<PAGE>
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section
14(c) of the Securities Exchange Act of 1934
Check the appropriate box:
[X] Preliminary Information Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule 14c-
5(d)(2))
[_] Definitive Information Statement
Eskimo Pie Corporation
---------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No Fee required
[_] $125 per Exchange Act Rules O-11(c)(1)(ii), 14(a)(6)(i)(1), 14(a)(6)(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] Fee computed on table below per Exchange Act Rules 14c-5(g) and O-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 O-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
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:
----------------------------------------------------------------------
Notes:
<PAGE>
ESKIMO PIE CORPORATION
-----------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
-----------------------
TO BE HELD FRIDAY, OCTOBER 13, 2000
A Special Meeting of Shareholders of Eskimo Pie Corporation will be
held at the SunTrust Bank (formerly Crestar Bank) auditorium, 4th Floor, 919
East Main Street, Richmond, Virginia, at 10:00 a.m., local time, on October 13,
2000, for the following purpose:
1. To elect eight (8) new directors to serve until the 2001 Annual
Meeting of Stockholders. An anticipated change in the control of
Eskimo Pie necessitates that the elections be held at the Special
Meeting instead of the Annual Meeting. EP Acquisition Corp., a
wholly owned subsidiary of CoolBrands International Inc.
anticipates that it will acquire the majority of Eskimo Pie Common
Stock, and therefore control of Eskimo Pie, by tender offer on or
before October 12, 2000. New directors will be elected to reflect
the anticipated change in control.
The Board of Directors has fixed the close of business on August 31,
2000, as the record date for determination of shareholders entitled to notice of
and to vote at the special meeting or any adjournment or postponement thereof.
By Order of the Board of Directors
/s/ Thomas M. Mishoe, Jr.
Chief Financial Officer, Vice President
Treasurer and Corporate Secretary
September __, 2000
901 Moorefield Park Drive
Richmond, Virginia 23236
<PAGE>
ESKIMO PIE CORPORATION
901 Moorefield Park Drive
Richmond, Virginia 23236
----------------------
PRELIMINARY INFORMATION STATEMENT
FOR
SPECIAL MEETING OF SHAREHOLDERS
-----------------------
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY.
GENERAL
Eskimo Pie Corporation ("Eskimo Pie") is providing this Information
Statement in connection with its Special Meeting of Shareholders to be held on
October 13, 2000. The purpose of the Special Meeting of Shareholders is set
forth in the accompanying Notice of Special Meeting of Shareholders. This
Information Statement is being mailed to shareholders on or about September __,
2000.
VOTING RIGHTS
Only those shareholders of record at the close of business on August 31,
2000 are entitled to notice of and to vote at the Special Meeting or any
adjournments or postponements thereof. The number of shares of Eskimo Pie
Common Stock outstanding and entitled to vote as of the record date was
[3,485,757]. There are no other outstanding classes of voting securities of
Eskimo Pie. Each holder of a share of Eskimo Pie Common Stock is entitled to
one vote per share in the Special Meeting election of directors.
CHANGE IN CONTROL OF ESKIMO PIE CORPORATION
CoolBrands International Inc. anticipates acquiring control of Eskimo Pie
Corporation on or before October 12, 2000 as a result of a tender offer
commenced by its wholly owned subsidiary, EP Acquisition Corp., on or about the
date of this Information Statement. The tender offer is being made pursuant to
an Agreement and Plan of Merger dated as of May 3, 2000 and amended as of June
1, 2000, between Eskimo Pie, CoolBrands and EP Acquisition. The tender offer is
disclosed in a Tender Offer Statement on Schedule TO, dated September __, 2000,
in which EP Acquisition has offered to purchase all of the outstanding shares of
Eskimo Pie common stock at a cash price of $10.25 per share, net to the seller,
on the terms and subject to the conditions set forth in the Offer to Purchase
and related Letter of Transmittal, copies of which are being mailed to Eskimo
Pie shareholders simultaneously with this Information Statement.
CoolBrands anticipates obtaining control of Eskimo Pie on consummation of
the tender offer, by EP Acquisition purchasing shares of Eskimo Pie common stock
which, together with Eskimo Pie shares already owned by CoolBrands, will
constitute at least a majority of the shares of Eskimo Pie Common Stock. As of
August 31, 2000, CoolBrands owned 587,700 shares of Eskimo Pie stock (or
approximately 16.9% of outstanding Eskimo Pie shares).
