SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. _______)
X Filed by the Registrant
_____ Filed by a Party other than the Registrant
Check the appropriate box:
X Preliminary Proxy Statement
_____ Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
Definitive Proxy Statement
_____ Definitive Additional Materials
_____ Soliciting Material Pursuant to 240.14a-11(c) or
240.14a-12
GALAXY FOODS COMPANY, a Delaware corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the
Registrant)
Payment of Filing Fee (Check the approximate box)
X No fee required.
_____ Fee computed on table below per Exchange Act
Rules 14a-6(i)(4) and O-11.
1. Title of each class of securities to which transaction
applies:
2. Aggregate number of securities to which transaction
applies:
3. Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule O-11 (set forth the amount on
which the filing fee is calculated and state how it was determined):
4. Proposed maximum aggregate value of transaction:
<PAGE> 2
5. Total fee paid:
_____ Fee paid previously with preliminary materials.
_____ Check box if any part of the fee is offset as
provided by Exchange Act Rule O-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date of its
filing.
1. Amount Previously Paid:
2. Form, Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:
<PAGE> 3
GALAXY FOODS COMPANY
2441 Viscount Row
Orlando, Florida 32809
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD THURSDAY, FEBRUARY 10, 2000
To the Shareholders:
The Annual Meeting of Shareholders of Galaxy Foods Company
(the "Company"), will be held Thursday, February 10, 2000
at 10:00 a.m. at the Renaissance Hotel in Orlando, Florida
for the following purposes:
1. To fix the number of directors at five and to elect
a Board of Directors for the ensuing year.
2. To consider and vote upon an amendment to the
Company's 1991 Employee Stock Purchase Plan to
extend the expiration date of the Plan and to
increase the number of shares of Common Stock
subject thereto;
3. To consider and vote upon an amendment to the
Company's 1996 Amendment and Restatement of the
1991 Non-Employee Director Stock Option Plan to
extend the expiration date of the Plan and to
increase the number of shares of Common Stock
subject thereto;
4. To ratify the retention of BDO Seidman L.L.P. as
the independent auditors of the Company for the
fiscal year ended March 31, 2000.
5. To transact such other business as may properly
come before the meeting and any adjournment
thereof.
Shareholders of record at the close of business on January
2, 2000 will be entitled to vote at the meeting or any
adjournment thereof.
By Order of the Board
of Directors
/S/Cynthia L. Hunter
Cynthia L. Hunter
Corporate Secretary
Orlando, Florida
January 4, 2000
SHAREHOLDERS ARE REQUESTED TO SIGN THE ENCLOSED PROXY AND
RETURN IT IN THE ENCLOSED STAMPED ENVELOPE BY RETURN MAIL.
IF YOU ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND
VOTE IN PERSON.
<PAGE> 4
GALAXY FOODS COMPANY
2441 Viscount Row
Orlando, Florida 32809
January 4, 2000
PROXY STATEMENT FOR
THE ANNUAL MEETING OF SHAREHOLDERS
to be held Thursday, February 10, 2000
Proxies in the form enclosed with this proxy statement are
solicited by the Board of Directors of Galaxy Foods Company (the
"Company"), a Delaware corporation, for the use at the Annual
Meeting of Shareholders to be held Thursday, February 10, 2000 at
10:00 a.m. at the Renaissance Hotel in Orlando, Florida.
Only shareholders of record as of January 2, 2000 will be
entitled to vote at the meeting and any adjournment thereof. As
of January 2, 2000, 9,183,032 shares of Common Stock, par value
$.01 per share, of the Company were issued and outstanding. Each
share of Common Stock outstanding as of the record date will be
entitled to one vote, and shareholders may vote in person or by
proxy. Execution of a proxy will not, in any way, affect a
shareholders' right to revoke it by written notice to the
Secretary of the Company at any time before it is exercised or by
delivering a later executed proxy to the Secretary of the Company
at any time before the original proxy is exercised. This proxy
statement and the form of proxy were first mailed to shareholders
on or about January 4, 2000.
All properly executed proxies returned in time to be cast at the
meeting will be voted and, with respect to the election of a
Board of Directors, will be voted as stated below under "Election
of Directors". Any shareholder giving a proxy has the right to
withhold authority to vote for any individual nominee to the
Board of Directors by writing that nominee's name in the space
provided on the proxy. In addition to the election of directors,
the shareholders will consider and vote upon (i) a proposal to
amend the Company's 1991 Employee Stock Purchase Plan to extend
the expiration date thereof and to increase the number of shares
of Common Stock subject thereto, (ii) a proposal to amend the
Company's 1996 Amendment and Restatement of the 1991 Non-Employee
Director Stock Option Plan to extend the expiration date thereof
and to increase the number of shares of Common Stock subject
thereto, and (iii) a proposal to ratify the retention of BDO
Seidman L.L.P. as the Company's auditors for the fiscal year
ending March 31, 2000. Where a choice has been specified on the
proxy with respect to the foregoing matters, the shares
represented by the proxy will be voted in accordance with the
specification, and will be voted FOR if no specification is
indicated.
The Board of Directors knows of no other matter to be presented
at the meeting. If any other matter should be presented at the
meeting upon which a vote might be taken, shares represented by
all proxies received by the Board of Directors will be voted with
respect thereto in accordance with the judgment of the persons
named as attorneys in the proxies.
<PAGE> 5
PROPOSAL ONE ELECTION OF DIRECTORS
A full board of five directors of the Company will be elected to
serve until the next annual meeting of shareholders and until
their successors shall have been elected and qualified. All of
the nominees are currently serving as directors of the Company,
all have consented to being named herein and all have indicated
their intention to serve as directors of the Company, if elected.
Unless you specify otherwise, your proxy will be voted to fix the
number of directors for the ensuing year at five and for the
election of the nominees named below, all of whom are now
Directors. If any nominee becomes unavailable, your proxy will
be voted for a new nominee designated by the Board unless the
Board reduces the number of directors to be elected. The Board
of Directors knows of no reason why any nominee should be unable
or unwilling to serve, but if such be the case, proxies will be
voted for the election of some other person or for fixing the
number of directors at a lesser number.
The nominees for the Board of Directors are:
ANGELO S. MORINI
Age: 56
First Elected: 1987
Experience: Galaxy Foods Company - Chairman of the Board
of Directors,
President, and Chief Executive Officer (since 1987); Galaxy
Cheese Company - President (1980-1987), General Manager
(1974-1980)
EARL G. TYREE
Age: 78
First Elected: 1992
Experience: Bruce Novograd Advertising, Incorporated -
President (1980-
1994); American Home Products Corporation, John F. Murray
advertising division - President (1975-1979); Sterling Drug,
Incorporated - President (1972-1975).
