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:
|X| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
Eskimo Pie Corporation
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(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
|_| $125 per Exchange Act Rules O-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item
22(a)(2) of Schedule 14A.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and O-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule O-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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|_| Fee paid previously by written preliminary materials.
|_|Check box if any part of the fee is offset as provided by Exchange Act Rule
O-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>
PRELIMINARY COPY, SUBJECT TO COMPLETION, DATED JULY 15, 1999
[ESKIMO PIE CORPORATION LOGO]
July 23, 1999
Dear Fellow Shareholder:
You are cordially invited to attend the Annual Meeting of
Shareholders to be held on Wednesday, September 8, 1999, at 10:00 a.m. in the
Auditorium of the Crestar Center, 919 East Main Street, Richmond, Virginia.
Enclosed with this letter is a formal notice of the meeting, together with a
proxy statement and proxy form. This Annual Meeting of Shareholders was
previously scheduled for May 12, 1999. Any materials (including the proxy
statement and proxy form) you received from the Company in connection with the
previously scheduled May 12 meeting have been withdrawn and are no longer valid.
Any Proxy Card You Previously Completed And Returned In Connection
With The May 12, 1999, Annual Meeting Is NO LONGER VALID. You Must Fill Out A
NEW Proxy Card If You Do Not Plan To Attend The September 8, 1999, Annual
Meeting In Person But Want Your Vote To Be Counted.
As you will see from the enclosed notice, you will be asked to elect
seven directors to serve until the next Annual Meeting, to ratify the
designation of independent auditors for 1999 and, if properly presented, to vote
on two Bylaw amendments which may be proposed at the meeting by Yogen Fruz
World-Wide Incorporated ("Yogen Fruz"), a shareholder. In addition to the formal
agenda, we expect to report on the Company's business activities and to answer
any questions properly brought before the meeting.
You may have already received proxy solicitation materials from Yogen
Fruz in connection with matters Yogen Fruz may present at the September 8
meeting. These matters are expected to be: a slate of directors chosen by Yogen
Fruz; a Bylaw amendment relating to the Company's Shareholder Rights Plan; and a
Bylaw amendment relating to shareholders' ability to call a special meeting of
shareholders. The Board of Directors believes that these proposals are not in
the best interests of the Company and its shareholders and urges you to vote
against these proposals.
- --------------------------------------------------------------------------------
Please sign, date and return the WHITE PROXY CARD in the enclosed
postage-paid envelope to vote FOR your Board of Directors and AGAINST the
Yogen Fruz Proposals. Please DISCARD any proxy card sent to you by Yogen
Fruz. If you have any questions or need assistance in voting your shares,
please call our proxy solicitor, Corporate Investor Communications, Inc.
toll-free at: 877-460-4351.
- --------------------------------------------------------------------------------
<PAGE>
If you do not plan to attend the meeting, please vote, sign, date and
promptly return the enclosed proxy in the enclosed postage-paid envelope. By
doing so, you will be sure that your shares will be represented and voted at the
meeting. If you choose to attend the meeting, you may revoke your proxy and vote
in person.
YOUR VOTE IS VERY IMPORTANT NO MATTER HOW FEW OR HOW MANY SHARES YOU
OWN! We encourage you to vote your shares as soon as possible.
We look forward to seeing you if you are able to attend. Whether or
not you attend, please sign, date and return the enclosed WHITE PROXY CARD in
the postage-paid envelope provided to you. We hope you will enjoy our products
and recommend them to your friends.
Sincerely,
Arnold H. Dreyfuss
Chairman of the Board
<PAGE>
ESKIMO PIE CORPORATION
----------------------
NEW! NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------------------
TO BE HELD WEDNESDAY, September 8, 1999
(previously scheduled for May 12, 1999)
The Annual Meeting of Shareholders of Eskimo Pie Corporation (the
"Company") will be held on September 8, 1999, at 10:00 a.m. in the Auditorium of
the Crestar Center, 919 East Main Street, Richmond, Virginia, for the following
purposes:
1. To elect seven directors to serve until the 2000 Annual Meeting
of Shareholders.
-------------------------------------------------------
The Board of Directors recommends a vote FOR the
election of the existing director nominees proposed for
reelection by the Company, as described in the
Company's proxy statement.
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2. To ratify the selection of Ernst & Young LLP as independent
auditors for the current fiscal year.
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The Board of Directors recommends a vote FOR this
proposal.
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3. To vote on a proposal by Yogen Fruz World-Wide Incorporated, if
properly presented, as described in the Company's proxy
statement, relating to the Company's Shareholder Rights Plan.
-------------------------------------------------------
The Board of Directors recommends a vote AGAINST this
proposal.
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4. To vote on a proposal by Yogen Fruz World-Wide Incorporated, if
properly presented, as described in the Company's proxy
statement, relating to the ability of certain shareholders to
call a special meeting of shareholders.
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The Board of Directors recommends a vote AGAINST this
proposal.
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5. To transact such other business as may properly come before the
meeting or any adjournments or postponements thereof.
<PAGE>
The Board of Directors has fixed the close of business on July 23,
1999, as the record date for determination of shareholders entitled to notice of
and to vote at the meeting and any adjournments or postponements thereof.
By Order of the Board of Directors,
Thomas M. Mishoe, Jr.
Chief Financial Officer, Vice President,
Treasurer and Corporate Secretary
July 23, 1999
Please complete and return the enclosed NEW WHITE PROXY CARD in the
postage-paid envelope that has been provided. (Any proxy card you previously
completed in connection with the May 12, 1999, Annual Meeting DOES NOT COUNT.)
If you attend the meeting in person, you may withdraw your proxy and vote your
own shares.
901 Moorefield Park Drive, Richmond, Virginia 23236
<PAGE>
ESKIMO PIE CORPORATION
901 Moorefield Park Drive
Richmond, Virginia 23236
----------------------------
NEW! PROXY STATEMENT
----------------------------
ANNUAL MEETING OF SHAREHOLDERS
September 8, 1999
General
The enclosed proxy is solicited by the Board of Directors of Eskimo
Pie Corporation (the "Company") for the Annual Meeting of Shareholders ("Annual
Meeting") of the Company to be held Wednesday, September 8, 1999, at the time
and place and for the purposes set forth in the accompanying Notice of Annual
Meeting of Shareholders or any adjournments or postponements thereof.
ANY PROXY CARD YOU PREVIOUSLY COMPLETED IN CONNECTION WITH THE MAY
12, 1999, ANNUAL MEETING IS NO LONGER VALID. YOU MUST COMPLETE A NEW PROXY CARD
IF YOU DO NOT ATTEND THE ANNUAL MEETING AND WANT YOUR VOTE TO BE COUNTED.
The approximate mailing date of this Proxy Statement ("Proxy
Statement") and the accompanying proxy form is July 26, 1999.
A copy of the Company's Annual Report for the year ended December 31,
1998, is enclosed. You may also obtain without charge a copy of the Company's
1998 Annual Report on Form 10-K, as filed with the Securities and Exchange
Commission, exclusive of certain exhibits, by writing to the Corporate Secretary
at 901 Moorefield Park Drive, Richmond, Virginia 23236. The 1998 Form 10-K may
also be accessed on the worldwide web at www.cfonews.com/epie/.
Voting Rights and Revocability of Proxies
You are urged to sign and date the enclosed proxy card and return it
in the enclosed postage-paid envelope whether or not you attend the meeting. You
have the right to revoke your proxy at any time prior to the Annual Meeting by
submitting written notice to the Company, by submitting another proxy bearing a
later date, or by attending the Annual Meeting and requesting to vote in person.
Only those shareholders of record at the close of business on July
23, 1999, are entitled to notice of and to vote at the Annual Meeting or any
adjournments or postponements thereof. The number of shares of the Company's
Common Stock outstanding and entitled to vote as of the record date was
[3,462,850]. A majority of the shares outstanding and entitled to vote,
represented in person or by proxy, will constitute a quorum for the transaction
of business.
<PAGE>
Voting of Proxies
Yogen Fruz World-Wide Incorporated, a Canadian corporation ("Yogen
Fruz"), has informed the Company that Yogen Fruz may appear at the Annual
Meeting to nominate seven individuals for election to the Board of Directors in
opposition to the Company's nominees for election and to make shareholder
proposals concerning: (i) a Bylaw amendment that would require the Board to
repeal or amend the Company's Shareholder Rights Plan upon a majority vote of
the shareholders; and (ii) a Bylaw amendment that would allow holders of 15% of
the outstanding shares of the Company's Common Stock to call a special meeting
of shareholders (together, the "Yogen Fruz Proposals"). The Board of Directors
is soliciting your vote FOR the Company's slate of nominees for election to the
Board of Directors, FOR the ratification of the selection of Ernst & Young LLP
as independent auditors for the 1999 fiscal year and AGAINST the Yogen Fruz
Proposals. Unless contrary instructions are indicated on the proxy card, all
shares represented by valid proxies received pursuant to this solicitation (and
not revoked) will be voted FOR the election of all of the Company's nominees for
director named in this Proxy Statement, FOR ratification of the selection of
Ernst & Young LLP as independent auditors for 1999 and AGAINST the Yogen Fruz
Proposals. If you specify a different choice on the proxy card, your shares will
be voted as you have specified.
