<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 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 1999 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 19, 1999, 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 1999 Annual Meeting of
Stockholders.
Sincerely,
Merrick M. Elfman
Chairman
April 19, 1999
<PAGE> 3
ATLANTIC PREMIUM BRANDS, LTD.
650 DUNDEE ROAD, SUITE 370
NORTHBROOK, ILLINOIS 60062
(847) 480-4000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The 1999 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 19, 1999, 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 an amendment to the Company's Certificate
of Incorporation to authorize a new class of non-voting Common Stock.
3. To consider and vote upon the approval of the Atlantic Premium
Brands, Ltd. 1999 Amended and Restated Stock Option Plan;
4. To consider and act upon such other business as may properly come
before the meeting.
Ten days prior to the 1999 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 19, 1999
<PAGE> 4
ATLANTIC PREMIUM BRANDS, LTD.
650 DUNDEE ROAD, SUITE 370
NORTHBROOK, ILLINOIS 60062
---------------
PROXY STATEMENT
---------------
ANNUAL MEETING OF STOCKHOLDERS
MAY 19, 1999
This Proxy Statement is furnished on or about April 19, 1999 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 1999 Annual Meeting of Stockholders (the "Annual Meeting"). The Annual
Meeting will be held at 10:00 a.m. central time on Wednesday, May 19, 1999, 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 2, 1999, there were 7,412,583 shares
of the Common Stock of the Company outstanding and entitled to vote at the
meeting. Only stockholders of record on April 1, 1999, 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
stockholder,
<PAGE> 5
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 III Directors (Messrs. Inatome, Miller and
Sussna) expire with this Annual Meeting. Each of these individuals has been
nominated as a Class III Director to be elected at the Annual Meeting. Each of
the nominees, if elected, will serve for three years until the 2002 Annual
Meeting of Stockholders and until a successor has been elected and qualified.
The current Class I and II Directors will continue in office until the 2000 and
2001 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 III -- Directors to be Elected at the 1999 Annual Meeting:
Rick Inatome. Mr. Inatome, age 45, has served as a director of the
Company since September 1993. Since 1991, Mr. Inatome has served as the Chairman
of Inacom Corp., a computer services firm. In addition to being a director of
the Company and Inacom, Mr. Inatome is a director of Liberty Business and
Industrial Development Corporation and Sylvan Learning Systems Inc., positions
he has held since 1991 and 1997, respectively.
John A. Miller. Mr. Miller, age 45, 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 has been a director of Network
Services Inc. since 1991, where he is a member of the Compensation Committee and
Audit Committee; a director of The Becker Group, Ltd., a privately-held company
in the mall decorations business ("Becker Group"), since 1998; and a director of
International Collectors Society LP, a privately-held collectibles company
("ICS"), since 1998, where he is a member of the Compensation Committee.
Alan F. Sussna. Mr. Sussna, age 42, 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 1996. Mr. Sussna is also a director
of ICS (where he is a member of the Compensation Committee) and Becker Group,
positions he has held since 1998. From 1991 through 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.
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
Class I -- Directors Serving Until the 2000 Annual Meeting:
Eric D. Becker. Mr. Becker, age 36, 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
co-founder and Managing Principal of Sterling Capital, Ltd., a private
investment firm which was founded in 1984 ("Sterling Capital"), and, since 1984,
Mr. Becker has also been Chairman and Vice President of
-2-
<PAGE> 6
Sterling Group, Inc., an affiliate of Sterling Capital ("Sterling Group"). Mr.
Becker is also Chairman of ICS and Becker Group.
Brian Fleming. Mr. Fleming, age 53, has served as a director of the
Company since December 1997 and is currently a member of the Compensation
Committee. Mr. Fleming is President of E.W. Knauss & Son, a manufacturer of
processed meat products specializing in dried beef and meat snacks, a position
he has held since 1988. 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 company. Mr. Fleming is presently a director of the
McShane Group, a management consulting company, and The Decal Source, which
designs and distributes decals for use in Nascar motor sports, positions he has
held since 1997 and 1998, respectively.
G. Cook Jordan, Jr. Mr. Jordan, age 47, has served as a director of the
Company since September 1993 and is a member of the Audit Committee and the
Compensation Committee. In 1998, Mr. Jordan became a general partner at CID
Equity Partners, a venture capital investment fund. From 1996 through 1998, Mr.
Jordan was a principal at C3 Holdings, LLC, a private investment firm. From 1988
through 1996, Mr. Jordan served as a Manager of Allstate Venture Capital, which
is affiliated with Allstate Insurance Company.
Class II -- Directors Serving Until 2001 Annual Meeting:
Merrick M. Elfman. Mr. Elfman, age 41, is Chairman of the Company, a
position he has held since July 1996, and has been a director of the Company
since 1993. Mr. Elfman has been Chairman of Gray Supply Company, Inc., a
privately-held distributor of specialty lighting products, since 1989, and
Carlton Foods, which is now a subsidiary of the Company, since 1990;
Vice-Chairman of ICS since 1997; and a director of Becker Group since 1998. He
is also the founder of Elfman Venture Partners, Inc. ("EVP"), a private
investment firm of which he has been president since 1987.
John T. Hanes. Mr. Hanes, age 62, has served as a director of the
Company since December 1997 and is a member of the Audit Committee. From 1994 to
the present, Mr. Hanes has served as President of The John T. Hanes Company, a
management consulting firm, and he has been a director of Premier Valley Foods,
a privately-held manufacturer and marketer of the Dole brand of dried fruits,
since 1998. From 1991 to 1994, Mr. Hanes served as the Chairman, President and
Chief Executive Officer of Doskocil Companies/Wilson Foods Corporation,
Incorporated, a publicly held manufacturer of pizza and other processed meat
products.
Steven M. Taslitz. Mr. Taslitz, age 40, has served as a director of the
Company since 1991. Mr. Taslitz is a co-founder and Managing Principal of
Sterling Capital and Sterling Group and a partner of Sterling Advisors, LP
("Sterling Advisors"). He has served as the President of Sterling Group since
1984. Mr. Taslitz is a director of New Century Arizona LLC, a privately-held
radio broadcast company; Gray Supply Company, a privately-held distributor of
specialty lighting products; and 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.
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 is made by the entire Board of Directors.
From January 1, 1998 through its May 1998 meeting, the Audit Committee
was composed of Mr. Becker, Mr. Jordan and Mr. Miller. Beginning with its May
1998 meeting, the Audit Committee was 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, 1998; each member of the Audit Committee attended both
meetings.
-3-
<PAGE> 7
From January 1, 1998 through its April 1998 meeting, the Compensation
Committee was composed of Mr. Jordan and Mr. Miller. Beginning with its April
1998 meeting, the Compensation Committee was 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 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, 1998; each member of the
Compensation Committee attended both meetings.
ATTENDANCE AT MEETINGS
During the year ended December 31, 1998, the Board of Directors held
five meetings. All directors attended at least 75% of the meetings of the Board
of Directors, except Mr. Becker, who attended three of the five meetings.
DIRECTORS' FEES
Non-employee directors receive options to purchase 10,000 shares of
Common Stock on January 1 of each year. This practice will continue under the
Atlantic Premium Brands, Ltd. 1999 Amended & Restated Stock Option Plan (the
"New Option Plan"), assuming the adoption by the stockholders at the Annual
Meeting of the New Option Plan as described in Proposal Three.
-4-
<PAGE> 8
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
ownership of Common Stock as of April 2, 1999, 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, each Named
Officer (as defined below), 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 .................................. 400,957(2) 5.32%
Eric D. Becker ..................................... 485,957(3) 6.50%
Merrick M. Elfman .................................. 502,559(4) 6.72%
Philip L. Glass .................................... 393,568(5) 5.44%
Bruce L. Goldman ................................... 647,076(6) 8.73%
Bobby L. Grogan .................................... 573,810(7) 7.74%
Rudolf Christopher Hoehn-Saric ..................... 431,699(8) 5.80%
Steven M. Taslitz .................................. 493,434(9) 6.60%
Thomas M. Dalton ................................... 38,100(10) *
Brian T. Fleming ................................... 15,000(11) *
John T. Hanes ...................................... 15,000(11) *
Rick Inatome ....................................... 164,151(12) 2.20%
G. Cook Jordan, Jr ................................. 74,107(13) *
John A. Miller ..................................... 175,405(12) 2.35%
Alan F. Sussna ..................................... 322,528(14) 4.26%
All directors and executive officers as a group
(11 persons) ....................................... 2,289,991(15) 28.90%
</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.
(2) Includes 50,000 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 60,000 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 64,500 shares underlying currently exercisable options or options
exercisable within 60 days. Of the remaining 438,059 shares, 433,805 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 114,940 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, 278,628 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.
-5-
<PAGE> 9
(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 Rudolph Christopher Hoehn-Saric, Jr. Also includes 25,000 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 64,500 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 25,000 shares underlying currently exercisable options or options
exercisable within 60 days.
(11) Includes 15,000 shares underlying currently exercisable options or options
exercisable within 60 days.
(12) Includes 39,500 shares underlying currently exercisable options or options
exercisable within 60 days.
(13) Includes 39,500 shares underlying presently exercisable options or options
exercisable within 60 days. Also includes 19,607 shares held by Mr.
Jordan's IRA.
(14) Includes 162,725 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 172,528 of these shares. Also includes 150,000 shares
underlying currently exercisable options, which are held by Mr. Sussna as
Trustee of the Alan F. Sussna Trust.
(15) Includes 512,500 shares underlying currently exercisable options or options
exercisable within 60 days.
-6-
<PAGE> 10
COMPENSATION
EXECUTIVE COMPENSATION
The following table sets forth annual and long-term compensation for
the fiscal years ended December 31, 1996, 1997 and 1998 for services in all
capacities to the Company of (i) the Chief Executive Officer, and (ii) the
Company's second most highly compensated executive officer (collectively, the
"Named Officers"). No other executive officer of the Company received total
annual salary and bonus in excess of $100,000 during 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------- ------------
SECURITIES
NAME AND UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) COMPENSATION($)(3)
- --------------------------------- ---- -------- ------- ---------- ------------------
<S> <C> <C> <C> <C> <C>
Alan F. Sussna, 1998 335,347 50,000 500,000 41,600
President and Chief Executive 1997 270,000 53,825 -- 21,462
Officer (1) 1996 177,808 -- 250,000 13,915
Thomas M. Dalton, 1998 110,425 -- 75,000 12,462
Senior Vice President and Chief
Financial Officer (2)
</TABLE>
- ------------------
(1) Mr. Sussna joined the Company as President and Chief Executive Officer on
March 15, 1996.
(2) Mr. Dalton joined the Company as Senior Vice President and Chief Financial
Officer on April 6, 1998.