1
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth, as of June 30, 2000, the number and percentage
of shares of Eskimo Pie's common stock held by persons known to Eskimo Pie to be
the owners of more than five percent of Eskimo Pie's issued and outstanding
common stock, each of Eskimo Pie's directors and executive officers during the
last fiscal year and all of Eskimo Pie's directors and executive officers as a
group. 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 four shareholders other than Eskimo Pie's directors and
executive officers is based upon the most recent filings received by Eskimo Pie
for such shareholders pursuant to Section 13(d) of the Securities Exchange Act
of 1934.
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Beneficial Ownership Common Stock
Name and Address of Beneficial Owner of Common Stock Outstanding
------------------------------------ --------------- -----------
<S> <C> <C>
CoolBrands International Inc. (1) 587,700 15.9%
(formerly, Yogen Fruz World-Wide, Inc.)
Toronto, Canada
Shamrock Farms Company (2) 514,566 13.9%
Phoenix, Arizona
Dimensional Fund Advisors Inc. (3) 213,800 5.8%
Santa Monica, California
Peak Management, Inc. (4) 160,600 4.3%
Boston, Massachusetts
Arnold H. Dreyfuss 28,080 (5) *
Jupiter, Florida
Kimberly P. Ferryman 21,254 (6)(7) *
Richmond, Virginia
Wilson H. Flohr, Jr. 13,385 (5)(8) *
Richmond, Virginia
Craig L. Hettrich 6,443 (6)(7) *
Richmond, Virginia
F. Claiborne Johnston, Jr. 3,700 (5)(9) *
Richmond, Virginia
V. Stephen Kangisser 14,050 (6)(7) *
Richmond, Virginia
David B. Kewer 82,255 (6)(7) 2.2%
Richmond, Virginia
</TABLE>
2
<PAGE>
<TABLE>
<S> <C> <C>
Daniel J. Ludeman 9,698 (5) *
Richmond, Virginia
Judith B. McBee 7,125 (5) *
Richmond, Virginia
Thomas M. Mishoe, Jr. 21,135 (6)(7) *
Richmond, Virginia
Robert C. Sledd 5,645 (5) *
Richmond, Virginia
William J. Weiskopf 8,482 (6)(7) *
Richmond, Virginia
All Directors and Executive Officers 221,252 (5)(6)(7) 6.0%
of Eskimo Pie as a Group (12 persons)
</TABLE>
________________________________________
* Beneficial ownership does not exceed one percent of the outstanding shares of
Eskimo Pie's common stock.
(1) Based on a Schedule 13D, filed December 10, 1998, by CoolBrands (formerly
Yogen Fruz World-Wide Incorporated), as amended by Amendment Nos. 1, 2 and
3, filed December 17, 1998, July 1, 1999, and July 2, 1999, respectively.
(2) Based on a Schedule 13D, filed September 10, 1999, by Shamrock Farms
Company, as amended by Amendment No. 1, filed October 26, 1999.
(3) Based on a Schedule 13G, filed by Dimensional Fund Advisors Inc. for the
year ended December 31, 1999, stating that it is a registered investment
advisor whose advisory clients own the shares indicated, but that
Dimensional possesses voting and/or investment power over the shares of
Eskimo Pie's common stock. Dimensional disclaims beneficial ownership of
such securities.
(4) Based on a Schedule 13D, filed on November 30, 1998, by Peak Management,
Inc., Peak Investment Limited Partnership and Peter H. Kamin, as amended by
Amendment Nos. 1, 2 and 3, filed September 28, 1999, January 27, 2000, and
June 28, 2000, respectively. These filings indicate that Mr. Kamin has
shared voting and dispositive power over all the shares of Eskimo Pie's
common stock reported as beneficially owned by the collective Peak entities
in the preceding table.
(5) Includes shares under option that are currently exercisable or will be
exercisable within 60 days of June 30, 2000, and shares of restricted and
unrestricted stock, in each case granted to non-employee directors as
compensation for board service under the 1996 Incentive Stock Plan.
(6) Includes 6,000, 12,093, 66,667, 17,140, 7,667 and 19,990 shares under
option that are currently exercisable or will be exercisable by Messrs.
Hettrich, Kangisser, Kewer, Mishoe and Weiskopf and Ms. Ferryman,
respectively, within 60 days of June 30, 2000, granted under Eskimo Pie's
1992 and 1996 Incentive Stock Plans.
(7) Includes shares held by executive officers in Eskimo Pie's 401(k) Savings
Plan and Employee Stock Purchase Plan. 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.
