<PAGE>
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
WESTERN BEEF, INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Merrill Corporation
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(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:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
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:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
WESTERN BEEF, INC.
47-05 METROPOLITAN AVENUE
RIDGEWOOD, NEW YORK 11385
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 12, 1996
To the Stockholders of Western Beef, Inc.:
The Annual Meeting of the Stockholders of Western Beef, Inc., (the
"Company") will be held at the La Guardia Marriott Hotel, 102-05 Ditmars
Boulevard, East Elmhurst, N.Y. 11369, on June 12, 1996 at 10:00 A.M., New York
time, for the following purposes:
1. To elect six directors to hold office until the next Annual Meeting;
2. To consider and vote on a proposal to amend the Western Beef, Inc. 1995
Stock Option Plan for Employees;
3. To consider and vote for the selection of BDO Seidman, LLP as
independent auditors for Western Beef, Inc. for the fiscal year ended January 3,
1997;
4. To transact such other business as may properly come before the meeting.
Only stockholders of record at the close of business on April 24, 1996 will
be entitled to notice of and to vote at the meeting and any adjournments or
postponements thereof. A complete list of stockholders entitled to vote will be
available for inspection by stockholders at the executive offices of the Company
at least ten days before the date of the meeting.
The Company's Annual Report for the fiscal year ended December 29, 1995,
including financial statements is also enclosed.
By order of the Board of Directors,
Peter R. Admirand,
SECRETARY
Dated: April 26, 1996
Ridgewood, New York
IMPORTANT -- PLEASE SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE POSTPAID
RETURN ENVELOPE PROVIDED, PARTICULARLY IF YOU DO NOT EXPECT TO ATTEND THE
MEETING IN PERSON.
<PAGE>
WESTERN BEEF, INC.
47-05 METROPOLITAN AVENUE
RIDGEWOOD, NEW YORK 11385
------------------------
PROXY STATEMENT
------------------------
PROXIES
This statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Western Beef, Inc. (the "Company") to be used at
the Annual Meeting of Stockholders of the Company (the "Meeting") to be held on
June 12, 1996 at 10:00 A.M., New York time, at the La Guardia Marriott Hotel,
102-05 Ditmars Boulevard, East Elmhurst, N.Y. 11369, for the purposes set forth
in the accompanying Notice of Annual Meeting of Stockholders. If the enclosed
form of proxy is executed and returned, it nevertheless may be revoked at any
time before it is exercised, either in person at the Meeting or by written
notice or by a duly executed proxy, bearing a later date, sent to the Secretary
of the Company. The Company anticipates mailing this proxy statement and the
accompanying proxy to stockholders on or about May 9, 1996.
SOLICITATION OF PROXIES
This solicitation of proxies is being made by the Board of Directors of the
Company and the expenses thereof will be borne by the Company. The principal
solicitation is being made by mail; however arrangements have been made with
brokerage houses and other custodians, nominees and fiduciaries to forward proxy
material to the beneficial owners of the Company's common stock, par value $.05
per share (the "Common Stock"), and such persons will be reimbursed for their
reasonable expenses.
OUTSTANDING VOTING STOCK
As of April 24, 1996, there were 5,463,317 shares of Common Stock
outstanding. Each share of Common Stock is entitled to one vote. Only holders of
record of Common Stock at the close of business on April 24, 1996, will be
entitled to vote at the Meeting. All questions will be determined by a majority
vote of those present and voting in person or by proxy.
