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:
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> 2
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 Janaury 7,
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
Janaury 10, 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> 3
GALAXY FOODS COMPANY
2441 Viscount Row
Orlando, Florida 32809
Janaury 10, 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 Janaury 7, 2000 will be
entitled to vote at the meeting and any adjournment thereof.
As of Janaury 7, 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 Janaury 10, 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> 4
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> 5
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> 6
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> 7
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> 8
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 Janaury 7, 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 $175,000, 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> 9
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> 10
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 Janaury 7, 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 $35,000, 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> 11
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> 12
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> 13
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> 14
(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. Mr. Tyree
serves on the Compensation and Nominating Committees of the
Board of Directors.
<PAGE> 15
(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. Dr. Walsh
serves on the Audit, Nominating and Compensation Committees
of the Board of Directors.
(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. Mr. Luther
serves on the Audit Committee of the Board of Directors.
<PAGE> 16
(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. Mr. Juliano
serves on the Audit, Compensation, and Nominating Committees
of the Board of Directors.
(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> 17
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> 18
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> 19
(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> 20
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> 21
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> 22
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.
