<PAGE>
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14a INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Annie's Homegrown, Inc.
________________________________________________________________
(Name of Registrant as Specified in Its Charter)
_________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6 (i) (1) and
0-11.
(1) Title of each class of securities to which transaction applies:
_________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
_________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined:
________________________________________________________________
(4) Proposed maximum aggregate value of the transaction:
________________________________________________________________
(5) Total fee paid:
________________________________________________________________
/ / Fee paid previously with preliminary materials:
________________________________________________________________
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
________________________________________________________________
(2) Form, Schedule or Registration Statement no.:
SCHEDULE 14A
________________________________________________________________
(3) Filing Party:
Annie's Homegrown, Inc.
________________________________________________________________
(4) Date Filed:
July 29, 1998
<PAGE>
ANNIE'S HOMEGROWN, INC.
395 MAIN STREET
WAKEFIELD, MA 01880
_______________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 14, 1998
_______________
Dear Stockholder:
It is with great pleasure that the directors and I invite you to attend the
Annual Meeting of Stockholders of Annie's Homegrown, Inc. (the "Company") which
will be held at 10:00 a.m. (Eastern Standard Time) on Monday, September 14, 1998
at the Sheraton Colonial Hotel, One Audubon Road, Wakefield, MA, for the
following purposes:
1. To elect a Board of Directors for the ensuing year.
2. To ratify the selection of the firm of KPMG Peat Marwick LLP as
auditors for the fiscal year ending March 31, 1999.
3. To transact such other business as may properly come before the
meeting and any postponements or adjournments thereof.
Only stockholders of record at the close of business on July 28, 1998, the
record date, are entitled to notice of, and to vote at, the Annual Meeting.
By Order of the Board of Directors
Deborah Churchill Luster
Secretary
Wakefield, Massachusetts
July 29, 1998
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT
PROMPTLY IN THE ENCLOSED STAMPED ENVELOPE BY RETURN MAIL PRIOR TO THE MEETING
DATE IN ORDER TO ASSURE REPRESENTATION OF YOUR SHARES. IF YOU ATTEND THE ANNUAL
MEETING, YOU MAY VOTE YOUR SHARES IN PERSON BY COMPLETING A BALLOT OR PROXY AT
THE MEETING. YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS VOTED AT THE
ANNUAL MEETING.
<PAGE>
ANNIE'S HOMEGROWN, INC.
395 Main Street
WAKEFIELD, MA 01880
(781) 224-1172
_________________
PROXY STATEMENT
_________________
JULY 29, 1998
Proxies in the form enclosed with this Proxy Statement are solicited by the
Board of Directors of Annie's Homegrown, Inc., a Delaware corporation (the
"Company") for use at the Annual Meeting of Stockholders of the Company to be
held at 10:00 a.m. (Eastern Standard Time) on Monday, September 14, 1998 at the
Sheraton Colonial Hotel, One Audubon Road, Wakefield, MA, and any adjournments
thereof (the "Meeting").
Only holders of the Company's common stock, $.001 par value per share (the
"Common Stock"), of record as of the close of business on July 28, 1998, the
record date fixed by the Board of Directors, will be entitled to notice of, and
to vote at, the Meeting. As of the record date, 4,548,168 shares of Common
Stock of the Company were issued and outstanding. Holders of Common Stock are
entitled to cast one vote for each share held of record by them on each proposal
submitted to a vote at the Meeting. Stockholders may vote in person or by
proxy. Execution of a proxy will not in any way affect a stockholder's right to
attend the Meeting and vote in person. Any stockholder giving a proxy has the
right to revoke that proxy by (i) filing a later-dated proxy or a written notice
of revocation with the Secretary of the Company at the address set forth above
at any time before it is exercised, or (ii) voting in person at the Meeting.
The persons named as attorneys in the proxy, Deborah Churchill Luster and
Andrew Martin, were selected by the Board of Directors and are directors and/or
officers of the Company. All properly executed proxies returned in time to be
counted at the Meeting will be voted as stated below under "Voting Procedures."
Any stockholder giving a proxy has the right to withhold authority to vote for
any individual nominee to the Board of Directors by so marking the proxy in the
space provided thereon. Where a choice has been specified on the proxy with
respect to the foregoing matters, including the election of directors, the
shares represented by the proxy will be voted in accordance with the
specifications and will be voted FOR any such proposal if no specification is
indicated.
