<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
ATLANTIC PREMIUM BRANDS, LTD.
- --------------------------------------------------------------------------------
(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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of 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:
------------------------------------------------------------------------
<PAGE> 2
ATLANTIC PREMIUM BRANDS, LTD.
650 DUNDEE ROAD, SUITE 370
NORTHBROOK, ILLINOIS 60062
(847) 480-4000
Dear Stockholder:
You are cordially invited to attend the 1998 Annual Meeting of Stockholders
of Atlantic Premium Brands, Ltd., a Delaware corporation, to be held at 10:00
a.m. central time on Wednesday, May 13, 1998, at Edens Corporate Center, 630
Dundee Road, 2nd Floor, Northbrook, Illinois.
The matters to be considered at the meeting are described in the
accompanying Proxy Statement. Regardless of your plans for attending in person,
it is important that your shares be represented at the meeting. On behalf of the
Board of Directors, I urge you to please complete, sign, date and return the
enclosed proxy card in the enclosed stamped envelope. Signing this proxy will
not prevent you from voting in person should you be able to attend the meeting,
but will assure that your vote will be counted, if, for any reason, you are
unable to attend. If your shares are held in the name of a broker, you should
obtain a letter of identification from your broker and bring it to the meeting.
In order to personally vote shares held in the name of your broker, you must
obtain from the broker a proxy issued to you.
We look forward to seeing you at the 1998 Annual Meeting of Stockholders.
Sincerely,
Merrick M. Elfman
Chairman
April 22, 1998
<PAGE> 3
ATLANTIC PREMIUM BRANDS, LTD.
650 DUNDEE ROAD, SUITE 370
NORTHBROOK, ILLINOIS 60062
(847) 480-4000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The 1998 Annual Meeting of Stockholders of Atlantic Premium Brands, Ltd.
(the "Company") will be held at Edens Corporate Center, 630 Dundee Road, 2nd
Floor, Northbrook, Illinois, on Wednesday, May 13, 1998, at 10:00 a.m. central
time for the following purposes:
1. To elect three (3) directors to the Board of Directors to serve for a
term of three (3) years and until their respective successors are elected and
qualified;
2. To consider and vote upon the Atlantic Premium Brands, Ltd. Employee
Stock Purchase Plan;
3. To consider and vote upon an amendment to the Company's Stock Option
Plan to increase the number of shares authorized to be issued thereunder to
2,500,000; and
4. To consider and act upon such other business as may properly come
before the meeting.
Ten days prior to the 1998 Annual Meeting of Stockholders, a list of all
stockholders entitled to vote at the meeting will be open to the examination of
any stockholder for any purpose germane to the meeting, during ordinary business
hours, at the Company's office in Northbrook, Illinois.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO SIGN,
DATE AND PROMPTLY RETURN THE ENCLOSED PROXY AS SOON AS POSSIBLE IN THE ENCLOSED
STAMPED ENVELOPE.
By Order of the Board of Directors
Tom D. Wippman
Secretary
Northbrook, Illinois
April 22, 1998
<PAGE> 4
ATLANTIC PREMIUM BRANDS, LTD.
650 DUNDEE ROAD, SUITE 370
NORTHBROOK, ILLINOIS 60062
------------------------
PROXY STATEMENT
------------------------
ANNUAL MEETING OF STOCKHOLDERS
MAY 13, 1998
This Proxy Statement is furnished on or about April 22, 1998 to
stockholders of Atlantic Premium Brands, Ltd. (the "Company") in connection with
the solicitation by the Board of Directors of the Company of proxies to be voted
at the 1998 Annual Meeting of Stockholders (the "Annual Meeting"). The Annual
Meeting will be held at 10:00 a.m. central time on Wednesday, May 13, 1998, at
Edens Corporate Center, 630 Dundee Road, 2nd Floor, Northbrook, Illinois.
The cost of soliciting proxies will be borne by the Company. Copies of
solicitation material may be furnished to brokers, custodians, nominees and
other fiduciaries for forwarding to beneficial owners of shares of the Company's
Common Stock, and normal handling charges may be paid for such forwarding
service. Solicitation of proxies may be made by the Company by mail or by
personal interview, telephone and telegraph by officers and other management
employees of the Company, who will receive no additional compensation for their
services.
Any stockholders giving a proxy pursuant to this solicitation may revoke it
at any time prior to exercise of the proxy by giving notice of such revocation
to the Secretary of the Company at its executive offices at 650 Dundee Road,
Suite 370, Northbrook, Illinois 60062, or by attending the meeting and voting in
person.
At the close of business on April 10, 1998, there were 7,400,174 shares of
the Common Stock of the Company outstanding and entitled to vote at the meeting.
Only stockholders of record on April 1, 1998, will be entitled to vote at the
meeting, and each share will have one vote.
VOTING INFORMATION
At the Annual Meeting votes will be counted by written ballot. A majority
of the shares entitled to vote will constitute a quorum for purposes of the
Annual Meeting. The election of the Board of Directors' nominees for directors
will require the affirmative vote of a plurality of the shares present in person
or represented by proxy and entitled to vote in the election of directors.
Approval of any other business which may properly come before the Annual
Meeting, or any adjournments thereof, will require the affirmative vote of a
plurality of the shares present in person or represented by proxy and entitled
to vote thereon. Under Delaware law and the Company's Certificate of
Incorporation and Bylaws, the aggregate number of votes entitled to be cast by
all stockholders present in person or represented by proxy at the Annual
Meeting, whether those stockholders vote "For", "Against" or abstain from
voting, will be counted for purposes of determining the minimum number of
affirmative votes required for approval of such matters, and the total number of
votes cast "For" each of these matters will be counted for purposes of
determining whether sufficient affirmative votes have been cast. An abstention
from voting on a matter by a stockholder present in person or represented by
proxy at the meeting has the same legal effect as a vote "Against" the matter
even though the stockholder or interested parties analyzing the results of the
voting may interpret such a vote differently. Broker non-votes will have the
effect of reducing the number of shares considered present and entitled to vote
on the matter.
A stockholder may, with respect to the election of directors, (i) vote for
the election of all named director nominees, (ii) withhold authority to vote for
all named director nominees, or (iii) withhold authority to vote with respect to
any nominee, by so indicating in the appropriate space on the proxy card.
Proxies properly executed and received by the Company prior to the meeting
and not revoked, will be voted as directed therein on all matters presented at
the meeting. In the absence of specific direction from a
<PAGE> 5
stockholder, proxies will be voted for the election of all named director
nominees. If a proxy indicates that all or a portion of the shares represented
by such proxy are not being voted with respect to a particular proposal, such
non-voted shares will not be considered present and entitled to vote on such
proposal, although such shares may be considered present and entitled to vote on
other proposals and will count for the purpose of determining the presence of a
quorum.
PROPOSAL ONE
ELECTION OF DIRECTORS
The Board of Directors currently consists of nine persons and will consist
of nine persons following the Annual Meeting assuming the election of all of the
nominees to the Board of Directors. The Board of Directors is divided into three
classes, each of whose members serves for a staggered three-year term. The terms
of the current Class II Directors (Messrs. Elfman, Hanes and Taslitz) expire
with this Annual Meeting. Each of these individuals has been nominated as a
Class II Director to be elected at the Annual Meeting. Each of the nominees, if
elected, will serve for three years until the 2001 Annual Meeting of
Stockholders and until a successor has been elected and qualified. The current
Class III and I Directors will continue in office until the 1999 and 2000 Annual
Meetings of Stockholders, respectively.
The following table presents information concerning both persons nominated
for election as directors of the Company and continuing directors of the
Company, including their current membership on committees of the Board of
Directors, principal occupations or affiliations during the last five years and
certain other directorships held.
NOMINEES FOR DIRECTORS
Class II -- Directors to be Elected at the 1998 Annual Meeting:
Merrick M. Elfman. Mr. Elfman, age 40, is Chairman of the Company, a
position he has held since July 1996, and has been a director of the Company
since 1993. He is also the founder of Elfman Venture Partners, Inc. ("EVP"), a
private investment firm of which he has been president since 1987, and serves as
Chairman of both Gray Supply Company, Inc., a privately-held distributor of
specialty lighting products, and Carlton Foods, which is now a subsidiary of the
Company.
John T. Hanes. Mr. Hanes, age 61, has served as a director of the Company
since December 1997. From 1991 to 1994, Mr. Hanes served as the Chairman,
President and Chief Executive Officer of Doskocil Companies/Wilson Foods
Corporation, a publicly held manufacturer of pizza topping and other processed
meat products. From 1994 to the present, Mr. Hanes has served as President of
The John T. Hanes Company, a management consulting firm.
Steven M. Taslitz. Mr. Taslitz, age 39, has served as a director of the
Company since 1991. Mr. Taslitz is a cofounder and Managing Principal of
Sterling Capital, Ltd. ("Sterling Capital"), a private investment firm which was
founded in 1984, and Sterling Group, Inc., an affiliate of Sterling Capital
("Sterling Group") and a partner of Sterling Advisors, LP ("Sterling Advisors").
Mr. Taslitz has served as the President of Sterling Group since 1984. Mr.
Taslitz is also a director of New Century Arizona LLC, a privately-held radio
broadcast company; Gray Supply Company, a privately-held distributor of
specialty lighting products; Registry Services, International, a data base
management and marketing firm; and was the president and a director of Arizona
City Broadcasting Corporation, a privately held Delaware corporation which filed
a petition under the Federal bankruptcy laws in January 1995.
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
Class III -- Directors Serving Until 1999 Annual Meeting:
Rick Inatome. Mr. Inatome, age 44, has served as a director of the Company
since September 1993. Since 1991, Mr. Inatome has served as the Chairman of
Inacom, a computer services firm. In addition to being a director of the Company
and Inacom, Mr. Inatome is a director of Liberty BIDCO Investment Corporation
and Sylvan Learning Systems Inc.
2
<PAGE> 6
John A. Miller. Mr. Miller, age 44, has served as a director of the
Company since September 1993 and is currently a member of the Audit Committee
and the Compensation Committee. Mr. Miller has served as President of North
American Paper Company since 1988. Mr. Miller is also a director of Network
Services Inc., where he is a member of the Compensation Committee and Audit
Committee.
Alan F. Sussna. Mr. Sussna, age 41, has served as a director of the
Company since March 1996 and is the Company's President and Chief Executive
Officer, positions he has held since March 15, 1996. From October 1991 through
October 1995, Mr. Sussna was a director of Bain & Company, a consulting firm.
