<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 Section 240.14a-11(c) or Section 240.14a-12
UNIVERSAL FOODS CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
UNIVERSAL FOODS CORPORATION
433 EAST MICHIGAN STREET
MILWAUKEE, WISCONSIN 53202
NOTICE OF ANNUAL MEETING
TO BE HELD JANUARY 21, 1999
To the Shareholders of
Universal Foods Corporation:
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Shareholders
("Meeting") of Universal Foods Corporation, a Wisconsin corporation
("Company"), will be held at the Italian Community Center, 631 East Chicago
Street, Milwaukee, Wisconsin, on Thursday, January 21, 1999, at 2:00 p.m.,
Central Standard Time, for the following purposes:
1. To elect five directors of the Company as described in the
accompanying proxy statement.
2. To approve the Amended and Restated Articles of Incorporation of
Universal Foods Corporation, including an amendment to Section 3.1 thereof
increasing the number of authorized shares of Common Stock from 100,000,000
to 250,000,000.
3. To approve an amendment to Section 5.1 of the Universal Foods
Corporation 1998 Stock Option Plan.
4. To ratify the appointment of Deloitte & Touche LLP, certified public
accountants, as the independent auditors of the Company for fiscal 1999.
5. To transact such other business as may properly come before the
Meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on December 4, 1998,
as the record date for the determination of shareholders entitled to notice
of, and to vote at, the Meeting and any adjournments thereof.
We encourage you to attend the Meeting and vote your shares in person.
However, whether or not you are able to attend the Meeting, please complete
the enclosed proxy and return it promptly using the envelope provided so that
your shares will be represented at the Meeting. You may revoke your proxy at
any time before it is actually voted by notice in writing to the undersigned
or by attending the Meeting and voting in person. Your attention is directed
to the attached proxy statement and accompanying proxy.
On Behalf of the Board of Directors
John L. Hammond
Secretary
Milwaukee, Wisconsin
December 15, 1998
<PAGE>
UNIVERSAL FOODS CORPORATION
433 EAST MICHIGAN STREET
MILWAUKEE, WISCONSIN 53202
(414) 271-6755
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON
JANUARY 21, 1999
----------------
GENERAL
This proxy statement and accompanying proxy are first being furnished to the
shareholders of Universal Foods Corporation, a Wisconsin corporation
("Company"), beginning on or about December 15, 1998, in connection with the
solicitation by the Board of Directors of the Company ("Board") of proxies for
use at the Company's 1999 Annual Meeting of Shareholders to be held at the
Italian Community Center, 631 East Chicago Street, Milwaukee, Wisconsin, on
Thursday, January 21, 1999, at 2:00 p.m., Central Standard Time, and at any
adjournments thereof ("Meeting"), for the purposes set forth in the attached
Notice of Annual Meeting of Shareholders and in this proxy statement.
Accompanying this proxy statement are a Notice of Annual Meeting of
Shareholders and a form of proxy for the Meeting solicited by the Board. The
Annual Report to Shareholders, which also accompanies this proxy statement,
contains financial statements for the three years ended September 30, 1998,
and certain other information concerning the Company. The Annual Report and
financial statements are neither a part of this proxy statement nor
incorporated herein by reference.
Only holders of record of the Company's Common Stock ("Common Stock") as of
the close of business on December 4, 1998, are entitled to notice of, and to
vote at, the Meeting. On that date, the Company had 51,161,121 shares of
Common Stock outstanding, each of which is entitled to one vote for each
proposal submitted for shareholder consideration at the Meeting.
A proxy, in the enclosed form, which is properly executed, duly returned to
the Company or its authorized representatives or agents and not revoked will
be voted in accordance with the shareholder's instructions contained in the
proxy. If no instructions are indicated on the proxy, the shares represented
thereby will be voted "FOR" the Board's five nominees for director, "FOR" the
approval of the Company's Amended and Restated Articles of Incorporation,
including an amendment to Section 3.1 thereof increasing the number of shares
of authorized Common Stock from 100,000,000 to 250,000,000, "FOR" the approval
of an amendment to Section 5.1 of the Universal Foods Corporation 1998 Stock
Option Plan, "FOR" ratification of the Board's selection of Deloitte & Touche
LLP as the Company's independent auditors for fiscal 1999 and on such other
matters that may properly come before the Meeting in accordance with the best
judgment of the individual proxies named in the proxy. Any shareholder giving
a proxy may revoke it at any time before it is exercised by delivering written
notice thereof to the Secretary. Any shareholder attending the Meeting may
vote in person whether or not the shareholder has previously filed a proxy.
Presence at the Meeting by a shareholder who has signed a proxy does not in
itself revoke the proxy. The shares represented by all properly executed
proxies received prior to the Meeting will be voted as directed by the
shareholders.
The cost of soliciting proxies will be borne by the Company. Proxies may be
solicited by directors, officers or employees of the Company in person, by
telephone or by telegram. The Company will use the services of D.F. King &
Co., Inc., New York, New York, to aid in the solicitation of proxies. Their
charges will be $7,500 plus reasonable expenses. The Company will also
reimburse brokerage houses and other custodians, nominees and fiduciaries for
their expenses in sending proxy materials to the beneficial owners.
<PAGE>
ITEM 1
ELECTION OF DIRECTORS
The Board of Directors consists of eleven members divided into three classes
of four, four and three directors each. One class is elected each year to
serve for a term of three years.
Five directors are to be elected at the Meeting. Three of the nominees are
currently directors of the Company. Incumbent director Mr. Leon T. Kendall is
retiring after fourteen years of service, having reached the age of 70, which
is the mandatory retirement age for members of the Board of Directors under
the Company's Bylaws. Incumbent director Mr. James H. Keyes has chosen to
retire at the end of his term, which expires in January 1999. Mr. Keyes has
served as a director for eight years. The Board of Directors has chosen Mr.
Richard A. Abdoo, Chairman, President and Chief Executive Officer of Wisconsin
Energy Corp., and Mr. Alberto Fernandez, Chief Executive Officer of Pyosa,
S.A. de C.V., a Mexican specialty chemical company, to replace Messrs. Kendall
and Keyes. Because Messrs. Kendall and Keyes' retirements coincide with the
expiration of their current terms, Messrs. Abdoo and Fernandez are being
nominated for three-year terms expiring in 2002.
Effective April 30, 1998, Mr. Guy A. Osborn, former Chairman and Chief
Executive Officer of the Company, resigned from the Board. At the June 25,
1998 Board meeting, Dr. Fergus M. Clydesdale, Professor and Head of the
Department of Food Science at the University of Massachusetts--Amherst, was
unanimously elected to replace Mr. Osborn. Although the Board of Directors has
the power under the Company's Bylaws to elect Dr. Clydesdale to fill the
vacancy created by Mr. Osborn's resignation without action by the
shareholders, the Board of Directors chose to give the shareholders the
opportunity to vote at the Meeting on Dr. Clydesdale's election to a two-year
term (the remainder of the term of Mr. Osborn, the director whom Dr.
Clydesdale was chosen to replace) expiring in 2001.
Mr. James L. Forbes and Dr. Carol I. Waslien Ghazaii have been directors of
the Company previously and are being nominated for three-year terms expiring
in 2002. The remaining six directors will continue to serve in accordance with
their previous elections.
It is intended that the persons named as proxies in the accompanying proxy
will vote "FOR" the election of the Board's five nominees. If any nominee
should become unable to serve as a director prior to the Meeting, the shares
represented by proxies otherwise voted in favor of the Board's five nominees
or which do not contain any instructions will be voted "FOR" the election of
such other person as the Board may recommend. Under Wisconsin law, directors
are elected by a plurality of the votes cast by the shares entitled to vote in
the election, assuming a quorum is present. For this purpose, "plurality"
means that the individuals receiving the largest number of votes are elected
as directors, up to the maximum number of directors to be chosen at the
election. Therefore, any shares of Common Stock which are not voted on this
matter at the Meeting (whether by abstention, broker nonvote or otherwise)
will have no effect on the election of directors at the Meeting.
Pursuant to the Company's Bylaws, written notice of other qualifying
nominations by shareholders for election to the Board must have been received
by the Secretary no later than December 2, 1998. As no notice of any such
other nominations was received, no other nominations for election to the Board
of Directors may be made by shareholders at the Meeting.
Set forth below is certain information about the Board's nominees and the
six continuing members.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" ALL NOMINEES.
SHARES OF COMMON STOCK REPRESENTED AT THE MEETING BY EXECUTED BUT
UNMARKED PROXIES WILL BE VOTED "FOR" ALL NOMINEES.
2
<PAGE>
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
FOR THREE-YEAR TERMS EXPIRING JANUARY, 2002
<TABLE>
<CAPTION>
YEAR
FIRST
POSITION WITH COMPANY ELECTED
NAME AND AGE OR OTHER OCCUPATION DIRECTOR
------------------------- -------------------------------------- --------
<S> <C> <C>
RICHARD A. ABDOO...... 54 Chairman, President and Chief
Executive Officer, Wisconsin Energy
Corp., a supplier of electric, gas and
real estate development services;
Director of Marshall & Ilsley Corp.
and Sundstrand Corp.
ALBERTO FERNANDEZ..... 52 Chief Executive Officer, Pyosa, S.A.
de C.V., a Mexican chemical company
specializing in lead oxides, fine
chemicals and dyes (1)
JAMES L. FORBES President, Chief Executive Officer and 1989
A, E, F............... 66 Director of Badger Meter, Inc., a
manufacturer and marketer of flow
measurement and control products;
Director of Blue Cross & Blue Shield
United of Wisconsin, United Wisconsin
Services, Inc., Firstar Corporation
and Journal Communications, Inc.
DR. CAROL I. WASLIEN Professor and Chair, Public Health 1981
GHAZAII Sciences, School of Public Health,
A, S.................. 58 University of Hawaii
</TABLE>
- --------
A--Audit Committee F--Finance Committee
C--Compensation and Development Committee
N--Nominating Committee
E--Executive Committee S--Scientific Advisory Committee
(1) In September, 1997, the Company acquired certain assets of the food color
business of Pyosa, S.A. de C.V., which is located in Monterrey, Mexico.
3
<PAGE>
NOMINEE FOR ELECTION TO THE BOARD OF DIRECTORS
FOR A TWO-YEAR TERM EXPIRING JANUARY, 2001
<TABLE>
<CAPTION>
YEAR
FIRST
POSITION WITH COMPANY ELECTED
NAME AND AGE OR OTHER OCCUPATION DIRECTOR
------------------------- -------------------------------------- --------
<S> <C> <C>
DR. FERGUS M. CLYDESDALE Professor and Head of the Department 1998
S..................... 61 of Food Science at the University of
Massachusetts--Amherst
</TABLE>
- --------
A--Audit Committee F--Finance Committee
C--Compensation and Development Committee
N--Nominating Committee
E--Executive Committee S--Scientific Advisory Committee
4
<PAGE>
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
TERMS EXPIRING JANUARY, 2000
<TABLE>
<CAPTION>
YEAR
FIRST
POSITION WITH COMPANY ELECTED
NAME AND AGE OR OTHER OCCUPATION DIRECTOR
------------------------ -------------------------------------- --------
<S> <C> <C>
JOHN F. BERGSTROM Chairman and Chief Executive Officer 1994
C, E, N.............. 52 of Bergstrom Corporation, which owns
automotive dealerships and commercial
real estate; Director of Wisconsin
Energy Corporation, Wisconsin Electric
Co., Kimberly-Clark Corporation,
Midwest Express Airlines and Banta
Corp.
WILLIAM V. HICKEY President and Chief Operating Officer 1997
C, E, F.............. 54 of Sealed Air Corporation, a leading
global manufacturer of a complementary
line of protective, food and specialty
packaging materials and systems (1)
KENNETH P. MANNING Chairman of the Board, President and 1989
E, S................. 56 Chief Executive Officer of the
Company; Director of Firstar
Corporation and Badger Meter, Inc. (2)
</TABLE>
- --------
A--Audit Committee F--Finance Committee
C--Compensation and Development Committee
N--Nominating Committee
E--Executive Committee S--Scientific Advisory Committee
(1) Mr. Hickey served as Executive Vice President and Chief Operating Officer
of Sealed Air Corporation from 1994 to 1996 and as its Senior Vice
President--Finance and Chief Financial Officer from 1991 to 1994.
(2) Mr. Manning was elected Chief Executive Officer effective October 1, 1996,
and was elected Chairman effective April 30, 1997.
5
<PAGE>
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
TERMS EXPIRING JANUARY, 2001
<TABLE>
<CAPTION>
YEAR
FIRST
POSITION WITH COMPANY ELECTED
NAME AND AGE OR OTHER OCCUPATION DIRECTOR
------------------------- -------------------------------------- --------
<S> <C> <C>
MICHAEL E. BATTEN Chairman of the Board and Chief 1980
F, N.................. 58 Executive Officer of Twin Disc, Inc.,
a manufacturer of transmission
components; Director of Briggs &
Stratton Corporation, Firstar
Corporation and Simpson Industries
JAMES A.D. CROFT Retired Director of Richard Ellis 1997
A, C.................. 61 Holdings Limited, Property and
Investment Consultants
ESSIE WHITELAW President and Chief Operating Officer 1993
C, N.................. 50 of Blue Cross & Blue Shield United of
Wisconsin, a comprehensive health
insurer; Director of WICOR, Inc. and
Compcare
</TABLE>
- --------
A--Audit Committee F--Finance Committee
C--Compensation and Development Committee
N--Nominating Committee
E--Executive Committee S--Scientific Advisory Committee
6
<PAGE>
All nominees and directors continuing in office have held their current
positions or otherwise have served in their respective positions with the
listed organizations for more than five years. No director, nominee for
director or executive officer had any material interest, direct or indirect,
in any business transaction of the Company or any subsidiary during the 1998
fiscal year, nor does any director, nominee or executive officer have any
material interest, direct or indirect, in any such proposed transaction.
The Board of Directors met five times during fiscal 1998, and, except for
Mr. Batten, each director attended at least 75% of the meetings of the Board
and the Board Committees on which he or she served that were held during the
period in which he or she was a director.
COMMITTEES OF THE BOARD OF DIRECTORS
The Executive Committee of the Board of Directors, which currently consists
of Messrs. Bergstrom, Forbes, Hickey, Keyes and Manning, did not meet in
fiscal 1998. This Committee has the power and authority of the Board of
Directors in directing the management of the business and affairs of the
Company in the intervals between Board of Directors meetings, except to the
extent limited by law.
The Audit Committee of the Board of Directors met twice during fiscal 1998.
Messrs. Croft, Forbes, Kendall and Dr. Waslien Ghazaii are the members of the
Audit Committee. This Committee, among other things: (a) recommends the
engagement of the independent auditors of the Company and approves their fee
and the scope and timing of their audit services; (b) reviews the Company's
internal control structure with the independent auditors; (c) reviews with the
independent auditors their report on the consolidated financial statements of
the Company, their recommendations for improvements in the internal controls
of the Company and the implementation of such recommendations; (d) reviews the
Company's internal audit program; and (e) reviews the adequacy and
appropriateness of the various policies of the Company dealing with the
principles governing performance of corporate activities. These policies,
which are set forth in the Company's Code of Conduct, include antitrust
compliance, conflict of interest and business ethics.
