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 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12 [ ]
Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
PET FOOD WAREHOUSE 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):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Items 22(a)(2) of Schedule A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which the
filing fee is calculated and state how it was determined.)
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing party:
(4) Date filed:
- - --------------------------------------------------------------------------------
PET FOOD WAREHOUSE LOGO
INTERCHANGE TOWER, SUITE 701
600 SOUTH HIGHWAY 169
ST. LOUIS PARK, MN 55426
----------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
----------
Dear Stockholders:
The Annual Meeting of Stockholders of Pet Food Warehouse, Inc. will be held
on Wednesday, June 19, 1996, at 3:30 p.m. (Minneapolis time), in Salon D at
the Minneapolis Marriott Southwest, 5801 Opus Parkway, Minnetonka, Minnesota
for the following purposes:
1. To set the number of directors at seven (7).
2. To elect directors for the ensuing year.
3. To consider and act upon such other matters as may properly come
before the meeting and any adjournments thereof.
Only stockholders of record at the close of business on May 10, 1996, are
entitled to notice of and to vote at the meeting or any adjournment thereof.
Your vote is important. We ask that you complete, sign, date and return the
enclosed proxy in the envelope provided for your convenience. The prompt return
of proxies will save the Company the expense of further requests.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Marvin W. Goldstein
Marvin W. Goldstein
Chairman, President and Chief Executive Officer
St. Louis Park, Minnesota
May 17, 1996
- - --------------------------------------------------------------------------------
PET FOOD WAREHOUSE, INC.
ANNUAL MEETING OF STOCKHOLDERS
JUNE 19, 1996
----------
PROXY STATEMENT
----------
INTRODUCTION
Your Proxy is solicited by the Board of Directors of Pet Food Warehouse, Inc.
("the Company") for use at the Annual Meeting of Stockholders to be held on June
19, 1996, at the location and for the purposes set forth in the notice of
meeting, and at any adjournment thereof.
The cost of soliciting proxies, including the preparation, assembly and mailing
of the proxies and soliciting material, as well as the cost of forwarding such
material to beneficial owners of stock, will be borne by the Company. Directors,
officers and associates of the Company may, without compensation other than
their regular remuneration, solicit proxies personally or by telephone.
Any stockholder giving a proxy may revoke it at any time prior to its use at the
meeting by giving written notice of such revocation to the Secretary of the
Company. Proxies not revoked will be voted in accordance with the choice
specified by stockholders by means of the ballot provided on the Proxy for that
purpose. Proxies which are signed but which lack any such specification will,
subject to the following, be voted in favor of the proposals set forth in the
Notice of Meeting and in favor of the number and slate of directors proposed by
the Board of Directors and listed herein. If a stockholder abstains from voting
as to any matter, then the shares held by such stockholder shall be deemed
present at the meeting for purposes of determining a quorum and for purposes of
calculating the vote with respect to such matter, but shall not be deemed to
have been voted in favor of such matter. Abstentions, therefore, as to any
proposal will have the same effect as votes against such proposal. If a broker
returns a "non-vote" proxy, indicating a lack of voting instructions by the
beneficial holder of the shares and a lack of discretionary authority on the
part of the broker to vote on a particular matter, then the shares covered by
such non-vote shall be deemed present at the meeting for purposes of determining
a quorum but shall not be deemed to be represented at the meeting for purposes
of calculating the vote required for approval of such matter.
The mailing address of the principal executive office of the Company is
Interchange Tower, Suite 701, 600 South Highway 169, St. Louis Park, Minnesota
55426. The Company expects that this Proxy Statement, the related proxy and
notice of meeting will first be mailed to stockholders on or about May 17, 1996.
OUTSTANDING SHARES AND VOTING RIGHTS
The Board of Directors of the Company has fixed May 10, 1996, as the record date
for determining stockholders entitled to vote at the Annual Meeting. Persons who
were not stockholders on such date will not be allowed to vote at the Annual
Meeting. At the close of business on May 10, 1996, an aggregate of 9,381,260
shares of the Company's Common Stock were issued and outstanding. The Common
Stock is the only outstanding class of capital stock of the Company entitled to
vote at the meeting. Each share of Common Stock is entitled to one vote on each
matter to be voted upon at the meeting. Holders of Common Stock are not entitled
to cumulative voting rights.