Method of Counting Votes
Votes will be counted and certified by an independent Inspector of
Elections. Under SEC rules, boxes and a designated blank space are provided on
the proxy card for you to mark if you wish to vote "for" or "against" or
"abstain" from voting on one or more of the proposals, or to vote "for" or
withhold authority to vote for one or more of the nominees for director.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of June 30, 1999, the number and
percentage of shares of the Company's Common Stock held by persons known to the
Company to be the owners of more than five percent of the Company's issued and
outstanding Common Stock, each of the Company's directors and nominees for
director, the executive officers named in the Summary Compensation Table, and
all of the Company's directors and executive officers as a group:
2
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Beneficial Ownership Common Stock
Name and Address of Beneficial Owner of Common Stock(1) Outstanding
- ------------------------------------ ------------------ -----------
<S> <C> <C>
Yogen Fruz World-Wide, Inc. (2) 587,700 17.0%
Toronto, Canada
Peak Management, Inc. (3) 369,600 10.7%
Boston, Massachusetts
Gabelli Funds, Inc. (4) 245,700 7.1%
Rye, New York
Arnold H. Dreyfuss 25,766 (5)(6)(7) *
Richmond, Virginia
Kimberly P. Ferryman 13,498 (6)(7) *
Richmond, Virginia
Wilson H. Flohr, Jr. 9,043 (5)(8) *
Richmond, Virginia
Craig L. Hettrich 3,134 (6)(7) *
Richmond, Virginia
F. Claiborne Johnston, Jr. 3,100 (5)(9) *
Richmond, Virginia
V. Stephen Kangisser 7,691 (6)(7) *
Richmond, Virginia
David B. Kewer 55,474 (6)(7) 1.6%
Richmond, Virginia
Daniel J. Ludeman 6,522 (5) *
Richmond, Virginia
Judith B. McBee 3,043 (5) *
Richmond, Virginia
Thomas M. Mishoe, Jr. 13,498 (6)(7) *
Richmond, Virginia
Robert C. Sledd 1,416 (5) *
Richmond, Virginia
All Directors and Executive Officers 147,489 (5)(6)(7) 4.1%
as a Group (12 persons)
- ----------------------------------------
* Beneficial ownership does not exceed one percent of the
outstanding shares of Common Stock.
</TABLE>
3
<PAGE>
(1) Except to the extent that shares may be held in joint tenancy with a
spouse or as otherwise indicated, each director or executive officer has
sole voting and investment power with respect to the shares shown. The
beneficial ownership shown for the three shareholders, other than
directors and executive officers of the Company, is based upon the most
recent filings received by the Company for such shareholders pursuant to
Section 13(d) of the Securities Exchange Act of 1934 (Exchange Act).
(2) The Schedule 13D, dated December 10, 1998, filed by Yogen Fruz, as
amended by Amendment Nos. 1, 2 and 3, dated December 17, 1998, July 1,
1999, and July 2, 1999, respectively, states that Yogen Fruz acquired the
shares of the Company's Common Stock reflected in the filing with a view
toward acquiring control of the Company for the purpose of thereafter
causing the Company to take such actions as Yogen Fruz deems advisable,
including a sale of all or part of the Company to a third party, a change
in the management of the Company and/or a restructuring of the Company.
(3) Peak Management, Inc., Peak Investment Limited Partnership and Peter H.
Kamin, have previously reported their holdings of the Company's Common
Stock on Schedule 13G, which is permitted for institutional investors
that certify passive investment intent with respect to such holdings. The
holdings of the collective Peak entities are now reported on a Schedule
13D, dated November 30, 1998, which reflects their intention of engaging
in discussions with the Company or other third parties about a possible
sale or recapitalization of the Company or other change in control
transaction in which they may participate. This filing indicates that Mr.
Kamin has shared voting and dispositive power over all the shares of the
Company's Common Stock reported as beneficially owned by the Peak
entities in the preceding table.
(4) Amendment No. 11 to the Schedule 13D, dated January 14, 1999, for Gabelli
Funds, Inc. reflects beneficial ownership of the reported shares of
Company Common Stock by Gabelli Funds, Inc., GAMCO Investors, Inc.,
Gabelli Associates, Ltd. and Mario J. Gabelli and indicates that Mr.
Gabelli directly or indirectly controls, or acts as Chief Investment
Officer for, these various entities.
(5) Includes shares subject to presently exercisable stock options and shares
of restricted and unrestricted stock granted to non-employee directors as
compensation for board duties under the 1996 Incentive Stock Plan, as
more fully described under "Compensation of Directors."
(6) Includes shares subject to presently exercisable stock options and/or
shares of restricted stock as more fully described in the "Summary
Compensation Table" and table of "Fiscal Year-End Option Values".
(7) Includes shares held by executive officers in the Company's 401(k)
Savings Plan and/or Employee Stock Purchase Plan. Employees, exclusive of
the executive officers, held 21,712 shares of Common Stock in these plans
on June 30, 1999. Each participant in the respective plans has the right
to instruct the plans' trustee with respect to the voting of shares
allocated to his or her account.
(8) Includes 1,500 shares held by Mr. Flohr's wife; 2,000 shares held by Mr.
Flohr's wife as trustee; and 200 shares held as custodian.
(9) Includes 400 shares held by, or for the benefit of, a family member
living in Mr. Johnston's household, as to which shares Mr. Johnston
disclaims beneficial ownership.
4
<PAGE>
PROPOSAL ONE: Election of Directors
Seven directors are to be elected at the Annual Meeting. The seven
persons named below, each of whom currently serves as a director of the Company,
will be nominated by the Company to serve as directors until the 2000 Annual
Meeting or until their successors have been duly elected and have qualified. The
persons named in the enclosed proxy will vote for the election of the nominees
named below unless authority is withheld. If, for any reason, any of the persons
named below should become unavailable to serve, an event which management does
not anticipate, proxies will be voted for the remaining nominees and such other
person or persons as the Board of Directors of the Company may designate.
Biographical information follows for each of the Company's seven
nominees for director. There are no family relationships among the directors or
executive officers of the Company.
Vote Required and Board Recommendation
With regard to the election of directors, votes may be cast in favor
or withheld. If a quorum is present, the seven nominees for director receiving
the highest number of affirmative votes shall be elected as directors. Votes
withheld from any director are counted for purposes of determining the presence
or absence of a quorum for the transaction of business, but have no other legal
effect on the election of directors under Virginia law.
Your Board of Directors recommends that you vote FOR the election to
the Board of Directors of each of the Company's nominees set forth below.
<TABLE>
COMPANY'S NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
<CAPTION>
Director Principal Occupation During Past Five Years;
Name (Age) Since Directorship in other Public Companies
---------- ----- --------------------------------------
<S> <C> <C>
Arnold H. Dreyfuss (70) 1992 From September 1996 through March 1998, Chief Executive
Officer of the Company. Also, President of Jupiter Ocean
and Racquet Club of Jupiter, Florida; formerly (1982 until
1991), Chairman of the Board and Chief Executive Officer of
Hamilton Beach/Proctor-Silex, Inc., a small appliance
manufacturer headquartered in Richmond, Virginia; director
of Mentor Growth Trust, Inc.
Wilson H. Flohr, Jr. (52) 1992 Retired (in January, 1999) Executive Vice President and
General Manager of Paramount's Kings Dominion, a regional
family theme park in Doswell, Virginia.
F. Claiborne Johnston, Jr. (56) 1992 Attorney-at-Law, Partner in the law firm of Mays &
Valentine, L.L.P., Richmond, Virginia.
5
<PAGE>
David B. Kewer (44) 1997 Effective March, 1998, President and Chief Executive Officer
of the Company. Previously, beginning March, 1997,
President and Chief Operating Officer of the Company.
Formerly (1993 until 1997), President of Willy Wonka Candy
Factory, a subsidiary of Nestle USA, Inc. From 1988 through
1993, various senior level positions at Drumstick Co. which
was acquired by Nestle in 1991.
Daniel J. Ludeman (41) 1997 Chairman and Chief Executive Officer of Mentor Investment
Group, LLC, a Richmond, Virginia based asset management
company; director of Mentor Series Trust, Mentor
Institutional Trust, Mentor Income Fund, Mentor Cash
Resource Trust and American's Utility Fund.
Judith B. McBee (52) 1996 Senior Vice President, Marketing of Hamilton Beach/
Proctor-Silex, Inc., a small appliance manufacturer
headquartered in Richmond, Virginia, since January, 1997;
previously Executive Vice President, Marketing (June, 1994
to December, 1996) and Executive Vice President,
Sales/Marketing (January, 1990, to June, 1994), Hamilton
Beach/Proctor-Silex, Inc.
Robert C. Sledd (46) 1998 Chairman of the Board (since February, 1995) and Chief
Executive Officer (since 1987) of Performance Food Group
Company, a foodservice distributor headquartered in
Richmond, Virginia; director of SCP Pool Corporation.