Members of the Compensation and Development Committee of the Board of
Directors, which held three meetings during fiscal 1998, include Messrs.
Bergstrom, Croft, Hickey and Ms. Whitelaw. This Committee reviews and approves
all compensation programs for senior management of the Company, including
salary structure, base salary and short- and long-term incentive compensation
plans, including stock options and non-qualified fringe benefit programs. The
Committee also reviews and approves annual changes in each elected officer's
compensation including base salary and short- and long-term incentive awards,
and approves all executive employment contracts. The Committee annually
recommends to the Board of Directors the election of Company officers. In
addition, the Committee annually reviews the performance of the Chief
Executive Officer and reviews and approves the Chief Executive Officer's
management development and succession plans for the Company.
The Nominating Committee of the Board of Directors, which consists of
Messrs. Batten, Bergstrom, Kendall and Ms. Whitelaw, met twice during fiscal
1998. This Committee studies and makes recommendations concerning the
composition of the Board of Directors and its committee structure and reviews
the compensation of Board and Committee members. The Committee also recommends
persons to be nominated by the Board of Directors for election as directors of
the Company at the Annual Meeting of Shareholders. The Committee will consider
nominees recommended by shareholders. Recommendations by shareholders should
be forwarded to the Secretary of the Company and should identify the nominee
by name and provide detailed information concerning his or her qualifications.
The Company's Bylaws require that shareholders give advance notice and furnish
certain information to the Company in order to nominate a person for election
as a director. See the discussion under "Future Shareholder Proposals and
Nominations" on page 28.
7
<PAGE>
The Scientific Advisory Committee of the Board of Directors, which met twice
during fiscal 1998, reviews the Company's research and development programs
with respect to the quality and scope of work undertaken. It advises the
Company on maintaining product leadership through technological innovation,
reports on new technological trends that would significantly affect the
Company and suggests possible new emphases with respect to its research
programs. Members of the Scientific Advisory Committee are Dr. Clydesdale, Dr.
Waslien Ghazaii and Mr. Manning.
The Finance Committee of the Board of Directors, which held one meeting
during fiscal 1998, reviews and monitors the Company's financial planning and
structure to ensure conformance with the Company's requirements for growth and
fiscally sound operation. The Committee reviews and approves: (a) the
Company's annual capital budget, long-term financing plans, existing credit
facilities and investments and commercial and investment banking
relationships; (b) existing insurance programs, foreign currency management
and the stock repurchase program; (c) the Company's dividend policy, including
payout levels and timing; and (d) the financial management and administrative
operation of the Company's qualified and non-qualified benefit plans. Messrs.
Batten, Forbes and Hickey are members of the Finance Committee.
DIRECTOR COMPENSATION AND BENEFITS
Directors who are not employees of the Company received during fiscal 1998
an annual retainer of $22,000 and fees of $1,000 for each Board and Committee
meeting attended in addition to reimbursable expenses for such attendance.
Each Committee chairperson receives an additional $1,000 annually for serving
in that capacity. A portion of the annual retainer is paid in Common Stock
pursuant to the Universal Foods Corporation Director Stock Grant Plan (the
"Director Plan") as approved by the shareholders on January 23, 1992. Under
the Director Plan, each non-employee director automatically receives an award
of Common Stock on October 1 of each year. The value of the award was $5,500
for fiscal 1998. The award consists of a number of shares of Common Stock
determined by dividing the value of the award by the per share closing price
of Common Stock on the New York Stock Exchange on October 1. The shares may
not be sold or otherwise transferred for a period of six months after the
grant date, except in the event of death or disability. On October 1, 1997,
270 shares of Common Stock were awarded to each of the following current non-
employee directors: Messrs. Batten, Bergstrom, Croft, Forbes, Hickey, Kendall,
Keyes, Dr. Waslien Ghazaii and Ms. Whitelaw. Such shares were transferred from
the Company's treasury stock.
The Company has an unfunded retirement plan for non-employee directors who
have at least three years (one full term) of service with the Company as a
director. The plan provides a benefit equal to the annual retainer fee for
directors in effect at the time of the director's departure from the Board.
This benefit, payable only during the lifetime of the participant, continues
for a period equal to the amount of time the individual was an active
director. During the benefit period, the participant must be available to the
Chairman of the Board for consultation.
The Company has a Deferred Compensation Plan available to any director who
is entitled to compensation as a Board member. Under this plan, the maximum
amount that is eligible to be deferred is the total of all fees paid to the
director by reason of his or her membership on the Board or any Committee
thereof other than the portion of the annual retainer paid in Common Stock.
The fees deferred are credited to individual deferred compensation accounts
which bear interest at the rate of 6.5%. The amounts deferred pursuant to this
plan will be paid in either (i) a lump sum on January 31st of the calendar
year following the year in which the director ceases to be a director or (ii)
five equal consecutive annual installments commencing on January 31st of the
first calendar year after the director ceases to serve as a director. In the
event of death, the balance in a director's account will be paid in a lump sum
to a designated beneficiary or to the director's estate.
8
<PAGE>
PRINCIPAL SHAREHOLDERS
MANAGEMENT
The following table sets forth certain information as of November 30, 1998,
regarding the beneficial ownership of Common Stock by each of the executive
officers of the Company who is named in the Summary Compensation Table set
forth below, each director and nominee and all of the directors and executive
officers of the Company as a group. Except as otherwise indicated, all shares
listed are owned with sole voting and investment power.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
AND
NAME OF BENEFICIAL OWNER PERCENT OF CLASS (1)(2)
------------------------ -----------------------
<S> <C>
Richard A. Abdoo.................................. 0
Michael E. Batten................................. 3,849
John F. Bergstrom................................. 3,531
Dr. Fergus M. Clydesdale.......................... 2,667
James A.D. Croft.................................. 1,337
Alberto Fernandez................................. 0
James L. Forbes................................... 3,399
Michael Fung...................................... 109,952
Dr. Carol I. Waslien Ghazaii...................... 1,408
William V. Hickey................................. 2,537
Richard F. Hobbs.................................. 166,965
Leon T. Kendall................................... 5,349
James H. Keyes.................................... 5,678
Kenneth P. Manning................................ 452,986
James F. Palo..................................... 199,919
Essie Whitelaw.................................... 1,821
Michael A. Wick................................... 250,232
All directors and executive officers
as a group (25 persons).......................... 1,510,308
</TABLE>
- --------
(1) No director or named executive officer beneficially owns 1% or more of the
Company's Common Stock. The beneficial ownership of all directors and
executive officers as a group represents 2.89% of the outstanding Common
Stock. In each case this percentage is based upon the assumed exercise of
that number of options which are included in the total number of shares
shown (see Note (2), below).
(2) Includes the following shares subject to stock options which are currently
exercisable or exercisable within 60 days of November 30, 1998: Mr. Fung--
80,663 shares; Mr. Hobbs--118,798 shares; Mr. Manning--344,531 shares; Mr.
Palo--149,165 shares; Mr. Wick--206,497 shares; and all directors and
executive officers as a group--1,135,816 shares.
OTHER BENEFICIAL OWNERS
The following table sets forth information regarding beneficial ownership by
those persons whom the Company believes to be beneficial owners of more than
5% of the Common Stock of the Company.
<TABLE>
<CAPTION>
AMOUNT AND
NAME AND ADDRESS NATURE OF PERCENT
OF BENEFICIAL OWNER OWNERSHIP (1) OF CLASS (2)
------------------- ------------- ------------
<S> <C> <C>
Morgan Stanley, Dean Witter, Discover & Co... 5,153,184(3) 10.1%
Principal Mutual Life Ins. Co................ 3,353,200(4) 6.6%
Universal Foods Retirement Employee Stock
Ownership Plan ("ESOP")..................... 3,944,770(5) 7.7%
</TABLE>
9
<PAGE>
- --------
(1) All share amounts reflected in this table and the accompanying footnotes
have been restated as necessary to reflect the Company's May 6, 1998 two-
for-one stock split.
(2) All percentages are based on 51,161,121 shares of Common Stock outstanding
as of December 4, 1998.
(3) Morgan Stanley, Dean Witter, Discover & Co., 1585 Broadway, New York, New
York 10036 ("Morgan Stanley") and its subsidiary, Miller Anderson &
Sherrerd, LLP, 1 Tower Bridge, Suite 1100, West Conshohocken, PA 19428
("Miller Anderson"), filed a joint Schedule 13G on February 11, 1998,
which reported that Morgan Stanley held shared voting power with respect
to 2,992,310 shares and shared dispositive power with respect to 5,153,184
shares, including 1,408,700 and 1,659,200 shares with respect to which
Miller Anderson reported shared voting power and shared dispositive power,
respectively. According to the Schedule 13G, Morgan Stanley and Miller
Anderson are investment advisors registered under Section 203 of the
Investment Advisors Act of 1940.
(4) Invista Capital Management, 699 Walnut, 1500 Hub Tower, Des Moines, IA
50309 ("Invista"), filed a Schedule 13G/A on February 13, 1998, which
reported on behalf of its parent holding company, Principal Mutual Life
Ins. Co., 711 High Street, Des Moines, IA 50392-0088 ("Principal"), that
Principal held shared voting power and shared dispositive power with
respect to 3,353,200 shares, including 3,318,800 shares with respect to
which Invista reported shared voting power and shared dispositive power.
According to the Schedule 13G/A, Invista is an investment advisor
registered under Section 203 of the Investment Advisors Act of 1940.
(5) The Trustee of the ESOP is Fidelity Management Trust Company, 82
Devonshire Street, Boston, Massachusetts 02109 ("Fidelity"). Fidelity is
also the Trustee of the Universal Foods Corporation Savings Plan ("Savings
Plan"), which holds 2,246,907 shares of Common Stock, or 4.4% of the
number of shares outstanding. Fidelity has advised the Company that it
disclaims beneficial ownership of the ESOP and Savings Plan shares.
COMPENSATION AND DEVELOPMENT COMMITTEE REPORT
Introduction
This report describes the Company's executive compensation programs and the
basis on which fiscal year 1998 compensation was determined with respect to
the executive officers of the Company. The Committee is composed entirely of
independent non-employee directors and met three times during fiscal 1998. A
more complete description of the Committee functions is set forth under the
heading "Committees of the Board of Directors" on page 7.
Compensation Policy and Objectives
The Company has developed an overall compensation policy and specific
compensation plans that tie a significant portion of executive compensation to
the Company's success in meeting specified financial goals ("Program"). The
overall objectives of the Program are to attract and retain the best possible
executive talent, to motivate these executives to achieve the Company's
business strategy, to link executive and shareholder interests through equity-
based plans and to provide a program that recognizes individual contributions
and achievement.
Each year the Committee conducts a review of the Program. This review
includes a meeting with an independent compensation consultant assessing the
effectiveness of the Program and comparing it to a group of public
corporations that represent the Company's competition for executive talent.
The Committee approves the selection of comparator companies used for this
analysis. The Committee determines the compensation for the 15 elected
officers including the five most highly compensated Company executives. In
reviewing individual performance, the Committee takes into account the
recommendations of Mr. Manning. Key elements of the Company's Program are base
salary, short-term (annual) incentives and long-term incentives.
10
<PAGE>
Base Salaries
Base salaries are initially determined by evaluating the responsibilities of
the position, the experience of the individual and the competitive marketplace
for executive talent, including a comparison with base salaries for comparator
positions at other companies. The base salary levels of the Company's
executives are targeted at the 50th percentile of the range of base pay levels
of similarly positioned executives in other companies. Base pay levels are
determined using regression analysis because of the difference in size between
the comparator companies and the Company. The Committee annually reviews each
executive's base salary. Adjustments are determined by evaluating the
financial performance of the Company, the performance of each executive
officer against job specifications, any new responsibilities and average
percentage pay increases provided by the comparator companies for similar
positions. In the case of executive officers with responsibility for a
particular business unit, such unit's financial results are also considered.
As reflected in the Summary Compensation Table on page 13, Mr. Manning's
base salary was increased in fiscal 1998 by $70,000 (16.2%). In determining
Mr. Manning's base salary, the Committee weighed the aforementioned criteria
equally.
Annual Bonuses
The Management Incentive Plans for elected officers ("Annual Plans") promote
the Company's pay-for-performance policy by providing annual cash payments to
executives based upon achieving overall Company or divisional financial goals.
The Annual Plans are subject to a target of 45% to 85% of fiscal base salary
depending on a participant's position in the Company. The award is based on
the achievement of a targeted Earnings Per Share level, and in certain cases
division sales operating profit, for the fiscal year, with 100% of the maximum
award being paid upon achieving the targeted level. Performance in excess of
the targeted level allows for a payment of up to 125% of the maximum award.
Target bonus award levels approximate the 50th percentile (adjusted for
company size) of comparator companies' practices for each executive position.
For performance exceeding the targeted levels, the bonus opportunities are
tied to 75th percentile practices among comparator companies. In fiscal 1998,
Mr. Manning's bonus opportunity was 85% of his base salary. As reflected in
the Summary Compensation Table, his bonus award under the Annual Plan was
$532,313 or approximately 106.3% of his base salary. The Company's Earnings
Per Share level for fiscal 1998 exceeded the targeted level.
Stock Awards and Long-Term Incentives
Under the Company's 1994 Employee Stock Plan and 1998 Stock Option Plan,
which were approved by the shareholders, restricted stock or stock options may
be granted to the Company's executive officers and other key employees. The
Committee makes annual decisions regarding appropriate stock-based grants for
each executive based on the following equally weighted factors. The Committee
considers the Company's financial performance, executives' levels of
responsibilities and predicted award values at the 50-75th percentile of long-
term incentive compensation practices for similar positions at other
companies. These factors determine the amount which may be represented by the
determined grant value of options and restricted stock. Generally, restricted
stock is only awarded to recognize a significant contribution to the Company's
performance. Restricted stock vests in five years. All outstanding options
have an exercise price equal to the market price on the date of grant and vest
in increments of one-third of the total grant on each of the first, second and
third anniversaries of the date of grant. This compensation approach is
designed to provide incentive to create shareholder value over the long-term,
since the full benefit of the compensation cannot be realized unless stock
price appreciation occurs over a number of years. In fiscal 1998, Mr. Manning
received options to purchase 73,000 shares at their fair market value on the
date of grant and received 15,000 shares of restricted stock. Other named
executive officers who each received 5,000 shares of restricted stock during
fiscal 1998 were Messrs. Fung, Hobbs, Palo and Wick.
11
<PAGE>
Code Section 162(m)
Section 162(m) of the Internal Revenue Code limits the Company's income tax
deduction for compensation paid in any taxable year to certain executive
officers to $1,000,000 per individual, subject to several exceptions. The
Committee intends to grant awards under the 1998 Stock Option Plan that are
designed to qualify for the performance-based compensation exception, subject
to shareholder approval of the proposed amendment to Section 5.1 of the 1998
Stock Option Plan. However, the Committee may grant such awards and the
Company may enter into compensation arrangements from time to time, which do
not qualify for deductibility under Section 162(m).