PRINCIPAL SHAREHOLDERS AND MANAGEMENT SHAREHOLDINGS
The following table sets forth the number of shares of Common Stock beneficially
owned as of May 10, 1996 by (i) each person known to the Company to be the
beneficial owner of more than 5% of the Company's outstanding Common Stock, (ii)
each executive officer of the Company named in the Summary Compensation table
below ("Named Executive Officers"), (iii) each current director and nominee for
director of the Company and (iv) all directors and executive officers (including
the named individuals) as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) PERCENT OF CLASS
- - ------------------------------------ --------------------- ----------------
<S> <C> <C>
Gordon F. Stofer 779,999(2)(8) 8.3%
3800 West 80th Street, #1400
Minneapolis, MN 55431
Cherry Tree Ventures IV 771,428 8.2%
3800 West 80th Street, #1400
Minneapolis, MN 55431
George E. Kline 304,284(3)(8) 3.2%
4750 IDS Center
Minneapolis, MN 55402
Marvin W. Goldstein 134,429(4) 1.4%
600 South Highway 169
St. Louis Park, MN 55426
Roe H. Hatlen 99,998(5)(8) 1.1%
10260 Viking Drive
Eden Prairie, MN 55344
Hilding C. Nelson 73,321(6) *
1235 Yale Place #1410
Minneapolis, MN 55403
Jeffrey Sell 55,714(7) *
105 Lindawood Lane
Wayzata, MN 55391
Paul D. Finkelstein 32,142(8)(9) *
7201 Metro Boulevard
Minneapolis, MN 55439
Reid Johnson 25,571(8)(10) *
9166 Breckenridge Lane
Eden Prairie, MN 55347
Stanley Goldberg 12,856(7)(8) *
9959 Valley View Road
Eden Prairie, MN 55344
Patrick A. Labriola 0 0 %
7550 Accotink Park Road
Springfield, VA 22150
William L. Lechtner 0 0 %
7130 Calabria Ct. #E
San Diego, CA 92122
All directors and current executive
officers as a group (11 persons) 1,434,306(11) 14.9%
</TABLE>
* Less than one percent.
(1) Shares not outstanding but deemed beneficially owned by virtue of the
individual's right to acquire them as of May 10, 1996 or within 60 days of
such date, are treated as outstanding when determining the percent of the
class owned by such individual and when determining the percent owned by
the group. Unless otherwise indicated, each person or entity named or
included in the group has sole voting and investment power with respect to
the shares of Common Stock reported as beneficially owned by them.
(2) Includes 771,428 shares held by Cherry Tree Ventures IV and 8,571 shares
issuable pursuant to currently exercisable stock options. Mr. Stofer is a
general partner of CTV Partners IV, which is the general partner of Cherry
Tree Ventures IV. Mr. Stofer disclaims beneficial ownership of the shares
held by Cherry Tree Ventures IV.
(3) Includes 252,856 shares held by the Venture Management Profit Sharing
Trust, of which Mr. Kline is sole trustee, and 8,571 shares issuable
pursuant to currently exercisable stock options.
(4) Includes 100,000 shares issuable pursuant to currently exercisable
options.
(5) Includes 57,142 shares held by Eventyr Investments Ltd. Partnership, and
12,856 shares issuable pursuant to currently exercisable stock options.
Mr. Hatlen is the general partner of Eventyr Investments Ltd. Partnership.
(6) Includes 14,571 shares issuable pursuant to currently exercisable stock
options.
(7) Represents shares issuable pursuant to currently exercisable stock
options.
(8) Does not include 2,857 shares which will be granted to and become
purchasable by such individual on June 19, 1996 pursuant to an automatic
option under the Company's 1993 Stock Option Plan if such individual is
reelected as a director of the Company. See "Election of
Directors--Director Compensation."
