SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant |X|
Filed by a party other than the registrant |_|
|_| Preliminary Proxy Statement |_| Confidential, for Use of the
Commission Only (as permitted
|X| Definitive Proxy Statement by Rule 14a-6(e)(2))
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to
Rule 14a-11(c) to Rule 14a-12
ULTRA PAC, INC.
(Name of Registrant as Specified in Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
|_| $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6j(2)
or Item 22(a)(2) of Schedule 14A.
|_| $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
(2) Aggregate number of securities to which transactions applies:
N/A
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 011 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
N/A
(4) Proposed maximum aggregate value of transaction:
N/A
(5) Total fee paid:
N/A
|X| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
N/A
(2) Form, Schedule or Registration Statement No.:
N/A
(3) Filing Party:
N/A
(4) Date Filed:
N/A
ULTRA PAC, INC.
May 30, 1996
TO: THE SHAREHOLDERS OF ULTRA PAC, INC.
You are cordially invited to attend the Annual Meeting of Shareholders of
Ultra Pac, Inc., to be held on July 16, 1996, at 3:30 p.m. at the Radisson Plaza
Hotel, 35 S. 7th Street, Minneapolis, Minnesota. I encourage you to attend.
Whether or not you plan to attend the meeting, I urge you to complete and sign
the accompanying Proxy and return it in the enclosed envelope. Also attached for
your review are the formal Notice of Meeting and Proxy Statement.
On behalf of your Board of Directors and employees, thank you for your
continued support of Ultra Pac, Inc.
Very truly yours,
Calvin S. Krupa,
PRESIDENT AND CHAIRMAN OF THE
BOARD OF DIRECTORS
ULTRA PAC, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JULY 16, 1996
To: The Shareholders of Ultra Pac, Inc.:
The Annual Meeting of Shareholders of Ultra Pac, Inc. (the "Company")
will be held on Tuesday, July 16, 1996 at 3:30 p.m. at the Radisson Plaza Hotel,
35 S. 7th Street, Minneapolis, Minnesota.
The items of business are:
1. To set the number of members of the Board of Directors at
five;
2. To elect five directors, each to hold office for a term of one
year, ending in 1997 or when their successors are elected;
3. To approve an amendment to the Company's Articles of
Incorporation to increase the number of authorized shares of
Capital Stock from 5,000,000 to 10,000,000; and
4. To take action on any other business that may properly come
before the meeting or any adjournment thereof.
Only shareholders of record as shown on the books of the Company at the
close of business on May 17, 1996, will be entitled to vote at the meeting and
any adjournment thereof.
THIS NOTICE, THE ENCLOSED PROXY STATEMENT AND PROXY ARE SENT TO YOU BY
ORDER OF THE BOARD OF DIRECTORS.
James A. Thole,
SECRETARY
Date: May 30, 1996
Minneapolis, Minnesota
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE SIGN, DATE AND RETURN YOUR
PROXY IN THE ENCLOSED ENVELOPE WHETHER OR NOT YOU EXPECT TO ATTEND IN PERSON.
SHAREHOLDERS WHO ATTEND THE MEETING MAY REVOKE THEIR PROXIES AND VOTE IN PERSON
IF THEY DESIRE.
ULTRA PAC, INC.
21925 Industrial Boulevard
Rogers, Minnesota 55374
--------------------
PROXY STATEMENT
--------------------
ANNUAL MEETING OF SHAREHOLDERS
JULY 16, 1996
PROXY SOLICITED BY THE BOARD OF DIRECTORS
This Proxy Statement is furnished to the record holders of shares of
Common Stock of Ultra Pac, Inc., a Minnesota corporation (the "Company"), as of
May 17, 1996, by order of the Board of Directors. This Proxy Statement is
furnished in connection with the Board of Directors' solicitation of the
enclosed Proxy for the Annual Meeting of Shareholders to be held on July 16,
1996, at 3:30 p.m., at the Radisson Plaza Hotel, 35 S. 7th Street, Minneapolis,
Minnesota. A shareholder giving a Proxy may revoke it at any time prior to the
actual voting at the Annual Meeting of Shareholders by filing written notice of
the termination of the appointment with an officer of the Company, by attending
the Annual Meeting of Shareholders and voting in person, or by filing a new
written appointment of a Proxy with an officer of the Company. The revocation of
a Proxy will not affect any vote taken prior to the revocation. This Proxy
Statement is expected to be first mailed to shareholders on or about June 9,
1996.
