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
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
TOFUTTI BRANDS 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):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(1)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] 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:
Common Stock $.01 par value
(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 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>
TOFUTTI BRANDS INC.
50 Jackson Drive
Cranford, New Jersey 07016
Telephone: (908) 272-2400
April 30, 1998
To Our Shareholders:
On behalf of the Board of Directors, I cordially invite you to attend the
1998 Annual Meeting of the Shareholders of Tofutti Brands Inc. The Annual
Meeting will be held at 10:00 a.m. on Friday, May 29, 1998, at the Holiday Inn
Select, 36 Valley Road, Clark, New Jersey. The Holiday Inn Select is located on
the circle off exit 135 of the Garden State Parkway (telephone no. (732)574-
0100).
We are gratified by your interest in Tofutti Brands and are pleased that
you are part of our family of shareholders. We hope that you will be able to
attend the meeting.
The matters expected to be acted upon at the meeting are described in the
attached Proxy Statement. During the meeting, shareholders who are present at
the meeting will have the opportunity to ask questions.
It is important that your views be represented whether or not you are able
to be present at the Annual Meeting. Please sign and date the enclosed proxy
card and promptly return it to us in the postpaid envelope.
Sincerely,
/s/David Mintz
David Mintz
Chairman
and Chief Executive Officer
<PAGE>
TOFUTTI BRANDS INC.
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 29, 1998
---------------------
Cranford, New Jersey
April 30, 1998
The Annual Meeting of Shareholders of Tofutti Brands Inc. will be held at
the Holiday Inn Select, 36 Valley Road, Clark, New Jersey, on Friday, May 29,
1998 at 10:00 a.m., for the following purposes:
1. To elect four directors for the ensuing year;
2. To approve an amendment to the Company's 1993 Stock Option Plan
providing for an increase of 1,500,000 in the number of shares of the
Company's Common Stock available for the grant of options;
3. To ratify the appointment of auditors; and
4. To act upon any other matters that may properly be brought before the
meeting and any adjournment thereof.
Shareholders of record at the close of business on April 29, 1998 will be
entitled to notice of and to vote at the meeting.
By order of the Board of Directors,
/s/Steven Kass
Steven Kass
Secretary
PLEASE SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY
IN THE ENVELOPE PROVIDED FOR THAT PURPOSE.
<PAGE>
TOFUTTI BRANDS INC.
50 Jackson Drive, Cranford, New Jersey 07016
--------------------------
PROXY STATEMENT
--------------------------
ANNUAL MEETING OF SHAREHOLDERS
May 29, 1998
This Proxy Statement is furnished to shareholders of Tofutti Brands Inc.
(the "Company") in connection with the Annual Meeting of Shareholders (the
"Annual Meeting") to be held at 10:00 a.m. on Friday, May 29, 1998 at the
Holiday Inn Select, 36 Valley Road, Clark, New Jersey, and at any adjournment
thereof. The Tofutti Brands Inc. Board of Directors is soliciting proxies to be
voted at the Annual Meeting.
This Proxy Statement and Notice of Annual Meeting, the proxy card and
Company's Annual Report to Shareholders are expected to be mailed to
shareholders beginning May 1, 1998.
Proxy Procedure
Only shareholders of record at the close of business on April 29, 1998 are
entitled to vote in person or by proxy at the Annual Meeting.
The Company's Board of Directors solicits proxies so that each shareholder
has the opportunity to vote on the proposals to be considered at the Annual
Meeting. When a proxy card is returned properly signed and dated, the shares
represented thereby will be voted in accordance with the instructions on the
proxy card. If a shareholder does not return a signed proxy card or does not
attend the Annual Meeting and vote in person, his or her shares will not be
voted. Abstentions and "broker non-votes" are not counted in determining
outcomes of matters being acted upon. They are counted only for determining a
meeting quorum. If a shareholder attends the Annual Meeting, he or she may vote
by ballot.
Shareholders are urged to mark the boxes on the proxy card to indicate how
their shares are to be voted. If a shareholder returns a signed proxy card but
does not mark the boxes, the shares represented by that proxy card will be voted
as recommended by the Board of Directors. The proxy card gives the individuals
named as Proxies discretionary authority to vote the shares represented on any
other matter that is properly presented for action at the Annual Meeting. A
shareholder may revoke his or her proxy at any time before it is voted by: (i)
giving notice in writing to the Secretary of the Company, (ii) granting a
subsequent proxy; or (iii) appearing in person and voting at the Annual Meeting.