(9) Includes 22,142 shares issuable pursuant to currently exercisable stock
options.
(10) Includes 25,000 shares issuable pursuant to currently exercisable stock
options and 571 shares owned by Mr. Johnson's spouse.
(11) Includes 234,888 shares issuable pursuant to currently exercisable stock
options.
ELECTION OF DIRECTORS
(PROPOSALS #1 AND #2)
GENERAL INFORMATION
The Bylaws of the Company provide that at each annual meeting the stockholders
shall determine the number of directors for the ensuing year. Such number shall
not be less than the minimum required by law (which is one) nor more than eight.
The Board of Directors recommends that the number of directors to be elected at
the Annual Meeting be set at seven and that seven directors be elected. Under
applicable Minnesota law, approval of the proposal to set the number of
directors at seven, as well as the election of each nominee, requires the
affirmative vote of the holders of the greater of (1) a majority of the voting
power of the shares represented in person or by proxy at the Annual Meeting with
authority to vote on such matter or (2) a majority of the voting power of the
minimum number of shares that would constitute a quorum for the transaction of
business at the Annual Meeting.
In the absence of other instructions, each proxy will be voted for each of the
nominees listed below unless the proxy withholds a vote for one or more of such
nominees. If elected, each nominee will serve until the next Annual Meeting of
Stockholders and until his successor shall be elected and qualified. If prior to
the Annual Meeting of Stockholders it should become known to the Board of
Directors that any one of the following individuals will be unable to serve as a
director after the Annual Meeting by reason of death, incapacity or other
unexpected occurrence, the proxies will be voted for such substitute nominee as
is selected by the Board of Directors. The Board of Directors has no reason to
believe that any of the following nominees will be unable to serve.
Pursuant to an investment agreement between Cherry Tree Ventures IV and the
Company, Cherry Tree Ventures IV has the right to designate a director until
such time as it owns less than 25% of the shares it originally purchased. Mr.
Stofer is currently serving as this director designee. Certain stockholders of
the Company have agreed to vote their shares of Common Stock for such director
designee, pursuant to a voting agreement, the term of which is coterminous with
the designation right of Cherry Tree Ventures IV. There are no other
arrangements or understandings between any of the directors or any other person
(other than arrangements or understandings with directors acting as such)
pursuant to which any person was selected as a director or nominee of the
Company. There are no family relationships among the Company's directors.
The name and age of all of the director nominees and the positions held by
each with the Company are listed below.
NAME AGE POSITION
- - ---- --- --------
Marvin W. Goldstein 52 Chairman of the Board, President and
Chief Executive Officer
George E. Kline(1)(2) 60 Secretary, Director
Paul D. Finkelstein(2) 53 Director
Stanley Goldberg(1) 49 Director
Roe H. Hatlen(2) 52 Director
Reid Johnson(1) 53 Director
Gordon F. Stofer(2) 49 Director
(1) Member of Audit Committee.
(2) Member of Compensation Committee.
MARVIN W. GOLDSTEIN was elected Chairman of the Board, President and Chief
Executive Officer of the Company in July 1995. From 1988 until 1989, Mr.
Goldstein served as Executive Vice President of Merchandising of the Department
Store Division of Dayton Hudson Corporation, at which time he became President
and Chief Operating Officer of such Division. In 1990 Mr. Goldstein was elected
Chairman, President and Chief Executive Officer of the Department Store Division
and in 1992 was elected President and Chief Operating Officer of the Department
Store Division, a position he held until September 1994.
GEORGE E. KLINE has served as Secretary and a director of the Company since its
inception in 1990 and as Treasurer from inception to December 1993. Since 1966,
Mr. Kline has been President of Venture Management, a firm engaged in providing
financial consulting services to corporations, and since 1985 has been Vice
President of Brightstone Capital Limited (or its predecessor), a venture capital
management firm. Mr. Kline is also a director of Cyberoptics Corporation, a
manufacturer of laser-based sensors and sensor equipment, Rimage Corporation, a
manufacturer of computer diskette duplication and finishing systems and diskette
publishing technology, Applied Biometrics, Inc., a medical devices manufacturer,
and Health Fitness Physical Therapy, Inc., an operator of physical therapy
clinics and fitness centers in hospitals and corporations, all of which are
publicly traded corporations.
