SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
[Amendment No. _________]
Filed by the Registrant _X_
Filed by a Party other than the Registrant ___
Check the appropriate box:
___ Preliminary Proxy Statement
___ Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
_X_ Definitive Proxy Statement
___ Definitive Additional Materials
___ Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
ARMANINO FOODS OF DISTINCTION, INC.
(Name of Registrant as Specified in Its Charter)
ARMANINO FOODS OF DISTINCTION, INC.
(Name of Person(s) Filing Proxy Statement)
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ARMANINO FOODS OF DISTINCTION, INC.
30588 San Antonio Street
Hayward, California 94544
(510) 441-9300
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 20, 1999
TO THE SHAREHOLDERS OF ARMANINO FOODS OF DISTINCTION, INC.:
NOTICE HEREBY IS GIVEN that the Annual Meeting of Shareholders of
Armanino Foods of Distinction, Inc., a Colorado corporation (the "Company"),
will be held at the Clarion Hotel, 401 East Millbrae Avenue, Millbrae,
California, on Thursday, May 20, 1999, at 11:00 a.m., Pacific Time, and at any
and all adjournments thereof, for the purpose of considering and acting upon
the following matters.
1. The election of six (6) Directors of the Company to serve until the
next Annual Meeting of Shareholders and until their successors have been duly
elected and qualified;
2. The ratification of the appointment of Pritchett, Siler & Hardy,
P.C., as the Company's independent auditors;
3. The transaction of such other business as may properly come before
the meeting or any adjournment thereof.
Only holders of the no par value common stock of the Company of record at
the close of business on April 14, 1999, will be entitled to notice of and to
vote at the Meeting or at any adjournment or adjournments thereof. The
proxies are being solicited by the Board of Directors of the Company.
All shareholders, whether or not they expect to attend the Annual Meeting
of Shareholders in person, are urged to sign and date the enclosed Proxy and
return it promptly in the enclosed postage-paid envelope which requires no
additional postage if mailed in the United States. The giving of a proxy will
not affect your right to vote in person if you attend the Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
WILLIAM J. ARMANINO, PRESIDENT
Hayward, California
April 14, 1999
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ARMANINO FOODS OF DISTINCTION, INC.
30588 San Antonio Street
Hayward, California 94544
(510) 441-9300
------------------------------
PROXY STATEMENT
------------------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 20, 1999
GENERAL INFORMATION
The enclosed Proxy is solicited by and on behalf of the Board of
Directors of Armanino Foods of Distinction, Inc., a Colorado corporation (the
"Company"), for use at the Company's Annual Meeting of Shareholders to be held
at the Clarion Hotel, 401 East Millbrae Avenue, Millbrae, California, on
Thursday, May 20, 1999, at 11:00 a.m., Pacific Time, and at any adjournment
thereof. It is anticipated that this Proxy Statement and the accompanying
Proxy will be mailed to the Company's shareholders on or about April 16, 1999.
Any person signing and returning the enclosed Proxy may revoke it at any
time before it is voted by giving written notice of such revocation to the
Company, or by voting in person at the Meeting. The expense of soliciting
proxies, including the cost of preparing, assembling and mailing this proxy
material to shareholders, will be borne by the Company. It is anticipated
that solicitations of proxies for the Meeting will be made only by use of the
mails; however, the Company may use the services of its Directors, Officers
and employees to solicit proxies personally or by telephone, without
additional salary or compensation to them. Brokerage houses, custodians,
nominees and fiduciaries will be requested to forward the proxy soliciting
materials to the beneficial owners of the Company's shares held of record by
such persons, and the Company will reimburse such persons for their reasonable
out-of-pocket expenses incurred by them in that connection.
All shares represented by valid proxies will be voted in accordance
therewith at the Meeting.
The Company's Annual Report on Form 10-K for the year ended December 31,
1998, is being simultaneously mailed to the Company's shareholders, but does
not constitute part of these proxy soliciting materials.
SHARES OUTSTANDING AND VOTING RIGHTS
All voting rights are vested exclusively in the holders of the Company's
no par value common stock, with each share entitled to one vote. Only
shareholders of record at the close of business on April 14, 1999, are
entitled to notice of and to vote at the Meeting or any adjournment thereof.
On April 14, 1999, the Company had 1,945,081 shares of its no par value
common stock outstanding, each share of which is entitled to one vote on all
matters to be voted upon at the Meeting, including the election of Directors.
Cumulative voting in the election of Directors is not permitted.
A majority of the Company's outstanding common stock represented in
person or by proxy shall constitute a quorum at the Meeting.
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SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number and percentage of shares of
the Company's no par value common stock owned beneficially, as of April 14,
1999, by any person, who is known to the Company to be the beneficial owner of
5% or more of such common stock, and, in addition, by each Director of the
Company, Nominee for Director, and Executive Officer and by all Directors,
Nominees for Director and Executive Officers of the Company as a group.
Information as to beneficial ownership is based upon statements furnished to
the Company by such persons.
Name and Address Amount and Nature of Percent
of Beneficial Owners Beneficial Ownership of Class
- ------------------------ -------------------- --------
William J. Armanino 373,048 (1) 18.7%
30588 San Antonio Street
Hayward, CA 94544
Deborah Armanino-LeBlanc 67,854 (2) 3.5%
30588 San Antonio Street
Hayward, CA 94544
John J. Micek, III 49,296 (3) 2.5%
645 High Street
Palo Alto, CA 94301
Tino Barzie 36,454 (3) 1.8%
10590 Wilshire Boulevard
Los Angeles, CA 90024
David Scatena 35,945 (4) 1.8%
655 Mariner's Island Blvd.
Suite 304
San Mateo, CA 94404
J. Bryan King 224,000 (5) 11.5%
301 Commerce, Suite 1600
Fort Worth, TX 76102
Linda A. Armanino 373,048 (6) 18.7%
30588 San Antonio Street
Hayward, CA 94544
Alexandria Breitman 13,300 (7) 0.7%
30588 San Antonio Street
Hayward, CA 94544
Michael K. Jarrett -0- --
30588 San Antonio Street
Hayward, CA 94544
Pia Zadora 116,668 (8) 6.0%
c/o Grant & Tani, Inc.
