<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Silverado Foods, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Not Applicable
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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Notes:
<PAGE>
SILVERADO FOODS, INC.
6846 SOUTH CANTON, SUITE 110
TULSA, OKLAHOMA 74136
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 9, 1997
To the Shareholders of
SILVERADO FOODS, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Silverado
Foods, Inc., an Oklahoma corporation (the "Company"), will be held at the
Company's Tulsa Manufacturing Plant, 3920 East Pine Street, Tulsa, Oklahoma, on
Friday, May 9, 1997, at 10:00 a.m., local time, for the following purposes:
1. To elect seven directors for one-year terms;
2. To consider and act upon a proposal to ratify the appointment of Arthur
Andersen LLP as the independent public accountants of the Company for
1997; and
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Directors has fixed the close of business on April 1, 1997, as
the record date for the meeting, and only holders of the Company's Common Stock
of record at such time will be entitled to vote at the meeting or any
adjournment thereof. A complete list of the shareholders entitled to vote at
the meeting will be open to the examination of any shareholder, for any purpose
germane to the meeting, during ordinary business hours for a period of ten days
prior to the date of the meeting at the offices of the Company and at the time
and place of the meeting.
By Order of the Board of Directors,
/s/ DORVIN D. LIVELY
Dorvin D. Lively
Secretary
Tulsa, Oklahoma
April 17, 1997
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. WHETHER OR
NOT YOU PLAN TO ATTEND THE MEETING, PLEASE MARK, SIGN, DATE AND RETURN THE
ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES. IF YOU DO ATTEND THE MEETING, YOU MAY WITHDRAW YOUR PROXY AND
VOTE IN PERSON.
<PAGE>
SILVERADO FOODS, INC.
6846 SOUTH CANTON, SUITE 110
TULSA, OKLAHOMA 74136
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 9, 1997
SOLICITATION AND REVOCATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Silverado Foods, Inc., an Oklahoma corporation (the
"Company"), of proxies to be voted at the Annual Meeting of Shareholders of the
Company to be held on May 9, 1997, or at any adjournment thereof (the "Annual
Meeting"), for the purposes set forth in the accompanying Notice of Annual
Meeting. This Proxy Statement and accompanying proxy were first forwarded on or
about April 17, 1997, to shareholders of record on April 1, 1997.
If the accompanying proxy is properly executed and returned, the shares
represented by the proxy will be voted at the Annual Meeting. If a shareholder
indicates in his or her proxy a choice with respect to any matter to be acted
upon, that shareholder's shares will be voted in accordance with such choice.
If no choice is indicated, such shares will be voted "FOR" (a) the election of
all of the nominees for directors listed below, and (b) the ratification of the
appointment of the independent public accountants. A shareholder giving a proxy
may revoke it by giving written notice of revocation to the Secretary of the
Company at any time before it is voted, by executing another valid proxy bearing
a later date and delivering such proxy to the Secretary of the Company prior to
or at the Annual Meeting, or by attending the Annual Meeting and voting in
person.
The expenses of this proxy solicitation, including the cost of preparing
and mailing this Proxy Statement and accompanying proxy will be borne by the
Company. Such expenses will also include the charges and expenses of banks,
brokerage firms, and other custodians, nominees or fiduciaries for forwarding
solicitation material regarding the Annual Meeting to beneficial owners of the
Company's Common Stock. Solicitation of proxies may be made by mail, telephone,
personal interviews or by other means by the Board of Directors or employees of
the Company who will not be additionally compensated therefor, but who may be
reimbursed for their out-of-pocket expenses in connection therewith.
SHAREHOLDERS ENTITLED TO VOTE
Shareholders of record at the close of business on April 1, 1997 (the
"Record Date"), will be entitled to vote at the Annual Meeting. As of the
Record Date, there were issued and outstanding 7,632,299 shares of Common Stock,
par value $0.01 per share (the "Common Stock"), of the Company. Each share of
Common Stock is entitled to one vote. There is no cumulative voting with
respect to the election of directors. The presence in person or by proxy of the
holders of a majority of the shares issued and outstanding at the Annual Meeting
will constitute a quorum for the transaction of business. Votes withheld from
nominees for directors, abstentions and broker non-votes will be counted for
purposes of determining whether a quorum has been reached. Votes will be
tabulated by an inspector of election appointed by the Board of Directors of the
Company. With regard to the election of directors, votes may be cast in favor
of or withheld from each nominee; votes that are withheld will be excluded
entirely from the vote and will have no effect. Abstentions, which may be
specified on all proposals except the election of directors, will have the
effect of a negative vote. Under applicable Oklahoma law, a broker non-vote
will have no effect on the outcome of the election of directors or the other
proposals.