The Annual Meeting of Shareholders has been called for the purpose of
setting the number of members of the Board of Directors at five, electing five
directors to a one-year term and to approve an amendment to the Company's
Articles of Incorporation to increase the number of authorized shares of Capital
Stock from 5,000,000 to 10,000,000 shares. All properly executed proxies
received at or prior to the meeting will be voted at the meeting. If a
shareholder directs how the Proxy is to be voted with respect to the business
coming before the meeting, the Proxy will be voted in accordance with the
shareholder's directions. Where specification has not been made, it will be
voted FOR setting the number of members of the Board of Directors at five, FOR
electing management's nominees as members of the Company's Board of Directors,
and FOR the Amendment of the Company's Articles of Incorporation.
OUTSTANDING SHARES AND VOTING RIGHTS
At the close of business on May 17, 1996, the record date for the
Annual Meeting of Shareholders, there were 3,766,215 shares of Common Stock
outstanding. The Company's only class of Capital Stock outstanding is Common
Stock. Each share of Common Stock is entitled to one vote on each matter
properly coming before the meeting. Cumulative voting for directors is not
permitted.
A list of those shareholders entitled to vote at the Annual Meeting of
Shareholders will be available for a period of 10 days prior to the Annual
Meeting of Shareholders for examination by any shareholder at the Company's
principal executive offices, 21925 Industrial Boulevard, Rogers, Minnesota, and
at the Annual Meeting of Shareholders.
ELECTION OF DIRECTORS
(PROPOSALS #1 AND #2)
The Bylaws of the Company provide that at each annual meeting the
shareholders shall determine the number of directors for the ensuing year;
provided, however, that the number may be increased by resolution of the Board
of Directors. The number of directors is currently set at five. The Board of
Directors recommends that the number of directors be set at five for the coming
year and that the nominees named below be elected. Directors are elected to
serve a one-year term. Directors being elected at this Annual Meeting of
Shareholders will serve until the next Annual Meeting of Shareholders, or until
their successors have been duly elected and qualified.
The affirmative vote of the holders of a majority of the outstanding
shares of Common Stock present in person or by proxy at the annual meeting and
entitled to vote is required for approval of the proposal to set the number of
directors at five and to elect directors.
THE BOARD RECOMMENDS A VOTE "FOR" SETTING THE NUMBER OF DIRECTORS AT
FIVE AND "FOR" THE ELECTION OF THE NOMINEES FOR DIRECTOR.
All nominees have consented to serve if elected, but if any becomes
unable to serve, the persons named as proxies may exercise their discretion to
vote for a substitute nominee. The name, age, business experience and offices
held by each nominee for director are as follows:
Name Age Company Position Director Since
---- --- ---------------- --------------
Calvin S. Krupa 49 President, Chief Executive Officer and 1987
Chairman of the Board of Directors
James A. Thole 56 Secretary and Director 1987
John F. DeBoer 54 Director 1991
Frank I. Harvey 45 Director 1991
Thomas F. Rains 61 Director --
CALVIN S. KRUPA has served as President, Chief Executive Officer and a
Director since February 1987. For the three years prior to 1987, Mr. Krupa was
marketing manager for Innovative Plastics, Inc., a Minneapolis-based producer of
plastic packaging.
JAMES A. THOLE has served as Secretary and a Director of the Company
since February 1987. From February 1987 to August 1991, Mr. Thole also served as
Treasurer of the Company. Mr. Thole is not an employee of the Company. Mr. Thole
has served as Chief Executive Officer and President of Packaging Plus, Inc., a
Minneapolis packaging company, since 1979.
