SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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mission Only (as permitted by
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[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
John B. Sanfilippo & Son, Inc.
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(Name of Registrant as Specified in Its Charter)
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(Company logo)
JOHN B. SANFILIPPO & SON, INC.
2299 Busse Road
Elk Grove Village, Illinois 60007
---------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held
on October 26, 2000
---------------------------------
TO THE STOCKHOLDERS:
The annual meeting of stockholders of John B. Sanfilippo & Son, Inc. (the
"Company") will be held on Thursday, October 26, 2000 at 10:00 a.m., local
time, at the Wyndham Hotel Northwest Chicago, 400 Park Boulevard, Itasca,
Illinois 60143, for the following purposes:
1. To elect directors;
2. To ratify the action of the Board of Directors in appointing
PricewaterhouseCoopers LLP as the Company's independent accountants
for the fiscal year ending June 28, 2001;
3. To approve an amendment to the 1998 Equity Incentive Plan to increase
the number of authorized shares under the plan from 350,000 to
700,000; and
4. To transact such other business as may properly be brought before the
annual meeting or any adjournment or postponement thereof.
The annual meeting may be postponed or adjourned from time to time without any
notice other than announcement at the meeting, and any and all business for
which notice is hereby given may be transacted at any such postponed or
adjourned meeting.
The Board of Directors has fixed the close of business on September 8, 2000
as the record date for determination of stockholders entitled to notice of
and to vote at the annual meeting. A list of these stockholders will be
available for inspection for 10 days preceding the meeting (at the Wyndham
Hotel Northwest Chicago, 400 Park Boulevard, Itasca, IL) and will also be
available for inspection at the meeting.
Stockholders are requested to complete and sign the enclosed proxy, which is
solicited by the Board of Directors, and promptly return it in the
accompanying envelope whether or not they plan to attend the annual meeting
in person. The proxy is revocable at any time before it is voted. Returning
the proxy will in no way limit your right to vote at the annual meeting if
you should later decide to attend and vote in person.
Because two classes of stock of the Company are now outstanding, a separate
form of proxy has been prepared with respect to each class of stock: a white
proxy, which relates to the Company's Common Stock, $.01 par value; and a
blue proxy, which relates to the Company's Class A Common Stock, $.01 par
value. Stockholders who own of record shares of only one class are being
furnished only with the proxy relating to that class. Stockholders who own
of record shares of both classes are being furnished with both proxies (in
separate mailings, each of which also includes a copy of this notice and the
proxy statement). Stockholders who receive both proxies must complete, sign
and return both proxies in order for the shares of both classes to be
voted by proxy.
By Order of the Board of Directors
/s/ Michael J. Valentine
------------------------
MICHAEL J. VALENTINE
Secretary
Elk Grove Village, Illinois
September 12, 2000
John B. Sanfilippo & Son, Inc.
------------------------------
PROXY STATEMENT
------------------------------
ANNUAL MEETING OF STOCKHOLDERS
October 26, 2000
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of John B. Sanfilippo & Son, Inc., a Delaware corporation,
of proxies for use at the annual meeting of stockholders of the Company to be
held on Thursday, October 26, 2000 at 10:00 a.m., local time, at the Wyndham
Hotel Northwest Chicago, 400 Park Boulevard, Itasca, Illinois 60143, and at
any postponement or adjournment thereof (the "Annual Meeting"). All shares
of the Company's Common Stock, $.01 par value (the "Common Stock"), and the
Company's Class A Common Stock, $.01 par value (the "Class A Stock"),
entitled to vote at the Annual Meeting which are represented by properly
executed proxies will, unless such proxies have been revoked, be voted in
accordance with the instructions given in such proxies. Any stockholder who
has given a proxy may revoke it at any time prior to its exercise at the
Annual Meeting by delivering a written notice of revocation or duly executed
proxy bearing a later date to the Secretary of the Company, or by attending
the Annual Meeting and voting in person. Any written notice of revocation or
subsequent proxy should be delivered to the Company at 2299 Busse Road, Elk
Grove Village, Illinois 60007-6057, Attention: Secretary, or hand delivered
to the Secretary, before the closing of the polls at the Annual Meeting.
Unless the context otherwise requires, references herein to the "Company"
refer to John B. Sanfilippo & Son, Inc. and its subsidiary.
This Proxy Statement and accompanying proxy are being mailed to stockholders
on or about September 12, 2000. The mailing address of the principal
executive offices of the Company is 2299 Busse Road, Elk Grove Village,
Illinois 60007-6057.
Record Date and Shares Outstanding
----------------------------------
The Company had outstanding on September 8, 2000, the record date for
determination of stockholders entitled to notice of and to vote at the Annual
Meeting, 5,461,139 shares of Common Stock (excluding 117,900 treasury shares)
and 3,687,426 shares of Class A Stock. The Common Stock is traded on the
Nasdaq National Market. There is no established public trading market for
the Class A Stock.
Voting and Quorum
-----------------
Pursuant to the Company's Restated Certificate of Incorporation (the
"Restated Certificate"), so long as the total number of shares of Class A
Stock outstanding is greater than or equal to 12.5% of the total number of
shares of Class A Stock and Common Stock outstanding, generally the holders
of Common Stock voting as a class are entitled to elect such number (rounded
to the next highest number in the case of a fraction) of directors as equals
25% of the total number of directors constituting the full Board of Directors
and the holders of Class A Stock voting as a class are entitled to elect the
remaining directors. The holders of Common Stock are not entitled to
cumulative voting. In connection with the election of directors, however,
each holder of Class A Stock has the right, in person or by proxy, to either
(a) vote the number of shares of Class A Stock owned by such holder for as
many persons as there are directors to be elected by holders of Class A Stock
("Class A Directors"), or (b) cumulate said votes (by multiplying the number
of shares of Class A Stock owned by such holder by the number of candidates
for election as a Class A Director) and either (i) give one candidate all of
the cumulated votes, or (ii) distribute the cumulated votes among such
candidates as the holder sees fit.
Three proposals are scheduled for stockholder consideration at the Annual
Meeting, each of which is described more fully herein: (i) the election of
seven directors of the Company; (ii) the ratification of the action of the
Board of Directors in appointing PricewaterhouseCoopers LLP as the Company's
independent accountants for the fiscal year ending June 28, 2001; and (iii)
the approval of an amendment to the 1998 Equity Incentive Plan to increase
the number of authorized shares of Common Stock in the plan from 350,000 to
700,000. At the meeting, the holders of Common Stock voting as a class will
be entitled to elect two of the seven directors, and the holders of Class A
Stock voting as a class will be entitled to elect the remaining five
directors. With respect to all matters other than the election of directors
or any matters for which class voting is required by law, the holders of
Common Stock and the holders of Class A Stock will vote together as a single
class and the holders of Common Stock will be entitled to one vote per share
of Common Stock and the holders of Class A Stock will be entitled to ten
votes per share of Class A Stock.
Attendance at the meeting in person or by proxy by the holders of Common
Stock entitled to cast at least a majority of the votes which the Common
Stock is entitled to cast at the Annual Meeting is required in order to
establish a quorum for the purpose of electing the directors to be elected
by holders of the Common Stock (the "Common Stock Directors"). Attendance
at the Annual Meeting in person or by proxy by the holders of Class A Stock
entitled to cast at least a majority of the votes which the Class A Stock
is entitled to cast at the Annual Meeting is required in order to
establish a quorum for the purpose of electing the Class A Directors.
Attendance at the meeting in person or by proxy by the holders of Common
Stock and Class A Stock entitled to cast at least a majority of the votes
which such stock is entitled to cast at the Annual Meeting on matters other
than the election of directors is required in order to establish a quorum for
the purpose of any other business. Assuming the presence of a quorum, (i)
the affirmative vote of a majority of the shares of Common Stock and Class A
Stock, voting separately as a class, present in person or by proxy at the
Annual Meeting will be required for the election of the Common Stock
Directors and Class A Directors, respectively, and (ii) the affirmative
vote of the holders of shares representing a majority of the votes entitled
to be cast by the holders of Common Stock and Class A Stock, voting together
as one class, present in person or by proxy at the Annual Meeting and
entitled to vote thereon shall be required to act on all other matters
to come before the Annual Meeting.
Votes may be cast by a stockholder in favor of the nominees for election as
directors or withheld. Similarly, votes may be cast by a stockholder in
favor or against ratification of the appointment of the independent
accountants, in favor or against approval of the amendment to the 1998
Equity Incentive Plan (the "1998 Plan") or a stockholder may elect to
abstain from voting on these issues. Directions to withhold authority,
abstentions and broker non-votes (which occur when a nominee holding
shares for a beneficial owner does not vote on a particular proposal because
the nominee does not have discretionary voting power with respect to that
item and has not received instructions from the beneficial owner) will be
counted in determining the presence or absence of a quorum for the
transaction of business at the Annual Meeting. Abstentions and directions to
withhold authority will have the effect of votes against the proposal being
considered. Broker non-votes, because they are not deemed to be entitled to
vote with respect to any matter for which a broker does not have authority
to vote, are not counted in the vote totals and will have no effect on
any proposal scheduled for consideration at the Annual Meeting.
If a properly executed, unrevoked proxy does not specifically direct the
voting of the shares covered by such proxy, the proxy will be voted (a) FOR
the election of all nominees for election as director to be elected by
holders of the class of shares covered by such proxy as listed herein, (b)
FOR the ratification of the appointment of PricewaterhouseCoopers LLP as the
Company's independent accountants for the fiscal year ending June 28, 2001,
(c) FOR the amendment to the 1998 Equity Incentive Plan to increase the
number of authorized shares of Common Stock under the 1998 Plan from
350,000 to 700,000, and (d) in accordance with the judgment of the persons
named in the proxy as to such other matters as may properly come before
the Annual Meeting.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of September 8, 2000 with
respect to the beneficial ownership of Common Stock and Class A Stock by
(a) the persons known by the Company to be the beneficial owners of more than
5% of the outstanding shares of Common Stock or Class A Stock, (b) each
director of the Company, (c) each of the executive officers named in the
Summary Compensation Table below ("Named Executive Officers") who currently
serves as an executive officer of the Company, and (d) all directors and
executive officers of the Company as a group. The information set forth in
the table as to directors and executive officers is based upon information
furnished to the Company by them in connection with the preparation of this
Proxy Statement. Except where otherwise indicated, the mailing address of
each of the stockholders named in the table is: c/o John B. Sanfilippo & Son,
Inc., 2299 Busse Road, Elk Grove Village, Illinois 60007-6057.
<TABLE>
<CAPTION>
% of
No. of Outstanding % of % of Outstanding
Shares Shares of No. of Shares Outstanding Votes on Matters
of Common Common of Class Shares of Class Other than Election
Name Stock(1) Stock A Stock(1)(2) A Stock of Directors
---- -------- ----------- ------------- --------------- -------------------
<S> <C> <C> <C> <C> <C>
Jasper B. Sanfilippo(3)+- 60,600 1.1% 1,523,776 41.3% 36.0%
Mathias A. Valentine(4)+- None -- 620,015 16.8 14.6
Marian Sanfilippo(5) 8,152 * 914,720 24.8 21.6
Michael J. Valentine(6)+- 14,102 * 628,915 17.1 14.8
Jeffrey T. Sanfilippo(7)+ 92,352 1.7 None -- *
Gary P. Jensen(8)- 13,950 * None -- *
Steven G. Taylor(9)- 21,550 * None -- *
John W. A. Buyers(10)+ 8,300 * None -- *
Timothy R. Donovan(11)+ 250 * None -- *
Governor James R. Edgar(12)+ 250 * None -- *
Brinson Partners, Inc.(13) 589,100 10.6 None -- 1.4
Heartland Advisors, Inc.(14) 500,000 9.0 None -- 1.2
Dimensional Fund Advisors, Inc.(15) 440,300 7.9 None -- 1.0
Citigroup, Inc.(16) 327,000 5.9 None -- 0.8
All directors and executive officers
as a group (12 persons, all of whom 328,708 5.9 2,772,706 75.2 66.1
are stockholders) (3)(4)(6)(7)(8)
(9)(10)(11)(12)(17)
</TABLE>
------------------------------------_
+ Denotes Director.
- Denotes Named Executive Officer.
* Less than one percent.
(1) Except as otherwise indicated below, beneficial ownership means the
sole power to vote and dispose of shares. In calculating each holder's
percentage ownership and beneficial ownership in the table above, shares
of Common Stock which may be acquired by the holder through the exercise
of stock options exercisable on or within 60 days of September 8, 2000
are included.
(2) Each share of Class A Stock is convertible at the option of the holder
thereof at any time and from time to time into one share of Common Stock.
In addition, the Restated Certificate provides that Class A Stock may be
transferred only to (a) Jasper B. Sanfilippo or Mathias A. Valentine, (b)
a spouse or lineal descendant of Mr. Sanfilippo or Mr. Valentine, (c)
trusts for the benefit of any of the foregoing individuals, (d) entities
controlled by any of the foregoing individuals, (e) the Company, or (f)
any bank or other financial institution as a bona fide pledge of shares
of Class A Stock by the owner thereof as collateral security for
indebtedness due to the pledgee (collectively, the "Permitted
Transferees"), and that upon any transfer of Class A Stock to someone
other than a Permitted Transferee each share transferred will
automatically be converted into one share of Common Stock.
(3) Includes 163,045 shares of Class A Stock held as trustee of certain
trusts, the beneficiaries of which are the children of Jasper and Marian
Sanfilippo (two of whom - Jasper B. Sanfilippo, Jr. and Jeffrey T.