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
Shareholder action will be requested at the Annual Meeting with respect to
the re-election of each of the current members of the Board of Directors of the
Company (the "Board of Directors"). The Amended and Restated Bylaws (the
"Bylaws") of the Company provide that the Board of Directors shall consist of
not less than one nor more than nine directors, as determined from time to time
by resolution of the Board of Directors. The number of directors is currently
fixed at seven. The term of all of the members of the Board of Directors,
consisting of Lawrence D. Field, Gerald E. Milton, James K. Tolbert, Milton D.
McKenzie, Sam L. Susser, James H. Bankard and Timothy G. Bruer, will expire at
the Annual Meeting, and the accompanying proxy solicits your vote for seven
directors.
The Board of Directors has nominated Lawrence D. Field, Gerald E. Milton,
James K. Tolbert, Milton D. McKenzie, Sam L. Susser, James H. Bankard and
Timothy G. Bruer, for re-election as directors. The persons named as proxies in
the accompanying proxy, who have been designated by the Board of Directors,
intend to vote, unless otherwise instructed in such proxy, for the election of
Messrs. Field, Milton, Tolbert, McKenzie, Susser, Bankard and Bruer. Should any
nominee named herein become unable for any reason to stand for election as a
director of the Company, it is intended that the persons named in such proxy
will vote for the election of such other person or persons as the Board of
Directors may recommend. The Company knows of no reason why any of the nominees
will be unavailable or unable to serve. A plurality of the votes cast is
required for the election of directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE FOLLOWING
NOMINEES FOR DIRECTORS.
NOMINEES FOR DIRECTORS
TERM EXPIRES AT THE 1998 ANNUAL MEETING OF SHAREHOLDERS
Lawrence D. Field, age 37, the founder of the Company, has been a Director
and Chairman of the Board of Directors of the Company since its inception in
August 1990. He was also Chief Executive Officer of the Company from August 1990
to March 1997 and President of the Company from August 1990 to February 1994.
Mr. Field has also served as President of Regent Private Capital Corp, an
investment company, since February 1990. From September 1984 to February 1990,
Mr. Field was Vice President and a shareholder of Capital Advisors, Inc., an
investment management firm headquartered in Tulsa, Oklahoma, which managed
investments for pension and profit sharing plans, foundations and individuals in
the United States. From August 1982 to September 1984, Mr. Field served as Vice
President of American Central Oil Corporation, an independent oil and gas
company. Mr. Field graduated from the University of Texas at Austin in 1982 with
a Bachelor of Science degree in Communications.
Timothy G. Bruer, age 39, joined the Company as a Director, Chief Executive
Officer and President in March 1997. Immediately prior to joining the Company,
Mr. Bruer served as Vice President/General Manager of the Culinary Division of
Nestle USA. He joined Nestle in 1992 as Vice President of Business Development.
From 1985 to 1992, he was a partner with Bain and Company, Inc., a national
consulting firm. Mr. Bruer graduated from Stanford University in 1979 with a
Bachelor of Arts degree in Economics and from the University of Chicago in 1985
with a Master of Business Administration degree.
Gerald E. Milton, age 53, has been a Director of the Company since January
1994, and served as President of the Company from February 1994 until March
1997. He also served as Chief Financial Officer of the Company from June 1993
until February 1995. From May 1989 to June 1993, Mr. Milton worked as an
independent consultant and investor. From August 1987 to October 1989, he served
as President and Chief Executive Officer of Engineered Films, Inc., a
manufacturer of industrial packaging films. From September 1980 to August 1986,
Mr. Milton was Chief Financial Officer of Linear Films, Inc., a manufacturer of
industrial packaging films. He
-2-
<PAGE>
graduated from Oklahoma State University with a Bachelor of Science degree in
Business and a Master of Business Administration.
James K. Tolbert, age 40, joined the Company as a Director in November
1990. Mr. Tolbert has been President of Tolbert Enterprises, Inc. in Tulsa,
Oklahoma, a company which owns and operates several restaurants in Oklahoma and
Texas, since April 1986. Prior to that time, he was a Land Manager of Texas Oil
& Gas Corp., an independent oil and gas company, for seven years. He has a
Bachelor of Business Administration--Management degree from the University of
Oklahoma.
