SARATOGA BRANDS INC, PRE 14A, 1998-04-24

SARATOGA BRANDS INC
PRE 14A, 1998-04-24
DAIRY PRODUCTS

Previous: UNIVERSAL INTERNATIONAL INC /MN/, 8-K, 1998-04-24

Next: GLACIER BANCORP INC, S-4, 1998-04-24

May 1, 1998

Dear Shareholders:

We cordially invite you to attend the Meeting of the Shareholders of
Saratoga Brands Inc. (the "Company") to be held at 10:00 a.m. on Tuesday, June
9, 1998, at the offices of Greenbaum, Rowe, Smith, Ravin, Davis & Himmel LLP, 99
Wood Avenue South, Iselin, New Jersey 07095.

The purposes of this meeting are to (i) elect a Board of four (4)
directors, (ii) ratify the appointment of auditors, (iii) approve a change in
the Company's state of incorporation from New York to Delaware, (iv) ratify and
approve the Company's Quasi-reorganization, which was effective April 1, 1997,
(v) ratify and approve the adoption of the Company's 1998 Incentive and
Non-Qualified Stock Option Plan, and (vi) ratify and approve the adoption of the
Company's 1998 Director Stock Option Plan. These matters are described in the
accompanying Notice of Meeting and Proxy Statement.

The Board of Directors recommends that Shareholders vote in favor of each
proposal. We encourage all Shareholders to participate by voting their shares by
Proxy whether or not they plan to attend the meeting. Please sign, date and mail
the enclosed Proxy as soon as possible. If you do attend the Annual Meeting, you
may still vote in person.

Sincerely,

Bernard F. Lillis, Jr.
Secretary
<PAGE>

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To be held on June 9, 1998

Notice is hereby given that the Annual Meeting of Shareholders (the
"Meeting") of Saratoga Brands Inc. (the "Company") will be held at the offices
of Greenbaum, Rowe, Smith, Ravin, Davis & Himmel LLP, 99 Wood Avenue South,
Iselin, New Jersey at 10:00 a.m. Eastern Time, for the following purposes:

1. To elect a Board of Directors of four (4) persons to serve until the 1999
Annual Meeting of Shareholders or until a successor is duly elected and
qualified.

2. To approve the appointment of ________ as the Company's independent
auditors.

3. To approve a change in the Company's state of incorporation from New York
to Delaware.

4. To ratify and approve the Company's Quasi-Reorganization effective April
1, 1997.

5. To ratify and approve the adoption of the Company's 1998 Incentive and
Non-Qualified Stock Option Plan.

6. To ratify and approve the adoption of the Company's 1998 Director Stock
Option Plan.

7. To transact such other business as may properly come before the Meeting or
any adjournment thereof.

Only shareholders of record at the close of business on April 28, 1998
will be entitled to notice of and to vote at the Meeting.

Whether or not you intend to attend the Meeting, please complete, date and
sign the enclosed Proxy. Your Proxy will be revocable, either in writing or by
voting in person at the Meeting, at any time prior to its exercise.

By Order of the Board of Directors

---------------------------------
BERNARD F. LILLIS, JR., Secretary

Lakewood, New Jersey
May 1, 1998
<PAGE>

SARATOGA BRANDS INC.
1835 Swarthmore Avenue
Lakewood, New Jersey 08701

PROXY STATEMENT

Accompanying this Proxy Statement is a Notice of Annual Meeting of
Shareholders, the Company's Form 10KSB for the year ended December 31, 1997, and
a form of Proxy for such meeting solicited by the Board of Directors. The Board
of Directors has fixed the close of business on April 28, 1998, as the record
date for the determination of shareholders that are entitled to notice of and to
vote at the meeting or any adjournment thereof. The holders of a majority of the
outstanding shares of Common stock present in person, or represented by Proxy,
shall constitute a quorum at the meeting.

As of the record date, the Company had 4,855,719 outstanding shares of
common stock, $.001 par value (the "Common Stock"), the holders of which are
entitled to one vote per share.

A Proxy that is properly submitted to the Company may be revoked at any
time before it is exercised by written notice to the Secretary of the Company,
and any Shareholder attending the meeting may vote in person and by doing so
revokes any Proxy previously submitted by him. Where a Shareholder has specified
a choice on his Proxy with respect to Proposals 1,2,3,4,5, and 6, it will be
complied with. If no direction is given, all the shares represented by the Proxy
will be voted in favor of such Proposals.

The cost of soliciting Proxies will be paid by the Company, which will
reimburse brokerage firms, custodians nominees and fiduciaries for their
expenses in forwarding proxy material to the beneficial owners of the Company's
stock. Officers and regular employees of the Company may solicit Proxies
personally and by telephone. The Annual report of the Company for the fiscal
year ended December 31, 1997, containing audited financial statements for such
year, is enclosed with this Proxy Statement. This Proxy Statement and the
enclosed Proxy are being sent to the shareholders of the Company on or about May
1, 1998.

IN ORDER THAT YOUR SHARES MAY BE REPRESENTED AT THIS MEETING, YOU ARE REQUESTED
TO PLEASE SIGN, DATE AND MAIL THE PROXY PROMPTLY.
<PAGE>

Proposal 1

ELECTION OF DIRECTORS

According to the Company's By-Laws, the Board of Directors is composed of
four (4) members. At each Annual Meeting, all directors will be elected to serve
for one year expiring on the date of the Annual Meeting of shareholders for the
following year. Each director elected will continue in office until a successor
has been elected or until resignation or removal in the manner provided by the
Company's By-Laws. The names of the nominees for the Board of directors are
listed below. Shares represented by a properly executed proxy in the
accompanying form will be voted for such nominees. However, discretionary
authority is reserved to vote such shares in the best judgment of the persons
named in the event that any person or persons other than the nominees listed
below are to be voted on at the meeting due to the unavailability of any nominee
so listed.

All persons named below are directors of the Company at the present time.
There are no family relationships between any nominees, directors or executive
officer of the Company.

NOMINEES FOR ONE YEAR TERMS

Scott G. Halperin has been Chairman of the Company since July 1, 1997 and Chief
Executive Officer since August 16, 1994. He also served as Treasurer from May of
1994 through June 30, 1997. He serves as President and Chief Executive Officer
of Agama, Inc., which pursued mergers and acquisitions from 1993 through the end
of 1994, the Company is currently inactive. He has been a director of Alliance
Technologies, Inc. since February of 1997.

Bernard F. Lillis, Jr. has been a director, Chief Operating Officer, and
Treasurer since July 1, 1997. He has been Chief Financial Officer since Apri1 of
1996. Prior to joining Saratoga he served as Chief Financial Officer of one of
the largest suppliers of construction aggregate in the New York Metropolitan
Area for fourteen years. Previously he was Vice President Finance &
Administration of a Princeton (NJ) management consulting firm for seven years.
Mr. Lillis also served as Deputy City Manager-Finance of Rochester, New York,
and began his career with Deloitte & Touche (previously Haskins & Sells),
Certified Public Accountants. He is a Certified Public Accountant, a recipient
of the New York State Society of CPA's Award for Outstanding Scholastic
Achievement in Accounting, and a member of the New York, New Jersey and
Pennsylvania Societies of CPA's, and the Institute of Management Accountants. He
has been a director of Alliance Technologies, Inc. since April of 1997.

Joseph M. Greene has been a director of the Company since February 23, 1998. He
is the founder and has been the Chief Executive Officer of Advanced Trading
Concepts since January of 1990, a sales agency for various, fully tariffed,
switch and network based domestic and international carriers of telephone
services. Additionally, he was the founder of National Telephone Company in
March of 1987. He is a graduate of the College of William and Mary.

Harry J. Friedberg has been a director of the Company since March 2 1998. He has
been engaged in the private practice of law since 1963. He is admitted to the
Bars of the state of New York and the District of Columbia.

2
<PAGE>

INFORMATION CONCERNING BOARD

The Board of Directors met 4 times in fiscal 1997. No director attended
fewer than 75% of the meetings of the Board of Directors. In addition, the Board
acted by unanimous consent 8 times during fiscal 1997.