DOUGLAS A. WALSH
Age: 54
First Elected: 1992
Experience: Practicing physician specializing in Family
Practice and Sports
Medicine (Since 1970); Family Doctors physician group (1984 to
present); Mahoning County, Ohio - Health Commission (1971-
1984); U.S. Air Force 911 Tac Clinic, Pittsburgh, Pennsylvania -
Clinic Commander (1983-1985); Patrick Air Force Base, Cocoa
Beach, Florida - Flight Surgeon (1985-1988).
LUTHER K. MARSHALL
Age: 46
First Elected: 1996
Experience: Tropicana Products, Inc. - Senior Vice
President, Marketing
(1993-1995); General Mills International Restaurants - various
marketing positions (1975-1992).
<PAGE> 6
JOSEPH JULIANO
Age: 49
First Elected: 1999
Experience: Pepsi-Cola Company - various management
positions (1973-
1988); Pepsi Cola Company Bottling Operations - management
(1988-1991); Pepsi Cola North America - Vice President of
Prestige, Sports and Gaming (1991-1997), Vice President of
Entertainment Sales (1997-present).
All elected Directors will serve until the next annual meeting
for the and until their successors are elected and qualified.
Abstentions, broker non-votes, and instructions on the
accompanying proxy card to withhold authority to vote for one or
more of the nominees will result in the respective nominees
receiving fewer votes. If for any reason any nominee should,
prior to the annual meeting, become unavailable for election as a
director, an event not now anticipated, the proxies will be voted
for such substitute nominee, if any, as may be recommended by the
Board. In no event, however, shall the proxies be voted for a
greater number of persons than the number of nominees named.
PROPOSAL TWO: TO AMEND THE COMPANY'S 1991 EMPLOYEE STOCK
PURCHASE PLAN TO EXTEND THE EXPIRATION DATE
OF THE PLAN TO JANUARY 31, 2006, AND TO
INCREASE THE NUMBER OF SHARES OF COMMON STOCK
SUBJECT THERETO
General
On December 10, 1991, the Board of Directors adopted the
Company's 1991 Employee Stock Purchase Plan (the "Purchase
Plan"). The shareholders approved the Purchase Plan on January
31, 1992. The purpose of the Purchase Plan is to provide an
incentive to, and to encourage stock ownership by, all eligible
employees of the Company by providing them the opportunity to
purchase shares at a discount so that they may share in the
growth of the Company by acquiring or increasing their
proprietary interest in the Company, as well as to encourage
eligible employees to remain in the employ of the Company. As of
the date hereof, assuming the continuation of the Purchase Plan,
approximately 175 employees were eligible to participate in the
Purchase Plan.
Originally, an aggregate of 35,714 (taking into account the
Company's one-for-seven reverse stock split effective February 12,
1999) shares of Common Stock were made available for purchase by
those Company employees who participate.
Participant Eligibility
All Company employees who have completed six months of employment
with the Company and are customarily employed for more than 20
hours per week and more than five months per calendar year are
eligible to participate; those who choose to participate receive
nontransferable options to purchase Common Stock at less than fair
market value. However, Company employees who own 5% or more of
the total combined voting power or value of all classes of stock
of the Company, and directors who are not Company employees, are
not eligible to participate in the Purchase Plan.
<PAGE> 7
Purchase of Common Stock Under the Purchase Plan
The opportunity to purchase Common Stock is provided every six (6)
months, commencing each March 1 and September 1. Eligible
employees participate by filing a written election to contribute
between 2% and 10% of their total compensation. All contributions
are made by payroll deduction. An eligible employee can purchase
a maximum of 286 shares of Common Stock in a single plan year (a
maximum of 143 shares during each six month purchase period).
However, a participating employee may not in any event purchase
Common Stock having a value of more than $25,000 (based on the
value of Common Stock at the beginning of each six month purchase
period) in any individual calendar year. The Company retains all
withheld funds, without crediting any interest, pending the
issuance of Common Stock. Common Stock purchased under the
Purchase Plan is distributed to purchasing employees, in the form
of stock certificates evidencing those shares so purchased, as
soon as practicable following the close of each six month purchase
period. Withholding in excess of the amounts capable of being
used under the Purchase Plan to purchase Common Stock is refunded
to the participating employees from whom such amounts were
withheld, after the purchase of Common Stock is completed.
The purchase price at which Common Stock is sold to participating
employees under the Purchase Plan generally is equal to the lesser
of (i) 85% of the fair market value of shares of Common Stock on
the first business day of the six-month purchase period; or (ii)
85% of the fair market value of shares of Common Stock on the last
business day of such six-month purchase period. The Purchase Plan
is intended to function as an employee stock purchase plan under
Section 423 of the Internal Revenue Code; accordingly,
participating Company employees who purchase shares of Common
Stock at a discount are not subject to federal taxation on the
value of such discount (generally, 15% of fair market value),
unless and until they either dispose of such shares or die while
holding such shares.
Federal Income Tax Consequences
The following is a brief summary of the general federal income
tax consequences to participants and the Company of participation
in the Purchase Plan. This summary is not intended to be
exhaustive and does not describe foreign, state or local tax
consequences, nor does it describe consequences based on
particular circumstances. For these reasons, each participant
should consult with a tax advisor as to specific questions
relating to tax consequences of participation in the Purchase
Plan.
The option to purchase Common Shares granted under the Purchase
Plan will constitute an option issued pursuant to Section 423 of
the Internal Revenue Code. If Common Stock is purchased under
the Purchase Plan, and no disposition of this Common Stock is
made within two years after the date of the grating of the
option, nor within one year after the transfer of the shares of
Common Stock for that option to the participant, then no income
will be realized by the participant at the time of the transfer
of the Common Stock to such participant. For this favorable tax
treatment to apply, the participant must be an employee of the
Company (or an affiliate) when granted the option and for the
period from that date to the date within three months before the
option is exercised. In the event of the exercise of the option
by a participant's estate after the death of such participant, no
income will be realized at the time of the transfer of the Common
Stock to such participant's estate. When a participant or his
estate sells or otherwise disposes of the Common Stock, there
will be included in such participant's income, as compensation,
an amount equal to the lesser of (i) the excess of the fair
market value of the Common Stock on the date the option was
granted over the option price, or (ii) the amount by which the
fair market value of the Common Stock at the time of disposition
or death exceeds the purchase price for the Common Stock. Any
additional gain would be treated for tax purposes as long-term
capital gain, provided that the participant holds the Common
Stock for the applicable long-term capital gain holding period.
<PAGE> 8
If a participant disposes of the Common Stock within either the
one-or two- year period described above, such participant would
realize ordinary income in the year of disposition in an amount
equal to the difference between the purchase price and the fair
market value of the Common Stock at option exercise. Any
difference between the amount received upon such a disposition
and the fair market value of the Common Stock at option exercise
would be treated as a capital gain or loss, as the case may be.