JOHN F. DEBOER is Secretary of SIG Holding U.S.A., Inc., a privately
held holding company. Mr. DeBoer is also Vice President-Finance for Doboy
Packaging Machinery, Inc., a wholly owned subsidiary of SIG Holding U.S.A.,
Inc., which is engaged in the manufacture and sale of packaging equipment.
FRANK I. HARVEY is a shareholder in the law firm of Larkin, Hoffman,
Daly & Lindgren, Ltd., where he has been an attorney since 1976.
THOMAS F. RAINS was Vice President/General Manager -- In-Store Retail
Bakeries of Pillsbury Bakeries and Food Service, Inc. until his retirement in
June 1995, and had been employed by such company since 1992. Prior thereto, Mr.
Rains was employed, from 1965, by McGlynn Bakeries, Inc., in various positions,
most recently as President of the Frozen Products Division.
During the fiscal year ended January 31, 1996, the Board of Directors
met and took action by unanimous written consent on five (5) occasions.
BOARD COMMITTEES
The Board of Directors has appointed three standing committees of the
Company: (i) the Audit Committee; (ii) the Compensation Committee; and (iii) the
Stock Option Committee.
The Audit Committee consists of Calvin S. Krupa, Frank I. Harvey and
Michael J. McGlynn. Its purpose is to recommend the appointment of an auditor
for the Company, review the scope of the audit, examine the auditor's reports,
make appropriate recommendations to the Board of Directors as a result of such
review and examination, and make inquires into the effectiveness of the
financial and accounting functions and controls of the Company. The Audit
Committee held one meeting during the fiscal year ended January 31, 1996. Mr.
McGlynn, who is not standing for re-election as a Director of the Company, has
advised the Company that he will resign from the Audit Committee concurrent with
the Annual Meeting of Shareholders. The Board of Directors intends to appoint
Thomas F. Rains to replace Mr. McGlynn.
The Compensation Committee consists of James A. Thole, Frank I. Harvey
and John F. DeBoer and is responsible for setting the compensation of executive
officers of the Company. The Compensation Committee held one meeting during the
fiscal year ended January 31, 1996.
The Stock Option Committee consists of Frank I. Harvey and John F.
DeBoer. Its purpose is to administer the Company's 1991 Stock Option Plan (the
"Plan") and to designate appropriate individuals to receive options pursuant to
the Plan. The Stock Option Committee held one meeting during the fiscal year
ended January 31, 1996.
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid for service
rendered in all capacities to the Company during the Company's fiscal years
ended January 31, 1996, 1995 and 1994 by Calvin S. Krupa, President and Chief
Executive Officer, and Bradley C. Yopp, Chief Financial Officer (no other
executive officer's compensation exceeded $100,000).
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
----------------------------------------- -------------
Fiscal Other Securities
Name and Year Ended Annual Underlying All Other
Principal Position January 31 Salary Bonus Compensation(1) Options Compensation(2)
------------------ ---------- ------ ----- --------------- ------- ---------------
($) ($) ($) (#) ($)
<S> <C> <C> <C> <C> <C> <C>
Calvin S. Krupa, 1996 275,144 35,000 20,336 20,000 3,000
President and Chief 1995 241,827 50,000 15,999 20,000 3,000
Executive Officer 1994 213,750 60,000 15,834 20,000 4,354
Bradley C. Yopp 1996 100,355 10,000 0 5,000 2,207
Chief Financial 1995 89,809 0 0 3,000 1,796
Officer 1994 81,120 7,600 0 2,000 1,739
- ------------------------
</TABLE>
(1) Includes the cost to the Company of a rental automobile provided to Mr.
Krupa and the cost of a disability income policy for Mr. Krupa.
(2) Matching contributions by the Company to a 401(k) plan for such person's
benefit.
