SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
((Amendment No. )
Filed by the Registrant [ x ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ x ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material under Rule 14a-12
SYNERGY BRANDS INC.
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(Name of Registrant as Specified in Its Charter)
------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required
[ ] Fee computed on table below per Exchange Act Rule 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies
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2. Aggregate number of securities to which transaction applies:
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3. Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined)
- - ------------------------------------------------------------------------------
4. Proposed maximum aggregate value of transaction:
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5. Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] check box if any part of the fee is offset as provided by Exchange Act rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
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2. Form, Schedule or Registration Statement No.
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3. Filing Party:
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4. Date Filed:
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SYNERGY BRANDS INC.
1175 Walt Whitman Road
Melville, NY 11747
PROXY STATEMENT
This statement is furnished in connection with a solicitation of proxies by
the Board of Directors (the "Board of Directors" or the "Board") of Synergy
Brands Inc. (the "Company") to be used at the Annual Meeting of Stockholders of
the Company (the "Meeting") to be held on June 28, 2002 at 10:00 A.M. at
Melville Marriott, Melville, New York, 631-423-1600.
VOTING PROCEDURES
Stockholders of record at the close of business on May 1, 2002 will be
entitled to vote at the Meeting. On the said record date, there were 5,200,484
shares of Common Stock, par value $.001 per share ("Common Stock"), outstanding,
each of which being entitled to one vote at the Meeting, and 100,000 shares of
Class A Preferred Stock, par value $.001 per share ("Preferred Stock" and,
together with the Common Stock, collectively the "Company Shares"), outstanding,
each of which being entitled to 13 votes at the Meeting (vote is controlled by
Mair Faibish, Chief Executive Officer of the Company). Holders of the Common
Stock and the Preferred Stock will vote as a single class as to all matters to
come before the Meeting. A Shareholder List disclosing shareholders of record on
May 1, 2002 shall be made available for inspection by shareholders entitled to
vote at the Annual Meeting at the location of the Meeting on the date of and in
advance of the date of the Meeting.
On April 19, 2001, the Board of Directors authorized a 5-for-1 reverse
split of its common stock to shareholders of record on April 20, 2001. Par value
and per share amounts in the accompanying information and schedules have been
retroactively adjusted for the split.
The By-Laws of the Company (the "By-Laws") provide that the holders of a
minimum of one third of the Company Shares issued and outstanding and entitled
to vote at the Meeting, present in person or represented by proxy, shall
constitute a quorum at the Meeting. The By-Laws further provide that the
directors of the Company shall be elected by a plurality vote, and that, except
as otherwise provided by statute, the Certification of Incorporation of the
Company, or the By-Laws, all other matters coming before the meeting shall be
decided by the vote of a majority of the number of Company Shares present in
person or represented by proxy at the Meeting and entitled to vote thereat where
a quorum is present.
Votes cast at the Meeting will be counted by the persons appointed by the
Company to act as inspectors of election for the Meeting. The inspectors of
election will treat Company Shares represented by a properly executed and
returned proxy as present at the Meeting for purpose of determining a quorum.
Abstention and broker non-votes with respect to particular proposals will not
affect the determination of a quorum.
Seven directors will be elected by a plurality vote of the Company Shares
present, in person or by proxy, and entitled to vote at the Meeting.
Accordingly, abstentions and broker non-votes as to the election of directors
will have no effect thereon. All other matters to come before the Meeting
require either the approval of a majority of the votes represented by all
Company Shares or those present at the meeting and entitled to vote thereon,
therefore abstentions as to particular proposals will have the same effect as
votes against such proposals. Broker non-votes as to particular proposals will
not, however, be deemed to be a part of the voting power present with respect to
such proposals and will not therefore count as votes for or against such
proposals and will not be included in calculating the number of votes necessary
for approval of such proposals.
-3-
Proxies in the enclosed form are solicited by the Board of Directors to
provide an opportunity to every stockholder to vote on all matters to come
before the Meeting, whether or not he or she attends in person. If proxies in
the enclosed form are properly executed and returned, the Company Shares
represented thereby will be voted at the Meeting in accordance with stockholder
direction. Proxies in the enclosed form upon presentation unless otherwise
designated thereon will be voted FOR the election of each director, and FOR the
election of Grant Thornton LLP as the Company's auditors for the fiscal year
ending December 31, 2002. Any stockholder executing a proxy may revoke that
proxy or submit a revised one at any time before it is voted. A stockholder may
also attend at the Meeting in person and vote by ballot, thereby canceling any
proxy previously given. Except for the election of directors and confirmation of
the auditors, Company management expects no other matters to be presented for
action at the Meeting. If, however, any other matters properly come before the
Meeting, the persons named as proxies in the enclosed form of proxy intend to
vote in accordance with their judgment on the matters presented unless otherwise
specified in the Proxy.
