SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
(Amendment No. )
Filed by Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e) (2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
RYMER FOODS INC.
(Name of Registrant as Specified In Its Charter)
___________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, If Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
______________________________________________________________
(2) Aggregate numer of securities to which transactions applies:
______________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
______________________________________________________________
(4) Proposed maximum aggregate value of transaction:
______________________________________________________________
(5) Total Fee Paid
______________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
______________________________________________________________
(2) Form, Schedule or Registration Statement No:
______________________________________________________________
(3) Filing Party:
(4) Date Filed:
______________________________________________________________
<PAGE>
RYMER FOODS INC.
4600 South Packers Avenue
Suite 400
Chicago, Illinois 60609
Notice of Annual Meeting of Stockholders
to be held April 6, 1999
TO THE HOLDERS OF COMMON STOCK OF RYMER FOODS INC.:
The Annual Meeting of Stockholders of Rymer Foods Inc. (the
"Company") will be held at 11:00 a.m., local time, on Tuesday, April 6,
1999, at the Company's Corporate Headquarters, 4600 S. Packers Ave.,
Chicago, IL 60609, for the following purposes:
(1) To elect two Class 1 Directors to the Company's Board of
Directors.
(2) To ratify the appointment by the Board of Directors of Grant
Thornton LLP as auditors of the Company for fiscal 1999.
(3) To transact any other business that may properly be brought
before the Meeting or any adjournments thereof.
Only holders of record of Common Stock at the close of business on
February 15, 1999 (the "Record Date"), will be entitled to notice of and
to vote at the Meeting or any adjournments thereof.
Stockholders are cordially invited to attend the meeting in person.
IF YOU WILL NOT BE ABLE TO ATTEND THE MEETING IN PERSON, PLEASE INDICATE
YOUR VOTE ON THE MATTERS TO BE VOTED UPON, SIGN AND DATE THE ENCLOSED
PROXY, AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors
/s/ Edward M. Hebert
EDWARD M. HEBERT
Secretary
February 26, 1999
<PAGE>
RYMER FOODS INC.
4600 South Packers Avenue
Suite 400
Chicago, Illinois 60609
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS - APRIL 6, 1999
This Proxy Statement (the "Proxy Statement") is furnished in
connection with the SOLICITATION OF PROXIES BY THE BOARD OF DIRECTORS of
Rymer Foods Inc. (the "Company") from the holders of shares of its common
stock, $0.04 par value (the "Common Stock"), to be voted at THE ANNUAL
MEETING OF STOCKHOLDERS, which will be held at 11:00 a.m., local time, on
Tuesday, April 6, 1999, at the Company's Corporate Headquarters, 4600
South Packers Avenue, Chicago, Illinois 60609, and at any adjournments
thereof (the "Meeting").
The purposes of the Meeting are:
(1) To elect two Class 1 Directors to the Company's Board of
Directors.
(2) To ratify the appointment by the Board of Directors of Grant
Thornton LLP as auditors of the Company for fiscal 1999.
(3) To transact any other business that may properly be brought
before the Meeting or any adjournments thereof.
This Proxy Statement and a form of proxy are first being mailed by
the Company to its stockholders on or about February 26, 1999.
The cost of solicitation of proxies will be borne by the Company.
The solicitation of proxies generally will be by mail. Such solicitation
may also be made in person or by telephone, facsimile or other means by
directors, officers, agents and employees of the Company. Arrangements
have been made with brokers and other custodians, nominees and
fiduciaries to send copies of this Proxy Statement, proxies and other
proxy solicitation materials to their principals, and the Company will
reimburse them for reasonable out-of-pocket and clerical expenses in so
doing.
<PAGE>
STOCKHOLDERS ENTITLED TO VOTE
The Company's Board of Directors (the "Board of Directors" or the
"Board") has fixed the close of business on February 15, 1999 as the
record date (the "Record Date") for the Meeting.
Holders of record of the Company's outstanding Common Stock at the
close of business on the Record Date (consisting of 4,300,000 shares) are
entitled to notice of and to vote at the Meeting. For a quorum to be
present, the holders of at least 50% of the shares entitled to vote at
the Meeting must be present in person or represented by proxy.