Sanfilippo are executive officers of the Company and one of whom -
Jeffrey T. Sanfilippo is a director of the Company). Includes 15,000
shares of Common Stock held as a trustee of a certain trust, the
beneficiaries of which are the grandchildren of Jasper and Marian
Sanfilippo. Includes 16,600 shares of Common Stock that Jasper and
Marian Sanfilippo hold in joint tenancy. Excludes shares held or voted
by Jasper B. Sanfilippo's wife, Marian Sanfilippo, of which Mr.
Sanfilippo disclaims beneficial ownership.
(4) Excludes 24 shares of Common Stock held by Mathias A. Valentine's wife,
Mary Valentine, of which Mr. Valentine disclaims beneficial ownership.
(5) Includes 890,220 shares of Class A Stock held as trustee of certain
trusts, the beneficiaries of which are the children of Jasper and Marian
Sanfilippo (two of whom - Jasper B. Sanfilippo, Jr. and Jeffrey T.
Sanfilippo are executive officers of the Company and one of whom -
Jeffrey T. Sanfilippo is a director of the Company). Excludes shares
held or voted by Marian Sanfilippo's husband, Jasper B. Sanfilippo, of
which Mrs. Sanfilippo disclaims beneficial ownership. Excludes 16,600
shares of Common Stock that Jasper and Marian Sanfilippo hold in joint
tenancy.
(6) Includes (a) options to purchase 1,600 shares of Common Stock at $10.3125
per share which are exercisable by Michael J. Valentine on September 8,
2000 expiring on October 2, 2000 and 1,350 shares of Common Stock at
$6.875 per share which are exercisable by Michael J. Valentine on or
within 60 days of September 8, 2000, (b) 628,915 shares of Class A Stock
held as trustee of certain trusts (collectively, the "Valentine Trusts"),
the beneficiaries of which are the children of Mathias and Mary
Valentine, including Michael J. Valentine, and (c) 3,000 shares of Common
Stock owned by a general partnership, the general partners of which are
the Valentine Trusts.
(7) Includes options to purchase 1,400 shares of Common Stock at $10.3125 per
share which are exercisable by Jeffrey T. Sanfilippo on September 8, 2000
expiring on October 2, 2000 and 1,350 shares of Common Stock at $6.875
per share which are exercisable by Jeffrey T. Sanfilippo on or within 60
days of September 8, 2000. Excludes 32,609 and 178,044 shares of Class
A Stock held as trustee by Jasper B. Sanfilippo and Marian Sanfilippo,
respectively. (Jasper B. Sanfilippo is Chairman of the Board and Chief
Executive Officer and a director of the Company.)
(8) Includes options to purchase 3,000 shares of Common Stock, 2,600 shares
of Common Stock, 2,100 shares of Common Stock and 1,250 shares of Common
Stock at $9.625, $9.375, $6.25 and $4.00, respectively, per share which
are exercisable by Gary P. Jensen on or within 60 days of September 8,
2000.
(9) Includes options to purchase 10,000 shares of Common Stock, 3,400 shares
of Common Stock, 1,500 shares of Common Stock, 3,300 shares of Common
Stock, 2,100 shares of Common Stock and 1,250 shares of Common Stock at
$15.00, $13.75, $6.00, $9.375, $6.25 and $4.00, respectively, per share
which are exercisable by Steven G. Taylor on or within 60 days of
September 8, 2000.
(10) Includes options to purchase 4,000 shares of Common Stock, 1,000 shares
of Common Stock, 500 shares of Common Stock, 1,000 shares of Common
Stock, 750 shares of Common Stock, 500 shares of Common Stock and 250
shares of Common Stock at $12.25, $10.50, $6.00, $6.625, $6.00, $4.25,
and $3.4375, respectively, per share which are exercisable by John W. A.
Buyers on or within 60 days of September 8, 2000. Mr. Buyer's mailing
address is 26-238 Hawaii Belt Road, Hilo, HI 96720.
(11) Includes options to purchase 250 shares of Common Stock at $3.4375 per
share which are exercisable by Timothy R. Donovan on or within 60 days of
September 8, 2000. Excludes (a) 4,152 shares of Common Stock held by Mr.
Donovan's spouse, Elaine Karacic, (b) 28,468 shares of Common Stock held
by Elaine Karacic as trustee of certain trusts, the beneficiaries of
which are the children of Mr. Donovan and Ms. Karacic, and (c) 157,220
shares of Common Stock held by Ms. Karacic as trustee of certain trusts,
the beneficiaries of which are Ms. Karacic and her three siblings. Mr.
Donovan disclaims beneficial ownership of all of the foregoing shares of
Common Stock. Mr. Donovan's mailing address is c/o Tenneco Automotive,
Inc., 500 North Field Drive, Lake Forest, IL 60045.
(12) Includes options to purchase 250 shares of Common Stock at $3.4375 per
share which are exercisable by Governor James R. Edgar on or within 60
days of September 8, 2000.
(13) The information set forth in the table above and in this footnote is
based solely on Form 13F-HR as of June 30, 2000 filed by Brinson
Partners, Inc. ("BPI") dated August 15, 2000. BPI is a wholly owned
subsidiary of UBS AG. The principal business office of BPI is located at
209 South LaSalle Street, Chicago, IL 60604-1295. The principal business
office of UBS AG is located at Bahnhofstrasse 45 8021 Zurich,
Switzerland.
(14) The information set forth in the table above and in this footnote is
based solely on Form 13F-H as of June 30, 2000 filed by Heartland
Advisors Inc. dated August 14, 2000. The principal business office of
Heartland Advisors Inc. is 790 North Milwaukee Street, Milwaukee, WI
53202.
(15) The information set forth in the table above and in this footnote is
based solely on Form 13F-H as of June 30, 2000 filed by Dimensional Fund
Advisors Inc. dated August 29, 2000. The principal business office of
Dimensional Fund Advisors Inc. is 1299 Ocean Avenue, 11th floor, Santa
Monica, CA 90401.
(16) The information set forth in the table above and in this footnote is
based solely on Form 13F-HR as of June 30, 2000 filed by Citigroup Inc.
dated as of August 1, 2000. The principal office of Citigroup Inc. is
153 East 53rd Street, New York, NY 10043.
(17) Includes options to purchase a total of 65,650 shares of Common Stock
(including the options referred to in footnotes 6, 7, 8, 9, 10, 11 and 12
above) at prices ranging from $3.4375 to $15.00 per share which are
exercisable by certain of the directors and executive officers on or
within 60 days of September 8, 2000. Included in the option to purchase
65,650 shares of Common Stock are options to purchase 4,000 shares of
Common Stock that expire on October 2, 2000 which are exercisable at a
price of $10.3125.
ELECTION OF DIRECTORS
Seven directors are to be elected to serve until the next annual meeting of
stockholders and until their respective successors shall be elected and
qualified. Two of such directors are to be elected by the holders of Common
Stock voting as a class and the remaining five directors are to be elected by
the holders of Class A Stock voting as a class. While the Board of Directors
does not contemplate that any nominee for election as a director will not be
able to serve, if any of the nominees for election shall be unable or shall
fail to serve as a director, the holders of proxies shall vote such proxies
for such other person or persons as shall be determined by such holders in
their discretion or, so long as such action does not conflict with the
provisions of the Company's Restated Certificate relating to the proportion
of directors to be elected by the holders of Common Stock, the Board of
Directors may, in its discretion, reduce the number of directors to be
elected.
The Board of Directors recommends that the stockholders vote "FOR" each of
the nominees listed herein.
The affirmative vote of a majority of the shares of Common Stock present at
the Annual Meeting is required to elect the nominees for election by the
holders of Common Stock. The affirmative vote of a majority of the total
votes possessed by the shares of Class A Stock present at the meeting, in
accordance with the cumulative voting rights possessed by holders of Class A
Stock, is required to elect the nominees for election by the holders of
Class A Stock.
NOMINEES FOR ELECTION BY THE HOLDERS OF COMMON STOCK
The name of and certain information regarding each nominee for election to
the Company's Board of Directors by the holders of Common Stock, as reported
to the Company, is set forth below.
JOHN W. A. BUYERS, Director, age 72 -- Mr. Buyers is currently employed by C.
Brewer and Company, Limited ("C. Brewer"), based in Hilo, Hawaii, where he
has served as Chief Executive Officer since 1975 and as Chairman of the Board
since 1982. Mr. Buyers is also currently the Chairman of the Board,
President and Chief Executive Officer of Buyco, Inc., the privately held
parent company of C. Brewer, and has served in those capacities since 1986.
C. Brewer is a diversified agribusiness, specialty foods company and developer
of commercial and agricultural real estate. It is the world's leading
producer of macadamia nuts (Mauna Loa) and guava (KAI and Mauna La'i).
In addition, C. Brewer specializes in the roasting, processing, marketing and
distribution of Kona Coffee (Royal Kona and Mauna Kea) as well as the
processing, marketing and distribution of Hawaiian fruit jams, jellies and
syrups (Kukui). C. Brewer also distributes products and services for the
agricultural, environmental and construction industries. In addition, Mr.
Buyers currently serves on the board of directors of First Hawaiian Bank,
First Hawaiian, Inc., Mauna Loa Macadamia Partners, L.P., and C. Brewer
Homes, Inc. Mr. Buyers has been a member of the Company's Board of Directors
since January 1992 and is a member of the Company's Audit Committee and
Compensation Committee.
GOVERNOR JAMES R. EDGAR, Director, age 54 -- Governor Edgar is currently a
Distinguished Fellow at the University of Illinois Institute of Government
and Public Affairs where he is also a teacher and lecturer. He has been in
this position since January 1999. He was also a Resident Fellow at the John
F. Kennedy School of Government at Harvard University beginning in the 1999
fall semester. Gov. Edgar served as governor of Illinois from January 14,
1991 through January 11, 1999. Prior to his election, Gov. Edgar served as
Illinois Secretary of State from 1981 to 1991. Gov. Edgar's retirement from
public office marked 30 years of state government service. Gov. Edgar serves
on the board of directors of Kemper Insurance Companies, Scudder Kemper Funds,
Horizon Group Properties, Inc., Clayton Residential Home, Inc. and B&D Hotel
Corporation. Governor Edgar has been a member of the Company's Board of
Directors since October, 1999 and is a member of the Company's Audit
Committee.
NOMINEES FOR ELECTION BY THE HOLDERS OF CLASS A STOCK
The name of and certain information regarding each nominee for election to
the Company's Board of Directors by the holders of Class A Stock, as reported
to the Company, is set forth below.
JASPER B. SANFILIPPO, Chairman of the Board and Chief Executive Officer and
Director, age 69 -- Mr. Sanfilippo has been employed by the Company since
1953. Mr. Sanfilippo served as the Company's President from 1982 to December
1995 and was the Company's Treasurer from 1959 to October 1991. He became
the Company's Chairman of the Board and Chief Executive Officer in October
1991 and has been a member of the Company's Board of Directors since 1959.
Mr. Sanfilippo is also a member of the Company's Compensation Committee and
was a member of the Stock Option Committee until February 27, 1997 (when that
Committee was disbanded). Mr. Sanfilippo is the father of Jasper B.
Sanfilippo, Jr., an executive officer of the Company, and Jeffrey T.
Sanfilippo, an executive officer and director of the Company, the
brother-in-law of Mathias A. Valentine, the President and a director of the
Company, the uncle of Michael J. Valentine, a director and an executive
officer of the Company, and James A. Valentine, an executive officer of the
Company. Mr. Sanfilippo is also the uncle by marriage of Timothy R. Donovan,
a director of the Company.
MATHIAS A. VALENTINE, President and Director, age 67 -- Mr. Valentine has
been employed by the Company since 1960 and was named its President in
December 1995. He served as the Company's Secretary from 1969 to December
1995, as its Executive Vice President from 1987 to October 1991 and as its
Senior Executive Vice President and Treasurer from October 1991 to December
1995. He has been a member of the Company's Board of Directors since 1969.
Mr. Valentine is also a member of the Company's Compensation Committee and
was a member of the Stock Option Committee until February 27, 1997 (when that
Committee was disbanded). Mr. Valentine is the brother-in-law of
Jasper B. Sanfilippo, Chairman of the Board and Chief Executive Officer and a
director of the Company, the father of Michael J. Valentine, a director and an
executive officer of the Company, and James A. Valentine, an executive officer
of the Company. Mr. Valentine is the uncle of Jasper B. Sanfilippo, Jr., an
executive officer of the Company, and Jeffrey T. Sanfilippo, an executive
officer and director of the Company. Mr. Valentine is also the uncle by
marriage of Timothy R. Donovan, a director of the Company.
MICHAEL J. VALENTINE, Senior Vice President and Secretary, age 41 -- Mr.
Valentine has been employed by the Company since 1987 and in August 1999 was
named Senior Vice President and Secretary. Mr. Valentine was elected as a
director of the Company in April 1997. Mr. Valentine served as the Company's
Vice President and Secretary from December 1995 to August 1999. He served as
Assistant Secretary and the General Manager of External Operations for the
Company from June 1987 and 1990, respectively, to December 1995. Mr.
Valentine is the son of Mathias A. Valentine, the President and a director of
the Company, the brother of James A. Valentine, an executive officer of the
Company, the nephew of Jasper B. Sanfilippo, Chairman of the Board and
Chief Executive Officer of the Company, and cousin of Jasper B. Sanfilippo,
Jr., an executive officer of the Company, and Jeffrey T. Sanfilippo, an
executive officer and director of the Company. Mr. Valentine is also a
first cousin by marriage of Timothy R. Donovan, a director of the Company.
JEFFREY T. SANFILIPPO, Senior Vice President Sales and Marketing, age 37 --
Mr. Sanfilippo has been employed by the Company since 1991 and was named its
Senior Vice President Sales and Marketing in August 1999. He served as
General Manager West Coast Operations from September 1991 to September 1993.
