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
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss. 240.14a-11(c) or ss.
240.14a-12
THE HAIN FOOD GROUP, INC.
(Name of Registrant as Specified in Its Charter)
THE HAIN FOOD GROUP, INC.
(Name of Person(s) Filing Proxy Statement)
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(j)(2).
|_| $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 transaction
applies:
3) Per unit or other underlying value of transaction computed
pursuant to
Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
|_| 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:
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3) Filing Party:
4) Date Filed:
<PAGE>
THE HAIN FOOD GROUP, INC.
50 Charles Lindbergh Boulevard
Uniondale, New York 11553
November
4, 1996
Dear Fellow Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders
of The Hain Food Group, Inc., scheduled to be held on Tuesday,
December 3, 1996
at the conference center, located in the lower lobby, at 50 Charles
Lindbergh
Boulevard, Uniondale, New York 11553, commencing at 11:00 A.M.,
Eastern Standard
Time. Your Board of Directors and management look forward to
greeting personally
those stockholders able to attend.
At the meeting, stockholders will be asked to: (i) elect
a Board of
nine Directors to serve for a term of one year; (ii) approve the
1996 Directors
Stock Option Plan; (iii) ratify the appointment of Ernst & Young
LLP as
independent auditors for fiscal 1997; and (iv) transact such other
business as
may properly come before the meeting.
It is important that your shares are represented at the
meeting
whether or not you plan to attend. Accordingly, we request your
cooperation by
promptly signing, dating and mailing the enclosed Proxy in the
envelope provided
for your convenience.
Sincerely,
Irwin D. Simon
President and Chief
Executive
Officer
<PAGE>
THE HAIN FOOD GROUP, INC.
50 Charles Lindbergh Boulevard
Uniondale, New York 11553
--------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AND PROXY STATEMENT
--------------------------
To the Stockholders of
THE HAIN FOOD GROUP, INC.:
The Annual Meeting of Stockholders of The Hain Food
Group, Inc. (the
"Company") will be held on Tuesday, December 3, 1996 at 11:00 A.M.,
Eastern
Standard Time, at the conference center, located in the lower
lobby, 50 Charles
Lindbergh Boulevard, Uniondale, New York, for the following
purposes:
(i) To elect a Board of Directors to serve until the next
Annual Meeting
of Stockholders and until their successors are elected
and
qualified;
(ii) To approve the 1996 Directors Stock Option Plan;
(iii) To ratify the appointment of Ernst & Young LLP as
independent
auditors for fiscal 1997; and
(iv) To transact such other business as may properly come
before the
meeting.
Your vote is important. If you do not expect to be
present at the
meeting and wish your stock to be voted, please sign and date the
enclosed Proxy
and mail it promptly in the enclosed reply envelope addressed to
Continental
Stock Transfer & Trust Company, 2 Broadway, New York, New York
10004.
<PAGE>
SOLICITATION AND REVOCATION OF PROXIES
Proxies are being solicited on behalf of the Board of
Directors of the
Company, and the Company will bear the cost of such solicitation.
It is expected
that the solicitation of Proxies will be primarily by mail. Proxies
may also be
solicited by officers and employees of the Company at no additional
cost to the
Company, in person or by telephone, telegram or other means of
communication.
The Company may reimburse custodians, nominees and fiduciaries
holding Common
Stock (as defined below) for their reasonable expenses in sending
proxy material
to principals and obtaining their Proxy. Any stockholder giving a
Proxy may
revoke it at any time before it is exercised by written notice to
the Secretary
of the Company or by voting in person at the meeting.
It is expected that this Notice of Annual Meeting of
Stockholders and
Proxy Statement will first be mailed to stockholders on or about
November 4,
1996.
STOCKHOLDERS ENTITLED TO VOTE AND SHARES OUTSTANDING
Only stockholders of record at the close of business on
October 28,
1996 will be entitled to vote at the Annual Meeting. On that date
there were
8,866,899 shares of the Common Stock, par value $.01 per share, of
the Company
("Common Stock") outstanding and entitled to be voted at the Annual
Meeting.
Each such share is entitled to one vote. Proxies marked as
abstaining (including
proxies containing broker non-votes) on any matter to be acted upon
by
stockholders will be treated as present at the meeting for purposes
of
determining a quorum but will not be counted as votes cast on such
matters.
BENEFICIAL OWNERSHIP OF SECURITIES
The following table reflects the holdings of the only
persons known to
the Company to own beneficially 5% or more of Common Stock, and
sets forth the
amount and percentage of Common Stock to be beneficially owned as
of September
30, 1996 by each of the individuals named in the Summary
Compensation Table and
by all Executive Officers and Directors of the Company as a group.
Beneficial
ownership has been determined in accordance with Rule 13d-3 under
the Securities
Exchange Act of 1934, as amended, and does not necessarily bear on
the economic
incidents of ownership or the right to transfer such shares.
<PAGE>
-2-
Number of
Percentage of
Name and Address Shares(5)(6)
Common Stock
- ---------------- ------------
- ------------
Irwin D. Simon(1) 1,546,482(3)
16.3%
Jack Kaufman(1) 60,000
*
Benjamin Brecher(1) 87,097
*
Andrew R. Heyer(2) 1,321,620(4)
14.0%
Jerry Fitzgerald(1) 61,000
*
Michael Miller(1) 20,000
*
Ellen B. Deutsch(1) 20,000
*
Beth L. Bronner 36,667
*
500 West Madison
Chicago, Illinois 60661
Barry Gordon 70,000
*
1415 Kellam Place
Garden City, N.Y. 11530
Steven S. Schwartzreich 20,000
*
286 Northern Boulevard
Great Neck, N.Y. 11021
John Gildea 1,100,000(9)
12.4%
90 Ferris Hill Road
New Canaan, Connecticut 06840
William P. Carmichael 15,000
*
808 S. Garfield Avenue
Hinsdale, Illinois 60521
Argosy-Hain Warrant 550,000(7)
5.8%
Holdings, L.P.(2)
Argosy-Hain Investment 708,972
8.0%
Group, L.P.(2)
Jay R. Bloom(2) 1,304,666(4)
13.9%
Dean C. Kehler(2) 1,321,800(4)
14.0%
<PAGE>
Argosy Investment 1,258,972
13.4%
Corp.(2)(8)
Continental Casualty 523,432
5.9%
Company
CNA Plaza
Chicago, Illinois 60685
The Network Company II 1,055,556
11.9%
Limited(9)
c/o Abacus Asset Management
Limited
Lamott Chambers
St. Helier
Jersey, Channel Islands
All officers and 4,357,866
42.3%
directors as a group
(12 persons)
(3)(5)
- -------------------------
* Indicates less than 1%
(1) 50 Charles Lindbergh Boulevard, Uniondale, New York 11553.
(2) 425 Lexington Avenue, New York, New York 10017.
(3) Includes 600,000 shares of Common Stock issuable to Irwin D.
Simon under
the Company's 1993 Executive Stock Option Plan. Also includes
a 2.7%
limited partnership interest in Argosy-Hain Investment Group,
L.P.