Stockholders have cumulative voting rights for the election of
directors and one vote per share for all other purposes. Cumulative
voting means that each stockholder is entitled to as many votes as are
equal to the number of shares owned multiplied by the number of directors
to be elected and that the stockholder may cast all of such votes for a
single director or may distribute them among the number to be voted for,
as the stockholder may see fit. Each share of Common Stock (par value
$0.04) is entitled to one vote with respect to the ratification of Grant
Thornton LLP as auditors for fiscal 1999, and any other matters that may
be properly brought before the Meeting.
Elections are determined by a plurality vote, assuming that a quorum
is present. Other matters are determined by vote of the holders of a
majority of the shares present or represented at the Meeting and voting
on such matters. Therefore, the affirmative vote of the holders of not
less than a majority of the shares of Common Stock present at the Meeting
in person or by proxy is required to ratify the appointment of Grant
Thornton LLP as auditors for fiscal 1999.
With regard to the election of the Class 1 Directors, votes may be
cast in favor of or withheld from the nominees, therefore votes that are
withheld will be excluded entirely from the vote and will have no effect,
except for quorum purposes. Abstentions may be specified on the proposal
to ratify the appointment of Grant Thornton LLP as auditors for fiscal
1999 and will be counted as present for purposes of determining the
existence of a quorum regarding the proposal on which the abstention is
noted. Because ratification of Grant Thornton LLP as auditors for fiscal
1999 requires the affirmative vote of a majority of shares present in
person or by proxy and entitled to vote, an abstention on either of such
proposals will have the same effect as a negative vote.
Under the rules of the New York and American Stock Exchanges,
brokers who hold shares in street name may have the authority to vote on
certain items when they have not received instructions from beneficial
owners. Brokers that do not receive instructions generally are entitled
to vote on the election of directors and the ratification of the
appointment of auditors. Under applicable Delaware law, a broker non-
vote will have no effect on the outcome of the election of the Class 1
Directors.
<PAGE>
The proxies hereby solicited vest in the proxy holders' cumulative
voting rights (discussed above) with respect to the election of directors
(unless the stockholder marks the proxy so as to withhold such authority)
and all other voting rights of the stockholders signing such proxies.
The shares represented by each duly executed proxy will be voted and,
where a choice is specified by the stockholder on the proxy, the proxy
will be voted in accordance with the specification so made.
Any proxy given by a stockholder pursuant to this solicitation may
be revoked by the stockholder by written notice delivered to the
Secretary of the Company at any time prior to exercise of the proxy. All
valid proxies on file with the Secretary of the Company, unless revoked,
will be voted in accordance with the instructions of the stockholder
or, in the absence of such instructions, in accordance with the
recommendations of the Board of Directors.
A list of stockholders of the Company will be available at the
Company's offices during ordinary business hours for the ten days
preceding the Meeting for examination by stockholders for any purpose
germane to the Meeting.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of February 15, 1999, the
beneficial ownership of the Common Stock by each of the directors, the
nominees for director and each of the executive officers of the Company
listed in the Summary Compensation Table below and of all directors, the
nominees for director and executive officers of the Company as a group,
and by each person who is known by the Company to beneficially own 5% or
more of the Common Stock. The Common Stock is the only outstanding class
of equity securities of the Company.
Percentage
of
Number of Shares Outstanding
Name Title of Security Beneficially Owned Shares
---- ----------------- ------------------ ------
P. E. Schenk .......... Common Stock 258,000 6%
Edward M. Hebert ...... Common Stock 172,150 4%
Michael Bowen ......... Common Stock 1,805,296(1)(2)(4) 42%
c/o Palm Beach
Investment Advisers
249 Royal Palm Way
Suite 400
Palm Beach, FL 33480
Tom Krasnor ........... Common Stock 382,916(2)(3)(5) 8.9%
Riverside Capital
Advisors Inc.