In addition to the election of directors, the stockholders will consider and
vote upon a proposal to ratify the selection of the firm of KPMG Peat Marwick
LLP as the auditors for the fiscal year ending March 31, 1999, all as further
described in this Proxy Statement.
The Board of Directors of the Company knows of no other matters to be
presented at the Meeting. If any other matter should be presented at the
Meeting upon which a vote properly may be taken, including any proposal to
adjourn the Meeting, shares represented by all proxies received by the Board of
Directors will be voted with respect thereto in accordance with the judgment of
the persons named as attorneys in the proxies.
An Annual Report to Stockholders, containing financial statements for the
fiscal year ended March 31, 1998, is being furnished together with this Proxy
Statement to all stockholders entitled to vote. This Proxy Statement and the
form of proxy were first mailed to stockholders on or about July 29, 1998.
VOTING PROCEDURES
The presence, in person or by proxy, of at least a majority of the
outstanding shares of Common Stock entitled to vote at the Meeting is necessary
to establish a quorum for the transaction of business. Shares represented by
proxies pursuant to which votes have been withheld from any nominee for
director, or which contain one or more abstentions are counted as present for
purposes of determining the presence or absence of a quorum for the Meeting.
-1-
<PAGE>
All properly executed proxies delivered pursuant to this solicitation and not
revoked will be voted at the Meeting as specified in such proxies. Directors
are elected by a plurality of the votes cast, in person or by proxy, at the
Meeting. The six nominees receiving the highest number of affirmative votes of
the shares present or represented and voting on the election of directors at the
Meeting will be elected as directors. Only shares that are voted in favor of a
particular nominee will be counted toward such nominee's achievement of a
plurality. Shares present at the Meeting that are not voted for a particular
nominee or shares present by proxy where the stockholder properly withheld
authority to vote for such nominee will not be counted toward such nominee's
achievement of a plurality. Votes at the Meeting will be tabulated by one or
more independent inspector of elections appointed by the Company.
For all other matters being submitted to stockholders at the Meeting, the
affirmative vote of the majority of shares present (in person or represented by
proxy) and voting on that matter is required for approval. Shares voted to
abstain, since they are not affirmative votes for the matter, will have the same
effect as votes against the matter.
SECURITY OWNERSHIP BY MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth as of July 15, 1998 certain information
regarding the ownership of the Company's voting securities by (i) each person
who, to the knowledge of the Company, beneficially owned more than 5% of the
Company's voting securities outstanding at such date, (ii) each director (or
nominee for director) of the Company, (iii) each Named Executive Officer (as
defined below under "Compensation and Other Information Concerning Directors and
Officers--Executive Compensation") and (iv) all directors (and nominees for
director) and executive officers as a group:
<TABLE>
<CAPTION>
Amount and Nature of PERCENT OF
Name and Address (1) Beneficial Ownership (2)(3) CLASS (4)
-------------------- --------------------------- ----------
<S> <C> <C>
Ann E. Withey (5)
c/o Annie's Homegrown, Inc.
395 Main Street
Wakefield, MA 01880 1,704,209 36.76%
Andrew M. Martin (6)
c/o Annie's Homegrown, Inc.
395 Main Street
Wakefield, MA 01880 1,714,993 36.59%
Ronald L. Cheney 52,238 1.15%
Deborah Churchill Luster (7) 149,092 3.24%
Brady Bevis (8) 11,000 *
Patrick DeTemple 0 *
All directors and executive officers
as a group (8 persons) (9) 3,751,086 76.46%
</TABLE>
__________________
* Less than 1% of total voting securities.
(1) Pursuant to rules of the Securities and Exchange Commission ("SEC"),
addresses are provided only for 5% beneficial owners.
-2-
<PAGE>
(2) Except as otherwise noted in the footnotes to this table, each person or
entity named in the table has sole voting and investment power with respect
to all shares shown as owned, based on information provided to the Company
by the persons and entities named in the table.
(3) Shares of Common Stock subject to stock options exercisable within 60 days
of July 15, 1998 are deemed outstanding for computing the percentage of the
person or group holding such securities.
(4) Percentage of beneficial ownership is calculated on the basis of the amount
of outstanding securities at July 15, 1998 (4,548,168) plus, for each
person, any securities that such person has the right to acquire within 60
days pursuant to stock options or other rights.