PAUL D. FINKELSTEIN has served as a director of the Company since March 1996.
Mr. Finkelstein has been President and Chief Operating Officer and a director of
Regis Corporation, a publicly held company which operates mall-based hair salons
and beauty supply stores, since 1986. Prior to joining Regis, Mr. Finkelstein
was a Senior Vice President of Revlon, Inc. subsequent to Revlon's 1986
acquisition of Turner Hall Corporation, a manufacturer and distributor of a full
line of hair, beauty and nail care products, at which Mr. Finkelstein was Chief
Executive Officer from 1984 to 1986. From 1981 to 1984 Mr. Finkelstein was
Chairman of the Beauty Division of Seligman & Latz, an operator of beauty
salons. From 1971 to 1981 Mr. Finkelstein served in various capacities,
including Executive Vice President and President of Sophia Beauty Salons
Division, for Glemby International, an operator of beauty salons.
STANLEY GOLDBERG has served as a director of the Company since June 1993. Mr.
Goldberg has been the President and Chief Executive Officer and a director of
Ringer Corporation, a publicly held lawn and garden products manufacturer,
since September 1992. Before joining Ringer Corporation, Mr. Goldberg was
Vice President and General Manager of Thompson Consumer Electronics, Inc.
since 1988 and a Manager for various departments of General Electric Company
between 1980 and 1988.
ROE H. HATLEN has served as a director of the Company since November 1993. In
1983, Mr. Hatlen founded Buffets, Inc., a publicly held, multiple-state operator
of Old Country Buffet Restaurants, and has served as its Chairman and Chief
Executive Officer since 1983. From January through September 1983, Mr. Hatlen
served as Chief Financial Officer of Pizza Ventures, Inc., a franchisee of
Godfather's Pizza restaurants, until it was acquired by the franchisor. From
1973 to 1982, Mr. Hatlen served in various capacities, including Chief Financial
Officer, at International King's Table, Inc., a publicly held operator of buffet
restaurants. Mr. Hatlen is a certified public accountant.
REID JOHNSON has served as a director of the Company since July 1995. Mr.
Johnson has been Executive Vice President and Chief Financial Officer of
Musicland Group, Inc., a specialty retailer, since 1994. Prior to joining
Musicland, Mr. Johnson was Vice Chairman and Chief Administrative Officer of
Dayton Hudson Department Stores since 1985, and Senior Vice President and Chief
Financial Officer of Target Stores, a Division of Dayton Hudson, from 1975 to
1985.
GORDON F. STOFER has served as a director of the Company since December 1992,
and served as Chairman of the Board from December 1992 to July 1995. Since 1980,
Mr. Stofer has been Managing General Partner of Cherry Tree Investments, Inc., a
venture capital investment company, where his primary responsibilities include
directing equity investments in small growth companies. Mr. Stofer is also a
director of Insignia Systems, Inc., a marketer of electronic sign product
equipment, Ringer Corporation, a lawn and garden products manufacturer, Harmony
Brook, Inc., a manufacturer of water processing equipment, and Coda Music
Technology, Inc., a provider of proprietary music technology products, all of
which are publicly traded corporations.
COMMITTEE AND BOARD MEETINGS
The Company's Board of Directors has two standing committees, the Audit
Committee and the Compensation Committee. The members of the Audit Committee are
Stanley Goldberg, Reid Johnson and George E. Kline. This committee is
responsible for reviewing the Company's internal audit procedures, the quarterly
and annual financial statements of the Company, and reviewing with the Company's
independent accountants the results of the annual audit. The Audit Committee met
twice during fiscal 1996. The members of the Compensation Committee are Paul D.
