SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
POORE BROTHERS, INC.
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting was paid
previously. Identifying the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule, or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
POORE BROTHERS, INC.
3500 SOUTH LA COMETA DRIVE
GOODYEAR, ARIZONA 85338
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 14, 1998
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Shareholders
(the "Annual Meeting") of Poore Brothers, Inc., a Delaware corporation (the
"Company"), will be held on Thursday, May 14, 1998, at 3:00 p.m. local time, at
the Holiday Inn at 1500 North 51st Avenue, Phoenix, Arizona 85043, for the
purpose of considering and voting upon the following:
(1) A proposal to elect directors of the Company to serve until
the 1999 Annual Meeting of Shareholders or until the election
and qualification of their respective successors.
(2) Such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
The Board of Directors has fixed March 24, 1998 as the record date (the
"Record Date") for the determination of shareholders entitled to notice of and
to vote at the Annual Meeting or any adjournment or postponement thereof. Only
shareholders of record at the close of business on the Record Date are entitled
to notice of and to vote at the Annual Meeting. The stock transfer books will
not be closed for the Annual Meeting.
By Order of the Board of Directors
Eric J. Kufel
President and Chief Executive Officer
Goodyear, Arizona
April 8, 1998
IMPORTANT
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. HOWEVER,
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE URGED
TO PROMPTLY MARK, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED,
SELF-ADDRESSED, STAMPED ENVELOPE SO THAT YOUR SHARES OF STOCK MAY BE REPRESENTED
AND VOTED IN ACCORDANCE WITH YOUR WISHES AND IN ORDER THAT THE PRESENCE OF A
QUORUM MAY BE ASSURED AT THE ANNUAL MEETING. YOUR PROXY WILL BE RETURNED TO YOU
IF YOU SHOULD BE PRESENT AT THE ANNUAL MEETING AND SHOULD REQUEST SUCH RETURN OR
IF YOU SHOULD REQUEST SUCH RETURN IN THE MANNER PROVIDED FOR REVOCATION OF
PROXIES ON THE INITIAL PAGES OF THE ENCLOSED PROXY STATEMENT. PROMPT RESPONSE BY
OUR SHAREHOLDERS WILL REDUCE THE TIME AND EXPENSE OF SOLICITATION.
<PAGE>
POORE BROTHERS, INC.
3500 SOUTH LA COMETA DRIVE
GOODYEAR, ARIZONA 85338
PROXY STATEMENT FOR ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON MAY 14, 1998
This Proxy Statement and the accompanying proxy are furnished in
connection with the solicitation by the Board of Directors of Poore Brothers,
Inc. (the "Company") of proxies for the Annual Meeting of Shareholders of the
Company (the "Annual Meeting"), to be held on Thursday, May 14, 1998, at the
time and place and for the purposes set forth in the accompanying Notice of
Annual Meeting of Shareholders and any adjournment or postponement thereof. This
Proxy Statement, the accompanying proxy and the Company's Annual Report to
Shareholders for the fiscal year ended December 31, 1997 are being first mailed
to the Company's shareholders on or about April 10, 1998.
All expenses of the Company in connection with this solicitation will
be borne by the Company. In addition to the solicitation of proxies by use of
the mail, officers, directors and employees of the Company may solicit the
return of proxies by personal interview, mail, telephone and/or facsimile. Such
persons will not be additionally compensated, but will be reimbursed for
out-of-pocket expenses. The Company will also request brokerage houses and other
custodians, nominees and fiduciaries to forward solicitation materials to the
beneficial owners of shares held of record by such persons and will reimburse
such persons and the Company's transfer agent for their reasonable out-of-pocket
expenses in forwarding such material.
The Annual Report to Shareholders covering the Company's fiscal year
ended December 31, 1997 (the "Annual Report"), including audited financial
statements, is enclosed herewith. The Annual Report does not form any part of
the material for the solicitation of proxies.
VOTING AT THE MEETING
All shares of the Company's common stock, par value $.01 per share (the
"Common Stock"), represented at the Annual Meeting by properly executed proxies
will be voted in accordance with the instructions indicated thereon unless such
proxies previously have been revoked. If any proxies do not contain voting
instructions, the shares represented by such proxies will be voted FOR the
election of the nominees for director listed. It is not anticipated that any
matters other than those set forth in this Proxy Statement will be brought
before the Annual Meeting. If any other matters properly come before the Annual
Meeting, the shares represented by all properly executed proxies will be voted
in accordance with the judgment of the persons named on such proxies.
The Company encourages the personal attendance of its shareholders at
the Annual Meeting, and execution of the accompanying proxy will not affect a
shareholder's right to attend the Annual Meeting and to vote his or her shares
in person. Any shareholder giving a proxy has the right to revoke it by: (1)
delivering written notice of revocation to: Secretary, Poore Brothers, Inc.,
3500 South La Cometa Drive, Goodyear, Arizona 85338, at any time before the
proxy is voted; (2) by executing and delivering a later-dated proxy; or (3) by
attending the Annual Meeting and voting his or her shares in person. No such
notice of revocation or later-dated proxy will be effective, however, until
received by the Company at or prior to the Annual Meeting. Such revocation will
not affect a vote on any matter taken prior to the receipt of such revocation.