PROXY SOLICITATION
The cost of soliciting proxies will be borne by the Company. In addition to
solicitations by mail, arrangements have been made for brokers and nominees to
send proxy material to their principals, and the Company, will reimburse them
for their reasonable expenses in doing so. The Company's transfer agent,
American Stock Transfer and Trust Company will assist it in the solicitation of
proxies from brokers and nominees. The fees for the services of the transfer
agent are included in the monthly fees paid by the Company, however, the Company
will reimburse the transfer agent for its reasonable out-of-pocket expenses
incurred in connection with providing solicitation services. Certain employees
of the Company, who will receive no compensation for their services other than
their regular remuneration, may also solicit by telephone, telegram, telex,
telecopy, or personal interview.
PROPOSAL 1. ELECTION OF DIRECTORS
At the Meeting, seven directors are to be elected to a one-year term and to
hold office until their successors are elected and qualified. The Board of
Directors consists of one class, which serves for a one-year term or until their
successor is elected and qualifies. The persons named in the enclosed form of
proxy intend to vote such proxy, unless otherwise directed, FOR the election of
each of the directors nominated to serve on the Board to serve until the fiscal
2002 Annual Meeting of Stockholders or other dates for proposed election of new
directors. If contrary to present expectation, any of the nominees should become
unavailable for any reason, votes may be cast pursuant to the accompanying form
of proxy for a substitute nominee designated by the Board.
INFORMATION CONCERNING DIRECTORS AND DIRECTOR NOMINEES.
Set forth is certain information concerning directors and director
nominees.
Year First
Elected A
Name of Nominee Age Position Director
--------------- --- -------- --------
Mair Faibish 42 Chairman and Chief
Executive Officer
and Director 1989
Henry J. Platek, Jr. 55 President, Chief Operating
Officer and Director 1989
Mitchell Gerstein 46 Chief Financial Officer,
Treasurer, Secretary
and Director 1991
Dominic Marsicovetere 52 Director 1993
Michael Ferrone 49 Director 1995
Donald E. Butler (deceased)56 Director 2000
Dail Elizabeth Miller 44 Director 2001
Randall J. Perry 47 Director nominee
MAIR FAIBISH. Mr. Faibish has been CEO since January 1, 2000, prior thereto
he served as Executive Vice President, Chief Financial Officer and a Director of
the Company since May 1989. He serves on the Employee Compensation Committee and
the Executive Committee.
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HENRY J. PLATEK, JR. has been President and a Director of the Company since
December 1989 and Chief Operating Officer since January 1, 2000. Mr. Platek
serves on the Employee Compensation Committee and the Executive Committee.
MITCHELL GERSTEIN. Mr. Gerstein has been Treasurer since March 1994, Vice
President and a Director of the Company since June 1991, Controller and
Treasurer of the Company since March 1992, Secretary of the Company from June
1991 to March 1994, a position he resumed in January 1995 and Chief Financial
Officer since January 1, 2000. Mr. Gerstein serves on the Audit Committee.
DOMINIC A. MARSICOVETERE, CPA. Mr. Marsicovetere has been a Director of the
Company since April 1993. Since 1978, Mr. Marsicovetere has been an Accounting
Professor in the school of Business Administration at Hofstra University. Since
1978, Mr. Marsicovetere had been in private practice as a certified public
accountant. Mr. Marsicovetere is the chairman of the Audit Committee and
Independent Compensation Committee.
DAIL ELIZABETH MILLER, has been a director since December, 2001. Since
August, 2001 Ms. Miller has been President of DailCo Inc., a Real Estate
development company located in Woodstock, Vermont. Between 1997 and 2001, Ms.
Miller worked at LIM Inc. as an Investment Researcher. Ms. Miller plans to be
involved in the Company's strategic planning and Business to Consumer
operations.
RANDALL J. PERRY is a new nominee for election to the Board of Directors of
the Company. Mr. Perry acted in the past and is presently retained as corporate
and securities counsel for the Company as an independent contractor. Mr. Perry
is an attorney licensed and practicing in New Jersey, New York and Pennsylvania.
Mr. Perry has been in active law practice since 1981. Mr Perry is a graduate of
PennState University (1975 BA) and Seton Hall Law Center (JD 1980).
The Company was saddened by the loss of Donald E. Butler who died in March
2002. The Company appreciates all of his efforts and he will be missed. Randall
J. Perry has been nominated to replace Mr. Butler on the Company's Board of
Directors.
MICHAEL FERRONE. Mr. Ferrone is an executive with Guardian Insurance
Company where he has been employed since 1989. Prior thereto he had been an
associate at Certified Financial Services for 2 years. Mr. Ferrone has been a
Vice President and has served on the Executive Committee of Alliance Financial
Group for the past eight years. Mr. Ferrone serves on the Audit Committee and
Independent Compensation Committee.
