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SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of
the Securities Exchange Act of 1934 (Amendment No. )
Check the appropriate box:
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VESTRO NATURAL FOODS INC.
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VESTRO NATURAL FOODS INC.
1065 E. Walnut Street
Carson, CA 90746
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
June 17, 1997
----------------
To the Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders
of Vestro Natural Foods Inc. (the "Company") which will be held at 1065 E.
Walnut Street, Carson, California 90746 on Tuesday, June 17, 1997 at 10:00 A.M.
(Pacific Coast Time) for the following purposes:
(1) To elect directors; and
(2) To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on
May 1, 1997 as the record date for shareholders entitled to notice of and to
vote at the meeting. The share transfer books will not be closed.
By order of the Board of Directors,
Stephen Schorr
Secretary
May 15, 1997
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
<PAGE>
INFORMATION STATEMENT
For the Annual Meeting to be held on June 17, 1997.
This Information Statement is furnished in connection
with the Annual Meeting of Shareholders of Vestro Natural Foods Inc. (the
"Company") to be held at 10:00 A.M. (Pacific Coast Time) on Tuesday, June 17,
1997 at 1065 E. Walnut Street, Carson, California 90746 or at any adjournment
thereof with respect to the matters referred to in the accompanying notice.
This Information Statement is to be mailed to shareholders on or about May 15,
1997.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE
REQUESTED NOT TO SEND US A PROXY
VOTING SECURITIES AND RECORD DATE
Only holders of record of the Company's Common Stock, $.01 par value, at
the close of business on May 1, 1997 will be entitled to notice of and to vote
at the meeting. On the record date, there were issued and outstanding 5,950,588
shares of Common Stock. Each outstanding share of Common Stock is entitled to
one vote.
See SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT, for
information as to the holdings of persons owning in excess of 5% of the Common
Stock as well as the holdings of Management.
MATTERS TO BE ACTED UPON
(1) The election of nine directors to hold office until the next Annual
Meeting of Shareholders and until their respective successors are
duly elected and qualified; and
(2) To transact such other business as may properly come before the
meeting or any adjournment thereof.
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ELECTION OF DIRECTORS
Nine directors are to be elected to serve until the next Annual Meeting of
Shareholders and until their successors are elected and qualified.
The following table sets forth the name of each nominee for director of the
Company, his age, position and office with the Company and period he has served
as a director:
POSITION AND OFFICE DIRECTOR
NAME AGE WITH COMPANY SINCE
- --------------------- ---- ------------------------- ---------
Robert J. Cresci 53 Director 1990
Allan Dalfen 54 Director 1992
Anthony J. Harnett 52 Director 1994
B. Allen Lay 62 Chairman of the Board,
President, Chief
Executive Officer
and Director 1987
Jay J. Miller 64 Director 1966
Stephen P. Monticelli 42 Director 1994
F. Noel Perry 44 Director 1995
Henry W. Poett, III 58 Director 1987
Donald R. Stroben 66 Director 1987
Robert J. Cresci has been a Managing Director of Pecks Management Partners
Ltd., an investment management firm, since September 1990. Mr Cresci currently
serves on the boards of Bridgeport Machines, Inc., Serv-Tech, Inc., EIS
International, Inc., Sepracor, Inc., Olympic Financial, Ltd., GeoWaste, Inc.,
Hitox, Inc., Natures Elements, Inc., Garnet Resources Corporation, HarCor
Energy, Inc., Meris Laboratories, Inc., Film Roman, Inc., Educational Medical,
Inc. and several private companies.
Allan Dalfen was President and Chief Executive Officer of the Company from
February, 1993 to January, 1995. From 1979 to 1992, Mr. Dalfen was President
and Chief Executive Officer of Weider Health and Fitness, a manufacturer of
health and fitness equipment, sports nutrition products and fitness
publications. He is currently President of KSD Fitness and is a Director of
Herristic Development Group, Inc.
Anthony J. Harnett was the owner of Bread & Circus, a leading natural
products retailer, from 1975 through 1992. He currently serves as Chairman of
Harnett's, a homeopathic retail pharmacy.
