As filed with the Securities and Exchange Commission on October 26, 2000
Registration No. ____________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
POORE BROTHERS, INC.
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(Exact Name of Registrant as Specified in Its Charter)
DELAWARE
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(State or Other Jurisdiction of Incorporation or Organization)
86-0786101
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(IRS Employer Identification Number)
3500 SOUTH LA COMETA DRIVE
GOODYEAR, ARIZONA 85338
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(Address and Zip Code of Principal Executive Offices)
POORE BROTHERS, INC. 1995 STOCK OPTION PLAN
NON-QUALIFIED STOCK OPTION AGREEMENTS
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(Full Title of the Plan)
ERIC J. KUFEL
PRESIDENT AND CHIEF EXECUTIVE OFFICER
POORE BROTHERS, INC.
3500 SOUTH LA COMETA DRIVE
GOODYEAR, ARIZONA 85338
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(Name and Address of Agent for Service)
(623) 932-6200
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(Telephone Number, Including Area Code, of Agent for Service)
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<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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Proposed Maximum Proposed Maximum Amount Of
Title Of Securities Amount To Be Offering Price Aggregate Registration
To Be Registered Registered(1) Per Share Offering Price Fee(4)
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<S> <C> <C> <C> <C>
Common Stock, par value
$0.01 per share 500,000 $2.28125(2) $1,140,625(2) $3,011
Common Stock, par value
$0.01 per share 1,000,000 $1.61(3) $1,610,640(3) $4,252
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</TABLE>
(1) Of the shares of common stock, par value $.01 per share (the "Common
Stock"), of Poore Brothers, Inc. (the "Registrant") being registered
hereunder, (i) 500,000 shares are reserved for issuance upon the exercise
of stock options available for grant under the Poore Brothers, Inc. 1995
Stock Option Plan (the "Plan"), and (ii) 1,000,000 shares are reserved for
issuance pursuant to stock options granted to certain affiliates of the
Registrant pursuant to Non-Qualified Stock Option Agreements (the "Non-Plan
Stock Option Agreements"). Pursuant to Rule 416 of the Securities Act of
1933, as amended (the "Securities Act"), this Registration Statement also
covers such number of additional shares of Common Stock as may become
available for issuance pursuant to the Plan to reflect certain changes in
the Registrant's capital structure, including reorganizations,
recapitalizations, stock splits, stock dividends, reverse stock splits and
similar transactions.
(2) Estimated solely for the purpose of calculating the registration fee. The
registration fee has been calculated in accordance with Rule 457(h) of the
Securities Act based on the last sales price of the Common Stock as
reported on the Nasdaq SmallCap Market on October 20, 2000, which was
$2.28125.
(3) The registration fee has been calculated in accordance with Rule 457(h) of
the Securities Act based on the aggregate exercise price of $1,610,640.00,
the aggregate exercise price at which the stock options may be exercised,
which averages $1.61 per share.
(4) The registration fee for the securities registered hereby has been
calculated pursuant to Rule 457(h) and Section 6(b) under the Securities
Act.
<PAGE>
EXPLANATORY NOTE
In accordance with General Instruction E of Form S-8, this Registration
Statement is being filed by the Registrant for the purpose of registering: (i)
an additional 500,000 shares of the Registrant's Common Stock reserved for
issuance upon the exercise of stock options available for grant under the Plan;
and (ii) 1,000,000 shares of the Registrant's Common Stock reserved for issuance
pursuant to the Non-Plan Stock Option Agreements. The Registrant currently has
an effective Registration Statement filed on Form S-8 (Commission File No.
333-26117) filed with the Securities and Exchange Commission (the "Commission")
on April 29, 1997, covering: (i) 1,500,000 shares of Common Stock reserved for
issuance upon the exercise of stock options granted or available for grant under
the Plan; and (ii) 820,000 shares of Common Stock reserved for issuance pursuant
to Non-Qualified Stock Option Agreements. Such previously filed Registration
Statement included a Reoffer Prospectus. The Registrant hereby incorporates by
reference into this Registration Statement the contents of such previously filed
Registration Statement on Form S-8 (other than Items 1, 2, 3, 6 and 8);
PROVIDED, HOWEVER, that a Reoffer Prospectus is being filed herewith, which
supercedes and replaces the earlier Reoffer Prospectus as of the date hereof.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The documents containing the information specified in Part I of Form
S-8 will be sent or given to employees of the Registrant as specified in Rule
428(b)(1) under the Securities Act. Such documents are not filed with the
Commission either as part of this Registration Statement or as prospectuses or
prospectus supplements pursuant to Rule 424 under the Securities Act.
As provided in Instruction C to Form S-8, any prospectus that is to be
used for reoffers and resales of restricted securities issued under an employee
benefit plan of the Registrant must be filed as part of a Registration Statement
on Form S-8. Accordingly, this Registration Statement contains a Reoffer
Prospectus that is to be used by affiliates of the Registrant who were granted
stock options by the Registrant prior to the date hereof, with respect to
reoffers and resales of shares of Common Stock acquired pursuant to the exercise
of such stock options.
<PAGE>
REOFFER PROSPECTUS
2,585,000 Shares
POORE BROTHERS, INC.
Common Stock
(Par Value $.01 per Share)
The shares of common stock, par value $.01 per share (the "Common
Stock"), of Poore Brothers, Inc. ("Poore Brothers") offered hereby will be sold
from time to time by certain shareholders of Poore Brothers described under the
caption "Selling Shareholders" in this Prospectus. The shares offered hereby
(the "Shares") include (i) 1,300,000 shares of Common Stock issuable upon the
exercise of stock options granted by Poore Brothers to certain of its directors
and officers under the Poore Brothers, Inc. 1995 Stock Option Plan (the "Plan"),
and (ii) 1,285,000 shares of Common Stock issuable upon the exercise of stock
options granted by Poore Brothers to certain of its directors and officers
pursuant to Non-Qualified Stock Option Agreements entered into by and between
Poore Brothers and such persons (such stock options referred to in (i) and (ii)
being hereinafter referred to collectively as the "Options").
The sales may occur in transactions in the over-the-counter market
(quoted on the Nasdaq SmallCap Market) at prevailing market prices or in
negotiated transactions. We will not receive proceeds from any of these sales.
We are paying the expenses incurred in registering the Shares, but all selling
and other expenses incurred by each of the Selling Shareholders will be borne by
that Selling Shareholder.
