UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
------------
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-12
MONACO GROUP INC.
-----------------
(Name of Registrant as Specified In Its Charter)
Not Applicable
--------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] No fee required.
[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
Total value of consideration paid to Burgio Family Holdings Inc., an
Ontario corporation, and ALBAR Capital Corp., an Ontario corporation, by
Monaco Group Inc. and its subsidiary Monaco (Canada) Inc., under the
Share Purchase Agreement, dated October 4, 2004, is estimated at
$8,300,000.00.
4) Proposed maximum aggregate value of transaction:
$8,300,000.00
5) Total fee paid:
$1,660.00
[_] 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:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
MONACO GROUP INC.
-----------------
20A Voyager Court South,
Etobicoke, Ontario, Canada, M9W 5M7
November 26, 2004
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders of
Monaco Group Inc., a Delaware corporation ("Company"), which will be held at
11:00 a.m., Eastern Standard Time, on December 17, 2004, at the Mayfair
Conference Room of the Wyndham Bristol Place Hotel located at 950 Dixon Road,
Etobicoke, Ontario M9W 5N4 ("Annual Meeting"). All holders of the Company's
outstanding common stock as of November 17, 2004, are entitled to vote at the
Annual Meeting.
Enclosed is a copy of the Notice of Annual Meeting of Stockholders, Proxy
Statement, and Proxy. Stockholders will have an opportunity to ask questions at
the Annual Meeting.
We hope you will be able to attend the Annual Meeting. Whether or not you
expect to attend, it is important you complete, sign, date, and return the Proxy
in the enclosed envelope, to make certain that your shares will be represented
at the Annual Meeting.
Sincerely,
/s/ Peter Nelipa
Peter Nelipa
President and Chief Executive Officer
MONACO GROUP INC.
-----------------
20A Voyager Court South,
Etobicoke, Ontario, Canada, M9W 5M7
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
----------------------------------------
To Be Held on December 17, 2004
-------------------------------
NOTICE IS HEREBY given that the Annual Meeting of Stockholders of Monaco
Group Inc., a Delaware corporation ("Company"), will be held at 11:00 a.m.,
Eastern Standard Time, on November 19, 2004, at the Mayfair Conference Room of
the Wyndham Bristol Place Hotel located at 950 Dixon Road, Etobicoke, Ontario
M9W 5N4 ("Annual Meeting") for the following purposes:
1. To elect 7 members to the Board of Directors of the Company;
2. To approve and adopt the Company's 2004 Stock Plan;
3. To ratify the selection of Amisano Hanson, Chartered Accountants,
independent auditors, to audit the financial statements of the Company for
the fiscal year ending December 31, 2004;
4. To approve a Share Purchase Agreement by and among the Company; Burgio
Family Holdings Inc., an Ontario Corporation; ALBAR Capital Corp., an
Ontario corporation; and Monaco (Canada) Inc., an Ontario corporation;
5. To approve the adoption of new Bylaws for the Company;
6. To approve the amendment of the Certificate of Incorporation of the Company
to change its name from Monaco Group Inc. to Loretta Food Group Inc.;
----------------- -----------------------
7. To approve the issuance to Gerry C. Quinn, a nominee for election to the
Board of Directors of the Company, of 125,000 shares of our Common Stock
and options to purchase 75,000 shares of our Common Stock; and
8. To transact such other business as may properly come before the Annual
Meeting or any adjournment or adjournments thereof.
If you were a stockholder of record of the Company on November 17, 2004,
you are entitled to vote regarding these matters. A list of shareholders as of
the record date of November 17, 2004, will be available for stockholder
inspection at the offices of the Company, 20A Voyager Court South, Etobicoke,
Ontario, Canada, during ordinary business hours from November 26, 2004, until
the date of the Annual Meeting. The list will also be available for inspection
at the Annual Meeting.
At the Annual Meeting, you will have an opportunity to ask questions about
the Company and the current condition of our business. Regardless of the number
of shares of our Common Stock you own, your vote is important. Please sign, date
and return the enclosed Proxy in the enclosed envelope at your earliest
convenience.