Through his association with Bain & Company and as a partner in the consulting
firm of McKinsey & Company, he has opened offices as well as led those firms'
Consumer Goods practices. Mr. Sussna has also held industry positions as
Executive Vice President -- Sales and Marketing for Jim Beam Brands and in
product management at Frito-Lay, Inc.
Class I -- Directors Serving Until the 2000 Annual Meeting:
Eric D. Becker. Mr. Becker, age 35, served as Chairman of the Company from
September 1993 through July 1996, and has been a director since 1991, when the
Company's business was purchased from a predecessor. Mr. Becker is also a
cofounder and Managing Principal of Sterling Capital. Since 1984, Mr. Becker has
been Chairman and Vice President of Sterling Group. From March 1988 until
December 1992, Mr. Becker served as the Chairman and a director of Castle Food
Products Corp., a privately held Maryland food distribution company which
commenced Chapter 7 liquidation proceedings in March 1993. Mr. Becker is
currently a member of the Audit Committee.
Brian T. Fleming. Mr. Fleming, age 52, has served as a director of the
Company since December 1997 and is currently President of E.W. Knauss & Son, an
affiliate of Knauss Snack Food Company. From 1991 to 1997, Mr. Fleming was the
President of Knauss Snack Food Company, a privately held meat snack business.
Prior to 1991, Mr. Fleming was the President and Chief Operating Officer of Acme
Foods Company, a privately held meat snack distribution company. Mr. Fleming is
presently on the Board of Directors of the Snack Foods Association and Trifoods
International (where he was a member of the Compensation Committee until January
1998).
G. Cook Jordan, Jr. Mr. Jordan, age 46, has served as a director of the
Company since September 1993. Beginning in April 1998, Mr. Jordan became a
general partner at CID Equity Partners, a venture capital investment fund. From
October 1996 through April 1998, Mr. Jordan was a principal at C3 Holdings, LLC,
a private investment firm. From 1988 through October 1996, Mr. Jordan served as
a Manager of Allstate Venture Capital, which is affiliated with Allstate
Insurance Company. Mr. Jordan is a member of the Audit Committee and the
Compensation Committee.
BOARD COMMITTEES
The Board of Directors has established an Audit Committee and a
Compensation Committee and has no nominating committee. Selection of nominees
for the Board of Directors is made by the entire Board of Directors.
Throughout 1997, the Audit Committee was composed of Mr. Becker, Mr. Jordan
and Mr. Miller. Beginning with its May 1998 meeting, the Audit Committee will be
composed of Mr. Hanes, Mr. Jordan and Mr. Miller. The Audit Committee is
responsible for reviewing the internal accounting procedures of the Company and
the results and scope of the audit and other services provided by the Company's
independent auditors, consulting with the Company's independent auditors and
recommending the appointment of independent auditors to the Board of Directors.
The Audit Committee met two times during the year ended December 31, 1997; each
member of the Audit Committee attended one meeting and two of the three members
attended the other meeting.
Throughout 1997, the Compensation Committee was composed of Mr. Jordan and
Mr. Miller. Beginning with its April 1998 meeting, the Compensation Committee
will be composed of Mr. Fleming, Mr. Jordan and Mr. Miller. The Compensation
Committee has the authority and performs all of the duties related to the
compensation of management of the Company, including determining policies and
practices, changes in
3
<PAGE> 7
compensation and benefits for management, determination of employee benefits and
all other matters relating to employee compensation, including matters relating
to the administration of the Company's Stock Option Plan (the "Option Plan").
The Compensation Committee met two times during the year ended December 31,
1997; each member of the Compensation Committee attended both meetings.
ATTENDANCE AT MEETINGS
During the year ended December 31, 1997, the Board of Directors held four
meetings. All directors attended at least 75% of the meetings of the Board of
Directors.
DIRECTORS' FEES
Prior to the 1996 Annual Meeting, the Company had a policy of paying fees
to non-employee directors (other than Mr. Becker) in the amount of $7,500 per
year, plus $500 for each meeting of the Board attended and $250 for each meeting
of each committee thereof attended. Non-employee directors also received options
to purchase an aggregate of 15,000 shares of Common Stock under the Option Plan.
At the 1996 Annual Meeting, the Option Plan was amended and a new Director's
Stock Option Plan was adopted (the "Director Plan"; the Option Plan and the
Director Plan are referred to collectively as the "Plans"). Since then, non-
employee directors have received, in lieu of cash directors' fees, options to
purchase 10,000 shares of Common Stock per year commencing January 1 of each
year.
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of Common Stock as of April 10, 1998 by each person known by the Company to be
the beneficial owner of more than five percent (5%) of the outstanding shares of
Common Stock, each director of the Company, including the Company's Chief
Executive Officer, and all executive officers and directors as a group. The
information presented in the table is based upon the most recent filings with
the Securities and Exchange Commission (the "SEC") by such persons or upon
information otherwise provided by such persons to the Company.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
NAMES OF BENEFICIAL OWNERS OWNED(1) PERCENTAGE OWNED
-------------------------- ------------------- ----------------
<S> <C> <C>
Douglas L. Becker........................................... 391,704(2) 5.28%
Eric D. Becker.............................................. 466,704(3) 6.27%
Merrick M. Elfman........................................... 483,305(4) 6.49%
Philip L. Glass............................................. 399,676(5) 5.40%
Bruce L. Goldman............................................ 642,822(6) 8.69%
Bobby L. Grogan............................................. 573,810(7) 7.75%
Rudolf Christopher Hoehn-Saric.............................. 422,446(8) 5.69%
Steven M. Taslitz........................................... 474,180(9) 6.37%
Brian T. Fleming............................................ 5,000(10) *
John T. Hanes............................................... 5,000(10) *
Rick Inatome................................................ 154,151(11) 2.07%
G. Cook Jordan, Jr.......................................... 64,107(12) *
John A. Miller.............................................. 156,151(11) 2.10%
Alan F. Sussna.............................................. 262,703(13) 3.50%
All directors and executive officers as a group (11
persons).................................................. 2,095,801(14) 27.01%
</TABLE>
- ---------------
* Less than one percent
(1) Beneficial ownership is determined in accordance with the rules of the SEC
and generally includes voting or investment power with respect to
securities. Shares of Common Stock subject to options or warrants currently
exercisable or exercisable within 60 days are deemed outstanding for
purposes of computing the percentage ownership of the person holding such
option or warrant but are not deemed outstanding for purposes of computing
the percentage ownership of any other person. Except where indicated
otherwise, and subject to community property laws where applicable, the
persons named in the table above have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them.
4
<PAGE> 8
(2) Includes 20,000 shares underlying currently exercisable options. The
address for this shareholder is c/o 650 Dundee Road, Suite 370, Northbrook,
IL 60062.
(3) Includes 392,293 shares held by Mr. Becker's wife (of which Mr. Becker
disclaims beneficial ownership) and 45,000 shares underlying currently
exercisable options or options exercisable within 60 days. The address for
this shareholder is c/o 650 Dundee Road, Suite 370, Northbrook, IL 60062.
(4) Includes 49,500 shares underlying currently exercisable options or options
exercisable within 60 days. The remaining 433,805 shares are held by Mr.
Elfman and his wife jointly. The address for this shareholder is c/o 650
Dundee Road, Suite 370, Northbrook, IL 60062.
(5) Includes 101,240 shares held by the Glass International Ltd. Profit Sharing
Plan and Trust dated July 1, 1983 (the "Trust"). Mr. Glass and his wife,
Ellen V. Glass, are co-trustees and also the beneficiaries of the Trust. Of
the remaining shares, 285,495 are held by Mr. Glass and his wife jointly,
either as joint tenants or tenants in common. The address for this
shareholder is 20 N. Wacker, #3400, Chicago, IL 60606-3102.
(6) Includes 250,346 shares held by Mr. Goldman and Mr. Taslitz as co-trustees
of the KJT Gift Trust. Mr. Goldman disclaims beneficial ownership of the
shares held by the KJT Gift Trust. The address for this shareholder is c/o
650 Dundee Road, Suite 370, Northbrook, IL 60062.
(7) As reported on a Schedule 13G filed with the Securities and Exchange
Commission on October 23, 1996. Beneficial ownership of these shares is
shared by Mr. Grogan and his wife, Betty R. Grogan. The address for this
shareholder is Route 2, Box 24B, Arlington, KY 42021.
(8) Includes 24,593 shares held by Mr. Hoehn-Saric as Trustee for the benefit
of Gabriella Hoehn-Saric and 21,519 shares held by him as Trustee for the
benefit of Rudolf Christopher Hoehn-Saric, Jr. Also includes 20,000 shares
underlying currently exercisable options. The address for this shareholder
is c/o 650 Dundee Road, Suite 370, Northbrook, IL 60062.
(9) Includes 144,923 shares held by Mr. Taslitz as trustee of the Kathy J.
Taslitz Trust and 250,346 shares held by Mr. Taslitz and Mr. Goldman as
co-trustees of the KJT Gift Trust. Mr. Taslitz disclaims beneficial
ownership of the 250,346 shares held by him as co-trustee of the KJT Gift
Trust. Also includes 49,500 shares underlying currently exercisable options
or options exercisable within 60 days. The address for this shareholder is
c/o 650 Dundee Road, Suite 370, Northbrook, IL 60062.
(10) Includes 5,000 shares underlying currently exercisable options or options
exercisable within 60 days.
(11) Includes 29,500 shares underlying currently exercisable options or options
exercisable within 60 days.
(12) Includes 29,500 shares underlying presently exercisable options or options
exercisable within 60 days. Also includes 19,607 shares held by Mr.
Jordan's IRA.
(13) Includes 152,900 shares held by Mr. Sussna as trustee of the Alan F. Sussna
Trust and 9,803 shares held by Mr. Sussna's wife, Brenda B. Sussna, as
trustee of the Brenda B. Sussna Trust. Mr. Sussna disclaims beneficial
ownership of all 162,703 of these shares. Also includes 100,000 shares
underlying currently exercisable options, which are held by Mr. Sussna as
Trustee of the Alan F. Sussna Trust.
(14) Includes 359,000 shares underlying currently exercisable options or options
exercisable within 60 days.
5
<PAGE> 9
COMPENSATION
EXECUTIVE COMPENSATION
The following table sets forth annual and long-term compensation for the
fiscal years ended December 31, 1996 and 1997 for services in all capacities to
the Company of its Chief Executive Officer. No other executive officer of the
Company received total annual salary and bonus in excess of $100,000 during
1997. No information has been provided for 1995 because Mr. Sussna joined the
Company as President and Chief Executive Officer on March 15, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------- ------------
SECURITIES
NAME AND UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) COMPENSATION($)(1)
------------------ ---- --------- -------- ------------ ------------------
<S> <C> <C> <C> <C> <C>
Alan F. Sussna.......................... 1997 288,000 53,825 -- $ 3,462
President and Chief Executive Officer 1996 177,808 -- 250,000 $13,915
</TABLE>
- ---------------
(1) These amounts represent $1,500 per month for Mr. Sussna to fund his own
benefits in 1996; and $3,462 contributed by the Company in 1997 to its
401(k) Plan on behalf of Mr. Sussna.
