SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 ss.240.14a-11(c) or ss.240.14a-12
BOSS HOLDINGS, INC.
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(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)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
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2. Aggregate number of securities to which transaction applies:
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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):
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4. Proposed maximum aggregate value transaction:
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5. Total fee paid:
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|_| 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 number, or
the Form or Schedule and the date of its filing.
1. Amount previously paid:
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BOSS HOLDINGS, INC.
221 W. First Street, Kewanee, Illinois 61443
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 23, 2000
To the Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Boss
Holdings, Inc., a Delaware corporation (formerly known as Vista 2000, Inc.) (the
"Company") will be held at the Board Room of Union Planters Bank N.A., 8182
Maryland Ave., First Floor, St. Louis, Missouri, 63105 on May 23, 2000, at 10:00
A.M. Central Daylight Time for the following purposes:
1. To elect six directors of the Company, each to serve until the next
Annual Meeting of Stockholders and until his successor has been elected
and qualified or until his earlier resignation or removal.
2. To approve an amendment to the Company's Certificate of Incorporation
to reduce the number of authorized shares of common stock of the Company
from 50,000,000 to 10,000,000.
3. To approve an amendment to the Company's 1998 Incentive Stock Option
Plan to increase the number of shares reserved for issuance under the plan
from 210,000 to 285,000.
4. To approve an amendment to the Company's 1998 Incentive Stock Option
Plan to provide for accelerated vesting of options issued under the plan
upon the occurrence of certain corporate transactions.
5. To approve an amendment to the Company's 1998 Non-Employee Director
Stock Option Plan to increase the number of shares reserved for issuance
under the plan from 90,000 to 140,000.
6. To ratify the appointment of Grant Thornton LLP as the Company's
independent auditors for the fiscal year ending December 30, 2000.
7. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. Only stockholders of record at the close of
business on April 24, 2000, are entitled to notice of and to vote at the Annual
Meeting. A list of shareholders entitled to vote at the Annual Meeting shall be
open to the examination of any shareholder, his agent or attorney for any
purpose germane to the Annual Meeting upon written notice, and the list shall be
available for inspection at the Annual Meeting by any shareholder that is
present.
BY ORDER OF THE BOARD OF DIRECTORS
James F. Sanders,
Dated: May 4, 2000 Corporate Secretary
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. REGARDLESS OF
WHETHER YOU PLAN TO ATTEND, PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE
ENCLOSED PROXY IN THE POSTAGE-PAID ENVELOPE PROVIDED SO THAT YOUR SHARES MAY BE
REPRESENTED AT THE MEETING. IF YOU SEND IN YOUR PROXY CARD AND DECIDE TO ATTEND
THE MEETING TO VOTE YOUR SHARES IN PERSON, YOU STILL MAY DO SO.
<PAGE>
BOSS HOLDINGS, INC.
221 W. First Street, Kewanee, Illinois 61443
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished to stockholders of Boss Holdings, Inc.,
a Delaware corporation (formerly known as Vista 2000, Inc.) ("Company"), in
connection with the solicitation by the Board of Directors of the Company
("Board of Directors" or "Board") of proxies for use at the Annual Meeting of
Stockholders (the "Meeting") scheduled to be held on Tuesday, May 23, 2000, at
10:00 A.M. local time at the Board Room of Union Planters Bank, N.A., 8182
Maryland Ave., First Floor, St. Louis, MO 63105, and at any and all adjournments
or postponements thereof. This Proxy Statement and the accompanying form of
proxy first are being mailed to stockholders on or about May 4, 2000.
The proxy, when properly executed and received by the Secretary of the
Company prior to the Meeting, will be voted as therein specified unless revoked
by filing with the Secretary prior to the Meeting a written revocation or a duly
executed proxy bearing a later date. Unless authority to vote for one or more of
the director nominees is specifically withheld according to the instructions, a
signed proxy will be voted FOR the election of the six director nominees named
herein and, unless otherwise indicated, FOR each other proposal described in
this proxy statement and in the accompanying notice of meeting.
Voting Rights and Votes Required
The close of business on April 24, 2000, has been fixed as the record date
for the determination of stockholders entitled to receive notice of and to vote
at the Meeting. As of April 24, 2000, the Company had outstanding and entitled
to vote approximately 1,934,904 shares of Common Stock, $0.25 par value per
share ("Common Stock").
A majority of the outstanding shares of Common Stock must be represented
in person or by proxy at the Meeting in order to constitute a quorum for the
transaction of business. The record holder of each share of Common Stock
entitled to vote at the Meeting will have one vote for each share so held. There
is no cumulative voting with respect to any matter submitted for vote of the
stockholders. Abstentions will be treated as Common Stock present and entitled
to vote for purposes of determining the presence of a quorum. If a broker
indicates on a proxy that it does not have the discretionary authority as to
certain Common Stock (a "broker nonvote"), those shares will not be considered
present and entitled to vote with respect to that matter.
The affirmative vote of the holders of a majority of the shares of Common
Stock represented at the Meeting in person or by proxy and entitled to vote at
the Meeting will be required to approve the election of six directors of the
Company, the proposal for an amendment to the Company's Certificate of
Incorporation to reduce the number of authorized shares of common stock of the
Company from 50,000,000 to 10,000,000, the proposal for an amendment to the
Company's 1998 Incentive Stock Option Plan to increase the number of shares
reserved for issuance under the plan from 210,000 to 285,000, the proposal for
an amendment to the Company's 1998 Incentive Stock Option Plan to provide for
accelerated vesting of options issued under the plan upon the occurrence of
certain corporate transactions, the proposal for an amendment to the Company's
1998 Non-Employee Director Stock Option Plan to increase the number of shares
reserved for issuance under the plan from 90,000 to 140,000, and the appointment
of Grant Thornton LLP as the Company's independent auditors for the
<PAGE>
fiscal year ending December 30, 2000. In determining whether a proposal has
received the requisite number of affirmative votes, broker nonvotes will be
disregarded and have no effect on the outcome of the vote. Abstentions will be
included in the vote totals and, as such, will have the same effect as a
negative vote.
Voting of Proxies
Shares represented by properly executed proxies will be voted at the
Meeting in accordance with the instructions specified thereon. If no
instructions are specified, the shares represented by any properly executed
proxy will be voted FOR the election of the directors of the Company, and FOR
each of the other five proposals described in this proxy statement and in the
accompanying notice of meeting.
The Board of Directors is not aware of any matter that will come before
the Meeting other than as described above. However, if any such other matter is
duly presented, in the absence of instructions to the contrary, such proxies
will be voted in accordance with the judgment of the proxy holders with respect
to such matter properly coming before the Meeting.
Revocation of Proxies
Any proxy given pursuant to this solicitation may be revoked by a
stockholder at any time before it is exercised. Any proxy may be revoked in
writing, or by a valid proxy bearing a later date, delivered to the Secretary of
the Company or by attending the Meeting and voting in person.