The Company is not allowed a deduction for federal income tax
purposes in connection with the grant or exercise of the option
to purchase Common Stock under the Purchase Plan, provided there
is no disposition of Common Stock by a participant within either
the one- or two- year period described above. If such a
disposition occurs within either of these two periods, the
Company will be entitled to a deduction in the same amount and at
the same time that the participant realizes ordinary income.
Purchase Plan Benefits
Participation in the Purchase Plan is voluntary. Each eligible
employee will make his or her own election whether and to what
extent to participate in the Purchase Plan. It is therefore not
possible to determine the benefit or amounts that will be
received in the future by individual employees or groups of
employees under the Purchase Plan.
Withdrawal from the Plan
A participant in the Purchase Plan may, by giving notice to the
Company, revoke his or her authorization for payroll deduction
for the payment period in which such revocation is made. A
participant who revokes authorization for payroll deduction may
not again
participate under the Purchase Plan until the next payment period
immediately subsequent to the payment period during which the
participant revoked payroll deduction authorization with respect
thereto. Separation from employment from the Company for
any reason will be treated automatically as a withdrawal from the
Purchase Plan.
Termination and Amendments to Plan
Under its terms, the Purchase Plan was to terminate once all or
substantially all of the 35,714 shares of Common Stock reserved
for issuance under the Purchase Plan have been purchased. Unless
sooner terminated or otherwise extended, the expiration of the
Purchase Plan is September 30, 2001. The Company's Board of
Directors has the right to terminate the Purchase Plan, provided,
however, that such termination will not affect any options then
outstanding under the Purchase Plan. The Board of Directors may
also adopt amendments to the Purchase Plan, provided that,
without the approval of the shareholders, no amendment may (i)
increase the number of shares that may be issued under the
Purchase Plan or change the class of employees eligible to
receive options under the Purchase Plan or (ii) cause Rule 16b-3
under the Securities and Exchange Act of 1934, as amended, to
become inapplicable to the Purchase Plan.
<PAGE> 9
Determination of Benefits
Benefits to eligible participants in the Purchase Plan are not
determinable as of the date hereof. The Purchase Plan does not
require, nor does the Company contemplate, any specific
allocation of benefits or amounts to any individual or discrete
group (i.e., executive officers, non-executive directors, or non-
executive officer employees).
Market Value of Shares Reserved Under Purchase Plan
As of January 2, 2000, assuming the shareholders had approved the
increase in the number of shares issuable under the Purchase Plan
by 50,000 shares as of such date so that the aggregate number of
shares that would be available for issuance under the Purchase
Plan would be 50,000, the market value of the shares to be
reserved for issuance under the Purchase Plan, would be
$__________, based on the closing bid quotation on such date of
the Common Stock as reported on the American Stock Exchange.
Upon request, the Company will provide a copy of the Purchase
Plan to any shareholder.
Availability of Shares Under Purchase Plan; Proposed Amendments
to Plan
Prior to the March 1, 1999 purchase date under the Purchase Plan,
there were approximately 430 shares available for issuance under
the Purchase Plan. This number was insufficient to cover all of
March 1, 1999 purchase requirements of participants under the
Purchase Plan, but was allocated pro rata among the Purchase Plan
participants as of March 1, 1999. On February 26, 1999, pursuant
to a written action, the Board of Directors elected to amend the
Purchase Plan to provide for its continuation notwithstanding
that there were an insufficient number of shares available for
purchase under the Purchase Plan to satisfy the then outstanding
unfilled purchase requirements.
Pursuant to such February 26, 1999 written action, the Board of
Directors further approved an amendment to the Purchase Plan,
subject to shareholder approval, to increase the number of shares
of Common Stock subject thereto by 50,000 shares to a total of
85,714 shares. As of the date hereof, there are no shares
available for issuance under the Purchase Plan. The Board of
Directors has approved, subject to the approval of the
shareholders, a further amendment to the Purchase Plan in order
to extend the expiration date of the Purchase Plan to January 31,
2006.
Outstanding Options to Purchase Shares Under Purchase Plan
Subject to the approval of the shareholders of this Proposal, on
March 1, 1999 and September 1, 1999, the Board of Directors
granted to employees participating in the Purchase Plan options
to purchase an aggregate of 358 shares of Common Stock under the
Purchase Plan. Such options were granted in accordance with the
terms of the Purchase Plan and, if this Proposal is approved by
the shareholders, will be deemed exercised effective as of the
dates of their respective grants.
<PAGE> 10
Vote Required for Approval
The affirmative vote of the holders of a majority of outstanding
shares of Common Stock present or represented at the Annual
Meeting is required for the approval of this Proposal. Broker
non-votes and abstentions will be treated as votes against this
Proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE
"FOR" THE ADOPTION OF THE AMENDMENT TO THE COMPANY'S 1991 EMPLOEE
STOCK PURCHASE PLAN TO EXTEND THE EXPIRATION DATE THEREOF AND TO
INCREASE THE NUMBER OF SHARES SUBJECT THERETO.
PROPOSAL THREE: TO AMEND THE COMPANY'S 1996 AMENDMENT AND
RESTATEMENT OF THE 1991 NON-EMPLOYEE DIRECTOR
STOCK OPTION PLAN TO EXTEND THE EXPIRATION
DATE OF THE PLAN TO SEPTEMBER 29, 2006 AND TO
INCREASE THE NUMBER OF SHARES OF COMMON STOCK
SUBJECT THERETO
General
On October 1, 1991, the Board of Directors adopted the Company's
1991 Non-Employee Director Stock Option Plan. The shareholders
approved the plan on January 31, 1992. On August 6, 1996,
effective September 30, 1996, the Board of Directors Adopted The
1996 Amendment and Restatement of The 1991 Non-Employee Director
Plan (the "Director Plan"). The shareholders approved the
Director Plan on September 30, 1996. The Director Plan was
adopted to provide incentives to outside directors of the Company
through initial and periodic grants of stock options in
consideration of services rendered to the Company.
The Director Plan provides that options to purchase Common Stock
of the Company be granted to non-employee directors of the
Company, and authorizes the issuance of a maximum of 4,786 shares
of Common Stock (taking into account the Company's one-for-seven
reverse stock split effective February 12, 1999), subject to
adjustment for capital changes.
Administration of the Director Plan
The Director Plan is administered by the Board of Directors or a
committee thereof (for Plan purposes, the "Committee").
<PAGE> 11
Issuance of Stock Options Under the Purchase Plan
Under the Director Plan, each eligible non-employee director
shall receive on October 1 of each year (the "Approval Date"), in
consideration for his service as a director of the Company during
the prior year, an option to purchase 286 shares of the Company's
Common Stock; provided that if a director served less than 12
months during the prior year, the options would be pro rated for
the number of full months such director served.