He served as Vice President West Coast Operations and Sales from October 1993
to September 1995. He served as Vice President Sales and Marketing from
October 1995 to August 1999. Mr. Sanfilippo is the son of Jasper B.
Sanfilippo, the Chairman of the Board and Chief Executive Officer and a
director of the Company, the nephew of Mathias A. Valentine, the
President and a director of the Company, the brother of Jasper B. Sanfilippo,
Jr., an executive officer of the Company, the cousin of Michael J. Valentine,
an executive officer and director of the Company, and James A. Valentine, an
executive officer of the Company. Mr. Sanfilippo is also a first cousin by
marriage of Timothy R. Donovan, a director of the Company.
TIMOTHY R. DONOVAN, Director, age 44 -- Since August 1999, Mr. Donovan has
been the Senior Vice President and General Counsel of Tenneco Automotive Inc.,
one of the world's largest producers of emissions control and ride control
systems and products for the automotive industry. Mr. Donovan was elected
as a director of the Company in October 1999. Mr. Donovan is the nephew by
marriage of Messrs. Jasper B. Sanfilippo and Mathias A. Valentine, who are
directors and executive officers of the Company, and the first cousin by
marriage of Jasper B. Sanfilippo, Jr., Jeffrey T. Sanfilippo, Michael J.
Valentine and James A. Valentine, each of whom is an executive officer and
certain of whom are also directors of the Company. Mr. Donovan was a partner
in the law firm of Jenner & Block from 1989 until his resignation in
September 1999, and most recently served as the Chairman of the firm's
Corporate and Securities Department and as a member of its Executive
Committee. Mr. Donovan joined Jenner & Block in 1982 after serving as a
staff trial attorney at the Chicago District Counsel's Office of the
Internal Revenue Service.
COMMITTEES AND MEETING OF THE BOARD OF DIRECTORS
The Board of Directors of the Company met four times during fiscal 2000.
During fiscal 2000, all directors attended at least 75% of the meetings of
the Board of Directors and the committees thereof on which they served.
Standing committees of the Board of Directors include the Audit Committee
and the Compensation Committee. The Board does not have a nominating
committee, and the usual functions of such a committee are performed by the
entire Board.
The Audit Committee reviews and, as it deems appropriate, approves internal
accounting and financial controls for the Company and accounting principles
and auditing practices and procedures to be employed in the preparation and
review of financial statements of the Company. The Audit Committee also
makes recommendations to the Board concerning the engagement of independent
public accountants to audit the annual consolidated financial statements of
the Company and arranges with such accountants the scope of the audit to be
undertaken by them. Further, the Audit Committee also reviews related party
transactions in accordance with the rules promulgated by the National
Association of Securities Dealers, Inc. The current members of the Audit
Committee are John W. A. Buyers, Timothy R. Donovan and Governor James R.
Edgar. The Audit Committee held two meetings during fiscal 2000.
The Compensation Committee reviews and makes recommendations to the Board
with respect to the salaries, bonuses and other compensation of officers and
other executives, including matters relating to stock options, which are
determined by the entire Board of Directors. The Compensation Committee
consists of Jasper B. Sanfilippo, Timothy R. Donovan, John W.A. Buyers and
Mathias A. Valentine. The Compensation Committee held one meeting during
fiscal 2000.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Compensation of Directors
-------------------------
Compensation to directors who are not employees of the Company is paid at the
rate of $16,000 per year plus $1,000 for each Board meeting attended, $350
for each telephonic meeting of the Board in which they participate, $500 for
each committee meeting attended and $350 for each telephonic committee
meeting in which they participate. Directors are also reimbursed for their
expenses incurred in attending such meetings. Directors who are employees
of the Company receive no additional compensation for their services as
directors.
Under the 1998 Plan, a director who is not an employee of the Company, its
subsidiary, or any of their affiliates (an "Outside Director") is
automatically granted an option to purchase 1,000 shares of Common Stock on
the date of his or her election to the Company's Board, and on each date of
his or her re-election to the Board. Options granted to Outside Directors
under the 1998 Plan are granted at an exercise price equal to the Fair Market
Value (as defined in the 1998 Plan) of a share of Common Stock on the date
of grant. Options granted to Outside Directors will become exercisable in
equal increments of 250 shares of Common Stock on the first four anniversaries
of the date of grant and expire 10 years following the date of grant.
Pursuant to the 1998 Plan, on October 27, 1999, Mr. Buyers, Mr. Donovan
and Governor Edgar each were granted an option to purchase up to 1,000 shares
of Common Stock at an exercise price of $3.4375 per share.
Executive Compensation
----------------------
The following table sets forth a summary of compensation for services in all
capacities to the Company during the fiscal year ended June 29, 2000, the
fiscal year ended June 24, 1999 and the fiscal year ended June 25, 1998,
paid to or accrued for (i) the Company's Chief Executive Officer, and (ii)
each of the four additional most highly compensated executive officers of
the Company, (collectively the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
---------------------------- ------------
Securities
Name and Underlying All Other
Principal Position Year Salary Bonus Other(1) Options(#) Compensation
-------------------- ---- -------- ------- -------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Jasper B. Sanfilippo 2000 $428,292 $82,879 $6,107 -- $144,042(2)(3)
Chairman of the 1999 410,000 0 4,270 -- 139,138
Board and Chief 1998 403,077 45,995 6,231 -- 141,185
Executive Officer
Mathias A. Valentine 2000 $261,154 $50,597 $3,478 -- $79,029(3)(4)
President 1999 250,000 0 2,441 -- 77,699
1998 243,077 27,755 2,082 -- 76,271
Steven G. Taylor(5) 2000 $201,638 $36,585 $364 5,000 $2,124(6)
Executive Vice 1999 194,807 0 237 5,000 40,856
President 1998 178,153 18,920 366 -- 2,193
Gary P. Jensen 2000 $168,404 $30,547 $701 5,000 $3,174(7)
Executive Vice 1999 155,315 0 389 5,000 999
President Finance and 1998 143,446 15,280 498 -- 846
Chief Financial Officer
Michael J. Valentine 2000 $126,369 $20,985 -- -- $1,238(8)
Senior Vice President 1999 114,115 0 -- -- 400
and Secretary 1998 103,461 10,077 -- -- 300
</TABLE>
-------------------------------
(1) None of the Named Executive Officers received perquisites in excess of
the lesser of $50,000 or 10% of the aggregate of such officer's salary
and bonus. The Other Annual Compensation reflected is the Company's
reimbursement to the named executives for the tax liability incurred by
the named executives for a life insurance benefit as described in the
subsequent footnotes. The Named Executive Officers are the only
employees who participate in this benefit.
(2) Includes $116,503 of premiums paid by the Company under a split-dollar
agreement with Mr. Sanfilippo covering certain joint and survivor life
insurance policies issued on the joint lives of Jasper B. Sanfilippo and
his spouse. Also includes $15,456 of life insurance premiums and $2,507
of matching contributions to the 401(k) Plan. During fiscal 2000, the
Company paid $9,576 for the term portions of the split-dollar life
insurance premiums of Mr. Sanfilippo.
(3) The split-dollar agreements require that the Company be reimbursed for
all premiums paid upon either the surrender of the policies or the death
of both insureds. The reimbursement obligation is secured by a
collateral assignment to the Company of certain rights in the policies.
The Company is required to pay the monthly premiums; provided, however,
each of Messrs. Sanfilippo and Valentine may elect in any year to pay
that portion of the monthly premiums which would otherwise be treated
as taxable compensation to him under the Internal Revenue Code of 1986,
as amended (the "Code"). The Company reflects the total amount of
premiums it pays under the split-dollar agreements as an asset on its
financial statements.
(4) Includes $40,008 of premiums paid by the Company under a split-dollar
agreement with Mr. Valentine covering certain joint and survivor life
insurance policies issued on the joint lives of Mathias A. Valentine
and his spouse. Also includes $31,380 of life insurance premiums and
$917 of matching contributions to the 401(k) Plan. During 2000, the
Company paid $6,724 for the term portions of the split-dollar life
insurance premiums of Mr.Valentine.
(5) The salary and bonus amounts set forth for Mr. Steven G. Taylor, for
fiscal 1999 and 1998, an executive officer of the Company and also an
executive officer of Sunshine Nut Co., Inc. ("Sunshine") until June 25,
1999 (when Sunshine was merged into and with the Company), were paid
by Sunshine.
(6) Includes $1,352 of matching contributions to the 401(k) Plan and $772
of life insurance premiums paid by the Company for fiscal 2000.
(7) Includes $2,536 of matching contributions to the 401(k) Plan and $638
of life insurance premiums paid by the Company for fiscal 2000.
(8) Includes $1,185 of matching contributions to the 401(k) Plan and $53 of
life insurance premiums paid by the Company for fiscal 2000.
Incentive Bonus Program
-----------------------
During 1997, the Compensation Committee established an Incentive Bonus
Program (the "Incentive Bonus Program") to provide qualifying employees,
including executive officers, with cash bonuses. Under the Incentive Bonus
Program, cash bonuses are awarded based on the Company's earnings per share
and vary according to each qualifying employee's job category. For fiscal
2000, the Company paid bonuses of approximately $688,887 in August 2000.
The Company did not accrue or pay bonuses in fiscal 1999 in accordance with
the Incentive Bonus Program. Under the Incentive Bonus Program the Company
paid aggregate bonuses for fiscal 1998 of $442,139 in September 1998.
Option Grant Table
------------------
The following table sets forth certain information concerning the grant of
stock options made to each of the Named Executive Officers during 2000.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
-----------------------------------------------------------
Potential Realizable Value
At Assumed Annual Rates
% of Total of Stock Price Appreciation
Options Granted Exercise for Option Term(2)
Options Granted To Employees in Price Expiration ---------------------------
Name (No. of Shares)(1) Fiscal Year ($/Share) Date 5% ($) 10% ($)
---- ------------------ --------------- --------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Jasper B. Sanfilippo -- -- -- -- -- --
Mathias A. Valentine -- -- -- -- -- --
Steven G. Taylor 5,000 3.3% $4.50 1/27/2010 $14,150 $35,859
Gary P. Jensen 5,000 3.3% $4.50 1/27/2010 $14,150 $35,859
Michael J. Valentine -- -- -- -- -- --
</TABLE>
--------------------------
(1) The stock options reflected above expire one year after the termination
of the individual's employment with the Company. The stock options set
forth above are exercisable with respect to the Common Stock underlying
such options 25% annually commencing on the first anniversary of the
date of the grant and become fully exercisable on the fourth anniversary
of the date of the grant.
(2) Amounts represent hypothetical gains or "option spreads" that could be
achieved for the respective options based on assumed annual compound
stock appreciation rates of 5% and 10% over the original full ten-year
term of these options. The 5% and 10% rates of stock appreciation are
mandated by rules of the Securities and Exchange Commission and do not
represent the Company's estimate of the future market price of the
Common Stock.
Option Exercises and Holdings
-----------------------------
The following table sets forth certain information regarding option exercises
during fiscal 2000 by each of the Named Executive Officers and the number and
value of securities underlying options held by each of the Named Executive
Officers at June 29, 2000.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Options (Shares) at In-The-Money Options at
Shares Acquired Value Fiscal-Year End (#) Fiscal-Year End($)
Name on Exercise(#) Realized($) Exercisable/Unexercisable Exercisable/Unexercisable
---- --------------- ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Jasper B. Sanfilippo -- -- -- --
Mathias A. Valentine -- -- -- --
Steven G. Taylor -- -- 21,550/9,450 --(1)
Gary P. Jensen -- -- 8,950/9,450 --(1)
Michael J. Valentine -- -- 2,950/450 --(1)
</TABLE>
(1) The exercise price for each of the exercisable options which remained
unexercised as of June 29, 2000 exceeded the fair market value of the
Common Stock underlying such options at June 29, 2000.
Employment Contract
-------------------
The Company is a party to an Employment Agreement with Steven G. Taylor,
dated May 1, 1999, pursuant to which Steven G. Taylor is to be employed as
and serve as an Executive Vice President of the Company until May 1, 2002.
Steven G. Taylor's annual base compensation under his Employment Agreement
is $195,000, subject to increase from time to time in the sole discretion
of the Board of Directors of the Company but generally in accordance with
the Company's customary practices for increases in base salaries. Under his
Employment Agreement, Steven G. Taylor is entitled to participate in
employment plans and benefits provided by the Company to executive officers
of the Company and is also entitled to receive pay increases, bonuses and
stock options comparable to those available annually to upper level
management employees of the Company. In accordance with the terms of the
Employment Agreement, the Board of Directors of the Company authorized an
annual salary for Steven G. Taylor of $209,900 effective August 18, 2000.
The Report of the Compensation Committee on Executive Compensation and the
Performance Graph below shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement or any
portion hereof into any filing under the Securities Act of 1933, as amended,
or the Securities Exchange Act of 1934, as amended, and shall not otherwise
be deemed filed under such Acts.
JOINT REPORT OF THE BOARD OF DIRECTORS AND THE COMPENSATION
COMMITTEE ON EXECUTIVE COMPENSATION
Executive Compensation Principles
---------------------------------
The Company's Executive Compensation Program is based on principles designed
to align executive compensation with Company objectives, management
initiatives and business financial performance. These principles are applied
by the Board of Directors and Compensation Committee (and, in the case of
Steven G. Taylor, subject to the terms of his Employment Agreement, see
"Executive Compensation - Employment Contract") to:
-- Attract and retain key executives critical to the success of the Company
and its subsidiary;
-- Reward executives for long-term strategic management and the enhancement
of stockholder value; and
-- Support a performance-oriented environment that rewards performance
based on Company goals.