</TABLE>
Board and Committee Meetings and Attendance
The Board of Directors held eleven meetings during the fiscal year
ended December 31, 1998. All directors attended at least 90% of all meetings of
the Board and committees on which they served.
The Board has standing Executive, Compensation and Audit Committees.
The Executive Committee has a wide range of powers, but its primary duty is to
act, if necessary, between scheduled Board meetings. For such purpose, the
Executive Committee possesses all the powers of the Board in management of the
business and affairs of the Company except as otherwise limited by Virginia law.
The Executive Committee did not meet or otherwise take action during the fiscal
year ended December 31, 1998. Members of the Executive Committee are Messrs.
Dreyfuss (Chairman), Flohr, Johnston and Kewer and Ms. McBee.
The Compensation Committee is responsible for setting and
administering the policies and programs that govern both annual compensation for
the Company's executive officers and employee stock ownership. During the fiscal
year ended December 31, 1998, the Compensation Committee met three times.
Members of the Compensation Committee are Messrs. Flohr (Chairman) and Sledd and
Ms. McBee.
The Audit Committee recommends the appointment of a firm of
independent public accountants to audit the Company's financial statements, as
well as reviews and approves the scope, purpose and type of audit services to be
performed by the external auditors. The Audit Committee met two times during the
fiscal year ended December 31, 1998. Members of the Audit Committee are Messrs.
Ludeman (Chairman), Johnston, and Sledd.
Compensation Committee Interlocks and Insider Participation
Members of the Compensation Committee are Messrs. Flohr (Chairman)
and Sledd and Ms. McBee. No current member of the Compensation Committee is or
has been an employee of the Company or has any relationship to the Company that
is required to be disclosed pursuant to regulations of the Securities and
Exchange Commission. Furthermore, none of the Company's executive officers
serves on the board of directors of any company of which a Compensation
Committee member is an employee.
Compensation of Directors
Each director of the Company who is not also an executive officer of
the Company receives (a) an annual retainer of $7,000; (b) a $500 fee for
attendance at each Board Meeting; and (c) a $250 fee for attendance at each
Committee Meeting. The Chairman of the Board, who, beginning January 1, 1999, no
longer receives a salary for his duties, receives director's compensation at two
times that paid to other non-employee directors. Beginning in 1998, directors
may elect to receive payment of the annual retainer and meeting fees in Common
Stock of the Company under the 1996 Incentive Stock Plan, as amended. Under the
1996 Incentive Stock Plan, outside directors also automatically receive a stock
option grant for 200 shares and a restricted stock grant for 200 shares of the
Company's Common Stock, each year, as part of their compensation for Board
service. Each outside director is also reimbursed for usual and ordinary
expenses of meeting attendance. A director who is also an executive officer of
the Company receives no additional compensation for serving as a director.
Certain Relationships
Mays & Valentine, L.L.P., a law firm of which F. Claiborne Johnston,
Jr., a current director and nominee for director of the Company, is a partner,
was retained to perform legal services for the Company and its subsidiaries
during the last fiscal year. It is anticipated that the firm will continue to
provide such services to the Company and its subsidiaries during the current
fiscal year. The amounts paid by the Company were based upon an agreed-upon fee
arrangement for services rendered, which the Company believes to be consistent
with fees charged for similar services by other comparable firms.
Daniel J. Ludeman, a current director and nominee for director of the
Company, is the Chairman and Chief Executive Officer of Mentor Investment Group,
of which Wheat First Butcher Singer, Inc. ("Wheat") is the majority shareholder.
First Union Corporation, the parent of Wheat, also wholly owns First Union
Capital Markets Corp. ("First Union"), of which Bowles Hollowell Conner ("BHC")
is a division. First Union, Wheat and BHC have provided the Company with
investment banking services and First Union provides the Company with long term
financing. It is anticipated that First Union, Wheat and BHC will continue to
provide such services to the Company based upon agreed-upon fee arrangements and
interest rates which are consistent with amounts charged for similar services by
other comparable firms.
7
<PAGE>
EXECUTIVE COMPENSATION
The following table lists all compensation paid or accrued by the
Company for each person who served as the Chief Executive Officer at any time
during the past fiscal year and the Company's four most highly paid executive
officers, other than the Chief Executive Officer, whose total annual salary and
bonus for the year ended December 31, 1998, exceeded $100,000. Messrs. Dreyfuss,
Mishoe and Kangisser first became executive officers of the Company in 1996. Mr.
Kewer was employed by the Company effective March 1, 1997, and became Chief
Executive Officer on March 1, 1998, succeeding Mr. Dreyfuss who had previously
served as Chief Executive Officer since September, 1996. Mr. Hettrich was
employed by the Company in February, 1998.
<TABLE>
Summary Compensation Table
<CAPTION>
Annual Compensation Long Term Compensation
------------------- ----------------------
Restricted Securities
Name, Age and Other Annual Stock Underlying All Other
Principal Position Year Salary Bonus Compensation(1) Awards Options(#) Compensation (2)
- ------------------ ---- ------ ----- --------------- ------ ---------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Arnold H. Dreyfuss (70) 1998 $70,417 ---- ---- ---- 7,500 $270
Chairman of the Board 1997 131,250 ---- ---- ---- 7,500 315
1996 42,115 ---- ---- $41,125 (3) 200 (4) 11,647
David B. Kewer (44) 1998 213,333 ---- $23,042 ---- 10,000 9,460
President and Chief 1997 166,667 $40,000(5) 102,182 125,000 (6) 50,000 525
Executive Officer 1996 ---- ---- ---- ---- ---- ----
Kimberly P. Ferryman (42) 1998 99,100 3,000 10,312 ---- 3,000 2,973
Vice President, Quality 1997 93,600 ---- 9,815 ---- 13,485 2,375
Assurance and Product 1996 87,500 ---- ---- ---- 10,000 2,625
Development
Craig L. Hettrich (39) 1998 105,417 15,391 87,223 ---- 3,000 ----
General Manager, 1997 ---- ---- ---- ---- ---- ----
Foodservice Division 1996 ---- ---- ---- ---- ---- ----
V. Stephen Kangisser (47) 1998 119,792 5,000 ---- ---- 4,500 3,594
Vice President, Sales 1997 112,002 ---- 52,558 ---- 7,639 2,023
1996 67,286 ---- 18,161 ---- 2,000 ----
Thomas M. Mishoe, Jr. (46) 1998 134,833 ---- 16,217 ---- 4,500 2,680
Chief Financial Officer, 1997 127,500 ---- ---- ---- 7,709 2,495
Vice President, Secretary 1996 104,154 ---- 24,444 ---- 12,000 ----
and Treasurer
</TABLE>
1) Of the total amounts reported as "Other Annual Compensation", the
following amounts are attributable to relocation expenses incurred in
connection with the respective officer's employment by the Company; Mr.
Hettrich - $78,398 in 1998, Mr. Kangisser - $43,877 in 1997 and $16,563
in 1996, Mr. Kewer - $10,242 in 1998 and $92,182 in 1997, and Mr. Mishoe
- $19,912 in 1996. The remaining amounts relate primarily to automobile
allowances.
2) Except for Mr. Dreyfuss whose 1996 amount reflects amounts earned as an
outside director prior to his appointment as Chief Executive Officer, all
amounts reflect the Company's matching contributions to the Company's
401(k) Savings Plan and Employee Stock Purchase Plan.
8
<PAGE>
3) Reflects an automatic award of 200 shares made to Mr. Dreyfuss on May 2,
1996, as an outside director under the 1996 Incentive Stock Plan and an
award of 2,500 shares made as of September 19, 1996, upon Mr. Dreyfuss'
appointment as Chief Executive Officer. The May 2, 1996, award vested on
May 2, 1999. The September 19, 1996, award vested in four installments,
the first 1,000 shares vested six months from the grant date, the next
three installments of 500 shares each vested when the market price
(average of 20 consecutive trading days) of the Company's Common Stock
reached $10.50, $12.00 and $13.00 per share.
4) Reflects options granted to Mr. Dreyfuss on May 2, 1996, as an outside
director under the 1996 Incentive Stock Plan.
5) Reflects amounts paid to Mr. Kewer as incentive to join the Company as
President and Chief Operating Officer.
6) Reflects an award of 10,000 shares made to Mr. Kewer upon his employment
by the Company on March 1, 1997. The award vests in three installments,
the first 2,500 shares vested on March 1, 1998; 2,500 additional shares
vested on March 1, 1999, and the remaining 5,000 shares vest on March 1,
2000. During the period of restriction, Mr. Kewer has the right to vote
the shares and to receive dividends on the shares of restricted stock as
and when paid on the Company's Common Stock. At December 31, 1998, Mr.
Kewer's restricted stock holdings had a value of $99,375.
The following table sets forth information regarding option grants
made during the year ended December 31, 1998, for each of the named executive
officers.