1650 S.E. 17th St. Causeway
Suite 204
Fort Lauderdale,
FL 33316-1735
All directors, the nominees
for director, and executive
officers as a group
(9 persons) ..... Common Stock 2,237,446 52%
1) The beneficial ownership of these shares of Common Stock derives from
accounts managed by Palm Beach Investment Advisers. Michael Bowen is
Vice-President and Portfolio Manager of Palm Beach Investment Advisers
and is in a position to directly and indirectly determine the investment
and voting decisions made by Palm Beach Investment Advisers and,
therefore, is deemed to beneficially own all of the shares that Palm
Beach Investment Advisers has in its portfolios. Mr. Bowen disclaims
beneficial ownership of these shares.
2) The beneficial ownership of these shares of Common Stock includes
multiple beneficial ownership of the same shares.
<PAGE>
3) The beneficial ownership of these shares of Common Stock derives from
accounts managed by Riverside Capital Advisors Inc. Riverside Capital
Advisors Inc. is in a position to directly and indirectly determine
investment and voting decisions and, therefore, is deemed to beneficially
own all of the shares that it has in its portfolios.
4) The beneficial ownership of these shares of Common Stock derives from
accounts managed by Palm Beach Investment Advisers. Palm Beach
Investment Advisers is in a position to directly and indirectly determine
investment and voting decisions and, therefore, is deemed to beneficially
own all of the shares that it has in its portfolios.
5) Mr. Tom Krasnor is Portfolio Manager of Riverside Capital Advisors
Inc. and is in a position to directly and indirectly determine investment
and voting decisions and, therefore, is deemed to beneficially own all of
the shares that it has in its portfolio. Mr. Krasnor disclaims
beneficial ownership of these shares.
<PAGE>
ELECTION OF DIRECTORS
[Item (1) on Proxy Card]
ITEM 1
Pursuant to its Certificate of Incorporation, the Board of Directors
is comprised of three classes, consisting of six Directors in total.
Class 1 consists of two Directors whose terms expire when their
successors are elected at this Meeting. Class 3 consists of two
Directors whose terms expire in 2000. Class 2 consists of two Directors
whose terms expire in 2001.
At the Meeting, two Class 1 Directors will be elected for a term of
3 years. Messrs. P. Edward Schenk and Barry Spector, management's
nominees for Class 1 Directors, are now serving as Class 1 Directors.
Unless otherwise indicated on a proxy, the proxy holders intend to
vote the shares of Common Stock for which they hold proxies "FOR" the
election of P. Edward Schenk and Barry Spector as Class 1 Directors
without cumulation. Each of such persons has consented to being named as
a nominee in this Proxy Statement and to serve as a Class 1 Director if
elected.
The affirmative vote of a plurality of the shares of the Common
Stock, present or represented by proxy and voted at the Meeting, is
required for the election of Directors, assuming that a quorum is
present. See "Stockholders Entitled to Vote" above.
The Board has no nominating committee. The nominees for Class 1
Directors were selected by the entire Board of Directors. At the
Meeting, stockholders may make nominations for Class 1 Directors.
The votes applicable to the shares represented by proxies in the
accompanying form will be cast in favor of Messrs. Schenk and Spector as
nominees. While it is not anticipated that such nominees will be unable
to serve, if any of them should be unable to serve, the proxy holders
reserve the right to substitute any other person.
Class 2 Directors (Term of Office Expiring in 2001)
MICHAEL BRINATI (age 39; Director since 1997). Mr. Brinati is
President, Chief Executive Officer and a principal shareholder of Iowa
Grain Company, a Chicago-based Futures Commission Merchant clearing
member. Mr. Brinati is also a full member of the Chicago Board of Trade
("CBOT") and has been a member of the CBOT since 1984. He is an active
floor broker and proprietary trader in the soybean quadrant on the CBOT
trading floor. Mr. Brinati is currently a governor of the Board of Trade
Clearing Corporation, a term expiring in February 2001.
JOHN ELTING (age 55; Director since 1997). Mr. Elting has been the
manager of a private equity fund since 1991. Prior to such date, Mr.
