<PAGE> 1
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 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
CUISINE SOLUTIONS, 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 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:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
CUISINE SOLUTIONS, INC.
85 SOUTH BRAGG STREET
ALEXANDRIA, VIRGINIA 22312
(703) 750-9600
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO THE STOCKHOLDERS:
Notice is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of Cuisine Solutions, Inc. (the "Company") will be held at the
Washington Dulles Airport Marriott Hotel, 45020 Aviation Drive, Dulles,
Virginia, 20166 on Tuesday, October 26, 1999, at 2:00 p.m., local time, for the
following purposes:
1. To elect eight directors to hold office for one year or until
their successors are elected and qualified.
2. To approve or disapprove the Company's 1999 Stock Option Plan.
3. To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Only the stockholders of record at the close of business on September 30,
1999 will be entitled to vote at the Annual Meeting.
All stockholders are requested to be present at the Annual Meeting in
person or by proxy. For the convenience of those stockholders who do not expect
to attend the Annual Meeting in person and desire to have their stock voted, a
form of proxy and an envelope for which no postage is required, are enclosed.
Any proxy may be revoked at any time prior to its exercise by filing with the
Secretary of the Company a written notice of revocation, by delivering a duly
executed proxy bearing a later date, or by attending the Annual Meeting and
voting in person.
Please complete, sign, date and mail promptly the accompanying proxy card
in the return envelope furnished for that purpose, whether or not you plan to
attend the Annual Meeting. Your cooperation is appreciated since a majority of
the outstanding shares of Common Stock of the Company must be represented,
either in person or by proxy, to constitute a quorum for the conduct of business
at the Annual Meeting.
By Order of the Board of Directors
Jean-Louis Vilgrain
Chairman of the Board
Alexandria, Virginia
October 1, 1999
<PAGE> 3
CUISINE SOLUTIONS, INC.
85 SOUTH BRAGG STREET
ALEXANDRIA, VIRGINIA 22312
PROXY STATEMENT
This Proxy Statement is furnished to stockholders of Cuisine Solutions,
Inc., a Delaware corporation (the "Company") in connection with the Annual
Meeting of Stockholders to be held on October 26, 1999 (the "Annual Meeting").
This Proxy Statement, the notice to stockholders, and the enclosed proxy card
are being mailed to stockholders of the Company on or about October 1, 1999.
SOLICITATION OF PROXIES
Proxies in the form enclosed are solicited by and on behalf of the Board
of Directors of the Company (the "Board"). The individuals named as proxies are
Mr. Jean-Louis Vilgrain and Mr. Stanislas Vilgrain. Proxies may be solicited by
use of the mails, by personal interview, or by telephone and may be solicited by
officers and directors, and by the other employees of the Company. All costs of
solicitation of proxies will be borne by the Company.
All shares of common stock of the Company, par value $.01 per share
("Common Stock"), represented by proxies received will be voted in accordance
with the instructions contained therein. In the absence of voting instructions,
the shares of Common Stock will be voted for the nominees listed herein and for
the adoption of the Cuisine Solutions, Inc. 1999 Stock Option Plan (the "1999
Plan"). Any proxy may be revoked at any time prior to its exercise by filing
with the Secretary of the Company a written notice of revocation, by delivering
a duly executed proxy bearing a later date, or by attending the Annual Meeting
and voting in person.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
At the close of business on September 30, 1999, there were 13,255,838
shares of Common Stock outstanding, which represent all of the voting securities
of the Company. Each share of Common Stock is entitled to one vote per share.
Stockholders do not have cumulative voting rights in the election of directors
to the Board. A list of stockholders of the Company at the close of business on
September 30, 1999 will be available for inspection during normal business hours
during the ten days prior to the meeting at the offices of the Company at 85
South Bragg Street, Alexandria, Virginia 22312, and will also be available at
the meeting. Only stockholders of record at the close of business on September
30, 1999 will be entitled to vote at the Annual Meeting.
For purposes of determining the presence of a quorum and counting votes
on the matters presented, shares represented by abstentions and "broker
non-votes" will be counted as present, but not as votes cast, at the Annual
Meeting. Under Delaware law and the Company's By-Laws, the election of directors
at the Annual Meeting will be determined on the basis of a percentage of votes
cast at the Annual Meeting and requires the affirmative vote of the holders of a
plurality of the Company's Common Stock represented and voting at the Annual
Meeting for approval. All other matters expected to be submitted for
consideration at the Annual Meeting require the affirmative vote of the holders
of a majority of the Company's Common Stock represented and voting at the Annual
Meeting for approval.
1
<PAGE> 4
The following table sets forth, as of September 30, 1999, certain
information as to the number of shares of Common Stock beneficially owned by
each person who is known by the Company to own beneficially more than 5% of its
outstanding shares of Common Stock based upon reports on Schedule 13D filed with
the Securities and Exchange Commission (the "SEC") or other reliable
information.
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name and Address of Beneficial Owner (1) Beneficial Ownership Class
- -------------------------------------------------------- ------------------------------ ------------------------------
<S> <C> <C>
Food Research Corporation 7,181,588 54.2%
85 South Bragg Street, Suite 600
Alexandria, Virginia 22312
Gruber McBaine Capital Management 1,555,057 11.7%
50 Osgood Place
San Francisco, California 94133
</TABLE>
(1) Beneficial ownership is determined in accordance with the rules of the
SEC and generally includes voting -or investment power with respect to
securities.
The following table sets forth as of September 30, 1999 the beneficial
ownership of each director, nominee for director, each named executive officer,
and the directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
Name of Beneficial Owner Amount and
Nature of Percent
Beneficial Ownership of Class
<S> <C> <C>
Jean-Louis Vilgrain................................................. 7,194,088 (1) 54.2%
Alexandre Vilgrain.................................................. 7,194,088 (1) 54.2%
Stanislas Vilgrain ................................................. 7,775,588 (1) 57.3%
Carl Youngman ...................................................... 102,500 (2) *
Michael C. McCloud ................................................. 136,000 (2) 1.0%
Robert Murphy ...................................................... 53,500 (2) *
Charles McGettigan.................................................. 12,500 (3) *
David Jordan........................................................ 12,500 (3) *
Nancy Schaefer...................................................... 12,500 (3) *
Bruno Goussault .................................................... 12,500 (3) *
Directors, nominees and executive officers
as a group (10 persons)........................................... 8,130,588 58.3%
</TABLE>
- ---------------
* Less than one percent.
(1) Jean-Louis Vilgrain, Chairman of the Company, is Chairman and President
of Food Research Corporation, a Delaware corporation ("FRC"). FRC is a
controlled subsidiary of Secria Europe, S.A. ("Secria
2
<PAGE> 5
Europe"). Jean-Louis Vilgrain is also a director of Secria Europe. The
equity ownership of Secria Europe is held in equal amounts by the five
children of Jean-Louis Vilgrain, including Stanislas Vilgrain, an officer
and director of the Company, and Alexandre Vilgrain, a director of the
Company. As a result of his directorship in Secria Europe and his
position as President and director of FRC, Jean-Louis Vilgrain may be
deemed to be the beneficial owner of the 7,181,588 shares of Common Stock
held directly by FRC. In addition, as a result of their ownership of a
20% equity interest in Secria Europe, respectively, Stanislas and
Alexandre Vilgrain each may be deemed to be the beneficial owner of these
7,181,588 shares of Common Stock of the Company held by FRC. The
beneficial ownership of Jean-Louis Vilgrain also includes 12,500 shares
issuable pursuant to options granted under the 1999 Plan. The beneficial
ownership of Alexandre Vilgrain also includes 12,500 shares issuable
pursuant to the options granted under the 1999 Plan. The beneficial
ownership of Stanislas Vilgrain also includes 324,000 shares issuable
pursuant to options granted under stock option plans of the Company,
including the Company's 1992 Stock Option Plan (the "1992 Plan") and the
Company's 1986 Stock Option Plan.
(2) Includes shares issuable pursuant to options granted under the 1992 Plan
in the amount of 90,000 for Carl Youngman, 125,000 for Michael McCloud
and 52,500 for Robert Murphy. The beneficial ownership of Carl Youngman
includes 12,500 shares issuable pursuant to options granted under the
1999 Plan.
(3) Includes 12,500 shares issuable pursuant to options granted under the
1999 Plan.
ELECTION OF DIRECTORS
Eight nominees for director are to be elected to the Board for one year
to serve until the Annual Meeting of Stockholders in 2000 or until their
successors are elected and qualified. All nominees are currently serving as
directors.