The Shares are "control securities" and/or "restricted securities"
under the Securities Act of 1933, as amended (the "Securities Act"), before
their sale under this Prospectus. This Prospectus has been prepared for the
purpose of registering the Shares under the Securities Act to allow for future
sales by the Selling Shareholders, on a continuous or delayed basis, to the
public without restriction. Each Selling Shareholder may be deemed to be an
"underwriter" within the meaning of the Securities Act. Any commissions received
by a broker or dealer in connection with resales of the shares may be deemed to
be underwriting commissions or discounts under the Securities Act.
Our Common Stock is traded on the Nasdaq SmallCap Market under the
symbol "SNAK." The last closing sales price per share of the Common Stock on the
Nasdaq SmallCap Market on October 20, 2000 was $2.28125.
Our principal executive offices are located at 3500 South La Cometa
Drive, Goodyear, Arizona 85338, and our telephone number at that address is
(623) 932-6200.
THE SHARES OFFERED HEREBY ARE SUBJECT TO CERTAIN RISKS WHICH SHOULD BE
CAREFULLY CONSIDERED BY POTENTIAL INVESTORS. FOR MORE INFORMATION,
PLEASE SEE "RISK FACTORS" BEGINNING ON PAGE 5.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is October 26, 2000.
<PAGE>
TABLE OF CONTENTS
Available Information........................................................ 2
Documents Incorporated By Reference.......................................... 3
Cautionary Statement Regarding Forward-Looking Statements.................... 4
The Company.................................................................. 4
Risk Factors................................................................. 5
Use of Proceeds.............................................................. 10
Selling Shareholders......................................................... 11
Plan of Distribution......................................................... 11
Legal Matters................................................................ 12
AVAILABLE INFORMATION
Pursuant to the Securities Act, Poore Brothers has filed with the
Securities and Exchange Commission (the "Commission") a Registration Statement
on Form S-8 (together with all amendments and exhibits thereto, the
"Registration Statement") of which this Prospectus is a part. This Prospectus
does not contain all the information set forth in the Registration Statement, to
which reference is hereby made for further information. Statements made in this
Prospectus as to the contents of any contract, agreement or other document
referred to are not necessarily complete. With respect to each such contract,
agreement or other document filed as an exhibit to the Registration Statement,
reference is hereby made to the exhibit for a more complete description of the
matter involved, and each such statement shall be deemed qualified in its
entirety by such reference.
Poore Brothers is subject to the informational reporting requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Commission. These reports, proxy statements and other information may be
inspected and copied at the Public Reference Room of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices
at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and 7 World
Trade Center, 13th Floor, New York, New York 10048, at prescribed rates. The
Commission maintains a web site that contains reports, proxy and information
statements and other information regarding registrants, including Poore
Brothers, that file electronically with the Commission. The address of this
website is http://www.sec.gov. In addition, you may obtain information from the
Public Reference Room by calling the Commission at 1-800-SEC-0330. In addition,
our Common Stock is quoted on the Nasdaq SmallCap Market System. Reports, proxy
statements, informational statements and other information concerning Poore
Brothers can be inspected at the offices of the National Association of
Securities Dealers, Inc. at 1735 K. Street, N.W., Washington, D.C. 20006.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH
SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE HEREUNDER WILL UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN POORE BROTHERS' AFFAIRS SINCE THE DATE OF THIS
PROSPECTUS OR THAT THE INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT AS OF
ANY TIME SUBSEQUENT TO ITS DATE.
2
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
The Commission allows us to "incorporate by reference" information into
this Prospectus, which means that we can disclose important information to you
by referring you to another document filed separately with the Commission. The
information incorporated by reference is deemed to be part of this Prospectus,
except for any information superseded by information in this Prospectus. The
following documents which have been filed by Poore Brothers with the Commission
are incorporated into this Prospectus by reference:
(a) Poore Brothers' Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1999;
(b) Poore Brothers' Quarterly Report on Form 10-QSB for the three-month period
ended March 31, 2000;
(c) Poore Brothers' Quarterly Report on Form 10-QSB for the three-month period
ended June 30, 2000;
(d) Poore Brothers' Current Report on Form 8-K filed with the Commission on
June 12, 2000, regarding the acquisition by Poore Brothers of Boulder
Natural Foods, Inc. and Boulder Potato Company(TM)brand potato chips;
(e) Poore Brothers' Proxy Statement dated April 17, 2000 concerning its Annual
Meeting of Shareholders held on May 22, 2000;
(f) All other reports filed by Poore Brothers pursuant to Section 13(a) or
15(d) of the Exchange Act since December 31, 1999; and
(g) The description of Poore Brothers' Common Stock contained in Poore
Brothers' Registration Statement on Form SB-2 filed with the Commission on
December 5, 1996 pursuant to the Securities Act (Registration No.
333-5594-LA), including any amendment or report filed for the purpose of
updating such description.
All documents filed by Poore Brothers after the date of this Prospectus
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to
the sale of all of the securities offered hereunder or the de-registration of
all such securities then remaining unsold, shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents. Any statement contained in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
Poore Brothers will provide without charge to you, upon the written or
oral request, a copy of any and all of the documents referred to above which
have been or may be incorporated by reference in this Prospectus. Requests for
such copies of any document(s) should be directed to: Poore Brothers, Inc., 3500
South La Cometa Drive, Goodyear, Arizona 85338; Attention: Senior Vice President
and Chief Financial Officer. Our telephone number at that address is (623)
932-6200.
3
<PAGE>
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus, including all documents incorporated by reference,
includes "forward-looking" statements within the meaning of Section 27A of the
Securities Act of 1933, as amended (the "Securities Act") and Section 12E of the
Securities Exchange Act of 1934, as amended, and the Private Securities
Litigation Reform Act of 1995, and Poore Brothers desires to take advantage of
the "safe harbor" provisions thereof. Therefore, we are including this statement
for the express purpose of taking advantage of the protections of the safe
harbor with respect to all of such forward-looking statements. In this
Prospectus, the words "anticipates," "believes," "expects," "intends,"
"estimates," "projects," "will likely result," "will continue," "future" and
similar terms and expressions identify forward-looking statements. The
forward-looking statements in this Prospectus reflect our current views with
respect to future events and financial performance. These forward-looking
statements are subject to certain risks and uncertainties, including
specifically our brief operating history and significant operating losses to
date, the probability that Poore Brothers will need additional financing due to
continued operating losses or in order to implement our business strategy, the
possible diversion of management resources from the day-to-day operations of
Poore Brothers as a result of our pursuit of strategic acquisitions; potential
difficulties resulting from the integration of acquired businesses with our
business, other acquisition-related risks, significant competition, risks
related to the food products industry, volatility of the market price of our
Common Stock, the possible de-listing of our Common Stock from the Nasdaq
SmallCap Market and those other risks and uncertainties discussed herein, that
could cause actual results to differ materially from historical results or those
anticipated. In light of these risks and uncertainties, there can be no
assurance that the forward-looking information contained in this Registration
Statement on Form S-8 will in fact transpire or prove to be accurate. Readers
are cautioned to consider the specific risk factors described herein and in
"Risk Factors," and not to place undue reliance on the forward-looking
statements contained herein, which speak only as of the date hereof. We
undertake no obligation to publicly revise these forward-looking statements to
reflect events or circumstances that may arise after the date hereof. All
subsequent written or oral forward-looking statements attributable to Poore
Brothers or persons acting on our behalf are expressly qualified in their
entirety by this section.