The exercise price for options granted under the Director Plan
are equal to the fair market value per share of Common Stock on
the date of grant. Options granted under the Director Plan are
exercisable in full at the time of grant. There is no limitation
on the cumulative number of option shares which may be granted to
any one person, however, in no event shall the number of options
granted to any one person in a calendar year under the Plan
exceed 286. The term of each option are for a period not
exceeding ten years from the date of grant, unless a lesser
period is specified by the Committee at the time of the grant.
If an optionee ceases to be a director of the Company other than
by reason of death, he may exercise his option as to all or any
of the shares covered thereby within the original term of such
option. In the event an optionee dies, the Director Plan
provides for the exercise of an option on behalf of the deceased
director. Options may not be assigned or transferred except by
will or by operation of the laws of descent and distribution.
Option holders are protected against dilution in the event of a
stock dividend, recapitalization, stock split, merger or similar
transaction. The Board of Directors may from time to time adopt
amendments, certain of which are subject to shareholder approval,
and may terminate the Director Plan at any time (although such
action shall not affect options previously granted). Any shares
subject to an option which for any reason expires or terminates
unexercised may again be available for option grants under the
Director Plan.
Termination and Amendment of Director Plan
Unless terminated sooner or extended, the Director Plan will
terminate on September 29, 2001. The Board of Directors may
terminate or amend the Director Plan in any respect at any time;
provided, that without the prior approval of the shareholders (i)
the total number of shares that may be issued under the Director
Plan and the maximum number of shares available for each grant
may not be increased; (ii) the limits on grants in any calendar
year may not be modified; (iii) the provisions relating to the
option price may not be modified; (iv) the provisions relating to
the exercise of options may not be modified; (v) the provisions
regarding eligibility may not be modified; and (vi) the
expiration date of the Plan may not be extended.
Market Value of Shares Reserved Under Purchase Plan
As of January 2, 2000, assuming that the shareholders had
approved the increase in the number of shares issuable under the
Director Plan by 10,000 shares as of such date so that the
aggregate number of shares that would be available for issuance
under the Director Plan would be 10,948, the market value of the
shares to be reserved for issuance under the Director Plan, would
be $__________, based on the closing bid quotation on such date
of the Common Stock as reported on the American Stock Exchange.
Additionally, as of December 1999, a total of 3,838 options had
been issued and are outstanding under the Director Plan. Upon
request, the Company will provide a copy of the Director Plan to
any shareholder.
<PAGE> 12
Proposed Amendments to Director Plan; Availability of Shares
Under Director Plan
The Board of Directors has approved, subject to the approval of
the shareholders, certain amendments to the Director Plan in
order to extend the expiration date of the Director Plan to
September 29, 2006, and to increase the number of shares subject
to the Director Plan by 10,000 shares to a total of 14,786. As
of the date hereof, there are 948 shares available for issuance
under the Director Plan.
Federal Income Tax Consequences
The following is a brief summary of the general federal income
tax consequences to optionees and the Company of participation in
the Director Plan. This summary is not intended to be exhaustive
and does not describe foreign, state or local tax consequences,
nor does it describe consequences based on particular
circumstances. For these reasons, each optionee should consult
with a tax advisor as to specific questions relating to tax
consequences of participation in the Purchase Plan.
Options granted under the Director Plan are non-qualified stock
options. The optionee generally does not realize any taxable
income upon the grant of an option, and the Company is not
allowed a business expense deduction by reason of such grant.
The optionee generally will recognize ordinary compensation
income at the time of exercise of the option in an amount equal
to the excess, if any, of the fair market value of the shares on
the date of exercise over the exercise price. In accordance with
the regulations under the Internal Revenue Code and applicable
state law, the Company will require the optionee to pay to the
Company an amount sufficient to satisfy withholding taxes in
respect of such compensation income at the time of the exercise
of the option. If the Company withholds stock to satisfy this
withholding tax obligation, instead of cash, the optionee
nonetheless will be required to include in income the
compensation income attributable to the stock withheld. Under
certain circumstances, compensation income may be measured and
recognized at some later date, not to exceed six months after the
date of exercise.
When the optionee sells the shares, he generally will recognize a
capital gain or loss in an amount equal to the difference between
the amount realized upon the sale of the shares and his basis in
the shares generally, the exercise price plus the amount taxed to
the optionee as compensation income). If the optionee's holding
period for the shares exceeds one year, such gain or loss will be
a long-term capital gain or loss.
The Company will generally be entitled to a tax deduction in the
year in which, and in an amount equal to, ordinary compensation
income is recognized by the optionee.
<PAGE> 13
Vote Required for Approval
The affirmative vote of the holders of a majority of outstanding
shares of Common Stock present or represented at the Annual
Meeting is required for the approval of this Proposal. Broker
non-votes and abstentions will be treated as votes against this
Proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE
"FOR" THE ADOPTION OF AMENDMENTS TO THE COMPANY'S 1996 AMENDMENT
AND RESTATED OF THE 1991 NON-EMPLOYEE DIRECTOR STOCK PURCHASE
PLAN TO EXTEND THE EXPIRATION DATE THEREOF TO SEPTEMBER 29, 2006,
AND TO INCREASE THE NUMBER OF SHARES SUBJECT THERETO.
PROPOSAL FOUR: TO RATIFY THE RETENTION OF BDO SEIDMAN L.L.P.
AS THE COMPANY'S AUDITORS
The Board of Directors has selected the firm of BDO Seidman L.L.P.
as the Company's independent certified public accountants for the
current fiscal year. BDO Seidman has served as the Company's
independent public accountants for each of the last six years. It
is expected that a representative of BDO Seidman L.L.P. will be
present during the Annual Meeting. The representative will have
an opportunity to make a statement if he or she so desires and is
expected to be available to respond to appropriate questions from
shareholders.
Vote Required for Approval
The affirmative vote of the holders of a majority of outstanding
shares of Common Stock present or represented at the Annual
Meeting is required for the approval of this Proposal. Broker
non-votes and abstentions will be treated as votes against this
Proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
RETENTION OF BDO SEIDMAN L.L.P. AS THE COMPANY'S INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS FOR THE CURRENT FISCAL YEAR.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth to the knowledge of Management,
each person of entry who is the beneficial owner of more than 5%
of the 9,183,032 shares of the Company's Common Stock, $.01 par
value ("Common Stock") outstanding as of December 7, 1999, the
number of shares owned by each such person and the percentage of
the outstanding shares represented thereby.
<PAGE> 14
Amount and
Name and Address Nature of Percent
of Beneficial Owner Beneficial Ownership(1) of Class(2)
Angelo S. Morini
2441 Viscount Row
Orlando, Florida 32809 4,952,743 (3) 46%
Cede & Co.
Box #20
Bowling Green Station
New York, New York 5,075,015 (4) 53.8%
(1) The inclusion herein of any shares deemed beneficially owned
does not constitute an admission of beneficial ownership of these
shares.