B. Allen Lay was elected by the Board of Directors as President and Chief
Executive Officer on January 12, 1995 and Chairman of the Board on August 6,
1996. Mr. Lay has served as a General Partner of Southern
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California Ventures, a venture capital firm, since May, 1983. He is a director
of PairGain Technologies, Physical Optics Corp., Kofax Imaging, ViaSat Inc.
Helisys Inc. and Medclone Inc. Mr. Lay has served in a number of interim
Management roles, most recently as Chairman and Chief Executive Officer of
Meridian Data Inc. from July, 1993 to December, 1994.
Jay J. Miller has been a practicing attorney in the State of New York for
more than thirty years. Mr. Miller is a director of Total-Tel USA
Communications, Inc. a long distance telephone service provider, and Edison
Control Corporation, a manufacturer and distributor of concrete piping systems.
He is also a Chairman of the Board of Amtrust Pacific Ltd., a New Zealand real
estate company.
Stephen P. Monticelli is founder and President of Mosaic Venture LLC, a
private investment firm. From 1991 to 1995 he was a partner and Managing
Director of Baccharis Capital, Inc., a venture capital and buyout firm. From
1987 to 1991, Mr. Monticelli was a Principal in the Private Ventures group of
The Fremont Group (formerly known as Bechtel Investments, Inc.), a private
family investment firm. Prior to 1987, he was a management consultant with
Marakon Associates and a Certified Public Accountant with Deloitte and Touche.
F. Noel Perry is the founder and a Managing Director of Baccharis Capital,
Inc., a private venture capital partnership which concentrates its interests in
the natural and organic food area. Mr. Perry currently serves on the Board of
several private companies and served on the Board of Earth's Best before its
sale.
Henry W. Poett, III was President and Chief Executive Officer of the
Company from April, 1992 to January, 1993. Previously, he was Executive Vice
President-Operations and Chief Operating Officer of the Company from May, 1990
to March, 1992. Mr. Poett is currently a partner in Dalton Partners, a
management services company. Mr. Poett was an independent management consultant
from 1989 to 1990. He served as President and Chief Operating Officer of
Transcisco Industries Inc. from 1987 to 1988. From 1984 to 1987, he was Chief
Executive Officer of Wilsey Foods, Inc., a packager, marketer and distributor of
food products. He is a director of Biovation Inc., Wilsey Bennett Company, and
Armanino Foods.
Donald R. Stroben was Chairman of the Board of the Company from January,
1987 to January, 1993. He has served as a Managing General Partner of
Princeton/Montrose Partners, a venture capital firm, since December 1981. Mr.
Stroben currently serves as a director of Etz Lavud Ltd. (ASE) and several
private companies Mr. Stroben is also past Chairman of the Board of Laura
Scudder's, Inc., a snack food manufacturer.
During 1996, the Board held four meetings. Each director attended at least
75% of the meetings held. Where formal action has otherwise been required, the
Board has acted by unanimous written consent as permitted under applicable
corporate law and the Company's By-Laws. The Company's Board of Directors
currently has an Audit Committee consisting of Messrs. Stroben and Poett and a
Compensation Committee consisting of Messrs. Miller and Cresci. The Board
currently has no Nominating Committee.
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REQUIRED VOTE
FOR ELECTION OF DIRECTORS:
Assuming the presence of a quorum (a majority of the total issued and
outstanding shares of the Company's Common Stock) a favorable vote of the
holders of a plurality of the shares of the Company's Common Stock present and
voting at the meeting for the election of each nominee is required.
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth information covering the executive officers
of the Company. All officers serve at the pleasure of the Board of Directors.
There are no family relationships among any officers or directors of the
Company.
NAME AGE POSITION
- -------------- ----- -------------------------------
B. Allen Lay 62 Chairman of the Board,
President and Chief Executive
Officer
Stephen Schorr 51 Vice President, Finance,
Secretary, Treasurer and Chief
Financial Officer
Mr. Lay currently serves as a director of the Company. See ELECTION OF
DIRECTORS for employment and background information concerning Mr. Lay.