Unless otherwise specified, proxies received will be voted for the
election of the eight nominees to the Board set forth below. All such nominees
have indicated that they are willing and able to serve as directors. If any
nominee becomes unable or unwilling to serve, the accompanying proxy may be
voted for the election of such other person as shall be designated by the Board.
Each director will be elected to the Board by a plurality vote of Common Stock
represented, in person or by proxy, at the Annual Meeting. Therefore, an
abstention from voting will be counted neither for nor against the election of
any nominee for director to the Board.
The name, principal occupation and selected biographical information of
each nominee to the Board are set forth below:
Mr. Jean-Louis Vilgrain, age 65, has been Chairman of the Company since
September 1977 and has served as director since November 1974. In addition, Mr.
J.L. Vilgrain served as Chief Executive Officer of the Company from September
1977 until October 1993. Mr. J.L. Vilgrain is Chairman and President of the
JLVilgrain Group, and is President of Secria Europe, a French holding company
controlling the JLVilgrain Group. The JLVilgrain Group is an international
consortium of food related businesses and industries with interests ranging from
production engineering to retail food establishments. He is also Chairman and
President of FRC, the majority stockholder of the Company, and a holding company
for certain African and Pacific Rim companies. Mr. J.L. Vilgrain was President
from 1978 to 1989 of Grands Moulins de Paris, an international milling and food
processing company incorporated in France.
3
<PAGE> 6
Mr. Stanislas Vilgrain, age 40, was appointed President and Chief
Executive Officer in October 1993, having served as President and Chief
Operating Officer of the Company since June 1991 and as a director since 1991.
He served as President of the Vie de France Culinary Division from July 1987 to
June 1991. Previously, he was employed by Vie de France Corporation as Director
of Staff Operations from August 1986 through June 1987. He was Manager of the
Vie de France Corporation's San Francisco bakery from January 1986 through
August 1986, after having served as Assistant Manager of the Denver bakery from
July 1984 through December 1985. Prior to joining Vie de France Corporation, he
was Assistant to the Director of Research & Development for the Bakery Division
of Grands Moulins de Paris from June 1983 to July 1984, and was Regional Manager
of Operations and Sales from July 1982 through May 1983 for O.F.U.P., a
publication distributor in Paris, France. Mr. Stanislas Vilgrain is the son of
Mr. Jean-Louis Vilgrain and the brother of Mr. Alexandre Vilgrain.
Mr. Alexandre Vilgrain, age 43, has been employed by S.O.M.D.I.A.A., an
international food processing company, since 1980. He has served in the capacity
of Vice General Manager since January 1987. From January 1982 to December 1986
he served as Secretary, and from April 1980 to December 1981 he was Field
Manager of that company. In 1995, Mr. A. Vilgrain was appointed President of
SETUCAF, a holding company for the JLVilgrain Group trading in the sugar and
cereal industry in Africa. He was elected to the Board in 1991. Mr. Alexandre
Vilgrain is the son of Mr. Jean-Louis Vilgrain, and the brother of Mr. Stanislas
Vilgrain.
Mr. Bruno Goussault, age 57, has been employed since 1991 by Centre de
Recherche d'Etude pour l'Alimentation (a food industry research center) as
Scientific Managing Director. From 1981 to 1990, he served as Director of
Research for the Institut Superieur de l'Alimentation (Food Industry Institute),
while from 1975 to 1981 he served as Assistant Laboratory Director for the
Institute. Prior to working at the Institute, Mr. Goussault worked in a number
of capacities within the food engineering industry. Mr. Goussault received an
advanced degree in engineering from the National School of Agricultural and Food
Industries. He also holds several other advanced degrees, including a Doctorate
of Economic Development from Paris Pantheon. Mr. Goussault is considered
internationally as a leading expert in the sous vide field. He became a member
of the Board in 1993.
Mr. Carl M. Youngman, age 56, was appointed Treasurer in October 1996. He
served as Chief Financial Officer of the Company from February 1996 to November
1997. Mr. Youngman has over twenty six years of experience in executive-level
positions. During this period he has been an executive in over twenty companies
and an advisor to over fifty other companies. From 1993 to the present, Mr.
Youngman has been the senior partner of Youngman and Charm, a professional firm
that specializes in corporate renewal and corporate finance. Mr. Youngman holds
a B.S. degree in Electrical Engineering from Worcester Polytechnic Institute and
a Master's Degree from Harvard Business School. He became a member of the Board
in 1996.
Carl M. Youngman signed a consent decree December 4, 1995, to resolve an
action brought against him by the SEC for alleged insider-trading in violation
of the federal securities laws. The transaction at issue occurred in 1992 and
involved Youngman's purchase of shares of American Biltrite Inc., ("ABL")
allegedly on the basis of material non-public information conveyed to him by a
friend who was ABL's Chief Operating Officer. By signing the decree, Youngman
consented to an Order issued by the United States District Court for the
District of Massachusetts, enjoining him from future violations of Section 10(b)
of the Securities Exchange Act of 1934 (15 U.S.C. Section 78j(b)) and rule 10b-5
thereunder (17 C.F.R. Section 240.10b-5), as well as requiring him to pay
approximately $9,000 to the SEC representing the profits from the transaction
plus interest, and a penalty.
4
<PAGE> 7
Mr. Charles McGettigan, age 53, was a co-founder and is a general
partner of Proactive Investment Managers, L.P. which is the general partner of
Proactive Partners, L.P., a San Francisco-based merchant banking fund. Mr.
McGettigan is a graduate of Georgetown University and has been an investment
banker since receiving his MBA in Finance from the Wharton School at the
University of Pennsylvania in 1969. From 1970 to 1978 Mr. McGettigan was with
Blyth Eastman Dillon's corporate finance department in New York and then in San
Francisco from 1978 to 1980. In 1975, he was made a partner at Blyth and a
Senior Vice President in 1978. He was a Senior Vice President of Dillon, Read &
Co., running its corporate finance activities in San Francisco from 1980 through
1982. In January 1983, Mr. McGettigan was a founding partner of Woodman,
Kirkpatrick & Gilbreath, which was sold to Hambrecht & Quist in September 1984.
Mr. McGettigan was a co-founder, in November 1988, and continues to be a
managing director of McGettigan, Wick & Co., Inc., an investment banking firm.
Mr. McGettigan currently serves on the Boards of Directors of Digital Dictation,
Inc., I-Flow Corporation, Modtech Inc., Onsite Energy Corporation, PMR
Corporation, Phoenix Network Inc., Sonex Research, Inc. Tanknology-NDE Corp.,
and Wray-Tech Instruments, Inc. He became a member of the Board in 1997.
Mr. David Jordan, age 46, is Vice President for Pepsi Cola North America
Fountain Division. From 1996 until recently Mr. Jordan was Senior Vice President
of Business Development for Shoney's Corporation. He served as President of
Sonic Corporation's Sonic Industries Franchising Subsidiary from 1994 to 1996.
From 1989 to 1994 Mr. Jordan was Director of National Accounts for Coca-Cola's
Fountain Division and prior to that was District Manager for Proctor and
Gamble's Foodservice Division for 10 years. Mr. Jordan served as an Army
Lieutenant for the 82nd Airborne Command at Fort Bragg as a Master Parachuter
for three and a half years. He became a member of the Board in October 1998.
Ms. Nancy Schaefer, age 46, is a founding partner of Consumer Dynamics, a
marketing and new products consulting firm located in New York City. Prior to
that, she was a Consultant and Project Director for Kane, Bortree and Faith
Popcorn. She began her career in advertising at Young & Rubicam, followed by
marketing at General Foods, where she was the Vice President of Marketing for
Culinova, a refrigerated meals venture. In her capacity as a consultant, she has
worked with leading food companies like Kraft Foods, Entemann's, Con Agra,
Campbell Soup Company, Clorox Foods and Lipton. Ms. Schaefer has a B.A. from
Occidental College in Los Angeles, and an MBA from Columbia University in New
York City. She became a member of the Board in October 1998.
BOARD COMMITTEES AND MEETINGS
Committees of the Board include the Audit Committee, the Stock Option
Committee, the Compensation Committee and the Technology Committee.
The Audit Committee consists of Mr. Charles McGettigan and Mr. Carl
Youngman. The Audit Committee's functions include making recommendations to the
Company regarding the selection of independent accountants, conferring with the
independent accountants and reviewing the scope and fees of the prospective
annual audit and the results of their work. The Audit Committee reviews the
Company's financial statements and the adequacy of the internal auditing,
accounting, financial controls and procedures. The committee held three meetings
during fiscal year 1999, and each committee member attended all meetings.