(5) Includes 87,287 shares of Common Stock issuable upon exercise of certain
options granted pursuant to the Company's 1990 Option Plan.
(6) Includes 139,261 shares of Common Stock issuable upon exercise of certain
options granted pursuant to the Company's 1990 Option Plan.
(7) Includes 54,212 shares of Common Stock issuable upon exercise of certain
options granted pursuant to the Company's 1990 Option Plan; includes 3,000
shares held in trust for her minor child as to which Ms. Churchill Luster
is the custodian; and 600 shares held jointly with her husband.
(8) Includes 10,000 shares of Common Stock issuable upon exercise of certain
options granted as directors' compensation.
(9) Includes 358,091 shares of Common Stock issuable upon exercise of certain
options granted to directors and executive officers pursuant to the
Company's 1990 Option Plan. Includes 36,000 shares subject to options
exercisable at $2.00 per share granted to Paul Nardone on August 31, 1993
by Mr. Martin and Ms. Withey. Excludes 37,500 shares issuable to Mr.
Nardone pursuant to an Employment Agreement between Mr. Nardone and the
Company dated November 26, 1996.
ELECTION OF DIRECTORS (PROXY ITEM NO. 1)
The Board of Directors of the Company has nominated the following
persons for election as directors of the Company at the Meeting (the
"Nominees"). With the exception of Mr. Cheney, all Nominees are currently
members of the Company's Board of Directors. The Nominees and the year they
first joined the Board of Directors are:
Nominee Year First Joined Board
------- -----------------------
Ann E. Withey 1989
Andrew M. Martin 1989
Ronald L. Cheney
Deborah Churchill Luster 1991
Brady Bevis 1995
Patrick DeTemple 1996
The directors of the Company are elected annually and hold office
until the next Annual Meeting of Stockholders and until their successors have
been elected and qualified or until their earlier death, resignation or removal.
The Board of Directors knows of no reason why any Nominee should be unwilling or
unable to serve, but if such should be the case, proxies will be voted for the
election of a substitute nominee nominated by the Board of Directors or the
Board of Directors may vote to fix the number of directors at a lesser number,
but not less than three (3). A plurality of the votes cast by the holders of
Common Stock present or represented by proxy and entitled to vote at the Meeting
is required for the election of a Nominee. See "Voting Procedures" above.
The Company's By-Laws presently fix the number of directors at seven. The
Board of Directors has named fewer nominees than the number of directors fixed
by such By-Laws because it is seeking to appoint one additional director in the
future. As of the date of this Proxy Statement, no person has been offered this
position, nor has any person agreed to fill this vacancy. Proxies cannot be
voted for a greater number of persons that the number of nominees named herein.
-3-
<PAGE>
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR ELECTION OF THE
NOMINEES AS DIRECTORS OF THE CORPORATION
COMPENSATION OF DIRECTORS
The Board of Directors has the authority to determine a fixed sum to
be paid to directors for attendance at each meeting of the Board or a stated
salary as a director. Directors may be reimbursed for certain expenses in
connection with attendance at Board and committee meetings. No such payment
shall preclude any director from serving the Company in any other capacity and
receiving compensation therefor. Members of special or standing committees of
the Board may be allowed like compensation for attending committee meetings.
Except as set forth above, no director is, or will be, paid any salary, fees or
other compensation for services as a director, except for shares and stock
options which may be granted from time to time to non-employee members of the
Board of Directors pursuant to the 1996 Option Plan.
Each non-employee director elected on or after January 1, 1996 is
eligible to receive stock options to purchase 1,000 shares of Common Stock at an
exercise price equal to the fair market value of such Common Stock at the date
of grant pursuant to the Company's 1996 Stock Plan. All stock options become
vested on the first anniversary of the date of grant and would expire if not
exercised within three years after becoming vested.
INFORMATION CONCERNING DIRECTORS
Ms. Kare Anderson and Mr. Paul Geffner resigned from the Company's
Board of Directors on December 19, 1997, and December 23, 1997, respectively.
Mr. DeTemple resigned from the Board's Audit and Compensation Committees on May
20, 1998. The Board of Directors met two (2) times during the twelve months
ended March 31, 1998. Neither the Audit Committee nor the Compensation
Committee met during the twelve month period ended March 31, 1998. Each of the
directors attended at least 75% of the aggregate of all meetings of the Board of
Directors which were held during his or her period of service during fiscal year
1998.