CORPORATE GOVERNANCE
Directors are elected at the annual meeting of stockholders and hold office
until their successors have been duly elected and qualified, or until their
earlier death, resignation or removal.
The Board of Directors has primary responsibility of directing the
management of the business and affairs of the Company. The Board currently
consist of seven members.
The Company has an Audit Committee, an Executive Committee, an Independent
Compensation Committee and an Employee Compensation Committee.
The Audit Committee is comprised of Dominic A. Marsicovetere (chair),
Mitchell Gerstein and Michael Ferrone and its functions include recommending to
the Board of Directors the engagement of the Company's independent certified
public accountants, reviewing with such accountants the plan and results of
their examination of the consolidated financial statements and determining the
independence of such accountants. The Audit Committee will also have primary
responsibility for reviewing all related party transactions. However, it is the
Company's policy that all related party transactions be approved by a majority
of the disinterested directors of the Company. Such directors will not be
required to make a determination that each related party transaction meets a
fairness test, but will decide whether the transaction is in the best interest
of the Company. The Audit Committee is comprised of a majority of independent
directors as required by NASDAQ.
-5-
The Executive Committee is comprised of Henry J. Platek, Jr. and Mair
Faibish and is responsible for establishing policies and procedures relating to
the administration and operation of the Company.
The Independent Compensation Committee, consisting of Dominic Marsicovetere
and Michael Ferrone, the Company's two independent non-employee directors, will
review and make recommendations with respect to compensation of officers and key
employees. They also administer the Company's 1994 Services and Consulting
Compensation Plan, as amended, with respect to compensation of directors (except
non-employee directors) and officers and consultants of the Company.
The Employee Compensation Committee, consisting of Mair Faibish and Henry
J. Platek, will review and make recommendations with respect to compensation of
employees, who are not officers or directors.
Executive officers serve at the discretion of the Board of Directors,
subject to any employment agreement between the executive officer and the
Company.
The Board of Directors and its Committees voted by unanimous or majority
(on notice to others not voting) written consent in lieu of formal meetings with
respect to all actions taken during the year ended December 31, 2001 and
thereafter in 2002.
None of the directors or respective officers of the Company have over the
last two fiscal years been involved in any material transactions with the
Company wherein the amount of money involved exceeded $60,000 except that the
Company has paid to Mr. Perry on retainer sums in excess of $100,000 for legal
services rendered on behalf of the Company. The Company has paid in fiscal 2001
$139,400 to Libra Marketing Inc. which compensation is a marketing consulting
firm in which Mair Faibish has a controlling stock interest and is an officer
and Director. No other material transactions involving the officers and or
directors of the Company and the Company are proposed where the amount to be
paid exceeds $60,000 except that the Company anticipates continuing to pay for
consulting services to Libra Marketing to similar extent in fiscal 2002. There
are also no common affiliations between the Company and officers and/or
directors in any other business or entity, to the best knowledge of the Company.
No officer or director or affiliate thereof is or in the last fiscal year
has been in debt to the Company in excess of $60,000 except that debt has in the
last fiscal year been owed to the Company by Mair Faibish the largest aggregate
amount owing during the last fiscal year of which was $113,629, but presently
such debt has been satisfied in full from cancellation of certain outstanding
options. The debt carried no interest and was related to exercise of options in
fiscal year 2000.
COMPENSATION OF DIRECTORS/ NON-EMPLOYEE DIRECTOR PLAN
Directors and committee members who are part of management serve as such
without compensation but are reimbursed for their reasonable out-of-pocket
expenses in attending meetings of the Board and its committees. Pursuant to the
Option Plan, directors who are not employees of the Company are granted an
option to purchase 10,000 shares of Common Stock at an exercise price equal to
fair market value on the date of grant immediately upon their election or
reelection to the Board of Directors.
RECOMMENDATION AND VOTE
The Board of Directors recommends the election of the nominees listed above
as directors of the Company to hold office until the next annual meeting or
until their successors are elected and qualified. The affirmative vote of a
plurality of the Company Shares represented at the Meeting where a quorum is
presented is required for such approval. Quorum at the meeting shall require
attendance in person and/or by proxy by at least one-third amount of the
potential votes outstanding.