QUORUM AND VOTING REQUIREMENTS
The Company's By-Laws provide that the holders of a majority of the
outstanding shares of stock shall constitute a quorum at a meeting of
stockholders for the transaction of any business. The stockholders present may
adjourn the meeting despite the absence of a quorum. Each share of Common Stock
shall entitle the holder thereof to one vote. In the election of directors, a
plurality of the votes cast shall elect. Any other action shall be authorized by
a majority of the votes cast except where the General Corporation Law of the
State of Delaware (the "General Corporation Law") prescribes a different
percentage of votes and/or a different exercise of voting power. In the election
of directors, voting need not be by ballot. Voting by ballot shall not be
required for any other corporate action except as otherwise provided by the
General Corporation Law.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth beneficial ownership (determined in
accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) of the Company's Common Stock (being the Company's only
voting securities) by each director, each named executive officer designated in
the section of this Proxy Statement captioned "Executive Compensation", all
directors and named executive officers as a group, and each person (including
any "group" as that term is used in Section 13(d)(3) of the Exchange Act,) known
by the Company to own more than 5% of the Common Stock as of April 24, 1996. The
Company has been advised that except as otherwise
1
<PAGE>
indicated in the notes to such table, all those listed have the sole power to
vote and dispose of the number of shares set forth opposite their respective
names, and their respective addresses are in care of the Company:
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES % OF CLASS
- - ---------------------------------------------------------------------- ----------------- ---------------
<S> <C> <C>
PSL Foods, Inc. (1)................................................... 1,690,007 30.9
Camile Magliocco (3).................................................. 446,126 8.2
Joseph Castellana (2)(4)(5)........................................... 486,138 8.9
Frank Castellana (2)(4)(6)............................................ 453,529 8.3
Peter Castellana, Jr. (2)(4)(7)....................................... 446,126 8.2
Michael Castellana (2)(4)(8).......................................... 406,114 7.4
Stephen R. Bokser (4)................................................. -- --
Richard G. Klein (4).................................................. -- --
Arnold B. Becker (4).................................................. -- --
Robert C. Ludlow (4).................................................. 4,000 *
All directors and named executive officers as a group (eight persons)
(9).................................................................. 3,485,914 63.8
</TABLE>
- - ------------------------
* Less than 1% of the outstanding Common Stock.
(1) PSL Foods, Inc. is owned in equal proportions by the individuals named in
note (2) below.
(2) Frank Castellana, Joseph Castellana, Peter Castellana, Jr., Michael
Castellana and Camile Magliocco are siblings.
(3) Includes 32,818 shares owned by the minor children of Camile Magliocco.
(4) Member of the Company's Board of Directors and/or a named executive officer
of the Company.
(5) Includes 38,968 shares owned by the wife and minor children of Joseph
Castellana.
(6) Includes 17,528 shares owned by the wife and minor children of Frank
Castellana.
(7) Includes 158,048 shares owned by the wife and minor children of Peter
Castellana, Jr.
(8) Includes 22,234 shares owned by the wife and minor children of Michael
Castellana.
(9) Includes shares owned by PSL Foods, Inc.
PROPOSAL NO. 1: ELECTION OF DIRECTORS
Six directors are to be elected to hold office until the next Annual Meeting
of Stockholders and until their successors have been duly elected and qualified.
The Board of Directors intends to present for action at the Meeting the election
of Messrs. Frank Castellana, Joseph Castellana, Peter Castellana, Jr., Arnold B.
Becker, Stephen R. Bokser and Richard G. Klein to serve as directors until the
1997 Annual Meeting of Stockholders and their successors have been elected and
qualified. All of these persons except for Mr. Klein were elected as Directors
of the Company at the last Annual Meeting of Stockholders. Mr. Klein joined the
Board of directors on April 1, 1996, replacing Mr. Daniel M. Healy. Mr. Healy
resigned as a director effective April 1, 1996.
The enclosed proxy will be voted for the election of such nominees. It is
not anticipated that any of these nominees will become unavailable for any
reason, but, if that should occur before the Meeting, the appointees named in
the proxy reserve the right in the exercise of their sole discretion to
substitute and to vote for any other person of their choice as a nominee in
place of such nominee or to vote for such lesser number of Directors as may be
prescribed by the Board of Directors in accordance with the Company's
Certificate of Incorporation and By-Laws.
2
<PAGE>
In accordance with Securities and Exchange Commission ("SEC") regulations,
the enclosed proxy card provides stockholders with an opportunity to grant to,
or withhold from, the appointees named therein the authority to vote for the
election of any director nominee.
Approval of the nominees for Director requires the affirmative vote of a
plurality of the votes of the out-standing shares of Common Stock cast at the
Meeting. The Board of Directors recommends that stockholders vote for the
election of the nominees listed below.
Set forth below is information with respect to the directors and executive
officers of the Company.
<TABLE>
<CAPTION>
DIRECTOR
DIRECTOR PRINCIPAL OCCUPATION DURING THE PAST FIVE YEARS AGE SINCE
- - ------------------------ ----------------------------------------------------------------------- --- -----------
<S> <C> <C> <C>
Frank Castellana Chairman and Executive Vice-President--Wholesale Operations of the 40 1982
Company since March 1995; prior to that President of the Company for
more than the past five years.
Joseph Castellana Vice-Chairman, Executive Vice-President--Retail Operations and 38 1995
Executive Assistant to the President and Chief Executive Officer of
the Company since March 1995; prior to that Vice-President and
Secretary for more than the past five years; Director of the Company
from 1982 through 1993.