Overview of Executive Compensation Program
------------------------------------------
The Company's total compensation program for its executive officers consists
of both cash and, except with respect to the Chief Executive Officer and the
President, equity based compensation. Each executive officer's annual
compensation consists of a base salary, eligibility for matching contributions
to the 401(k) Plan and eligibility for an annual bonus under the Incentive
Bonus Program. In addition, the Company provides life (including split-dollar
life insurance) and disability insurance for certain executive officers.
The Compensation Committee determines the level of base salary for key
executive officers, including the Chief Executive Officer, and a base salary
range for other executive officers. The Compensation Committee generally
determines such salary or salary range based on a number of factors and
criteria, including the salaries paid by the Company to its executive
officers during the immediately preceding year, the rate of inflation, the
Company's performance during the immediately preceding fiscal year, the
performance of the executive officer during the immediately preceding fiscal
year and the salaries paid to the executive officers of certain other
companies engaged in the food or agricultural commodity business with annual
sales of less than $1.0 billion (the "Compensation Comparison Group"). The
weight and importance given each year to the foregoing factors, the
individual components of each factor and the decision whether to consider
additional factors, lies within the subjective discretion of the Compensation
Committee. Because the compensation levels of the Company's executive
officers are significantly below compensation levels that would be affected
by the limitations on the deduction of executive salaries imposed by Section
162(m) of the Code ("Section 162(m)"), the Compensation Committee has not
formulated a policy with respect to Section 162(m). The 1998 Plan provides
for certain limits, consistent with Code Section 162 and the regulations
promulgated thereunder, on the maximum number of shares of Common Stock
subject to options that may be granted to any grantee in any one
calendar year.
Fiscal 2000 Executive Compensation
----------------------------------
The Company's fiscal 2000 year consisted of the fifty-three week period ended
June 29, 2000. The Company's fiscal 1998 and fiscal 1999 year consisted of
the fifty-two week period ended June 25, 1998 and June 24, 1999, respectively.
The base salaries and salary ranges for the Company's executive officers have
continued to be determined at the first meetings of the Compensation
Committee and Board of Directors of the calendar year. Accordingly, fiscal
2000 base salaries and salary ranges include one-half year of amounts set as
of the beginning of calendar 2000.
The Compensation Committee primarily based calendar 1998, 1999 and 2000
salaries and salary ranges of the Company's executive officers, including the
Chief Executive Officer, on the salaries paid to such executive officers in
1997, 1998 and 1999, respectively. For calendar 1998, 1999 and 2000, such
base salaries and salary ranges were generally increased by a percentage
slightly greater than the percentage change in the Consumer Price Index in
1997, 1998 and 1999, respectively. The Compensation Committee did not use
the salaries of executive officers of the Compensation Comparison Group to
establish base salaries and salary ranges for the Company's executive
officers, including the Chief Executive Officer, but did compare its
determination of such salaries and salary ranges against the base salaries
reported for executive officers of the Compensation Comparison Group as an
independent measure of reasonableness. The calendar 1998, 1999 and 2000 base
salaries for the Company's executive officers set by the Compensation
Committee were, in general, at the low to medium ranges when compared to the
base salaries of the Compensation Comparison Group executives. However, the
Compensation Committee does not currently have an established policy with
regard to the salaries and salary ranges of the Company's executive officers,
including the salary of the Chief Executive Officer, relative to the salaries
paid to the Compensation Comparison Group executive officers.
The Company awards annual bonuses to executive officers of the Company
pursuant to the Incentive Bonus Program. Under the Incentive Bonus Program,
each executive officer receives a set percentage of his salary as a bonus if
the Company's earnings per share for the prior fiscal year meet or exceed
specified levels, which percentage increases as the Company's earnings per
share increase. The Board of Directors, when it adopted the Incentive Bonus
Program, set the earnings per share targets and salary percentages for
executive officers based on the subjective judgment of the directors,
as well as management's recommendations regarding a number of factors such as
position held and annual performance. The Company paid bonuses of $294,314
and $161,949, in the aggregate, to the Company's executive officers for
fiscal 2000 and fiscal 1998, respectively, pursuant to the Incentive Bonus
Program. In fiscal 1999 bonuses were not earned under the Incentive Bonus
Program.
The Company provides long-term incentives to its executive officers through
its stock option plans. Through the award of stock option grants, the
objective of aligning executive officers' long-range interests with those of
the stockholders are met by providing the executive officers with the
opportunity to build a meaningful stake in the Company. The Board of
Directors did not award any stock options to executive officers during fiscal
1998. In fiscal 1999 and fiscal 2000, the Board awarded stock options under
the 1998 Plan to certain of its executive officers (other than Jasper
B. Sanfilippo and Mathias A. Valentine, who are not eligible to participate
in the 1998 Plan) (see "Executive Compensation - Option Grant Table").
Executive officers are eligible to participate in the Company's 401(k) Plan,
including Company matching. In January 2000, the 401(k) Plan was amended to
eliminate discretionary profit contributions. The Company made no
discretionary contributions to the 401(k) Plan for fiscal 2000, fiscal 1999
or fiscal 1998, however, the executive officers as a whole had $10,956,
$2,800 and $2,100 contributed as matching funds under the 401(k) Plan for
fiscal 2000, fiscal 1999 and fiscal 1998, respectively. The Company provides
certain executive officers with life and disability insurance. The Company
also maintains split-dollar life insurance policies on the joint lives of
Jasper B. Sanfilippo and his spouse and Mathias A. Valentine and his spouse
(see "Executive Compensation - Summary Compensation Table").
The Compensation Committee and the Board of Directors believe that their
respective grants of compensation awards will produce significant long-term
compensation for periods when the Company's performance objectives are met.
Fiscal 2000 Chief Executive Officer Compensation
------------------------------------------------
The Chief Executive Officer's fiscal 2000 base salary increased to $434,600
which was a percentage increase from his base salary for fiscal 1999 that was
comparable to the inflation rate. The Compensation Committee based this
increase in the Chief Executive Officer's base salary on the factors and
criteria discussed above with regard to the establishment of calendar 1998,
1999 and 2000 base salaries and salary ranges for the Company's executive
officers. The Chief Executive Officer's fiscal 2000 base salary was at the
medium range of the base salaries of chief executive officers of the
companies in the Compensation Comparison Group. John W. A. Buyers and
Timothy R. Donovan, as the only non-employee directors on the Compensation
Committee during fiscal 2000, assisted in establishing the increase in the
Chief Executive Officer's base salary for fiscal 2000 by their broad
knowledge of executive pay practices in the food industry and the importance
to the Company of the services provided by the Chief Executive Officer.
The Chief Executive Officer was awarded a bonus of $82,979 and $45,995 for
fiscal 2000 and fiscal 1998, respectively, pursuant to the formula
established for him under the Incentive Bonus program as described above.
In fiscal 1999, the Chief Executive Officer did not receive a bonus. The
Chief Executive Officer is not eligible to participate in the 1998 Plan.
In fiscal 2000, the Company also provided the Chief Executive Officer with
life insurance and split-dollar life insurance as discussed above.
Compensation Committee Board of Directors
---------------------- ------------------
Jasper B. Sanfilippo Jasper B. Sanfilippo
Mathias A. Valentine Mathias A. Valentine
John W. A. Buyers Michael J. Valentine
Timothy R. Donovan Jeffrey T. Sanfilippo
John W. A. Buyers
Governor James R. Edgar
Timothy R. Donovan
PERFORMANCE GRAPH
The following Performance Graph compares the Company's cumulative total
stockholder return on its Common Stock for the period from December 31, 1994
to June 29, 2000 with the cumulative total return of the Standard & Poor's
500 stock index and a peer group of companies selected by the Company (the
"Peer Group") for purposes of the comparison and identified below.
Comparison of Cumulative Total Return(1)
Among the Company, S&P 500 Index and Peer Group(2)
JOHN B. SANFILIPPO
DATE & SON, INC S & P 500 PEER GROUP
----------------- ------------------ --------- ----------
December 31, 1994 100.00 100.00 100.00
December 31, 1995 168.18 137.55 127.32
December 31, 1996 90.91 169.11 129.21
June 26, 1997 118.18 203.63 145.49
June 25, 1998 93.18 264.35 203.27
June 24, 1999 71.02 312.33 194.39
June 29, 2000 56.82 346.6 176.28
(1) Assumes $100 invested on December 31, 1994 in the Company's Common
Stock, S&P 500 Index and Peer Group and dividends were reinvested.
(2) The Peer Group selected by the Company is comprised of the following
companies: J&J Snack Foods Corp., Lance, Inc., Universal Foods Corp.
and Tootsie Roll Industries, Inc. The Peer Group was selected by the
Company in good faith based upon similarities in the nature of the
business of the companies, total revenues and seasonality of business
of the companies. The Peer Group selected by the Company for its 1999
Proxy Statement included Chock Full O'Nuts Corp. but did not include
Lance, Inc. The Company is no longer able to include Chock Full O'Nuts
in its Peer Group because Chock Full O'Nuts was acquired by Sara Lee
Corp. during fiscal 2000 and is no longer publicly traded. The
cumulative total return for the Peer Group in the Performance Graph
above has been recalculated to exclude Chock Full O'Nuts and to include
Lance, Inc. for the period December 31, 1994 to June 29, 2000.
COMPENSATION COMMITTEE INTERLOCKS, INSIDER PARTICIPATION
AND CERTAIN TRANSACTIONS
The Compensation Committee, which reviews and makes recommendations to the
Board with respect to salaries, bonuses and other compensation of officers
and other executives, is comprised of Jasper B. Sanfilippo, Mathias A.
Valentine, John W. A. Buyers and Timothy R. Donovan. Mr. Sanfilippo is the
Company's Chairman of the Board and Chief Executive Officer. Mr. Valentine
is the Company's President.
Below is a summary of certain transactions between the Company and either of
Messrs. Sanfilippo or Valentine, or persons with whom they are related or
entities in which they have an interest. All such transactions have been and
will continue to be on terms which the Company believes to be at least as
favorable to the Company as could be obtained from unaffiliated parties.
Lease Arrangements
------------------
The Company leases a warehousing and retail facility in Des Plaines, Illinois
(the "Des Plaines Facility") and its production and office facilities at 2299
Busse Road, Elk Grove Village, Illinois (the "Busse Road Facility") from land
trusts in which the direct and indirect beneficiaries are Jasper B. Sanfilippo
(a stockholder, director and executive officer of the Company), Mathias A.
Valentine (a stockholder, director and executive officer of the Company),
their respective spouses, Anne Karacic and Rose Laketa (sisters of Mr.
Sanfilippo) and Rosalie Sanfilippo (Mr. Sanfilippo's mother). The lease for
the Des Plaines Facility expires on October 31, 2010 and provides for monthly
rent of $21,250, subject to periodic increases based on increases in the
Consumer Price Index (the "CPI") on each of June 1, 2000 and June 1, 2005.
As of the date of this proxy statement, the June 1, 2000 CPI increase has
not been determined. The lease for the Busse Road Facility, as amended,
expires on May 31, 2015 and provides for monthly rent of $84,500, subject to
CPI increases on each of June 1, 2002, June 1, 2007 and June 1, 2012.
Previous amendments to the lease delayed a scheduled CPI increase scheduled
for 1995 until June 1, 1997. Effective January 1, 1998, the lease was
further amended to waive the June 1997 CPI adjustment and increase the rent
to its current level (from $74,084 per month). The increase in monthly rent
is less than the increase that would have been implemented if the scheduled
CPI increase had not been waived. The leases for the Des Plaines Facility
and the Busse Road Facility also require the Company to pay the real estate
taxes on, and to maintain and insure, the Des Plaines Facility and the Busse
Road Facility. During fiscal 2000, the aggregate amount of real estate taxes
on and insurance premiums paid by the Company under both leases was
approximately $314,000. During fiscal 2000 the Company advanced $24,250 to
the Des Plaines Facility land trust, which was repaid in August 2000.
The Company constructed an addition to the Busse Road Facility (the
"Addition") which is situated on property owned by the land trust that owns
the Busse Road Facility (the "Busse Land Trust") and on property owned by the
Company. Accordingly, (i) the Company and the Busse Land Trust entered into
a ground lease with a term beginning January 1, 1995 pursuant to which the
Company leases from the Busse Land Trust the land on which a portion of the
Addition is situated and all related improvements thereon (the "Busse
Addition Property"), and (ii) the Company, the Busse Land Trust and the sole
beneficiary of the Busse Land Trust entered into a party wall agreement
effective as of January 1, 1995, which sets forth the respective rights and
obligations of the Company and the Busse Land Trust with respect to the
common wall which separates the existing Busse Road Facility and the
Addition. The ground lease has a term which expires on May 31, 2015 (the
same date on which the Company's lease for the Busse Road Facility expires)
and requires the Company to pay the Busse Land Trust annual rent of $6,425,
subject to CPI increases on each of June 1, 2000, June 1, 2005 and June 1,
2010. As of the date of this proxy statement, the June 1, 2000 CPI increase
has not been determined. The Company has an option to extend the term
of the ground lease for one five-year term, an option to purchase the Busse
Addition Property at its then appraised fair market value at any time during
the term of the ground lease, and a right of first refusal with respect to
the Busse Addition Property. The ground lease also requires the Company to
pay the real estate taxes on, and to insure the Busse Addition Property.
The party wall agreement grants the Company the right to use and the
obligation to participate pro rata with the Busse Partnership (defined below)
in the maintenance of the common wall shared by the Addition and Busse Road
Facility.