Solicitation of Proxies
The expenses of this solicitation will be paid by the Company. To the
extent necessary to ensure sufficient representation at the Meeting, proxies may
be solicited by any appropriate means by officers, directors and regular
employees of the Company, who will receive no additional compensation therefor.
The Company anticipates utilizing the services of Corporate Investor
Communications, Inc. (CIC) to communicate with and distribute materials to
banks, brokers and other institutional holders. CIC also may contact
shareholders to assist in obtaining a high level of shareholder participation
via proxy. CIC will be paid approximately $4,000 for such solicitation services
in accordance with their normal rate schedule, plus costs of printing and
mailing. The Company will pay persons holding stock in their names or in the
names of their nominees, but not owning such stock beneficially (such as
brokerage houses, banks and other fiduciaries), for the expense of forwarding
soliciting material to their principals.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
A Board of Directors consisting of six directors is to be elected by the
stockholders at the Meeting, each to hold office until the next Annual Meeting
of Stockholders or until a successor is duly elected and qualified.
The Board of Directors recommends the election of the six nominees named
below, all of whom (other than J. Bruce Lancaster) currently are directors of
the Company. Unless authority to vote for one or more of the nominees is
specifically withheld according to the instructions, proxies in the enclosed
form will be voted FOR the election of each of the six nominees named below. The
Board of Directors does not contemplate that any of the nominees will not be
able to serve as a director, but if that contingency should occur prior to the
voting of the proxies, the persons named in the enclosed proxy
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reserve the right to vote for such substitute nominee or nominees as they, in
their discretion, shall determine.
G. Louis Graziadio, III Age 50 - Chief Executive Officer and Chairman of the
Board of the Company since June 1996. He is also the Chairman and CEO of Ginarra
Holdings, Inc., a holding company with investments through various corporations,
and a director of Imperial Bancorp.
Perry A. Lerner Age 57 - Director since June 1996. Mr. Lerner is a Managing
Director of Crown Capital Group, Inc., a New York-based investment company. A
graduate of Harvard Law School and Claremont McKenna College, Mr. Lerner was a
partner of the law firm O'Melveny & Myers from 1984-1996 and is a member of the
State Bar of New York, State Bar of California and American Bar Association. Mr.
Lerner also serves on the Board of Directors of Imperial Credit Industries, Inc.
and Gemstar International Group Ltd.
Lee E. Mikles Age 44 - Director since June 1996. Mr. Mikles is Chairman of
Mikles/Miller Management, LLC, and Mikles/Miller Securities, LLC. Prior to the
formation of that company, he headed Mikles/Miller Group, an affiliate of
Shearson Lehman Brothers after serving as First Vice President of the Corporate
Finance Department at Bateman Eichler, Hill Richards Inc. and as First Vice
President with Drexel Burnham Lambert, Inc. from 1981 through 1989. Mr. Mikles
also serves on the Board of Directors of Imperial Bancorp, Imperial Bank,
Coastcast Corporation and Official Payments Corporation.
Paul A. Novelly Age 56 - Director since June 1996. Mr. Novelly controls Apex Oil
Company, Inc. in St. Louis, MO with a refinery in Long Beach, CA; World Point
Terminals Inc., a publicly-held Canadian company, which owns and operates
petroleum storage facilities in the United States, the Netherlands and the
Bahamas; and AIC, Limited, which, headquartered in Bermuda, trades petroleum
products internationally through its office in Monaco. He also serves on the
Board of Directors of Apex Oil Company, Inc., World Point Terminals Inc.,
Intrawest Corporation, Imperial Bancorp, Imperial Bank and Coastcast
Corporation.
Richard D. Squires Age 42 - Director since June 1996. Mr. Squires serves as
President of RS Holdings, Inc., a Dallas, Texas based real estate and high-yield
investment company, and as President of R3 Realty Corporation, formerly Pace
Membership Warehouse, Inc., a former subsidiary of K-Mart Corporation. Mr.
Squires previously has served as Chief Financial Officer of Ft. Worth Holdings,
Inc. and Vice President of Finance at American Hotels Corporation and Second
Vice President of Finance at Punta Gorda Isles, Inc. Mr. Squires has a B.S. in
Accounting from Pennsylvania State University, and a Masters of Business
Administration from Harvard University.
J. Bruce Lancaster Age 44 - Chief Financial Officer of the Company since April,
1998 and Executive Vice President since August, 1999. From 1995 through 1998,
Mr. Lancaster was Vice President Finance and Administration for Acme Boot
Company, Inc. Previously, from 1989 to 1995, he served in various positions,
including Vice President Finance and CFO, with Kinark Corporation, a public
corporation traded on the American Stock Exchange. Mr. Lancaster has a Masters
in Business Administration from Texas A&M University and is a certified public
accountant.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE ELECTION OF EACH OF THE NOMINEES NAMED ABOVE
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DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Directors. Information with respect to five current Directors of the Company is
set forth above. The term of office of the other current director, Shyam H.
Gidumal, will expire upon election of the above nominees. Mr. Gidumal resigned
as President of the Company effective February, 1999.
Executive Officers
Following is a list of the names and ages of all the executive officers of
the Company and its principal subsidiaries as of the date of this Proxy
Statement, indicating all positions and offices with the Company held by each
such person, and each such person's principal occupations or employment during
the past five years.
<TABLE>
<CAPTION>
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BOSS HOLDINGS, INC.
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Name Age Positions and Offices Held and
Principal Occupations or Employment during past 5 years
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<S> <C> <C>
G. Louis Graziadio, III 50 Chairman of the Board and Chief Executive Officer of the Company since June
1996. He is also the Chairman and CEO of Ginarra Holdings, Inc., a holding
company with investments through various corporations, and a director of
Imperial Bancorp.
- --------------------------------------------------------------------------------------------------------------------
J. Bruce Lancaster 44 Chief Financial Officer since April 1998 and Executive Vice President since
August 1999. From 1995 through March 1998, Mr. Lancaster was Vice President
Finance and Administration for Acme Boot Company, Inc. From 1989 to 1995,
he served in various positions, including Vice President Finance and CFO,
with Kinark Corporation, publicly traded on the American Stock Exchange.
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</TABLE>
Relationship Among Directors or Executive Officers
Mr. Graziadio and Mr. Mikles are first cousins; otherwise, there are no
family relationships existing between the officers and directors of the Company.
Board Meetings and Committees of the Board
During the fiscal year ended December 25, 1999, ("Fiscal 1999"), the Board
held three meetings and took action by unanimous written consent one time. All
directors attended at least 75% of the Board meetings.
The Company has an Executive Committee and standing Audit and Compensation
Committees of the Board. Although the Company has no Nominating Committee, the
Executive Committee has acted as a nominating committee and the above nominees
are recommended by the Board of Directors. The Board of Directors will consider
director nominees recommended by stockholders. Such recommendations should be
sent to the Company at its principal executive offices, to the attention of the
Secretary.
The members of the Audit Committee are Messrs. Mikles and Squires, both of
whom are independent of the Company. The Committee reviews with Grant Thornton
LLP, the Company's
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independent auditors, the Company's financial statements and internal accounting
procedures, Grant Thornton LLP's auditing procedures and fees, and the possible
effects of professional services upon the independence of Grant Thornton LLP.