OPTION GRANTS
Mr. Sussna did not receive any option grants during 1997, nor did he
exercise any options in 1997. Shown below is information with respect to
outstanding options held by Mr. Sussna as of December 31, 1997. All options
reflected in the chart below were granted under the Option Plan.
AGGREGATED 1997 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
12/31/97 AT 12/31/97
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
---- -------------- --------------------
<S> <C> <C>
Alan F. Sussna........................................... 50,000/200,000 $112,500/$450,000
</TABLE>
- ---------------
(1) Based on the closing price of $3.75 per share of Common Stock on December
31, 1997, as reported by the American Stock Exchange.
6
<PAGE> 10
PERFORMANCE GRAPH
During the fiscal year ended December 31, 1997, the Company's food
processing, marketing and distribution businesses collectively comprised
approximately 88.1% of the Company's overall revenues, and its beverage
distribution business accounted for approximately 11.9% of the Company's overall
revenues.
The graph below compares the Company's cumulative stockholder return on its
Common Stock since inception with the CRSP Total Returns Index for the Nasdaq
Stock Market (US and Foreign), Saratoga Beverage Group Inc. and Bev-Tyme Inc.
(no trading activity was recorded for Bev-Tyme Inc. after June 16, 1997). In
addition, because of the change in the Company's business during the 1996 fiscal
year, the comparison in the Company's stock performance graph now also uses the
average stockholder return on the common stock of a composite peer group of
Hormel Foods Corp., Smithfield Foods Inc., Thorn Apple Valley Inc. and Bridgford
Foods Corp. The Board of Directors believes that the addition of the latter
Composite Peer Group Index more accurately reflects the Company's current peer
group.
Since December 31, 1997, the Company's Common Stock has been principally
traded on the American Stock Exchange ("AMEX") under the symbol "ABR." Prior to
December 31, 1997, the Company's Common Stock was principally traded on the
NASDAQ SmallCap Market under the symbol "ABEV."
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR ATLANTIC PREMIUM BRANDS, LTD.
<TABLE>
<CAPTION>
NASDAQ
STOCK
'ATLANTIC MARKET 'SARASOTA
MEASUREMENT PERIOD PREMIUM (U.S. & COMPOSITE BEVERAGE BEV-TYME
(FISCAL YEAR COVERED) BRANDS, LTD.' FOREIGN) PEER GROUP GROUP, INC.' INC.
<S> <C> <C> <C> <C> <C>
11/19/93 100.000 100.000 100.000 100.000 100.000
12/31/93 100.000 103.405 100.290 85.484 90.162
6/30/94 65.385 94.042 103.727 67.742 37.741
12/30/94 45.192 100.295 123.433 38.710 4.771
6/30/95 42.308 124.712 120.854 46.774 3.370
12/29/95 19.231 140.859 122.149 25.806 2.247
6/28/96 53.846 159.150 122.669 27.419 2.247
12/31/96 44.471 172.486 136.290 12.097 0.674
6/30/97 53.846 193.436 159.569 35.484 0.056
12/31/97 57.692 211.045 187.834 27.419 0.056
</TABLE>
This graph is not deemed to be "soliciting material" or to be filed with
the SEC or subject to the SEC's proxy rules or to the liabilities of Section 18
of the Securities Exchange Act of 1934 (the "1934 Act"), and the graphs shall
not be deemed to be incorporated by reference into any prior or subsequent
filing by the Company under the Securities Act of 1933 (the "1933 Act") or the
1934 Act.
7
<PAGE> 11
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors has furnished the
following report on its policies with respect to the compensation of the
executive officers. The report is not deemed to be "soliciting material" or to
be "filed" with the SEC or subject to the SEC's proxy rules or to the
liabilities of Section 18 of the 1934 Act, and the report shall not be deemed to
be incorporated by reference into any prior or subsequent filing by the Company
under the 1933 Act or the 1934 Act.
The Company's Board of Directors established the Compensation Committee at
the end of 1993, and the Compensation Committee will determine and act upon
compensation decisions as described below in 1998 and future years. Decisions on
compensation of the Company's executives officers generally will be made by the
Compensation Committee of the Board of Directors. No member of the Compensation
Committee is an employee of the Company. During 1997, the Committee consisted of
Mr. Miller and Mr. Jordan. All decisions by the Compensation Committee relating
to the compensation of the Company's executive officers will be reviewed by its
full Board of Directors, except for decisions concerning grants under the Plans,
which will be made solely by the Committee in order for the grants to satisfy
certain requirements under the 1934 Act.
Compensation Policies Toward Executive Officers
The Company's executive compensation policies are intended to provide
competitive levels of compensation that reflect the Company's annual and
long-term performance goals, reward superior corporate performance and assist
the Company in attracting and retaining qualified executives. Total compensation
for executive officers is comprised of three principal components: base salary,
annual incentive compensation and grants of options to purchase the Company's
Common Stock. The base salaries, if not fixed by contract, are set at levels
which the Compensation Committee believes are comparable to those of executives
of similar status in the beverage distribution industry and the food industry,
as applicable. In addition to base salary, each executive officer may be
eligible to receive an annual bonus tied to the Company's success in achieving
certain annual performance measures, as well as individual performance. The
Board of Directors and the Compensation Committee also believe that longer-term
incentives are appropriate to motivate and retain key personnel and that stock
ownership by management is beneficial in aligning management's and stockholders'
interests in the enhancement of stockholder value. Accordingly, the Compensation
Committee intends to consider annual grants of stock options to certain
executive officers and other eligible persons under the Option Plan.
The following describes in more specific terms the three elements of
compensation that implement the Compensation Committee's compensation reported
for 1997:
Base Salary. The base salaries for Mr. Sussna and John Izzo, who is Vice
President Finance, Controller and Treasurer, are fixed by contract, and Mr.
Elfman is not directly compensated by the Company.
Annual Incentive Bonus. Annual incentive bonuses are primarily based upon
the achievement of measurable pre-tax earnings performance goals established at
the beginning of the fiscal year. With respect to Mr. Sussna, the Company is to
pay Mr. Sussna 20% of the operating cash flow earned above the budgeted goal of
the Company on a consolidated basis. In the case of Mr. Izzo, a bonus
opportunity of up to 22.5% of base salary is based on this pre-tax earnings goal
of the Company on a consolidated basis. The Compensation Committee may also
consider discretionary bonuses for those executive officers under contract. Mr.
Sussna was granted a discretionary $53,825 bonus in 1997.
Long-Term Stock Option Incentives. Stock options provide executive
officers with the opportunity to buy an equity interest in the Company and to
share in the appreciation of the value of the Company's Common Stock. Stock
options are granted at the fair market value price of the Common Stock on the
date of grant, are subject to vesting over time and only have future value for
the executive officers if the stock price appreciates from the date of grant.
All options have terms of ten years from the date of grant. Factors influencing
stock option grants to executive officers include performance of the Company,
relative levels of responsibility, contributions to the business of the Company
and competitiveness with other growth oriented companies. Stock options granted
to executive officers and other management employees are approved by the
Compensation Committee. In 1997, neither Mr. Sussna nor Mr. Izzo was granted any
options.
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Other Compensation Plans. The Company maintains a defined contribution
plan (the "401(k) Plan") which is intended to satisfy the tax qualification
requirements of Sections 401(a), 401(k) and 401(m) of the Internal Revenue Code
of 1986, as amended (the "Code"). The Company's executive officers are eligible
to participate in the 401(k) Plan and are permitted to contribute up to the
maximum percentage allowable not to exceed the limits of Code Sections 401(k),
404 and 415 (i.e., $9,500 in 1997). All amounts deferred under the 401(k) Plan's
salary reduction feature by a participant vest immediately in the participant's
account while contributions made by the Company vest over a seven year period in
the participant's account. The Company will make a matching contribution to the
401(k) Plan equal to 25% of each participant's contribution, up to a maximum of
6% of the participant's salary. The Company may make additional discretionary
contributions.
Benefits. Benefits offered to executive officers are largely those that
are offered to the general employee population, such as group health and life
insurance coverage and participation in the 401(k) Plan. Benefits are not tied
directly to corporate performance.
Mr. Elfman's Compensation. Although Mr. Elfman received no direct compensation
from the Company during 1997, the Company paid EVP $35,000 for certain
consulting services, including the services of Mr. Elfman, and $35,000 for
certain investment banking services. See "Certain Transactions with Management
and Others" and "Consulting and Employment Agreements."
The Compensation Committee believes that the Company's executive
compensation policies and programs serve the interests of the Company and its
stockholders. Total compensation to executive officers is linked to Company
performance.
Submitted by the Members of the Compensation Committee:
John A. Miller
G. Cook Jordan, Jr.
CONSULTING AND EMPLOYMENT AGREEMENTS
The Company entered into a Consulting Agreement (the "Consulting
Agreement") with Mr. Eric Becker and Sterling Group (assigned by Sterling Group
to Sterling Advisors), effective November 29, 1993, pursuant to which Mr. Becker
acted as a part-time consultant to the Company and served as the Company's
Chairman of the Board and a director. The initial term of this Consulting
Agreement was from November 29, 1993 until December 31, 1998. The term of the
agreement was to extend for additional one year periods commencing on January 1,
1999, and each January 1 thereafter, unless and until terminated by written
notice given by either party to the other 12 months prior to each applicable
termination date. The Consulting Agreement provided that the Company pay
Sterling Advisors a base fee of $140,000 per year, which base fee was to
increase by 3% on January 1 of each year the agreement remained in effect.
The Company, Sterling Group and Messrs. Eric Becker, Steven Taslitz,
Douglas Becker and Christopher Hoehn-Saric entered into a Non-Compete and
Non-Disclosure Agreement containing certain non-competition and confidentiality
provisions pursuant to which Sterling Group and Messrs. E. Becker, Taslitz, D.
Becker and Hoehn-Saric agreed not to compete with the Company for a period
ending one year after Sterling Group's consulting relationship with the Company
is terminated, nor will they solicit for employment any director, stockholder or
certain employees of the Company during such period. This agreement also
provides that neither Sterling Group nor these individuals will disclose any
confidential information concerning the Company and its business to any other
person or entity except as may be required by law.