Elting founded Elting Enterprises, a broadcast group of radio stations,
and was founder and Executive Vice President and Director of Shipboard
Satellite Networks and President of the Board of Directors of Intouch
Networks, Inc.
<PAGE>
Nominees for Class 1 Directors (Term of Office Expiring in 2002)
P. E. SCHENK (age 61; Director since November 1995). Mr. Schenk was
named to the Board of Directors of the Company on November 8, 1995 as a
Class 1 Director to fill a vacancy therein created by a resignation. Mr.
Schenk has served as President and Chief Executive Officer of the Company
since November 1995. In 1994 and 1995, Mr. Schenk operated Schenk &
Associates, Inc., a consulting practice. Mr. Schenk was Executive Vice
President of Lykes Processed Meats Group from December 1993 to November
1994, and from August 1993 to December 1993 he served as Senior Vice
President of Sales & Marketing. From 1986 to 1993, Mr. Schenk was
employed by Smithfield Foods, Inc. as President and Chief Operating
Officer of various meat processing subsidiaries.
BARRY SPECTOR (age 56; Director since 1997). Mr. Spector has been
the Managing Director of Bengur, Bryan & Co., Inc. since March 1997.
Prior to such date, Mr. Spector was President and Chief Executive Officer
of Acme Foods Co., a national snack meat company.
Class 3 Directors (Term of Office Expiring in 2000)
MICHAEL BOWEN (age 57; Director since 1997). Mr. Bowen has been the
Vice President of Riverside Capital Advisors since January 1997. Prior
to such date, Mr. Bowen was a Vice President of Goldman, Sachs & Co. and
a Director of Kleinworth Benson Ltd., a UK Merchant Bank.
EDWARD M. HEBERT (age 48; Director since 1997). Mr. Hebert was
appointed Secretary in April 1998. Mr. Hebert was named to the Board of
Directors as part of the Company's Restructuring in 1997. Mr. Hebert was
appointed Chief Financial Officer on October 6, 1995. Mr. Hebert has
been Senior Vice President Finance of the Company since January 1990 and
Treasurer of the Company since January 1993. Prior thereto, Mr. Hebert
was Controller of the Company since December 1988. Prior to that time,
Mr. Hebert was employed by Arco Metals Company in various financial
positions.
<PAGE>
INFORMATION ABOUT THE BOARD AND ITS COMMITTEES
During fiscal 1998, there were 7 meetings of the Board. Each
director then in office attended more than 75% of the combined meetings
of the Board of Directors and the Committees on which he served held
during the year while he served as Director.
The Executive Committee, consisting of Messrs. P. E. Schenk, Michael
Bowen and John Elting, did not meet in fiscal 1998. Except for certain
matters, the duties of the Executive Committee include the exercise of
all of the powers and authority of the Board of Directors and the
management of the business and affairs of the Company, except for any
powers and authority granted to another Committee. The authority of the
Executive Committee is generally limited to acquisitions and dispositions
of assets and negotiations to accomplish the same; personnel matters;
guidance to senior management on policy matters; negotiations, review and
analysis of financial needs; litigation matters; and public or private
stock placement or other equity or debt offerings.
The Audit Committee, consisting of Messrs. Michael Brinati and Barry
Spector did not meet during fiscal 1998. The Audit Committee reviews the
proposed scope of audit and non-audit services to be performed by the
Company's independent public accountants; reviews and reports on audits
and the Company's accounting policies and controls; and annually
recommends independent public accountants for selection as auditors of
the Company. The Audit Committee also monitors the administration of the
Company's business ethics and conflicts of interest policies.
The Compensation Committee, consisting of Messrs. Michael Bowen and
John Elting, held one meet during fiscal 1998. The Compensation Committee
reviews the compensation policies of the Company, determines compensation
of the Company's executive officers, determines general compensation and
benefit levels for all officers, and recommends to the full Board future
compensation of executive officers. The Compensation Committee
administers the Company's employee benefit plans presently in effect.