Mr. Schorr joined the Company in July, 1988 as Vice President, Finance. He
is an officer and director of each of the Company's subsidiaries. From
December, 1982 through June, 1988, he held the positions of Vice President,
Finance and Corporate Controller of Linear Corporation, a manufacturer of
electronic components.
SIGNIFICANT EMPLOYEES
Andrew Jacobson (36) has been President of the Company's subsidiaries,
Westbrae Natural Foods, Inc. and Little Bear Organic Foods, Inc. since joining
the Company in November, 1992. From 1985 to 1992, Mr. Jacobson was employed by
Tree of Life Inc., a major national natural products distributor, in several
executive capacities culminating as Director of Sales of Tree of Life West, Sun
Valley and Hayward, CA. Mr. Jacobson is a member of the Board of Directors of
the National Nutritional Foods Association.
Myron Cooper, 63, is Vice President, Technical Services of Westbrae and
Little Bear. Prior to joining Vestro in 1988, Mr. Cooper held executive
positions in operations, marketing, product development and quality control with
Kellogg's, Fairmont Foods and Hain Pure Food Company. Mr. Cooper holds a Ph. D.
in Food Science and Biochemistry. He is Vice President of the Soy
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Foods of America Association and a member of the California Organic Advisory
Board.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation which the Company paid
during the three years ended December 31, 1996 to the Chief Executive Officer
and to its other executive officers.
<TABLE>
<CAPTION>
NAME AND OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS GRANTED COMPENSATION
- ------------------ ---- ------ -------- ------- ------------
<S> <C> <C> <C> <C> <C>
B. Allen Lay, CEO 1996 $124,000 $ 20,000 (f) 120,000 (h)
1995 $115,000 (a) (b) 120,000 $ 5,000(c)
Allan Dalfen, CEO 1994 $120,000 (d) $ 3,120 (e)
Andrew Jacobson, Pres., Westbrae Natural Foods, Inc.
1996 $124,000 $ 29,700 (f)
1995 $120,000 $ 15,000 (f)
1994 $120,000 $ 3,120 (e)
Stephen Schorr, CFO 1996 $108,000 $ 23,000 (f) 10,000 (h)
1995 $105,000 $ 9,300 (f) 30,000
1994 $105,000 $ 2,000 20,000 (g)
</TABLE>
(a) Represents amounts paid as a consulting fee to SCV Management Company of
which Mr. Lay is a general partner.
(b) Began employment on January 12, 1995.
(c) Consulting fee paid prior to becoming CEO.
(d) Represents amounts paid as a consulting fee to Dalfen Corporation of which
Mr. Dalfen is the sole shareholder.
(e) Paid under a management bonus agreement which provided for the payment of
6% of pretax income above $500,000 in a year to Mr. Dalfen and Mr.
Jacobson.
(f) Bonus paid under an incentive plan covering substantially all employees of
the Company.
(g) Replaced options that expired in 1994.
(h) See Option Grants in Last Fiscal Year table below.
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OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL
REALIZABLE VALUE AT
ANNUAL RATES
OF STOCK
APPRECIATION
OPTIONS % OF TOTAL EXERCISE EXPIRATION
NAME GRANTED GRANTED PRICE DATE 5% 10%
- ---- ------- ---------- -------- ---------- --------- ------------
B. Allen Lay
120,000 62 $1.875 07/12/2001 $62,217 $137,497
Stephen Schorr
10,000 5 $3.00 10/25/2006 $18,880 $ 47,853
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Board of Directors has structured a compensation package for the
Company's Chief Executive Officer which puts a substantial emphasis on equity
incentive over fixed compensation. Mr. Lay's cash compensation of $124,000 per
year is believe to be low for a firm of the Company's size in its industry and
considering Mr. Lay's experience.