Effective March 15, 1996, the Consulting Agreement was terminated and
replaced with a new Consulting Agreement (the "New Consulting Agreement")
pursuant to which Sterling Advisors and EVP agreed to provide consulting
services to the Company for base consulting fees in the aggregate of $300,000
per year, increasing 5% on January 1 of each year the agreement is in effect and
increases or decreases in the event of an acquisition or divestiture by the
Company. Due to certain acquisitions during 1996, the base consulting fee
increased to $350,000 on January 1, 1997. The New Consulting Agreement also
provides for the reimbursement of certain expenses incurred by Sterling Advisors
and EVP on behalf of the Company. Mr. Elfman acts as a consultant to the Company
and starting in July 1996 began serving as the Company's
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Chairman of the Board pursuant to the New Consulting Agreement. The New
Consulting Agreement provides that the Chairman is entitled to participate in
any profit sharing plan, retirement plan, group life insurance plan or other
insurance plan or medical insurance plan maintained by the Company for its non-
employee directors, and reimbursement for certain fees of professional
organizations. The term of the New Consulting Agreement is from March 15, 1996
until December 31, 2001. The term of the agreement extends for additional one
year periods commencing January 1, 2002, and each January 1 thereafter, unless
and until terminated by written notice given by either party to the other 12
months prior to each applicable termination date. In 1996, an aggregate of
$400,000 in investment banking fees was paid to Sterling Advisors and EVP in
connection with the acquisitions of Prefco, Inc. and Richards Cajun Foods and
the merger of Carlton Foods, Inc. The New Consulting Agreement provides that
Sterling Advisors and EVP (or their respective principals) will receive in the
aggregate options to purchase 25,000 shares of Common Stock during each year in
which the New Consulting Agreement is in effect. Such options vest on December
31 of each year at an exercise price equal to the fair market value of the
Common Stock on the preceding January 1 of the same year. For the 18 month
period commencing July 1, 1997 until December 31, 1998 Sterling Advisors and EVP
agreed not to take any consulting fees which would otherwise be payable under
the New Consulting Agreement and in lieu thereof the Company paid Sterling
Advisors and EVP an aggregate $750,000 in investment banking fees in connection
with its March 1998 acquisition of J.C. Potter Sausage Company and the related
financings thereof. All compensation payable by the Company under the New
Consulting Agreement is payable 80% to Sterling Advisors and 20% to EVP.
Effective March 15, 1996, the Company entered into an Employment Agreement
with Mr. Sussna, pursuant to which Mr. Sussna serves as the Company's Chief
Executive Officer and President. The initial term of the Employment Agreement is
for five years and may be extended for additional one year periods commencing
March 15, 2001 unless and until terminated by written notice given by either
party to the other six months prior to each applicable termination date. The
Employment Agreement provides that the Company will pay Mr. Sussna base
compensation of $230,000 in the first year of the Employment Agreement and
$200,000 per year thereafter, subject to normal cost of living increases, as
well as those increases permitted by the Compensation Committee. The base
compensation was raised to $300,000 per year in April 1997. Mr. Sussna will also
receive an annual bonus equal to 20% of the amount by which the Company's actual
cash flow exceeds its budgeted cash flow. Mr. Sussna received a discretionary
bonus of $53,825 in 1997. In addition, in 1996 Mr. Sussna received options to
purchase 250,000 shares of the Company's Common Stock at an exercise price of
$1.50 per share, which options vest in five equal installments on the first
through fifth anniversaries of the Employment Agreement, subject to acceleration
based upon the stock price as reported on NASDAQ (or AMEX after December 31,
1997).
Mr. Sussna's Employment Agreement also contains certain non-competition and
confidentiality provisions pursuant to which he agreed not to compete with the
Company for a period of three years following termination of his employment with
the Company, nor will he solicit for employment any director, stockholder or
certain employees of the Company during such period. The Employment Agreement
also provides that Mr. Sussna will not disclose any confidential information
concerning the Company and its business to any other person or entity except as
may be required by law.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the 1934 Act requires the Company's officers, directors
and certain beneficial holders of Common Stock to file reports about their
beneficial ownership of the Company's Common Stock. Specific due dates for these
reports have been established and the Company is required to disclose in this
Proxy Statement any failure to file by these dates during 1997. All of these
filing requirements were satisfied except that Messrs. Eric Becker and G. Cook
Jordan, Jr. each filed one late report covering one transaction and Messrs.
Brian Fleming and John Hanes each filed their initial report of beneficial
ownership late, although neither of their reports disclosed any transactions. In
making these disclosures, the Company has relied solely upon written
representations of its directors and executive officers and copies of the
reports they filed with the Securities and Exchange Commission.
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CERTAIN TRANSACTIONS WITH MANAGEMENT AND OTHERS
Pursuant to the New Consulting Agreement described in "Consulting and
Employment Agreements," as of January 1, 1997 a base consulting fee of $350,000
is payable by the Company to Sterling Advisors and EVP. For the 18 month period
commencing July 1, 1997 until December 31, 1998 Sterling Advisors and EVP agreed
not to take any consulting fees which would otherwise be payable under the New
Consulting Agreement and in lieu thereof the Company paid Sterling Advisors and
EVP $750,000 in investment banking fees in connection with its March 1998
acquisition of J.C. Potter Sausage Company and the related financings thereof.
Messrs. Douglas Becker (a 5% beneficial owner of the Company's Common Stock),
Eric Becker (a director and 5% beneficial owner), Rudolf Christopher Hoehn-Saric
(a 5% beneficial owner), and Steven Taslitz (a director and 5% beneficial owner)
all have an interest in Sterling Advisors, while Mr. Merrick Elfman (a director
and 5% beneficial owner) has an interest in EVP.
PROPOSAL TWO
APPROVAL OF THE ATLANTIC PREMIUM BRANDS, LTD.
EMPLOYEE STOCK PURCHASE PLAN
Subject to the approval of the Company's stockholders at the Annual
Meeting, the Board of Directors has adopted the Atlantic Premium Brands, Ltd.
Employee Stock Purchase Plan (the "Stock Purchase Plan"), effective as of
November 1, 1997. The Company wishes to provide an employee stock purchase plan
within the meaning of Section 423 of the Code for its employees and the
employees of its subsidiaries to increase their interest in the Company's growth
and success and encourage employees to remain in the employ of the Company or
its subsidiaries. Stockholders are being asked to approve the adoption of the
Stock Purchase Plan to qualify it (i) pursuant to Rule 16b-3 under the 1934 Act
and thereby render certain transactions under the Stock Purchase Plan exempt
from Section 16 of the 1934 Act, and (ii) under Section 423 of the Code. The
Stock Purchase Plan is set forth in Appendix A.
The Stock Purchase Plan is administered by the Compensation Committee. The
Compensation Committee has the authority to interpret the Stock Purchase Plan,
to prescribe, amend and rescind rules relating to it, and to make all other
determination necessary or advisable in administering the Plan. The following
summary of certain features of the Stock Purchase Plan is qualified in its
entirety by reference to the full text of the Stock Purchase Plan.
TERMS OF THE STOCK PURCHASE PLAN
Employees eligible to participate in the Stock Purchase Plan ("Eligible
Employees") consist of all persons employed by the Company or any of its
subsidiaries, except the following (who are ineligible to participate): (i) an
employee who has been employed by the Company or any of its subsidiaries for
less than 60 days as of each November 1, or such other date as the Compensation
Committee designates as the commencement of a payroll deduction period; (ii) an
employee whose customary employment is for less than five months in any calendar
year; (iii) an employee whose customary employment is 20 hours or less per week;
(iv) an employee who, after exercising his or her rights to purchase shares
under the Stock Purchase Plan, would own shares of Common Stock (including
shares that may be acquired under any outstanding options) representing five
percent or more of the total combined voting power of all classes of stock of
the Company; and (v) employees of any subsidiary of the Company which the Board
has deemed it advisable to terminate the participation of that subsidiary's
employees in the Stock Purchase Plan. For the payroll deduction period which
commenced November 1, 1997, there were approximately 303 employees eligible to
participate in the Stock Purchase Plan.
The initial payroll deduction period commenced on November 1, 1997 and ends
on October 31, 1998. Subsequent payroll deduction periods are one year periods
commencing on the following November 1 and ending on the following October 31
(or on such dates or for such periods determined by the Compensation
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Committee). In order to be eligible to participate, an Eligible Employee must
submit the required election to participate and payroll deduction authorization.
Enrollment is effective on the first day of the payroll deduction period.
At the time an Eligible Employee submits his or her election to
participate, the employee elects to have deductions made from his or her pay, in
any whole percentage up to a maximum of 10 percent, on each pay day following
his or her enrollment. The deductions are credited to the participating
employee's account under the Stock Purchase Plan. All funds received or held by
the Company under the Stock Purchase Plan may be used for any corporate purpose
until applied to the purchase of Common Stock and/or refunded to participating
employees. Participating employees' accounts will not be segregated.
Rights to purchase shares of Common Stock are deemed granted to
participating employees as of the first trading day of each payroll deduction
period (the "Grant Date"). A participating employee is deemed to have exercised
his or her right to purchase Common Stock on the last trading day of the payroll
deduction period (the "Exercise Date"). On each Exercise Date, payroll
deductions credited to participating employees' accounts will be applied to the
purchase of Common Stock at a price per share which is the lesser of 85% of the
fair market value of the Common Stock on the Grant Date or on the Exercise Date,
or at such higher price determined by the Compensation Committee. If listed on
an established national or regional stock exchange, admitted to quotation on the
Nasdaq Stock Market, or publicly traded on an established securities market,
then the fair market value on the relevant date is the closing price of the
Common Stock on such exchange or in such market on such date (or, if such date
is not a trading day, on the trading day immediately preceding such date). The
number of shares purchased for each participating employee's account will be the
number of shares of Common Stock which the accumulated funds in the employee's
account at that time will purchase at the purchase price.
No participant may purchase shares of Common Stock in any calendar year
under the Stock Purchase Plan with an aggregate fair market value (determined as
of the Grant Date) in excess of $25,000. There is also a maximum number of
250,000 shares of Common Stock available under the Stock Purchase Plan. If
contributions by participating employees are such that the total number of
shares of Common Stock to be purchased would exceed the 250,000 Stock Purchase
Plan maximum, then the number of shares to be purchased by any participant shall
be reduced proportionately. Any funds remaining in a participating employee's
account after such exercise will be refunded to the employee.
If a participating employee dies, or if his or her employment with the
Company terminates for any reason, prior to the last day of the payroll
deduction period, then the amount in the employee's account will be distributed
and the employee's option to purchase will terminate.