The Board of Directors has an Audit Committee. The Audit Committee is
responsible for reviewing the Company's audited financial statements, meeting
with the Company's independent accountants to review the Company's internal
controls and financial management practices and examining all agreements or
other transactions between the Company and its directors and officers to
determine whether such agreements or transactions are fair to the Company's
shareholders. Messrs. Greene, Friedberg, and Halperin currently serve on the
Audit Committee.

SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information, as of March 31, 1998,
regarding the ownership of the Common Stock by (i) each director and nominee for
director of the Company; (ii) each of the executive named officers and nominees,
(iii) each person known to the Company to beneficially own five percent (5%) or
more of the Company's Common Stock, and (iv) all directors and executive
officers of the Company as a group.

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Common Stock
-----------------------------------------------
Percentage of
Name of Beneficial Owner (A) Number of Shares Outstanding (F)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Scott G Halperin 716,662 (B) 14.2%
1835 Swarthmore Avenue
Lakewood, N.J. 08701
- -----------------------------------------------------------------------------------------------------------------
Bernard F. Lillis, Jr. 326,137 (C) 6.5%
1835 Swarthmore Avenue
Lakewood, N.J. 08701
- -----------------------------------------------------------------------------------------------------------------
Joseph M. Greene 40,000 (D) 0.8%
1835 Swarthmore Avenue
Lakewood, N.J. 08701
- -----------------------------------------------------------------------------------------------------------------
Harry J. Friedberg 43,334 (E) 0.9%
551 Fifth Avenue, Suite 3400
New York, N.Y. 10176
- -----------------------------------------------------------------------------------------------------------------
Robert Castellano 64,972 1.3%
1835 Swarthmore Avenue
Lakewood, N.J. 08701
- -----------------------------------------------------------------------------------------------------------------
Ronald Gagnon 17,701 0.4%
1835 Swarthmore Avenue
Lakewood, N.J. 08701
- -----------------------------------------------------------------------------------------------------------------
All Directors and executive officers as a group 1,208,806 22.8%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>

3
<PAGE>

(A) All information with respect to beneficial ownership of the shares is based
upon filings made by the respective beneficial owners with the Securities
and Exchange Commission or information provided by such beneficial owners to
the Company. Shares include stock options and warrants exercisable within 60
days.

(B) Includes options to purchase 195,556 shares at $1.125 (market price on the
date granted) held by Mr. Halperin.

(D) Includes options to purchase 40,000 shares at $1.6875 (market price on the
date granted) held by Mr. Greene.

(E) Includes options to purchase 40,000 shares at $1.8125 (market price on the
date granted) held by Mr. Friedberg.

(F) For each beneficial owner, the "Percentage of Outstanding" equals each
owner's actual holdings of shares plus shares represented by unexercised
options and warrants held, divided by total shares outstanding of the
Company at March 18, 1998, of 4,885,706, plus the above-referenced
unexercised options and warrants of the referenced holder only. In other
words, individual percentages of the listed holders will not add to the
group total because the calculations are made separately for each holder.

CERTAIN TRANSACTIONS

In February, 1997 Mr. Halperin loaned $25,000 to the Company. This loan
does not bear interest and is payable upon demand.

EXECUTIVE COMPENSATION

The following table sets forth, for each of the last fiscal years, cash
and certain other compensation paid or accrued by the Company for the Chief
Executive Officer. There are no other executive officers who earned at least
$100,000 for any of the last three fiscal years.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Annual Compensation ($) Long-Term Compensation ($)
----------------------------------------------------------------------------
Restricted Securities Long-Term
Name and Principal Other Annual Stock Underlying Incentive Plan All Other
Position Year Salary Bonus Compensation Awards Options Payouts Compensation ($)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Scott G. Halperin 1997 -- -- 6,205 -- 195,556 -- --
Chairman of the Board 1996 -- -- 6,000 73,499 181,149 -- --
Chief Executive Officer 1995 133,846 -- 16,050 -- 58,334 -- --
</TABLE>

4
<PAGE>

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Individual Grants
- ---------------------------------------------------------------------------
% of Total Potential Realizable Value at
Number of Options Assumed Rates of Stock Price
Securities Granted to Exercise Appreciation for Option Term (A)
Underlying Employees of Base
Options in Fiscal Price Expiration --------------------------------
Name Granted (#) Year ($/Sh) Date 0% ($) 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Scott G. Halperin 195,556 10% 1.125 July 31, 2005 0 104,622 251,289
- --------------------------------------------------------------------------------------------------------------
</TABLE>

(A) The value indicated is a net amount, since the aggregate exercise price has
been deducted from the final appreciated value. 5% and 10% appreciation
would result in per share prices of approximately $1.66 and $2.41,
respectively, as of July 31 2005.

AGGREGATED OPTION EXERCISES IN 1997 AND
DECEMBER 31, 1997 OPTION VALUES

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Number of Securities
Underlying Unexercised Value of Unexercised In-the-
Shares Options at Fiscal Year-End (#)* Money Options at FY-End ($)
Acquired on Value -------------------------------------------------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Scott G. Halperin - - 195,556 0 220,000 0
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>

* Options are "in-the-money" if, on March 30, 1998, the market price of the
Common Stock ($2.25) exceeded the exercise price of such options. The value of
such options is calculated by determining the difference between the aggregate
market price of the Common Stock covered by such options on March 30, 1998, and
the aggregate price of such options.

Employment Agreements

The Company has employment agreements with both Scott G. Halperin, the
Company's Chairman and Chief Executive Officer and Bernard F. Lillis, Jr, the
Company's Chief Financial Officer and Chief Operating Officer. Reference is made
to exhibits 10 (ae) and 10( af) for all terms and conditions of the agreements,
which are summarized below.

Scott G. Halperin

On August 1, 1997, the Company entered into an employment agreement the
("Halperin Agreement") with Scott G. Halperin. This Halperin Agreement
superseded and replaced Mr. Halperin's previous employment agreement. The
Halperin Agreement provides that Mr. Halperin shall serve as Chairman of the
Board and Chief Executive Officer of the Company from August 1, 1997 through
July 31, 2005. The Employment Agreement provides that the Company shall pay Mr.
Halperin at the annual rate of $220,000 for the initial term of the Employment
Agreement. The Employment Agreement may be renewed by the Company for successive
three year periods commencing on the termination date, by mutual agreement of
the Company and Mr. Halperin provided however that the Company may elect to
terminate the agreement at the end of the term hereof, or the then renewal term,
as the case may be, giving written notice of such non-renewal not

5
<PAGE>

less than 180 days prior to the then current term or the renewal term of the
agreement. Mr. Halperin's base compensation shall be increased annually by
twenty percent from August 1 1998 through July 31, 2001 and by fifteen percent
from August 1, 2001 through July 31 2005. Additionally, Mr. Halperin's base
compensation shall increase by fifteen percent on the date of renewal and
annually thereafter. In addition to his base salary, Mr. Halperin is entitled to
receive additional incentive compensation during each fiscal year in an amount
not less than 2% of the increase in gross revenues of the Company during each
such year as compared to the prior year, commencing with the fiscal year ended
December 31, 1996, and any other bonus the Company's Board of Directors may
award to Mr. Halperin.

As an inducement to enter into the Employment Agreement and without
further payment therefore, Mr. Halperin was granted, upon execution of the
Employment Agreement, options to purchase 195,556 shares of the common stock of
the Company, $.001 par value, at a purchase price equal to the average of the
closing bid prices of the stock for the 5 days prior to the execution of the
Halperin Agreement, which was $1.125 per share.

The Employment Agreement provides that the Company shall pay Mr. Halperin
an automobile expense allowance in the amount of $12,000 per annum. The Company
shall maintain a medical and dental plan for qualified employees that covers Mr.
Halperin, his spouse and his minor children and it shall bear the premiums
related to Mr. Halperin and his family.

The Company may terminate Mr. Halperin for "Cause," which is defined as
(a) willfully damaging the Company's property, (b) conviction of a felony, (c)
willfully engaging in theft, fraud, embezzlement or securities law violations
with respect to the Company, or (d) willfully and substantially failing to
perform his duties under the Employment Agreement (other than a failure
resulting from Mr. Halperin's incapacity due to physical or mental illness).

Mr. Halperin may terminate the Employment Agreement for Good Reason (as
defined below) or if his health should become impaired to an extent that makes
the continued performance of his duties under the Employment Agreement hazardous
to his physical or mental health. "Good Reason" includes, but is not limited to,
failure of the Company to comply with the Company's material obligation and
agreement, or an assignment to Mr. Halperin of any duties or reporting
obligations other than those contemplated by, or any limitation of the powers of
Mr. Halperin in any respect not contemplated by, the Employment Agreement.