Milton D. McKenzie, age 60, joined the Company as a Director in November
1990. He has been Chairman of the Board of Directors of GPM, Inc. and its
predecessors, the General Partner of CAPMAC Eight-Two Limited Partnership
("CAPMAC"), since October 1983. CAPMAC is an investment company specializing in
oil and gas exploration. From February 1970 to October 1983, he was President
and/or Chairman of the Board of Directors of Viking Petroleum, Inc., an oil and
gas exploration and production company located in Tulsa, Oklahoma. He has a
Juris Doctor from the University of Denver Law School and an Engineering degree
from Tulsa University.
Sam L. Susser, age 33, joined the Company as a Director in November 1990.
In 1995, Mr. Susser became President and Chief Executive Officer of SSP, a joint
venture of The Circle K Corporation and The Southguard Corporation
("Southguard"), which operates 172 convenience stores. Mr. Susser has been
Chief Executive Officer of Southguard Corporation ("Southguard") since January
1991, and served as Vice President, General Manager and Chief Financial Officer
of Southguard from its founding in 1988 until January 1991. Prior to 1988, he
was with the investment banking firm of Salomon Brothers Inc in New York, New
York, for three years. Mr. Susser graduated from the University of Texas at
Austin in 1985 with a Bachelor of Business Administration in Finance degree.
James H. Bankard, age 52, joined the Company as a Director in November
1996. Also in 1996, Mr. Bankard became President and Chief Operating Officer of
Home Juice Company, a supplier and manufacturer of a variety of juice beverage
products for the retail food industry. From 1988 to 1995, he was employed by
the Quaker Oats Corporation serving for a period as President of the Continental
Coffee Products Company and then as President of Quaker Beverage Company. From
1973 to 1988, Mr. Bankard was employed by CFS Continental, Inc./Continental
Coffee Products Co., serving in various general management and senior management
positions. Mr. Bankard has a Bachelor of Science degree in Industrial
Administration from Yale University and a Master of Business Administration from
the Harvard Business School.
The Company has agreed, for a period of three years from August 4, 1994, if
so requested by Commonwealth Associates, the representative of the several
underwriters in the Company's initial public offering, to nominate and use its
best efforts to elect a designee of Commonwealth Associates as a Director of the
Company. At the present time, however, Commonwealth Associates has not
requested that a designee of Commonwealth Associates be elected to the Company's
Board of Directors.
COMPENSATION OF DIRECTORS
Each Director of the Company is reimbursed for expenses incurred in
attending meetings of the Board of Directors and meetings of committees of the
Board of Directors. The Directors currently do not receive any additional fees
for their services as Directors of the Company. The Company's Bylaws provide
that the Company shall indemnify its Directors and officers to the fullest
extent permitted by Oklahoma law. The Company has also entered into
indemnification agreements with and carries liability insurance on behalf of all
of its Directors.
-3-
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During 1996, the Board of Directors held four meetings. Each of the
incumbent Directors who served as a Director during 1996 attended at least 75%
of the total number of meetings of the Board of Directors and meetings of
committees on which he served during his tenure as a Director. In addition, the
Board of Directors took action four times during 1996 by unanimous written
consent. The Board of Directors has previously established an Executive
Committee, an Audit Committee, a Compensation Committee and a Stock Option
Committee; however, as of February 1996, the Board of Directors determined that
the Executive Committee was no longer necessary and such committee was
dissolved.
The Audit Committee was composed during 1996 of Messrs. Susser, Joe D.
Tippens, a Director of the Company until March 1997, and David A. Hentschel, a
Director of the Company until October 1996. For 1997, the Audit Committee will
be composed of Messrs. Susser, McKenzie and Bankard. The Audit Committee is
comprised entirely of independent Directors and recommends to the Board of
Directors the appointment of the Company's independent public accountants. The
Audit Committee reviews the plan and scope of the annual audit of the Company's
financial statements, as well as the Company's significant accounting policies
and other related matters. The Audit Committee met once during 1996. All of
the members of the Audit Committee were present at such meeting.
The Compensation Committee was composed during 1996 of Messrs. Milton,
McKenzie and Tolbert. For 1997, such committee will be composed of Messrs.
Susser, Tolbert and Bankard. The Compensation Committee makes recommendations
to the Board of Directors regarding the compensation of executive officers of
the Company and administers the Company's employee benefit plans other than the
Company's 1994 Stock Option Plan. During 1996, two of the three members of the
Compensation Committee were independent directors. The Compensation Committee
met once during 1996. All of the members of the Compensation Committee were
present at such meeting.
The Stock Option Committee was composed during 1996 of Messrs. McKenzie,
Tolbert and Tippens. Such committee is presently composed of Messrs. Susser,
Tolbert and Bankard. The Stock Option Committee administers the Company's 1994
Stock Option Plan and is comprised entirely of independent Directors. The Stock
Option Committee met once during 1996. All of the members of the Stock Option
Committee were present at such meeting.