The sole beneficiary of the Busse Land Trust is the Arthur/Busse Limited
Partnership (the "Busse Partnership"). The general partner of the Busse
Partnership is Arthur/Busse Properties, Inc. The shareholders of
Arthur/Busse Properties, Inc. and the limited partners of the Busse
Partnership are Jasper B. Sanfilippo, Marian Sanfilippo (Mr. Sanfilippo's
wife), Mathias A. Valentine, Mary Valentine (Mr. Valentine's wife), Anne
Karacic and Rose Laketa (sisters of Mr. Sanfilippo), and Rosalie Sanfilippo
(Mr. Sanfilippo's mother).
Supplier, Vendor, Broker and Other Arrangements
-----------------------------------------------
During fiscal 2000, the Company purchased approximately $387 thousand of
products and services from Navarro Pecan Company, Inc., ("Navarro") a
processor of pecans, and sold approximately $1.53 million of products and
services to Navarro. The Company anticipates that it will continue to make
such purchases from and sales to Navarro in fiscal 2001 and thereafter.
Jasper B. Sanfilippo, a stockholder, director and executive officer of the
Company, also serves as a director and officer of Navarro. In addition, Mr.
Sanfilippo owns 33-1/3% of the outstanding common stock of Navarro.
The remaining two-thirds of the outstanding common stock of Navarro is owned
by unaffiliated parties.
During fiscal 2000, the Company purchased approximately $5.95 million of raw
materials from an entity in respect of which Jasper B. Sanfilippo, a
stockholder, director and executive officer of the Company, serves as a
director and owns 10% of the outstanding common stock. The balance is owned
by a trust, the beneficiaries of which are the sons and daughter of Jasper B.
Sanfilippo. Two of the beneficiaries of the trust are officers of the
Company and one is a director of the Company. One is also a director of the
entity. In addition, Marian Sanfilippo, Jasper B. Sanfilippo's wife and a
beneficial owner of more than 5% of the Company's outstanding Class A Stock,
is also a director of the entity.
During fiscal 2000, the Company purchased approximately $268 thousand of
manufacturing equipment (such as canning and packaging machinery), engineering
services and inventory from JesCorp, Inc. ("JesCorp") and MAP Systems
International, a division of JesCorp. The Company anticipates that it will
continue to make such purchases of products and services from JesCorp in
fiscal 2001 and thereafter. James J. Sanfilippo and John E. Sanfilippo are
the stockholders, directors and officers of JesCorp and are stockholders of
the Company and sons of Jasper B. Sanfilippo, a stockholder, director and
executive officer of the Company. Marian Sanfilippo, Jasper B. Sanfilippo's
wife and beneficial owner of more than 5% of the Company's outstanding Class
A Stock, is also a director of JesCorp. During fiscal 2000, JesCorp
subleased from the Company approximately 28,600 square feet of space at the
Company's facilities and paid rent for this space at the rate of $12,874 per
month. This amount is equal to the amount paid by the Company in respect of
such space (inclusive of taxes). JesCorp's lease will expire on December
31, 2000.
During fiscal 2000, the Company purchased approximately $165 thousand of raw
materials from JRC Color Corp. ("JRC"). The Company anticipates that it will
continue to purchase raw materials from JRC in fiscal 2001. JRC is one third
owned by Jerome Evon, the son-in-law of Jasper B. Sanfilippo.
During fiscal 2000, the Company compensated the following employees who are
related to directors or executive officers of the Company. Roseanne Karacic,
Director of Creative Services, is the sister-in-law of Timothy R. Donovan, a
director of the Company. Roseanne Karacic's total compensation for fiscal
2000 was $93,645. Lisa Evon, Industrial Sales Manager, is the daughter of
Jasper B. Sanfilippo, Chairman of the Board and Chief Executive Officer and
director of the Company, and the sister of Jasper B. Sanfilippo, Jr., an
executive officer of the Company and Jeffrey T. Sanfilippo, an executive
officer and director of the Company. Lisa Evon's total compensation for
fiscal 2000 was $82,332.
RATIFY APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP
AS INDEPENDENT ACCOUNTANTS
The stockholders will be asked to ratify the appointment of the firm of
PricewaterhouseCoopers LLP as the Company's independent accountants for the
fiscal year ending June 28, 2001. This appointment was made by the Board of
Directors on recommendation of its Audit Committee.
PricewaterhouseCoopers LLP served as independent accountants for the fiscal
year ended June 29, 2000 and it (or its predecessor by merger, Price
Waterhouse LLP) has acted as accountants for the Company since 1982.
Representatives of PricewaterhouseCoopers LLP are expected to be present at
the Annual Meeting with the opportunity to make a statement if they desire to
do so and are expected to be available to respond to appropriate questions.
The Board of Directors recommends a vote "FOR" ratification of the
appointment of PricewaterhouseCoopers LLP as independent accountants for the
fiscal year ending June 28, 2001.
The affirmative vote of the holders of shares representing a majority of the
votes entitled to be cast by the holders of shares present and entitled to
vote at the Annual Meeting is required for ratification of this item. No
determination has been made as to what action the Board of Directors would
take if the appointment is not ratified.
APPROVE AMENDMENT TO 1998 EQUITY INCENTIVE PLAN
In August 2000, the Board of Directors approved an amendment to the
Company's 1998 Plan, subject to the approval of the stockholders at the
October 26, 2000 annual meeting. The stockholders of the Company will be
asked to consider and approve an amendment to the 1998 Plan to increase the
number of authorized shares of Common Stock under the 1998 Plan from 350,000
to 700,000.
The 1998 Plan enables the Board of Directors to create equity incentives to
help the Company attract, retain and motivate the best available talent for
the successful conduct of the Company's business. The Board of Directors
believes the remaining shares under the 1998 Plan are not sufficient to
support this objective. Therefore, it is the opinion of the Board of
Directors that the proposed amendment is necessary to maintain a viable plan.
1998 Equity Incentive Plan
--------------------------
The Company's 1998 Plan was adopted in 1998 at the Annual Stockholders
Meeting. The purpose of the 1998 Plan is to increase ownership of Common
Stock of the Company by those key employees (including officers and certain
directors who are also officers) and Outside Directors who contribute to the
continued growth, development and financial success of the Company and its
subsidiaries, and to attract and retain key employees and reward them for the
Company's profitable performance based on factors determined by the Board of
Directors. As of September 8, 2000, the Company had granted options to
purchase a total of 202,500 shares of Common Stock under the 1998 Plan. Of
these options, 7,000 had been canceled as of September 8, 2000 and 11,625
were exercisable on or within 60 days of September 8, 2000 (the balance of
such options becoming exercisable in various increments over the next four
years).
Generally, the Board of Directors may at any time modify (but for certain
option grants to outside directors not more than once every six months) the
1998 Plan as it deems advisable. However, the Board of Directors generally
may not impair the rights of any previously granted option and it may not
without further stockholder approval (except for certain permitted
adjustments), materially increase either the number of shares or the benefits
under the 1998 Plan, materially modify eligibility requirements, or extend
the term of the 1998 Plan.
Pursuant to the 1998 Plan, the Board of Directors can select key employees
of the Company to receive awards of stock options, which can be either
nonqualified stock options or "incentive stock options" within the meaning
of Section 422 of the Code, in consideration for their services. Under the
1998 Plan each Outside Director is granted a nonqualified option to purchase
up to 1,000 shares of Common Stock (i) on the date of his or her initial
election to the Board of Directors, and (ii) on the date of each subsequent
re-election to the Board.
Generally, stock options granted under the 1998 Plan become exercisable in
equal installments of 25% of the shares covered by the option on the first
four anniversaries of the date of grant subject to, in the case of an
employee, continued employment with the Company or its subsidiaries, or in
the case of an Outside Director, continued service as a director, on such
date. However, all options granted under the 1998 Plan become fully vested
and exercisable on the first date on which no shares of Class A Stock are
outstanding. The exercise price of options granted to employees under the
1998 Plan is determined by the Board of Directors; provided, however, that
(i) the exercise price for nonqualified stock options granted to employees
was required to be not less than 50% of the fair market value of a share
of Common Stock on the date of grant, and (ii) the exercise price for
incentive stock options was required to be not less than 100% of the fair
market value of a share of Common Stock on the date of the grant (110% in the
case of incentive stock options granted to a 10% Owner). The exercise price
for each option granted to an Outside Director under the 1998 Plan is
required to equal 100% of the fair market value for a share of Common Stock
on the date such option was granted. Options granted under the 1998 Plan may
not be assigned or transferred other than by will or the laws of descent and
distribution and may be exercised during the grantee's lifetime only by
the grantee. No option granted under the 1998 Plan may be exercised after
the expiration of ten years after the date of the grant (five years in the
case of incentive stock options granted to a 10% Owner). Unexercised options
terminate upon or within one year of an employee's termination of employment
with the Company.
The grant of a stock option will not result in federal tax consequences to
the Company or the participant. Upon the exercise of an option and the
transfer to the grantee of shares, the tax treatment depends upon whether the
option is a nonqualified option or an incentive stock option. When a
nonqualified option is exercised, the grantee will realize compensation
taxable as ordinary income in an amount equal to the difference between the
option price and the fair market value of the shares on the date of exercise,
and the Company will have deductible expense in the same amount. The
grantee's basis in such shares will generally be their fair market value on
the date of exercise. When the grantee disposes of such shares, the
difference between the amount received and the fair market value of the
shares on the date of exercise will be treated as long-term or short-term
capital gain or loss, depending upon the holding period of the shares.
When an incentive stock option is exercised, the grantee will not realize
any income and the Company will not be allowed any deduction if certain
conditions regarding the holding period of the option and the option stock
are met. The basis to the grantee of shares acquired upon the exercise of
an incentive stock option will be the exercise price. In the event of a sale
of the stock after compliance with these conditions, the resulting gain or
loss will ordinarily be treated as long-term capital gain or loss. If the
grantee fails to comply with the holding period conditions, the grantee is
taxed as if he or she had exercised a nonqualified option, and the Company
will have a deductible expense upon exercise equal to the compensation income
recognized by the grantee. Any gain in excess of the amount treated as
compensation will be treated as long-term or short-term capital gain
depending on the length of time the grantee had held the stock at the time
of disposition.
The above is only a summary of the effect of federal income taxation upon
the participant and the Company and does not purport to be complete, and
does not discuss income tax laws of any municipality, state or foreign
country in which a participant may reside.
The Board of Directors believes that the 1998 Plan continues to be necessary
to allow the Company to provide meaningful equity incentives to attract,
motivate and retain executives and employees. Consequently, the Board of
Directors recommends a vote "FOR" the approval of the amendment to the 1998
Equity Incentive Plan.
ANNUAL REPORT
The Company's annual report for the fiscal year ended June 29, 2000 has been
included in the mailing of this Proxy Statement. Stockholders are referred
to the report for financial and other information about the Company, but such
report is not incorporated in this Proxy Statement and is not to be deemed a
part of the proxy soliciting material.
STOCKHOLDER PROPOSALS FOR THE 2001 ANNUAL MEETING
Any stockholder proposal to be considered for inclusion in the proxy
materials for the Company's 2001 annual meeting of stockholders must be
received at the principal executive offices of the Company no later than
May 17, 2001 and must otherwise comply with the requirements of Rule 14a-8
under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
With respect to the Company's 2001 annual meeting of stockholders, if the
Company is not provided notice of a stockholder proposal which the
stockholder has not previously sought to include in the Company's proxy
statement by August 3, 2001, the management proxies will be allowed to use
their discretionary authority as outlined above.
PROXY SOLICITATION
Proxies will be solicited by mail. Proxies may also be solicited by
directors, officers and a small number of regular employees of the Company
personally or by mail, telephone or telegraph, but such persons will not be
specially compensated for such services. Brokerage houses, custodians,
nominees and fiduciaries will be requested to forward the soliciting
material to the beneficial owners of stock held of record by such persons,
and the Company will reimburse them for their expenses in doing so. The
entire cost of the preparation and mailing of this Proxy Statement and
accompanying materials and the related proxy solicitation will be borne by
the Company.
Stockholders are requested to complete and sign the enclosed proxy, which is
solicited by the Board of Directors, and promptly return it in the
accompanying envelope whether or not they plan to attend the Annual Meeting
in person. The proxy is revocable at any time before it is voted. Returning
the proxy will in no way limit a stockholder's right to vote at the Annual
Meeting if the stockholder attends and chooses to vote in person.
OTHER MATTERS
Management does not intend to present, and does not have any reason to
believe that others will present, any item of business at the Annual Meeting
other than those specifically set forth in the notice of the Annual Meeting.
However, if other matters are properly presented for a vote, the proxies will
be voted for such matters in accordance with the judgment of the persons
acting under the proxies.
By Order of the Board of Directors
/s/ Michael J. Valentine
------------------------
MICHAEL J. VALENTINE
Secretary
Elk Grove Village, Illinois
September 12, 2000
APPENDIX A - COMMON STOCK PROXY CARD
JOHN B. SANFILIPPO & SON, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS OCTOBER 26, 2000
Jasper B. Sanfilippo, Mathias A. Valentine, and Michael J. Valentine or any
one or more of them, with power of substitution in each, are hereby appointed
the proxies of the undersigned to vote all shares of the Common Stock of
John B. Sanfilippo & Son, Inc. (the "Company"), that the undersigned is
entitled to vote at the Annual Meeting of Stockholders to be held on
October 26, 2000 at the hour of 10:00 A.M., local time, at the Wyndham
Hotel Northwest Chicago, 400 Park Boulevard, Itasca, Illinois 60143, and at
all postponements or adjournments thereof, upon such business as may properly
come before the meeting, including the items proposed by the Company that are
listed on the reverse side and more completely described in the enclosed
Notice of Annual Meeting of Stockholders and Proxy Statement.
(THIS PROXY IS CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
[X] Please mark your votes as in this example.