(4) As the officers and directors of Argosy Investment Corp.,
which is the
general partner of Argosy-Hain Investment Group, L.P. ("AHIG")
and
Argosy-Hain Warrant Holdings, L.P. ("AHWH"), Messrs. Heyer,
Kehler and
Bloom may be deemed to be the beneficial owners of the 550,000
shares of
Common Stock owned by AHWH and the 708,972 shares of Common
Stock owned by
AHIG.
(5) Includes shares issuable upon exercise of options pursuant to
the Company's
1994 Long Term Incentive and Stock Award Plan, as follows:
Irwin D. Simon -
25,000 shares, Jack Kaufman - 60,000 shares, Benjamin Brecher
- - 45,000
shares, Jerry Fitzgerald - 60,000 shares, Michael Miller -
20,000 shares,
Ellen B. Deutsch - 20,000 shares and Barry Gordon - 50,000
shares.
(6) Does not include shares granted, subject to stockholder
approval, under the
1996 Directors Stock Option Plan. See "Proposal 2 - Approval
of 1996
Directors Stock Option Plan."
(7) Consists of warrants to purchase 550,000 shares of Commons
Stock at $3.25
per share.
<PAGE>
-4-
(8) As general partner of AHIG and AHWH, Argosy Investment Corp.
may be deemed
to be the beneficial owner of the 550,000 shares of Common
Stock owned by
AHWH and the 708,972 shares of Common Stock owned by AHIG.
(9) According to a Schedule 13D jointly filed by The Network
Company II Ltd.
("Network") and John Gildea, Network and Mr. Gildea have
shared dispositive
power over the 1,055,556 shares of Common Stock owned by
Network.
Accordingly, Mr. Gildea may be deemed a beneficial owner of
such shares.
The Schedule 13D also states that the directors and executive
officers of
Network are Bjorn Carlson, Peter Bailey, Michael Harsburg and
David Paul
Boleat.
<PAGE>
-5-
Executive Compensation
Summary of Cash and Certain Other Compensation
The following table sets forth the compensation paid by
the Company
for services rendered during the fiscal year ended June 30, 1996 to
or for the
accounts of the Chief Executive Officer and the other three most
highly
compensated officers.
<TABLE>
<CAPTION>
Summary
Compensation Table
Annual
Compensation Long-Term Compensation
Awards
Restricted Securities
Name and Fiscal
Other Annual Stock Underlying All Other
Principal Position(6) Year Salary Bonus
Compensation Awards Options Compensation
- --------------------- ---- ------ -----
------------ ---------- ---------- ------------
<S> <C> <C> <C>
<C> <C> <C> <C>
Irwin D. Simon.................... 1996 $160,000
$52,000 $5,400 -- 25,000 --
President, Chief 1995 $160,000 --
$5,400 -- -- --
Executive Officer 1994 $107,723(1) --
-- -- 600,000(2) --
and Director
Jack Kaufman(3)................... 1996 $100,000
$30,000 $5,400 -- 10,000 --
Chief Financial 1995 $100,000 --
$5,400 -- -- --
Officer, Treasurer and 1994 $ 26,000 --
$1,350 -- 50,000 --
Assistant Secretary
Benjamin Brecher(4)............... 1996 $125,000
$37,500 $5,400 -- 10,000 --
Vice President- 1995 $125,000 --
$5,400 -- 15,000 --
Operations 1994 $ 61,781 --
$1,350 -- 20,000 --
Jerry Fitzgerald(5)............... 1996 $100,000
$30,000 $5,400 -- 10,000 --
Vice President-Natural 1995 $100,000 --
$5,400 -- 20,000 --
Foods Sales 1994 $ 21,400 --
$ 900 -- 30,000 --
--------------------------------
</TABLE>
(1) Excludes $41,250 accrued to Mr. Simon during year ended June
30, 1994,
which was paid during the year ended June 30, 1995.
(2) The options granted to Mr. Simon provided that they would
become
exercisable upon the Company achieving specified levels of net
sales or
pre-tax income in the fiscal years 1994 to 1996. Upon the
acquisition of
Hain Pure Food Company, Inc. in April 1994, the Board of
Directors further
reviewed the performance conditions set forth above and
determined that the
performance conditions had been satisfied and that Mr. Simon's
options were
fully vested.
(3) Mr. Kaufman was employed effective March 1, 1994.
(4) Mr. Brecher was employed effective with the acquisition of
Kineret Foods
Corp. on November 13, 1993.
<PAGE>
-6-
(5) Mr. Fitzgerald was employed effective with the acquisition of
Hain Pure
Food Company, Inc. on April 14, 1994.
(6) Pursuant to the extension of Mr. Simon's employment agreement
as outlined
below, Mr. Simon's annual base compensation effective July 1,
1996 is
$200,000.
Employment Agreements
Irwin D. Simon, President and Chief Executive Officer of
the Company,
entered into a three year employment agreement with the Company
dated May 1,
1993 pursuant to which Mr. Simon was issued options to acquire
600,000 shares of
Common Stock under the Company's 1993 Executive Stock Option Plan
(the "1993
Plan"), all of which options are currently exercisable. In March
1996, Mr.
Simon's employment agreement as President and Chief Executive
Officer of the
Company was extended for a period of three years, commencing July
1, 1996, at an
annual base compensation of $200,000 effective July 1, 1996, with
minimum annual
increases of $25,000 on each of July 1, 1997 and July 1, 1998.
The Company has entered into a three year employment
agreement with
Benjamin Brecher, expiring on November 19, 1996, at a minimum
annual rate of
compensation of $100,000. Mr. Brecher's current salary, as
determined by the
Board of Directors, is $125,000.
In addition, each employee is eligible to receive
short-term incentive
bonus compensation, the amount of which, if any, shall be
determined by the
Board of Directors based on the employee's performance and
contributions to the
Company's success and on the Company's ability to pay such
incentive
compensation. Employment agreements provide for termination based
on death,
disability, voluntary resignation or material failure in
performance, and do not
provide for severance payments upon termination.
<PAGE>
-7-
Stock Option Grants and Exercises
The tables below set forth information with respect to
grants of
options to, and exercise of options by, the Chief Executive Officer
and the
three other most highly compensated executive officers of the
Company, during
the fiscal year ended June 30, 1996.
Option Grants in Last Fiscal Year
Individual Grants
% of Total
Options Number of
Granted to Securities Exercise
Employees Underlying or Base
in Fiscal Options Price
Expiration
Name Year Granted ($/Sh)(1) Date
Irwin Simon 25,000 24.3% $2.94
January 2006
Jack Kaufman 10,000 9.7% $2.94
January 2006
Benjamin Brecher 10,000 9.7% $2.94
January 2006
Jerry Fitzgerald 10,000 9.7% $2.94
January 2006
- --------------------
(1) Options were granted at exercise prices which were not less
than the fair
market value of the Common Stock at the time of grant.
Aggregate Option Exercises in Last Fiscal Year
and Fiscal Year End Option Values
<TABLE>
<CAPTION>
Securities Underlying
Value of Unexercised
Shares Unexercised Options
In-the-Money Options
Acquired Value Held at June 30, 1996
at June 30, 1996(1)
Name on Exercise Realized Exercisable
Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C>
<C> <C>
Irwin Simon 0 $0 625,000 0
$89,000 $0
Jack Kaufman 0 $0 60,000 0
$11,000 0
Benjamin Brecher 0 $0 45,000 0
$ 7,000 0
Jerry Fitzgerald 0 $0 60,000 0
$11,000 0
- -----------------------
</TABLE>
(1) Based on a price of $3.38 per share, the closing bid price for
the Common
Stock on NASDAQ for such date.