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PRINCIPAL STOCKHOLDERS
The following table sets forth as of May 1, 2002 information regarding the
beneficial ownership of the Company's voting securities (i) by each person who
is known to the Company to be the owner of more than five percent of the
Company's voting securities, (ii) by each of the Company's directors, and (iii)
by all directors and executive officers of the Company as a group each share of
Common Stock being entitled to one vote and Preferred Stock being entitled to 13
votes per share:
Amount and Nature of
Beneficial Ownership Percent of Class
Name and Address of Common Preferred Common Preferred
Beneficial Owner(1) Stock Stock Stock Stock
- --------------------- ----- ----- ----- -----
Henry J. Platek (2).......... 4000 -0- .10 --
1175 Walt Whitman Road
Melville, NY 11747
Mair Faibish (3)............. 407,483 100,000 7.8% 100.0%
1175 Walt Whitman Road
Melville, NY 11747
Mitchell Gerstein............ -0- -0- -0- --
1175 Walt Whitman Road
Melville, NY 11747
Dominic A. Marsicovetere..... 2000 -0- .05% --
1175 Walt Whitman Road
Melville, NY 11747
Michael Ferrone............. 2000 -0- .05% --
1175 Walt Whitman Road
Melville, NY 11747
Dail Elizabeth Miller (5)(6). 160,000 -0- 3.1% --
13 Golf Avenue
Woodstock, Vermont 05030
Randall J. Perry........... -0- -0- -0- --
44 Union Avenue
PO Box 108
Rutherford, NJ 07070
Lloyd I. Miller III(4)(6).. 1,174,422 -0- 22.6% --
4550 Gordon Drive
Naples, Florida 34102
Sinclair Broadcast Group, Inc.. 640,000 -0- 12.3% --
10706 Beaver Dam Road
Cockeysville, Md. 21030
All Officers and Directors
as Group.................... 575,483 100,000 11.1% 100.0%
(1) Unless otherwise indicated, each person named in the table exercises sole
voting and investment power with respect to all shares beneficially owned.
(2) Includes 4000 options expiring 10/2003
(3) Mr. Faibish owns the 100,000 shares of Preferred Stock outstanding. Each
share of Preferred Stock is entitled to 13 votes on all matters on which Common
Stock may vote. Accordingly, the percentage of overall voting power of the
Company's voting securities beneficially owned by Mair Faibish and all officers
and directors as a group is increased accordingly to 24%. Also includes 80,815
options expiring 10/2003.
(4) Includes 80,000 warrants exercisable at $1.25 per warrant
(5) Includes 20,000 warrants exercosable at $1.25 per warrant
(6) Dail Miller is the designee to the Company's Board of Directors nominated by
Lloyd I. Miller III, Mr. Miller being a significant shareholder in the Company
but Ms. Miller discliams any benefical ownership in any Company stock issued in
the name of Lloyd I. Miller III.
-7-
PROPOSAL 2. ELECTION OF AUDITORS
The Board of Directors proposed and recommends the election, at the Annual
Meeting, of the firm of Grant Thornton LLP as the Company's auditors for the
year ending December 31, 2002. Effective January 22, 2002, the Company's Board
of Directors approved the engagement of Grant Thornton LLP to serve as the
Company's independent public accountants for the fiscal 2001 audit, and
dismissed BDO Seidman LLP, which had served as the Company's auditors from 1993
through 2000. The Company's Board of Directors, upon recommendation of its Audit
Committee, approved the change in accountants. Neither of the reports BDO
Seidman LLP or Belew Averitt LLP, whose practice was combined with BDO Seidman
LLP, on the financial statements of the Company for the past two fiscal years
contained an adverse opinion or disclaimer of opinion, nor was either qualified
or modified as to uncertainty, audit scope, or accounting principle.
During the Company's two most recent fiscal years and the subsequent
interim period through January 22, 2002, there were no disagreements with BDO
Seidman LLP or Belew Averitt LLP, on any matter of accounting principles or
practices, financial statements disclosure, or auditing scope of procedure,
which disagreements, if not resolved to the satisfaction of BDO Seidman LLP or
Belew Averitt LLP would have caused them to make reference to the subject matter
of the disagreements in their reports for such fiscal years.
During the Company's two most recent fiscal years and the subsequent
interim period through January 22, 2002, the Company did not consult with Grant
Thornton regarding either (i) the application of accounting principles to a
specific transaction, either completed or proposed, of the type of audit opinion
that might be rendered on the Company's financial statements by Grant Thornton
LLP that was an important factor considered by the Company in reaching a
decision as to any accounting, auditing or financial reporting issue; of (ii)
any matter that was either the subject of a disagreement or a reportable event.
During fiscal 2001, and in connection with the audit of the Company's
fiscal 2001 financial statements, Grant Thronton LLP and BDO Seidman LLP
provided various audit and non-audit services to the Company as follows:
(a) AUDIT FEES: Aggregate fees billed by Grant Thornton for
professional services rendered for the audit of the Company's fiscal
year 2001 annual financial statements were $80,000. Aggregate fees
billed by BDO Seidman LLP for review of financial statements in the
Company's Form 10-QSB were $20,000.