Compensation and Development Committee
John F. Bergstrom, Chairperson
James A.D. Croft
William V. Hickey
Essie Whitelaw
12
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information on the compensation of the Chief
Executive Officer and each of the other four most highly compensated executive
officers (collectively, the "named executive officers") of the Company as of
September 30, 1998.
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION(1) LONG-TERM COMPENSATION
------------------ --------------------------
NAME AND RESTRICTED SECURITIES ALL OTHER
PRINCIPAL BASE BONUS STOCK AWARDS UNDERLYING COMPENSATION
POSITION YEAR SALARY($) ($)(2) ($)(3) OPTIONS(#)(4) ($)(5)
--------- ---- --------- -------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth P.
Manning 1998 $501,000 $532,313 $323,436 73,000 $84,505
Chairman,
President and 1997 431,000 322,776 120,563 76,000 68,140
Chief
Executive
Officer 1996 381,000 229,133 0 90,000 64,137
Michael Fung 1998 285,000 231,563 107,813 32,000 43,620
Vice President
and Chief 1997 264,000 151,193 80,375 40,000 37,013
Financial
Officer 1996 250,000 106,128 0 50,000 32,449
Michael A. Wick 1998 230,000 163,516 107,813 23,000 38,168
President--
Color 1997 215,000 148,415 80,375 28,000 32,344
Products 1996 203,000 105,176 0 37,000 30,697
Richard F.
Hobbs 1998 215,000 174,688 107,813 29,000 33,530
Vice
President-- 1997 195,000 103,077 80,375 34,000 29,160
Administration 1996 187,000 79,383 0 40,000 29,098
James F. Palo 1998 222,000 166,500 107,813 22,000 49,612
President--
Dehydrated 1997 210,000 148,050 80,375 26,000 46,354
Products 1996 200,000 127,883 0 33,000 43,960
</TABLE>
- --------
(1) Includes amounts deferred at the election of the named executive officer
under the Company's Executive Income Deferral Plan (see "Employment
Agreements and Other Arrangements").
(2) Consists of awards under the Company's Management Incentive Plans.
(3) The amounts in the table reflect the market value on the date of award of
restricted shares of Common Stock ("Restricted Stock"). Total number and
value of shares of Restricted Stock held as of September 30, 1998 (based
on the $20.875 per share closing price of the Common Stock on September
30, 1998) for each named executive officer are: Kenneth P. Manning--31,000
shares/$647,125; Michael Fung--11,000 shares/$229,625; Michael A. Wick--
16,200 shares/$338,175; Richard F. Hobbs--12,400 shares/$258,850; and
James F. Palo--15,800 shares/$329,825. Dividends are paid on Restricted
Stock when paid on Common Stock.
(4) Awards for 1997 and 1996 have been restated to reflect the Company's May
6, 1998 two-for-one stock split.
(5) Consists of Company contributions under certain benefit plans and other
arrangements for the five named executive officers. These contributions
are set forth in the following table. The Company's Employee Stock
Ownership Plan ("ESOP") and Savings Plan are tax-qualified plans which are
subject to government imposed annual limitations ($30,000 per year for
fiscal 1998) on contributions. The Company's Supplemental Benefits Plan, a
non-tax qualified plan, replaces benefits which cannot be provided by the
tax-qualified ESOP and Savings Plan because of these annual limitations.
The amounts shown in the table below as contributed to the ESOP and
Savings Plan which exceed the applicable annual limits were contributed to
the Supplemental Benefits Plan. At the time the ESOP and Savings Plan were
adopted to replace the Company's former defined benefit pension plan, the
Transition Retirement Plan, also a tax-qualified plan, was adopted to
assure that affected employees would receive approximately the same level
of benefits through normal retirement age that they would have received
under the former defined benefit pension plan. The named executive
officers do not participate in the Transition Retirement Plan but a
benefit equivalent to what they would have received thereunder is
contributed to the Supplemental Benefits Plan.
<TABLE>
<CAPTION>
TRANSITION PLAN
ESOP SAVINGS PLAN BENEFIT EQUIVALENT
----------------------- ----------------------- --------------------
1998 1997 1996 1998 1997 1996 1998 1997 1996
------- ------- ------- ------- ------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mr. Manning............. $49,427 $39,608 $36,608 $32,951 $26,405 $25,402 $2,127 $2,127 $2,127
Mr. Fung................ 26,172 22,208 21,368 17,448 14,805 11,081 0 0 0
Mr. Wick................ 22,705 19,211 18,491 15,137 12,807 11,880 326 326 326
Mr. Hobbs............... 19,085 16,463 15,983 12,723 10,975 11,393 1,722 1,722 1,722
Mr. Palo................ 22,203 20,248 19,673 14,802 13,499 11,680 12,607 12,607 12,607
</TABLE>
13
<PAGE>
STOCK OPTIONS
The following table sets forth information concerning the grant of stock
options under the Company's 1998 Stock Option Plan during fiscal 1998 to the
named executive officers.
<TABLE>
<CAPTION>
PERCENTAGE
NUMBER OF OF TOTAL POTENTIAL REALIZABLE VALUE
SECURITIES OPTIONS AT ASSUMED ANNUAL RATES OF
UNDERLYING GRANTED TO STOCK PRICE APPRECIATION
OPTIONS EMPLOYEES IN EXERCISE OR FOR TEN-YEAR OPTION TERM(4)
GRANTED 1998 FISCAL BASE PRICE EXPIRATION ---------------------------
NAME (#)(1)(2) YEAR ($/SHARE)(3) DATE 5% 10%
---- ---------- ------------ ------------ ---------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth P. Manning...... 73,000 12.2% $21.5625 9/14/08 $ 989,919 $ 2,508,650
Michael Fung............ 32,000 5.3% 21.5625 9/14/08 433,937 1,099,682
Michael A. Wick......... 23,000 3.8% 21.5625 9/14/08 311,892 790,397
Richard F. Hobbs........ 29,000 4.8% 21.5625 9/14/08 393,256 996,587
James F. Palo........... 22,000 3.7% 21.5625 9/14/08 298,332 756,032
All Shareholders (5).... -- -- -- -- $693,715,182 $1,758,010,473
</TABLE>
- --------
(1) The options reflected in the table were granted on September 14, 1998,
under the Company's 1998 Stock Option Plan (the "1998 Plan") and include
both incentive stock options under Section 422 of the Internal Revenue
Code and nonstatutory stock options. The exercise price of each option
granted was equal to 100% of the fair market value of the Common Stock on
the date of grant. The options granted vest in increments of one-third of
the total grant on each of the first, second and third anniversaries of
the grant date. The options are subject to early vesting in the event of
the individual's death, disability or retirement. Upon a "Change of
Control" of the Company (as defined in the 1998 Plan), all options then
outstanding will become immediately exercisable in full.
(2) The nonstatutory stock options granted to elected officers (including the
individuals named in the above table) were granted subject to shareholder
approval of the proposed amendment to Section 5.1 of the 1998 Plan (See
"Item 3. Amendment to Section 5.1 of the Company's 1998 Stock Option
Plan"). If the shareholders do not approve the proposed amendment to
Section 5.1, these nonstatutory stock options will be forfeited. The
number of nonstatutory stock options which were granted and which are
subject to shareholder approval of the proposed amendment to Section 5.1
are as follows: Mr. Manning--68,363; Mr. Fung--27,363; Mr. Wick--18,363;
Mr. Hobbs--24,363; and Mr. Palo--17,363. If the shareholders do not
approve the proposed amendment to Section 5.1 of the 1998 Plan, the
information set forth in the above table would be identical for each
individual named in the table, as follows: Each of the named individuals
would have been granted 4,637 stock options (all of which would have been
incentive stock options), constituting 1.32% of all stock options granted
during fiscal 1998, at an exercise price of $21.5625 per share, which
would have had potential realizable values of $62,880 and $159,351,
respectively, at the assumed annual rates of stock price appreciation set
forth above.
(3) The exercise price of options may be paid in cash or its equivalent, by
delivering previously issued shares of Common Stock, or any combination
thereof, or by electing to have the Company withhold shares of Common
Stock issuable upon exercise with a fair market value equal to the
exercise price.
(4) The option values presented were calculated based on a per-share price of
$21.5625 on the date of grant at assumed 5% and 10% annualized rates of
appreciation for the term of the grant. The actual value, if any, that an
individual may realize upon exercise will depend on the excess of the
market price of the Common Stock over the option exercise price on the
date the option is exercised. There is no assurance that the actual value
realized by an individual upon the exercise of an option will be at or
near the value estimated under the model described above.
(5) The potential realizable value for "All Shareholders" is determined on the
assumption that the price of the Company's Common Stock appreciated over
the term of the options from the $21.5625 per share market price as of the
date of grant at an annualized rate (a) of 5% (which would result in a
value on September 14, 2008, of $35.123 per share); and (b) 10% (which
would result in a value on September 14, 2008, of $55.9276 per share). The
"All Shareholders" information is calculated based on 51,156,898 shares of
the Company's Common Stock outstanding as of September 30, 1998. Thus, for
comparative purposes, the total value of such Common Stock as of September
14, 1998, the date on which the options were granted, would be
$1,103,070,613.
14
<PAGE>
AGGREGATE OPTION EXERCISES IN 1998 FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth information regarding the exercise of stock
options by each of the named executive officers during the 1998 fiscal year
and the fiscal year-end value of unexercised stock options held by such
officers.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-
UNDERLYING UNEXERCISED THE-
SHARES OPTIONS AT END OF MONEY OPTIONS AT END
ACQUIRED ON FISCAL 1998 (#)(1)(3) OF FISCAL 1998 ($) (2)(3)
EXERCISE VALUE ------------------------- -------------------------
NAME (#)(1) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth P. Manning...... 63,400 $502,117 344,531 153,669 $1,512,580 $198,967
Michael Fung............ 6,000 49,688 80,663 75,337 336,235 109,398
Michael A. Wick......... 8,610 128,265 206,497 54,003 1,066,120 80,118
Richard F. Hobbs........ 40,100 324,582 118,798 65,002 506,711 88,550
James F. Palo........... 18,000 158,496 149,165 50,335 538,896 71,989
</TABLE>
- --------
(1) Share amounts for exercises prior to the Company's May 6, 1998 two-for-one
stock split have been restated to reflect the split.
(2) The dollar values were calculated by determining the difference between
the fair market value of the underlying shares of Common Stock and the
various applicable exercise prices of the named executive officers'
outstanding options at the end of fiscal 1998. As provided by the
Company's 1990 Employee Stock Plan, 1994 Employee Stock Plan and the 1998
Plan, the fair market value of the underlying shares of Common Stock on
any date is equal to the price of the Company's Common Stock as reported
on the New York Stock Exchange. On September 30, 1998, the closing price
of the Common Stock as reported on the New York Stock Exchange was $20.875
per share.
(3) Nonstatutory stock options granted to elected officers (including the
individuals named in the above table) were granted subject to shareholder
approval of the proposed amendment to Section 5.1 of the 1998 Plan (See
"Item 3. Amendment to Section 5.1 of the Company's 1998 Stock Option
Plan"). If the shareholders do not approve the proposed amendment to
Section 5.1, these nonstatutory stock options, none of which were in-the-
money at the end of fiscal 1998, will be forfeited, and the named
executive officers would have held the following unexercised and
unexercisable stock options at September 30, 1998: Mr. Manning--85,306;
Mr. Fung--47,974; Mr. Wick--35,640; Mr. Hobbs--40,639; and Mr. Palo--
32,972.
EMPLOYMENT AGREEMENTS AND OTHER ARRANGEMENTS
EMPLOYMENT AGREEMENT. The Company has an employment contract with Mr.
Manning dated November 5, 1987, and amended May 10, 1988. The term of the
agreement is for three years, which is automatically extended annually for
additional one-year periods, except that in no event will the term of his
employment extend beyond the calendar month in which his 65th birthday occurs
or he becomes disabled or dies. During this employment period, the agreement
provides for the payment of base salary (subject to annual adjustment), plus
bonus and customary fringe benefits. The agreement can be terminated by the
Board of Directors with or without cause. If terminated without cause, certain
termination benefits are payable to Mr. Manning in an amount equal to his base
salary then in effect plus, in the discretion of the Board of Directors, the
bonus for the most recently completed fiscal year. Mr. Manning would also
continue to receive fringe benefits for not more than one year. In the event
of a change of control of the Company, Mr. Manning's employment contract would
be superseded by a Change of Control Employment and Severance Agreement as
described below, except that he would be entitled to retain certain retirement
and disability benefits under his employment contract.
CHANGE OF CONTROL EMPLOYMENT AND SEVERANCE AGREEMENTS. The Company also has
Change of Control Employment and Severance Agreements with Mr. Manning and 14
other executive officers who are part of the executive officer group. Each of
these agreements provides that in the event of a "Change of Control," as
defined in the respective agreement, the Company will continue to employ the
executive for a period of three years following the date of such Change of
Control. During this employment period, the executive will receive as
compensation a base salary, subject to annual adjustment, bonus awards in
accordance with past practice and all other customary fringe benefits in
effect as of the date of the Change of Control. The agreements can be
terminated upon 30 days' notice by the Company in the event of the executive's
disability. The agreements can also be terminated by the Company for "cause"
and by the executive for "good reason." If terminated by the Company other
than for cause or disability, or by the executive for good reason, the Company
will pay the executive an amount equal to the sum of (i) accrued unpaid
deferred compensation and vacation pay, and (ii)
15
<PAGE>
three times the executive's base salary plus the highest annual bonus for the
last three fiscal years. The executive will also be entitled to coverage under
existing benefit plans for three years and a payment equal to the vested
amounts plus a payment equal to three additional years of employer
contributions under the Savings Plan, ESOP, and Supplemental Benefits Plan
(including the Transition Plan benefit equivalent described in footnote (5) to
the Summary Compensation Table). The Savings Plan, ESOP and Supplemental
Benefits Plan provide for full vesting of all accounts upon the occurrence of
a Change of Control. In addition, payments under the Company's Supplemental
Executive Retirement Plan, described below ("SERP"), are calculated based on
an adjusted final salary reflecting three additional years of salary increases
consistent with past practice. If terminated for cause, the Company will pay
the executive his annual base salary through termination. If the executive's
employment is terminated by reason of death or disability, the Company will
pay certain accrued obligations and other customary death or disability
benefits. In all cases, the Company will pay any excise taxes assessed against
any payments made to the executive.
SERP. The SERP provides a non-qualified supplemental executive retirement
benefit for selected officers and key employees. Generally, participants
contribute to the plan, in each year until death or retirement, an amount
equivalent to a term insurance premium applicable to a life insurance benefit
of three times the participant's base salary in effect on the date of
acceptance into the plan, unless all amounts were previously paid under a
predecessor plan. A pre-retirement survivor income benefit equal to 20%, 25%
or 30% of base salary payable for 15 or 20 years is available to designated
beneficiaries if the participant dies prior to retirement. At the time of
retirement, the participant may continue the survivor income benefit or elect
to receive a supplemental retirement income benefit equal to 20%, 25% or 30%
of base salary for 15 or 20 years or an actuarially equivalent joint and
survivor benefit. The benefit obligations under the SERP are funded under
Rabbi Trust B described below under "Funding Arrangements." The named
executive officers participate in the SERP. Under their respective agreements
under the SERP, each of the named executive officers is entitled to 20 years
of benefits, and the applicable percentages of pre-retirement survivor income
benefits and supplemental retirement income benefits for the named executive
officers are 30% for Mr. Manning and 25% for the other named executive
officers.