REMUNERATION OF DIRECTORS
Directors who are not officers of the Company or its subsidiaries
are not compensated in cash, however, they are eligible to receive stock
options. Directors who are also officers of the Company or its
subsidiaries do not receive additional compensation for attending board
meetings. Directors are reimbursed only for out-of-pocket expenses
incurred in attending Board or Committee meetings.
Incentive Compensation Program
The Incentive Compensation Program provides opportunities for
executives to receive incentive compensation if specific performance
goals, proposed by management and approved by the Board, are met.
Stock Options
In fiscal 1998, under the Stock Option Plan, there were 348,000
options granted to acquire shares of the Common Stock. See "Security
Ownership of Certain Beneficial Owners and Management."
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
Awards Payouts
Other
Annual Restricted Securities All Other
Com- Stock Underlying LTIP Compen-
Salary Bonus pensation Award(s) Options Payouts sation
Principal Position Year1 ($) ($) ($)2 ($) (#)4 ($) ($)3
- ------------------ ----- ------- ----- ----- ------ --------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
P.E.Schenk 1998 207,692 - 6,600 - - - 8,000
Chairman and Chief 1997 223,908 - 6,600 - - - 265,500
Executive Officer 1996 197,808 - 6,050 - 750,000** - -
Edward M. Hebert 1998 130,353 - 6,000 - - - 6,796
Senior V.P., CFO, 1997 141,031 - 6,000 - - - 178,909
Treasurer and
Secretary 1996 135,665 - 6,000 - 50,000 - 6,587
Jose Muguerza 1998 99,192 - 6,000 - - - 5,201
Executive V.P. 1997 96,625 2,500 6,000 - - - 5,669
Chief Operating
Officer 1996 88,130 - 6,000 - - - -
John Bormann 1998 100,000 - 6,000 - - - 2,625
Vice President
of Marketing
and Sales
1 For fiscal year ended on the last Saturday of October in each year.
2 Reimbursement allowance for automobile use and maintenance.
3 Represents vested amount from the Company's 401k Plan and also
includes a one-time stock grant under the terms of the Company's
prepackaged plan of reorganization to Mr. Schenk and Mr. Hebert of
$258,000 and $172,000 respectively.
4 In conjunction with the Company's 1997 restructuring, all prior
warrants and stock options were cancelled. They are shown here for
historical purposes only.
** Mr. Schenk was issued a warrant to acquire 750,000 shares of
Common Stock for $1.00 per share. See "Certain Transactions and
Related Transactions - Employment and Consulting Agreements and
Other Arrangements."
</TABLE>
<PAGE>
OPTION GRANTS IN 1998 FISCAL YEAR
Number Percent of Potential
of Total Realizable
Securities Options Assumed Annual
Underlying Granted to Exercise Rates of Stock
Options Employees or Base Price Appreciation
Granted in Fiscal Price Expiration For Option Term
Name # Year ($/Sh) Date 5%($) 10%($)
---- ------- --------- ------ ------ ----------------
P.E. Schenk - - - - -
Edward M. Hebert - - - - -
Jose Muguerza 175,000 50.3% 1 10/30/08 -
John Bormann 25,000 7.2% 1 10/30/08 -
AGGREGATED OPTION EXERCISES IN 1998 FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Values
Number of Unexercisable
Unexercised In-the-Money
Options Options
Shares Value at Fiscal Year-End at Fiscal Year-End
Acquired on Realized (#) ($)
Name Exercise ($) Exercisable/ Exercisable/
Unexercisable Unexercisable
--------
P.E. Schenk 0 0 0/0 0
Edward M. Hebert 0 0 0/0 0
Jose Muguerza 0 0 43,750/131,250 0
John Bormann 0 0 6,250/18,750 0
<PAGE>
REMUNERATION OF EXECUTIVE OFFICERS
Compensation Committee Report
In fiscal 1998, the Company's philosophy on executive compensation
was to attempt to provide a compensation package competitive with
comparable companies in the food industry and which linked the amount of
compensation provided to the achievement of business objectives while
recognizing the economic factors then affecting the Company. In this
regard, individual base salaries were established for the Chief Executive
Officer and others based generally on the Board of Directors' perception
of competitive, industry-wide salaries, the executive's experience and
seniority, as well as his or her performance, while considering
the overall level of spending which the Board deemed appropriate for
officers' salaries in light of these economic factors.