Upon the early termination of the Employment Agreement by the Company
(other than for Mr. Halperin's death, his disability or cause) or upon the early
termination of the Employment Agreement by Mr. Halperin for Good Reason, the
Company is required to pay to Mr. Halperin his full base salary through the time
notice of termination is given and a lump sum payment equal to the greater of
(i) the remaining compensation (including incentive compensation) payable to Mr.
Halperin as though the Employment Agreement had been performed through July 31,
2005 or such later date to which the term of the employment has been extended
and (ii) the total compensation earned by Mr. Halperin during the one year
period prior to the date of termination. Under such circumstances, Mr. Halperin
is also entitled to receive all employee benefits until the later of (A) July
31, 2005 or such later date to which the term of the Employment Agreement has
been extended or (B) one year from the date of termination. In addition, all
stock awards and options theretofore awarded or granted to Mr. Halperin shall,
to the fullest extent permitted by applicable law, immediately vest.

6
<PAGE>

The Employment Agreement prohibits Mr. Halperin from disclosing
confidential information or trade secrets of the Company during the term of his
employment under the Employment Agreement and for 12 months thereafter. The
Employment Agreement also prohibits Mr. Halperin from competing, during the
period of his employment under the Employment Agreement and for 12 months
thereafter, within any county (or adjacent county) in any state within the
United States in which the Company is engaged in business during Mr. Halperin's
employment by the Company. However, the restrictions on disclosure and
competition do not apply if the Company terminates Mr. Halperin without Cause or
if Mr. Halperin terminates the Employment Agreement for Good Reason.

The Employment Agreement also grants Mr. Halperin certain demand and
"piggyback" registration rights with respect to the shares of common stock owned
by him.

Mr. Halperin waived cash compensation for 1996 and 1997 in exchange for
additional employee stock options.

Bernard F. Lillis, Jr.

On August 1, 1997, the Company entered into an employment agreement the
("Lillis Agreement") with Bernard F. Lillis, Jr.. The Lillis Agreement provides
that Mr. Lillis shall serve as Chief Financial Officer and Chief Operating
Officer of the Company from August 1, 1997 through July 31, 2005. The Employment
Agreement provides that the Company shall pay Mr. Lillis at the annual rate of
$190,000 for the initial term of the Employment Agreement. The Employment
Agreement may be renewed by the Company for successive three year periods
commencing on the termination date, by mutual agreement of the Company and Mr.
Lillis provided however that the Company may elect to terminate the agreement at
the end of the term hereof, or the then renewal term, as the case may be, giving
written notice of such non-renewal not less than 180 days prior to the then
current term or the renewal term of the agreement. Mr. Lillis's base
compensation shall be increased annually by twenty percent from August 1 1998
through July 31, 2001 and by fifteen percent from August 1, 2001 through July 31
2005. Additionally, Mr. Lillis's base compensation shall increase by fifteen
percent on the date of renewal and annually thereafter. In addition to his base
salary, Mr. Lillis is entitled to receive additional incentive compensation
during each fiscal year in an amount not less than 2% of the increase in gross
revenues of the Company during each such year as compared to the prior year,
commencing with the fiscal year ended December 31, 1996, and any other bonus the
Company's Board of Directors may award to Mr. Lillis.

As an inducement to enter into the Employment Agreement and without
further payment therefore, Mr. Lillis was granted, upon execution of the
Employment Agreement, options to purchase 168,889 shares of the common stock of
the Company, $.001 par value, at a purchase price equal to the average of the
closing bid prices of the stock for the 5 days prior to the execution of the
Lillis Agreement, which was $1.125 per share.

The Employment Agreement provides that the Company shall pay Mr. Lillis an
automobile expense allowance in the amount of $12,000 per annum. The Company
shall maintain a medical and dental plan for qualified employees that covers Mr.
Lillis, his spouse and his minor children and it shall bear the premiums related
to Mr. Lillis and his family.

The Company may terminate Mr. Lillis for "Cause," which is defined as (a)
willfully damaging the Company's property, (b) conviction of a felony, (c)
willfully engaging in theft, fraud,

7
<PAGE>

embezzlement or securities law violations with respect to the Company, or (d)
willfully and substantially failing to perform his duties under the Employment
Agreement (other than a failure resulting from Mr. Lillis's incapacity due to
physical or mental illness).

Mr. Lillis may terminate the Employment Agreement for Good Reason (as
defined below) or if his health should become impaired to an extent that makes
the continued performance of his duties under the Employment Agreement hazardous
to his physical or mental health. "Good Reason" includes, but is not limited to,
failure of the Company to comply with the Company's material obligation and
agreement, or an assignment to Mr. Lillis of any duties or reporting obligations
other than those contemplated by, or any limitation of the powers of Mr. Lillis
in any respect not contemplated by, the Employment Agreement.

Upon the early termination of the Employment Agreement by the Company
(other than for Mr. Lillis's death, his disability or cause) or upon the early
termination of the Employment Agreement by Mr. Lillis for Good Reason, the
Company is required to pay to Mr. Lillis his full base salary through the time
notice of termination is given and a lump sum payment equal to the greater of
(i) the remaining compensation (including incentive compensation) payable to Mr.
Lillis as though the Employment Agreement had been performed through July 31,
2005 or such later date to which the term of the employment has been extended
and (ii) the total compensation earned by Mr. Lillis during the one year period
prior to the date of termination. Under such circumstances, Mr. Lillis is also
entitled to receive all employee benefits until the later of (A) July 31, 2005
or such later date to which the term of the Employment Agreement has been
extended or (B) one year from the date of termination. In addition, all stock
awards and options theretofore awarded or granted to Mr. Lillis shall, to the
fullest extent permitted by applicable law, immediately vest.

The Employment Agreement prohibits Mr. Lillis from disclosing confidential
information or trade secrets of the Company during the term of his employment
under the Employment Agreement and for 12 months thereafter. The Employment
Agreement also prohibits Mr. Lillis from competing, during the period of his
employment under the Employment Agreement and for 12 months thereafter, within
any county (or adjacent county) in any state within the United States in which
the Company is engaged in business during Mr. Lillis's employment by the
Company. However, the restrictions on disclosure and competition do not apply if
the Company terminates Mr. Lillis without Cause or if Mr. Lillis terminates the
Employment Agreement for Good Reason.

The Employment Agreement also grants Mr. Lillis certain demand and
"piggyback" registration rights with respect to the shares of common stock owned
by him.

DIRECTORS' REPORT ON COMPENSATION

The Board of Directors reviews, recommends and approves changes to the
Company's compensation policies and programs and is responsible for reviewing
and approving the compensation of the Chief Executive Officer and other senior
officers of the Company.

The following report shall not be deemed incorporated by reference by any
general statement incorporating by reference this proxy statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.

8
<PAGE>

The Board of Directors is responsible for reviewing the compensation and
benefits of the Company's executive officers concerning compensation and
benefits for such executive officers and administering the Company's stock
option plans.

The Company believes that executive compensation should be based upon
value returned to shareholders. The Company has developed and is developing
compensation programs designed to reflect Company performance and to be
competitive in the marketplace. In designing compensation programs, the Company
attempts to reflect both value created for shareholders while supporting the
Company's strategic goals. The Company's compensation programs reflect the
following themes:

o Compensation should be meaningfully related to the value created for
shareholders

o Compensation programs should support the Company's short-term and
long-term strategic goal and objectives.

o Compensation programs should promote the Company's value and reward
individuals for outstanding contributions to the Company's success.

o Short-term and long-term compensation should be designed to attract
and retain superior executives.

The Company's executive compensation is based upon three components, base
salary, annual incentive bonuses and long-term incentives, which are intended to
serve the overall compensation philosophy.

Base Salary

The base salary of each executive officer is determined as a function of
three principal factors: the individual's performance, the relationship of the
individual's salary to similar executives in comparable companies, and increases
in the individual's responsibilities, whether through promotions or otherwise.