EXECUTIVE INCOME DEFERRAL PLAN. Under the Executive Income Deferral Plan,
executives of the Company (including the named executive officers) are
entitled to defer up to 25% of their annual salary. Amounts deferred earn
interest at a Company-guaranteed annual minimum rate and are payable upon
retirement over a 15-year period, unless the executive elects to receive an
actuarially equivalent joint and survivor benefit, reduced by up to 20%
depending upon the executive's age at retirement. The Company's obligations
under the Executive Income Deferral Plan are also funded by Rabbi Trust B.
FUNDING ARRANGEMENTS. The Company has established three so-called "Rabbi
Trusts" by entering into trust agreements with a trustee to assure the
satisfaction of the obligations of the Company under various plans and
agreements to make deferred and other payments to certain of its past, present
and future executives and directors, including the named executive officers.
Rabbi Trust A requires the Company to deposit assets into ("fund") the Trust
in the event of a "Change of Control" (as defined therein) in an amount
sufficient to satisfy the Company's obligations to Mr. Manning, the other
named executive officers, and other executive officers under the Change of
Control Employment and Severance Agreements with those individuals (except to
the extent that those obligations consist of benefits covered by Rabbi Trust
B, described below). Rabbi Trust A is currently not funded except with a
nominal amount of assets, and is currently revocable but will become
irrevocable once it is funded. The Board may elect to fund Rabbi Trust A in
whole or in part prior to the occurrence of a Change of Control. Rabbi Trust B
was created to fund the Company's obligations under various employee benefit
plans, including three plans in which the named executive officers
participate: the SERP, the Supplemental Benefits Plan, and the Executive
Income Deferral Plan. The Company makes annual contributions to Rabbi Trust B
and it currently holds approximately $13.8 million of assets. Rabbi Trust B is
irrevocable. Rabbi Trust C was created to assure that payments to non-employee
directors under the director retirement and Deferred Compensation plans
described under "Director Compensation and Benefits" will not be improperly
withheld. Rabbi Trust C is currently funded with a nominal amount, although
the Board may elect to fund it at any time. Rabbi Trust C is irrevocable. Each
of the Rabbi Trusts will terminate upon the earlier of the exhaustion of the
trust corpus or the final payment to the directors or executives pursuant to
the respective plans and agreements covered thereby, and any remaining assets
will be paid to the Company.
16
<PAGE>
COMPANY STOCK PERFORMANCE
The following graph compares the cumulative annual change since September
30, 1993, in (a) the total shareholder return on the Common Stock with (b) the
total return on the Standard & Poor's 500 Food Index (the "S&P Food Index"),
and (c) the total return on the Standard & Poor's 500 Composite Index (the
"S&P Composite Index"), assuming that $100 was invested in each of the Common
Stock, the stocks comprising the S&P Food Index and the stocks comprising the
S&P Composite Index on September 30, 1993 and assuming that all dividends were
reinvested at the end of the month in which they are paid.
COMPARISON OF FIVE-YEAR TOTAL RETURN
AMONG UNIVERSAL FOODS CORPORATION, THE S&P FOOD INDEX AND THE S&P COMPOSITE
INDEX
<TABLE>
<CAPTION>
SEPTEMBER 30,
-----------------------------------------------
1993 1994 1995 1996 1997 1998
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Universal Foods Corporation..... $100.00 $ 89.90 $109.12 $104.69 $133.47 $141.85
S&P Food Index.................. 100.00 110.81 137.61 169.83 226.43 240.42
S&P Composite Index............. 100.00 103.69 134.50 164.81 227.26 247.85
</TABLE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors to file initial reports of beneficial ownership (on
Form 3) and reports of changes in beneficial ownership (on either Form 4 or
Form 5) with the Securities and Exchange Commission ("SEC") and the New York
Stock Exchange. SEC regulations require officers and directors to furnish the
Company with copies of all Section 16(a) forms they file. Based solely on a
review of the copies of such forms furnished to the Company, and upon
certifications from reporting persons who did not file year-end reports on
Form 5 that no such reports were required, the Company believes that during
the fiscal year ended September 30, 1998, all its officers and directors
complied with Section 16(a) filing requirements except as follows: two
officers, Jorge Slater and Dr. Ho Seung Yang, who were first elected to their
positions and became subject to the Section 16 reporting requirements during
the fiscal year ended September 30, 1998 filed their initial beneficial
ownership reports on Form 3 one and seven days late, respectively.
17
<PAGE>
ITEM 2
APPROVAL OF THE COMPANY'S AMENDED AND RESTATED
ARTICLES OF INCORPORATION, INCLUDING AN
AMENDMENT TO SECTION 3.1 INCREASING
THE NUMBER OF AUTHORIZED SHARES
OF COMMON STOCK FROM
100,000,000 TO 250,000,000
AMENDED AND RESTATED ARTICLES OF INCORPORATION
The Board of Directors, on November 12, 1998, adopted Amended and Restated
Articles of Incorporation for the principal purpose of harmonizing, updating
and consolidating into a single unified document various amendments and
restatements which have been adopted by the Board or the shareholders over the
years, including an update to a statutory reference in Section 8.1 of the
Restated Articles of Incorporation and a change in the Registered Agent.
Shareholders were last furnished with a complete copy of the Company's
Restated Articles of Incorporation as an attachment to the Company's 1981
annual meeting proxy statement. The principal changes in the Articles of
Incorporation made in 1981 and since then were: (i) a shareholder-approved
amendment in 1981 adding certain antitakeover provisions (Article X) (other
changes adopted in 1981 related to the renumbering of certain articles and
sections and the deletion of all references to two series of preferred stock
which had previously been redeemed and canceled); (ii) a shareholder-approved
amendment in 1987 increasing the number of shares of authorized Common Stock
from 15 million to 40 million; (iii) a shareholder-approved amendment in 1990
increasing the number of shares of authorized Common Stock from 40 million to
100 million; and (iv) an amendment by the Board of Directors in 1998 (which
did not require shareholder approval under Wisconsin law) establishing the
Series A Participating Cumulative Preferred Stock in connection with the
Preferred Stock Shareholder Purchase Rights Plan (the "Rights Plan") discussed
below. All of these provisions are included in the Company's current Amended
and Restated Articles of Incorporation.
On November 12, 1998, the Board of Directors also authorized an amendment to
Article III, Section 3.1 of the Company's Amended and Restated Articles of
Incorporation to increase the authorized number of shares of Common Stock from
100,000,000 to 250,000,000, subject to shareholder approval. The proposed
amendment, if adopted, would not change the provisions of the present Section
3.1 in any manner other than to increase the number of authorized shares of
Common Stock.
SHAREHOLDER VOTE
The Board of Directors believes that it is appropriate to give the Company's
shareholders the opportunity to approve the Company's Amended and Restated
Articles of Incorporation in their entirety, even though, except for the
proposed amendment to Section 3.1, all of the provisions thereof have been
approved over the years either by the shareholders or by the Board of
Directors in accordance with Wisconsin law. A copy of the proposed Amended and
Restated Articles of Incorporation, which includes the proposed amendment to
Section 3.1, is attached to this proxy statement as Exhibit A and is
incorporated herein by reference. Exhibit A includes the text of Section 3.1,
as proposed to be amended, on page A-1.
PRESENT CAPITALIZATION
Common Stock. The Company's authorized capital stock presently includes
100,000,000 shares of Common Stock, par value $0.10 per share. On April 9,
1998, the Board of Directors of the Company declared a two-for-one stock split
effected in the form of a 100% stock dividend which was paid on May 22, 1998
to shareholders of record on May 6, 1998 (the "1998 Stock Split"). As a result
of the 1998 Stock Split, the number of authorized but unissued shares of
Common Stock available to the Company for future issuance was significantly
reduced. As of the Record Date, 53,954,874 shares of Common Stock were
outstanding (including 2,793,753 shares of treasury stock) and 5,797,774
shares of Common Stock were reserved for issuance under the Company's stock
option plans.
18
<PAGE>
Preferred Stock. The Company's authorized capital also presently includes
250,000 shares of Cumulative Preferred Stock, without par value ("Preferred
Stock"), of which 100,000 shares have been designated as Series A
Participating Cumulative Preferred Stock and a sufficient number of which are
reserved for issuance under the Rights Plan which was adopted by the Board of
Directors effective August 6, 1998 to replace a common stock shareholder
rights plan which was to have expired on September 30, 1998. The Rights Plan
is intended to deter hostile or coercive attempts to acquire the Company. The
Rights Plan enables shareholders to acquire shares of Common Stock, or the
common stock of an acquiror, at a substantial discount to the public market
price should any person or group acquire more than 20% of the Common Stock
without the approval of the Board under certain circumstances. The Company is
authorized to issue an additional 150,000 shares of Preferred Stock in one or
more series, with terms to be fixed by the Board, without a shareholder vote.
As of the Record Date, there were no shares of Preferred Stock outstanding.
While the Board has no current intentions or plans to issue any Preferred
Stock, issuance of shares of Preferred Stock could also be used as an anti-
takeover device.
REASONS FOR AND EFFECTS OF INCREASE IN AUTHORIZED SHARES OF COMMON STOCK
The increase in authorized shares of Common Stock is recommended by the
Board of Directors in order to provide a sufficient reserve of such shares for
the future growth and needs of the Company. If approved by the shareholders of
the Company, such additional authorized shares would be available for future
issuance for various corporate purposes at the discretion of the Board of
Directors and without further authorization by the shareholders (subject to
the requirements of applicable law or the listing requirements of the New York
Stock Exchange). Such purposes might include, without limitation, the issuance
and sale of Common Stock (i) as part or all of the consideration required to
be paid for the acquisition of ongoing businesses or other assets; (ii) in
public or private offerings as a means of obtaining additional capital to
strengthen the Company and expand its business; (iii) to satisfy any current
or future obligation of the Company; (iv) in connection with the exercise of
options, warrants, rights, or the conversion of convertible securities of the
Company; (v) in public or private exchange offers for other securities of the
Company; (vi) as part or all of the consideration to repay or retire any debt
of the Company; (vii) in connection with stock splits and dividends; or (viii)
with respect to existing or new benefit, option or stock ownership plans or
employment agreements. Any such issuance could reduce the current
shareholders' proportionate interests in the Company, depending on the number
of shares issued and the purpose, terms and conditions of the issuance.
Moreover, the issuance of additional shares of Common Stock could discourage
attempts to acquire control of the Company by tender offer or other means. In
such a case, shareholders might be deprived of benefits that could result from
such an attempt, such as realization of a premium over the market price of
their shares in a tender offer or the temporary increase in market price that
could result from such an attempt. Also, the issuance of stock to persons
supportive of the Board of Directors could make it more difficult to remove
incumbent management and directors from office. The proposed increase in the
number of authorized shares of Common Stock will not change the number of
shares of Common Stock outstanding or the rights of the holders of such stock.
Other than for the possibility of issuing new shares of Common Stock upon
the exercise of stock options under the Company's stock option plans or in
connection with various other benefit plans, the Company does not have any
immediate plans, arrangements, commitments or understandings with respect to
the issuance of any of the additional shares of Common Stock that would be
authorized by the proposed amendment to Section 3.1.
Although the Board of Directors will authorize the issuance of Common Stock
only when it considers such issuance to be in the best interest of the
Company, the issuance of additional shares of Common Stock may have, among
others, a dilutive effect on earnings per share of Common Stock and on the
equity and voting rights of holders of shares of Common Stock as described
above. The Board of Directors, however, believes that the benefits of
providing the flexibility to issue shares without delay for any business
purpose outweigh these possible disadvantages.
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Holders of shares of Common Stock do not have preemptive rights to subscribe
to additional securities that may be issued by the Company, which means that
current shareholders do not have a prior right to purchase any new issue of
capital stock of the Company in order to maintain their proportionate
ownership. However, shareholders wishing to maintain their interest may be
able to do so through normal market purchases.
VOTE REQUIRED
Assuming that a quorum is present, the Amended and Restated Articles of
Incorporation (including the amendment to Section 3.1) will be approved if
more shares are voted at the Meeting in favor of approval than are voted
against approval. Under Wisconsin law, any shares not voted at the Meeting
with respect to the Amended and Restated Articles of Incorporation (whether as
a result of abstention, broker nonvote or otherwise) will have no impact on
the vote. If the shareholders do not approve the proposed Amended and Restated
Articles of Incorporation, the Company's Amended and Restated Articles of
Incorporation currently in effect (as set forth on Exhibit A, except for the
proposed amendment to Section 3.1) will remain in effect and the Company will
be authorized to issue not more than 100,000,000 shares of Common Stock.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THE
AMENDED AND RESTATED ARTICLES OF INCORPORATION, INCLUDING AN AMENDMENT TO
SECTION 3.1 THEREOF INCREASING THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK FROM 100,000,000 TO
250,000,000, AS SET FORTH ABOVE. SHARES OF COMMON
STOCK REPRESENTED AT THE MEETING BY EXECUTED
BUT UNMARKED PROXIES WILL BE VOTED "FOR"
APPROVAL OF THE AMENDED AND RESTATED
ARTICLES OF INCORPORATION.
ITEM 3
AMENDMENT TO SECTION 5.1 OF THE COMPANY'S 1998 STOCK OPTION PLAN
THE 1998 STOCK OPTION PLAN
At the Company's annual shareholders' meeting held on January 22, 1998, the
shareholders approved the adoption of the Universal Foods Corporation 1998
Stock Option Plan (the "1998 Plan").
AMENDMENT NO. 1 TO THE 1998 PLAN
On September 10, 1998, the Board of Directors of the Company, acting
pursuant to the authority granted to the Board of Directors under Section 12.1
of the Plan to amend the 1998 Plan without shareholder approval (see "General
Information About the 1998 Plan--Amendment, Modification and Termination"
below) adopted Amendment No. 1 to the 1998 Plan ("Amendment No. 1") to revise
various provisions of the Plan. Amendment No. 1 had the effect of clarifying
certain provisions of the 1998 Plan, removing certain restrictions on the time
during which certain officers of the Company could exercise stock options or
elect to have the Company withhold stock to satisfy their payment obligation
upon the exercise of options and amended the definition of "Change of
Control." By its terms, the number of shares available for issuance as stock
options or Restricted Stock under the 1998 Plan was automatically increased as
a result of the 1998 Stock Split.
PROPOSED AMENDMENT TO SECTION 5.1 OF THE 1998 PLAN
Amendment No. 1 included an amendment to Section 5.1 of the 1998 Plan to add
a limitation on the total number of stock options which may be awarded to any
person who is granted options or Restricted Stock under the 1998 Plan (a
"Participant") over the term of the 1998 Plan. The amendment to Section 5.1
was adopted subject to approval of such amendment by the shareholders of the
Company at the Meeting. The amendment to
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Section 5.1 is necessary to enable the Company to take advantage of an
exception from Section 162(m) of the Internal Revenue Code (the "Code"), which
limits the Company's income tax deduction for compensation paid by the Company
to any of its five most highly compensated officers in any taxable year to $1
million per individual, subject to several exceptions.