Finkelstein, Roe H. Hatlen, George E. Kline and Gordon F. Stofer. The
Compensation Committee recommends to the Board of Directors from time to time
the salaries to be paid to executive officers of the Company and any plan for
additional compensation that it deems appropriate. The Compensation Committee
met three times during fiscal 1996. Members of both of such Committees meet
informally from time to time throughout the year on Committee matters.
During fiscal 1996, the Board of Directors held eleven meetings. Each incumbent
director attended 75% or more of the total number of meetings (held during the
period(s) for which he has been a director or served on committee(s)) of the
Board and of committee(s) of which he was a member.
DIRECTOR COMPENSATION
Under the Company's 1993 Stock Option Plan (the "1993 Plan"), each director of
the Company who is not serving as a full-time officer or employee of the Company
will automatically be granted non-qualified options exercisable for 7,142 shares
of Common Stock upon his or her initial election as a director and for 2,857
shares upon each re-election thereafter. In connection with their agreements to
serve on the Board, Reid Johnson and Paul D. Finkelstein were granted additional
nonqualified options under the Plan to purchase 15,000 shares of Common Stock.
Each such option will be exercisable for a period of five years, unless earlier
terminated in accordance with the 1993 Plan, at an exercise price per share
equal to 100% of the fair market value of the Common Stock on the date of grant.
Options to purchase an aggregate of 89,996 shares of Common Stock are currently
outstanding as a result of the non-employee director compensation portion of the
1993 Plan.
CERTAIN TRANSACTIONS
Pursuant to the terms of a non-recourse promissory note, Jeffrey Sell, the
former Executive Vice President--Chief Operating Officer of the Company,
borrowed $105,000 from the Company on April 29, 1993 at 7.5% interest per annum,
which was 1.5% over the prime lending rate at that time. Payments of interest
are to be made monthly and, as of May 1, 1996, Mr. Sell was current with the
interest payments. On May 6, 1996, Mr. Sell paid $55,305 of outstanding
principal on the note. The remaining principal balance of $49,695 is due and
payable in full on February 1, 1997 and is secured by Mr. Sell's option to
purchase 45,714 shares of Common Stock of the Company at $1.75 per share.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation earned
or awarded during each of the Company's last three fiscal years to those persons
who served as the Company's Chief Executive Officer during the fiscal year ended
February 3, 1996 and each of the Company's other executive officers
(collectively, the "Named Executive Officers") whose total salary and bonus
compensation for the fiscal year ended February 3, 1996 exceeded $100,000.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
FISCAL SECURITIES
NAME AND PRINCIPAL POSITION YEAR OR PERIOD(1) SALARY BONUS OTHER UNDERLYING OPTIONS
- - --------------------------- ----------------- ------ ----- ----- ------------------
<S> <C> <C> <C> <C> <C>
Marvin W. Goldstein, 1/29/95 - 2/03/96 $ 63,462 $ 0 $ 0 400,000
Chairman, President, 1/30/94 - 1/28/95 N/A -- -- --
and Chief Executive Officer 1/01/94 - 1/29/94 N/A -- -- --
1/01/93 -12/31/93 N/A -- -- --
Patrick A. Labriola, 1/29/95 - 2/03/96 $ 70,769 $ 0 $139,679(2) 25,000
Former President and 1/30/94 - 1/28/95 160,000 12,000 0 25,000
Chief Executive Officer 1/01/94 - 1/29/94 12,712 0 0 0
1/01/93 -12/31/93 86,154 0 0 100,000
Hilding C. Nelson, 1/29/95 - 2/03/96 $ 39,920 $ 0 $ 0 8,857
Former Acting President and 1/30/94 - 1/28/95 N/A -- -- --
Chief Executive Officer 1/01/94 - 1/29/94 N/A -- -- --
1/01/93 -12/31/93 N/A -- -- --
Jeffrey Sell, Former Executive 1/29/95 - 2/03/96 $109,392 $ 0 $ 0 20,000
Vice President-Chief 1/30/94 - 1/28/95 104,846 6,625 0 20,000
Operating Officer 1/01/94 - 1/29/94 7,945 0 0 0
1/01/93 -12/31/93 91,774 0 0 85,714
William L. Lechtner, 1/29/95 - 2/03/96 $101,250 $ 5,000 $ 0 65,000
Former Vice President- 1/30/94 - 1/28/95 99,038 0 0 10,000
General Merchandise Manager 1/01/94 - 1/29/94 7,548 0 0 0
1/01/93 -12/31/93 61,375 0 0 28,571
</TABLE>
(1) In March 1994, the Company's Board of Directors changed the Company's
fiscal year end from December 31 to the Saturday closest to January 31.