Any reorganization in which the Company is not the surviving corporation,
any sale of all or substantially all of the assets of the Company, or any
transaction approved by the Board of Directors that results in any person owning
more than 80% of the combined voting power of all classes of stock of the
Company will generally be treated as an Exercise Date, except to the extent
provision is made in writing in connection with such transaction for the
continuation of the Stock Purchase Plan.
At any time during a payroll deduction period, a participating employee may
(i) cancel his or her payroll deductions and receive a refund of prior payroll
deductions, or (ii) suspend payroll deductions for the remainder of the payroll
deduction period, but retain prior payroll deductions for the purchase of Common
Stock on the Exercise Date.
The shares of Common Stock to be offered shall be authorized but unissued
shares, treasury shares or shares purchased in the open market. In the event
there is any change in the shares of the Company by reason of stock dividends,
stock splits, recapitalizations, or combinations or exchanges of shares, or
otherwise, appropriate adjustments in the number of shares available for
purchase, as well as the shares subject to purchase rights and the purchase
price thereof, shall be made, but no fractional shares shall be subject to
purchase and, upon any adjustment, each purchase right shall be adjusted down to
the nearest full share. Participants do not have the right to assign or transfer
their rights to purchase Common Stock under the Stock Purchase Plan.
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The Board of Directors has authority to amend the Stock Purchase Plan;
provided, however, that without approval of the stockholders of the Company no
amendment shall be made (i) increasing the number of shares authorized to be
issued, (ii) changing the eligibility requirement for participation, or (iii)
impairing the vested rights of participating employees. The Board of Directors
may terminate the Stock Purchase Plan at any time, but no termination may impair
any rights of participating employees that have vested at the time of
termination.
DISCUSSION OF FEDERAL INCOME TAX CONSEQUENCES
The following summary of tax consequences with respect to awards under the
Stock Purchase Plan is not comprehensive and is based upon laws and regulations
in effect on April 2, 1998. Such laws and regulations are subject to change.
The Stock Purchase Plan is intended to qualify as an employee stock
purchase plan under Section 423 of the Code. Under present law, a participant
will not be deemed to have received any compensation for Federal income tax
purposes on either a Grant Date or Exercise Date.
If a participant's account is applied to purchase Common Stock while the
participant is an employee and the participant disposes (for example, by a sale,
exchange, gift or transfer of legal title, subject to narrow exceptions) of the
Common Stock purchased under the Stock Purchase Plan either within two years
after the Grant Date or within one year after the Exercise Date (a
"disqualifying disposition"), the excess of the fair market value of the Common
Stock on the Exercise Date over the purchase price of the Common Stock under the
Stock Purchase Plan will be taxable as ordinary income (even if there is no gain
realized at the time of the disposition) and, for purposes of computing gain or
loss on the disposition, the participant's cost basis will be increased by the
amount of the ordinary income recognized. Any additional gain or loss to be
recognized upon disposition will be a capital gain or loss.
If a participant's account is applied to purchase Common Stock while the
participant is an employee and the employee disposes of Common Stock purchased
under the Stock Purchase Plan two years or more after the Grant Date and one
year or more after the Exercise Date (a "qualifying disposition"), the tax
treatment will be different. The participant must recognize as ordinary income
the lesser of (a) any excess of the fair market value of the Common Stock on the
Grant Date over the purchase price under the Stock Purchase Plan; and (b) any
excess of the fair market value of the Common Stock on the date the stock is
disposed of over the amount paid for the stock. The participant's basis in the
Common Stock is increased by the amount of ordinary income recognized. The
difference between the fair market value on the date of disposition and the
adjusted basis (i.e., basis increased by ordinary income recognized) will be
taxable as a capital gain. If the Common Stock is sold at a price below the
purchase price under the Stock Purchase Plan, the loss will be treated as a
capital loss.
The Company will not be entitled to a deduction for any difference between
the fair market value of the Common Stock and the purchase price for the Common
Stock under the Stock Purchase Plan, except to the extent it is taxed to the
participant as ordinary income upon a disqualifying disposition and the Company
makes any necessary and appropriate tax withholding arrangements. Different
dates for recognizing gain may apply to participants who are subject to Section
16(b) of the 1934 Act.
STOCK PURCHASE PLAN BENEFITS
It is not possible to determine the number of shares of Common Stock that
will in the future be purchased under the Stock Purchase Plan by any particular
individual.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF
THE ATLANTIC PREMIUM BRANDS, LTD. EMPLOYEE STOCK PURCHASE PLAN.
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PROPOSAL THREE
APPROVAL OF INCREASE IN AUTHORIZED SHARES UNDER
THE COMPANY'S STOCK OPTION PLAN
Subject to the approval of the Company's stockholders at the Annual
Meeting, the Board of Directors has approved an amendment to the Option Plan to
increase the number of shares of Common Stock reserved for issuance under the
Option Plan from 1,000,000 to 2,500,000. The Option Plan, as amended, remains in
all other respects identical to the Option Plan as originally adopted by the
Company's stockholders. The amendment to the Option Plan is set forth in
Appendix B.
Stockholder approval of the amendment to the Option Plan is sought to
continue (i) to qualify the Option Plan, as amended, under Rule 16b-3 of the Act
and thereby render certain transactions under the Option Plan exempt from
certain provisions of Section 16 of the 1934 Act, and (ii) to qualify certain
compensation under the Option Plan as performance based compensation that is tax
deductible without limitation under Section 162(m) of the Code.
The following is a summary of certain features of the Option Plan, as
amended.
AVAILABLE SHARES UNDER THE OPTION PLAN
Under the terms of the Option Plan, 2,500,000 shares of authorized but
unissued Common Stock of the Company are reserved for issuance. Of such shares,
120,000 shares are reserved for issuance upon the exercise of options granted to
non-employee directors of the Company and 2,380,000 shares are reserved for
issuance upon the exercise of options granted to officers and employees of the
Company and its subsidiaries and non-employee directors of subsidiaries. The
Option Plan provides for the grant of options that are intended to qualify as
"incentive stock options" under Section 422 of the Code as well as nonqualified
options. There are approximately 536 people currently eligible to receive grants
under the Option Plan.
STOCK APPRECIATION RIGHTS
Options granted to officers and employees under the Option Plan may be
accompanied by Stock Appreciation Rights ("SARs"). The grant of an SAR permits
the optionee to surrender an option and receive in exchange cash or, if
specified in the option agreement, shares of the Company's Common Stock with a
value equal to the excess of the fair market value of the stock subject to the
option exercise price.
ADMINISTRATION
The Option Plan will be administered by the Compensation Committee of the
Board (the "Compensation Committee"). The Compensation Committee will select the
officers and employees and non-employee directors of the Company and
subsidiaries to whom options may be granted. Options grants to non-employee
directors of the Company are fixed pursuant to the terms of the Option Plan.
The Board of Directors has the authority to amend the Option Plan;
provided, however, that without approval of the stockholders of the Company no
amendment shall (i) materially increase the benefits accruing to participants
under the Option Plan, (ii) change the requirements as to eligibility to receive
options or SARs, or (iii) increase the maximum number of shares in the aggregate
that may be sold pursuant to options or SARs granted under the Plan. The Board
of Directors may terminate the Option Plan at any time, but no termination may
alter or impair any rights or obligations under any option or SAR previously
granted under the Option Plan.
GRANT AND EXERCISE OF OPTION
The exercise price of options granted under the Option Plan may not be less
than 100% of the fair market value of the Common Stock on the date of the grant,
as determined in accordance with the Plan. The maximum option term will be 10
years. Each option granted to a non-employee director of the Company under the
Option Plan will be exercisable for up to 1,500 shares on the date of
stockholder approval of the Option Plan (or one year after grant, for grants
made after the date of stockholder approval), and as to an
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additional 1,500 shares on each of the first and second anniversaries of such
date. Each option and any related SAR granted to persons other than non-employee
directors of the Company under the Option Plan will be exercisable, at any time
and from time to time, over a period commencing on the date of grant and ending
upon expiration or termination of the option, as the Compensation Committee
shall determine and as set forth in the option agreement relating thereto. No
person may receive any incentive stock option, if, at the time of grant such
person owns directly or indirectly more than 10% of the total combined voting
power of the Company unless the Option price is at least 110% of the fair market
value of the Common Stock and the exercise period of such incentive option is by
its terms limited to five years. There is also a $100,000 limit on the value of
stock (determined at the time of grant) covered by incentive stock options that
first become exercisable by an optionee in any calendar year. The maximum number
of shares subject to options that can be granted under the Plan to any executive
officer or other employee of the Company or any subsidiary will be 250,000
shares. No option may be granted more than 10 years after the effective date of
the Option Plan.
Payment for shares purchased under the Option Plan may be made either in
cash or cash equivalents, or, if permitted by the option agreement, by
exchanging shares of Common Stock of the Company with a fair market value equal
to or less than the total option price plus cash for any difference or by a
combination of the foregoing. Options also may be exercised by the optionee
directing that certificates for the shares purchased be delivered to a licensed
broker acceptable to the Company as agent for the optionee, provided that the
broker tenders to the Company cash or cash equivalents equal to the option
exercise price plus the amount of any taxes that the Company may be required to
withhold in connection with the exercise of the option. An optionee may exercise
an SAR only at such time as the related option may be exercised and only at such
times as the fair market value of a share of Common Stock on the exercise date
exceeds the option exercise price of the related option. As to SARs that are
exercisable for shares of Common Stock, the number of shares issued pursuant to
the exercise of SARs shall be determined by dividing (i) the total number of
SARs being exercised, multiplied by the excess of the fair market value of a
share of Common Stock on the market value of a share of Common Stock on the
exercise date over the per share exercise price, by (ii) the fair market value
of a share of Common Stock on the exercise date. No fractional shares will be
issued by the Company on exercise of SARs and no cash will be paid in lieu of
any fractional shares.
RESTRICTION ON TRANSFER AND TERMINATION OF EMPLOYMENT
Options and SARs granted under the Option Plan will not be transferable and
may be exercised only by the optionee during his or her lifetime. If any
employee's employment with the Company or a subsidiary terminates by reason or
death or permanent and total disability, his or her other options, whether or
not then exercisable, may be exercised within one year after the date of such
death or disability unless otherwise provided in the option agreement (but no
later than the date the option would otherwise expire). If the optionee's
employment terminates for any reason other than death or disability, options
held by such optionee will terminate three months after the date of such
termination unless otherwise provided in the option agreement (but not later
than the date the option would otherwise expire). The Compensation Committee may
extend the period during which the option may be exercised (but not later than
the date the option would otherwise expire) by so providing in the option
agreement. Options granted to non-employee directors of the Company shall remain
exercisable for their remaining term in the event the non-employee director
ceases to be a member of the Board of Directors by reason of death or permanent
and total disability and three months following the date on which the
non-employee director ceases to be a member of the Board for any other reasons.