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<PAGE>
Cost of Solicitation
The cost of soliciting proxies will be borne by the Company. Proxies may be
solicited by directors, officers or regular employees of the Company in person
or by telephone or other means. The Company will reimburse brokerage houses and
other custodians, nominees and fiduciaries for their expenses in accordance with
the regulations of the Securities and Exchange Commission concerning the sending
of proxies and proxy material to the beneficial owners of stock.
Voting
The outstanding voting stock of the Company as of April 29, 1998 consisted
of 6,183,567 shares of Common Stock. The presence of a majority of the
outstanding shares of the Common Stock, represented in person or by proxy at the
meeting, will constitute a quorum. If a nominee for director receives a
plurality of the votes cast by the holders of the outstanding shares of Common
Stock entitled to vote at the Annual Meeting, he will be elected. An affirmative
majority of the votes cast is required to approve the proposal to increase the
number of shares of Common Stock reserved for issuance under the Company's 1993
Stock Option Plan (the "1993 Plan") and to ratify the appointment of auditors.
Abstentions and broker non-votes are not counted in determining the number of
shares voted for or against any nominee for director or any proposal.
Management has received indications from the Company's Chief Executive
Officer, the beneficial owner of approximately 50% of the outstanding shares of
Common Stock, that he presently intends to vote in favor of all of the
resolutions on the agenda for the Annual Meeting. The Company believes that its
Chief Executive Officer owns a sufficient number of shares to elect the four
nominees as directors, to approve the increase in the number of shares of Common
Stock reserved for issuance under the 1993 Plan and ratify the appointment KPMG
Peat Marwick LLP as the Company's independent auditors.
The Company's Annual Report for the fifty-two week period ended December
27, 1997, which report is not part of this proxy solicitation, is being mailed
to shareholders with this proxy solicitation. It is anticipated that this Proxy
Statement and the accompanying form of proxy will first be mailed to
shareholders on or about May 1, 1998.
Proxy Statement Proposals
Each year at the Annual Meeting, the Board of Directors submits to
shareholders its nominees for election as directors. Shareholders also vote to
ratify or reject the auditors selected by the Board of Directors. In addition,
the Board of Directors may submit other matters to the shareholders for action
at the Annual Meeting.
Shareholders of the Company also may submit proposals for inclusion in the
proxy material. These proposals must meet the shareholder eligibility and other
requirements of the Securities and Exchange Commission. In order to be included
in the Company's 1999 proxy material, a
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<PAGE>
shareholder's proposal must be received not later than January 4, 1999 at the
Company's headquarters, 50 Jackson Drive, Cranford, New Jersey 07016, Attention:
Secretary.
ITEM 1.
ELECTION OF DIRECTORS
The Board of Directors (the "Board") has proposed that four directors be
elected at the Annual Meeting to serve until the next Annual Meeting of
Shareholders and the due election and qualification of their successors. The
proxies will be voted, unless otherwise specified, in favor of the election as
directors of the four persons hereinafter named. Should any of the nominees not
be available for election, the proxies will be voted for a substitute nominee
designated by the Board. It is not expected that any of the nominees will be
unavailable. All of the four nominees are now members of the Board, with terms
expiring as of the date of this Annual Meeting.
Background information with respect to the four incumbent director nominees
appears below. See "Security Ownership of Certain Beneficial Owners and
Management" for information regarding such persons' holdings of Common Stock.
Director
Nominee Principal Occupation Age Since
- ------- -------------------- --- -----
David Mintz Chairman of the Board of Directors 66 1981
and Chief Executive Officer
Bernard Koster Counsel, Litwin and Holsinger 63 1993
Reuben Rapoport Director of Product Development 68 1983
and Director
Franklyn Snitow Partner, Snitow & Pauley 51 1987
David Mintz, the founder of the Company, has been Chairman of the Board and
Chief Executive Officer of the Company and its predecessor since August 1981.
Bernard Koster has been counsel to the New Jersey law firm of Litwin and
Holsinger since January 1993. Since February 1990, Mr. Koster has been
self-employed as a business consultant.
Reuben Rapoport has been the Director of Product Development of the Company
since January 1984.
