LUCILLE
FARMS INC.
150 RIVER
ROAD P.O. BOX 517
MONTVILLE, NEW JERSEY 07045
________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS - November 12, 1998
________________
TO THE STOCKHOLDERS OF LUCILLE FARMS, INC.:
Notice is hereby given that the Annual Meeting of Stockholders
of Lucille Farms, Inc. (the "Company") will be held at the at
the Embassy Suites Hotel, 909 Parsippany Blvd., Parsippany, New
Jersey 07054 on Nov. 12, 1998 at 10:30 a.m., Eastern Daylight
Savings Time, for the following purposes:
1. To elect a Board of Directors to serve until the next Annual
Meeting of Stockholders and until their successors are duly
elected and qualified;
2. To ratify the selection by the Board of Directors of Citrin
Cooperman & Co., LLP to serve as independent auditors for the
fiscal year ending March 31, 1999; and
3. To transact such other business as may properly be presented
for action at the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on Oct.
1, 1998 as the record date for the determination of
stockholders entitled to notice of, and to vote at, this meeting
or any adjournment thereof.
Holders of a majority of the outstanding shares must be present
in person or by proxy in order for the meeting to be held.
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, YOUR
PROXY VOTE IS IMPORTANT. ACCORDINGLY, YOU ARE REQUESTED TO
MARK, SIGN AND DATE THE ENCLOSED PROXY FORM AND RETURN IT IN THE
ACCOMPANYING ENVELOPE. The giving of such proxy will not affect
your right to revoke such proxy before it is exercised or to
vote in person should you later decide to attend the meeting.
All stockholders are cordially invited to attend this meeting.
By Order of the Board of Directors
Stephen M. Katz, Secretary
Oct. 2, 1998
IT IS IMPORTANT THAT THE ENCLOSED PROXY FORM BE
COMPLETED AND RETURNED PROMPTLY.
LUCILLE FARMS, INC.
150 River Road, P.O. Box 517
Montville, New Jersey 07045
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD November 12, 1998
SOLICITATION AND REVOCATION OF PROXIES
This proxy statement is furnished in connection with the
solicitation by the Board of Directors of Lucille Farms, Inc., a
Delaware corporation (the "Company"), of proxies to be voted at
the Annual Meeting of Stockholders of the Company to be held on
November 12, 1998, at 10:30 a.m., Eastern Daylight Savings Time,
at the Embassy Suites Hotel, 909 Parsippany Blvd.
Parsippany, New Jersey 07054 and any adjournments thereof.
A form of proxy is enclosed for use at the meeting. The proxy
may be revoked by a stockholder at any time before it is voted
by execution of a proxy bearing a later date or by written
notice to the Secretary before the meeting, and any stockholder
present at the meeting may revoke his proxy thereat and vote in
person if he so desires. When such proxy is properly executed
and returned, the shares it represents will be voted at the
meeting in accordance with any instructions noted thereon. If
no direction is indicated, all shares represented by valid
proxies received pursuant to this solicitation (and not revoked
prior to exercise) will be voted by the person named in the form
of proxy FOR the election of the nominees for directors named
herein, FOR the ratification of the appointment of Citrin and
Cooperman & Co., LLP as the Company's independent
auditors for the year ending March 31, 1999, and, as recommended
by the Board of Directors with regard to all other matters, or,
if no such recommendation is given, in the discretion of the
named proxy.
The cost of soliciting proxies on behalf of the Board of
Directors will be borne by the Company. In addition to
solicitation by mail, proxies may be solicited by directors,
officers or regular employees of the Company (who will receive
no extra compensation for these services) in person or by
telephone or telefax. The Company will also request brokerage
houses, custodians, nominees and fiduciaries to forward these
proxy materials to the beneficial owners of the common stock,
par value $.001 per share, of the Company ("Common Stock"), and
will reimburse such holders for their reasonable expenses in
connection therewith. The approximate date of mailing of this
proxy statement is October 2, 1998.
Only stockholders of record at the close of business on October
1, 1998 will be entitled to notice of, and to vote at, the
Annual Meeting. At the close of business on such record date,
the Company had issued and outstanding 3,002,500 shares of
Common Stock. Each share entitles the holder thereof to one
vote and a vote of the majority of the shares present, or
represented, and entitled to vote at the meeting is required to
approve each proposal to be acted upon at the meeting.
All votes will be tabulated by the inspector of election
appointed for the meeting, who will separately tabulate
affirmative and negative votes, abstentions and broker
non-votes. Abstentions will be counted towards the tabulation of
votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are
counted towards a quorum, but are not counted for any purpose in
determining whether a matter has been approved.