9100 Wilshire Blvd., Suite 100 West
Beverly Hills, CA 90212-3413
All Directors and Executive 799,897 37.4%
Officers as a Group (8 Persons)
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_________________
(1) Includes 136,635 shares held directly by the William J. Armanino Trust, of
which Mr. Armanino is trustee; 24,480 shares held by Mr. Armanino as
custodian for a minor child; 133,453 shares held the Linda A. Armanino Trust,
of which his wife, Linda A. Armanino, is trustee; and 24,480 shares held by
Linda A. Armanino as custodian for a minor child. Also includes 34,000
shares underlying stock options held by Mr. Armanino and 20,000 shares
underlying options held by Linda A. Armanino, which are exercisable within 60
days.
(2) Includes 21,000 shares underlying stock options held by Ms.
Armanino-LeBlanc exercisable within 60 days.
(3) Includes 35,000 shares underlying stock options exercisable within 60
days.
(4) Includes 945 shares held by the accounting firm of Polly, Scatena, Gekakis
& Company of which Mr. Scatena is Managing Partner, and 35,000 shares
underlying stock options exercisable within 60 days held by Mr. Scatena.
(5) Represents 4,000 shares held directly and 220,000 shares of Common Stock
held by a limited partnership of which Luther King Capital Management
Corporation is the General Partner, and is managed by Luther King Capital
Management Corporation and the Directors and Officers of Luther King Capital
Management Corporation of which Mr. King is an employee.
(6) Includes 133,453 shares held directly by the Linda A. Armanino Trust, of
which Mrs. Armanino is trustee; 24,480 shares held by Mrs. Armanino as
custodian for minor children; 136,635 shares held by the William J. Armanino
Trust, of which her husband, William J. Armanino, is trustee; and 24,480
shares held by William J. Armanino as custodian for a minor child. Also
includes 20,000 shares underlying stock options held by Mrs. Armanino and
34,000 shares underlying options held by William J. Armanino, which are
exercisable within 60 days.
(7) Represents shares underlying stock options held by Ms. Breitman
exercisable within 60 days.
(8) Includes 111,112 shares held directly by The Pia Zadora Living Trust of
which Ms. Zadora is trustee and 5,556 shares held by or for the benefit of
Saturina Zadora Schipani and Pia Zadora Riklis as Joint Tenants.
ELECTION OF DIRECTORS
The Company's Bylaws have been amended to provide that effective at the
Annual Meeting of Shareholders that the Board of Directors will consist of
eight members. The Board of Directors recommends the election as Directors of
the six (6) nominees listed below, to hold office until the next Annual
Meeting of Shareholders and until their successors are elected and qualified
or until their earlier death, resignation or removal. Each of the six current
members of the present Board of Directors has been nominated for re-election.
The persons named as "Proxies" in the enclosed form of Proxy will vote the
shares represented by all valid returned proxies in accordance with the
specifications of the shareholders returning such proxies. If at the time of
the Meeting any of the nominees named below should be unable to serve, which
event is not expected to occur, the discretionary authority provided in the
Proxy will be exercised to vote for such substitute nominee or nominees, if
any, as shall be designated by the Board of Directors.
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The following table sets forth the name and age of each nominee for
Director, indicating all positions and offices with the Company presently
held, and the period during which each person has served as a Director:
Positions and Offices Held
Name Age and Term as a Director
---- --- --------------------------
William J. Armanino 71 President, Chief Executive Officer, Chief
Financial Officer, and Chairman of the
Board and a Director since February 1988
Deborah Armanino-LeBlanc 48 Vice President - Production Operations,
Secretary and a Director since February
1988
John J. Micek, III 46 Director since February 1988
David Scatena 57 Director since February 1988 and Vice
Chairman of the Board since February 1999
Tino Barzie 71 Director since June 1988
J. Bryan King 28 Director since February 1999
Except for the fact that William J. Armanino and Deborah Armanino-LeBlanc
are father and daughter, there is no family relationship between any Director
or Executive Officer of the Company.
The Company has no Nominating Committee, but does have a Compensation
Committee, an Audit Committee and a Strategic Finance Committee.
The Compensation Committee presently consists of David Scatena, John J.
Micek, III and J. Bryan King. The Compensation Committee reviews the
compensation arrangements for each of the Company's Executive Officers and
makes recommendations to the Board of Directors. During 1998, this committee
held five (5) meetings.
The Audit Committee presently consists of John J. Micek, III and J. Bryan
King. The Audit Committee reviews audit plans, reports on material changes in
accounting principles and audit reports. During 1998, the Audit Committee met
three (3) times with the Company's Executive Officers and independent
auditors.
The Strategic Finance Committee presently consists of John J. Micek, III,
J. Bryan King and David Scatena. The Strategic Finance Committee assists
management in developing overall corporate strategies designed to maximize
corporate growth and profitability resulting in increased shareholder value,
as well as assists in the financial direction of the Company's investments.
During 1998, the Strategic Finance Committee held three (3) meetings.