Mere attendance at the Annual Meeting will not by itself revoke the proxy.
<PAGE>
Record Date And Outstanding Shares
The Board of Directors has fixed March 24, 1998 as the record date (the
"Record Date") for the Annual Meeting. Only holders of record of the outstanding
shares of Common Stock at the close of business on the Record Date are entitled
to notice of and to vote at the Annual Meeting and any adjournment or
postponement thereof. At the close of business on March 24, 1998, 7,126,657
shares of Common Stock were outstanding and entitled to be voted at the Annual
Meeting. The Common Stock is the only class of the Company's securities entitled
to vote at the Annual Meeting. Each share of Common Stock is entitled to one
vote on each matter presented to the shareholders.
Quorum And Vote Required
The presence, in person or by proxy, of a majority of the shares of
Common Stock entitled to vote at the Annual Meeting will constitute a quorum at
the Annual Meeting. A proxy submitted by a shareholder may indicate that all or
a portion of the shares represented by such proxy are not being voted
("shareholder withholding") with respect to a particular matter. Similarly, a
broker may not be permitted to vote stock ("broker non-vote") held in street
name on a particular matter in the absence of instructions from the beneficial
owner of such stock. The shares subject to a proxy which are not being voted on
a particular matter (because of either shareholder withholding or broker
non-vote) will not be considered shares entitled to vote on such matter. These
shares, however, may be considered present and entitled to vote on any other
matters and will count for purposes of determining the presence of a quorum,
unless the proxy indicates that such shares are not being voted on any matter at
the Annual Meeting, in which case such shares will not be counted for purposes
of determining the presence of a quorum. Assuming the presence of a quorum, the
affirmative vote of the holders of a majority of shares of Common Stock
represented in person or by proxy at the Annual Meeting is required to approve
or ratify each proposal to be presented at the Annual Meeting.
PROPOSAL 1 -- ELECTION OF DIRECTORS
The By-laws of the Company, as amended, provide that the number of
directors constituting the Board of Directors shall be determined by resolution
of the Board of Directors at any meeting or by the shareholders at the Annual
Meeting. The Board of Directors of the Company has set the number of directors
comprising the Board of Directors at five.
The Board of Directors has nominated five persons for election as
directors of the Company at the Annual Meeting, each to serve until the 1999
annual meeting of shareholders of the Company or until his successor shall have
been duly elected and qualified. All of the nominees are currently serving as
Directors of the Company. Each nominee has consented to be named in this Proxy
Statement and to serve if elected. If, prior to the meeting, any nominee should
become unavailable to serve for any reason, the shares represented by all
properly executed proxies will be voted for such alternate individual as shall
be designated by the Board of Directors, unless the Board of Directors shall
determine to reduce the number of directors pursuant to the By-laws of the
Company.
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<PAGE>
The table below sets forth the names and ages of the nominees for
director and the year each first became a director of the Company.
Year First Became a
Name Age Director of the Company
---- --- -----------------------
Mark S. Howells 44 1995
Eric J. Kufel 31 1997
Jeffrey J. Puglisi 39 1995
Robert C. Pearson 62 1996
Aaron M. Shenkman 57 1997
Set forth below for each person nominated to be a director is a
description of all positions held by such person with the Company and the
principal occupations of such person during the last five years.
Mark S. Howells. Mr. Howells has served as Chairman of the Board of the
Company since March 1995. For the period from March 1995 to August 1995, Mr.
Howells also served as President and Chief Executive Officer of the Company. He
has served as the Chairman of the Board of Poore Brothers Southeast, Inc. ("PB
Southeast"), a subsidiary of the Company, since its inception in May 1993 and
served as its President and Chief Executive Officer from May 1993 to August
1994. Since 1988, Mr. Howells has devoted a majority of his time to serving as
the President and Chairman of Arizona Securities Group, Inc., a registered
securities broker-dealer.
Eric J. Kufel. Mr. Kufel has served as President, Chief Executive
Officer and a Director of the Company since February 1997. From November 1995 to
January 1997, Mr. Kufel was Senior Brand Manager at The Dial Corporation and was
responsible for the operating results of Purex Laundry Detergent. From June 1995
to November 1995, Mr. Kufel was Senior Brand Manager for The Coca-Cola Company
where he was responsible for the marketing and development of Minute Maid
products. From November 1994 to June 1995, Mr. Kufel was Brand Manager for The
Coca-Cola Company, and from June 1994 to November 1994, Mr. Kufel was Assistant
Brand Manager for The Coca-Cola Company. From January 1993 to June 1994, Mr.
Kufel was employed by The Kellogg Company in various capacities including being
responsible for introducing the Healthy Choice line of cereal and executing the
marketing plan for Kellogg's Frosted Flakes cereal. Mr. Kufel earned a Masters
of International Management from the American Graduate School of International
Management in December 1992.
Jeffrey J. Puglisi. Mr. Puglisi has served as a Director of the Company
since March 1995. From March 1996 to August 1996, Mr. Puglisi also served as
Vice Chairman of the Company. For the period from August 1995 to March 1996, Mr.