- ------------------------
OPTION GRANTS DURING FISCAL 1996
The following table sets forth information with respect to each option
and similar instrument granted or entered into during the fiscal year ended
January 31, 1996 to the executive officers named in the Summary Compensation
Table:
<TABLE>
<CAPTION>
Potential Realizable
Percent of Value at Assumed
Total Annual Rates of Stock
Options Market Price Appreciation
Granted Price For Option Term
Options To Employees Exercise On Date Expiration ---------------------------
Name Granted This Year Price of Grant(1) Date 5% 10%
---- ------- --------- ----- ----------- ---- ------------ -------------
(#) (%) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C>
Calvin S. Krupa 20,000 49.4 6.00 6.00 7/24/00 33,154 73,261(2)
Bradley C. Yopp 5,000 12.3 6.00 6.00 7/24/00 8,288 18,315
</TABLE>
- ------------------------
(1) The market values shown are as of the date of grant of the options. All
options were fully vested on the date of grant.
(2) Computed based upon the closing price of the Company's Common Stock on
July 25, 1995, the date of grant. No assurance can be given that the
stated rates of appreciation (5% and 10%) will be or can be achieved.
They are presented pursuant to applicable rules of the Securities and
Exchange Commission. Solely for illustration, if such rates of
appreciation were applied to the total market value of all of the
Company's outstanding Common Stock over a five-year term (the same as
the stock options granted to such persons), the value at July 25, 1995,
was $6.00 per share or an aggregate of $22,597,290, and at July 24,
2000 (the expiration date of the option), assuming an annual stock
price appreciation of 5% would be $7.66 per share or an aggregate of
$28,841,647, and assuming an annual stock price appreciation of 10%
would be $9.66 per share or an aggregate of $36,392,936.
AGGREGATE OPTION EXERCISES IN FISCAL 1996
AND FISCAL YEAR-END OPTION VALUES
The following table summarizes options exercised during the year ended
January 31, 1996 by the executive officers named in the Summary Compensation
Table (no options were exercised) and the value of the unexercised options held
as of January 31, 1996:
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Shares Acquired Value Options at 1/31/96 Options at 1/31/96
Name on Exercise Realized (All Exercisable) (All Exercisable)
- ----------------- ------------------ ------------- ---------------------------- --------------------------
(#) ($) (#) ($)
<S> <C> <C> <C> <C>
Calvin S. Krupa -- -- 80,000 --(1)
Bradley C. Yopp -- -- 15,000 --(1)
- ------------------------
</TABLE>
(1) The exercise prices of all options exceeded the market value of the
shares underlying such options on January 31, 1996.
- ------------------------
COMPENSATION OF DIRECTORS
The Company pays each director, who is not an employee of the Company,
a director's fee of $2,500 per year. The Outside Directors' Option Plan (the
"Directors' Plan") provides for an annual non-discretionary grant of an option
to purchase 1,000 shares (2,500 shares if the director has not previously
received an option under the Directors' Plan) to each nonemployee director of
the Company, who is a Company director immediately after each Annual Meeting of
Shareholders. The exercise price shall be equal to the closing price of the
Company's Common Stock, as reported by Nasdaq, on the date of grant. The options
are immediately exercisable and expire five years from the date of grant,
subject to earlier cancellation 30 days after termination as a director. The
payment for option exercises may be by cash or by delivery of shares of the
Company's Common Stock that have been owned for at least six months.
In addition, the Company's directors who are also employees of the
Company are eligible to be granted incentive stock options or non-qualified
stock options. During the fiscal year ended January 31, 1996, the Company
granted Mr. Krupa a non-qualified option to purchase 20,000 shares of Common
Stock at an exercise price of $6.00 per share. Such option expires in July 2000.
EMPLOYMENT AGREEMENT
The Company entered into an employment agreement with Calvin S. Krupa
on June 20, 1989, as amended on March 31, 1990 and January 3, 1992 (the
"Employment Agreement"). The Employment Agreement provides for an annual salary
to be set by the Compensation Committee ($291,500 effective July 1995),
discretionary bonuses as determined by the Compensation Committee and other
employment benefits. Pursuant to the Employment Agreement, Mr. Krupa must give
90 days notice prior to termination and is subject to a one year covenant not to
compete. Mr. Krupa's Employment Agreement also provides for severance pay in the
amount equal to three years' base salary in effect on the date of termination
if: (i) the Company terminates him for any reason other than "for cause," as
defined in the Employment Agreement, or even "for cause," if terminated during
the 18 months following a "change in control," also defined in the Employment
Agreement, or (ii) Mr. Krupa voluntarily terminates his employment within 18
months after a "change in control." These amounts are payable, at the option of
Mr. Krupa, in a lump sum or in semi-monthly installments.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") is responsible for setting
the compensation of the Company's executive officers, including the executive
officers named in the Summary Compensation Table, namely Calvin S. Krupa,
President, Chairman of the Board and Chief Executive Officer, and Bradley C.