Franklyn Snitow has been a partner in the New York law firm of Snitow &
Pauley, the Company's general counsel, since 1985.
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<PAGE>
All directors of the Company hold office until the next Annual Meeting of
Shareholders and until their successors have been elected and qualified.
Officers serve at the discretion of the Board of Directors. There are no family
relationships between any directors and executive officers of the Company. All
of the executive officers devote their full time to the operations of the
Company.
The Board recommends that the shareholders vote FOR the election of each
nominee for Director named above.
Board of Directors
The business and affairs of the Company are managed under the direction of
the Board of Directors, composed of two non-employee directors and two employee
directors as of the date of this Proxy Statement. The Board of Directors
establishes the overall policies and standards for the Company and reviews the
performance of management. Members of the Board are kept informed of the
Company's operations at meetings of the Board and its Audit Committee and
through reports and discussions with management. In addition, members of the
Board periodically visit the Company's facilities. Members of management are
available at Board meetings and at other times to answer questions and to
discuss issues.
In 1997 the Board of Directors held three meetings, two of which were held
by telephone conference. Each director was present for all of the meetings of
the Board, and each member of the Audit Committee attended the one meeting of
such committee. The Audit Committee is composed of Mr. Koster and Mr. Snitow.
The duties of the Audit Committee include the recommendation of the
appointment of independent public accountants for the Company, review of the
scope of audits proposed by the independent public accountants, and
consultations with the independent public accountants on matters relating to
internal financial controls and procedures.
Share Ownership of Directors and Executive Officers
The following table sets forth as of April 15, 1998, certain information
regarding the Company's Common Stock, $.01 par value, for each person known by
the Company to be the beneficial owner of more than 5% of the outstanding shares
of the Company's Common Stock, for each executive officer named in the Summary
Compensation Table, for each of the Company's Directors and for the executive
officers and Directors of the Company as a group:
Amount of
Name Beneficial Ownership Percent of Class
- ---- -------------------- ----------------
David Mintz................. 3,283,440 (1) 50.4%
Steven Kass................. 120,000 (2) 1.8%
Reuben Rapoport............. 45,000 (3) *
Franklyn Snitow............. 30,000 (4) *
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<PAGE>
Bernard Koster.............. 14,000 (5) *
All Executive Officers
and Directors as a group
(5 persons)................. 3,492,440 (6) 53.4%
_______________
The address of all individuals except Messrs. Koster and Snitow is c/o
Tofutti Brands Inc., 50 Jackson Drive, Cranford, New Jersey 07016. The address
of Mr. Snitow is 345 Madison Avenue, New York, NY 10017 and the address of Mr.
Koster is 2050 Center Ave., Suite 670, Ft. Lee, New Jersey 07024. Each person
listed above has sole voting and/or investment power of the shares attributed to
him.
* Less than 1%.
(1) Includes 133,000 shares issuable upon the exercise of currently exercisable
stock options.
(2) Issuable upon the exercise of currently exercisable stock options.
(3) Includes 25,000 shares issuable upon the exercise of currently exercisable
stock options.
(4) Includes 10,000 shares issuable upon the exercise of currently exercisable
stock options.
(5) Includes 10,000 shares issuable upon the exercise of currently exercisable
stock options.
(6) Includes 298,000 shares issuable upon the exercise of currently exercisable
stock options.
Director and Executive Officer Securities Reports
Compliance with Section 16(a) of The Exchange Act. Section 16(a) of the
Securities Exchange Act of 1934, as amended, requires the Company's officers and
directors, and persons who own more than ten percent of its Common Stock, to
file initial statements of beneficial ownership (Form 3), and statements of
changes in beneficial ownership (Forms 4 or 5), of Common Stock and other equity
securities of the Company with the Securities and Exchange Commission (the
"SEC") and the American Stock Exchange. Officers, directors and greater than
ten-percent stockholders are required by SEC regulation to furnish the Company
with copies of all such forms they file.