<PAGE>
-8-
1994 Long Term Incentive and Stock Award Plan
In December 1994, the Company adopted the 1994 Long Term
Incentive and
Stock Award Plan (the "1994 Plan"), which amended and restated the
Company's
prior stock option plan. The 1994 Plan provides for the granting of
incentive
stock options to employees, directors and consultants to purchase
up to an
aggregate of 855,000 shares of the Company's common stock. The 1994
Plan is
administered by the Compensation Committee of the Board of
Directors. All of the
options granted to date under the 1994 Plan have been qualified
stock options
providing for exercise prices equivalent to the fair market price
at date of
grant, and expire 10 years after date of grant. At the discretion
of the
Compensation Committee, options are exercisable upon grant or over
a five year
period. Through June 30, 1994, options for an aggregate of 255,000
shares had
been granted at a price of $3.25 per share. During 1995, options
for an
aggregate of 111,500 shares were granted at prices from $3.50 to
$5.00 per share
and 55,000 options were terminated. During 1996, 103,500 options
were granted at
prices ranging from $2.94 to $3.25 per share and 15,000 options
were terminated.
At June 30, 1996, 400,000 options are outstanding, all of which are
currently
exercisable, and 455,000 shares are available for grant.
1993 Executive Stock Option Plan
The Company also has the 1993 Plan pursuant to which it
granted Mr.
Irwin D. Simon, its founder and Chief Executive Officer, options to
acquire
600,000 shares of the Company's common stock. As a result of the
Company
achieving certain sales thresholds, all of such shares are
currently
exercisable. The exercise price of options designed to qualify as
incentive
options is $3.58 per share and the exercise price of non-qualified
options is
$3.25 per share. None of Mr. Simon's options have been exercised.
The options
expire ten years after date of grant.
1996 Directors Stock Option Plan
In December 1995, subject to the approval of stockholders
at the
Annual Meeting to be held on December 3, 1996, the Company adopted
the 1996
Directors Stock Option Plan (the "Directors Plan"). The Directors
Plan provides
for the granting of stock options to non-employee directors to
purchase up to an
aggregate of 300,000 shares of the Company's Common Stock. During
1996,
conditional options for an aggregate of 90,000 shares were granted
at a price of
$3.50 per share, subject to shareholder approval. At June 30, 1996,
90,000
options are outstanding, subject to stockholder approval, and
210,000 are
available for grant. See "Proposal 2 - Approval of 1996 Directors
Stock Option
Plan."
Compensation Committee Report on Executive Compensation
Compensation Committee. The Compensation Committee (the
"Committee")
is responsible for determining the compensation of Company officers
other than
the salaries of the three most senior officers of the Company which
are
determined by the Board of Directors based upon the Committee's
recommendation.
The Committee also administers the 1994 Plan.
Effective August 8, 1994, the Board of Directors
appointed Mr. Heyer,
Ms. Bronner and Mr. Schwartzreich as the members of the Committee.
Decisions and
recommendations by the Committee are made on the basis of an
assessment of
corporate performance and a review of supporting data, including
historical
compensation data of other companies within the industry. Although
actions with
respect to various programs are taken at different times,
consideration of each
is made in the context of the overall compensation package provided
by the
Company.
<PAGE>
-9-
As of the time of issuing this report the Committee has
not evaluated
its compensation policies with respect to qualifying compensation
paid to its
executive officers for deductibility under Section 162(m) of the
Internal
Revenue Code. The Committee believes that compensation to be paid
in fiscal 1996
will not exceed one million dollars in non-excluded compensation to
any of the
named executives.
Compensation Philosophy. The Company's executive
compensation program
is designed to provide competitive levels of remuneration and
assist the Company
in attracting and retaining qualified executives. The Committee is
committed to
the objectives of linking executive compensation to corporate
performance and
providing incentives which align the interests of Company
executives with the
interests of its stockholders. This philosophy underlies executive
compensation
policies designed to integrate rewards with the attainment of
annual and
long-term performance goals, reward significant corporate
performance and
recognize individual initiatives and achievements. It is
performance which most
significantly influences an individual executive's compensation
level. As a
result, actual compensation levels in any particular year may be
above or below
those of the Company's competitors, depending upon the Company's
performance.
The executive compensation program is comprised of salary, annual
cash
incentives and long-term, stock-based incentives. The following is
a discussion
of each of the elements of the executive compensation program along
with a
description of the decisions and actions taken by the Committee
with regard to
fiscal 1996 compensation:
Base Salary. Salary ranges for each executive position
are established
by the Company based on appropriate external comparisons, internal
responsibilities and relationships to other corporate positions.
Existing base
salaries and annual escalations for the named executives were
established based
on the foregoing factors and in negotiation with each of the
executives in
connection with their employment by the Company.
Annual Incentive. The Company may pay annual cash bonuses
in any year
to reward significant corporate accomplishments and individual
initiatives which
contributed to the attainment of targeted goals relating to product
sales,
product margins, return on capital employed, earnings per share and
stockholder
return. If the Committee determines that corporate results are such
that a bonus
program is warranted, then each executive's accomplishments are
assessed as to
their impact on corporate results. Contributions must be above and
beyond normal
expectations. The Chief Executive Officer meets with the Committee
to review
corporate results, the individual executive's contributions and his
recommendations as to annual incentive payments. The Committee
evaluates the
Chief Executive Officer's contributions.
Long-Term Incentives. The 1994 Plan and the 1993 Plan
were approved by
stockholders for the purpose of promoting the interests of the
Company and its
stockholders by (i) attracting and retaining executives and other
key employees
of outstanding ability; (ii) strengthening the Company's capability
to develop,
maintain and direct a competent management team; (iii) motivating
executives and
other key employees, by means of performance-related incentives, to
achieve
longer-range performance goals; (iv) providing incentive
compensation
opportunities which are competitive with those of other comparably
situated
corporations; and (v) enabling such employees to participate in the
long-term
growth and financial success of the Company.
The 1994 Plan provides for the grant of options to
acquire the
Company's Common Stock. The granting of stock options is normally
considered
annually except when special events or circumstances warrant
otherwise. The
options are granted to employees based upon their potential impact
on corporate
results and on their performance. The specific terms of each grant
of options,
including the vesting thereof, are recommended by the Compensation
Committee to
the Board of Directors but are subject to the provisions of the
1993 Plan.
Through June 30, 1994, options for an aggregate of 255,000 shares
had been
issued at a price of $3.25 per share. During 1995, options for an
aggregate of
111,500 shares were granted at prices from $3.50 to $5.00 per share
and 55,000
options were terminated. During 1996, 103,500 options were granted
at prices
ranging from $2.94 to $3.25 per share and
<PAGE>
-10-
15,000 options were terminated. At June 30, 1996, 400,000 options
are
outstanding, all of which are currently exercisable, and 455,000
shares are
available for grant.