Annual Incentive Bonus

The Company's annual incentive bonuses are designed to reflect the
individual officer's contribution to the profitability of the Company and any
special achievements by the respective officers. Each officer's bonus is based
upon the Company's performance in various areas, such as sales, profit margins,
operating expenses and net income, as compared to a pre-determined plan for each
officer each year.

9
<PAGE>

PERFORMANCE GRAPH

- --------------------------------------------------------------------------------
INDEX VALUES
- --------------------------------------------------------------------------------
Saratoga Brands NASDAQ Market
CSRP Non-Financial Inc. Index
- --------------------------------------------------------------------------------
12/31/93 260.777 84.375 250.210
- --------------------------------------------------------------------------------
12/30/94 250.756 7.500 244.582
- --------------------------------------------------------------------------------
12/29/95 349.472 10.500 345.901
- --------------------------------------------------------------------------------
12/31/96 424.679 2.625 425.440
- --------------------------------------------------------------------------------
12/31/97 498.358 1.438 522.072
- --------------------------------------------------------------------------------
Pct. Ch. 191.105% -98.296% 208.654%
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
GROWTH OF $100
- --------------------------------------------------------------------------------
Saratoga Brands NASDAQ Market
CSRP Non-Financial Inc. Index
- --------------------------------------------------------------------------------
12/31/93 100.000 100.000 100.000
- --------------------------------------------------------------------------------
12/30/94 96.157 8.889 97.751
- --------------------------------------------------------------------------------
12/29/95 134.012 12.444 138.244
- --------------------------------------------------------------------------------
12/31/96 162.851 3.111 170.033
- --------------------------------------------------------------------------------
12/31/97 191.105 1.704 208.654
- --------------------------------------------------------------------------------
Pct. Ch. 191.105% -98.296% 208.654%
- --------------------------------------------------------------------------------

10
<PAGE>

COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
BASED ON REINVESTMENT OF $100 BEGINNING DECEMBER 31, 1993

[GRAPHIC OMITTED]

This graph shall not be deemed incorporated by reference by any general
statement incorporating by reference this proxy statement into any filing under
the Securities Act of 1933 or under the Securities Exchange Act of 1934, except
to the extent that the Company specifically incorporates this graph by
reference, and shall not otherwise be deemed filed under such Acts.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE TO ELECT THE
AFOREMENTIONED NOMINEES TO SERVE ON THE BOARD OF DIRECTORS.

11
<PAGE>

PROPOSAL 2

RATIFICATION OF THE
SELECTION OF INDEPENDENT AUDITORS

The selection of independent auditors to examine the financials statements
of the Company for the fiscal year ending December 31, 1998 to be transmitted or
made available to shareholders and filed with the Securities and Exchange
Commission is to be submitted to the meeting for ratification.

Effective April 24, 1998, the Company dismissed its prior certifying
accountants, Broza, Block & Rubino Certified Public Accountants, PA ("BBR") and
retained as its new certifying accountants, ___________________. BBR's report on
Saratoga's financial statements for the fiscal years ended December 31, 1994
through December 31, 1997, which were the only fiscal years during which BBR was
the certifying accountant for Saratoga, contained no adverse opinions or
disclaimer of opinions, and was not qualified as to uncertainties, audit scope
or accounting principles. The decision to change accountants was approved by the
Board of Directors of Saratoga. As required by applicable rules of the
Securities and Exchange Commission, the Company notified BBR that the Company
was unaware of any disputes between the Company and BBR as to matters of
accounting principles or practices, financial statement disclosure, or audit
scope of procedure, which disagreements, whether or not resolved to the
satisfaction of BBR, would have caused it to make a reference to the subject
matter of the disagreements in connection with its reports and requested BBR to
confirm this.

Effective April , 1998, the Company engaged _______ as its principle
accountants. During the most recent fiscal year end and the subsequent interim
periods to the date hereof, the Company did not consult ____ regarding any of
the matters or events set forth in item 304 (a) (2) and (i) and (ii) of
Regulation S-B.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
RATIFICATION OF ___________________________ AS THE COMPANY'S INDEPENDENT
AUDITORS.

12
<PAGE>

PROPOSAL 3

On April 9 1998, the Board of Directors unanimously adopted a resolution
proposing that the Company change its state of incorporation from New York to
Delaware.

Since the Company has no operations in the state of New York, the Board of
Directors did not see any reason to be incorporated in that state.

The Board of Directors selected Delaware as the new state of incorporation
based upon its well developed body of corporate law.

The Board of Directors does not anticipate any adverse consequences to its
shareholders as a result of the reincorporation in the state of Delaware.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO CHANGE THE COMPANY'S STATE OF
INCORPORATION TO DELAWARE. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE
SO VOTED UNLESS SHAREHOLDERS SPECIFY A DIFFERENT CHOICE.

13
<PAGE>

PROPOSAL 4

The Board of Directors of the Company has directed that, effective April
1, 1997, the Company undergo a quasi-reorganization. A quasi reorganization is
an elective accounting procedure intended to restate assets and liabilities to
current values and eliminate any accumulated deficit in retained earnings.

Subsequent to the March 31, 1997 quarter end the Company reviewed its
financial position as well as the presentation of its balance sheet. The Company
further reviewed its future prospects for profitability, and determined that the
Company could reasonably anticipate profitability for the foreseeable future.
Additionally, the Company believes that a restatement balance sheet would
improve the Company's ability to raise capital through both debt and equity.
Further, the Company consulted and agreed with its accountants concerning the
quasi-reorganization. These and other reasons lead the Company to the decision
that it would be advantageous to restate its balance sheet, revalue its assets
to fair value, and eliminate its retained deficit. In revaluing the Company's
assets the Company reduced its carrying value of goodwill by reviewing the
undiscounted future cash flows of the Company. This procedure resulted in a
reduction in the Company's carrying value of its goodwill in the amount of
$8,023,460, which has been accounted for as a direct shareholders' equity
transaction, rather than as a result of operations. Further, the Company's
accumulated deficit as of April 1, 1997 ($20,956,422) has been eliminated
against Paid-in Capital in Excess of Par Value. This procedure effectively
eliminated the retained deficit at each of the Company's business segments.
Generally Accepted Accounting Principles require that the Company obtain
shareholder approval to affirm the Quasi-Reorganization.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO AFFIRM THE
QUASI-REORGANIZATION EFFECTED APRIL 1, 1997. PROXIES SOLICITED BY THE BOARD OF
DIRECTORS WILL BE SO VOTED UNLESS SHAREHOLDERS SPECIFY A DIFFERENT CHOICE.

14
<PAGE>

PROPOSAL 5

1998 INCENTIVE AND
NON-QUALIFIED STOCK OPTION PLAN

Summary Description of Options and Tax Status

The full text of the 1998 Incentive and Non-Qualified Stock Option Plan
(the "1998 Plan") is set forth as Exhibit A to this Proxy Statement and
reference is made thereto for a complete statement of the terms of that
document.

Shares Reserved for Issuance. Pursuant to the terms of the 1998 Plan,
eight hundred thousand (800,000) shares of the Company's Common Stock are
reserved for issuance thereunder. In the event there is any change in the number
of issued shares of the Common Stock of the Company without new consideration to
the Company (such as by stock dividends or stock splits), the number of shares
reserved for issuance under the 1998 Plan, the number of shares subject to any
outstanding option and the option price per share of each outstanding stock
option shall be appropriately adjusted. Similarly, if the Company shall be party
to a merger, consolidation, reorganization, sale or similar occurrence,
equitable adjustment in the option may be made.

Administration of Plan; Award of Options. The 1998 Plan is administered by
the Board of Directors. Pursuant to its authority, the Board may grant options
to purchase shares of Common Stock reserved under the Plan to all employees of
the Company.

Amendments. The Board of Directors may amend the Plan as it deems
advisable. No amendment may, without further approval of the shareholders of the
Company within twelve months before or after the date on which such amendment
was adopted, (a) increase the total number of shares which may be made subject
to options granted under the 1998 Plan, (b) change the manner of determining the
option price, (c) change the criteria of determining which employees are
eligible to receive options, (d) extend the period during which options may be
granted or exercised, or (e) withdraw the administration of the 1998 Plan from
the Board of Directors.

Vesting. Options granted to employees under the 1998 Plan are to vest and
become exercisable as specified in each grant provided that certain conditions
are satisfied. For a description of these conditions, see the subsection below
entitled "Termination of Employment."