To the Company's knowledge, based solely on its review of the copies of
such forms received by it, or written representations from certain reporting
persons that no additional forms were required for those persons, the Company
believes that during fiscal 1997 all persons subject to these reporting
requirements filed the required reports on a timely basis except: (i) David
Mintz, Chairman of the Board and President, did not timely file a report on Form
4 for (a) a February 28, 1997 grant of 400,000 options and a July 31, 1997 grant
of 80,000 options under the Company's 1993 Amended Stock Option Plan (the
"Plan"), (b) the September 22, 1997 exercise of 75,000 options granted under
Plan, and (c) the subsequent sale of 40,000 shares so acquired on September 22,
1997 (4,400 shares for $2.5625 per share, 4,000 shares for $2.375 per
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<PAGE>
share, 13,000 shares for $2.625 per share and 5,600 shares for $2.25 per share)
and September 24, 1997 (2,500 shares for $2.375 per share, 2,000 shares for
$2.0625 per share, 5,500 shares for $2.4375 per share and 3,000 shares for $2.25
per share); (ii) Bernard Koster, a director of the Company, did not timely file
a report on Form 4 for (a) a February 28, 1997 grant of 30,000 options and a
July 31, 1997 grant of 10,000 options under the Plan, (b) the September 22, 1997
exercise of 16,000 options granted under the Plan, and (c) the subsequent sale
of 12,000 shares so acquired on September 29, 1997 (2,500 shares for $2.4375 per
share, 1,500 shares for $2.25 per share and 2,000 shares for $2.0625 per share),
September 30, 1997 (400 shares for $2.0625 per share and 1,600 shares for $2.00
per share) and October 1, 1997 (2,000 shares for $2.125 per share and 2,000
shares for $2.00 per share); (iii) Reuben Rapoport, a director of the Company,
did not timely file a report on Form 4 for a February 28, 1997 grant of 75,000
options and a July 31, 1997 grant of 20,000 options under the Plan; (iv)
Franklyn H. Snitow, a director of the Company, did not timely file a report on
Form 4 for (a) a February 28, 1997 grant of 30,000 options and a July 31, 1997
grant of 30,000 options under the Plan, (b) the September 21, 1997 exercise of
30,000 options granted under Plan, and (c) the subsequent sale of 10,000 shares
so acquired on September 22, 1997 for $2.4375 per share; and (v) Steven Kass,
Chief Financial Officer, Secretary and Treasurer of the Company, did not timely
file a report on Form 4 for a February 28, 1997 grant of 360,000 options and a
July 31, 1997 grant of 70,000 options under the Company's Plan.
Executive Compensation
The following table sets forth information concerning the total
compensation during the last three fiscal years for the Company's executive
officers whose total salary in fiscal 1997 totaled $100,000 or more:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Long-Term
Compensation Compensation
------------ ------------
Securities Underlying
Name and Principal Position Year Salary ($) Options (#)
- --------------------------- ---- ---------- -----------
<S> <C> <C> <C>
David Mintz 1997 $180,000(1) 480,000
Chief Executive Officer 1996 155,000(2) --
and Chairman of the Board 1995 125,000 --
Steven Kass 1997 117,500(1) 430,000
Chief Financial Officer 1996 100,000(2) --
Secretary and Treasurer 1995 -- (3) --
- ---------------
</TABLE>
(1) Includes bonuses of $30,000 and $20,000 for Messrs. Mintz and Kass,
respectively, accrued at year-end and payable April 1, 1998.
(2) Includes bonuses of $30,000 and $15,000 for Messrs. Mintz and Kass,
respectively, accrued at year-end and payable April 1, 1997.
(3) Less than $100,000.
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<PAGE>
The aggregate value of all other perquisites and other personal benefits
furnished in each of the last three years to each of these executive officers
was less than 10% of each officer's salary for such year. There are currently no
employment agreements between the Company and any of its officers. Neither Mr.
Snitow nor Mr. Koster has received any cash remuneration from the Company for
his service as a Director in the last three years.
Stock Options
The following table provides information concerning the grants and
exercising of stock options during the Company's last fiscal year to each of the
officers named above in the Summary Compensation Table.
OPTIONS GRANTED IN LAST FISCAL YEAR
-----------------------------------
<TABLE>
<CAPTION>
Number of Percent of
Shares Total Options
Underlying Granted to
Options Employees in
Name Granted (#) Fiscal Year Exercise Price ($/SH) Expiration Date
- ---- ----------- ----------- --------------------- ---------------
<S> <C> <C> <C> <C>
David Mintz, 400,000(1) 32.8% $ .756 2/28/02
Chief Executive Officer 80,000(2) 6.6 1.031 7/31/02
and Chairman of the
Board
Steven Kass, 360,000(1) 29.5 .6875 2/28/02
Chief Financial Officer, 70,000(2) 5.7 .9375 7/31/02
Secretary and Treasurer
</TABLE>
- ----------------------
(1) One-third of the shares subject to this option becomes exercisable on each
of January 1, 1998, January 1, 1999 and January 1, 2000.