<TABLE>
OPTIONS GRANTED IN LAST FISCAL YEAR
<CAPTION>
Number of Percentage of Potential Realizable Value at Assumed
Securities Total Options Exercise Grant Date Annual Rates of Stock Appreciation
Underlying Granted to Price Market During Option Term (3)
Options Employees in Per Price Expiration ----------------------
Granted 1998 Share Per Share Date 5% 10%
------- ---- ----- --------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Arnold H. Dreyfuss 7,500 (1) 9% $13.375 $13.375 3/6/08 $63,075 $159,900
David B. Kewer 10,000 (2) 12% 13.375 13.375 3/6/08 84,100 213,200
Kimberly P. Ferryman 13.375 13.375 3/6/08 25,230 63,960
3,000 (2) 4%
Craig L. Hettrich 13.375 13.375 3/6/08 25,230 63,960
3,000 (2) 4%
V. Stephen Kangisser 4,500 (2) 6% 13.375 13.375 3/6/08 37,845 95,940
Thomas M. Mishoe, Jr. 4,500 (2) 6% 13.375 13.375 3/6/08 37,845 95,940
</TABLE>
(1) Grant was made under the 1996 Incentive Stock Plan and was immediately
exercisable on the grant date.
(2) Grants were made under the Company's 1996 Incentive Stock Plan and become
exercisable in increments of one-third of the shares subject to option on
each of the first, second and third anniversaries of the March 6, 1998,
grant date.
9
<PAGE>
(3) The dollar amounts under the 5% and 10% columns are the result of
calculations at assumed rates of stock price appreciation set by the
Securities and Exchange Commission. The dollar amounts shown are not
intended to forecast possible future price appreciation, if any, for the
Company's Common Stock.
The following table sets forth information regarding year-end option
values at December 31, 1998, for each of the named executive officers.
<TABLE>
Fiscal Year-End Option Values (1)
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at Year-End Options at Year-End (2)
------------------- -----------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Arnold H. Dreyfuss 15,200 0 $5,625 $0
David B. Kewer 20,000 40,000 65,000 97,500
Kimberly P. Ferryman 5,000 21,485 0 10,114
Craig L. Hettrich 0 3,000 0 0
V. Stephen Kangisser 0 12,139 0 5,729
Thomas M. Mishoe, Jr. 5,000 17,209 0 5,782
</TABLE>
(1) The columns "Number of Shares Acquired on Exercise" and "Value Realized"
have been omitted because no options were exercised by the named
executive officers during the year ended December 31, 1998.
(2) The value included in this column is the difference between the market
value of the Company's Common Stock of $13.25 on December 31, 1998, and
the exercise price of the respective in-the-money options.
10
<PAGE>
Retirement Benefits
The following table sets forth information related to the annual
benefits payable upon retirement under the Company's defined benefit pension
plans to persons with the specified final average earnings and years of service
as a salaried employee of the Company, assuming a continuation of service and
1998 compensation to age 65, retirement at age 65, and an annual accrual rate of
1.5% of average annual earnings, and without regard to the compensation
limitations under Internal Revenue Code (IRC) 401(a)(17) or the benefit
limitation of IRC 415. The benefits set forth in the following table are not
subject to any deduction for social security or other offset amount.
<TABLE>
Pension Plan Table
<CAPTION>
Years of Service
-------------------------------------------------------------------------------
Amount of Annual Retirement Benefit
Average -------------------------------------------------------------------------------
Annual Earnings 15 20 25 30 35
--------------- -- -- -- -- --
<S> <C> <C> <C> <C> <C>
$125,000 $ 28,125 $ 37,500 $ 46,875 $ 56,250 $ 65,625
$150,000 33,750 45,000 56,250 67,500 78,750
$175,000 39,375 52,500 65,625 78,750 91,875
$200,000 45,000 60,000 75,000 90,000 105,000
$225,000 50,625 67,500 84,375 101,250 118,125
$250,000 56,250 75,000 93,750 112,500 131,250
$300,000 67,500 90,000 112,500 135,000 157,500
$400,000 90,000 120,000 150,000 180,000 210,000
$450,000 101,250 135,000 168,750 202,500 236,250
$500,000 112,500 150,000 187,500 225,000 262,500
</TABLE>
"Average Annual Earnings" is an employee's highest five consecutive year average
total cash compensation within the last 10 years (which is salary, incentive
awards and the Savings Plan match as such amounts are shown under the respective
salary, bonus and other compensation columns in the Summary Compensation Table.)
The Company established two substantially identical pension plans in
1992, covering salaried employees age 21 or over with one year of service.
Salaried employees who are not officers are covered by the tax-qualified plan
and officers are covered by the non-qualified plan.
Credited years of service for the named executive officers as of
December 31, 1998 are Arnold H. Dreyfuss - 2.2; David B. Kewer - 1.8; Kimberly
P. Ferryman - 6.9; Craig L. Hettrich -.9; V. Stephen Kangisser - 2.6 and Thomas
M. Mishoe, Jr. - 2.8.
Certain Agreements
The Company entered into severance agreements with Messrs. Hettrich,
Kangisser, Kewer and Mishoe and Ms. Ferryman upon their being named executive
officers of the Company. The agreements provide that termination compensation
will be paid if the executive's employment is terminated by the Company within
three years after a change in control other than for cause (as defined in the
agreements) or upon the death, permanent disability, or retirement of the
executive if the executive voluntarily terminates his employment for "good
reason" (as defined in the agreements). "Change in control" is defined generally
11
<PAGE>
to include (i) an acquisition of 20% of the Company's voting stock, (ii) certain
changes in the composition of the Company's Board of Directors, (iii)
shareholder approval of certain business combinations or asset sales in which
the Company's historic shareholders hold less than 60% of the resulting or
purchasing company or (iv) shareholder approval of the liquidation or
dissolution of the Company. Termination compensation consists of a cash payment
equal to approximately three times the average annual compensation paid to the
executive for the three most recent taxable years of the Company ending prior to
the change in control. In addition, the agreements provide for the continuation
of certain medical, life and disability benefits. These agreements renew
annually unless terminated by the Company by notice given 60 days prior to
expiration of the current term.
Compensation Committee Report on 1998 Executive Compensation
The Company's executive compensation and benefits program is
administered by the Compensation Committee (the "Committee"), which is composed
entirely of non-employee directors. The goal of the program is to attract,
motivate, reward and retain the management talent required to achieve the
Company's business objectives, at compensation levels which are equitable and
competitive with those of comparable companies. This goal is furthered by the
Committee's policy of linking compensation to individual and corporate
performance and by encouraging significant stock ownership by senior management
in order to align the financial interests of management with those of the
shareholders.
The three main components of the Company's executive compensation
program are base salary, incentive awards under the Senior Management Incentive
Plan as established annually by the Committee and equity participation in the
form of stock options, restricted stock grants and eligibility to participate in
the Company Stock Fund of the Company's 401(k) Savings Plan and Employee Stock
Purchase Plan. Each year, the Committee reviews the total compensation package
of each executive officer to ensure it meets the goals of the program. As a part
of this review, the Committee considers corporate performance, compensation
survey data, the advice of consultants and the recommendations of management.
Base Salaries
Base salaries for executive officers are reviewed annually to
determine whether adjustments may be necessary. Factors considered by the
Committee in determining base salaries for executive officers include personal
performance considering the respective executive's level of responsibility, the
overall performance and profitability of the Company during the preceding year
and the competitiveness of the executive's salary with the salaries of
executives in comparable positions at companies of comparable size and
operational characteristics. Each factor is weighed by the Committee in a
subjective analysis of the appropriate level of compensation for that executive.
For purposes of assessing the competitiveness of salaries, the Committee reviews
compensation data from national surveys and selected groups as provided by
William M. Mercer, Incorporated, the Company's compensation consultant. Such
compensation data indicates that salary levels for the Company's executive
officers approximate the market averages of executive positions of similar scope
and responsibility.
In March, 1998, the Board of Directors appointed Mr. Kewer as the
Company's Chief Executive Officer. In consideration of the increased duties to
be assumed by Mr. Kewer, his salary was increased from $200,000 to $218,000
annually. Effective December, 1998, Mr. Kewer's base salary was further
increased on an interim basis by $12,000 per month in view of the significant
additional responsibilities undertaken by Mr. Kewer at the Board's request in
connection with the Company's announced decision to explore, with the assistance
of its financial advisor, strategic alternatives to enhance shareholder value.
12
<PAGE>
The annual base salary for Mr. Dreyfuss, who continued as Chairman of the Board,
was reduced from $112,500 to $80,000 beginning March 1, 1998, to $60,000
beginning July 1, 1998, and to $40,000 beginning October 1, 1998, as management
of the Company transitioned to Mr. Kewer. Mr. Dreyfuss receives no salary from
the Company beginning January 1, 1999, but, as Chariman of the Board, will
receive "non-employee" director compensation at two times the amount paid to
other non-employee directors, (additional details regarding the compensation of
directors is provided on page __ of this Proxy Statement).