Set forth below are the names of all directors, nominees for director and
executive officers of the Company, all positions and offices with the Company
held by each such person, the period during which he has served as such, and
the principal occupations and employment of such persons during at least the
last five years:
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WILLIAM J. ARMANINO -- PRESIDENT, CHIEF EXECUTIVE OFFICER, CHIEF
FINANCIAL OFFICER AND CHAIRMAN OF THE BOARD. Mr. Armanino has been
President, Chief Executive Officer and a Director of the Company since
February 1988, and served in these capacities for the Company's wholly owned
subsidiary from January 1987, until it was merged into the Company in December
1990. In April of 1990, Mr. Armanino was elected to be Chairman of the Board
of Directors of Armanino Foods of Distinction. From August of 1990 to June
1998, Mr. Armanino also served as Treasurer of the Company. He has also been
Chief Financial Officer of the Company since September 1989. Since May 1995,
he has also served as President, and since March 1996 he has also served as
Chief Financial Officer of AFDI, Inc., a wholly-owned subsidiary of the
Company. From May 1996 to December 1997, until it was merged into the
Company, Mr. Armanino has also served as President and Chief Financial
Officer of Alborough, Inc., d/b/a Emilia Romagna. In 1957, he and his father
founded G. Armanino & Sons, Inc., and its principal subsidiary, Armanino
Farms of California, which developed into an international business
specializing in growing, processing and merchandising of fresh frozen and
freeze dried herbs, spices and vegetables. In December 1986, most of this
business was sold to and became a subsidiary of McCormick & Company, which is
publicly-held, but Mr. Armanino remained as the Chairman of the Board of
Directors of that subsidiary of McCormick & Company until December 1989. Mr.
Armanino also established the business of manufacturing and marketing frozen
pasta sauces as part of G. Armanino & Sons, Inc. in 1978. This business was
acquired by the Company's subsidiary in January 1987. Mr. Armanino devotes
substantially all of his time to the business of the Company.
DEBORAH ARMANINO-LEBLANC -- VICE PRESIDENT - PRODUCTION OPERATIONS,
SECRETARY AND DIRECTOR. Ms. Armanino-LeBlanc has been Secretary and a
Director of the Company since February 1988, and served in these capacities
for the Company's wholly owned subsidiary from January 1987, until it was
merged into the Company in December 1990, and has been a Vice President of the
Company since September 1989. She also served as Chief Operations Officer
from September 1990 to January 1992. Since March 1997, Ms. Armanino-LeBlanc
has also been a director of AFDI, Inc., d/b/a Focaccia Di Genova, a
wholly-owned subsidiary of the Company. She has also served as Secretary of
AFDI, Inc. since March 1998. From May 1996 to December 1997, until it was
merged into the Company. Ms. Armanino-LeBlanc served as Secretary and
Director of Alborough, Inc., d/b/a/ Emilia Romagna. From October 1980 to
December 1986, she was the public relations director as well as director of
product development and package design for Armanino Farms of California. Ms.
Armanino-LeBlanc devotes substantially all of her time to the business of the
Company.
JOHN J. MICEK III -- DIRECTOR. Mr. Micek has been a Director of the
Company since February 1988. He also served as a director of the Company's
wholly owned subsidiary from May 1987 until it was merged into the Company in
December 1990, and was a Vice President of the Company from September 1989 to
December 1993. From February 1988 to December 31, 1988, he served as General
Counsel and Chief Financial Officer for the Company, and served in these
capacities for the Company's wholly owned subsidiary from May 1987 to December
31, 1988. From July 1997, Mr. Micek served as Chief Operating Officer for
Protozoa, Inc. in San Francisco, California. From April 1994 to February
1997, Mr. Micek was General Counsel for U.S. Electricar, Inc. in San
Francisco, California. From January 1989 to March 1994, Mr. Micek practiced
law and served as a consultant to the Company on corporate finance matters.
Since September 1998, Mr. Micek has been President of Universal Assurors,
Inc., a member company of Universal Group, Inc., a midwest group of insurance
companies. He also serves as a Director of Universal Group, Inc. Mr. Micek
is also a Director of Instant Video Technologies, Inc., a publicly-held
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company. He received a Bachelor of Arts degree in History from the University
of Santa Clara in 1974 and a Juris Doctorate from the University of San
Francisco School of Law in 1979.
DAVID SCATENA -- DIRECTOR. Mr. Scatena has been a Director of the
Company since February 1988, and was a Director of the Company's wholly owned
subsidiary from January 1987, until it was merged into the Company in December
1990. He also served as Treasurer of the Company from February 1988 to
January 1989, and of its wholly owned subsidiary from January 1987 to January
1989. From May 1996 to December 1997, until it was merged into the Company,
Mr. Scatena also served as a director of Alborough, Inc., d/b/a Emilia
Romagna, which is a wholly-owned subsidiary of the Company. He is Managing
Partner of Polly, Scatena, Gekakis and Company, a Certified Public Accounting
firm in San Mateo, California, where he has practiced as a Certified Public
Accountant for over 15 years. Mr. Scatena received a Bachelor of Science
Degree from the University of San Francisco in 1964.
TINO BARZIE -- DIRECTOR. Mr. Barzie has been a Director of the Company
and was a Director of its wholly owned subsidiary from June 1988, until it was
merged into the Company in December 1990. Mr. Barzie has been involved in the
entertainment profession for nearly 50 years. Currently and in addition to
the preceding, he is Personal Manager and Producer to Steve Lippia. He is
also President of Tin-Bar Amusement Corporation. During his career, Mr.
Barzie has been Manager for several entertainers including Tommy Dorsey, Jimmy
Dorsey, Jackie Gleason, Pia Zadora, Paul Anka, and Frank Sinatra. Mr. Barzie
also played baseball for the Boston Red Sox for several seasons and was co-
owner of several Red Sox and Phillies farm teams.