DISCUSSION OF FEDERAL INCOME TAX CONSEQUENCES
The following summary of tax consequences with respect to the awards
granted under the 1996 Stock Incentive Plan is not comprehensive and is based
upon laws and regulations in effect as of March 1, 1998. Such laws and
regulations are subject to change.
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NON-QUALIFIED STOCK OPTIONS
Participant. Generally, a Participant receiving a non-qualified stock
option does not realize any taxable income for Federal income tax purposes at
the time of grant. Upon exercise of such Option, the excess of the fair market
value of the shares of Common Stock subject to the non-qualified stock option on
the date of exercise over the exercise price will be taxable to the Participant
as ordinary income. The Participant will have a capital gain (or loss) upon the
subsequent sale of the shares of Common Stock received upon exercise of the
option in an amount equal to the sale price reduced by the fair market value of
the shares of Common Stock on the date the option was exercised. The holding
period for purposes of determining whether the capital gain (or loss) is a
long-term, mid-term or short-term capital gain (or loss) will commence on the
date the non-qualified stock option is exercised.
Tax Withholding. The amount of income that is taxable to a Participant
upon the exercise of a non-qualified stock option will be treated as
compensation income. Accordingly, such amount will be subject to applicable
withholding of Federal, state and local income taxes and Social Security taxes.
If the Participant Uses Company Stock to Pay the Option Exercise Price. If
the Participant who exercises a non-qualified stock option pays the exercise
price by tendering shares of Common Stock and receives back a larger number of
shares of Common Stock, the Participant will realize taxable income in an amount
equal to the fair market value of the additional shares of Common Stock received
on the date of exercise, less any cash paid in addition to the shares of Common
Stock tendered. Upon a subsequent sale of the Common Stock received, the number
of shares of Common Stock equal to the number delivered as payment of the
exercise price will have a tax basis equal to that of the shares of Common Stock
originally tendered. The additional newly-acquired shares of Common Stock
obtained upon exercise of the non-qualified stock option will have a tax basis
equal to the fair market value of such shares on the date of exercise.
The Company. The Company generally will be entitled to a tax deduction in
the same amount and in the same year in which the Participant recognizes
ordinary income resulting from the exercise of a non-qualified stock option.
INCENTIVE STOCK OPTIONS
Participant. Generally, a Participant will not realize any taxable income
for Federal income tax purposes at the time an Incentive Stock Option is
granted. Upon exercise of the Incentive Stock Option, the Participant will incur
no income tax liability (other than pursuant to the alternative minimum tax, if
applicable). If the Participant transfers shares of Common Stock received upon
the exercise of an Incentive Stock Option within a period of two years from the
date of grant of such Incentive Stock Option or one year from the date of
receipt of the shares of Common Stock (the "Holding Period"), then, in general,
the Participant will have taxable ordinary income in the year in which the
transfer occurs in an amount equal to the excess of the fair market value on the
date of exercise over the exercise price, and will have long-term or short-term
capital gain (or loss) in an amount equal to the difference between the sale
price of the shares of Common Stock and the fair market value of such shares on
the date of exercise. However, if the sale price is less than the fair market
value of such shares on the date of exercise, the ordinary income will be not
more than the difference between the sale price and the exercise price. If the
Participant transfers the shares of Common Stock after the expiration of the
Holding Period, he or she will recognize income taxable at the capital gains tax
rate on the difference between the sale price and the exercise price.
Tax Withholding. If the Participant makes any disqualifying disposition
prior to the completion of the Holding Period with respect to shares of Common
Stock acquired upon the exercise of an Incentive Stock Option granted under the
Plan, then such Participant must remit to the Company an amount sufficient to
satisfy all Federal, state, and local withholding taxes thereby incurred.
If the Participant Uses Common Stock to Pay the Option Exercise Price. If
a Participant who exercises an Incentive Stock Option pays the option exercise
price by tendering shares of Common Stock, such Participant will generally incur
no income tax liability (other than pursuant to the alternative minimum tax, if
applicable), provided any Holding Period requirement for the tendered shares is
met. If the tendered stock
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was subject to the Holding Period requirement when tendered, payment of the
exercise price with such stock constitutes a disqualifying disposition. If the
Participant pays the exercise price by tendering shares of Common Stock and the
Participant receives back a larger number of shares, under proposed Treasury
Regulations, the Participant's basis in the number of shares of newly acquired
stock equal to the number of the shares delivered as payment of the exercise
price will have a tax basis equal to that of the shares originally tendered,
increased, if applicable, by any amount included in the Participant's gross
income as compensation. The additional newly acquired shares obtained upon
exercise of the Option will have a tax basis of zero. All Common Stock acquired
upon exercise will be subject to the Holding Period requirement, including the
number of shares equal to the number tendered to pay the exercise price. Any
disqualifying disposition will be deemed to be a disposition of Common Stock
with the lowest basis.
The Company. The Company is not entitled to a tax deduction upon grant,
exercise or subsequent transfer of shares of Common Stock acquired upon exercise
of an Incentive Stock Option, provided that the Participant holds the shares
received upon the exercise of such Option for the Holding Period. If the
Participant transfers the Common Stock acquired upon the exercise of an
Incentive Stock Option prior to the end of the Holding Period, the Company
generally is entitled to a deduction at the time the Participant recognizes
ordinary income in an amount equal to the amount of ordinary income recognized
by such Participant as a result of such transfer.
STOCK APPRECIATION RIGHTS
Upon the grant of a Stock Appreciation Right ("SAR"), the Participant will
not recognize any taxable income and the Company will not be entitled to a
deduction. Upon the exercise of an SAR, the consideration paid to the
Participant upon exercise of the SAR will constitute compensation taxable to the
Participant as ordinary income. In determining the amount of the consideration
paid to the Participant upon the exercise of an SAR for the Common Stock, the
fair market value of the shares on the date of exercise is used, except that in
the case of an Insider, the fair market value will be determined six months
after the date on which the Common Stock is transferred unless such Participant
makes an election under Section 83(b) of the Code to be taxed based on the fair
market value on the date of exercise. The Company in computing its Federal
income tax generally will be entitled to a deduction in an amount equal to the
compensation taxable to the Participant.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE AMENDMENT TO
THE COMPANY'S STOCK OPTION PLAN.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Company has engaged the firm of Arthur Andersen LLP as its independent
public accountants for 1998. It is expected that a representative from this firm
will be present at the Annual Meeting, and will be available to respond to
appropriate questions from the Stockholders if the need arises, or make a
statement if the representative desires to do so.
STOCKHOLDER PROPOSALS
All stockholder proposals intended to be presented at the 1999 Annual
Meeting of Stockholders must be received by the Company no later than December
23, 1998 and must otherwise comply with rules of the Securities and Exchange
Commission for inclusion in the Company's proxy statement and form of proxy
relating to the meeting.
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OTHER MATTERS
The Company knows of no other matters to be presented for action at the
Annual Meeting other than those mentioned above. However, if any other matters
should properly come before the meeting, it is intended that the persons named
in the accompanying proxy card will vote on such matters in accordance with
their best judgment.
A COPY OF THE ANNUAL REPORT TO
STOCKHOLDERS FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1997 ACCOMPANIES THIS
PROXY STATEMENT. STOCKHOLDERS MAY
OBTAIN, FREE OF CHARGE, A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K
FOR THE SAME YEAR BY WRITING TO
ATLANTIC PREMIUM BRANDS, LTD.,
ATTENTION: TOM WIPPMAN, 650 DUNDEE
ROAD, SUITE 370, NORTHBROOK, ILLINOIS
60062.
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APPENDIX A
ATLANTIC PREMIUM BRANDS, LTD.
EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors of Atlantic Premium Brands, Ltd. (the "Company") has
adopted this Employee Stock Purchase Plan (the "Plan") to enable eligible
employees of the Company and its participating Affiliates (as defined below),
through payroll deductions, to purchase shares of the Company's common stock,
par value $0.01 per share (the "Common Stock"). The Plan is for the benefit of
the employees of Atlantic Premium Brands, Ltd. and any participating Affiliates.
The Plan is intended to benefit the Company by increasing the employees'
interest in the Company's growth and success and encouraging employees to remain
in the employ of the Company or its participating Affiliates. The provisions of
the Plan are set forth below:
1. Shares Subject to the Plan.
Subject to adjustment as provided in Section 26 below, the aggregate number
of shares of Common Stock that may be made available for purchase by
participating employees under the Plan is 250,000. The shares issuable under the
Plan may, in the discretion of the Board of Directors of the Company (the
"Board"), be authorized but unissued shares, treasury shares or shares purchased
in the open market.
2. Administration.
The Plan shall be administered under the direction of the Compensation
Committee of the Board (the "Committee"). No member of the Board or the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan.
3. Interpretation.
It is intended that the Plan will meet the requirements for an "employee
stock purchase plan" under Section 423 of the Internal Revenue Code of 1986 (the
"Code"), and it is to be so applied and interpreted. Subject to the express
provisions of the Plan, the Committee shall have authority to interpret the
Plan, to prescribe, amend and rescind rules relating to it, and to make all
other determinations necessary or advisable in administering the Plan, all of
which determinations will be final and binding upon all persons.
4. Eligible Employees.
Any employee of the Company or any of its participating Affiliates may
participate in the Plan, except the following, who are ineligible to
participate: (a) an employee who has been employed by the Company or any of its
participating Affiliates for less than 60 days as of the beginning of a Payroll
Deduction Period (as defined in Section 7 below); (b) an employee whose
customary employment is for less than five months in any calendar year; (c) an
employee whose customary employment is 20 hours or less per week; and (d) an
employee who, after exercising his or her rights to purchase shares under the
Plan, would own shares of Common Stock (including shares that may be acquired
under any outstanding options) representing five percent or more of the total
combined voting power of all classes of stock of the Company. The term
"participating Affiliate" means any company or other trade or business that is a
subsidiary of the Company (determined in accordance with the principles of
Sections 424(e) and (f) of the Code and the regulations thereunder). The Board
may at any time in its sole discretion, if it deems it advisable to do so,
terminate the participation of the employees of a particular participating
Affiliate.
5. Participation in the Plan.
An eligible employee may become a participating employee in the Plan by
completing an election to participate in the Plan on a form provided by the
Company and submitting that form to the Payroll Department of the Company. The
form will authorize payroll deductions (as provided in Section 6 below) and
authorize the purchase of shares of Common Stock for the employee's account in
accordance with the terms of the Plan. Enrollment will become effective upon the
first day of the first Payroll Deduction Period.
