of the Company, and all executive
officers and Directors as a group. The persons named in the table have sole
voting and investment power with respect to all shares beneficially owned,
unless otherwise indicated.
<TABLE>
<CAPTION>
CLASS A COMMON STOCK CLASS B COMMON STOCK
BENEFICIALLY OWNED(1) BENEFICIALLY OWNED(1)
------------------------- -------------------------
NUMBER OF NUMBER OF
NAME AND ADDRESS OF BENEFICIAL OWNER(2) SHARES PERCENTAGE SHARES PERCENTAGE
- ------------------------------------------------------------- ---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Alfred G. Scheid(3).......................................... 1,649,589 37.6 1,649,589 48.9
Scott D. Scheid(4)........................................... 356,259 11.5 347,093 10.3
Heidi M. Scheid(5)........................................... 366,259 11.8 357,093 10.6
Kurt J. Gollnick(6).......................................... 309,259 11.3 300,093 8.9
John L. Crary(7)............................................. 5,000 * 0 0.0
Robert P. Hartzell(7)(8)..................................... 5,000 * 0 0.0
Emily K. Liberty(9).......................................... 309,066 10.2 309,066 9.2
Tyler P. Scheid.............................................. 309,066 10.2 309,066 9.2
Wellington Management Company, LLP(10)....................... 640,000 23.4 0 0.0
Putnam Investment Management, Inc.(11)....................... 400,000 14.6 0 0.0
Cowen & Company(12).......................................... 388,800 14.2 0 0.0
All executive officers and Directors as a group (6
PERSONS)................................................... 2,691,366 49.6 2,653,868 78.7
</TABLE>
- ------------------------
* Less than one percent.
(1) Except in the cases of Wellington Management Company, LLP, Putnam Investment
Management, Inc. and Cowen & Company (the "Institutional Holders") and for
certain stock options exercisable for shares of Class A Common Stock as
described in notes 4 through 6 below, all shares of Class A Common Stock
reflected as beneficially owned by each person named in this table represent
shares issuable upon conversion of the beneficial holder's shares of Class B
Common Stock. Beneficial ownership and the percentages of the Class A Common
Stock and Class B Common Stock outstanding have been determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended, and the rules promulgated thereunder. In the case of the
Institutional Holders, the stockholdings reported reflect data set forth in
the latest Schedule 13G furnished to the Company by the respective
Institutional Holders.
(2) The address of each of the persons named in this table, other than the
Institutional Holders, is c/o Scheid Vineyards Inc., 13470 Washington
Boulevard, Marina del Rey, California 90292. The addresses of the
Institutional Holders are set forth in notes 10 through 12 below. Scott D.
Scheid, Heidi M. Scheid, Emily K. Liberty and Tyler P. Scheid are children
of Alfred G. Scheid.
(FOOTNOTES CONTINUED ON NEXT PAGE)
6
<PAGE>
(FOOTNOTES CONTINUED FROM PREVIOUS PAGE)
(3) Owned by Alfred G. Scheid as Trustee of the Alfred G. Scheid Revocable Trust
dated October 8, 1992. Does not include 100,000 shares of Class B Common
Stock owned by a revocable trust of which Mr. Scheid's wife is the sole
trustee and over which Mr. Scheid does not have any voting power or
investment power. Mr. Scheid disclaims beneficial ownership of the shares
beneficially owned by his wife's trust.
(4) Includes 335,093 shares of Class B Common Stock owned by Scott D. Scheid and
12,000 shares of Class B Common Stock owned by trusts for the benefit of the
children of Heidi M. Scheid, of which Mr. Scheid is a co-trustee together
with Heidi M. Scheid. Class A shareholdings also include 9,166 shares that
may be acquired upon the exercise of options granted under the Plan that are
currently exercisable or may become exercisable prior to May 30, 1999. Does
not include 11,000 shares of Class B Common Stock owned by Mr. Scheid's wife
and over which Mr. Scheid does not have any voting power or investment
power. Mr. Scheid disclaims beneficial ownership of the shares beneficially
owned by his wife.
(5) Includes 345,093 shares of Class B Common Stock owned by Heidi M. Scheid and
12,000 shares of Class B Common Stock owned by trusts for the benefit of the
children of Ms. Scheid, of which Ms. Scheid is a co-trustee together with
Scott D. Scheid. Class A shareholdings also include 9,166 shares that may be
acquired upon the exercise of options granted under the Plan that are
currently exercisable or may become exercisable prior to May 30, 1999. Does
not include 1,000 shares of Class B Common Stock owned by Ms. Scheid's
husband and over which Ms. Scheid does not have any voting power or
investment power. Ms. Scheid disclaims beneficial ownership of the shares
beneficially owned by her husband.