Participants who exercise nonstatutory stock options ("NSOs") are generally
required to recognize ordinary income at the time of exercise in an amount
equal to the excess of the fair market value of the Common Stock at such time
over the exercise price. The Company will be entitled to a deduction in the
same amount and at the same time as ordinary income is recognized by the
Participant. Such ordinary income is not counted toward the $1 million
limitation under Code Section 162(m) provided that the NSOs were granted under
a stock option plan which (i) provides for the grant of stock options with
exercise prices equal to the fair market value (generally, the market price)
of the stock at the time of grant, and (ii) contains a limitation on the
number of stock options which may be granted to any one individual over a
specified period, provided that such plan is approved by the shareholders of
the company. Although the 1998 Plan, at the time it was approved by
shareholders, did provide for the grant of stock options with exercise prices
of not less than the fair market value at the time of grant, it did not
contain a limitation on the number of stock options which may be granted to
any one Participant over a specified period.
Because Code Section 162(m) requires that any such limitation be approved by
shareholders, the Board of Directors, in adopting Amendment No. 1, determined
to submit the proposed amendment to Section 5.1 of the 1998 Plan containing
such limitation to the shareholders for approval at the Meeting. The proposed
amendment to Section 5.1 is the only amendment included in Amendment No. 1
which was adopted subject to shareholder approval.
TEXT OF PROPOSED AMENDMENT TO SECTION 5.1 OF THE 1998 PLAN
The text of Section 5.1, as it is proposed to be amended, is as follows
(with the limitation required by Code Section 162(m) appearing as italicized
text):
5.1 Number. The total number of shares of Stock reserved and available
for issuance under this Plan shall initially be 2,400,000. The number of
shares of Stock reserved and available for issuance hereunder shall be
subject to adjustment upon occurrence of any of the events indicated in
Subsection 5.3 hereof. Of this total number, not more than 600,000 shares
may at any time consist of Restricted Stock. No Participant may be granted
stock options under this Plan with respect to more than 600,000 shares of
Stock (subject to adjustment) during the term of this Plan (as established
under Section 6). The shares to be issued under this Plan may consist, in
whole or in part, of authorized but unissued Stock or treasury Stock, not
reserved for any other purpose.
EFFECT OF PROPOSED AMENDMENT TO SECTION 5.1 OF THE 1998 PLAN
If the shareholders approve the proposed amendment to Section 5.1 of the
1998 Plan, no Participant may be granted Options under the 1998 Plan with
respect to more than 600,000 shares of Common Stock (subject to adjustment as
discussed under "General Information about the 1998 Plan--Available Shares;
Adjustment") during the term of the 1998 Plan (see "General Information about
the 1998 Plan--Effective Date; Term") and, accordingly, the maximum value of
the Options which any Participant can receive under the 1998 Plan would be
equal to 600,000 times the appreciation in the Fair Market value of the Common
Stock from the date (or dates) of grant to the date (or dates) of exercise.
GENERAL INFORMATION ABOUT THE 1998 PLAN
Under SEC regulations, the Company is required to provide a summary of the
material features of the 1998 Plan when asking shareholders to consider the
approval of a proposed amendment thereto. The following summary contains the
same information as the summary of the 1998 Plan contained in the Company's
proxy statement for its 1998 annual meeting (except, as noted, where specific
provisions have been amended pursuant
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<PAGE>
to Amendment No. 1). Capitalized terms used in this summary are defined in,
and all references in this summary to the 1998 Plan refer to, the 1998 Plan,
as amended. All references to the "Code" are to the Internal Revenue Code of
1986, as amended. The 1998 Plan authorizes the granting of stock options and
Restricted Stock to eligible employees.
GENERAL. The purpose of the 1998 Plan is to provide for the acquisition of
an equity interest in the Company by officers and key employees, which the
Company believes will enable it to attract and retain the services of officers
and key employees upon whose judgment, interest and special effort its success
largely depends.
LIMITATION ON NUMBER OF OPTIONS THAT MAY BE GRANTED. There is currently no
limit on the number of Options that may be granted under the 1998 Plan. If the
shareholders approve the proposed amendment to Section 5.1 of the 1998 Plan,
the number of Options that may be granted to any Participant will be limited
as discussed above under "Effect of Proposed Amendment to Section 5.1 of the
1998 Plan."
AVAILABLE SHARES; ADJUSTMENT. Up to 2,400,000 shares of Common Stock are
available for Awards, of which no more than 600,000 may be shares of
Restricted Stock. To date, certain Awards have been made under the 1998 Plan
(see "New Plan Benefits," below). The aggregate number of shares of Common
Stock authorized for issuance was changed from 1,200,000 to 2,400,000 as a
result of the 1998 Stock Split and is subject to further adjustment in the
event of any change in the total number of shares outstanding resulting from a
stock dividend or split, recapitalization, merger, consolidation, combination,
spin-off, split-up, exchange of shares or other similar corporate change.
Further, in the event of any such change in the total number of shares
outstanding, the Committee shall make an appropriate adjustment to each
outstanding Award to change the number of options or the stated exercise
price, or both, or to change the number of shares of Restricted Stock, as the
case may be.
ADMINISTRATION. The 1998 Plan is administered by the Compensation and
Development Committee of the Board of Directors ("Committee") which must
consist of not less than two directors who are "non-employee directors" within
the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and who are "outside directors" within the
meaning of Code Section 162(m). Among other functions, the Committee has the
authority to establish rules for the administration of the 1998 Plan, to
determine the officers and employees of the Company and its affiliates to whom
Awards will be granted, to determine the types of Awards to be granted and the
number of shares covered by such Awards and to set the terms and conditions of
such Awards. The terms of Awards may differ from Participant to Participant.
Subject to the express terms of the 1998 Plan, determinations and
interpretations will be in the sole discretion of the Committee and will be
binding on all parties.
ELIGIBILITY. Participants are selected by the Committee from among those
officers and key employees who are recommended for participation by the Chief
Executive Officer and who, in the opinion of the Committee, are in a position
to contribute materially to the Company's continued growth, development and
long-term financial success. The Committee's designation of any person to
receive an Award does not require the Committee to designate such person to
receive an Award at any subsequent time. Approximately 115 officers and key
employees are eligible for consideration to receive Awards.
EFFECTIVE DATE; TERM. The 1998 Plan became effective on January 22, 1998 and
will expire on the earlier of January 22, 2008 or the date that all Options
and Restricted Stock available for issuance thereunder have been awarded.
AMENDMENT, MODIFICATION AND TERMINATION. The Board of Directors may at any
time amend, alter, suspend, discontinue or terminate the 1998 Plan (subject to
shareholder approval if required by applicable law or New York Stock Exchange
listing requirement or deemed by the Board to be desirable). Amendment No. 1
was adopted pursuant to this authority. Termination of the 1998 Plan may not
adversely affect the rights of Participants with respect to Awards previously
granted to them, and all unexpired Awards shall continue in force and effect
after termination except as they may lapse or be terminated by their own terms
and conditions.
STOCK OPTIONS. Options may be either incentive stock options meeting the
requirements of Code Section 422 ("ISOs") or nonstatutory stock options
("NSOs").
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Exercise Price. The per share exercise price of Options may not be less than
the Fair Market Value of a share of Common Stock on the date of grant. There
will be no consideration received by the Company from a Participant in
exchange for the original grant of an Option.
Term. The term of any Option will be as determined by the Committee.
When Exercisable. Options will become exercisable in such manner and within
such period or periods and in such installments or otherwise as determined by
the Committee. The Committee may establish provisions relating to the vesting
of Options over a period of time, upon the attainment of specified performance
goals, or otherwise. Pursuant to Amendment No. 1, the Board of Directors
removed a provision no longer required under applicable law which stated that
any Option granted to a Participant who is subject to the reporting
requirements under Section 16 of the Exchange Act ("Section 16 Participant")
may not be exercised until at least six (6) months following the date of its
grant.
Manner of Exercise. Options may be exercised by payment in one or any
combination of: (a) cash, (b) if permitted by the Committee, a promissory note
from the Participant to the Company (which must be on terms specified in the
1998 Plan), (c) tendering shares of Common Stock having a Fair Market Value at
the time of exercise equal to the total exercise price, or (d) by electing to
have the Company withhold from the shares of Common Stock otherwise issuable
upon exercise of the Option that number of shares of Common Stock having a
Fair Market Value at the time of exercise plus cash for any fractional share
amounts, equal to the total exercise price. Pursuant to Amendment No. 1, the
Board of Directors removed a provision no longer required under applicable law
which provided that any election described in (d), above, by a Section 16
Participant must be made during the ten-day period beginning on the third
business day following the release of the Company's quarterly or annual
consolidated financial statements.
Special Provisions for ISOs. All ISOs granted under the 1998 Plan will be
required to comply with the requirements of Code Section 422, including the
following: (i) the term of an ISO may not exceed ten years from the date of
its grant and (ii) the Fair Market Value (determined on the grant date) of all
shares of Common Stock with respect to which ISOs are exercisable for the
first time during any calendar year may not exceed $100,000.
Transferability. The Committee may permit a Participant to transfer Options
directly to (or to a trust or trusts for the exclusive benefit of, or a
partnership consisting exclusively of) one or more members of the
Participant's immediate family, provided there is no consideration paid to the
Participant for any such transfer and the transferee is expressly prohibited
from any further transfer of such Options other than upon their death. Unless
expressly permitted, no Option may be transferred in any manner other than by
will or pursuant to the laws of descent and distribution, and all Options are
exercisable during a Participant's lifetime only by the Participant. None of
the Options issued to date under the 1998 Plan are transferable.
Forfeiture. Except as otherwise determined by the Committee, any
unexercisable Option will be forfeited, upon termination of a Participant's
employment for any reason.
Substitute Options. If the Company should succeed to the business of another
corporation through merger or otherwise, the Committee may grant Options under
the 1998 Plan in substitution for options previously granted by such
corporation and which are outstanding at the date of the succession. The
Committee shall determine the terms and conditions upon which such substitute
options will be granted so as to preserve the economic benefits to the
optionees.
RESTRICTED STOCK. Shares of Restricted Stock will be subject to such
restrictions as the Committee may impose, which restrictions may lapse
separately or in combination at such time or times, or in such installments or
otherwise, as the Committee may determine. The Committee may condition the
lapse of such restrictions on the passage of time, the attainment of specified
performance goals, or otherwise. These conditions may differ from Participant
to Participant.
Forfeiture. Except as otherwise determined by the Committee, shares of
Restricted Stock will be forfeited upon termination of a Participant's
employment for any reason prior to the lapse of the restrictions thereon.
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Maximum Number. No more than 600,000 shares of Restricted Stock may be
issued (subject to adjustment as discussed above under "Available Shares;
Adjustment").
Voting and Dividends. Prior to the lapse of the applicable restrictions
thereon, shares of Restricted Stock are entitled to vote and receive dividends
on the same basis as all other shares of outstanding Common Stock.
Limits on Transfer. Until the restrictions thereon have lapsed, Restricted
Stock may not be transferred in any manner by a Participant, other than by
will, designation of a beneficiary, or the laws of descent and distribution.
Resale to Company. A Participant, or in the case of death, his or her
beneficiary or estate, may require the Company to repurchase up to one-half of
the shares of Restricted Stock upon which the restrictions have lapsed within
60 days of such lapse at a price equal to the Fair Market Value determined as
of the last business day prior to such lapse.
CHANGE OF CONTROL.
Accelerated Vesting; Effect. Upon a "Change of Control," each outstanding
Option will automatically vest and the restrictions on each share of
Restricted Stock will automatically terminate. Within 60 days after the Change
of Control (i) each Participant holding Options will have the right to
receive, in exchange for the surrender of such Option, cash equal to the
highest of: (A) the difference between the Fair Market Value of the Common
Stock covered by the Option on the date of the Change of Control and the
exercise price; (B) the difference between the Fair Market Value of the Common
Stock covered by the Option on the date of surrender and the exercise price;
or (C) the difference between the highest price per share of Common Stock paid
in the transaction giving rise to the Change of Control and the exercise price
and (ii) each holder of Restricted Stock shall have the right to receive, in
exchange for the surrender of such Restricted Stock, cash equal to the highest
of (A) the Fair Market Value of the Restricted Stock on the date of surrender;
(B) the highest price paid for the Common Stock in the transaction giving rise
to the Change of Control; or (C) the Fair Market Value of such Restricted
Stock on the effective date of the Change of Control.
Change of Control Defined. Pursuant to Amendment No. 1, the Board of
Directors amended the definition of "Change of Control" from the definition
contained in Section 12 of the 1998 Plan as originally adopted and approved by
shareholders. The principal purpose in doing so was to make this definition
identical to the definition contained in various other agreements and plans of
the Company, some of which were amended at the same time. In general, the
amendment to the definition of Change of Control did not materially change the
types of transactions which would constitute a Change of Control except for
the transactions described in (a), below.
In general, the 1998 Plan defines a "Change of Control" to include the
following:
(a) The acquisition by any individual, entity or group of 20% or more of
the then outstanding shares of Common Stock of the Company (or, if the
Company has more than one class of voting securities, the combined voting
power of the then outstanding voting securities of the Company entitled to
vote generally in the election of directors). However, the following
transactions are excluded: (i) any acquisition directly from or by the
Company, (ii) any acquisition by an employee benefit plan sponsored or
maintained by the Company or any subsidiary, and (iii) any acquisition
pursuant to a transaction which is excluded under (c), below;
(b) Persons who are members of the "Incumbent Board" cease for any reason
to constitute a majority of the Board of Directors. "Incumbent Board" means
persons who were members of the Board of Directors on September 10, 1998 or
persons whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the
directors comprising the Incumbent Board (excluding any such person whose
initial assumption of office occurred as a result of an actual or
threatened election contest or solicitation of proxies or consents by or on
behalf of a someone other than the Incumbent Board);
(c) Consummation by the Company of a reorganization, merger,
consolidation, or sale or other disposition of all or substantially all of
its assets or the acquisition of assets of another entity (a "Business
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<PAGE>
Combination") unless, immediately following such Business Combination, all
of the following are true: (i) the shareholders who owned more than 50% of
the Company's Common Stock (or the combined voting power of the voting
securities of the Company entitled to vote generally in the election of
directors) before the Business Combination continue to own, in
substantially the same proportions, more than 50% of the outstanding shares
of common stock and the combined voting power of the outstanding voting
securities entitled to vote generally in the election of directors of the
corporation resulting from such Business Combination; (ii) no shareholder
(other than an employee benefit plan of the Company or of the corporation
resulting from such Business Combination) owns 20% or more of the
outstanding shares of common stock and the combined voting power of the
outstanding voting securities entitled to vote generally in the election of
directors of the corporation resulting from such Business Combination, and
(iii) at least a majority of the members of the board of directors of the
corporation resulting from the Business Combination were members of the
Incumbent Board prior to the authorization of the Business Combination; or
(d) The shareholders approve a complete liquidation or dissolution of the
Company.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The following summary of certain
federal income tax consequences arising from the grant, exercise and
disposition of Common Stock acquired upon the exercise of Options and from the
grant, lapse of restrictions on and disposition of Restricted Stock is
necessarily selective and general and does not purport to describe the
applicable provisions of the Code in detail.