The Company has also adopted the 1993 Plan pursuant to
which, in July
1993, it granted options to purchase an aggregate of 600,000 shares
of Common
Stock to the President and Chief Executive Officer of the Company,
Irwin D.
Simon. The options provided that vesting thereof was contingent
upon the Company
achieving specified levels of net sales or pre-tax income by
certain dates.
Following the acquisition by the Company in April 1994 of Hain Pure
Food
Company, Inc., the Board of Directors reviewed the vesting
provisions in light
of such acquisition, and Mr. Simon's performance in effecting the
acquisition,
and determined that the options would be treated as fully vested.
The exercise
price of the options is $3.25 per share.
Chief Executive Officer Compensation. Irwin D. Simon,
President and
Chief Executive Officer of the Company, entered into a three year
employment
agreement with the Company dated May 1, 1993 pursuant to which Mr.
Simon was
issued options to acquire 600,000 shares of Common Stock under the
1993 Plan,
all of which options are currently exercisable. In March 1996, Mr.
Simon's
employment agreement as President and Chief Executive Officer of
the Company was
extended for a period of three years, commencing July 1, 1996, at
an annual base
compensation of $200,000 effective July 1, 1996, with minimum
annual increases
of $25,000 on each of July 1, 1997 and July 1, 1998.
Compensation Committee: Andrew R. Heyer, Chairman
Beth L. Bronner
Steven S. Schwartzreich
<PAGE>
-11-
Performance Graph
The following graph compares the performance of the
Company's Common
Stock to the S&P 500 Index and to the Standard & Poor's food group
index for the
period from January 21, 1994 (the date the Company's Common Stock
began trading
separately from the units issued in the Company's initial public
offering)
through June 30, 1996.
The Hain Food
Date Group, Inc. S&P 500 S&P Food Group
01/22/94 100 100 100
06/30/94 179 94 97
12/31/94 168 97 109
06/30/95 159 115 121
12/31/95 159 130 135
06/30/96 123 141 138
PROPOSAL 1 - ELECTION OF DIRECTORS
Nine Directors are to be elected, each Director to hold
office until
the next Annual Meeting of Stockholders and until his or her
successor is
elected and qualifies. The persons named as proxies in the
accompanying proxy,
who have been designated by the Board of Directors, intend to vote,
unless
otherwise instructed in such proxy, FOR the election of all of the
nominees
listed below.
Following is certain information about the nominees:
Irwin D. Simon, President and Chief Executive Officer, Age 37
Mr. Simon has been a Director, President and Chief
Executive Officer
of the Company since its inception and is its founder. From
December 1990
through December 1992, Mr. Simon was employed in various marketing
capacities
with Slim-Fast Foods Company ("Slim Fast"), a national distributor
of meal
replacement and weight loss food supplements with annual revenues
in excess of
$500 million. His duties initially involved marketing and business
development
for the frozen and dairy divisions of Slim Fast, which included
establishing and
implementing marketing strategies and establishing a distribution
system
throughout the United States. In March 1992, Mr. Simon became Vice
President of
Marketing for Slim Fast. From 1986 through 1990, Mr. Simon was
associated with
The Haagen-Dazs Company, a division of Grand Metropolitan, plc.
Haagen-Dazs is a
manufacturer and distributor of premium ice cream and related
products. Mr.
Simon held a number of sales and marketing positions, including
<PAGE>
-12-
Eastern Regional Director of Haagen-Dazs Shops, the entity managing
a majority
of the total franchisee system and all company-owned retail shops.
Andrew R. Heyer(1), Chairman of the Board, Age 38
Since August 1995, Mr. Heyer has been a Managing Director
of CIBC Wood
Gundy Securities Corp., an affiliate of the Canadian Imperial Bank
of Commerce
and the successor to the Argosy Group, L.P. From February 1990
until August
1995, Mr. Heyer was a Managing Director of the Argosy Group, L.P.,
an investment
banking firm that specialized in merger, acquisition, divestiture,
financing,
refinancing and restructuring transactions. From 1984 to 1990, Mr.
Heyer held
various positions with Drexel Burnham Lambert Incorporated,
including co-head of
Merchant Banking, Head of Industrial Branch and Managing Director
of the
Corporate Finance Department. Mr. Heyer has been a Director since
November 1993.
Beth L. Bronner(1)(2), Secretary of the Company, Age 45
Ms. Bronner joined Citibank, N.A. in September 1996 as
Vice President
and Director of Marketing for the United States and Europe. From
July 1994 to
August 1996, Ms. Bronner was Vice President - Emerging Markets of
American
Telephone & Telegraph Company Consumer Communication Services
business. Ms.
Bronner was President of the Professional Products Division of
Revlon, Inc. from
May 1993 until June 1994. From February 1992 to May 1993 she was
Executive Vice
President of the Beauty Care and Professional Products Division of
Revlon, Inc.
From October 1990 to February 1992, Ms. Bronner was President of
the Frozen
Dessert/Refrigerated Divisions of Slim-Fast Foods Company. Prior to
joining Slim
Fast, she was Senior Vice President of The Haagen-Dazs Company and
General
Manager for the Haagen-Dazs Shops Division. Ms. Bronner also serves
as a
director of Fortis, Inc. and Ulta, Inc. Ms. Bronner has been a
Director since
November 1993.
Barry Gordon(2), Age 51
Since 1980, Mr. Gordon has been President and a director
of American
Fund Advisors, Inc., a money management firm, and was elected
Chairman of the
Board thereof in 1987. In addition, Mr. Gordon is President of The
John Hancock
Global Technology Fund (a mutual fund specializing in
telecommunications and
technology securities) and a director of Winfield Capital
Corporation, a
publicly traded small business investment company. Mr. Gordon has
been a
Director since November 1993.
Steven S. Schwartzreich(1), Age 48
Since 1973, Mr. Schwartzreich has been Vice President and
a director
of Nassau Suffolk Frozen Food Co., Inc., a distributor of frozen
food, ice cream
and bakery products to retail stores. He is currently the Chairman
and President
of the Hunts Point Cooperative Market located in New York City. Mr.
Schwartzreich has been a Director since November 1993.
John Gildea, Age 53
Mr. Gildea has been President and sole director of Gildea
Investment
Co. since 1983, Managing Director of The Network Company II
Limited, a General
Partner of Gildea Management Company, L.P. since 1990 and from 1986
to 1990 was
a Senior Vice President of Donaldson, Lufkin & Jenrette. Mr. Gildea
is also a
director of UNC, Inc., FAC Realty Trust, Barry's Jewelers, Inc. and
America
Service Group, Inc. Mr. Gildea has been a Director since December
1994.
<PAGE>
-13-
William P. Carmichael(2), Age 51
Mr. Carmichael is a certified public accountant and
member of the
Illinois State Bar. He was Senior Vice President & Chief Accounting
Officer of
Sara Lee Corporation from 1991 until his retirement in 1993. From
1988 to 1990
he was Senior Vice President & Chief Financial Officer of the
Beatrice Company.
Mr. Carmichael is a director of several other companies, including
Health O
Meter Products, Inc., Cobra Electronics Corporation and The Golden
Rule
Insurance Company. Mr. Carmichael has been a director since
December 1995.