Details of the business to be conducted at the Annual Meeting are specified
more completely in the accompanying Proxy Statement.
Whether or not you expect to attend the Annual Meeting in person, we urge
you to vote your proxy by marking, dating, and signing the enclosed Proxy and
returning it promptly in the enclosed envelope. Voting by proxy will ensure the
-------------------------------
presence of a quorum at the Annual Meeting and will save the Company the expense
- --------------------------------------------------------------------------------
and extra work of additional solicitation. Returning your Proxy will not prevent
- --------------------------------------------------------------------------------
you from voting at the Annual Meeting, if you desire to do so, as your proxy is
- --------------------------------------------------------------------------------
revocable at your option.
- -------------------------
The Company's Board of Directors unanimously recommends that you vote for
all of the proposals.
We look forward to seeing you. Thank you for your continuing support of and
interest in the Company.
By Order of the Board of Directors
/s/ Peter Nelipa
Peter Nelipa
President and Chief Executive Officer
Dated: November 26, 2004
PROXY STATEMENT
---------------
ANNUAL MEETING OF STOCKHOLDERS
To Be Held December 17, 2004
11:00 a.m.
This Proxy Statement is being furnished in connection with the solicitation of
proxies by the Board of Directors of Monaco Group Inc., a Delaware corporation
(the "Company"), for use at the annual meeting of stockholders of the Company to
be held at 11:00 a.m., Eastern Standard Time, on December 17, 2004, at the
Mayfair Conference Room of the Wyndham Bristol Place Hotel located at 950 Dixon
Road, Etobicoke, Ontario M9W 5N4 (the "Annual Meeting"), and at any adjournment
thereof. When a Proxy is properly executed and returned, the shares of the
Company's $.001 par value common stock ("Common Stock") that such Proxy
represents will be voted in accordance with any directions specified in that
Proxy. If no specification is indicated in that Proxy, those shares will be
voted "FOR" (i) the election as directors of the Company of the 7 nominees named
in this Proxy Statement (Proposal 1); (ii) approval and adoption of the
Company's 2004 Stock Plan, a copy of which is attached to this Proxy Statement
as Exhibit 1 (Proposal 2); (iii) the approval and ratification of the selection
of Amisano Hanson, Chartered Accountants, independent auditors, to audit the
financial statements of the Company for the fiscal year ending December 31, 2004
(Proposal 3); (iv) approval of the Share Purchase Agreement by and among Burgio
Family Holdings Inc., an Ontario corporation; ALBAR Capital Corp., an Ontario
corporation ("ALBAR"); Monaco (Canada) Inc., an Ontario corporation and the
Company's wholly-owned subsidiary ("Monaco Canada") (the "Share Purchase
Agreement"), a copy of which is attached to this Proxy Statement as Exhibit 2
(Proposal 4); (v) approval of new Bylaws for the Company, a copy of which is
attached to this Proxy Statement as Exhibit 3 (Proposal 5); (vi) approval of the
amendment to the Company's Certificate of Incorporation to change the Company's
name from Monaco Group Inc. to Loretta Food Group Inc., a copy of which
------------------- --------------------------
amendment is attached to this Proxy Statement as Exhibit 4 (Proposal 6); (vii)
the approval of the issuance to Gerry C. Quinn, a nominee for election on our
Board of Directors, of 125,000 shares of our Common Stock and options to
purchase 75,000 shares of our Common Stock for a period of 5 years at a price of
$1.50 per share, if he is elected to our Board of Directors and he accepts his
election as such (Proposal 7); and (viii) the approval of any other such
business as may properly come before the Annual Meeting or any adjournment or
adjournments thereof.