(3) These amounts represent $1,500 per month for Mr. Sussna to fund his own
benefits in 1996; $3,462 and $2,600 contributed by the Company in 1997 and
1998, respectively, to its 401(k) Plan on behalf of Mr. Sussna; $18,000 and
$39,000 paid to Mr. Sussna in 1997 and 1998, respectively, as an allowance
for transportation costs and health related benefits; and $12,462 paid to
Mr. Dalton in 1998 as an allowance for transportation costs and health
related benefits.
-7-
<PAGE> 11
OPTION GRANTS
The following table sets forth certain information concerning option
grants to the Named Officers during 1998:
OPTION GRANTS IN 1998
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS(1) OPTION TERM
- -------------------------------------------------------------------------------------- -------------------
PERCENT OF
TOTAL
OPTIONS
NUMBER OF GRANTED TO
SECURITIES EMPLOYEES EXERCISE
NAME AND UNDERLYING IN FISCAL PRICE(3) EXPIRATION 5% 10%
PRINCIPAL POSITION OPTIONS GRANTED YEAR(2) ($/SH) DATE ($) ($)
- ----------------------- --------------- ----------- -------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Alan F. Sussna 500,000 72.76% 2.75 7/23/08 864,730 2,191,396
Thomas M. Dalton 75,000 10.91% 3.375 4/1/08 159,188 403,415
</TABLE>
- ------------------
(1) These options were issued pursuant to the Option Plan and the Named
Officer's employment agreement and may not be exercised until they vest. Of
Mr. Sussna's options, 250,000 vest one-third on each of July 23, 1999, 2000
and 2001, while the vesting of the remaining 250,000 depends upon the
Company's stock price achieving certain levels. Mr. Dalton's 75,000 options
vest one-third on each of April 1, 1999, 2000 and 2001.
(2) Based on 687,232 options granted to all employees.
(3) Based on the market price on the date of grant.
There were no option exercises by the Named Officers in 1998. Shown
below is information with respect to outstanding options held by the Named
Officers as of December 31, 1998. All options reflected in the chart below were
granted under the Option Plan and the Named Officer's employment agreement.
AGGREGATED 1998 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED OPTIONS VALUE OF UNEXERCISED
AT 12/31/98 IN-THE-MONEY OPTIONS AT
EXERCISABLE/ 12/31/98 EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE(1)
- -------------------------------- --------------------- -------------------------
<S> <C> <C>
Alan F. Sussna 100,000/650,000 $37,500/$56,250
Thomas M. Dalton 0/75,000 $0/$0
</TABLE>
- ------------------
(1) Based on closing price of $1.875 per share of Common Stock on December 31,
1998, as reported by the American Stock Exchange.
-8-
<PAGE> 12
PERFORMANCE GRAPH
The graph below compares the Company's cumulative stockholder return on
its Common Stock since December 31, 1993 with the CRSP Total Return Index for
the Nasdaq Stock Market (US and Foreign) and a composite peer group of Hormel
Foods Corp., Smithfield Foods Inc., Thorn Apple Valley Inc. and Bridgford Foods
Corp.
In 1996, the Company implemented a new corporate strategy that resulted
in the acquisition of five food businesses, each of which represented a
preeminent local or regional branded processed meat company. In conjunction with
the new corporate strategy, during the fourth quarter of 1998 and the first
quarter of 1999, the Company completed the sale of substantially all the assets
of its beverage division, which operated as a distributor of non-alcoholic
beverages in the Baltimore and Washington, D.C. metropolitan areas. In 1998, the
beverage division accounted for approximately 9.8% of the Company's total
revenues. Because of the change in the Company's business during the 1996 fiscal
year, in 1997 the Company added a comparison in its stock performance graph to
the composite peer group described above due to the belief of the Board of
Directors that this composite peer group more accurately reflected the Company's
peer group after the change in the Company's business. Although a comparison to
Saratoga Beverage Group Inc. and Bev-Tyme Inc. was included in 1997 in order to
provide transition from the beverage focus to the food focus of the Company's
business, this comparison is no longer included in the graph below now that the
disposition of the beverage division is complete.
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."
[PERFORMANCE GRAPH]
Plot points for Performance Graph:
<TABLE>
<CAPTION>
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Atlantic Premium 100.00 45.192 19.231 44.471 57.692 28.846
Brands, Ltd.
Nasdaq Stock Market 100.00 96.996 136.242 166.796 203.927 281.931
(US & Foreign)
Composite Peer Group 100.00 123.074 121.794 135.892 187.331 188.564
</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 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.
-9-
<PAGE> 13
CONSULTING AND EMPLOYMENT AGREEMENTS
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 of up to 50% of his base salary, based on the Company's
actual cash flow and management objectives. Mr. Sussna received a discretionary
bonus of $50,000 in 1998. In addition, in 1998 Mr. Sussna received options to
purchase 500,000 shares of the Company's Common Stock at an exercise price of
$2.75 per share, 250,000 of which options vest in three equal installments on
the first through third anniversaries of the date of the grant, while the
vesting of the remaining 250,000 options depends upon the Company's stock price
achieving certain levels.
Effective April 6, 1998, the Company entered into an Employment
Agreement with Mr. Dalton, pursuant to which Mr. Dalton serves as the Company's
Senior Vice President and Chief Financial Officer. The initial term of the
Employment Agreement is for three years and may be extended for additional one
year periods commencing April 6, 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. Dalton base compensation of $150,000 in the first year of the Employment
Agreement, subject to normal cost of living increases, as well as those
increases permitted by the Compensation Committee. Mr. Dalton will also receive
an annual bonus of up to 30% of his base salary, based on the Company's actual
cash flow and management objectives. In addition, Mr. Dalton's Employment
Agreement provided for a grant of 75,000 options vesting over three years.
The Employment Agreements for Mr. Sussna and Mr. Dalton provide for
certain separation benefits. These provisions provide that if the executive's
employment is terminated either (1) by the Company without cause, or (2) by the
executive due to a reduction in responsibility without his consent, a reduction
in his base salary, relocation of his office from Chicago, Illinois, a failure
by the Company to comply with the terms of the Employment Agreement, or certain
changes of control of the Company, then the executive will receive one-half or
the full amount (depending upon whether the termination occurs before or after
the second anniversary of the effective date of the executive's employment) of
the executive's base salary, the annual bonus to which the executive would have
been entitled but for the termination, and continued employee benefits for the
maximum period permitted by law. These separation benefits are also triggered if
the aggregate beneficial ownership of the following individuals is reduced to
less than 15% of the number of shares of common stock outstanding: Douglas L.
Becker, Eric D. Becker, Merrick M. Elfman, Bruce L. Goldman, Rudolf Christopher
Hoehn-Saric and Steven M. Taslitz, as well as their spouses and dependent
children or trusts established for their benefit.
The Employment Agreements for Mr. Sussna and Mr. Dalton also contain
certain non-competition and confidentiality provisions pursuant to which they
agree not to compete with the company for a period of three years (two years in
the case of Mr. Dalton) following termination of his employment with the
Company, nor will they solicit for employment any director, stockholder or
certain employees of the Company during such period. The Employment Agreements
also provide that Mr. Sussna and Mr. Dalton 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.
The Company is also a party to a consulting agreement with entities
owned by certain directors and stockholders of the Company. See "Certain
Transactions with Management and Others."
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Board of Directors and the Compensation Committee 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.
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<PAGE> 14
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 1999 and future years. Decisions on
compensation of the Company's executive 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. Beginning with its April 1998 meeting,
the Compensation Committee consisted of Mr. Fleming, Mr. Jordan and Mr. Miller.
From January 1998 until its April 1998 meeting, the Compensation Committee
consisted of Mr. Jordan and Mr. Miller. 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.
Compensation Policies Toward Named Officers and 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 the 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 believe 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 senior executive 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 of the executive officers and other eligible persons
under the New Option Plan.
The following describes in more specific terms the three elements of
the executive officers' compensation in 1998:
Base Salary. The base salaries for Mr. Sussna, Mr. Dalton, Steve
Englander (Vice President and Chief Marketing Officer) and John Izzo (former
Vice President Finance and Controller) 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 an annual bonus of up to 50% of his base salary,
based on the Company's actual cash flow and management objectives. Mr. Dalton's
bonus of up to 30% of base salary is also based on the Company's actual cash
flow and management objectives. Mr. Englander's bonus of up to 30% of base
salary is based 50% on overall company performance and 50% on management
objectives described by the Chief Executive Officer on an annual basis. In the
case of John Izzo, a bonus opportunity of up to 22.5% of base salary was based
on a 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
$50,000 bonus in 1998.
Long-Term Stock Option Incentives. Stock options provide executives
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 businesses 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 1998, Mr. Sussna, Mr. Dalton and Mr. Englander were
granted 500,000, 75,000 and 45,000 options, respectively.
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
-11-
<PAGE> 15
401(k), 404 and 415 (i.e., $10,000 in 1998). 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 1998, the Company paid EVP $150,000 for
services provided in connection with the March 1998 acquisition of J.C. Potter
Sausage Company and the related financings, including the services of Mr.
Elfman. See "Certain Transactions with Management and Others."
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 the executive officers is linked to Company
performance.
Submitted by the Members of the Compensation Committee:
Brian Fleming
G. Cook Jordan, Jr.
John A. Miller
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 1998. All of
these filing requirements were satisfied except that Mr. Dalton failed to timely
report four 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 SEC.
CERTAIN TRANSACTIONS WITH MANAGEMENT AND OTHERS
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.
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. Messrs. Douglas Becker (a 5% beneficial owner of the Company's Common
Stock), Eric Becker
-12-
<PAGE> 16
(a director and 5% beneficial owner), Rudolph Christopher Hoehn-Saric (a 5%
beneficial owner), and Steven Taslitz (a director and 5% beneficial owner) own
Sterling Advisors, while Mr. Merrick Elfman (a director and 5% beneficial owner)
is the sole stockholder of EVP. Mr. Elfman acts as a consultant to the Company
and starting in July 1996 began serving as the Company's 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. All compensation payable by the
Company under the New Consulting Agreement is payable 80% to Sterling Advisors
and 20% to EVP. 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. The New Consulting Agreement also provides
for the reimbursement of certain expenses incurred by Sterling Advisors and EVP
on behalf of the Company.
For the 18 month period commencing July 1, 1997 and ending 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. The New Consulting
Agreement was further amended effective as of December 1, 1998 in connection
with the December 1998 to February 1999 disposition of the beverage division.
This amendment (the "Beverage Amendment") provides for an aggregate payment to
Sterling Advisors and EVP of $260,000 for services provided in connection with
the disposition of the beverage division, in lieu of all other base fees that
would have been payable under the New Consulting Agreement for the period from
January 1, 1999 through July 15, 1999. Subsequent to July 15, 1999, the
provisions of the New Consulting Agreement will again be effective upon the
expiration of the Beverage Amendment.
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.