The Company does not have a standing Nominating Committee. Nominations of
candidates for election as Directors of the Company may be made at a meeting of
shareholders by or at the direction of the Board of Directors or by any
shareholder entitled to vote at such meeting. The Company's Bylaws provide that
the annual meeting of shareholders to be held each year will be on the second
Friday in May.
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Upon the recommendation of the Audit Committee, the Board of Directors has
appointed Arthur Andersen LLP as the independent public accountants of the
Company for the fiscal year ending December 31, 1997. Arthur Andersen LLP has
been the independent public accountants of the Company since 1992. A proposal
will be presented at the Annual Meeting asking the shareholders to ratify the
appointment of Arthur Andersen LLP as the Company's independent public
accountants. If the shareholders do not ratify the appointment of Arthur
Andersen LLP, the Board of Directors will reconsider the appointment.
The affirmative vote of a majority of the shares present in person or by
proxy at the Annual Meeting and entitled to vote is required for the adoption of
this proposal.
-4-
<PAGE>
A representative of Arthur Andersen LLP will be present at the Annual
Meeting. Such representative will be given the opportunity to make a statement
if he desires to do so and will be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF ARTHUR
ANDERSEN LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR 1997.
PRINCIPAL SHAREHOLDERS AND
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information as of March 18, 1997,
regarding the ownership of the Company's Common Stock by (a) all persons known
by the Company to be beneficial owners of more than five percent of such stock,
(b) each director and nominee for director of the Company, (c) each of the
executive officers of the Company named in the Summary Compensation Table below,
and (d) all executive officers and directors of the Company as a group. Unless
otherwise noted, the persons named below have sole voting and investment power
with respect to such shares.
<TABLE>
<CAPTION>
SHARES PERCENT
NAME OF OWNER OR IDENTITY OF GROUP BENEFICIALLY OWNED(1) OF CLASS(1)
- ---------------------------------- ------------------------- -----------
<S> <C> <C>
Lawrence D. Field
6846 South Canton, Suite 110
Tulsa, Oklahoma 74136....................................... 2,485,566(2) 30.0%
ML Oklahoma Venture Partners, Limited Partnership
5100 East Skelly Drive, Suite 1060
Tulsa, Oklahoma 74135....................................... 717,802(3) 9.5%
The Texas Growth Fund--1991 Trust
100 Congress Avenue, Suite 980
Austin, Texas 78701......................................... 450,000(4) 6.0%
Milton D. McKenzie
5727 South Lewis, Suite 125
Tulsa, Oklahoma 74105....................................... 470,603(5) 6.2%
Gerald E. Milton.............................................. 95,880(6) 1.3%
James K. Tolbert.............................................. 19,800 *
Sam L. Susser................................................. 6,525 *
Timothy G. Bruer.............................................. -0- --
James H. Bankard.............................................. -0- --
Dorvin D. Lively.............................................. 15,608(7) *
Richard A. Hall............................................... 1,500 *
Robert W. Luttman............................................. -0- --
All executive officers and directors as a group (11 persons).. 3,095,482(8) 37.0%
</TABLE>
* Represents less than 1% of the Common Stock outstanding.
(1) Shares of Common Stock which were not outstanding but which could be
acquired by a person upon exercise of an option or warrant within 60 days
of March 18, 1997, are deemed outstanding for the purpose of computing
the number of shares and the percentage of outstanding shares
beneficially owned by such person. However, such shares are not deemed to
be outstanding for the purpose of computing the percentage of outstanding
shares beneficially owned by any other person.
(2) Includes 686,940 shares owned by Regent Private Capital Corp. ("Regent"),
with respect to which Mr. Field has sole voting and investment control as
the controlling shareholder thereof, 76,547 shares purchasable pursuant
to presently exercisable stock purchase warrants held by Mr. Field and
Regent, and 22,500 shares owned by Legacy Investment Partnership, a
partnership in which Mr. Field shares voting and investment control over
such shares, 659,076 shares which may be acquired pursuant to a presently
convertible debenture
-5-
<PAGE>
held by Mr. Field, and 2,961 shares held by the Silverado Foods, Inc.
401(k) Plan which are allocated to the account of Mr. Field.