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6. Payroll Deductions.
At the time an eligible employee submits his or her election to participate
in the Plan (as provided in Section 5 above), the employee shall elect to have
deductions made from his or her pay, in any whole percentage up to a maximum of
10 percent, on each pay day following his or her enrollment in the Plan, and for
as long as he or she shall participate in the Plan. The deductions will be
credited to the participating employee's account under the Plan. An employee may
not during any Payroll Deduction Period change his or her percentage of payroll
deduction for that Payroll Deduction Period, nor may an employee withdraw any
contributed funds, other than in accordance with Sections 14 through 20 below.
7. Payroll Deduction Periods.
The initial Payroll Deduction Period shall commence on November 1, 1997 and
end on October 31, 1998. Subsequent Payroll Deduction Periods shall be one year
periods commencing on following November 1 and end on the following October 31
or shall commence on such dates and for such periods as shall be determined by
the Committee.
8. Rights to Purchase Common Stock; Purchase Price.
Rights to purchase shares of Common Stock will be deemed granted to
participating employees as of the first trading day of each Payroll Deduction
Period. The purchase price of each share of Common Stock (the "Purchase Price")
shall be the lesser of 85 percent of the fair market value of the Common Stock
(i) on the first trading day of the Payroll Deduction Period or (ii) on the last
trading day of such Payroll Deduction Period; or such higher price as determined
by the Committee; provided, further, that in no event shall the Purchase Price
be less than the par value of the Common Stock. For purposes of the Plan, "fair
market value" means the value of each share of Common Stock subject to the Plan
on a given date determined as follows: if on such date the shares of Common
Stock are listed on an established national or regional stock exchange, are
admitted to quotation on The Nasdaq Stock Market, or are publicly traded on an
established securities market, the fair market value of the shares of Common
Stock shall be the closing price of the shares of Common Stock on such exchange
or in such market (the highest such closing price if there is more than one such
exchange or market) on such date or, if such date is not a trading day, on the
trading day immediately preceding such date (or if there is no such reported
closing price, the fair market value shall be the mean between the highest bid
and lowest asked prices or between the high and low sale prices on such trading
day) or, if no sale of the shares of Common Stock is reported for such trading
day, on the next preceding day on which any sale shall have been reported. If
the shares of Common Stock are not listed on such an exchange, quoted on such
System or traded on such a market, fair market value shall be determined by the
Board in good faith.
9. Timing of Purchase; Purchase Limitation.
Unless a participating employee has given prior written notice terminating
such employee's participation in the Plan, or the employee's participation in
the Plan has otherwise been terminated as provided in Sections 15 through 18
below, such employee will be deemed to have exercised automatically his or her
right to purchase Common Stock on the last trading day of the Payroll Deduction
Period (except as provided in Section 14 below) for the number of shares of
Common Stock which the accumulated funds in the employee's account at that time
will purchase at the Purchase Price, subject to the participation adjustment
provided for in Section 13 below and subject to the adjustment under Section 24
below. Notwithstanding any other provision of the Plan, no employee may purchase
in any one calendar year under the Plan and other "employee stock purchase
plans" of the Company and its participating Affiliates shares of Common Stock
having an aggregate fair market value in excess of $25,000, determined as of the
first trading date of the Payroll Deduction Period as to shares purchased during
such period. Effective upon the last trading day of the Payroll Deduction
Period, a participating employee will become a stockholder with respect to the
shares purchased during such period, and will thereupon have all dividend,
voting and other ownership rights incident thereto. Notwithstanding the
foregoing, no shares shall be sold pursuant to the Plan unless the Plan is
approved by the Company's stockholders in accordance with Section 23 below.
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10. Issuance of Stock Certificates.
On the last trading day of the Payroll Deduction Period, a participating
employee will be credited with the number of shares of Common Stock purchased
for his or her account under the Plan during such Payroll Deduction Period.
Shares purchased under the Plan will be held in the custody of an agent (the
"Agent") appointed by the Board of Directors. The Agent may hold the shares
purchased under the Plan in stock certificates in nominee names and may
commingle shares held in its custody in a single account or stock certificate
without identification as to individual participating employees. A participating
employee may, at any time following his or her purchase of shares under the
Plan, by written notice instruct the Agent to have all or part of such shares
reissued in the participating employee's own name and have the stock certificate
delivered to the employee.
11. Withholding of Taxes.
To the extent that a participating employee realizes ordinary income in
connection with a sale or other transfer of any shares of Common Stock purchased
under the Plan, the Company may withhold amounts needed to cover such taxes from
any payments otherwise due and owing to the participating employee or from
shares that would otherwise be issued to the participating employee hereunder.
Any participating employee who sells or otherwise transfers shares purchased
under the Plan within two years after the beginning of the Payroll Deduction
Period in which the shares were purchased must within 30 days of such transfer
notify the Payroll Department of the Company in writing of such transfer.
12. Account Statements.
The Company will cause the Agent to deliver to each participating employee
a statement for each Payroll Deduction Period during which the employee
purchases Common Stock under the Plan, reflecting the amount of payroll
deductions during the Payroll Deduction Period, the number of shares purchased
for the employee's account, the price per share of the shares purchased for the
employee's account and the number of shares held for the employee's account at
the end of the Payroll Deduction Period.
13. Participation Adjustment.
If in any Payroll Deduction Period the number of unsold shares that may be
made available for purchase under the Plan pursuant to Section 1 above is
insufficient to permit exercise of all rights deemed exercised by all
participating employees pursuant to Section 9 above, a participation adjustment
will be made, and the number of shares purchasable by all participating
employees will be reduced proportionately. Any funds then remaining in a
participating employee's account after such exercise will be refunded to the
employee.
14. Changes in Elections to Purchase.
(a) A participating employee may, at any time prior to the last trading day
of the Payroll Deduction Period, by written notice to the Company, direct the
Company to cease payroll deductions (or, if the payment for shares is being made
through periodic cash payments, notify the Company that such payments will be
terminated), in accordance with the following alternatives:
(i) The employee's option to purchase shall be reduced to the number
of shares which may be purchased, as of the last day of the Payroll
Deduction Period, with the amount then credited to the employee's account;
or
(ii) Withdraw the amount in such employee's account and terminate such
employee's option to purchase.
(b) Any participating employee may increase or decrease his or her payroll
deduction or periodic cash payments, to take effect on the first day of the next
Payroll Deduction Period, by delivering to the Company a new form regarding
election to participate in the Plan under Section 5 above.
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15. Termination of Employment.
In the event a participating employee terminates employment, whether
voluntarily or involuntary, due to death, disability or retirement, or
discharged for cause, prior to the last day of the Payroll Deduction Period, the
amount in the employee's account will be distributed and the employee's option
to purchase will terminate.
16. Lay-Off, Authorized Leave of Absence, Disability.
Payroll deductions for shares for which a participating employee has an
option to purchase may be suspended during any period of absence of the employee
from work due to lay-off, authorized leave of absence or disability or, if the
employee so elects, periodic payments for such shares may continue to be made in
cash.
If such employee returns to active service prior to the last day of the
Payroll Deduction Period, the employee's payroll deductions will be resumed and
if said employee did not make periodic cash payments during the employee's
period of absence, the employee shall, by written notice to the Company's
Payroll Department within 10 days after the employee's return to active service,
but not later than the last day of the Payroll Deduction period, elect:
(a) To make up any deficiency in the employee's account resulting from
a suspension of payroll deductions by an immediate cash payment;
(b) Not to make up such deficiency, in which event the number of
shares to be purchased by the employee shall be reduced to the number of
whole shares which may be purchased with the amount, if any, then credited
to the employee's account plus the aggregate amount, if any, of all payroll
deductions to be made thereafter; or
(c) Withdraw the amount in the employee's account and terminate the
employee's option to purchase.
A participating employee on lay-off, authorized leave of absence or
disability on the last day of the Payroll Deduction Period shall deliver written
notice to his or her employer on or before the last day of the Payroll Deduction
Period, electing one of the alternatives provided in the foregoing clauses (a),
(b) and (c) of this Section 16. If any employee fails to deliver such written
notice within 10 days after the employee's return to active service or by the
last day of the Payroll Deduction Period, whichever is earlier, the employee
shall be deemed to have elected subsection 16(c) above.
If the period of a participating employee's lay-off, authorized leave of
absence or disability shall terminate on or before the last day of the Payroll
Deduction Period, and the employee shall not resume active employment with the
Company or a participating Affiliate, the employee shall receive a distribution
in accordance with the provisions of Section 15 of this Plan.
17. Failure to Make Periodic Cash Payments.
Under any of the circumstances contemplated by this Plan, where the
purchase of shares is to be made through periodic cash payments in lieu of
payroll deductions, the failure to make any such payments shall reduce, to the
extent of the deficiency in such payments, the number of shares purchasable
under this Plan.
18. Termination of Participation
A participating employee will be refunded all moneys in his or her account,
and his or her participation in the Plan will be terminated if either (a) the
Board elects to terminate the Plan as provided in Section 23 below, or (b) the
employee ceases to be eligible to participate in the Plan under Section 4 above.
As soon as practicable following termination of an employee's participation in
the Plan, the Company will deliver to the employee a check representing the
amount in the employee's account and a stock certificate representing the number
of whole shares held in the employee's account. Once terminated, participation
may not be reinstated for the then current Payroll Deduction Period, but, if
otherwise eligible, the employee may elect to participate in any subsequent
Payroll Deduction Period.
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19. Assignment.
No participating employee may assign his or her rights to purchase shares
of Common Stock under the Plan, whether voluntarily, by operation of law or
otherwise. Any payment of cash or issuance of shares of Common Stock under the
Plan may be made only to the participating employee (or, in the event of the
employee's death, to the employee's estate). Once a stock certificate has been
issued to the employee or for his or her account, such certificate may be
assigned the same as any other stock certificate.
20. Application of Funds.
All funds received or held by the Company under the Plan may be used for
any corporate purpose until applied to the purchase of Common Stock and/or
refunded to participating employees. Participating employees' accounts will not
be segregated.
21. No Right to Continued Employment.
Neither the Plan nor any right to purchase Common Stock under the Plan
confers upon any employee any right to continued employment with the Company or
any of its participating Affiliates, nor will an employee's participation in the
Plan restrict or interfere in any way with the right of the Company or any of
its participating Affiliates to terminate the employee's employment at any time.