J. BRYAN KING -- DIRECTOR. Mr. King has been a Director of the Company
since February 1999. Since 1993, Mr. King has been an employee of Luther King
Capital Management Corporation. Mr. King has served in several private and
public investment company roles. His current responsibilities focus primarily
on small public company analysis. He is also a Chartered Financial Analyst.
Luther King Capital Management Corporation is an investment firm located in
Fort Worth, Texas. Mr. King received his A.B. degree in History from
Princeton University in 1993.
ALEXANDRIA BREITMAN -- TREASURER. Ms. Breitman has been Treasurer for
the Company since June of 1998. Ms. Breitman is also the Company's
Controller. Ms. Breitman has been serving in the capacity of Controller since
1996 and from September 1990 to September 1996 as Accounting Manager. From
January 1986 to August 1990, Mr. Breitman was employed by Wain, Samuel & Co.,
a Certified Public Accounting firm in San Mateo, California. Ms. Breitman
received her Certified Public Accounting license in January 1991 and a B.S.
degree in Accounting from Golden Gate University in December 1985. Ms.
Breitman is 33 years old.
MICHAEL K. JARRETT -- SENIOR VICE PRESIDENT AND DIRECTOR OF SALES AND
MARKETING. Mr. Jarrett has been Senior Vice President and Director of Sales
and Marketing of the Company since November 1998. From 1992 to 1998, Mr.
Jarrett was National Manager, Sales and Operations for Otis Spunkmeyer, Inc.,
a manufacturer and distributor of frozen gourmet cookie dough, other baked
goods and roaster of gourmet whole coffee beans. From 1989 to 1991, he was
Western Division Sales and Marketing Manager for Sara Lee Bakery/Deli, a
division of Sara Lee Corporation. Sara Lee is a leading manufacturer of baked
goods and consumer products. From 1980 to 1989, Mr. Jarrett was employed by
Frito-Lay, Inc., a division of PepsiCo, the leading manufacturer and
distributor of snack foods nationally where he served in a series of
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increasingly responsible positions, the later of which was Regional Sales
Manager. Mr. Jarrett is 46 years old.
The Company's Board of Directors held ten (10) meetings during the year
ended December 31, 1998. Each Director attended at least 75% of the aggregate
number of meetings held by the Board of Directors and its Committees during
the time each such Director was a member of the Board or of any Committee of
the Board, except for Tino Barzie and Soren Svenningsen who only attended 60%
and 70%, respectively, of such meetings.
The Company's executive officers hold office until the next annual
meeting of directors of the Company, which currently is scheduled for May 20,
1999. There are no known arrangements or understandings between any director
or executive officer and any other person pursuant to which any of the
above-named executive officers or directors was selected as an officer or
director of the Company.
No event occurred during the past five years which is material to an
evaluation of the ability or integrity of any Director or person nominated to
be Director or Executive Officer of the Company.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on a review of Forms 3 and 4 and amendments thereto
furnished to the Company during its most recent fiscal year, and Forms 5 and
amendments thereto furnished to the Company with respect to its most recent
fiscal year and certain representations, no persons who were either a
director, officer, or beneficial owner of more than 10% of the Company's
common stock, failed to file on a timely basis reports required by Section
16(a) of the Exchange Act during the most recent fiscal year, except as
follows:
Tino Barzie, a Director of the Company, filed a Form 5 reporting the
grant of exempt options two days late.
COMPENSATION
The following tables set forth information regarding executive
compensation for the Company's President and Chief Executive Officer and each
other executive officer who received total annual salary and bonus in excess
of $100,000 for any of the years ended December 31, 1998, 1997 or 1996.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG TERM COMPENSATION
---------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
---------------------------- ------------------- -------
SECURI-
TIES
UNDERLY-
OTHER RE- ING ALL
ANNUAL STRICTED OPTIONS/ OTHER
NAME AND PRINCIPAL COMPEN- STOCK SARs LTIP COMPEN-
POSITION YEAR SALARY BONUS SATION AWARD(S) (NUMBER) PAYOUTS SATION
- ------------------ ---- -------- ----- ------ -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William J. Armanino, 1998 $179,000 -0- $18,631<FN1> -0- 34,000 -0- $6,149<FN2>
President, Chief 1997 $179,000 -0- $15,327<FN1> -0- -0- -0- $5,656<FN2>
Executive Officer 1996 $179,000 -0- $18,602<FN1> -0- 30,000 -0- $2,550<FN2>
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Robert P. Kraemer 1998 $116,520 -0- $ 8,141<FN4> -0- 25,000 -0- -0-
Chief Operating
Officer<FN3>
William G. Bump, 1998 $ 56,125 -0- $ 3,485<FN6> -0- 2,000 -0- -0-
Vice President of 1997 $110,789 -0- $ 6,016<FN6> -0- -0- -0- -0-
Sales and Marketing 1996 $106,289 -0- $ 7,642<FN6> -0- -0- -0- -0-
<FN5>
- -------------------
<FN>
<FN1>
For 1998, the amount includes $12,556 for automobile reimbursement and $6,075
for 75% of Mr. Armanino's club membership reimbursement to him. For 1997, the
amount includes $9,243 for automobile expense reimbursement, and $6,084 for
75% of Mr. Armanino's club membership reimbursed to him. For 1996, the amount
includes $12,682 for automobile expense reimbursement and $5,920 for 75% of
Mr. Armanino's club membership reimbursed to him.
<FN2>
Represents amounts paid for premiums on a term life insurance policy for Mr.
Armanino's benefit.
<FN3>
Mr. Kraemer resigned on August 20, 1998. The salary amount shown includes
consulting fees paid to him after that date.
<FN4> This amount includes $4,868 for automobile expense reimbursement and
$3,273 for temporary housing reimbursement paid to Mr. Kraemer.