(b) FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES: None.
(c) ALL OTHER FEES: BDO Seidman billed an aggregate of $25,000 in
fiscal 2001 for tax consulting services.
The Audit Committee of the Board has considered whether provision of the
services described in sections (b) and (c) above is compatible with maintaining
the independent accountant's independence and, inasmuch as Grant Thornton LLP
provided no such services in fiscal 2001, determined that such services have not
adversely affected Grant Thornton LLP's independence.
A representative of Grant Thornton will be present at the meeting and will
have an opportunity to make a statement if the representative desires to do so.
Said representative will also be available to respond to appropriate questions
from shareholders of the Company.
RECOMMENDATION AND VOTE
The Board of Directors recommends the election of Grant Thornton LLP to
serve as auditors for the Company for the fiscal year ended December 31, 2002
and until successors are elected and qualified. The affirmative vote of a
majority of the Company Shares represented at the Meeting where a quorum is
present is required for such approval. Quorum at the Meeting shall require
attendance in person and/or by proxy by at least one-third amount of potential
votes outstanding.
-8-
OTHER BUSINESS
Management knows of no other business which is to be presented for action
at the meeting. Should any other matters properly come before the meeting, the
persons named in the accompanying proxy will have discretionary authority to
vote all proxies in accordance with their judgement.
It is important that proxies be returned promptly. Therefore, stockholders
who do not expect to attend in person are urged to execute and return the
enclosed proxy to which no postage need be affixed if mailed in the United
States.
EXECUTIVE COMPENSATION
Set forth below are tables showing (i) in summary form, the compensation
paid to Henry J. Platek, Mair Faibish and Mitchel Gerstein, the only executive
officers of the Company for the fiscal year ended December 31, 2001: and (ii)
the options and stock appreciation rights (SARs) granted to such executives in
2001.
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SUMMARY COMPENSATION TABLE
annual long term compensation
compensation awards
--------------- -----------------------------------
restricted securities underlying
salary stock bonus stock options
NAME
- ----
Henry Platek, President
2001 $ 85,056.00 0 0
2000 $ 88,028.00 0 0
1999 $ 64,143.00 0 0
Mair Faibish, CEO
2001 $191,400.00 0 0
2000 $145,000.00 0 0
1999 $106,000.00 0 0
Mitchell Gerstein, CFO
2001 $ 52,000.00 0 0
2000 $ 52,000.00 0 0
1999 $ 50,000.00 0 0
There were no stock options or stock appreciation rights (SARs) given to any of
the officers or directors of the Company. There are no outstanding SARs held by
officers and/or directors of the Company and no stock options held by officers
and/or directors of the Company in fiscal year 2001 have been exercised during
such period. No Long-Term Incentive Plan awards have been granted by the Company
to any of its officers and/or directors in fiscal year 2001. In the fiscal year
2001 there were no adjustments made to the exercise price of any outstanding
stock options held by officers and/or directors of the Company other than an
adjustment identical to adjustment made in all outstanding Company stock options
as a result of and in direct proportion to the level of the 1 for 5 share
reverse stock split of the Company's common stock which the Company adopted in
April 2001.
Compensation Committee Interlocks and Insider Participation
All decisions with respect to the stock compensation of the Company's
executive officers and key employees are made by the Independent Compensation
Committee, which is comprised of Mr. Marsicovetere and Mr. Ferrone under the
1994 Plan. Neither Mr. Marsicovetere nor Mr. Ferrone are officers or employees
of the Company nor were they at any time.
All decisions with respect to the compensation of employees who are not
officers or key employees are made by the Employee Compensation Committee which
is comprised of Mr. Platek and Mr. Faibish.
-10-
AUDIT COMMITTEE REPORT
The Audit Committee of our Board of Directors is composed of three
directors two of whom are independent of management as required by the listing
standards of the Nasdaq Stock Market. The Audit Committee operates under a
written charter adopted by the Board of Directors (attached as Appendix A). The
members of the Audit Committee as of the date of the annual meeting will be
Dominic A. Marsicovetere (chair), Mitchell Gerstein and Michael Ferrone.
Our management has the primary responsibility for the Company's financial
statements, as well as its financial reporting process, principles and internal
controls. Our independant accountants have the primary responsibility for
performing an independent audit of our financial statements and expressing an
opinion as to the conformity of such financial statements with generally
accepted auditing standards and to issue a report on its audit. The role of the
Audit Committee is to monitor and oversee these processes on behalf of the Board
of Directors. In addition, the Audit Committee recommends to the Board of
Directors the selection of our independent accountants.