Stock Options. The grant of an Option will create no income tax consequences
to the Participant or the Company.
A Participant will recognize ordinary income at the time of exercise of an
NSO in an amount equal to the excess of the fair market value of the Common
Stock at such time over the exercise price (the "spread"). This Fair Market
Value will become the Participant's tax basis in the Common Stock acquired
upon exercise. A subsequent disposition of the Common Stock by the Participant
will give rise to capital gain or loss to the extent the amount realized from
the sale differs from the tax basis.
A Participant will not recognize ordinary income as a result of the exercise
of an ISO (except that the alternative minimum tax may apply). However, if the
Participant fails to hold the shares of Common Stock acquired pursuant to the
exercise of an ISO for at least two years from the date of grant of the ISO
and one year from the date of exercise (a "Disqualifying Disposition"), the
Participant will recognize ordinary income at the time of the disposition
equal to the lesser of (a) the gain realized on the Disqualifying Disposition,
or (b) the spread as of the date of exercise. Except in the case of a
Disqualifying Disposition, any gain or loss realized by the Participant on the
disposition of the Common Stock acquired pursuant to the exercise of an ISO
will be treated as a capital gain or loss.
Whenever a Participant is required to recognize ordinary income (either upon
the exercise of an NSO or a Disqualifying Disposition), the Company will be
entitled to a deduction in the same amount and at the same time as ordinary
income is recognized by the Participant, subject to certain provisions of the
Code such as, for example, the limitations under Code Section 162(m) or the
limitation on the deductibility of excess "golden parachute" payments under
Code Sections 280G and 4999.
The treatment of any capital gain or loss as long-term or short-term will be
determined by the Participant's holding period under the applicable provisions
of the Code. In any case, no deduction will be allowed to the Company upon the
realization by the Participant of capital gain or loss.
Restricted Stock. A Participant will not recognize income at the time of an
award of Restricted Stock, unless the Participant makes an election under Code
Section 83 ("Section 83 Election"). Under Code Section 83, a Participant may,
within 30 days after the date of the award of Restricted Stock, elect to
recognize ordinary income as of the date of the award in an amount equal to
the fair market value of such Restricted Stock on the date of the award. If
the Participant does not make a Section 83 Election, he or she will recognize
ordinary income at the time the restrictions lapse in an amount equal to the
fair market value of the Restricted Stock at such time. In either case, the
Company will be entitled to a corresponding deduction in the same amount and
at
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the same time as the Participant recognizes income, subject to certain
provisions of the Code such as, for example, the limitations under Code
Section 162(m) or the limitation on the deductibility of excess "golden
parachute" payments under Code Sections 280G and 4999. If the Section 83
Election is made, any cash dividends received with respect to the Restricted
Stock will be treated as dividend income to the Participant in the year of
payment and will not be deductible by the Company.
Any otherwise taxable disposition of the Restricted Stock after the time the
restrictions lapse will result in long-term or short-term capital gain or
loss. Dividends paid in cash and received by a Participant prior to the time
the restrictions lapse will constitute ordinary income to the Participant in
the year paid. Any dividends paid in Common Stock will be treated as an award
of additional Restricted Stock subject to the tax treatment described herein.
If a Participant who has made a Section 83 Election subsequently forfeits
the Restricted Stock, the Participant will not be entitled to deduct any loss.
In addition, the Company would then be required to include as ordinary income
the amount of the deduction it originally claimed with respect to such shares.
Withholding. The Company may withhold the amount of any tax attributable to
any amount payable or shares of Common Stock deliverable under the 1998 Plan
after giving the Participant notice as far in advance as practicable, and may
defer making any such payment or delivery if any such tax may be pending,
unless and until indemnified to its satisfaction. A Participant may elect to
pay all or a portion of the federal, state and local withholding taxes by
electing to (a) have the Company withhold shares of Common Stock, (b) tender
back shares of Common Stock received in connection with such benefit, or (c)
deliver other previously owned shares of Common Stock, in each case having a
Fair Market Value equal to the amount to be withheld. The Committee may grant
a cash bonus to a Participant who holds Restricted Stock to enable the
Participant to pay all or a portion of the federal, state or local tax
liability incurred by the Participant upon the vesting of Restricted Stock,
but must deduct from any cash bonus such amount as may be required for the
purpose of satisfying the Company's withholding obligations.
NEW PLAN BENEFITS
On September 14, 1998, the Committee granted 348,000 Options and 42,000
shares of Restricted Stock under the 1998 Plan to certain officers of the
Company. As of the date of this proxy statement, these are the only Options or
Restricted Stock outstanding under the 1998 Plan. In order to preserve the
Company's ability to deduct the compensation arising therefrom under Section
162(m), NSOs granted in September, 1998 under the 1998 Plan were issued
subject to shareholder approval of the proposed amendment to Section 5.1 of
the 1998 Plan. If the shareholders do not approve the proposed amendment to
Section 5.1 of the 1998 Plan these NSOs will be forfeited. Further, if the
shareholders do not approve the proposed amendment to Section 5.1 of the 1998
Plan, the Company may be unable to deduct all or a portion of the compensation
arising from the exercise of NSOs granted in the future under the 1998 Plan,
although the Company reserves the right to grant such NSOs without regard to
the deductibility of compensation arising therefrom.
The NSOs which were granted on September 14, 1998, subject to shareholder
approval of the proposed amendment to Section 5.1 of the 1998 Plan are as
follows:
<TABLE>
<CAPTION>
NUMBER DOLLAR
INDIVIDUAL OR GROUP OF NSOS VALUE(1)
------------------- ------- --------
<S> <C> <C>
Kenneth P. Manning....................................... 68,363 (1)
Michael Fung............................................. 27,363 (1)
Michael A. Wick.......................................... 18,363 (1)
Richard F. Hobbs......................................... 24,363 (1)
James F. Palo............................................ 17,363 (1)
All executive officers as a group (2).................... 255,171 (1)
</TABLE>
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- --------
(1) The dollar value of the NSOs is not determinable because the dollar value
depends upon the future appreciation in the Fair Market Value of the
Common Stock subject to such NSOs between the date of grant and the date
(or dates) of exercise.
(2) The 1998 Plan does not provide for the award of Options or Restricted
Stock to directors.
Any benefits which may be awarded in the future under the 1998 Plan are
subject to the discretion of the Committee and are therefore not determinable
and are not included in the above table.
VOTE REQUIRED
Assuming that a quorum is present, the proposed amendment to Section 5.1 of
the 1998 Plan will be approved if more shares are voted in favor of approval
than are voted against approval. Under Wisconsin law, any shares not voted at
the Meeting with respect to the proposed amendment to the 1998 Plan (whether
as a result of abstention, broker nonvote or otherwise) will have no impact on
the vote.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THE
PROPOSED AMENDMENT TO SECTION 5.1 OF THE 1998 PLAN AS SET FORTH ABOVE.
SHARES OF COMMON STOCK REPRESENTED AT THE MEETING BY EXECUTED BUT
UNMARKED PROXIES WILL BE VOTED "FOR" THE PROPOSED AMENDMENT TO
SECTION 5.1 OF THE 1998 PLAN.
ITEM 4
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee of the Board of Directors,
the Board, subject to shareholder ratification, has selected Deloitte & Touche
LLP, certified public accountants, to audit the financial statements of the
Company for the year ending September 30, 1999. Deloitte & Touche LLP has been
the independent auditor of the Company for many years and has advised the
Company that neither the firm nor any of its partners have any direct or
indirect material financial interest in the Company.
Although not required by law to submit the appointment to a vote by
shareholders, the Board believes it appropriate, as a matter of policy, to
request that the shareholders ratify the appointment of Deloitte & Touche LLP
as independent auditors for fiscal 1999. Assuming that a quorum is present,
the selection of Deloitte & Touche LLP will be deemed to have been ratified if
more shares are voted in favor of ratification than are voted against
ratification. Under Wisconsin law, any shares of Common Stock which are not
voted on this matter at the Meeting (whether by abstention, broker nonvote or
otherwise) will have no effect on this matter. If the shareholders should not
so ratify, the Board will reconsider the appointment.
Representatives of Deloitte & Touche LLP are expected to be present at the
Meeting and will have an opportunity to make a statement if they desire to do
so and to respond to appropriate shareholder questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE RATIFICATION
OF THE SELECTION OF DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT
AUDITORS FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 1999. SHARES OF
COMMON STOCK REPRESENTED AT THE MEETING BY EXECUTED BUT UNMARKED
PROXIES WILL BE VOTED "FOR" THE RATIFICATION OF SUCH SELECTION.
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ITEM 5
OTHER MATTERS
Company management knows of no business which will be presented for action
at the Meeting other than those items identified in the Notice of Annual
Meeting. Pursuant to the Company's Bylaws, written notice of any shareholder
proposals to be presented at the Meeting must have been received by the
Secretary no later than December 2, 1998. As no notice of any shareholder
proposals was received, no business may be brought before the Meeting by any
shareholders. If other matters are brought before the Meeting by the Board of
Directors, it is intended that proxies will be voted at the Meeting in
accordance with the judgment of the person or persons exercising the authority
conferred by such proxies.
FUTURE SHAREHOLDER PROPOSALS AND NOMINATIONS
The Company welcomes comments or suggestions from its shareholders. In the
event a shareholder desires to have a proposal formally considered at the
Annual Shareholders' Meeting in January, 2000 and included in the proxy
statement for that meeting, the proposal must be in writing and received by
the Secretary of the Company on or before August 17, 1999.
In addition, the Company's Bylaws establish procedures for shareholder
nominations for election of directors of the Company and bringing business
before any annual meeting of shareholders of the Company. Among other things,
to bring business before an annual meeting or to nominate a person for
election as a director at an annual meeting, a shareholder must give written
notice to the Secretary of the Company not more than 90 nor less than 50 days
prior to the third Thursday after the first Friday in the month of January
next following the last annual meeting held. The notice must contain certain
information about the proposed business or the nominee and the shareholder
making the proposal. Any shareholder interested in making a nomination or
proposal should request a copy of the applicable Bylaw provisions from the
Secretary of the Company.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, SHAREHOLDERS
ARE REQUESTED TO DATE, SIGN AND RETURN THE PROXY CARD AS SOON AS POSSIBLE. IF
YOUR SHARES ARE REGISTERED IN THE NAME OF A BROKER OR BANK, ONLY YOUR BROKER
OR BANK CAN SUBMIT THE PROXY CARD ON YOUR BEHALF. PLEASE CONTACT THE PERSON
RESPONSIBLE FOR YOUR ACCOUNT AND DIRECT HIM OR HER TO SUBMIT THE PROXY CARD ON
YOUR BEHALF.
UPON THE WRITTEN REQUEST OF ANY SHAREHOLDER, ADDRESSED TO THE SECRETARY OF
THE COMPANY, THE COMPANY WILL PROVIDE TO SUCH SHAREHOLDER WITHOUT CHARGE A
COPY OF THE COMPANY'S 1998 ANNUAL REPORT ON FORM 10-K (WITHOUT EXHIBITS) AS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
By Order of the Board of Directors
John L. Hammond
Secretary
December 15, 1998
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UNIVERSAL FOODS CORPORATION
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
These Amended and Restated Articles of Incorporation, duly adopted pursuant
to Chapter 180 of the Wisconsin Statutes, supersede and take the place of the
existing Articles of Incorporation and all amendments and restatements
thereto.
ARTICLE I.
NAME.
Section 1.1. Name.
The name of the corporation is UNIVERSAL FOODS CORPORATION.
ARTICLE II.
PURPOSES.
Section 2.1. Purposes.
The purposes for which the corporation is organized are to engage in any
lawful activity within the purposes for which corporations may be organized
under the Wisconsin Business Corporation Law.
ARTICLE III.
CAPITAL STOCK.
Section 3.1. Number of Shares and Classes.
The aggregate number of shares which the corporation has authority to issue
is 250,250,000 divided into the following classes:
Subsection 3.1.1. Common Stock. 250,000,000 shares at the par value of $0.10
per share designated as "Common Stock."
Subsection 3.1.2. Cumulative Preferred Stock. 250,000 shares without par
value designated as "Cumulative Preferred Stock," of which 100,000 shares are
designated as Series A Participating Cumulative Preferred Stock pursuant to
Section 4.7 hereof.
ARTICLE IV.
PREFERENCES, LIMITATION AND RELATIVE RIGHTS OF
CUMULATIVE PREFERRED STOCK.
Section 4.1. Dividends and Distributions on Cumulative Preferred Stock.
Subsection 4.1.1. The holders of Cumulative Preferred Stock of all series
shall be entitled to receive dividends at such rates, upon such conditions and
at such times as shall be stated in the resolution or resolutions of the Board
of Directors providing for the issuance thereof and not inconsistent with the
provisions hereof.
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Subsection 4.1.2. No dividend or other distribution, except a dividend
payable solely in Common Stock, shall be paid on Common Stock, and no shares
of Common Stock shall be purchased, redeemed or otherwise acquired by the
corporation for a consideration, otherwise than in exchange for or through
application of the proceeds of the sale of other Common Stock, if the payment
of such dividend or distribution on Common Stock, or the making of any such
purchase, redemption or other acquisition of Common Stock, will result in
reducing the Consolidated Net Worth of the corporation below 150% of the
aggregate involuntary liquidation amounts of all outstanding shares of
Cumulative Preferred Stock.
Subsection 4.1.3. All dividends on Cumulative Preferred Stock shall be
without priority as between series, shall be paid out of net earnings or any
surplus properly applicable to the payment thereof, shall be cumulative and
shall be paid or set apart before any dividends or other distributions shall
be paid or set apart for Common Stock, provided, however, that dividends may
be declared and paid on Common Stock in Common Stock of the corporation. Any
dividends paid upon the Cumulative Preferred Stock in an amount less than full
cumulative dividends accrued and in arrears upon all Cumulative Preferred
Stock outstanding shall, if more than one series be outstanding, be
distributed among the different series in proportion to the aggregate amounts
which would be distributable to the Cumulative Preferred Stock of each series
if full cumulative dividends were declared and paid thereon.
Subsection 4.1.4. The Cumulative Preferred Stock shall entitle the holder
thereof to receive, out of net profits of the corporation or out of any
surplus applicable to the payment of such dividends in each fiscal year as
declared at any time by the Board of Directors, dividends at the rate fixed in
the resolution or resolutions adopted by the Board of Directors pursuant to
which the issuance of such Cumulative Preferred Stock shall be authorized. The
dividends on the Cumulative Preferred Stock shall be cumulative, so that if at
any time the full amount of dividends accrued and in arrears on the Cumulative
Preferred Stock shall not be paid, the deficiency shall be payable before any
dividends or other distributions shall be paid or set apart on the Common
Stock, and before any sums shall be paid or set apart for the redemption of
less than all of the Cumulative Preferred Stock then outstanding. Dividends on
Cumulative Preferred Stock shall accrue from date of issue. Whenever all
dividends accrued and in arrears on Cumulative Preferred Stock shall have been
declared and shall have been paid or set apart, the Board of Directors may
declare dividends on Common Stock out of the remaining net profits of the
corporation, or out of surplus applicable to the payment of such dividends,
subject to the restriction set forth in Subsection 4.1.2 hereof.