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<PAGE> 17
PROPOSAL TWO
APPROVAL OF AMENDMENT TO
THE COMPANY'S CERTIFICATE OF INCORPORATION
In March 1998, the Company and certain of its subsidiaries sold a
$6,500,000 Senior Subordinated Note and two Common Stock Purchase Warrants (the
"Warrants") to Banc One Capital Partners, LLC ("Banc One") in connection with
the Company's acquisition of J.C. Potter Sausage Company. The first of the two
Warrants is exercisable for 666,947 shares of non-voting common stock; while the
second is exercisable for a number of shares of non-voting common stock which
varies depending upon an equity valuation of the Company as of March 20, 2003
(or such earlier date that the second Warrant becomes exercisable), up to a
maximum of 428,753 shares. The terms of the Warrants require the Company, not
later than June 30, 1999, to cause a sufficient number of shares of non-voting
common stock to permit the full exercise of the Warrants to be authorized.
The Board of Directors unanimously adopted a resolution recommending
that the Company's Certificate of Incorporation be amended to authorize
1,100,000 shares of non-voting common stock, par value $.01 per share
("Non-Voting Common Stock"). The text of the proposed amendment to the Company's
Certificate of Incorporation is set forth in Appendix A. The terms of the
Non-Voting Common Stock will be identical to the terms of the Common Stock, with
the following exceptions: (1) except as otherwise required by law, the
Non-Voting Common Stock will have no right to vote on any matters to be voted on
by the Company's stockholders; and (2) the Non-Voting Common Stock will, upon
the written request of the holder, be convertible into shares of Common Stock
(a) in connection with certain sales which are pursuant to a registration
statement, in a private placement or to a purchaser acquiring a majority of the
outstanding Common Stock, or (b) if the holder does not own or have the right to
acquire more than 4.9% of the outstanding Common Stock.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPROVAL OF THE
AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION.
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<PAGE> 18
PROPOSAL THREE
APPROVAL OF THE ATLANTIC PREMIUM BRANDS, LTD.
1999 AMENDED & RESTATED STOCK OPTION PLAN
Subject to the approval of the Company's stockholders at the Annual
Meeting, the Board of Directors has approved and adopted the Atlantic Premium
Brands, Ltd. 1999 Amended & Restated Stock Option Plan (the "New Option Plan").
The New Option Plan comprehensively integrates and restates the Company's
current Stock Option Plan and Directors Stock Option Plan. In addition, the New
Option Plan amends certain terms pertaining to eligibility, formula vesting for
Non-Employee Directors and changes in control. The total number of shares
reserved for issuance under the combined plans has not changed. The New Option
Plan is set forth in Appendix B.
Stockholder approval of the New Option Plan is sought to continue (i)
to qualify grants made pursuant to the New Option Plan under Rule 16b-3 of the
Act and thereby render certain transactions under the New Option Plan exempt
from certain provisions of Section 16 of the 1934 Act, (ii) to meet certain
additional listing criteria of the American Stock Exchange, and (iii) to qualify
certain compensation under the New 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 New Option Plan.
AVAILABLE SHARES UNDER THE NEW OPTION PLAN
Under the terms of the New Option Plan, 3,000,000 shares of authorized
but unissued Common Stock of the Company are reserved for issuance. The New
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 470 people currently eligible to participate in
the New Option Plan.
ADMINISTRATION
The New Option Plan will be administered by a Stock Option Committee of
the Board (which may be the Compensation Committee) (the "Committee"). The
Committee will select the recipients to whom options may be granted. Options
grants to non-employee directors of the Company are fixed pursuant to the terms
of the New Option Plan.
The Board of Directors has the authority to amend the New Option Plan;
provided, however, that, without the consent of an affected participant, no
amendment shall be made that would impair the rights of a participant under an
option granted prior to the date of the amendment. The Board of Directors may
terminate the New Option Plan at any time, but no termination may alter or
impair any rights or obligations under any option previously granted under the
New 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 annually to non-employee directors of the
Company under the Option Plan will be exercisable for up to 10,000 shares of
Common Stock, vesting quarterly. Each option granted to persons other than
non-employee directors of the Company under the New 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
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 participant in any calendar year is 500,000
shares. No option may be granted more than 10 years after the effective date of
the New Option Plan.
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<PAGE> 19
Payment for shares purchased under the New 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. The Committee may elect
to cash out all or a part of any participant's Option by paying the participant
an amount, in cash or Common Stock, equal to the excess of the fair market value
over the exercise price. No fractional shares will be issued by the Company if
such option is elected, although cash may be paid in lieu of any fractional
shares.
RESTRICTION ON TRANSFER AND TERMINATION OF EMPLOYMENT
Options granted under the New Option Plan will not be transferable and
may be exercised only by the optionee during his or her lifetime. If any
participant'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 90 days and one year,
respectively, 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 or termination for cause, 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). Unless otherwise provided, all options shall terminate
immediately where an optionee's employment is terminated voluntarily (other than
for retirement) or with cause (as defined in the plan). The 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 remain exercisable for
one year after the non-employee director ceases to hold the position of
Director.
DISCUSSION OF FEDERAL INCOME TAX CONSEQUENCES
The following summary of tax consequences with respect to the awards
granted under the Amended and Restated Stock Incentive Plan is not comprehensive
and is based upon laws and regulations in effect as of March 1, 1999. These
rules are highly technical and subject to change in the future. In particular,
the discussion of ISOs is based, in part, on proposed regulations which may be
amended substantially before they are adopted in final form. Optionees should
consult their personal tax advisors with respect to the tax consequences
(including those under state and local tax laws) associated with stock options.
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 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
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<PAGE> 20
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 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.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ADOPTION OF THE
ATLANTIC PREMIUM BRANDS, LTD. 1999 AMENDED AND RESTATED STOCK OPTION PLAN.
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<PAGE> 21
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Company has engaged the firm of KPMG LLP as its independent public
accountants for 1999. 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.
The Audit Committee of the Board of Directors of the Company voted to
replace Arthur Andersen LLP with KPMG LLP as the Company's independent
accountant. This decision was communicated to Arthur Andersen LLP on December
14, 1998. During fiscal years 1996 and 1997, and the subsequent interim period
of 1998 prior to December 14, 1998, there were no disagreements with Arthur
Andersen LLP on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, nor did Arthur Andersen
LLP's reports on the financial statements for such periods contain an adverse
opinion or disclaimer of opinion, nor were such reports qualified or modified as
to uncertainty, audit scope or accounting principles. In connection with the
filing of a Current Report on Form 8-K with the SEC regarding the Company's
change in accountants, Arthur Andersen LLP, by letter addressed to the SEC and
filed with the Form 8-K, indicated that it is in agreement with the statements
in the preceding sentence.
STOCKHOLDER PROPOSALS
All stockholder proposals intended to be presented at the 2000 Annual
Meeting of Stockholders must be received by the Company no later than December
18, 1999 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.
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, 1998 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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<PAGE> 22
APPENDIX A
AMENDMENT TO CERTIFICATE OF INCORPORATION OF
ATLANTIC PREMIUM BRANDS, LTD.
Article 4 of the Certificate of Incorporation of Atlantic Premium
Brands, Ltd. is amended to read in its entirety as follows:
4. CAPITAL STOCK
4.1 AUTHORIZED SHARES
The total number of shares of all classes of stock that the Corporation
shall have the authority to issue is 35,000,000, of which 5,000,000 shares shall
be Preferred Stock, having a par value of $.01 per share ("Preferred Stock");
28,900,000 shares shall be Common Stock, having a par value of $.01 per share
("Common Stock"), and 1,100,000 shares shall be Non-Voting Common Stock, having
a par value of $.01 per share ("Non-Voting Common Stock"). The Common Stock and
the Non-Voting Common Stock are hereafter collectively referred to as the
"Common Securities." The Board of Directors is expressly authorized to provide
for the classification and reclassification of any unissued shares of Preferred
Stock or Common Stock and the issuance thereof in one or more classes or series
without the approval of the stockholders of the Corporation.
4.2 COMMON STOCK
Except as otherwise provided herein, all shares of Common Stock and
Non-Voting Common Stock will be identical and will entitle the holders thereof
to the same rights and privileges.
4.2.1 RELATIVE RIGHTS
The Common Securities shall be subject to all of the rights,
privileges, preferences and priorities of the Preferred Stock as set forth in
the certificate of designations filed to establish the respective series of
Preferred Stock.
4.2.2 DIVIDENDS
Whenever there shall have been paid, or declared and set aside
for payment, to the holders of shares of any class of stock having preference
over the Common Securities as to the payment of dividends, the full amount of
dividends and of sinking fund or retirement payments, if any, to which such
holders are respectively entitled in preference to the Common Securities, then
dividends may be paid on the Common Securities and on any class or series of
stock entitled to participate therewith as to dividends, out of any assets
legally available for the payment of dividends thereon, but only when and as
declared by the Board of Directors of the Corporation. When and as dividends are
declared thereon, whether payable in cash, property or securities of the
Company, the holders of Common Stock and the holders of Non-Voting Common Stock
will be entitled to share equally, share for share, in such dividends; provided
that if dividends are declared which are payable in shares of Common Stock or
Non-Voting Common Stock, dividends will be declared which are payable at the
same rate on both classes of stock, and the dividends payable in shares of
Common Stock will be payable to holders of Common Stock and the dividends
payable in shares of Non-Voting Common Stock will be payable to holders of
Non-Voting Common Stock.
4.2.3 DISSOLUTION, LIQUIDATION, WINDING UP
In the event of any dissolution, liquidation, or winding up of
the Corporation, whether voluntary or involuntary, the holders of the Common
Securities shall become entitled to participate in the distribution of any
assets of the Corporation remaining after the Corporation shall have paid, or
set aside for payment, to the holders of any class of stock having preference
over the Common Securities in the event of dissolution, liquidation or winding
up the full preferential amounts (if any) to which they are entitled.
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4.2.4 VOTING RIGHTS
Except as otherwise required by law, the holders of Common
Stock will be entitled to one vote per share on all matters to be voted
on by the Company's stockholders, and the holders of Non-Voting Common
Stock will have no right to vote on any matters to be voted on by the
Company's stockholders.
4.2.5 CONVERSION
(i) Conversion of Non-Voting Common Stock. Each
record holder of Non-Voting Common Stock is entitled to convert any or
all of the shares of such holder's Non-Voting Common Stock into the
same number of shares of Common Stock to the extent that the holder:
(A) sells such Common Stock pursuant to
registration statement under the Securities Act,
provided that such offering is underwritten on a firm
commitment basis or otherwise provides for a widely
dispersed distribution of the shares;
(B) sells such Common Stock in a private
placement pursuant to Rule 144 or Rule 144A
promulgated under the Securities Act of 1933, as
amended, provided that no purchaser or related group
of purchasers acquires more than 2% of the
outstanding shares of Common Stock.
(C) sells such Common Stock as part of a
direct sale, together with other shareholders of the
Company, to a third party that is not related to or
affiliated with the holder, provided that pursuant to
such sale the purchaser acquires at least a majority
of the outstanding Common Stock without regard to any
shares purchased from the holder; or
(D) does not own or have the right to
acquire more than 4.9% of the Common Stock that would
be outstanding after such conversion.