(3) Includes 12,121 shares purchasable pursuant to presently exercisable
stock purchase warrants. MLOK Co., Limited Partnership is the managing
general partner of ML Oklahoma Venture Partners, Limited Partnership ("ML
Oklahoma"). Merrill Lynch Venture Capital Inc., an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. is the sole general partner of
MLOK Co., Limited Partnership. Merrill Lynch & Co., Inc. is a widely-held
public company. MLOK Co., Limited Partnership, Merrill Lynch Venture
Capital Inc. and Merrill Lynch & Co., Inc. may be deemed to be the
beneficial owners of these shares. Merrill Lynch & Co., Inc. disclaims
beneficial ownership of these shares.
(4) TGF Management Corp. is the Executive Director of The Texas Growth Fund-
1991 Trust ("Texas Growth Fund"). However, sole investment and voting
power with respect to these shares is exercised by the Board of Trustees
of the Texas Growth Fund which is comprised of nine individuals who are
selected in accordance with certain statutorily defined procedures.
(5) Includes 191,250 shares owned by CAPMAC Eighty-Two Limited Partnership
("CAPMAC"), with respect to which Mr. McKenzie has sole voting and
investment control of the general partner, and 76,923 shares which may be
acquired pursuant to a presently convertible debenture held by CAPMAC.
(6) Includes 6,061 shares purchasable pursuant to presently exercisable stock
purchase warrants.
(7) Includes 10,000 shares purchasable pursuant to presently exercisable
stock options and 708 shares held by the Silverado Foods, Inc. 401(k)
Plan which are allocated to the account of Mr. Lively.
(8) Includes 828,607 shares purchasable pursuant to presently exercisable
stock options and stock purchase warrants and which may be acquired
pursuant to presently convertible debentures.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information with respect to the
compensation of the Company's Chief Executive Officer and each of the Company's
other executive officers whose cash compensation, based on salary and bonus,
exceeded $100,000 during 1996, for services in all capacities to the Company and
its subsidiaries during each of the Company's last three fiscal years. No
information is given as to any person for any fiscal year during which such
person was not an executive officer of the Company.
-6-
<PAGE>
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------ ----------------------- ----------
SECURITIES
RESTRICTED UNDERLYING LONG-TERM
OTHER ANNUAL STOCK OPTIONS/ INCENTIVE ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARD(S) SARS PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($)(1) ($) (#)(2) ($) ($)
- ----------------------------- ---- -------- ------ ------------ ---------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lawrence D. Field,
Chairman and Chief
Executive Officer ........ 1996 106,607 --0-- --0-- --0-- --0-- --0-- --0--
1995 100,000 --0-- --0-- --0-- 15,000(3) --0-- --0--
1994 82,154 --0-- --0-- --0-- 45,000(4) --0-- --0--
Gerald E. Milton,
President................... 1996 100,563 --0-- --0-- --0-- --0-- --0-- --0--
1995 100,000 --0-- --0-- --0-- 15,000(3) --0-- --0--
1994 90,431 --0-- --0-- --0-- 45,000(4) --0-- --0--
Dorvin D. Lively,
Vice President, Chief
Financial Officer and
Secretary................... 1996 124,602 --0-- --0-- --0-- --0-- --0-- --0--
1995 110,492 --0-- --0-- --0-- 20,000(5) --0-- --0--
Richard A. Hall,
Vice President of
Operations.................. 1996 114,365 --0-- --0-- --0-- --0-- --0-- --0--
1995 13,462 --0-- --0-- --0-- --0-- --0-- --0--
Robert W. Luttman,
President of Silverado 1996 114,463 --0-- --0-- --0-- --0-- --0-- --0--
Marketing Services, Inc. 1995 23,077 --0-- --0-- --0-- --0-- --0-- --0--
</TABLE>
- -----------
(1) Does not include the value of perquisites and other personal benefits
because the aggregate amount of such compensation, if any, does not exceed
the lesser of $50,000 or 10 percent of the total amount of annual salary
and bonus for any individual named.
(2) Consists solely of options to acquire shares of Common Stock.
(3) Such option is subject to vesting upon the achievement of an earnings
target for 1997.
(4) Such option was to vest in one third increments over three years in the
event certain earnings targets are met. The earnings targets were not
achieved, and thus none of such shares presently remain available for
vesting.
(5) Consists of two separate options, each of which provides for the option to
purchase 10,000 shares of Common Stock. One of such options was subject to
vesting upon the achievement of a certain earnings target for 1995 which
was not met.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The Company did not grant any options to the named executive officers of the
Company during fiscal 1996. The Company has never granted any stock
appreciation rights.