Any stockholder giving a Proxy has the power to revoke that Proxy at any time
before that Proxy is voted by (i) giving to the Secretary of the Company written
notice of such revocation, (ii) issuance of a subsequent Proxy, or (iii) voting
in person at the Annual Meeting. Except for the election of directors and the
approval of the Share Purchase Agreement, the affirmative vote of a majority of
the shares present in person or represented by Proxy at the Annual Meeting will
be required for each proposal. The directors shall be elected by a plurality of
the votes of the shares of our Common Stock present in person or represented by
Proxy at the Annual Meeting and entitled to vote for the election of directors.
Plurality of votes means that those 7 nominees for directors receiving the most
1
votes will be elected as directors of the Company, in spite of the fact that one
or more of those nominees may receive less than a majority of the total votes
cast.
The approval of the Share Purchase Agreement shall require the affirmative vote
of a majority of the shares of our Common Stock present in person or represented
by Proxy at the Annual Meeting and which are held by persons not having a
beneficial interest in the transaction contemplated by the provisions of the
Share Purchase Agreement. Al Burgio, a nominee for the Board of Directors, has a
beneficial interest in that transaction, as he is the beneficiary of (i) Burgio
Family Trust I and (ii) Burgio Family Trust II. Burgio Family Holdings Inc. is a
party to the Share Purchase Agreement and is owned by Burgio Family Trust I and
Burgio Family Trust II. Therefore, Burgio Family Holdings Inc. and, by
attribution, Al Burgio, have a beneficial interest in that transaction.
Therefore, a majority of the shares of our Common Stock present in person or
represented by Proxy at the Annual Meeting other than those shares of our Common
Stock held by Burgio Family Holdings Inc. will be required to approve the Share
Purchase Agreement.
At the close of business on November 17, 2004, the record date for determining
stockholders entitled to notice of and to vote at the Annual Meeting, the
Company had issued and outstanding 5,007,000 shares of our Common Stock. Each
share of Common Stock entitles the holder of record thereof to one vote on any
matter coming before the Annual Meeting. Only stockholders of record at the
close of business on November 17, 2004, are entitled to notice of and to vote at
the Annual Meeting or at any adjournment thereof.
Pursuant to Delaware law and the Company's Bylaws, a majority of the shares of
our Common Stock entitled to vote, represented in person or by Proxy, at the
Annual Meeting will constitute a quorum at the Annual Meeting. Generally, if a
quorum is present, the affirmative vote of a majority of the shares of our
Common Stock represented in voting on any matter will constitute the act of the
shareholders, provided that the number of shares voting in favor of any proposal
equals, at least, a majority of the quorum. As the directors shall be elected by
a plurality of the votes of the shares present in person or represented by Proxy
at the Annual Meeting, those 7 nominees for director receiving the most votes of
the shares of our Common Stock present in person or represented by Proxy at the
Annual Meeting will be elected as the members of the Company's Board of
Directors, in spite of the fact that no such nominee may receive more than
one-half (1/2) of the total votes cast.
Although abstentions are not counted either "for" or "against" any proposal, if
the number of abstentions results in votes "for" a proposal not equaling at
least a majority of the quorum required for the Annual Meeting, that proposal
will not be approved. This will be the case although the number of votes "for"
that proposal exceeds the votes "against" that proposal.
The Company will pay the expenses of soliciting proxies for the Annual Meeting,
including the cost of preparing, assembling and mailing the proxy solicitation
materials. Proxies may be solicited personally, or by mail or by telephone, by
2
directors, officers, and regular employees of the Company who will not be
additionally compensated therefor. It is anticipated that this Proxy Statement
and accompanying Proxy will be mailed to all stockholders entitled to vote at
the Annual Meeting on or about November 26, 2004.
ELECTION OF DIRECTORS
- ---------------------
(Proposal 1)
Directors of the Company are elected annually and hold office until the next
annual meeting of stockholders of the Company or until their respective
successors are elected and qualified. It is intended that the Proxies solicited
by the Board of Directors of the Company will be voted for election of the 7
nominees specified below, unless a contrary instruction is made on the Proxy.