(2) The total number of shares outstanding assuming the exercise
of all currently exercisable and vested options and warrants held
by all executive officers, current directors, and holders of 5%
or more of the Company's issued and outstanding Common Stock is
10,722,963 shares. Does not assume the exercise of any other
options or warrants.
(3) Includes options to acquire 1,520,072 shares of the
Company's Common Stock. All of Mr. Morini's options currently
are exercisable at $3.31 to $5.75 per share. The original
exercise prices of 20,215 of the options ranged from $17.50 per
share to $25.03 per share. The exercise prices of these options
were reduced by the Board of Directors to $3.50 per share on
August 31, 1993. Options expire as to 7,143 shares on December
4, 1997, as to 13,072 shares on October 1, 2001 as to 142,858 on
July 1, 2007, and as to 1,357,000 shares on June 15, 2009. Also
includes 715 shares owned by Mr. Morini that are held in a
nominee name and 286 shares held in joint tenancy. With the
exception of the options and the shares held in a nominee name,
all of Mr. Morini's shares are held by Morini Investments Limited
Partnership, a Delaware limited liability partnership, of which
Angelo Morini is the Limited Partner and Morini Investments LLC
is the General Partner. Mr. Morini is the sole general partner
of Morini Investments LLC.
(4) Cede & Co. is a share depository used by shareholders to
hold stock in street name. Does not include 715 shares
beneficially owned by Angelo S. Morini and held by Cede & Co. in
street name.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of December 7, 1999, the
number of shares owned directly, indirectly and beneficially by
each executive officer and each director and director-nominee of
the Company, and by all executive officers and directors as a
group:
Amount and
Name and Address Nature of Percent of
of Beneficial Owner Beneficial Ownership (1) Class (2)
Angelo S. Morini
Galaxy Foods Company
2441 Viscount Row
Orlando, Florida 32809 4,952,743 (3) 46%
Earl G. Tyree
240 North Line Drive
Apopka, Florida 32703 3,144 (4) *
Douglas A. Walsh
607 Tamiami Trail
Ruskin, Florida 33570 3,239 (5) *
Marshall K. Luther
Galaxy Foods Company
2441 Viscount Row
Orlando, Florida 32809 9,190 (6) *
Joseph Juliano
Galaxy Foods Company
2441 Viscount Row
Orlando, Florida 32809 9,286 (7) *
Cynthia L. Hunter
Galaxy Foods Company
2441 Viscount Row
Orlando, Florida 32809 5,286 (8) *
All executive officers and directors
as a group 4,982,888 46.4%
* Less than 1%.
<PAGE> 15
(1) The inclusion herein of any shares deemed beneficially owned
does not constitute an admission of beneficial ownership of these
shares.
(2) The total number of shares outstanding assuming the exercise
of all currently exercisable and vested options and warrants held
by all executive officers, directors, and holders of 5% or more
of the Company's issued and outstanding Common Stock is
10,722,963 shares. Does not assume the exercise of any other
options or warrants.
(3) Includes options to acquire 1,520,072 shares of the Company's
Common Stock. All of Mr. Morini's options currently are
exercisable at $3.31 to $5.75 per share. The original exercise
prices of 20,215 of the options ranged from $17.50 per share to
$25.03 per share. The exercise prices of these options were
reduced by the Board of Directors to $3.50 per share on August
31, 1993. Options expire as to 7,143 shares on December 4, 1997,
as to 13,072 shares on October 1, 2001 as to 142,858 on July 1,
2007, and as to 1,357,000 shares on June 15, 2009. Also includes
715 shares owned by Mr. Morini that are held in a nominee name
and 286 shares held in joint tenancy. With the exception of the
options and the shares held in a nominee name, all of Mr.
Morini's shares are held by Morini Investments Limited
Partnership, a Delaware limited liability partnership, of which
Angelo Morini is the Limited Partner and Morini Investments LLC
is the General Partner. Mr. Morini is the sole general partner
of Morini Investments LLC.
4) Mr. Tyree, a current member of the Board of Directors, was
granted an option to acquire 2,143 shares of Common Stock on
September 11, 1992 for an exercise price of $20.16 per share.
This option expires on September 11, 2002. The closing bid price
of the Company's Common Stock as quoted on the NASDAQ System on
September 10, 1992 was $20.13 per share. Mr. Tyree was granted
an additional option on October 1, 1993 to acquire 143 shares of
Common Stock at an exercise price of $14.88 per share. This
option expires on October 1, 2003. The closing bid price of the
Company's Common Stock as quoted on the NASDAQ System on
September 30, 1993 was $14.00 per share. The exercise price of
all of Mr. Tyree's then existing options was reduced to $14.00
per share on January 31, 1994. The closing bid price of the
Company's Common Stock as quoted on the NASDAQ System on January
28, 1994 was $32.38 per share. On October 1, 1994, Mr. Tyree was
granted an option to acquire 143 shares at an exercise price of
$19.25 per share. The closing bid price of the Company's Common
Stock as quoted on the NASDAQ System on September 30, 1994, was
$20.13 per share. This option expires on October 1, 2004. On
October 1, 1995, Mr. Tyree was granted an option to acquire 143
shares at an exercise price of $4.13 per share. The closing bid
price of the Company's Common Stock as quoted on the NASDAQ
System on September 29, 1995, was $4.16 per share. This option
expires on October 1, 2005. This option expires on October 1,
2005. On October 1, 1996, Mr. Tyree was granted an option to
acquire 286 shares at an exercise price of $10.29 per share which
expire on October 1, 2006. The closing bid price of the
Company's Common Stock as quoted on the NASDAQ System on
September 30, 1996 was $10.50 per share. On October 1, 1997, he
was granted an option to acquire 286 shares at an exercise price
of $8.3125 per share which expire on October 1, 2007. The
closing bid price of the Company's Common Stock as quoted on the
NASDAQ system on September 30, 1997 was $8.31 per share. On
October 1, 1998, he was granted an option to acquire 286 shares
at an exercise price of $3.06 per share which expire on October
1, 2008. The closing bid price of the Company's Common Stock as
quoted on the NASDAQ system on September 30, 1998 was $3.06 per
share. On October 1, 1999, he was granted an option to acquire
286 shares at an exercise price of $4.13 per share which expire
on October 1, 2009. The closing bid price of the Company's
Common Stock as quoted on the NASDAQ system on September 30, 1999
was $4.13 per share. All of Mr. Tyree's options currently are
exercisable.
