<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/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 Section 240.14a-11(c) or Section
240.14a-12
FOODBRANDS AMERICA, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(set forth the amount on which the filing fee is calculated and state how
it was determined):
1) Title of each class of securities to which transaction applies:
N/A
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
N/A
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11
N/A
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
N/A
------------------------------------------------------------------------
5) Total fee paid:
N/A
------------------------------------------------------------------------
/ / 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:
N/A
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
N/A
------------------------------------------------------------------------
3) Filing Party:
N/A
------------------------------------------------------------------------
4) Date Filed:
N/A
------------------------------------------------------------------------
<PAGE>
FOODBRANDS AMERICA, INC.
1601 N.W. EXPRESSWAY, SUITE 1700
OKLAHOMA CITY, OKLAHOMA 73118-1495
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
---------------------
TO BE HELD MAY 21, 1996
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of FOODBRANDS
AMERICA, INC., a Delaware corporation (the "Company"), will be held at the
Conference Center of Ackerman McQueen, 1601 N.W. Expressway, Suite 2100,
Oklahoma City, Oklahoma at 10:00 a.m., Central Daylight Time, on Tuesday, May
21, 1996, for the following purposes:
(1) To elect three members to the Board of Directors, each to serve for a
term of three years; and
(2) To approve certain amendments to the Amended and Restated Certificate of
Incorporation of the Company; and
(3) To approve the Foodbrands America, Inc. Non-Employee Directors' Deferred
Stock Compensation Plan; and
(4) To approve certain amendments to the Foodbrands America, Inc. 1992 Stock
Incentive Plan; and
(5) To approve the Foodbrands America, Inc. Associate Stock Purchase Plan;
and
(6) To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
The Board of Directors of the Company has fixed the close of business on
Monday, April 1, 1996, as the record date for the determination of stockholders
of the Company entitled to notice of and to vote at the Annual Meeting and at
any adjournments thereof. Only holders of record on such date will be entitled
to vote at the Annual Meeting. A copy of the Proxy Statement relating to the
Annual Meeting, a Form of Proxy and the Company's 1995 Annual Report to
Stockholders accompany this Notice.
MANAGEMENT INVITES THE STOCKHOLDERS TO BE REPRESENTED AT THE MEETING IN
PERSON OR BY PROXY. IF YOU DO NOT EXPECT TO BE PRESENT AND VOTE IN PERSON,
PLEASE SIGN AND DATE THE ENCLOSED PROXY AND MAIL IT AT ONCE IN THE ENCLOSED
SELF-ADDRESSED ENVELOPE. STOCKHOLDERS WHO ATTEND THE MEETING IN PERSON MAY
REVOKE THEIR PROXIES AND VOTE IN PERSON IF THEY DESIRE. NO POSTAGE IS REQUIRED
IF MAILED WITHIN THE UNITED STATES.
By Order of the Board of Directors,
Bryant P. Bynum
CORPORATE SECRETARY
Dated: Oklahoma City, Oklahoma
April 4, 1996
<PAGE>
FOODBRANDS AMERICA, INC.
1601 N.W. EXPRESSWAY, SUITE 1700
OKLAHOMA CITY, OKLAHOMA 73118-1495
------------------------
PROXY STATEMENT
---------------------
ANNUAL MEETING OF STOCKHOLDERS
---------------------
TO BE HELD MAY 21, 1996
GENERAL INFORMATION
INTRODUCTION. This Proxy Statement is furnished in connection with the
solicitation of proxies by and on behalf of the Board of Directors of Foodbrands
America, Inc., a Delaware corporation (the "Company"), for use in connection
with the 1996 Annual Meeting of the holders of the common stock, par value $.01
per share (the "Common Stock"), of the Company to be held on May 21, 1996, and
at any adjournment thereof (the "Annual Meeting"), at 10:00 a.m., Central
Daylight Time, at the Conference Center of Ackerman McQueen, 1601 N.W.
Expressway, Suite 2100, Oklahoma City, Oklahoma 73118, and, together with the
enclosed form of proxy, is being mailed to stockholders of the Company on or
about April 4, 1996.
REVOCATION OF PROXIES. Any stockholder who executes and delivers a proxy
may unconditionally revoke it at any time prior to its use either in person at
the Annual Meeting by delivering a duly executed proxy bearing a later date or
by giving written notice of revocation to Bryant P. Bynum, Corporate Secretary
of the Company, at 1601 N.W. Expressway, Suite 1700, Oklahoma City, Oklahoma
73118-1495, prior to the Annual Meeting or by voting in person at the Annual
Meeting.
QUORUM AND VOTING. As of April 1, 1996, the record date for the
determination of stockholders entitled to vote at the Annual Meeting (the
"Record Date"), the Company had outstanding shares of Common Stock. The
holder of each share of Common Stock outstanding as of the Record Date is
entitled to one vote and there is no right to cumulative voting. The presence,
in person or by proxy, of the holders of a majority of the issued and
outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum to transact business. If a quorum is not
present in person or by proxy at the Annual Meeting, the stockholders that are
present in person or by proxy who are entitled to vote at the Annual Meeting
may, by majority vote, adjourn the Annual Meeting from time to time without
notice or other announcement until a quorum is present. Assuming that a quorum
of the shares of Common Stock is present in person or by proxy at the Annual
Meeting, then (i) the election of the nominees to the Board of Directors will be
by plurality vote of the holders of the shares of Common Stock voting thereon in
person or by proxy at the Annual Meeting, (ii) the proposed amendment to the
Certificate of Incorporation must be approved by a majority of the shares
entitled to vote, and (iii) the approval of all other matters to be acted on by
the stockholders will be by a majority vote of the holders of the shares of
Common Stock present in person or by proxy at the Annual Meeting.
All shares of Common Stock represented by properly executed proxies returned
to the Company will be voted at the Annual Meeting. Neither the corporate law of
the State of Delaware, the Company's state of incorporation, nor the Company's
certificate of incorporation or bylaws has any specific provisions regarding the
treatment of abstentions and broker non-votes. Votes submitted as abstentions on
matters to be voted on at the Annual Meeting will be counted as votes against
such matters. Broker non-votes will not count for or against the election of
directors and will be counted as votes against the other matters to be voted on
at the Annual Meeting. In each case in which a stockholder has appropriately
specified how the proxy is to be voted, it will be voted in accordance with the
specification so made. ABSENT SUCH SPECIFICATION BY
<PAGE>
A STOCKHOLDER, EACH SIGNED AND RETURNED PROXY WILL BE VOTED IN FAVOR OF THE
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS STATED HEREIN AND IN ACCORDANCE
WITH THE RECOMMENDATION OF THE BOARD OF DIRECTORS FOR ALL OTHER MATTERS. As to
any other matter of business that may be brought before the Annual Meeting, a
vote may be cast pursuant to the accompanying proxy in accordance with the
judgment of the person or persons voting the same; however, the Board of
Directors does not know of any such other matter of business.
ALL STOCKHOLDERS ARE URGED TO FILL IN, DATE, EXECUTE AND RETURN THE FORM OF
PROXY SENT TO THEM WITH THIS PROXY STATEMENT.
DIRECTORS
The Company's Amended and Restated Certificate of Incorporation (the
"Certificate of Incorporation") provides that the directors of the Company (the
"Directors") be divided into three classes, as nearly equal in number as
possible, with approximately one-third of the Board of Directors to be elected
at each annual meeting of stockholders to hold office for a term expiring at the
third annual meeting of stockholders after their election. Pursuant to the
Certificate of Incorporation and applicable law, the current Board of Directors
of the Company is comprised of the following persons, listed by classification
of the year in which their current terms of office expire:
<TABLE>
<CAPTION>
1996 1997 1998
- ------------------- ------------------------ --------------------------
<S> <C> <C>
Richard T. Berg Theodore Ammon R. Randolph Devening
Peter A. Joseph Dort A. Cameron III Paul S. Levy
Paul W. Marshall Terry M. Grimm Angus C. Littlejohn, Jr.
</TABLE>
Pursuant to that certain Stock Purchase Agreement (the "JLL Agreement")
dated February 16, 1993, between the Company and Joseph Littlejohn & Levy Fund,
L.P. ("JLL"), on March 22, 1993, JLL purchased two million newly-issued shares
of Common Stock at $15.00 per share. As of the date of this Proxy Statement,
JLL's ownership constitutes % of the outstanding shares of Common Stock. See
"Security Ownership of Certain Beneficial Owners and Management". Pursuant to
the terms of the JLL Agreement, JLL is entitled to designate for nomination to
the Company's Board of Directors (the "JLL Designees") one less than the number
of persons that would constitute a majority of the members of the Company's
Board of Directors and the Company agreed to nominate and use its best efforts
to cause the JLL Designees to be elected to the Company's Board of Directors.
The number of JLL Designees will be reduced as JLL's stock holdings decrease.
Further, pursuant to the JLL Agreement, for so long as JLL is entitled to
nominate a JLL Designee, the Company agrees to nominate and use its best efforts
to cause to be elected to the Company's Board of Directors one individual who is
not affiliated either with the Company or with JLL (the "Independent Director")
mutually acceptable to both a majority of the Directors who are JLL Designees
and a majority of the Directors who are not JLL Designees.
Pursuant to the terms of the JLL Agreement, the Company entered into a
Stockholders Agreement dated March 22, 1993 (the "Airlie Agreement") with The
Airlie Group L.P. ("Airlie") pursuant to which, among other things, Airlie has
the right, for so long as it owns more than 5% of the Outstanding Shares (as
defined in the Airlie Agreement), to nominate one person for election to the
Board of Directors of the Company provided that such person is mutually
acceptable to both a majority of the Directors who are JLL Designees and a
majority of the Directors who are not JLL Designees (the "Airlie Designee"). The
Director who is the Airlie Designee shall be the Independent Director, so long
as there is a Director who is the Airlie Designee.
JLL and Airlie each separately have agreed to vote all voting securities
held by them in favor of persons nominated by the Company in accordance with the
JLL Agreement and the Airlie Agreement, respectively. JLL shall have the right
to fill vacancies created if a Director who is a JLL Designee shall resign, die,
or is removed, or declines to stand for re-election or is not renominated for
re-election (a "Vacancy"). Any Vacancy involving the Director who is the Airlie
Designee shall be filled with another Airlie Designee. The Directors who are not
JLL Designees shall have the right to fill any Vacancy involving a Director who
is not a
2
<PAGE>
JLL Designee, except that any Vacancy involving the Independent Director (if he
or she is not the Airlie Designee) shall be filled by a person mutually
acceptable to both a majority of the Directors who are JLL Designees and a
majority of the Directors who are not JLL Designees.
The JLL Agreement and the Airlie Agreement each include certain restrictions
on the ability of JLL and Airlie, respectively, among other things, to resell or
otherwise transfer securities of the Company or to purchase additional
securities of the Company and grant certain demand and piggyback registration
rights to each of JLL and Airlie.
Pursuant to the terms of the JLL Agreement, the existing JLL Designees on
the Company's Board of Directors are Messrs. Ammon, Joseph, Levy and Littlejohn.
Pursuant to the terms of the Airlie Agreement, the existing Airlie Designee and
the Independent Director is Mr. Cameron. The Directors who are neither a JLL
Designee nor an Airlie Designee are Messrs. Berg, Devening, Grimm and Marshall.
Yvonne V. Cliff, a Director who was a JLL Designee, resigned in October
1995. The Board of Directors elected Peter A. Joseph, a JLL Designee, who
resigned in March 1995, to fill this vacancy until the remaining term expires in
1996.
DIRECTORS WHOSE TERMS EXPIRE IN 1996
Messrs. Berg, Joseph and Marshall, whose terms expire in 1996, have been
renominated for election to the Board of Directors. See "PROPOSAL I. ELECTION OF
DIRECTORS". The following table sets forth information with respect to these
nominees.
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
- ----------------------- ------------------------------------------------------------------ ------------------
<S> <C> <C>
Richard T. Berg (1) Director of the Company October 1991
Age 70
Peter A. Joseph (2) General Partner, JLL Associates December 1995
Age 43
Paul W. Marshall (3) Chairman and Chief Executive Officer of Rochester Shoe Tree October 1991
Age 54 Company
</TABLE>
- ------------------------
(1) Mr. Berg has been a Director of the Company since October 1991. From
September 1990 to October 1991, Mr. Berg served as an employee of a
subsidiary of the Company and from October 1991 to December 1992 served as a
consultant to a subsidiary of the Company. Mr. Berg was retired from October
1988 to September 1990. Mr. Berg was a Director of Wilson Foods Corporation
from July 1981 to October 1988 and President and Chief Operating Officer of
Wilson Foods Corporation from November 1985 to October 1988.
(2) Mr. Joseph has been a partner of JLL and its predecessors since July 1987.
Mr. Joseph serves on the Board of Directors of OrNda HealthCorp., Lancer
Industries Inc. and Motor Wheel Corporation.
(3) Mr. Marshall is currently and has been Chairman and Chief Executive Officer
of the Rochester Shoe Tree Company, a shoe tree manufacturing company, since
October 1991. Mr. Marshall was an adjunct professor of the Harvard Graduate
School of Business Administration from July 1989 through February 1992. He
also was Chairman of Industrial Economics, Incorporated, a consulting firm,
from 1989 to 1991. He was also a Member of the Lexington Board of Selectmen
from 1984 to 1993. Prior to that time, he was President of Marshall Bartlett
Incorporated from 1981 to 1989. He currently serves on the Board of
Directors of Applied Extrusion Technologies, Inc. and Raymond James
Financial, Inc.
3
<PAGE>
CONTINUING DIRECTORS
The following table sets forth information with respect to the Directors
whose current terms expire in 1997 or 1998.
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
- ------------------------------ ------------------------------------------------------------- ---------------
<S> <C> <C>
Theodore Ammon (1) Chairman and Chief Executive Officer, Big Flower Press March 1993
Age 46 Holdings, Inc.
Dort A. Cameron III (2) General Partner, EBD L.P., a General Partner of The Airlie May 1992
Age 51 Group L.P.
R. Randolph Devening (3) Chairman, President and Chief Executive Officer August 1994
Age 54
Terry M. Grimm (4) Partner in the law firm of Winston & Strawn October 1991
Age 54
Paul S. Levy (5) General Partner, JLL Associates March 1993
Age 48
Angus C. Littlejohn, Jr. (6) General Partner, JLL Associates March 1993
Age 45
</TABLE>
- ------------------------
(1) Mr. Ammon has been Chairman of the Board and Chief Executive Officer of Big
Flower Press Holdings, Inc. since its inception in 1993. Mr. Ammon has also
been the Chairman of the Board of Treasure Chest since 1993. Mr. Ammon was a
General Partner of Kohlberg Kravis Roberts & Co. (a New York and San
Francisco-based investment firm) from 1990 to 1992, and an executive of such
firm prior to 1990. Mr. Ammon is also a member of the Board of Directors of
Host Marriott Corporation, Samsonite Corporation and Culligan Water
Technologies, Inc. In addition, Mr. Ammon serves on the Board of Directors
of the New York YMCA and on the Board of Trustees of Bucknell University.
(2) Mr. Cameron has been the general partner of EBD, L.P., the general partner
of The Airlie Group L.P., a manager of private investment funds, since
October 1988. Mr. Cameron has also been the general partner of BMA Limited
Partnership, the general partner of Investment Limited Partnership, since
July 1984. Mr. Cameron currently serves as Chairman of the Board of Entex
Information Services, Inc. and as a member of the Board of Directors of
Perkins Management Company, Inc., which is a general partner of Perkins
Family Restaurants, L.P.
(3) Mr. Devening has been Chairman, President and Chief Executive Officer of the
Company since August 1994. From May 1993 to July 1994, Mr. Devening was Vice
Chairman and Chief Financial Officer of Fleming Companies, Inc., which is
the second largest food marketing and distribution company in the United
States and one of the Company's largest customers. From June 1989 to April
1993, Mr. Devening was Executive Vice President and Chief Financial Officer
and from February 1990 to July 1994, a director of Fleming. He currently
serves as a member of the Board of Directors of Arkwright Mutual Insurance
Company, Del Monte Corporation, Hancock Fabrics, Inc. and Autocraft
Industries, Inc.
(4) Mr. Grimm has been a partner with the law firm of Winston & Strawn for more
than five years and is a member of that firm's Executive Committee and
Litigation Committee.
(5) Mr. Levy has been a partner of JLL and its predecessors since May 1988. Mr.
Levy currently serves as Chairman of the Board of Directors of Lancer
Industries Inc. and as a member of the Board of Directors of OrNda
HealthCorp. and Motor Wheel Corporation.
(6) Mr. Littlejohn has been a partner of JLL and its predecessors since July
1987. Mr. Littlejohn serves on the Board of Directors of OrNda HealthCorp.,
Lancer Industries Inc. and Motor Wheel Corporation.
4
<PAGE>
MEETINGS OF BOARD OF DIRECTORS AND COMMITTEES
During the Company's fiscal year ended December 30, 1995 ("Fiscal 1995"),
the Board of Directors of the Company held four regular meetings and one special
meeting.
Directors who are not employees of the Company or its subsidiaries each
receive from the Company $20,000 per year (prorated for partial years) for
serving on the Board of Directors, plus expenses, $750 for each Board meeting
attended and $500 for each committee meeting attended. In April 1995, the Board
of Directors also granted to each non-employee director, other than the JLL
Designees, options to purchase 5,000 shares of Common Stock. The options were
granted at fair market value on the date of grant, are currently exercisable and
have a term of 10 years. In addition, Directors who are not employees of the
Company or its subsidiaries and who serve as committee chairmen receive an
additional $2,000 per year.