THE COMPANY
Poore Brothers is engaged in the production, marketing and distribution
of distinctive salty snack food products that are sold primarily through grocery
retail chains in the southwestern United States and through vend distributors
across the United States. Poore Brothers manufactures and sells its own brands
of salty snack food products including Poore Brothers(R), Bob's Texas Style(R)
and Boulder Potato Company(TM) brand batch-fried potato chips, Tato Skins(R)
brand potato snacks, Pizzarias(R) brand pizza chips, and O'Boisies(R) brand
potato crisps, manufactures private label potato chips for grocery store chains,
and distributes and merchandises snack food products that are manufactured by
others. Poore Brothers generally sells its products to retailers and vend
operators through independent distributors.
Poore Brothers(R), Bob's Texas Style(R) and Boulder Potato Company(TM)
potato chips are manufactured with a batch-frying process that Poore Brothers
believes produces potato chips with enhanced crispness and flavor. Poore
Brothers offers its brand name potato chips in a total of fourteen flavors.
Poore Brothers also manufactures potato chips for sale on a private label basis
using a continuous frying process. Poore Brothers currently has three California
and three Arizona grocery chains as customers for its private label potato
chips. Poore Brothers' potato chips are manufactured at a Company-owned facility
in Goodyear, Arizona.
Since Poore Brothers' October 1999 acquisition of Wabash Foods, LLC
("Wabash Foods"), Poore Brothers has produced Tato Skins(R) brand potato crisps,
Pizzarias(R) brand pizza chips, and O'Boisies(R) brand potato crisps utilizing a
sheeting and frying process that includes patented technology. Poore Brothers
licenses the patented technology from a third party and has an exclusive right
to use the technology within North America until the patents expire between 2004
and 2006. These products are offered in a total of five flavors and are
manufactured at a plant in Bluffton, Indiana which is leased by Poore Brothers.
Poore Brothers also produces tortilla chips at the Indiana plant on a private
label basis for snack food manufacturers.
4
<PAGE>
Poore Brothers' business objective is to be a leading manufacturer,
marketer and distributor of distinctive branded and private label salty snack
foods by providing high quality products at competitive prices that are superior
in taste, texture, flavor variety and brand personality to comparable products.
Poore Brothers' philosophy is to compete in the market niches not served by the
dominant national competition. A significant element of Poore Brothers' growth
strategy is to pursue additional strategic acquisition opportunities. Poore
Brothers plans to acquire snack food brands that provide strategic fit and
possess strong brand equity in a geographic region or channel of distribution in
order to expand, complement or diversify Poore Brothers' existing business. To
assist in this strategy, Poore Brothers has retained Stifel, Nicolaus & Company,
Incorporated ("Stifel"), a regional investment banking and brokerage firm, as
Poore Brothers' financial advisor to assist Poore Brothers in connection with
strategic acquisitions. Poore Brothers also plans to increase sales of its
existing products, increase distribution and merchandising revenues and continue
to improve its manufacturing capacity utilization.
Poore Brothers' executive offices are located at 3500 South La Cometa
Drive, Goodyear, Arizona 85338, and its telephone number is (623) 932-6200.
RISK FACTORS
This offering involves a high degree of risk. You should carefully
consider the risks described below and the other information in this Prospectus
before deciding to invest in the share of Common Stock.
WE HAVE A BRIEF OPERATING HISTORY AND HAVE INCURRED SIGNIFICANT LOSSES TO DATE.
Although certain of Poore Brothers' subsidiaries have operated for
several years, Poore Brothers as a whole has a relatively brief operating
history upon which an evaluation of its prospects can be made. Such prospects
are subject to the substantial risks, expenses and difficulties frequently
encountered in the establishment and growth of a new business in the snack food
industry, which is characterized by a significant number of market entrants and
intense competition. Poore Brothers had significant operating losses prior to
fiscal 1999. Poore Brothers incurred net losses of $3,034,097 and $874,091 for
the fiscal years ended December 31, 1997 and 1998, respectively, and net income
for the fiscal year ended December 31, 1999 of $74,240. At December 31, 1999,
Poore Brothers had an accumulated deficit of $6,261,784 and net working capital
of $780,086. At September 30, 2000, Poore Brothers had an accumulated deficit of
$5,587,646 and net working capital of $740,548. Even if Poore Brothers is
successful in making additional strategic acquisitions, increasing distribution
and sales volume of Poore Brothers' existing products and developing new
products, it may be expected to incur substantial additional expenses, including
integration costs of recently completed and future acquisitions, advertising and
promotional costs, and "slotting" expenses (i.e., the cost of obtaining shelf
space in certain grocery stores). Accordingly, Poore Brothers may incur
additional losses in the future as a result of the implementation of Poore
Brothers' business strategy, even if revenues increase significantly. There can
be no assurance that Poore Brothers' business strategy will prove successful or
that Poore Brothers will be profitable in the future.
WE WILL LIKELY NEED ADDITIONAL FINANCING IN THE FUTURE. A FAILURE TO OBTAIN SUCH
FINANCING WOULD LIKELY HAVE A MATERIAL ADVERSE IMPACT ON OUR ABILITY TO EXECUTE
OUR BUSINESS STRATEGY.
A significant element of Poore Brothers' business strategy is the
pursuit of selected strategic acquisition opportunities for the purpose of
expanding, complementing and/or diversifying Poore Brothers' business. In
connection with each of Poore Brothers' recent acquisitions, Poore Brothers has
borrowed funds to finance the purchase price paid by Poore Brothers. It is
likely that in the future Poore Brothers will require funds in excess of cash
flow generated from operations in order to consummate any additional
acquisitions involving cash consideration to the sellers. Any such funds would
most likely be obtained through third party financing (debt or equity). In
addition, Poore Brothers may, in the future, require third party financing (debt
or equity) as a result of continued operating losses or expansion of Poore
Brothers' business through non-acquisition means. There can be no assurance that
any such required financing will be available or, if available, on terms
attractive to Poore Brothers. Any third party financing obtained by Poore
Brothers may result in dilution of the equity interests of Poore Brothers'
shareholders.