(2) One-half of the shares subject to this option becomes exercisable on each
of August 1, 1998 and August 1, 1999.
The following table provides information concerning stock options held in
1997 by each of the executive officers named above in the Summary Compensation
Table.
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<PAGE>
AGGREGATED OPTION EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
---------------------------------------------
<TABLE>
<CAPTION>
Number of Shares Value of Unexercised
Shares Underlying Unexercised in the Money Options at
Acquired on Value Options at FY-End (#) FY-End ($)
Name Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ------------ ------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
David Mintz, 75,000 $70,312(1) 480,000 (U) $395,120(U)(1)
Chief Executive Officer
and Chairman of the
Board
Steven Kass, -- -- 430,000(U) 385,625(U)(1)
Chief Financial Officer,
Secretary and Treasurer
</TABLE>
- -----------------------
(E) Exercisable options
(U) Unexercisable options
(1) Calculated by subtracting option exercise price from year-end market price.
Certain Transactions
Franklyn Snitow, a director of the Company, is a member of the law firm of
Snitow & Pauley, which firm provided limited legal services on behalf of the
Company in 1997.
On October 17, 1994, the Company's Board of Directors adopted a resolution
wherein the Company was authorized to purchase a $1,000,000 split dollar
insurance plan on the life of a member of David Mintz's family. Mr. Mintz is
Chairman and Chief Executive Officer of the Company. The purpose of this
transaction is to provide the Mintz estate with funds sufficient to pay any
estate taxes levied upon the transfer of Mr. Mintz's Tofutti stock, which would
have otherwise necessitated a sale of the stock. The sale of such stock might
have a negative effect of significantly decreasing the market price of the stock
to the detriment of other shareholders. Upon the death of the family member, the
Company is to receive a complete refund of all its premiums paid plus interest
at 4%.
ITEM 2.
PROPOSAL TO AMEND THE 1993 STOCK OPTION PLAN
The Board of Directors of the Company has unanimously adopted, subject to
shareholder approval, an amendment to the Company's 1993 Stock Option Plan (the
"1993 Plan") to increase by
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1,500,000 shares the number shares of Common Stock available for the grant of
options under the 1993 Plan. The 1993 Plan, as amended in 1996, was adopted by
the Company's Board of Directors and approved by its shareholders. The 1993 Plan
has proven to be a valuable tool in retaining key employees. The Board believes
that such authority, in view of the need to continue to hire additional
qualified employees, should be expanded to increase the number of options which
may be granted under the 1993 Plan. The Board believes that such authority (i)
will provide the Company with significant means to attract and retain talented
personnel, (ii) will result in saving cash, which otherwise would be required to
pay higher salaries in order to maintain current key employees and adequately
reward key personnel, and (iii) consequently will prove beneficial to the
Company's ability to be competitive.
It is therefore proposed that at the Annual Meeting the shareholders adopt
the following resolution:
RESOLVED: That the Company's 1993 Stock Option Plan be amended to
increase the number of shares available for the grant of options by
1,500,000 shares of Common Stock.
The Board recommends a vote FOR the resolution.
Stock Option Plan
The 1993 Plan provides for the granting to key employees of incentive stock
options ("Incentive Stock Options"), within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), and for the granting of
nonstatutory options to directors, key employees and consultants. The 1993 Plan
is currently administered by the Board of Directors, which determines the terms
and conditions of the options granted under the 1993 Plan, including the
exercise price, number of shares subject to the option and the exercisability
thereof. A total of 1,400,000 shares have been reserved for issuance under the
1993 Plan. At April 15, 1998 1,220,000 shares were subject to outstanding
options and no shares remained available for future grant.