(6) Class A shareholdings include 9,166 shares that may be acquired upon the
exercise of options granted under the Plan that are currently exercisable or
may become exercisable prior to May 30, 1999. Does not include 1,000 shares
of Class B Common Stock owned by Mr. Gollnick's wife and over which Mr.
Gollnick does not have any voting power or investment power. Mr. Gollnick
disclaims beneficial ownership of the shares beneficially owned by his wife.
(7) Represents shares that may be acquired upon the exercise of options granted
under the Plan that are currently exercisable or may become exercisable
prior to May 30, 1999.
(8) Does not include 600 shares of Class B Common Stock owned by Mr. Hartzell's
wife and over which Mr. Hartzell does not have any voting power or
investment power. Mr. Hartzell disclaims beneficial ownership of the shares
beneficially owned by his wife.
(9) Does not include 100 shares of Class B Common Stock owned by Ms. Liberty's
husband and over which Ms. Liberty does not have any voting power or
investment power. Ms. Liberty disclaims beneficial ownership of the shares
beneficially owned by her husband.
(10) Wellington Management Company, LLP ("WMC") is an investment adviser to and
parent holding company of Wellington Trust Company, NA ("WTC"), which
beneficially owns 490,000 of the 640,000 shares of Class A Common Stock
beneficially owned by WMC. The address of WMC and WTC is 75 State Street,
Boston, Massachusetts 02109.
(11) Putnam Investment Management, Inc. ("PIM") is an indirect wholly owned
subsidiary of Marsh & McLennan Companies, Inc. PIM is the investment adviser
to the Putnam Capital Appreciation Fund, which owns the 400,000 shares of
Class A Common Stock beneficially owned by PIM. The address of PIM is One
Post Office Square, Boston, Massachusetts 02109.
(12) Cowen & Company is a subsidiary of Cowen Incorporated, which may be deemed
to be controlled by Joseph Cohen. The address of Cowen & Company is
Financial Square, New York, New York 10005-3597.
7
<PAGE>
AGREEMENT AMONG CLASS B STOCKHOLDERS
The holders of the outstanding shares of Class B Common Stock and the
Company are parties to an Amended and Restated Buy-Sell Agreement (the "Buy-Sell
Agreement"). Pursuant to the Buy-Sell Agreement, no holder of shares of Class B
Common Stock other than Alfred G. Scheid may, with limited exceptions, transfer
Class B Common Stock or convert Class B Common Stock into Class A Common Stock
without first offering such stock, in a specified order, to the Company, Alfred
G. Scheid, Scott D. Scheid and Heidi M. Scheid. The Buy-Sell Agreement applies
to a broad range of transfers and dispositions other than transfers to (i) the
Company, (ii) certain other Class B stockholders, (iii) a current or former
spouse or direct lineal descendant of any Class B stockholder including, without
limitation, adopted persons (if adopted during minority) and persons born out of
wedlock, and excluding foster children and stepchildren, (iv) a trust under
which all of the beneficiaries are persons described in clauses (ii) or (iii)
above, and (v) a corporation, partnership or limited liability company, all of
the equity interests of which are owned by persons or entities described in
clauses (i), (ii), (iii) and (iv) above or corporations, partnerships and
limited liability companies described in this clause (v). The Buy-Sell Agreement
also grants an option, exercisable in a specified order, to the Company, Alfred
G. Scheid, Scott D. Scheid and Heidi M. Scheid, to purchase the shares of Class
B Common Stock held by certain Class B stockholders at specified prices upon (A)
the death of such Class B Stockholder, (B) the entry or imposition of certain
judgments, levies or attachments affecting the shares of Class B Common Stock
held by such stockholder, (C) certain bankruptcy or insolvency events affecting
such stockholder or (D) in the case of Kurt J. Gollnick, the termination of his
employment with the Company.
8
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION OF NAMED EXECUTIVE OFFICERS
The following table sets forth information concerning the annual and
long-term compensation earned by the Named Executive Officers for services
rendered in all capacities to the Company for the fiscal years ended December
31, 1998, 1997 and 1996. The "Named Executive Officers" include (i) each person
who served as Chief Executive Officer during 1998 (one person), (ii) each person
who (a) served as an executive officer at December 31, 1998, (b) was among the
four most highly paid executive officers of the Company, not including the Chief
Executive Officer, during 1998 and (c) earned total annual salary and bonus
compensation in 1998 in excess of $100,000 (three persons), and (iii) up to two
persons who would be included under clause (ii) above had they served as an
executive officer at December 31, 1998 (no persons).