Exercise Period. The options granted to employees under the 1998 Plan may
not be exercised more than ten (10) years after the date of grant or five (5)
years after the date of grant in the case of an incentive option granted to a
10% shareholder.

Termination of Employment. Outstanding incentive stock options must be
exercised during employment with the Company or within three months after
termination of employment with the Company (other than by reason of death or
permanent disability, in which case they must be exercised within three years
after termination). In addition, options are exercisable only to the extent that
they are vested as of the date of termination of employment.

Nontransferability. Each incentive stock option granted under the 1998
Plan is not transferable by the holder except by will or the laws of descent and
distribution of the State wherein the holder is

15
<PAGE>

domiciled at the time of his death. If the administrator makes an option
transferable, such option shall contain additional terms and conditions as the
administrator deems appropriate.

Merger or Asset Sale of the Company. In the case of (i) a merger of the
Company with or into another corporation; or (ii) the sale of substantially all
of the assets of the Company; all outstanding options may be assumed or
equivalent options may be substituted by the successor corporation or a parent
or subsidiary thereof. In the event an option is assumed or substituted for, the
option or substituted option shall continue to be exercisable as it would have
been in the absence of the transaction for so long as the optionee serves as a
employee of the successor corporation. If, following such an assumption or
substitution, the optionee's status as a employee is terminated other than as a
result of his or her voluntary resignation, his or her options shall become
fully exercisable and shall be exercisable for such period during which options
may generally be exercised under the plan by an individual who is no longer an
employee.

Federal Income Tax Treatment of Options. The options to be granted under
the 1998 Plan may be deemed to be qualified or non-qualified within the meaning
of the Code, in the discretion of the Board of Directors. Generally, an optionee
will recognize ordinary income upon exercise of a non-qualified stock option
(or, if the stock subject to the option is restricted within the meaning of Code
83 and the optionee does not otherwise elect to recognize income upon the
exercise of the stock option, at such time as the shares become transferable or
are no longer subject to a substantial risk of forfeiture) in an amount equal to
the excess (if any) of the fair market value of the shares purchased at the time
of exercise over the exercise price. The Company will be entitled to an income
tax deduction in the same amount and at the same time as the optionee recognizes
such income. Upon the sale of shares which were purchased upon the exercise of
an option, the optionee will recognize capital gain or loss measured by the
difference between the amount realized on the sale and the fair market value of
the shares at the time income was previously recognized in connection with the
exercise (or possibly the grant) of the stock option. Such capital gain or loss
will be short-term or long-term, depending upon the length of time the shares
were held by the optionee.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE APPROVAL
AND RATIFICATION OF THE COMPANY'S 1998 INCENTIVE AND NON-QUALIFIED STOCK OPTION
PLAN.

16
<PAGE>

PROPOSAL 6

1998 DIRECTOR
STOCK OPTION PLAN

Summary Description of Options and Tax Status

The full text of the 1998 director stock Option Plan (the "1998 Director
Plan") is set forth as Exhibit B to this Proxy Statement and reference is made
thereto for a complete statement of the terms of that document.

Shares Reserved for Issuance. Pursuant to the terms of the 1998 Director
Plan, two hundred thousand (200,000) shares of the Company's Common Stock are
reserved for issuance thereunder. In the event there is any change in the number
of issued shares of the Common Stock of the Company without new consideration to
the Company (such as by stock dividends or stock splits), the number of shares
reserved for issuance under the 1998 Director Plan, the number of shares subject
to any outstanding option and the option price per share of each outstanding
stock option shall be appropriately adjusted. Similarly, if the Company shall be
party to a merger, consolidation, reorganization, sale or similar occurrence,
equitable adjustment in the option may be made.

Administration of Plan; Award of Options. Options may only be granted to
outside (non-employee) directors under the 1998 Director Plan. The plan provides
that no person shall have any discretion to select which outside directors shall
be granted options or to determine the number of shares to be covered by options
granted to outside directors. Each outside director shall be automatically
granted an option to purchase forty thousand (40,000) shares on the date on
which such person first becomes an outside director, provided, however, that a
director who is an employee and who then ceases to be an employee but who
remains a director, shall not receive such an option. Each outside director
shall also automatically be granted an option to purchase twenty thousand
(20,000) shares on the date following the date of the Company's annual
stockholder's meeting each year, provided he or she is then an outside director.

Amendments. The Board of Directors may amend the 1998 Director Plan as it
deems advisable. However, no amendment shall be made which would impair the
rights of an optionee under any grant theretofore made, without his or her
consent.

Vesting. The options granted shall be immediately exercisable as to 1/12th
of the shares subject thereto and shall become exercisable as to an additional
1/12th of the shares subject thereto each month thereafter, provided that the
optionee continues to serve as an outside director on such date.

Term of Plan. The 1998 Director Plan shall continue in effect for a term
of ten (10) years.

Exercise Period. An option granted to an outside director under the 1998
Director Plan may not be exercised more than ten (10) years after the date on
which the option is granted.

Exercise Price. The exercise price per share shall be the fair market
value of the shares on the date of grant of the option.

Termination of Status as a Director. Outstanding options must be exercised
while the optionee is a director of the Company or within three years after the
termination of optionee's status as a

17
<PAGE>

director. In addition, options are exercisable only to the extent that they are
vested as of the date on which optionee's status as a director terminates and
are in no event exercisable after the expiration of the ten (10) year term of
the option.

Nontransferability. Each option granted under the 1998 Director Plan is
not transferable by the holder except by will or the laws of descent and
distribution and may be exercised, during the lifetime of the optionee, only by
the optionee. If the administrator makes an option transferable, such option
shall contain additional terms and conditions as the administrator deems
appropriate.

Merger or Asset Sale of the Company. In the case of (i) a merger of the
Company with or into another corporation; or (ii) the sale of substantially all
of the assets of the Company; all outstanding options may be assumed or
equivalent options may be substituted by the successor corporation or a parent
or subsidiary thereof. In the event an option is assumed or substituted for, the
option or substituted option shall continue to be exercisable as it would have
been in the absence of the transaction for so long as the optionee serves as a
director of the successor corporation. If, following such an assumption or
substitution, the optionee's status as a director is terminated other than as a
result of his or her voluntary resignation, his or her options shall become
fully exercisable and shall be exercisable for such period during which options
may generally be exercised under the plan by an individual who is no longer an
director.

Federal Income Tax Treatment of Options. The options to be granted under
the 1998 Director Plan are non-qualified within the meaning of the Code.
Generally, an optionee will recognize ordinary income upon exercise of a
non-qualified stock option (or, if the stock subject to the option is restricted
within the meaning of Code 83 and the optionee does not otherwise elect to
recognize income upon the exercise of the stock option, at such time as the
shares become transferable or are no longer subject to a substantial risk of
forfeiture) in an amount equal to the excess (if any) of the fair market value
of the shares purchased at the time of exercise over the exercise price. The
Company will be entitled to an income tax deduction in the same amount and at
the same time as the optionee recognizes such income. Upon the sale of shares
which were purchased upon the exercise of an option, the optionee will recognize
capital gain or loss measured by the difference between the amount realized on
the sale and the fair market value of the shares at the time income was
previously recognized in connection with the exercise (or possibly the grant) of
the stock option. Such capital gain or loss will be short-term or long-term,
depending upon the length of time the shares were held by the optionee.

Options to purchase 40, 000 shares each were granted to Joseph M. Greene,
and Harry J. Friedberg, on February 23, 1998, and March 2, 1998, respectively,
at exercise prices equal to the closing stock price on the dates of grant of
$1.6875 and $1.8125, respectively.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE APPROVAL
AND RATIFICATION OF THE COMPANY'S 1998 DIRECTOR PLAN.

18
<PAGE>

COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934

The Securities Exchange Act of 1934 requires the Company's directors and
executive officers and person who own more than ten percent of a registered
class of the Company's equity securities to file reports of beneficial ownership
and changes in beneficial ownership with the Securities and Exchange Commission.
To the knowledge of the Company, all filing requirements under Section 16(a) in
respect of the Company were complied within the year ended December 31, 1997.

GENERAL

The expense of this solicitation is to be borne by the Company. The
Company may also reimburse persons holding shares in their names or in the names
of their nominees for their expenses in sending proxies and proxy material to
their principals.