The exercise price of all Incentive Stock Options granted under the 1993
Plan must be at least equal to the fair market value of the Common Stock of the
Company on the date of grant. If an incentive stock option is granted to an
individual who owns shares having more than 10% of the combined voting power of
all classes of shares of the Company, the option price must be at least 110% of
the fair market value of the shares subject to the option on the date of grant
and the option granted under the 1993 Plan must be at least 75% of the fair
market value of the Company's Common Stock on the date of grant. To date, no
options have been granted at exercise prices less than fair market value on the
date of grant as determined by the Compensation Committee. The terms of options
granted under the 1993 Plan may not exceed 10 years. Shares subject to options
under the 1993 Plan may be purchased for cash or, with the consent of the
Compensation Committee, in exchange for shares of the Company's Common Stock or
by a promissory note. The 1993 Plan may be amended, suspended or terminated by
the Board, but no such action may impair
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rights under a previously granted option. No options may be granted under the
1993 Plan after March 23, 2003.
Options are not transferable by the optionee otherwise than by will or the
laws of descent and distribution and during the optionee's lifetime will be
exercisable only by him or her. Options terminate before their expiration dates
one year after the optionee's death while in the employ of the Company, three
months after the optionee's retirement for reasons of age or disability or
involuntary termination of employment other than for cause, and immediately upon
voluntary termination of employment or involuntary termination of employment for
cause.
The Board may, in its discretion, modify, revise or terminate the 1993 Plan
at any time, but the aggregate number of shares issuable pursuant to options may
not be increased (except in the event of certain changes in the Company's
capital structure), the eligibility provisions and minimum option price may not
be changed, and the permissible maximum term of options may not be increased,
without the consent of the Company's shareholders.
The 1993 Plan also contains provisions protecting optionees against
dilution of the value of their options in the case of stock splits, stock
dividends or other changes in the capital structure of the Company, in the event
of any proposed reorganization or merger involving the Company or in the event
of any spin-off or distribution of assets of the Company to shareholders.
Income Tax Consequences
Certain of the Federal income tax consequences applicable to the 1993 Plan
are set forth below. The discussion is intended to be general in scope and does
not consider, among other things, certain special rules which are applicable to
optionees who are subject to Section 16(b) of the Securities Exchange Act of
1933.
With respect to incentive stock options granted under the 1993 Plan: When
an optionee exercises an incentive stock option while employed by the Company or
within the permitted periods after termination of employment, no ordinary income
will be recognized by the optionee at that time but the excess of the fair
market value of shares acquired by such exercise over the option price will be
an item of tax preference for purposes of the Federal alternative minimum tax
applicable to individuals. If the shares acquired upon exercise are not disposed
of until more than one year after the date of acquisition, the excess of the
sale proceeds over the aggregate option price of such shares will be long-term
capital gain to the optionee, and the Company will not be entitled to a tax
deduction under such circumstances. If shares are disposed of prior to such date
(a "disqualifying disposition"), the excess of the fair market value of such
shares at the time of exercise over the aggregate option price (but generally
not more than the amount of gain realized on the disposition) will be ordinary
income to the optionee at the time of such disqualifying disposition. The
Company generally will be entitled to a Federal income tax deduction in an
amount equal to the amount of ordinary income so recognized.
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With respect to non-qualified options granted under the 1993 Plan: When an
optionee exercises an option, the difference between the option price and any
higher fair market value of the shares on the date of exercise will be ordinary
income to the optionee and generally will be allowed as a deduction for Federal
income tax purposes to the Company. When an optionee disposes of shares acquired
by the exercise of the option, any amount received in excess of the fair market
value of the shares on the date of exercise will be treated as long-term or
short-term capital gain to the optionee, depending upon the holding period of
the shares. If the amount received is less than the market value of the shares
on the date of exercise, the loss will be treated as long-term or short-term
capital loss, depending upon the holding period of the shares.
ITEM 3.
APPOINTMENT OF AUDITORS
The following resolution will be offered by the Board of Directors at the
Annual Meeting.
RESOLVED: That the appointment of KPMG Peat Marwick LLP by the Board of
Directors of the Company to conduct the annual audit of the financial statements
of Tofutti Brands Inc. for the year ending December 26, 1998 is ratified,
confirmed and approved.
The Board of Directors recommends a vote FOR the foregoing proposal for the
following reasons:
The Board of Directors of the Company first appointed KPMG Peat Marwick LLP
("KPMG"), independent public accountants, as its auditors in 1985 and has
reappointed the firm as auditors since such time. As a result of KPMG's
knowledge of the Company's operations and reputation in the auditing field, the
Board of Directors is convinced that the firm has the necessary personnel,
professional qualifications and independence to act as the Company's auditors.