3
<PAGE>
(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.
To Eskimo Pie's knowledge, no director or executive officer of CoolBrands
holds any shares of Eskimo Pie common stock.
ELECTION OF DIRECTORS
Eight (8) directors are to be elected at the Special Meeting. The eight
(8) persons named below will be nominated to serve as directors until the 2001
Annual Meeting or until their successors have been duly elected and have
qualified. None of the nominees listed below, other than David B. Kewer, has
ever served as a director of the Company.
With regard to the election of directors, votes may be cast in favor or
withheld. If a quorum is present at the Special Meeting, the eight (8) nominees
for director receiving the highest number of affirmative votes shall be elected
as directors. A majority of the shares of Common Stock outstanding and entitled
to vote, represented in person or by proxy, will constitute a quorum for the
vote at the Special Meeting. 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.
DIRECTOR NOMINEES
Director Principal Occupation During Past Five Years;
Name (Age) Since Directorship in Other Public Companies
------------ -------- --------------------------------------------
Thomas Delaplane (55) -- Corporate Vice President of Dreyer's Grand
Ice Cream, for more than the past five
years.
David B. Kewer (45) 1997 Effective May 2000, Chairman of the Board
of Directors, and effective March 1998,
President and Chief Executive Officer of
Eskimo Pie. Previously, beginning March
1997, President and Chief Operating Officer
of Eskimo Pie. 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.
Aaron Serruya* (34) -- Executive Vice President of CoolBrands
since September 1995. He is a co-founder
and director of CoolBrands and has been
actively involved in its development since
its inception in 1986. Mr. Serruya also
serves as President of Yogen Fruz Canada,
Inc., CoolBrands' affiliate.
4
<PAGE>
Michael Serruya* (36) -- Co-Chairman of the Board of CoolBrands.
He served as Co-President and Co-Chief
Executive Officer of CoolBrands from March
1998 until February, 2000. From September
1995 until March 1998, Mr. Serruya served
as President, Chief Executive Officer and
Chairman of the Board of CoolBrands. He is
a co-founder of CoolBrands and has been
actively involved in its development since
its inception in 1986.
Irwin D. Simon (40) -- President and Chief Executive Officer of
The Hain Celestial Group, for more than the
past five years. Mr. Simon is currently a
director of the Hain Food Group, Inc.
David M. Smith* (34) -- Executive Vice President of CoolBrands
since March 1998. Mr. Smith is a director
of CoolBrands and has also been a Vice
President of Integrated Brands, Inc., since
December 1989.
Richard E. Smith* (58) -- Co-Chairman of the Board and Co-Chief
Executive Officer of CoolBrands. Mr. Smith
was Co-President of CoolBrands from March
1998 until February 2000, and was Chairman
of the Board and Chief Executive Officer of
Integrated Brands, Inc. from October 1985
until the merger of Integrated Brands, Inc.
and a wholly-owned subsidiary of CoolBrands
in March 1998. For more than the past five
years, Mr. Smith has also been Chairman of
the Board and Secretary of Calip Dairies,
Inc., which owns the trademark and trade
names of Dolly Madison Ice Cream. Mr. Smith
was founder of Frusen Gladje Ltd. in 1980
and was its Chairman of the Board and Chief
Executive Officer until the sale of Frusen
Gladje to Kraft, Inc. in 1985.
David J. Stein (39) -- President and Co-Chief Executive Officer
of CoolBrands. He served as Executive Vice
President of CoolBrands from March 1998
until February 2000. Mr. Stein is a
director of CoolBrands and is also Chief
Operating Officer of Integrated Brands,
Inc. and has been a Vice President of
Integrated Brands, Inc. since December
1989.
*Aaron Serruya and Michael Serruya are brothers.
**David M. Smith is the son of Richard E. Smith.
None of the individuals listed above has been convicted in a criminal proceeding
during the past five years. None of the individuals listed above was a party to
any judicial or administrative proceeding during the past five years that
resulted in a judgment, decree or final order enjoining the individual from
future violations of, or prohibiting activities subject to, federal or state
securities laws, or a finding of any violation of federal or state securities
laws. Each of the individuals listed above is a citizen of the United States,
other than Aaron Serruya and Michael Serruya, both of whom are citizens of
Canada.