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION(1) COMPENSATION
------------------------------------------------------ -------------
OTHER SHARES
ANNUAL UNDERLYING ALL OTHER
FISCAL SALARY BONUS COMPENSATION OPTIONS/SARS COMPENSATION
NAME AND CAPACITY IN WHICH SERVED YEAR ($)(2) ($) ($)(3) (#)(4) ($)(5)(6)(7)
- ---------------------------------------- ----------- ---------- ---------- ----------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Alfred G.Scheid......................... 1998 $ 400,000 $ 75,000 -- -- -- 0 $ 249,634
CHAIRMAN OF THE BOARD AND 1997 $ 400,000 $ 140,000 0 $ 168,183
CHIEF EXECUTIVE OFFICER 1996 $ 400,000 $ 0 0 $ 97,095
Scott D. Scheid......................... 1998 $ 130,000 $ 85,000 -- -- -- 0 $ 3,900
VICE PRESIDENT AND CHIEF OPERATING 1997 $ 118,300 $ 105,000 20,000 $ 3,550
OFFICER 1996 $ 90,000 $ 75,000 0 $ 2,700
Heidi M. Scheid......................... 1998 $ 120,000 $ 75,000 -- -- -- 0 $ 3,600
VICE PRESIDENT FINANCE, 1997 $ 106,700 $ 90,000 20,000 $ 3,200
CHIEF FINANCIAL OFFICER, TREASURER AND 1996 $ 75,000 $ 30,000 0 $ 2,250
SECRETARY
Kurt J. Gollnick........................ 1998 $ 120,000 $ 85,000 -- -- -- 20,000 $ 53,600
VICE PRESIDENT VINEYARD OPERATIONS 1997 $ 111,700 $ 105,000 20,000 $ 3,350
1996 $ 92,700 $ 85,000 0 $ 2,781
</TABLE>
- ------------------------
(1) Amounts shown include cash compensation earned for the periods reported
whether paid or accrued in such periods.
(2) As of April 1, 1999, the annual salary levels for the Named Executive
Officers were: Alfred G. Scheid ($400,000); Scott D. Scheid ($130,000);
Heidi M. Scheid ($120,000); and Kurt J. Gollnick ($120,000).
(3) During each of 1998, 1997 and 1996, the Named Executive Officers received
personal benefits, the aggregate amounts of which for each Named Executive
Officer did not exceed the lesser of $50,000 or 10% of the total of the
annual salary and bonus reported for such Named Executive Officer in such
years.
(4) The Named Executive Officers did not receive any restricted stock awards or
long-term incentive plan payouts in 1998, 1997 or 1996. The stock option
grant to Mr. Gollnick in 1998 represents a repricing of the stock options
granted to Mr. Gollnick in 1997. The exercise price was reduced from $10.00
per share to $4.00 per share.
(FOOTNOTES CONTINUED ON NEXT PAGE)
9
<PAGE>
(FOOTNOTES CONTINUED FROM PREVIOUS PAGE)
(5) Except as described in notes 6 and 7, all amounts in this column represent
matching contributions under the Company's 401(k) plan. In the case of
Alfred G. Scheid, matching contributions in 1998, 1997 and 1996 were $5,000,
$4,750 and $4,620, respectively. In the case of Mr. Gollnick, matching
contributions in 1998 were $3,600.
(6) In the case of Alfred G. Scheid, includes $244,634, $163,433 and $92,475 in
1998, 1997 and 1996, respectively, representing benefits received under a
split dollar life insurance trust arrangement pursuant to which Alfred G.
Scheid is entitled to designate the beneficiary of a $4,500,000 life
insurance policy and the Company is obligated to advance a portion of the
premiums. The owner of the insurance policy is a trust, the trustees of
which include Scott D. Scheid and Heidi M. Scheid, each of whom is an
executive officer and Director of the Company and a child of Alfred G.
Scheid. Advances by the Company are required to be repaid out of the
surrender proceeds or death benefits payable under the policy. The amount of
the benefits received in each year represents (i) the premiums payable by
the Company during the year ($244,634 in 1998, $163,433 in 1997 and $92,475
in 1996) plus (ii) the proportionate amount, if any, of the excess of the
actuarially projected cash surrender value of the policy at the end of such
year over the aggregate amount of premiums advanced by the Company through
such year ($0 at each of December 31, 1998, 1997 and 1996). Such
proportionate amount is measured by the time-weighted compounded returns on
the premiums advanced by each of the Company and the policy owner, and
assuming a constant rate of return from inception of the policy.
(7) In the case of Mr. Gollnick, includes $50,000 in 1998 in respect of 10,000
shares of SVI Class B Common Stock gifted to him by Alfred G. Scheid as
Trustee of the Alfred G. Scheid Revocable Trust dated October 8, 1992. Such
shares were valued at a 33% discount from the closing per share price of the
Class A Common Stock on the Nasdaq National Market System on the date of
gift.
OPTION GRANTS
The following table sets forth information with respect to grants of stock
options to the Named Executive Officers during fiscal 1998, which stock options
are exercisable for shares of Class A Common Stock of the Company. No stock
appreciation rights were granted by the Company in fiscal 1998.