NOMINATION AND ELECTION OF DIRECTORS
Six persons, all of whom are members of the present Board of
Directors, are nominees for election to hold office until the
next annual meeting and until their respective successors are
elected and qualified. Unless authority to vote for the
election of directors shall have been withheld, it is intended
that proxies in the accompanying form will be voted at the
meeting for the election of the six nominees named below. If
any nominee, for any reason presently unknown to the Company,
should refuse or be unable to serve, the shares represented by
the proxies will be voted for such person as shall be designated
by the Board of Directors to replace any such nominee.
The following information is submitted concerning the nominees
named for election as directors based upon information received
by the Company from such persons:
Nominee Age Office
Director Since
Philip Falivene 80 Chairman of the Board of Directors,
Executive Vice President-Manufacturing
1976
Gennaro Falivene 68 Vice Chairman of the Board of
Directors, Executive Vice President-
Quality Control 1976
Alfonso Falivene 56 Director, President and Chief
Executive Officer 1976
Stephen M. Katz 63 Director, Vice President-Finance and
Administration, Chief Financial Officer
and Secretary
1993
Howard S. Breslow 58
Director 1993
Jay M Rosengarten 53 1998
Mr. Philip Falivene founded the Company and has been a director
of the Company since inception in 1976. He served as President
of the Company from the date of its incorporation until April
1993 when he was appointed Chairman of the Board and Executive
Vice President-Manufacturing.
Mr. Gennaro Falivene is a founder of the Company and has been a
director of the Company since inception in 1976. He served as
Vice President and Treasurer of the Company from inception until
April 1993 when he was appointed Vice Chairman of the Board and
Executive Vice President-Quality Control.
Mr. Alfonso Falivene is a founder of the Company and has been a
director of the Company since inception in 1976. He served as
Vice President and Secretary of the Company until April 1993
when he was appointed President and Chief Executive Officer.
Mr. Stephen M. Katz has been a director of the Company, its
Vice President-Finance and Administration and Chief Financial
Officer and Secretary since April 1993. Mr. Katz was a partner
in the certified public accounting firm of Drogin & Katz, a
position he has held since 1970. Drogin & Katz was the
Company's accounting firm from 1973 to March 1993. Mr. Katz is a
certified public accountant licensed in New York and Florida.
Mr. Howard S. Breslow has been a director of the Company since
April 1993. He has been a practicing attorney in New York for
more than 28 years and is a member of the law firm of Breslow &
Walker, New York, New York, which firm serves as general counsel
to the Company. Mr. Breslow currently serves as a director of
Excel Technology, Inc. a publicly-held company engaged in the
development and sale of laser systems, Cryomedical Sciences,
Inc., a publicly-held company engaged in the research,
development and sale of products for use in low temperature
medicine, Vikonics, Inc.,a publicly-held company engaged in the
design and sale of computer-based security systems, and
FIND/SVP, Inc., a publicly-held company engaged in the
development and marketing of business information services and
products.
Mr. Jay Rosengarten was appointed to the Board of
Directors effective February 1,1998.
Mr. Rosengarten, the former Board Chairman of Shopwell, Chicago
is an internationally
recognized consultant, author and lecturer on Consumer
Marketing, Ethnic Marketing and
Business Management. Mr. Rosengarten has a J.D., from Fordham
University Law School.
Mr. Rosengarten is a principal in the Rosengarten Group, a
management consulting firm,
a position he has held from 1993 to present.
BOARD OF DIRECTORS AND COMMITTEES
Philip Falivene and Gennaro Falivene are brothers. Philip
Falivene is also the father of Alfonso Falivene. No other
family relationship exists between any director or executive
officer and any other director or executive officer of the
Company.
The Company has agreed, for a five year period terminating
November 1998, if so requested by Royce Investment Group, Inc.,
the underwriter of the Company's initial public offering
("Royce"), to nominate and use its best efforts to elect a
designee of Royce as a director of the Company or, at Royce's
option, as a non-voting advisor to the Company's Board of
Directors (which person may be an affiliate of Royce). Royce
has not yet exercised its right to designate such a person.
The Company does not currently compensate its directors for
their services in such capacity.
The Board of Directors held four meetings during the year
ended March 31, 1998, which were attended by all directors
except that Messrs Philip Falivene and Gerrero Falivene did not
attend two meetings. The Company currently has no standing
audit, nominating or compensation committees of the Board of
Directors, or committees performing similar functions.