If, for any reason, one or more of those nominees should be unavailable as a
candidate for director of the Company, an event which is not anticipated, the
person to whom the accompanying Proxy was given will vote for another candidate
or candidates nominated by the Board of Directors. As the directors shall be
elected by a plurality of the votes of the shares present in person or
represented by Proxy at the Annual Meeting, those 7 nominees for director
receiving the most votes of the shares of our Common Stock present in person or
represented by Proxy at the Annual Meeting will be elected as the members of the
Company's Board of Directors, in spite of the fact that no such nominee may
receive more than one-half (1/2) of the total votes cast. Cumulative voting for
nominees is not permitted.
---
5 of the nominees for directors, Taragh Bracken, Leo Couprie, William Rancic,
Joel Sebastian, and William C. Fatica are, at present, directors of the Company.
The following table sets forth certain information with respect to (i) each
nominee for director of the Company; and (ii) all director nominees and
executive officers of the Company as a group at November 17, 2004, including the
number of shares of our Common Stock then officially owned by each of them. The
persons specified below hold sole voting and investment power with respect to
the shares of our Common Stock specified opposite their respective names, unless
otherwise indicated, subject to community property and similar laws, where
applicable. The information with respect to each person specified is as supplied
or confirmed by such person or based upon statements filed with the Securities
and Exchange Commission.
Security Ownership by Management.
- ---------------------------------
NAMES AND ADDRESSES (1) TITLE OF CLASS AMOUNT AND NATURE OF PERCENT OF CLASS (2)
BENEFICIAL OWNERSHIP
- ------------------------------- -------------- -------------------- --------------------
Peter Nelipa (3)(5) COMMON 830,000 shares 12.21%
President, Chief Executive
Officer and Secretary
3
Suzanne Lilly (4)(5) COMMON 175,000 shares 2.57%
Chief Financial Officer
and Treasurer
Taragh Bracken (5) COMMON 630,000 shares 9.27%
Director
William Fatica COMMON 40,000 shares (6) 0.59%
Director
Joel Sebastian COMMON 40,000 shares (6) 0.59%
Director
Leo Couprie COMMON 290,000 shares (6) 4.27%
Director (7)
Al Burgio COMMON 1,880,000 shares 27.66%
Nominee Director (8)(9)
Tyrone Ganpaul COMMON 250,000 shares 3.68%
Vice President (7)
William (Bill) Rancic COMMON 100,000 shares 1.47%
Director
Gerry C. Quinn COMMON 200,000 shares 2.94%
Nominee Director (10)
All directors and named COMMON 4,435,000 shares 65.25%
executive officers as
a group
<FN>
(1) The address for all of the above is c/o Monaco Group, 20A Voyager Court
South, Etobicoke, ON, M9W 5M7
(2) Based on 6,797,000 issued and outstanding shares of our Common Stock as of
November 17, 2004, on a fully diluted basis.
(3) Mr. Nelipa is also the President and a director of both of our wholly owned
subsidiaries, Monaco (Canada) Inc. and MG Holdings Inc.
(4) Ms. Lilly is also the Secretary, Treasurer, and a director of 3 of our
wholly owned subsidiaries, Monaco (Canada) Inc., MG Holdings Inc., and
Sweet Valley Food Corporation.
(5) Pursuant to share repurchase agreements, dated as of July 23, 2003, by and
among Peter Nelipa, our President and Secretary; Suzanne Lilly, our Chief
Financial Officer; Taragh Bracken, our Director; and the Company, we have
an option to purchase as many as 75% of the shares of our Common Stock
owned by those directors until July 2005, in the event those persons
terminate their membership on our Board of Directors. Those shares may be
purchased by us for 120%. The total shares pursuant to those share
repurchase agreements are based on the number of shares owned by those
directors on the dates of their termination. As of the date of this Proxy
Statement, those directors owned an aggregate of 1,635,000 shares of our
Common Stock.
(6) Includes 30,000 shares of our Common Stock which may be acquired by the
exercise of stock options.