In this context, the Audit Committee has reviewed and discussed the audited
financial statements of Synergy as of and for the year ended December 31, 2001
with management and the independent auditors. The Audit Committee has discussed
with the independent auditors the matters required to be discussed by Statement
on Auditing Standards No. 61 (Communication with Audit Committees), as currently
in effect. In addition, the Audit Committee has received the written disclosures
and the letter from the independent auditors required by Independence Standards
Board Standard No. 1 (Independence Discussions with Audit Committees), as
currently in effect, and it has discussed with the auditors their independence
from Synergy.
In the performance of their oversight function, the members of the Audit
Committee necessarily relied upon the information, opinions, reports and
statements presented to them by management of the Company and by the independent
auditors. Based on the reports and discussions described above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-KSB for the
year ended December 31, 2001, for filing with the Securities and Exchange
Commission.
Audit Committee:
Dominic A Marsicovetere
Mitchell Gerstein
Michael Ferrone
* Notwithstanding anything to the contray set forth in any of the Company's
filings under the Securities Act of 1993 or the Securities Exchange Act of 1934,
the aforesaid and following reports of the Audit Committee or the Company's
Board of Directors shall not be incorporated by reference into any such filing
and shall not otherwise be deemed filed under either act.
-11-
REPORT OF THE BOARD OF DIRECTORS ON ANNUAL COMPENSATION
ADMINISTRATION OF COMPENSATION PROGRAM
The Independent Compensation Committee will be responsible for establishing
and administering the stock compensation policies applicable to the Company's
executive officers.
Prior to the establishment of the Committee, decisions with respect to the
compensation of the Company's executive officers have been made by the Board of
Directors.
COMPENSATION POLICY
The goals of the Company's executive compensation policy are to (i) attract
and retain qualified executives and (ii) ensure that an appropriate relationship
exists between executive pay and the creations of shareholder value. To achieve
these goals, the Company's executive compensation policy will reward executives
for long term strategic management and the enhancement of stockholder value by
integrating annual base compensation with other forms of incentive compensation
based upon corporate results and individual performance. Measurement of
corporate performance will be primarily based on the level of achievement of
Company goals and upon Company performance levels compared with industry
performance levels.
The Committee will obtain compensation survey data where available for
similar industries to be used as a guide to establish compensation levels to be
competitive with and comparable to other companies in its industry group.
FISCAL 2001 EXECUTIVE COMPENSATION PROGRAM
The Company's fiscal 2001 executive compensation program was comprised
exclusively of base salary and stock grants pursuant to the Company's
compensation plan. During fiscal 2001 Mr. Faibish, Mr. Gerstein and Mr. Platek,
the Company's three executive officers, did not receive base salary increases.
The decisions not to grant increases were made by the Board of Directors based
on the Company's performance and financial condition. The compensation program
described below will be implemented by the Independent Compensation Committee on
a going forward basis.
BASE SALARY. The Independent Compensation Committee will review and approve
all salary changes and stock grants for executive officers. The Committee will
base its approval of such salary changes on: (i) performance of the executive,
(ii) Company performance, (iii) experience, and (iv) external salary surveys.
ANNUAL INCENTIVE. The Company may use annual performance incentives to
focus management on achieving financial and operating results. The Company may
establish a bonus pool for executive officers for a particular year or years,
from which bonuses will be paid at the discretion of the CEO and President upon
approval of the Committee, except that bonuses awarded to the CEO and President
will be at the discretion of the Committee based on the financial performance of
the Company.
LONG TERM INCENTIVE. The primary purpose of the long-term incentive
compensation plan (the "Plan") is to link management pay with the long term
interests of stockholders. The Independent Compensation Committee will use stock
options to achieve this link. The grant of options at 100 percent for the fair
value assures that the executive officers will receive a benefit only when stock
price increases.
The amount of options granted is based on comparative data on the estimated
value of long term compensation for other industry executives. In determining
annual stock option grants, the Independent Compensation Committee will base its
decision on the individual's performance and potential to improve stockholder
value.
-12-
PRESIDENT and CEO COMPENSATION DURING FISCAL 2001
Messrs Platek's and Faibish's salaries are intended to be competitive with
salary arrangements received by other chief executive officers in the industry.
The Committee will base future bonuses or awards to Messrs. Platek and Faibish
on Company and individual performance as compared to other promotional wholesale
distribution companies, and the criteria set forth above for executive officers
generally.
COMPENSATION OF DIRECTORS
The Company's executive officers do not receive any compensation for their
services as Directors; however, such officers are reimbursed for their
reasonable out-of-pocket expenses in attending any meetings of the Board and/or
its committees. The Company's two non-employee Directors, on the other hand,
each receive compensation for their service in the form of an option to purchase
10,000 shares of the Company's Common Stock immediately upon their election or
re-election to the Board. These options, which are granted pursuant to the
Company's Stock Option Plan for Non-Employee Directors (the "Option Plan"), are
issued at their fair market value, are immediately exercisable and have a term
of ten years.