BENEFICIAL OWNERSHIP OF THE COMPANY'S SECURITIES
The following table sets forth, as of August 30, 1998, certain
information with respect to the beneficial ownership of the
Common Stock by each person known by the Company to be the
beneficial owner of five (5%) percent or more of the Company's
outstanding Common Stock, by each director of the Company, each
executive officer named in the Summary Compensation Table below,
and by all executive officers and directors of the Company as a
group. Unless expressly indicated otherwise, each stockholder
exercises sole voting and investment power with respect to the
shares beneficially owned.
Amount and Nature Name and Address of
Beneficial Percent Beneficial Owner Ownership
of Class
Philip Falivene 219,917 7.3% Box 125 Swanton,
Vt. 05488
Gennaro Falivene 327,417 10.8% Box 125
Swanton, Vt. 05488
Alfonso Falivene(1) 464,917 15.4% 150 River Rd.,
P.O. Box 517 Montville, N.J. 07045
Stephen Katz(2) 85,750 2.8% 150 River Rd.,
P.O. Box 517 Montville, N.J. 07045
BWM Investments 242,249 8.0% c/o Howard S.
Breslow 14 Parkwood Lane Dix Hills, N.Y. 11746
Howard S. Breslow 242,249(3) 8.0% 14 Parkwood Lane
Dix Hills, N.Y. 11746
Jay M. Rosengarten
25,000(4) .8%
150 River Road P.O. Box 517
Montville, New Jersey, 07045
All officers and 1,446,500 47.8% directors as a
group (seven persons)
________________
(1)Includes for purposes of this table 7,500 shares owned by
Mr. Falivene's wife and 20,000 shares owned by one of his
children.
(2)Includes for purposes of this table 40,000 shares owned by
Mr. Katz's wife.
(3)Represents all of the shares owned by BWM Investments, a
partnership of which Howard S. Breslow, a director of the
Company, is a partner.
(4) Includes 25,000 shares issuable under outstanding options.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company is not aware of any late filings of, or failure
to file, the reports required by
Section 16(a) of the Securities Exchange Act of 1934, as amended.
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding
compensation paid by the Company during each of the Company's
last three fiscal years to the Company's Chief Executive Officer
and to each of the Company's executive officers who received
salary, bonus and other compensation payments in excess of
$100,000 during the year ended March 31, 1998.
SUMMARY COMPENSATION TABLE
Annual Compensation
Name and Fiscal Other Annual
Principal Positions Year(1) Salary Bonus Compensation(1)
Alfonso Falivene 1998 $106,000 - $8,000 President
and Chief 1997 112,700 - 8,000 Executive Officer
1996 103,800 - 8,000
Gennero Falivene 1998 106,000 -
4,000
Executive Vice 1997
106,000 -
President-Quality 1996 100,000 -
-
Control
__________________
1)Represents automobile allowances and/or automobile lease
payments for the benefit of such employee.
EMPLOYMENT AGREEMENTS
Effective April, 1, 1998, there are no employment
agreements in effect.
REPORT OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
During the fiscal year ended March 31, 1998, the entire Board
of Directors held primary responsibility for determining
executive compensation levels. The goals of the Company's
compensation program is to align compensation with business
objectives and performance and to enable the Company to attract,
retain and reward executive officers and other key employees who
contribute to the long term success of the Company.
The Chief Executive Officer's compensation for the fiscal year
ended March 31, 1998 was based upon Mr. Falivene's negotiated
employment agreement. The compensation provided in Mr.
Falivene's employment agreement was determined by the Board of
Directors (without the vote of Mr. Alfonso Falivene) based on
the Company's performance in 1997, anticipated performance in
1998, and the level of salaries of chief executive officers in a
peer group consisting of cheese manufacturers and/or food
processors having sales levels comparable to the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDE PARTICIPATION
During the year ended March 31, 1998, Messrs. Alfonso, Gennaro
and Philip Falivene, Stephen Katz were each officers of the
Company as well as directors of the Company who participated in
deliberations of the Company's Board of Directors concerning
executive officer compensation.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
At March 31, 1998, Messrs. Alfonso Falivene, Philip Falivene
and Gennaro Falivene each was indebted to the Company in the
amount of $46,000, $40,000 and $40,000,
respectively. Such indebtedness is represented by promissory
notes, dated as of June 1, 1992, the principal amount of which
notes are payable in full on June 1, 2000. The notes bear
interest at the rate of 9% per annum, which interest is payable
annually commencing June 1, 1994.