In fiscal 1998, there were two programs of direct executive officer
compensation: the Base Salary Program and the Incentive Compensation
Program. Subsequent to fiscal 1997, executives have been awarded stock
options as part of their compensation package.
Base Salary Program
Base salary for 1998 for the executive officers named in the Summary
Compensation Table was determined based on their respective employment
agreements. See "Certain Transactions and Related Transactions."
[PERFORMANCE GRAPH DATA FOLLOWS]
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG RYMER FOODS INC., THE RUSSELL 2,000 INDEX AND THE S&P FOODS INDEX
Cumulative Total Return*
10/93 10/94 10/95 10/96 10/97 10/98
Rymer Foods Inc. .......... 100 178 56 25 44 21
Russell 2,000 .................. 100 100 118 137 178 160
S&P Foods ..................... 100 107 129 159 212 250
* $100 invested on October 31, 1993 in stock or index -- including
reinvestment of dividends. Fiscal year ending October 31.
<PAGE>
EXECUTIVE OFFICERS
The following is a list of the names and ages of the current
executive officers of the Company, the period during which each has
served as such and their respective positions:
Name and Age Position(s)
------------ -----------
P. E. Schenk (61) .............. Chairman, President and Chief
Executive Officer (since November 95)
Edward M. Hebert (48) .......... Senior Vice President (since 1990),
Treasurer and Chief Financial Officer
and Secretary (since April 98)
Jose Muguerza (36) .......... Executive Vice President and Chief
Operating Officer of Rymer Meat Inc.
(since October 95)
John H. Bormann (47) ........... Vice President, Sales & Marketing of
Rymer Meat Inc. (since July 97)
P. E. Schenk. Mr. Schenk was named to the Board of Directors of the
Company on November 8, 1995 as a Class 1 Director to fill a vacancy
therein created by a resignation. Mr. Schenk has served as President and
Chief Executive Officer of the Company since November 1995. In 1994 and
1995, Mr. Schenk operated Schenk & Associates, Inc., a consulting
practice. Mr. Schenk was Executive Vice President of Lykes Processed
Meats Group from December 1993 to November 1994, and from August 1993 to
December 1993 he served as Senior Vice President of Sales & Marketing.
From 1986 to 1993, Mr. Schenk was employed by Smithfield Foods, Inc. as
President and Chief Operating Officer of various meat processing
subsidiaries.
Edward M. Hebert. Mr. Hebert was appointed Secretary on April 30,
1998. Mr. Hebert was appointed Chief Financial Officer on October 6,
1995. Mr. Hebert has been Senior Vice President, Finance of the Company
since January 1990 and Treasurer of the Company since January 1993.
Prior thereto, Mr. Hebert was Controller of the Company since December
1988. Prior to that time, Mr. Hebert was employed by Arco Metals Company
in various financial positions.
Jose Muguerza. Mr. Muguerza was appointed Executive Vice President
and Chief Operating Officer in September 1997. Prior to that time, Mr.
Muguerza was Vice President of Operations and Technical Services since
October 1995. Prior to such election, Mr. Muguerza was Vice President-
Technical Services of a subsidiary of the Company. Prior to joining the
Company, Mr. Muguerza was with several foodservice companies in the meat
production and cooked products industries.
<PAGE>
John H. Bormann. Mr. Bormann was appointed Vice President Sales &
Marketing in July 1997. Mr. Bormann has over sixteen years' experience
in the foodservice industry. He has held various positions in sales and
marketing with several foodservice companies, the most recent being as
Vice President of Sales & Marketing for the Bruss Meat Company.
All of the executive officers are citizens of the United States of
America. Edward M. Hebert served as an executive officer of the Company
during its 1993 Restructuring.