In April 1995, the Board of Directors adopted the Non-Employee Directors'
Deferred Stock Compensation Plan ("Deferred Stock Plan"). The Deferred Stock
Plan enables members of the Board of Directors who are not employees of the
Company to receive shares of Common Stock in lieu of all or a portion of the
compensation they receive for membership on the Board of Directors and
committees. See "PROPOSAL III. NON-EMPLOYEE DIRECTORS' DEFERRED STOCK
COMPENSATION PLAN".
During Fiscal 1995, all Directors attended more than 75% of the aggregate of
(i) the total number of meetings of the Board of Directors (held during the
period for which they served as Directors of the Company) and (ii) the total
number of meetings held by all committees of the Board of Directors on which
they served, if any (during the periods that each served).
The Board of Directors of the Company has standing Executive, Audit and
Compensation Committees. The Company does not have a standing nominating
committee. The normal duties of such a committee are carried out by the
Executive Committee.
The Executive Committee is responsible for submitting major long-range plans
and policies to the Board of Directors for consideration and approval, and,
subject to certain exceptions, has the full power of the Board. The Executive
Committee also recommends to the Board the names of candidates for election to,
or to fill vacancies on, the Board of Directors. The Committee will consider
qualified candidates recommended by stockholders. The Executive Committee
currently is composed of R. Randolph Devening, Chairman, Richard T. Berg, Dort
A. Cameron III, and Angus C. Littlejohn, Jr. During Fiscal 1995, the Executive
Committee conferred frequently and took action by written consent and held four
meetings.
The Audit Committee is responsible for recommending the selection of
independent auditors, reviewing with the independent auditors the general scope
of their audit services to be performed and the annual results of their audit.
The Audit Committee also reviews (i) reports and recommendations made to the
Committee by the independent auditors and (ii) the Company's system of internal
controls. It also consults with management, as it deems appropriate, on the
results of its reviews. The Audit Committee currently is composed of Paul W.
Marshall, Chairman, Theodore Ammon and Richard T. Berg. Prior to January 1996,
Mr. Angus C. Littlejohn, Jr. was a member of the Audit Committee, however, to
satisfy certain requirements of the New York Stock Exchange, he resigned from
the Audit Committee in January 1996. Mr. Theodore Ammon was appointed to fill
this vacancy. The Audit Committee held two meetings during Fiscal 1995.
The Compensation Committee is responsible for reviewing salaries, bonuses
and other compensation arrangements of all officers of the Company and granting
incentive awards and stock options pursuant to the Company's incentive plans.
The Compensation Committee currently is composed of Terry M. Grimm, Chairman and
Dort A. Cameron III. Ms. Cliff resigned from the Compensation Committee in
October 1995. Her vacancy has not been filled. The Compensation Committee held
three meetings during Fiscal 1995.
5
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
The following is the report of the Compensation Committee of the Company
(the "Committee") on executive compensation for Fiscal 1995.
COMPENSATION PHILOSOPHY. The Committee believes that it is in the best
interests of the stockholders of the Company for the Company to attract,
maintain, and motivate top quality management personnel, especially its
executive officers, by offering and maintaining a competitive compensation
package that exhibits an appropriate relationship between executive pay and the
creation of stockholder value. The general philosophy of the Committee is to
integrate (i) reasonable levels of annual base compensation; (ii) annual cash
bonuses and equity awards based on achievement of short-term corporate and
individual performance goals, such that executive compensation levels will be
higher in years in which performance goals are achieved or exceeded; and (iii)
equity awards, to ensure that management has a continuing stake in the long-term
success of the Company and return of value to its stockholders.
The elements of the Committee's integrated compensation philosophy are
summarized as follows:
BASE COMPENSATION LEVELS. Although the Company must maintain base
compensation levels commensurate with other comparable companies in its industry
with whom the Company competes for management personnel (the "Comparable
Companies", as discussed below), the Committee believes that performance-based
pay elements should be the primary elements in the compensation packages for its
executive officers. Therefore, the Committee believes that, in general, the
Company's base compensation levels are competitive with those of the Comparable
Companies. The Comparable Companies selected by the Company are food industry
companies which have production and marketing strategies similar to those of the
Company, which are similar in size to the Company and which compete for
executives in the same markets as the Company. Management of the Company
compiled the list of Comparable Companies and their compensation information
based upon executive compensation studies of Wyatt Data Services and William L.
Mercer, Incorporated, as well as proxy statement disclosure for companies
meeting the criteria set forth in the preceding sentence. Although the process
of setting base compensation levels often reflects subjective factors such as
leadership, commitment, attitude and motivational effect, the Committee also
considers objective factors such as achievement of performance goals (primarily
profitability of the areas over which the executive has management
responsibility), level of responsibility and prior experience. Although there is
only a slight overlap between the Comparable Companies and those companies
included in the Dow Jones Food Sub-Industry Group (the "Sub-Industry Group"),
see "STOCK PRICE PERFORMANCE GRAPH", the Committee believes that both groups
generally consist of similar companies, but that the Company more closely
competes with the Comparable Companies for executive officers and for employees
than with others in the Sub-Industry Group.
At the beginning of Fiscal 1995, the Committee set base salaries for
executive officers and set the EBITDA targets and individual performance goals
based on total Company profitability, respective business unit profitability and
individual objectives under the "Cash Incentive Plan" (as hereafter defined),
based on the recommendations of the Chief Executive Officer of the Company. The
base salaries were increased over fiscal 1994 amounts between 4.8% and 25.2%.
The increases were not linked directly to any element of the Company's
performance for Fiscal 1995, but instead were linked to individual levels of
responsibilities, performance and contributions.
PERFORMANCE-BASED COMPENSATION. The Company provides executive officers
with the following performance-based compensation programs:
- CASH BONUSES. Annual cash bonuses may be earned under the Company's Key
Management Cash Incentive Plan ("Cash Incentive Plan"), based on the
achievement of Company, division/function, and individual-based
performance goals determined by the Committee at the beginning of each
year. For Fiscal 1995, earnings before interest, taxes, depreciation,
amortization, and extraordinary items (EBITDA) was the primary measure of
Company and division performance, and specific individual
6
<PAGE>
performance goals included matters such as profitability of individual
business activities and measures of plant efficiency. The Company as a
whole has to meet its EBITDA goal before any payments are made under the
Cash Incentive Plan with the exception that if a division meets its EBITDA
goal and the Company does not meet its EBITDA goal, the division president
and other personnel in that division will qualify for a substantially
reduced bonus. For Fiscal 1995, the target bonus could be exceeded (up to
a set maximum) if the target goals were exceeded.
The Company met its goals for Fiscal 1995 under the Cash Incentive Plan.
The Committee granted bonuses under the Cash Incentive Plan in the
aggregate amount of $1,838,356 to certain key employees. Two executive
officers received bonuses totalling $120,000 pursuant to their respective
employment agreements with the Company.
- STOCK OPTIONS. Options may be granted pursuant to the Foodbrands America,
Inc. 1992 Stock Incentive Plan (the "Stock Incentive Plan") at an exercise
price equal to or greater than the fair market value of the shares of
Common Stock on the date of the grant in the case of Incentive Stock
Options (as defined in the Stock Incentive Plan) or at any price in the
case of other options. The value of the options is related directly to the
market price of the Common Stock and, accordingly, to the long-term
performance of the Company. In September 1994, the Company granted options
to Mr. Devening based on negotiations between the Company and Mr.
Devening. Pursuant to such negotiations, Mr. Devening holds 625,593
options (approximately 5% of the shares of outstanding Common Stock),
which vest over a six-year period. Vesting is tied to the achievement by
the Company of specified EBITDA targets. The Committee then approved a
revised approach to granting options proposed by Mr. Devening, pursuant to
which options were granted to the executive officer group on terms similar
to those granted to Mr. Devening and in amounts determined by the
employee's level of responsibility as recommended by Mr. Devening and
reviewed and approved by the Committee. The Committee considers the number
of options already held by an executive when determining whether to grant
additional options. As a result, since September of 1994, all option
grants to executive officers have vesting schedules similar to that
applicable to Mr. Devening's options. An aggregate of 124,814 options were
granted to executive officers in Fiscal 1995.
EQUITY-BASED INCENTIVES. In addition to stock options, pursuant to the
Stock Incentive Plan, the Committee may grant awards of performance shares and
restricted stock to executive officers. The purpose of these awards and stock
options is to create in the Company's management a vested interest in maximizing
the value of the Company's stock and align management's interest in maximizing
stockholder value on a long-term basis with that of all other stockholders. No
performance awards or restricted stock awards were made during Fiscal 1995.
COMPENSATION OF CHIEF EXECUTIVE OFFICER. Pursuant to the terms of his
employment agreement effective August 1, 1994 (the "Devening Agreement"), Mr.
Devening is entitled to an annual salary of not less than $550,000 and a
performance bonus for each fiscal year beginning after December 31, 1994, if the
Company achieves certain financial goals for such year set by the Committee in
consultation with senior management. The performance bonus amount is 100% of Mr.
Devening's base salary for such year, plus additional minimum percentages of
such base salary if the financial goals are exceeded by specified amounts. For
Fiscal 1995, Mr. Devening's bonus was based on the achievement by the Company of
specified EBITDA targets. For Fiscal 1995, Mr. Devening's salary was $550,000
and he received a performance bonus of $550,000 since the specified EBITDA
targets were met. See "Executive Compensation -- Termination of Employment,
Change-In-Control and Other Agreements -- Devening Employment Agreement." The
$550,000 performance bonus earned for Fiscal 1995 will not be recognized for tax
purposes until fiscal 1996. This performance bonus should cause the total
compensation payable to Mr. Devening for fiscal 1996 to exceed the deductible
limit set by Section 162(m) ("Section 162(m)") of the Internal Revenue Code of
1986, as amended (the "Code").
DEDUCTION LIMITATION ON EXECUTIVE COMPENSATION. Section 162(m) limits the
deductibility of certain compensation paid by the Company to its Chief Executive
Officer and certain of its other executive officers. As will be the case in
fiscal 1996, it is possible that circumstances may warrant compensation payments
which
7
<PAGE>
will not qualify as a tax deductible expense. It shall be the policy of the
Committee to compensate executive officers based on performance, and the
Committee recognizes that flexibility with respect to the payment of
compensation must be insured in order to maintain this policy. Accordingly,
although the Committee will to the extent possible attempt to qualify all
compensation payments for deductibility under Section 162(m), circumstances may
arise which require it to authorize compensation which is not deductible under
Section 162(m).
Terry M. Grimm, Chairman
Dort A. Cameron III
STOCK PRICE PERFORMANCE GRAPH
The following line graph compares the yearly percentage change:
(i) in the Company's cumulative Total Stockholder Return (as herein defined)
(the solid line); with
(ii) the cumulative Total Stockholder Return of the Standard & Poor's 500 Stock
Index (the long broken line); and with
(iii) the cumulative Total Stockholder Return of the Dow Jones Food Sub-Industry
Group (the short broken line).
"Total Stockholder Return" is measured by dividing (i) the sum of (A) the
cumulative amount of dividends for measurement period, assuming dividend
reinvestment, and (B) the difference between the share price at the end and the
beginning of the measurement period; by (ii) the share price at the beginning of
the measurement period.
As depicted by the graph, the Company's stock price performance through 1994
underperformed both the Standard & Poor's Stock Index and the Dow Jones Food
Sub-Industry Group. The Company believes the underperformance prior to 1995 was
directly related to significant losses incurred by the Company.
Beginning in mid-1994, the Company has taken a series of steps to eliminate
the losses and to return the Company to profitability. Those steps included
strengthening its management team by naming a new Chief Executive Officer and a
new Chief Financial Officer, sale of the Retail Division and the elimination of
losses associated with its operation, implementing a restructuring and cost
reduction program and completing acquisitions of three businesses which are
expected to improve the Company's profitability. Details of these and other
actions are included in the Company's 1995 annual report.
The Company believes these actions have had a positive impact on the stock
price performance in 1995, which improved approximately 61 percent over the
December 1994 level. This 1995 improvement exceeded both the 1995 improvements
of the Standard & Poor's 500 Stock Index and the Dow Jones Food Sub-Industry
Group. On April 1, 1996, the year-to-date 1996 improvement over the December
1995 level was percent.
8
<PAGE>
The graph illustrates the comparisons set forth in this section for a
measurement period beginning December 30, 1990, and ending December 30, 1995.
[GRAPH]
<TABLE>
<CAPTION>
DEC 90 DEC 91 DEC 92 DEC 93 DEC 94 DEC 95
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
FDB................................. $100 $ 79 $121 $ 89 $ 61 $ 98
S&P 500............................. $100 $130 $140 $155 $157 $215
Dow Jones Food Index................ $100 $144 $145 $134 $146 $188
</TABLE>
9
<PAGE>
EXECUTIVE OFFICERS
The following individuals currently serve as executive officers of the
Company, each of whom has been elected to serve for a term of one year or until
his successor is duly elected and qualified.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------- --- ---------------------------------------------------------------------
<S> <C> <C>
R. Randolph Devening (1) 54 Chairman, Chief Executive Officer & President
Horst O. Sieben (2) 57 Senior Vice President and Chief Financial Officer
Thomas G. McCarley (3) 50 Senior Vice President and President, Food Service Division
Patrick A. O'Ray (4) 43 Senior Vice President and President, Specialty Brands Division
William E. Rosenthal (5) 45 Senior Vice President and President, KPR Foods Division
Raymond J. Haefele (6) 45 Vice President and President, Deli Division
William L. Brady (7) 47 Vice President and Controller
Bryant P. Bynum (8) 33 Vice President -- Finance, Treasurer & Secretary
David J. Clapp (9) 51 Vice President -- Operating Services
Howard S. Katz (10) 45 Vice President and President, Kettle Cooked Foods
Howard C. Madsen (11) 52 Vice President -- Procurement
</TABLE>
- ------------------------
(1) Mr. Devening has been Chairman, President, Chief Executive Officer and a
Director of the Company since August 1994. See "Continuing Directors" for a
description of Mr. Devening's business experience.
(2) Mr. Sieben has been Senior Vice President and Chief Financial Officer of
the Company since October 1994. Prior thereto, Mr. Sieben was Chief
Financial Officer of various companies operated by Lancer Industries, Inc.
for the last six years. Mr. Sieben also acted as a consultant to the Company
during its acquisition of the Specialty Brands Division in 1994. Previously,
Mr. Sieben worked at two public companies, at Nashua Corporation in various
controllership positions and at Gradco Systems, Inc. as Chief Financial
Officer.
(3) Mr. McCarley has been Senior Vice President of the Company since October
1991 and President, Doskocil Food Service Company, L.L.C. since December
1995. Prior thereto, Mr. McCarley was Senior Vice President -- General
Manager of the Food Service Division from June 1993 to December 1995. Mr.
McCarley was Senior Vice President -- General Manager of the Food Service
and Deli Divisions from October 1991 to January 1993. Prior thereto, Mr.
McCarley was Executive Vice President -- Food Service Sales from February
1990 to October 1991 and was Senior Vice President -- Sales and Marketing of
the Company from January 1989 to January 1990. Mr. McCarley was Senior Vice
President of Sara Lee Bakery F.S. Division, a diversified food company, and
of Chef Pierre, a division of Sara Lee Corporation, from January 1988 to
December 1988 and Vice President -- Marketing and Research and Development
of Sara Lee Bakery F.S. Division prior thereto.
(4) Mr. O'Ray has been Senior Vice President of the Company and President,
Doskocil Specialty Brands Company since October 1995. From 1988 to 1995, Mr.
O'Ray was Vice President of the Foodservice Division of American Home
Products with the added responsibility of General Manager of the Foodservice
and International Divisions since 1993.
(5) Mr. Rosenthal has been Senior Vice President of the Company and President,
KPR Foods Division since December 1995. Since 1990, Mr. Rosenthal has been
President of KPR Holdings, L.P. Mr. Rosenthal was President of Standard Meat
Company, a division of Sara Lee Corporation, prior thereto.
(6) Mr. Haefele has been Vice President of the Company since October 1991 and
President, Continental Deli Foods, Inc. since December 1995. Prior thereto
Mr. Haefele was Vice President -- General Manager of the Deli Division from
January 1993 to December 1995. Mr. Haefele was Vice President --
10
<PAGE>
Retail Sales of the Company from October 1991 to January 1993 and Vice
President of Sales of Wilson Brands from October 1989 to October 1991. Prior
to that time, Mr. Haefele was Director and National Sales Manager -- Deli of
Wilson Foods Corporation.
(7) Mr. Brady has been Vice President of the Company since January 1990 and
Controller of the Company since May 1990. Mr. Brady served as Vice President
and Controller of Wilson Foods prior thereto.
(8) Mr. Bynum has been Vice President -- Finance of the Company since February
1993, Treasurer of the Company since January 1994 and Secretary of the
Company since July 1995. Mr. Bynum was Director -- Corporate Planning and
Development from November 1989 to February 1993. Mr. Bynum was a management
consultant at the accounting firm of Coopers & Lybrand prior thereto.
(9) Mr. Clapp has been Vice President -- Operating Services of the Company
since October 1991. Mr. Clapp was Vice President of Operations of Wilson
Brands from October 1989 to September 1991 and was Corporate Director of
Engineering of Wilson Foods prior thereto.
(10) Mr. Katz has been Vice President of the Company since December 1995. Since
1989, Mr. Katz has been President of Kettle Cooked Foods, a division of KPR
Holdings, L.P. Prior thereto, he was Vice President of Sales of Standard
Meat Company, a division of Sara Lee Corporation.
(11) Dr. Madsen has been Vice President -- Procurement of the Company since
February 1994. Dr. Madsen was Vice President of Purchasing at Sara Lee Meat
Group for more than five years prior thereto.