4
(7) Mr. Couprie and Mr. Ganpaul are also shareholders, officers, and directors
of Sweet Valley Foods Inc. ("Sweet Valley"). As specified later in this
Proxy Statement, Sweet Valley holds 750,000 shares of exchangeable stock of
MG Holdings and those 750,000 shares of that exchangeable stock may be
exchanged for 1,500,000 shares of our Common Stock. Mr. Ganpaul owns
one-sixth (1/6) of the issued and outstanding stock of Sweet Valley. Mr.
Couprie owns one sixth (1/6) of the issued and outstanding stock of Sweet
Valley.
(8) Mr. Burgio is a director and the only officer of Burgio Family Holdings
Inc., the largest shareholder of the Company. Burgio Family Holdings Inc.
is owned by (i) Burgio Family Trust I and (ii) Burgio Family Trust II. Al
Burgio is a beneficiary of each of those trusts.
(9) At such time as the Monaco Canada transaction is approved, as discussed
later in this Proxy Statement, Monaco Canada will issue to Burgio Family
Holdings Inc. 3,000,000 shares of the Class A Preferred Stock of Monaco
Canada. Also, at that time, Monaco Canada will issue to ALBAR Capital Corp.
7,000,000 shares of Class A Preferred Stock of Monaco Canada. Burgio Family
Holdings Inc. holds 50.1% of the issued and outstanding stock of ALBAR
Capital Corp.
(10) Mr. Quinn, if elected to our Board of Directors will be issued 125,000
shares of our Common Stock and options to purchase 75,000 shares of our
Common Stock for a period of 5 years, at a purchase price of $1.50 per
share if he accepts his election. In the event Mr. Quinn resigns as a
director of the Company before the expiration of 6 months from the date of
his election, all of those shares and warrants shall be cancelled by the
Company. Additionally, in the event Mr. Quinn resigns as a director of the
Company on a date sooner than 12 months following the date of his election,
one-half of those shares and those warrants shall be cancelled by the
Company.
</FN>
Security Ownership of Certain Beneficial Owners. Other than directors and
officers, the following table specifies the beneficial owners of 5% or more of
our Common Stock.
NAME AND TITLE OF AMOUNT AND NATURE OF PERCENT OF
ADDRESS CLASS BENEFICIAL OWNERSHIP CLASS (2)
- ---------------------- ---------- ---------------------- ------------
Burgio Family (1) COMMON 1,880,000 shares 27.66%
Holdings Inc. (3)(4)
Sweet Valley Foods COMMON 1,500,000 shares 22.07%
Inc. (5)
Amton Inc. (5)(6) COMMON 400,000 shares 5.88%
(1) The address for Burgio Family Holdings Inc. is c/o Monaco Group, 20A
Voyager Court South, Etobicoke, ON, M9W 5M7.
(2) Based on 6,797,000 issued and outstanding shares on November 17, 2004, on a
fully diluted basis.
(3) Al Burgio is the President and Director of Burgio Family Holdings Inc.
Burgio Family Holdings Inc. is owned by (i) Burgio Family Trust I and (ii)
Burgio Family Trust II. Al Burgio is a beneficiary of each of those trusts.
(4) At such time as the Monaco Canada transaction is approved, as specified
later in this Proxy Statement, Monaco Canada will issue to Burgio Family
5
Holdings Inc. 3,000,000 shares of the Class A Preferred Stock of Monaco
Canada. Also, at that time, Monaco Canada will issue to ALBAR Capital Corp.
7,000,000 shares of Class A Preferred Stock of Monaco Canada. Burgio Family
Holdings Inc. holds 50.1% of the issued and outstanding stock of ALBAR
Capital Corp.
(5) The address for Sweet Valley Foods Inc. is 2345 Stanfield Road,
Mississauga, Ontario, Canada, L4Y 3Y3.
(6) The address for Amton Inc. is 2 Independence Court, New York, New York
10956.