The Audit Committee held two meetings during Fiscal 1999.
The members of the Compensation Committee are Messrs. Lerner and Novelly.
The Committee makes recommendations to the Board with respect to compensation
and benefits paid to the Company's senior management. The Compensation Committee
also makes determinations under the Company's various plans providing incentive
compensation for management. See "EXECUTIVE COMPENSATION." The Compensation
Committee held one meeting during Fiscal 1999, in addition to discussions in
meetings of the Board of Directors.
The members of the Executive Committee are Messrs. Graziadio, Squires,
Lerner and Mikles. The executive committee generally has and may exercise all
the powers and authority of the full Board in the management of the business and
affairs of the Company, but specifically does not have the power or authority to
(i) amend the Company's certificate of incorporation (except as permitted by
applicable law with respect to fixing the number, designations, preferences and
rights of shares of stock to be issued by the Company in certain circumstances),
(ii) adopt an agreement of merger or consolidation, (iii) recommend to the
stockholders the sale, lease or exchange of all or substantially all of the
Company's property and assets, (iv) recommend to the stockholders a dissolution
of the Company or a revocation of a dissolution, (v) amend the by-laws of the
Company; (vi) declare a dividend, or (vii) authorize the issuance of stock. The
full Board of Directors may act to rescind any actions previously taken by the
executive committee.
Compensation of Directors
During Fiscal 1999, each of the Company's directors earned an annual
stipend of $15,000, and quarterly directors' fees of $5,000 for the first
quarter and $2,000 per quarter for each of the last three quarters. In addition,
the Company pays compensation of $1,200 per special Board meeting attended
(i.e., non-regularly scheduled meeting) or for more than four regular board
meetings per year. Committee members receive compensation of $500 per committee
meeting attended. The total compensation earned by all directors during Fiscal
1999 was $156,000. The Company also reimburses its directors for reasonable
expenses incurred in connection with attending Board and Board committee
meetings. Except as described under "Directors' Stock Options" below, the
Company had no other compensation arrangements with directors during Fiscal
1999.
Directors' Stock Options
Pursuant to the affirmative vote of shareholders at the Company's 1998
Annual Meeting, the Company adopted the 1998 Non-Employee Director Stock Option
Plan ("1998 Director Plan"). During Fiscal 1999, the Company issued
non-qualified options for 90,000 shares of Common Stock under such plan,
representing all of the shares originally reserved for issuance under the 1998
Director Plan. During Fiscal 1999, none of such options were exercised. Proposal
#5 below requests an amendment of the 1998 Director Plan to reserve an
additional 50,000 shares of Common Stock for issuance thereunder.
Section 16(a) Beneficial Ownership Reporting Compliance.
To the best of the Company's knowledge, for the fiscal year ended December 25,
1999: (i) each of the directors and Mr. Lancaster have filed or will file
untimely a report on Form 5 reporting a late transaction during 1999 relating to
the issuance of stock options, and (ii) James F. Sanders, corporate secretary,
has filed or will file untimely a report on Form 3 for his initial report of
beneficial ownership and a Form 5 reporting the
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issuance of stock options during 1999. To the Company's best knowledge, all
other Forms 3, 4 or 5 required to be filed during Fiscal 1999 were filed on a
timely basis.
EXECUTIVE COMPENSATION
Compensation Tables
The compensation paid in Fiscal 1999 to the Company's Chief Executive
Officer and to each of the other executive officers of the Company and its
subsidiaries whose total compensation exceeded $100,000 are as follows:
<TABLE>
<CAPTION>
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1999 SUMMARY COMPENSATION TABLE
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BOSS HOLDINGS, INC.
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All
Other Annual Other
Name and Principal Annual Compensation Compensation
Position Year Compensation ($) Long-Term Compensation ($)
----------------------- -------------------------------------
Salary Bonus
($) ($) Awards Payouts
-------------------------------------
Options LTIP
Restricted SARs Payout
Stock Awards (#)(4) ($)
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<S> <C> <C> <C> <C> <C> <C> <C> <C>
G. Louis Graziadio, III(1) 1999 -0- -0- -0- -0- 30,000 -0- 26,000
Chairman of the Board and 1998 -0- -0- -0- -0- -0- -0- 35,000
CEO 1997 -0- -0- -0- -0- 96,000 -0- 465,000
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1999 -0- -0- -0- -0- 12,000 -0- 210,420
Shyam H. Gidumal, 1998 -0- -0- -0- -0- -0- -0- 121,000
President(2) 1997 -0- -0- -0- -0- 96,000 -0- 1,035,000
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J. Bruce Lancaster, Exec 1999 121,667 10,000 6,000 -0- 15,000 -0- 221
VP & CFO(3) 1998 92,192 -0- -0- -0- -0- -0- 38,665
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<CAPTION>
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THE SUBSIDIARIES
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All
Other Annual Other
Name and Principal Annual Compensation Compensation
Position Year Compensation ($) Long-Term Compensation ($)
----------------------- -------------------------------------
Salary Bonus
($) ($) Awards Payouts
-------------------------------------
Restricted Options LTIP
Stock SARs Payout
Awards (#) ($)
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<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ken Fristad, President of 1999 83,126 -0- -0- -0- 12,500 -0- 19,185
BMHI Subsidiary 1998 125,000 37,500 -0- -0- -0- -0- 1,242
(resigned August, 1999) 1997 95,865 48,000 -0- -0- -0- -0- -0-
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</TABLE>
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(1) Compensation for Mr. Graziadio's services is as periodically determined by
the Board's Compensation Committee, based on the type and extent of
services Mr. Graziadio provided. Amount listed as other compensation
includes director's fees.
(2) Compensation shown for Mr. Gidumal includes director's fees paid directly
to Mr. Gidumal and payments to companies in which Mr. Gidumal is a
principal for services provided to the Company. (See "Certain
Relationships and Related Transactions" below.) Mr. Gidumal was elected
President of the Company effective November 1, 1997, and resigned
effective February 3, 1999.
(3) Mr. Lancaster was appointed Chief Financial Officer of the Company in
April 1998. Other compensation paid to Mr. Lancaster in 1998 consisted
primarily of relocation expenses and associated tax payments reimbursed by
the Company in 1998.
(4) All figures in this column reflect options to purchase shares of Common
Stock. Options granted to Mr. Graziadio and Mr. Gidumal during Fiscal 1999
were issued under the Company's 1998 Non-Employee Director Stock Option
Plan (the "1998 Director Plan").
Pursuant to the affirmative vote of shareholders at the Company's 1998
Annual Meeting of Stockholders, the Company has adopted its 1998 Incentive Stock
Option Plan (the "1998 Employee Plan") under which the Company may issue
qualified or non-qualified stock options to employees, consultants and other key
persons. During Fiscal 1999, options for a total of 27,500 shares were granted
under the 1998 Employee Plan to the named executive officers of the Company and
its subsidiaries. No options were granted during 1998. During 1997, options for
96,000 shares were granted under the Company's 1993 Incentive Stock Option Plan
to the named executive officers of the Company and its subsidiaries. The Company
has no stock appreciation rights ("SARs") outstanding.