<FN5>
Mr. Bump resigned on June 26, 1998.
<FN6>
This amount represents automobile expense reimbursement paid to Mr. Bump.
</FN>
</TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
SECURITIES
UNDERLYING VALUE OF UNEXER-
SHARES UNEXERCISED CISED IN-THE
ACQUIRED OPTIONS MONEY OPTIONS/
ON SARs AT FY-END SARs AT FY-END
EXERCISE VALUE EXERCISABLE/ EXERCISABLE/
NAME (NUMBER) REALIZED UNEXERCISABLE UNEXERCISABLE
---- -------- -------- -------------- ---------------
William J. Armanino -0- -0- 34,000 / 0 $-0- / $-0-
Robert P. Kraemer -0- -0- 12,500 / 12,500 $-0- / $-0-
William G. Bump -0- -0- 0 / 0 $-0- / $-0-
None of the Company's Officers presently have an employment agreement
with the Company. The annual salary levels for the Company's Officers, which
became effective on January 1, 1998, are as follows:
William J. Armanino $179,000
Deborah Armanino-LeBlanc $ 87,400 *
Michael K. Jarrett $127,000
Alexandria Breitman $ 78,000
______________
* Effective January 15, 1999, the Company has agreed to allow Ms. Armanino-
LeBlanc to work an average of 36 hours per week. The above salary is reduced
proportionately to hours worked.
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Effective January 1, 1996, the Company entered into a three year
employment agreement with William J. Armanino, which provided for a base
salary of $179,000 per year. This base salary was to be reviewed annually and
increased by the Board of Directors by up to seven percent. Mr. Armanino was
also entitled to participate in the Company's Management Incentive
Compensation Plan described below. The Company also agreed to reimburse Mr.
Armanino for 75% of his cost of belonging to certain clubs which he uses for
business purposes, and 75% of his expenses relating to an automobile.
Pursuant to the terms of this new employment agreement, the Board of Directors
granted Mr. Armanino an additional stock option in March 1996 which was
amended in January 1998. This employment agreement ended on December 31,
1998.
Effective September 15, 1999, the Company entered into a three-year
agreement with Robert P. Kraemer, the Company's former Chief Operating Officer
which provided for a base salary of $130,000 through March 14, 1998, then
increased to $150,000 on March 15, 1998. This employment agreement was
mutually terminated on August 20, 1998, in connection with Mr. Kraemer's
resignation. Effective August 21, 1998, the Company entered into a Consulting
Agreement with Mr. Kraemer. (See "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS.")
Effective August 1996, the Company entered into a three year employment
agreement with Robert H. Anderson, the Company's former Chief Operating
Officer, which provided for a base salary of $140,000 through February 28,
1997, then increased to $150,000 per year on March 1, 1997. This employment
agreement was mutually terminated on May 31, 1997, in connection with Mr.
Anderson's resignation. Effective June 1, 1997, the Company entered into a
consulting agreement with Mr. Anderson. (See "CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS.")
During 1998, members of the Board of Directors received a fee of $1,000
per meeting attended. Members of Committees of the Board of Directors were
entitled to receive a fee of $100 per hour for approved committee meetings.
They were also entitled to reimbursement of reasonable travel expenses
incurred by them in attending board or committee meetings. Effective in
March 1998, members of the Board of Directors receive a fee of $1,000 per
meeting attended in person and $100 per hour or fraction thereof for all other
meetings attended. This hourly fee will also be paid for time spent in
preparation for meetings not attended in person. Members of the committees of
the Board of Directors are entitled to receive a fee of $100 per hour or
fraction thereof for approved committee meetings. They are also entitled to
receive a fee of $50 per hour for travel time and reimbursement of reasonable
travel expenses incurred by them in attending board or committee meetings.
The hourly rates will be adjusted annually for inflation.
Except as disclosed below, the Company has no retirement, pension, profit
sharing or other plans covering its Officers and Directors.
INCENTIVE COMPENSATION PLANS
In March 1993, the Board of Directors established a Management Incentive
Compensation Plan to provide an incentive to Officers and other senior
management personnel who contribute substantially to the financial success of
the Company as measured primarily by the achievement of certain profit goals
for the year. The plan is to be reviewed and revised annually. In 1997, the
Board of Directors established an Employee Incentive Compensation Plan which
includes officers of the Company. However, it was not funded due to the fact
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that the Company did not meet the performance goals established, and no
distributions were made under this plan.
For 1998, the Board of Directors has adopted an Employee Incentive
Compensation Plan which will reward all officers and employees of the Company
collectively, except for the President and Chief Operating Officer, based on
the Company achieving certain revenue and profit targets, and individually
based on the accomplishment of specific personal objectives. Under this plan,
eligible Executive Officers of the Company will receive cash payments. The
maximum cash compensation to be paid to an Executive Officer eligible under
the plan will range from 12% to 19% of the individual's annual salary, based
on level of responsibility. A maximum of approximately $30,000 in cash will
be distributed among Executive Officers of the Company if all corporate and
personal performance goals are met, assuming that all the salaries of such
persons remain at their current levels and no additional Executive Officers
are employed by the Company. To be eligible for awards under the plan, an
individual must be employed for at least 90 days. Persons employed for part
of a year will receive awards on a pro-rata basis.
The Board of Directors will approve the forecast of sales and profits
for the year, and the specific objectives for the Chief Executive Officer and
Senior Vice President and Director of Sales and Marketing on the advice of the
Compensation Committee. All other individual objectives will be approved by
the Chief Executive Officer. The Board of Directors will have the authority
to and at their sole discretion, determine amounts, if any to be awarded to
the Chief Executive Officer. The Board of Directors will review and revise
the plan annually under the auspices of the Compensation Committee.