5
<PAGE>
OUR PURSUIT OF STRATEGIC ACQUISITIONS, WHICH COMPRISES A SIGNIFICANT ELEMENT OF
OUR BUSINESS STRATEGY, INVOLVES SUBSTANTIAL RISKS.
A significant element of Poore Brothers' business strategy is the
pursuit of selected strategic acquisition opportunities for the purpose of
expanding, complementing and/or diversifying Poore Brothers' business; however,
no assurance can be given that Poore Brothers will be able to identify, finance
and complete additional suitable acquisitions on acceptable terms, or that
future acquisitions, if completed, will be successful. Poore Brothers' recently
completed acquisitions of Wabash Foods and Boulder, as well as any future
acquisitions, could divert management's attention from the daily operations of
Poore Brothers and otherwise require additional management, operational and
financial resources. Moreover, there is no assurance that Poore Brothers would
successfully integrate acquired companies or their management teams into Poore
Brothers' operating structure, retain management teams of acquired companies on
a long-term basis, or operate acquired companies profitably. Acquisitions may
also involve a number of other risks, including adverse short-term effects on
Poore Brothers' operating results, dependence on retaining key personnel and
customers, amortization of acquired intangible assets, and risks associated with
unanticipated liabilities or contingencies.
WE HAVE INCURRED SUBSTANTIAL INDEBTEDNESS IN THE EXECUTION OF OUR BUSINESS
STRATEGY. WE ARE SUBJECT TO VARIOUS FINANCIAL COVENANTS IN CONNECTION WITH OUR
INDEBTEDNESS AND THE FAILURE TO COMPLY WITH SUCH FINANCIAL COVENANTS COULD
RESULT IN THE ACCELERATION OF ALL OR A PORTION OR OUR INDEBTEDNESS.
At September 30, 2000, Poore Brothers had outstanding 9% Convertible
Debentures due July 1, 2002 (the "9% Convertible Debentures") in the aggregate
principal amount of $1,354,889 and outstanding indebtedness under a credit
agreement (the "U.S. Bank Credit Agreement") with U.S. Bank National Association
("U.S. Bank") in the aggregate principal amount of $7,570,053. The indebtedness
under the 9% Convertible Debentures and the U.S. Bank Credit Agreement is
secured by substantially all of Poore Brothers' assets. Poore Brothers is
required to comply with certain financial covenants pursuant to the loan
agreement pursuant to which the 9% Convertible Debentures were issued (the
"Debenture Loan Agreement") so long as the 9% Convertible Debentures are
outstanding and pursuant to the U.S. Bank Credit Agreement so long as borrowings
from U.S. Bank thereunder remain outstanding. Should Poore Brothers be in
default under any of such covenants, the holders of the 9% Convertible
Debentures and U.S. Bank, as applicable, shall have the right, upon written
notice and after the expiration of any applicable period during which such
default may be cured, to demand immediate payment of all of the then unpaid
principal and accrued but unpaid interest under the 9% Convertible Debentures or
pursuant to the U.S. Bank Credit Agreement, respectively. At September 30, 2000,
Poore Brothers was in compliance with all financial covenants under the
Debenture Loan Agreement (including working capital, minimum shareholders'
equity, current ratio and interest coverage requirements) and the U.S. Bank
Credit Agreement (including minimum annual operating results, minimum fixed
charge coverage, minimum tangible capital basis, minimum cash flow coverage and
minimum debt service coverage requirements). There can be no assurance that
Poore Brothers will be in compliance with the financial covenants in the future.
Any acceleration of the 9% Convertible Debentures or the borrowings under the
U.S. Bank Credit Agreement prior to their respective maturities could have a
material adverse effect upon Poore Brothers.
OUR COMMON STOCK MAY EXPERIENCE MARKET PRICE AND VOLUME FLUCTUATIONS AND HOLDERS
OF OUR COMMON STOCK MAY NOT BE ABLE TO RESELL THEIR SHARES AT OR ABOVE THE PRICE
THEY PAID FOR IT
The market price of the Common Stock has experienced a high level of
volatility since the completion of Poore Brothers' initial public offering in
December 1996. Commencing with an offering price of $3.50 per share in the
initial public offering, the market price of the Common Stock experienced a
substantial decline, reaching a low of $0.50 per share (based on last reported
sale price of the Common Stock on the NASDAQ SmallCap Market) on December 22,
1998. During fiscal 1999, the market price of the Common Stock (based on last
reported sale price of the Common Stock on the Nasdaq SmallCap Market) ranged
from a high of $1.69 per share to a low of $0.56 per share. The last reported
sales price of the Common Stock on the Nasdaq SmallCap Market on October 20,
2000 was $2.28125 per share. There can be no assurance as to the future market
price of the Common Stock.
6
<PAGE>
OUR COMMON STOCK COULD BE DE-LISTED FROM THE NASDAQ SMALLCAP MARKET IF WE FAIL
TO COMPLY WITH CERTAIN CONTINUED LISTING STANDARDS.
In order for Poore Brothers' Common Stock to continue to be listed on
the Nasdaq SmallCap Market, Poore Brothers is required to be in compliance with
certain continued listing standards. One of such requirements is that the bid
price of listed securities be equal to or greater than $1.00. As of November 9,
1998, the closing bid price of Poore Brothers' Common Stock had remained below
$1.00 per share for thirty consecutive trading days. As a result, Poore Brothers
received a notice from the Nasdaq Stock Market, Inc. ("Nasdaq") that Poore
Brothers was not in compliance with the closing bid price requirements for
continued listing of the Common Stock on the Nasdaq SmallCap Market and that
such Common Stock would be de-listed after February 15, 1999 if the closing bid
price was not equal to or greater than $1.00 per share for a period of at least
ten consecutive trading days during the ninety-day period ending February 15,
1999. On February 9, 1999, Poore Brothers submitted to Nasdaq a request for a
hearing to discuss the possibility of obtaining an extension of such ninety-day
period. Poore Brothers' hearing request was granted by Nasdaq and a hearing was
held on April 16, 1999. The de-listing of the Common Stock was stayed pending a
determination by Nasdaq after the hearing. On October 19, 1999, Poore Brothers
was notified by Nasdaq that a determination had been made to permit Poore
Brothers' Common Stock to continue to be listed on the Nasdaq SmallCap Market.