(ii) Conversion Procedure.
(A) Each conversion of shares of Non-Voting
Common Stock into shares of Common Stock will be
effected by the surrender of the certificate or
certificates, if any, representing the shares to be
converted at the principal office of the Company at
any time during normal business hours, together with
a written notice by the holder of such Non-Voting
Common Stock stating that such holder desires to
convert the shares, or a stated number of the shares,
of Non-Voting Common Stock represented by such
certificate or certificates into Common Stock and
that the conversion complies with the provisions of
Section 4.2.5(i) of the Corporation's Certificate of
Incorporation. Such conversion will be deemed to have
been effected as of the close of business on the date
on which such certificate or certificates, if any,
have been surrendered and such notice has been
received, and at such time the rights of the holder
of the converted Non-Voting Common Stock as such
holder will cease and the person or persons in whose
name or names the certificate or certificates for
shares of Common Stock are to be issued upon such
conversion will be deemed to have become the holder
or holders of record of the shares of Common Stock
represented thereby.
(B) Promptly after such surrender and the
receipt of such written notice, the Company will
issue and deliver in accordance with the surrendering
holder's instructions (a) the certificate or
certificates for the Common Stock issuable upon such
conversion and (b) a certificate representing any
Non-Voting Common Stock which was represented by the
certificate or certificates, if any, delivered to the
Company in connection with such conversion but which
are not converted.
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(C) If the Company in any manner subdivides
or combines the outstanding shares of one class of
Common Securities, the outstanding shares of the
other class of Common Securities will be
proportionately subdivided or combined.
(D) The issuance of certificates for Common
Stock upon conversion of Non-Voting Common Stock will
be made without charge to the holders of such shares
for any issuance tax in respect thereof or other cost
incurred by the Company in connection with such
conversion and the related issuance of Common Stock.
(E) The Company will not close its books
against the transfer of Non-Voting Common Stock or of
Common Stock issued or issuable upon conversion of
Non-Voting Common Stock in any manner which would
interfere with the timely conversion of Non-Voting
Common Stock.
4.3 PREFERRED STOCK
4.3.1 ESTABLISHMENT OF SERIES
The Board of Directors is expressly authorized, subject to
limitations prescribed by the Delaware General Corporation Law and the
provisions of this Certificate of Incorporation, to provide, by resolution and
by filing a certificate of designations pursuant to the Delaware General
Corporation Law, for the issuance of the shares of Preferred Stock in series, to
establish from time to time the number of shares to be included in each such
series, and to fix the designation, powers, preferences and other rights of the
shares of each such series and to fix the qualifications, limitations and
restrictions thereon. The authority of the Board of Directors with respect to
each series shall include, but not be limited to, determination of the
following:
(i) the number of shares constituting that series and
the distinctive designation of that series;
(ii) the dividend rate on the shares of that series,
whether dividends shall be cumulative, and, if so, from which date or
dates, and the relative rights of priority, if any, of payment of
dividends on shares of that series;
(iii) whether that series shall have voting rights,
in addition to the voting rights provided by law, and, if so, the terms
of such voting rights;
(iv) whether that series shall have conversion
privileges, and, if so, the terms and conditions of such conversion,
including provisions for adjustment of the conversion rate in such
events as the Board of Directors shall determine;
(v) whether or not the shares of that series shall be
redeemable, and if so, the terms and conditions of such redemption,
including the dates upon or after which they shall be redeemable, and
the amount per share payable in case of redemption, which amount may
vary under different conditions and at different redemption dates;
(vi) whether that series shall have a sinking fund
for the redemption or purchase of shares of that series, and, if so,
the terms and amount of such sinking fund;
(vii) the rights of the shares of that series in the
event of voluntary or involuntary liquidation, dissolution or winding
up of the Corporation, and the relative rights of priority, if any, of
payment of shares of that series; and
(viii) any other relative powers, preferences, and
rights of that series, and qualifications, limitations or restrictions
on that series.
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<PAGE> 25
4.3.2 ADJUSTMENTS IN NUMBER OF SHARES AUTHORIZED
Except as provided to the contrary in the provisions
establishing a series of Preferred Stock, the number of shares of any such
series may be increased (but not above the total number of authorized shares of
Preferred Stock) or decreased (but not below the number of shares thereof then
outstanding) by the affirmative vote of a majority of the directors.
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<PAGE> 26
APPENDIX B
ATLANTIC PREMIUM BRANDS, LTD.
1999 AMENDED & RESTATED STOCK OPTION PLAN
ARTICLE I
ESTABLISHMENT
1.1 Purpose. The Atlantic Premium Brands, Ltd. 1999 Amended & Restated
Stock Option Plan ("Plan") is hereby established by Atlantic Premium Brands,
Ltd. ("Company"). The purpose of this Plan is to promote the overall financial
objectives of the Company and its stockholders by motivating those persons
selected to participate in this Plan to achieve long-term growth in stockholder
equity in the Company and by retaining the association of those individuals who
are instrumental in achieving this growth. The Plan and the grant of awards
hereunder are expressly conditioned upon the Plan's approval by the stockholders
of the Company.
ARTICLE II
DEFINITIONS
For purposes of this Plan, the following terms are defined as set forth
below:
2.1 "Affiliate" means any individual, corporation, partnership,
association, limited liability company, joint-stock company, trust,
unincorporated association or other entity (other than the Company) that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the Company including, without
limitation, any member of an affiliated group of which the Company is a common
parent corporation as provided in Section 1504 of the Code.
2.2 "Agreement" means any agreement entered into pursuant to this Plan
pursuant to which an Option is granted to a Participant.
2.3 "Beneficiary" means the person, persons, trust or trusts which have
been designated by a Participant in his or her most recent written beneficiary
designation filed with the Committee to receive the benefit specified under the
Plan to the extent permitted. If there is no designated beneficiary, then the
term means the person or persons, trust or trusts entitled by will or the laws
of descent and distribution to receive such benefits.
2.4 "Board" means the Board of Directors of the Company.
2.5 "Cause" shall mean, for purposes of whether and when a Participant
has incurred a Termination of Employment for Cause, any act or omission which
permits the Company to terminate a written agreement or arrangement (employment
or otherwise) between the Participant and the Company or an Affiliate for Cause
as defined in such agreement or arrangement, or in the event there is no such
agreement or arrangement or the agreement or arrangement does not define the
term "cause," then Cause shall mean (a) any act or failure to act deemed to
constitute cause under the Company's established practices, policies or
guidelines applicable to the Participant or (b) the Participant's act or
omission constituting gross misconduct with respect to the Company or an
Affiliate in any material respect.
2.6 "Change in Control" has the meaning set forth in Section 8.2.
2.7 "Code" means the Internal Revenue Code of 1986, as amended, final
Treasury Regulations thereunder and any subsequent Internal Revenue Code.
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2.8 "Commission" means the Securities and Exchange Commission or any
successor agency.
2.9 "Committee" means the person or persons appointed by the Board to
administer this Plan.
2.10 "Common Stock" means the shares of the Company's Common Stock,
$.01 par value per share, whether presently or hereafter issued, and any other
stock or security resulting from adjustment thereof as described hereinafter or
the common stock of any successor to the Company which is so designated for the
purpose of this Plan.
2.11 "Company" means Atlantic Premium Brands, Ltd. and includes any
successor or assignee corporation or corporations into which the Company may be
merged, changed or consolidated; any corporation for whose securities all or
substantially all of the securities of the Company shall be exchanged; and any
assignee of or successor to substantially all of the assets of the Company.
2.12 "Disability" means a mental or physical illness that entitles the
Participant to receive benefits under the long term disability plan of the
Company or an Affiliate, or if the Participant is not covered by such a plan or
the Participant is not an employee of the Company or an Affiliate, a mental or
physical illness that renders a Participant totally and permanently incapable of
performing the Participant's duties for the Company or an Affiliate.
Notwithstanding the foregoing, a Disability shall not qualify under this Plan if
it is the result of (i) a willfully self-inflicted injury or willfully
self-induced sickness, or (ii) an injury or disease contracted, suffered, or
incurred, while participating in a criminal offense. Notwithstanding the
foregoing, if the Participant and the Company or an Affiliate have entered into
an employment agreement which defines the term "Disability" (or a similar term),
such definition shall govern for purposes of determining whether such
Participant suffers a Disability for purposes of this Plan. The determination of
Disability shall be made by the Committee. The determination of Disability for
purposes of this Plan shall not be construed to be an admission of disability
for any other purpose.
2.13 "Effective Date" means May 19, 1999 or such later date on which
the 1999 Annual Meeting of Stockholders is held.
2.14 "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
2.15 "Fair Market Value" means the fair market value of Common Stock
(or other property) as determined by the Committee or under procedures
established by the Committee. Unless otherwise determined by the Committee, the
Fair Market Value per share of Common Stock as of any date shall be the closing
sale price per share reported on a consolidated basis for stock listed on the
principal stock exchange or market on which the Common Stock is traded on the
date as of which such value is being determined or, if there is no sale on that
date, then on the last previous day on which a sale was reported.
2.16 "Grant Date" means the date as of which an Option is granted
pursuant to this Plan.
2.17 "Incentive Stock Option" means any Option intended to be and
designated as an "incentive stock option" within the meaning of Section 422 of
the Code.
2.18 "Nonqualified Stock Option" means an Option to purchase Common
Stock granted under this Plan, the taxation of which is determined pursuant to
Section 83 of the Code.
2.19 "Option" means a right to purchase Common Stock on specified
conditions granted under Article VI.
2.20 "Option Period" means the period during which the Option shall be
exercisable in accordance with the Agreement and Article VI.
2.21 "Option Price" means the price at which the Common Stock may be
purchased under an Option as provided in Section 6.3(b).
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2.22 "Participant" means a person who satisfies the eligibility
conditions of Article V and to whom an Option has been granted by the Committee
under this Plan, and in the event a Representative is appointed for a
Participant or another person becomes a Representative, then the term
"Participant" shall mean such Representative. The term shall also include a
trust for the benefit of the Participant, a partnership the interest of which is
by or for the benefit of the Participant, the Participant's parents, spouse or
descendants, or a custodian under a uniform gifts to minors act or similar
statute for the benefit of the Participant's descendants, to the extent
permitted by the Committee and not inconsistent with the Rule 16b-3 or the
status of the Option as an Incentive Stock Option to the extent intended.
Notwithstanding the foregoing, the term "Termination of Employment" shall mean
the Termination of Employment of the employee to whom the Option was originally
granted (and other terms intended to refer solely to such employee shall be
interpreted in a manner that is consistent with such intent).
2.23 "Plan" means this Atlantic Premium Brands, Ltd. 1999 Amended and
Restated Stock Option Plan, as the same may be amended from time to time.