Peter Castellana, Jr. President and Chief Executive Officer of the Company since March 1995; 36 1995
prior to that Vice-President and President of Retail Operations since
May 1992; General Manager-- Retail Operations of the Company for more
than the past five years.
Stephen R. Bokser President and Chief Executive Officer of White Rose Food, a wholesale 53 1993
distributor and a division of Di Giorgio Corp., for more than the past
five years; Director of Di Giorgio Corp.
Arnold B. Becker President of The Arnold Becker Group, Inc., provider of management 61 1995
consulting services to retail companies since February 1, 1996; prior
to that President of Vendamerica, Inc., the U.S. investment arm of
Vendex International N.V. for more than the past five years; Director
of Specialty Retail Group Corporation since 1994.
Richard G. Klein Partner at the law firm of Hofheimer, Gartlir & Gross, LLP, since 47 1996
February 1995; prior to that partner at the law firm of Bondy &
Schloss, for more than the past five years.
NON-DIRECTOR EXECUTIVE OFFICERS
- - -------------------------------------------------------------------------------------------------
Michael Castellana Senior Vice-President--Retail Operations of the Company since March 32 --
1995; prior to that, General Manager-- Produce Division of the Company
for more than the past five years.
Robert C. Ludlow Senior Vice-President of the Company since March 1995; Chief Financial 35 --
Officer of the Company since May 1994; prior to that Partner and
Certified Public Accountant in the Public Accounting firm of Marden
Harrison & Kreuter, for more than the past five years.
Peter R. Admirand Controller--Retail Operations, for more than the past five years; 56 --
Secretary of the Company since March, 1995.
</TABLE>
3
<PAGE>
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
The Board of Directors held three meetings during fiscal 1995 with every
director (with the exception of Daniel M. Healy, who attended two of the
meetings) attending all of the meetings held during his term as director. The
Board has a Compensation and Benefits Committee (the "Compensation Committee"),
and an Audit Committee, each consisting of Stephen R. Bokser and Richard G.
Klein. Mr. Klein joined the Compensation Committee and the Audit Committee on
April 1, 1996. Mr. Daniel M. Healy served on the Compensation Committee and the
Audit Committee until his resignation from the Board of Directors, which was
effective April 1, 1996. Non-employee directors received a quarterly fee of
$1,250 and a $1,000 reimbursement for travel and related expenses for each
meeting they attended. The Compensation Committee met once in fiscal 1995. No
meetings were held by the Audit Committee in fiscal 1995.
COMPENSATION OF NON-EMPLOYEE DIRECTORS
Pursuant to the Company's compensation policy, each non-employee director
will receive:
1. A $5,000 annual retainer to be paid in quarterly installments of $1,250.
2. A deferred compensation payment of $5,000 for each full year that such
person serves as a member of the Board.
3. An annual grant of Options to purchase 5,000 shares of the Company's
Common Stock at a price equal to the fair market value of the Common Stock on
the date of grant.
4. A payment of $1,000 for each meeting of the Board that such member
attends to cover travel and related expenses.
In addition, all members of the Board are indemnified by a standard
Directors and Officers liability policy in a manner consistent with the
requirements of Delaware law. Pursuant to the Certificate of Incorporation of
the Company, the Company indemnifies all members of the Board to the fullest
extent possible under the General Corporation Law.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than ten percent of a registered
class of the Company's equity securities, to file with the SEC initial reports
of ownership and reports of changes in ownership of Common Stock and other
equity securities of the Company. Officers, directors and greater than ten
percent stockholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) reports they file.
Based solely upon its review of copies of such reports furnished to the
Company through the date hereof, or written representations that no reports were
required to be filed, the Company believes that during the fiscal year ended
December 29, 1995, all filing requirements applicable to its officers, directors
and ten percent stockholders were complied with.
EXECUTIVE COMPENSATION
GENERAL
The following table sets forth information as to the 1995 compensation of
the Chief Executive Officer and each of the other four most highly compensated
executive officers of the Company (the "named executive officers") for services
in all capacities to the Company and its subsidiaries in 1995, 1994 and 1993.