Committees
----------
The Board of Directors disbanded its Audit Committee, previously
comprised of Messrs. Paul Geffner, DeTemple and the Company's Chief Financial
Officer, Mr. Raiff, on July 9, 1998. The Board of Directors formed a
Compensation Committee on October 27, 1997, initially comprised of Ms. Anderson,
Ms. Bevis, Mr. DeTemple and Mr. Geffner. Following the resignations of Ms.
Anderson and Mr. Geffner from the Board, Ms. Churchill Luster was elected to
serve on the Compensation Committee. At present, the Compensation Committee
consists of Ms. Churchill Luster and Ms. Bevis. The Company does not currently
have a standing audit committee or nominating committee.
OCCUPATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the Nominees to be voted upon at the
Meeting and the executive officers of the Company, their ages, and the positions
currently held by such persons with the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Ann E. Withey 35 Inspirational President and Director
Andrew M. Martin 44 Chief Executive Officer and Director
Deborah Churchill Luster 36 Vice Chairman, Corporate Secretary and Director
Paul Nardone 30 President and Chief Operating Officer
Neil Raiff 41 Chief Financial Officer and Treasurer
Brady Bevis 53 Director
Ronald L. Cheney 62 Director
Patrick DeTemple 46 Director
</TABLE>
-4-
<PAGE>
ANN E. WITHEY co-founded the Company in 1989 and is a director and the
Company's Inspirational President. Ms. Withey has served as a director of the
Company since 1989. Ms. Withey's responsibilities include new product
development and consumer correspondence and relations. Ms. Withey was co-
founder of Smartfood, Inc. and creator of the original recipe for Smartfood
Popcorn. Smartfood, Inc. was sold to Frito-Lay a division of PepsiCo in 1989.
Ms. Withey and her husband own and operate a small organic produce farm in
Connecticut. Ms. Withey actively supports a variety of programs that benefit
women, children, education and the environment. Ms. Withey holds a B.A. degree
from the University of Connecticut.
ANDREW M. MARTIN co-founded the Company and is the Company's Chairman
and Chief Executive Officer. His responsibilities include various aspects of
strategic planning, product development, finance and sales and marketing. Mr.
Martin was a co-founder, President and Chairman of Smartfood, Inc. He presently
divides his time approximately equally between homes the United States and New
Zealand. Mr. Martin actively supports a variety of programs that benefit women,
children, education, and the environment. He has also created several successful
programs to benefit the homeless and the environment including S.A.V.E., Be
Green/(R)/, Bottle Bag, and the Company's community programs.
PAUL NARDONE is the Company's President and Chief Operating Officer.
Mr. Nardone is responsible for managing the Company's strategic national sales
plan. In 1988, Mr. Nardone founded The Olde Boston Snacks brand which is
distributed by Galaxy Foods, Inc., which he continues to serve in an advisory
capacity. In 1990, Mr. Nardone founded New England Snacks, Inc., a regional
snack food distributorship. In March, 1992, New England Snacks, Inc. was sold
to Alternative Distributors where Mr. Nardone was Vice President of Sales until
joining the Company in 1993. Mr. Nardone holds a B.A. degree from Tufts
University.
DEBORAH CHURCHILL LUSTER is the Company's Vice Chairman and Secretary.
She has been a director since 1991. From January 1991 through October 1996, Ms.
Churchill Luster served as the Company's President. Ms. Churchill Luster
presently is employed by the Company on a part-time basis, working closely with
the Company's Chief Operating Officer on various Company matters. She has been
honored by many groups on behalf of issues relating to women, business and the
environment. Prior to joining the Company in May 1990, Ms. Churchill was a
District Loan Officer, in charge of all loan operations in Northern California,
with Glendale Federal Bank of San Mateo California. Ms. Churchill Luster holds
a B.A. degree in Economics from the University of California at Santa Barbara.
NEIL RAIFF is the Company's Chief Financial Officer. From 1989 to
September 1994, Mr. Raiff served in this capacity as an independent contractor.
In October 1994, Mr. Raiff became a part-time employee, and in May 1995 he
joined the Company on a full-time basis. Mr. Raiff is responsible for all day-
to-day financial and administrative functions of the Company including financial
forecasting and strategic planning, expense control, accounting, banking and
insurance relationships. From 1991 to May 1995, Mr. Raiff was a public
accountant in private practice. Mr. Raiff holds a B.S. degree in Accountancy
from Bentley College, and is a certified public accountant.