5
<PAGE>
BOARD AND COMMITTEE MEETINGS AND ATTENDANCE
The Company's board of directors held 43 meetings in person or by
conference telephone call during the fiscal year ended December 31, 1999. All
directors attended at least 88% of all meetings of the board and committees on
which they served, except for Mr. Ludeman, who attended 58% of the meetings of
the board and the committee on which he served.
The Eskimo Pie 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 Eskimo Pie except as otherwise limited
by Virginia law. The Executive Committee did not meet or otherwise take action
during the fiscal year ended December 31, 1999. Current members of the Executive
Committee are Messrs. Kewer (Chairman), Flohr, and Johnston.
The Compensation Committee is responsible for setting and administering
the policies and programs that govern both annual compensation for Eskimo Pie's
executive officers and employee stock ownership. During the fiscal year ended
December 31, 1999, the Compensation Committee met three times. Current 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 Eskimo Pie or has any relationship to Eskimo Pie that is required to
be disclosed pursuant to regulations of the Securities and Exchange Commission.
Furthermore, none of Eskimo Pie's executive officers serves on the board of
directors of any company of which a Compensation Committee member is an
employee.
The Audit Committee recommends the appointment of a firm of independent
public accountants to audit Eskimo Pie'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 carries out its duties
pursuant to a written charter which was recommended by the Audit Committee and
adopted by the Board in 1996. The Audit Committee met two times during the
fiscal year ended December 31, 1999. Current members of the Audit Committee are
Messrs. Ludeman, Johnston (Chairman) and Sledd.
CERTAIN RELATIONSHIPS
David M. Smith, a nominee for election to the board of directors, is the
son of Richard E. Smith, another nominee for election to the board.
Aaron Serruya and Michael Serruya, both of whom are nominees for election
to the board of directors, are brothers.
Mays & Valentine, L.L.P., a law firm of which F. Claiborne Johnston, Jr., a
current director of the Company, is a partner, was retained to perform legal
services for Eskimo Pie and its subsidiaries during the last fiscal year and
continues to provide such services to Eskimo Pie and its subsidiaries during the
current fiscal year. The amounts paid by Eskimo Pie were based upon an agreed-
upon fee arrangement for services rendered, which Eskimo Pie believes to be
consistent with fees charged for similar services by other comparable firms.
Daniel J. Ludeman, a current director, is the President and Chief Executive
Officer of First Union Securities, a division of First Union Securities, Inc.
First Union Securities, Inc. is Eskimo Pie's financial advisor. First Union
Securities, Inc. is an affiliate of First Union National Bank, which provides
commercial banking services to Eskimo Pie. It is anticipated that First Union
Securities, Inc. and First Union National Bank will continue to provide such
services to Eskimo Pie based on agreed-upon fee arrangements and interest rates
which are consistent with amounts charged for similar services by other
comparable firms.
6
<PAGE>
DIRECTOR COMPENSATION
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 attendance 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. From 1998 until May 3,
2000, in lieu of cash payments, directors could 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, each year, a stock option grant for 200
shares and a restricted stock grant for 200 shares of the Company's Common Stock
as part of their compensation for Board service. Each outside director is also
reimbursed for ordinary and usual expenses of meeting attendance. A director
who is also an executive officer of the Company receives no additional
compensation for serving as a director.
EXECUTIVE COMPENSATION
The table below 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, 1999, exceeded $100,000. Messrs. 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. Mr. Weiskopf became an executive officer in 1997. Mr.
Hettrich was employed by the Company in February 1998.
SUMMARY COMPENSATION TABLE
--------------------------
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
--------------------------------------------- ------------------------------------------
Restricted Securities All Other
Name, Age and Other Annual Stock Underlying Compen-
Principal Position Year Salary Bonus Compensation (1) Awards Options(#) sation (2)
------------------ ---- ---------- ------------ ------------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
David B. Kewer (45) 1999 $384,500 (3) $264,250 (4)(5) ---- ---- 15,000 $3,400
President and Chief 1998 213,333 ---- $ 23,042 ---- 10,000 9,460
Executive Officer 1997 166,667 40,000 (6) 102,182 $125,000 (7) 50,000 525
Craig L. Hettrich (40) 1999 120,500 92,400 (4)(5) ---- ---- 6,000 3,025
General Manager, 1998 105,417 15,391 87,223 ---- 3,000 ----
Foodservice Division 1997 ---- ---- ---- ---- ---- ----
V. Stephen Kangisser (48) 1999 126,584 94,225 (4)(5) ---- ---- 6,000 3,663
Vice President, Sales 1998 119,792 5,000 ---- ---- 4,500 3,594
1997 112,002 ---- 52,558 ---- 7,639 2,023
Thomas M. Mishoe, Jr. (47) 1999 176,667 (3) 98,750 (4)(5) ---- ---- 6,000 2,628
Chief Financial Officer, 1998 134,833 ---- 16,217 ---- 4,500 2,680
Vice President, Secretary 1997 127,500 ---- ---- ---- 7,709 2,495
and Treasurer
William J. Weiskopf (39) 1999 101,667 68,000 (4)(5) ---- ---- 6,000 3,000
Vice President and 1998 96,667 3,000 ---- ---- 3,000 2,900
General Manager, 1997 85,877 --- 10,502 ---- --- 2,576
Flavors Division
</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, Mr. Kewer - $10,242 in 1998 and
7
<PAGE>
$92,182 in 1997, and Mr. Weiskopf - $9,145 in 1997. The remaining amounts
relate primarily to automobile allowances and club dues.