The Board of Directors has supplemented Mr. Lay's salary with grants of
options to purchase 60,000 shares (approximately 1% of the total outstanding) at
the inception of his employment and 60,000 shares at subsequent six month
intervals up to a maximum of 300,000 shares. To March 31, 1997, Mr. Lay has
received options to purchase 300,000 shares of the Company's Common Stock. Each
option is granted at the then-current market value of the Company's Common
Stock. Exercise prices range between $1.50 and $3.00 per share.
The current compensation package of the Chief Executive Officer was
designed to closely align his interests with those of the Company's
shareholders.
Board of Directors Compensation Committee
Robert J. Cresci
Jay J. Miller
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COMPARISON OF FIVE YEAR TOTAL RETURN
VESTRO NATURAL FOODS AND NASDAQ INDEX
TOTAL RETURN
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
NASDAQ INDEX 100 109 125 120 171 211
VESTRO NATURAL
FOOD 100 90 105 64 52 104
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STOCK OPTIONS
The Company adopted a Stock Option Plan at its May 23, 1988 Annual Meeting.
This plan provides for options to purchase up to 150,000 shares of the Company's
Common Stock to be granted at prices not less than the fair market value on the
date of grant. Both incentive and non-incentive options may be issued under the
1988 Plan. At December 31, 1996, there were 149,500 incentive options
outstanding under the 1988 Plan, of which options to purchase 49,625 shares were
currently exercisable. During the year ended December 31, 1996, no options were
granted or exercised under this plan.
During 1993, the Company granted a stock option to Mr. Jacobson to purchase
329,875 shares of its Common Stock at a price of $1.29 per share. This option
is exercisable in installments through November 1, 1997.
On July 26, 1995, the Board of Directors granted to each of the eight non-
employee Directors, a non-qualified option to purchase 20,000 shares of Common
Stock, of the Company. Each option is exercisable, at a price of $1.875 per
share, the fair market value of the Company's Common Stock on the date of grant,
for a period of five years from the date of grant and vest in three equal
installments on each anniversary date with credit given for up to two years of
prior service by an option holder. The grant of the options was ratified by
shareholders at the Annual Meeting on June 20, 1996. At December 31, 1996
options to purchase 160,000 shares were outstanding of which 133,333 were
currently exercisable. During 1996, no options were exercised.
On January 31, 1996, and at subsequent six month intervals, non-qualified
options to purchase 60,000 shares each of the Company's Common Stock were issued
to Mr. Lay, totalling 300,000 shares. Each option was granted at the then-
current market value and has a term of five years. Each option is immediately
exercisable in full. SEE EXECUTIVE COMPENSATION
At the Company's Annual Meeting on June 20, 1996, shareholders voted to
adopt the 1996 Incentive Stock Plan. This plan provides for options to purchase
up to 150,000 shares of the Company's Common Stock. During the year ended
December 31, 1996, options to purchase 74,500 shares were granted under this
plan.
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SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Set forth below is certain information concerning persons known by the
Company to own beneficially more than 5% of the shares of Common Stock of the
Company outstanding on March 31, 1997.
NUMBER OF PERCENT
NAME AND ADDRESS BENEFICIALLY OF
OF BENEFICIAL OWNER OWNED SHARES (1) CLASS (1)
- --------------------------- ---------------- ----------
NAP & Company 983,940 16.5%
Nominee for Delaware State
Employee's Retirement Fund
1 Hopkins Plaza
Baltimore, MD 21203
Baccharis Capital, Inc. 702,814 11.8%
2420 Sand Hill Rd., Suite 100
Menlo Park, CA 94025
Allan Dalfen 609,155 10.2%
509 No. Palm Drive
Beverly Hills, CA 90210
Princeton/Montrose Partners 548,016 9.2%
243 No. Highway 101
Solana Beach, CA 92075
Scottish Invest. Trust PLC 527,111 8.9%
6 Albyn Place
Edinburgh, Scotland EH24 NL
Southern Calif. Ventures II 365,345 6.1%
A California Limited Partnership
406 Amapola Avenue, Suite 205
Torrance, CA 90501
Natural Venture Partners I 351,407 5.9%
250 Central Avenue
Needham, MA 02194
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The following table sets forth the beneficial share ownership of each
director of the Company, and the number of shares of Common Stock beneficially
owned by all officers and directors as a group as of March 31, 1997:
NUMBER OF PERCENT
NAME AND ADDRESS BENEFICIALLY OF
OF BENEFICIAL OWNER OWNED SHARES (8) CLASS (1)
------------------- ----------
Robert J. Cresci (2) 1,425,629 23.9%
Allan Dalfen 609,155 (7) 10.2%
Anthony J. Harnett (3) 364,741 6.1%
B. Allen Lay (4) 682,916 11.2%
Jay J. Miller 105,144 1.8%
Stephen P. Monticelli 23,333 .4%
F. Noel Perry (5) 709,481 11.9%
Henry W. Poett, III 28,786 .5%
Donald R. Stroben (6) 568,016 9.5%
Officers and directors as a
group (10 persons) 4,543,487 76.0%
(1) Based upon an aggregate of 5,950,588 shares of Common Stock outstanding and
currently exercisable stock options to purchase an aggregate of 746,858
shares of Common Stock. Each of the above shareholders has sole voting and
sole dispositive power with respect to the shares beneficially owned.