Section 4.2. Issuance of Cumulative Preferred Stock.
Subsection 4.2.1. No stock having preference or priority in rights or
security over the Cumulative Preferred Stock may be issued unless first
approved by the affirmative vote of such majority of the Cumulative Preferred
Stock then outstanding as then required by law.
Subsection 4.2.2. No Cumulative Preferred Stock shall be issued which, after
giving effect to such issuance, would result in the aggregate involuntary
liquidation amount of all outstanding shares of Cumulative Preferred Stock
exceeding 66 2/3% of Consolidated Net Worth of the corporation.
Section 4.3. Rights of Holders of Cumulative Preferred Stock on Liquidation.
In the event of the voluntary liquidation or winding up of the corporation,
the holders of Cumulative Preferred Stock shall be entitled to receive in full
the fixed voluntary liquidation amount thereof plus accrued dividends thereon,
all as provided in the resolution or resolutions providing for the issuance
thereof, and no more, before any amount shall be paid to the holders of Common
Stock. In the event of the involuntary liquidation of the corporation, the
holders of the Cumulative Preferred Stock shall be entitled to receive in full
the fixed involuntary liquidation amount thereof, plus accrued dividends
thereon, all as provided in the resolution or resolutions providing for the
issuance thereof and no more, before any amount shall be paid to the holders
of Common Stock. The holders of all series of Cumulative Preferred Stock shall
be entitled to receive all amounts described in the preceding provisions of
this Section 4.3 out of the assets of the corporation, whether from
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capital, surplus or earnings. As used in this Section 4.3 "accrued dividends"
means, in respect to each share of Cumulative Preferred Stock, an amount equal
to the fixed dividend rate per annum for each share (without interest
thereon), from the date from which cumulative dividends commenced to accrue in
respect of such share to the date as of which the computation is to be made,
less the aggregate amount (without interest) of all dividends paid thereon or
declared and set aside for payment in respect thereof, whether or not any such
dividends shall have been earned. If, upon any such voluntary or involuntary
liquidation, the assets of the corporation distributable as aforesaid among
the holders of the Cumulative Preferred Stock shall be insufficient to permit
payment to them of the full preferential amounts aforesaid, then the entire
assets of the corporation available for distribution to shareholders shall be
distributed ratably among the holders of Cumulative Preferred Stock in
proportion to the full preferential amounts to which they are respectively
entitled.
The holders of Cumulative Preferred Stock shall not otherwise be entitled to
participate in any distribution of assets of the corporation which shall be
divided and distributed among the holders of Common Stock according to their
respective rights and preferences. No consolidation or merger of the
corporation with or into another corporation or corporations and no sale by
the corporation of all or substantially all of its assets shall be deemed a
liquidation or winding up of the corporation within the meaning of this
Section 4.3.
Section 4.4. Voting Rights of Cumulative Preferred Stock.
The holders of the Cumulative Preferred Stock shall, together with the
holders of Common Stock (neither the Cumulative Preferred Stock nor the Common
Stock voting as a class), possess full voting rights for the election of
directors and for other purposes, and for such purposes the holders of
Cumulative Preferred Stock shall, subject to the provisions of the Bylaws of
the corporation and of the Wisconsin Business Corporation Law relative to the
fixing of the record date, be entitled to one vote for each share held by them
respectively.
Section 4.5. Directors' Authority to Establish Series of Cumulative
Preferred Stock.
The Cumulative Preferred Stock may be issued in series from time to time,
with such designations, preferences and other rights, qualifications,
limitations or restrictions thereof as shall be stated and expressed in the
resolution or resolutions providing for the issuance of such series and
adopted by the Board of Directors pursuant to the authority hereby given as
provided by the Wisconsin Business Corporation Law and not inconsistent with
the provisions hereof. Without limiting the authority granted to the Board of
Directors in this Section, each series shall have such (a) rate of dividend;
(b) price at and terms and conditions on which shares may be redeemed; (c)
amount payable upon shares in event of voluntary or involuntary liquidation;
(d) sinking fund provisions for the redemption or purchase of shares; and (e)
terms and conditions on which shares may be converted, if the shares of any
series are issued with the privilege of conversion; as shall be stated or
expressed in the resolution or resolutions of the Board of Directors providing
for the issuance thereof.
Section 4.6. Definitions.
Subsection 4.6.1. The term "Consolidated Net Worth" of the corporation shall
mean the Consolidated Net Worth of the corporation and all of its subsidiaries
determined on a consolidated basis in accordance with generally accepted
accounting principles.
Subsection 4.6.2. The term "Subsidiary" shall mean any corporation or
association of which not less than a majority of the capital stock or shares
(having the power in all events to vote for the election of directors or
trustees) is owned and controlled by the corporation either directly or
through another Subsidiary.
Section 4.7. Series A Participating Cumulative Preferred Stock.
Subsection 4.7.1. Designation and Amount. The shares of such series shall be
designated as "Series A Participating Cumulative Preferred Stock" (the "Series
A Preferred Stock") and the number of shares constituting the Series A
Preferred Stock shall be 100,000. Such number of shares may be increased or
decreased by resolution of the Board of Directors; provided, that no decrease
shall reduce the number of shares of Series A Preferred Stock to a number less
than the number of shares then outstanding plus the number of shares reserved
for issuance upon the exercise of outstanding options, rights or warrants or
upon the conversion of any outstanding securities issued by the corporation
convertible into Series A Preferred Stock.
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Subsection 4.7.2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series of
Cumulative Preferred Stock (or any similar stock) ranking pari passu with
the Series A Preferred Stock with respect to dividends, the holders of
shares of Series A Preferred Stock, in preference to the holders of Common
Stock, par value $0.10 per share ("Common Shares"), of the corporation, and
of any other junior stock, shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the first day of December,
March, June and September in each year (each such date being referred to in
this Section 4.7 as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a share
or fraction of a share of Series A Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $1 or (b) subject
to the provision for adjustment hereinafter set forth, 1,000 times the
aggregate per share amount of all cash dividends, and 1,000 times the
aggregate per share amount (payable in kind) of all non-cash dividends or
other distributions, other than a dividend payable in Common Shares or a
subdivision of the outstanding Common Shares (by reclassification or
otherwise), declared on the Common Shares since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or fraction of
a share of Series A Preferred Stock. In the event the corporation shall at
any time declare or pay any dividend on the Common Shares payable in Common
Shares, or effect a subdivision or combination or consolidation of the
outstanding Common Shares (by reclassification or otherwise than by payment
of a dividend in Common Shares) into a greater or lesser number of Common
Shares, then in each such case the amount to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such event
under clause (b) of the preceding sentence shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of Common
Shares outstanding immediately after such event and the denominator of
which is the number of Common Shares that were outstanding immediately
prior to such event.
(B) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares, unless the date of issue
of such shares is prior to the record date for the first Quarterly Dividend
Payment Date, in which case dividends on such shares shall begin to accrue
from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment
Date, in either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series A
Preferred Stock in an amount less than the total amount of such dividends
at the time accrued and payable on such shares shall be allocated pro rata
on a share-by-share basis among all such shares at the time outstanding.
The Board of Directors may fix a record date for the determination of
holders of shares of Series A Preferred Stock entitled to receive payment
of a dividend or distribution declared thereon, which record date shall be
not more than 60 days prior to the date fixed for the payment thereof.
Subsection 4.7.3. Voting Rights. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Series A Preferred Stock shall entitle the holder thereof to one
vote on all matters submitted to a vote of the shareholders of the
corporation.
(B) Except as otherwise provided in these Articles of Incorporation, in
any other Resolution of the Board of Directors creating a series of
Cumulative Preferred Stock or any similar stock, or by law, the holders of
shares of Series A Preferred Stock and the holders of Common Shares and any
other capital stock of the corporation having general voting rights shall
vote together as one class on all matters submitted to a vote of
shareholders of the corporation.
(C) Except as set forth in these Articles of Incorporation or as
otherwise provided by law, holders of Series A Preferred Stock shall have
no special voting rights and their consent shall not be required (except
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to the extent they are entitled to vote with holders of Common Shares as
set forth herein) for taking any corporate action.
Subsection 4.7.4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions payable
on the Series A Preferred Stock as provided in Subsection 4.7.2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the corporation shall not:
(i) declare or pay dividends, or make any other distributions, on any
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends, or make any other distributions, on any
shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except dividends paid ratably on the Series A Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares of
any stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock, provided that
the corporation may at any time redeem, purchase or otherwise acquire
shares of any such junior stock in exchange for shares of any stock of the
corporation ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration any shares
of Series A Preferred Stock, or any shares of stock ranking on a parity
with the Series A Preferred Stock, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series and classes,
shall determine in good faith will result in fair and equitable treatment
among the respective series or classes.
(B) The corporation shall not permit any subsidiary of the corporation to
purchase or otherwise acquire for consideration any shares of stock of the
corporation unless the corporation could, under paragraph (A) of this
Subsection 4.7.4, purchase or otherwise acquire such shares at such time and
in such manner.
Subsection 4.7.5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Cumulative Preferred Stock and may be reissued as part of a new series of
Cumulative Preferred Stock subject to the conditions and restrictions on
issuance set forth in these Articles of Incorporation or in any other
Resolution of the Board of Directors creating a series of Cumulative Preferred
Stock or any similar stock or as otherwise required by law.
Subsection 4.7.6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the corporation, no distribution
shall be made (1) to the holders of shares of stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received $250 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment, provided that the holders of shares of
Series A Preferred Stock shall be entitled to receive an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth, equal to
1,000 times the aggregate amount to be distributed per share to holders of
Common Shares, or (2) to the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with
the Series A Preferred Stock, except distributions made ratably on the Series
A Preferred Stock and all such parity stock in proportion to the total amounts
to which the holders of all such shares are entitled upon such liquidation,
dissolution or winding
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up. In the event the corporation shall at any time declare or pay any dividend
on the Common Shares payable in Common Shares, or effect a subdivision or
combination or consolidation of the outstanding Common Shares (by
reclassification or otherwise than by payment of a dividend in Common Shares)
into a greater or lesser number of Common Shares, then in each such case the
aggregate amount to which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event under the proviso in clause (1) of
the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of Common Shares outstanding
immediately after such event and the denominator of which is the number of
Common Shares that were outstanding immediately prior to such event.
Subsection 4.7.7. Consolidation, Merger, etc. In case the corporation shall
enter into any consolidation, merger, combination or other transaction in
which the Common Shares are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share
of Series A Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each Common Share is changed or exchanged. In the
event the corporation shall at any time declare or pay any dividend on the
Common Shares payable in Common Shares, or effect a subdivision or combination
or consolidation of the outstanding Common Shares (by reclassification or
otherwise than by payment of a dividend in Common Shares) into a greater or
lesser number of Common Shares, then in each such case the amount set forth in
the preceding sentence with respect to the exchange or change of shares of
Series A Preferred Stock shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of Common Shares outstanding
immediately after such event and the denominator of which is the number of
Common Shares that were outstanding immediately prior to such event.
Subsection 4.7.8. No Redemption. The shares of Series A Preferred Stock
shall not be redeemable.
Subsection 4.7.9. Rank. The Series A Preferred Stock shall be of equal rank,
with respect to the payment of dividends and the distribution of assets, to
all series of any other class of the corporation's Cumulative Preferred Stock.
Subsection 4.7.10. Amendment. These Articles of Incorporation shall not be
amended in any manner which would materially alter or change the powers,
preferences or special rights of the Series A Preferred Stock so as to affect
them adversely without the affirmative vote of the holders of at least two-
thirds of the outstanding shares of Series A Preferred Stock, voting together
as a single class. In addition to the rights, preferences and privileges
accorded to the Series A Preferred Stock in this Section 4.7, the Series A
Preferred Stock shall have the rights, privileges and preferences, and be
subject to the limitations, accorded generally to the Cumulative Preferred
Stock in the foregoing Sections 4.1 through 4.6.
ARTICLE V.
PRE-EMPTIVE RIGHTS.
Section 5.1. Pre-emptive Rights.
No holder of any class of stock of the corporation shall, because of such
holder's ownership of said stock, have any pre-emptive or other right to
purchase, or subscribe for, or take any part of any class of stock, or any
part of the notes, debentures, bonds or other securities convertible into or
carrying options or warrants to purchase any class of stock of this
corporation.
ARTICLE VI.
REGISTERED OFFICE; REGISTERED AGENT.
Section 6.1. Registered Office; Registered Agent.
The address of the registered office of the corporation is 433 East Michigan
Street, Milwaukee, Wisconsin 53202, and the registered agent at the registered
office of the corporation is John L. Hammond.
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ARTICLE VII.
DIRECTORS; REMOVAL OF DIRECTORS.
Section 7.1. Directors.
The number of directors constituting the Board of Directors of the
corporation shall be fixed from time to time by the Bylaws of the corporation.
The Board of Directors of the corporation shall be divided into three (3)
classes. The term of office of the first class of directors shall expire at
the first annual meeting after their election, the term of office of the
second class shall expire at the second annual meeting after their election
and that of the third class shall expire at the third annual meeting after
their election. At each annual meeting after classification of the Board of
Directors, the class of directors whose term expires at the time of such
election shall be elected to hold office until the third succeeding annual
meeting. The number of directors in each class shall be as fixed from time to
time in the Bylaws.
Section 7.2. Removal of Directors.
A director may be removed from office by affirmative vote of two thirds (
2/3) of the outstanding shares entitled to vote for the election of such
director, taken at a meeting of shareholders called for that purpose, and any
vacancy so created may be filled by such shareholders.
ARTICLE VIII.
ACQUISITION OF SHARES.
Section 8.1. Acquisition of Shares.
The corporation is authorized by action of the Board of Directors without
consent of shareholders to purchase, take, receive or otherwise acquire shares
of the corporation subject to the provisions of Sections 180.0603, 180.0631,
and 180.0640 of the Wisconsin Statutes and Section 4.1.2 hereof.
ARTICLE IX.
DISTRIBUTIONS.
Section 9.1. Distributions.
The Board of Directors may from time to time distribute to shareholders in
partial liquidation out of stated capital or net capital surplus of the
corporation, a portion of its assets, in cash or property.
ARTICLE X.
REPURCHASE OF COMMON STOCK.
Section 10.1. Repurchase Rights.
Subsection 10.1.1. In the event that any person (Acquiring Person) (i) who
is the beneficial owner, directly or indirectly, of more than fifty percent of
the Common Stock outstanding becomes the beneficial owner, directly or
indirectly, of any additional Common Stock pursuant to a tender offer or (ii)
becomes the beneficial owner, directly or indirectly, of more than fifty
percent of the Common Stock outstanding and any of such Common Stock was
acquired pursuant to a tender offer, each holder of Common Stock, other than
the Acquiring Person or a transferee of the Acquiring Person, shall have the
right until and including the thirtieth day following the date the notice to
holders of Common Stock referred to in Section 10.3 herein is mailed to have
the Common Stock held by such holder repurchased by the corporation at the
Repurchase Price determined as provided in Section 10.5 herein, and each
holder of securities convertible into Common Stock or of options, warrants, or
rights exercisable to acquire Common Stock prior to such thirtieth day, other
than the Acquiring Person or a transferee of the Acquiring Person, shall have
the right simultaneously with the conversion of such securities or exercise of
such options, warrants, or rights to have the Common Stock to be received
thereupon by such holder repurchased by the corporation at the Repurchase
Price.