The determination was based upon Poore Brothers' compliance with the Nasdaq
closing bid price requirement of $1.00 per share and the satisfaction by Poore
Brothers of various information requests. If, in the future, Poore Brothers'
Common Stock fails to be in compliance with the minimum closing bid price
requirement for at least thirty consecutive trading days or Poore Brothers fails
to be in compliance with any other Nasdaq continued listing requirements, then
the Common Stock could be de-listed from the Nasdaq SmallCap Market. Upon any
such de-listing, trading, if any, in the Common Stock would thereafter be
conducted in the over-the-counter market on the so-called "pink sheets" or the
"Electronic Bulletin Board" of the National Association of Securities Dealers,
Inc. ("NASD"). As a consequence of any such de-listing, an investor could find
it more difficult to dispose of, or to obtain accurate quotations as to the
price of, Poore Brothers' Common Stock.
THE MARKETS FOR OUR PRODUCTS ARE HIGHLY COMPETITIVE AND CERTAIN OF OUR
COMPETITORS HAVE GREATER FINANCIAL AND OTHER RESOURCES THAN US.
The market for salty snack foods, such as those sold by Poore Brothers,
including potato chips, tortilla chips, dips, pretzels and meat snacks, is large
and intensely competitive. Competitive factors in the salty snack food industry
include product quality and taste, brand awareness among consumers, access to
supermarket shelf space, price, advertising and promotion, variety of snacks
offered, nutritional content, product packaging and package design. Poore
Brothers competes in that market principally on the basis of product quality and
taste. The snack food industry is primarily dominated by Frito-Lay, Inc., which
has substantially greater financial and other resources than Poore Brothers and
sells brands that are more widely recognized than are Poore Brothers' products.
Numerous other companies that are actual or potential competitors of Poore
Brothers, many with greater financial and other resources (including more
employees and more extensive facilities) than Poore Brothers, offer products
similar to those of Poore Brothers. In addition, many of such competitors offer
a wider range of products than that offered by Poore Brothers. Local or regional
markets often have significant smaller competitors, many of whom offer batch
fried products similar to those of Poore Brothers. Expansion of Company
operations into new markets has and will continue to encounter significant
competition from national, regional and local competitors that may be greater
than that encountered by Poore Brothers in its existing markets. In addition,
such competitors may challenge Poore Brothers' position in its existing markets.
While Poore Brothers believes that its products and methods of operation will
enable it to compete successfully, there can be no assurance of its ability to
do so.
7
<PAGE>
WE MAY INCUR SIGNIFICANT PROMOTIONAL AND SHELF SPACE COSTS WHICH COULD
MATERIALLY ADVERSELY AFFECT OUR FINANCIAL PERFORMANCE.
Successful marketing of food products generally depends upon obtaining
adequate retail shelf space for product display, particularly in supermarkets.
Frequently, food manufacturers and distributors, such as Poore Brothers, incur
additional costs in order to obtain additional shelf space. Whether or not Poore
Brothers incurs such costs in a particular market is dependent upon a number of
factors, including existing demand for Poore Brothers' products, relative
availability of shelf space and general competitive conditions. Poore Brothers
may incur significant shelf space or other promotional costs as a necessary
condition of entering into competition in particular markets or stores. If
incurred, such costs may materially adversely affect Poore Brothers' financial
performance.
OUR BUSINESS WILL BE ADVERSELY IMPACTED IF OUR EXISTING AND FUTURE PRODUCTS DO
NOT GET AND MAINTAIN CONSUMER ACCEPTANCE.
Consumer preferences for snack foods are continually changing and are
extremely difficult to predict. The ability of Poore Brothers to develop
successful operations in new markets will depend upon customer acceptance of,
and Poore Brothers' ability to manufacture, its products. There can be no
assurance that Poore Brothers' products will achieve a significant degree of
market acceptance, that acceptance, if achieved, will be sustained for any
significant period or that product life cycles will be sufficient to permit
Poore Brothers to recover start-up and other associated costs. In addition,
there can be no assurance that Poore Brothers will succeed in the development of
any new products or that any new products developed by Poore Brothers will
achieve market acceptance or generate meaningful revenue for Poore Brothers.
OUR BUSINESS IS SUBJECT TO NUMEROUS UNCERTAINTIES AND RISKS THAT EXIST WITHIN
THE FOOD PRODUCTS INDUSTRY.
The food product industry in which Poore Brothers is engaged is subject
to numerous uncertainties and risks outside of Poore Brothers' control.
Profitability in the food product industry is subject to adverse changes in
general business and economic conditions, oversupply of certain food products at
the wholesale and retail levels, seasonality, the risk that a food product may
be banned or its use limited or declared unhealthful, the risk that product
tampering may occur that may require a recall of one or more of Poore Brothers'
products, and the risk that sales of a food product may decline due to perceived
health concerns, changes in consumer tastes or other reasons beyond the control
of Poore Brothers.
OUR BUSINESS MAY BE ADVERSELY IMPACTED BY FLUCTUATIONS IN THE AVAILABILITY OF
SUPPLIES AND THE PRICES OF SUPPLIES.
Poore Brothers' manufacturing costs are subject to fluctuations in the
prices of potatoes, potato flakes, wheat flour, corn and oil, as well as other
ingredients of Poore Brothers' products. Potatoes, potato flakes, wheat flour
and corn are widely available year-round. Poore Brothers uses a variety of oils
in the production of its products. Poore Brothers is dependent on its suppliers
to provide Poore Brothers with products and ingredients in adequate supply and
on a timely basis. Although Poore Brothers believes that its requirements for
products and ingredients are readily available, and that its business success is
not dependent on any single supplier, the failure of certain suppliers to meet
Poore Brothers' performance specifications, quality standards or delivery
schedules could have a material adverse effect on Poore Brothers' operations. In
particular, a sudden scarcity, a substantial price increase, or an
unavailability of product ingredients could materially adversely affect Poore
Brothers' operations. There can be no assurance that alternative ingredients
would be available when needed and on commercially attractive terms, if at all.
8
<PAGE>
WE DO NOT POSSESS PROPRIETARY MANUFACTURING METHODS WITH RESPECT TO OUR POTATO
CHIP PRODUCTS. WE HAVE AN EXCLUSIVE RIGHT TO USE CERTAIN PATENTED TECHNOLOGY IN
CONNECTION WITH CERTAIN OF OUR NON-POTATO CHIP PRODUCTS; HOWEVER SUCH PATENTS
WILL EXPIRE BETWEEN 2004 AND 2006 AFTER WHICH TIME OUR COMPETITORS MAY USE THE
PATENTED TECHNOLOGY IN THE MANUFACTURE OF THEIR PRODUCTS.