2.24 "Representative" means (a) the person or entity acting as the
executor or administrator of a Participant's estate pursuant to the last will
and testament of a Participant or pursuant to the laws of the jurisdiction in
which the Participant had the Participant's primary residence at the date of the
Participant's death; (b) the person or entity acting as the guardian or
temporary guardian of a Participant; (c) the person or entity which is the
Beneficiary of the Participant upon or following the Participant's death; or (d)
any person to whom an Option has been transferred with the permission of the
Committee or by operation of law; provided that only one of the foregoing shall
be the Representative at any point in time as determined under applicable law
and recognized by the Committee.
2.25 "Retirement" means the Participant's Termination of Employment
after attaining either the normal retirement age or the early retirement age as
defined in the principal (as determined by the Committee) tax-qualified plan of
the Company or an Affiliate, if the Participant is covered by such plan, and if
the Participant is not covered by such a plan, then age 65, or age 55 with the
accrual of 10 years of service.
2.26 "Rule 16b-3" and "Rule 16a-1(c)(3)" means Rule 16b-3 and Rule
16a-1(c)(3), as from time to time in effect and applicable to the Plan and
Participants, promulgated by the Securities and Exchange Commission under
Section 16 of the Exchange Act.
2.27 "Termination of Employment" means the occurrence of any act or
event whether pursuant to an employment agreement or otherwise that actually or
effectively causes or results in the person's ceasing, for whatever reason, to
be an officer, consultant, advisor, independent contractor, director or employee
of the Company or of any Affiliate, or to be an officer, consultant, advisor,
independent contractor, director or employee of any entity that provides
services to the Company or an Affiliate, including, without limitation, death,
Disability, dismissal, severance at the election of the Participant, Retirement,
or severance as a result of the discontinuance, liquidation, sale or transfer by
the Company or its Affiliates of all businesses owned or operated by the Company
or its Affiliates. With respect to any person who is not an employee of the
Company or an Affiliate, the Agreement may establish what act or event shall
constitute a Termination of Employment for purposes of this Plan. A transfer of
employment from the Company to an Affiliate, or from an Affiliate to the
Company, shall not be a Termination of Employment, unless expressly determined
by the Committee. A Termination of Employment shall occur with respect to an
employee who is employed by an Affiliate if the Affiliate shall cease to be an
Affiliate and the Participant shall not immediately thereafter become an
employee of the Company or an Affiliate.
In addition, certain other terms used herein have definitions given to
them in the first place in which they are used.
ARTICLE III
ADMINISTRATION
3.1 Committee Structure and Authority. This Plan shall be administered
by the Committee which shall be comprised of two or more persons designated by
the Board. In the absence of a designation, the Board or the
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portion that qualifies as the Committee shall be the Committee. A majority of
the Committee shall constitute a quorum at any meeting thereof (including
telephone conference) and the acts of a majority of the members present, or acts
approved in writing by a majority of the entire Committee without a meeting,
shall be the acts of the Committee for purposes of this Plan. The Committee may
authorize any one or more of its members or an officer of the Company to execute
and deliver documents on behalf of the Committee. At any time the Company is
publicly held, this Plan is intended to qualify for exemption from Section 16(b)
of the Exchange Act and to qualify as performance-based compensation under
Section 162(m) of the Code and shall be interpreted in such a way as to result
in such qualification. A member of the Committee shall not exercise any
discretion respecting himself or herself under this Plan. The Board shall have
the authority to remove, replace or fill any vacancy of any member of the
Committee upon notice to the Committee and the affected member. Any member of
the Committee may resign upon notice to the Board. The Board may select
different Committees to administer Options for different classes of
Participants. The Committee may allocate among one or more of its members, or
may delegate to one or more of its agents, such duties and responsibilities as
it determines.
Among other things, the Committee shall have the authority, (i) subject
to the terms of this Plan, and (ii) subject to the approval of the Board (to the
extent required to qualify an option granted hereunder for exemption under
Section 16(b) of the Exchange Act and as "performance-based compensation" under
Section 162(m) of the Code):
(a) to select those persons to whom Options may be granted
from time to time;
(b) to determine whether and to what extent Options are to be
granted hereunder;
(c) to determine the number of shares of Common Stock to be
covered by each Option granted hereunder;
(d) to determine the terms and conditions of any Option
granted hereunder (including, but not limited to, the Option Price, the
Option Period, any exercise restriction or limitation, any exercise
acceleration or forfeiture waiver or any performance criteria regarding
any Option and the shares of Common Stock relating thereto);
(e) to adjust the terms and conditions, at any time or from
time to time, of any Option, subject to the limitations of Section 9.1;
(f) to determine to what extent and under what circumstances
Common Stock and other amounts payable with respect to an Option shall
be deferred;
(g) to determine under what circumstances an Option may be
settled in cash or Common Stock.
(h) to provide for the forms of Agreement to be utilized in
connection with this Plan;
(i) to determine whether a Participant has a Disability or a
Retirement;
(j) to determine what securities law requirements are
applicable to this Plan, Options, and the issuance of shares of Common
Stock and to require of a Participant that appropriate action be taken
with respect to such requirements;
(k) to cancel, with the consent of the Participant or as
otherwise provided in this Plan or an Agreement, outstanding Options;
(l) to interpret and make a final determination with respect
to the remaining number of shares of Common Stock available under this
Plan;
(m) to require as a condition of the exercise of an Option or
the issuance or transfer of a certificate of Common Stock, the
withholding from a Participant of the amount of any federal, state or
local
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taxes as may be necessary in order for the Company or any other
employer to obtain a deduction or as may be otherwise required by law;
(n) to determine whether and with what effect an individual
has incurred a Termination of Employment;
(o) to determine whether the Company or any other person has a
right or obligation to purchase Common Stock from a Participant and, if
so, the terms and conditions on which such Common Stock is to be
purchased;
(p) to determine the restrictions or limitations on the
transfer of Common Stock;
(q) to determine whether an Option is to be adjusted, modified
or purchased, or is to become fully exercisable, under this Plan or the
terms of an Agreement;
(r) to determine the permissible methods of Option exercise
and payment, including cashless exercise arrangements;
(s) to adopt, amend and rescind such rules and regulations as,
in its opinion, may be advisable in the administration of this Plan;
and
(t) to appoint and compensate agents, counsel, auditors or
other specialists to aid it in the discharge of its duties.
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing this Plan as it shall,
from time to time, deem advisable, to interpret the terms and provisions of this
Plan and any Option issued under this Plan (and any Agreement) and to otherwise
supervise the administration of this Plan. The Committee's policies and
procedures may differ with respect to Options granted at different times or to
different Participants.
Any determination made by the Committee pursuant to the provisions of
this Plan shall be made in its sole discretion, and in the case of any
determination relating to an Option, may be made at the time of the grant of the
Option or, unless in contravention of any express term of this Plan or an
Agreement, at any time thereafter. All decisions made by the Committee pursuant
to the provisions of this Plan shall be final and binding on all persons,
including the Company and Participants. No determination shall be subject to de
novo review if challenged in court.
3.2 Independent Committee. The Board may appoint a Committee that
consists of directors who are disinterested "Non-Employee Directors" the meaning
of Rule 16b-3 and each of whom is an "outside" director under Section 162(m) of
the Code to administer the Plan with respect to individuals subject to (or
potentially subject to) such provisions.
ARTICLE IV
STOCK SUBJECT TO PLAN
4.1 Number of Shares. Subject to the adjustment under Section 4.6, the
total number of shares of Common Stock initially reserved and available for
distribution pursuant to Options under this Plan shall be 3,000,000 shares of
Common Stock, inclusive of all shares associated with options issued to
officers, directors, employees and other recipients prior to the adoption of
this Plan. Such shares may consist, in whole or in part, of authorized and
unissued shares or treasury shares.
4.2 Release of Shares. The Committee shall have full authority to
determine the number of shares of Common Stock available for Option, and in its
discretion may include (without limitation) as available for distribution any
shares of Common Stock that have ceased to be subject to an Option, any shares
of Common Stock subject to any
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Option that are forfeited, any Option that otherwise terminates without issuance
of shares of Common Stock being made to the Participant, or any shares (whether
or not restricted) of Common Stock that are received by the Company in
connection with the exercise of an Option including the satisfaction of any tax
liability or the satisfaction of a tax withholding obligation. If any shares
could not again be available for Options to a particular Participant under any
applicable law, such shares shall be available exclusively for Options to
Participants who are not subject to such limitations.
4.3 Restrictions on Shares. Shares of Common Stock issued upon exercise
of an Option shall be subject to the terms and conditions specified herein and
to such other terms, conditions and restrictions as the Committee in its
discretion may determine or provide in the Option Agreement. The Company shall
not be required to issue or deliver any certificates for shares of Common Stock,
cash or other property prior to (i) the listing of such shares on any stock
exchange (or other public market) on which the Common Stock may then be listed
(or regularly traded), (ii) the completion of any registration or qualification
of such shares under federal or state law, or any ruling or regulation of any
government body which the Committee determines to be necessary or advisable, and
(iii) the satisfaction of any applicable withholding obligation in order for the
Company or an Affiliate to obtain a deduction with respect to the exercise of an
Option. The Company may cause any certificate for any share of Common Stock to
be delivered to be properly marked with a legend or other notation reflecting
the limitations on transfer of such Common Stock as provided in this Plan or as
the Committee may otherwise require. The Committee may require any person
exercising an Option to make such representations and furnish such information
as it may consider appropriate in connection with the issuance or delivery of
the shares of Common Stock in compliance with applicable law or otherwise.
Fractional shares shall not be delivered, but shall be rounded to the next lower
whole number of shares, with appropriate payment made with respect to such
fractional shares.
4.4 Stockholder Rights. No person shall have any rights of a
stockholder as to shares of Common Stock subject to an Option until, after
proper exercise of the Option or other action required, such shares shall have
been recorded on the Company's official stockholder records as having been
issued and transferred. Upon exercise of the Option or any portion thereof, the
Company will have a reasonable time in which to issue the shares, and the
Participant will not be treated as a stockholder for any purpose whatsoever
prior to such issuance. No adjustment shall be made for cash dividends or other
rights for which the record date is prior to the date such shares are recorded
as issued and transferred in the Company's official stockholder records, except
as provided herein or in an Agreement.
4.5 Registration. During any period in which the Company's Common Stock
is registered under Section 12 of the Exchange Act, the Company will register
under the Securities Act the Common Stock delivered or deliverable pursuant to
Options on Commission Form S-8 if available to the Company for this purpose (or
any successor or alternate form that is substantially similar to that form to
the extent available to effect such registration), in accordance with the rules
and regulations governing such forms, as soon after stockholder approval of the
Plan as the Committee, in its sole discretion, shall deem such registration
appropriate. The Company will use its reasonable best efforts to cause the
registration statement to become effective and will file such supplements and
amendments to the registration statement as may be necessary to keep the
registration statement in effect until the earliest of (a) one year following
the expiration of the last relevant period of the last Option outstanding, (b)
the date the Company is no longer a reporting company under the Exchange Act and
(c) the date all Participants have disposed of all shares of Common Stock
delivered pursuant to any Option. The Company may delay the foregoing obligation
if the Committee reasonably determines that any such registration would
materially and adversely affect the Company's interests or if there is no
material benefit to Participants.