2) All amounts reflect the Company's matching contributions to the Company's
401(k) Savings Plan and Employee Stock Purchase Plan.
3) Amounts reported for Messrs. Kewer and Mishoe reflect a monthly increase to
their base salaries in light of the additional responsibilities they were
asked to assume in connection with the Board's decision in December 1998 to
explore strategic alternatives to enhance shareholder value. For Mr. Kewer,
the amount reported reflects an additional $12,000 per month for December
1998 through December 1999. For Mr. Mishoe, the amount reported includes an
additional $5,000 per month for December 1998 through June 1999. The
decision to continue Mr. Kewer's supplemental monthly base salary after
September 1999 was made, as explained below under "Certain Agreements," in
connection with the continuation of his additional responsibilities in the
Company's pursuit of strategic alternatives and in part in recognition of
the Company's reduction of approximately $250,000 in the amount potentially
payable to Mr. Kewer under his retention and severance agreement with the
Company in the event of a sale of the Company.
4) Amounts shown for each of Messrs. Kewer, Hettrich, Kangisser, Mishoe and
Weiskopf include awards under the 1999 Senior Management Incentive Plan in
the amount of $114,250, $36,150, $37,975, $42,500 and $30,500, respectively.
5) Amounts shown for each of Messrs. Kewer, Hettrich, Kangisser, Mishoe and
Weiskopf also include payments made in January 2000 in the amount of
$150,000, $56,250, $56,250, $56,250 and $37,500, respectively. As explained
under "Certain Agreements," these payments were made under revised retention
and severance agreements put in place in September 1999, in connection with
the restructuring of the Company's retention and severance benefits for the
Company's senior management and other employees. The revised contracts
provided for a 25% retention payment to be made in January 2000, provided
the named employee was still employed by the Company on December 31, 1999.
These contract revisions were made in an effort to assure the continued
employment of key employees following the Board's September 8, 1999,
announcement of its decision to seek a sale of the Company in order to
maximize shareholder value.
6) Reflects amounts paid to Mr. Kewer as incentive to join the Company as
President and Chief Operating Officer.
7) Reflects an award of 10,000 restricted shares made to Mr. Kewer upon his
employment by the Company on March 1, 1997. All restrictions on these shares
expired as of March 1, 2000. As of December 31, 1999, Mr. Kewer's aggregate
restricted stock holdings were 5,000 shares with a value of $36,875.
The table below sets forth information regarding option grants made
during the year ended December 31, 1999, for each of the named executive
officers.
8
<PAGE>
<TABLE>
<CAPTION>
OPTIONS GRANTED IN LAST FISCAL YEAR
-----------------------------------
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 (2)
Options Employees in Per Price Expiration ----------------------
Granted 1999 Share Per Share Date 5% 10%
------- ---- ----- --------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C> <C>
David B. Kewer 15,000 (1) 20% $13.25 $13.25 1/7/09 $125,000 $316,800
Craig L. Hettrich 6,000 (1) 8% 13.25 13.25 1/7/09 50,000 126,700
V. Stephen Kangisser 6,000 (1) 8% 13.25 13.25 1/7/09 50,000 126,700
Thomas M. Mishoe, Jr. 6,000 (1) 8% 13.25 13.25 1/7/09 50,000 126,700
William J. Weiskopf 6,000 (1) 8% 13.25 13.25 1/7/09 50,000 126,700
</TABLE>
(1) Grants were made under the Company's 1996 Incentive Stock Plan and become
exercisable in increments of one third each of the shares subject to option
on the January 7, 1999, grant date, and the first and second anniversaries
of the grant date, respectively.