The Company leases a portion of its Montville, New Jersey
offices from Messrs. Alfonso Falivene, Philip Falivene and
Gennaro Falivene, the joint owners of the office condominium
unit. During the fiscal years ended March 31, 1996, 1997 and
1998, the Company paid approximately $14,000, $14,000 and
$14,000, respectively, towards the rental of such offices. The
Company currently pays $1,200 per month rent for such premises
on a month to month basis. The Company also leases an additional
900 adjacent square feet for $750 monthly on a month-to-month
basis. These premises are also owned by Messrs. Alfonso
Falivene, Philip Falivene and Gennero Falivene. The space is
primarily used for marketing operations. Rent expense for this
space was $9,000, $9,000, and $9,000, respectively, for the
years ended March 31, 1996, 1997, 1998.
Effective July 15,1998 the Company leased a 2 acre parcel of
property adjacent to the
industrial park from Mssrs. Alphonso Falivene, Philip Falivene,
and Gennaro Falivene for
$750.00 monthly or $9,000 annually. The property was required
for use as a parking lot
for Company employees.
The Company is the owner and beneficiary of life insurance
policies on the lives of Messrs. Falivene, each in the amount of
$300,000. In the event of the death of any such insured, the
Company has agreed to utilize the proceeds of such policy to
purchase shares of Common Stock from the deceased's estate at
the market value of such shares on the date of death.
STOCK PERFORMANCE GRAPH
The following chart compares the percentage change in the
cumulative total stockholder return of the Company's Common
Stock during the period from the initial public offering of the
Common Stock (November 2, 1993) through the fiscal year ended
March 31, 1998, with the cumulative total return on the NASDAQ
Composite Index and the Company Peer Group. The comparison
assumes $100.00 was invested in the Common Stock on November 2,
1993, the date of the Company's initial public offering, and in
each of the stocks included in the NASDAQ Composite Index and
the Company Peer Group.
(GRAPH OMITTED)
LEGEND 11/2/93 3/31/94 3/31/95
3/29/96 03/31/97 03/31/98
Lucille Farms, Inc. 100.0 103.1 93.4
103.1 58.0 32.2 Nasdaq Stock Market (US Companies)
100.0 94.9 105.4 143.2 159.2 241.6
Peer Group 100.0 99.5 76.5
96.1 140.8 259.9
Notes: A. The lines represent montly Index levels derived from
compounded daily returns that include all dividends. B. The
Indexes are reweighted daily, using the market capitalization on
the previous trading day. C. If the monthly interval, based on
the fiscal year-end, is not a trading day, the preceeding
trading day is used. D. The Index level for all series was set
to 100.0 on 11/2/93. E. The Peer Group represents 14 companies
in the groceries and related products
field, all of which were listed on NASDAQ during the periods
indicated.
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors has selected the accounting firm of
Citrin Cooperman & Co., LLP to serve as independent auditors of
the Company and proposes the ratification of such decision. A
representative of Citrin Cooperman & Co., LLP is expected to be
present at the meeting to make a statement if he wishes to do so
and to respond to appropriate stockholder questions.
The Board of Directors recommends a vote FOR ratification of
the selection of Citrin Cooperman & Co., LLP as the independent
auditors for the Company for the fiscal year ending March 31,
1999.
STOCKHOLDER PROPOSALS
Stockholders who wish to present proposals for action at the
1998 Annual Meeting should submit their proposals in writing to
the Secretary of the Company at the address of the Company set
forth on the first page of this Proxy Statement. Proposals must
be received by the Secretary no later than May 10, 1999 for
inclusion in next year's proxy statement and proxy card.
ANNUAL REPORT TO STOCKHOLDERS
The Annual Report to stockholders of the Company for the year
ended March 31, 1998, including audited consolidated financial
statements, has been mailed to the stockholders concurrently
herewith, but such report is not incorporated in this Proxy
Statement and is not deemed to be a part of the proxy
solicitation material.
OTHER MATTERS
The Board of Directors of the Company does not know of any
other matters that are to be presented for action at the Annual
Meeting. Should any other matters come before the meeting or
any adjournments thereof, the persons named in the enclosed
proxy will have the discretionary authority to vote all proxies
received with respect to such matters in accordance with their
judgments.
A copy of the Company's Annual Report on Form 10-K, as filed
with the Securities and Exchange Commission (exclusive of
exhibits), will be furnished without charge to any stockholder
upon written request to Stephen M. Katz, Vice President-Finance
and Administration and Chief Financial Officer, 150 River Road,
P.O. Box 517, Montville, New Jersey 07045.
By Order of the Board of Directors
Stephen M. Katz, Secretary
Montville, New Jersey
September 25, 1998
STOCKHOLDERS ARE URGED TO SPECIFY THEIR CHOICES, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE. PROMPT
RESPONSE IS HELPFUL AND YOUR COOPERATION WILL BE APPRECIATED.