4.6 Anti-Dilution. In the event of any Company stock dividend, stock
split, combination or exchange of shares, recapitalization or other change in
the capital structure of the Company, corporate separation or division of the
Company (including, but not limited to, a split-up, spin-off, split-off or
distribution to Company stockholders other than a normal cash dividend), sale by
the Company of all or a substantial portion of its assets (measured on either a
stand-alone or consolidated basis), reorganization, rights offering, a partial
or complete liquidation, or any other corporate transaction, Company share
offering or event involving the Company and having an effect similar to any of
the foregoing, then the Committee shall adjust or substitute, as the case may
be, the number of shares of Common Stock available for Options under this Plan,
the number of shares of Common Stock covered by outstanding Options, the
exercise price per share of outstanding Options, and any other characteristics
or terms of the Options as the Committee shall deem necessary or appropriate to
reflect equitably the effects of such changes to the Participants;
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provided, however, that the Committee may limit any such adjustment so as to
maintain the deductibility of the Options under Section 162(m) of the Code, and
that any fractional shares resulting from such adjustment shall be eliminated by
rounding to the next lower whole number of shares with appropriate payment for
such fractional share as shall reasonably be determined by the Committee.
ARTICLE V
ELIGIBILITY
5.1 Eligibility. Except as herein provided, the persons who shall be
eligible to participate in this Plan and be granted Options shall be those
persons who are officers, directors, employees, advisors, independent
contractors or consultants of the Company or any subsidiary, who shall be in a
position, in the opinion of the Committee, to make contributions to the growth,
management, protection and success of the Company and its subsidiaries. Of those
persons described in the preceding sentence, the Committee may, from time to
time, select persons to be granted Options and shall determine the terms and
conditions with respect thereto. In making any such selection and in determining
the form of the Option, the Committee may give consideration to the functions
and responsibilities of the person, the person's contributions to the Company
and its subsidiaries, the value of the individual's service to the Company and
its subsidiaries and such other factors deemed relevant by the Committee.
ARTICLE VI
STOCK OPTIONS
6.1 General. The Committee shall have authority to grant Options under
this Plan at any time or from time to time. Options may be either Incentive
Stock Options or Non-Qualified Stock Options. An Option shall entitle the
Participant to receive shares of Common Stock upon exercise of such Option,
subject to the Participant's satisfaction in full of any conditions,
restrictions or limitations imposed in accordance with this Plan or an Agreement
(the terms and provisions of which may differ from other Agreements) including
without limitation, payment of the Option Price. During any calendar year,
Options to purchase no more than 500,000 shares of Common Stock shall be granted
to any Participant.
6.2 Grant and Exercise. The grant of an Option shall occur as of the
date the Committee determines. Each Option granted under this Plan shall be
evidenced by an Agreement, in a form approved by the Committee, which shall
embody the terms and conditions of such Option and which shall be subject to the
express terms and conditions set forth in this Plan. Such Agreement shall become
effective upon execution by the Participant. Only a person who is a common-law
employee of the Company, any parent corporation of the Company or a subsidiary
corporation of the Company (as such terms are defined in Section 424 of the
Code) on the Grant date shall be eligible to be granted an Option which is
intended to be and is an Incentive Stock Option. To the extent that any Option
is not designated as an Incentive Stock Option or even if so designated does not
qualify as an Incentive Stock Option, it shall constitute a Non-Qualified Stock
Option.
6.3 Terms and Conditions. Options shall vest in accordance with the
terms specified in the Agreement covering such Options, and shall be subject to
such terms and conditions as shall be determined by the Committee, including the
following:
(a) Option Period. The Option Period of each Option shall be
fixed by the Committee; provided that no Non-Qualified Stock Option
shall be exercisable more than ten (10) years after the date the Option
is granted. In the case of an Incentive Stock Option, the Option Period
shall not exceed ten (10) years from the date of grant or five (5)
years in the case of an individual who owns more than ten percent (10%)
of the combined voting power of all classes of stock of the Company, a
corporation which is a parent corporation of the Company or any
subsidiary corporation of the Company (each as defined in Section 424
of the Code). No Option which is intended to be an Incentive Stock
Option shall be granted more than ten
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(10) years from the date this Plan is adopted by the Company or the
date this Plan is approved by the stockholders of the Company,
whichever is earlier.
(b) Option Price. The Option Price per share of the Common
Stock purchasable under an Option shall be not less than the Fair
Market Value per share on the date the Option is granted. If such
Option is intended to qualify as an Incentive Stock Option, where such
Option is granted to an individual who owns or who is deemed to own
stock possessing more than ten percent (10%) of the combined voting
power of all classes of stock of the Company, a corporation which is a
parent corporation of the Company or any subsidiary corporation of the
Company (each as defined in Section 424 of the Code), the Option Price
per share shall be not less than one hundred ten percent (110%) of such
Fair Market Value per share.
(c) Exercisability. Subject to Section 8.1, Options shall be
exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee. Unless provided in
an Agreement or by the Committee, no Option may be exercised to the
extent it is not vested. If the Committee provides that any Option is
exercisable only in installments, the Committee may at any time waive
such installment exercise provisions, in whole or in part. In addition,
the Committee may at any time accelerate the exercisability of any
Option. If the Committee intends that an Option be an Incentive Stock
Option, the Committee shall, in its discretion, provide that the
aggregate Fair Market Value (determined at the Grant Date) of the
Incentive Stock Option which is exercisable for the first time during
the calendar year shall not exceed $100,000.
(d) Method of Exercise. Subject to the provisions of this
Article VI, a Participant may exercise Options, in whole or in part, at
any time during the Option Period by giving written notice of exercise
on a form provided by the Committee to the Company specifying the
number of shares of Common Stock subject to the Option to be purchased.
Such notice shall be accompanied by payment in full of the purchase
price by cash or check or such other form of payment as the Company may
accept. If approved by the Committee (including approval at the time of
exercise), payment in full or in part may also be made (i) by
delivering Common Stock already owned by the Participant having a total
Fair Market Value on the date of such delivery equal to the Option
Price; (ii) by the execution and delivery of a note or other evidence
of indebtedness (and any security agreement thereunder) satisfactory to
the Committee and permitted in accordance with Section 6.3(e); (iii) by
authorizing the Company to retain shares of Common Stock which would
otherwise be issuable upon exercise of the Option having a total Fair
Market Value on the date of delivery equal to the Option Price; (iv) by
the delivery of cash or the extension of credit by a broker-dealer to
whom the Participant has submitted a notice of exercise or otherwise
indicated an intent to exercise an Option (in accordance with Part 220,
Chapter II, Title 12 of the Code of Federal Regulations); (v) by
certifying ownership of shares of Common Stock owned by the Participant
to the satisfaction of the Committee for later delivery to the Company
as specified by the Company; or (vi) by any combination of the
foregoing. In the case of an Incentive Stock Option, the right to make
a payment in the form of already owned shares of Common Stock of the
same class as the Common Stock subject to the Option may be authorized
only at the time the Option is granted. No shares of Common Stock shall
be issued until full payment therefor, as determined by the Committee,
has been made.
(e) Company Loan or Guarantee. Upon the exercise of any Option
and subject to the pertinent Agreement and the discretion of the
Committee, the Company may at the request of the Participant:
(i) lend to the Participant, an amount equal to
such portion of the Option Price as the
Committee may determine; or
(ii) guarantee a loan obtained by the
Participant from a third-party for the
purpose of tendering the Option Price.
The terms and conditions of any loan or guarantee, including the term,
interest rate, whether the loan is with recourse against the
Participant and any security interest thereunder, shall be determined
by the Committee, except that no extension of credit or guarantee shall
obligate the Company for an amount to exceed the lesser of (i) the
aggregate Fair Market Value per share of the Common Stock on the date
of exercise, less the par
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value of the shares of Common Stock to be purchased upon the exercise
of the Option, and (ii) the amount permitted under applicable laws or
the regulations and rules of the Federal Reserve Board and any other
governmental agency having jurisdiction.
(f) Non-transferability of Options. Except as provided herein
or in an Agreement and then only consistent with the intent that the
Option be an Incentive Stock Option (as applicable), (i) no Option or
interest therein may be transferred, assigned, alienated or encumbered
in any way by the Participant other than by will or by the laws of
descent and distribution or by a designation of beneficiary effective
upon the death of the Participant, (ii) no Option shall be subject to
the claims of a Participant's creditors, and (iii) all Options shall be
exercisable during the Participant's lifetime only by the Participant.
6.4 Termination by Reason of Death. Unless otherwise provided in an
Agreement or determined by the Committee, if a Participant incurs a Termination
of Employment due to death, any unexpired and unexercised Option held by such
Participant shall, to the extent then vested and exercisable, thereafter be
fully exercisable for a period of ninety (90) days (or such other period or no
period as the Committee may specify) immediately following the date of such
death or until the expiration of the Option Period, whichever period is the
shorter.
6.5 Termination by Reason of Disability. Unless otherwise provided in
an Agreement or determined by the Committee (and subject to Section 6.8 with
respect to formula grants to non-employee Directors) if a Participant incurs a
Termination of Employment due to a Disability, any unexpired and unexercised
Option held by such Participant shall, to the extent then vested and
exercisable, thereafter be fully exercisable by the Participant for the period
of one year (or such other period or no period as the Committee may specify)
immediately following the date of such Termination of Employment or until the
expiration of the Option Period, whichever period is shorter, and the
Participant's death at any time following such Termination of Employment due to
Disability shall not affect the foregoing. In the event of Termination of
Employment by reason of Disability, if an Incentive Stock Option is exercised
after the expiration of the exercise periods that apply for purposes of Section
422 of the Code, such Option will thereafter be treated as a Non-Qualified Stock
Option.
6.6 Other Termination. Unless otherwise provided in an Agreement or
determined by the Committee (and subject to Section 6.8 with respect to formula
grants to non-employee Directors) if a Participant incurs a Termination of
Employment due to Retirement, or the Termination of Employment is involuntary on
the part of the Participant (but is not due to death, Disability or with Cause),
any Option held by such Participant shall thereupon terminate, except that such
Option, to the extent then vested and exercisable, may be exercised for the
lesser of the ninety (90) day period commencing with the date of such
Termination of Employment or until the expiration of the Option Period. Unless
otherwise provided in an Agreement or determined by the Committee, if the
Participant incurs a Termination of Employment which is either (a) voluntary on
the part of the Participant (and is not due to Retirement) or (b) with Cause,
the Option shall terminate immediately. Unless otherwise provided in an
Agreement or determined by the Committee, the death or Disability of a
Participant after a Termination of Employment otherwise provided herein shall
not extend the exercisability of the time permitted to exercise an Option.