Nominees for Directors
- ----------------------
Taragh Bracken is 33 years old and has been one of our directors since July 21,
- --------------
2003, the date that the Company was formed. Ms. Bracken has been a lawyer in
private practice since 2001, specializing in civil and commercial litigation,
family, and criminal law. From 1999 to 2001, Ms. Bracken was a Solicitor for
Watkins, Wilson & Associates Inc. Trustees in Bankruptcy. From 1992 to 1996, Ms.
Bracken was a Solicitor for O'Mara, Geraghty, McCourt in Ireland. Ms. Bracken
was called to the Bar by the Law Society of Ireland in 1992 and qualified as a
Solicitor with the Law Society of Upper Canada in 1999.
Joel Sebastian is 62 years old and has been one of our directors since July 2,
- ---------------
2004. Mr. Sebastian is the Vice President of Special Projects at Bozzuto's Inc.,
a wholesale distributor of food and household products to retailers in New
England, New York, New Jersey, Pennsylvania, and Maryland, based in Cheshire,
Connecticut. From June 1971 to December 1985, Mr. Sebastian was with Sweet Life
Foods in a variety of positions, including Director of Purchasing; and from
December 1985 to January 1995, he was with Bozzuto's as Vice President of
Merchandising and Advertising before accepting the position of Vice President of
Marketing for the Sweet Life Division of Supervalu in January of 1995. He was
later promoted to the position of Vice President of Category Management for the
New England Region of Supervalu. In October 2003, Mr. Sebastian then returned to
Bozzuto's as Vice President of Special Projects.
As an active member of industry trade associations, Mr. Sebastian served as
Chairman of Food Distributors International (formerly NAWGA) Buyer Merchandiser
Committee, was a Director on Independent Grocer Association ("IGA") Executive
Committee, served on the IGA Red Oval Advisory Board, a member of Ralston
Purina's Advisory Board, a member of the Connecticut Food Association, served on
Mass Foods Legislative Committee and Convention Committees, a past Chairman and
Director Emeritus of North East Food Distributors Association, and currently
serves as Chairman of Food Marketing Institute's Vendor Distributor Exchange
("VENDEX") and Annual Business Conference (ABC) Convention Committees and is on
the Board of Directors for Mass Foods. Mr. Sebastian also served on the
committee that developed Nestle Foods current funding program. In addition to
his degree of Business Management at Quinnipiac College, Mr. Sebastian continued
his education with the Levinson Institute, Zenger Miller and a variety of
training seminars. Mr. Sebastian is a director of Synergy Brands Inc. Synergy
Brands Inc., which is a public company and listed on the NASDAQ Small Cap
securities exchange.
6
William Fatica is 63 years old and has been one of our directors since July 2,
- ---------------
2004. Mr. Fatica is a partner of Corporate Brand Specialists, headquartered in
Pittsburgh, Pennsylvania, a company he co-founded in 2001. Corporate Brand
Specialists clients include Del Monte, H. J. Heinz Co., Knauss Snack Food
Company, and Creekside Springs. Prior to co-founding Corporate Brand
Specialists, Mr. Fatica worked in various management positions for H.J. Heinz
for thirty (30) years, eventually retiring as the General Manager of the Heinz
Corporate Brand Business Unit in 2001. Mr. Fatica is a past Vice President of
the Northeastern GMR, served on the VENDEX Planning Committee, and participated
in the annual Private Label Manufacturers Association Industry Roundtable. Mr.
Fatica graduated from Ohio University in Athens, Ohio.
Leo Couprie is 53 years old and has been one of our directors since July 27,
- ------------
2004. He was appointed to the Board of Directors of the Company in conjunction
with the acquisition of the assets of Sweet Valley Foods Inc. by MG Holdings
Inc., a subsidiary of the Company. Mr. Couprie is the Chairman of the Board of
Directors of Sweet Valley Foods Inc. Mr. Couprie is an officer, director, and
shareholder of Sweet Valley Foods Inc., which holds 750,000 shares of
exchangeable stock of MG Holdings Inc. in which are exchangeable for 1,500,000
of our Common Stock. Mr. Couprie is also the Chairman of Couprie, Fenton Inc., a
company he co-founded in 1986. From 1994 to 1996, Mr. Couprie was the President
of C&F Meat Brokers and from 1974 to 1984, a trader for Canada Packers Limited,
International Division. Mr. Couprie also serves on the Board of Directors of
Mortgage Central and Voyager Group Inc. Since 2001, he has served as the Chair
of Seneca College's International Business Advisory Board.