-7-
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
The following table sets forth certain information with respect to options
exercised by the named executive officers of the Company during fiscal 1996, and
the number and value of unexercised options held by such executive officers at
the end of the fiscal year. The Company has never granted any stock appreciation
rights.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY
ACQUIRED OPTIONS/SARS AT FY-END OPTIONS/SARS AT FY-END
ON VALUE (#)(2) ($)(1)(3)
EXERCISE REALIZED ---------------------------- ---------------------------
NAME (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------ --------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Lawrence D. Field --0-- --0-- --0-- 15,000 --0-- --0--
Gerald E. Milton 78,750 120,488 --0-- 15,000 --0-- --0--
Dorvin D. Lively --0-- --0-- 10,000 --0-- --0-- --0--
Richard A. Hall --0-- --0-- --0-- --0-- --0-- --0--
Robert W. Luttman --0-- --0-- --0-- --0-- --0-- --0--
</TABLE>
- -------------------------
(1) Market value of the underlying securities at exercise date or fiscal year-
end, as the case may be, minus the option exercise price.
(2) Does not include option shares pursuant to the Company's 1994 Stock Option
Plan which failed to vest in 1996.
(3) The closing price of the Common Stock on the American Stock Exchange on
December 31, 1996, the last trading day of the fiscal year, was $2.75.
EMPLOYMENT AGREEMENTS AND CHANGE
IN CONTROL ARRANGEMENTS
The Company does not currently have any employment agreements or change in
control arrangements with the executive officers named in the compensation
tables shown above.
REPORT OF THE COMPENSATION COMMITTEE OF THE
BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors administers the Company's
executive compensation program with respect to current salaries. During 1996,
the Committee was comprised of two outside Directors (Messrs. McKenzie and
Tolbert) and the President of the Company (Mr. Milton). The Stock Option
Committee administers the Company's executive compensation program with respect
to all stock options. During 1996, the Stock Option Committee was comprised of
three outside Directors (Messrs. McKenzie, Tippens and Tolbert). All decisions
of the Compensation Committee relating to the compensation of the executive
officers of the Company are reviewed by the full Board of Directors.
A 1993 amendment to the Internal Revenue Code of 1986, as amended, provides
that no publicly held company shall be permitted to deduct from its income taxes
compensation exceeding $1 million paid to its chief executive officer or any of
its four other highest paid executive officers unless (a) the compensation is
payable solely on account of the attainment of performance goals, (b) the
performance goals are determined by a compensation committee of two or more
outside directors, (c) the material terms under which the compensation is paid
are disclosed to and approved by the stockholders, and (d) the compensation
committee certifies that the performance goals were met. Neither the
Compensation Committee, the Stock Option Committee nor the Company expects this
amendment to have an impact, or result in the loss of a deduction, with respect
to compensation paid to such executive officers, including stock options granted
to such executive officers.
Overall Executive Compensation. Since inception, the Company has believed in
compensating its executives based on the merits of their performance, with
special weighting placed on long-term incentives based upon increases
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<PAGE>
in the equity value of the Company. For this reason, executive compensation
generally consists of current salary and stock options. In most cases, there is
no incentive plan which generates current income, either in the form of salary
adjustments or bonus awards.
Salary. The Compensation Committee reviews executive salaries on an as needed
basis, usually not more than once each year. In developing a recommendation for
the Board of Directors concerning the compensation levels for the executive
officers, the Compensation Committee believes there is necessarily some
subjectivity required and therefore does not follow specific objective
performance criteria when recommending salaries. In determining appropriate
salary levels for 1996, the Compensation Committee primarily considered the
individual's past performance, the performance of the Company to date, the
individual's contribution to that performance and the immediate goals of the
Company. The Compensation Committee also considered the executive's level and
scope of responsibility, experience, internal equity of the Company's executive
compensation program and the compensation practices of other high growth,
acquisition companies in related industries for executives of similar
responsibility.
Stock Options. The Company relies heavily on stock options to compensate its
executive officers and believes that stock options encourage and reward
effective management that results in long-term corporate financial success, as
measured by stock price appreciation. The Stock Option Committee administers
the Company's 1994 Stock Option Plan and the decisions concerning the issuance
of stock options as a part of executive compensation. Options are awarded based
upon the individual's performance and contribution to the overall growth and
financial success of the Company. The Stock Option Committee anticipates that
stock options issued under the Plan will generally vest upon the achievement of
annual earnings targets as adopted by the Board of Directors. No stock options
were granted during 1996. Previously issued options which were subject to
vesting based on annual earnings targets for 1996 did not vest and expired
unexercised because the 1996 targets were not met.