Yopp, Chief Financial Officer and Vice President. The Committee is composed
exclusively of independent, nonemployee directors who are not eligible to
participate in any of the executive compensation programs. The Compensation
Committee met in July of 1995 to set annual compensation and to award bonuses
based on the Company's results for the fiscal year ended January 31, 1995.
The Committee reviews and determines three components in the Company's
executive compensation program:
1. Base Salary;
2. Performance-based Bonuses; and
3. Long-term Incentive Compensation.
BASE SALARY - The philosophy of the Committee is to set a base salary
for each of the executive officers of the Company based at appropriate levels
for the relative positions of the officer, the duties of the position, and the
salary levels paid to executives in comparable companies. The Committee
continued its view that there should be little change from year to year in the
base salary of the executive officers other than increases due to: (i) growth of
the Company's sales; (ii) growth in responsibility of the position; or (iii)
cost of living increases. The Committee believes that additional compensation
above base levels should be by bonus based on individual performance and the
financial performance of the Company. Mr. Krupa's salary was increased $31,500
effective as of June 1995, based on increased sales of the Company and Mr.
Krupa's individual performance. Mr. Yopp received a salary increase of $14,650
over the prior year's salary based on growth of the Company, increase in the
responsibility of Mr. Yopp, and Mr. Yopp's individual performance.
BONUSES - The bonus paid to Mr. Krupa for the fiscal year ended January
31, 1995 was determined based upon the Company's financial results during this
period. Based on the increased sales of the Company, the Committee granted Mr.
Krupa a bonus of $35,000, which was $15,000 less than the bonus paid Mr. Krupa
based on the fiscal year ended January 31, 1994. Mr. Yopp was awarded a bonus of
$10,000.
LONG-TERM INCENTIVE COMPENSATION - The executives of the Company are
eligible for incentive stock options and for non-qualified stock options. In
July of 1995, Mr. Krupa was granted non-qualified stock options to purchase
twenty thousand (20,000) shares at the market price of $6.00 per share; and Mr.
Yopp was granted non-qualified stock options to purchase five thousand (5,000)
shares at the market price of $6.00 per share.
COMPARATIVE STOCK PERFORMANCE
The following graph compares the cumulative total shareholder return,
assuming $100 invested on January 31, 1991, as if such amount had been invested
in each of: (i) the Company's Common Stock; (ii) the stocks comprising the Dow
Jones Containers and Packaging Industrial Sector; and (iii) the stocks included
in the Dow Jones Industrial Average. The graph assumes the reinvestment of all
dividends (the Company has never paid a dividend). The prices for the Company's
Common Stock are closing bid prices as reported by Nasdaq.
[LINE GRAPH]
1/31/91 1/31/92 1/29/93 1/31/94 1/31/95 1/31/96
Ultra Pac, Inc. 100 445 281 194 145 87
Dow Jones Containers and 100 143 151 155 148 160
Packaging Industrial Sector
Dow Jones Industrial Average 100 122 129 159 158 228
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Frank I. Harvey, a director of the Company, is an attorney with and a
shareholder of the law firm of Larkin, Hoffman, Daly & Lindgren, Ltd., which
currently serves as legal counsel to the Company and served as legal counsel to
the Company during the fiscal year ended January 31, 1996.
Michael J. McGlynn, a director of the Company who is not standing for
re-election, serves as Chief Executive Officer and a director of McGlynn
Bakeries, Inc., which purchased products valued at approximately $531,000 from
the Company during the period from his election as a director in July 1995
through the fiscal year ended January 31, 1996.