The following sets forth the value of options exercised during the year
and unexercised options held by the named executive officers on December 25,
1999:
Aggregated Options/SAR Exercises in the last Fiscal Year
and Fiscal Year-End Option/SAR Values
<TABLE>
<CAPTION>
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(2) Number of (1)
Securities Underlying Value of Unexercised
Unexercised In-the-Money Options/SARs
Shares Acquired Value Options/SARs at Fiscal at Fiscal Year-End
Name on Exercise Realized ($) Year End ($)
------------------------ ----------------------------
Exercisable/ Exercisable/
Unexercisable Unexercisable
====================================================================================================================
<S> <C> <C> <C> <C>
G. Louis Graziadio III -0- -0- 15,000 / 15,000 31,875 / 31,875
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J. Bruce Lancaster -0- -0- -0- / 15,000 -0- / 31,875
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</TABLE>
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(1) Assumes a market closing price of $3.875 per share at fiscal year end less
the option exercise price of $1.75 per share.
(2) All figures in this column reflect options to purchase shares of Common
Stock.
<TABLE>
<CAPTION>
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STOCK OPTIONS GRANTED IN 1999
Individual Grants
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Potential Realizable
Value at Assumed
Number of % of Total Annual Rates
Securities Options of Stock Price
Underlying Granted Exercise Appreciation for
Options in Fiscal Price Option Term (Note 3)
Granted Year 1999 Per Expiration --------------------------
Name of Optionee (Note 1) (Note 2) Share Date 5% 10%
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<S> <C> <C> <C> <C> <C> <C> <C>
G. Louis Graziadio, III 30,000 20.0% $1.75 3/8/2009 $33,017 $83,671
J. Bruce Lancaster 15,000 10.0% $1.75 3/8/2009 $16,508 $41,836
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</TABLE>
1) All options were granted at fair market value as of the date of the grant.
Mr. Lancaster's options were granted under the 1998 Incentive Stock Option
Plan and generally are not exercisable until one year after the grant date
with vesting at the rate of one-third per year over the three years
following the grant. Mr. Graziadio's options were granted under the 1998
Non-Employee Director Stock Option Plan.
2) In 1999, options for 90,000 shares were granted to directors and 59,500
shares were granted to employees. The percentages shown reflect the
optionee's percentage of all options granted directors and employees.
3) The dollar amounts in these columns reflect the 5% and 10% annual rates of
appreciation prescribed by SEC regulation. The 5% and 10% rates of
appreciation would result in per share prices of $2.85 and $4.54,
respectively, over the option term. The Company expressly disclaims any
representations as to the level of appreciation which may be realized on
the Company's stock.
Employment Agreements
The Company does not have an employment agreement with any executive
officer of the Company.
Report of Compensation Committee with Respect to Executive Compensation
The following report of the Compensation Committee required by the rule of
the SEC to be included in the Proxy Statement shall not be deemed incorporated
by reference by any statement incorporating this Proxy Statement by reference
into any filing under the Securities Act of 1933, as amended (the "Securities
Act") or the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
except to the extent that the Company specifically incorporates this information
by reference, and shall not otherwise be deemed filed under either such Act. The
Compensation Committee reviews the
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performance of the executive officers of the Company, makes recommendations to
the Board of Directors as to compensation of the executives and reviews
compensation for other key employees, including salary and cash bonus levels.
The Company seeks to pay salaries to executive officers that are commensurate
with qualifications and responsibilities and that are competitive in the
marketplace.
Executive Compensation Philosophy:
The Company has not formally adopted an executive compensation philosophy.
Due to the changing character of the Company, as it has proceeded through a
period of reorganization and transition, the Board generally has maintained the
executive decision-making functions using the services of Mr. Graziadio and a
select group of outside consultants. Generally the executive compensation
decisions have been made to attract, retain and reward executives who contribute
to the Company's success, provide economic incentives for officers to achieve
business objectives, reward individual performance and strengthen the
relationship between executive pay and shareholder value.
EICP:
The Company does not have an Executive Incentive Compensation Plan.
Recommendations for executive compensation are made by the Board's Compensation
Committee and approved by the Board or the Executive Committee on an as-needed
basis. The Company from time-to-time has retained Johnson & Associates, a
management and benefits consultant, to provide advice on the type and amount of
compensation to be paid to executive officers, directors and consultants.
Executive Officer Compensation:
The Company's Fiscal 1999 and current total compensation programs for
executive officers consist of both cash and stock-based compensation. The annual
cash compensation and any incentive bonuses are decided or approved by vote of
the Board or its Executive Committee on a discretionary basis. Executive
compensation in the form of stock options is included under the Company's 1998
Incentive Stock Option Plan, as amended. Under this Plan, the number of Options
granted and vesting periods are decided at the discretion of the Compensation
Committee of the Board of Directors.
Chief Executive Officer Compensation:
Compensation paid to Mr. Graziadio as Chief Executive Officer during
Fiscal 1999 consisted solely of $26,000 in director's fees. Reimbursement of
certain expenses incurred by Mr. Graziadio and a company affiliated with Mr.
Graziadio in connection with the Company's business is discussed below in the
section titled "Certain Relationships and Related Transactions."
Members of the Company's Compensation Committee:
Perry A. Lerner Paul A. Novelly
Stock Price Performance Graph
The following graph sets forth a comparison of the cumulative total return
to stockholders on the Common Stock during the five year period ended December
25, 1999, based on the market price thereof and taking into account all stock
splits in the form of stock dividends paid through Fiscal 1999, with the
9
<PAGE>
cumulative total return of companies on the NASDAQ Stock Market and NASDAQ
companies comprising SIC Codes 3420-3429 (cutlery, hand tools and general
hardware).