The Stock Option Committee was established pursuant to the adoption of
the 1992 Plan and is made up of Mr. McGettigan and Mr. Youngman. The Stock
Option Committee's function is to grant options to eligible employees and to
administer the 1992 Plan and the 1999 Plan. The committee held three meetings
during fiscal
5
<PAGE> 8
year 1999. Each committee member attended all meetings.
The Compensation Committee consists of Mr. McGettigan and Mr. Youngman.
The Compensation Committee's function is to review and approve all compensation
packages totaling over $99,500. The committee held three meetings during fiscal
year 1999. Each committee member attended all meetings.
The Technology Committee is made up of Mr. Goussault and Mr. Stanislas
Vilgrain. The Technology Committee's function is to oversee the implementation,
application, efficiency and quality standards of sous vide technology to the
Company's production facilities. This committee meets through on-site inspection
and performs written recommendations to Company management on an as-needed
basis. The committee held four meetings during fiscal year 1999. Each committee
member attended all meetings.
The Board currently does not have a nominating committee. Although there
are no formal procedures for the stockholders to nominate persons to serve on
the Board, the Board will consider recommendations from stockholders, which
should be addressed to Robert Murphy, Chief Financial Officer of the Company, at
the Company's address.
During fiscal year 1999, there were four meetings of the Board of
Directors. Each Board member attended the meeting during his respective
directorship, with the exception of Mr. A. Vilgrain, who was unable to attend
any of the meetings.
SECTIONS 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers, directors and persons who own more that ten percent of the
issued and outstanding shares of Common Stock to file reports of beneficial
ownership and changes in beneficial ownership with the SEC and to furnish copies
of all Section 16(a) forms to the Company.
Based solely on the Company's review of the copies of such forms received
by it, or written representations from certain reporting persons that no filings
were required for those persons, the Company believes that during the last
fiscal year all required filings were timely made as required by Section 16(a).
SEC rules require the Company to disclose all known delinquent Section 16(a)
filings by its officers, directors and ten percent stockholders in this Proxy
Statement.
NOTICE OF DELISTING FROM NASDAQ
On November 30, 1998, the Company was notified by the NASDAQ Stock
Market, Inc., that the Company failed to maintain a closing bid price of greater
than or equal to $1.00 in accordance with Marketplace Rule 4450(a) under
Maintenance Standard 1. The Company was delisted from the NASDAQ at the close of
trading on November 30, 1998. The Company currently trades on the NASDAQ OTC
Bulletin Board Market Quotation System.
6
<PAGE> 9
EXECUTIVE OFFICERS OF THE COMPANY
In addition to Jean-Louis Vilgrain, Stanislas Vilgrain and Carl Youngman,
for whom biographical information is included under "ELECTION OF DIRECTORS," the
following are executive officers of the Company:
<TABLE>
<CAPTION>
NAME AGE OFFICE HELD WITH COMPANY SINCE
- ---- --- ------------------------ -----
<S> <C> <C> <C>
Michael C. McCloud 36 Executive Vice President 1996
Robert Murphy 36 Vice President and Chief Financial Officer 1997
</TABLE>
Mr. McCloud joined the Company as Executive Vice President in October
1996. Prior to joining the Company, Mr. McCloud was Vice President of Sales for
Edwards Baking Company since July 1994. He previously served as Edwards' Vice
President of Marketing, and as that Company's Director of Marketing. Before
joining Edwards, Mr. McCloud was Director of Marketing for Borden, Inc.'s snacks
and international consumer products division. He has also held sales and
marketing positions with units of Coca-Cola, USA and Procter & Gamble.
Mr. Murphy joined the Company in November 1997 and was appointed Vice
President and Chief Financial Officer. Prior to joining the Company, Mr. Murphy
was with Edwards Baking Company since 1993 as Senior Director of Acquisitions
and New Business Integration's and Operations Controller. Prior to 1993, Mr.
Murphy worked with Bunge Foods since 1988 in the bakery and dairy industrial
ingredient divisions in senior accounting positions.
7
<PAGE> 10
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table provides information concerning compensation paid by
the Company to each of the named executive officers of the Company, consisting
of the Chief Executive Officer and the two other most highly compensated
officers of the Company whose compensation exceeded $100,000 during fiscal 1999,
for each of the Company's last three fiscal years.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- -----------------------------------------------------------------------------------------------------------------------------------
ALL OTHER
COMPENSA-
LONG TERM TION
NAME AND PRINCIPAL POSITION YEAR ANNUAL COMPENSATION COMPENSATION ($)(3)
-----------------------------------------------------------------------
OTHER ANNUAL SECURITIES
BONUS ($) COMPENSATION UNDERLYING
SALARY ($) (1) ($) (2) OPTIONS (#)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
STANISLAS VILGRAIN
President and Chief Executive Officer 1999 185,000 150,000 7,457 50,000 3,613
President and Chief Operating Officer 1998 191,480 15,353 -- 6,286
President and Chief Operating Officer 1997 181,100 16,000 200,000 3,374
- -----------------------------------------------------------------------------------------------------------------------------------
MICHAEL McCLOUD (5)
Executive Vice President 1999 175,000 100,000 70,945 50,000 5,381
Executive Vice President 1998 233,323 -- 3,257 -- 5,274
Executive Vice President 1997 123,000 -- 5,300 150,000 --
- -----------------------------------------------------------------------------------------------------------------------------------
ROBERT MURPHY(5)
Vice President - Chief Financial Officer 1999 110.000 60,000 12,015 50,000 --
Vice President - Chief Financial Officer 1998 65,581 -- -- 80,000 --
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1) The Company's executive officers are eligible for cash bonuses under the
Company's Executive Incentive Compensation Plan, which are based on
objectives determined by the Compensation Committee of the Board. See
"BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION."
2) Other annual compensation consists of annual car allowances and
relocation expenses.
3) All other compensation consists of 401(k) and supplemental retirement
plan matching funds paid by the Company.
8
<PAGE> 11
STOCK OPTIONS
The following table sets forth certain information regarding stock options
granted to the named executive officers during the Company's 1999 fiscal year.
No stock appreciation rights were granted during fiscal year 1999.
9
<PAGE> 12
<TABLE>
<CAPTION>
OPTION GRANTS IN FISCAL YEAR 1999
- ------------------------------------------------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK PRICE
CURRENT YEAR INDIVIDUAL GRANTS APPRECIATION FOR OPTION TERM (2)
- -------------------------------------------------------------------------------------------------
NUMBER OF
SECURITIES
UNDERLYING PERCENT OF TOTAL
OPTIONS OPTIONS GRANTED TO EXERCISE OR
GRANTED EMPLOYEES IN FISCAL BASE PRICE
NAME (#) (1) YEAR ($/SH) EXPIRATION DATE
----------------------------------
5% ($) 10% ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Stanislas Vilgrain 50,000 25% $.656 10/28/08
Michael McCloud 50,000 25% $.656 10/28/08
Robert Murphy 50,000 25% $.656 10/28/08
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The options were granted under the 1992 Plan. Under the 1992 Plan, each
option granted may be exercised during the period of the employee's continuous
employment by the Company, or within three months thereafter, or within one year
after the employee's death or total and permanent disability, if the death or
total and permanent disability occurs while employed or if the death occurs
during the three months after termination; provided that no option is
exercisable after its expiration date. All options granted in fiscal year 1999
expire within ten years from the date of grant. All unvested options of an
optionee become fully vested and exercisable upon the death or total and
permanent disability of an optionee and all unvested options of all optionees
become fully vested and exercisable upon a change of control of the Company. A
change of control is defined as an event, the result of which would be that more
than 50% of the voting stock of the Company would be owned by persons or
entities other than FRC or any persons controlling or controlled by FRC. Grants
vest and become exercisable to the extent of 25% of the total on the day of
grant, and 25% of the total on each of the first three anniversaries of the date
of grant.
(2) These amounts are based on compounded annual rates of stock price
appreciation of five and ten percent over the ten year term of the options and
are mandated by the SEC. Actual gains, if any, on stock option exercises are
dependent on the future performance of the Common Stock, overall market
conditions, as well as the option holder's continued employment throughout any
applicable vesting period. Thus, the values reflected in this table are based on
hypothetical rates and these values may not be achieved or may be exceeded. The
value indicated in this table is a net amount, as the aggregate exercise price
has been deducted from the final appreciated value.