BRADY BEVIS has been a director since 1995, and presently serves on
the Board's Compensation Committee. Ms. Bevis is a public interest lawyer and
businesswoman, and currently is the Program Coordinator for the Bay Area
Multimedia Partnership. Ms. Bevis was formerly on the Board of Supervisors for
the County of Marin, California, during which she ended the 17-year polarization
over the conversion of Hamilton Air Force Base and started a collaborative
process for planning its future. Prior to elected office, Ms. Bevis was Chair
of the Marin SANE/Freeze, active in the nationwide Lawyers Alliance on Nuclear
Policy, and the Marin County Peace Conversion Commission. Ms. Bevis was a
founding member of Marin Action, Exodux - establishing residential treatment
facilities for autistic children, and the Marin County Commission on
Homelessness. In addition, Ms. Bevis has served on the Boards of Directors for
numerous organizations including The California Council on Partnerships, Marin
Conservation League, and the California Elected Women's Association for
Education and Research.
RONALD L. CHENEY is currently a co-principal of an unregistered fund
of funds. He retired from the practice of law in 1996 and currently resides in
Christiansted, US Virgin Islands. Prior to retirement, Mr. Cheney worked for the
last ten years as a sole practitioner specializing in the area of securities
law. Mr. Cheney has been a panelist at discussions on securities litigation,
lectured in law school, and published articles on securities law.
-5-
<PAGE>
PATRICK DeTEMPLE has been a director of the Company since 1996. Mr.
DeTemple is an attorney with a history of commitment to social issues. Mr.
DeTemple has extensive experience in community, labor and political organizing,
negotiations, and campaigns. As an attorney, Mr. DeTemple practiced immigration
law and has worked with labor organizations (United Farm Workers, Service
Employees), community groups, and political organizations (California Democratic
Party and various candidates). In 1989 and 1990, Mr. DeTemple served as the
National Field Director for Earth Day 1990. He also has served as an attorney
for the City of Cambridge, Massachusetts, and as a senator's chief of staff in
the Massachusetts legislature. During the 1980's, Mr. DeTemple traveled,
worked, wrote and spoke extensively on events in Central America and the
Philippines. Mr. DeTemple holds degrees from Brown, Northeastern, and Harvard
Universities, and is a member of the state bar associations of Massachusetts and
California.
COMPENSATION AND OTHER INFORMATION
CONCERNING DIRECTORS AND OFFICERS
EXECUTIVE COMPENSATION
The following table sets forth for the fiscal years ended December 31,
1996, March 31, 1997 and March 31, 1998, a summary of compensation awarded to,
earned by or paid to the Company's Chief Executive Officer and each of its four
other most highly compensated executive officers (the "Named Executive
Officers") at March 31, 1998. The values reported for the fiscal year ended
March 31, 1997 have been adjusted to give effect to a change in the Company's
fiscal year from December 31 to March 31, effective as of March 27, 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
SECURITIES
NAME AND YEAR UNDERLYING ALL OTHER
PRINCIPAL SALARY /(1)/ BONUS/(2)/ OPTIONS /(2)/ COMPENSATION /(3)/
POSITION
($) ($) (#)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ANDREW M. MARTIN 1998 $ 82,500 $ -- -- $ 22,278
----
Chief Executive Officer 1997 79,500 -- -- 12,682
----
1996 75,000 -- -- 9,307
----
ANN E. WITHEY 1998 $ 73,500 $ -- -- --
----
Inspirational President 1997 79,500 -- -- --
----
1996 75,000 -- -- --
----
PAUL NARDONE 1998 $ 69,750 $ 19,288 -- --
----
President, Chief 1997 65,500 7,958 -- --
----
Operating Officer 1996 61,000 -- -- --
----
NEIL RAIFF 1998 $ 61,500 $ -- -- --
----
Chief Financial 1997 60,000 -- -- --
----
Officer, Treasurer 1996 60,000 -- -- --
----
DEBORAH CHURCHILL LUSTER 1998 $ 22,375 $ -- -- --
----
Secretary 1997 28,750 -- -- --
----
1996 37,500 -- -- --
----
</TABLE>
_________________
(1) Amounts shown do not include the cost to the Company of personal benefits,
the value of which did not exceed 10 percent of the aggregate salary and
bonus compensation for each Named Executive Officer.