(2) Mr. Cresci is the investment advisor for Nap & Company, Fuelship & Company
and Northman and Company.
(3) Mr. Harnett is a partner of Natural Venture Partners I.
(4) Mr. Lay is a General Partner of Southern California Ventures II.
(5) Mr. Perry is a Managing Director of Baccharis Capital, Inc.
(6) Mr. Stroben is a Managing General Partner of Princeton/Montrose Partners.
(7) Includes 263,900 shares of the Company's Common Stock purchased in 1993 at
a price of $1.29 per share and 131,950 shares of the Company's Common Stock
purchased in 1995 under a Severance and Settlement Agreement at a price of
$1.29 per share. Mr. Dalfen paid the Company $66,000 for the shares and
executed a note payable to the Company for $444,025. The note is interest
bearing at the rate of 5.75%, due on December 31, 1997 and is secured by
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the shares of stock purchased.
(8) Shares include currently exercisable stock options to purchase shares of
Common Stock as follows:
Robert J. Cresci 20,000
Allan Dalfen 20,000
Anthony J. Harnett 13,333
B. Allen Lay 300,000
Jay J. Miller 20,000
Stephen P. Monticelli 13,333
F. Noel Perry 6,667
Henry W. Poett, III 20,000
Donald R. Stroben 20,000
Officers and directors as a
group (10 persons) 450,833
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company currently rents warehouse and office space from a partnership,
in which Mr. Poett is a partner, for which it paid rentals of $196,000 in 1996.
The rent paid for such space is believed to be not less favorable to the Company
than that which would be paid under an arm's length transaction. The lease
expires on September 30, 1997, subject to earlier termination by the lessor or
the Company under certain circumstances.
The Company has used the law office of Mr. Miller for certain legal
services. It is believed that the fees paid for such services are not greater
than those which would have been paid to an unaffiliated party .
ANNUAL REPORT
The Annual Report of the Company for the fiscal year ended December 31,
1996 is being mailed to shareholders with this Information Statement. The
Company's audited financial statements and Management's Discussion and Analysis
of Financial Condition and results of operations for the year ended December 31,
1996 are included in the Annual Report. The Company's Form 10-K as filed with
the Securities and Exchange Commission is available upon request.
SHAREHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Any proposals by a shareholder intended to be presented at the 1998 Annual
Meeting of Shareholders must be received by the Corporation no later than March
31, 1998 and be in compliance with applicable Securities and Exchange Commission
regulations, for inclusion in the Corporation's Information or Proxy Statement
relating to such meeting.
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INDEPENDENT PUBLIC ACCOUNTANTS
It is expected that a representative of Price Waterhouse, which serves as
the Company's independent public accountants will be available to respond to
questions raised at the Meeting.
OTHER MATTERS
The Management knows of no business which will be presented for
consideration at the Meeting other than as stated in the Notice of Meeting.
By Order of the Board of Directors,
Stephen Schorr
Secretary
May 15, 1997
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