1. Election of Directors FOR [ ] WITHHELD [ ]
Nominees: Governor James R. Edgar
John W. A. Buyers
For, except vote withheld from the following nominee(s):
--------------------------------
2. APPROVAL OF APPOINTMENT OF ACCOUNTANTS: Approval of appointment of
PricewaterhouseCoopers LLP as independent accountants for 2001.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. APPROVAL OF AMENDMENT to the 1998 Equity Incentive Plan to increase the
number of authorized shares under the Plan from 350,000 to 700,000.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. In
their discretion, the proxies are authorized to vote on such other
matters as may properly come before the Annual Meeting or any
postponements or adjournments thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE DEEMED TO CONSTITUTE DIRECTION TO VOTE "FOR" EACH OF THE
ABOVE PROPOSALS.
SIGNATURE(S) DATE
------------------------------ -----------------
NOTE: Please sign name exactly as name appears on this Proxy. When shares
are held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee, guardian, corporate officer or partnership,
give full title as such. If a corporation, please sign in corporate name
by president or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
APPENDIX B - CLASS A COMMON STOCK PROXY CARD
JOHN B. SANFILIPPO & SON, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS OCTOBER 26, 2000
Jasper B. Sanfilippo, Mathias A. Valentine, and Michael J. Valentine or any
one or more of them, with power of substitution in each, are hereby appointed
the proxies of the undersigned to vote all shares of the Class A Common Stock
of John B. Sanfilippo & Son, Inc. (the "Company"), that the undersigned is
entitled to vote at the Annual Meeting of Stockholders to be held on
October 26, 2000 at the hour of 10:00 A.M., local time, at the Wyndham
Hotel Northwest Chicago, 400 Park Boulevard, Itasca, Illinois 60143, and at
all postponements or adjournments thereof, upon such business as may properly
come before the meeting, including the items proposed by the Company that are
listed on the reverse side and more completely described in the enclosed
Notice of Annual Meeting of Stockholders and Proxy Statement.
(THIS PROXY IS CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
[X] Please mark your votes as in this example.
1. Election of Directors by holders of Class A Common Stock
FOR [ ] WITHHELD [ ]
Nominees: Jasper B. Sanfilippo
Mathias A. Valentine
Michael J. Valentine
Jeffrey T. Sanfilippo
Timothy R. Donovan
For, except vote withheld from the following nominee(s):
--------------------------------
2. APPROVAL OF APPOINTMENT OF ACCOUNTANTS: Approval of appointment of
PricewaterhouseCoopers LLP as independent accountants for 2001.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. APPROVAL OF AMENDMENT to the 1998 Equity Incentive Plan to increase the
number of authorized shares under the Plan from 350,000 to 700,000.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. In
their discretion, the proxies are authorized to vote on such other
matters as may properly come before the Annual Meeting or any
postponements or adjournments thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE DEEMED TO CONSTITUTE DIRECTION TO VOTE "FOR" EACH OF THE
ABOVE PROPOSALS.
Please mark, sign date and return the proxy card using the enclosed
envelope.
SIGNATURE(S) DATE
------------------------------ -----------------
NOTE: Please sign name exactly as name appears on this Proxy. When shares
are held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee, guardian, corporate officer or partnership,
give full title as such. If a corporation, please sign in corporate name
by president or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
APPENDIX C - 1998 EQUITY INCENTIVE PLAN
THE JOHN B. SANFILIPPO & SON, INC.
1998 EQUITY INCENTIVE PLAN
John B. Sanfilippo & Son, Inc. (the "Company") hereby establishes The John B.
Sanfilippo & Son, Inc. 1998 Equity Incentive Plan (the "Plan"), to become
effective September 1, 1998 (the "Effective Date"), subject to approval by
the holders of a majority of the combined voting power of the Common Stock,
$.01 par value, of the Company ("Common Stock") and Class A Common Stock,
$.01 par value, of the Company ("Class A Stock") present, or represented, and
entitled to vote at a meeting duly called and held. Grants may be made
hereunder prior to such stockholder approval, provided that any such grants
shall be subject to such stockholder approval.
1. Definitions.
In this Plan, except where the context otherwise indicates, the following
definitions apply:
1.1. "Agreement" means a written agreement implementing a grant of an
Option.
1.2 "Board" means the Board of Directors of the Company.
1.3 "Change in Control" shall have the meaning set forth in Subsection
15.1 hereof.
1.4 "Class A Stock" means the Class A Common Stock, $.01 par value per
share, of the Company.
1.5 "Code" means the Internal Revenue Code of 1986, as amended.
1.6 "Committee" means the entire Board or any committee of the Board
appointed by the Board to administer the Plan, meeting the standards of
Rule 16b-3(d)(1) under the Exchange Act, or any similar successor rule
and Temp. Treas. Reg. Section 1.162-27(e)(3) or any similar successor
rule. Unless otherwise determined by the Board, the entire Board shall
be the Committee and shall administer the Plan.
1.7 "Common Stock" means the Common Stock, par value $.01 per share,
of the Company, and any other shares into which such common stock shall
thereafter be exchanged by reason of a recapitalization, merger,
consolidation, split-up, combination, exchange of shares or the like.
1.8. "Company" means John B. Sanfilippo & Son, Inc., a Delaware
corporation, its successors and assigns.
1.9. "Current Grant" shall have the meaning set forth in Subsection
6.4(e)hereof.
1.10. "Date of Exercise" means the date on which the Company receives
notice of the exercise of an Option in accordance with the terms of
Section 8 hereof.
1.11. "Date of Grant" means the date on which an Option is granted by
the Committee (or such later date as specified in advance by the
Committee) or, in the case of a Nonstatutory Stock Option granted to an
Outside Director, the date on which such Nonstatutory Stock Option is
granted pursuant to and in accordance with the provisions of Section
10 hereof.
1.12. "Effective Date" means September 1, 1998, subject to approval by
the holders of the combined voting power of the Common Stock and Class A
Stock present, or represented, and entitled to vote at a meeting duly
called and held.
1.13. "Employee" means any person determined by the Committee to be an
employee of the Company or any Subsidiary.
1.14. "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
1.15. "Fair Market Value" of a Share means:
(a) If on the applicable date the Common Stock is listed for
trading on a national or regional securities exchange or authorized for
quotation on the Nasdaq National Market System, the closing price of the
Common Stock on such exchange or Nasdaq National Market System, as the
case may be, on the applicable date, or if no sales of Common Stock
shall have occurred on such exchange or Nasdaq National Market System,
as the case may be, on the applicable date, the closing price of the
Common Stock on the next preceding date on which there were such sales;
(b) If on the applicable date the Common Stock is not listed for
trading on a national or regional securities exchange or authorized for
quotation on the Nasdaq National Market System, the mean between the
closing bid price and the closing ask price of the Common Stock as
otherwise reported by the Nasdaq Stock Market, Inc. with respect to the
applicable date or, if closing bid and ask prices for the Common Stock
shall not have been so reported with respect to the applicable date, on
the next preceding date with respect to which such bid and ask prices
were so reported; or
(c) If on the applicable date the Common Stock is not listed for
trading on a national or regional securities exchange or authorized for
quotation on the Nasdaq National Market System or otherwise reported by
the Nasdaq Stock Market, Inc., the fair market value of a Share as
determined by the Committee pursuant to a reasonable method adopted in
good faith for such purpose.
Such Fair Market Value shall be subject to adjustment as provided in
Section 23 hereof.
1.16. "For Cause" shall have the meaning set forth in Subsection 14.2
hereof.
1.17. "Incentive Stock Option" means an Option granted under the Plan
that qualifies as an incentive stock option under Section 422 of the
Code and that the Company designates as such in the Agreement granting
the Option.
1.18. "Insider" means a director, officer or beneficial owner of more
than 10% of the Common Stock of the Company for purposes of Section 16
of the Exchange Act.
1.19. "Nonstatutory Stock Option" means an Option granted under the
Plan that is not an Incentive Stock Option.
1.20. "Option" means a right to purchase Common Stock granted under the
Plan in accordance with the terms of either Section 6 or Section 10
hereof.
1.21. "Optionee" means an Outside Director or an Employee to whom an
Option has been granted.
1.22. "Option Period" means the period during which an Option may be
exercised.
1.23. "Option Price" means the price per Share at which an Option may be
exercised. The Option Price shall be determined by the Committee in
accordance with the terms and conditions of the Plan, except that, in
the case of Nonstatutory Stock Options granted to Outside Directors
pursuant to the provisions of Section 10, in no event shall the Option
Price be less than 100% of the Fair Market Value per Share determined as
of the Date of Grant.
1.24. "Other Plans" shall have the meaning set forth in Subsection
6.4(d) hereof.
1.25. "Outside Director" means any person who is a director of the
Company and who is not also an employee of either the Company, any
Subsidiary or any of their respective affiliates.
1.26. "Permanent Disability" means a mental or physical condition which,
in the opinion of the Committee, renders an Optionee unable or
incompetent to carry out the job responsibilities which such Optionee
held or tasks to which such Optionee was assigned at the time the
disability was incurred and which is expected to be permanent or for an
indefinite period.
1.27. "Plan" means The John B. Sanfilippo & Son, Inc. 1998 Equity
Incentive Plan.
1.28. "Prior Grants" shall have the meaning set forth in Subsection
6.4(e) hereof.
1.29. "Reload Option" means a new Option granted to an Optionee pursuant
to and in accordance with Subsections 4.3(f)(v) and 8.2 hereof, upon the
surrender of Shares to pay the Option Price of a previously granted
Option.
1.30 "Share" means a share of Common Stock.
1.31. "Share Withholding" shall have the meaning set forth in Subsection
13.1 hereof.
1.32. "Subsidiary" means a corporation at least 50% of the total
combined voting power of all classes of stock of which is owned by the
Company either directly or through one or more Subsidiaries.
1.33. "Ten Percent Owner" shall have the meaning set forth in Subsection
6.4(a) hereof.
1.34. "Termination of Employment" shall have the meaning set forth in
Subsection 14.1 hereof.
1.35. "$100,000 Limit" shall have the meaning set forth in Subsection
6.4(d) hereof.
2. Purpose.
The purpose of the Plan is to advance the interests of the Company and
its Subsidiaries by encouraging and facilitating the acquisition of a
larger personal financial interest in the Company by Outside Directors
and those Employees upon whose judgment and interest the Company and its
Subsidiaries are largely dependent for the successful conduct of their
operations, and by making executive positions in the Company and its
Subsidiaries more attractive. It is anticipated that the acquisition of
such financial interest will stimulate the efforts of such Employees and
Outside Directors on behalf of the Company and its Subsidiaries and
strengthen their desire to continue in the service of the Company and
its Subsidiaries. It is also anticipated that the opportunity to obtain
such a financial interest will prove attractive to promising executive
talent and will assist the Company and its Subsidiaries in attracting
such persons. The Plan is intended to meet the requirements of Rule
16b-3 of the Exchange Act at all times during which Insiders are subject
to the requirements of Section 16 of the Exchange Act.
3. Scope of the Plan.
3.1. Shares Available. An aggregate of 350,000 Shares is hereby
authorized and made available and shall be reserved for issuance under
the Plan with respect to the exercise of Options. Such number of Shares
shall be reduced by the aggregate number of Shares acquired from time to
time to be held as treasury Shares reserved for use under the Plan.
Subject to the foregoing and the other provisions of this Section 3,
Shares that are issued upon the exercise of Options awarded under the
Plan may be issued out of either the Company's authorized and unissued
or treasury shares of Common Stock. The aggregate number of Shares
available under this Plan shall be subject to adjustment upon the
occurrence of any of the events and in the manner set forth in Section
23 hereof.
3.2. Shares Subject to Terminated Options. If, and to the extent, an
Option shall expire or terminate for any reason without having been
exercised in full, the Shares subject thereto which have not become
outstanding shall (unless the Plan shall have terminated) become
available under the Plan for other grants.
3.3 Authority to Purchase Shares. The Board, such committee of the
Board that the Board shall specifically authorize or direct on its
behalf, or the Committee shall have the authority to cause the Company
to purchase from time to time, in such amounts and at such prices as the
Board, in its discretion, shall deem advisable or appropriate, Shares to
be held as treasury Shares and reserved and used solely for or in
connection with grants under the Plan, at the discretion of the
Committee.
4. Administration.
4.1. The Committee. The Plan shall be administered by the Committee.
4.2. Authority of the Committee. The Committee shall have full and
final authority, in its discretion, but subject to the express
provisions of the Plan, as follows:
(a) to grant Options;
(b) subject to Sections 6 and 10, to determine (a) the Option
Price of the Shares subject to each Option, (b) the Employees and
Outside Directors to whom, and the time or times at which, Options shall
be granted, and (c) subject to Section 3, the number of Shares subject
to an Option to be granted to each Optionee thereof;
(c) to determine all other terms and provisions of each Agreement
(which may, but need not be, identical), other than the exercisability
of Options which is governed by Subsection 6.2 hereof, and, with the
consent of the Optionee, to modify any Agreement;
(d) to construe and interpret the Plan and Agreements;
(e) to prescribe, amend and rescind rules and regulations relating
to the Plan, including, without limitation and subject to Section 14
hereof, the rules with respect to the exercisability of Options;
(f) to require, whether or not provided for in the pertinent
Agreement, of any person exercising an Option, at the time of such
exercise, the making of any representations or agreements which the
Committee may deem necessary or advisable in order to comply with the
securities laws of the United States of America or of any state;
(g) to prescribe the method by which grants of Options shall be
evidenced;
(h) to cancel, with the consent of the Optionee thereof,
outstanding Options and to grant new Options in substitution therefor;
(i) to require withholding from or payment by an Optionee of any
federal, state or other governmental taxes;
(j) to prohibit the election described in Section 11 hereof;
(k) to make all other determinations deemed necessary or advisable
for the administration of the Plan; and
(l) to impose such additional conditions, restrictions and
limitations upon the exercise, vesting or retention of Options as the
Committee may, prior to or concurrently with the grant or award thereof,
deem appropriate, including, but not limited to, limiting the percentage
of Options which may from time to time be exercised by an Optionee.