COMPLIANCE WITH SECTION 16 REPORTING OBLIGATIONS
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, certain officers and persons holding 10% of the Company's
Common Stock to file reports regarding their ownership and regarding their
acquisitions and dispositions of the Company's Common Stock with the Securities
and Exchange Commission. The Company is unaware that any required reports were
not timely filed except that reports related to grants of options, in July 1995,
to Messrs. Krupa and Yopp, which reports were due August 10, 1995, were not
filed until September 12, 1995.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information as of January 31,
1996, concerning the number of shares of Common Stock held: (i) by all persons
known to own beneficially more than 5% of the Company's outstanding Common
Stock; (ii) by each director and director nominee; (iii) by each executive
officer named in the Summary Compensation Table; and (iv) by all directors and
officers as a group. Where the persons listed have the right to acquire
additional shares of Common Stock through the exercise of options or warrants
within 60 days of January 31, 1996, such additional shares are deemed to be
outstanding for the purpose of computing the percentage of outstanding shares
owned by such persons, but are not deemed to be outstanding for the purpose of
computing the percentage ownership interest of any other person. Unless
otherwise indicated, each person is believed to hold the Common Stock with sole
voting and investment power.
Number of Shares Beneficially Owned
Name and Address -------------------------------------
of Beneficial Owner Shares Percent
- ---------------------------------------- --------------- -----------------
Calvin S. Krupa 414,000(1) 10.8%
21925 Industrial Boulevard
Rogers, Minnesota 55374
James A. Thole 227,500(2)(3) 6.0
5800 Main Street, N.E.
Minneapolis, Minnesota 55432
Frank I. Harvey 10,110(2)(3) *
1500 Norwest Financial Center
7900 Xerxes Avenue South
Bloomington, Minnesota 55431
John F. DeBoer 6,500(2)(4) *
535 East 3rd Street
New Richmond, Wisconsin 54017
Phillip T. Levin 241,000 6.4
5353 Nathan Lane
Plymouth, Minnesota 55442
Thomas F. Rains 0(2) *
8824 Hillswick Trail
Brooklyn Park, Minnesota 55443
Michael J. McGlynn 3,500(5) *
7350 Commerce Lane
Minneapolis, Minnesota 55432
Bradley C. Yopp 18,000(6) *
21925 Industrial Boulevard
Rogers, Minnesota 55374
All directors, director nominees and 679,610(7) 17.5%
officers of the Company as a group
(7 persons)
- ------------------------
* Less than 1%.
SEE FOOTNOTES ON NEXT PAGE.
- ------------------------
(1) Includes 80,000 shares issuable upon exercise of currently exercisable
options.
(2) Excludes options to be issued, effective immediately after the
Company's Annual Meeting of Shareholders, for an additional 1,000
shares to each non-employee director elected (Mr. Rains will receive an
option to purchase 2,500 shares if he is elected).
(3) Includes options to purchase 5,500 shares of the Company's Common
Stock.
(4) Includes: (i) options to purchase 5,500 shares of Common Stock and (ii)
1,000 shares owned jointly with Mr. DeBoer's spouse.
(5) Includes options to purchase 2,500 shares of Common Stock.
(6) Includes: (i) options to purchase 15,000 shares of Common Stock; and
(ii) 3,000 shares owned jointly with Mr. Yopp's spouse.
(7) Includes 114,000 shares issuable upon exercise of currently exercisable
options.