4
<PAGE>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION AWARDS
-----------------------------
ANNUAL COMPENSATION SECURITIES
------------------------ UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS(1) OPTIONS(#) COMPENSATION(2)
- - ------------------------------------------------- --------- ----------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Frank Castellana................................. 1995 $ 330,000 $ 70,417 -- $ 6,000
Chairman and Executive 1994 312,000 75,133 -- 6,000
Vice-President 1993 348,000 -- -- 9,434
Joseph Castellana................................ 1995 330,000 70,417 -- 6,000
Vice-Chairman and 1994 330,000 75,133 -- 6,000
Executive Vice-President 1993 330,000 -- -- 9,434
Peter Castellana, Jr............................. 1995 575,000 124,583 -- 6,000
President and CEO 1994 390,000 75,133 -- 6,000
1993 330,000 -- -- 9,434
Michael Castellana............................... 1995 275,000 59,383 -- 6,000
Senior Vice-President 1994 280,559 69,999 -- 6,000
1993 245,000 -- -- 9,434
Robert C. Ludlow................................. 1995 151,250 16,250 3,000 6,000
Senior Vice-President 1994 93,500 15,818 -- N/A
and CFO 1993 N/A N/A -- N/A
</TABLE>
- - ------------------------
(1) Amounts shown include cash compensation earned by the named executive
officers during the year covered, including amounts deferred if any, at the
election of those officers. Bonuses are shown for the year earned.
(2) Amounts shown represent the Company's contributions to its Profit Sharing
Plan.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on option grants to the named
executive officers during the past year. No stock appreciation rights ("SARs")
were granted during this period.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
------------------------------------------------------- POTENTIAL REALIZABLE VALUE AT
NUMBER OF ASSUMED ANNUAL RATES OF PRICE
SECURITIES % OF TOTAL APPRECIATION FOR OPTION TERM ($)
UNDERLYING OPTIONS GRANTED EXERCISE OR ---------------------------------
OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED(#) FISCAL YEAR ($/ SHARE) DATE 0% 5% 10%
- - ------------------------------------- ------------- --------------- ----------- ---------- -- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert C. Ludlow..................... 3,000 4.48% 6.00 11/16/05 0 11,340 28,710
</TABLE>
- - ------------------------
(1) All options were granted under the 1995 Stock Option Plan for Employees. All
options are fully exercisable five years after grant (with 20% becoming
exercisable each year on the first through fifth anniversaries of the date
of grant). The exercise price may be paid in cash, by the surrender of
currently owned Common Stock (valued at 100% of market price) or by the
delivery to the Company of a copy of irrevocable instructions to a
stockbroker to sell shares of Common Stock to be acquired upon exercise of
the option and to deliver promptly to the Company an amount sufficient to
pay such purchase price or by any combination of the methods of payment
described above.
5
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
Common Stock of the Company with that of the Dow Jones Equity Market Index, a
broad market index, and the Dow Jones Food Retailers and Wholesalers Index, an
index of operators of supermarkets, food-oriented convenience stores and other
food retailers, both issued by The Dow Jones Company. The comparison for each of
the periods assumes that $100 was invested on December 28, 1990, in each of the
Common Stock of the Company, the stocks included in the Dow Jones Equity Market
Index and the stocks included in the Dow Jones Food Retailers and Wholesalers
Index. These indices, which reflect formulas for dividend reinvestment and
weighing of individual stocks, do not necessarily reflect returns that could be
achieved by individual investors.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
12/28/90 01/03/92 01/01/93 12/31/93 12/30/94 12/29/95
<S> <C> <C> <C> <C> <C> <C>
Western Beef, Inc. 100 130 153 227 160 140
Dow Jones Equity Market Index 100 134 144 159 160 221
Dow Jones Food Retailers 100 126 128 121 122 154
& Wholesalers
</TABLE>
6
<PAGE>
BOARD OF DIRECTORS COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation of the Company's executive officers currently is administered
by a Compensation Committee of the Board of Directors consisting of Messrs.
Arnold B. Becker and Richard G. Klein (effective April 1, 1996). Mr. Daniel M.
Healy was a member of the Compensation Committee until his resignation from the
Board of Directors on April 1, 1996.
Compensation of the executive officers of the Company, including its chief
executive officer, has been determined by the Compensation Committee after the
Chief Executive Officer, Peter Castellana, Jr., has submitted his requested base
salary, and recommended a base salary for the other executive officers. The
Committee also retains independent consultants, William M. Mercer, Inc., for
advice on compensation matters and information on competitive practices. The
Compensation Committee then reviews such requests and recommendations in
combination with other factors, including the Company's overall performance.
Compensation paid to executive officers during 1995 did not exceed the tax
deductibility limits of 162(m) of the Internal Revenue Code.
COMPENSATION COMMITTEE
Arnold B. Becker
Richard G. Klein
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As indicated above, the Compensation Committee establishes executive
compensation. Former director of the Company Daniel M. Healy, is Executive
Vice-President and Chief Financial Officer of North Fork Bancorporation, Inc.