10
<PAGE>
[THE FOLLOWING WAS REPRESENTED AS A PERFORMANCE CHART IN THE PRINTED MATERIAL]
Date Company Market Market Peer Peer
Index Index Count Index Count
12/23/1993 0 99.291 4363 90.897 5
1/26/1994 0 103.357 4395 95.764 5
2/25/1994 0 102.8 4435 91.579 5
3/25/1994 0 102.844 4480 92.069 5
4/26/1994 0 96.363 4522 83.875 5
5/26/1994 0 96.058 4556 83.47 5
6/24/1994 0 91.321 4569 81.746 5
7/26/1994 0 94.01 4585 80.395 4
8/26/1994 0 100.586 4614 85.964 4
9/26/1994 0 99.587 4607 95.52 4
10/25/1994 100 100 4637 100 4
10/26/1994 92.486 100.706 4642 97.915 4
11/25/1994 78.613 4657 4
12/23/1994 100 100 4672 100 4
1/26/1995 76.54320988 100.527 4644 89.198 4
2/24/1995 74.07407407 105.809 4653 90.739 4
3/24/1995 103.7037037 108.953 4647 86.033 4
4/26/1995 81.48148148 112.385 4668 90.927 4
5/26/1995 117.2839506 115.289 4652 87.255 4
6/26/1995 216.0493827 124.622 4659 85.593 4
7/26/1995 269.1358025 133.774 4680 80.885 4
8/25/1995 266.6666667 136.49 4721 83.796 4
9/26/1995 207.4074074 139.634 4709 80.584 4
10/26/1995 283.9506173 138.829 4745 72.114 4
11/24/1995 345.6790123 142.086 4783 79.745 4
12/26/1995 390.1234568 141.335 4818 71.292 4
1/26/1996 404.9382716 142.042 4808 67.835 4
2/26/1996 469.1358025 147.457 4838 72.31 4
3/26/1996 395.0617284 147.952 4869 73.587 4
4/26/1996 123.4567901 160.21 4920 77.614 4
5/24/1996 27.16049383 167.557 4983 86.009 4
6/26/1996 22.22222222 160.004 5035 79.796 4
7/26/1996 19.75308642 145.764 5059 81.722 4
8/26/1996 19.75308642 153.954 5095 86.038 4
9/26/1996 19.75308642 165.725 5086 87.367 4
10/25/1996 4.938271605 163.882 5125 90.075 4
11/26/1996 2.469135802 174.044 5175 89.803 5
12/26/1996 2.469135802 173.898 5194 99.451 5
1/24/1997 2.469135802 186.24 5158 103.248 5
2/26/1997 3.950617284 175.937 5173 110.041 5
3/26/1997 2.469135802 164.466 5168 107.475 5
4/25/1997 3.950617284 169.591 5153 96.908 5
5/23/1997 4.740740741 188.793 5147 105.211 5
6/26/1997 7.901234568 194.6 5140 113.666 6
7/25/1997 9.87654321 215.102 5129 112.408 6
8/26/1997 2.469135802 214.784 5121 115.354 6
9/26/1997 9.87654321 227.516 5111 116.2 6
10/24/1997 2.469135802 215.662 5114 116.511 6
11/26/1997 4.938271605 216.8 5132 120.005 6
12/26/1997 3.160493827 213.067 5096 121.954 6
1/26/1998 2.469135802 219.811 5053 126.401 6
2/26/1998 4.938271605 240.479 5033 131.709 6
3/26/1998 2.469135802 249.366 5002 119.154 6
4/24/1998 4.938271605 253.569 4968 127.881 6
5/26/1998 2.469135802 239.48 4957 106.624 6
6/26/1998 3.086222222 256.207 4949 113.161 6
7/24/1998 3.160493827 253.22 4916 99.626 6
8/26/1998 2.469135802 203.026 4891 83.239 6
9/25/1998 5.135802469 231.195 4836 90.094 6
10/26/1998 3.950617284 241.359 4753 81.29 6
11/25/1998 2.765432099 265.891 4705 80.949 6
12/24/1998 2.419358025 300.431 4658 76.976 6
1/29/1999 2.518518519 344.017 81.136
2/26/1999 2.37037037 313.166 82.607
3/31/1999 2.765432099 336.721 73.422
4/30/1999 3.160493827 347.52 80.365
5/28/1999 3.950617284 338.248 80.22
6/30/1999 4.049382716 368.444 88.412
7/30/1999 4.938271605 361.925 75.955
8/31/1999 4.938271605 377.049 67.771
9/30/1999 5.925925926 377.376 58.291
10/29/1999 7.209876543 406.822 52.447
11/30/1999 7.703703704 454.354 48.705
12/31/1999 5.728395062 555.988 35.551
Per
Bloomberg
63.28125 100
48.4375 76.54320988
46.875 74.07407407
65.625 103.7037037
51.5625 81.48148148
74.21875 117.2839506
136.71875 216.0493827
170.3125 269.1358025
168.75 266.6666667
131.25 207.4074074
179.6875 283.9506173
218.75 345.6790123
246.875 390.1234568
256.25 404.9382716
296.875 469.1358025
250 395.0617284
78.125 123.4567901
17.1875 27.16049383
14.0625 22.22222222
12.5 19.75308642
12.5 19.75308642
12.5 19.75308642
3.125 4.938271605
1.5625 2.469135802
1.5625 2.469135802
1.5625 2.469135802
2.5 3.950617284
1.5625 2.469135802
2.5 3.950617284
3 4.740740741
5 7.901234568
6.25 9.87654321
1.5625 2.469135802
6.25 9.87654321
1.5625 2.469135802
3.125 4.938271605
2 3.160493827
1.5625 2.469135802
3.125 4.938271605
1.5625 2.469135802
3.125 4.938271605
1.5625 2.469135802
1.953 3.086222222
2 3.160493827
1.5625 2.469135802
3.25 5.135802469
2.5 3.950617284
1.75 2.765432099
1.531 2.419358025
1.59375 2.518518519
1.5 2.37037037
1.75 2.765432099
2 3.160493827
2.5 3.950617284
2.5625 4.049382716
3.125 4.938271605
3.125 4.938271605
3.75 5.925925926
4.5625 7.209876543
4.875 7.703703704
3.625 5.728395062
Notes to Performance Graph:
A. Information concerning the NASDAQ index and comparative industry index
were provided by the Center for Research in Security Prices.
B. Information concerning the Company's stock price from December 1994 to
March 1999 is based on unofficial month-end pricing obtained by the
Company from over-the-counter sources, including internet stock-price
services. Information on stock prices after March 1999 was provided by the
OTC Bulletin Board system.
C. The lines for the NASDAQ and comparative industry indices represent
monthly index levels derived from compounded daily returns that include
all dividends.
D. The indices are reweighted daily, using the market capitalization on the
previous trading day.
E. If the monthly interval for the indices, based on the fiscal year-end, is
not a trading day, the preceding trading day is used. The index levels for
all series were set to $100.00 on 12/25/94.
F. Produced on 4/14/99 including data to 12/25/1999.
11
<PAGE>
There can be no assurance that the Company's stock performance will
continue into the future with the same or similar trends depicted in the graph
above. The Company will neither make nor endorse any predictions as to future
stock performance.
The Stock Price Performance Graph above shall not be deemed incorporated
by reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act or the Exchange Act, except
to the extent that the Company specifically incorporates this information by
reference and shall not otherwise be deemed filed under such Act.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In July 1996, the Board of Directors contracted with a turnaround
management company, S. Gidumal & Company, Inc., and its affiliate, Strategic
Turnarounds & Investment Corp. (collectively "STIC"), to assist with the
restructuring of the Company, including operations, financing, litigation,
strategic planning and divestitures. Mr. Shyam Gidumal is a principal with STIC
and in September 1996 became a member of the Board of Directors of ACPI and
other subsidiaries of ACPI. In November, 1997, Mr. Gidumal became a member of
the Board of Directors of the Company and was elected President of the Company.