4.3. Agreements Evidencing Stock Options.
(a) Options awarded under the Plan shall be evidenced by
Agreements which shall not be inconsistent with the terms and provisions
of the Plan, and which shall contain such provisions as the Committee
may in its sole discretion deem necessary or desirable. Without
limiting the generality of the foregoing, the Committee may in any
Agreement impose such restrictions or conditions upon the exercise of
such Option or upon the sale or other disposition of the shares of
Common Stock issuable upon exercise of such Option as the Committee may
in its sole discretion determine. By accepting an award pursuant to the
Plan each Optionee shall thereby agree that each such award shall be
subject to all of the terms and provisions of the Plan, including, but
not limited to, the provisions of Section 4.6.
(b) Each Agreement shall set forth the number of shares of Common
Stock subject to the Option granted thereby, subject to adjustment by
the Committee to reflect changes in capitalization as contemplated by
Section 23.
(c) Each Agreement relating to Options shall set forth the amount
payable by the Optionee to the Company upon exercise of the Option
evidenced thereby, subject to adjustment by the Committee to reflect
changes in capitalization as contemplated by Section 23.
(d) Each Agreement shall set forth the period during which the
Option shall be exercisable, which shall be determined by the Committee
in its discretion, subject to the terms of Subsection 6.4(b) and Section
10 hereof; provided, however, that no Option shall be exercisable after
the expiration of ten (10) years from the Date of Grant, and each Option
shall be subject to earlier termination as herein provided.
(e) Each Agreement shall specify whether the Option is a
Nonstatutory Stock Option or an Incentive Stock Option.
(f) Without limiting the foregoing, the Committee shall provide,
in its discretion, in any Agreement:
(i) for an agreement by the Optionee to render services to
the Company or a Subsidiary upon such terms and conditions as may
be specified in the Agreement, provided that the Committee shall
not have the power to commit the Company or a Subsidiary to employ
or otherwise retain any Optionee;
(ii) for restrictions on the transfer, sale or other
disposition of Shares issued to the Optionee upon the exercise of
an Option;
(iii) for an agreement by the Optionee to resell to the
Company, under specified conditions, Shares issued upon the
exercise of an Option;
(iv) for the payment of the Option Price upon the exercise of
an Option otherwise than in cash, including without limitation by
delivery of Shares valued at Fair Market Value on the Date of
Exercise of the Option in accordance with the terms of Subsection
8.1 hereof, or a combination of cash and Shares, or for the
payment in part of the Option Price with a promissory note in
accordance with the terms of Subsection 8.3 hereof;
(v) for the automatic issuance of a Reload Option covering a
number of Shares equal to the number of any Shares used to pay the
Option Price in accordance with the terms of Subsection 8.2 hereof;
or
(vi) for the right of the Optionee to surrender to the Company
an Option (or a portion thereof) that has become exercisable and to
receive upon such surrender, without any payment to the Company or
a Subsidiary (other than required tax withholding amounts), that
number of Shares (equal to the highest whole number of Shares)
having an aggregate Fair Market Value as of the date of surrender
equal to that number of Shares subject to the Option (or portion
thereof) being surrendered multiplied by an amount equal to the
excess of (i) the Fair Market Value of a Share on the date of
surrender, over (ii) the Option Price, plus an amount of cash equal
to the Fair Market Value of any fractional Share to which the
Optionee might be entitled. Any such surrender shall be treated
as the exercise of the Option (or portion thereof).
4.4. Finality of Committee Determinations: Liability of Members. The
determination of the Committee on all matters relating to the Plan or
any Agreement shall be final, binding and conclusive. No member of the
Committee shall be liable for any action or determination made in good
faith with respect to the Plan, any Agreement or any grant thereunder.
4.5. Periodic Committee Review and Meetings with Management. The
Committee shall from time to time review the implementation and results
of the Plan to determine the extent to which the Plan's purpose is being
accomplished. In addition, the Committee shall periodically meet with
senior management of the Company to review their suggestions regarding
grants under the Plan, including the individuals who are proposed to
receive grants and the amount and terms of such grants; provided,
however, that all such grants shall be determined solely by the
Committee in its discretion.
4.6. Indemnification of Committee. In addition to such other rights of
indemnification as they may have as directors of the Company or as
members of the Committee, the members of the Committee shall be
indemnified by the Company against the reasonable expenses, including
attorneys' fees, actually and reasonably incurred in connection with the
defense of any action, suit or proceeding, or in connection with any
appeal therein, to which they or any of them may be a party by reason of
any action taken or failure to act under or in connection with the Plan
or any Option granted hereunder, and against all amounts reasonably paid
by them in settlement thereof or paid by them in satisfaction of a
judgment in any such action, suit or proceeding, other than for actions
involving wilful misfeasance, gross negligence or reckless disregard of
the member's duties.
5. Eligibility.
Options may be granted only to Outside Directors and Employees, except
that (i) Outside Directors are not eligible to receive Options other
than pursuant to Section 10 and (ii) neither Jasper B. Sanfilippo, Sr.
nor Mathias A. Valentine shall be eligible to receive Options under the
Plan. Subject to the provisions of Section 3 and Subsection 6.5 hereof,
an Employee or Outside Director who has been granted an Option may be
granted additional Options; provided, however, that grants of
Nonstatutory Stock Options to Outside Directors are subject to the
limitations set forth in Section 10. In selecting the individuals to
whom Options shall be granted as well as in determining the number of
Shares subject to each Option to be granted, the Committee shall take
into consideration such factors as it deems relevant in connection with
promoting the purposes of the Plan.
6. Conditions to Grants and Awards.
6.1. General. Subject to the provisions of Sections 5 and 10 hereof,
the Committee is hereby authorized to grant Nonstatutory Stock Options
to Outside Directors and Employees and Incentive Stock Options to
Employees. All Options designated as Incentive Stock Options shall be,
in addition to the other provisions of this Plan, subject to the terms
and conditions of Subsection 6.4 below. Subject to the provisions of
Section 3 hereof, an individual who has been granted an Option may, if
such individual is otherwise eligible, be granted additional Options if
the Committee shall so determine. Subject to the other provisions of
this Plan, the Committee may grant Options with terms and conditions
which differ among the Optionees thereof.
6.2. Exercisability. Each Option granted under this Plan shall provide
that the Option shall become exercisable in equal installments of 25%
of the total number of Shares subject to being purchased thereunder on
each of the first, second, third and fourth anniversaries of the
Option's Date of Grant; provided, however, that the Optionee remains
an Employee (or a director of the Company in the case of a Nonstatutory
Stock Option granted to an Outside Director pursuant to Section 10
hereof) on each such anniversary of the Date of Grant. To the extent
not set forth in the Plan, the terms and conditions of each grant shall
be set forth in an Agreement.
6.3. Grants of Options and Option Price. Subject to the provisions of
Section 10, before the grant of any Option, the Committee shall
determine the Option Price of the Shares subject to such Option;
provided that, except as provided in Subsection 6.4 below with respect
to Incentive Stock Options, the Option Price shall not be less than
fifty percent (50%) of the Fair Market Value of a Share on the Date of
Grant.
6.4. Grants of Incentive Stock Options. Any Option designated as an
Incentive Stock Option may be granted only to an Employee and shall:
(a) have an Option Price of (i) not less than 100% of the Fair
Market Value of a Share on the Date of Grant, or (ii) in the case of
an Employee who owns stock (including stock treated as owned under
Section 424(d) of the Code) possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any of
its Subsidiaries (a "Ten Percent Owner"), not less than 110% of the
Fair Market Value of a Share on the Date of Grant;
(b) have an Option Period of not more than ten (10) years (five
(5) years, in the case of a Ten Percent Owner) from the Date of Grant,
and shall be subject to earlier termination as herein provided;
(c) notwithstanding the provisions relating to termination of
employment set forth in Section 14 hereof, not be exercisable more than
three (3) months (or one (1) year, in the case of an Optionee who is
disabled within the meaning of Section 22(e)(3) of the Code) after
termination of employment;
(d) not have an aggregate Fair Market Value of Shares (determined
for each Incentive Stock Option at the time it is granted) with respect
to which Incentive Stock Options are exercisable for the first time by
such Optionee during any calendar year (under this Plan and any other
employee stock option plan of the Optionee's employer or any parent or
50%-or-more owned subsidiary thereof ("Other Plans")), determined in
accordance with the provisions of Section 422 of the Code, which exceeds
$100,000 (the "$100,000 Limit");
(e) if the aggregate Fair Market Value of Shares (determined on
the Date of Grant) with respect to all Incentive Stock Options
previously granted under this Plan and the Other Plans ("Prior Grants")
and any Incentive Stock Options under such grant (the "Current Grant")
which are exercisable for the first time during any calendar year would
exceed the $100,000 Limit, be exercisable as follows:
(i) the portion of the Current Grant exercisable for the
first time by the Optionee during any calendar year which would
be, when added to any portions of any Prior Grants exercisable for
the first time by the Optionee during any such calendar year with
respect to Shares which would have an aggregate Fair Market Value
(determined at the time of each such grant) in excess of the
$100,000 Limit shall, notwithstanding the terms of the Current
Grant, be exercisable for the first time by the Optionee in the
first subsequent calendar year or years in which it could be
exercisable for the first time by the Optionee when added to all
Prior Grants without exceeding the $100,000 Limit; and
(ii) if, viewed as of the date of the Current Grant, any
portion of a Current Grant could not be exercised under the
provisions of the immediately preceding sentence during any
calendar year commencing with the calendar year in which it is
first exercisable through and including the last calendar year in
which it may by its terms be exercised, such portion of the
Current Grant shall not be an Incentive Stock Option, but
shall be exercisable as a separate Option at such date or dates as
are provided in the Current Grant.
(f) be granted within ten (10) years from the earlier of the date
the Plan is adopted or the date the Plan is approved by the stockholders
of the Company; and
(g) require the Optionee to notify the Committee of any disposition
of any Shares issued pursuant to the exercise of the Incentive Stock
Option under the circumstances described in Section 421(b) of the Code
(relating to certain disqualifying dispositions), within ten (10) days
of such disposition.
6.5. Code Section 162(m) Compliance for Option Grants. The maximum
number of Shares subject to Options which may be awarded to any Optionee
in any one calendar year shall not exceed 50,000 Shares. In all events,
determinations under the preceding sentence shall be made in a manner
which is consistent with Code Section 162 and the regulations promulgated
thereunder.
7. Non-transferability.
Each Option granted hereunder shall by its terms not be assignable or
transferable other than by will or the laws of descent and distribution.
During the life of the Optionee, all rights granted to the Optionee
under the Plan or under any Agreement shall be exercisable only by
the Optionee.
8. Exercise of Options.
8.1. Manner of Exercise and Payment. Subject to the provisions hereof
and the provisions of the Agreement under which it was granted, each
Option shall be exercised by delivery to the Company's treasurer of
written notice of intent to purchase a specific whole number of Shares
subject to the Option. The Option Price of any Shares as to which an
Option is exercised shall be paid in full at the time of the exercise,
unless and to the extent that the Committee agreed in the Agreement in
which the Option was granted to accept a promissory note as provided in
Subsection 8.3 below. Payment may, at the election of the Optionee, be
made in (i) cash, (ii) Shares valued at their Fair Market Value on
the Date of Exercise, (iii) surrender of an exercisable Option covering
Shares with an aggregate Fair Market Value as of the date of exercise in
excess of the aggregate dollar amount of the Option Prices of such
Shares under such Option equal to the Option Price of the Options sought
to be exercised, (iv) through the delivery of irrevocable instructions
to a broker to deliver promptly to the Company an amount in cash equal
to the Option Price, (v) any combination of the foregoing, or (vi) in
accordance with the terms of the Agreement under which the Options
sought to be exercised were granted. In certain circumstances, payment
may also be made in accordance with Subsection 8.3 below.
8.2. Reload Option. Pursuant to Subsection 4.3(f)(v) hereof, the
Committee may, in its sole discretion, award Reload Options in an amount
equal to the number of Shares that could be delivered in payment of the
Option Price (as set forth in Subsection 8.1 above) in connection with
the exercise of an Option. To the extent required by applicable law,
the number of Reload Options available to each Optionee shall be set
forth in each grant. The Option Price for any Reload Option shall be
the Fair Market Value of a Share on the date that Shares are surrendered
in payment of the Option Price. Other terms of the Reload Option shall
be the same as the terms contained in the Agreement relating to the
Option being exercised, provided that if a Reload Option is granted in
connection with the use of Shares to pay the exercise price of an
Incentive Stock Option, the Reload Option shall be a Nonstatutory Stock
Option.
8.3. Deferred Payment of Option Price. To the extent permitted by
applicable law, the Committee may agree in the Agreement in which an
Option is granted to accept as partial payment for the Shares a
promissory note of the Optionee evidencing his or her obligation to
make future cash payment therefor; provided, however, that in no event
may the Committee accept a promissory note for an amount in excess of
the difference between the aggregate Option Price and the par value of
the Shares purchased pursuant to the Option. Promissory notes made
pursuant to this Subsection 8.3 shall be payable as determined by
the Committee, shall be secured by a pledge of the Shares in respect of
the purchase of which the promissory is being delivered and shall bear
interest at a rate fixed by the Committee (which rate shall not be lower
than a reasonable commercial rate).