<PAGE> 16
(5) Dr. Walsh, a current member of the Board of Directors, was
granted an option to acquire 2143 shares of Common Stock on
January 31, 1992 for an exercise price of $21.00 per share. This
option expires on January 31, 2002. The closing bid price of the
Company's Common Stock as quoted on the NASDAQ System on January
30, 1992 was $17.50 per share. Dr. Walsh was granted an
additional option on October 1, 1992 to acquire 72 shares of
Common Stock at an exercise price of $20.13 per share. This
option expires on October 1, 2002. The closing bid price of the
Company's Common Stock as quoted on the NASDAQ System on
September 30, 1992 was $18.38 per share. The exercise price of
all of Dr. Walsh's then existing options was reduced to $14.00
per share on January 31, 1994. The closing bid price of the
Company's Common Stock as quoted on the NASDAQ System on January
28, 1994 was $32.38 per share. On October 1, 1994, Dr. Walsh was
granted an option to acquire 143 shares at an exercise price of
$19.25 per share. The closing bid price of the Company's Common
Stock as quoted on the NASDAQ System on September 30, 1994, was
$20.13 per share. This option expires on October 1, 2004. On
October 1, 1995, Dr. Walsh was granted an option to acquire 143
shares at an exercise price of $4.13 per share. The closing bid
price of the Company's Common Stock as quoted on the NASDAQ
System on September 29, 1995, was $4.16 per share. This option
expires on October 1, 2005. On October 1, 1996, Dr. Walsh was
granted an option to acquire 286 shares at an exercise price of
$10.29 per share which expire on October 1, 2006. The closing
bid price of the Company's Common Stock as quoted on the NASDAQ
System on September 30, 1996 was $10.50 per share. On October 1,
1997, he was granted an option to acquire 286 shares at an
exercise price of $8.31 per share which expire on October 1,
2007. The closing bid price of the Company's Common Stock as
quoted on the NASDAQ system on September 30, 1997 was $8.31 per
share. On October 1, 1998, he was granted an option to acquire
286 shares at an exercise price of $3.06 per share which expire
on October 1, 2008. The closing bid price of the Company's
Common Stock as quoted on the NASDAQ system on September 30, 1998
was $3.06 per share. On October 1, 1999, he was granted an
option to acquire 286 shares at an exercise price of $4.13 per
share which expire on October 1, 2009. The closing bid price of
the Company's Common Stock as quoted on the NASDAQ system on
September 30, 1999 was $4.13 per share. All of Dr. Walsh's
options currently are exercisable.
(6) Mr. Luther, a current member of the Company's Board of
Directors, holds warrants to acquire 7143 shares of Common Stock
at a price of $4.48 per share. These warrants were granted as
compensation for work per the terms of Mr. Luther's former
agreement with the Company to serve as Senior Vice President of
Marketing for a term of one year. In addition, Mr. Luther was
granted options to acquire 2,143 shares of the Company's Common
Stock on January 31, 1996, for an exercise price of $5.69 per
share, which option expires on January 31, 2006. On October 1,
1996, Mr. Luther was granted an option to acquire 190 shares at
an exercise price of $10.29 per share which expire on October 1,
2006. The closing bid price of the Company's Common Stock as
quoted on the NASDAQ System on September 30, 1996 was $10.50 per
share. On October 1, 1997, he was granted an option to acquire
286 shares at an exercise price of $8.31 per share which expire
on October 1, 2007. The closing bid price of the Company's
Common Stock as quoted on the NASDAQ system on September 30, 1997
was $8.31 per share. On October 1, 1998, he was granted an option
to acquire 286 shares at an exercise price of $3.06 per share
which expire on October 1, 2008. The closing bid price of the
Company's Common Stock as quoted on the NASDAQ system on
September 30, 1998 was $3.06 per share. On October 1, 1999, he
was granted an option to acquire 286 shares at an exercise price
of $4.13 per share which expire on October 1, 2009. The closing
bid price of the Company's Common Stock as quoted on the NASDAQ
system on September 30, 1999 was $4.13 per share. All of Mr.
Luther's options currently are exercisable.
<PAGE> 17
(7) Mr. Juliano, a current member of the Company's Board of
Directors, was granted on October 1, 1999, options to acquire 72
shares at an exercise price of $4.13 per share which expire on
October 1, 2009. The closing bid price of the Company's Common
Stock as quoted on the NASDAQ system on September 30, 1999 was
$4.13 per share. All of Mr. Juliano's options currently are
exercisable.
(8) Includes options to acquire 4,286 shares of the Company's
Common Stock which were granted to Ms. Hunter in fiscal 1998
pursuant to the Company's 1996 Stock Option Plan. Such options
are exercisable at $5.47 to $7.00 per share and expire as to
2,143 on June 18, 2007 and as to 2,143 on October 23, 1997. Of
these options, 2,143 are currently exercisable.
Officers and Directors
The following table sets forth the current and proposed directors
and the current officers of the Company as of December 7, 1999,
and the ages of and positions with the Company held by each of
such persons:
Name Age Positions______________________
Angelo S. Morini (1) 56 Chairman of the Board of
Directors, President, and
Chief Executive Officer
Cynthia L. Hunter 30 Chief Financial Officer and
Corporate Secretary
Earl G. Tyree (1) 78 Director
Douglas A. Walsh (1) 54 Director
Marshall K. Luther (1) 46 Director
Joseph Juliano (1) 49 Director
(1) Nominee for Director.
The current directors of the Company are the sole nominees for
election to the Board of Directors for the ensuing year.
Each director is elected to hold office for a one year term and
until his successor is chosen and qualified. The officers of the
Company are elected annually at the first Board of Directors
meeting following the annual meeting of shareholders, and hold
office until their respective successors are duly elected and
qualified, unless sooner displaced.
Angelo S. Morini has been President of the Company since its
inception and is the inventor of formagg?. He was elected
Chairman of the Board of Directors, President,
and Chief Executive Officer in 1987. Between 1974 and 1980, Mr.
Morini was the general manager of Galaxy Cheese Company, which
operated as a sole proprietorship until its incorporation in May
1980. Prior to 1974, he was associated with the Food Service
Division of Pillsbury Company and the Post Division of General
Foods Company. In addition, he worked in Morini Markets, his
family-owned and operated chain of retail grocery stores in the
New Castle, Pennsylvania, area. Mr. Morini received a B.S.
degree in Business Administration from Youngstown State
University in 1968.
Cynthia L. Hunter, CPA was elected Chief Financial Officer and
Corporate Secretary as of June 18, 1998. Prior to joining the
Company, Ms. Hunter worked as a senior auditor for Coopers and
Lybrand LLP in Orlando, Florida from 1993 to 1997. From 1992 to
1993, she worked for United Technologies as a cost accountant.
During her years in public accounting, Ms. Hunter was responsible
for coordinating and overseeing audits on a variety of clients
including companies in the manufacturing, high-tech and financial
institution industries. Ms. Hunter earned a BS in Accounting
from Florida State University in 1991 and a Masters in Accounting
Information Systems from Florida State University in 1992.