Mr. Gidumal resigned as president of the Company effective February, 1999. STIC
was involved in the resolution of certain class action litigation involving the
Company, sale of the assets of the FSPI subsidiary, financing transactions
involving the Company's ACPI and Alabaster subsidiaries, the sale of the key and
numbers, letters and signs business of ACPI and restructuring of the Company's
operations. STIC received payments for its services in the approximate amounts
of $184,420, $101,000 and $1,035,000, respectively, during fiscal years 1999,
1998 and 1997.
James F. Sanders, corporate secretary of the Company, provides general
counsel services to the Company. During fiscal year 1999, Mr. Sanders was paid
$75,027 in payment for legal services and reimbursement of related costs and
expenses. Mr. Sanders also is employed by Apex Oil Company, Inc., a company
controlled by P.A. Novelly, a director of the Company.
The Company reimburses or pays costs and expenses incurred by Ginarra
Holdings, Inc., a company affiliated with Mr. Graziadio, in connection with Mr.
Graziadio's execution of his duties as chief executive officer of the Company.
These costs include clerical and administrative support, travel and
entertainment expenses, and certain direct overhead costs including, but not
limited to, postage, communication charges and office supplies. Payments to
Ginarra for such costs and expenses in fiscal years 1999, 1998 and 1997 were
$102,338, $55,000 and $38,618, respectively.
12
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth, as of March 31, 2000, certain information
regarding the beneficial ownership of Common Stock by (i) each person known by
the Company to be beneficial owner of more than five percent of the outstanding
shares of Common Stock, (ii) each director; (iii) each named Executive Officer;
and (iv) all directors and executive officers as a group.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Name and Address of Beneficial Owner (1) Common Stock Beneficially Owned
- ------------------------------------------------------------------------------------
No. of Shares % of Class
====================================================================================
<S> <C> <C>
Ginarra Holdings, Inc. (2) 247,098 12.8%
2325 Palos Verdes Drive West, Suite 211
Palos Verdes Estates, CA 90274
- ------------------------------------------------------------------------------------
G. Louis Graziadio, III (3) 147,000 7.5%
2325 Palos Verdes Drive West, Suite 211
Palos Verdes Estates, CA 90274
- ------------------------------------------------------------------------------------
Mr. Perry A. Lerner (4) 33,000 1.7%
660 Madison Ave., New York, NY 10022
- ------------------------------------------------------------------------------------
Mr. Lee E. Mikles (4) 91,283 4.7%
1801 Century Park East, Suite 460
Los Angeles, CA 90067
- ------------------------------------------------------------------------------------
Mr. Paul A. Novelly (4) (5) 12,000 *
8182 Maryland Ave., St. Louis, MO 63105
- ------------------------------------------------------------------------------------
Mr. Richard D. Squires (4) 91,283 4.7%
4229 Cochran Chapel, Dallas, TX 75209
- ------------------------------------------------------------------------------------
Mr. Shyam H. Gidumal (4) 166,283 8.5%
660 Madison Ave., New York, NY 10022
- ------------------------------------------------------------------------------------
Mr. J. Bruce Lancaster (6) 7,600 *
221 W. First St., Kewanee, IL 61443
- ------------------------------------------------------------------------------------
All Directors and Executive Officers as a 548,449 27.0%
Group (7 Persons, excludes Ginarra Holdings)
- ------------------------------------------------------------------------------------
</TABLE>
- ----------
(1) Unless otherwise noted, the Company believes that all persons named in the
table have sole voting and investment power with respect to all shares of
common stock beneficially owned by them. Under the rules of the Securities
and Exchange Commission, a person is deemed to be a "beneficial" owner of
securities if he or she has or shares the power to vote or direct the
voting of such securities or the power to direct the disposition of such
securities. More than one person may be deemed to be a beneficial owner of
the same securities.
13
<PAGE>
(2) Mr. Graziadio has sole voting and investment power over these shares in
his capacity as president of Ginarra Holdings, Inc., but he disclaims any
pecuniary interest.
(3) Includes 30,000 shares subject to options granted under the Company's 1998
Non-Employee Director Stock Option Plan ("1998 Director Plan"). Does not
include 247,098 shares held by Ginarra Holdings, Inc., as to which Mr.
Graziadio has sole voting and investment power, but disclaims any
pecuniary interest. Mr. Graziadio disclaims beneficial ownership of all
shares owned by Ginarra Holdings. Does not include 52,453 shares (2.7% of
shares outstanding) which are owned by Graziadio Family Trust, a trust
established by Mr. Graziadio, but as to which he is neither a trustee nor
a beneficiary. Mr. Graziadio disclaims beneficial ownership of all shares
owned by Graziadio Family Trust.
(4) Includes 12,000 shares subject to options granted under the Company's 1998
Director Plan.
(5) Does not include 87,283 shares (4.5% of shares outstanding), which are
owned by Novelly Exempt Trust, an irrevocable trust established by Mr.
Novelly, but as to which he is not a trustee and does not have the right
to name or replace the trustee. Mr. Novelly disclaims beneficial ownership
of the shares owned by Novelly Exempt Trust.
(6) Includes 5,000 shares subject to options granted under the Company's 1998
Incentive Stock Option Plan.
* Number of shares owned is less than 1% of shares outstanding.
PROPOSAL NO. 2
AMENDMENT OF THE COMPANY'S CERTIFICATE OF INCORPORATION TO REDUCE THE
NUMBER OF AUTHORIZED SHARES OF THE COMPANY'S COMMON STOCK, PAR VALUE
$0.25 PER SHARE, FROM 50,000,000 TO 10,000,000.
The Company's Certificate of Incorporation currently authorizes 50,000,000
shares of the Company's common stock, par value $.25 per share. On April 6,
2000, the Board of Directors approved and adopted, subject to approval by the
shareholders, an amendment of the Company's Certificate of Incorporation to
reduce the number of authorized shares of common stock to 10,000,000 shares. By
reducing the number of authorized but unissued shares in this fashion, the
Company will be able to realize a reduction of approximately $130,000 in annual
franchise taxes payable to the State of Delaware. As of April 6, 2000, the
Company had less than 2,000,000 common shares outstanding and the Board believes
that reducing the number of authorized common shares to 10,000,000 still leaves
the Company sufficient flexibility for future corporate needs.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT OF THE
CERTIFICATE OF INCORPORATION TO REDUCE THE NUMBER OF AUTHORIZED
SHARES OF COMMON STOCK FROM 50,000,000 TO 10,000,000.
PROPOSAL NO. 3
AMENDMENT OF THE COMPANY'S 1998 INCENTIVE STOCK OPTION PLAN TO INCREASE
THE NUMBER OF SHARES OF COMMON STOCK RESERVED FOR ISSUANCE UNDER THE PLAN
FROM 210,000 TO 285,000.