(the "Bank") and held such positions while he was a member of the Compensation
Committee. During 1995 and 1994 the Company had credit facilities with the Bank
that permitted borrowings of up to $3,000,000. As of December 29, 1995 and
December 30, 1994 the Company was indebted to the Bank in the amounts of
$360,677 and $0, respectively. The Company believes that all Bank terms and fees
are at customary rates.
Effective April 1, 1996, Mr. Richard G. Klein, a partner in the law firm of
Hofheimer, Gartlir & Gross, joined the Board of Directors and the Compensation
Committee. The Company has retained such law firm to represent the Company in
certain matters. Payments for services rendered by Mr. Klein's law firm to the
Company were not material to either such law firm or the Company and were in
line with fees charged by other law firms for similar services.
PROPOSAL NO. 2: AMENDMENT OF STOCK OPTION PLAN FOR EMPLOYEES
In the absence of a negative vote, the proxies will be voted for the
adoption of an amendment (the "Amendment") of the Western Beef, Inc. 1995 Stock
Option Plan for employees described below (the "Employee Plan"). The Board of
Directors recommends approval of the Amendment.
The Employee Plan presently provides that the purchase price of shares of
Common Stock subject to options may not be less than the fair market value of
the Common Stock on the date of grant. Pursuant to the proposed amendment, the
Compensation Committee would have the discretion to grant options with a
purchase price less than fair market value, but not less than 25% of such fair
market value on the date of grant.
The proposed Amendment to the Employee Plan, in the opinion of the Board of
Directors, will promote the best interests of the Company and its stockholders
by enabling the Company to attract and retain the best personnel for positions
of substantial responsibility. As of the date of this Proxy Statement, options
covering 37,349 shares of Common Stock were granted subject to stockholder
approval of the Amendment, none of which were granted to executive officers.
Set forth below is a description of the principal provisions of the Employee
Plan.
7
<PAGE>
ADMINISTRATION
The Employee Plan is administered by a committee (the "Committee") of at
least three persons appointed by the Company's Board of Directors, each of whom
shall be a "disinterested person" within the meaning of Rule 1b-3, under the
Exchange Act.
TYPE OF OPTIONS
Under the Employee Plan the Company may grant "incentive stock options"
("ISOs") within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended, or non-qualified stock options ("NQSOs").
SHARES AVAILABLE FOR OPTIONS
Options for shares of Common Stock may be granted for an amount not to
exceed 2% of the number of shares of Common Stock issued on January 1, 1995. On
January 1, 1996 and each January 1st thereafter, the total number of shares for
which options may be granted under the Employee Plan shall be increased on a
cumulative basis, by 2% of the number of shares of Common Stock issued on
January 1 of such calendar year. The total number of shares of Common Stock for
which ISO's may be granted under the Employee Plan shall not exceed 750,000.
ELIGIBILITY
Options may be granted under the Plan only to employees of the Company or
any "subsidiary corporation" of the Company, within the meaning of Section
424(f) of the Code (a "Subsidiary"). All employees of the Company except persons
who own Common Stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company, any Subsidiary, or any "parent
corporation" of the Company within the meaning of Section 424(e) of the Code,
are currently eligible to receive options under the Employee plan.
TERMS OF OPTIONS
The terms of each option granted under the Plan shall be determined by the
Committee consistent with the provisions of the Plan, including the following:
(a) The purchase price of the shares of Common Stock and dates on which
each option (or portion thereof) shall be exercisable shall be fixed by the
Committee, in its discretion, at the time such option is granted.
(b) The expiration of each option shall be fixed by the Committee, and
no option shall be exercisable after the expiration of ten (10) years from
the date of its grant. In no event shall any single optionee be granted
options covering more than 50,000 shares of Common Stock during any calendar
year that the plan is in effect.
TERMINATION, MODIFICATION AND AMENDMENT
The Employee Plan shall terminate ten (10) years from the date of its
adoption by the Board of Directors, and no options shall be granted under the
Employee Plan after such termination. The Employee Plan may be terminated,
modified or amended at any time by the Board of Directors; provided however,
that the Board of Directors shall not, without approval of holders of a majority
of shares of Common Stock, (i) increase the maximum number of shares of Common
Stock as to which options may be granted under the Employee Plan, (ii) reduce
the minimum purchase price at which options may be granted under the Employee
Plan, or (iii) change the class of persons eligible to receive options under the
Employee Plan.