-6-
<PAGE>
(2) Pursuant to an Employment Agreement between Mr. Nardone and the Company
dated November 26, 1996, Mr. Nardone receives a quarterly cash bonus and a
fixed number of stock options based on the amount by which the Company's
actual performance exceeds budget during the preceding quarter. Mr.
Nardone has earned, and is owed, stock options to purchase 37,500 shares of
Common Stock. Such stock options have not been granted by the Board of
Directors. When approved by the Board, these options will be granted under
the Company's stockholder-approved 1996 Stock Plan at the fair market value
as of the date of grant.
(3) Other compensation to Mr. Martin includes imputed interest on indebtedness
to the Company, the personal portion of rent and telephone expenses paid by
the Company on Mr. Martin's behalf. See "Certain Relationships and Related
Transactions."
OPTION GRANTS IN LAST FISCAL YEAR
No stock options were granted to the Named Executive Officers during the 1998
fiscal year.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information with respect to the Named Executive
Officers concerning the exercise of stock options during the fiscal year ended
March 31, 1998 and unexercised stock options held as of March 31, 1998.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS AT
OPTIONS AT FY- FY-END ($) (1)
SHARES ACQUIRED END EXERCISABLE/
EXERCISABLE/
NAME on Exercise UNEXERCISABLE UNEXERCISABLE
- - ---- ----------- ------------- -------------
Andrew M. Martin, Chief Executive Officer 84,552 139,261/ $512,506/
0 $0
</TABLE>
_______________________
(1) Calculated based on the initial public offering price of the Company's
Common Stock ($6.00), minus the exercise price of the option
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
REPAID LOAN TO RELATED PARTY
Andrew M. Martin, Chairman and Chief Executive Officer and a director of the
Company, is also the majority stockholder of Simple Packaging Solutions, Inc.
("Simpak"), with which he held similar offices until April 1997. Neil Raiff,
Chief Financial Officer and Treasurer of the Company, also previously held
similar offices with Simpak. Ann E.. Withey and Deborah Churchill Luster are
stockholders of Simpak. Simpak has borrowed from the Company, for which it was
charged interest at the rate of 11% per annum. At March 31, 1997, there was an
outstanding balance of $67,598 which was fully repaid in April 1997.
LOAN TO OFFICER
Andrew M. Martin, Chairman and Chief Executive Officer and a director of
the Company, borrowed $75,000 from the Company on June 30, 1995 pursuant to an
unsecured demand note accruing interest at 11% per annum. As of July 15, 1998,
the full principal balance of the loan was outstanding. Pursuant to a
resolution adopted by the Company's Board of Directors in October 1997, Mr.
Martin entered into a secured promissory note
-7-
<PAGE>
providing for interest payable quarterly at the Medium-Term Federal Reference
Rate, secured by 25,000 shares of the Company's Common Stock owned by Mr.
Martin, which stock was deposited in an escrow account established for this
purpose, together with stock powers in blank authorizing the resale of such
shares under the applicable rules and regulations of the Securities and Exchange
Commission, and restricting the resale of other shares of the Company's Common
Stock owned by Mr. Martin under certain circumstances.
DUE FROM OFFICER
The Company periodically pays certain personal expenses of Mr. Martin which
are accounted for on the Company's books as "Due From Officer." The total amount
of such advances outstanding on March 31, 1998 was $20,688.
STOCK LOANS
Pursuant to Section 8 of the 1990 Option Plan, the Company made loans to Ms.
Churchill Luster, Mr. Martin and Ms. Withey in the amounts of $49,735.20,
$67,641.60 and $67,641.60, respectively, to enable each employee of the Company
to purchase shares of Common Stock upon exercise of certain options which
previously were granted to such employees. In each case, the options were
granted on October 1, 1992 for a term of five years at exercise price of $.80
per share. The terms of the Stock Purchase and Loan Agreements ("Stock Loans")
provide for annual interest at the rate of 6.34%, the Mid-Term Applicable
Federal Rate in effect for October 1997. Interest is payable annually on
October 1. The entire outstanding principal is due on the October 1, 2002. The
terms of the Stock Loans further provide for the Company to pay all interest due
on the foregoing loan on the employees' behalf, plus 1/5 of the original
principal amount of such loans, providing that the employee is still employed by
the Company on September 30 of each year during the life of the obligation.