EMPLOYMENT CONTRACTS
The Company entered into employment agreements (the "Agreements") with each
of Messrs. Platek and Faibish on November 14, 1994, providing for their
continued employment in their current capacities until October 1997 and such
agreements have been extended until terminated or new employment agreements are
executed subject to termination for cause at an annual base salary, effective
November 14, 1994 with respect to Mr. Platek and effective April 1, 1995 with
respect to Mr. Faibish, of $108,000 (with automatic 5% annual increases). Under
these Agreements, Messrs. Platek and Faibish will each be eligible to receive
bonus payments at the discretion of the Independent Compensation Committee. In
addition, the Agreements provide for each of Messrs. Platek and Faibish to
receive certain stock option grants pursuant to the Company's 1994 Plan. Each
officer has agreed that upon termination of his employment he will not compete
with the Company for a period of one year in any area within a 50 mile radius of
the Company's principal place of business. The Agreements also provide for
certain payments in the event of either officers' disability and for the use of
a Company automobile.
CONCLUSION
The Board of Directors and the Independent Compensation Committee believe
that the quality and motivation of management make a significant difference in
the long term performance of the Company. The Board of Directors and the
Committee also believe that a compensation program which rewards performance
that meets or exceeds high standards also benefits the stockholders, so long as
there is an appropriate downside risk element to compensation when performance
falls short of such standards. The Board of Directors and the Committee are of
the opinion that the Company's management compensation program meets these
requirements, has contributed to the Company's success, and is deserving of
stockholder support.
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COMPANY STOCK PERFORMANCE
(PLEASE SEE SCHEDULE A)
ANNUAL REPORT
The Annual Report to Shareholders of the Company for the fiscal year ended
December 31, 2000 which includes audited financial statements has been
previously mailed to stockholders and the 2001 Annual Report being mailed to
shareholders herewith. Such reports are incorporated herein by reference and
should be review by the recipient of this Proxy Statement in conjunction with
review of the other information on the company included herewith.
FORM 10-KSB
The Company is furnishing herewith to each person whose Proxy is being
solicited, a copy of the Annual Report of the Company on Form 10-KSB for the
fiscal year ended December 31, 2001, as filed with the Securities and Exchange
Commission. The form 10-KSB of the Company for 2001 is incorporated herein by
reference and should be reviewed by the recipient of this Proxy Statement in
conjunction with review of the other information on the Company included herein.
STOCKHOLDER PROPOSALS
If any stockholder desires to present a proposal for action at the
Company's annual meeting to be held in 2002, such proposal must be in compliance
with applicable laws and Securities and Exchange Commission regulations and must
be received by the Company on or prior to June 1, 2002.
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SECTION 16 REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and officers, and persons who own more than 10% of a
registered class of the Company's equity securities, to file initial reports of
ownership and reports of changes in ownership with the Securities and Exchange
Commission ("SEC"). Such persons are required by SEC regulation to furnish the
Company with copies of all Section 16(a) reports they file.
Based solely on its review of the copies of such reports received by it
with respect to fiscal 2000 and 2001 or written representations from certain
reporting persons, the Company believes that all filing requirements applicable
to its directors, officers and persons who own more than 10% of a registered
class of the Company's equity securities have been timely complied with.
By Order of the Board of Directors
Mitchell Gerstein
Secretary
Melville, NY
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SCHEDULE A
COMPANY STOCK PERFORMANCE
1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- ----
SYNERGY BRANDS INC. 100.00 56.00 85.00 95.00 19.01 6.91
INTERNET SOFTWARE & SVCS 100.00 59.28 155.54 452.69 100.12 67.56
RUSSEL 3000 INDEX 100.00 131.78 163.17 194.77 178.15 155.64
PEER GROUP INCLUDES:
RUSSEL 3000 INDEX
Source: Media General Financial Services
PO Box 85333
Richmond, VA 23293
80-446-7922
(GRAPH ALSO INCLUDED) Graph represents the total return of $100 investment in
the Company relative to sample peer group and a national stock index
-16-
APPENDIX A
SYNERGY BRANDS INC.
AUDIT COMMITTEE CHARTER
ORGANIZATION
There shall be a committee of the board of directors to be known as the
audit committee. The audit committee shall be composed of majority of directors
who are independent of the management of the corporation and are free of any
relationship that, in the opinion of the board of directors, would interfere
with their exercise of independent judgment as a committee member.
STATEMENT OF POLICY
The audit committee shall provide assistance to the corporate directors in
fulfilling their responsibility to the shareholders, potential shareholders, and
investment community relating to corporate accounting, reporting practices of
the corporation, and the quality and integrity of the financial reports of the
corporation. In so doing, it is the responsibility of the audit committee to
maintain free and open means of communication between the directors, the
independent auditors, the internal auditors, and the financial management of the
corporation.