11
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of the Common Stock as of April 1, 1996, with respect to (i) each
person known by the Company to beneficially own in excess of 5% of the
outstanding shares of Common Stock, (ii) each of the Company's Directors, (iii)
each executive officer of the Company listed in the Summary Compensation Table
set forth under the caption "Executive Compensation", except for those who have
resigned, and (iv) all Directors and executive officers as a group. Unless
otherwise indicated, each of the stockholders has sole voting and investment
power with respect to the shares beneficially owned.
<TABLE>
<CAPTION>
AMOUNT PERCENT OF
BENEFICIALLY SHARES
NAME OWNED OUTSTANDING
- ------------------------------------------------------------------------------ ----------- -----------
<S> <C> <C>
Joseph Littlejohn & Levy Fund, L.P. (1)....................................... 5,515,833
450 Lexington Avenue, Suite 3350
New York, NY 10017
The Airlie Group L.P. (2)..................................................... 827,200
115 East Putnam Avenue
Greenwich, CT 06830
R. Randolph Devening (3)...................................................... 183,105
Horst O. Sieben (4)........................................................... 19,617 *
Thomas G. McCarley (5)........................................................ 33,781 *
Raymond J. Haefele (6)........................................................ 18,325 *
David J. Clapp (7)............................................................ 26,114 *
Theodore Ammon (8)............................................................ 10,000 *
Richard T. Berg (8)........................................................... 50,467 *
Dort A. Cameron III (2)(8)(9)................................................. 837,200
Terry M. Grimm (8)............................................................ 10,226 *
Peter A. Joseph (1)(10)....................................................... 5,515,833
Paul S. Levy (1)(10).......................................................... 5,515,833
Angus C. Littlejohn, Jr. (1)(10).............................................. 5,515,833
Paul W. Marshall (8)(11)...................................................... 13,340 *
All directors and executive officers as a group (21 persons).................. 6,762,544
</TABLE>
- ------------------------
* Less than one percent
(1) Pursuant to a Schedule 13D filed on or about February 16, 1993, as amended
March 22, 1993, November 18, 1993, and October 27, 1994, Messrs. Levy and
Littlejohn reported that they had shared voting and dispositive power over
the shares of Common Stock held by Joseph Littlejohn & Levy Fund, L.P.
(2) The following persons filed a Schedule 13D on or about November 8, 1991, as
amended on April 2, 1993, and October 25, 1994, reporting that they had
shared or sole voting and dispositive power over the shares of Common Stock
held by The Airlie Group L.P.; EBD L.P.; TMT-FW, Inc.; Dort A. Cameron III;
and Thomas M. Taylor. As part of that Schedule 13D, the following persons
reported sole dispositive power over 6,962 shares of Common Stock, which
shares are not included in the preceding table: Sid R. Bass; Sid R. Bass,
Inc.; Lee M. Bass; Lee M. Bass, Inc.; Edward D. Bass; and Thru Line Inc.
12
<PAGE>
The Schedule 13D states that the single, joint filing was made by all such
persons because they may be deemed to constitute a "group" under Section
13(d)(3) of the Exchange Act, but all such persons disclaim membership in
such group.
(3) Includes 170,161 shares subject to options which are currently exercisable.
(4) Includes 19,617 shares subject to options which are currently exercisable.
(5) Includes 19,197 shares subject to options which are currently exercisable.
(6) Includes 12,491 shares subject to options which are currently exercisable.
(7) Includes 14,447 shares subject to options which are currently exercisable.
(8) Includes 10,000 shares each subject to options which are currently
exercisable.
(9) Includes the 827,200 shares of Common Stock beneficially owned by The
Airlie Group L.P. Mr. Cameron is the General Partner of EBD L.P., which is a
general partner of The Airlie Group L.P., and may disclaim beneficial
ownership of some or all of these shares.
(10) Includes the 5,515,833 shares of Common Stock held by JLL; these Directors,
who are general partners of JLL Associates, L.P., the general partner of
JLL, may disclaim beneficial ownership of some or all of these shares.
(11) Includes 3,340 shares of Common Stock held by Paul W. Marshall, as Trustee
of the Paul W. Marshall Self-directed Retirement Plan.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION. The following table summarizes, for each of Fiscal
1995, fiscal 1994 and fiscal 1993, the compensation awarded, paid to or earned
by (i) R. Randolph Devening, the Chief Executive Officer (the "CEO") of the
Company, (ii) each of the four most highly compensated executive officers other
than the CEO who served as executive officers of the Company or its subsidiaries
as of December 30, 1995, whose annual compensation exceeded $100,000 for Fiscal
1995, and (iii) two former executive officers whose annual compensation exceeded
$100,000 for Fiscal 1995 and who each would have been one of the four most
highly compensated executive officers but for the fact they resigned prior to
December 30, 1995.
13
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
-------------
ANNUAL COMPENSATION SECURITIES
---------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS (1) OPTIONS COMPENSATION (2)
- ------------------------------------------------ --------- ---------- ---------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
R. Randolph Devening (3) ....................... 1995 $ 550,000 $ 550,000 -- $ 26,423
Chairman, President and Chief 1994 229,187 500,000 625,593 10,559
Executive Officer 1993 -- -- -- --
Horst O. Sieben (4) ............................ 1995 227,292 119,969 10,000 4,586
Senior Vice President and Chief 1994 42,692 65,000 68,814 2,657
Financial Officer 1993 -- -- -- --
Thomas G. McCarley ............................. 1995 214,165 116,425 -- 5,428
Senior Vice President -- President, 1994 171,593 101,276 33,814 4,750
Food Service Division 1993 165,000 -- -- 6,720
Robert S. Wright (5) ........................... 1995 165,550 -- -- 4,750
Former Senior Vice President -- President, 1994 151,750 127,961 68,814 3,905
Specialty Brands Division 1993 -- -- -- --
Raymond J. Haefele ............................. 1995 150,000 110,714 -- 5,694
Vice President and President, Deli Division 1994 124,520 80,275 27,540 4,262
1993 113,120 -- -- 4,685
David J. Clapp ................................. 1995 141,544 59,349 5,000 6,242
Vice President -- Operating Services 1994 129,876 12,500 22,047 4,431
1993 127,200 -- -- 12,010
Larry P. Swafford (6) .......................... 1995 100,256 130,000 -- 400,000
Former Senior Vice President -- President, 1994 -- -- -- --
Retail Division 1993 -- -- -- --
</TABLE>
- ------------------------
(1) The amounts in this column for Fiscal 1995 are for 1995 performance under
the Cash Incentive Plan, except for Mr. Swafford who received a $60,000
signing bonus in early 1995 and a $70,000 termination bonus upon the sale of
the Retail Division. For fiscal 1994, amounts in the column include, signing
bonuses of $500,000 and $65,000 for Mr. Devening and Mr. Sieben,
respectively. The amounts for fiscal 1994 also include a performance bonus
of $127,961 paid to Mr. Wright pursuant to the terms of an employment
agreement between Mr. Wright and the Company and a $12,500 special cash
bonus paid to Mr. Clapp for his individual accomplishments in fiscal 1994.
In addition, the Committee waived certain target requirements under the Cash
Incentive Plan and granted special bonuses of $101,276 and $80,275,
respectively, to Mr. McCarley and Mr. Haefele because of the high level of
performance of the Company's Food Service and Deli Divisions.
(2) For Mr. Devening, includes $20,991 paid by the Company for term life
insurance and $5,432 contributed by the Company to the Retirement & Profit
Sharing Plan during Fiscal 1995; and $7,520 paid by the Company for life
insurance and $3,039 contributed by the Company to the Retirement & Profit
Sharing Plan during fiscal 1994.
For Mr. Sieben, includes $2,989 paid by the Company for term life insurance
and $1,597 contributed by the Company to the Retirement & Profit Sharing
Plan during Fiscal 1995; and $2,657 paid by the Company for life insurance
during fiscal 1994.
For Mr. McCarley, includes amounts contributed by the Company to the
Retirement & Profit Sharing Plan of $5,428, $4,750 and $6,720 for Fiscal
1995, fiscal 1994 and fiscal 1993, respectively.
14
<PAGE>
For Mr. Wright, includes amounts contributed by the Company to the
Retirement & Profit Sharing Plan of $4,750 and $3,905 for Fiscal 1995 and
fiscal 1994, respectively.
For Mr. Haefele, includes amounts contributed by the Company to the
Retirement & Profit Sharing Plan of $5,694, $4,262 and $4,685 for Fiscal
1995, fiscal 1994 and fiscal 1993, respectively.
For Mr. Clapp, includes amounts contributed by the Company to the Retirement
& Profit Sharing Plan of $6,242, $4,431 and $12,010 for Fiscal 1995, fiscal
1994 and fiscal 1993, respectively.
For Mr. Swafford, $400,000 was paid pursuant to his Separation Agreement.
See "-- Employment, Termination of Employment, Change-In-Control and Other
Agreements".
(3) On August 1, 1994, Mr. Devening became Chairman of the Board, President and
Chief Executive Officer of the Company. See "-- Employment, Termination of
Employment, Change-In-Control and Other Agreements -- Devening Employment
Agreement".
(4) On October 24, 1994, Mr. Sieben became Senior Vice President and Chief
Financial Officer of the Company. Prior to employment with the Company, Mr.
Sieben was a consultant to the Company and received $48,000 in consulting
fees in fiscal 1994. See "-- Employment, Termination of Employment,
Change-In-Control and Other Agreements -- Sieben Agreement".
(5) On August 11, 1995, Mr. Wright resigned as the Senior Vice President --
President, Specialty Brands Division. See "-- Employment, Termination of
Employment, Change-In-Control and Other Agreements -- Wright Agreement".
(6) On June 30, 1995, Mr. Swafford resigned as the Senior Vice President --
President, Retail Division of the Company as a result of the sale of the
Retail Division. See "-- Employment, Termination of Employment,
Change-In-Control and Other Agreements -- Swafford Separation Agreement".
STOCK OPTION INFORMATION
OPTION GRANTS. The following table sets forth information concerning the
grant of stock options to Messrs. Sieben and Clapp during the fiscal year ended
December 30, 1995. No other named executive officer received any option grants
during Fiscal 1995.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZED
VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF STOCK
SECURITIES % OF TOTAL PRICE APPRECIATION FOR
UNDERLYING OPTIONS GRANTED EXERCISE OR OPTION TERM (1)
OPTIONS TO EMPLOYEES IN BASE ----------------------
NAME GRANTED (#) FISCAL YEAR PRICE ($/SH) EXPIRATION DATE 5% ($) 10% ($)
- ---------------------------- ----------- ----------------- --------------- ---------------------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Horst O. Sieben............. 10,000(2) 3.1 13 December 13, 2005 81,900 206,700
David J. Clapp.............. 5,000(2) 1.5 13 December 13, 2005 40,950 103,350
</TABLE>
- ------------------------
(1) The assumed annual rates of stock price appreciation of 5% and 10% are set
by the Commission's rules and are not intended as a forecast of possible
future appreciation in stock prices.
(2) The Company granted these options on December 14, 1995, at an exercise price
of $13 per share. Nine percent of such options vested on December 14, 1995,
and 18.2% of such options vest on December 31 of each of the subsequent five
years if the recipient remains an employee of the Company and the Company
meets the specified earnings target for such year. The options terminate 10
years from the date of grant and must be exercised within 90 days after
recipient ceases to be an employee of the Company.
15
<PAGE>
OPTION EXERCISE. The following table sets forth information concerning each
exercise of stock options by the named executive officers during the fiscal year
ended December 30, 1995 with information as of the fiscal year-end of any
unexercised in-the-money options.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION VALUES
<TABLE>
<CAPTION>
NO. OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
NO. OF SHARES FY-END (#) AT FY-END ($)
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED($) UNEXERCISABLE UNEXERCISABLE (1)
- ---------------------------------------- ------------- ----------- ---------------------- --------------------
<S> <C> <C> <C> <C>
R. Randolph Devening.................... 0 0 170,161/455,432 510,483/1,366,296
Horst O. Sieben......................... 0 0 19,617/59,197 56,151/150,291
Thomas G. McCarley...................... 0 0 19,197/24,617 27,591/73,851
Robert S. Wright........................ 13,493 49,965 0/0 0/0
Raymond J. Haefele...................... 0 0 12,491/20,049 22,473/60,147
David J. Clapp.......................... 0 0 14,447/20,600 17,991/48,150
Larry P. Swafford....................... 6,193 34,061 0/0 0/0
</TABLE>
- ------------------------
(1) The values shown in this column are based on a market price of the Common
Stock on December 30, 1995 of $12.00 per share
EMPLOYMENT, TERMINATION OF EMPLOYMENT, CHANGE-IN-CONTROL AND OTHER AGREEMENTS.
DEVENING EMPLOYMENT AGREEMENT. Pursuant to the Devening Agreement, Mr.
Devening serves as the Chairman of the Board, President and Chief Executive
Officer of the Company. The Devening Agreement has a term ending on December 31,
1998, but automatically extends for an additional one-year term unless either
party elects not to extend the term (the "Employment Period"). See "Report of
the Compensation Committee of the Board of Directors -- Compensation of Chief
Executive Officer" for information regarding the salary and bonus provisions of
the Devening Agreement. Bonuses payable under the Devening Agreement are payable
in cash or common stock (based on the market price on the payment date) or a
combination thereof as selected by Mr. Devening, subject to such limitation on
the number of shares as the Committee may have set for the year.
The Company granted to Mr. Devening options to purchase, in the aggregate, a
number of shares of the Company's common stock equal to 5% of the total number
of shares outstanding on the date of the grant (as adjusted to reflect the
number of shares issued in the rights offering made pursuant to the offering
prospectus dated September 19, 1994) at an option price per share equal to the
greater of the exercise price under such rights offering ($9.00) or the fair
market value on the date of the grant. Nine percent of such options vested on
December 31, 1994, and 18.2% of such options vested on December 31, 1995, with
the remaining such options to vest on December 31 of each of the subsequent four
years if Mr. Devening remains an employee and the Company meets the specified
earnings target for such year. The options terminate 10 years from the date of
grant and must be exercised within 90 days after Mr. Devening ceases to be an
employee.
In the event that Mr. Devening's employment is terminated during the
Employment Period other than for "Cause" (as defined in the Devening Agreement),
or if Mr. Devening terminates his employment for "Good Reason" or within
eighteen months after a "Change of Control" (as those terms are defined in the
Devening Agreement), the Company will be required to pay him an amount equal to
two times the sum of his base salary for the previous twelve-month period plus
the amount of his performance bonus, if any, for the previous fiscal year. Upon
a Change of Control, all outstanding option shares not previously vested will
vest, provided Mr. Devening is an employee on such date. In the event of the
death of Mr. Devening between
16
<PAGE>
July 31, 1997 and January 1, 2000 while an employee of the Company, all
outstanding option shares not previously vested will vest. Mr. Devening is
entitled to employee benefit arrangements on a comparable basis with other
senior executives, and to financial, tax planning and consulting services.
SIEBEN AGREEMENT. Pursuant to the terms of a letter agreement ("Sieben
Agreement") with the Company, Mr. Sieben receives an annual salary of $225,000
and, for the first year of his employment, a monthly living allowance of $2,000
in lieu of certain other allowances. Pursuant to the Sieben Agreement, he is
eligible for an annual bonus of up to 50% of his base salary if certain
performance objectives are met. In addition, Mr. Sieben received a signing bonus
of $65,000 and was granted options to purchase, in the aggregate, 68,814 shares
of Common Stock at an exercise price per share of $9.00. These options have a
vesting schedule similar to Mr. Devening's. Upon a Change of Control Event (as
defined in the Stock Incentive Plan) or in the event of the death of Mr. Sieben,
all outstanding option shares not previously vested will vest, provided Mr.
Sieben is an employee on the date of such event. In the event Mr. Sieben is
terminated for any reason other than dishonesty or malfeasance, he will be
entitled to receive his base salary for a period of six months from the
termination date. In addition, the Company and Mr. Sieben have entered into a
Transition Employment Agreement. See "Compensation of Directors and Executive
Officers -- Employment, Termination of Employment, Change-in-Control and Other
Agreements -- Transition Employment Agreements".
O'RAY EMPLOYMENT AGREEMENT. Effective as of October 9, 1995, Mr. O'Ray and
the Company entered into an employment agreement (the "O'Ray Agreement")
pursuant to which Mr. O'Ray serves as Senior Vice President of the Company and
President of the Specialty Brands Division. The O'Ray Agreement provides for an
annual salary of $210,000 and a signing bonus of $50,000. In addition, Mr. O'Ray
received options to purchase 68,814 shares of Company Common Stock at an
exercise price of $13.50 per share, which have a vesting schedule similar to Mr.
Devening's options adjusted to reflect the different grant date.
The O'Ray Agreement also provides that in fiscal 1996 the Company will pay
Mr. O'Ray a minimum cash bonus of $75,000, subject to upward adjustment. Any
amount of cash incentive in excess of such amount shall be provided by the
Company's Cash Incentive Plan conditioned upon the Specialty Brands Division
achieving the performance targets established for 1996. Such cash incentive is
payable in February 1997.
If Mr. O'Ray's employment is terminated during the term of the O'Ray
Agreement by the Company for "Cause" (as defined in the O'Ray Agreement) or as a
result of a voluntary termination, the Company will pay Mr. O'Ray his base
compensation through the date specified as his last day of employment. If Mr.
O'Ray's employment is terminated during the term of the O'Ray Agreement by the
Company without Cause, the Company will pay O'Ray an amount equal to one-half of
his annual base compensation.
ROSENTHAL AGREEMENTS. Effective as of December 11, 1995, Mr. Rosenthal and
the Company entered into an employment agreement (the "Rosenthal Agreement")
pursuant to which Mr. Rosenthal serves as Senior Vice President of the Company
and President of the KPR Foods Division. The term of the Rosenthal Agreement is
from December 11, 1995, until December 10, 2000. The Rosenthal Agreement
provides for an annual salary of $175,000 as President of the KPR Foods
Division. Mr. Rosenthal will also receive an annual salary of $40,000 in payment
of his duties as Senior Vice President. In addition, Mr. Rosenthal received
options to purchase 12,000 shares of Company Common Stock at an exercise price
of $13.125 per share, which have a vesting schedule similar to Mr. Devening's
options adjusted to reflect the different grant date.