William J. Fox, Age 40
Mr. Fox has been Executive Vice President and Chief
Financial Officer
of Revlon, Inc. and Revlon Consumer Products Corporation since
their respective
formations in 1992 and was elected as a Director in November 1995
and September
1994, respectively. He has been Executive Vice President and Chief
Financial
Officer of Revlon Holdings Inc. since November 1991 and a Vice
President since
1987. He has been Senior Vice President of MacAndrews & Forbes
Holdings Inc.
("MacAndrews") since August 1990 and was Treasurer from February
1987 to
September 1992. From April 1983 to February 1987, he held various
positions at
MacAndrews or its affiliates. Prior to April 1983, Mr. Fox was a
certified
public accountant at the international auditing form of Coopers &
Lybrand. Mr.
Fox is nominated as a Director for the first time.
Jack Futterman, Age 63
Mr. Futterman retired as Chairman and Chief Executive
Officer of the
Pathmark Supermarket chain in March 1996. He joined Pathmark in
1973 as Vice
President of its drugstore and general merchandise divisions and
occupied a
number of positions before becoming Chairman and Chief Executive
Officer. Mr.
Futterman is a registered pharmacist and former Chairman of the
National
Association of Chain Drugstores. He is a Director of Del Labs,
Inc., as well as
several not-for-profit organizations. Mr. Futterman is nominated as
a Director
for the first time.
- -----------------------
(1) Compensation Committee member.
(2) Audit Committee member.
Directors' Compensation, Committees and Meeting Attendance
During the last fiscal year, the Board of Directors held
six meetings.
During the last fiscal year, the Company did not pay any
direct
compensation to Directors, other than reimbursement of
out-of-pocket expenses
incurred in connection with attendance at meetings of the Board of
Directors. On
December 5, 1995, each non-employee director was granted, subject
to stockholder
approval, options to purchase 15,000 shares of Common Stock at an
exercise price
of $3.50 per share pursuant to the Directors Plan. See "Proposal 2
- - Approval of
1996 Directors Stock Option Plan."
The Board has two standing committees: the Compensation
Committee and
the Audit Committee. The Compensation Committee administers the
1994 Plan and
the 1993 Plan, determines the compensation policies for Company
Officers, and
recommends to the entire Board of Directors the salaries of the
three most
senior Officers of the Company. During fiscal 1996, the
Compensation Committee
held one meeting.
<PAGE>
-14-
During fiscal 1996, the Company's Audit Committee held
one meeting.
The principal functions of the Audit Committee are: to receive
reports prepared
by the Company's finance department; to recommend the selection,
retention or
termination of independent auditors; to review arrangements and
proposals for
the overall scope of the annual audit with management and the
independent
auditors; and to discuss matters of concern to the Audit Committee
with the
independent auditors and management relating to the annual
financial statements
and results of the audit.
During fiscal 1996, each of the incumbent Directors
attended at least
75% of the aggregate of the meetings of the Board of Directors and
committees on
which they served.
PROPOSAL 2 - APPROVAL OF 1996 DIRECTORS STOCK OPTION
PLAN
Background
The Directors Plan is designed to advance the interests
of the Company
by providing additional incentive to attract and retain
non-employee directors
through the encouragement of stock ownership in the Company by such
persons.
The Board of Directors adopted the Directors Plan on
December 5, 1995,
subject to stockholder approval.
The full text of the Directors Plan is set forth in
Appendix A to this
Proxy Statement. The essential features of the Directors Plan are
summarized
below, but such summary is qualified in its entirety by reference
to the full
text of the Directors Plan.
Description of the Directors Plan
There are reserved for issuance under the Directors Plan
an aggregate
of up to 300,000 shares of Common Stock. The shares of Common Stock
issuable
over the term of the Directors Plan may be available from
authorized and
unissued Common Stock and treasury stock (including shares acquired
in the open
market or other transactions).
Each option granted under the Directors Plan will be
immediately
exercisable and shall expire ten (10) years from its date of grant.
The exercise
price of each option shall be the fair market value (as determined
under the
Directors Plan) of the shares of Common Stock underlying such
option on its
grant date.
The Directors Plan will continue in effect until all
options granted
thereunder have expired or terminated or upon earlier termination
as provided
for in the Directors Plan. No options will be granted after five
(5) years from
the date of adoption of the Directors Plan by the Board of
Directors.
Eligibility for Participation
Directors who are not full time or part-time employees of
the Company
will be eligible for participation under the Directors Plan (each,
an "Eligible
Director" and, together, the "Eligible Directors"). At the date of
this Proxy
Statement, six directors of the Company are Eligible Directors, and
two
additional Eligible Directors are nominated for election on
December 3, 1996.
<PAGE>
-15-
Grants of Options
Each Eligible Director will be granted options to
purchase 15,000
Shares of Common Stock on the date such Eligible Director is first
elected as a
member of the Board of Directors, or, in the case of persons who
were Eligible
Directors upon the date of adoption of the Plan, on such date of
adoption. In
addition, each Eligible Director shall automatically receive an
annual grant of
options to purchase 7,500 shares of Common Stock on the date of
each annual
stockholder meeting subsequent to his election as director.
Subject to approval of the Directors Plan by the
stockholders, stock
options have conditionally been granted in the following amounts to
the Eligible
Directors:
New Directors Plan Benefits
- -----------------------------------------------------------------
- --------------
Name Number of
Options (#) (1)
- -----------------------------------------------------------------
- --------------
Beth L. Bronner 15,000
William Carmichael 15,000
John Gildea 15,000
Barry Gordon 15,000
Andrew R. Heyer 15,000
Steven S. Schwartzreich 15,000
All Eligible Directors, as a group 90,000
(1) The number of shares of Common Stock subject to stock
options
heretofore granted under the Directors Plan are set forth
herein.
Options granted under the Directors Plan were granted at
the closing
sales price of the Company's Common Stock ($3.50) on the
date of grant
(December 5, 1995).
Administration
The Directors Plan is designed to operate automatically
and not
require administration. However, to the extent that administration
is necessary,
the Directors Plan shall be administered by those members of the
Board of
Directors who are not eligible to participate in the Directors Plan
(the "Plan
Committee"). Since it is intended that the Directors Plan provide
for grants of
options to non-employee directors of the Company, this function
will be limited
to matters of administrative oversight. The Plan Committee will
have no
discretion with respect to the selection of Eligible Director
optionees, the
determination of the exercise price of options, the timing of such
grants or
number of shares of Common Stock covered by the options. Decisions
and
determinations of the Plan Committee shall be final and binding on
all persons
having an interest in the Directors Plan.
Amendment and Termination
The Board of Directors may, from time to time, amend the
Directors
Plan; provided, however, that, except to the extent provided
therein, no such
amendment may (i) without approval by the Company's stockholders,
increase the
number of shares of Common Stock reserved for options or change the
class of
persons eligible to receive options, or involve any other change or
modification
requiring stockholder approval under Rule 16b-3 of
<PAGE>
-16-
the Securities Exchange Act of 1934, as amended, (ii) permit the
granting of
options that expire beyond the maximum ten (10) year period
described therein,
or (iii) extend the termination date of the Directors Plan as set
forth therein;
provided, further, that, except to the extent specifically provided
otherwise
therein, no amendment or suspension of the Directors Plan issued
thereunder
shall substantially impair any option previously granted to any
optionee without
the consent of such optionee, except such amendment made to cause
the Directors
Plan to qualify for the exemption provided by Rule 16b-3.