OPTIONS/SAR GRANTS IN FISCAL 1998
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO
OPTIONS/SARS EMPLOYEES IN EXERCISE PRICE EXPIRATION
NAME GRANTED(#)(1) FISCAL YEAR ($/SHARE) DATE
- --------------------------------------------------- ------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Kurt J. Gollnick................................... 20,000 29.6% $ 4.00 July 23, 2007
</TABLE>
- ------------------------
(1) These options were originally granted under the Plan on July 24, 1997 and
were repriced on October 8, 1998 from $10.00 per share to $4.00 per share.
The exercise price is equal to the fair market value of the Class A Common
Stock on the date of grant or repricing. The options vest 25% on the first
anniversary of the grant date with the remaining 75% vesting ratably in 36
monthly installments following the first anniversary of the grant date;
provided, however, that the vesting of options will be accelerated
immediately prior to certain corporate transactions involving certain
changes in control of the Company unless the options are assumed, or
replaced with comparable options or a cash incentive program, by the
successor corporation. In addition, the options provide for the acceleration
of vesting and extension of the option termination dates upon the
termination of the optionee's employment with the Company under certain
circumstances following certain changes in control of the Company. The stock
options are subject to termination prior to the expiration date
10
<PAGE>
following the termination of the optionee's employment with the Company. See
"--Employment Agreements, Termination of Employment and Change-in-Control
Arrangements" below.
OPTION EXERCISES AND HOLDINGS
The following table sets forth with respect to the Named Executive Officers
information concerning the exercise of stock options during 1998 and unexercised
options held as of the end of the year. The Company has never granted stock
appreciation rights.
AGGREGATED OPTION/SAR EXERCISES
AND 1998 YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS
SHARES VALUE FISCAL YEAR END(#) AT FISCAL YEAR END($)(1)
ACQUIRED REALIZED ---------------------------- --------------------------
NAME ON EXERCISE(#) ($) UNEXERCISABLE EXERCISABLE UNEXERCISABLE EXERCISABLE
- ------------------------------------ ------------------- ------------- --------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Alfred G. Scheid.................... 0 $ 0 0 0 -- --
Scott D. Scheid..................... 0 $ 0 7,083 12,917 $ 0 $ 0
Heidi M. Scheid..................... 0 $ 0 7,083 12,917 $ 0 $ 0
Kurt J. Gollnick.................... 0 $ 0 7,083 12,917 $ 6,198 $ 11,302
</TABLE>
- ------------------------
(1) The values of unexercised in-the-money options have been determined based on
the per share closing price of the Company's Common Stock as reported in the
Nasdaq-National Market System on December 31, 1998 ($4.875).
REPORT OF THE BOARD OF DIRECTORS ON REPRICING OF OUTSTANDING STOCK OPTIONS
On October 8, 1998, the Board of Directors unanimously adopted resolutions
reducing the per share exercise price of all stock options previously granted
under the Discretionary Option Grant Program of the Plan, excluding those stock
options granted to Directors, from $10.00 to $4.00, the Fair Market Value (as
defined in the Plan) on that date. The repriced stock options are exercisable
for an aggregate of 71,000 shares of Class A Common Stock and include options
exercisable for 20,000 shares of Class A Common Stock granted to Kurt J.
Gollnick, one of the Named Executive Officers. The Board of Directors believes
that due to the trading levels of the Company's Class A Common Stock during the
several months preceding the repricing date, the outstanding stock options
neither provided adequate compensation incentive to the option holders nor
aligned their long-term interests with those of the Company's stockholders. The
Board of Directors concluded that it was in the long-term best interests of the
Company and its stockholders to reduce the per share exercise price of the
outstanding stock options, excluding those granted to Directors, to the then
prevailing trading price.
<TABLE>
<CAPTION>
THE BOARD OF DIRECTORS
<S> <C>
Alfred G. Scheid John L. Crary
Scott D. Scheid Robert P. Hartzell
Heidi M. Scheid
</TABLE>
EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Company has entered into an employment agreement (collectively, the
"Employment Agreements") with each of Alfred G. Scheid, Scott D. Scheid, Heidi
M. Scheid and Kurt J. Gollnick (collectively, the "Employees") providing for a
minimum employment of three years beginning on July 19, 1997, except for Alfred
G. Scheid, whose Employment Agreement has a minimum one-year term. Under their
respective Employment Agreements, Alfred G. Scheid currently is entitled to an
annual base salary of $400,000, Scott D. Scheid currently is entitled to an
annual base salary of $130,000 and each of Heidi M.
11
<PAGE>
Scheid and Kurt J. Gollnick is entitled to an annual base salary of $120,000.