If Mr. Rosenthal's employment is terminated during the term of the Rosenthal
Agreement by reason of death, the Company shall pay to Rosenthal's estate his
base compensation as though employment was terminated by the Company without
"Cause" (as defined in the Rosenthal Agreement) and the bonus, if any, for the
bonus period in which "Termination Date" (as defined in the Rosenthal Agreement)
occurs. If Mr. Rosenthal's employment is terminated during the term of the
Rosenthal Agreement by disability, Mr. Rosenthal will continue to receive his
base compensation for a period of one year and the bonus, if any, for the bonus
period in which the disability occurs until the Rosenthal Agreement is
terminated. Mr. Rosenthal shall also continue to receive all compensation
payable under the Company's disability benefit programs then in effect through
the expiration of the term of the Rosenthal Agreement. Thereafter, benefits
shall be determined under the retirement, insurance and other compensation
programs. If
17
<PAGE>
Mr. Rosenthal's employment is terminated by the Company for Cause or as a result
of a voluntary termination, the Company will pay Mr. Rosenthal his base
compensation through the date specified as his last day of employment. If Mr.
Rosenthal's employment is terminated during the term of the Rosenthal Agreement
by the Company without Cause, the Company will pay Rosenthal an amount equal to
his base compensation for a period not to exceed one year.
In connection with the acquisition of KPR Holdings, L.P. ("KPR") pursuant to
the Purchase Agreement dated November 14, 1995 (the "KPR Agreement"), the
Company has agreed to certain contingent payments payable in Common Stock of the
Company or cash, at the option of the sellers, aggregating approximately $15
million over the next three years based on the attainment of specified earning
levels by KPR. If the sellers elect to receive the contingent payment in Common
Stock of the Company, it will be payable based on a price of $13.125 per share.
The right to this contingent payment is currently held by KPR Holdings, Inc.,
one of the sellers, and Mr. Rosenthal holds an equity position in KPR Holdings,
Inc. In addition, in connection with the acquisition of KPR, KPR entered into a
lease agreement with BAM Corporation pursuant to which BAM leases to KPR the
production and office facility located in Fort Worth, Texas (the "Lease"). The
Lease is for a period of ten years, with base rental payments of approximately
$71,000 per month. KPR has the option, pursuant to the Lease, to purchase the
leased facility based on its fair market value. Mr. Rosenthal and other members
of his immediate family own all of the equity securities of BAM Corporation.
KATZ AGREEMENTS. Effective as of December 11, 1995, Mr. Katz and the
Company entered into an employment agreement (the "Katz Agreement") pursuant to
which Mr. Katz serves as Vice President of the Company and President of Kettle
Cooked Foods, a subdivision of the KPR Foods Division. The term of the Katz
Agreement is from December 11, 1995 until December 10, 2000. The Katz Agreement
provides for an annual salary of $175,000. In addition, Mr. Katz received
options to purchase 12,000 shares of Company Common Stock at an exercise price
of $13.125, per share which have a vesting schedule similar to Mr. Devening's
options adjusted to reflect the different grant date.
If Mr. Katz's employment is terminated during the term of the Katz Agreement
by reason of death, the Company shall pay to Katz's estate his base compensation
as though employment was terminated by the Company without "Cause" (as defined
in the Katz Agreement) and the bonus, if any, for the bonus period in which
"Termination Date" (as defined in the Katz Agreement) occurs. If Mr. Katz's
employment is terminated during the term of the Katz Agreement by disability,
Mr. Katz will continue to receive his base compensation for a period of one year
and the bonus, if any, for the bonus period in which the disability occurs until
the Katz Agreement is terminated. Mr. Katz shall also continue to receive all
compensation payable under the Company's disability benefit programs then in
effect through the expiration of the term of the Katz Agreement. Thereafter,
benefits shall be determined under the retirement, insurance and other
compensation programs. If Mr. Katz's employment is terminated by the Company for
Cause or as a result of a voluntary termination, the Company will pay Mr. Katz
his base compensation through the date specified as his last day of employment.
If Mr. Katz's employment is terminated during the term of the Katz Agreement by
the Company without Cause, the Company will pay Katz an amount equal to his base
compensation for a period not to exceed one year.
Mr. Katz holds an equity position in KPR Holdings, Inc. which is entitled to
the contingent payment under the KPR Agreement as described above. See "--
Employment, Termination of Employment, Change-In-Control and Other Agreements --
Rosenthal Agreements".
WRIGHT AGREEMENT. Mr. Wright resigned as of August 11, 1995. Pursuant to
the terms of an employment agreement between Robert S. Wright and the Company,
Mr. Wright received his base compensation through the date specified as his last
day of employment.
SWAFFORD SEPARATION AGREEMENT. As a result of the sale of the Retail
Division on May 30, 1995, Mr. Swafford resigned as Senior Vice President of the
Company and President of the Retail Division as of June 30, 1995. Mr. Swafford
and the Company entered into a Separation Agreement dated May 25, 1995,
18
<PAGE>
(the "Swafford Separation Agreement") concerning the payment of certain
consideration upon his resignation. Pursuant to the Swafford Separation
Agreement, Mr. Swafford received his base salary through June 30, 1995 and under
the terms of his employment agreement a one-time bonus payment of $70,000. The
Company made a separation payment to Mr. Swafford in the amount of $400,000.
TRANSITION EMPLOYMENT AGREEMENTS. The Company has entered into Transition
Employment Agreements ("Agreement") with each of 13 of the key employees of the
Company, including all of the executive officers listed in the "Summary
Compensation Table" above, other than Mr. Devening (each an "Executive"). The
Agreements are effective for a period of two years (the "Term" of the Agreement)
after a "Change of Control" (as defined in the Agreement), which includes, among
other things, a change in stock ownership whereby a person or group acquires a
sufficiently large block of Common Stock which, when voted with shares solicited
by proxy or written consent solicitation without the benefit of a management
supported proxy, would enable such person or group to elect a member of the
Board of Directors. If the Executive's employment is terminated by the Company
without "Cause" (as defined in the Agreement) or by the Executive for "Good
Reason" (as defined in the Agreement), within two years following a Change of
Control, then (i) for the remainder of the Term of the Agreement the Executive
shall continue to be paid his or her "Compensation" (as defined in the
Agreement); (ii) all "Stock Options", "Performance Shares", and shares of
"Restricted Stock" (as such terms are defined in the Agreement) held by the
Executive shall vest; and (iii) the Executive shall have a period of three
months to exercise any such Stock Options. The Agreement also provides that the
Company will indemnify the Executives to the fullest extent permitted by the
Certificate of Incorporation, the Company's bylaws, and Delaware law;
confidentiality and noncompetition covenants by the Executives; notice
requirements prior to termination; and for continuation of pre-Change of Control
pay levels after a Change of Control. The Company intends to amend the
Agreements to provide for automatic vesting of any stock options, Performance
Shares and shares of Restricted Stock, following a Change of Control as
redefined under Proposal IV. Mr. Sieben's Agreement has been amended to provide
for such automatic vesting after a Change of Control.
OFFICER SEPARATION PAY PLAN. In 1995, the Company adopted a separation pay
plan for corporate officers which takes effect on termination of employment of a
corporate officer other than by voluntary resignation or for "Cause" (as defined
in the plan). The plan provides that separation pay will be made up of a lump
sum of 100% of current annual base salary and current allowances (e.g., auto
allowance) for a 20-week period for a corporate officer who has served for less
than two years and for a 9-month period for an officer who has served two years
or more. Such officer will be eligible for outplacement service (selected and
paid for by the Company) as needed. If a corporate officer is terminated for
death, disability or Cause, then no separation payment will be made. At the time
of separation, unused but accrued vacation will be paid in addition to earned
but unpaid bonus(es).
FOODBRANDS AMERICA, INC. RETIREMENT & PROFIT SHARING PLAN. The Retirement &
Profit Sharing Plan, formerly the Doskocil Companies Incorporated Retirement &
Profit Sharing Plan, provides that all eligible employees of the Company who
have attained the age of 21, have completed one year of service and are not
subject to a collective bargaining agreement are permitted to contribute up to
15% of their salary to the Retirement & Profit Sharing Plan. The Company makes
contributions on behalf of each participant of a matching amount up to an
employee contribution of 3% of such employee's salary. The Company also makes a
1% seed contribution to the employee's account up to $250. Employees become
fully vested in Company matching contributions and profit sharing accounts in
the Retirement & Profit Sharing Plan after three years of employment with the
Company. The Company made a profit-sharing contribution to the Retirement &
Profit Sharing Plan for Fiscal 1995. The profit-sharing contribution amount was
determined and authorized by the Board of Directors of the Company. Upon
severance from service with the Company, participants are entitled to a
distribution in a single lump sum of their vested interest in the Retirement &
Profit Sharing Plan.
FOODBRANDS AMERICA, INC. 1992 STOCK INCENTIVE PLAN. Pursuant to the terms
of the 1992 Stock Incentive Plan, awards granted under the Plan may, in the
discretion of the Committee be immediately vested, fully earned and exercisable
upon the termination of a participant's employment within the two year period
following a "Change of Control Event" (as defined in the 1992 Stock Incentive
Plan) except (i) if such award
19
<PAGE>
has been terminated due to acts such as fraud, misrepresentation and
embezzlement or (ii) as otherwise provided in any employment agreement. This
Section of the 1992 Stock Incentive Plan has been proposed to be amended. See
"PROPOSAL IV. AMENDMENTS TO THE 1992 STOCK INCENTIVE PLAN".
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During Fiscal 1995, the Compensation Committee of the Board of Directors of
the Company was comprised of Terry W. Grimm, Chairman and Dort A. Cameron III.
Ms. Cliff resigned from the Compensation Committee in October 1995. None of the
members of the Compensation Committee has ever been (i) an employee or officer
of the Company or any of its subsidiaries or (ii) had any relationship requiring
disclosure under any paragraph of Item 404 or in Item 402(j)(3) of Regulation
S-K promulgated by the Securities and Exchange Commission.
PROPOSAL I. ELECTION OF DIRECTORS
At the Annual Meeting, the positions of the three Directors whose current
terms expire in 1996 are to be filled. The persons elected to these positions
shall hold office until their successors are duly elected and qualified at the
annual meeting of stockholders in 1999 or until they earlier die, resign, or are
removed from office in accordance with applicable law. Messrs. Berg, Joseph and
Marshall, who currently hold the three positions that are to be filled at the
Annual Meeting, are nominees for re-election at the Annual Meeting for
three-year terms expiring at the annual meeting of stockholders in 1999. See
"DIRECTORS -- Directors Whose Terms Expire In 1996" which provides information
with respect to each of the nominees.
It is the intention of the persons named in the enclosed proxy to vote the
shares of Common Stock represented thereby for the election of these nominees
unless authority therefore is withheld. While it is not expected that any of the
nominees will be unable or unwilling to accept office, if for any reason any of
them shall be unable or unwilling to do so and a position on the Board of
Directors remains vacant as a result, then the proxies will be voted for a
nominee or nominees selected by the Board of Directors of the Company or, in the
case of Mr. Joseph, by JLL. See "Directors". The Company knows of no family
relationships between any director or executive officer and any other director
or executive officer of the Company.
The election of the nominees to the Board of Directors will be by plurality
vote. Management believes that all of the shares of Common Stock held by JLL
Associates and Airlie will be voted in favor of the nominees named herein.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
PROPOSAL II. AMEND THE AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
The Board of Directors has approved and recommends that the stockholders
consider and approve a proposal to amend the Company's Certificate of
Incorporation by amending Sections 5.2, 5.4 and 5.7 of Article Fifth thereof
(the "Charter Amendments") to read in their entirety as follows:
Section 5.2 ATTEMPTED TRANSFER IN VIOLATION OF TRANSFER
RESTRICTION. Unless approval of the Board of Directors is obtained as
provided in subsection (3) of Section 5.1 of this Article Fifth, any
attempted Transfer of shares of stock of the Corporation in excess of the
shares that could be Transferred to the Transferee without restriction under
subsection (2) of Section 5.1 of this Article Fifth is not effective to
Transfer ownership of such excess shares (the "Prohibited Shares") to the
purposed acquiror thereof (the "Purposed Acquiror"), who shall not be
entitled to any rights as a Stockholder of the Corporation with respect to
the Prohibited Shares (including, without limitation the right to vote or to
receive dividends with respect thereto). The transfer agent of the stock of
the corporation shall not recognize the purposed transfer of the Prohibited
Shares to the Purposed Acquiror. All rights with respect to the Prohibited
shares shall (i) be deemed to have been acquired in equal amounts by the
Charitable Organizations (as defined below) and (ii) be transferred to a
person nominated and appointed by the Board of Directors from time to time
(the "Agent") to act as agent for the Charitable Organizations (in the
absence of such designation the Corporation shall act as Agent), until such
time as the Prohibited
20
<PAGE>
Shares are resold as set forth in subsection (i) or subsection (2) of this
Section 5.2. As agent, Agent shall exercise all rights incident to ownership
of the Prohibited Shares. The Purported Acquiror, by acquiring ownership of
shares of stock of the Corporation that are not Prohibited Shares, shall be
deemed to have consented to all the provisions of this Article Fifth and to
have agreed to act as provided in the following subsection (1). The
Corporation, the Board of Directors and the Agent shall be fully protected
in relying in good faith upon the information, opinions, reports or
statements of the chief executive officer, the chief financial officer, or
the chief accounting officer of the Corporation or of the Corporation's
legal counsel, independent auditors, transfer agent, investment bankers, and
other employees and agents in making the determinations and findings
contemplated by this Section 5.2, and neither the Corporation, the Board of
Directors nor the Agent shall be responsible for any good faith errors made
in connection therewith.
(1) Upon demand by the Agent, the Purported Acquiror shall transfer any
certificate or other evidence of Purported Acquiror's possession or control
of the Prohibited Shares, along with any dividends or other distributions
paid by the Corporation with respect to the Prohibited Shares that were
received by the Purported Acquiror (the "Prohibited Distributions"). If the
Purported Acquiror has sold the Prohibited Shares to an unrelated party in
an arms-length transaction after purportedly acquiring them, the Purported
Acquiror shall be deemed to have sold the Prohibited Shares as agent for the
Charitable Organizations, and in lieu of transferring the Prohibited Shares
and Prohibited Distributions to the Agent shall transfer to the Agent the
Prohibited Distributions and the proceeds of such sale (the "Resale
Proceeds"), except to the extent that the Agent grants written permission to
the Purported Acquiror to retain a portion of the Resale Proceeds not
exceeding the amount that would have been payable by the Agent to the
Purported Acquiror pursuant to the following subsection (2) if the
Prohibited Shares had been sold by the Agent rather than by the Purported
Acquiror. Any purported transfer of the Prohibited Shares by the Purported
Acquiror other than a transfer described in one of the two preceding
sentences shall not be effective to transfer any ownership of the Prohibited
Shares.
(2) The Agent shall sell in an arms-length transaction (through the New
York Stock Exchange, if possible) any Prohibited Shares transferred to the
Agent by the Purported Acquiror, and the proceeds of such sale (the "Sale
Proceeds"), or the Resale Proceeds, if applicable, shall be allocated, after
reimbursement to the Agent of its expenses, to the Purported Acquiror up to
the following amount: (i) where applicable, the purported purchase price
paid or value of consideration surrendered by the Purported Acquiror for the
Prohibited Shares, or (ii) where the purported Transfer of the Prohibited
Shares to the Purported Acquiror was by gift, inheritance, or any similar
purported Transfer, the fair market value of the Prohibited Shares at the
time of such purported Transfer. Subject to the succeeding provisions of
this subsection, any Resale Proceeds or Sales Proceeds in excess of the
Agent's expenses and the amount allocable to the Purported Acquiror pursuant
to the preceding sentence, together with any Prohibited Distributions, shall
be paid in equal shares to the charitable organizations designated from time
to time by the Corporation that qualify as entities described in Section
501(c)(3) of the Code (the "Charitable Organizations"). In the absence of
such designation, the Agent shall designate one or more Charitable
Organizations, in its discretion, such that there is a sufficient number of
Charitable Organizations none of which will own a Prohibited Ownership
Percentage. In no event shall any such amounts due to the Charitable
Organizations inure to the benefit of the Corporation or the Agent, but such
amounts may be used to cover expenses incurred by the Agent.
Section 5.4 ADDITIONAL ACTIONS TO PREVENT VIOLATION OR ATTEMPTED
VIOLATION. Upon a determination by the Board of Directors that there has
been or is threatened a purported Transfer of Prohibited Shares to a
Purported Acquiror, the Board of Directors may take such action in addition
to any action required by the preceding paragraph as it deems advisable to
give effect to the provisions of this Article Fifth, including, without
limitation, refusing to give effect on the books of this Corporation to such
purported Transfer or instituting proceedings to enjoin such purported
Transfer. Nothing herein shall preclude the settlement of transactions
entered into through the facilities of the New York Stock Exchange.