<PAGE> 18
Earl G. Tyree has been a director of the Company since September
1992. From 1980 to 1994, Mr. Tyree served as President of Bruce
Novograd Advertising, Incorporated, a company he co-founded.
From 1975 to 1979, Mr. Tyree was President of the John F. Murray
advertising division of American Home Products Corporation and
from 1972 to 1975, Mr. Tyree served as President of Sterling
Drug, Incorporated, whose subsidiaries included the Bayer Company
(Bayer Aspirin), the Charles H. Phillips Company (Milk of
Magnesia), and Glenbrook Laboratories. Mr. Tyree attended the
University of Richmond where he majored in accounting.
Douglas A. Walsh, D.O., has been a director of the Company since
January 1992. Dr. Walsh has been a practicing physician since
1970, specializing in Family Practice and Sports Medicine. From
1984 to present, he has been affiliated with Family Doctors, a
four-physician group located in Tampa, Florida. From 1971 to
1984, he was the Health Commissioner for Mahoning County, Ohio,
and from 1983 to 1985, he was the Clinic Commander for the U.S.
Air Force 911 Tac Clinic in Pittsburgh, Pennsylvania. From 1985
to 1988, he was a flight surgeon at Patrick Air Force Base, Cocoa
Beach, Florida. Dr. Walsh's teaching appointments include
Associate Professor of Family Practice (Clinical) at Ohio
University and Clinical Preceptor at the University of Health
Sciences, Kansas City, Missouri. Dr. Walsh received a B.S.
degree in Microbiology from the University of Houston, Houston,
Texas, in 1965, and a D.O. degree from the University of Health
Sciences, Kansas City, Missouri, in 1970. Dr. Walsh also serves
as a team physician for the Pittsburgh Pirates organization.
Marshall K. Luther was elected to the Board of Directors on
January 31, 1996. From 1993 to 1995, Mr. Luther served as Senior
Vice President, Marketing of Tropicana Products, Inc. and from
1975 to 1992, he served in various marketing positions for
General Mills International Restaurants. Mr. Luther received his
B.S. in Engineering from Brown University in 1974 and his M.B.A.
in Marketing from the Wharton Graduate School of Business in
1976.
Joseph Juliano was elected to the Board of Directors on June 16,
1999. From 1973 to 1988, Mr. Juliano served in various
management positions for Pepsi-Cola Company. In 1988, Mr.
Juliano managed Pepsi Cola Company Bottling Operations where he
achieved record sales and profits during his three-year tenure in
this position. From 1991 to 1997, he served as Vice President of
Prestige, Sports and Gaming for Pepsi Cola North America. In
1997, he was promoted to Vice President of Entertainment Sales,
with expanded domestic and international account responsibilities
encompassing movie theaters, theme parks, sports venues, theme
restaurants, hotels, and casinos. Mr. Juliano received his
Masters in Business Administration from St. John's University in
New York City.
Certain Relationships and Related Transactions
On June 17, 1999, the Company's Board of Directors approved to
rescind the existing employment agreement with the Company's
President and Chief Executive Officer, Mr. Angelo S. Morini, and
to enter into new employment agreement with him. The new
agreement eliminates the performance based option arrangement and
allows for a one- time grant of stock options to acquire
1,357,000 shares of Common Stock at an exercise price of $3.31
per share. The new agreement also forgives the interest on the
existing note, provides for a salary increase to $300,000 and
decreases the annual bonus to a sliding scale of pre-tax income,
beginning with the fiscal year ending March 31, 2000. This new
agreement has a rolling five year term.
<PAGE> 19
Angelo S. Morini's brother, Christopher Morini, works for the
Company as Vice President of Marketing. On May 16, 1996,
Christopher Morini was issued an option to purchase 7,143 shares
of the Company's Common Stock at a price of $8.47 per share.
This option expires on May 16, 2006. This option is currently
exercisable for 4,286 of the 7,143 shares under option. On
September 24, 1998, Christopher Morini was issued an option to
purchase 14,286 shares of the Company's Common Stock at a price
of $2.87 per share. This option expires on September 24, 2008.
This option is currently fully exercisable.
Executive Compensation
The following table sets forth the compensation of the Company's
Chief Executive Officer for the fiscal years ended March 31,
1999, 1998, and 1997 (no other executive officer of the Company
was compensated in an amount in excess of $100,000 for any such
fiscal years):
Summary Compensation Table
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Securities
Annual Restricted Under- All Other
Name and Compen- Stock lying LTIP Compen-
Principal Fiscal Salary Bonus sation Award(s) Options/ Payouts sation
Position Year ($) ($) ($) ($) SARs(#) ($) ($)
Angelo S. Morini(1) 1999 250,000 -- 20,128(2) -- -- -- --
Chairman of the 1998 250,000 -- 19,132(3) -- -- -- --
Board of Directors, 1997 250,000 -- 16,262(4) -- -- -- --
President, and Chief
Executive Officer
(1) On June 17, 1999, the Company's Board of Directors approved
to rescind the existing employment agreement with the Company's
President and Chief Executive Officer, Mr. Angelo S. Morini, and
to enter into new employment agreement with him. The new
agreement includes a one-time grant of stock options to acquire
1,357,000 shares of Common Stock at an exercise price of $3.31
per share. Under the new agreement, the Company forgave all
outstanding interest, approximately $3,000,000, on two promissory
notes executed by Mr. Morini in favor of the Company in
connection with the exercise of certain purchase rights and
options previously granted by the Company to Mr. Morini. The new
agreement also provides for a salary increase to $300,000 and
decreases the annual bonus to a sliding scale of pre-tax income,
beginning with the fiscal year ending March 31, 2000, and has a
rolling five year term. In conjunction with the entry into the
new agreement, the Company agreed to a consolidation of Mr.
Morini's two existing promissory notes in favor of the Company
into a single note payable in the amount of $12,772,000, which is
the current outstanding balance of the obligation. This new note
is non-interest bearing, non-recourse to Mr. Morini, and is
secured by 2,914,286 shares of the Company's Common Stock
beneficially owned by Mr. Morini.
<PAGE> 20
(2) For the fiscal year ended March 31, 1999, the Company paid
$11,860 in lease payments for Mr. Morini's automobile and $8,268
in club dues for Mr. Morini
(3) For the fiscal year ended March 31, 1998, the Company paid
$11,500 in lease payments for Mr. Morini's automobile and $7,632
in club dues for Mr. Morini
(4) For the fiscal year ended March 31, 1997, the Company paid
$9,107 in lease payments for Mr. Morini's automobile and $7,155
in club dues for Mr. Morini
Compensation of Directors
Each non-employee director who served on the Board of Directors
during the last fiscal year received a fee of $2,000 plus
expenses for his services.