Accordingly, there was a short period which commenced January 1, 1994
and ended January 29, 1994.
(2) Amount paid pursuant to Separation Agreement. See "Employment Contracts
and Change in Control Arrangements" below.
EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL ARRANGEMENTS
The Company has an employment agreement with Mr. Goldstein which provides that
the Company may terminate his employment with or without cause with 30 days'
notice. Mr. Goldstein may terminate the agreement with or without cause and with
or without notice, although he has agreed to use his best efforts to provide 30
days' notice. Mr. Goldstein's current annual base salary is $125,000. The
agreement contains a noncompete obligation which remains in effect for a period
of twelve months after termination of employment. Upon termination by the
Company without cause, Mr. Goldstein will be entitled to receive severance
payments for 12 months equal to his base compensation at the time of
termination.
In June of 1995 Hilding C. Nelson, who was then a director of the Company,
agreed to serve as Acting President and Chief Executive Officer of the Company
pending the recruitment of a permanent such officer, and as a consultant for a
reasonable period thereafter. The Company agreed to compensate Mr. Nelson at the
$166,400 annual rate paid to its former president and to issue to Mr. Nelson an
option to purchase 2,000 shares of the Common Stock of the Company for each
month during which he served.
Prior to his resignation in June 1995, Mr. Labriola had an employment agreement
with the Company providing for an annual base salary of $166,400, subject to
annual review and adjustments and a bonus of up to 30% of his base salary. The
agreement also contained a noncompete obligation which remains in effect for a
period of one year after his resignation. Pursuant to the terms of a Separation
Agreement entered into in connection with Mr. Labriola's resignation, the
Company agreed to continue paying, for a period of 13 months, Mr. Labriola's
base salary, monthly premiums for medical and life insurance policies and health
plans and other considerations.
Prior to his resignation in February 1996, Mr. Sell had an employment agreement
with the Company, as amended April 21, 1995, with an initial term from January
1, 1993 to December 31, 1995 and which continued thereafter on a month-to-month
basis. Mr. Sell's annual base salary was $110,200 at the time of his
resignation. He also was entitled to receive a bonus pursuant to an executive
compensation plan established by the Company. The employment agreement contained
a noncompete provision which remains in effect for two years after voluntary
termination by Mr. Sell. Pursuant to the employment agreement Mr. Sell will
receive his base compensation and benefits for six months from the date of
termination. Additionally, pursuant to the terms of his original employment
agreement, Mr. Sell was granted a nonqualified stock option to purchase 85,714
shares of Common Stock at $1.75 per share.
Prior to his resignation in November 1995, Mr. Lechtner had an employment
agreement with the Company which provided that the Company could terminate his
employment for any or no reason with 30 days' notice and Mr. Lechtner could
terminate the agreement for any or no reason, with or without notice, although
he agreed to use his best efforts to provide 30 days' notice. The agreement
provided for an annual base salary, subject to annual review and adjustment, of
$125,000. Mr. Lechtner was also eligible to receive a bonus under the terms of a
compensation plan to be formulated by Mr. Lechtner and the Company's President,
subject to the approval of the Board of Directors. The agreement contained a
noncompete obligation which remains in effect for a period of six months after
termination of employment.