CERTAIN TRANSACTIONS AND RELATED TRANSACTIONS
Stock Purchase Agreements and Certain Additional Compensation
Upon the completion of the Company's prepackaged plan of
reorganization, Mr. Schenk and Mr. Hebert were granted 258,000 and
172,000 fully-vested shares, respectively, of the Company's Common Stock.
Under the terms of their employment agreements, the Company will provide
a loan to the executives to assist with the tax consequences of the grant
of such stock. Mr. Schenk and Mr. Hebert will also be eligible to
receive stock option grants consistent with those grants made to other
executives in 1998 and subsequent years. No options were granted to Mr.
Schenk or Mr. Hebert in 1998.
The value of the stock grants issued to Mr. Schenk and Mr. Hebert is
reflected in the Summary Compensation Table as shown on page six of this
report.
Employment and Consulting Agreements and Other Arrangements
P.E. Schenk. On November 8, 1995, Mr. Schenk entered into a
two year employment agreement with the Company providing for annual
compensation of $200,000, subject to mandatory annual escalation in the
event of an increase in the regional Consumer Price Index equivalent to
the percentage increase of such index. Pursuant to the employment
agreement, Mr. Schenk was also issued a warrant to acquire 750,000 shares
of Common Stock for an exercise price of $1.00 per share for a period of
three years commencing November 8, 1996.
Warrants previously issued to Mr. Schenk were cancelled as a result
of the Company's recent Senior Note restructuring. Also, in conjunction
with the Company's restructuring, on August 21, 1997, Mr. Schenk entered
into a new employment agreement with the Company. The new agreement
provides annual compensation of $250,000. Under the agreement, Mr.
Schenk is entitled to an automobile allowance of $550 per month, as well
as other normal executive benefits. The agreement term is for an initial
period of two years, commencing August 21, 1997 and continuing through
August 20, 1999. Beginning on August 21, 1999, the term of employment
shall be renewed annually for a period of 12 months unless Mr. Schenk
provides the Board of Directors with written notice to the contrary at
least ninety days prior to any annual renewal date.
Mr. Schenk is entitled to annual increases in salary equal to the
percentage increase in the Consumer Price Index for all Urban Consumers
for the Chicago Metropolitan area.
On December 26, 1997, Mr. Schenk voluntarily reduced his annual
salary to $200,000 as part of a cost savings initiative program.
<PAGE>
Edward M. Hebert. The Company entered into an employment agreement
with Edward M. Hebert, the Company's Senior Vice President, Treasurer and
Chief Financial Officer, on June 1, 1991. The agreement's original one-
year term that began on June 1, 1991, automatically extends thereafter
for successive one-year periods unless either the Company or Mr. Hebert
notifies the other not later than May 1 of any year that the agreement is
to be terminated on June 1 of such year. Mr. Hebert was entitled in the
first year of the agreement to a salary of $100,000 per year with an
increase in subsequent years based on increases in the Consumer Price
Index limited to 6% of the amount in effect for the prior year. In
connection with the 1993 restructuring, Mr. Hebert's salary was set at
$112,200.
In conjunction with the Company's restructuring, on August 21, 1997,
Mr. Hebert entered into a new employment agreement with the Company. The
new agreement provides annual compensation of $140,000. Under the
agreement, Mr. Hebert is entitled to an automobile allowance of $500 per
month, as well as other normal executive benefits. The agreement term
is for an initial period of two years, commencing August 21, 1997 and
continuing through August 20, 1999. Beginning on August 21, 1999, the
term of employment shall be renewed annually for a period of 12 months
unless Mr. Hebert provides the Board of Directors with written notice
to the contrary at least ninety days prior to any annual renewal date.
Mr. Hebert is entitled to annual increases in salary equal to the
percentage increase in the Consumer Price Index for all Urban Consumers
for the Chicago Metropolitan area.
On December 26, 1997, Mr. Hebert voluntarily reduced his annual
salary to $128,600 as part of a cost savings initiative program.
General. Executive Officers of the Company and its subsidiaries
("Subsidiaries") generally receive participation in benefit plans, split
dollar life insurance programs, an automobile expense reimbursement
allowance or use of an automobile, bonuses at the discretion of the Board
of Directors, reimbursement of business-related expenses and certain
fringe benefits.