Senior Management Incentive Plan
The Company utilizes a Senior Management Incentive Plan under which
executives may receive cash and stock incentive awards based upon corporate,
divisional and individual performance. Target thresholds and anticipated awards
are established annually by the Committee and ratified by the full Board. The
plan provides for cash payment of awards under the plan.
Mr. Hettrich received an incentive payment of $15,391 as a result of
the achievement of divisional (Foodservice) performance. The remaining executive
officers as a group, including those listed in the Summary Compensation Table,
received incentive payments totaling $11,000 for 1998 based on individual
performance. Corporate and other divisional incentive awards were not awarded
for 1998 as financial results did not meet the target thresholds required under
the 1998 Senior Management Incentive Plan.
Equity Participation
At the time the Company became a public company in April, 1992,
management held abnormally low ownership interests in the Company because of the
prior controlling ownership by Reynolds Metals Company. From time to time since
the Company's initial public offering, this issue has been raised as a concern
by various shareholders. As a result, the Committee and the Board have continued
to believe it is important to increase management's equity participation in the
Company as a part of the Company's overall compensation policies to provide
long-term financial rewards linked directly to the market performance of the
Company's stock. The Committee believes that significant ownership of stock by
senior management is the best way to align the interests of management and the
shareholders, and the Company's stock incentive program is designed to further
this objective. Awards with respect to the Chief Executive Officer are made by
the Committee and awards for all the other executive officers are made by the
Committee in consultation with the Chief Executive Officer.
In March, 1998, the Committee granted non-qualified stock options on
72,500 shares of Common Stock to executive officers and management employees.
These awards were made at an exercise price of $13.375 per share (which equaled
the closing price on the date of the grant) and are exercisable in increments of
one third each of the shares subject to option on the first, second and third
anniversaries of the March 6, 1998, award date.
The Committee also granted non-qualified stock options on 7,500
shares to Mr. Dreyfuss. This award, also made on March 6, 1998, has an exercise
price of $13.375 per share and became exercisable immediately upon grant. The
accelerated rate of exercisability for this grant was made in consideration of
the significant contributions made to the Company by Mr. Dreyfuss during his
tenure as Chief Executive Officer.
In addition to stock option and restricted stock grants, eligible
executive officers and many of the Company's employees participate in the
Company Stock Fund under the Company's 401(k) Savings Plan and Employee Stock
13
<PAGE>
Purchase Plan, thereby increasing, on a voluntary basis, their equity
participation in the Company.
Section 162(m) Considerations
The Committee has not given significant consideration to the
deductibility of executive compensation under Section 162(m) of the Internal
Revenue Code which was enacted in 1993. Under this provision, beginning in 1994,
a publicly held corporation is not permitted to deduct compensation in excess of
$1 million per year paid to the chief executive officer or any one of the other
named executive officers except to the extent the compensation was paid under
compensation plans meeting certain tax code requirements. The Committee has
noted that the Company does not currently face the loss of this deduction for
compensation. The Committee nevertheless has determined that in reviewing the
design of and administering the executive compensation program, the Committee
will continue in the future to seek to preserve the Company's tax deductions for
executive compensation unless this goal conflicts with the primary objectives of
the Company's compensation program.
Compensation Committee
Wilson H. Flohr, Jr., Chairman
Judith B. McBee
Robert C. Sledd
14
<PAGE>
Performance Graph
Securities and Exchange Commission regulations require the Company to
include in its Proxy Statement the following Performance Graph. As required by
the regulations, the Graph shows the percentage change in the total return on
the Company's Common Stock during the five-year period ended December 31, 1998.
The Company's Common Stock price ranged from a low of $7.125 to a high of $22.00
between January 1, 1994, and December 31, 1998. The closing price for the stock
on December 31, 1998, was $13.25.
The Performance Graph assumes $100 was invested on January 1, 1994,
in the Company, the NASDAQ Stock Market Index, and an industry index for the ice
cream and frozen dessert business ("Industry Index") and shows the total return
on such investments, assuming reinvestment of dividends, as of December 31,
1998. The Industry Index includes companies in SIC Code 2024 (ice cream and
frozen desserts). In addition to the Company, the Industry Index currently
includes: Ben & Jerry's Homemade, Inc., Dreyer's Grand Ice Cream, International
Yogurt Company, Suiza Foods Corporation, TCBY Enterprises, Inc. and Tofutti
Brands, Inc.
<TABLE>
Comparison of Cumulative Total Return
Among Eskimo Pie Corporation Common Stock, an Industry Index
and the Nasdaq Market Index
<CAPTION>
Cumulative Return as of
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Eskimo Pie Corporation 100.00 106.01 104.32 64.45 67.73 79.43
Ice Cream and Frozen
Desserts Industry 100.00 106.10 123.09 105.67 211.62 176.90
NASAQ Market Index 100.00 104.99 136.18 169.23 207.00 201.96
</TABLE>
PROPOSAL TWO: Ratification of the Selection of Independent Auditors
Ernst & Young LLP has been selected as independent auditors for the
Company for the fiscal year ending December 31, 1999, subject to ratification by
the shareholders.
If not otherwise specified, proxies will be voted in favor of
ratification of the appointment. Representatives of Ernst & Young LLP are
expected to be present at the Annual Meeting, will have an opportunity to make a
statement if they so desire and are expected to be available to respond to
appropriate questions.
Your Board of Directors recommends a vote FOR the ratification of the
selection of Ernst & Young LLP as independent auditors.
15
<PAGE>
YOGEN FRUZ SOLICITATION
Yogen Fruz, a Canadian corporation, may conduct the Yogen Fruz
Solicitation in an attempt to acquire control of your Company to pursue its own
interests. The Yogen Fruz Solicitation has two elements: (i) the nomination of
seven individuals for election to the Board of Directors in opposition to the
Company's nominees, and (ii) the Yogen Fruz Proposals.
Beginning in 1997, Yogen Fruz initiated a series of informal telephone
contacts with the Company regarding potential business opportunities between
Yogen Fruz and the Company. These contacts did not result in any formal
discussions. In mid-1998, Yogen Fruz requested an in-person meeting. As a
result, Michael Serruya and Richard Smith, Co-Chairmen, Co-Presidents and
Co-Chief Executive Officers of Yogen Fruz, met in Richmond with David Kewer, the
Company's President and Chief Executive Officer, as well as Tom Mishoe, the
Company's Chief Financial Officer. At this meeting, the Yogen Fruz
representatives made overtures regarding Yogen Fruz's interest in a possible
acquisition of the Company. The Company's representatives indicated they would
advise the Company's Board, but did not encourage these overtures. On November
3, 1998, Yogen Fruz made an unsolicited conditional proposal for the purchase of
all of the outstanding shares of the Company's stock at $10.00 per share. After
consultation with the Company's financial and legal advisors, the Company
rejected this proposal. On November 17, 1998, Yogen Fruz made a new unsolicited
conditional proposal for the purchase of all outstanding shares of the Company's
common stock at $10.25 per share. After due consideration and consultation with
its financial and legal advisors, the Board of Directors of the Company
concluded that Yogen Fruz's revised proposal was not in the best interests of
the Company's shareholders and so advised Yogen Fruz. On November 25, 1998,
Yogen Fruz made a new proposal to acquire the Company at $13.00 per share,
subject to, among other conditions, specific assurances concerning the transfer
of certain of the Company's license agreements with third parties. Following
consideration of this proposal with its advisors, and given the problematic
nature of the requested assurances, the Board concluded that the proposal was
inadequate and not in the best interests of the Company's shareholders and
advised Yogen Fruz accordingly.
In further response to Yogen Fruz's November 25 proposal, the Company's
Board of Directors directed management to proceed to explore a broad range of
strategic options to enhance long-term shareholder value. The Company engaged
its financial advisor, Bowles Hollowell Conner, the investment banking division
of First Union Capital Markets Corp., to assist in this process. As an integral
part of this process, the Company and its financial advisor conducted a thorough
search for potential buyers. Yogen Fruz was invited to participate in this
process and, as a result, engaged in discussions with, and further investigation
of, the Company. On December 10, 1998, Yogen Fruz filed a Schedule 13D
indicating that it had accumulated approximately 587,700 shares of the Company's
common stock at an average price of just under $13.00.
On January 26, and again on January 28, 1999, Yogen Fruz submitted
revised proposals at prices above its previous $13.00 per share proposal,
subject to additional contingencies which included the termination of the
Company's process of soliciting proposals from other parties. In view of the
contingencies included in Yogen Fruz's revised January proposals, the Company's
Board of Directors concluded it was in the best interests of its shareholders to
continue the search process that had been commenced. As a result, the Company
engaged in extended discussions with various parties throughout the first
quarter of 1999. In late February, 1999, after extensive due diligence and
discussions with the Company, Yogen Fruz advised the Company that its prior
offers for the Company were no longer in effect and that it was no longer
interested in pursuing an acquisition of the Company.
16
<PAGE>
Although the Company's process of exploring strategic alternatives also
led to extensive discussions with several other parties regarding the purchase
of the Company, the Company did not receive any formal acquisition offers.