RESPONSIBILITIES
In carrying out its responsibilities, the audit committee believes its
policies and procedures should remain flexible, in order to best react to
changing conditions and to ensure to the directors and shareholders that the
corporate accounting and reporting practices of the corporations are in
accordance with all requirements and are of the highest quality.
In carrying out these responsibilities, the audit committee will:
Review and recommend to the directors the independent auditors to be
selected to audit the financial statements of the corporation audits
divisions and subsidiaries.
Meet with the independent auditors and financial management of the
corporation to review the scope of the proposed audit for the current
year and the audit procedures to be utilized, and at the conclusion
thereof review such audit, including any comments or recommendations of
the independent auditors.
Review with the independent auditors and financial and accounting
personnel, the adequacy and effectiveness of the accounting and
financial controls of the corporation, and elicit any recommendations
for the improvement of such internal control procedures of particular
areas where new or more detailed controls or procedures are desirable.
Particular emphasis should be given to the adequacy of such internal
controls to expose any payments, transactions, or procedures that might
be deemed illegal or otherwise improper. Further, the committee
periodically should review company policy statements to determine their
adherence to the code of conduct.
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Review the internal audit function of the corporation including the
independence and authority of its reporting obligations, the proposed
audit plans for the coming year, and the coordination of such plans
with the independent auditors.
Receive prior to each meeting, a summary of findings from completed
internal audits and a progress report on the proposed internal audit
plan, with explanations for any deviations from the original plan.
Review the financial statements contained in the annual report to
shareholders with management and the independent auditors to determine
that the independent auditors are satisfied with the disclosure and
content of the financial statements to be presented to the
shareholders. Any changes in accounting principles should be reviewed.
Provide sufficient opportunity for the internal and independent
auditors to meet with the members of the audit committee without
members of management present. Among the items to be discussed in these
meetings are the independent auditor's evaluation of the corporation's
financial, accounting, and auditing personnel, and the cooperation that
the independent auditors received during the course of the audit.
Review accounting and financial human resources and succession planning
within the company.
Submit the minutes of all meetings of the audit committee to, or
discuss the matters discussed at each committee meeting with, the board
of directors.
Investigate any matter brought to its attention within the scope of
its duties, with the power to retain outside counsel for this purpose
if, in its judgment, that is appropriate.
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EXHIBIT A
SYNERGY BRANDS INC.
40 UNDERHILL BLVD.
SYOSSET, NY 11791
THE PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Mair Faibish and Mitchell Gerstein, and
each of them, as proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and vote, as designated herein, all of the
shares of the common stock, par value $.001 per share, of Synergy Brands Inc.
the "Company"), held of record by the undersigned on at the Annual Meeting (the
"Annual Meeting") of Stockholders of the Company to be held on , and any
adjournment(s) thereof.
THIS PROXY, WHEN PROPERLY EXECUTED AND DATED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR PROPOSAL 1 AND PROPOSAL 2, AND THE PROXIES WILL USE
THEIR DISCRETION WITH RESPECT TO ANY MATTERS PRESENTED FOR SHAREHOLDER VOTE AT
THE ANNUAL MEETING.
1. PROPOSAL TO ELECT THE FOLLOWING PERSONS TO SERVE AS THE BOARD OF DIRECTORS
FOR SYNERGY BRANDS INC. FOR ONE YEAR FROM THE EFFECTIVE DATE OF THE ANNUAL
MEETING OF SHAREHOLDERS TO WHICH THIS PROXY RELATES OR UNTIL THEIR SUCCESSORS
ARE ELECTED AND QUALIFIED:
HENRY J. PLATEK, JR.
MAIR FAIBISH
MITCHELL GERSTEIN
DOMINIC MARSICOVETERE
MICHAEL FERRONE
DAIL ELIZABETH MILLER
RANDALL J. PERRY
FOR { } AGAINST { } ABSTAIN { }
2. PROPOSAL TO ELECT GRANT THORNTON LLP TO SERVE AS THE COMPANY'S AUDITORS FOR
THE FISCAL YEAR ENDED DECEMBER 31, 2002 AND UNTIL THEIR SUCCESSORS ARE ELECTED
AND QUALIFIED.
FOR { } AGAINST { } ABSTAIN { }
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING AND ANY ADJOURNMENT(S)
THEREOF.
FOR { } AGAINST { } ABSTAIN { }
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MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW { }
PLEASE EXECUTE THIS PROXY AS YOUR NAME APPEARS HEREON. 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 THE PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
SIGNATURE: DATE:
SIGNATURE: DATE:
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
-20-