The taste and quality of Poore Brothers(R), Bob's Texas Style(R) and
Boulder Potato Company(TM) brand potato chips is largely due to two elements of
Poore Brothers' manufacturing process: its use of batch frying and its use of
distinctive seasonings to produce a variety of flavors. Poore Brothers does not
have exclusive rights to the use of either element; consequently, competitors
may incorporate such elements into their own processes. Poore Brothers licenses
patented technology from a third party in connection with the manufacture of its
Tato Skins(R), Pizzarias(R) and O'Boisies(R) brand products, and has an
exclusive right to use such technology within North America until the patents
expire between 2004 and 2006. Upon the expiration of the patents, competitors of
Poore Brothers, certain of which may have significantly greater resources than
Poore Brothers, may utilize the patented technology in the manufacture of
products that are similar to those currently manufactured by Poore Brothers with
such patented technology. The entry of any such products into the marketplace
could have a material adverse effect on sales of Tato Skins(R), Pizzarias(R) and
O'Boisies(R) brand products by Poore Brothers.
OUR BUSINESS COULD SUFFER IF WE LOSE THE BUSINESS OF CERTAIN OF OUR CUSTOMERS.
One customer of Poore Brothers, Fry's Food Stores (a subsidiary of
Kroger, Inc.), accounted for 14% of Poore Brothers' 1999 net sales and 11% of
net sales for the nine months ended September 30, 2000. Another customer, Vend
Supply of America, accounted for 15% of net sales for the nine months ended
September 30, 2000. The remainder of Poore Brothers' net sales are derived from
sales to a limited number of additional customers, either grocery chains or
regional distributors, none of which individually accounted for more than 10% of
Poore Brothers' sales during such periods. A decision by any major customer to
cease or substantially reduce its purchases could have a material adverse effect
on Poore Brothers' business.
OUR BUSINESS COULD SUFFER IF WE LOSE THE SERVICES OF KEY EXECUTIVES
Poore Brothers' success is dependent in large part upon the abilities
of its executive officers, including Eric J. Kufel, President and Chief
Executive Officer, Glen E. Flook, Senior Vice President-Operations, Thomas W.
Freeze, Senior Vice President and Chief Financial Officer, and John M.
Silvestri, Senior Vice President-Sales and Marketing. The inability of the
executive officers to perform their duties or the inability of Poore Brothers to
attract and retain other highly qualified personnel could have a material
adverse effect upon Poore Brothers' business and prospects. Poore Brothers does
not maintain, nor does it currently contemplate obtaining, "key man" life
insurance with respect to such employees. The employment of the executive
officers of Poore Brothers is on an "at-will" basis. Poore Brothers has
non-compete agreements with all of its executive officers.
FAILURE TO COMPLY WITH LAWS GOVERNING OUR BUSINESS OR MATERIAL CHANGES IN THE
REGULATORY ENVIRONMENT RELATING TO OUR BUSINESS COULD HAVE A MATERIAL ADVERSE
EFFECT ON OUR BUSINESS.
The packaged food industry is subject to numerous federal, state and
local governmental regulations, including those relating to the preparation,
labeling and marketing of food products. Poore Brothers is particularly affected
by the Nutrition Labeling and Education Act of 1990 ("NLEA"), which requires
specified nutritional information to be disclosed on all packaged foods. Poore
Brothers believes that the labeling on its products currently meets these
requirements. Poore Brothers does not believe that complying with the NLEA
regulations materially increases Poore Brothers' manufacturing costs. There can
be no assurance, however, that new laws or regulations will not be passed that
could require Poore Brothers to alter the taste or composition of its products.
Such changes could affect sales of Poore Brothers' products and have a material
adverse effect on Poore Brothers.
WE MAY BE SUBJECT TO VARIOUS PRODUCT LIABILITY CLAIMS.
As a manufacturer and marketer of food products, Poore Brothers may be
subjected to various product liability claims. There can be no assurance that
the product liability insurance maintained by Poore Brothers will be adequate to
cover any loss or exposure for product liability, or that such insurance will
continue to be available on terms acceptable to Poore Brothers. Any product
liability claim not fully covered by insurance, as well as any adverse publicity
from a product liability claim, could have a material adverse effect on the
financial condition or results of operations of Poore Brothers.
9
<PAGE>
ONE OF OUR MAJOR SHAREHOLDERS MAY, BY VIRTUE OF ITS SHARE OWNERSHIP, EXERCISE A
SUBSTANTIAL INFLUENCE ON OUR BUSINESS AND AFFAIRS AS WELL AS THE MARKET FOR OUR
COMMON STOCK.
As a result of the Wabash Foods acquisition in October, 1999, Capital
Foods, LLC ("Capital Foods") (an affiliate of the former owner of Wabash Foods)
became the single largest shareholder of Poore Brothers, with approximately 31%
of the outstanding shares of Common Stock (without giving effect to the possible
exercise of a warrant to purchase 400,000 shares of Common Stock also held by
Capital Foods). Accordingly, Capital Foods is in a position to exercise a
substantial influence on the business and affairs of Poore Brothers and may be
deemed (either alone or together with Company management) to control Poore
Brothers. Although Poore Brothers is not aware of any plans or proposals on the
part of Capital Foods to recommend or undertake any material change in the
management or business of Poore Brothers, there is no assurance that Capital
Foods will not adopt or support any such plans or proposals in the future. Apart
from transfer restrictions arising under applicable provisions of the securities
laws, there are no restrictions on the ability of Capital Foods to transfer any
or all of its shares of Common Stock at any time. One or more of such transfers
could have the effect of transferring control of Poore Brothers to one or more
parties not currently known to Poore Brothers. Following expiration of the
required holding period (one year, in the case of reliance upon the exemption
provided by Rule 144 under the Securities Act) for the shares of Common Stock
held by Capital Foods, Capital Foods (or other holder(s) of such shares) will be
generally free to resell any or all of such shares without registration under
the Securities Act. Such sales will be subject to volume limitations under Rule
144 only if Capital Foods or such other holder is deemed an "affiliate" of Poore
Brothers at or about the time of resale or resells shares prior to completion of
a two-year holding period. In addition, Capital Foods or its transferees have
certain "piggyback" registration rights which will permit such resales pursuant
to an effective registration statement under the Securities Act. Depending upon
their timing, magnitude and other factors, such resales, or the possibility
thereof, could adversely affect the market price of the Common Stock.
IT MAY BE DIFFICULT FOR A THIRD PARTY TO ACQUIRE OUR COMPANY, WHICH COULD
DEPRESS OUR STOCK PRICE.