1993 STOCK OPTION PLAN
In March 1993, the Board of Directors adopted a Stock Option Plan (the
"1993 Plan"). The 1993 Plan was approved by the Company's shareholders in May
1993. The 1993 Plan allows the Board to grant stock options from time to time
to employees, officers and directors of the Company and consultants to the
Company. The Board has the power to determine at the time the option is
granted whether the option will be an Incentive Stock Option (an option which
qualifies under Section 422 of the Internal Revenue Code of 1986) or an option
which is not an Incentive Stock Option. However, Incentive Stock Options will
only be granted to persons who are employees of the Company. Vesting
provisions are determined by the Board at the time options are granted. As
originally adopted, the total number of shares of Common Stock subject to
options under the 1993 Plan was not to exceed 280,000, subject to adjustment
in the event of certain recapitalizations, reorganizations and similar
transactions. In December 1994, the Company's Board of Directors adopted an
amendment to the 1993 Plan to increase the number of shares subject to options
to 500,000, and this amendment was approved by the Company's Shareholders in
May 1995. In March 1996, the Board of Directors adopted a further amendment
to the 1993 Plan to increase the number of shares subject to options to
650,000, and this amendment was approved by the Company's Shareholders in May
1996. The option price must be satisfied by the payment of cash. The Board
of Directors may amend the 1993 Plan at any time, provided that the Board may
not amend the 1993 Plan to materially increase the benefits accruing to
participants under the 1993 Plan, or materially change the eligible classes
of participants without shareholder approval.
In March 1993, the Board of Directors granted non-qualified stock options
to the Directors of the Company who were not employees. All of these options
had expired by March 11, 1998.
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In December 1994, the Board of Directors granted non-qualified stock
options to purchase 60,000 shares of Common Stock and incentive stock options
to purchase 108,000 shares of Common Stock to Officers, Directors and
employees of the Company. All of these options are exercisable at $4.625 per
share and expire in December 2004.
Included in the options granted in December 1994 are non-qualified stock
options to purchase 5,000 shares each that were granted to John J. Micek III,
David Scatena, and Tino Barzie, Directors of the Company, and Robert M. Geller
who was then a Director of the Company. Each option vested as to 1/36th of
the total number of shares each month commencing May 1, 1995, and are now
fully vested.
Also included in the options granted in December 1994 are non-qualified
stock options to purchase 20,000 shares each that were granted to William J.
Armanino, an Officer and Director of the Company, and Linda A. Armanino, who
was at that time an Officer and Director of the Company, and incentive stock
options to purchase 20,000 shares each that were granted to Deborah
Armanino-LeBlanc, an Officer of the Company, and Anthony J. Scafine, who was
then an Officer of the Company. Options as to 10,000 shares each vested as to
1/36th of the total number of shares each month commencing January 1, 1995.
Options as to the remaining 10,000 shares were to vest once the Company has
two consecutive quarters in which the Company had net income after taxes of at
least $250,000. This had occurred as of January 1, 1996. In July 1995, Mr.
Scafine agreed to the reduction of his 10,000 options which vest when the
Company had two consecutive quarters of net income after taxes of $250,000 to
2,000 shares, and to a reduction of the number of shares covered by his other
option from 10,000 shares to 6,000.
On March 9, 1995, the Board of Directors granted non-qualified stock
options to purchase 55,000 shares of common stock to Steven Gonzales, a
consultant to the Company, in connection with the Company's new Italian quick
service restaurant concept. During 1996, these options expired as a result of
the termination of Mr. Gonzales' consulting agreement.
On July 28, 1995, the Board of Directors granted two non-qualified stock
options each to Henry W. Poett, III and Soren Svenningsen, who were then
Directors of the Company. Each of these persons received one option to
purchase up to 20,000 shares of Common Stock at $7.50 per share and one option
to purchase up to 5,000 shares at $10.00 per share. These options were
cancelled as of January 29, 1998.
On December 8, 1995, the Board of Directors granted an incentive stock
option to William G. Bump, who was the Company's former Vice President of
Sales and Marketing, to purchase 20,000 shares of Common Stock at $10.15 per
share. This option was repriced in January 1998 but expired as a result of
Mr. Bump's subsequent resignation.
On March 14, 1996, the Company granted a non-qualified stock option to
William J. Armanino, an Officer and Director of the Company, to purchase up to
30,000 shares of the Company's Common Stock at $9.35 per share. The option
was immediately exercisable as to 6,000 shares. The remainder of the option
was to vest in 8,000 share increments after December 31, 1996, December 31,
1997, and December 31, 1998, in the event that the Compensation Committee of
the Board of Directors determined that the Company's return on equity for the
year preceding such date is greater than or equal to the return on equity
projected in the budget approved by the Board of Directors for such year. The
option will expire on March 14, 2001. During 1996 and 1997, the predetermined
level of profitability was not achieved and the option was forfeited as to
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16,000 shares. On January 29, 1998, the Board amended the vesting provision
of the existing Stock Option to remove the vesting condition which requires
the Company to attain a certain rate of return on the Company's equity and,
instead, the 8,000 shares remaining eligible for vesting became vested on
December 31, 1998. In addition, the option was re-priced to $5.075 per share.
In May 1996, the Board of Directors granted an incentive stock option to
Donato De Marchi, an employee of the Company, to purchase 20,000 shares of
Common Stock at $10.50 per share. As a result of Mr. De Marchi no longer
being employed by the Company, the option expired.
In December 1996, the Board of Directors granted an incentive stock
option to Robert H. Anderson, Vice President and Chief Operating Officer, to
purchase 30,000 shares of Common Stock at $8.675 per share. This option
expired as a result of Mr. Anderson's resignation and execution of a mutual
release agreement with the Company.