Compensation of Key Executives. Mr. Field and Mr. Milton, the Chairman/CEO
and the President during 1996, respectively, received no increase in their
respective salaries during 1996. Neither executive received any type of cash
bonus. The Compensation Committee and the Stock Option Committee believe these
levels of compensation are below average when compared to executives holding
similar responsibilities in similar companies.
Compensation Committee Stock Option Committee
---------------------- ----------------------
Gerald E. Milton Milton D. McKenzie
Milton D. McKenzie Joe D. Tippens
James K. Tolbert James K. Tolbert
This Report on Executive Compensation 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, as amended, or the
Securities Exchange Act of 1934, as amended, except to the extent that the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1996, the Company's Compensation Committee was composed of Gerald E.
Milton, Milton D. McKenzie and James K. Tolbert. During 1996, Mr. Milton was
President and a Director of the Company, while Messrs. McKenzie and Tolbert
served the Company as independent Directors.
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<PAGE>
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the cumulative
total shareholder return on the Company's Common Stock during the period
commencing August 4, 1994 (the date on which the Company's Common Stock began
trading publicly), and ending on December 31, 1996, with the cumulative total
return on the S&P 500 Index and an index of peer companies (weighted by market
capitalization) selected by the Company. Companies in the peer group are as
follows: Bridgford Foods Corp., Brothers Gourmet Coffee, Inc., Celestial
Seasonings, Inc., Hain Food Group, Inc., J&J Snack Foods Corp. and Tasty Baking
Co. The comparison assumes $100 was invested on August 4, 1994, in the
Company's Common Stock and in each of the foregoing indices and assumes
reinvestment of dividends.
[PERFORMANCE GRAPH APPEARS HERE]
YEARS ENDING
COMPANY/INDEX 8/4/94 DEC94 DEC95 DEC96
======================================================
S&P 500 INDEX 100 101.18 139.20 171.16
SILVERADO FOODS INC 100 62.50 39.29 39.29
PEER GROUP 100 102.67 86.14 89.25
The above performance 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, as amended, or the Securities Exchange
Act of 1934, as amended, except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
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<PAGE>
CERTAIN TRANSACTIONS
From time to time, Lawrence D. Field, the Chairman of the Board of Directors
of the Company, has provided financing to the Company. For 1996, the largest
amount of indebtedness to Mr. Field was $8,927,000, the amount of indebtedness
incurred was $8,884,000, the amount of indebtedness repaid was $250,000, and the
amount of indebtedness at year-end was $8,927,000. The amount of indebtedness
as of March 15, 1997, was $8,319,000. $6,177,000 of such indebtedness bears
interest at the rate of 10% per annum. The remainder of such indebtedness, the
amount of $2,142,000, bears interest at the rate of 9% per annum and relates to
Mr. Field's purchase on September 30, 1996, of a 9% Convertible Note of the
Company (a "9% Note") in the original principal amount of $3,000,000. The 9%
Notes are due three years from issuance and are convertible into shares of the
Company's Common Stock at any time prior to maturity. The conversion price of
the 9% Notes is $3.25 per share, except that Mr. Field has agreed to exchange up
to $3 million in principal amount of the 9% Notes for different notes with a
conversion price at a higher level which when averaged with the convertible
debentures issued in a Regulation S offering conducted by the Company in
November 1996, will result in an average price of $3.25 per share; however, in
no event will the conversion price for Mr. Field's 9% Notes be less than $3.25
per share. The Company believes the terms of such financing are as favorable to
the Company as those which it might have been able to obtain from an
unaffiliated third party.
Also from time to time, Mr. Field has guaranteed obligations of the Company.
Currently, Mr. Field has guaranteed the Company's obligations with respect to a
vehicle lease agreement with Timmer Leasing. Also, Mr. Field and his wife,
Cynthia Field, have guaranteed the Company's line of credit with Liberty Bank
and Trust Company of Tulsa in the amount of $12,000,000, which bears interest at
the prime rate published in The Wall Street Journal. As compensation for
providing such guaranty of the Company's bank line of credit, the Company pays
to Mrs. Field a monthly fee of 1/12 of 1% of the outstanding balance under such
line of credit. The Company believes that the terms of the arrangement with
Mrs. Field are as favorable as those which it might have been able to obtain
from an unaffiliated third party.