The Board of Directors, without further approval of the
Company's
stockholders, may at any time terminate or suspend the Directors
Plan. Any such
termination or suspension of the Directors Plan shall not affect
options already
granted and such options shall remain in full force and effect as
if the
Directors Plan had not been terminated or suspended. No options may
be granted
while the Directors Plan is suspended or after it is terminated.
The rights and
obligations under any option granted to any optionee while the
Directors Plan is
in effect shall not be altered or impaired by the suspension or
termination of
the Directors Plan without the consent of such optionee.
Adjustments
In the event of any recapitalization, reclassification,
split-up or
consolidation of shares of Common Stock, separation (including a
spin-off),
dividend on shares of Common Stock payable in capital stock, or
other similar
change in capitalization of the Company or a merger or
consolidation of the
Company or sale by the Company of all or a portion of its assets or
other
similar event, the Committee shall make such appropriate
adjustments in the
exercise prices of options, including options then outstanding, in
the number
and kind of securities, cash or other property which may be issued
pursuant to
options under the Directors Plan, including options then
outstanding, and in the
number of shares of Common Stock with respect to which options may
be granted
(in the aggregate and to individual participants) as the Committee
deems
equitable with a view toward maintaining the proportionate interest
of the
directors and preserving the value of the options.
No fractional shares of Common Stock shall be issued. In
lieu thereof,
the cash value of such fraction shall be paid.
Without limiting the generality of the foregoing, the
existence of
outstanding options granted under the Directors Plan shall not
affect in any
manner the right or power of the Company to make, authorize or
consummate (i)
any or all adjustments, recapitalizations, reorganizations or other
changes in
the Company's capital structure or its business; (ii) any merger or
consolidation of the Company; (iii) any issue by the Company of
debt securities,
or preferred or preference stock that would rank above the shares
of Common
Stock subject to outstanding options; (iv) the dissolution or
liquidation of the
Company; (v) the sale, transfer or assignment of all or any part of
the assets
or business of the Company; or (vi) any other corporate act or
proceeding,
whether of a similar character or otherwise.
Federal Income Tax Consequences
The following discussion summarizes the principal federal
income tax
consequences of the Directors Plan. This discussion is based on
current
provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), the
Treasury regulations promulgated thereunder, and administrative and
judicial
interpretations thereof as in effect on the date hereof.
Upon exercise of an option granted under the Directors
Plan, the
optionee will recognize ordinary income in an amount equal to the
excess of the
fair market value of the shares received over the exercise price of
such shares.
That amount increases the optionee's basis in the Common Stock
acquired pursuant
to the exercise of the
<PAGE>
-17-
option. Upon a subsequent sale of the shares of Common Stock, the
optionee will
incur short-term or long-term capital gain or loss depending upon
his holding
period for the shares of Common Stock and upon the shares of Common
Stock's
subsequent appreciation or depreciation in value. The Company will
be allowed a
federal income tax deduction for the amount recognized as ordinary
income by the
optionee upon the optionee's exercise of the option.
Recommendation
At the annual meeting, the Company's stockholders will be
asked to
approve the adoption of the Directors Plan. The Board of Directors
believes that
approval of the Directors Plan is in the best interests of the
Company and its
stockholders and unanimously recommends a vote FOR approval.
Approval of the
amendments requires the affirmative vote of the holders of a
majority of the
shares of Common Stock of the Company represented in person or by
proxy at the
annual meeting and entitled to vote.
PROPOSAL 3 - RATIFICATION OF THE SELECTION OF INDEPENDENT
AUDITORS
It is the practice of the Board of Directors of the
Company to
designate the accounting firm that will serve as independent
auditors for the
Company. The Audit Committee has recommended that Ernst & Young LLP
be selected
to audit the Company's financial statements for the fiscal year
ending June 30,
1997 and the Board of Directors of the Company has approved the
selection of
Ernst & Young LLP. Ernst & Young LLP audited the Company's
financial statements
for the fiscal years ended June 30, 1996, 1995 and 1994. Unless a
contrary vote
is indicated, the Proxies solicited hereby will be voted FOR the
ratification of
the selection of Ernst & Young LLP as independent auditors for the
fiscal year
ending June 30, 1997.
The Audit Committee reviews and approves the audit and
non-audit
services to be provided by the Company's independent auditors
during the year,
considers the effect that performing those services might have on
audit
independence, and approves management's engagement of the Company's
independent
auditors to perform those services.
Ernst & Young LLP expects to have a representative at the
1996 Annual
Meeting of Stockholders who will have the opportunity to make a
statement and
will be available to respond to appropriate questions.
Compliance with Section 16(a) of the Securities Exchange Act of
1934
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% of
a registered class of the Company's equity securities to file
initial reports of
ownership and changes in ownership with the Securities and Exchange
Commission
("SEC"). Such Officers, Directors and stockholders are required by
SEC
regulations to furnish the Company with copies of all Section 16(a)
forms they
file. Based solely on a review of the copies of such forms
furnished to the
Company and written representations from the Company's Executive
Officers and
Directors, all persons subject to the reporting requirements of
Section 16(a)
filed the required reports on a timely basis.
OTHER MATTERS
Management does not know of any other matters that will
come before
the meeting, but should any other matters requiring a vote of
stockholders
arise, including any question as to an adjournment of the meeting,
the persons
named on the enclosed Proxy will vote thereon according to their
best judgment
in the interests of the
<PAGE>
-18-
Company. All shares represented by valid Proxies, unless otherwise
specified,
will be voted in the election of Directors for the nominees named
above;
provided, however, that in the event any of such nominees should
withdraw or
otherwise become unavailable for reasons not presently known, the
persons named
as Proxies will vote FOR the election of the other persons in their
place.
<PAGE>
-19-
STOCKHOLDER PROPOSALS
The Company will not consider including a stockholder's
proposal for
action at its 1997 Annual Meeting of Stockholders in the proxy
material to be
mailed to its stockholders in connection with such meeting unless
such proposal
is received at the principal office of the Company no later than
July 11, 1997.
By order of the Board of Directors,
BETH L. BRONNER
Corporate Secretary
Dated: November 4, 1996
Your vote is important. Stockholders who do not expect to be
present at the
Annual Meeting and who wish to have their stock voted are requested
to sign and
date the enclosed proxy and return it in the enclosed envelope. No
postage is
required if mailed in the United States.
<PAGE>
APPENDIX A
THE HAIN FOOD GROUP, INC.
1996 DIRECTORS STOCK OPTION PLAN
1. Purpose. The purpose of this Plan is to advance the interests of
The Hain
Food Group, Inc., a Delaware corporation, by providing an
additional incentive
to attract and retain nonemployee directors through the
encouragement of stock
ownership in the Company by such persons.
2. Definitions. As used herein, the following terms shall have the
meaning
indicated:
(a) "Annual Meeting Date" shall mean the date of the
annual meeting of
the Company's shareholders at which the Directors are elected.