The following table sets forth certain information regarding stock
options exercised by the executive officers named in the Summary Compensation
Table during the Company's 1999 fiscal year and the year-end values of
unexercised options held by such executive officers.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1999
10
<PAGE> 13
<TABLE>
<CAPTION>
AND FISCAL YEAR-END OPTION VALUES
- ------------------------------------------------------------------------------------------------------------------------------------
Number of Securities Underlying
Unexercised Options at Fiscal Value of Unexercised in-the-Money
Year End(#) Options at Fiscal Year End ($)
Shares Acquired on Exercisable\ Exercisable\
Name Exercise Value Realized ($) Unexercisable Unexercisable
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Stanislas Vilgrain None None 190,000 \ 171,500 4,300\12,900
Michael McCloud None None 125,000\ 75,000 4,300\12,900
Robert Murphy None None 52,500 \ 77,500 4,300\12,900
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
COMPENSATION OF DIRECTORS
Each Director, except for the Chairman of the Board and the President,
receives $7,000 per year for serving on the Board and attending special and
annual meetings. For fiscal year 1999, the Chairman of the Board received a
total of $1,000 for serving in that capacity. Members of the committees receive
$1,000 each for service on each committee. No fees are paid to members of the
Technology Committee, except as set forth below. The Company also reimburses
directors for their costs incurred in attending meetings of the Board of
Directors.
Mr. Goussault, who serves on the Technology Committee, provides
engineering consulting services to the Company through his own company, at his
normal billing rates. As a member of the Technology Committee, Mr. Goussault is
paid an annual fee of $15,000, less the amount of any engineering consulting
fees paid to him during the fiscal year. During fiscal year 1999, Mr. Goussault
was paid approximately $37,000 in consulting fees by the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are Carl Youngman and Charles
McGettigan. Mr. Youngman is an executive officer of the Company. Mr. Youngman
receives compensation for services rendered to the Company, in the role of
Treasurer, of $20,000 paid in quarterly installments. In addition to these fees,
approximately $11,000 was paid by the Company in fiscal year 1999 to a finance
company for a leased vehicle registered to Mr. Youngman.
11
<PAGE> 14
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
In fiscal year 1999 the full Board approved the Company's compensation
policy.
EXECUTIVE COMPENSATION OBJECTIVES AND POLICIES
The Board evaluates and sets the base salary for the Chief Executive
Officer (the "CEO") of the Company. The CEO evaluates and sets the base salaries
for all other executive officers of the Company. In addition, the Compensation
Committee evaluates and sets the parameters for the Executive Incentive
Compensation Plan ("EICP"). The Stock Option Committee of the Board administers
the Company's 1992 and 1999 Stock Option Plans.
The major objective of the Company's compensation program is to align
compensation with business results. The Company's program is designed to (1)
attract, retain, and reward senior management who are able to meet and exceed
business objectives, (2) tie a meaningful portion of compensation to the
achievement of improved earnings growth and other business objectives, and (3)
provide stock-based long term incentives to executives that directly link their
compensation to stock appreciation. To this end, the components of the
compensation program include base salary, results-based cash incentives, and
long-term equity-based rewards.
Base Salary
The Directors set the base salary for the CEO based upon the historical
salary levels for the past five years, along with Company performance and
prevailing food service industry conditions. The CEO sets base salary for each
other executive officer based on the relative level of responsibility of the
respective position within the organization, and the base salaries paid to
executives holding similar positions within the same industry.
Incentive Compensation
The EICP provides the opportunity for eligible executives to earn a
specified percentage of division and/or Company operating income on the
achievement of pre-determined objectives. The Board establishes the percentages
and goals for the CEO, and the CEO establishes the percentages and the goals for
each other eligible executive based on the responsibility of each executive
position. The percentage so established for each executive is then applied to
revenues, profits, and achievement of targeted profit levels, or a combination
thereof, as deemed appropriate by the Board or the CEO, as the case may be. No
profit related incentive compensation is paid to these executives should the
results of the division and/or the Company be unprofitable.
Stock Option Program
The 1992 Stock Option Plan was established to provide additional
incentive and reward to those executives who deliver the results that maximize
stockholder value. Stock Options valued at fair market value as of the date of
grant provide potential reward based on the Company's future stock performance.
Additionally, the option program for executives utilizes vesting periods to
encourage key executives to continue in the employ of the Company. One of the
factors considered by the Stock Option Committee in granting options is the
relative level of responsibility of the executive officer's position within the
Company.
12
<PAGE> 15
Policy with Respect to Section 162(m) Deduction Limit
In light of the Company's historical compensation practices, the Company has not
adopted a policy with respect to deduction limits under Section 162(m) of the
Internal Revenue Code of 1986, as amended.
13
<PAGE> 16
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The compensation level for Mr. Stanislas Vilgrain, the CEO of the
Company, is a combination of salary, incentive compensation, and stock options.
The Compensation Committee reviews the salary level of the CEO on an annual
basis and makes a recommendation to the Board, after consideration of company
performance relative to its business plan, individual performance of the CEO,
the expected objectives for the coming year, and other factors that the Board
may, in its discretion, deem relevant at that time.
In recognition of the responsibilities of the CEO, including that of
attaining the goal of Company profitability, the Board established Mr. S.
Vilgrain's incentive compensation program to include 3.5% consolidated after tax
profit if above budget, and other discretionary compensation as the Board deems
appropriate.
In preparation for making any decision regarding the grant of stock
options, the Stock Option Committee evaluates Mr. S. Vilgrain's past
achievements and his critical leadership role in the Company's future success.
In addition, the Stock Option Committee is mindful of the goals described above
and its intent to use the Stock Option Plan as a means to align the financial
interest of the CEO with those of the Company's stockholders.
Jean-Louis Vilgrain
Stanislas Vilgrain
Alexandre Vilgrain
Bruno Goussault
Charles McGettigan
Carl Youngman
Nancy Schaefer
David Jordan
The Board of Directors of the Company
14
<PAGE> 17
FIVE-YEAR PERFORMANCE COMPARISON
The following graph shows the changes over the past five-year period in
the value of $100 invested in Common Stock of the Company, the NASDAQ Stock
Market-US Index and the Dow Jones Food Index. The Company has been notified by
NASDAQ that it does not meet the minimum bid requirement to be included in the
NASDAQ National Market. The Company currently trades on the NASDAQ OTC Bulletin
Board.
15
<PAGE> 18
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG CUISINE SOLUTIONS, INC.,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE DOW JONES FOOD INDEX
[GRAPH]
<TABLE>
<CAPTION>
DOLLARS
--------------------------------------------------------
6/94 6/95 6/96 6/97 6/98 6/99
<S> <C> <C> <C> <C> <C> <C>
CUISINE SOLUTIONS, INC. $ 100 $ 81 $ 56 $ 33 $ 22 $ 30
NASDAQ STOCK MARKET (U.S.) 100 133 171 208 274 393
DOW JONES FOOD 100 127 151 199 232 212
</TABLE>
* $100 INVESTED ON 6/30/94 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING JUNE 30.
16
<PAGE> 19
CERTAIN TRANSACTIONS
The Company receives consulting services under an agreement with Food
Investors Corporation ("FIC"), which is majority owned by Secria Europe. FRC,
the majority stockholder of the Company, also owns Secria Europe. Pursuant to
the consulting agreement, FIC provides services related to management, planning,
strategy development and pursuing world-wide interests of the Company. This
agreement is renewable by the Company annually. The amount paid by the Company
to FIC in fiscal year 1999 was $144,000.
During fiscal year 1998 the Company issued an employee loan in the amount
of $375,000. The loan of $375,000 was combined with the loan this officer had
outstanding in the amount of $45,000 at the end of fiscal year 1997. The revised
loan amount of $420,000 bears interest of at 6.5% per annum and is payable on
October 1, 2002 and is collateralized by the employee's home. Payments on the
loan will be derived from the equity proceeds from the sale of the employees
first residence, a portion of future annual bonuses to be paid to the employee
by the Company as negotiated. All outstanding balances of the note, including
principal and interest accrued thereon, shall become payable in full on October
1, 2002. At the end of fiscal year 1998 the employee sold his first residence
and applied the net proceeds of $26,000 from the sale of the residence as
payment towards the loan.
At June 27, 1998 and June 28, 1997, the Company also has an employee loan
outstanding in the amount of $68,000 and $56,000, respectively. This loan was
made in two payments, $12,000 in fiscal year 1998 and $56,000 was made during
fiscal year 1996 and bears no interest through April 1997. Effective April 1997
this loan was renewed, and interest shall accrue on the outstanding principal of
the note and shall be payable at a rate of 8.5% per annum, commencing April
2000. The note is due in full in April 2002. The employee will pay against the
principal with 50% of all future cash bonuses earned with the Company and any
additional payments made by the employee, until the loan is relinquished. This
loan was established as a part of the employee's employment contract.