The Board has again selected KPMG as the Company's auditors for the year 1998
and recommends that the shareholders ratify and approve the selection.
In the event this resolution does not receive the necessary vote for
adoption, or if for any reason KPMG ceases to act as auditors for the Company,
the Board of Directors of the Company will appoint other independent public
accountants as auditors.
Representatives of KPMG will attend the Annual Meeting. They will be
available to respond to appropriate questions from shareholders at the meeting.
-12-
<PAGE>
OTHER MATTERS
The Board of Directors does not intend to bring any matters before the
Annual Meeting other than those specifically set forth in the Notice of the
Annual Meeting and knows of no matters to be brought before the Annual Meeting
by others. If any other matters properly come before the Annual Meeting, it is
the intention of the persons named in the accompanying proxy to vote such proxy
in accordance with the judgment of the Board of Directors.
Financial statements for the Company are included in its Annual Report to
Shareholders for the year 1997 which were expected to be mailed to the
shareholders beginning May 1, 1998.
A COPY OF THE COMPANY'S 1997 ANNUAL REPORT ON FORM 10-KSB FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS AVAILABLE WITHOUT CHARGE TO THOSE
SHAREHOLDERS WHO WOULD LIKE MORE DETAILED INFORMATION CONCERNING THE COMPANY. TO
OBTAIN A COPY, PLEASE WRITE TO: STEVEN KASS, SECRETARY, TOFUTTI BRANDS INC., 50
JACKSON DRIVE, CRANFORD, NEW JERSEY 07016.
By Order of the Board of Directors,
/s/StevenKass
Steven Kass
Secretary
Dated: April 30, 1998
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<PAGE>
APPENDIX A
TOFUTTI BRANDS INC.
50 Jackson Drive
Cranford, New Jersey 07016
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints David Mintz and Steven Kass, or either of
them, attorneys or attorney of the undersigned, for and in the names(s) of the
undersigned, with power of substitution and revocation in each to vote any and
all shares of Common Stock, par value $.01 per share, of Tofutti Brands Inc.
(the "Company"), which the undersigned would be entitled to vote as fully as the
undersigned could if personally present at the Annual Meeting of Shareholders of
the Company to be held on May 29, 1998 at 10:00 a.m. at the Holiday Inn Select,
36 Valley Road, Clark, New Jersey, and at any adjournment or adjournments
thereof, hereby revoking any prior proxies to vote said stock, upon the
following items of business more fully described in the notice of and proxy
statement for such Annual Meeting (receipt of which is hereby acknowledged):
(CONTINUED ON OTHER SIDE)
<PAGE>
(1) The election of four Directors.
[ ] FOR all nominees listed at right (except as marked to contrary)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed at right
DAVID MINTZ, BERNARD KOSTER, REUBEN RAPOPORT, FRANKLYN SNITOW
INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name at right.
(2) To approve an amendment to the Company's 1993 Stock Option Plan
providing for an increase of 1,5000,000 shares of Common Stock
available for the grant of options.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) To ratify the appointment of KPMG Peat Marwick LLP to examine the
Company's accounts for 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) To transact such other business as may properly come before the
meeting, or any adjournment thereof.
THIS PROXY WILL BE VOTED AS SPECIFIED ABOVE. UNLESS OTHERWISE INDICATED,
THIS PROXY WILL BE VOTED FOR (i) ELECTION OF THE FOUR NOMINEES NAMED IN ITEM 1;
(ii)APPROVAL OF AN AMENDMENT TO THE COMPANY'S 1993 STOCK OPTION PLAN PROVIDING
FOR AN INCREASE OF 1,5000,000 SHARES OF COMMON STOCK AVAILABLE FOR THE GRANT OF
OPTIONS AND (iii) THE RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP
AS THE COMPANY'S INDEPENDENT AUDITORS FOR 1998.
Dated______________________________1998
------------------------------
Signature(s)
------------------------------
Signatures, if held jointly
(Please sign exactly as name(s) appear(s)
hereon. When signing as attorney, executor,
administrator, trustee, guardian, or as an
officer signing for a corporation, please
give full title under signature.)