(b) "Board" shall mean the Company's Board of Directors.
(c) "Code" shall mean the Internal Revenue Code of 1986,
as amended.
(d) "Committee" shall have the meaning provided in
Section 12.
(e) "Common Stock" shall mean the Common Stock, par value
$.01 per
share, of the Company.
(f) "Company" shall refer to The Hain Food Group, Inc.,
a Delaware
corporation.
(g) "Director" shall mean a member of the Board.
(h) "Eligible Director" means any person who is a member
of the Board
and who is not an employee, full time or part time, of the Company
or a
Subsidiary.
(i) "Fair Market Value" of a share of Common Stock on any
day means:
(i) if the principal market for the Common Stock is national
securities exchange
or the NASDAQ National Market System, the closing sales price of
the Common
Stock on such day as reported by such exchange or market system, or
on a
consolidated tape reflecting transactions on such exchange or
market system, or
(ii) if the principal market for the Common Stock is not a national
securities
exchange or the NASDAQ National Market System, and the Common Stock
is quoted on
the National Association of Securities Dealers Automated Quotations
System, the
mean between the closing bid and the closing asked prices for the
Common Stock
on such day as quoted on such system, or (iii) if the principal
market for the
Common Stock is not a national securities exchange or the NASDAQ
National Market
System, and the Common Stock is not quoted on the National
Association of
Securities Dealers Automated Quotations System, the mean between
the highest bid
and lowest asked prices for the Common Stock on such day as
reported by the
National Quotation Bureau, Inc.
(j) "Initial Grant Date" means the date on which a person
is first
elected as a member of the Board, or, in the case of persons who
were members of
the Board as of the date of the adoption of this Plan.
(k) "Option" shall mean any stock option granted under
this Plan.
(l) "Option Agreement" means the agreement between the
Company and the
Optionee to evidence the grant of an Option.
<PAGE>
-2-
(m) "Optionee" shall mean a person to whom a stock option
is granted
under this plan or any person who succeeds to the rights of such
person under
this Plan by reason of the death of such person.
(n) "Plan" shall mean this Directors Stock Option Plan
for the
Company.
(o) "Share(s)" shall mean a share or shares of the Common
Stock.
(p) "Subsidiary" means (i) any corporation of which the
securities
have a majority of the ordinary voting power in electing the Board
(other than
as a result of a default) are owned, at the time as of which any
determination
is being made, by the Company either directly or through one or
more
Subsidiaries, (ii) a partnership in which the Company or a
Subsidiary of the
Company is, at the time as of which any determination is being
made, a general
partner or (iii) any other Person (other than a corporation or a
partnership) in
which the Company either directly or through one or more
Subsidiaries, at the
time as of which any determination is being made, has (x) at least
a majority
ownership interest or (y) the power to elect or direct the election
of the
directors or other governing body of such Person.
3. Shares and Options. Subject to Section 9 of this Plan, there
shall be
reserved for issuance pursuant to the Plan an aggregate of up to
300,000 Shares
from authorized and unissued Shares or treasury Shares including
Shares acquired
by purchase in the open market or other transactions. If any Option
granted
under the Plan shall terminate, expire, or be canceled or
surrendered as to any
Shares, such Shares shall be available for future grants under the
Plan.
4. Grants of Options.
(a) On the Initial Grant Date, each Eligible Director
shall
automatically be granted an Option to purchase 15,000 Shares.
(b) Each Eligible Director shall automatically receive an
annual grant
of an Option to purchase 7,500 Shares on each Annual Meeting Date
subsequent to
his election as a director of the Company.
(c) Upon the grant of each Option, the Company and the
Eligible
Director shall enter into an Option Agreement, which shall specify
the grant
date and the exercise price and shall include or incorporate by
reference the
substance of this Plan and such other provisions consistent with
this Plan as
the Committee may determine.
5. Exercise Price. The exercise price per Share of any Option shall
be the Fair
Market Value of the Shares underlying such Option on the date such
Option is
granted.
6. Exercise of Options. An option shall be deemed exercised when
(i) the Company
has received written notice of such exercise in accordance with the
terms of the
Option, (ii) full payment has been made of the aggregate exercise
price of the
Shares as to which the Option is exercised, and (iii) arrangements
for the
Optionee's payment to the Company of the amount, if any, that is
necessary for
the Company to withhold in accordance with applicable tax
withholding
requirements. The exercise price of any Shares purchased shall be
paid in cash,
by certified or official bank check or personal check, by money
order, with
Shares or by a combination of the above. If the exercise price is
paid in whole
or in part with Shares, the value of the Shares surrendered shall
be their Fair
Market Value on the date the Option is exercised. No Optionee shall
be deemed to
be a holder of any Shares subject to an Option unless or until a
stock
certificate or certificates for such Shares are issued to such
person(s) under
the terms of the Plan.
<PAGE>
-3-
7. Exercise Schedule for Options. Each Option granted hereunder
shall be
immediately exercisable. The expiration date of an Option shall be
ten (10)
years from the date of grant of the Option.
8. Termination of Option Period. The unexercised portion of any
Option shall
automatically and without notice terminate and become null and void
prior to the
expiration date specified in Section 7 hereof at the time of the
earliest to
occur of the following:
(i) three (3) months after the date on which the Optionee
ceases to be
a Director for any reason other than by reason of (A) Cause which,
for purposes
of this Plan, shall mean the removal of the Optionee as a Director
by reason of
any act of (x) fraud or intentional misrepresentation, or (y)
embezzlement,
misappropriation, or conversion of assets or opportunities of the
Company or any
Subsidiary, or (B) death;
(ii) immediately upon the removal of the Optionee as a
Director for
Cause;
(iii) one year after the date the Optionee ceases to be
a Director by
reason of death of the Optionee.
9. Adjustment of Shares.
(a) In the event of any recapitalization,
reclassification, split-up
or consolidation of Shares of Common Stock, separation (including
a spin-off),
dividend on Shares of Common Stock payable in capital stock, or
other similar
change in capitalization of the Company or a merger or
consolidation of the
Company or sale by the Company of all or a portion of its assets or
other
similar event, the Committee shall make such appropriate
adjustments in the
exercise prices of Options, including Options then outstanding, in
the number
and kind of securities, cash or other property which may be issued
pursuant to
Options under the Plan, including Options then outstanding, and in
the number of
Shares of Common Stock with respect to which Options may be granted
(in the
aggregate and to individual participants) as the Committee deems
equitable with
a view toward maintaining the proportionate interest of the
Directors and
preserving the value of the Options.
(b) No fractional Shares of Common Stock shall be issued.
In lieu
thereof, the cash value of such fraction shall be paid.
(c) Without limiting the generality of the foregoing, the
existence of
outstanding Options granted under the Plan shall not affect in any
manner the
right or power of the Company to make, authorize or consummate (i)
any or all
adjustments, recapitalizations, reorganizations or other changes in
the
Company's capital structure or its business; (ii) any merger or
consolidation of
the Company; (iii) any issue by the Company of debt securities, or
preferred or
preference stock that would rank above the Shares subject to
outstanding
Options; (iv) the dissolution or liquidation of the Company; (v)
the sale,
transfer or assignment of all or any part of the assets or business
of the
Company; or (vi) any other corporate act or proceeding, whether of
a similar
character or otherwise.