OPTION/SAR GRANTS DURING 1996 FISCAL YEAR
The following table sets forth information regarding stock options granted to
the Named Executive Officers during the fiscal year ended February 3, 1996. The
Company has not granted stock appreciation rights.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES PERCENT OF TOTAL EXERCISE
UNDERLYING OPTIONS GRANTED PRICE EXPIRATION
NAME OPTIONS GRANTED TO EMPLOYEES IN FISCAL YEAR (PER SHARE) DATE
- - ---- --------------- --------------------------- ----------- ----
<S> <C> <C> <C> <C>
Marvin W. Goldstein 100,000(1) 13.0% $ 4.00 7/18/01
300,000(1) 39.1% $ 4.00 7/18/01
Patrick A. Labriola 25,000(2) 3.3% $ 3.625 1/31/01
Hilding C. Nelson 2,857(3) 0.4% $ 5.125 9/13/00
6,000(3) 0.8% $3.8125 11/07/00
Jeffrey Sell 20,000(4) 2.6% $ 3.625 1/31/01
William L. Lechtner 15,000(5) 2.0% $ 3.625 1/31/01
50,000(6) 6.5% $ 3.72 6/13/01
</TABLE>
(1) Such option is exercisable as to 25% of the total number of shares
immediately, 25% on July 19, 1996, and the balance on July 19, 1997.
(2) Such option was to be exercisable at the rate of 25% of the total
number of shares per year for four years beginning February 1, 1996 and
was to terminate January 31, 2001; however, the option terminated in
September 1995 as a result of Mr. Labriola's termination of employment.
(3) Such option is exercisable in full immediately. As a result of Mr.
Nelson's resignation from the Board in February 1996, such option will
terminate in August 1996.
(4) Such option was to be exercisable at the rate of 25% of the total
number of shares per year for four years beginning February 1, 1996 and
was to terminate January 31, 2001; however, the option will terminate
in May 1996 as a result of Mr. Sell's termination of employment.
(5) Such option was to be exercisable at the rate of 25% of the total
number of shares per year for four years beginning February 1, 1996 and
was to terminate January 31, 2001; however, the option terminated in
November 1995 as a result of Mr. Lechtner's termination of employment.
(6) Such option was to become exercisable on June 15, 1996, but terminated
in November 1995 as a result of Mr. Lechtner's termination of
employment.
AGGREGATED OPTION/SAR EXERCISES DURING 1996 FISCAL YEAR AND FISCAL YEAR END
OPTION/SAR VALUES
None of the Named Executive Officers exercised any stock options during fiscal
1996. The following table sets forth certain information regarding the number
and value of unexercised stock options held by the Named Executive Officers as
of the end of the Company's 1996 fiscal year.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT 1996
OPTIONS AT 1996 FY-END FY-END(1)
---------------------- ---------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Marvin W. Goldstein 100,000 300,000 0 0
Patrick A. Labriola(2) 0 0 0 0
Hilding C. Nelson 14,571 0 0 0
Jeffrey Sell 95,714 30,000 $172,053 $1,875
William L. Lechtner 16,785 0 0 0
</TABLE>
(1) The value of each option is equal to the difference between the fair
market value per share of Common Stock and the option exercise price
per share multiplied by the number of shares subject to the option. The
assumed fair market value of a share of Common Stock as of the end of
the Company's 1996 fiscal year is $3.75, based on the last sale price
for the Common Stock on February 2, 1996, as reported by Nasdaq.
(2) All options previously granted to Mr. Labriola had expired by fiscal
year end as a result of his termination of employment.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Arthur Andersen LLP acted as the Company's independent accountants for fiscal
1996 and the Company has selected Arthur Andersen LLP as its independent
accountants for the current fiscal year ending February 1, 1997. Representatives
of Arthur Andersen LLP are expected to be present at the meeting. They will be
given an opportunity to make a statement regarding financial and accounting
matters of the Company if they so desire, and will be available at the meeting
to respond to appropriate questions from the Company's stockholders.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than 10 percent of
the Company's Common Stock, to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of Common Stock
and other equity securities of the Company. Officers, directors and greater than
10% shareholders ("Insiders") are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based on a review of the copies of such reports
furnished to the Company, during the fiscal year ended February 3, 1996, all
Section 16(a) filing requirements applicable to Insiders were complied with
except that Forms 3 were filed late by Mary Andert and Dean Baarda and one form
covering one transaction was filed late by George E. Kline.