Unless otherwise directed, the persons named in the accompanying form of
proxy intend to vote all proxies received by them in favor of the election of
nominees to the Board herein, and the ratification of selected independent
auditors. All proxies will be voted as specified.

Management does not intend to present any business at the meeting other
than that set forth in the accompanying Notice of Annual Meeting, and it has no
information that others will do so. If other matters requiring the vote of the
shareholders properly come before the meeting and any adjournments thereof, it
is the intention of the persons named in the accompanying form of proxy to vote
the proxies held by them in accordance with their judgment on such matters.

SHAREHOLDER PROPOSALS FOR THE 1999 ANNUAL MEETING

Shareholder proposals for inclusion in the proxy materials related to the
1999 Annual Meeting of Shareholders must be received by the Company no later
than December 31, 1998. A Shareholder must have been a record or beneficial
owner of the Company's common stock for at least one year prior to December 31,
1998, and the shareholder must continue to own such shares, worth at least
$1,000, through the date on which the Meeting is held.

The Company's by-laws outline procedures, including minimum notice
provisions, for shareholder nominations of directors and other shareholder
business to be brought before shareholders at the Annual Meeting. A copy of the
pertinent by-laws provisions is available upon request to Bernard F. Lillis,
Jr,, Secretary, Saratoga Brands Inc., 1835 Swarthmore Avenue, Lakewood, New
Jersey 08701.

By order of the Board of Directors

SARATOGA BRANDS INC.

------------------------
BERNARD F. LILLIS, JR.
Secretary

Lakewood, New Jersey
May 1, 1998

19
<PAGE>

EXHIBIT A

SARATOGA BRANDS, INC.

1998 DIRECTOR STOCK OPTION PLAN

1. Purposes of Plan. The purposes of the Saratoga Brands, Inc. 1998
Director Stock Option Plan (hereinafter referred to as the "Plan") are to
provide non-employee directors of Saratoga Brands, Inc. (hereinafter referred to
as the "Corporation"), as well as an opportunity for investment in the
Corporation's common stock (hereinafter referred to as the "Shares"), as an
inducement for such individuals to remain with the Corporation, and to encourage
them to increase their efforts to make the Corporation's business more
successful.

2. Effective Date and Termination of Plan. The effective date of the Plan
is April __, 1998, the date on which the Plan was adopted by the Board of
Directors of the Corporation. The Plan shall terminate on, and no option shall
be granted hereunder, after April __, 2008; provided, however, that the Board of
Directors may at any time prior to that date terminate the Plan; and provided
further that any option granted hereunder prior to the termination of the Plan
shall remain exercisable in accordance with its terms as then in effect.

3. Administration of Plan. The Plan shall be administered by the Board of
Directors of the Corporation. The Board of Directors may, however, to the extent
permissible under the Corporation's Articles of Organization, By-laws and
applicable law, delegate any of its functions under this Plan to a committee of
the Board of Directors or any other committee. Wherever in this Plan the term
"Board of Directors" is used it shall be construed to mean such committee to the
extent that the Board of Directors may have delegated any of its functions to
said committee and only to the extent of any such delegation. The acts of a
majority of the members present at any meeting of the Board of Directors at
which a quorum is present, or acts approved in writing by a majority of the
entire Board, shall be the acts of the Board of Directors for purposes of the
Plan.

4. Eligibility and Grant of Options. Subject to the provisions of the
Plan, incentive stock options to the extent permissible, and the balance in the
form of non-qualified stock options (collectively, the "options") shall be
granted to each non-employee director of the Corporation at the rate of 40,000
shares on the date on which each such person first becomes a director; provided,
however, that a director who is an employee and who then ceases to be an
employee but remains a director shall not receive any such options; and each
such non-employee director shall also be granted an option to purchase 20,000
shares on the date following the date of the Corporation's annual stockholders
meeting each year.

Incentive stock options shall be those options which satisfy the
requirements of Section 422 of the Internal Revenue Code of 1986, as amended and
which the Board of Directors has specifically identified as incentive stock
options in the Stock Option Agreement executed by the Corporation and the
optionee. In the case of incentive stock options, the aggregate fair market
value, determined at the time incentive stock options are granted, of the stock
with respect to which the incentive stock options are exercisable for the first
time by such individual during any calendar year (under all such plans the
Corporation may adopt) shall not exceed one hundred thousand dollars
($100,000.00). In the event that an incentive stock option granted pursuant to
the terms of this Plan is granted to an employee who, prior to the grant, holds
more than ten percent (10%) of the total combined voting power of all classes of
stock of the Corporation, its parent or a subsidiary ("10% Shareholder") the
option price under such grant shall be at least one hundred ten percent (110%)
of the fair market value, and such option, by its terms, shall not be
exercisable more than five (5) years from the date of grant.

Nothing in the Plan or in any option granted pursuant to the Plan shall
confer on any individual any right to continue
<PAGE>

as a director of the Corporation.

5. Number of Shares Subject to Options. The Board of Directors, prior to
the time options under the Plan become exercisable, shall reserve for the
purposes of the Plan a total of Two Hundred Thousand (200,000) Shares, which
Shares may be either authorized and unissued Shares, or previously issued Shares
held in the treasury of the Corporation, or both. Shares as to which an option
granted under the Plan shall remain unexercised at the expiration or termination
thereof, and Shares subject to options which are cancelled, may be the subject
of the grant of further options. Shares reserved pursuant to this paragraph may
be adjusted to reflect changes in the Corporation's capital structure as
discussed in paragraph 19 hereof.

6. Option Price. The option price per Share shall be determined in each
case by the Board of Directors and shall not be less than one hundred percent
(100%) (one hundred ten percent (110%) in the case of an incentive stock option
granted to a 10% Shareholder) of the fair market value thereof as determined by
the Board by any reasonable method using market quotations on the date the
option is granted.

7. Period of Option and When Exercisable. No option may be granted under
this Plan whose exercise date is later than ten (10) years after the date of the
grant or five (5) years after the date of grant in the case of an incentive
stock option granted to a 10% Shareholder. Generally, an option may be exercised
only by the optionee and subject to the rules set forth below only if, at all
times during the period beginning on the date of the granting of such option and
ending with the date of exercise of such option, the optionee is a non-employee
director of the Corporation.

(i) Except as otherwise provided herein, in the case of a director
who terminates his directorship, options which are vested but
unexercised as of the date of termination as a director must
be exercised within three (3) months of termination. In the
case of a director who is discharged for cause, as determined
in the sole discretion of the Board of Directors, all
previously vested but unexercised options shall be forfeited
immediately.

(ii) In the case of a director who dies during the three (3) month
period discussed in (i) above, options which are vested but
unexercised as of the date of termination as a director must
be exercised within twelve (12) months of death.

(iii) Options which are vested but unexercised as of the date of
termination as a director due to death, must be exercised
within twelve (12) months after the death of an optionee.

(iv) In the event that a director becomes disabled as defined in
Section 22(e)(3) of the Internal Revenue Code of 1986, as
amended, options which are vested but unexercised as of the
date of termination as a director due to disability must be
exercised within twelve (12) months following the date of
termination of the optionee's said employment.

(v) In the event an optionee's directorship is terminated for any
reason (including but not limited to, voluntary or involuntary
termination or termination resulting from the death or
disability of the optionee), all unvested options shall be
immediately forfeited.

Notwithstanding the foregoing, options may not be exercised after the
original five (5) or ten (10) year term. Options

2
<PAGE>

may be exercised on behalf of the estate of a former employee by the person or
persons entitled to do so under the optionee's will or, if the optionee shall
have failed to make testamentary disposition of such option or shall have died
intestate, by the optionee's legal representative or representatives. Such
person, persons, representative, or representatives are hereinafter referred to
as the "Successors of an Optionee."

8. Vesting. Options granted to a participant shall be exercisable at the
rate of one-twelfth (1/12) of the shares subject thereto per month after
granting, in order that such options be fully granted after one year; provided
however, that all options shall terminate upon termination of the grantee as a
non-employee director of the Corporation.