Puglisi served as Chief Executive Officer of the Company. For the period from
March 1995 to August 1995, Mr. Puglisi served as Executive Vice President, Chief
Operating Officer, Secretary and Treasurer of the Company. He also served as
President, Chief Executive Officer and a Director of PB Southeast from August
1994 to August 1995. Since 1988, Mr. Puglisi has also served as the Senior Vice
President of Arizona Securities Group, Inc. In addition, since August 1997 Mr.
Puglisi has served as the investment manager for Puglisi Capital Partners, LP, a
private investment partnership.
Robert C. Pearson. Mr. Pearson has served as a Director of the Company
since March 1996. Mr. Pearson has been Senior Vice President - Corporate Finance
for Renaissance Capital Group, Inc. since April 1997. Previously, Mr. Pearson
had been an independent financial and management consultant specializing in
investments with emerging growth companies. He has performed services for
Renaissance Capital Partners ("RCP") in connection with the Company and other
RCP investments. RCP is the
3
<PAGE>
operating manager of Renaissance Capital Growth & Income Fund III, Inc.
("Renaissance"), the owner of a 9% Convertible Debenture due July 1, 2002 issued
by the Company (a "9% Convertible Debenture"). From 1990 to 1994, Mr. Pearson
served as Executive Vice President and Chief Financial Officer of Thomas Group,
Inc., a publicly traded consulting firm. Prior to 1990, Mr. Pearson was Vice
President - Finance of Texas Instruments, Incorporated.
Pursuant to a Convertible Debenture Loan Agreement dated May 31, 1995
among the Company, Renaissance and Wells Fargo Small Business Investment
Company, Inc. (formerly Wells Fargo Equity Capital, Inc. and hereinafter
referred to as "Wells Fargo"), so long as the 9% Convertible Debentures issued
by the Company have not been fully converted into shares of Common Stock or
redeemed or paid by the Company, Renaissance shall be entitled to designate a
nominee to the Company's Board of Directors subject to election by the Company's
shareholders. Renaissance designated Mr. Pearson as a nominee to the Board of
Directors.
Aaron M. Shenkman. Mr. Shenkman has served as a Director of the Company
since June 1997. Mr. Shenkman has served as the General Partner of Managed Funds
LLC since October 1997. He served as the Vice Chairman of Helen of Troy Corp., a
distributor of personal care products, from March 1997 to October 1997. From
February 1984 to February 1997, Mr. Shenkman was the President of Helen of Troy
Corp. From 1993 to 1996, Mr. Shenkman also served as a Director of Craftmade
International, a distributor of ceiling fans.
Information Regarding Board of Directors and Committees
The Board of Directors conducts its business through meetings of the
Board of Directors and through its standing committees. As of the date of this
Proxy Statement, two committees have been established, an Audit Committee and a
Compensation Committee. The Board of Directors does not currently utilize a
Nominating Committee or committee performing similar functions.
The Audit Committee: (i) makes recommendations to the Board of
Directors as to the independent accountants to be appointed by the Board of
Directors; (ii) reviews with the independent accountants the scope of their
examinations; (iii) receives the reports of the independent accountants for the
purpose of reviewing and considering questions relating to their examination and
such reports; (iv) reviews, either directly or indirectly or through independent
accountants, the internal accounting and auditing procedures of the Company; (v)
reviews related party transactions; and (vi) performs such other functions as
may be assigned to it from time to time by the Board of Directors. The Audit
Committee is comprised of two members of the Board of Directors, Messrs. Pearson
and Howells. The Chairman of the Audit Committee is Mr. Pearson. The Audit
Committee was established on October 22, 1996.
The Compensation Committee reviews and recommends the compensation of
executive officers and key employees. The Compensation Committee is comprised of
two members of the Board of Directors, Messrs. Howells and Shenkman. The
Chairman of the Compensation Committee is Mr. Shenkman. The Compensation
Committee was established on June 12, 1997.
During the fiscal year ended December 31, 1997, the Board of Directors
met ten times and took actions on one other occasion by unanimous written
consent. There were two meetings of the Audit Committee during 1997 and no
meetings of the Compensation Committee. During 1997, each director attended,
during the period each was a director, at least 75% of the Board of Directors
meetings and meetings of any committees on which they served.
4
<PAGE>
Compensation of Directors
In June 1997, the Company granted options to purchase 15,000 shares of
the Company's Common Stock to each person who was elected to the Board of
Directors at the 1997 Annual Meeting of Shareholders. Such options, which have
an exercise price of $3.0625 per share, will vest on May 14, 1998 and have a
term of five years. In addition, Mr. Shenkman, who was newly elected to the
Board of Directors at the 1997 Annual Meeting of Shareholders, was granted an
option to purchase an additional 10,000 shares of Common Stock on the same
terms, except that the option became exercisable on the date of grant.
In the future, in order to attract and retain highly competent persons
as Directors and as compensation for Directors' service on the Board, the
Company may, from time to time, grant additional stock options or issue shares
of Common Stock to Directors.
Directors are reimbursed for out-of-pocket expenses incurred in
attending meetings of the Board of Directors and for other expenses incurred in
their capacity as directors.