9. Accelerated Exercise.
Notwithstanding any other provisions of the Plan, all unexercised
Options may be exercised or disposed of commencing on the date of a
Change of Control, as defined in Section 15 hereof; provided, however,
that the Company may cancel all such Options under the Plan as of the
date of a Change of Control by giving notice to each Optionee thereof of
its intention to do so and by permitting the purchase during the
thirty-day period next preceding such effective date of all of the
Shares subject to such outstanding Options.
10. Grant of Stock Options to Outside Directors.
Each Outside Director shall be eligible to be granted Nonstatutory
Stock Options and all such grants shall only be made under and in
accordance with the provisions in this Section 10.
10.1. Grant to Outside Directors. Each person who becomes an Outside
Director shall be granted on the date such person first becomes elected
as an Outside Director, and on each date such person is re-elected as
an Outside Director, which in each case shall be the Date of Grant, a
Nonstatutory Stock Option to purchase 1,000 Shares at an Option Price
equal to the Fair Market Value of such Shares on the Date of Grant.
Each such Nonstatutory Stock Option shall provide that it may be
exercised no later than ten (10) years following the Date of Grant and
that the Nonstatutory Stock Option shall become exercisable in equal
installments of 250 Shares on each of the first, second, third and
fourth anniversaries of the Date of Grant, provided, however, that the
Optionee remains a director of the Company on each such anniversary of
the Date of Grant.
10.2. Insufficient Shares Available. If on any date on which
Nonstatutory Stock Options are to be granted pursuant to Subsection
10.1 above there is an insufficient number of Shares available pursuant
to Section 3 hereof for such grant, the number of Shares subject to each
Option granted pursuant to Subsection 10.1 on such date shall equal the
number of Shares that otherwise would be subject to such Nonstatutory
Stock Options but for such limitation multiplied by a fraction, the
numerator of which shall be the total number of Shares then available
pursuant to Section 3 for the grant of Nonstatutory Stock Options, and
the denominator of which shall be the aggregate number of Shares that
otherwise would be granted pursuant to Subsection 10.1, such product to
be rounded down to the nearest whole number.
10.3. Amendments to Section. Notwithstanding Section 24 hereof, the
provisions in this Section 10 may not be amended more than once every
six (6) months, other than to comport with changes in the Code, the
Employee Retirement Income Security Act, or the rules thereunder.
11. Notification under Section 83(b).
Provided that the Committee has not prohibited such Optionee from
making the following election, if an Optionee shall, in connection with
the exercise of any Option, make the election permitted under Section
83(b) of the Code (ie., an election to include in such Optionee's gross
income in the year of transfer the amounts specified in Section 83(b) of
the Code), such Optionee shall notify the Committee of such election
within ten (10) days of filing notice of the election with the Internal
Revenue Service, in addition to any filing and notification required
pursuant to regulations issued under the authority of Section 83(b)
of the Code.
12. Withholding Taxes.
12.1. Remittance of Tax as Condition of Delivery. The Company shall be
entitled to require as a condition of delivery of Shares hereunder that
the Optionee remit an amount sufficient to satisfy all federal, state
and other governmental withholding tax requirements related thereto.
12.2. Mandatory Withholding on Officers, Directors and Greater Than 10%
Stockholders. In the case of an Optionee who is an officer, director
or beneficial owner of more than 10% of the Common Stock of the Company
(as determined in accordance with Rule 13d-3 under the Exchange Act),
whenever under the Plan, Shares are to be delivered, the Company shall
withhold an amount sufficient to satisfy all federal, state and other
governmental withholding tax requirements related thereto.
13. Elective Share Withholding.
13.1. An Optionee, other than an Insider, may, subject to Committee
approval, elect the withholding ("Share Withholding") by the Company of
a portion of the Shares otherwise deliverable to such Optionee upon his
or her exercise of an Option having a Fair Market Value equal to either
(a) the amount necessary to satisfy such Optionee's required federal,
state or other governmental withholding tax liability with respect
thereto, or (b) a greater amount, not to exceed the estimated total
amount of such Optionee's tax liability with respect thereto.
13.2. Share Withholding Is Subject to Committee Approval. Share
Withholding is subject to Committee approval and each Share Withholding
election by an Optionee shall also be subject to the following
restrictions:
(a) the election must be made prior to the date on which the
amount of tax to be withheld is determined; and
(b) the election shall be irrevocable.
14. Termination of Employment.
14.1. Forfeiture. Subject to the provisions of Subsection 6.4 hereof
with respect to Incentive Stock Options, an unexercised Option shall
terminate and/or be forfeited upon the date on which the Optionee
thereof is no longer an Employee ("Termination of Employment") if the
Termination of Employment was the result of the resignation of the
Optionee or the Optionee was terminated For Cause (as defined in
Subsection 14.2 below) or otherwise, except that:
(a) Death. If the Optionee's Termination of Employment is by
reason of his or her death, unexercised Options to the extent
exercisable on the date of the Optionee's death, may be exercised, in
whole or in part, at any time within one (1) year after the date of
death by the Optionee's personal representative or by the person to
whom the Options are transferred by will or the applicable laws of
descent and distribution.
(b) Retirement. If the Optionee's employment is terminated as a
result of retirement under the provisions of a retirement plan of the
Company or a Subsidiary applicable to the Optionee (or on or after age
60 if no retirement plan of the Company or Subsidiary is applicable to
the Optionee), any unexercised Option, to the extent exercisable at the
date of such Termination of Employment, may be exercised, in whole or in
part, at any time within ninety (90) days after the date of such
Termination of Employment; provided that, if the Optionee dies after
such Termination of Employment and before the expiration of such 90-day
period, unexercised Options held by such deceased Optionee may be
exercised by his or her personal representative or by the person to whom
the Option is transferred by will or the applicable laws of descent and
distribution within one (1) year after the Optionee's Termination
of Employment.
(c) Permanent Disability. If the Optionee's employment is
terminated as a result of his or her Permanent Disability, any
unexercised Option, to the extent exercisable at the date of such
Termination of Employment, may be exercised, in whole or in part, at any
time within one (1) year after the date of such Termination of
Employment; provided that, if an Optionee dies after such Termination of
Employment and before the expiration of such one (1) year period, the
unexercised Options may be exercised by the deceased Optionee's
personal representative or by the person to whom the unexercised Options
are transferred by will or the applicable laws of descent and
distribution within one (1) year after the Optionee's Termination of
Employment, or, if later, within 180 days after the Optionee's death.
(d) Other Reasons for Termination. If the Optionee has a
Termination of Employment for any reason other than by death, retirement,
Permanent Disability, resignation or For Cause, any unexercised Option
to the extent exercisable on the date of such Termination of Employment,
may be exercised, in whole or in part, at any time within three (3)
months from the date of such Termination of Employment.
14.2. "For Cause." A Termination of Employment "For Cause" shall mean
a Termination of Employment that, in the judgment of the Committee, is
the result of (i) the breach by the Employee of any employment
agreement, employment arrangement or any other agreement with the
Company or a Subsidiary, (ii) the Employee engaging in a business that
competes with the Company or a Subsidiary, (iii) the Employee disclosing
business secrets, trade secrets or confidential information of the
Company or a Subsidiary to any party, (iv) dishonesty, misconduct, fraud
or disloyalty by the Employee, (v) misappropriation of corporate funds,
or (vi) such other conduct by the Employee of an incompetent,
insubordinate, immoral or criminal nature as to have rendered the
continued employment of the Employee incompatible with the best
interests of the Company and its Subsidiaries.
14.3. Option Term. Any of the provisions herein to the contrary
notwithstanding, no Option shall be exercisable beyond the term
specified in the related Agreement thereof.
15. Change of Control.
15.1. Definition of "Change of Control." A "Change of Control" occurs
if, and as of the first date on which, no shares of Class A Stock remain
outstanding.
15.2. Notice of Change of Control. The Company shall notify all
Optionees of the occurrence of a Change of Control promptly after its
occurrence, but any failure of the Company to notify shall not deprive
the Optionees of any rights accruing hereunder by virtue of a Change of
Control.
16. Substituted Options.
If the Committee cancels, with the consent of an Optionee, any Option
granted under the Plan, and a new Option is substituted therefor, then
the Committee may, in its discretion, provide that the Date of Grant of
the canceled Option shall be the date used to determine the earliest
date or dates for exercising the new substituted Option under Subsection
6.2 hereof so that the Optionee may exercise or dispose of the
substituted Option at the same time as if the Optionee had held the
substituted Option since the Date of Grant of the canceled Option;
provided, however, that no Optionee who for purposes of Section 16 of
the Exchange Act is treated as an officer, director or 10% stockholder
of the Company may dispose of a substituted Option, within less than
six months after the Date of Grant (calculated without reference to this
Section 16).
17. Securities Law Matters.
17.1. Investment Intent Representation: Restrictive Legend. Where an
investment intent representation or restrictive legend is deemed
necessary to comply with the Securities Act of 1933, as amended, the
Committee may require a written representation to that effect by the
Optionee, or may require that such legend be affixed to certificates for
Shares at the time the Option is exercised.
17.2. Company's Right to Postpone Exercise. If based upon the opinion
of counsel to the Company, the Committee determines that the exercise of
any Options would violate any applicable provision of (i) state or
federal securities law, (ii) the listing requirements of any securities
exchange registered under the Exchange Act on which are listed any of
the Company's equity securities, (iii) the listing requirements of the
Nasdaq National Market if any of the Company's equity securities are
listed thereon, or (iv) the listing requirements of The Nasdaq Small
Cap Market if any of the Company's equity securities are listed thereon,
then the Committee may postpone any such exercise; provided, however,
that the Company shall use its best efforts to cause such exercise to
comply with all such provisions at the earliest practicable date; and
provided further, that the Committee's authority under this Subsection
17.2 shall expire from and after the date of any Change of Control.
17.3. Rule 16b-3 Compliance. With respect to Insiders, transactions
under the Plan are intended to comply with all applicable conditions of
Rule 16b-3 or its successors under the Exchange Act. To the extent any
provision of the Plan or action by the Board or the Committee fails to
so comply, it shall be deemed null and void, to the extent permitted by
law and deemed advisable by the Board and the Committee.
18. Funding.
Benefits payable under the Plan to any person shall be paid directly by
the Company. The Company shall not be required to fund, or otherwise
segregate assets to be used for payment of, benefits under the Plan.
19. No Employment Rights.
Neither the establishment of the Plan, nor the granting of any rights
under the Plan, shall be construed to (a) give any Optionee the right to
remain employed by the Company, any Subsidiary or any of their
affiliates or to any benefits not specifically provided by the Plan, or
(b) in any manner modify the right of the Company, any Subsidiary or any
of their affiliates to modify, amend or terminate any of its employee
benefit plans.
20. Stockholder Rights.
An Optionee shall not, by reason of any right granted hereunder, have any
right as a stockholder of the Company with respect to the Shares which
may be deliverable upon exercise of such Option until such Shares have
been delivered to him or her.
21. Nature of Payments.
Any and all grants or deliveries of Shares hereunder shall constitute
special incentive payments to the Optionee and shall not be taken into
account in computing the amount of salary or compensation of the
Optionee for the purposes of determining any pension, retirement, death
or other benefits under (a) any pension, retirement, profit-sharing,
bonus, life insurance or other employee benefit plan of the Company, any
Subsidiary or any of their affiliates, or (b) any agreement between the
Company, any Subsidiary or any of their affiliates, on the one hand, and
the Optionee, on the other hand, except as such plan or agreement shall
otherwise expressly provide.
22. Non-Uniform Determinations.
Neither the Committee's nor the Board's determinations under the Plan
need be uniform and may be made by the Committee or the Board
selectively among persons who receive, or are eligible to receive,
grants under the Plan (whether or not such persons are similarly
situated). Without limiting the generality of the foregoing, the
Committee shall be entitled, among other things, to make non-uniform and
selective determinations, and to enter into non-uniform and selective
Option agreements as to (a) the persons to receive grants under the
Plan, (b) the terms and provisions of grants under the Plan, and (c) the
treatment, under Section 14 hereof, of leaves of absence.
23. Adjustments.
Any Option entered into hereunder may contain such provisions as the
Committee shall determine for equitable adjustment of (a) the number of
Shares covered thereby, (b) the Option Price, or (c) otherwise, to
reflect a stock dividend, stock split, reverse stock split, Share
combination, recapitalization, merger, consolidation, asset spin-off,
reorganization or similar event, of or by the Company. In any such
event, regardless of whether specified in an Agreement, the aggregate
number of Shares available under the Plan shall be appropriately
adjusted to equitably reflect such event.
24. Amendment of the Plan.
Subject to Subsection 10.3 hereof, the Board may make such modifications
of the Plan as it shall deem advisable; provided, however, no
modifications shall be made which would impair the rights of any Option
theretofore granted without the Optionee's consent; and provided further,
the Board may not, without further approval of the stockholders of the
Company, except as provided in Section 23 above, either:
(a) materially increase the number of Shares reserved for issuance
under the Plan;
(b) materially increase the benefits accruing to participants
under the Plan;
(c) materially modify the requirements as to eligibility for
participation in the Plan; or
(d) extend the date of termination of the Plan.
25. Termination of the Plan.
The Plan shall terminate on the tenth (10th) anniversary of the
Effective Date or at such earlier time as the Board may determine. Any
termination, whether in whole or in part, shall not affect any rights
then outstanding under the Plan.
26. Controlling Law.
The Plan shall be governed, construed and administered in accordance
with the laws of the State of Delaware, except its laws with respect to
choice of law.
27. Action by the Company.
Any action required by the Company under the Plan shall be by resolution
of the Board.