Poore Brothers' Certificate of Incorporation authorizes the issuance of
up to 50,000 shares of "blank check" Preferred Stock with such designations,
rights and preferences as may be determined from time to time by the Board of
Directors of Poore Brothers. Poore Brothers may issue such shares of Preferred
Stock in the future without shareholder approval. The rights of the holders of
Common Stock will be subject to, and may be adversely affected by, the rights of
the holders of any Preferred Stock that may be issued in the future. The
issuance of Preferred Stock, while providing desirable flexibility in connection
with possible acquisitions and other corporate purposes, could have the effect
of discouraging, delaying or preventing a change of control of Poore Brothers,
and preventing holders of Common Stock from realizing a premium on their shares.
In addition, under Section 203 of the Delaware General Corporation Law (the
"DGCL"), Poore Brothers is prohibited from engaging in any business combination
(as defined in the DGCL) with any interested shareholder (as defined in the
DGCL) unless certain conditions are met. This statutory provision could also
have an anti-takeover effect.
USE OF PROCEEDS
The proceeds received by Poore Brothers upon the exercise of Options by
the Selling Shareholders will be approximately $4,011,537. However, there can be
no assurance as to the number of Options, if any, which will be exercised. Poore
Brothers anticipates that the net proceeds of Option exercises, if any, will be
allocated to working capital and general corporate purposes, which will be
applied, to the extent necessary, to Poore Brothers' operations. Any and all of
the Shares which may be sold pursuant to this Prospectus will be sold by the
Selling Shareholders for their own accounts. Poore Brothers will receive none of
the proceeds from the sale of the Shares.
10
<PAGE>
SELLING SHAREHOLDERS
The following table sets forth with respect to each listed person
(each, a "Selling Shareholder"): (i) the name of such Selling Shareholder, (ii)
such Selling Shareholder's position or other material relationship with Poore
Brothers; (iii) the number of shares of Common Stock owned by such Selling
Shareholder at September 30, 2000, (iv) the number of shares of Common Stock to
be registered pursuant to this Prospectus, and (v) the number of shares of
Common Stock to be owned by such Selling Shareholder after the sale of all
shares to be registered pursuant to this Prospectus.
<TABLE>
<CAPTION>
POSITION WITH COMPANY NUMBER OF SHARES NUMBER OF
OR OTHER MATERIAL NUMBER OF REGISTERED UNDER SHARES OWNED
NAME RELATIONSHIP SHARES OWNED(1) THIS PROSPECTUS AFTER OFFERING
---- ------------ --------------- --------------- --------------
<S> <C> <C> <C> <C>
Thomas E. Cain Director 25,000 25,000 0
Glen E. Flook Senior Vice President - 451,000 450,000 1,000
Operations
Thomas W. Freeze Senior Vice President, 537,000 535,000 2,000
Chief Financial Officer,
Secretary, Treasurer,
Director
Mark S. Howells Director, Chairman 798,137 330,000 468,137
Eric J. Kufel President, Chief 920,000 915,000 5,000
Executive Officer,
Director
James W. Myers Director 30,000 30,000 0
Robert C. Pearson Director 45,000 45,000 0
Aaron M. Shenkman Director 92,000 55,000 37,000
John M. Silvestri Senior Vice President - 200,000 200,000 0
Sales and Marketing
</TABLE>
----------
(1) The number of shares owned by listed individuals includes restricted stock
and options to purchase Common Stock under the Plan, whether or not
exercisable as of, or within sixty days of, the date of this Prospectus as
well as shares of Common Stock beneficially owned by the Selling
Shareholders.
PLAN OF DISTRIBUTION
The Shares offered hereby may be sold from time to time directly to
purchasers by the Selling Shareholders. Alternatively, the Selling Shareholders
may from time to time offer their Shares through brokers, dealers or agents who
may receive compensation in the form of underwriting discounts, commissions or
concessions from the Selling Shareholders and/or the purchasers of the Common
Stock for whom they may act as agent. The Selling Shareholders and any brokers,
dealers or agents that participate in the distribution of the Common Stock
offered hereby may be deemed to be underwriters, and any profit on the sale of
the Common Stock offered hereby by them and any discounts, commissions or
concessions received by any such brokers, dealers and agents may be deemed to be
underwriting discounts and commissions under the Securities Act.
11
<PAGE>
The Shares offered hereby may be sold from time to time in one or more
transactions by block trading, in negotiated transactions, through the writing
of options on such shares, or a combination of such methods of sale, at fixed
offering prices which may be changed, at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at negotiated prices
or by a combination of such methods. The Selling Shareholders are not restricted
as to the price or prices at which they may sell their Shares. Sales of such
shares at less than the market price may depress the market price of the Common
Stock.
Poore Brothers will pay substantially all of the expenses incident to
the offering and sale of the Common Stock offered hereby to the public other
than commissions and discounts of brokers, dealers or agents.
In order to comply with certain state securities laws, if applicable,
the shares of Common Stock offered hereby will be sold in such jurisdictions
only through registered or licensed brokers or dealers. In addition, in certain
states, the Common Stock offered hereby may not be sold unless it has been
registered or qualifies for sale in such state or an exemption from registration
or qualification is available and is complied with.
There can be no assurance that any of the Selling Shareholders will
sell any or all of the shares of Common Stock offered by them hereunder.
LEGAL MATTERS
Certain legal matters with respect to the shares of Common Stock
offered hereby will be passed upon for Poore Brothers by Cobb & Eisenberg LLC,
Westport, Connecticut.
12
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents which have heretofore been filed by the
Registrant with the Commission pursuant to the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), or the Securities Act are incorporated by
reference herein and shall be deemed to be a part hereof:
(a) The Registrant's Annual Report on Form 10-KSB for the
Registrant's fiscal year ended December 31, 1999;
(b) The Registrant's Quarterly Report on Form 10-QSB for the
three-month period ended March 31, 2000;
(c) The Registrant's Quarterly Report on Form 10-QSB for the
three-month period ended June 30, 2000;
(d) The Registrant's Current Report on Form 8-K filed with the
Commission on June 12, 2000, regarding the acquisition by the
Registrant of Boulder Natural Foods, Inc. and Boulder Potato
Company(TM)brand potato chips;
(e) The Registrant's Proxy Statement dated April 17, 2000 concerning
its Annual Meeting of Shareholders held on May 22, 2000; and
(f) The description of the Registrant's Common Stock contained in the
Registrant's Registration Statement on Form SB-2 filed with the
Commission on December 5, 1996 pursuant to the Securities Act
(Registration No. 333-5594-LA), including any amendment or report
filed for the purpose of updating such description.