During fiscal year 1999, the Company issued two employee loans in the
amount of $55,000 and $85,000. The loan of $55,000 was collateralized by the
employee's first residence and bears interest of 6.5% per annum. The payment of
the note is payable from the net equity proceeds on the sale of the
collateralized property and shall be deemed payable in full within two years
from the date of the note if the property is not sooner sold. The loan of
$85,000 is collateralized by the employee's home and bears interest at 6.6% per
annum. The payment of the note is due and payable in full five years from the
date of the loan or six months after the employee's termination whichever comes
first. During fiscal year 1999, $23,000 was collected on the $55,000 notes and
subsequent to 1999, an additional $20,000 was received as well as $20,000
against the $85,000 note.
17
<PAGE> 20
ADOPTION OF THE COMPANY'S 1999 STOCK OPTION PLAN
On August 6, 1999, the Board adopted the Cuisine Solutions, Inc. 1999
Stock Option Plan (the "1999 Plan"), subject to stockholder approval prior to
December 31, 1999. The 1999 Plan will become effective on the date of its
approval by the stockholders. The 1999 Plan is intended to promote the interests
of the Company and its stockholders by attracting and retaining eligible
employees and consultants of the Company and its subsidiaries and motivating
such persons by enabling such persons to participate in the long-term growth and
financial success of the Company.
Generally, the 1999 Plan will be administered by the Board or a committee
appointed by the Board (each in such capacity, the "Administrator"). With
respect to grants of stock options to employees or consultants who are also
officers or directors of the Company, the 1999 Plan shall be administered by the
Board or, if the Board in its discretion elects, by a committee designated by
the Board. Such committee shall be composed solely of two or more non-employee
directors (as determined in accordance with Rule 16b-3 ("Rule 16b-3") under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")). If permitted
or required by Rule 16b-3 or other applicable law, the 1999 Plan may be
administered by different bodies with respect to different groups or classes of
persons eligible to receive awards under the 1999 Plan.
The 1999 Plan provides for the granting of stock options. A stock option
award grants the recipient the right to buy a specified number of shares of
Common Stock at a fixed exercise price during a specified time, subject to the
terms of the 1999 Plan and such other terms and conditions as the Administrator
may determine in accordance with the 1999 Plan. All stock option awards granted
under the 1999 Plan are nonqualified stock options. The exercise price of all
stock option awards under the 1999 Plan is payable, as determined by the
Administrator, in cash, in shares of already owned Common Stock (provided such
shares were owned by the participant for at least six months prior to such
payment), in any combination of cash and shares, or by any other method deemed
appropriate by the Administrator.
The 1999 Plan provides that the total number of shares of Common Stock
with respect to which awards may be granted under the 1999 Plan may not exceed
2,600,000 shares (subject to adjustment in the event of any extraordinary
dividend, any increase or decrease in the number of issued shares of Common
Stock and any conversion of Common Stock into other securities or property
resulting from a stock split, stock dividend, combination or exchange of shares,
exchange for other securities, reclassification, reorganization, redesignation,
merger, consolidation, recapitalization, or other such change). As of the date
hereof, approximately 40 persons are eligible to participate in the 1999 Plan.
No payments or contributions are required to be made by the persons who
participate in the 1999 Plan other than the payment of any purchase price upon
the exercise of a stock option. Subject to certain exceptions set forth in the
1999 Plan, upon termination of employment or service of a participant with the
Company, any stock options granted to such participant, unless otherwise
determined by the Administrator, shall, to the extent not previously exercised,
terminate.
Subject to applicable law and provided that the Common Stock is not then
registered under the Exchange Act, the Administrator may cause: (i) any stock
option granted under the 1999 Plan to be cancelled in consideration of a cash
payment or alternative grant made to the holder of such stock option equal in
value to the excess of the aggregate fair market value of the Common Stock
subject to such cancelled stock option over the exercise price of such cancelled
stock option; and (ii) the Company to redeem any shares of Common Stock issued
pursuant to an exercise of a stock option in exchange for a cash payment equal
to the aggregate fair market value of the shares of Common Stock redeemed.
18
<PAGE> 21
Except as otherwise provided in the 1999 Plan, the Board may at any time
terminate, and, from time to time, amend or modify the 1999 Plan. Any such
action of the Board may be taken without the approval of the Company's
stockholders, but only to the extent that such stockholder approval is not
required by applicable law. Furthermore, no amendment, modification, or
termination of the 1999 Plan shall adversely affect any awards already granted
to a participant without his or her consent.
GRANTS UNDER THE 1999 PLAN
Following adoption of the 1999 Plan by the Board, the Board approved the
following grants of stock options under the 1999 Plan on August 6, 1999:
<TABLE>
<CAPTION>
NAME AND POSITION NUMBER OF OPTIONS EXERCISE PRICE PER SHARE
- -------------------------------------------------- ---------------------------------- ----------------------------
<S> <C> <C>
Non-Executive Director Group 350,000 $1.125
</TABLE>
As summarized in the foregoing table, each of the Company's directors who
are not executive officers of the Company, including Jean-Louis Vilgrain,
Alexandre Vilgrain, Bruno Goussault, Carl Youngman, Charles McGettigan, David
Jordan and Nancy Schaefer, were granted options to purchase 50,000 shares of
Common Stock at an exercise price of $1.125 per share. Such stock options became
exercisable with respect to 25% of the Common Stock covered thereby on the date
of grant and will become exercisable with respect to 25% of the Common Stock
covered thereby on the first, second and third anniversary of the date of grant.
Except as set forth above, no other awards have been granted under the
1999 Plan, and the grants of all of the above awards are subject to stockholder
approval. The benefits accruing pursuant to the above awards are not presently
determinable.
FEDERAL INCOME TAX CONSEQUENCES OF GRANTS UNDER THE 1999 PLAN
The following discussion generally summarizes the Federal income tax
consequences to participants who may receive grants of awards under the 1999
Plan.
For Federal income tax purposes, no income is recognized by a participant
upon the grant of a stock option under the 1999 Plan. Upon the exercise of an
option, however, compensation taxable as ordinary income will be realized by the
participant in an amount equal to the excess of the fair market value of a share
of the Company's Common Stock on the date of such exercise over the exercise
price. A subsequent sale or exchange of such shares will result in gain or loss
measured by the difference between (i) the exercise price, increased by any
compensation reported upon the participant's exercise of the option, and (ii)
the amount realized on such sale or exchange. Such gain or loss will be capital
in nature if the shares were held as a capital asset and will be long-term if
such shares were held for more than one year.
The Company generally is entitled to a deduction (subject to the
provisions of Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code")) for compensation paid to a participant at the same time and in the
same amount as the participant is considered to have realized compensation by
reason of the exercise
19
<PAGE> 22
of an option. Under Section 162(m) of the Code, the deduction allowable to the
Company in a taxable year for compensation paid to the Chief Executive Officer
and the four other most highly paid executive officers of the Company (including
its subsidiaries) is limited to $1,000,000 per person, subject to certain
exception. The ability of the Company to claim a deduction for compensation paid
to any other person is not affected by this provision.
Information contained herein relating to the 1999 Plan is qualified in
its entirety by reference to such plan, which is attached to this Proxy
Statement as Appendix A.
The following resolution will be proposed for approval by holders of the
Company's Common Stock:
RESOLVED, that the Cuisine Solutions, Inc. 1999 Stock Option Plan
is hereby approved, ratified and confirmed.
The affirmative vote of a majority of the votes cast at the meeting is
required for approval of this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THIS PROPOSAL.
20
<PAGE> 23
INDEPENDENT ACCOUNTANTS
Effective on October 28, 1998, the Board elected to retain Grant Thorton
LLP ("Grant Thorton") as the Company's independent auditor and to dismiss KPMG
Peat Marwick LLP ("KPMG"). Prior to such date, KPMG had acted as the Company's
independent auditor. The decision to change auditors was approved by the
Company's Audit Committee and the Board.
The audit reports of KPMG on the consolidated financial statements of the
Company and its subsidiaries as of and for the years ended June 27, 1998 and
June 28, 1997 did not contain any adverse opinion or disclaimer of opinion, nor
were they qualified or modified as to uncertainty, audit scope or accounting
principles. However, the audit reports of KPMG on the consolidated financial
statements of the Company and its subsidiaries as of and for the years ended
June 27, 1998 and June 28, 1997 referred to a change in accounting method for
certain inventory costs.