The base salary under each Employment Agreement is subject to upward adjustment,
and each Employee is eligible for bonus compensation pursuant to bonus
arrangements, as determined by the Board of Directors upon the recommendation of
the Compensation Committee. The Company may terminate each Employee's employment
at any time with or without cause, and no severance payment obligations are
provided.
A Buy-Sell Agreement among the Company and the holders of Class B Common
Stock provides, among other things, that the shares of Class B Common Stock held
by Mr. Gollnick (currently 300,093) are purchasable at the option first of the
Company, next of Alfred G. Scheid if the Company does not exercise such option,
and thereafter of Scott D. Scheid and Heidi M. Scheid if the Company and Alfred
G. Scheid do not exercise such options, if Mr. Gollnick's employment with the
Company terminates for any reason. See "Security Ownership of Certain Beneficial
Owners and Management--Agreement Among Class B Stockholders". If such
termination is a voluntary termination by Mr. Gollnick that occurs prior to July
29, 2004, or is for "cause" (as defined) regardless of when such termination for
"cause" occurs, the per share purchase price for Mr. Gollnick's shares of Class
B Common Stock will be equal to the price per share he paid for such shares, and
if such termination occurs for any other reason or under any other
circumstances, or upon the death of Mr. Gollnick, the per share purchase price
will be the weighted average trading price of the Class A Common Stock for the
immediately preceding 20 trading days on which such Class A Common Stock
actually was traded.
The outstanding stock options exercisable for shares of Class A Common Stock
of the Company that have been granted under the Plan, including those granted to
the Directors and Named Executive Officers, provide for accelerated vesting in
connection with certain corporate transactions involving certain changes in
control of the Company unless the options are assumed, or replaced with
comparable options or a cash incentive program, by the successor corporation. In
addition, the stock options that have been granted to the Named Executive
Officers provide for immediate acceleration of these options upon an
"involuntary termination" of employment occurring within 18 months of a "change
in control." In the event of such an acceleration, the options will remain
exercisable until the earlier of the expiration date specified in the option
grant and one year after the date of involuntary termination. For purposes of
these provisions: an "involuntary termination" means, generally, termination by
the Company other for "misconduct" (as defined) or termination by the employee
following an involuntary material change in position and responsibility, an
involuntary reduction in compensation by more than 15% or an involuntary
relocation by more than 50 miles; and a "change in control" means, generally,
the acquisition of securities representing a majority of the voting power of the
Company other than by the Company and its affiliates, a change in a majority of
the Board of Directors over a period of 36 month or less involving new Directors
that have not been elected or nominated by the other Directors or a change in
ownership of securities representing more than a majority of the voting power of
certain subsidiaries of the Company.
The Company has entered into agreements to provide indemnification for the
Company's Directors and certain officers in addition to the indemnification
provided for in the Company's Bylaws. These agreements, among other things, will
indemnify the Company's Directors and certain officers to the fullest extent
permitted by Delaware law for certain expenses (including attorneys' fees), and
all losses, claims, liabilities, judgments, fines and settlement amounts
incurred by such person arising out of or in connection with such persons'
service as Directors or officers of the Company or an affiliate of the Company.
These agreements provide for the advancement of expenses incurred in defending a
claim prior to resolution of the merits of the claim. These agreements also
require the Company to maintain directors and officers liability insurance. The
Employment Agreements impose similar indemnification obligations on the Company.
There is no pending litigation or proceeding involving a Director, officer,
employee or agent of the Company, and the Company is not aware of any threatened
litigation or proceeding which may result in a claim for such indemnification.
12
<PAGE>
CERTAIN TRANSACTIONS
FORMATION OF SVI
SVI was incorporated in Delaware in July 1997 to act as a holding company
for Scheid Vineyards California Inc., a California corporation ("SVI-Cal"), the
Company's operating subsidiary, and to participate in the Exchange Transaction
described below. See "--Exchange of Shares, Partnership Units and Limited
Liability Company Interests for Class B Common Stock."
EXCHANGE OF SHARES, PARTNERSHIP UNITS AND LIMITED LIABILITY COMPANY INTERESTS
FOR CLASS B COMMON STOCK
Prior to the Company's initial public offering, SVI-Cal was the general
partner of (i) Vineyard Investors 1972 ("VI-1972"), a California limited
partnership having as its limited partners SVI-Cal, Big Vines Limited Liability
Company ("Big Vines"), a California limited liability company having Scott D.
Scheid (the son of Alfred G. Scheid and an executive officer and a Director of
the Company) and Heidi M. Scheid (the daughter of Alfred G. Scheid and an
executive officer and a Director of the Company) as its members, Emanty Limited
Liability Company, a California limited liability company having Alfred G.
Scheid (an executive officer and a Director of the Company), Tyler P. Scheid
(the son of Alfred G. Scheid) and Emily K. Liberty (the daughter of Alfred G.