On March 22, 1997, the Board of Directors granted a Non-Statutory Stock
Option to James Baker, a consultant to the Company to purchase 14,400 shares
of Common Stock at $5.475 per share. The option was to have vested 1,200
shares per month commencing March 22, 1997, however the vesting provisions
were to cease effective as of the Consultant's last day of engagement with the
Company. On July 22, 1997, Mr Baker's services were terminated and 8,400
shares expired under this option.
On September 25, 1997, the Board of Directors granted a Stock Option to
Robert P. Kraemer, Chief Operating Officer, to purchase 20,000 shares of
Common Stock at $6.70 per share, with certain vesting provisions. This option
was amended on January 29, 1998, by the Board of Directors at which time it
was re-priced to $5.075 per share. On August 17, 1998, the Board amended and
restated this option incorporating the options granted on January 29 and March
26, 1998 (discussed below). The Amended and Restated option became effective
August 20, 1998, and provides that Mr. Kraemer may purchase up to an aggregate
of 25,000 shares of the par value common stock for an exercise price of $5.075
per share. This option will vest as follows: up to 12,500 shares of the
Restated Option may be purchased immediately, and up to 12,500 shares of the
Restated Option may be purchased on or after August 15, 1999, provided,
however, that upon a "change in control" of the Company, all of the Restated
Option may be exercised by the Mr. Kraemer.
On January 29, 1998 the Board of Directors granted non-statutory options
to purchase 172,000 shares of Common Stock and incentive stock options to
purchase 52,040 shares of Common Stock to Officers, Directors and employees of
the Company.
Included in the options granted in January 1998 are non-statutory options
to purchase Common Stock, as follows:
(a) 20,000 shares each, were granted to John J. Micek III, David Scatena
and Tino Barzi, Directors of the Company, and Robert M. Geller who was then a
Director of the Company. Each option vested 10,000 shares as of the date of
grant and 10,000 shares on December 31, 1998. These options were granted in
exchange for the surrender and cancellation of an existing stock option
covering 20,000 shares each.
(b) 10,000 shares each, were granted to John J. Micek III, David Scatena
and Tino Barzi, Directors of the Company, and Robert M. Geller, who was then a
Director of the Company. Each option vested on or prior to March 11, 1998.
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These options were granted in exchange for the surrender and cancellation of
or the expiration of an existing stock option covering 10,000 shares each.
(c) 25,000 shares each, were granted to Henry W. Poett, III and Soren
Svenningsen, who were then Directors of the Company. Each option vested as to
20,000 shares as of date of grant and 5,000 shares on December 31, 1998.
These options were granted in exchange for the surrender and cancellation of
existing stock options covering 25,000 shares each.
All of the above options are exercisable at $5.075 per share and expire
April 30, 2005.
Also included in the options granted January 29, 1998 are incentive stock
options to Officers and a Director of the Company as follows:
(a) 8,000 shares were granted to Robert P. Kraemer, who was then Chief
Operating Officer. Option was to vest as to 4,000 shares each on January 28,
1999 and 2000. This option was amended and incorporated into the Amended and
Restated Option granted by the Board of Directors on August 17, 1998.
(b) 2,000 shares each were granted to Deborah Armanino-LeBlanc, an
Officer and Director of the Company, William G. Bump, who was then an Officer
of the Company, and Alexandria Breitman, who is now an Officer of the Company.
Each option vests as to 1,000 shares each on January 28, 1999 and 2000.
The above options are exercisable at $5.075 per share and expire January
28, 2008.
On March 26, 1998, the Board of Directors granted non-statutory options
to purchase 1,000 shares of Common Stock and incentive stock options to
purchase 10,430 shares of Common Stock to a consultant and an employee of the
Company. All of the options are exercisable at $5.70 per share and expire on
March 25, 2008.
Included in the options granted in March 1998 is a non-statutory option
to purchase 1,000 shares of Common Stock to Paul Irwin, a consultant to the
Company. The option vested in full on March 25, 1999.
Also included in the options granted in March 1998 was a stock option to
purchase 10,000 shares of Common Stock to Robert P. Kraemer, who was then
Chief Operating Officer. This option was amended and incorporated into the
Amended and Restated Option granted by the Board of Directors on August 17,
1998.
On October 16, 1998, the Board of Directors granted an Incentive Stock
Option to purchase 1,600 shares to an employee of the Company. This option is
exercisable at $4.297 per share and will expire on October 15, 2008.
On February 4, 1999, the Board of Directors granted an Incentive Stock
Option to purchase 20,000 shares of no par value common stock for an exercise
price of $3.094 per share to Michael K. Jarrett, Senior Vice President and
Director of Sales and Marketing. This option will vest one-sixth the total
number on August 4, 1999 and up to an additional one-thirty sixth of the total
number of shares under this option may be purchased for each additional month
on or after September 4, 1999.
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REPORT OF COMPENSATION COMMITTEE ON OPTION REPRICING
On January 29, 1998, the Board of Directors approved the repricing or
replacement of all of the outstanding options held by Officers and Directors
with exercise prices exceeding $5.00 per share. Included in the repriced or
replaced options were options granted to William J. Armanino, Robert P.
Kraemer and William G. Bump (the Named Executive Officers). The details
concerning these options are described above. The options that were repriced
or replaced for these persons ranged from $6.70 to $10.15 per share.
In approving the repricing and replacements of these options, the Board
of Directors considered that the exercise price of the outstanding options
made them of nominal value from the viewpoint of the option holder,
considering the then current market price of the Company's Common Stock. The
Board of Directors was concerned that the Company might, at critical points in
its development, lose the benefit of a key incentive in its compensation
philosophy and, thereby, make it more difficult for the Company to retain
talented personnel. By bringing the exercise price of these stock options in
line with the then current market conditions, the Board of Directors believed
that the Company's executive officers would be more motivated to focus on
increasing shareholder value.