21
<PAGE>
Section 5.7 FURTHER ACTIONS. Subject to the provisions of Section 5.4
of this Article Fifth, nothing contained in this Article Fifth shall limit
the authority of the Board of Directors to take such other action to the
extent permitted by law as it deems necessary or advisable to protect the
corporation and the interest of the holders of its securities in preserving
the Tax Benefits. Without limiting the generality of the foregoing, in the
event of a change in law making one or more of the following actions
necessary or desirable or in the event that the Board of Directors believes
that such actions are in the best interest of the Corporation and its
Stockholders, the Board of Directors may (i) accelerate or extend the
Expiration Date or modify the definitions of any terms set forth in this
Article Fifth; provided that the Board of Directors shall determine in
writing that such acceleration, extension change or modification is
reasonably necessary or desirable to preserve the Tax Benefits under the
Code and the regulations thereunder or that the continuation of these
restrictions is no longer reasonably necessary for the preservation of the
Tax Benefits, which determination shall be based upon an opinion of legal
counsel to the Corporation and which determination shall be filed with the
Secretary of the Corporation and mailed by the Secretary to the Stockholders
of this Corporation within ten days after the date of any such
determination. In addition, the Board of Directors may, to the extent
permitted by law, from time to time establish, modify, amend or rescind
Bylaws, regulations and procedures of the Corporation not inconsistent with
the express provisions of this Article Fifth for purposes of determining
whether any acquisition of stock of the Corporation would jeopardize the
Corporation's ability to preserve and use the Tax Benefits, and for the
orderly application, administration and implementation of the provisions of
this Article Fifth. Such procedures and regulations shall be kept on file
with the Secretary of the Corporation and with its transfer agent and shall
be made available for inspection by the public and, upon request, shall be
mailed to any holder of stock of the Corporation.
In May 1995, in connection with the merger of Doskocil Companies
Incorporated into the Company, the stockholders approved certain transfer
restrictions applicable to the shares of common stock, as set forth in Article
Fifth of the Company's Amended and Restated Certificate of Incorporation (the
"Transfer Restrictions"), in order to help assure that certain tax benefits (in
the form of net operating loss carryforwards) will continue to be available to
the Company. These Transfer Restrictions specifically referenced the trading of
common stock on the NASDAQ National Market System.
During the Company's eligibility review for the listing of the Company's
Common Stock on the New York Stock Exchange ("NYSE"), the NYSE raised certain
procedural issues with the Transfer Restrictions. The NYSE specifically
requested that the Sections in question be amended to specifically reference the
NYSE and to include certain language to the effect that the Board of Directors
and the Company will not take any action to preclude the settlement of a
transaction entered into through the facilities of the NYSE. The NYSE requires
these amendments to comply with its rules and regulations. Accordingly, the
Company and the Board of Directors agreed it would take no action that would
impair the settlement of any transaction entered into through the facilities of
the NYSE and would seek the approval of the stockholders to the above
amendments.
To be adopted, the Charter Amendment must be approved by holders of a
majority of the shares of Common Stock entitled to vote on such proposal.
Management believes that all of the shares of Common Stock held by JLL and
Airlie will be voted in favor of the Charter Amendments.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
PROPOSAL III. APPROVAL OF THE NON-EMPLOYEE DIRECTORS'
DEFERRED STOCK COMPENSATION PLAN
The Company's Board of Directors has adopted the Foodbrands America, Inc.
Non-Employee Directors' Deferred Stock Compensation Plan ("Deferred Stock Plan"
or the "Plan"). The Deferred Stock Plan enables members of the Board of
Directors of the Company who are not employees of the Company or any of its
subsidiaries to receive shares of the Company's Common Stock in lieu of all or a
portion of the compensation they receive for membership on the Board of
Directors and committees thereof. The Board of Directors has reserved 150,000
shares of the Company's Common Stock for purchase pursuant to the
22
<PAGE>
Deferred Stock Plan. A description of the Deferred Stock Plan appears below. A
copy of the Deferred Stock Plan is attached to this proxy statement as Exhibit A
and the description contained herein is qualified in its entirety by reference
to the complete text of the Deferred Stock Plan. Capitalized terms used below
not otherwise defined herein shall have the meaning ascribed to them in the
Deferred Stock Plan.
BACKGROUND
The purpose of the Deferred Stock Plan is to attract, retain and motivate
its non-employee Directors. The Company believes that because of the highly
competitive market for outside director talent, the best interests of the
Company and its shareholders will be served by the availability of the Plan for
its non-employee Directors, which currently total approximately five in number.
The JLL Designees are not participants in the Deferred Stock Plan.
ADMINISTRATION
The Deferred Stock Plan shall be administered by the Committee or such other
committee or individual as may be designated by the Board of Directors. The
Committee shall have the power to construe the Plan, to determine all questions
arising thereunder and to adopt and amend such rules and regulations for the
administration of the Plan as it may deem desirable. Any decisions of the
Committee in the administration of the Deferred Stock Plan shall be final and
conclusive.
PARTICIPATION
Each member of the Board of Directors who is not a regular employee of the
Company or any of its subsidiaries shall be eligible to participate in the Plan.
If a Director subsequently becomes an employee of the Company or any of its
subsidiaries, the Director shall continue as a Participant with respect to fees
previously deferred and cease to be eligible with respect to any future fees
earned while an employee.
DESCRIPTION OF THE PLAN
A Participant may elect to reduce all or part of the cash compensation
otherwise payable for services to be rendered by him or her as a director
(including the annual retainer fee and any fees payable for services on the
Board or Directors or any committee thereof) and to receive in lieu thereof
shares of Common Stock. Any such election (a) shall be in writing, (b) shall
specify an amount of such compensation to be received in the form of Common
Stock, (c) shall be made at least six months prior to the start of the calendar
year for which fees would otherwise be paid and (d) may not be revoked or
changed thereafter except as to compensation for services rendered at least six
months after any such election to revoke or change is made in writing. In the
case of a newly elected Participant, the Company shall hold such deferred fees,
if elected by the Participant, and credit them to his account six months
following his deferral election. With respect to fees paid in Fiscal 1995,
elections were effective for any fees paid on the date the election was made and
will be credited to the Participant on the date on which the stockholders of the
Company approve the Plan. An election by a Participant shall be deemed to be
continuing and therefore applicable to future fees unless the Participant
revokes or changes his election by filing a new election form six months prior
to the date such fees would be paid.
The Company will establish a stock unit account (the "Account") for each
Participant. All fees deferred pursuant to the Plan shall be credited as stock
units to the Participant's Account on the date the fees would have otherwise
been paid. The stock units will be converted into Common Stock on a one-for-one
basis upon termination of a non-employee director's status as a Participant.
A Participant may elect to receive all or a portion, in twenty-five percent
(25%) increments, of his or her fees in stock. A Participant may also elect to
have all stock units held in his or her Account be converted into Common Stock
in either a lump sum or substantially equal annual installments over a period
not to exceed ten (10) years. If upon a lump sum distribution or final
distribution of an installment, less than one whole stock unit is credited to a
Participant's Account, cash will be paid in lieu of fractional shares on the
date of such distribution. See "Termination and Amendment."
If a Participant elects to receive Common Stock, there shall be credited to
the Participant's Account on the date fees would otherwise be paid a number of
stock units equal to the amount of such compensation
23
<PAGE>
divided by the fair market value of the Common Stock. In the case of an election
with respect to 1995 fees, the value of Common Stock to be purchased through
deferred fees was determined as of the date the election is made. To the extent
that the application of the foregoing formula would result in fractional shares
of Common Stock being issuable, cash will be paid to the Participant in lieu of
such fractional shares based upon the value established pursuant to such
formula.
ATTRIBUTES OF STOCK UNITS
Any cash dividends paid by the Company shall be credited to a Participant's
Account as additional Common Stock units equal to (i) dividends payable with
respect to Common Stock units held in the Participant's Account as of the close
of business on the record date for such dividend, divided by (ii) the fair
market value of the Common Stock on such dividend payment date.
Common Stock units shall at all times be maintained by the Company as
bookkeeping entries evidencing unfunded and unsecured general obligations of the
Company. As a result, the interest of each Participant in any fees deferred
under the Plan will be that of a general unsecured creditor and therefore can be
lost until converted to Common Stock.
Participants have no rights as shareholders, including voting rights, until
stock units are converted to actual shares. Stock units are not be transferable
by a Participant except by will or the law of descent and distribution.
ADJUSTMENTS
The maximum number of shares of Common Stock that may be purchased under the
Plan is 150,000; provided, however, that if the Company shall at any time
increase or decrease the number of its outstanding shares of Common Stock or
change in any way the rights and privileges of such shares by means of a payment
of a stock dividend or any other distribution upon such shares payable in Common
Stock, or through a stock split, reverse stock split, subdivision,
consolidation, combination, reclassification or recapitalization involving
Common Stock, then the numbers, rights and privileges of the shares issuable
under the Plan shall be increased, decreased or changed in a like manner.
Upon the occurrence of certain events which cause the amount of fees
actually paid during a Plan year to differ from the amount of fees credited to a
Participant's Account, the Company shall make appropriate adjustments to each
Participant's Account to reflect such events.
TERMINATION AND AMENDMENT
Unless earlier terminated by action of the Board of Directors or the
Committee, the Plan will remain in effect until the earlier of (i) such time as
no Common Stock remain available for delivery under the Plan and the Company has
no further rights or obligations under the Plan, or (ii) April 26, 2000. No
termination of the Plan shall materially and adversely effect the rights or
obligations of any person without his or her consent with respect to any shares
of Common Stock theretofore earned and issuable under the Plan.
The Plan may be amended at any time and from time to time by resolution of
the Board of Directors as it shall deem advisable; provided, however, that no
amendment shall become effective without stockholder approval if such
stockholder approval is required by law, rule or regulation.
NEW PLAN BENEFITS
Since none of the named executive officers, the executive group or the
non-executive officer employer group are entitled to participate in the Deferred
Stock Plan, they will receive no benefits under the Plan. All current Directors
who are not executive officers (the "Non-Executive Director Group") are eligible
to participate in the Plan; however, the JLL Designees do not participate in the
Plan. It is not possible to determine the benefits or amounts that will be
received by the Non-Executive Director Group who participate in the Plan.
However, since the plan has been in place since April 1995, a total of
12,476.178 stock units with a value of $98,249.90 have been allocated to the
accounts of the Non-Executive Director Group Participants.
24
<PAGE>
To be adopted, the Deferred Stock Plan must be approved by the holders of a
majority of the shares of Common Stock present at the meeting. Management
believes that all of the shares of Common Stock held by JLL and Airlie will be
voted in favor of the Deferred Stock Plan.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
PROPOSAL IV. AMENDMENTS TO THE 1992 STOCK INCENTIVE PLAN
The Board of Directors has approved three amendments to the Stock Incentive
Plan as follows:
1. Section XI.7 is hereby amended to read as follows:
"Section XI.7 CHANGE OF CONTROL. Awards granted under the Plan to any
Participant may, in the discretion of the Committee, provide that (a) such
Awards shall be immediately vested, fully earned and exercisable, as
appropriate, upon a Change of Control Event, or (b) such Awards shall be
immediately vested, fully earned and exercisable, as appropriate, upon the
termination of such Participant's employment with the Corporation or any
Subsidiary within the two (2) year period following a Change of Control
Event, except as provided in Section XI.6 or as otherwise provided in any
employment contract or similar agreement between such Participant and
Corporation, and (c) the Corporation shall, within the three (3) month
period immediately following such termination of employment, make full
payment to each such Participant with respect to any Performance Share Award
or Other Incentive Award, deliver certificates to such Participant with
respect to each Restricted Stock Award, and permit the exercise of Options,
respectively, granted hereunder to such Participant."
2. Section IV.1(a) is amended to read as follows:
"(a) subject to Article X, the aggregate number of shares of Common
Stock made subject to the Award of Options to any Participant in any fiscal
year of the Company may not exceed 150,000."
3. Section II.4 is amended to read as follows:
"(e) whether such transaction results in a Change of Control Event
pursuant to subparagraphs (a) or (d) above or not, the following events
shall be deemed a Change of Control Event: (i) a transaction or series of
transactions pursuant to which Joseph Littlejohn & Levy Fund, L.P., transfer
all of its beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) in the capital stock of the Corporation to any other person
or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange
Act), or (ii) all of the outstanding capital stock of the Corporation is
acquired by any person or group in one or more related transactions."
Currently, the Stock Incentive Plan only permits the Committee to provide
that awards under the Stock Incentive Plan will be immediately vested, fully
earned and exercisable if a participant's employment is terminated within the
two-year period following a "Change of Control Event" (as defined in the Stock
Incentive Plan). The purpose of the foregoing amendment to Section XI.7 is to
provide the Committee with additional power. If the amendment is approved, the
Committee may also in its discretion provide for the immediate vesting of awards
upon a Change of Control Event and not require the additional condition of
termination within two years following such event. If the amendment is approved,
the Company intends to amend all existing option agreements which do not
currently provide for automatic vesting upon a Change of Control Event to
provide for such automatic vesting and delete the additional condition requiring
termination within two years following such Event.
The purpose of the foregoing amendment to Section IV.1(a) is to qualify the
compensation attributable to the grant of options under the Stock Incentive Plan
under Section 162(m) of the Code. See "Report of Compensation Committee of the
Board of Directors -- Deduction Limitation on Executive Compensation".
Regulations adopted under Section 162(m) of the Code require a per participant
limitation on the number of options which can be granted under a plan such as
the Stock Incentive Plan in order to permit the Company to deduct any amounts
attributable to option exercises by certain executive officers whose
compensation exceeds $1 million in any fiscal year, as to future grants.
25
<PAGE>
The purpose of the foregoing amendment to Section II.4(e) is to clarify the
definition of "Change of Control Event" under the Stock Incentive Plan. There
may be instances where the two events specified in the Amendment would not
constitute Change of Control Events under the current provisions of the Stock
Incentive Plan, and the Board of Directors believes that such events should
constitute a change of control of the Company. Accordingly, the Board of
Directors has decided to amend the Stock Incentive Plan to specify that (i) a
transfer by JLL of all of its beneficial ownership to a new owner of the
Company's capital stock and (ii) an acquisition of all of the Company's
outstanding capital stock will be deemed to be Change of Control Events. Where
applicable, the Company intends to make conforming changes to the term "Change
of Control" in all current Transition Employment Agreements and to the term
"Change of Control Event" in all current option agreements.
To be adopted, the amendments to the 1992 Stock Incentive Plan must be
approved by the holders of a majority of the shares of Common Stock present at
the meeting. Management believes that all of the shares of Common Stock held by
JLL and Airlie will be voted in favor of the foregoing amendments to the Stock
Incentive Plan.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
PROPOSAL V. APPROVAL OF THE ASSOCIATE STOCK PURCHASE PLAN
The Board of Directors has approved, adopted and seeks the approval of the
stockholders of the Foodbrands America, Inc. Associate Stock Purchase Plan (the
"Stock Purchase Plan"). A description of the Stock Purchase Plan appears below.
A copy of the Stock Purchase Plan is attached to this proxy statement as Exhibit
B and the description contained herein is qualified in its entirety by reference
to the complete text of the Stock Purchase Plan. Capitalized terms used below
not otherwise defined herein shall have the meaning ascribed to them in the
Stock Purchase Plan.
The Stock Purchase Plan, which offers eligible employees the opportunity to
purchase Common Stock through payroll deductions, is intended to encourage
participation in the ownership and economic progress of the Company. Eligible
employees are those employed by the Company continuously for six months prior to
the applicable granting date and whose customary employment is more than 20
hours per week and more than five months in any calendar year. Substantially all
salaried and hourly employees, totalling approximately 3,135, will be eligible
to participate in the Stock Purchase Plan.
ADMINISTRATION
The Stock Purchase Plan is administered by the Committee. The Board of
Directors may from time to time adopt amendments to the Stock Purchase Plan
consistent with Sections 421 and 423 of the Code without the approval of the
Company's stockholders; provided, unless stockholder approval is obtained, no
such amendment may increase the number of shares that may be issued under the
Stock Purchase Plan or change the class of associates eligible to participate.
The Board of Directors may terminate the Stock Purchase Plan at any time and
such action will result in a refund to the participants of the sums credited to
their accounts plus interest on the average balance in the Accounts at the rate
of 5% per annum. Unless sooner terminated, the Stock Purchase Plan will
terminate on June 30, 2001.
ISSUANCE OF OPTIONS
One hundred thousand (100,000) shares of the Company's authorized but
unissued Common Stock have been set aside for purchase under the Stock Purchase
Plan. An eligible employee may elect to participate in the Stock Purchase Plan
by executing an Option Agreement authorizing payroll deductions from such
participant's basic compensation in an amount equal to either 1%, 2% or 3% of
such compensation. A participant's basic compensation, which excludes any form
of extraordinary compensation such as overtime, prizes, bonuses, commissions,
reimbursed relocation expenses and the like, is determined as of the date which
is one month prior to the applicable granting date and will be annualized for
purposes of the Stock Purchase Plan. Increases but not decreases in a
participant's basic compensation occurring after the date of determination will
be disregarded for the purchase period for which such calculation was made.
26
<PAGE>
The Stock Purchase Plan fixes, as of each of the granting dates, the maximum
number of shares of Common Stock each participant will be entitled to purchase
on the applicable exercise date. Such maximum shares allotment, as defined in
the Stock Purchase Plan, is determined by dividing the sum of each participant's
anticipated contribution by 90% of the fair market value of a share of the
Common Stock as determined on the applicable granting date. For example, a
participant with a basic compensation of $20,000 who enrolls in the Stock
Purchase Plan for the First Purchase Period prior to the 1996 Granting Date,
electing a 3% payroll deduction, will have an anticipated contribution of $600
to the Stock Purchase Plan by the First Exercise Date ($20,000 X 3% per year).
Assuming the fair market value of a share of the Common Stock is $16 on the 1996
Granting Date, the maximum number of shares a participant can purchase will be:
the anticipated contribution ($600) divided by 90% of the fair market value of
the Common Stock ($14.40) or 41 shares. The Fair Market Value of the Common
Stock as of April 1, 1996, was $ per share.