Scheid) as its members, and Kurt J. Gollnick (an executive officer of the
Company); and (ii) Vineyard 405 ("V-405"), a California limited partnership
having as its limited partners SVI-Cal and VI-1972. Prior to the initial public
offering, SVI-Cal also was a member of Quadra Partners LLC ("Quadra Partners"),
a California limited liability company having Alfred G. Scheid, Scott D. Scheid,
Heidi M. Scheid and Kurt J. Gollnick as additional members. During their
respective existences, VI-1972, V-405 and Quadra Partners were the owners or
ground lessees of various vineyard properties currently owned or leased by the
Company.
In connection with the initial public offering, the capital stock of SVI-Cal
held by its sole stockholder, the membership interests held by all members of
each of Quadra Partners and Big Vines and the limited partnership units held by
all limited partners (other than SVI-Cal) in VI-1972 were contributed to the
Company in exchange for (i) 4,400,000 shares of Class B Common Stock of the
Company (the "Exchange Transaction"), representing 100% of the issued and
outstanding common stock of the Company prior to the initial public offering,
and (ii) a commitment by SVI-Cal to make the distributions described below. See
"--Termination of SVI-Cal's S Corporation Status." The Company, as part of the
Exchange Transaction, simultaneously contributed such limited partnership units
in VI-1972 and such membership interests in each of Quadra Partners and Big
Vines to SVI-Cal and, as a result, each of Quadra Partners, Big Vines, VI-1972
and V-405 was terminated and dissolved and the assets and liabilities of each
became assets and liabilities of SVI-Cal. The following table sets forth the
number and percentage of shares of Class B
13
<PAGE>
Common Stock of SVI that were issued to the sole stockholder of SVI-Cal and the
members of and limited partners in Quadra Partners, Big Vines and VI-1972 as a
result of the Exchange Transaction:
<TABLE>
<CAPTION>
PERCENTAGE OF CLASS B
NUMBER OF SHARES COMMON STOCK
OF CLASS B OUTSTANDING FOLLOWING
COMMON STOCK EXCHANGE
NAME OF MEMBER OR PARTNER RECEIVED(1) TRANSACTION(1)
- ------------------------------ ---------------- ---------------------
<S> <C> <C>
Emanty Limited Liability
Company(2).................. 573,870 13.0%
Alfred G. Scheid(3)........... 2,955,851 67.2%
Scott D. Scheid............... 290,093 6.6%
Heidi M. Scheid............... 290,093 6.6%
Kurt J. Gollnick.............. 290,093 6.6%
---------------- -------
Total..................... 4,400,000 100%
---------------- -------
---------------- -------
</TABLE>
- ------------------------
(1) This table does not reflect current shareholdings of the named persons. See
"Security Ownership of Certain Beneficial Owners and Management."
(2) Emanty Limited Liability Company has been dissolved by agreement of its
members, and its shares of Class B Common Stock have been distributed to its
members (Alfred G. Scheid and two of his children) pro rata in accordance
with their respective membership interests. See "Security Ownership of
Certain Beneficial Owners and Management."
(3) All of these shares were issued to Mr. Scheid as Trustee of the Alfred G.
Scheid Revocable Trust dated October 8, 1992.
TERMINATION OF SVI-CAL'S S CORPORATION STATUS
SVI-Cal was a Subchapter S Corporation for federal and California state
income tax purposes from 1989 until July 1997. As a result, the net income of
SVI-Cal for federal and certain state income tax purposes for such periods was
reported by, and taxed directly to, SVI-Cal's sole stockholder, Alfred G.
Scheid, whether or not such earnings were distributed. Prior to the Company's
initial public offering, SVI-Cal's cumulative S Corporation earnings were
determined and a distribution of $3,193,000 was made to Mr. Scheid. In addition,
a distribution of $480,000 was made to the limited partners of Vineyard
Investors 1972 (as of immediately prior to the Exchange Transaction) to pay
income taxes on income from the partnership. The Exchange Transaction resulted
in the termination of SVI-Cal's S Corporation status. See "--Exchange of Shares,
Partnership Units and Limited Liability Company Interests for Class B Common
Stock."
CORPORATE HEADQUARTERS LEASE
Pursuant to a five-year lease (the "Lease"), the Company leases the third
floor of a three-story office building in Marina del Rey, a suburb of Los
Angeles, from Tesh Partners, L.P., a limited partnership comprised of members of
the Scheid family. The Company occupies 5,685 square feet and the rest of the
building (approximately 5,300 square feet) is leased to unrelated parties. The
general partner of Tesh Partners, L.P. is SVI-Cal and the limited partners are
Alfred G. Scheid's four children, two of whom are Scott D. Scheid and Heidi M.