Al Burgio is 28 years old and is nominated as one of our directors. Since
- ----------
December 1999, Mr. Burgio has been President and director of Burgio Family
Holdings Inc., currently our largest shareholder, and majority shareholder of
ALBAR Capital Corp. Since September 2001, Mr. Burgio has been President and
director of ALBAR Capital Corp. From August 1998 to February 2000 Mr. Burgio was
President of Gordacom Consulting Inc. From June 2000 to May 2002, Mr. Burgio was
director of Avenue Financial Corporation (formerly University Avenue Financial
Corporation, a Canadian reporting company). From September 2002 to September
2004, Mr. Burgio was the Chief Executive Officer and President of Skyway
Wholesale Grocers Inc. From March 2004 to the present, Mr. Burgio was President
of (i) Loretta Foods Limited, (ii) LF Acquisition Corp., and (iii) LF Brands
Inc. From May 2004 to the present, Mr. Burgio has been the President and Chief
Executive Officer of Golden Gate Flour Corporation. Mr. Burgio attended Brock
University Bachelors of Accounting program from 1994 to 1997; provided, however,
Mr. Burgio did not complete the degree program.
William Edward (Bill) Rancic is 33 years old and the newest member of our Board
- -----------------------------
of Directors, elected on October 7, 2004. Mr. Rancic received a Bachelor of
Criminal Justice Degree from Loyola University of Chicago in 1992. In 1995, Mr.
Rancic founded The Ranley Group, doing business as Cigars Around the World. In
-----------------------
June 2003, The Ranley Group was acquired by Gran Reserve Corporation, a
subsidiary of Synergy Brands Inc. From 1995 to June 2004, Mr. Rancic was the
President and a director of The Ranley Group. Mr. Rancic is the winner of the
7
Donald Trump NBC show "The Apprentice" and author of "You're Hired: How to
Succeed in Business and Life." Mr. Rancic is a director of Synergy Brands Inc.,
and Synergy Brands Inc., which is a public company and listed on the NASDAQ
Small Cap securities exchange.
Gerry C. Quinn is 55 years old and is nominated as one of our directors. Mr.
- --------------
Quinn has served as President of The Erin Mills Investment Corporation, since
July 1989, a real estate development and investment company. Prior to joining
Erin Mills, Mr. Quinn served as a senior officer in Magna International Inc. and
Barrincorp, both publicly traded companies, and he served as a partner in the
public accounting firm of Ernst & Young. Currently, Mr. Quinn is also a director
of MotorVac Technologies, Inc. and Remote Dynamics Inc., and Remote Dynamics
Inc. is a public company and listed on NASDAQ Small Cap securities exchange.
Other Executive Officers
- ------------------------
Peter Nelipa is 37 years old and has been our President and Secretary since July
- ------------
21, 2003, the date of our formation. On October 7, 2004, Peter Nelipa resigned
as a director of the Company, but remained as the President and Secretary of the
Company. Mr. Nelipa is also the President and one of the directors of 2 of our
wholly owned subsidiaries, Monaco (Canada) Inc. and MG Holdings Inc. Since 2001,
Mr. Nelipa has held various management positions with New Durham Trading, an
importer and exporter of various consumer products. In 1999, Mr. Nelipa
co-founded Iceflow Technologies Inc. (formerly IC3), a company that developed a
patented technology for cooling liquid products, and served in various
management positions until 2001. From 1997 to 1999, Mr. Nelipa was the President
of Draft Guys, a company that installs draught systems in restaurant and
stadiums.