At the Company's 1998 annual meeting of shareholders, the shareholders
approved adoption of the Company's 1998 Incentive Stock Option Plan ("1998
Employee Plan") and reserved 210,000 shares
14
<PAGE>
of the Company's common stock for issuance under the plan. Options under the
1998 Employee Plan are available for issuance to the Company's employees,
advisors and consultants. The Board believes that the 1998 Employee Plan fosters
good employee relations, encourages and enables employees to acquire an equity
interest in the Company, helps align employee interests with those of the
shareholders, and helps the Company to attract, retain and motivate valuable
employees. On April 6, 2000, the Board of Directors approved an amendment to the
1998 Employee Plan, subject to approval of the shareholders, to increase the
total number of shares of common stock reserved for issuance by 75,000 shares,
thereby increasing the total shares reserved for issuance under the plan from
210,000 to 285,000. As of April 6, 2000, the Company had issued options covering
a total of 137,000 common shares. The currently outstanding options to employees
were issued during calendar year 1999 and generally vest ratably over a three
year period. Although there are no current proposals to issue more options to
employees, the Board believes that the recommended increase in the number of
shares reserved under the 1998 Employee Plan is appropriate to allow the Company
to continue to attract, reward and motivate valuable employees and other key
persons as the Company moves forward without adopting an entire new plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT OF THE
1998 EMPLOYEE PLAN TO INCREASE THE NUMBER OF SHARES RESERVED FOR
ISSUANCE UNDER THE PLAN FROM 210,000 TO 285,000.
PROPOSAL NO. 4
AMENDMENT OF THE COMPANY'S 1998 INCENTIVE STOCK OPTION PLAN TO PROVIDE FOR
ACCELERATED VESTING OF OPTIONS ISSUED UNDER THE PLAN UPON THE OCCURRENCE
OF CERTAIN CORPORATE TRANSACTIONS.
The Company's 1998 Incentive Stock Option Plan ("1998 Employee Plan") was
adopted and approved by the shareholders at the Company's 1998 annual meeting
and provides for issuance of options for purchase of the Company's common stock
to employees, advisors and consultants. At the same time, the shareholders
adopted and approved the Company's 1998 Non-Employee Director Stock Option Plan
("1998 Director Plan") for issuance of options to the Company's non-employee
directors. The 1998 Director Plan contains an appropriate provision for the
acceleration of vesting of unexercised options upon the occurrence of certain
corporate transactions, including specified changes in control of the Company. A
copy of Section 8 of the 1998 Director Plan is attached as Exhibit A to this
Proxy Statement. Generally this provision accelerates the vesting of options in
the event of a merger, consolidation, liquidation, or sale of all or
substantially all assets of the Company in which the shareholders of the Company
prior to the transaction cease to own at least 51% of the voting stock of the
Company after the transaction, or a merger, consolidation or reorganization in
which the surviving entity does not assume the obligation of the Company under
the plan. The 1998 Employee Plan, however, does not include such a provision for
the protection of employee option holders. The Board of Directors believes that
it is in the best interest of the Company to amend the 1998 Employee Plan to
extend to holders of options under such plan the same protections afforded to
non-employee directors under the 1998 Director Plan. The Company believes such
protections are commonplace for industrial companies, especially in view of
market volatility and the increased level of merger and acquisition activity
involving public companies during recent years. The proposed change will enhance
the value of options granted to the Company's employees and provide some
assurance as to the value of the employee options upon the occurrence of the
specified corporate transactions. To implement this change, a new Section 20
will be added to the 1998 Employee Plan in the form of Exhibit B attached to
this Proxy Statement. This new section tracks the language of the existing
Section 8(b) of the 1998 Director Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT OF THE
1998 EMPLOYEE PLAN TO PROVIDE FOR ACCELERATED VESTING OF
15
<PAGE>
UNEXERCISED OPTIONS ISSUED UNDER THE PLAN UPON THE OCCURRENCE OF
CERTAIN CORPORATE TRANSACTIONS.
PROPOSAL NO. 5
AMENDMENT OF THE COMPANY'S 1998 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN TO
INCREASE THE NUMBER OF SHARES OF COMMON STOCK RESERVED FOR ISSUANCE UNDER
THE PLAN FROM 90,000 TO 140,000.
At the Company's 1998 annual meeting of shareholders, the shareholders
approved adoption of the Company's 1998 Non-Employee Director Stock Option Plan
("1998 Director Plan") and reserved 90,000 shares of the Company's common stock
for issuance under the plan. Options under the 1998 Director Plan are available
for issuance to the Company's directors who are not employees of the Company or
any of its subsidiaries. The Board believes that the 1998 Director Plan fosters
the ability of the Company to attract and retain qualified and experienced
directors and helps align director interests with those of the other
shareholders. On April 6, 2000, the Board of Directors approved an amendment to
the 1998 Director Plan, subject to approval of the shareholders, to increase the
total number of shares of common stock reserved for issuance by 50,000 shares,
thereby increasing the total shares reserved for issuance under the plan from
90,000 to 14,000. As of April 6, 2000, the Company had issued options covering
all 90,000 common shares originally reserved under the plan. The currently
outstanding options to non-employee directors were issued during calendar year
1999 and all have fully vested. Although there are no current proposals to issue
more options to directors, the Board believes that the recommended increase in
the number of shares reserved under the 1998 Director Plan is appropriate to
allow the Company to continue to attract and retain qualified and experienced
directors as the Company moves forward without adopting an entire new plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT OF THE
1998 DIRECTOR PLAN TO INCREASE THE NUMBER OF SHARES RESERVED FOR
ISSUANCE UNDER THE PLAN FROM 90,000 TO 140,000.
PROPOSAL NO. 6
APPOINTMENT OF GRANT THORNTON LLP AS THE COMPANY'S INDEPENDENT AUDITORS
FOR THE FISCAL YEAR ENDING DECEMBER 30, 2000.
The firm of Grant Thornton LLP, Certified Public Accountant, served as the
independent auditors of the Company for Fiscal 1999, and the Board of Directors
recommends the appointment of Grant Thornton LLP as the Company's independent
auditors for the fiscal year ending December 30, 2000. This recommendation will
be presented to the stockholders for their approval at the Meeting. The Board of
Directors recommends a vote in favor of the proposal to ratify this selection,
and the persons named in the enclosed proxy (unless otherwise instructed
therein) will vote such proxies FOR such proposal. If the stockholders do not
approve this selection, the Board will consider other firms for this engagement.
The Company has not yet formally engaged Grant Thornton LLP for these services
and the actual engagement will be dependent upon reaching a satisfactory
agreement with the accounting firm on all terms, including the fees to be
charged.
The Company has been advised by Grant Thornton LLP that a representative
may be present at the Meeting and, if present, will be available to respond to
appropriate questions. In addition, the Company would provide such
representative an opportunity to make any statements if he should so desire.
16
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPOINTMENT OF
GRANT THORNTON LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE
FISCAL YEAR ENDING DECEMBER 30, 2000.
AUDIT COMMITTEE REPORT
The audit committee of the Board of Directors has reviewed and discussed
the audited financial statements with management, has discussed the financial
statements and related matters with the Company's independent auditors, and has
received required written disclosures from the independent auditors and
discussed with them their independence. Based on such review and discussions,
the audit committee recommended to the Board of Directors that the audited
financial statements be included in the Company's Annual Report on Form 10-K for
Fiscal 1999.