During the Company's two most recent fiscal years ended June 27, 1998 and
June 28, 1997, and through the subsequent interim period through October 28,
1998, there were no disagreements with KPMG on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedures, which disagreements if not resolved to the satisfaction of the
former accountant, would have caused them to make a reference to the subject
matter of the disagreements in connection with its report; nor has KPMG ever
presented a written report, or otherwise communicated in writing to the Company
or the Board the existence of any "disagreement" or "reportable event" within
the meaning of Item 304 of Regulation S-K.
KPMG provided the Company with a letter addressed to the SEC, as required
by Item 304(a)(3) of Regulations S-K. Such letter is attached as Exhibit 16 to
the Company's Current Report on Form 8-K filed with the SEC on November 3, 1998.
It is anticipated that representatives of Grant Thorton will be present
at the Annual Meeting, and will be given an opportunity to respond to
appropriate stockholder questions and to make a statement, if they so desire.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
The rules of the SEC currently provide that stockholder proposals for the
2000 Annual Meeting submitted pursuant to Rule 14a-8 of the Exchange Act must be
received at the Company's principal executive office not less than 120 calendar
days prior to the anniversary data of the release of the Company's proxy
statement to stockholders in connection with the 1999 Annual Meeting to be
considered by the Company for possible inclusion in the proxy materials for the
2000 Annual Meeting.
OTHER MATTERS
The Board knows of no other business that will be presented at the Annual
Meeting. If any other business is properly brought before the Annual Meeting,
proxies in the enclosed proxy form will be voted in respect thereof in
accordance with the judgements of the persons voting the proxies.
21
<PAGE> 24
It is important that the proxies be returned promptly and that your
shares be represented in the Annual Meeting. Stockholders are urged to sign,
date and promptly return the enclosed proxy card in the enclosed envelope.
A copy of the Company's 1999 Annual Report to Stockholders accompanies
this Proxy Statement. The Company has filed an Annual Report for its fiscal year
ended June 26,1999 on Form 10-K with the SEC. STOCKHOLDERS MAY OBTAIN, FREE OF
CHARGE, A COPY OF THE FORM 10-K BY WRITING TO ROBERT MURPHY, THE CHIEF FINANCIAL
OFFICER OF THE COMPANY, AT THE COMPANY'S ADDRESS. The Edgar version of the
Annual Report, Form 10-K and Proxy Statement will also be available on-line
through the Company's Internet web site (http://www.cuisinesolutions.com). The
Company's symbol is CUIS.
By Order of the Board of Directors
Jean-Louis Vilgrain
Chairman of the Board
22
<PAGE> 25
APPENDIX A
CUISINE SOLUTIONS, INC.
1999 STOCK OPTION PLAN
1. ADOPTION AND PURPOSE
CUISINE SOLUTIONS, INC. hereby adopts this 1999 Stock Option Plan dated
August 6, 1999. The purposes of the Plan are to promote the interests of the
Company and its stockholders by (a) attracting and retaining eligible employees
and consultants of the Company and its Subsidiaries; and (b) motivating such
personnel by enabling such personnel to participate in the long-term growth and
financial success of the Company.
2. DEFINITIONS
The following words and phrases shall have the following meanings unless
a different meaning is plainly required by the context:
(a) "Administrator" means the Board or any of its Committees appointed
pursuant to Section 4 of this Plan.
(b) "Applicable Laws" means all applicable provisions of state
corporate and securities laws, the Securities Act, the Exchange Act, the Code,
ERISA, any rules and regulations promulgated thereunder, and rules and
regulations of applicable stock exchanges (including the Nasdaq Stock Market).
(c) "Award" means a grant of Stock Options under this Plan.
(d) "Award Agreement" means a written agreement entered into between
the Company and an Optionee setting forth the terms and conditions of an Award
made to such Optionee under this Plan, in the form prescribed by the
Administrator.
(e) "Board" means the Board of Directors of the Company.
(f) "Code" means the Internal Revenue Code of 1986, as amended.
Reference to a specific section of the Code or regulation thereunder shall
include such section or regulation, any valid regulation promulgated under such
section, and any comparable provision of any future legislation or regulation
amending, supplementing or superseding such section or regulation.
(g) "Committee" means a committee of directors appointed by the Board
in accordance with Section 4 of this Plan.
(h) "Common Stock" means the common stock, par value $.01 per share,
of the Company.
<PAGE> 26
(i) "Company" means CUISINE SOLUTIONS, INC., a Delaware corporation
with its principal place of business in Alexandria, Virginia
(j) "Consultant" means any person not an Employee (including, without
limitation, a member of the Board) who provides bona fide services to the
Company or any Subsidiary, provided that such services are not rendered in
connection with the offer or sale of securities in a capital-raising
transaction.
(k) "Effective Date" means the effective date of this Plan as defined
in Section 16 of this Plan.
(l) "Employee" means an employee of the Company or a Subsidiary.
(m) "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended. Reference to a specific section of ERISA or regulation thereunder
shall include such section or regulation, any valid regulation promulgated under
such section, and any comparable provision of any future legislation or
regulation amending, supplementing or superseding such section or regulation.
(n) "Exchange Act" means the Securities Exchange Act of 1934, as
amended. Reference to a specific section of the Exchange Act or regulation
thereunder shall include such section or regulation, any valid regulation
promulgated under such section, and any comparable provision of any future
legislation or regulation amending, supplementing or superseding such section or
regulation.
(o) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:
i. If the Common Stock is listed on any established stock
exchange or a national market system, including, without
limitation, the Nasdaq National Market of the National
Association of Securities Dealers, Inc. Automated Quotation
("NASDAQ") System, its Fair Market Value shall be the
closing sales price for such stock (or the closing bid, if
no sales were reported), as quoted on such exchange or
system for such day (or, if such day is not a market
trading day for the last market trading day prior to the
time of determination), as reported in The Wall Street
Journal or such other source as the Administrator deems
reliable;
ii. If the Common Stock is quoted on the NASDAQ System (but not
on the Nasdaq National Market thereof) or regularly quoted
by a recognized securities dealer but selling prices are
not reported, its Fair Market Value shall be the mean
between the high bid and low asked prices for the Common
Stock on such day (or if such day is not a market trading
day on the last market trading day prior to the day of
determination), or;
2
<PAGE> 27
iii. In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in
good faith by the Administrator.
(p) "Optionee" means an Employee or Consultant who has been granted an
Award of a Stock Option under this Plan.
(q) "Person" means an individual, corporation, trust, firm,
partnership or other legal entity.
(r) "Plan" means this CUISINE SOLUTIONS, INC. 1999 Stock Option Plan.
(s) "Plan Year" means an annual period coinciding with the Company's
fiscal year.
(t) "Rule 16b-3" means Rule 16b-3 under the Exchange Act.
(u) "Securities Act" means the Securities Act of 1933, as amended.
Reference to a specific section of the Securities Act or regulation thereunder
shall include such section or regulation, any valid regulation promulgated under
such section, and any comparable provision of any future legislation or
regulation amending, supplementing or superseding such section or regulation.
(v) "Stock Option" means a right to buy a specified number of shares
of Common Stock at a fixed exercise price during a specified time and subject to
the terms of this Plan and such other terms and conditions, as the Administrator
may determine in accordance with this Plan.
(w) "Subsidiary" means any corporation or other entity, whether
domestic or foreign, in which the Company has or obtains, directly or
indirectly, a proprietary interest of more than 50% by reason of stock ownership
or otherwise.
3. ELIGIBILITY
Any Employee or Consultant selected by the Administrator is eligible to
receive an Award.
4. PLAN ADMINISTRATION
(a) General. The Plan shall be administered by the Board or a
Committee appointed by the Board.
i. Administration With Respect to Directors and Officers. With
respect to grants of Stock Options to Employees or
Consultants who are also officers or directors of the
Company, the Plan shall be administered (A) by the Board,
or (B) if the Board in its discretion elects, by a
Committee designated by the Board to administer the Plan,
which committee shall be composed solely of two or more
Non-Employee Directors (as defined in Rule 16b-3). Once
appointed, such Committee
3
<PAGE> 28
shall continue to serve in its designated capacity until
otherwise directed by the Board. From time to time the
Board may increase the size of the Committee and appoint
additional members thereof, remove members (with or without
cause) and appoint new members in substitution therefor,
fill vacancies, however caused, impose additional
requirements on membership in order to comply with
Applicable Laws, and remove all members of the Committee
and thereafter directly administer the Plan, all provided
that at all times during which it is the Administrator
hereunder, the Committee shall be composed solely of two or
more Non-Employee Directors.
ii. Multiple Administrative Bodies. If permitted or required by
Rule 16b-3 or other Applicable Laws, the Plan may be
administered by different bodies with respect to different
groups or classes of Persons eligible to receive Awards.