On August 26, 1996, CAPMAC Eighty-Two Limited Partnership ("CAPMAC"), a
limited partnership of which Milton D. McKenzie, a shareholder and Director of
the Company, has sole voting and investment control of the general partner,
purchased $250,000 in principal amount of the Company's 9% Notes. The Company
believes the terms of such financing are as favorable to the Company as those
which it might have been able to obtain from an unaffiliated third party.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's directors and executive officers, and persons who own more than ten
percent of the Common Stock, to report their initial ownership of the Common
Stock and any subsequent changes in that ownership to the SEC and the American
Stock Exchange, and to furnish the Company with a copy of each such report. SEC
regulations impose specific due dates for such reports, and the Company is
required to disclose in this Proxy Statement any failure to file by these dates
during and with respect to fiscal 1996.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during and with respect to fiscal 1996, all Section 16(a)
filing requirements applicable to its officers, directors and more than ten
percent shareholders were complied with, except as follows: (a) Michael W.
Knapik, Vice President of Sales and Marketing of the Company, and James H.
Bankard, a Director of the Company, each filed late his Form 3, (b) Lawrence D.
Field, Chairman of the Board of the Company, filed late five Form 4 reports
covering 14 transactions consisting of purchases of Common Stock in the open
market, (c) Mr. Field's Form 5 reported late the purchase of a convertible
debenture of the Company, (d) Milton D. McKenzie, a Director of the Company,
filed late one Form 4 report covering one transaction consisting of the purchase
of Common Stock in the open market, (e) Mr. McKenzie's Form 5 reported late the
purchase of a convertible debenture of the Company, and (f) Dorvin D. Lively,
Vice President, Chief
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<PAGE>
Financial Officer and Secretary of the Company, filed a Form 5 which reported
late the grant in fiscal year 1995 of an employee stock option.
OTHER MATTERS
MATTERS WHICH MAY COME BEFORE THE ANNUAL MEETING
The Board of Directors knows of no matters other than those described in this
Proxy Statement which will be brought before the Annual Meeting for a vote of
the shareholders. If any other matter properly comes before the Annual Meeting
for a shareholder's vote, the persons named in the accompanying proxy will vote
thereon in accordance with their best judgment.
PROPOSALS OF SHAREHOLDERS
Proposals of shareholders intended to be presented at the Company's 1998
Annual Meeting of Shareholders must be received at the principal executive
offices of the Company, 6846 South Canton, Suite 110, Tulsa, Oklahoma 74136, on
or before December 10, 1997, to be considered for inclusion in the Company's
proxy statement and accompanying proxy for that meeting.
ANNUAL REPORT
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER
31, 1996, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WILL BE
FURNISHED WITHOUT CHARGE TO SHAREHOLDERS UPON WRITTEN REQUEST TO: DORVIN D.
LIVELY, SECRETARY, SILVERADO FOODS, INC., 6846 SOUTH CANTON, SUITE 110, TULSA,
OKLAHOMA 74136.
By Order of the Board of Directors,
/s/ DORVIN D. LIVELY
Dorvin D. Lively
Secretary
April 17, 1997
Tulsa, Oklahoma
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<PAGE>
SILVERADO FOODS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 9, 1997
The undersigned hereby appoints Lawrence D. Field and Milton D. McKenzie, and
each of them, with full power of substitution, as proxies to represent and vote
all of the shares of Common Stock the undersigned is entitled to vote at the
Annual Meeting of Shareholders of Silverado Foods, Inc. to be held on the 9th
day of May, 1997, at 10:00 a.m., local time, at the Company's Tulsa
Manufacturing Plant, 3920 E. Pine Street, Tulsa, Oklahoma, and at any and all
adjournments thereof, on all matters coming before said meeting.
1. ELECTION OF DIRECTORS
<TABLE>
<S> <C>
[_] FOR ALL nominees listed below [_] WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees below.
</TABLE>
Lawrence D. Field, Timothy G. Bruer, Gerald E. Milton, James K. Tolbert, Milton
D. McKenzie, Sam L. Susser and James H. Bankard
INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
the nominee's name in the space provided below.
- --------------------------------------------------------------------------------
2. RATIFICATION OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC ACCOUNTANTS OF THE
COMPANY FOR 1997.
For [_] Against [_] Abstain [_]
(Continued on other side)
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND AT ANY AND ALL
ADJOURNMENTS THEREOF.
This Proxy, when properly executed, will be voted in the manner directed
herein by the shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1 AND 2.
Dated: , 1997
------------------
-------------------------------
Signature
-------------------------------
Signature If Held Jointly
Please sign exactly as name
appears hereon, date and re-
turn promptly. When shares are
held by joint tenants, both
must sign. When signing as at-
torney, executor, administra-
tor, trustee or guardian,
please give full title as
such. If a corporation, please
sign in full corporate name by
duly authorized officer and
give title of officer. If a
partnership, please sign in
partnership name by authorized
person and give title or ca-
pacity of person signing.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