Election Of Nominees
Assuming the presence of a quorum, the affirmative vote of the holders
of a majority of the shares of Common Stock, represented in person or by proxy
at the Annual Meeting, is required for the election of directors. Shares will be
voted for the nominees in accordance with the specifications marked on the
proxies applicable thereto, and if no specification is made, will be voted "FOR"
the election of the nominees.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" ALL NOMINEES FOR DIRECTOR.
EXECUTIVE OFFICERS
The Board of Directors appoints the Company's executive officers.
Certain information concerning the Company's executive officers is set forth
below, except that information concerning Mr. Kufel is set forth above under
"Proposal 1 -- Election of Directors."
Thomas W. Freeze, age 46, has served as Vice President, Chief Financial
Officer, Secretary and Treasurer of the Company since April 1997. From April
1994 to April 1997, Mr. Freeze served as Vice President, Finance and
Administration - Retail of New England Business Service, Inc. From October 1989
to April 1994, Mr. Freeze served as Vice President, Treasurer and Secretary of
New England Business Service, Inc.
Scott D. Fullmer, age 34, has served as Vice President-Sales and
Marketing of the Company since February 1997. From September 1993 to February
1997, Mr. Fullmer served in various capacities with The Dial Corporation,
including Senior Brand Manager, where he was responsible for managing the sales
and advertising for Dial Soap. From February 1992 to September 1993, Mr. Fullmer
was Product Manager for Sara Lee Corp. From April 1989 to February 1992, Mr.
Fullmer served in various capacities with Borden, Inc., including Product
Manager, Snack Foods, where he was responsible for managing the merchandising of
selected snack food products including potato chips. From May 1986 to April
1989, Mr. Fullmer was in sales management at Frito-Lay, Inc.
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<PAGE>
Glen E. Flook, age 39, has served as Vice President-Manufacturing since
March 1997. From January 1994 to February 1997, Mr. Flook was employed by The
Dial Corporation as a Plant Manager for a manufacturing operation that generated
$40 million in annual revenues. From January 1983 to January 1994, Mr. Flook
served in various capacities with Frito-Lay, Inc., including Plant Manager and
Production Manager.
James M. Poore, age 51, has served as a Vice President of the Company
since June 1995. Mr. Poore co-founded Poore Brothers Foods, Inc. in 1986 and
served as its Vice President, Secretary, Treasurer and Director until the PB
Acquisition (as hereinafter defined) in May 1995. In addition, Mr. Poore served
as the Secretary and a Director of Poore Brothers Distributing, Inc., a
subsidiary of the Company, from January 1990 to May 1995, and as Chairman of the
Board and a Director of Poore Brothers of Texas, Inc., a subsidiary of the
Company, from May 1991 to May 1995. In 1983, he co-founded Groff's of Texas,
Inc., a potato chip manufacturer in Brookshire, Texas, and served as its
President until January 1986.
Wendell T. Jones, age 57, has been the Director of Sales - Arizona
since February 1997. Previously, Mr. Jones was National Sales Manager of the
Company from January 1996 to February 1997. From 1969 to 1996, Mr. Jones served
in various capacities at Frito-Lay, Inc., including Director of Sales,
Operations Manager and Manager Trade Development.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain information regarding
compensation paid during each of the Company's last three fiscal years, as
applicable, to the Company's Chief Executive Officers and those other executive
officers of the Company whose salary and bonuses, if any, exceeded $100,000 for
the Company's fiscal year ended December 31, 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
------------------- ------------
Awards
------
Name and Other Annual Stock Options All Other
Principal Position Year(1) Salary Bonus Compensation Granted Compensation
------------------ ------- ------ ----- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Eric J. Kufel 1997 $ 99,519 --- $ 7,381(6) 350,000 ---
President, Chief Executive 1996 --- --- --- --- ---
Officer and Director (2) 1995 --- --- --- --- ---
David J. Brennan 1997 $ 10,385 --- --- --- $ 24,265(8)
President, Chief Executive 1996 $ 96,154 --- $ 4,016(6) 130,000(7) ---
Officer and Director (3) 1995 --- --- --- --- ---
Glen E. Flook 1997 $ 74,904 $ 30,000 --- 105,000 $ 63,143(9)
Vice President- 1996 --- --- --- --- ---
Manufacturing (4) 1995 --- --- --- --- ---
Jeffrey H. Strasberg 1997 $ 42,558 $ 20,000 $ 1,108(6) --- $ 38,522(11)
Vice President, Chief 1996 $100,750 --- $ 2,550(6) --- ---
Financial Officer, 1995 $ 38,675 --- --- 83,333(10) ---
Secretary and Treasurer(5)
</TABLE>
6
<PAGE>
- - ----------------
(1) The Company was incorporated in February 1995.
(2) Mr. Kufel has served as President, Chief Executive Officer and a Director
of the Company since February 1997.
(3) Mr. Brennan served as the Company's President and Chief Executive Officer
from March 1996 to February 1997. He also served as a Director of the
Company from March 1996 to June 1997.
(4) Mr. Flook has served as the Company's Vice President-Manufacturing since
March 1997.