6.7 Cashing Out of Option. On receipt of written notice of exercise,
the Committee may elect to cash out all or part of the portion of any Option by
paying the Participant an amount, in cash or Common Stock, equal to the excess
of the Fair Market Value of the Common Stock that is subject to the Option over
the Option Price times the number of shares of Common Stock subject to the
Option on the effective date of such cash out.
6.8 Formula Grants. Beginning January 1, 2000 and each January 1,
thereafter, each person who is a non-employee Director on the Effective Date
shall become a Participant and shall be granted an Option to purchase ten
thousand (10,000) shares of Common Stock without further action by the Board or
the Committee. Each non-employee who is not currently a Director and is elected
or appointed as a Director shall become a Participant and shall, on his date of
election or appointment, without further action by the Board or the Committee,
be granted an Option to purchase ten thousand (10,000) shares of Common Stock,
effective as of the first January 1 following such Director's election or
appointment. In each case, a Director's options granted pursuant to this
provision shall vest quarterly in equal increments from the effective grant
date, vesting on the earlier of the date of the quarterly Board of Directors
meeting or the last day of the quarter. If the number of shares of Common Stock
available to grant under the Plan on a scheduled date of grant is insufficient
to make all automatic grants required to be made pursuant to the
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Plan on such date, then each eligible Director shall receive an Option to
purchase a pro rata number of the remaining shares of Common Stock available
under the Plan; provided further, however, that if such proration results in
fractional shares of Common Stock, then such Option shall be rounded down to the
nearest number of whole shares of Common Stock. If there is no whole number of
shares remaining to be granted, then no grants shall be made under the Plan.
Each Option granted under the Plan shall be evidenced by an Agreement, in a form
approved by the Committee, which shall embody the terms and conditions of such
Option and which shall be subject to the express terms and conditions set forth
in the Plan. Such Agreement shall become effective upon execution by the
Participant. Any Option granted pursuant to this Section 6.8 shall terminate
upon the first anniversary of the date the Participant first ceased to hold the
position of Director.
ARTICLE VII
PROVISIONS APPLICABLE TO STOCK ACQUIRED UNDER THIS PLAN
7.1 Limited Transfer During Offering. In the event there is an
effective registration statement under the Securities Act pursuant to which
shares of Common Stock shall be offered for sale in an underwritten offering, a
Participant shall not, during the period requested by the underwriters managing
the registered public offering, effect any public sale or distribution of shares
received directly or indirectly pursuant to an exercise of an Option.
7.2 No Company Obligation. None of the Company, an Affiliate or the
Committee shall have any duty or obligation to affirmatively disclose to a
record or beneficial holder of Common Stock or an Option, and such holder shall
have no right to be advised of any material information regarding the Company or
any Affiliate at any time prior to, upon or in connection with receipt or the
exercise of an Option or the Company's purchase of Common Stock or an Option
from such holder in accordance with the terms hereof.
ARTICLE VIII
CHANGE IN CONTROL PROVISIONS
8.1 (a) Reorganization in which the Company is the Surviving
Corporation. Subject to subsection (b) hereof, if the Company shall be
the surviving corporation in any reorganization, merger, or
consolidation of the Company with one or more other corporations, any
Option theretofore granted pursuant to the Plan shall pertain to and
apply to the securities to which a holder of the number of shares of
stock subject to such Option would have been entitled immediately
following such reorganization, merger, or consolidation, with a
corresponding proportionate adjustment of the Option Price per share so
that the aggregate Option Price (relating to all shares under such
Option) thereafter shall be the same as the aggregate Option Price of
the shares remaining subject to the Option immediately prior to such
reorganization, merger or consolidation.
(b) Reorganization in which the Company is not the Surviving
Corporation or Sale of Assets or Stock. Upon the dissolution or
liquidation of the Company, or upon a merger, consolidation,
reorganization or other business combination of the Company with one or
more other entities in which the Company is not the surviving entity,
or upon a sale of all or substantially all of the assets of the Company
to another entity, or upon any transaction (including, without
limitation, a merger or reorganization in which the Company is the
surviving corporation) approved by the Board which results in any
person or entity (or persons or entities acting as a group or otherwise
in concert) owning 80 percent or more of the combined voting power of
all classes of stock of the Company, all Options 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 writing in connection with such transaction for the
continuation of the Plan and/or the assumption of the Options
theretofore granted, or for the substitution for such Options of new
options covering the stock of a successor entity, or parent or
subsidiary thereof, with appropriate adjustments as to the number and
kinds of shares and exercise prices, in which event the Plan and
Options theretofore granted shall continue in the manner and under the
terms so provided. In the event of any such termination, each
individual holding an Option shall have the right (subject to the
general limitations on exercise set forth in Section 6.3 and except as
otherwise specifically provided in the Option Agreement relating to
such Option),
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immediately prior to the occurrence of such termination and during such
period occurring prior to such termination as the Board in its sole
discretion shall determine and designate, to exercise such Option in
whole or in part, whether or not such Option was otherwise exercisable
at the time such termination occurs. The Board shall send written
notice of an event that will result in such a termination to all
individuals who hold Options not later than the time at which the
Company gives notice thereof to its shareholders.
(c) Discretionary Modifications. Notwithstanding provisions of any
other Article of this Plan to the contrary, in the event of a Change in
Control (as defined in Section 8.2), the Committee shall, in addition
to other provisions of this Article VIII, have full discretion,
notwithstanding anything herein or in an Agreement to the contrary
(except as provided below), to do any or all of the following with
respect to an outstanding Option:
(i) to provide that the Options outstanding as of the
date of the Change in Control which are not then exercisable
shall become fully exercisable to the full extent of the
original grant;
(ii) to provide that the restrictions and deferral
limitations applicable to the Options shall lapse, and such
Options shall become free of all restrictions and become fully
vested and transferrable to the full extent of the original
grant;
(iii) to cause any Option to be cancelled, provided
notice of at least 15 days thereof is provided before the date
of cancellation;
(iv) to provide that the securities of another entity
be substituted hereunder for the Common Stock and to make
equitable adjustment with respect thereto; and
(v) to take any other action the Committee determines
to take.
8.2 Definition of Change in Control. For purposes of this Plan, a
"Change in Control" shall mean the happening of any of the following events:
(a) Any corporation, person or other entity (other than the
Company, a majority-owned subsidiary of the Company or any of its
subsidiaries, or an employee benefit plan (or related trust) sponsored
or maintained by the Company), including a "group" as defined in
Section 13(d)(3) of the Exchange Act, becomes the beneficial owner of
stock representing more than forty-nine percent (49%) of the combined
voting power of the Company's then outstanding securities;
(b) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any individual
becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company's shareholders, was approved by
a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any
such individual whose initial assumption of office occurs as a result
of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other
than the Board.
(c) Consummation of a reorganization, merger or consolidation
of the Company or sale or other disposition of all or substantially all
of the assets of the Company (a "Business Combination"), in each case,
unless, following such Business Combination, (i) all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the then-outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") and the combined
voting power of the then-outstanding voting securities of the Company
entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities") immediately prior to such
Business Combination beneficially own, directly or indirectly, more
than sixty percent (60%) of, respectively, the then-outstanding shares
of common stock and the combined voting power of the then-outstanding
voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such
Business Combination (including,
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without limitation, a corporation which as a result of such transaction
owns the Company or all or substantially all of the Company's assets
either directly or through one or more subsidiaries) in substantially
the same proportions as their ownership, immediately prior to such
Business Combination of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (ii) no
Person (excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, thirty percent (30%) or more
of, respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination, or the combined
voting power of the then-outstanding voting securities of such
corporation except to the extent that such ownership existed prior to
the Business Combination and (iii) at least a majority of the members
of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time of
the execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(d) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company other than to a corporation
which would satisfy the requirements of clauses (i), (ii) or (iii) of
Subsection (c) of this Section 8.2, assuming for this purpose that such
liquidation or dissolution was a Business Combination.
ARTICLE IX
MISCELLANEOUS
9.1 Amendments and Termination. The Board may amend, alter or
discontinue the Plan at any time, but no amendment, alteration or
discontinuation shall be made which would impair the rights of a Participant
under an Option theretofore granted without the Participant's consent, except
such an amendment (a) made to avoid an expense charge to the Company or an
Affiliate, (b) made to cause the Plan to qualify for the exemption provided by
Rule 16b-3, or (c) made to permit the Company or an Affiliate a deduction under
the Code. In addition, no such amendment shall be made without the approval of
the Company's stockholders to the extent such approval is required by law or
agreement. The Committee may amend, alter or discontinue the terms of any Option
theretofore granted, prospectively or retroactively, on the same conditions and
limitations (and exceptions to limitations) as the Board and further subject to
any approval or limitations the Board may impose.
Subject to the above provisions, the Board shall have the authority to
amend the Plan to take into account changes in law and tax and accounting rules,
as well as other developments, and to grant Options which qualify for beneficial
treatment under such rules without stockholder approval. Notwithstanding
anything in the Plan to the contrary, if any right under this Plan would cause a
transaction to be ineligible for pooling of interest accounting that would, but
for the right hereunder, be eligible for such accounting treatment, the
Committee may modify or adjust the right so that pooling of interest accounting
shall be available, including the substitution of Common Stock having a Fair
Market Value equal to the cash otherwise payable hereunder for the right which
caused the transaction to be ineligible for pooling of interest accounting.
9.2 Unfunded Status of Plan. It is intended that this Plan be an
"unfunded" plan for incentive and deferred compensation. The Committee may
authorize the creation of trusts or other arrangements to meet the obligations
created under this Plan to deliver Common Stock or make payments; provided,
however, that, unless the Committee otherwise determines, the existence of such
trusts or other arrangements is consistent with the "unfunded" status of this
Plan.
9.3 Status of Options Under Section 162(m) of the Code. It is the
intent of the Company that Options granted to persons who are "covered
employees" within the meaning of Section 162(m) of the Code shall constitute
"qualified performance-based compensation" satisfying the requirements of
Section 162(m) of the Code. Accordingly, the provisions of the Plan shall be
interpreted in a manner consistent with Section 162(m) of the Code. If any
provision of the Plan or any agreement relating to such an Option does not
comply or is inconsistent with the
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requirements of Section 162(m) of the Code, such provision shall be construed or
deemed amended to the extent necessary to conform to such requirements.
9.4 General Provisions.
(a) Representation. The Committee may require each person
purchasing shares pursuant to an Option to represent to and agree with
the Company in writing that such person is acquiring the shares without
a view to the distribution thereof. The certificates for such shares
may include any legend which the Committee deems appropriate to reflect
any restrictions on transfer.
(b) No Additional Obligation. Nothing contained in this Plan
shall prevent the Company or an Affiliate from adopting other or
additional compensation arrangements for its employees.