(2) 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 reflect the tender offer price or to forecast possible future
price appreciation, if any, for the Company's Common Stock.
The table below sets forth information regarding year-end option values at
December 31, 1999, for each of the named executive officers.
<TABLE>
<CAPTION>
Fiscal Year-End Option Values (1)
---------------------------------
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>
David B. Kewer 38,334 36,766 0 0
Craig L. Hettrich 3,000 6,000 0 0
V. Stephen Kangisser 6,047 12,092 0 0
Thomas M. Mishoe, Jr. 11,070 17,279 0 0
William J. Weiskopf 3,834 7,666 0 0
</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, 1999.
(2) None of the options held by the named executive officers were in-the-money
at year-end, based on a market value of the Company's Common Stock on
December 31, 1999 of $7.375.
9
<PAGE>
RETIREMENT BENEFITS
The table below 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 1999
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.
Pension Plan Table
------------------
Years of Service
------------------------------------------------------
Average Amount of Annual Retirement Benefit
------------------------------------------------------
Annual Earnings 15 20 25 30 35
--------------- -- -- -- -- --
$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
"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 other compensation payable in cash (exclusive of expense
reimbursements and allowances and similar items) 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, 1999 are David B. Kewer - 2.8; Craig L. Hettrich - 1.9; V. Stephen Kangisser
- 3.6; Thomas M. Mishoe, Jr. - 3.8 and William J. Weiskopf - 5.7.
CERTAIN AGREEMENTS
The Company entered into substantially similar severance agreements with
each of Messrs. Hettrich, Kangisser, Kewer, Mishoe and Weiskopf upon their being
named executive officers of the Company. The agreements provided that
termination compensation would be paid if the executive's employment were
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
terminated his employment for "good reason" (as defined in the agreements).
"Change in control" was defined generally to include (i) an acquisition of 20%
of the Company's voting stock, (ii) a change in the composition of the Company's
Board of Directors whereby the individuals serving
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as directors at the date on which these agreements became effective, or
individuals becoming directors subsequent to the date these agreements became
effective whose election or nomination was approved by a majority of the
directors then in office, cease to constitute at least a majority of the Board;
(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. Under the agreements, termination compensation
consisted 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 provided for the continuation of certain medical, life and disability
benefits. These agreements renewed annually unless terminated by the Company by
notice given 60 days prior to expiration of the current term.
In connection with the Board of Directors' decision in September 1999 to
seek a sale of the Company, the Company undertook to restructure its overall
retention and severance program for both salaried and hourly employees. This
restructuring reflected the necessity of retaining key employees and maintaining
their focus on managing the ongoing business of the Company in order to preserve
and enhance the value of the Company through any possible future sale of the
Company. In this connection, the Company entered into new Executive Retention
Bonus and Severance Agreements with each of the named executive officers in
place of their previous severance agreements. The revised agreements provide
benefits in the form of retention payments payable, without regard to a
termination of employment, following certain specified events. The retention
payments were set at a fixed dollar amount, payable 25% in January 2000 to those
executive officers who were still employed by the Company at December 31, 1999.
This date was selected because at the time of the Company's announced intent in
September 1999 to seek a sale of the Company as promptly as reasonably
practical, the Board had a goal of negotiating a definitive agreement for such a
transaction by the end of 1999. Under the revised retention and severance
agreements, the balance of the retention payment is payable upon a sale of the
Company or, in the case of Mr. Kewer, 30 days after a sale of the Company unless
he has voluntarily left the employ of the Company prior to that date. The
definition of "sale of the Company" in the revised agreements includes (i) a
change in the ownership of the Company, in connection with a transaction
relating to the Board's intention to sell the Company or its assets, resulting
in any one individual, entity or group owning more than 50% of the Company's
Common Stock; (ii) in the case of employees of a subsidiary or division of the
Company, a sale of the stock or substantially all of the assets of the
subsidiary or division; or (iii) the elimination of certain job responsibilities
as a result of a sale of assets or of one or more divisions of the Company or
its subsidiaries. If a sale of the Company does not occur before January 1,
2001, these agreements terminate without the payment of the remaining 75%
benefit. The effect of the restructuring of the severance agreements was to
reduce the amount potentially payable under the agreements for Mr. Kewer from
approximately $850,000 to $600,000, and for all executive officers as a group
from approximately $2.62 million to approximately $1.55 million.
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
1999.
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