Thereafter, Yogen Fruz and the Company had discussions to explore various
business opportunities that would be in the best interest of both companies. In
the course of these discussions, Yogen Fruz indicated it was considering taking
actions to commence a proxy contest at the Company's annual meeting scheduled
for May 12, 1999, if the meeting were held as scheduled. In order to provide the
Company and Yogen Fruz additional time to discuss and evaluate mutually
beneficial, joint strategic opportunities, the Company rescheduled its annual
meeting for September 8, 1999. These discussions addressed a possible repurchase
of Yogen Fruz's stock in conjunction with other possible licensing and
manufacturing arrangements and board representation between Yogen Fruz and the
Company. The Company did not accept any of these proposals because they were not
in the best interests of all the shareholders. In June, Yogen Fruz notified the
Company of its intention to conduct a proxy contest and to present certain
shareholder proposals at the rescheduled annual meeting.
Your Board of Directors believes that it is in a better position to
pursue the interests of the Company and all of its shareholders and unanimously
recommends that you oppose Yogen Fruz's attempt to acquire control of your
Company. Please vote AGAINST the Yogen Fruz Proposals and in FAVOR of the slate
of directors proposed by the Board (see page ___) using the enclosed WHITE PROXY
CARD.
ELECTION OF DIRECTORS. The Company believes that an effective board of
directors should be composed of individuals who are business leaders, who
represent a broad range of business and community experience, and who bring to
the Board background, experience and skills that enable them to recognize the
best interests of the shareholders and contribute to the Company's long-term
objectives. Each of the current directors being proposed for reelection by the
Company is a business leader, with the depth of experience to pursue the
interests of all of the Company's shareholders rather than the interests of a
single shareholder.
o Arnold Dreyfuss has served the Company since its initial public
offering in 1992. Prior to his retirement from a lifetime in the
small appliance industry, he served from 1982 to 1991 as the
Chairman and Chief Executive Officer of Hamilton
Beach/Proctor-Silex, Inc. From September 1996 through March 1998, he
served as Chairman and Chief Executive Officer of the Company.
o David Kewer has over 22 years of consumer goods experience,
including seven years in the ice cream novelty industry. He has held
positions of increasing responsibility in marketing, sales and
executive management at Proctor & Gamble, Unilever, Nestle and the
Company. Most recently, he has led management's successful efforts
in pursuing a turn-around strategy for the Company.
o Wilson Flohr recently retired as General Manager of Paramount's
King's Dominion, a regional family theme park. He brings to the
Board his direct contacts with the family-focused consumers
attracted to Paramount's theme parks. He is also an active community
leader, participating on the boards of a number of Richmond-based
community organizations.
o Jay Johnston has also served as a Board member since the Company's
initial public offering. He brings to the Board over 30 years of
experience in the legal profession and provides significant counsel
to the Company on a broad range of important business matters. He is
also active in numerous Richmond-based community and charitable
organizations.
17
<PAGE>
o Dan Ludeman joined the Board in 1997. As Chairman of one of the
country's largest institutional asset management firms, he is able
to provide an investor's perspective to many of the Board and
Company discussions and considerations.
o Judy McBee, who currently serves as Senior Vice President of
Marketing of Hamilton Beach/Proctor-Silex, Inc., a Richmond-based
corporation, has been a Board member since 1996. Her extensive
experience in consumer goods marketing and sales has been
particularly valuable in connection with the Company's National
Brands segment.
o Robert Sledd, the newest Board member, brings to the Board his 12
years of experience as the Chief Executive Officer of Performance
Food Group Company, a successful public company, as well as his
specific knowledge of the foodservice industry.
The Company also believes that a majority of the directors should be
independent of management and the major suppliers, customers and shareholders of
the Company.
Yogen Fruz is attempting to replace your directors with its seven
nominees, each of whom either is or was affiliated with, or related to someone
who is affiliated with, Yogen Fruz. Five of the Yogen Fruz nominees are officers
and/or directors of Yogen Fruz. One of the Yogen Fruz nominees is a former
director of a Yogen Fruz subsidiary, and his law firm acts as United States
legal counsel to Yogen Fruz. The other Yogen Fruz nominee is the father-in-law
of a Yogen Fruz officer and director. The Company believes that these
individuals have similar and overlapping business experience, do not have the
background or experience to pursue the best interests of the Company and all of
the Company's shareholders, and represent a limited point of view concerning the
Company.
Your Company believes that Yogen Fruz's primary motivation in proposing
its opposition slate of nominees for the Board of Directors is to replace your
current Board with individuals who may pursue the goals and objectives of Yogen
Fruz to the potential detriment of other shareholders. Your current Board of
Directors has served, and will continue to serve, the best interests of all
shareholders without bias toward any individual shareholder. The enhancement of
shareholder value remains the primary objective of the current Board's efforts,
and the Board remains open to considering all viable alternatives in pursuit of
that objective. The Board believes that it and the current management team are
in the best position to enhance shareholder value. The financial performance of
the Company has been improving steadily over the last ___ quarters. The
Company's management-led growth and restructuring program involves renewed focus
on the profitable National Brands novelties and Food Service businesses of the
Company, building the value of the Eskimo Pie and other licensed brands
represented by the Company, divestiture, as appropriate, of certain non-core
assets and continued reduction in fixed overhead costs. An independent Board
committed to pursuing the interests of all shareholders is uniquely qualified to
continue these efforts and to realize the best interests of the Company and its
shareholders.
For these reasons, your Board of Directors believes that the interests
of your Company and all of its shareholders will be better served by electing
Dreyfuss, Flohr, Johnston, Kewer, Ludeman, McBee and Sledd to the Board, and you
are urged to vote FOR these individuals on the enclosed WHITE PROXY CARD.
18
<PAGE>
THE YOGEN FRUZ PROPOSALS
PROPOSAL THREE: Yogen Fruz Proposal Relating to Shareholder Rights Plan
--------------------------------------------------
Your Board Recommends a Vote AGAINST this Proposal
--------------------------------------------------
Summary of Yogen Fruz Proposal
Yogen Fruz may propose a resolution to amend the Company's Bylaws to
require the Board of Directors to effect any resolution adopted by the
shareholders calling for: (i) the partial or complete redemption of rights (the
"Rights") issued pursuant to the Company's Rights Agreement, dated January 23,
1993, as amended (the "Rights Plan"); or (ii) an amendment to the Rights Plan.
Currently, the approval of a majority of the Continuing Directors is required to
redeem the Rights and thereby terminate the Rights Plan. The Rights Plan defines
Continuing Directors as directors who were on the Board when the Rights Plan was
adopted or directors whose nominations for election to the Board were
recommended or approved by a majority of such directors.
Your Company's Response
For the reasons set forth below, the Board of Directors believes that
adoption of this Bylaw amendment would not be in the best interests of the
Company or its shareholders, and would, in fact, expose shareholders to coercive
tender offers and undervalued takeover bids without adequate protection.
The Board of Directors adopted the Rights Plan in 1993 to ensure that
in the event of a hostile bid for control of the Company, all shareholders would
be treated equally and fairly and receive full value for their shares. By its
terms, the Rights Plan causes a significant dilution of the shareholdings of any
potential acquiror who the Board of Directors concludes, in the exercise of its
fiduciary duties, is not offering an adequate price for the Common Stock of all
shareholders.
In adopting a Rights Plan, the Company joined approximately 2,400 other
public companies that have adopted similar plans. The Board did not adopt the
Rights Plan in response to, or in anticipation of, any specific takeover threat,
nor to deter takeover bids generally. Rather, the objectives of the Rights Plan
are to give adequate time for shareholders to evaluate a bid without undue
pressure, for the Board of Directors to consider and explore value-enhancing
alternatives and to allow competing bids to emerge. The issuance of the Rights
themselves had no dilutive effect, did not affect reported earnings per share,
was not taxable to the Company or its shareholders, and did not change the way
in which the Company's shares are presently traded.
The Company believes that the current Board is in the best position
to evaluate and negotiate on behalf of all shareholders any potential offer, and
to develop alternatives to maximize shareholder value. The Rights Plan is
designed to encourage prospective acquirors to negotiate directly with the Board
of Directors, and in the Board's view, the Rights Plan provides the Board
necessary flexibility in such negotiations. The Rights Plan protects
shareholders against abusive takeover tactics that do not treat all shareholders
fairly and equally, such as partial and two-tiered tender offers and creeping
stock accumulation programs. The Rights Plan does not prevent bidders from
making offers to acquire the Company at a price and on terms that are in the
best interests of all shareholders. In its fiduciary role, the Board of
19
<PAGE>
Directors carefully considered the adoption of the Rights Plan and determined it
to be the best available means of protecting the full value of the investment of
the Company's shareholders, while not preventing a fair acquisition offer for
the Company. The Board of Directors recently re-examined the Rights Plan and
determined that the Plan continues to be in the best interests of the Company
and all of its shareholders.
In addition, the terms of the Rights Plan already permit the Board to
redeem the Rights to facilitate an acquisition that it determines, in the
exercise of its fiduciary duty, adequately reflects the value of the Company and
is in the best interests of all the shareholders. In fact, a number of target
companies with similar rights plans in place have redeemed rights after their
directors were satisfied that an offer, as negotiated by them, was in the best
interests of the targets' shareholders.