- ------------------------
AMENDMENT OF ARTICLES OF INCORPORATION
TO INCREASE AUTHORIZED SHARES
(PROPOSAL #3)
The Articles of Incorporation of the Company, as currently in effect,
authorize the Company to issue up to 5,000,000 shares of Capital Stock, no par
value. The Board of Directors proposes to increase the number of authorized
shares to 10,000,000. The Board of Directors has the power to establish more
than one class or series of shares and to fix the relative rights and
preferences of any such different classes or series. The Board of Directors has
not established any additional class or series of Capital Stock and, therefore,
in accordance with the Restated Articles of Incorporation, all currently issued
and unissued Capital Stock is Common Stock. At January 31, 1996, there were
3,766,215 shares of Common Stock outstanding. Additionally, approximately
480,000 shares of Common Stock were reserved for issuance pursuant to the
Company's various stock option plans and stock option agreements
The principal purpose of the Amendment of Articles of Incorporation
(the "Proposed Amendment") is to give the Company greater flexibility in its
financial affairs by making 5,000,000 additional shares of Capital Stock
available for issuance by the Company, without further action by its
shareholders, in such transaction or transactions as the Board of Directors may
approve, whether in public or private offerings, as stock splits or dividends or
otherwise, at such time or times as the Board of Directors may approve whether
prior to (subject to the approval by the Company's shareholders and the taking
effect of such Proposed Amendment as described herein) or after the meeting of
shareholders of the Company.
Although the Company does not currently have any plans, understandings
or agreements for the issuance of the proposed additional shares of Capital
Stock nor for the issuance of rights to purchase or acquire additional shares of
Capital Stock, the Board of Directors believes that the Company needs additional
authorized shares to provide the Company with the flexibility, as the need
arises, to use Capital Stock or securities convertible into Capital Stock
without the expense and delay of a special shareholders meeting in the event of
any future public offerings, private placements, acquisitions by the Company of
any businesses or properties, restructuring of the Company's capital structure,
debt conversions, stock dividends and for other purposes. Such activities could
require more shares of Capital Stock than are currently available to the
Company.
The additional shares of Capital Stock proposed to be authorized would
be identical to the existing Capital Stock in all respects. The ability of the
Board of Directors, both as to shares currently authorized and the proposed
additional shares, to designate and issue classes or series of preferred stock
could impede or deter an unsolicited tender offer or takeover proposal regarding
the Company and could adversely affect the voting power and rights of holders of
the Company's Common Stock.
The Proposed Amendment could, under certain circumstances, have an
anti-takeover effect. However, the only intended purpose of the Proposed
Amendment is to increase the number of available shares of Capital Stock in
order to give the Board of Directors more flexibility in conducting business
operations and, possibly, restructuring the Company's capital structure, and the
proposal is not being presented as, nor is it part of, a plan to adopt a series
of anti-takeover measures.
Because shareholders do not have preemptive rights under the Articles
of Incorporation, the rights of existing shareholders may (depending upon the
particular circumstances in which additional Capital Stock is issued) be diluted
by any such issuance. Although the Company is unaware of any specific efforts to
obtain control of the Company, the increased authorized shares could be used to
make an attempt to effect a merger or other change in control more difficult and
less likely or to dilute the interest of a party attempting to obtain control of
the Company.
Unless required by law or by the rules of any stock exchange on which
the Company's Capital Stock may in the future be listed, no further authorized
vote by the shareholders will be sought for any issuance of shares of Capital
Stock. However, under existing Nasdaq regulations, approval by a majority of the
holders of outstanding shares of Common Stock may, nonetheless, be required
prior to the original issuance of additional shares of Capital Stock, other than
a public offering for cash, if (i) the shares to be issued (including securities
convertible into or exercisable for such shares) has, or will have upon
issuance, voting power equal to or in excess of 20% of the voting power
outstanding before the issuance of the additional shares; or (ii) the number of
shares to be issued is or will be equal to or in excess of 20% of the number of
shares outstanding before the issuance of the additional shares; or (iii) the
issuance would result in a change in control of the Company. If any of such
conditions are applicable to the issuance of any of the additional shares, the
Company intends to comply with such Nasdaq requirements.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THIS
AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION.
INDEPENDENT AUDITORS
The Board of Directors has selected Divine, Scherzer & Brody, Ltd., as
the Company's independent auditors for the fiscal year ending January 31, 1997.
Representatives of Divine, Scherzer & Brody, Ltd., are expected to be present at
the Annual Meeting of Shareholders with the opportunity to make a statement if
they so desire and to respond to appropriate shareholder questions.