FEDERAL TAX CONSEQUENCES
Set forth below is a brief description of the federal tax consequences
applicable to ISOs and NQSOs.
ISOS
No taxable income is realized by the optionee upon the grant or exercise of
an ISO. If Common Stock is issued to an optionee pursuant to the exercise of an
ISO, and if no disqualifying disposition of
8
<PAGE>
such shares is made by such optionee within two years after the date of grant or
within one year after the transfer of such shares to such optionee, then (i)
upon sale of such shares, any amount realized in excess of the option price will
be taxed to such optionee as a long-term capital gain, and (ii) no deduction
will be allowed to the optionee's employer for Federal income tax purposes.
If the Common Stock acquired upon the exercise of an ISO is disposed of
prior to the expiration of either holding period described above, generally (i)
the optionee will realize ordinary income in the year of disposition in an
amount equal to the excess (if any) of the fair market value of such shares at
exercise (or, if less, the amount realized on the disposition of such shares)
over the option price paid for such shares and (ii) the optionee's employer will
be entitled to deduct such amount for Federal income tax purposes if the amount
represents an ordinary and necessary business expense. Any further gain (or
loss) realized by the optionee will be taxed as short-term or long-term capital
gain (or loss), as the case may be, and will not result in any deduction by the
the employer.
Subject to certain exceptions for disability or death, if an ISO is
exercised more than three months following termination of employment, the
exercise of the option will generally be taxed as the exercise of a NQSO.
The exercise of an ISO will give rise to an alternative minimum tax
adjustment that may result in alternative minimum tax liability for the
optionee, unless the optionee engages, within the same year of exercise, in a
disqualifying disposition of the shares received upon exercise. Each optionee is
potentially subject to the alternative minimum tax. In substance, a taxpayer is
required to pay the higher of his/her alternative minimum tax liability or
his/her regular income tax liability. As a result, a taxpayer has to determine
his potential liability under the alternative minimum tax.
In general, for purposes of the alternative minimum tax, the exercise of an
ISO will be treated essentially as if it were the exercise of a NQSO. As a
result, the rules of Section 83 of the Code relating to transfers of property,
including restricted property, will apply in determining the optionee's
alternative minimum taxable income. Consequently, an optionee exercising an ISO
with respect to unrestricted Common Stock will have income, for purposes of
determining the base for the application of the alternative minimum tax, in an
amount equal to the spread between the option price for the shares and the fair
market value of the shares on the date of exercise.
NQSOS
With respect to NQSOs, (1) no income is realized by the optionee at the time
the option is granted; (2) generally, at exercise, ordinary income is realized
by the optionee in an amount equal to the difference between the option price
paid for the shares and the fair market value of the shares, if unrestricted on
the date of exercise, and the optionee's employer is generally entitled to a tax
deduction in the same amount subject to applicable tax withholding requirements;
and (3) at sale, appreciation (or depreciation) after the date of exercise is
treated as either short-term or long-term capital gain (or loss), depending on
how long the shares have been held.
Approval of the amendment to the Employee Plan requires the affirmative vote
of a majority of the shares of Common Stock present in person or by proxy and
entitled to vote at the Meeting.
PROPOSAL NO. 3: ELECTION OF INDEPENDENT AUDITORS
In the absence of contrary direction, the proxies will be voted for the
selection of BDO Seidman, LLP as independent auditors to audit the books and
accounts of Western Beef, Inc., at the close of the 1996 fiscal year. The Board
of Directors recommends that stockholders vote in favor of the selection of BDO
Seidman, LLP.
Approval of the selection of BDO Seidman, LLP as independent auditors
requires the affirmative vote of a majority of the votes of the outstanding
shares of Common Stock cast at the Meeting.
9
<PAGE>
It is expected that representatives of BDO Seidman, LLP will be present at
the Meeting with the opportunity to make a statement if they desire to do so and
will be available to respond to appropriate questions.
In connection with its audit of the books and accounts of Western Beef,
Inc., for the fiscal year ended December 29, 1995, BDO Seidman, LLP audited the
Company's annual consolidated financial statements and consulted with Western
Beef, Inc., concerning other accounting matters and certain tax and other
matters.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
For more than a decade, the Company and the members of the Castellana family
(collectively, the "Principal Stockholders") have had continuing relationships
simultaneously as lessors and lessees, suppliers and customers and debtors and
creditors. They have also shared certain management personnel and certain
administrative functions, such as insurance, advertising and payrolls, and have
attempted to allocate fairly the common costs.