All documents filed by the Registrant with the Commission pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the filing of a
post-effective amendment to this Registration Statement which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference in this
Registration Statement and made a part hereof from their respective dates of
filing (such documents, and the documents enumerated above, being hereinafter
referred to as "Incorporated Documents"); provided, however, that the documents
enumerated above or subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act in each year during which the
offering made by this Registration Statement is in effect prior to the filing
with the Commission of the Registrant's Annual Report on Form 10-KSB covering
such year shall not be Incorporated Documents or be incorporated by reference in
this Registration Statement or be a part hereof from and after the filing of
such Annual Report on Form 10-KSB.
Any statement contained in an Incorporated Document shall be deemed to
be modified or superseded for purposes of this Registration Statement to the
extent that a statement contained herein or in any other subsequently filed
Incorporated Document modifies or supersedes such statement. Any such statement
so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Registration Statement.
13
<PAGE>
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Certificate of Incorporation, as amended, of the Registrant
provides that no director shall have any personal liability to the Registrant or
its shareholders for any monetary damages for breach of fiduciary duty as a
director, except that the Certificate of Incorporation does not eliminate or
limit the liability of a director (i) for any breach of such director's duty of
loyalty to the Registrant or its shareholders, (ii) for acts of omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General Corporation Law or (iv) for
any transaction from which such director derived an improper personal benefit.
The By-Laws of the Registrant provide that:
(a) The Registrant shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Registrant) by
reason of the fact that he is or was a director, officer, employee or agent of
the Registrant, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Registrant, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Registrant, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) The Registrant shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Registrant to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee or agent of the Registrant, or is or was serving at the
request of the Registrant as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Registrant and except that no indemnification shall be
made in respect to any claim, issue or matter as to which such person shall have
been adjudged to be liable to the Registrant unless and only to the extent that
the Court of Chancery of the State of Delaware or the court in which such action
or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses which
the Court of Chancery of the State of Delaware or such other court shall deem
proper.
(c) To the extent that a director, officer, employee or agent of
the Registrant has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Subsections (a) and (b) above, or in
defense of any claim, issue or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(d) Any indemnification under Subsections (a) and (b) above
(unless ordered by a court) shall be made by the Registrant only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in Subsections (a) and (b). Such
determination shall be made (1) by the Board of Directors by a majority vote of
a quorum consisting of directors who were not parties to such action, suit or
proceeding, or (2) if such quorum is not obtainable, or, even if obtainable a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, or (3) by the shareholders.
14
<PAGE>
(e) Expenses incurred in defending a civil or criminal action,
suit or proceeding shall be paid by the Registrant in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of the director, officer, employee or agent to repay such amount if
it shall be ultimately determined that he is not entitled to be indemnified by
the Registrant as authorized in this Section.
(f) The indemnification provided by this Section shall be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled by any By-Law, agreement, vote of
shareholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(g) The Registrant is authorized, according to the discretion of
the Board of Directors, to purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the Registrant,
or is or was serving at the request of the Registrant as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or not the
Registrant must indemnify him against such liability under the provisions of
this Section.
(h) For purposes of these provisions, references to "the
Registrant" shall include, in addition to the Registrant, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had the power and authority to indemnify its directors, officers and
employees or agents, so that any person who is or was a director, officer,
employee or agent of such constituent corporation, or is or was serving at the
request of such constituent corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under these provisions with respect
to the resulting corporation as he would have with respect to such constituent
corporation if its separate existence had continued.
Each of Eric Kufel, Thomas Freeze, Glen Flook and John Silvestri has
entered into an employment agreement with the Registrant which provides, in
part, that the Registrant, each of its subsidiaries and affiliated entities
shall indemnify and hold him harmless and defend him for, from and against all
claims, liabilities, obligations, fines, penalties and other matters and all
costs and expenses relating thereto that the Registrant and/or such subsidiary
or affiliated entity is permitted by applicable law. Each of Messrs. Kufel and
Freeze is a Director and executive officer of the Registrant. Each of Messrs.
Flook and Silvestri is an executive officer of the Registrant.
15
<PAGE>
ITEM 8. EXHIBITS
Exhibit Description
------- -----------
4.1 Poore Brothers, Inc. 1995 Stock Option Plan, as amended.
4.3 Form of Stock Option Agreement (incorporated by reference to Exhibit
4.3 to the Registrant's Registration Statement on Form S-8 filed with
the Commission on April 29, 1997 (Commission File No. 333-26117)).
5.1 Opinion of Cobb & Eisenberg LLC
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Cobb & Eisenberg LLC (included in Exhibit 5.1).
24 Power of Attorney (contained on signature page hereof).
16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Goodyear, State of Arizona, on this 26th day of
October, 2000.
POORE BROTHERS, INC.
By: /s/ Thomas W. Freeze
----------------------------------
Thomas W. Freeze
Senior Vice President and
Chief Financial Officer
17
<PAGE>
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Eric J. Kufel his true and lawful
attorney-in-fact, to act for him and in his name, place and stead, in any and
all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement on Form S-8 to be filed pursuant to
the Securities Act of 1933 in connection with the registration of shares of
Common Stock, par value $.01 per share, of Poore Brothers, Inc., and to file the
same with all exhibits thereto, and all documents in connection therewith, with
the Securities and Exchange Commission, granting said attorney-in-fact and agent
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorney-in-fact and agent or his or her substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Eric J. Kufel President, Chief Executive October 26, 2000
---------------------------- Officer, Director
Eric J. Kufel (Principal Executive Officer)
/s/ Thomas W. Freeze Senior Vice President, Chief October 26, 2000
---------------------------- Financial Officer, Secretary,
Thomas W. Freeze Treasurer, Director (Principal
Financial Officer and Principal
Accounting Officer)
/s/ Mark S. Howells Director, Chairman October 26, 2000
----------------------------
Mark S. Howells
/s/ Thomas E. Cain Director October 26, 2000
----------------------------
Thomas E. Cain
/s/ James W. Myers Director October 26, 2000
----------------------------
James W. Myers
/s/ Robert C. Pearson Director October 26, 2000
----------------------------
Robert C. Pearson
/s/ Aaron M. Shenkman Director October 26, 2000
----------------------------
Aaron M. Shenkman
17
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBIT
------ -------
4.1 Poore Brothers, Inc. 1995 Stock Option Plan, as amended.
5.1 Opinion of Cobb & Eisenberg LLC
23.1 Consent of Arthur Andersen LLP