22. Amendment of Plan.
The Board may, at any time, amend the Plan in any respect (including an
increase in the percentage specified in Section 8 above used in calculating the
Purchase Price); provided, however, that without approval of the stockholders of
the Company no amendment shall be made (a) increasing the number of shares
specified in Section 1 above that may be made available for purchase under the
Plan (except as provided in Section 24 below), (b) changing the eligibility
requirements for participating in the Plan, or (c) impairing the vested rights
of participating employees.
23. Effective Date; Term and Termination of the Plan.
The Plan shall be effective as of the date of adoption by the Board which
date is set forth below, subject to approval of the Plan by a majority of the
votes present and entitled to vote at a duly held meeting of the shareholders of
the Company at which a quorum representing a majority of all outstanding voting
stock is present, either in person or by proxy; provided, however, that upon
approval of the Plan by the shareholders of the Company as set forth above, all
rights to purchase shares granted under the Plan on or after the effective date
shall be fully effective as if the shareholders of the Company had approved the
Plan on the effective date. If the shareholders fail to approve the Plan on or
before one year after the effective date, the Plan shall terminate, any rights
to purchase shares granted hereunder shall be null and void and of no effect,
and all contributed funds shall be refunded to participating employees. The
Board may terminate the Plan at any time and for any reason or for no reason,
provided that such termination shall not impair any rights of participating
employees that have vested at the time of termination. In any event, the Plan
shall, without further action of the Board, terminate ten (10) years after the
date of adoption of the Plan by the Board or, if earlier, at such time as all
shares of Common Stock that may be made available for purchase under the Plan
pursuant to Section 1 above have been issued.
24. Effect of Changes in Capitalization.
(A) Changes in Stock.
If the number of outstanding shares of Common Stock is increased or
decreased or the shares of Common Stock are changed into or exchanged for a
different number or kind of shares or other securities of the Company by reason
of any recapitalization, reclassification, stock split, reverse split,
combination of shares, exchange of shares, stock dividend, or other distribution
payable in capital stock, or other increase or decrease in such shares effected
without receipt of consideration by the Company occurring after the effective
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date of the Plan, the number and kinds of shares that may be purchased under the
Plan shall be adjusted proportionately and accordingly by the Company. In
addition, the number and kind of shares for which rights are outstanding shall
be similarly adjusted so that the proportionate interest of a participating
employee immediately following such event shall, to the extent practicable, be
the same as immediately prior to such event. Any such adjustment in outstanding
rights shall not change the aggregate Purchase Price payable by a participating
employee with respect to shares subject to such rights, but shall include a
corresponding proportionate adjustment in the Purchase Price per share.
(B) Reorganization in Which the Company is the Surviving Company
Subject to Subsection (C) of this Section 24, if the Company shall be the
surviving corporation in any reorganization, merger or consolidation of the
Company with one or more other corporations, all outstanding rights under the
Plan shall pertain to and apply to the securities to which a holder of the
number of shares of Common Stock subject to such rights would have been entitled
immediately following such reorganization, merger or consolidation, with a
corresponding proportionate adjustment of the Purchase Price per share so that
the aggregate Purchase Price thereafter shall be the same as the aggregate
Purchase Price of the shares subject to such rights immediately prior to such
reorganization, merger or consolidation.
(C) Reorganization in Which the Company is Not the Surviving Company or Sale
of Assets or Stock.
Upon any dissolution or liquidation of the Company, or upon a merger,
consolidation or reorganization of the Company with one or more other
corporations in which the Company is not the surviving corporation, or upon a
sale of all or substantially all of the assets of the Company to another
corporation, or upon any transaction (including, without limitation, a merger or
reorganization in which the Company is the surviving corporation) approved by
the Board that results in any person or entity owning more than 80 percent of
the combined voting power of all classes of stock of the Company, the Plan and
all rights outstanding hereunder shall terminate, except to the extent provision
is made in writing in connection with such transaction for the continuation of
the Plan and/or the assumption of the rights theretofore granted, or for the
substitution for such rights of new rights covering the stock of a successor
corporation, or a parent or subsidiary thereof, with appropriate adjustments as
to the number and kinds of shares and exercise prices, in which event the Plan
and rights theretofore granted shall continue in the manner and under the terms
so provided. In the event of any such termination of the Plan, the Payroll
Deduction Period shall be deemed to have ended on the last trading day prior to
such termination, and in accordance with Section 10 above the rights of each
participating employee then outstanding shall be deemed to be automatically
exercised on such last trading day. The Board shall send written notice of an
event that will result in such a termination to all participating employees not
later than the time at which the Company gives notice thereof to its
stockholders.
(D) Adjustments.
Adjustments under this Section 24 related to stock or securities of the
Company shall be made by the Committee, whose determination in that respect
shall be final, binding, and conclusive.
(E) No Limitations on Company.
The grant of a right pursuant to the Plan shall not affect or limit in any
way the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge,
consolidate, dissolve or liquidate, or to sell or transfer all or any part of
its business or assets.
25. Governmental Regulation.
The Company's obligation to issue, sell and deliver shares of Common Stock
pursuant to the Plan is subject to such approval of any governmental authority
and any national securities exchange or other market quotation system as may be
required in connection with the authorization, issuance or sale of such shares.
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26. Stockholder Rights.
Any dividends paid on shares held by the Company for a participating
employee's account will be transmitted to the employee. The Company will deliver
to each participating employee who purchases shares of Common Stock under the
Plan, as promptly as practicable by mail or otherwise, all notices of meetings,
proxy statements, proxies and other materials distributed by the Company to its
stockholders. Any shares of Common Stock held by the Agent for an employee's
account will be voted in accordance with the employee's duly delivered and
signed proxy instructions. There will be no charge to participating employees in
connection with such notices, proxies and other materials.
27. Rule 16b-3.
Transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3 or any successor provision under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). If any provision of the
Plan or action by the Board fails to so comply, it shall be deemed null and void
to the extent permitted by law and deemed advisable by the Board. Moreover, in
the event the Plan does not include a provision required by Rule 16b-3 to be
stated herein, such provision (other than one relating to eligibility
requirements, or the price and amount of awards) shall be deemed automatically
to be incorporated by reference into the Plan.
28. Payment of Plan Expenses.
The Company will bear all costs of administering and carrying out the Plan.
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APPENDIX B
AMENDMENT TO THE COMPANY'S STOCK OPTION PLAN
RESOLVED, that the Company's Stock Option Plan (the "Option Plan") be and
hereby is amended, subject to and effective upon stockholders' approval at the
Annual Meeting of Stockholders on May 13, 1998, as follows:
Section 3 of the Option Plan is amended to read as follows:
"3. Stock
The stock that may be issued pursuant to Options granted under the
Plan shall be shares of Common Stock, par value $.01 per share, of the
Company (the "Stock"), which shares may be treasury shares or authorized
but unissued shares. The number of shares of Stock that may be issued
pursuant to Options granted under the Plan shall not exceed in the
aggregate 2,500,000 shares, of which 120,000 shares may be issued pursuant
to options granted to Non-Employee Directors and 2,380,000 shares may be
issued pursuant to options granted to other eligible individuals. The
foregoing number of shares are subject to adjustment as provided in Section
18 below. If any Option expires, terminates, or is terminated or canceled
for any reason prior to exercise in full, the shares of Stock that were
subject to the unexercised portion of such Option shall be available for
future Options granted under the Plan and such number of shares shall be
restored to the number of shares available for issuance under Options
granted to Non-Employee Directors or to other eligible individuals,
whichever is applicable, except that such shares shall not be so available
whenever such Option has been surrendered as a result of the exercise of
the related SAR."
Section 4 of the Option Plan is amended to read as follows:
"4. Eligibility
(a) Employees and Subsidiary Directors. Options or SARs may be
granted under the Plan to any employee of the Company or any Subsidiary
(including any such employee who is an officer or director of the Company
or any Subsidiary) or to any Subsidiary Director as the Board shall
determine and designate from time to time prior to expiration or
termination of the Plan. The maximum number of shares of Stock subject to
Options that may be granted under the Plan to any executive officer or
other employee of the Company or any Subsidiary is 2,380,000 shares
(subject to adjustment as provided in Section 18 hereof)."
Except as herein amended, the Option Plan shall remain in full force and
effect.
ATLANTIC PREMIUM BRANDS, LTD.
By: /s/ ALAN F. SUSSNA
------------------------------------
Alan F. Sussna
Chief Executive Officer
B-1
<PAGE> 30
PROXY PROXY
ATLANTIC PREMIUM BRANDS, LTD.
NORTHBROOK, ILLINOIS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned holder of the Common Stock of Atlantic Premium Brands, Ltd. (the
"Corporation") acknowledges receipt of the Proxy Statement and Notice of Annual
Meeting of Stockholders, dated April 22, 1998, hereby constitutes and appoints
Brian Fleming, John E. Izzo and Alan F. Sussna, and each of them acting singly
in the absence of the other, as Proxies with full power of substitution, and
hereby authorize(s) them to represent and to vote, as designated below, all of
the shares of Common Stock of the Corporation held of record by the undersigned
on April 1, 1998, at the Annual Meeting of Stockholders to be held at 10:00 a.m.
local time on May 13, 1998, or at any adjournment(s) thereof.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
POSTAGE-PAID ENVELOPE.
(Continued and to be signed on reverse side.)
<PAGE> 31
[BACK SIDE OF PROXY CARD]
The Board of Directors Unanimously Recommends a Vote FOR Each
of the Following Proposals
1. ELECTION OF THREE (3) DIRECTORS FOR A THREE-YEAR TERM.
Class II (to serve until the 2001 annual meeting of stockholders)
Nominees: Merrick M. Elfman, John T. Hanes and Steven M. Taslitz
FOR ALL _______ WITHHOLD ALL______ FOR ALL EXCEPT _______
(Except Nominees Written Above.)
2. To consider and vote upon the Atlantic Premium Brands, Ltd. Employee
Stock Purchase Plan.
FOR _______ AGAINST ______ ABSTAIN _______
3. To increase the number of shares authorized under the Atlantic Premium
Brands, Ltd. Stock Option Plan.
FOR _______ AGAINST _______ ABSTAIN ________
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment(s)
thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR ALL OF THE DIRECTOR NOMINEES LISTED IN PROPOSAL ONE, FOR PROPOSALS TWO AND
THREE, AND, IF OTHER BUSINESS IS PRESENTED AT THE MEETING, IN ACCORDANCE WITH
THE BEST JUDGEMENT OF THE PROXIES ON THOSE MATTERS.
Dated: __________, 1998
____________________________________________________
____________________________________________________
Signature(s)
Please sign exactly as your name appears on this form. When shares are held in
more than one name, each joint owner should sign. When signing as an attorney,
executor, administrator, trustee or guardian, please give full title as such. If
a corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