(c) Withholding. No later than the date as of which an amount
first becomes includible in the gross income of the Participant for
Federal income tax purposes with respect to any Option, the Participant
shall pay to the Company (or other entity identified by the Committee),
or make arrangements satisfactory to the Company or other entity
identified by the Committee regarding the payment of, any Federal,
state, local or foreign taxes of any kind required by law to be
withheld with respect to such amount required in order for the Company
or an Affiliate to obtain a current deduction. To the extent permitted
by the Committee, withholding obligations may be settled with Common
Stock, including Common Stock that is part of the Option that gives
rise to the withholding requirement provided that any applicable
requirements under Section 16 of the Exchange Act are satisfied. The
obligations of the Company under this Plan shall be conditional on such
payment or arrangements, and the Company and its Affiliates shall, to
the extent permitted by law, have the right to deduct any such taxes
from any payment otherwise due to the Participant. If the Participant
disposes of shares of Common Stock acquired pursuant to an Incentive
Stock Option in any transaction considered to be a disqualifying
transaction under the Code, the Participant must give written notice of
such transfer and the Company shall have the right to deduct any taxes
required by law to be withheld from any amounts otherwise payable to
the Participant.
(d) Prior Grants. This Plan is expressly intended to
comprehensively amend and restate the Atlantic Beverage Company, Inc.
Stock Option Plan, as amended prior to the Effective Date, and the
Atlantic Beverage Company, Inc. Directors Stock Option Plan; and all
options previously granted by the Board of Directors or the Committee,
pursuant to such plans or otherwise, shall be treated as granted
pursuant to this Plan; provided, however, that no recipient shall have
their rights associated with such previously issued options impaired
without their consent. Specifically, attached as Exhibit A is a list of
options previously granted to officers subject to Section 16 of the
Exchange Act, directors, independent contractors and consultants to
which this Section 9.4(d) shall apply. In addition to options listed on
Exhibit A, this Section is also intended to apply to options previously
granted to employees which are not officers subject to Section 16 of
the Exchange Act.
(e) Reinvestment. The reinvestment of dividends in additional
Restricted Stock at the time of any dividend payment shall only be
permissible if sufficient shares of Common Stock are available for such
reinvestment (taking into account then outstanding Options and other
Options).
(f) Representation. The Committee shall establish such
procedures as it deems appropriate for a Participant to designate a
Representative to whom any amounts payable in the event of the
Participant's death are to be paid.
(g) Controlling Law. This Plan and all Options made and
actions taken thereunder shall be governed by and construed in
accordance with the laws of the State of Illinois (other than its law
respecting choice of law). This Plan shall be construed to comply with
all applicable law, and to avoid liability to the Company, an Affiliate
or a Participant, including, without limitation, liability under
Section 16(b) of the Exchange Act.
B-13
<PAGE> 39
(h) Offset. Any amounts owed to the Company or an Affiliate by
the Participant of whatever nature may be offset by the Company from
the value of any shares of Common Stock, cash or other thing of value
under this Plan or an Agreement to be transferred to the Participant,
and no shares of Common Stock, cash or other thing of value under this
Plan or an Agreement shall be transferred unless and until all disputes
between the Company and the Participant have been fully and finally
resolved and the Participant has waived all claims to such against the
Company or an Affiliate.
(i) Fail-Safe. With respect to persons subject to Section 16
of the Exchange Act, transactions under this Plan are intended to
comply with all applicable conditions of Rule 16b-3 or Rule
16a-1(c)(3), as applicable. To the extent any provision of the Plan or
action by the Committee fails to so comply, it shall be deemed null and
void, to the extent permitted by law and deemed advisable by the
Committee. Moreover, in the event the Plan does not include a provision
required by Rule 16b-3 or Rule 16a-1(c)(3) to be stated herein, such
provision (other than one relating to eligibility requirements or the
price and amount of Options) shall be deemed to be incorporated by
reference into the Plan with respect to Participants subject to Section
16.
(j) Right to Recapitalize. The grant of an Option shall in no
way affect the right of the Company to adjust, reclassify, reorganize
or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of
its business or assets.
9.5 Mitigation of Excise Tax. Subject to any other agreement between
the Participant and the Company or an Affiliate, if any payment or right
accruing to a Participant under this Plan (without the application of this
Section 9.5), either alone or together with other payments or rights accruing to
the Participant from the Company or an Affiliate ("Total Payments") would
constitute a "parachute payment" (as defined in Section 280G of the Code and
regulations thereunder), such payment or right shall be reduced to the largest
amount or greatest right that will result in no portion of the amount payable or
right accruing under this Plan being subject to an excise tax under Section 4999
of the Code or being disallowed as a deduction under Section 280G of the Code.
The determination of whether any reduction in the rights or payments under this
Plan is to apply shall be made by the Committee in good faith after consultation
with the Participant, and such determination shall be conclusive and binding on
the Participant. The Participant shall cooperate in good faith with the
Committee in making such determination and providing the necessary information
for this purpose. The foregoing provisions of this Section 9.5 shall apply with
respect to any person only if after reduction for any applicable federal excise
tax imposed by Section 4999 of the Code and federal income tax imposed by the
Code, the Total Payments accruing to such person would be less than the amount
of the Total Payments as reduced, if applicable, under the foregoing provisions
of this Plan and after reduction for only federal income taxes.
9.6 Rights with Respect to Continuance of Employment. Nothing contained
herein shall be deemed to alter the relationship between the Company or an
Affiliate and a Participant, or the contractual relationship between a
Participant and the Company or an Affiliate if there is a written contract
regarding such relationship. Nothing contained herein shall be construed to
constitute a contract of employment between the Company or an Affiliate and a
Participant. The Company or an Affiliate and each of the Participants continue
to have the right to terminate the employment or service relationship at any
time for any reason, except as provided in a written contract. The Company or an
Affiliate shall have no obligation to retain the Participant in its employ or
service as a result of this Plan. There shall be no inference as to the length
of employment or service hereby, and the Company or an Affiliate reserves the
same rights to terminate the Participant's employment or service as existed
prior to the individual becoming a Participant in this Plan.
9.7 Options in Substitution for Options Granted by Other Corporations.
Options may be granted under this Plan from time to time in substitution for
options in respect of other plans of other entities. The terms and conditions of
the Options so granted may vary from the terms and conditions set forth in this
Plan at the time of such grant as the majority of the members of the Committee
may deem appropriate to conform, in whole or in part, to the provisions of the
awards in substitution for which they are granted.
9.8 Procedure for Adoption. Any Affiliate of the Company on the
Effective Date shall be deemed to have adopted this Plan on the Effective Date.
Any other Affiliate of the Company may by resolution of such
B-14
<PAGE> 40
Affiliate's board of directors, with the consent of the Board of Directors and
subject to such conditions as may be imposed by the Board of Directors, adopt
this Plan as of the date specified in the board resolution.
9.9 Procedure for Withdrawal. Any Affiliate which has adopted this Plan
may, by resolution of the board of directors of such direct or indirect
subsidiary, with the consent of the Board of Directors and subject to such
conditions as may be imposed by the Board of Directors, terminate its adoption
of this Plan.
9.10 Delay. If at the time a Participant incurs a Termination of
Employment (other than due to Cause) or if at the time of a Change in Control,
the Participant is subject to "short-swing" liability under Section 16 of the
Exchange Act, any time period provided for under this Plan or an Agreement to
the extent necessary to avoid the imposition of liability shall be suspended and
delayed during the period the Participant would be subject to such liability,
but not more than six (6) months and one (1) day and not to exceed the Option
Period, whichever is shorter. The Company shall have the right to suspend or
delay any time period described in this Plan or an Agreement if the Committee
shall determine that the action may constitute a violation of any law or result
in liability under any law to the Company, an Affiliate or a stockholder of the
Company until such time as the action required or permitted shall not constitute
a violation of law or result in liability to the Company, an Affiliate or a
stockholder of the Company. The Committee shall have the discretion to suspend
the application of the provisions of this Plan required solely to comply with
Rule 16b-3 if the Committee shall determine that Rule 16b-3 does not apply to
this Plan.
9.11 Headings. The headings contained in this Plan are for reference
purposes only and shall not affect the meaning or interpretation of this Plan.
9.12 Severability. If any provision of this Plan shall for any reason
be held to be invalid or unenforceable, such invalidity or unenforceability
shall not effect any other provision hereby, and this Plan shall be construed as
if such invalid or unenforceable provision were omitted.
9.13 Successors and Assigns. This Plan shall inure to the benefit of
and be binding upon each successor and assign of the Company. All obligations
imposed upon a Participant, and all rights granted to the Company hereunder,
shall be binding upon the Participant's heirs, legal representatives and
successors.
9.14 Entire Agreement. This Plan and the Agreement constitute the
entire agreement with respect to the subject matter hereof and thereof, provided
that in the event of any inconsistency between this Plan and the Agreement, the
terms and conditions of the Agreement shall control.
IN WITNESS WHEREOF, this instrument has been executed by the
undersigned as of _________________, 1999.
ATLANTIC PREMIUM BRANDS, LTD.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
B-15
<PAGE> 41
EXHIBIT A
<TABLE>
<CAPTION>
TOTAL NUMBER OF
OPTIONS GRANTED
PRIOR TO THE
HOLDER EFFECTIVE DATE
- ------------------------------------------ --------------
<S> <C>
Douglas L. Becker 30,000
Eric D. Becker 70,000
Anthony J. Brocato, Jr 24,000
Thomas M. Dalton 75,000
Merrick M. Elfman 74,500
Steve Englander 45,000
Ericson Marketing Communications 8,000
Brian T. Fleming 20,000
John T. Hanes 20,000
Rudolph Christopher Hoehn-Saric 30,000
Rick Inatome 44,500
John Izzo 20,000
George Cook Jordan, Jr 44,500
Alan Macksey 25,000
John A. Miller 44,500
Stoelting, Inc. 30,000
Alan F. Sussna 750,000
Steven M. Taslitz 74,500
Tom D. Wippman 18,000
</TABLE>
B-16
<PAGE> 42
[FRONT SIDE OF PROXY CARD]
PROXY ATLANTIC PREMIUM BRANDS, LTD. PROXY
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
Thoms M. Dalton, Merrick M. Elfman and Tom D. Wippman, and each of them acting
singly in the absence of the other, as Proxies and 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, 1999, at the Annual Meeting of
Stockholders to be held at 10:00 a.m. local time on May 19, 1999, 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> 43
[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 III (to serve until the 2002 annual meeting of stockholders)
Nominees: Rick Inatome, John A. Miller and Alan F. Sussna
FOR ALL WITHHOLD ALL FOR ALL EXCEPT
------------ ------------ ------------
(Except Nominees Written Above.)
2. To consider and vote upon an amendment to the Company's Certificate of
Incorporation.
FOR AGAINST ABSTAIN
--------------- --------------- ---------------
3. To consider and vote upon the Atlantic Premium Brands, Ltd. 1999 Amended
and Restated Stock Option Plan.
FOR AGAINST ABSTAIN
--------------- --------------- ---------------
4. In their discretion, the Proxies are authorized to vote upon such other
business as may property 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: , 1999
-----------------------------
-----------------------------------------
-----------------------------------------
-----------------------------------------
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.