(5) Mr. Strasberg served as Vice President, Chief Financial Officer, Secretary
and Treasurer from July 1995 to April 1997.
(6) Represents the value of company vehicles provided to Mr. Kufel and Mr.
Brennan for their exclusive use and a car allowance provided to Mr.
Strasberg.
(7) Excludes options to purchase 200,000 shares of Common Stock that were
granted to Mr. Brennan in 1996 and were canceled in February 1997 in
connection with his resignation as President and Chief Executive Officer of
the Company.
(8) Represents consulting payments made to Mr. Brennan in connection with his
resignation as President and Chief Executive Officer of the Company.
(9) Represents payments made to, and expenses paid on behalf of, Mr. Flook in
connection with his relocation to Arizona upon obtaining employment with
the Company.
(10) Excludes options to purchase 41,667 shares of Common Stock that were
granted to Mr. Strasberg in 1995 and were cancelled in March 1997 in
connection with his resignation as Vice President, Chief Financial Officer,
Secretary and Treasurer of the Company.
(11) Represents severance payments made to Mr. Strasberg in connection with his
resignation.
The following table sets forth information concerning stock options
granted during the fiscal year ended December 31, 1997 for the individuals shown
in the Summary Compensation Table. No stock appreciation rights ("SARs") were
granted in connection with any such stock options during the fiscal year ended
December 31, 1997. Messrs. Brennan and Strasberg were not granted stock options
during the fiscal year ended December 31, 1997.
OPTION GRANTS IN LAST FISCAL YEAR
(Individual Grants)
<TABLE>
<CAPTION>
Number of Shares of Common Percent of Total Options Exercise
Stock Underlying Options Granted to Employees in Price per
Name Granted Fiscal Year (1) Share Expiration Date
---- ------- --------------- ----- ---------------
<S> <C> <C> <C> <C>
Eric J. Kufel 300,000 38% $3.5625 January 24, 2002
50,000 6% $2.6250 June 27, 2002
Glen E. Flook 75,000 10% $3.9375 February 14, 2002
30,000 4% $2.6250 June 27, 2002
</TABLE>
- - --------------------------------
(1) For purposes of calculating these percentages, stock options to purchase an
aggregate of 85,000 shares of Common Stock granted to non-employee
Directors during fiscal 1997 were excluded from Total Options Granted to
Employees in Fiscal Year.
The following table sets forth information concerning the number and
value of unexercised stock options at December 31, 1997 held by the individuals
shown in the Summary Compensation Table. None of such persons held any SARs at
December 31, 1997 or exercised any SARs during 1997.
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<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of Shares of
Number of Aggregate Common Stock Underlying Value of Unexercised In-the-
Shares Value Unexercised Options at Money Options at
Received Realized December 31, 1997 December 31, 1997 (3)
Upon Upon ----------------- ---------------------
Name Exercise Exercise Exercisable Unexercisable Exercisable Unexercisable
---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Eric J. Kufel --- --- --- 350,000 --- ---
David J. Brennan (1) --- --- 130,000 --- --- ---
Glen E. Flook --- --- --- 105,000 --- ---
Jeffrey H. Strasberg (2) 25,000 $ 46,078 58,333 --- --- ---
</TABLE>
- - ------------------------
(1) Excludes options to purchase 200,000 shares of Common Stock that were
canceled in February 1997 in connection with Mr. Brennan's resignation as
President and Chief Executive Officer of the Company.
(2) Excludes options to purchase 41,667 shares of Common Stock that were
canceled in March 1997 in connection with Mr. Strasberg's resignation as
Vice President, Chief Financial Officer, Secretary and Treasurer of the
Company.
(3) Value is the difference between the market value of the Company's Common
Stock on December 31, 1997, which was $1.00 per share (based upon the last
sales price of the Common Stock on the NASDAQ SmallCap Market), and the
exercise price.
Employment Agreements
Mr. Eric J. Kufel was appointed as President and Chief Executive
Officer and elected to the Board of Directors of the Company effective February
3, 1997. Mr. Kufel is employed under an "at will" employment agreement which
provides for a base salary of $115,000 per year, use of a Company vehicle and
participation in Company bonus plans, the terms of which are yet to be
determined. Mr. Kufel's salary is subject to increases at the discretion of the
Company's Board of Directors. Pursuant to his employment agreement, on January
24, 1997 Mr. Kufel was granted options to purchase 300,000 shares of Common
Stock at a price of $3.5625 per share. The options vest over a three-year period
and expire five years from the date of grant. Mr. Kufel's employment agreement
contains a non-compete covenant.
Mr. Glen E. Flook has served as Vice President-Manufacturing since
March 3, 1997. Mr. Flook is employed under an "at will" employment agreement
that provides for a base salary of $95,000 per year and for participation in
Company bonus plans, the terms of which are yet to be determined. Mr. Flook's
salary is subject to increases at the discretion of the Company's Board of
Directors. Pursuant to his employment agreement, on February 14, 1997 Mr. Flook
was granted options to purchase 75,000 shares of Common Stock at a price of
$3.9375 per share. The options vest over a three-year period and expire five
years from the date of grant. In addition, the Company made payments to and paid
expenses on behalf of Mr. Flook in an aggregate amount of $63,143 for expenses
incurred by him in connection with his relocation to Arizona upon the
commencement of his employment with the Company. Mr. Flook's employment
agreement contains a non-compete covenant.