If on any granting date there are insufficient uncommitted shares available
for stock options out of the 100,000 shares reserved for the Stock Purchase Plan
(as a result of prior purchases under the Stock Purchase Plan), the contemplated
next purchase period or periods may be cancelled. Stock issued under the Stock
Purchase Plan shall not exceed 100,000 shares, and if there is an
over-subscription by participants of the remaining shares set aside for the
Stock Purchase Plan on any granting date, a proportionate reduction will be made
for that purchase period.
EXERCISE OF OPTIONS
The Option Price of the Common Stock to be purchased under any purchase
period will be the lower of 90% of the fair market value of such stock on the
applicable granting date or 90% of the fair market value of such stock on the
applicable exercise date, provided, however, the Option Price will not be lower
than the par value of the Common Stock. The number of shares purchased at the
end of each purchase period, which may not exceed the maximum shares allotment
computed under the Stock Purchase Plan for each participant on the applicable
granting date, will be determined under the following formula:
<TABLE>
<S> <C>
Account Balance
- -------------- = Total Stock Entitlement
Option Price
</TABLE>
Only whole shares of Common Stock will be issued. Stock issued under the
Stock Purchase Plan will not exceed 100,000 shares subject to certain
adjustments to prevent the possible dilution of participants' interests.
Participants are protected against dilution in the event of a recapitalization,
stock split, merger, consolidation, reorganization, combination, liquidation,
stock dividend or similar transaction by an appropriate adjustment being made to
the aggregate number of shares reserved for purchase under the Stock Purchase
Plan, to the maximum number of shares to which a participant will be entitled,
and to the Option Price per share, except that upon a dissolution or liquidation
of the Company or a merger or consolidation in which the Company is not the
surviving or the resulting corporation, the Stock Purchase Plan will terminate.
Any option granted pursuant to the Stock Purchase Plan will terminate upon the
effective date of such dissolution, liquidation, merger or consolidation, and
the balance of each participant's Account will be refunded.
TAX ASPECTS
The Company has been advised by its counsel with respect to the federal
income tax aspects of options granted under the Stock Purchase Plan as follows:
Stock options granted under the Stock Purchase Plan will qualify as
options granted under an "employee stock purchase plan" as defined in
Section 423 of the Code and will be taxed in accordance with Sections 421
and 423 thereof and the regulations issued thereunder. The grant of an
option to an employee pursuant to the terms of the Stock Purchase Plan will
be without federal income tax consequences to the Company and the employee,
and the exercise of an option (options are deemed exercised if an employee
is a participant on any exercise date) would result in neither taxable
income to an employee nor a deduction to the Company, provided the employee
does not dispose of the shares within two years after the date of the grant
of the option and within one year after the transfer to him of the shares of
Common Stock represented by the option. If a disposition occurs within
either of said
27
<PAGE>
periods, the employee may realize ordinary income on part or all of the gain
and the Company will be entitled to a deduction for the amount taxed to the
employee as ordinary income. If an employee holds the shares acquired under
the option for the required time and a disposition or the employee's death
occurs thereafter, the employee will realize ordinary income on the excess
of (i) the lesser of the fair market value of the shares on the
participant's applicable granting date, the disposition date, or the date of
the employee's death, over (ii) his Option Price, and the Company will not
be entitled to a deduction for such amount. In such event, any additional
gain realized as the result of the disposition will be taxed on the
participant as a capital gain under the Code.
NEW PLAN BENEFITS
Since participation in the Stock Purchase Plan is at the election of the
participant, the dollar value and number of options granted are not determinable
with respect to the named executive officers, the executive group or the
non-executive officer employee group. The non-employee director group cannot
participate in the Stock Purchase Plan.
To be adopted, the Stock Purchase Plan must be approved by the holders of a
majority of the shares of Common Stock present at the meeting. Management
believes that all of the shares of Common Stock held by JLL and Airlie will be
voted in favor of the Stock Purchase Plan.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
COMPLIANCE WITH SECTION 16(A)
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
that companies, directors and executive officers, and persons who own more than
5% of common stock, to file with the Securities and Exchange Commission and the
NYSE initial reports of beneficial ownership and reports of changes in
beneficial ownership of common stock of the company. Said persons are also
required by applicable regulations to furnish the company with copies of all
Section 16(a) forms they file. To the Company's knowledge, based solely on a
review of the copies of such reports furnished to the Company and written
representations that no other reports were required to be filed, during 1995 all
Section 16(a) filings requirements were complied with except for one late filing
by Mr. Bynum, an officer of the Company.
DEADLINE FOR STOCKHOLDER PROPOSALS
December 9, 1996, is the date by which proposals of the stockholders of the
Company intended to be presented at the annual meeting of stockholders of the
Company in 1997 must be received by the Company for inclusion in the Company's
proxy statement and form of proxy relating to that meeting.
INDEPENDENT AUDITORS
Representatives of Coopers & Lybrand will be present at the Annual Meeting
and will be available to respond to appropriate questions, with an opportunity
to make a statement if they so desire. The Audit Committee will select the
Company's independent auditors for fiscal 1996 in September 1996.
OTHER MATTERS
Management does not know of any matters to be brought before the Annual
Meeting other than as set forth in the notice thereof. However, if any other
matters properly come before the meeting, it is the intention of the persons
named in the enclosed proxy solicited to vote such proxy in accordance with
their judgment on such matters.
SOLICITATION OF PROXIES
The expenses of the solicitation of proxies for the Annual Meeting,
including the cost of mailing, will be borne by the Company. In addition to
solicitation by mail, officers and regular employees of the Company may solicit
proxies from stockholders by telephone, telegram or personal interview. Such
persons will receive
28
<PAGE>
no additional compensation for such services. In addition, the Company intends
to request persons holding stock in their name as custodian, or in the name of a
nominee, to send proxy materials to their principals and request authority for
the execution of the proxies, and the Company will reimburse such persons for
their expense in doing so.
ANNUAL REPORT ON FORM 10-K
The Company's Annual Report on Form 10-K, including the financial statements
and the financial schedules, excluding exhibits thereto, as filed with the
Securities and Exchange Commission for Fiscal 1995 is available at no charge to
Stockholders upon written request to the undersigned. The financial statements
of the Company for Fiscal 1995 and other information were sent to Stockholders
as a part of the Annual Report to Stockholders.
By Order of the Board of Directors,
Bryant P. Bynum
CORPORATE SECRETARY
Dated: Oklahoma City, Oklahoma
April 4, 1996
29
<PAGE>
EXHIBIT A
FOODBRANDS AMERICA, INC.
NON-EMPLOYEE DIRECTORS'
DEFERRED STOCK COMPENSATION PLAN
ARTICLE I
PURPOSE AND EFFECTIVE DATE
1.1 PURPOSE. The Foodbrands America, Inc. Non-Employee Directors' Deferred
Stock Compensation Plan (the "Plan") is intended to advance the interests of the
Company and its shareholders by providing a means to attract and retain
highly-qualified persons to serve as non-employee Directors and to promote
ownership by non-employee Directors of a greater proprietary interest in the
Company, thereby aligning such Directors' interests more closely with the
interests of shareholders of the Company.
1.2 EFFECTIVE DATE. This Plan shall become effective April 27, 1995
subject to approval of the shareholders of the Company by the affirmative vote
of a majority of Shares present, or represented, and entitled to vote on the
subject matter, at the 1996 Annual Meeting of Shareholders of the Company at
which a quorum is present or by a written consent of the holders of a majority
of the Company's then outstanding Shares.
ARTICLE II
DEFINITIONS
The following terms shall be defined as set forth below:
2.1 "Board" means the Board of Directors of the Company.
2.2 "Committee" means the Compensation Committee of the Board.
2.3 "Company" means Foodbrands America, Inc., a Delaware corporation, or any
successor thereto.
2.4 "Deferral Date" means the date Fees would otherwise have been paid to
the Participant.
2.5 "Director" means any individual who is a member of the Board.
2.6 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
References to any provision of the Exchange Act include rules thereunder and
successor provisions and rules thereto.
2.7 "Fair Market Value" means the closing sales price for the Shares on the
relevant date, or (if there were no sales on such date) the closing sales price
on the nearest day before or the nearest day after the relevant date, as
reported in The Wall Street Journal or a similar publication selected by the
Committee.
2.8 "Fees" means all or part of any retainer and/or fees payable to a
non-employee Director in his or her capacity as a Director.
2.9 "Participant" means a non-employee Director who defers Fees under
Article VI of this Plan.
2.10 "Reconciliation Events" means certain events which cause the amount of
Fees actually paid during a Plan year to differ from the amount of Fees credited
pursuant to Section 6.4, including, but not limited to, the following: an
increase or decrease in Fees paid, additional meetings held, missed attendance
at certain meetings, newly elected directors and Terminations of Service which
occur prior to the end of the Plan year.
2.11 "Secretary" means the Corporate Secretary or any Assistant Corporate
Secretary of Foodbrands America, Inc.
2.12 "Shares" means shares of the common stock of Foodbrands America, Inc.,
par value $.01 per share, or of any successor corporation or other legal entity
adopting this Plan.
A-1
<PAGE>
2.13 "Stock Units" means the credits to a Participant's Stock Unit Account
under Article VI of this Plan, each of which represents the right to receive one
Share upon settlement of the Stock Unit Account.
2.14 "Stock Unit Account" means the bookkeeping account established by the
Company pursuant to Section 6.4.
2.15 "Termination Date" means the date the Plan terminates pursuant to
Section 12.8.
2.16 "Termination of Service" means termination of service as a Director in
any of the following circumstances:
(a) Where the Participant voluntarily resigns or retires;
(b) Where the Participant is not re-elected (or elected in the case of
an appointed Director) to the Board by the shareholders; or
(c) Where the Participant dies.
ARTICLE III
SHARES AVAILABLE UNDER THE PLAN
Subject to adjustment as provided in Article X, the maximum number of Shares
that may be distributed in settlement of Stock Unit Accounts under this Plan
shall not exceed 150,000. Such Shares may include authorized but unissued Shares
or treasury Shares.
ARTICLE IV
ADMINISTRATION
4.1 This Plan shall be administered by the Board's Compensation Committee,
or such other committee or individual as may be designated by the Board.
Notwithstanding the foregoing, no Director who is a Participant under this Plan
shall participate in any determination relating solely or primarily to his or
her own Shares, Stock Units or Stock Unit Account.
4.2 It shall be the duty of the Committee to administer this Plan in
accordance with its provisions and to make such recommendations of amendments or
otherwise as it deems necessary or appropriate.
4.3 The Committee shall have the authority to make all determinations it
deems necessary or advisable for administering this Plan, subject to the
limitations in Section 4.1 and other explicit provisions of this Plan.
ARTICLE V
ELIGIBILITY
5.1 Each Director who is not an employee of the Company shall be eligible to
defer Fees under Article VI of this Plan.
5.2 If such Director subsequently becomes an employee of the Company (or any
of its subsidiaries), but does not incur a Termination of Service, such Director
shall (a) continue as a Participant with respect to Fees previously deferred and
(b) cease eligibility with respect to all future Fees, if any, earned while an
employee.
ARTICLE VI
DEFERRAL ELECTIONS IN LIEU OF CASH PAYMENTS
6.1 GENERAL RULE. Each Director may, in lieu of receipt of Fees, defer
such Fees in accordance with this Article VI, provided that such Director is
eligible under Article V of this Plan to defer such Fees at the date any such
Fees are otherwise payable.
A-2
<PAGE>
6.2 TIMING OF ELECTION. Each eligible Director who wishes to defer Fees
under this Plan must make an irrevocable written election at least six (6)
months prior to the start of the calendar year for which the Fees would
otherwise be paid; provided, however, that with respect to (a) any election made
by a newly-elected or appointed Director ("New Director Elections") and (b) any
elections made by Directors with respect to Fees paid in 1995 ("1995
Elections"), the following special rules shall apply: (i) with respect to any
New Director Elections, the Company shall hold such deferred Fees (without
interest) and credit them pursuant to Section 6.4 on or as of the date which
follows by six months such deferral election and (ii) with respect to any 1995
Elections, such elections shall be effective for any Fees paid on the date the
election was made and the Company shall hold such deferred Fees (without
interest) and credit them pursuant to Section 6.4 on or as of the date on which
the shareholders of the Company approve the Plan in accordance with Section 1.2;
provided, however, the Fair Market Value used to determine the number of Stock
Units to be credited shall be the Fair Market Value as of the date the election
was made. An election by a Director shall be deemed to be continuing and
therefore applicable to Fees to be paid in future years unless the Director
revokes or changes such election by filing a new election form by the due date
for such form specified in this Section 6.2.
6.3 FORM OF ELECTION. An election shall be made in a manner satisfactory
to the Secretary. Generally, an election shall be made by completing and filing
the specified election form with the Secretary of the Company within the period
described in Section 6.2. At minimum, the form shall require the Director to
specify the following:
(a) a percentage (in 25% increments), not to exceed an aggregate of 100%
of the Fees to be deferred under this Plan; and
(b) the manner of settlement in accordance with Section 7.2.
6.4 ESTABLISHMENT OF STOCK UNIT ACCOUNT. The Company will establish a
Stock Unit Account for each Participant. All Fees deferred pursuant to this
Article VI shall be credited to the Participant's Stock Unit Account as of the
Deferral Date and converted to Stock Units as follows: The number of Stock Units
shall equal the deferred Fees divided by the Fair Market Value of a Share on the
Deferral Date, with fractional units calculated to three (3) decimal places.
6.5 CREDIT OF DIVIDEND EQUIVALENTS. As of each dividend payment date with
respect to Shares, each Participant shall have credited to his or her Stock Unit
Account an additional number of Stock Units equal to: the per-share cash
dividend payable with respect to a Share on such dividend payment date
multiplied by the number of Stock Units held in the Stock Unit Account as of the
close of business on the record date for such dividend divided by the Fair
Market Value of a Share on such dividend payment date. If dividends are paid on
Shares in a form other than cash, then such dividends shall be notionally
converted to cash, if their value is readily determinable, and credited in a
manner consistent with the foregoing and, if their value is not readily
determinable, shall be credited "in kind" to the Participant's Stock Unit
Account.
6.6 RECONCILIATIONS. Since the Company will pay Fees in advance as of
January 1 for each Plan year, except for 1995 Fees, the remainder of which will
be paid as of the effective date of the Plan, Reconciliation Events may occur.
The Company shall record all Reconciliation Events and, as soon as reasonably
practicable after the end of each Plan year or after a Termination of Service,
make appropriate adjustments to each Participant's Stock Unit Account to reflect
such Reconciliation Events; provided, however, the Fair Market Value used to
determine such adjustments shall be the same Fair Market Value used to determine
the number of Stock Units credited to such Participant's Stock Unit Account at
the beginning of the Plan year in which such Reconciliation Events occurred.
ARTICLE VII
SETTLEMENT OF STOCK UNITS
7.1 SETTLEMENT OF ACCOUNT. The Company will settle a Participant's Stock
Unit Account in the manner described in Section 7.2 as soon as administratively
feasible following the earlier of (i) notification of such Participant's
Termination of Service or (ii) the Termination Date.
A-3
<PAGE>
7.2 PAYMENT OPTIONS. An election filed under Article VI shall specify
whether the Participant's Stock Unit Account is to be settled by delivering to
the Participant (or his or her beneficiary) the number of Shares equal to the
number of whole Stock Units then credited to the Participant's Stock Unit
Accounts, in (a) a lump sum, or (b) substantially equal annual installments over
a period not to exceed ten (10) years. If, upon lump sum distribution or final
distribution of an installment, less than one whole Stock Unit is credited to a
Participant's Stock Unit Account, cash will be paid in lieu of fractional shares
on the date of such distribution.
7.3 CONTINUATION OF DIVIDEND EQUIVALENTS. If payment of Stock Units is
deferred and paid in installments, the Participant's Stock Unit Account shall
continue to be credited with dividend equivalents as provided in Section 6.5.
7.4 IN KIND DIVIDENDS. If any "in kind" dividends were credited to the
Participant's Stock Unit Account under Section 6.5, such dividends shall be
payable to the Participant in full on the date of the first distribution of
Shares under Section 7.2.
ARTICLE VIII
UNFUNDED STATUS
The interest of each Participant in any Fees deferred under this Plan (and
any Stock Units or Stock Unit Account relating thereto) shall be that of a
general creditor of the Company. Stock Unit Accounts, and Stock Units (and, if
any, "in kind" dividends) credited thereto, shall at all times be maintained by
the Company as bookkeeping entries evidencing unfunded and unsecured general
obligations of the Company.
ARTICLE IX
DESIGNATION OF BENEFICIARY
Each Participant may designate, on a form provided by the Committee, one or
more beneficiaries to receive the Shares described in Section 7.2 in the event
of such Participant's death. The Company may rely upon the beneficiary
designation last filed with the Committee, provided that such form was executed
by the Participant or his or her legal representative and filed with the
Committee prior to the Participant's death.
ARTICLE X
ADJUSTMENT PROVISIONS
In the event any recapitalization, reorganization, merger, consolidation,
spin-off, combination, repurchase, exchange of shares or other securities of the
Company, stock split or reverse split, or similar corporate transaction or event
affects Shares such that an adjustment is determined by the Board or Committee
to be appropriate to prevent dilution or enlargement of Participants' rights
under this Plan, then the Board or Committee will, in a manner that is
proportionate to the change to the Shares and is otherwise equitable, adjust the
number or kind of Shares to be delivered upon settlement of Stock Unit Accounts
under Article VII.