OTHER BUSINESS
Management knows of no other matters to be presented at the meeting. If any
other matter properly comes before the meeting, the appointees named in the
proxies will vote the proxies in accordance with their best judgment.
STOCKHOLDER PROPOSALS
It is expected that the Company's 1997 annual meeting of stockholders will be
held on or about June 4, 1997. Any appropriate proposal submitted by a
stockholder of the Company and intended to be presented at the 1997 annual
meeting must be received by the Company by January 16, 1997, to be includable in
the Company's proxy statement and related proxy for the 1997 annual meeting.
ANNUAL REPORT TO STOCKHOLDERS
A copy of the Company's Annual Report to Stockholders for the fiscal year ended
February 3, 1996, accompanies this notice of meeting and Proxy Statement. No
part of the Annual Report is incorporated herein and no part thereof is to be
considered proxy soliciting material.
FORM 10-KSB
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH PERSON WHOSE PROXY IS BEING
SOLICITED, UPON WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED FEBRUARY 3, 1996, AS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE FINANCIAL
STATEMENTS. THE COMPANY WILL FURNISH TO ANY SUCH PERSON ANY EXHIBIT DESCRIBED IN
THE LIST ACCOMPANYING THE FORM 10-KSB, UPON THE PAYMENT, IN ADVANCE, OF
REASONABLE FEES RELATED TO THE COMPANY'S FURNISHING SUCH EXHIBIT(S). REQUESTS
FOR COPIES OF SUCH REPORT OR EXHIBITS(S) SHOULD BE DIRECTED TO MS. SHARON K.
LINK, VICE PRESIDENT -- FINANCE, AT THE COMPANY'S PRINCIPAL ADDRESS.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Marvin W. Goldstein
Marvin W. Goldstein
Chairman, President and Chief Executive Officer
Dated: May 17, 1996
St. Louis Park, Minnesota
PET FOOD WAREHOUSE, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 19, 1996
The undersigned hereby appoints MARVIN W. GOLDSTEIN and SHARON K. LINK, and
each of them, with full power of substitution, as Proxies to represent and vote,
as designated below, all shares of Common Stock of Pet Food Warehouse, Inc.
registered in the name of the undersigned at the Annual Meeting of Stockholders
of the Company to be held in Salon D at the Minneapolis Marriott Southwest, 5801
Opus Parkway, Minnetonka, Minnesota at 3:30 p.m. (Minneapolis time) on June 19,
1996, and at any adjournment thereof, and the undersigned hereby revokes all
proxies previously given with respect to the meeting.
The Board of Directors recommends that you vote FOR each proposal below.
1. SET THE NUMBER OF DIRECTORS AT SEVEN (7):
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. ELECT DIRECTORS: Nominees: Paul D. Finkelstein, Stanley Goldberg,
Marvin W. Goldstein, Roe H. Hatlen
Reid Johnson, George E. Kline and
Gordon F. Stofer.
[ ] FOR all nominees listed above
(except those whose names have been written on the line below)
[ ] WITHHOLD AUTHORITY
to vote for all nominees listed above
(To withhold authority to vote for any nominee, write that nominee's name on the
line below.)
______________________________________________________________________________
(continued on other side)
(continued from other side)
3. OTHER MATTERS. In their discretion, the Proxies are . . .
[ ] AUTHORIZED [ ] NOT AUTHORIZED
to vote upon such other business as may properly come before the Meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN FOR A PARTICULAR PROPOSAL, WILL BE VOTED FOR SUCH PROPOSAL, AND WILL BE
DEEMED TO GRANT AUTHORITY UNDER PROPOSAL NUMBER 3.
THIS PROXY IS SOLICITED ON
BEHALF OF THE BOARD OF DIRECTORS.
Date: __________________, 1996
________________________________
________________________________
PLEASE DATE AND SIGN ABOVE
exactly as name appears at the
left, indicating, where
appropriate, official position or
representative capacity. For
stock held in joint tenancy, each
joint owner should sign.