9. Exercise of Options. Subject to Plan restrictions and vesting, an
option may be exercised, and payment in full of the option price made, by an
optionee only by written notice (in the form prescribed by the Board of
Directors) to the Corporation specifying the number of Shares to be so
purchased. Such notice shall state that the option price will be paid in full in
cash (which in the discretion of the Board of Directors may be obtained through
a loan from the Corporation or from a third party and guaranteed by the
Corporation) or other property, in the discretion of the Corporation. If the
Corporation accepts a request to pay in stock of the Corporation in satisfaction
of the exercise price, the fair market value of said stock shall at least equal
the option price, and, in the case of incentive stock options, prior to such
acceptance the Corporation must be furnished with evidence that the acquisition
of said stock and its transfer in payment of the option price satisfies the
requirements of Section 422 of the Internal Revenue Code of 1986, as amended and
other applicable law. As soon as practicable after receipt by the Corporation of
such notice and of payment in full of the option price of all the Shares with
respect to which an option has been exercised, a certificate or certificates
representing such Shares shall be registered (subject to the provisions of
paragraph 16 hereof) in the name of the optionee or the Successors of an
Optionee as defined under this Plan and delivered to the optionee or to the
Successors of an Optionee.

10. Sale of the Corporation. In the case of a Sale of the Corporation as
herein defined, in the discretion of the Board of Directors options granted but
unexercised shall become fully vested (100%) and exercisable for a period of
twenty (20) days from the date notice of such Sale is given to the optionees.
Upon the expiration of the twenty (20) day period, all then unexercised options
shall be permanently cancelled. For purposes of this paragraph, a Sale or Public
Offering shall be deemed to occur upon the happening of any one of the
following:

(i) A sale of all or substantially all of the Corporation's assets
outside the ordinary course of business;

(ii) An offer to purchase at least a majority of the Corporation's
issued and outstanding common stock or an offer to the
Corporation's shareholders to tender for sale at least a
majority of the Corporation's issued and outstanding common
stock, which offer is accepted or tender made with respect to
at least a majority of the Corporation's issued and
outstanding shares of common stock;

(iii) The merger or consolidation of the Corporation with another
corporation or entity; or

(iv) A dissolution or liquidation of the Corporation.

3
<PAGE>

by reason of the exercise of such options. The Corporation in its discretion
shall determine the method and amount of withholding.

12. Exercise by Successors and Payment in Full. An option may be
exercised, and payment in full of the option price made, by the Successors of an
Optionee only by written notice (in the form prescribed by the Board of
Directors) to the Corporation specifying the number of Shares to be purchased.
Such notice shall state that the option price will be paid in full in cash
(which in the discretion of the Board of Directors may be obtained through a
loan from the Corporation or from a third party and guaranteed by the
Corporation), property or stock of the Corporation in conformance with paragraph
9 hereof. As soon as practicable after receipt by the Corporation of such notice
and of payment in full of the option price of all the Shares with respect to
which an option has been exercised, a certificate or certificates representing
such Shares shall be registered (subject to the provisions of paragraph 16
hereof) in the name or names of such Successors of an Optionee and shall be
delivered to him.

13. Non-Transferability of Option. Each option granted under the Plan
shall by its terms be nontransferable by the optionee except by will or the laws
of descent and distribution of the state wherein the optionee is domiciled at
the time of his death.

14. Other Terms of Options. Options granted pursuant to the Plan shall
contain such terms, provisions, and conditions not inconsistent herewith as
shall be determined by the Board of Directors.

15. Registration of Certificates. Certificates representing Shares may be
registered either in the name of the Optionee or in the name or names of the
Successors of an Optionee. Designation of the appropriate form of registration
of certificates shall be made in the written notice given to the Corporation
upon exercise of an option.

16. Listing and Registration of Shares. If at any time the Board of
Directors of the Corporation shall determine, in its discretion, that the
listing, registration, or qualification of any of the Shares subject to options
under the Plan upon any securities exchange or under any state or federal law,
or the consent or approval of any governmental regulatory body is necessary or
desirable as a condition of or in connection with the granting of options or the
purchase or issue of Shares thereunder, no further options may be granted and
outstanding options may not be exercised in whole or in part unless and until
such listing, registration, qualification, consent, or approval shall have been
effected or obtained free of any conditions not acceptable to the Board of
Directors. The Board of Directors shall have the authority to cause the
Corporation at its expense to take any action related to the Plan which may be
required in connection with such listing, registration, qualification, consent,
or approval. The Board of Directors may require that any person exercising an
option hereunder shall make such representations and agreements and furnish such
information as it deems appropriate to assure compliance with the foregoing or
any other applicable legal requirement.

17. Interpretation and Amendments. The Board of Directors may make such
rules and regulations and establish such procedures for the administration of
the Plan as it deems appropriate. In the event of any dispute or disagreements
as to the interpretation of this Plan or of any rule, regulation, or procedure,
or as to any question, right or obligation arising from or related to the Plan,
the decision of the Board of Directors shall be final and binding upon all
persons. The Board of Directors may amend this Plan as it shall deem advisable.
However, in no event shall any such amendment adversely affect the rights of an
optionee under any existing stock option agreement without the consent of such
optionee.

4
<PAGE>

18. Indemnification and Exculpation.

(a) Each person who is or shall have been a member of the Board of
Directors shall be indemnified and held harmless by the Corporation against and
from any and all loss, cost, liability, or expense that may be imposed upon or
reasonably incurred by him in connection with or resulting from any claim,
action, suit, or proceeding to which he may be or become a party or in which he
may be or become involved by reason of any action taken or failure to act under
the Plan and against and from any and all amounts paid by him in settlement
thereof (with the Corporation's written approval) or paid by him in satisfaction
of a judgment in any such action, suit, or proceeding, except a judgment in
favor of the Corporation based upon a finding of his lack of good faith;
subject, however, to the condition that upon the institution of any claim,
action, suit, or proceeding against him, he shall in writing give the
Corporation an opportunity, at its own expense, to handle and defend the same
before he undertakes to handle and defend it on his own behalf. The foregoing
right of indemnification shall not be exclusive of any other right to which such
person may be entitled as a matter of law or otherwise, or any power that the
Corporation may have to indemnify him or hold him harmless.

(b) Each member of the Board of Directors, and each officer and
employee of the Corporation shall be fully justified in relying or acting in
good faith upon any information furnished in connection with the administration
of the Plan by any appropriate person or persons other than himself. In no event
shall any person who is or shall have been a member of the Board of Directors,
or an officer or employee of the Corporation be held liable for any
determination made or other action taken or any omission to act in reliance upon
any such information, or for any action (including the furnishing of
information) taken or any failure to act, if in good faith.

19. Changes in Capital Structure. In the event that a dividend shall be
declared upon the Shares payable in Shares, the number of Shares then subject to
any option outstanding under the Plan and the number of Shares reserved for the
grant of options pursuant to the Plan but not yet subject to option shall be
adjusted by adding to each such Share the number of Shares which would be
distributable in respect thereof if such Shares had been outstanding on the date
fixed for determining the shareholders of the Corporation entitled to receive
such Share dividend. In the event that the outstanding Shares shall be changed
into or exchanged for a different number of Shares or other securities of the
Corporation or of another corporation, whether through reorganization,
recapitalization, split-up, combination of shares, merger, or consolidation,
then there shall be substituted for each Share subject to any such option and
for each Share reserved for the grant of options pursuant to the Plan but not
yet subject to option the number and kind of Shares or other securities into
which each outstanding Share shall have been so changed or for which each such
Share shall have been exchanged. In the event there shall be any change, other
than as specified above in this paragraph, in the number or kind of outstanding
Shares or of any shares or other securities into which such Shares shall have
been changed or for which they shall have been exchanged, then if the Board of
Directors shall in its sole discretion determine that such change equitably
requires an adjustment in the number or kind of Shares theretofore reserved for
the grant of options pursuant to the Plan but not yet subject to option and of
the Shares then subject to an option or options, such adjustments shall be made
by the Board of Directors and shall be effective and binding for all purposes of
the Plan and of each option outstanding thereunder. In the case of any such
substitution or adjustment as provided for in this paragraph, the aggregate
option exercise price set forth for all outstanding options for all Shares
covered thereby prior to such substitution or adjustment will be the option
exercise price for all shares or other securities which shall have been adjusted
pursuant to this paragraph. No adjustment or substitution provided for in this
paragraph shall require the Corporation to sell a fractional Share, and the
total substitution or adjustment with respect to each outstanding option shall
be limited accordingly. Upon any adjustment made pursuant to this paragraph, the
Corporation will, upon request, deliver to the optionee or to his

5
<PAGE>

successors a certificate setting forth the option price thereafter in effect and
the number and kind of shares or other securities thereafter purchasable on the
exercise of the option.