10. Transferability of Options. Each Option shall provide that such
Option shall
not be transferable by the Optionee otherwise than by will or the
laws of
descent and distribution, and each Option shall be exercisable
during the
Optionee's lifetime only by the Optionee.
11. Issuance of Shares. As a condition of any sale or issuance of
Shares upon
exercise of any Options, the Committee may require such agreement
or
undertakings; if any, as the Committee may deem necessary or
advisable to assure
compliance with any such law or regulation including, but not
limited to, the
following:
<PAGE>
-4-
(a) a representation and warranty by the Optionee to the
Company, at
the time any Option is exercised, that he is acquiring the Shares
to be issued
to him for investment and not with a view to, or for sale in
connection with,
the distribution of any such Shares; and
(b) a representation, warranty and/or agreement to be
bound by any
legends that are, in the opinion of the Committee, necessary or
appropriate to
comply with the provisions of any securities law deemed by the
Committee to be
applicable to the issuance of the Shares and are endorsed upon the
Share
Certificates.
12. Administration of the Plan. The Plan is designed to operate
automatically
and not require administration. However, to the extent that
administration is
necessary, the Plan shall be administered by those members of the
Board who are
not eligible to participate in the Plan (the "Committee"). Since it
is intended
that this Plan provide for grants of options to non-employee
directors of this
Company, this function will be limited to matters of administrative
oversight.
The Committee will have no discretion with respect to the selection
of Eligible
Director optionees, the determination of the exercise price of
Options, the
timing of such grants or number of Shares covered by the Options.
Decisions and
determinations of the Committee shall be final and binding on all
persons having
an interest in the Plan.
13. Interpretation. If any provision of the Plan should be held
invalid or
illegal for any reason, such determination shall not affect the
remaining
provisions hereof, but instead the Plan shall be construed and
enforced as if
such provision had never been included in the Plan. The
determination and the
interpretation and construction of any provision of the Plan by the
Board shall
be final and conclusive. This Plan shall be governed by the laws of
the State of
Delaware. Headings contained in this Plan are for convenience only
and shall in
no manner be construed as part of the Plan. Any reference to the
masculine,
feminine, or neuter gender shall be a reference to such other
gender as is
appropriate.
14. Term of Plan, Amendment and Termination of the Plan.
(a) This Plan shall become effective upon its adoption of
the Board,
and shall continue in effect until all Options granted hereunder
have expired or
been exercised, unless sooner terminated under the provisions
relating thereto.
No Option shall be granted after five (5) years from the date of
the Board's
adoption of the Plan.
(b) The Plan shall be adopted by the Board and shall be
presented to
the Company shareholders for their approval by vote of a majority
of such
shareholders present or represented at a meeting duly held, such
approval to be
given within 12 months after the date of the Board's adoption.
Options may be
granted prior to shareholder approval of the Plan, but such Options
shall be
contingent upon such approval being obtained and may not be
exercised prior to
such approval.
(c) The Board may from time to time amend the Plan;
provided, however,
that, except to the extent provided in Section 9, no such amendment
may (i)
without approval by the Company's shareholders, increase the number
of Shares
reserved for Options or change the class of persons eligible to
receive options,
or involve any other change or modification requiring shareholder
approval under
Rule 16b-3 of the Securities Exchange Act of 1934, as amended, (ii)
permit the
granting of Options that expire beyond the maximum ten (10) year
period
described in Section 7, or (iii) extend the termination date of the
Plan as set
forth in Section 14(a); and, provided, further, that, except to the
extent
specifically provided otherwise in Section 8, no amendment or
suspension of the
Plan issued hereunder shall substantially impair any Option
previously granted
to any Optionee without the consent of such Optionee, except such
amendment made
to cause the Plan to qualify for the exemption provided by Rule
16b-3.
<PAGE>
-5-
(d) Notwithstanding anything else contained herein, the
provisions of
this Plan that govern the designation of the class of non-employee
directors
eligible to receive Options under the Plan, the number of Options
to be awarded
to nonemployee directors, the exercise price per share under each
such Option,
when and under what circumstance an Option will be granted and the
period within
which each Option may be exercised, shall not be amended more than
once every
six (6) months (even with shareholder approval), other than to
conform to
changes to the Code, or the rules promulgated thereunder, or to the
Employee
Retirement Income Security Act of 1974, as amended, or the rules
promulgated
thereunder, or with rules promulgated by the Securities and
Exchange Commission.
(e) The Board, without further approval of the Company's
shareholders,
may at any time terminate or suspend this Plan. Any such
termination or
suspension of the Plan shall not affect Options already granted and
such Options
shall remain in full force and effect as if the Plan had not been
terminated or
suspended. No Option may be granted while the Plan is suspended or
after it is
terminated. The rights and obligations under any Option granted to
any Optionee
while the Plan is in effect shall not be altered or impaired by the
suspension
or termination of the Plan without the consent of such Optionee.
15. Reservation of Shares. The Company, during the term of the
Plan, will at all
times reserve and keep available a number of Shares as shall be
sufficient to
satisfy the requirements of the Plan.
<PAGE>
[FORM OF PROXY]
THE HAIN FOOD GROUP, INC.
This Proxy is Solicited on Behalf of the Board of
Directors of The
Hain Food Group, Inc. The undersigned hereby appoints Andrew R.
Heyer, Irwin D.
Simon and Jack Kaufman, or any of them, proxies, each with full
power of
substitution, to vote the shares of the undersigned at the Annual
Meeting of
Stockholders of The Hain Food Group, Inc. on December 3, 1996, and
any
adjournments thereof, upon all matters as may properly come before
the meeting.
Without otherwise limiting the foregoing general authorization, the
proxies are
instructed to vote as indicated herein. If no instruction is given
the shares
will be voted "FOR" items 1 through 3 below, each of said items
being more fully
described in the Notice of such meeting and the accompanying Proxy
Statement,
receipt of which are hereby acknowledged.
The Board of Directors Recommends You Vote "FOR" Each of
the Items
Below
1. Election of Directors
FOR all nominees listed below [ ] WITHHOLD AUTHORITY
[ ]
(except as marked to the contrary to vote for all
nominees
below) listed below
(Instructions: to withhold authority to vote for individual
nominees,
strike a line through the nominees name listed below.)
Andrew R. Heyer, Irwin D. Simon, Beth L. Bronner,
Barry Gordon,
Steven S. Schwartzreich, John Gildea, William P.
Carmichael,
William J. Fox, Jack Futterman
2. To approve the 1996 Directors Stock Option Plan.
For [ ] Against [ ] Abstain [
]
3. To ratify the appointment of Ernst & Young, LLP, to act as
independent
auditors of the Company for the fiscal year ending June 30,
1997.
For [ ] Against [ ] Abstain [
]
Please Complete All Information Below
Signature:
- -------------------------------------
Signature:
- -------------------------------------
Dated:
, 1996
- ----------------------------------
Please sign exactly as names
appear
hereon, indicating official
position or representative
capacity, if any. If shares are
held jointly, both owners should
sign.