In addition to Mr. Kufel and Mr. Flook, certain other executive
officers of the Company have entered into employment agreements with the
Company.
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<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the acquisition by the Company of its operating
subsidiaries on May 31, 1995 (the "PB Acquisition"), the Company issued 423,137
and 403,138 shares of Common Stock to Messrs. Howells and Puglisi (Directors of
the Company), respectively, in exchange for shares of capital stock of PB
Southeast owned by such persons.
In connection with the PB Acquisition, the Company issued an aggregate
of 300,000 shares of its Common Stock to James Poore, an executive officer of
the Company, and two members of his immediate family, Donald Poore and Amelia
Poore (collectively, the "Poores"). Through May 31, 1998, the Company has the
right to repurchase all of these shares at any time for $500,000 ($1.67 per
share). Additionally, in connection with the PB Acquisition, the Company issued
to the Poores a Promissory Note due May 31, 2000 in the principal amount of
$500,000, which was repaid by the Company on February 28, 1997. The Promissory
Note accrued interest at a rate equal to the prime rate of Bank One, Arizona
N.A. plus 1-3/4% per annum. The remaining $3,228,061 of the acquisition price
for the PB Acquisition was paid by the Company in cash.
To finance the PB Acquisition, in May 1995 the Company issued an
aggregate of $2,700,000 of the 9% Convertible Debentures to Renaissance and
Wells Fargo. The initial public offering (the "IPO") of the Company's Common
Stock was consummated in December 1996. In connection with the IPO, Renaissance
and Wells Fargo converted a total of $400,409 of the principal amount of the 9%
Convertible Debentures into 367,348 shares of Common Stock (at a conversion rate
of $1.09 per share), and sold such shares of Common Stock in connection with the
IPO. The remaining principal amount of the outstanding 9% Convertible Debentures
is convertible into an aggregate of 2,109,717 shares of Common Stock. Also in
connection with the PB Acquisition, in May 1995 the Company sold 1,663,723
shares of its Common Stock through a private placement for aggregate
consideration of $1,799,982 (approximately $1.08 per share). Arizona Securities
Group, Inc., of which Mark S. Howells and Jeffrey J. Puglisi are principals,
acted as the placement agent for these transactions and received $120,000 in
sales commissions and $22,000 as reimbursement of expenses in connection with
the private placement.
In March 1996, the Company engaged in a private placement pursuant to
which it issued 750,000 shares of Common Stock to a group of investors for
aggregate consideration of $937,500 ($1.25 per share). Arizona Securities Group,
Inc. acted as the placement agent and received $46,875 in sales commissions in
connection with the private placement.
From February 1997 to October 1997, a construction company owned by
Matthew Howells, a brother of Mark S. Howells, provided construction management
services to the Company in connection with the Company's new Arizona
manufacturing facility. The Company paid $67,600 for these services.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of the Record Date by (i)
each person known by the Company to be the beneficial owner of more than 5% of
the outstanding Common Stock, (ii) each director and nominee for director of the
Company, (iii) each executive officer of the Company listed in the Summary
Compensation Table set forth in "Executive Compensation" above, and (iv) all
executive officers and directors of the Company as a group, as of the Record
Date.
9
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership of Percent of Shares of Common
Name and Address of Beneficial Owner Common Stock (1) Stock Beneficially Owned (2)
------------------------------------ ----------------------- ----------------------------
<S> <C> <C>
Mark S. Howells.................................... 768,137 (3) 10.2%
2390 E. Camelback Road
Suite 203
Phoenix, AZ 85016
Eric J. Kufel...................................... 105,000 (4) 1.5
3500 S. La Cometa Drive
Goodyear, AZ 85338
Jeffrey J. Puglisi................................. 825,001 (5) 11.0
2390 E. Camelback Road
Suite 203
Phoenix, AZ 85016
Robert C. Pearson.................................. 15,000 (6) 0.2
8080 North Central Expressway
Suite 210/LB59
Dallas, TX 75206
Aaron M. Shenkman.................................. 35,000 (7) 0.5
716 Gary Lane
El Paso, TX 79922
Glen E. Flook...................................... 26,000 (8) 0.4
3500 S. La Cometa Drive
Goodyear, AZ 85338
David J. Brennan................................... 257,760 (9) 3.6
3121 E. Washington Street
Phoenix, AZ 85034
Jeffrey H. Strasberg............................... 9,633 0.1
13260 N. 82nd Place
Scottsdale, AZ 85260
Renaissance Capital Growth & Income Fund III, Inc.. 1,640,891 (10) 18.7
8080 North Central Expressway
Suite 210/LB59
Dallas, TX 75206
Wells Fargo Small Business Investment Company, Inc. 469,826 (10) 6.2
One Montgomery Street
West Tower, Suite 2530
San Francisco, CA 94104
All executive officers and directors as
a group (12 persons) (11).......................... 2,263,198 (12) 27.3
</TABLE>
- - -----------------------
(1) Unless otherwise indicated, each of the persons named has sole voting and
investment power with respect to the shares reported.