Additionally, each non-employee director of the Company is
entitled to receive on October 1 of each year, options to purchase
a number of shares of Common Stock equal to (i) 286 shares, if
such director served for a full year prior to the October 1
anniversary date, or (ii) a pro rated amount equal to 24 shares
for each full month served during the year prior to such
anniversary date, if such director did not serve for a full year
prior to the anniversary date. Such options are granted pursuant
to the Company's 1991 Non-Employee Director Stock Option Plan
which was adopted by the Board of Directors on October 1, 1991,
and approved by the shareholders of the Company on January 31,
1992, as the same was amended by that certain 1996 Amendment and
Restatement of the 1991 Non-Employee Director Stock Option Plan
(as amended, the "Director Plan"). As originally adopted, 4,786
shares of Common Stock were reserved for issuance under the
Director Plan (taking into account the Company's one-for-seven
reverse stock split effective February 12, 1999). Of these 4,786
shares, Dr. Richard Gentile, a former director, and Mr. Earl Tyree
and Dr. Douglas Walsh, current directors, each received options on
October 1, 1995 to purchase 143 shares of Common Stock. Dr.
Douglas Walsh, Mr. Earl Tyree and Mr. Marshall Luther, all current
directors, each received options on October 1, 1996 to purchase
286, 286 and 191 shares respectively, of Common Stock. On each of
October 1, 1997, October 1, 1998 and October 1, 1999, Dr. Douglas
Walsh, Mr. Earl Tyree and Mr. Marshall Luther, all current
directors, each received options to purchase 286 shares,
respectively, of Common Stock. On October 1, 1999, Mr. Joseph
Juliano, a current director, received options to purchase 72
shares of Common Stock. The remaining 948 shares are available
for issuance pursuant to options granted under the Director Plan.
Employment Agreement of Chief Executive Officer
On June 17, 1999, the Company's Board of Directors approved to
rescind the existing employment agreement with the Company's
President and Chief Executive Officer, Mr. Angelo S. Morini, and
to enter into new employment agreement with him. The new
agreement includes a one-time grant of stock options to acquire
1,357,000 shares of Common Stock at an exercise price of $3.31
per share. Under the new agreement, the Company forgave all
outstanding interest, approximately $3,000,000, on two promissory
notes executed by Mr. Morini in favor of the Company in
connection with the exercise of certain purchase rights and
options previously granted by the Company to Mr. Morini. The new
agreement also provides for a salary increase to $300,000 and
decreases the annual bonus to a sliding scale of pre-tax income,
beginning with the fiscal year ending March 31, 2000, and has a
rolling five year term.
<PAGE> 21
In conjunction with the entry into the new agreement, the Company
agreed to a consolidation of Mr. Morini's two existing promissory
notes dated November 4, 1994 and October 11, 1995, in the
respective principal amounts of $1,200,000 and $11,572,200 in
favor of the Company (the "Prior Notes") into a single note
payable in the amount of $12,772,200, the aggregate principal
amount outstanding under the Prior Notes and the current
outstanding balance of the obligation.. The Prior Notes were
executed by Mr. Morini in favor of the Company in connection with
Mr. Morini's exercise of certain options and purchase rights
granted by the Company to acquire an aggregate of 2,914,286
shares of Common Stock. The consolidated note is non-interest
bearing, non-recourse to Mr. Morini, and is secured by 2,914,286
shares of the Company's Common Stock beneficially owned by Mr.
Morini.
Stockholder Return Performance Presentation
The graph set forth below provides comparisons of the yearly
percentage change in the cumulative total shareholder return on
Galaxy Foods Company's Common Stock with the cumulative total
return of Standard & Poor's MidCap 400 Stock Index and a Peer
Group Index for the five fiscal years ended March 31, 1999.
Comparative Total Returns
Galaxy Foods, S&P MidCap and Peer Group
(Performance Results Through 3/31/99)
1995 1996 1997 1998 1999
Galaxy Foods Company 100.00 69.18 44.83 53.46 31.03
S&P MidCap 400 100.00 113.80 123.81 162.64 176.42
Peer Group 100.00 121.59 149.95 190.67 214.63
* Assumes $100 invested at the close of trading on the last day
preceding the first day of the preceding fiscal year in
Galaxy Foods Company, S&P MidCap 400 and the Peer Group.
Meetings of the Board of Directors and Committees
The Board of Directors met three times during the fiscal year
ended March 31, 1999 and all the Directors were present. The
Board of Directors does not currently have any standing audit,
nominating, compensation, or other committees.
<PAGE> 22
Compliance with Section 16(a) of the Exchange Act
Based upon the Company's review of a Form 4 which was not filed
on a timely basis, and a Form 5 which was filed timely, each of
which was furnished by Angelo Morini to the Company with respect
to its fiscal year ended March 31, 1999, Mr. Morini reported a
transfer of certain Common Stock owned of record by him to
Morini Investment, Ltd., a limited partnership in which he is the
sole limited partner and the sole owner of the general partner,
Morini Investments, LLC.
Legal Proceedings
To the knowledge of the Company, no executive officer or director
of the Company is a party adverse to the Company or has material
interest adverse to the Company in any legal proceeding.
OTHER BUSINESS
The Board of Directors knows of no business which will be
presented for consideration at the meeting other than stated
above. If any other business should come before the meeting,
votes may be cast pursuant to proxies in respect to any such
business in the best judgment of the person or persons acting
under the proxies.
EXPENSES AND SOLICITATION
The cost of solicitation of proxies will be borne by the Company.
In addition to soliciting shareholders by mail of by its regular
employees, the Company may request banks and brokers to solicit
their customers who have stock of the Company registered in the
name of a nominee and, if so, will reimburse such banks and
brokers for their reasonable out-of-pocket costs. Solicitation by
officers and employees of the Company, none of whom will receive
additional compensation therefor, may also be made of some
shareholders in person or by mail, telephone or telegraph,
following the original solicitation.
SHAREHOLDER PROPOSALS
It is anticipated that the Company's next annual meeting of
shareholders will be held in October 2000, and proposals of
shareholders intended for inclusion in the proxy statement will
be furnished to all shareholders entitled to vote at the next
annual meeting of the Company, and must be received at the
Company's principal executive offices no later than June 1, 2000.
It is suggested that proponents submit their proposals by
certified Mail-Return Receipt Requested. Notice of shareholder
proposals outside the processes of Rule 14a-8 of the Securities
Exchange Act of 1934, as amended, for the next annual meeting of
shareholders must be received at the Company's principal
executive offices no later than August 1, 2000.
<PAGE> 23
The Company will provide without charge to each person whose
proxy is being solicited hereby, upon the written request of such
person, a copy of the Company's annual report on Form 10-K,
including the financial statements and the financial statement
schedules, filed with the Securities and Exchange Commission for
the Company's fiscal year ended March 31, 1999. All such
requests should be directed to Investor Relations, at 2441
Viscount Row, Orlando, Florida 32809.