Each such administrative body shall be the Administrator
hereunder with respect to such groups or classes of
Persons.
(b) Powers of the Administrator. Subject to the provisions of the Plan
and Applicable Laws and, in the case of a Committee, the specific duties
delegated by the Board to such Committee, and subject to the approval of any
relevant authorities, including the approval, if required, of any stock exchange
upon which the Common Stock is listed, the Administrator shall have the
authority, in its discretion:
i. to determine the Fair Market Value of the Common Stock;
ii. to select the Employees and Consultants to whom Awards may
from time to time be granted hereunder;
iii. to determine whether and to what extent Awards are granted
hereunder;
iv. to determine the number of shares of Common Stock to be
covered by each such Award granted hereunder;
v. to approve forms of agreement for use under the Plan;
vi. to determine the terms and conditions of any Award granted
hereunder, including vesting schedule, period of
exercisability and exercise price;
vii. to cancel any Award in consideration of a cash payment or
alternative grant made to the holder of such cancelled
Award equal in value to the excess of the aggregate Fair
Market Value of the Common Stock subject to such cancelled
Award over the aggregate exercise price of such cancelled
Award;
viii. to cause the Company to redeem any shares of Common Stock
issued pursuant to an exercise of an Award in exchange for
a cash payment
4
<PAGE> 29
equal to the aggregate Fair Market Value of the shares of
Common Stock redeemed; provided that the Common Stock is
not then registered under the Exchange Act;
ix. to accelerate any time period relating to the exercise or
vesting of Stock Options; to extend the time period during
which a Stock Option may be exercised, subject to Section
6(a); or
x. to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan.
(c) Effect of Administrator's Decision. All decisions, determinations
and interpretations of the Administrator shall be final and binding on all
Optionees and any other holders of any Stock Options.
5. STOCK SUBJECT TO THE PROVISIONS OF THIS PLAN
(a) The stock subject to the provisions of this Plan shall either be
shares of authorized but unissued Common Stock, shares of Common Stock held as
treasury stock or previously issued shares of Common Stock reacquired by the
Company, including shares purchased on the open market. Subject to adjustment in
accordance with the provisions of Section 9, the total number of shares of
Common Stock with respect to which Awards may be granted under this Plan may not
exceed 2,600,000 shares.
(b) There shall again be available for Awards under this Plan, shares
of Common Stock represented by Awards which have been canceled, forfeited,
surrendered, terminated or expire unexercised.
6. AWARDS UNDER THIS PLAN
(a) No Stock Option shall be exercisable more than ten (10) years
after the date of grant thereof.
(b) Each Award under this Plan shall be evidenced by an Award
Agreement.
(c) No Stock Option granted under this Plan shall be treated as an
incentive stock option within the meaning of Section 422 of the Code.
7. TERMINATION OF EMPLOYMENT
(a) Upon termination of employment or service of an Optionee with the
Company for any reason, any Stock Option previously granted to the Optionee,
unless otherwise specified by the Administrator, shall, to the extent not
previously exercised, terminate and become null and void, provided that:
i. if any Optionee shall die while in the employ or service of
the Company or during either the three (3) month or one (1)
year period, whichever is applicable, specified in Section
7(a)(ii) below and at a time when such Optionee was
entitled to exercise a Stock Option as
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herein provided, the legal representative of such Optionee,
or such person who acquired such Stock Option by bequest or
inheritance or by reason of the death of the Optionee, may,
not later than one (1) year from the date of death,
exercise such Stock Option with respect to the number of
shares as to which such Stock Option was exercisable on the
date of death, to the extent the Stock Option has not been
exercised with respect to all such shares;
ii. if the employment or service of any Optionee to whom such
Stock Option shall have been granted shall terminate by
reason of the Optionee's retirement (at such age or upon
such conditions as shall be specified by the Administrator,
as the case may be), disability (as described in Section
22(e)(3) of the Code) or dismissal by the Company other
than for cause (as defined below), and such Optionee is
entitled to exercise such Stock Option on the date of
retirement, disability or dismissal, such Optionee shall
have the right to exercise such Stock Option so granted, to
the extent the Stock Option has not been exercised, in
respect of any or all of such number of shares to which
such Stock Option has not been exercised at any time up to
and including (A) three (3) months after the date of such
termination of employment in the case of termination by
reason of retirement or dismissal other than for cause and
(B) one (1) year after the date of termination of
employment in the case of termination by reason of
disability.
(b) If an Optionee voluntarily terminates his or her employment or
service with the Company, or is discharged for cause, any Stock Option granted
hereunder to such Optionee shall, unless otherwise specified by the
Administrator, immediately terminate with respect to any unexercised portion
thereof. For the purposes of the Plan, as determined by the Administrator in its
sole discretion, the term "for cause" shall mean: (A) the willful commission by
an Optionee of a criminal or other act that causes or is likely to cause
substantial economic damage to the Company or substantial injury to the business
reputation of the Company; (B) the commission by an Optionee of an act of fraud
in the performance of such Optionee's duties on behalf of the Company; or (C)
the continuing willful failure of an Optionee to perform the duties of such
Optionee to the Company (other than such failure resulting from the Optionee's
incapacity due to physical or mental illness) after written notice thereof
(specifying the particulars thereof in reasonable detail) and a reasonable
opportunity to be heard and cure such failure are given to the Optionee by the
Administrator. For purposes of the Plan, no act, or failure to act, on the
Optionee's part shall be considered "willful" unless done or omitted to be done
by the Optionee not in good faith and without reasonable belief that such
Optionee's action or omission was in the best interest of the Company.
(c) The Administrator may extend the period during which a Stock
Option may be exercised to such period, not to exceed three (3) years following
the termination of an Optionee's employment or service with the Company, as the
Administrator may determine in its sole discretion to be appropriate in any
particular instance.
8. OTHER TERMS AND CONDITIONS
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(a) Assignability. No Stock Option shall be assignable or transferable
except by will or by the laws of descent and distribution and during the
lifetime of an Optionee, Stock Options shall be exercisable only by such
Optionee.
(b) Rights as a Shareholder. An Optionee shall have no rights as a
shareholder with respect to shares of Common Stock covered by an Award until the
date the Optionee is the holder of record of such shares.
(c) No Obligation to Exercise. The grant of an Award shall impose no
obligation upon the Optionee to exercise the Award.
(d) Payments by Optionees. The Administrator may determine that Awards
for which a payment is due from an Optionee may be payable: (i) in U.S. dollars
by personal check, bank draft or money order payable to the order of the
Company, by money transfers or direct account debits; (ii) through the delivery
or deemed delivery based on attestation to the ownership of shares of Common
Stock with a Fair Market Value equal to the total payment due from the Optionee,
which Common Stock was owned by the Optionee for at least six months prior to
such delivery; (iii) by a combination of the methods described in (i) and (ii)
above; or (iv) by such other methods as the Administrator may deem appropriate.
(e) Tax Withholding. The Company shall have the power and the right to
deduct or withhold, or require an Optionee to remit to the Company, an amount
sufficient to satisfy federal, state and local taxes (including the Optionee's
FICA obligation) required to be withheld with respect to an Award, any exercise
thereof, or any dividends or other distributions payable with respect thereto.
Subject to the requirements of Applicable Laws, the Administrator, in its sole
discretion and pursuant to such procedures as it may specify from time to time,
may permit an Optionee to satisfy such tax withholding obligation, in whole or
in part, by (i) electing to have the Company withhold otherwise deliverable
shares of Common Stock having a Fair Market Value not exceeding the minimum
amount required to be withheld, or (ii) delivering to the Company shares of
Common Stock then owned by the Optionee.
(f) Restrictions on Sale and Exercise. If and to the extent required
to comply with rules promulgated under Section 16 of the Exchange Act, shares of
Common Stock acquired pursuant to an Award granted under this Plan may not be
sold or otherwise disposed of for at least six months after the date of the
grant of the Award.
(g) Requirements of Law. The granting of Awards and the issuance of
shares of Common Stock upon the exercise of Awards shall be subject to all
Applicable Laws. As a condition precedent to the issuance of shares of Common
Stock pursuant to the exercise of an Award, the Company may require the Optionee
to take any reasonable action to comply with such Applicable Laws.