(2) Shares of Common Stock which an individual or group has a right to acquire
within 60 days pursuant to the exercise of options or warrants are deemed
to be outstanding for the purpose of computing the percentage ownership of
such individual or group, but are not deemed to be outstanding for the
purpose of computing the ownership percentage of any other person shown in
the table. On the Record Date, the date as of which these percentages are
calculated, there were 7,126,657 shares of Common Stock issued and
outstanding.
10
<PAGE>
(3) Excludes 40,000 shares of Common Stock held of record by trusts with
Jeannie L. Howells, the former wife of Mr. Howells, for the benefit of Mr.
Howells' children. Includes 400,000 shares of Common Stock issuable upon
the exercise of stock options (385,000 of which were granted outside of the
1995 Poore Brothers, Inc. Stock Option Plan, the "Stock Option Plan") by
Mr. Howells that are exercisable within 60 days.
(4) Includes 100,000 shares of Common Stock issuable upon the exercise of stock
options by Mr. Kufel that are exercisable within 60 days. Excludes 340,000
shares of Common Stock issuable upon the exercise of stock options which
have not yet vested and which are not exercisable within 60 days.
(5) Includes 400,000 shares of Common Stock issuable upon the exercise of stock
options (385,000 of which were granted outside of the Stock Option Plan) by
Mr. Puglisi that are exercisable within 60 days.
(6) Includes 15,000 shares of Common Stock issuable upon the exercise of stock
options by Mr. Pearson that are exercisable within 60 days.
(7) Includes 25,000 shares of Common Stock issuable upon the exercise of stock
options by Mr. Shenkman that are exercisable within 60 days.
(8) Includes 25,000 shares of Common Stock issuable upon the exercise of stock
options by Mr. Flook that are exercisable within 60 days. Excludes 135,000
shares of Common Stock issuable upon the exercise of stock options which
have not yet vested and which are not exercisable within 60 days.
(9) Includes 130,000 shares of Common Stock issuable upon the exercise of stock
options by Mr. Brennan that are exercisable within 60 days.
(10) Reflects shares of Common Stock that would be issued upon the conversion of
the 9% Convertible Debentures, assuming that such conversion was effected
at the conversion price, except that 1,000 shares of Common Stock
beneficially owned by Wells Fargo are held by Wells Fargo Bank, N.A., an
affiliate of Wells Fargo. Russell Cleveland exercises control over the 9%
Convertible Debenture owned by Renaissance. Richard K. Green is the
designated representative of Wells Fargo and, as such, exercises control
over the 9% Convertible Debenture held by Wells Fargo.
(11) Includes two persons, David J. Brennan and Jeffrey H. Strasberg, who are
listed in the Summary Compensation Table set forth in "Executive
Compensation" but whose employment with the Company has terminated.
(12) Includes (i) 1,162,667 shares of Common Stock which are issuable upon the
exercise of stock options that are exercisable within 60 days (392,667 of
which were granted pursuant to the Stock Option Plan and 770,000 of which
were granted outside of the Stock Option Plan). Excludes 806,933 shares of
Common Stock issuable upon the exercise of stock options which have not yet
vested and which are not exercisable within 60 days.
INDEPENDENT ACCOUNTANTS
Representatives of Arthur Andersen LLP, the Company's independent
auditors, are expected to be present at the Annual Meeting and will have the
opportunity to make a statement, if they so desire. In addition, such
representatives are expected to be available to respond to appropriate questions
from those attending the Annual Meeting.
On December 30, 1997, the Audit Committee of the Company's Board of
Directors voted unanimously to elect Arthur Andersen LLP as the Company's
independent auditors and to dismiss Coopers & Lybrand L.L.P., such appointment
and dismissal to be effective December 30, 1997. The reports prepared by Coopers
& Lybrand L.L.P. on the financial statements for the fiscal years ended December
31, 1995 and 1996 did not contain an adverse opinion or disclaimer of opinion,
nor was the report modified as to uncertainty, audit scope, or accounting
principles. During the fiscal years ended December 31, 1995 and
11
<PAGE>
1996 and the interim period from January 1, 1997 through December 30, 1997,
there were no disagreements between the Company and Coopers & Lybrand L.L.P. on
any matters of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which, if not resolved to the
satisfaction of Coopers & Lybrand L.L.P. would have caused it to make a
reference to the subject matter of the disagreement in connection with its
report. In November 1997, Coopers & Lybrand L.L.P. advised the Company of the
need to expand the scope of their upcoming audit, as required by professional
standards, to address the ability of the Company to continue as a going concern.
Due to the dismissal, no such procedures were performed, nor did Coopers &
Lybrand L.L.P make any determination.