Scheid, each an executive officer and a Director of the Company. The lease runs
until June 1999 and the rent is $98,616 annually, plus an additional annual
amount of $3,660 for parking. The Company believes that the terms of the Lease
are at least as favorable to the Company as if the Lease were entered into with
an unaffiliated third party. The Company anticipates renewing this lease in
1999.
14
<PAGE>
GOLLNICK NOTE
On December 30, 1994, Kurt J. Gollnick, an executive officer of the Company,
purchased 555 limited partnership units of VI-1972 from SVI in exchange for the
delivery by Mr. Gollnick to the Company of a Promissory Note (the "Gollnick
Note") in the original principal amount of $98,790. The Gollnick Note bore
interest at the rate of 8.23% per annum, and was payable interest only on the
30th day of December of each year until December 30, 2004, at which time the
entire principal balance and all accrued, unpaid interest was payable in full.
The Gollnick Note was repaid in full in December 1997.
CONSULTING AGREEMENTS
The Company periodically consults with John L. Crary and Robert P. Hartzell,
both Directors of the Company, on various matters relating to its business
activities. The Company pays Messrs. Crary and Hartzell on an hourly basis, at
varying rates depending on the nature of service being provided. Consulting fees
and reimbursable consulting-related expenses paid to Mr. Crary by the Company
during 1997 aggregated $124,864.
FUTURE TRANSACTIONS
The Company does not have any current intentions to enter into any future
transactions with related parties with respect to the acquisition or development
of additional vineyard or other properties. The Company has adopted a policy
requiring future transactions with affiliates to be on terms no less favorable
to the Company than could be obtained from unaffiliated parties.
FORM 10-KSB
SVI will furnish without charge to each stockholder, upon written request
addressed to SVI c/o Linda Carris, 13470 Washington Boulevard, Marina del Rey,
California 90292, a copy of its Annual Report on Form 10-KSB for the year ended
December 31, 1998 (excluding the exhibits thereto), as filed with the Securities
and Exchange Commission. The Company will provide a copy of the exhibits to its
Annual Report on Form 10-KSB for the year ended December 31, 1998 upon the
written request of any beneficial owner of the Company's securities as of the
record date for the Annual Meeting and reimbursement of the Company's reasonable
expenses. Such request should be addressed to SVI c/o Linda Carris at the above
address.
FUTURE STOCKHOLDER PROPOSALS
Any stockholder proposal intended to be presented at the 2000 Annual Meeting
of Stockholders must be submitted sufficiently far in advance so that it is
received by SVI not later than December 31, 1999.
15
<PAGE>
OTHER MATTERS
The Company's independent public accountants for the fiscal year ended
December 31, 1998 were Deloitte & Touche LLP, which firm is expected to be
appointed to serve in such capacity for the current year. A representative of
Deloitte & Touche LLP is not expected to be present at the meeting. However, if
a representative of Deloitte & Touche LLP is present at the meeting, such
representative will have an opportunity to make a statement if he or she so
desires and to respond to appropriate questions.
Neither the Company nor any of the persons named as proxies knows of matters
other than those stated above to be voted on at the Annual Meeting. However, if
any other matters are properly presented at the meeting, the persons named as
proxies are empowered to vote in accordance with their discretion on such
matters.
The Annual Report of SVI for the fiscal year ended December 31, 1998
accompanies this proxy statement, but it is not to be deemed a part of the proxy
soliciting material.
PLEASE COMPLETE, SIGN AND RETURN
THE ENCLOSED PROXY PROMPTLY
SCHEID VINEYARDS INC.
By order of the Board of Directors
[/S/ ALFRED G. SCHEID]
Alfred G. Scheid
Chairman of the Board
and Chief Executive Officer
Marina del Rey, California
April 12, 1999
16
<PAGE>
REVOCABLE PROXY FOR CLASS A COMMON STOCK
SCHEID VINEYARDS INC.
ANNUAL MEETING OF STOCKHOLDERS--MAY 13, 1999
The undersigned stockholder(s) of Scheid Vineyards Inc. (the "Company")
hereby nominates, constitutes and appoints Alfred G. Scheid, Scott D. Scheid and
Heidi M. Scheid, and each of them, the attorney, agent and proxy of the
undersigned, with full power of substitution, to vote all shares of CLASS A
COMMON STOCK of the Company that the undersigned is entitled to vote at the
Annual Meeting of Stockholders of the Company to be held at the World Trade
Club, located in the World Trade Center, Ferry Building, on the Embarcadero at
Market Street, San Francisco, California, at 2:00 p.m. (local time) on Thursday,
May 13, 1999, and any and all adjournments or postponements thereof, with
respect to the matters described in the accompanying Proxy Statement, and in
their discretion, on such other matters which properly come before the meeting,
as fully and with the same force and effect as the undersigned might or could do
if personally present thereat, as follows:
<TABLE>
<S> <C> <C>
1. PROPOSAL NO. 1 / / AUTHORITY GIVEN / / WITHHOLD AUTHORITY
ELECTION OF DIRECTORS to vote for the nominees listed below to vote for the nominees.