Compensation Committee:
David Scatena
John J. Micek, III
J. Bryan King
401(k) PLAN
The Company also maintains a 401(k) employee retirement and savings
program (the "401(k) Plan") for its employees. Under the 401(k) Plan, an
employee may contribute up to 15% of his or her gross annual earnings, subject
to a statutory maximum, for investment in one or more funds identified under
the plan. The Company may in the future, with the approval of the Board of
Directors, make matching contributions to participants in the 401(k) Plan.
During 1998, the Company made matching contributions totaling $10,678 under
the 401(k) Plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Board of Directors of the Company is of the opinion that, even
though the transactions described below were not the result of arms'-length
negotiations, the terms of these transactions were at least as favorable to
the Company as could have been obtained from an unaffiliated party. All
ongoing and future transactions with affiliates will be on terms no less
favorable than those which could be obtained from unaffiliated parties.
Polly, Scatena, Gekakis and Company, a certified public accounting firm
of which David Scatena, a Director of the Company, is managing partner, was
paid for accounting services provided to the Company in the amount of $32,495
for the year ended December 31, 1998.
Effective June 1, 1997, Robert H. Anderson, a former Chief Operating
Officer of the Company, entered into a Consulting Agreement with the Company
whereby Mr. Anderson agreed to serve as a consultant to provide advice and
counse1 regarding the Company's business matters when requested by the Company
for $117,000, payable in three (3) installments of $39,000 each, on each July
1, 1997, October 1, 1997 and January 2, 1998.
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Effective August 21, 1998, Robert P. Kraemer, a former Chief Operating
Officer of the Company, entered into a Consulting Agreement with the Company
whereby Mr. Kraemer agreed to serve as a Consultant to provide advice and
counsel regarding the Company's business matters when requested by the
Company, payable in twelve (12) equal monthly installments of $5,800
commencing September 21, 1998 and terminating August 20, 1999.
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The independent accounting firm of Pritchett, Siler & Hardy, P.C.
(formerly Peterson, Siler & Stevenson, P.C.), audited the financial statements
of the Company for the year ended December 31, 1998, and has been selected in
such capacity for the current fiscal year. At the direction of the Board of
Directors, this appointment is being presented to the shareholders for
ratification or rejection at the Annual Meeting of Shareholders. If the
shareholders do not ratify the appointment of Pritchett, Siler & Hardy, P.C.,
the appointment of auditors will be reconsidered by the Board of Directors.
It is expected that representatives of Pritchett, Siler & Hardy, P.C.,
will be present at the meeting and will be given an opportunity to make a
statement if they desire to do so. It is also expected that the
representatives will be available to respond to appropriate questions from
shareholders.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
FOR THE ANNUAL MEETING TO BE HELD IN MAY 2000
Any proposal by a shareholder intended to be presented at the Company's
Annual Meeting of Shareholders to be held in May 2000 must be received at the
offices of the Company, 30588 San Antonio Street, Hayward, California 94544,
no later than December 16, 1999, in order to be included in the Company's
proxy statement and proxy relating to that meeting.
Shareholders intending to bring any business before the Annual Meeting of
Shareholders to be held in May 2000 that is not to be included in the
Company's proxy statement and proxy related to that meeting must notify the
Company, in writing, prior to February 29, 2000, of the business to be
presented. Any such notices received after said date will be considered
untimely under Rule 14a(c)(1) under the Securities Exchange Act of 1934, as
amended.
WILLIAM J. ARMANINO, PRESIDENT
Hayward, California
April 14, 1999
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P R O X Y
ARMANINO FOODS OF DISTINCTION, INC.
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints William J. Armanino and Deborah
Armanino-LeBlanc, each with the power to appoint a substitute, and hereby
authorizes them to represent and to vote as designated below, all the shares
of common stock of Armanino Foods of Distinction, Inc. held of record by the
undersigned on April 14, 1999, at the Annual Meeting of Shareholders to be
held on May 20, 1999, or any adjournment thereof.
1. Election of Directors:
[ ] FOR all nominees listed below (except as marked to the contrary)
[ ] WITHHOLD authority to vote for all the nominees listed below:
William J. Armanino
Deborah Armanino-LeBlanc
John J. Micek, III
David Scatena
Tino Barzie
J. Bryan King
[INSTRUCTION: To withhold authority to vote for any individual nominee, cross
out that nominee's name above.]
2. The ratification of the appointment of Pritchett, Siler & Hardy,
P.C., as the Company's independent auditors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To transact such other business as may properly come before the
meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1 AND 2.
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING IN
ACCORDANCE WITH THE SHAREHOLDER'S SPECIFICATIONS ABOVE. THIS PROXY CONFERS
DISCRETIONARY AUTHORITY IN RESPECT TO MATTERS NOT KNOWN OR DETERMINED AT THE
TIME OF THE MAILING OF THE NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS TO THE
UNDERSIGNED.
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders, Proxy Statement and Annual Report.
Dated: _____________, 1999.
_________________________________________
_________________________________________
Signature(s) of Shareholder(s)
Signature(s) should agree with the name(s) stenciled hereon. Executors,
administrators, trustees, guardians and attorneys should indicate when
signing. Attorneys should submit powers of attorney.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ARMANINO
FOODS OF DISTINCTION, INC. PLEASE SIGN AND RETURN THIS PROXY IN THE ENCLOSED
PRE-ADDRESSED ENVELOPE. THE GIVING OF A PROXY WILL NOT AFFECT YOUR RIGHT TO
VOTE IN PERSON IF YOU ATTEND THE MEETING.