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Subsection 10.1.2. All repurchase rights hereunder shall be subject to, and
limited by, any provision contained in the Wisconsin Statutes, in Article IV
hereof, or in any loan agreement entered into at any time by the corporation,
which limits the amounts which may be used by the corporation to repurchase
Common Stock of the corporation.
Subsection 10.1.3. No holder of Common Stock of the corporation shall have
any right to have Common Stock repurchased by the corporation pursuant to this
Article X if the corporation, acting through a majority of its Board of
Directors, shall within ten (10) days following the announcement or
publication of such tender offer or following any amendment of such tender
offer recommend to the holders of Common Stock that such tender offer be
accepted.
Section 10.2. Definitions.
Subsection 10.2.1. The term "person" shall include an individual, a
corporation, partnership, trust or other entity. When two or more persons act
as a partnership, limited partnership, syndicate, or other group for the
purpose of acquiring Common Stock, such partnership, syndicate or group shall
be deemed a "person".
Subsection 10.2.2. For the purpose of determining whether a person is an
Acquiring Person, such person shall be deemed to beneficially own (i) all
Common Stock with respect to which such person has the capability to control
or influence the voting power in respect thereof and (ii) all Common Stock
which such person has the immediate or future right to acquire, directly or
indirectly, pursuant to agreements, through the exercise of options, warrants
or rights or through the conversion of convertible securities or otherwise;
and all Common Stock which such person has the right to acquire in such manner
shall be deemed to be outstanding shares, but Common Stock which any other
person has the right to acquire in such manner shall not be deemed to be
outstanding shares.
Subsection 10.2.3. The acquisition of Common Stock by the corporation or by
any person controlled by the corporation shall not engender the right to have
Common Stock repurchased pursuant to this Article.
Subsection 10.2.4. The right to have Common Stock repurchased pursuant to
this Article shall attach to such shares and shall not be personal to the
holder thereof.
Subsection 10.2.5. The term "tender offer" shall mean an offer to acquire or
an acquisition of Common Stock pursuant to a request or invitation for tenders
or an offer to purchase such shares for cash, securities or any other
consideration.
Subsection 10.2.6. The term "market purchases" shall mean the acquisition of
Common Stock from holders of such shares in privately negotiated transactions
or in transactions effected through a broker or dealer.
Subsection 10.2.7. Subject to the provisions of Section 10.2.2 herein,
"outstanding shares" shall mean shares of Common Stock which at the time in
question have been issued by the corporation and not reacquired and held or
retired by it or held by any subsidiary of the corporation.
Section 10.3. Repurchase Procedure.
Not later than thirty (30) days following the date on which the corporation
receives credible notice that any person has become an Acquiring Person
whereupon the right shall be engendered to have Common Stock repurchased by
the corporation under this Article X, the corporation shall give written
notice, by first class mail, postage prepaid, at the address shown on the
records of the corporation, to each holder of record of Common Stock (and to
any other person known by the corporation to have rights to demand repurchase
pursuant to Section 10.1 of this Article) as of a date not more than seven (7)
days prior to the date of the mailing pursuant to this Section 10.3 and shall
advise each such holder of the right to have shares repurchased and the
procedures for such repurchase. In the event that the corporation fails to
give notice as required by this Section 10.3, any holder entitled to receive
such notice may within thirty (30) days thereafter serve written demand upon
the corporation to give such notice. If within thirty (30) days after the
receipt of written demand the corporation fails to give the required notice,
such holder may at the expense and on behalf of the corporation take such
reasonable action as may be appropriate to give notice or to cause notice to
be given pursuant to this Section 10.3.
A-8
<PAGE>
Subsection 10.3.1. In the event Common Stock is subject to repurchase in
accordance with this Article X, the directors of the corporation shall
designate a Repurchase Agent, which shall be a corporation or association (i)
organized and doing business under the laws of the United States or any State,
(ii) subject to supervision or examination by Federal or State authority,
(iii) having combined capital and surplus of at least $5,000,000 and (iv)
having the power to exercise corporate trust powers.
Subsection 10.3.2. For a period of ninety days from the date of the mailing
of the notice to holders of Common Stock referred to in this Section 10.3,
holders of Common Stock and other persons entitled to have Common Stock
repurchased pursuant to this Article X may, at their option, deposit
certificates representing all or less than all Common Stock held of record by
them with the Repurchase Agent together with written notice that the holder
elects to have such shares repurchased pursuant to this Article X. Repurchase
shall be deemed to have been effected at the close of business on the day such
certificates are deposited in proper form with the Repurchase Agent.
Subsection 10.3.3. The corporation shall promptly deposit in trust with the
Repurchase Agent cash in an amount equal to the aggregate Repurchase Price of
all of the Common Stock deposited with the Repurchase Agent for purposes of
repurchase.
Subsection 10.3.4. As soon as practicable after receipt by the Repurchase
Agent of the cash deposit by the corporation referred to in this Section 10.3,
the Repurchase Agent shall issue its checks payable to the order of the
persons entitled to receive the Repurchase Price of the Common Stock in
respect of which such cash deposit was made.
Subsection 10.3.5. In the event the corporation is unable to deposit with
the Repurchase Agent cash in the full amount of the aggregate Repurchase Price
of all shares deposited for repurchase, because of limitations upon repurchase
of Common Stock contained in the Wisconsin Statutes, in Article IV hereof, or
in any loan agreement entered into at any time by the corporation, the
corporation shall promptly deposit with the Repurchase Agent the maximum
amount of cash which may be used for the repurchase of Common Stock, under the
most restrictive of the applicable limitations upon such repurchase. In the
event of deposit of less than the full aggregate Repurchase Price pursuant to
the provisions of this subsection, the Repurchase Agent shall use the amount
so deposited to repurchase the deposited shares pro tanto, in proportion to
the number of shares deposited by each shareholder for repurchase.
Certificates representing all shares which remain unpurchased shall be
returned to the depositors thereof as soon as practicable thereafter, and
there shall be no further repurchase rights with respect to such shares
arising in connection with the transactions already completed.
Section 10.4. Retired Stock.
All Common Stock with respect to which repurchase has been effected pursuant
to this Article X shall thereupon be deemed retired.
Section 10.5. Repurchase Price.
The Repurchase Price shall be the amount payable by the corporation in
respect of each share of Common Stock with respect to which repurchase has
been demanded pursuant to this Article X and shall be the greatest amount
determined on any of the following three bases:
(i) The highest price per share of Common Stock, including any commission
paid to brokers or dealers for solicitation or whatever, at which Common
Stock held by the Acquiring Person were acquired pursuant to a tender offer
regardless of when such tender offer was made or were acquired pursuant to
any market purchase or otherwise within eighteen months prior to the notice
to holders of Common Stock referred to in Section 10.3 herein. For purposes
of this subsection (i), if the consideration paid in any such acquisition
of Common Stock consisted, in whole or part, of consideration other than
cash, the Board of Directors of the corporation shall take such action, as
in its judgment it deems appropriate, to establish the cash value of such
consideration, but such valuation shall not be less than the cash value, if
any, ascribed to such consideration by the Acquiring Person.
A-9
<PAGE>
(ii) The highest sale price per share of Common Stock for any trading day
during the eighteen months prior to the notice to holders of Common Stock
referred to in Section 10.3 herein. For purposes of this subsection (ii),
the sale price for any trading day shall be the last sale price per share
of Common Stock traded on the New York Stock Exchange or other national
securities exchange, or, if Common Stock of the corporation is not then
traded on a national securities exchange, the mean of the closing bid and
asked price per share of Common Stock.
(iii) The amount of shareholders' equity in respect of each outstanding
share of Common Stock as determined in accordance with generally accepted
accounting principles and as reflected in any published report by the
corporation as at the fiscal year quarter ending immediately preceding the
notice to shareholders referred to in Section 10.3 herein.
Subsection 10.5.1. The determinations to be made pursuant to Section 10.5
shall be made by the Board of Directors not later than the date of the notice
to holders of Common Stock referred to in Section 10.3 herein. In making such
determination the Board of Directors may engage such persons, including
investment banking firms and the independent accountants, who have reported on
the most recent financial statements of the corporation, and utilize employees
and agents of the corporation, who will, in the judgment of the Board of
Directors, be of assistance to the Board of Directors.
Subsection 10.5.2. The determinations to be made pursuant to this Section
10.5, when made by the Board of Directors acting in good faith on the basis of
such information and assistance as was then reasonably available for such
purpose, shall be conclusive and binding upon the corporation and its
shareholders, including any person referred to in Section 10.1 herein.
A-10
<PAGE>
[Logo]
UNIVERSAL FOODS CORPORATION
433 East Michigan Street
Milwaukee, Wisconsin 53202
Notice of Annual Meeting
To be Held January 21, 1999
December 1998
Dear Fellow Shareholder:
You are invited to attend the Annual Meeting of Shareholders of Universal Foods
Corporation. The meeting will be held on Thursday, January 21, 1999, at 2:00
p.m. at the Italian Community Center, 631 East Chicago Street, Milwaukee,
Wisconsin. Directions to the meeting and a map are provided on the reverse side
of this letter.
We hope that you will be able to join us at the meeting to review the year and
take a look at what the future holds for our company. In addition, the business
to be transacted is the election of directors, approval of the Company's Amended
and Restated Articles of Incorporation to increase the Company's authorized
Common Stock, approval of an amendment to the 1998 Stock Option Plan, and
ratification of the appointment of auditors.
Whether or not you plan to attend, it is important that you exercise your right
to vote as a shareholder. Please indicate your vote on the proxy card below,
sign and date the card, detach it from this letter and return it promptly to
Corporate Election Services, Inc., our independent proxy tabulator, in the
envelope provided. Be assured that your votes are completely confidential.
We look forward to seeing you at the meeting. On behalf of the officers and
directors of Universal Foods Corporation, we want to thank you for your
continued support and confidence.
Sincerely,
/s/ Kenneth P. Manning
Kenneth P. Manning
Chairman, President and Chief Executive Officer
================================================================================
UNIVERSAL FOODS CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 21, 1999
The undersigned constitutes and appoints KENNETH P. MANNING, and JOHN L.
HAMMOND, and each of them, with full power of substitution, the true and lawful
Proxies of the undersigned, to represent and vote, as designated below, all
shares of Common Stock of Universal Foods Corporation which the undersigned is
entitled to vote at the Annual Meeting of Shareholders of such corporation to be
held at the Italian Community Center, 631 East Chicago Street, Milwaukee,
Wisconsin, on Thursday, January 21, 1999, 2:00 p.m. Central Standard Time, and
at any adjournment thereof:
1. Election of Directors [ ] FOR all nominees listed [ ] WITHHOLD authority
below (except as marked to vote for all
to the contrary below). nominees listed
below.
Richard A. Abdoo, Dr. Fergus M. Clydesdale, Alberto Fernandez, James L. Forbes,
Dr. Carol I. Waslien Ghazaii
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below)
----------------------------------------------------------
2. Proposal to approve the Company's Amended and Restated Articles of
Incorporation, including an amendment to Section 3.1 to increase the number
of authorized shares of Common Stock to 250,000,000.
[ ] For [ ] Against [ ] Abstain
3. Proposal to amend Section 5.1 of the Universal Foods Corporation 1998 Stock
Option Plan.
[ ] For [ ] Against [ ] Abstain
4. Proposal to ratify the appointment of Deloitte & Touche LLP as the Company's
independent auditors for fiscal 1999.
[ ] For [ ] Against [ ] Abstain
5. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES AND "FOR" ITEMS 2, 3
AND 4.
================================================================================
<PAGE>
UNIVERSAL FOODS [AREA MAP OF SHAREHOLDERS MEETING & PARKING]
CORPORATION
ANNUAL MEETING
OF SHAREHOLDERS
JANUARY 21, 1999 Convenient Free Parking
AT 2:00 P.M.
PLEASE FOLD HERE BEFORE DETACHING PROXY CARD
- -------------------------------------------------------------------------------
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED
"FOR" ALL NOMINEES LISTED IN ITEM 1 AND "FOR" ITEMS 2, 3 AND 4.
The undersigned acknowledges
receipt of the Notice of said
Annual Meeting and the
accompanying Proxy Statement and
Annual Report.
Dated: ___________________, 199_
Signed _________________________
________________________________
(Please print name)
NOTE: Please sign exactly as your
name appears on your stock
certificate. Joint owners should
each sign personally. A
corporation should sign full
corporate name by duly authorized
officers and affix corporate seal.
When signing as attorney,
executor, administrator, trustee
or guardian, give full title as
such.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF UNIVERSAL FOODS
CORPORATION.
<PAGE>
UNIVERSAL FOODS [AREA MAP OF SHAREHOLDERS MEETING & PARKING]
CORPORATION
ANNUAL MEETING
OF SHAREHOLDERS
JANUARY 21, 1999 Convenient Free Parking
AT 2:00 P.M.
PLEASE FOLD HERE BEFORE DETACHING PROXY CARD
- -------------------------------------------------------------------------------
SAVINGS PLAN -- 401(K)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED
"FOR" ALL NOMINEES LISTED IN ITEM 1 AND "FOR" ITEMS 2, 3 AND 4.
The undersigned acknowledges
receipt of the Notice of said
Annual Meeting and the
accompanying Proxy Statement and
Annual Report.
Dated: ___________________, 199_
Signed _________________________
________________________________
(Please print name)
NOTE: Please sign exactly as your
name appears on your stock
certificate. Joint owners should
each sign personally. A
corporation should sign full
corporate name by duly authorized
officers and affix corporate seal.
When signing as attorney,
executor, administrator, trustee
or guardian, give full title as
such.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF UNIVERSAL FOODS
CORPORATION.
<PAGE>
UNIVERSAL FOODS [AREA MAP OF SHAREHOLDERS MEETING & PARKING]
CORPORATION
ANNUAL MEETING
OF SHAREHOLDERS
JANUARY 21, 1999 Convenient Free Parking
AT 2:00 P.M.
PLEASE FOLD HERE BEFORE DETACHING PROXY CARD
- -------------------------------------------------------------------------------
EMPLOYEE STOCK OWNERSHIP PLAN (ESOP)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED
"FOR" ALL NOMINEES LISTED IN ITEM 1 AND "FOR" ITEMS 2, 3 AND 4.
The undersigned acknowledges
receipt of the Notice of said
Annual Meeting and the
accompanying Proxy Statement and
Annual Report.
Dated: ___________________, 199_
Signed _________________________
________________________________
(Please print name)
NOTE: Please sign exactly as your
name appears on your stock
certificate. Joint owners should
each sign personally. A
corporation should sign full
corporate name by duly authorized
officers and affix corporate seal.
When signing as attorney,
executor, administrator, trustee
or guardian, give full title as
such.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF UNIVERSAL FOODS
CORPORATION.