ARTICLE XI
COMPLIANCE WITH RULE 16B-3
Subject to Section 6.2, it is the intent of the Company that this Plan
comply in all respects with applicable provisions of Rule 16b-3 under the
Exchange Act in connection with the deferral of Fees. Thus, other provisions of
this Plan notwithstanding, if any deferral of Fees would occur less than six (6)
months after the Participant filed an irrevocable election which would result in
such deferral and at a time that the Company's employee benefit plans are being
operated in conformity with Rule 16b-3 as adopted and in effect, such deferral
election may be modified in a manner consistent with the special rule described
in Section 6.2 or in any other manner consistent with Rule 16b-3 as then
applicable to any transaction by a Participant subject to Section 16 of the
Exchange Act, or would cause any Participant or Director to no
A-4
<PAGE>
longer be deemed a "disinterested person" within the meaning of Rule 16b-3, such
provision will be construed or deemed amended to the extent necessary to conform
to such requirements with respect to such Participant or Director.
ARTICLE XII
GENERAL PROVISIONS
12.1 NO RIGHT TO CONTINUE AS A DIRECTOR. Nothing contained in this Plan
will confer upon any Participant any right to continue to serve as a Director.
12.2 NO SHAREHOLDER RIGHTS CONFERRED. Nothing contained in this Plan will
confer upon any Participant any rights of a shareholder of the Company unless
and until Shares are in fact issued or transferred to such Participant in
accordance with Article VII.
12.3 CHANGE TO THE PLAN. The Board may amend, alter, suspend, discontinue,
extend, or terminate the Plan without the consent of shareholders or
Participants, except that any such action will be subject to the approval of the
Company's shareholders at the next annual meeting of shareholders having a
record date after the date such action was taken if such stockholder approval is
required by any federal or state law or regulation or the rules of any stock
exchange or automated quotation system on which the Shares may then be listed or
quoted, or if the Board determines in its discretion to seek such shareholder
approval; provided, however, that, without the consent of an affected
Participant, no such action may materially impair the rights of such Participant
with respect to any Stock Units credited to his or her Stock Unit Account; and
provided, however, that any "plan provision" referred to in Rule
16b-3(c)(2)(ii)(B) under the Exchange Act, shall not be amended more than once
every six months, other than to comport with changes in the Internal Revenue
Code or the Exchange Act or the rules thereunder.
12.4 CONSIDERATION; AGREEMENTS. The consideration for Shares issued or
delivered in lieu of payment of Fees will be the Director's service during the
period to which the Fees paid in the form of Shares related.
12.5 COMPLIANCE WITH LAWS AND OBLIGATIONS. The Company will not be
obligated to issue or deliver Shares in connection with this Plan in a
transaction subject to the registration requirements of the Securities Act of
1933, as amended, or any other federal or state securities law, any requirement
under any listing agreement between the Company and any national securities
exchange or automated quotation system or any other laws, regulations, or
contractual obligations of the Company, until the Company is satisfied that such
laws, regulations, and other obligations of the Company have been complied with
in full. Certificates representing Shares delivered under the Plan will be
subject to such stop-transfer orders and other restrictions as may be applicable
under such laws, regulations, and other obligations of the Company, including
any requirement that a legend or legends be placed thereon.
12.6 LIMITATIONS ON TRANSFERABILITY. Stock Units and any other right under
the Plan that may constitute a "derivative security" as generally defined in
Rule 16a-1(c) under the Exchange Act will not be transferable by a Participant
except by will or the laws of descent and distribution (or to a designated
beneficiary in the event of a Participant's death); provided, however, that such
rights may be transferred to one or more trusts or other beneficiaries during
the lifetime of the Participant in connection with the Participant's estate
planning, but only if and to the extent then permitted under Rule 16b-3 and
consistent with the registration of the offer and sale of Shares on Form S-8 or
a successor registration form of the Securities and Exchange Commission. Stock
Units and other rights under the Plan may not be pledged, mortgaged,
hypothecated, or otherwise encumbered, and shall not be subject to the claims of
creditors.
12.7 GOVERNING LAW. The validity, construction, and effect of the Plan and
any agreement hereunder will be determined in accordance with the Delaware
General Corporation Law, to the extent applicable, other laws (including those
governing contracts) of the State of Oklahoma, without giving effect to
principles of conflicts of laws, and applicable federal law.
A-5
<PAGE>
12.8 PLAN TERMINATION. Unless earlier terminated by action of the Board or
Executive Committee of the Board, the Plan will remain in effect until the
earlier of (i) such time as no Shares remain available for delivery under the
Plan and the Company has no further rights or obligations under the Plan or (ii)
April 26, 2000.
A-6
<PAGE>
EXHIBIT B
FOODBRANDS AMERICA, INC. ASSOCIATE STOCK PURCHASE PLAN
Effective Date: July 1, 1996
<PAGE>
FOODBRANDS AMERICA, INC. ASSOCIATE STOCK PURCHASE PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<C> <S> <C>
ARTICLE I NAME AND PURPOSE OF PLAN............................................................... 1
1.1 Name of Plan........................................................................... 1
1.2 Purpose................................................................................ 1
ARTICLE II DEFINITIONS............................................................................ 1
2.1 Definitions............................................................................ 1
2.2 Construction........................................................................... 3
ARTICLE III FUNDING AND EARLY WITHDRAWAL OF ACCOUNTS............................................... 3
3.1 Stock Purchase Accounts................................................................ 3
3.2 Participant's Contributions............................................................ 3
3.3 Continued Participation; Voluntary Withdrawal from Plan................................ 4
3.4 Withdrawal by Terminating Participant.................................................. 4
3.5 Reparticipation........................................................................ 4
3.6 Interest Accrual....................................................................... 4
ARTICLE IV EXERCISE OF STOCK OPTION............................................................... 4
4.1 Exercise............................................................................... 4
4.2 Amount of Shares of Stock.............................................................. 4
4.3 Distribution........................................................................... 5
4.4 Issuance of Shares; Stock Certificates................................................. 5
ARTICLE V MAXIMUM SHARES OF STOCK AVAILABLE...................................................... 5
5.1 Maximum Number of Shares Allocable to Participants..................................... 5
5.2 Availability of Stock of Withdrawing Participants...................................... 5
5.3 Maximum Authorized Shares.............................................................. 6
5.4 Termination of Offering for the Second and Subsequent Purchase Periods................. 6
ARTICLE VI ADMINISTRATION......................................................................... 6
6.1 Appointment of Committee............................................................... 6
6.2 Committee Powers and Duties............................................................ 6
6.3 Committee to Make Rules and Interpret Plan............................................. 6
ARTICLE VII AMENDMENT OF THE PLAN.................................................................. 6
ARTICLE VIII RECAPITALIZATION AND EFFECT OF CERTAIN TRANSACTIONS.................................... 6
8.1 Stock Adjustments...................................................................... 6
8.2 Effect of Certain Transactions......................................................... 7
ARTICLE IX MISCELLANEOUS.......................................................................... 7
9.1 Notices................................................................................ 7
9.2 Application of the Funds............................................................... 7
9.3 Repurchase of Stock.................................................................... 7
9.4 Alternate Contribution Methods......................................................... 7
9.5 Nonassignability....................................................................... 7
9.6 Government Regulation.................................................................. 8
9.7 Effective Date of Plan................................................................. 8
9.8 Termination of Plan.................................................................... 8
9.9 No Obligations to Exercise Stock Option................................................ 8
9.10 Right to Continued Employment.......................................................... 8
9.11 Reliance on Reports.................................................................... 8
9.12 Applicable Law......................................................................... 8
9.13 Construction........................................................................... 8
</TABLE>
i
<PAGE>
FOODBRANDS AMERICA, INC. EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I
NAME AND PURPOSE OF PLAN
1.1 NAME OF PLAN. This Plan shall be known as: Foodbrands America, Inc.
Associate Stock Purchase Plan.
1.2 PURPOSE. The Foodbrands America, Inc. Employee Stock Purchase Plan, by
offering Employees the opportunity to purchase the Company's Stock through
payroll deductions, is intended to encourage participation in the ownership and
economic progress of the Company. Employees may only be granted Stock Options to
purchase Stock. Except as otherwise provided in the Plan, by reason of their
employment relationship with the Company and/or the Employer, all Employees of
all Employers will be eligible to participate in the Plan.
ARTICLE II
DEFINITIONS
2.1 DEFINITIONS. Where the following capitalized words and phrases appear
in either a singular or plural form in this instrument, they shall have the
respective meanings set forth below unless a different context is clearly
expressed herein.
(a) ACCOUNT AND ACCOUNT BALANCE:
(i) The word "Account" shall mean the record established and
maintained to record the interest in the Plan of each Participant in
accordance with Article III.
(ii) The words "Account Balance" shall mean the credited balance
standing in a Participant's Account from time to time.
(b) BOARD: The word "Board" shall mean the Board of Directors of the
Company.
(c) CODE: The word "Code" shall mean the Internal Revenue Code of
1986, as amended from time to time.
(d) COMMITTEE: The word "Committee" shall mean the Compensation
Committee of the Board referred to in Article VI.
(e) COMPANY: The word "Company" shall mean Foodbrands America, Inc., a
Delaware corporation.
(f) EMPLOYEE: The word "Employee" shall mean any person employed by
the Employer on the basis of an employer-employee relationship who receives
remuneration for personal services rendered to the Employer.
(g) EMPLOYER: The word "Employer" shall mean the Company and any
Subsidiary of the Company.
(h) EXERCISE DATE: The words "Exercise Date" shall mean June 30 of any
year during which the Plan is in existence, being June 30, 1997, 1998, 1999,
2000 and 2001.
(i) FAIR MARKET VALUE: The words "Fair Market Value" shall mean (A)
during such time as the Stock is listed upon the New York Stock Exchange or
other exchanges or the NASDAQ/National Market System, the closing price of
the Stock on such stock exchange or exchanges or the NASDAQ/ National Market
System on the day for which such value is to be determined, or if no sale of
the Stock shall have been made on any such stock exchange or the
NASDAQ/National Market System that day, on the next preceding day on which
there was a sale of such Stock or (B) during any such time as the
B-1
<PAGE>
Stock is not listed upon an established stock exchange or the
NASDAQ/National Market System, the mean between dealer "bid" and "ask"
prices of the Stock in the over-the-counter market on the day for which such
value is to be determined, as reported by the National Association of
Securities Dealers, Inc.
(j) GRANTING DATE: The words "Granting Date" shall mean the beginning
of each applicable Purchase Period, being July 1, 1996, 1997, 1998, 1999 and
2000.
(k) OPTION AGREEMENT: The words "Option Agreement" shall mean an
agreement to be executed by the Participant and the Company, which shall
comply with the terms of the Plan and shall be in such form as the Committee
agrees upon from time to time.
(l) OPTION PRICE: The words "Option Price" shall mean the price which
shall be paid by the Participant from his Account for any Stock purchased on
an applicable Exercise Date pursuant to any Stock Option granted to such
Participant; provided, such option price shall be the lesser of:
(i) 90% of the per share Fair Market Value on the Granting Date of
the Purchase Period applicable to such Participant; or
(ii) 90% of the per share Fair Market Value on the applicable
Exercise Date.
Provided, in no event shall the Option Price per share be less than the par
value of the Stock.
(m) PARTICIPANT: The word "Participant" shall mean an Employee (i) who
executes with the Company an Option Agreement on or prior to a Granting
Date, (ii) who on such Granting Date has been continuously employed by the
Employer for at least six months, and (iii) whose customary employment is
more than 20 hours per week and more than five months in any calendar year.
The word "Participant" shall also include the legal representative of a
deceased Participant, and a Participant who, within three months prior to
the end of the applicable Purchase Period for which he is a Participant,
terminates his employment with the Employer on account of (i) retirement on
or after age 55, (ii) retirement because of disability, (iii) lay off by the
Employer, or (iv) an authorized leave of absence granted by the Employer.
"Disability" for purposes of this Subsection (m) shall mean a physical or
mental condition which, in the judgment of the Committee, totally and
permanently prevents a Participant from engaging in any substantial gainful
employment with the Employer. A determination that disability exists shall
be based upon independent medical evidence satisfactory to the Committee. In
the event that the Company ceases to be a Subsidiary of the Company, the
Employees of such Employer will be deemed to have terminated employment as
of such date.
(n) PLAN: The word "Plan" shall mean this Foodbrands America, Inc.
Employee Stock Purchase Plan, and any amendments thereto.
(o) PURCHASE PERIOD: The words "Purchase Period" shall mean any one
year period commencing on July 1 and ending on June 30 of each year during
which the Plan is in existence, as follows:
(i) "First Purchase Period" -- July 1, 1996 through June 30, 1997.
(ii) "Second Purchase Period" -- July 1, 1997 through June 30, 1998.
(iii) "Third Purchase Period" -- July 1, 1998 through June 30, 1999.
(iv) "Fourth Purchase Period" -- July 1, 1999 through June 30, 2000.
(v) "Fifth Purchase Period" -- July 1, 2000 through June 30, 2001.
(p) STOCK: The word "Stock" shall mean any of the total number of
shares of common stock of the Company being authorized for issuance pursuant
to the terms of the Plan in accordance with Article V.
(q) STOCK OPTION: The words "Stock Option" shall mean the right of a
Participant on an applicable Exercise Date to purchase the number of whole
shares of Stock as provided in Article IV.
B-2
<PAGE>
(r) SUBSIDIARY: The word "Subsidiary" shall mean any present or future
subsidiary corporation of the Company as defined in Section 424 of the Code.
(s) TERMINATING PARTICIPANT: The words "Terminating Participant" shall
mean a Participant who terminates his employment for reasons other than
those set forth in Subsection 2.1(m).
2.2 CONSTRUCTION. The masculine gender, where appearing in the Plan, shall
be deemed to include the feminine gender, unless the context clearly indicates
to the contrary. Any word appearing herein in the plural shall include the
singular, where appropriate, and likewise the singular shall include the plural,
unless the context clearly indicates to the contrary.
ARTICLE III
FUNDING AND EARLY WITHDRAWAL OF ACCOUNTS
3.1 STOCK PURCHASE ACCOUNTS. As of the applicable Granting Date, there
shall be established and maintained under the Plan in the name of each
Participant (who is a Participant with respect to the Purchase Period pertaining
to such Granting Date) an Account which shall be debited and credited in
accordance with the following Sections of this Article III.
3.2 PARTICIPANT'S CONTRIBUTIONS. By becoming a Participant, authorization
shall be deemed to be automatically given by the Participant for his periodic
contributions which shall be credited to his Account calculated as follows:
FIRST: The Participant's basic compensation rate (excluding any form of
extraordinary compensation such as overtime, prizes, bonuses, commissions,
reimbursed relocation expenses and the like), as of the date ("Determination
Date") which is three months prior to the applicable Granting Date, shall be
determined and annualized ("Annual Compensation"). Increases in such basic
compensation rate after such Determination Date shall be disregarded for
that Purchase Period. Decreases in such basic compensation rate shall be
adjusted as provided hereinafter.
SECOND: Prior to the applicable Granting Date, the Participant shall
elect in his Option Agreement filed with the Committee a percentage of
either 1%, 2% or 3% ("Contribution Rate"); provided, an election, once
effective, with respect to the first Purchase Period applicable to such
Participant following such election, cannot thereafter be changed; and
provided, a Participant may elect to change his Contribution Rate for
succeeding Purchase Periods by notifying the Committee within 10 days of any
succeeding Granting Date. If a Participant receives a "hardship withdrawal"
from a cash or deferred arrangement established by the Employer under Code
Section 401(k), he shall be prohibited from making contributions to his
Account under this Plan for a period of 12 months after receipt of such
hardship distribution.
THIRD: The Participant's Annual Compensation for the applicable
Purchase Period shall be multiplied by his Contribution Rate, and the
product thereof shall equal his aggregate maximum contributions ("Aggregate
Contributions") to be made under the Plan for the applicable Purchase
Period.
FOURTH: A Participant's Aggregate Contributions shall be divided by the
number of his payroll payment dates falling within the applicable Purchase
Period to determine the dollar amount of equal periodic contributions which
shall be withheld by the Employer by payroll deduction. If a Participant's
number of payroll payment dates thereafter shall be changed, appropriate
adjustment shall be made so that equal periodic contributions shall be made.
Provided, in the event that a Participant incurs a decrease in his basic
compensation during any Purchase Period, and such Participant is not a
Terminating Participant or has not voluntarily withdrawn from the Plan,
then, in such event, and if requested by the Participant, appropriate
adjustments will be made by the Committee to reduce the maximum amount of
periodic contributions which such Participant would otherwise make pursuant
to the Plan to his Stock Purchase Account. The reduction shall occur by
determining the Participant's reduced basic
B-3
<PAGE>
compensation rate and then multiplying such rate by the Contribution Rate
which such Participant had previously elected for that Purchase Period. This
reduced amount thereafter will be credited to the Stock Purchase Account of
such Participant for the balance of the applicable Purchase Period.
3.3 CONTINUED PARTICIPATION; VOLUNTARY WITHDRAWAL FROM PLAN. Once a
Participant elects to participate in the Plan, he shall thereafter remain as a
Participant until expiration or termination of the Plan, unless he otherwise
withdraws from, or otherwise becomes ineligible to participate in the Plan. A
Participant who terminates employment for any reasons specified in Subsection
2.1(m) within three months prior to the end of the applicable Purchase Period
because of "disability" or retirement on or after attaining age 55, or
termination due to death will continue to be a Participant in the Plan until the
next succeeding Exercise Date unless such Participant or his representative (in
the event of the Participant's death) elects to withdraw from the Plan pursuant
to this Section 3.3. A Participant may withdraw from the Plan at any time by
filing a written notice with the Committee of withdrawal prior to the next
applicable Exercise Date. Upon a Participant's withdrawal, his entire Account
Balance, if any, on the date of withdrawal shall be refunded to him.
3.4 WITHDRAWAL BY TERMINATING PARTICIPANT. A Terminating Participant shall
be deemed to have made an election to withdraw from the Plan on the date his
employment terminates. Upon such withdrawal, his entire Account Balance, if any,
on the date of withdrawal, shall be refunded to him.