<PAGE>
APPOINTMENT OF AUDITORS
[Item (2) on Proxy Card]
ITEM 2
It is intended that the shares represented by the proxy holders will
be voted for approval of the appointment of Grant Thornton LLP (unless
otherwise indicated on the proxy) as independent public accountants
(auditors) to report to the stockholders on the financial statements of
the Company for the fiscal year ending October 30, 1999. Each
professional service performed by Grant Thornton LLP during fiscal 1998
was approved in advance or was subsequently approved, and the possible
effect on the auditors' independence was considered, by the Audit
Committee. The Audit Committee has recommended, and the Board of
Directors has approved, the appointment of Grant Thornton LLP subject to
the approval of the stockholders at the Meeting. Although submission of
the appointment of independent public accountants to stockholders is not
required by law, the Board of Directors, consistent with its past policy,
considers it appropriate to submit the selection of auditors for
stockholder approval. Representatives of Grant Thornton LLP are expected
to be present at the Meeting with the opportunity to make a statement if
they desire to do so and to be available to respond to appropriate
questions.
The affirmative vote of the holders of a majority of the shares of
Common Stock of the Company present, or represented by proxy, and voted
at the Meeting is required for the approval of this Item. The Board has
not determined what action it would take if the stockholders do not
approve the selection of Grant Thornton LLP, but would reconsider its
selection in light of the stockholders' action.
As previously reported on Form 8-K, Coopers & Lybrand L.L.P.
resigned as the Company's certifying accountants on October 21, 1997.
Grant Thornton LLP has been engaged as certifying accountants as of
October 28, 1997.
The resignation of Coopers & Lybrand L.L.P. was not recommended nor
approved by the Company's Audit Committee as it was the decision of
Coopers & Lybrand L.L.P. not to continue as the Company's auditors.
<PAGE>
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE APPOINTMENT OF GRANT THORNTON LLP
EXPENSES
The Company will bear all costs of this solicitation. In addition,
the Company will reimburse banks, custodians, fiduciaries, nominees,
securities dealers, trust companies and other persons for their
reasonable expenses in forwarding this Proxy Statement, proxies and other
related materials to the beneficial owners of shares of Common Stock.
OTHER MATTERS
Management knows of no other business that will be presented for
action at the Meeting. If any other matters properly come before the
Meeting, the persons named in the enclosed proxy will vote or refrain
from voting such proxy in accordance with their best judgment.
ANNUAL REPORT
A copy of the Company's Annual Report for the 1998 fiscal year (the
"Annual Report") has been mailed to its stockholders. The sections
entitled "Security Ownership of Certain Beneficial Owners and
Management," "Election of Directors," "Information about the Board and
Its Committees," "Remuneration of Directors," "Remuneration of Executive
Officers," "Executive Officers" and "Certain Transactions and Related
Transactions" in this Proxy Statement. The Annual Report is furnished to
stockholders for information only and no part of it is incorporated by
reference in this Proxy Statement.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Exchange Act, and in accordance therewith files reports, proxy
statements, and other information with the Securities and Exchange
Commission (the "Commission"). The public may inspect and copy at
prescribed rates such reports, proxy statements, and other information
that the Company has filed with the Commission, at the public reference
facilities that the Commission maintains at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the Commission's regional offices located
at 500 West Madison Street, Chicago, Illinois 60661 and Seven World Trade
Center, New York, New York 10048. In addition, the public may obtain
such reports, proxy statements and other information concerning the
Company from the Public Reference Section of the Commission, Washington,
D.C. 20549 at prescribed rates.
STOCKHOLDER PROPOSALS
Stockholder proposals for the 2000 Annual Meeting of Stockholders must be
received by the Corporation at its executive office in Chicago, Illinois,
on or prior to December 8, 1999 for inclusion in the Corporation's proxy
statement for that meeting. Any stockholder proposal must also meet the
other requirements for stockholder proposals as set forth in the rules of
the U.S. Securities and Exchange Commission relating to stockholder
proposals.