Additionally, the Stock Loans provide for acceleration and repayment by the
Company in the event of a "change of control." Such payments of principal and
interest shall be deemed to be compensation income to the employee. The Stock
Loans are secured by the Common Stock (the "Pledged Shares") issuable upon
exercise of the options. In the event of the employee's termination by the
Company for good cause, the Pledged Shares are subject to repurchase by the
Company at $.80 per share. In the event of termination for other than good
cause, the employee may obtain title to the Pledged Shares by payment of all
outstanding principal and interest due on his or her Stock Loan, or resell the
Pledged Shares to the Company at $.80 per share.
TRANSACTIONS WITH AHA!, INK.
The Company entered into a licensing agreement with Aha! Ink (the
"License") dated March 21, 1997 pursuant to which Aha! Ink has been granted an
exclusive license for a period of up to ten years to use certain of the
Company's trademarks (the "Marks"), principally the character Bernie/(R)/, in
children's books and other publications for children. As consideration for the
License, the License provides for an initial payment to the Company of 5% of the
capital stock of Aha! Ink, and royalties, payable quarterly, equal to 2.5% of
Licensee's gross receipts attributable to the use of the Marks. Aha! Ink is
controlled by Heather Smith Martin, the wife of Andrew M. Martin who, in
addition to being an executive officer and director of the Company, is also an
officer of Aha! Ink. Mr. Martin and Deborah Churchill Luster are stockholders
of Aha! Ink and presently serve on its Board of Directors. Subsequent to the
end of the latest fiscal year, the Company paid approximately $20,000 to Aha!
Ink for children's books.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Not applicable.
PROPOSAL TO RATIFY SELECTION OF AUDITORS (PROXY ITEM NO. 2)
The Board of Directors has selected the firm of KPMG Peat Marwick LLP,
independent certified public accountants, to serve as auditors for the fiscal
year ending March 31, 1998. KPMG Peat Marwick LLP has served as the Company's
auditors for the past three (3) fiscal years. Representatives of KPMG Peat
Marwick LLP are not expected to be in attendance at the Meeting.
-8-
<PAGE>
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR RATIFICATION OF KPMG
PEAT MARWICK LLP AS AUDITORS
STOCKHOLDER PROPOSALS
It is contemplated that the next Annual Meeting of Stockholders will be held
on or about October 1, 1999. To be eligible for inclusion in the proxy
statement to be furnished to all stockholders entitled to vote at the next
Annual Meeting, proposals must comply with Securities and Exchange Commission
rules and regulations and be received at the Company's principal executive
offices not later than July 31, 1999. In order to avoid controversy as to the
date on which a proposal was received by the Company, it is suggested that any
stockholder who wishes to submit a proposal submit such proposal by Certified
Mail, Return Receipt Requested.
EXPENSES AND SOLICITATION
The costs of printing and mailing proxies will be borne by the Company. In
addition to soliciting stockholders by mail through its regular employees, the
Company may request banks, brokers and other custodians, nominees and
fiduciaries to solicit their customers who have stock of the Company registered
in the names of a nominee and, if so, will reimburse such banks, brokers and
other custodians, nominees and fiduciaries for their reasonable out-of-pocket
costs. Solicitation by officers and employees of the Company may also be made
of some stockholders following the original solicitation.
OTHER BUSINESS
The Board of Directors knows of no other items that are likely to be
brought before the Meeting except those that are set forth in the foregoing
Notice of Annual Meeting of Stockholders. If any other matters properly come
before the Meeting, the persons designated on the enclosed proxy will vote in
accordance with their judgment on such matters.
By Order of the Board of Directors
Deborah Churchill Luster
Secretary
Wakefield, Massachusetts
July 29, 1998
ANNIE'S HOMEGROWN, INC. WILL FURNISH WITHOUT CHARGE TO EACH PERSON A COPY
OF THIS PROXY STATEMENT, A COPY OF ITS ANNUAL REPORT ON FORM 10-KSB, AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION, UPON RECEIPT OF A WRITTEN REQUEST
SENT TO THE SECRETARY OF ANNIE'S HOMEGROWN, INC., 395 MAIN STREET, WAKEFIELD,
MASSACHUSETTS, 01880.