3.5 REPARTICIPATION. A Participant who withdraws under Section 3.3 within
any Purchase Period shall not be eligible to reenter the Plan with respect to
the same Purchase Period; provided, a Participant who withdraws from the Plan
under Section 3.3 prior to the end of any Purchase Period shall not be precluded
from becoming a Participant with respect to any succeeding Purchase Period if he
satisfies the eligibility requirements of the Plan.
3.6 INTEREST ACCRUAL. With respect to the refund or distribution of an
Account Balance under either of Sections 3.3 or 3.4, no interest shall be paid
or payable. If the Plan is terminated under either of Sections 8.2 or 9.9, the
refund of an Account Balance shall be with interest at a per annum rate of 5%
and shall be computed upon the average balance in such Participant's Account for
the period of time following the Granting Date applicable to such Participant
and ending on the day of the withdrawal or distribution.
ARTICLE IV
EXERCISE OF STOCK OPTION
4.1 EXERCISE. If a Participant has not made an earlier election to
withdraw pursuant to either of Sections 3.3 or 3.4, he shall be deemed to have
elected to exercise his Stock Option as of each Exercise Date with respect to
the applicable Purchase Periods.
4.2 AMOUNT OF SHARES OF STOCK.
(a) Subject to the Subsection (b) following, the whole number of shares
of Stock to which a Participant shall be entitled ("Total Stock
Entitlement") upon the applicable Exercise Date shall be determined under
the following formula:
ACCOUNT BALANCE
---------------
Option Price = Total Stock Entitlement
Provided, the Account Balance for purposes of this Section 4.2 shall be
determined without crediting any interest thereon.
(b) The Total Stock Entitlement computed for each Participant shall be
reduced to the extent that any of the following Subsections shall apply:
(i) No Participant shall be entitled to participate in the Plan to a
greater extent than the maximum number of shares of Stock to which he has
been allocated under Section 5.1.
(ii) No Participant shall be entitled to participate in the Plan to a
greater extent than that permitted under Section 423(b)(3) of the Code.
Thus, no Employee may be granted a Stock Option
B-4
<PAGE>
if such Employee, immediately after the Stock Option is granted, owns
stock possessing five percent or more of the total combined voting power
or value of all classes of stock of the Company or of its parent or any
Subsidiary (if applicable). For purposes of this Subsection, the rules of
Section 424(d) of the Code shall apply in determining the stock ownership
of an individual, and stock which the Employee may purchase under all
outstanding stock options shall be treated as stock owned by the
Employee.
(iii) No Participant shall be entitled to participate in the Plan to a
greater extent than that permitted under Section 423(b)(8) of the Code.
Thus, no Employee may be granted a Stock Option which permits his rights
to purchase stock under all such "employee stock ownership plans" of the
Company and its parent or any Subsidiary (if applicable) intended to
qualify under Section 423 of the Code to accrue at a rate which exceeds
$25,000 of fair market value of such stock (determined at the time such
Stock Option is granted) for each calendar year in which such Stock
Option is outstanding at any time. For purposes of this Subsection, (1)
the right to purchase stock under an option accrues when the option (or
any portion thereof) first becomes exercisable during the calendar year;
(2) the right to purchase stock under an option accrues at the rate
provided in the option, but in no case may such rate exceed $25,000 of
fair market value of such stock (determined at the time such stock option
is granted) for any one calendar year; and (3) a right to purchase stock
which has accrued under one option granted pursuant to any such plan may
not be carried over to any other such stock option.
4.3 DISTRIBUTION. A Participant's Total Stock Entitlement as determined
under Section 4.2 shall be distributed to him pursuant to Section 4.4(b)
together with any cash which is not applied toward the purchase of whole shares
of Stock. No interest shall be payable upon such refunded Account Balance.
4.4 ISSUANCE OF SHARES; STOCK CERTIFICATES.
(a) The shares of Stock purchased by a Participant on the applicable
Exercise Date shall for all purposes, be deemed to have been issued and
sold at the close of business on such Exercise Date. Prior to that time,
none of the rights or privileges of a stockholder of the Company shall
exist with respect to such shares.
(b) As soon as practicable after each Exercise Date, the Company
shall issue and deliver a certificate, registered in the Participant's
name, for the number of shares of Stock purchased.
ARTICLE V
MAXIMUM SHARES OF STOCK AVAILABLE
5.1 MAXIMUM NUMBER OF SHARES ALLOCABLE TO PARTICIPANTS. As of each
Granting Date, there shall be computed for each Participant (who is a
Participant with respect to the Purchase Period pertaining to such Granting
Date) the maximum number of shares of Stock eventually exercisable by such
Participant as follows:
(a) With respect to each Purchase Period, the maximum number of shares
of Stock to which a Participant shall be entitled on the Exercise Date shall
be his Aggregate Contributions (determined under Section 3.2) divided by the
per share Fair Market Value determined on the applicable Granting Date.
(b) If on the Granting Date of any Purchase Period the maximum number of
shares of Stock, determined under the foregoing Subsection (a) aggregated
for all Participants, exceeds the number of shares of Stock available for
issuance under the Plan, there shall be a proportionate reduction for the
ensuing applicable Purchase Period of each Participant's maximum number of
shares of Stock in order to eliminate such excess.
5.2 AVAILABILITY OF STOCK OF WITHDRAWING PARTICIPANTS. With respect to a
Participant who is participating during any Purchase Period and who has
withdrawn from the Plan prior to the Granting Date of the next
B-5
<PAGE>
Purchase Period pursuant to either of Sections 3.3 or 3.4, such Participant's
maximum number of shares of Stock computed in accordance with Subsection 5.1(a)
shall be available for Stock Options granted in connection with the next
succeeding Purchase Period or Periods.
5.3 MAXIMUM AUTHORIZED SHARES. Subject to adjustment under Article VIII,
the maximum number of shares of Stock which may be issued under the Plan shall
not in the aggregate exceed 100,000 shares of Stock.
5.4 TERMINATION OF OFFERING FOR THE SECOND AND SUBSEQUENT PURCHASE
PERIODS. If in the opinion of the Committee, there is insufficient Stock
available for Stock Options at any Granting Date after the July 1, 1996 Granting
Date, the Committee may terminate the offering contemplated for any or all
succeeding Purchase Periods.
ARTICLE VI
ADMINISTRATION
6.1 APPOINTMENT OF COMMITTEE. The Plan shall be administered by the
Committee appointed by the Board and consisting of not less than two members
from the Board none of whom shall be employees of the Company or a subsidiary of
the Company while serving on the Committee. The members of the Committee shall
serve at the pleasure of the Board and shall be ineligible to participate under
the Plan. Any member may serve concurrently as a member of any other
administrative committee of any other plan of the Company or its affiliates
entitling participants therein to acquire stock, stock options or deferred
compensation rights including stock appreciation rights.
6.2 COMMITTEE POWERS AND DUTIES. The Committee shall have all the powers
and authorities which are reasonably appropriate and necessary to discharge its
duties under the Plan.
6.3 COMMITTEE TO MAKE RULES AND INTERPRET PLAN. The Committee, in its sole
discretion, shall have the authority, subject to the provisions of the Plan, to
establish, adopt, or revise rules and regulations with respect to the
administration of the Plan and to make all such determinations relating to the
Plan as it may deem necessary or advisable for the administration of the Plan.
The Committee's interpretation of the Plan and all decisions and determinations
by the Committee with respect to the Plan shall be final, binding, and
conclusive on all parties unless otherwise determined by the Board.
ARTICLE VII
AMENDMENT OF THE PLAN
The Board may at any time, or from time to time, amend the Plan in any
respect consistent with Sections 421 and 423 of the Code, except that, without
approval of the stockholders, no amendment shall (i) increase the maximum number
of shares reserved under the Plan other than as provided in Article VIII, or
(ii) make the Plan available to any person who is not a Participant.
ARTICLE VIII
RECAPITALIZATION AND EFFECT OF CERTAIN TRANSACTIONS
8.1 STOCK ADJUSTMENTS. In the event that the shares of Stock, as presently
constituted, shall be changed into or exchanged for a different number or kind
of shares of stock or other securities of the Company or of another corporation
(whether by reason of merger, consolidation, recapitalization, reclassification,
stock split, combination of shares or otherwise), or if the number of such
shares of Stock shall be increased through the payment of a stock dividend, or a
dividend on the shares of Stock or rights or warrants to purchase securities of
the Company shall be made, then there shall be substituted for or added to each
share available under and subject to the Plan as provided in Section 5.3 hereof,
and each share theretofore appropriated or thereafter subject or which may
become subject to Stock Options under the Plan, the number and kind of shares of
stock or other securities into which each outstanding share of Stock shall be so
changed or for which each such share shall be exchanged or to which each such
share shall be entitled, as the case may be, on a fair and equivalent basis in
accordance with the applicable provisions of Section 424 of the
B-6
<PAGE>
Code; provided, in no such event will such adjustment result in a modification
of any Stock Option as defined in Section 424(h) of the Code. In the event there
shall be any other change in the number or kind of the outstanding shares of
Stock, or any stock or other securities into which the Stock shall have been
changed or for which it shall have been exchanged, then if the Committee shall,
in its sole discretion, determine that such change equitably requires an
adjustment in the shares available under and subject to the Plan, or in any
Stock Option theretofore granted or which may be granted under the Plan, such
adjustments shall be made in accordance with such determination, except that no
adjustment of the number of shares of Stock available under the Plan or to which
any Stock Option relates that would otherwise be required shall be made unless
and until such adjustment either by itself or with other adjustments not
previously made would require an increase or decrease of at least 1% in the
number of shares of Stock available under the Plan or to which any Stock Option
relates immediately prior to the making of such adjustment (the "Minimum
Adjustment"). Any adjustment representing a change of less than such minimum
amount shall be carried forward and made as soon as such adjustment together
with other adjustments required by this Section 8.1 and not previously made
would result in a Minimum Adjustment. Notwithstanding the foregoing, any
adjustment required by this Section 8.1 which otherwise would not result in a
Minimum Adjustment shall be made with respect to shares of Stock relating to any
Stock Option immediately prior to exercise, payment or settlement of such Stock
Option.
No fractional shares of Stock or units of other securities shall be issued
pursuant to any such adjustment, and any fractions resulting from any such
adjustment shall be eliminated in each case by rounding downward to the nearest
whole share.
8.2 EFFECT OF CERTAIN TRANSACTIONS. Subject to any required action by the
stockholders, if the Company shall be the surviving or resulting corporation in
any merger or consolidation, any Stock Option hereunder shall pertain to and
apply to the shares of stock of the Company; but a dissolution or liquidation of
the Company or merger or consolidation in which the Company is not the surviving
or the resulting corporation shall cause the Plan and any Stock Option hereunder
to terminate upon the effective date of such dissolution, liquidation, merger or
consolidation, and the Account Balance of each Participant shall be refunded to
him. Provided, that for the purpose of this Section 8.2, if any merger,
consolidation or combination occurs in which the Company is not the surviving
corporation and is the result of a mere change in the identity, form or place of
organization of the Company accomplished in accordance with Section 368(a)(1)(F)
of the Code, then, such event shall not cause a termination.
ARTICLE IX
MISCELLANEOUS
9.1 NOTICES. Any notice which a Participant files pursuant to the Plan
shall be on the form prescribed by the Committee and shall be effective when
received by the Committee.
9.2 APPLICATION OF THE FUNDS. All funds received by the Company under the
Plan may be used for any corporate purpose.
9.3 REPURCHASE OF STOCK. The Company shall not be required to repurchase
from any Participant shares of Stock which he acquired under the Plan.
9.4 ALTERNATE CONTRIBUTION METHODS. If authorized payroll deductions of a
Participant's periodic contributions under Section 3.2 are not permitted by
reason of the provisions of any law applicable to an Employer, the Committee
shall adopt an appropriate alternative method under which affected Participants
may make payment for shares of Stock purchased hereunder which would otherwise
have been made pursuant to Section 3.2.
9.5 NONASSIGNABILITY. Stock Options are exercisable only by the
Participant during his lifetime, or by his estate or the person who acquires the
right to exercise such Stock Option upon his death by bequest or inheritance,
and are not transferable by him other than by will or the laws of descent and
distribution. No Stock Option shall be subject in any manner to alienation,
anticipation, sale, transfer, assignment, pledge, or encumbrance, except for
transfer by will or the laws of descent and distribution. Any attempt to
transfer,
B-7
<PAGE>
assign, pledge, hypothecate or otherwise dispose of, or to subject to execution,
attachment or similar process, any Stock Option contrary to the provisions
hereof, shall be void and ineffective, shall give no right to any purported
transferee, and may, at the sole discretion of the Committee, result in
forfeiture of the Stock Option involved in such attempt.
9.6 GOVERNMENT REGULATION. The Company's obligation to sell and deliver
the Stock under the Plan is at all times subject to any and all approvals, rules
and regulations of any governmental authority required in connection with the
authorization, issuance, sale or delivery of such Stock. In addition, the rights
of Participants under the Plan who are subject to Section 16 of the Securities
Exchange Act of 1934, as amended ("Section 16"), are subject to compliance by
such Participants with the applicable provisions of Section 16 and the rules and
regulations promulgated thereunder.
9.7 EFFECTIVE DATE OF PLAN. The Plan shall become effective on July 1,
1996, if prior to that date the Plan has been approved by the holders of a
majority of the common stock of the Company present, or represented, and
entitled to vote at a meeting called for such purposes.
9.8 TERMINATION OF PLAN. The Plan shall continue in effect through June
30, 2001, unless terminated pursuant to Section 8.2 or by the Board, which shall
have the right to terminate the Plan at any time. Upon the termination of the
Plan pursuant to this Section 9.8 or Section 8.2, the Account Balance of each
Participant shall be refunded to him.
9.9 NO OBLIGATIONS TO EXERCISE STOCK OPTION. The granting of a Stock
Option shall impose no obligation upon the Participant to exercise his Stock
Option.
9.10 RIGHT TO CONTINUED EMPLOYMENT. Participation in the Plan shall not
give any Participant any right to remain in the employ of the Employer. The
Employer reserves the right to terminate any Participant at any time. Further,
the adoption of this Plan shall not be deemed to give any Participant or any
other individual any right to be selected as a Participant or to be granted a
Stock Option.
9.11 RELIANCE ON REPORTS. Each member of the Committee and each member of
the Board shall be fully justified in relying or acting in good faith upon any
report made by the independent public accountants of the Company and upon any
other information furnished in connection with the Plan by any person or persons
other than himself. In no event shall any person who is or shall have been a
member of the Committee or of the Board be liable for any determination made or
other action taken or any omission to act in reliance upon any such report or
information or for any action taken, including the furnishing of information, or
failure to act, if in good faith.
9.12 APPLICABLE LAW. This Plan shall be governed by and interpreted in
accordance with the laws of the State of Oklahoma.
9.13 CONSTRUCTION. It is intended that this Plan shall qualify in
accordance with Sections 421 and 423 of the Code, and the provisions of this
Plan shall be interpreted and applied in a manner consistent with such intent.
Pursuant to the terms of the Plan and the applicable provisions of the Code, all
Participants in the Plan will have the same rights and privileges and all such
Participants will be treated in an equal, uniform and nondiscriminatory manner.
B-8
<PAGE>
FOODBRANDS AMERICA, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 21, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints as Proxies for the undersigned, Horst O.
Sieben, William L. Brady, and Bryant P. Bynum, or any one of them, with full
power of substitution, to vote all shares of the Common Stock of the
undersigned in Foodbrands America, Inc. (the "Company") at the Annual Meeting
of Stockholders of the Company to be held at the Conference Center of
Ackerman McQueen, 1601 NW Expressway, Suite 2100, Oklahoma City, Oklahoma
73118 on May 21, 1996, at 10:00 a.m. Central Daylight Time, or at any
adjournment thereof, hereby revoking any proxy heretofore given, upon the
following matters as described in the Notice of and Proxy Statement relating
to the Annual Meeting, receipt of such Notice of and Proxy Statement being
hereby acknowledged:
The Board of Directors Recommends a Vote "FOR" the following matters:
1. Election of the following as Directors: Messrs. Richard T. Berg, Peter A.
Joseph and Paul W. Marshall.
/ / FOR all nominees / / WITHHELD for all Nominees
Withhold for the following only: (Write the name of the nominee(s)
in the space below)
- -------------------------------------------------------------------------------
2. Approve certain amendments to the Amended and Restated Certificate of
Incorporation of the Company.
/ / FOR / / WITHHELD / / ABSTAIN
3. Approve the Foodbrands America, Inc. Non-Employee Directors' Deferred
Stock Compensation Plan.
/ / FOR / / WITHHELD / / ABSTAIN
4. Approve certain amendments to the Foodbrands America, Inc. 1992 Stock
Incentive Plan.
/ / FOR / / WITHHELD / / ABSTAIN
5. Approve the Foodbrands America, Inc. Employee Stock Purchase Plan.
/ / FOR / / WITHHELD / / ABSTAIN
<PAGE>
6. In their discretion, the Proxies are authorized to vote upon such other
matters as may properly come before the meeting.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned. If no directions to vote on the matters set forth
above are given, authority to vote for the election of directors will be
deemed to have been "granted." Discretionary authority is granted the proxies
as to other matters that may come before the meeting. Management knows of no
such other matters.
Dated _________________, 1996
NOTE: Please sign your name or
names exactly as set forth
hereon. If signing as attorney,
executor, administrator, trustee
or guardian, please indicate the
capacity in which you are acting.
Proxies executed by corporations
should be signed by a duly
authorized officer and should
bear the corporate seal.
==================================
Signature of Stockholder
==================================
Signature of Stockholder
PLEASE DATE AND SIGN THIS PROXY
AND MAIL IT IN THE ENCLOSED
ENVELOPE