SUBMISSION OF SHAREHOLDER PROPOSALS
The rules of the Securities and Exchange Commission permit shareholders
of the Company, after notice to the Company, to present proposals for
shareholder action in the Company's proxy statement where such proposals are
consistent with applicable law, pertain to matters appropriate for shareholder
action, and are not properly omitted by Company action in accordance with the
proxy rules published by the Securities and Exchange Commission. The 1997 Ultra
Pac, Inc. Annual Meeting of Shareholders is expected to be held on or about July
15, 1997, and proxy materials in connection with that meeting are expected to
mailed on or about May 26, 1997. Shareholder proposals prepared in accordance
with the proxy rules must be received by the Company on or before January 23,
1997.
OTHER PROPOSALS
The Board of Directors of the Company does not intend to present any
business at the meeting other than the matters specifically set forth in this
Proxy Statement and knows of no other business to come before the meeting.
COSTS AND METHOD OF SOLICITATIONS
Solicitations of proxies will be made by preparing and mailing the
Notice of Annual Meeting, Proxy and Proxy Statement to shareholders of record as
of the close of business on May 17, 1996. The cost of making the solicitation
includes the cost of preparing and mailing the Notice of Annual Meeting, Proxy
and Proxy Statement and the payment of charges made by brokerage houses and
other custodians, nominees and fiduciaries for forwarding documents to
shareholders. In certain instances, officers of the Company may make special
solicitations and proxies either in person or by telephone. Expenses incurred in
connection with special solicitations are expected to be nominal. The Company
will bear all expenses incurred in connection with the solicitation of proxies
for the annual meeting.
It is important that your shares are represented and voted at the
meeting, whether or not you plan to attend. Accordingly, we respectfully request
that you sign, date and mail your Proxy in the enclosed envelope as promptly as
possible.
BY ORDER OF THE BOARD OF DIRECTORS
James A. Thole,
SECRETARY
Date: May 30, 1996
[FRONT]
ULTRA PAC, INC. PROXY
21925 INDUSTRIAL BOULEVARD
ROGERS, MINNESOTA 55374
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Calvin S. Krupa and James A. Thole, and each of
them, with full power of substitution, his or her Proxies to represent and vote,
as designated below, all of the shares of the Common Stock of Ultra Pac, Inc.,
registered in the name of the undersigned on May 17, 1996, with the powers the
undersigned would possess if personally present at the 1996 Annual Meeting of
Shareholders to be held at the Radisson Plaza Hotel, 35 S. 7th Street,
Minneapolis, Minnesota at 3:30 p.m. on July 16, 1996, and at any adjournment
thereof, hereby revoking any proxy or proxies previously given.
1. Proposal to set the number of directors at five:
|_| FOR |_| AGAINST |_| ABSTAIN
2. ELECTION OF DIRECTORS:
FOR all nominees listed below |_| WITHHOLD AUTHORITY |_|
(except as marked to the contrary below) to vote for all nominees listed below
(To WITHHOLD authority to vote for any individual nominee strike a line through
the nominee's name below)
Calvin S. Krupa John F. DeBoer Frank I. Harvey
James A. Thole Thomas F. Rains
3. Proposal to approve an amendment to the Company's Articles of Incorporation
to increase the number of authorized shares of Capital Stock from 5,000,000 to
10,000,000:
|_| FOR |_| AGAINST |_| ABSTAIN
4. In their discretion, the appointed Proxies are authorized to vote upon such
other business as may properly come before the meeting or any adjournment.
(CONTINUED ON OTHER SIDE)
[BACK]
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE
VOTED AS DIRECTED. IF NO DIRECTION IS GIVEN,
THE PROXY WILL BE VOTED "FOR" PROPOSAL 1,
"FOR" ALL NOMINEES FOR DIRECTOR, "FOR"
PROPOSAL 3 AND IN THE PROXY'S DISCRETION ON
ANY OTHER MATTERS TO COME BEFORE THE
MEETING.
Dated _______________________________, 1996
___________________________________________
(Signature)
___________________________________________
(Second signature)
PLEASE DATE AND SIGN ABOVE exactly as your
name appears at left, indicating where
appropriate, official position or
representative capacity.