Finally, the Board of Directors opposes this Yogen Fruz Proposal
because it believes that Yogen Fruz's motivation in submitting this Proposal is
not to benefit the Company's shareholders generally but rather to enable a
change of control to be followed by an immediate sale in circumstances that may
not necessarily be in the best interests of the Company and all of its
shareholders.
For all of the above reasons, the Board of Directors unanimously
believes that this proposal is not in the best interests of the Company and its
shareholders.
Vote Required and Board Recommendation
The affirmative vote of the majority of the votes cast will be
required under Virginia law to approve the above-described Yogen Fruz Proposal.
Abstentions and broker non-votes (shares held by brokers for customers which may
not be voted on certain matters because the broker has not received specific
instructions from the customer) will be counted for purposes of determining the
presence or absence of a quorum to transact business. Abstentions will also be
counted in the tabulation of the votes cast on this Yogen Fruz Proposal, and
therefore, an abstention will have the effect of a vote against the proposal.
Broker non-votes, on the other hand, will not be counted for purposes of
determining whether the proposal has been approved and, therefore, will have no
effect.
The Board of Directors of your Company unanimously recommends that
shareholders vote AGAINST this Yogen Fruz Proposal (Proposal Three).
20
<PAGE>
PROPOSAL FOUR: Yogen Fruz Proposal Relating to Ability of Shareholders
to Call a Special Meeting
--------------------------------------------------
Your Board Recommends a Vote AGAINST this Proposal
--------------------------------------------------
Summary of Yogen Fruz Proposal
Yogen Fruz may also propose a resolution to amend Article II, Section
3 of the Company's Bylaws to allow persons holding at least 15% of the capital
stock of the Company to call a special meeting of shareholders. Currently, only
the Chairman of the Board, the President or the Board of Directors may call a
special meeting of shareholders.
Your Company's Response
For the reasons set forth below, the Board of Directors believes that
adoption of this Bylaw amendment would not be in the best interests of the
Company and its shareholders.
Allowing only the Board to call a special shareholders meeting makes
it more difficult for a dissident group of shareholders or a raider to force
consideration of a shareholder proposal at a special meeting rather than at the
next annual meeting of shareholders. Special meetings of shareholders require
considerable management time and expense, can become very disruptive to the
normal operations of the Company and may not provide the Board adequate time to
consider the proposal. The current Bylaws do not prevent shareholders from
proposing resolutions. Rather, shareholders have always been able to make such
proposals and to vote to change the direction of the Company at the annual
meeting of shareholders.
Voting down this proposed Bylaw amendment will have the continued
effect of reducing the risk of the unfair seizure of control of the Company by a
holder of a substantial block of the Company's stock. At the same time, if the
shareholders defeat this Yogen Fruz Proposal, the Board, if confronted by a
surprise proposal from a third party that has acquired a substantial portion of
the Company's stock, will have sufficient time to review the proposal, explore
alternatives thereto and, if deemed appropriate, seek a higher price for the
shareholders.
As discussed above, the purpose of the current Bylaw provision is to
make it more difficult for a shareholder to call a special meeting of
shareholders that, in the context of an unsolicited acquisition attempt, might
prevent the Company from pursuing other alternatives or undermine the Board's
bargaining power. Opposing this Bylaw amendment would not preclude any
shareholder from proposing business, or nominating candidates for election as
directors, at any annual meeting of shareholders.
For all of the above reasons, the Board of Directors unanimously
believes that this proposal is neither in the best interests of the Company and
its shareholders nor a reflection of the concerns of most shareholders.
Vote Required and Board Recommendation
The affirmative vote of the majority of the votes cast will be
required under Virginia law to approve the above-described Yogen Fruz Proposal.
Abstentions and broker non-votes will be counted for purposes of determining the
presence or absence of a quorum to transact business. Abstentions will also be
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counted in the tabulation of the votes cast on this Yogen Fruz Proposal, and
therefore, an abstention will have the effect of a vote against the proposal.
Broker non-votes, on the other hand, will not be counted for purposes of
determining whether the proposal has been approved and, therefore, will have no
effect.
The Board of Directors of your Company unanimously recommends that
shareholders vote AGAINST this Yogen Fruz Proposal (Proposal Four).
Cost and Method of Solicitation
The Company will bear the expenses related to the solicitation of
shareholders. Total expenses related to the solicitation, in excess of those
normally spent for an annual meeting, are expected to aggregate approximately
$100,000, of which approximately $50,000 has been spent to date. In addition to
soliciting proxies by mail, supplementary solicitations may also be made by mail
or telephone, telegraph or personal interview by directors, officers and other
employees of the Company, none of whom shall receive additional compensation for
their services.
Under applicable regulations of the SEC, each member of the Board of
Directors, certain executive officers of the Company and certain other corporate
officers of the Company may be deemed to be "participants" in the Company's
solicitation of proxies. The principal occupation and business address of each
person who may be deemed a participant are set forth in Appendix A hereto.
Information about the present ownership by the directors and named executive
officers of the Company of the Company's securities is provided in this Proxy
Statement and the present ownership of the Company's securities by other
"participants" is listed in Appendix A.
It is also contemplated that additional solicitation will be made by
personal interview, telephone, telecopy and telegraph under the direction of the
proxy solicitation firm of Corporate Investor Communications, Inc. ("CIC"), 111
Commerce Road, Carlstadt, New Jersey 07072. The cost of solicitation of proxies,
including a fee of $45,000 plus certain expenses for CIC's services, will be
borne by the Company. The Company also has agreed to indemnify CIC against
certain liabilities and expenses. Finally, the Company will reimburse banks,
brokerage firms and other custodians, nominees and fiduciaries for their
reasonable expenses in sending proxy materials to the beneficial owners of the
Company's Common Stock.
Section 16(a) Beneficial Ownership Reporting Compliance
Based on a review of reports of changes in beneficial ownership of
the Company's Common Stock and written representations furnished to the Company,
the Company believes that its officers and directors complied with all filing
requirements under Section 16(a) of the Securities Exchange Act of 1934 during
1998.
Shareholder Proposals for 2000 Annual Meeting
The 2000 Annual Meeting of Shareholders is expected to be held on May
3, 2000. Under applicable law, the Board of Directors need not include an
otherwise appropriate shareholder proposal in its Proxy Statement or form of
proxy for that meeting unless the proposal is received by the Secretary of the
Company at the Company's principal place of business on or before November 26,
1999. In addition, the Company's Bylaws prescribe certain procedures which must
be followed, including certain advance notice requirements, in order for a
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proposal to be properly brought before a shareholder meeting; such a shareholder
notice of intent to bring a proposal before an annual meeting of shareholders
must be delivered to the Company generally not later than 30 days prior to the
anniversary date of the notice sent by the Company in connection with the
previous year's annual meeting. Any shareholder desiring a copy of the Bylaws
will be furnished one without charge upon written request to the Secretary.
Other Matters
As of the date of this Proxy Statement, management of the Company has
no knowledge of any matters to be presented for consideration at the Annual
Meeting other than those referred to above. If any other matter properly comes
before the Annual Meeting, the persons named in the enclosed proxy card intend
to vote such proxy, to the extent entitled, in accordance with their best
judgment.
By Order of the Board of Directors,
Thomas M. Mishoe, Jr.
Chief Financial Officer, Vice President,
Treasurer and Corporate Secretary
-----------------------------------------------------------------
IMPORTANT
Your vote is important! No matter how many or how few shares of
Eskimo Pie Corporation you own, please vote FOR the Board's
nominees and AGAINST the Yogen Fruz Proposals by signing, dating
and mailing the enclosed WHITE PROXY CARD.
If you have already returned a proxy card sent to you by Yogen
Fruz, you have every right to change your vote by signing and
returning the enclosed WHITE PROXY CARD. Only your latest dated,
properly executed card will count.
If you own your shares in the name of a brokerage firm, your
broker cannot vote such Shares unless he receives your specific
instructions. Please sign, date and return the enclosed WHITE
PROXY CARD in the postage-paid envelope that has been provided.
If you have any questions as to how to vote your shares, please
call our proxy solicitor:
Corporate Investor Communications, Inc.
111 Commerce Drive
Carlstadt, NJ 07072
Toll free: (877) 460-4351
-----------------------------------------------------------------
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APPENDIX A
Information Concerning the Directors and Certain Officers of the Company Who May
Solicit Proxies
The following table sets forth the name, principal business address and
the present office or other principal occupation or employment, and the name,
principal business and the address of any corporation or other organization in
which such employment is carried on, of the directors and certain officers of
the Company (the "participants") who may also solicit proxies from shareholders
of the Company. Unless otherwise indicated, the principal occupation refers to
such person's position with the Company and the business address is Eskimo Pie
Corporation, 901 Moorefield Park Drive, Richmond, Virginia 23236.