In order to limit future conflicts of interest of the Principal Stockholders
and inter-affiliate dealings, so far as practicable, to the leasing of real
property where, in Management's opinion, the fairness of terms is more
susceptible of objective evaluation than, for example, the fairness of prices
charged for food products in the highly volatile wholesale markets, and to
strengthen the Company, in October 1992 the parties consummated, an Agreement of
Combination pursuant to which (1) the Company and the food business of the
Principal Stockholders were combined under a publicly traded successor Delaware
corporation, (2) the 3,566,796 outstanding shares of the Company's then
outstanding Common Stock were converted, on a share-for-share basis, into Common
Stock of such successor corporation and (3) the Principal Stockholders became
beneficial owners of an additional 1,400,000 shares of Common Stock, giving them
beneficial ownership of approximately 72% of such Common Stock (compared to
their former beneficial ownership of approximately 62%).
The Principal Stockholders, as lessors, have amended the leases of the
Company's food stores transferred to such successor corporation, where
necessary, so that as of the closing of the Combination the rentals thereunder
did not exceed fair market value as determined by independent appraisal. In
addition, Management and the Principal Stockholders agreed to obtain independent
appraisals of rentals under all other Company leases in which the Principal
Stockholders have an interest as landlord or tenant (other than one store rental
which was fixed on a formula basis) and to make any necessary revisions so that,
in the aggregate, such rentals do not exceed fair market value. All such
revisions were made effective as of January 4, 1992. It now is the Company's
policy to obtain independent appraisals in connection with new leases entered
into with the Principal Stockholders.
The Company leases land, various retail food stores and warehouse storage
and office space, from affiliates of the Principal Stockholders under various
leases which expire through December 2007. Rent expense relating to these leases
was $2,772,000 for 1995, $2,783,000 for 1994 and $2,383,000 for 1993. During the
years ended December 29,1995 and December 30, 1994, the Company made capital
expenditures of approximately $374,000 and $482,000 at leaseholds owned by
affiliates of the Principal Stockholders. At December 30, 1994 the Company had
prepaid rent to affiliates of the Principal Stockholders of $205,000. There was
no prepaid rent at December 29, 1995.
At December 29, 1995 and December 30, 1994, the Company had advances due
from the Principal Stockholders and affiliated entities of approximately $12,000
and $418,000, respectively. These advances are unsecured and non-interest
bearing. Subsequent to year-end the $12,000 balance was repaid.
The Company had sales to affiliates controlled by the Company's Principal
Stockholders for 1995, 1994 and 1993 of $528,000, $4,333,000 and $3,713,000,
respectively. In 1995, the Company acquired one of these affiliates which owed
the Company approximately $52,000 at December 29, 1995. No consideration was
paid by the Company for the acquisition of this affiliate.
10
<PAGE>
During 1995, 1994 and 1993, the Company purchased various food products in
the amounts of $21,954,000, $20,206,000 and $15,384,000 respectively, from White
Rose Food, of which Stephen R. Bokser, a Director of the Company, is an officer.
As of December 29, 1995 and December 30, 1994, the Company had trade payables of
$1,117,000 and $507,000 respectively, due to the affiliate.
Former director of the Company Daniel M. Healy, is Executive Vice-President
and Chief Financial Officer of North Fork Bancorporation, Inc. (the "Bank") and
held such positions while he was a director of the Company and a member of the
Compensation Committee. During 1995 and 1994 the Company had credit facilities
with the Bank that permitted borrowings of up to $3,000,000. As of December 29,
1995 and December 30, 1994 the Company was indebted to the Bank in the amounts
of $360,677 and $0, respectively. The Company believes that all Bank terms and
fees are at customary rates.
The Company has retained the firm of Hofheimer, Gartlir & Gross, LLP to
represent the Company in certain matters. Richard G. Klein, a Director of the
Company, is a partner of such firm. Payments for services rendered by Mr.
Klein's law firm to the Company were not material to either such law firm or the
Company and were in line with fees charged by other law firms for similar
services.
STOCKHOLDER PROPOSALS AND NOMINATIONS FOR DIRECTORS
FOR THE 1997 ANNUAL MEETING
Stockholder proposals intended for inclusion in the proxy material for the
1997 Annual Meeting, and nominations for Directors to be elected at the 1997
Annual Meeting, each must be received by the Secretary of the Company at the
Company's offices at 47-05 Metropolitan Avenue, Ridgewood, New York 11385, not
later than March 15, 1997, in order for such proposals and nominations to be
included in the proxy material for the 1997 Annual Meeting, which is currently
expected to be held in June, 1997.