20. Notices. All notices under the Plan shall be in writing, and if to the
Corporation, shall be delivered to the Treasurer of the Corporation or mailed to
its principal office, addressed to the attention of the Treasurer; and if to the
optionee, shall be delivered personally or mailed to the optionee at the address
appearing in the payroll records of the Corporation. Such addresses may be
changed at any time by written notice to the other party.

6
<PAGE>

EXHIBIT B

SARATOGA BRANDS, INC.

1998 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN

1. Purposes of Plan. The purposes of the Saratoga Brands, Inc. 1998
Incentive and Non-Qualified Stock Option Plan (hereinafter referred to as the
"Plan") are to provide to employees of Saratoga Brands, Inc. (hereinafter
referred to as the "Corporation"), as well as employees of subsidiary or parent
corporations which may currently exist or be formed or acquired in the future,
an opportunity for investment in the Corporation's common stock (hereinafter
referred to as the "Shares"), as an inducement for such individuals to remain
with the Corporation, and to encourage them to increase their efforts to make
the Corporation's business more successful.

4. Eligibility and Grant of Options. Subject to the provisions of the
Plan, the Board of Directors shall (i) authorize the granting of incentive stock
options, non-qualified stock options or a combination of incentive stock options
and non-qualified stock options (hereinafter collectively referred to as
"options" unless otherwise stated); (ii) determine and designate from time to
time those employees (from the group consisting of all employees of the Company)
to whom options are to be granted and the number of Shares to be optioned to
each employee; (iii) determine the number of Shares subject to each option; and
(iv) determine the time or times when and the manner in which each option shall
be exercisable and the duration of the exercise period. In determining the
eligibility of an individual to receive an option, as well as in determining the
number of Shares to be optioned to any individual, the Board of Directors shall
consider the position and responsibilities of the employee, the nature and value
to the Corporation, parent or subsidiary of his services and accomplishments,
his present and potential contribution to the success of the Corporation, parent
or subsidiary, and such other factors as the Board may deem relevant. To be
eligible to receive an incentive stock option or non-qualified stock option an
individual must be an employee of the Corporation, parent or subsidiary. A
Director shall abstain from voting on the grant of any options to himself, his
spouse, his children, grandchildren and parents. The grant of each option shall
be confirmed by a Stock Option Agreement (in the form prescribed by the Board of
Directors) which shall be executed by the Corporation and the optionee as
promptly as practicable after such grant. More than one option may be granted to
an individual.

Option Agreement executed by the Corporation and the optionee. In the case of
incentive stock options, the aggregate fair market value, determined at the time
incentive stock options are granted, of the stock with respect to which the
incentive stock options are exercisable for the first time by such individual
during any calendar year (under all such plans the Corporation may adopt) shall
not exceed one hundred thousand dollars ($100,000.00). In the event that an
incentive stock option granted pursuant to the terms of this Plan is granted to
an employee who, prior to the grant, holds more than ten percent (10%) of the
total combined voting power of all classes of stock of the Corporation, its
parent or a subsidiary ("10% Shareholder") the option price under such grant
shall be at least one hundred ten percent (110%) of the fair market value, and
such option, by its terms, shall not be exercisable more than five (5) years
from the date of grant.

Nothing in the Plan or in any option granted pursuant to the Plan shall
confer on any individual any right to continue in the employ of the Corporation
or any parent or subsidiary or interfere in any way with the right of the
Corporation to terminate his employment at any time.

5. Number of Shares Subject to Options. The Board of Directors, prior to
the time options under the Plan become exercisable, shall reserve for the
purposes of the Plan a total of Eight Hundred Thousand (800,000) Shares, which
Shares may be either authorized and unissued Shares, or previously issued Shares
held in the treasury of the Corporation, or both. Shares as to which an option
granted under the Plan shall remain unexercised at the expiration or termination
thereof, and Shares subject to options which are cancelled, may be the subject
of the grant of further options. Shares reserved pursuant to this paragraph may
be adjusted to reflect changes in the Corporation's capital structure as
discussed in paragraph 19 hereof.

(i) Except as otherwise provided herein, in the case of an
employee who terminates employment, options which are vested
but unexercised as of the date of termination of employment
must be exercised within three (3) months of termination. In
the case of an employee who is discharged for cause, as
determined in the sole discretion of the Board of Directors,
all previously vested but unexercised options shall be
forfeited immediately.

(ii) In the case of an employee who dies during the three (3) month
period discussed in (i) above, options which are vested but
unexercised as of the date of termination of employment must
be exercised within twelve (12) months of death.

(iii) Options which are vested but unexercised as of the date of
termination of employment due to death, must be exercised
within twelve (12) months after the death of an optionee.

2
<PAGE>

(iv) In the event that the employee becomes disabled as defined in
Section 22(e)(3) of the Internal Revenue Code of 1986, as
amended, options which are vested but unexercised as of the
date of termination of employment due to disability must be
exercised within twelve (12) months following the date of
termination of the optionee's said employment.

(v) In the event an optionee's employment is terminated for any
reason (including but not limited to, voluntary or involuntary
termination or termination resulting from the death or
disability of the optionee), all unvested options shall be
immediately forfeited.

Notwithstanding the foregoing, options may not be exercised after the
original five (5) or ten (10) year term. Options may be exercised on behalf of
the estate of a former employee by the person or persons entitled to do so under
the optionee's will or, if the optionee shall have failed to make testamentary
disposition of such option or shall have died intestate, by the optionee's legal
representative or representatives. Such person, persons, representative, or
representatives are hereinafter referred to as the "Successors of an Optionee."

8. Vesting. Options granted to a participant shall be exercisable pursuant
to vesting schedules established for individual grants by the Board of Directors
or a committee thereof.

(i) A sale of all or substantially all of the Corporation's assets
outside the ordinary course of business;

(ii) An offer to purchase at least a majority of the Corporation's
issued and outstanding common stock

3
<PAGE>

or an offer to the Corporation's shareholders to tender for
sale at least a majority of the Corporation's issued and
outstanding common stock, which offer is accepted or tender
made with respect to at least a majority of the Corporation's
issued and outstanding shares of common stock;

(iii) The merger or consolidation of the Corporation with another
corporation or entity; or

(iv) A dissolution or liquidation of the Corporation.

11. Employer Withholding. In the case of non-qualified stock options, the
Corporation shall be required to withhold additional income taxes attributable
to that amount which is considered compensation includible in the optionee's
gross income by reason of the exercise of such options. The Corporation in its
discretion shall determine the method and amount of withholding.

14. Other Terms of Options. Options granted pursuant to the Plan shall
contain such terms, provisions, and conditions not inconsistent herewith as
shall be determined by the Board of Directors.

4
<PAGE>

approval. The Board of Directors may require that any person exercising an
option hereunder shall make such representations and agreements and furnish such
information as it deems appropriate to assure compliance with the foregoing or
any other applicable legal requirement.

18. Indemnification and Exculpation.

5
<PAGE>

such Shares shall have been changed or for which they shall have been exchanged,
then if the Board of Directors shall in its sole discretion determine that such
change equitably requires an adjustment in the number or kind of Shares
theretofore reserved for the grant of options pursuant to the Plan but not yet
subject to option and of the Shares then subject to an option or options, such
adjustments shall be made by the Board of Directors and shall be effective and
binding for all purposes of the Plan and of each option outstanding thereunder.
In the case of any such substitution or adjustment as provided for in this
paragraph, the aggregate option exercise price set forth for all outstanding
options for all Shares covered thereby prior to such substitution or adjustment
will be the option exercise price for all shares or other securities which shall
have been adjusted pursuant to this paragraph. No adjustment or substitution
provided for in this paragraph shall require the Corporation to sell a
fractional Share, and the total substitution or adjustment with respect to each
outstanding option shall be limited accordingly. Upon any adjustment made
pursuant to this paragraph, the Corporation will, upon request, deliver to the
optionee or to his successors a certificate setting forth the option price
thereafter in effect and the number and kind of shares or other securities
thereafter purchasable on the exercise of the option.