DIRECTORS
The principal occupations of the Company's directors who are deemed
participants in the solicitation are set forth on pages ___ through ___ of this
Proxy Statement. The principal business address of Messrs. Dreyfuss and Kewer is
that of the Company. The name, business and address of the other
director-participants' organization of employment are as follows:
<TABLE>
<CAPTION>
Name Principal Business Address
---- --------------------------
<S> <C>
Wilson H. Flohr, Jr.
Retired, Executive Vice President and General Manager
Paramount's Kings Dominion
F. Claiborne Johnston, Jr.
Attoney-at- Law, Partner 1111 East Main Street
Mays & Valentine, L.L.P. Richmond, Virginia 23219
Daniel J. Ludeman
Chairman and Chief Executive Officer 901 East Byrd Street
Mentor Investment Group, L.L.C. Richmond, Virginia 23219
Judith B. McBee
Senior Vice President, Marketing 4421 Waterfront Drive
Hamilton Beach/Proctor-Silex, Inc. Glen Allen, Virginia 23060
Robert C. Sledd
Chairman of the Board and Chief Executive Officer 6800 Paragon Place, Suite 500
Performance Food Group Company Richmond, Virginia 23230
EXECUTIVE OFFICERS AND CERTAIN CORPORATE OFFICERS
Name
----
Thomas M. Mishoe, Jr. William T. Berry, Jr.
Chief Financial Officer, Vice President, Assistant Vice President, Controller
Treasurer and Corporate Secretary
</TABLE>
24
<PAGE>
INFORMATION REGARDING OWNERSHIP OF THE COMPANY'S SECURITIES BY PARTICIPANTS
Except as set forth in the Proxy Statement, none of the participants
owns any of the Company's securities of record but not beneficially. The number
of shares of Common Stock held by directors and the named executive officers is
set forth on page ___ of this Proxy Statement. The number of shares of Common
Stock held by the other participants as of June 30, 1999 is set forth below. The
information includes shares that may be acquired by the exercise of stock
options within 60 days of June 30, 1999:
Name Number of Shares Held
---- ---------------------
William T. Berry, Jr. 4,157 (1)
(1) - Includes 500 shares held by Mr. Berry's wife.
INFORMATION REGARDING TRANSACTIONS IN THE COMPANY'S SECURITIES BY PARTICIPANTS
The following table sets forth purchases and sales of the Company's
securities by the participants during the past two years. Unless otherwise
indicated, all transactions were in the public market.
Number of Shares of
Name Date Common Stock Purchased (or Sold)
---- ---- --------------------------------
DIRECTORS
Arnold H. Dreyfuss 3/6/98 7,500 (1)
6/30/99 366 (2)
David B. Kewer 3/6/98 3,334 (1)
1/7/99 5,000 (1)
6/30/99 3,454 (2)
6/30/99 3,186 (3)
Wilson H. Flohr, Jr. 5/7/98 200 (1)
5/7/98 200 (4)
1/1/99 1,143 (5)
F. Claiborne Johnston, Jr. 5/7/98 200 (1)
5/7/98 200 (4)
Daniel J. Ludeman 3/19/98 5,000 (6)
5/7/98 200 (1)
5/7/98 200 (4)
1/1/99 1,122 (5)
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<PAGE>
Judith B. McBee 5/7/98 200 (1)
5/7/98 200 (4)
1/1/99 1,143 (5)
Robert C. Sledd 4/8/98 225 (6)
5/7/98 200 (1)
5/7/98 200 (4)
1/1/99 791 (5)
EXECUTIVE OFFICERS AND CERTAIN CORPORATE OFFICERS
Thomas M. Mishoe, Jr. 3/6/98 1,500 (1)
1/7/99 2,000 (1)
6/30/99 256 (2)
6/30/99 3,083 (3)
William T. Berry, Jr. 3/6/98 667 (1)
1/7/99 1,334 (1)
6/30/99 456 (3)
(1) The aggregate number of currently exercisable stock options issued as of
the grant date, as indicated.
(2) The aggregate number of shares owned, as of the date indicated, were
acquired through periodic employee contributions and/or the Company's
match under the Company's Employee Stock Purchase Plan.
(3) The aggregate number of shares owned, as of the date indicated, were
acquired through periodic employee contributions and/or the Company's
match under the Company's 401(k) Savings Plan.
(4) Automatic award of restricted stock made to non-employee directors under
the 1996 Incentive Stock Plan.
(5) Shares issued to non-employee directors in lieu of 1998 cash compensation
under the 1996 Incentive Stock Plan.
(6) Open market purchases.
MISCELLANEOUS INFORMATION CONCERNING PARTICIPANTS
Except as set forth in the Proxy Statement or this Appendix A, to the
best of the Company's knowledge, none of the participants or, in the case of
clause (a) only, any of their associates, (a) owns of record or has direct or
indirect beneficial ownership of any securities issued by the Company or any of
its subsidiaries; (b) has purchased or sold any securities issued by the Company
within the past two years; (c) has incurred any outstanding indebtedness to
acquire or hold securities issued by the Company; or (d) has been a party to any
contract, arrangement or understanding with respect to any securities of the
Company during the past year.
Except as set forth in the Proxy Statement or this Appendix A, to the
best of the Company's knowledge, (a) none of the participants or any of their
associates has any arrangement or understanding with respect to any future
employment or any future transactions with the Company or any of its affiliates,
26
<PAGE>
and (b) none of the participants, executive officers of the Company, any person
known to the Company to own beneficially or of record more than five percent of
any class of Company voting securities, or any of their associates has entered
into any transaction or series of similar transactions with the Company or any
of its subsidiaries since the beginning of the Company's last fiscal year in
which such person had or will have a direct or indirect material interest, and
no such transactions are currently proposed. With respect to clause (a) of the
preceding sentence, Mr. Berry has a severance agreement with the Company that is
substantially similar to the severance agreements described under the heading
"Certain Agreements" on page __ of the Proxy Statement, with the exception that
Mr. Berry's termination compensation consists of a cash payment equal to
approximately the average of Mr. Berry's annual compensation for the three most
taxable years of the Company ending prior to the change in control.
27
<PAGE>
- FOLD AND DETACH HERE -
ESKIMO PIE CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints David B. Kewer, Thomas M. Mishoe, Jr.
and F. Claiborne Johnston, Jr., jointly and severally, proxies, with full power
to act alone, and with full power of substitution, to represent the undersigned
and to vote, as designated below and upon any and all other matters which may
properly be brought before such meeting, voting as specified on the reverse side
of this card with respect to the matters set forth in the Proxy Statement, and
voting in the discretion of the above-named persons on such other matters as may
properly come before the Annual Meeting, all shares of Common Stock which the
undersigned would be entitled to vote at the Annual Meeting of Shareholders of
Eskimo Pie Corporation to be held on September 8, 1999, or any adjournment or
postponement thereof.
PLEASE COMPLETE, SIGN AND DATE THE REVERSE SIDE OF THIS PROXY CARD AND PROMPTLY
RETURN IT IN THE ENCLOSED ENVELOPE.
YOU MAY SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, SEE REVERSE SIDE,
BUT YOU NEED NOT MARK ANY BOX IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD
OF DIRECTORS' RECOMMENDATIONS. THE PERSONS NAMED ABOVE AS PROXIES CANNOT VOTE
YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
(continued on reverse side)
[X] PLEASE MARK YOUR VOTES
AS IN THIS EXAMPLE.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2 AND
AGAINST PROPOSALS 3 AND 4.
<TABLE>
The Board of Directors Recommends a Vote FOR Proposals 1 and 2
PROPOSAL ONE: Election Of Directors to serve until 2000 Annual Meeting of
Shareholders.
Nominees: Arnold H. Dreyfuss, Wilson H. Flohr, Jr., F. Claiborne Johnston, Jr., David B. Kewer,
Daniel J. Ludeman, Judith B. McBee and Robert C. Sledd
<S> <C>
[ ] FOR all nominees listed above [ ] WITHHOLD AUTHORITY to vote for all
(except as written on the line below) nominees listed above
</TABLE>
(INSTRUCTION: To withhold authority to vote for any individual nominee listed
above, write that nominee's name on the space provided below.)
- --------------------------------------------------------------------------------
PROPOSAL TWO: Ratification of the selection of Ernst & Young LLP as the
independent auditors for the Corporation and its subsidiaries for
the current fiscal year.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The Board of Directors Recommends a Vote AGAINST Proposals 3 and 4
PROPOSAL THREE: Yogen Fruz Proposal Regarding the Shareholder Rights Plan
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PROPOSAL FOUR: Yogen Fruz Proposal Regarding Shareholder's Ability to Call
Special Meeting
[ ] FOR [ ] AGAINST [ ] ABSTAIN
I plan to attend the meeting. [ ]
SIGNATURE(S) _______________________________ DATE __________, 1999
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, give
full title as such. If signing on behalf of a corporation, sign the full
corporate name by authorized officer. The signer hereby revokes all proxies
heretofore given by the signer to vote at the 1999 Annual Meeting of
Shareholders of Eskimo Pie Corporation and any adjournment or postponement
thereof.