ADDITIONAL INFORMATION AND OTHER MATTERS
A copy of the Company's Form 10-K as filed with the Securities and Exchange
Commission may be obtained free of charge by writing to the Company, 47-05
Metropolitan Avenue, Ridgewood, New York 11385.
Management is not aware of any matters to be presented for action at the
meeting other than the matters mentioned above, and does not intend to bring any
other matters before the meeting. However, if any other matters should come
before the meeting, it is intended that the holders of the proxies will vote
them in their discretion.
By order of the Board of Directors
Peter R. Admirand,
SECRETARY
Date: April 26, 1996
11
<PAGE>
AMENDMENT TO WESTERN BEEF, INC. 1995 STOCK OPTION PLAN
AMENDMENT NO. 1
to the
Western Beef, Inc.
1995 Stock Option Plan
Pursuant to, and subject to the conditions precedent set forth in, the
Unanimous Written Consent of the Board of Directors of Western Beef, Inc.
dated the 13th day of November 1995, Section 5(a) of the Western Beef,
Inc. 1995 Stock Option Plan is hereby amended to read as follows:
"(a) The purchase price of the shares of Common Stock
subject to each Option shall be fixed by the Committee, in its
discretion, at the time such Option is granted; provided,
however, that in no event shall such purchase price be less
than 25% of the Fair Market Value (as defined in paragraph (g)
of this Section 5) of the shares of Common Stock as of the
date such Option is granted."
<PAGE>
PROXY WESTERN BEEF, INC.
PROXY
ANNUAL MEETING OF STOCKHOLDERS
JUNE 12, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints FRANK CASTELLANA and STEPHEN R. BOKSER, or
either one of them, attorneys with full power of substitution and revocation
to each, for and in the name of the undersigned, with all the powers the
undersigned would possess if personally present, to vote the Common Stock of
the undersigned in Western Beef, Inc., at the Annual Meeting of Stockholders
to be held June 12, 1996, and at any adjournment thereof, for the following
matters.
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FOLD AND DETACH HERE
DIRECTIONS
IF YOU'RE DRIVING WESTBOUND FROM LONG ISLAND
Take the Grand Central Parkway West to the 94th Street exit. Turn left at
the first stop light onto 94th Street. At the next stop light turn left
again, onto Ditmars Boulevard. The Marriott will be approximately 3 blocks
away on the left side of Ditmars Boulevard.
IF YOU'RE DRIVING EASTBOUND FROM NEW YORK
Take the Grand Central Parkway East to the 94th Street exit, continue on
the service road which is Ditmars Boulevard. The Marriott will be on the left
side of the street.
La Guardia MARRIOTT
102-05 Ditmars Blvd.
East Elmhurst, New York 11369
Telephone (718) 565-8900
<PAGE>
WESTERN BEEF'S BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, AND 3.
FOR all WITHHOLD
nominees AUTHORITY
(except as to vote for
marked to the all nominees
contrary )
ITEM 1.Election of Directors. -- --
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THAT NOMINEE'S NAME.
NOMINEES: FRANK CASTELLANA, JOSEPH CASTELLANA, PETER CASTELLANA JR.,
STEPHEN R. BOKSER, ARNOLD B. BECKER and RICHARD G. KLEIN
Please mark
your votes as X
indicated in
this example
I plan to attend the meeting. --
FOR AGAINST ABSTAIN
ITEM 2. Amendment to the 1995
Employee Stock Option Plan -- -- --
ITEM 3. Ratification of Independent
Auditors. -- -- --
ITEM 4. In their discretion, the proxies are authorized to vote upon such other
matters as may properly come before the meeting.
DATE:__________________________________
SIGNATURE:_____________________________
SIGNATURE:_____________________________
PLEASE MARK DATE AND SIGN AS YOUR NAME APPEARS HEREIN AND RETURN IN THE
ENCLOSED ENVELOPE. IF ACTING AS EXECUTOR, ADMINISTRATOR, TRUSTEE, ETC., YOU
SHOULD SO INDICATE WHEN SIGNING. IF THE SIGNER IS A CORPORATION, PLEASE SIGN
THE FULL CORPORATE NAME BY DULY AUTHORIZED OFFICER. IF SHARES ARE HELD
JOINTLY, EACH STOCKHOLDER NAME SHOULD SIGN.
PLEASE MARK INSIDE BLUE BOXES SO THAT DATA
PROCESSING EQUIPMENT WILL RECORD
YOUR VOTES
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FOLD AND DETACH HERE