(except as indicated to the contrary below).
</TABLE>
(INSTRUCTION: To withhold authority to vote for any nominee, strike a line
through such nominee's name below.)
JOHN L. CRARY ROBERT P. HARTZELL
2. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND
ANY ADJOURNMENT OR ADJOURNMENTS OR POSTPONEMENTS THEREOF. MANAGEMENT
CURRENTLY KNOWS OF NO OTHER BUSINESS TO BE PRESENTED BY OR ON BEHALF OF THE
COMPANY OR ITS BOARD OF DIRECTORS AT THE MEETING.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE REVOKED
PRIOR TO
ITS EXERCISE. PLEASE SIGN AND DATE ON THE REVERSE SIDE OF THIS PROXY.
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE OF "AUTHORITY GIVEN" FOR THE
ELECTION OF DIRECTORS. THE PROXY CONFERS AUTHORITY TO AND SHALL BE VOTED
"AUTHORITY GIVEN" FOR THE ELECTION OF DIRECTORS UNLESS OTHER INSTRUCTIONS ARE
INDICATED, IN WHICH CASE THE PROXY SHALL BE VOTED IN ACCORDANCE WITH SUCH
INSTRUCTIONS.
IF ANY OTHER BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY SHALL BE VOTED
IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS.
Dated ______________________, 1999
__________________________________
(Please print name)
__________________________________
(Signature of Class A Stockholder)
__________________________________
(Please print name)
__________________________________
(Signature of Class A Stockholder)
Please date this Proxy and sign
your name as it appears on your
stock certificates. (Executors,
administrators, trustees, etc.,
should give their full titles. All
joint owners should sign).
I do / / do not / / expect to
attend the Meeting.
Number of Persons: ____________
<PAGE>
REVOCABLE PROXY FOR CLASS B COMMON STOCK
SCHEID VINEYARDS INC.
ANNUAL MEETING OF STOCKHOLDERS--MAY 13, 1999
The undersigned stockholder(s) of Scheid Vineyards Inc. (the "Company")
hereby nominates, constitutes and appoints Alfred G. Scheid, Scott D. Scheid and
Heidi M. Scheid, and each of them, the attorney, agent and proxy of the
undersigned, with full power of substitution, to vote all shares of CLASS B
COMMON STOCK of the Company that the undersigned is entitled to vote at the
Annual Meeting of Stockholders of the Company to be held at the World Trade
Club, located in the World Trade Center, Ferry Building, on the Embarcadero at
Market Street, San Francisco, California, at 2:00 p.m. (local time) on Thursday,
May 13, 1999, and any and all adjournments or postponements thereof, with
respect to the matters described in the accompanying Proxy Statement, and in
their discretion, on such other matters which properly come before the meeting,
as fully and with the same force and effect as the undersigned might or could do
if personally present thereat, as follows:
1. PROPOSAL NO. 1 / / AUTHORITY GIVEN / / WITHHOLD
ELECTION OF DIRECTORS to vote for the nominees AUTHORITY
listed below to vote for
(except as indicated to the nominees.
the contrary below).
(INSTRUCTIONS: To withhold authority to vote for any nominee, strike a line
through such nominee's name below.)
ALFRED G. SCHEID SCOTT D. SCHEID HEIDI M. SCHEID
To transact such other business as may properly come before the Meeting
2. and any adjournment or adjournments or postponements thereof. Management
currently knows of no other business to be presented by or on behalf of
the Company or its Board of Directors at the Meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE REVOKED
PRIOR TO ITS EXERCISE. PLEASE SIGN AND DATE ON THE REVERSE SIDE OF THIS PROXY.
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE OF "AUTHORITY GIVEN" FOR THE
ELECTION OF DIRECTORS. THE PROXY CONFERS AUTHORITY TO AND SHALL BE VOTED
"AUTHORITY GIVEN" FOR THE ELECTION OF DIRECTORS UNLESS OTHER INSTRUCTIONS ARE
INDICATED, IN WHICH CASE THE PROXY SHALL BE VOTED IN ACCORDANCE WITH SUCH
INSTRUCTIONS.
IF ANY OTHER BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY SHALL BE VOTED
IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS.
Dated _______________________, 1999
___________________________________
(Please print name)
___________________________________
(Signature of Class B Stockholder)
___________________________________
(Please print name)
___________________________________
(Signature of Class B Stockholder)
Please date this Proxy and sign
your name as it appears on your
stock certificates. (Executors,
administrators, trustees, etc.,
should give their full titles. All
joint owners should sign).
I do / / do not / / expect to
attend the Meeting.
Number of Persons: _____________