(h) Non-Exclusivity of the Plan. Neither the adoption of the Plan by
the Board nor the submission of the Plan to the stockholders of the Company for
approval shall be construed as creating any limitations on the power of the
Board to adopt such other incentive arrangements as it may deem desirable,
including, without limitation, the granting of stock options and the awarding of
stock and cash otherwise than under the Plan, and such arrangements may be
either generally applicable or applicable only in specific cases.
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<PAGE> 32
(i) Unfunded Plan. Neither the Company nor any Subsidiary shall be
required to segregate any cash or any shares of Common Stock which may at any
time be represented by Awards and the Plan shall constitute an "unfunded" plan
of the Company. Neither the Company nor any Subsidiary shall, by any provisions
of the Plan, be deemed to be a trustee of any Common Stock or any other
property, and the liabilities of the Company and any Subsidiary to any Person
pursuant to the Plan shall be those of a debtor pursuant to such contract
obligations as are created by or pursuant to the Plan, and the rights of any
Optionee, Employee, former employee or beneficiary under the Plan shall be
limited to those of a general creditor of the Company or the applicable
Subsidiary, as the case may be. In its sole discretion, the Board may authorize
the creation of trusts or other arrangements to meet the obligations of the
Company under the Plan, provided, however, that the existence of such trusts or
other arrangements is consistent with the unfunded status of the Plan.
(j) Legends. Each certificate evidencing Common Stock subject to an
Award shall bear such legends as the Administrator deems necessary or
appropriate to reflect or refer to any terms, conditions or restrictions of the
Award applicable to such shares, including, without limitation, any to the
effect that the shares represented thereby may not be disposed of unless the
Company has received an opinion of counsel, acceptable to the Company, that such
disposition will not violate any federal or state securities laws.
(k) Company's Rights. The grant of Awards pursuant to the Plan shall
not affect in any way the right or power of the Company to make
reclassifications, reorganizations or other changes of or to its capital or
business structure or to merge, consolidate, liquidate, sell or otherwise
dispose of all or any part of its business or assets.
(l) Designation of Beneficiaries. If permitted by the Administrator,
an Optionee designate a beneficiary or beneficiaries in the event of the death
of the Optionee and may change such designation from time to time by filing a
written designation of beneficiary or beneficiaries with the Administrator on a
form to be prescribed by it, provided that no such designation shall be
effective unless so filed prior to the death of such Optionee.
(m) Buyout Provisions. Any provision of this Plan or any Award
Agreement to the contrary notwithstanding, subject to Applicable Laws, the
Administrator may cause: (1) any Award granted hereunder to be cancelled in
consideration of a cash payment or alternative grant made to the holder of such
cancelled Award equal in value to the excess of the aggregate Fair Market Value
of the Common Stock subject to such cancelled Award over the aggregate exercise
price of such cancelled Award; and (2) the Company to redeem any shares of
Common Stock issued pursuant to an exercise of an Award in exchange for a cash
payment equal to the aggregate Fair Market Value of the shares of Common Stock
redeemed; provided that the Common Stock is not then registered under the
Exchange Act.
9. AMENDMENTS
(a) Except as otherwise provided in this Plan, the Board may at any
time terminate and, from time to time, may amend or modify this Plan. Any such
action of the Board may be taken without the approval of the Company's
shareholders, but only to the extent that such shareholder approval is not
required by Applicable Laws, including specifically Rule 16b-3.
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<PAGE> 33
(b) No amendment, modification or termination of this Plan shall in
any manner adversely affect any Awards theretofore granted to an Optionee under
this Plan without the consent of such Optionee.
10. RECAPITALIZATION
The aggregate number of shares of Common Stock as to which Awards may be
granted to Optionees, the number of shares covered by each outstanding Award,
and the exercise price per share in each such Award, shall all be appropriately
adjusted in the Board's discretion for any extraordinary dividend or for any
increase or decrease in the number of issued shares of Common Stock and any
conversion of Common Stock into other securities or property, resulting from a
stock split, stock dividend, combination or exchange of shares, exchange for
other securities, reclassification, reorganization, redesignation, merger,
consolidation, recapitalization or other such change. Any such adjustment may
provide in the Board's discretion that any fractional shares which result from
such change shall be rounded, up or down, to the nearest whole number of shares.
11. NO RIGHT TO EMPLOYMENT
No person shall have any claim or right to be granted an Award, and the
grant of an Award shall not be construed as giving an Optionee the right to be
retained in the employ of the Company or a Subsidiary. Nothing in this Plan
shall interfere with or limit in any way the right of the Company or any
Subsidiary to terminate any Optionee's employment at any time, nor confer upon
any Optionee any right to continue in the employ of the Company or any
Subsidiary.
12. GOVERNING LAW
To the extent that federal laws do not otherwise control, this Plan shall
be construed in accordance with and governed by the law of the State of
Delaware.
13. CAPTIONS
Captions are provided herein for convenience of reference only, and shall
not serve as a basis for interpretation or construction of this Plan.
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<PAGE> 34
14. RESERVATION OF SHARES
The Company, during the term of the Plan, will at all times reserve and
keep available the number of shares of Common Stock as shall be sufficient to
satisfy the requirements of the Plan. The inability of the Company to obtain the
necessary approvals from any regulatory body having jurisdiction or approval
deemed necessary by the Company's counsel to the lawful issuance and sale of any
shares of Common Stock under the Plan shall relieve the Company of any liability
in respect of the nonissuance or sale of such shares of Common Stock as to which
such requisite authority shall not have been obtained.
15. SAVINGS CLAUSE
This Plan is intended to comply in all aspects with Applicable Laws,
including, with respect to those Optionees who are executive officers or
directors of the Company, Rule 16b-3. In case any one or more of the provisions
of this Plan shall be held invalid, illegal or unenforceable in any respect
under Applicable Laws (including Rule 16b-3), the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby and the invalid, illegal or unenforceable provision shall be
deemed null and void; however, to the extent permissible by law, any provision
which could be deemed null and void shall first be construed, interpreted or
revised retroactively to permit this Plan to be construed in compliance with all
Applicable Laws (including Rule 16b-3) so as to foster the intent of this Plan.
Notwithstanding anything in this Plan to the contrary, the Administrator, in its
discretion, may bifurcate this Plan so as to restrict, limit or condition the
use of any provision of this Plan with respect to Optionees who are officers or
directors of the Company without so restricting, limiting or conditioning this
Plan with respect to other Optionees.
16. EFFECTIVE DATE AND TERM
The Effective Date of this Plan shall be the date of its approval by the
Company's shareholders. If such approval is not obtained on or before December
31, 1999, this Plan shall terminate on such date. No new Awards shall be granted
under this Plan after the tenth anniversary of the Effective Date. Unless
otherwise expressly provided in the Plan or in an applicable Award Agreement,
any Award granted hereunder may, and the authority of the Board or the
Administrator to amend, alter, adjust, suspend, discontinue, or terminate any
such Award or to waive any conditions or rights under any such Award shall,
continue after the authority for grant of new Awards hereunder has been
exhausted.
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<PAGE> 35
PROXY
CUISINE SOLUTIONS, INC.
85 S. BRAGG STREET, SUITE 600
ALEXANDRIA, VA 22312
- -----------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Jean-Louis Vilgrain and Stanislas Vilgrain, and
each of them, as proxies, with power of substitution and hereby authorizes them
to represent and to vote, as designated below, the shares of common stock of
Cuisine Solutions, Inc. held of record by the undersigned on September 30, 1999
at the annual meeting of stockholders to be held on October 26, 1999 or any
adjournment thereof. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITS NOMINEES
LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2.
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS: [ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees listed below
</TABLE>
Jean-Louis Vilgrain, Stanislas Vilgrain, Alexandre Vilgrain, Bruno Goussault,
David Jordan, Charles McGettigan, Nancy Schaefer and Carl M. Youngman
(INSTRUCTION: To withhold authority to vote for any individual nominee mark that
nominee's name in the space provided below.)
2. 1999 STOCK OPTION PLAN: [ ] FOR [ ] AGAINST [ ] ABSTAIN
To approve or disapprove adoption of the 1999 Stock Option Plan
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before this meeting.
(THIS PROXY CONTINUES AND MUST BE SIGNED ON THE REVERSE SIDE.)
THIS PROXY, WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" ALL NOMINEES LISTED IN PROPOSAL 1, "FOR" PROPOSAL 2, AND IN THE
DISCRETION OF THE PROXIES ON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING.
Please sign below exactly as name
appears on the account. When shares are
held by joint tenants, both should sign.
When signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
Date: , 1999
--------------------------
-----------------------------------
Signature
-----------------------------------
Signature if held jointly.
PLEASE MARK, SIGN DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