-9-
<PAGE>
[Annie's Homegrown "Rabbit of Approval" Graphic Logo Appears Here]
To Annie's Stockholders:
Annie's Homegrown, Inc. is your company!
As Annie's stockholders, you have an opportunity to vote on issues which affect
your Company. Please return your proxy card in the addressed stamped envelope
as soon as possible with YOUR vote. Thank you for sharing in the future of
Annie's.
---- Detach Here ----
PROXY
ANNIE'S HOMEGROWN, INC.
395 MAIN STREET
WAKEFIELD, MASSACHUSETTS 01880
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 14, 1998
The undersigned hereby appoints Deborah Churchill Luster and Andrew M. Martin,
and each of them singly, true and lawful agents and proxies for the undersigned,
with full power of attorney and power of substitution, to represent the
undersigned and vote all shares of capital stock of any class which the
undersigned is entitled to vote at the Annual Meeting of Stockholders (the
"Meeting") of Annie's Homegrown, Inc. (the "Company") to be held on Monday,
September 14, 1998, at 10:00 a.m., at the Sheraton Colonial Hotel, One Audubon
Road, Wakefield, Massachusetts, and at any adjournment thereof, upon the matters
set forth in the Notice of Annual Meeting of Stockholders and accompanying Proxy
Statement, each dated July 29, 1998, receipt of which is hereby acknowledged.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
[SEE REVERSE SIDE] [SEE REVERSE SIDE]
<PAGE>
---- DETACH HERE ----
PLEASE MARK
[X] VOTES AS IN
THIS EXAMPLE
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THIS PROXY, WHEN
PROPERLY EXECUTED, WILL BE VOTED AS SPECIFIED OR, WHERE NO DIRECTION IS GIVEN,
WILL BE VOTED FOR THE ELECTION OF ALL NOMINEE DIRECTORS AND FOR THE PROPOSAL IN
ITEM 2. A VOTE TO TRANSACT SUCH OTHER BUSINESS AS MAY BE PROPERLY TAKEN UNDER
ITEM 3 WILL BE VOTED IN ACCORDANCE WITH THE JUDGMENT OF THE PERSONS HEREINBEFORE
NAMED AS ATTORNEYS.
1. To elect a Board of Directors for the ensuing year.
NOMINEES: Ann E. Withey, Andrew M. Martin, Deborah Churchill Luster,
Brady Bevis, Ronald L. Cheney and Patrick DeTemple.
FOR WITHHELD MARK HERE
[_] ALL [_] FROM ALL IF YOU PLAN [_]
NOMINEES NOMINEES TO ATTEND
THE MEETING
MARK HERE
FOR ADDRESS [_]
CHANGE AND
NOTE BELOW
[_]
--------------------------------------
For all nominees except as noted above
FOR AGAINST ABSTAIN
2. To ratify the selection of the firm of [_] [_] [_]
KPMG Peat Marwick LLP as auditors
of the Company for the fiscal year
ending March 31, 1999.
3. To transact such other business as may properly come before the meeting and
any adjournment thereof.
THIS PROXY GRANTS DISCRETIONARY AUTHORITY TO VOTE FOR A SUBSTITUTE NOMINEE OF
THE BOARD OF DIRECTORS IF ANY NOMINEE FOR DIRECTOR LISTED HEREIN IS UNABLE TO
SERVE, OR FOR GOOD CAUSE WILL NOT SERVE AS A DIRECTOR (UNLESS AUTHORITY TO VOTE
FOR ALL NOMINEES OR FOR THE PARTICULAR NOMINEE WHO CEASED TO BE A CANDIDATE IS
WITHHELD.)
STOCKHOLDERS WHO ATTEND THE ANNUAL MEETING OF STOCKHOLDERS MAY VOTE IN PERSON
EVEN THOUGH THEY HAVE PREVIOUSLY MAILED THIS PROXY. PLEASE DATE, SIGN AND
RETURN THIS PROXY PROMPTLY IN THE ENCLOSED PRE-PAID, PRE-ADDRESSED ENVELOPE.
IMPORTANT: Please date this Proxy and sign exactly as your name(s) appear(s)
hereon. If stock is held jointly, each owner should sign. If signing as an
attorney, executor, administrator, trustee, guardian or other fiduciary please
give your full title as such.
Signature: Date:
------------------------------------- ------------------------
Signature: Date:
------------------------------------- ------------------------