Audit Committee Members: Richard D. Squires Lee E. Mikles
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the Company's 2001
Annual Meeting of Stockholders must be received in writing by the Company at its
principal executive offices no later than December 29, 2000 in order to be
included in the Company's Proxy Statement and form of proxy relating to that
meeting.
FORM 10-K
THE COMPANY, UPON WRITTEN REQUEST, WILL PROVIDE WITHOUT CHARGE TO EACH
STOCKHOLDER A COPY OF ITS ANNUAL REPORT ON FORM 10-K FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION FOR THE FISCAL YEAR ENDED DECEMBER 25, 1999. REQUESTS
SHOULD BE DIRECTED TO:
Bruce Lancaster
Executive Vice President
Boss Holdings, Inc.
221 W. First Street
Kewanee, IL 61443
OTHER BUSINESS
The Board does not intend to bring any other business before the Meeting,
and, so far as is known to the Board, no matters are to be brought before the
Meeting except as specified in the notice of the Meeting. As to any business
that may properly come before the Meeting, however, it is intended that proxies,
in the form enclosed, will be voted in respect thereof in accordance with the
judgment of the persons voting such proxies.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN
AND PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE
SO THAT YOUR SHARES WILL BE REPRESENTED AT THE MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
James F. Sanders,
Corporate Secretary
Dated: May 4, 2000
17
<PAGE>
Exhibit A
EXISTING ACCELERATED VESTING PROVISIONS OF COMPANY'S
1998 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
8. Vesting Schedule
(a) Shares subject to an Option shall vest in accordance with the vesting
schedule and vesting terms and conditions established by the Compensation
Committee.
(b) Notwithstanding the foregoing, Shares subject to an Option shall vest as to
all Shares then subject to the Option upon the occurrence of any of the
following events:
(i) a transaction (or series of transactions occurring within a 60-day
period or pursuant to a plan approved by the Board or shareholders of the
Company) occurs that has the result that stockholders of the Company immediately
before such transaction cease to own directly or indirectly at least 51% of the
voting stock of the Company or of any entity that results from the participation
of the Company in a reorganization, consolidation, merger, liquidation or any
other form of corporate transaction;
(ii) all or substantially all of the assets of the Company shall be sold
or otherwise disposed of, except that an Option shall not vest as to all Shares
then subject to such Option if, after such sale or disposition: (i) the
shareholders of the Company immediately prior to such transaction continue to
own at least 51% of the voting stock of the entities that acquired 50% or more
in value of the assets of the Company so sold or conveyed; and (ii) the
acquiring entity agrees to assume the obligations of the Company under this
Agreement; or
(iii) the occurrence of a merger, consolidation or other reorganization of
the Company under the terms of which the surviving entity does not assume the
obligations of the Company under this Agreement.
Exhibit B
PROPOSED ACCELERATED VESTING PROVISIONS FOR
COMPANY'S 1998 INCENTIVE STOCK OPTION PLAN
20. Accelerated Vesting Schedule
Notwithstanding the foregoing, Shares subject to an Option shall vest as to all
Shares then subject to the Option upon the occurrence of any of the following
events:
(i) a transaction (or series of transactions occurring within a 60-day period or
pursuant to a plan approved by the Board or shareholders of the Company) occurs
that has the result that stockholders of the Company immediately before such
transaction cease to own directly or indirectly at least 51% of the voting stock
of the Company or of any entity that results from the participation of the
Company in a reorganization, consolidation, merger, liquidation or any other
form of corporate transaction;
(ii) all or substantially all of the assets of the Company shall be sold or
otherwise disposed of, except that an Option shall not vest as to all Shares
then subject to such Option if, after such sale or disposition: (a) the
shareholders of the Company immediately prior to such transaction continue to
own at least 51% of the voting stock of the entities that acquired 50% or more
in value of the assets of the Company so sold or conveyed; and (b) the acquiring
entity agrees to assume the obligations of the Company under this Agreement; or
(iii) the occurrence of a merger, consolidation or other reorganization of the
Company under the terms of which the surviving entity does not assume the
obligations of the Company under this Agreement.
<PAGE>
BOSS HOLDINGS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTOS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby constitutes and appoints G. Louis Graziadio, III
and James F. Sanders, and each of them, his or her true and lawful agent and
proxy with full power of substitution in each, to represent and to vote on
behalf of the undersigned all of the shares of common stock of Boss Holdings,
Inc., a Delaware corporation (the "Company"), which the undersigned is entitled
to vote at the Annual Meeting of Stockholders of the Company to be held at the
Board Room of Union Planters Bank N.A., 8182 Maryland Ave., First Floor, St.
Louis, Missouri 63105 at 10:00 A.M. Central Daylight Time, on May 23, 2000, and
at any adjournment or adjournments thereof, upon the following proposals more
fully described in the Notice of Annual Meeting of Stockholders and Proxy
Statement for the Meeting (receipt of which is hereby acknowledged).
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 each of proposals 1, 2, 3, 4, 5, 6, and 7.
1. ELECTION OF DIRECTORS Nominees:
G. Louis Graziadio, III, J. Bruce Lancaster, Perry A. Lerner, Lee Mikles,
Paul A. Novelly, Richard D. Squires
|_| VOTE FOR all the nominees, except |_| VOTE WITHHELD from all nominees
vote withheld from the following nominees (if any) _______________________
2. Approval of proposal to amend the Company's certificate of incorporation
to reduce the number of authorized shares of common stock from 50,000,000
to 10,000,000.
|_| FOR |_| AGAINST |_| ABSTAIN
3. Approval of proposal to amend the Company's 1998 Incentive Stock Option
Plan to increase the number of shares reserved for issuance from 210,000
to 285,000.
|_| FOR |_| AGAINST |_| ABSTAIN
4. Approval of proposal to amend the Company's 1998 Incentive Stock Option
Plan to provide for accelerated vesting of options for employees upon the
occurrence of certain corporate transactions.
|_| FOR |_| AGAINST |_| ABSTAIN
5. Approval of proposal to amend the Company's 1998 Non-Employee Director
Stock Option Plan to increase the number of shares reserved for issuance
from 210,000 to 285,000.
|_| FOR |_| AGAINST |_| ABSTAIN
6. Ratify the appointment of Grant Thornton LLP as independent auditors of
the Company for the fiscal year ending December 30, 2000.
|_| FOR |_| AGAINST |_| ABSTAIN
<PAGE>
7. In his discretion, the proxy is authorized to vote upon other matters as
may properly come before the Meeting.
|_| FOR |_| AGAINST |_| ABSTAIN
Dated_____________________________, 2000
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Signature of Stockholder
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Signature of Additional Stockholder if
held jointly
This proxy must be signed exactly as the
name appears hereon. When shares are held
by joint tenants, both should sign. If the
signer is a corporation, please sign full
corporate name by an authorized officer,
giving full title. If a partnership,
please sign in full partnership name by
authorized person.
PLEASE MARK, SIGN AND RETURN THE PROXY PROMPTLY, USING THE ENCLOSED ENVELOPE.