During the fiscal years ended December 31, 1995 and 1996 and the
interim period from January 1, 1997 through December 30, 1997, the Company did
not consult with Arthur Andersen LLP regarding the application of accounting
principles to a specific completed or contemplated transaction nor the type of
audit opinion that might be rendered on the Company's financial statements.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Paragraph Section 16(a) of the Exchange Act requires the Company's
directors, executive officers, and persons who own more than 10% of the
Company's Common Stock, to file with the Commission initial reports of ownership
and reports of changes in ownership of Common Stock and other equity securities
of the Company. Officers, directors and greater than 10% shareholders are
required by Commission regulation to furnish the Company with copies of all
Section 16(a) reports they file. To the Company's knowledge, based solely on
review of the copies of such reports furnished to the Company and written
representations, during the fiscal year ended December 31, 1997, all Section
16(a) filing requirements applicable to its officers, directors and greater than
10% beneficial owners were complied with, except that Aaron M. Shenkman, a
Director of the Company, did not file in a timely manner a report of change in
beneficial ownership relating to his purchase (in two separate transactions), in
June 1997, of an aggregate of 10,000 shares of Common Stock.
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Shareholders may submit proposals on matters appropriate for
shareholder action at the Company's annual meetings, consistent with regulations
adopted by the Securities and Exchange Commission. Proposals of shareholders
intended to be presented at the 1999 Annual Meeting of Shareholders should be
submitted by certified mail, return receipt requested, and must be received by
the Company at its principal executive offices on or before December 31, 1998,
to be eligible for inclusion in the Company's proxy statement relating to that
meeting. Proposals should be directed to the attention of Thomas W. Freeze,
Poore Brothers, Inc., 3500 South La Cometa Drive, Goodyear, Arizona 85338.
12
<PAGE>
ANNUAL REPORT
A copy of the Company's Annual Report, which includes a copy of Form
10-KSB for the fiscal year ended December 31, 1997, accompanies this Proxy
Statement. The Company will provide copies of any exhibits to the Form 10-KSB to
each shareholder of record as of the Record Date, upon request of such person
and such person's payment of the Company's reasonable expenses of furnishing
such exhibit.
OTHER BUSINESS
The Board of Directors does not know of any business to be brought
before the Annual Meeting other than the matters described in the Notice of
Annual Meeting. However, if any other matters are properly presented for action,
it is the intention of each person named in the accompanying proxy to vote said
proxy in accordance with his judgment on such matters.
The Company's principal executive offices are located at 3500 South La
Cometa Drive, Goodyear, Arizona 85338, and the Company's telephone number is
(602) 932-6200.
By Order of the Board of Directors
Eric J. Kufel
President and Chief Executive Officer
Goodyear, Arizona
April 8, 1998
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS WHO DO
NOT EXPECT TO ATTEND THE ANNUAL MEETING AND DESIRE THEIR STOCK TO BE VOTED ARE
URGED TO DATE, SIGN AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED
SELF-ADDRESSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
13
<PAGE>
8888 POORE BROTHERS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Eric J. Kufel and Thomas W. Freeze, and each of
them, with full power of substitution, as proxies of the undersigned to vote all
shares of common stock, par value $.01 per share, of Poore Brothers, Inc. (the
"Company") held of record by the undersigned on March 24, 1998, at an Annual
Meeting of Shareholders of the Company to be held on May 14, 1998 or any
adjournments or postponements thereof ( the "Annual Meeting"), on the matters
set forth on the reverse side of this Proxy, and, in their discretion, upon all
matters incident to the conduct of the Annual Meeting and upon such other
matters as may properly be brought before the Annual Meeting. This proxy revokes
all prior proxies given by the undersigned.
This proxy, when properly executed, will be voted in the manner directed herein.
If no direction is made, this proxy will be voted FOR approval of Proposal 1.
Receipt of the Notice of Annual Meeting of Shareholders and the Proxy Statement,
dated April 8, 1998 is hereby acknowledged.
(CONTINUED ON REVERSE SIDE)
<PAGE>
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Shareholders
POORE BROTHERS, INC.
May 14, 1998
\/ Please Detach and Mail in the Envelope Provided \/
_ |
A [X] Please mark your | |___
votes as in this
example
<TABLE>
<S> <C> <C> <C> <C>
FOR WITHHELD all
all nominees nominees
listed at right listed at right NOMINEES: Mark S. Howells
1. ELECTION 2. TO CONSIDER AND ACT UPON SUCH OTHER
OF [ ] [ ] Eric J. Kufel BUSINESS AS MAY PROPERLY COME BEFORE
DIRECTORS THE ANNUAL MEETING OR ANY ADJOURNMENT
Jefferey J. Puglisi OR POSTPONEMENT THEREOF.
Robert C. Pearson
FOR, except vote withheld from the following nominee(s): Aaron M. Shenkman THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS.
- - ----------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR PROPOSAL 1.
PLEASE MARK BOXES IN BLUE OR BLACK INK.
YOUR VOTE IS IMPORTANT. PLEASE MARK, SIGN,
DATE AND MAIL THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
(By) (Date) , 1998
- - ---------------------------------------- ------------------------------------ ----------------------- -------------
NAME (PLEASE PRINT) NAME OF CORPORATION (IF APPLICABLE) SIGNATURE
Note: Please sign exectly as name appears on stock certificate. When shares are held by joint tenants, both should sign. When
signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a partner, please sign in partnership name by
authorized person.
</TABLE>