Suzanne Lilly is 53 years old and Ms. Lilly has been the Chief Financial
- --------------
Officer, Treasurer and one of our directors since our formation. On July 2,
2004, Ms. Lilly resigned as a director, but remained the Chief Financial Officer
and Treasurer of the Company. Ms. Lilly is also the Secretary, Treasurer and one
of the directors of 3 of our wholly owned subsidiaries, Monaco (Canada) Inc., MG
Holdings Inc., and Sweet Valley Food Corporation. Ms. Lilly is responsible for
day-to-day operations as well as our administrative and financial activities.
Since May 2003, Ms. Lilly has also been the President of Logex Warehousing and
Distribution Inc., a company that providing warehousing and distribution
services to companies in the grocery industry. From 2001 to the present, Ms.
Lilly has also been a director and interim Chief Financial Officer of @rgentum
Management and Research Corporation. From 2001 to 2002, Ms. Lilly was the Chief
Financial Officer of Avenue Financial Corporation, a Canadian financial
management company listed on the TSX Venture Exchange. From 1991 to 2003, Ms.
Lilly was a Chartered Accountant in private practice. Ms. Lilly earned her
Chartered Accountant designation with PriceWaterhouseCoopers.
Tyrone Ganpaul is 55 years old and has been our Vice President since July 27,
- ---------------
2004. Mr. Ganpaul is also the President and a director of our subsidiary Sweet
Valley Food Corporation. He is currently the President, a director and a
shareholder of Sweet Valley Foods Inc., which holds 750,000 shares of
exchangeable stock of MG Holdings Inc. and which are exchangeable for 1,500,000
8
shares of our Common Stock. Mr. Ganpaul has significant experience in financial
management, marketing, control, and development for a number of various
businesses, especially food, consumer products, and resource products. From 1994
to 2001, he was a business development consultant for various companies,
including Goudas Food Products Company Limited. From 1987 to 1994, Mr. Ganpaul
was Vice President Finance for Export Packers Company Limited. Mr. Ganpaul has a
degree in Economics and Business Administration from the University of Guyana
and a RIA diploma from the Society of Management Accountants (formerly the
Society of Registered Industrial Accountants).
There is no family relationship between any of our officers or directors. There
are no orders, judgments, or decrees of any governmental agency or
administrator, or of any court of competent jurisdiction, revoking or suspending
for cause any license, permit or other authority to engage in the securities
business or in the sale of a particular security or temporarily or permanently
restraining any of our officers or directors from engaging in or continuing any
conduct, practice or employment in connection with the purchase or sale of
securities, or convicting such person of any felony or misdemeanor involving a
security, or any aspect of the securities business or of theft or of any felony,
nor are any of the officers or directors of any corporation or entity affiliated
with us so enjoined.
Board of Directors Meetings During Last Fiscal Year
- ---------------------------------------------------
The Board of Directors of the Company held 2 meetings during the fiscal year
ending December 31, 2003, and took action by unanimous written consent on 11
occasions. Our Board of Directors initially consisted of 3 directors, Peter
Nelipa, Taragh Bracken, and Suzanne Lilly. On July 2, 2004, Suzanne Lilly
resigned as a Director, but remained the Chief Financial Officer and Treasurer
of the Company. On July 2, 2004, the Board of Directors appointed William Fatica
and Joel Sebastian to the Board of Directors. On July 27, 2004, in conjunction
with the acquisition of the assets of Sweet Valley Foods Inc. by MG Holdings,
Inc., Leo Couprie, a member of the Board of Directors of Sweet Valley Foods
Inc., was appointed as a member of the Board of Directors of the Company. On
October 7, 2004, Peter Nelipa resigned as a director, but remained as the
President and Secretary of the Company. On October 7, 2004, the Board of
Directors appointed William (Bill) Rancic to fill the vacancy created by the
resignation of Mr. Nelipa. All action by the Company's directors regarding these
matters was taken by written consent in lieu of holding Board of Directors'
meetings.
All directors of the Company hold office until the next annual meeting of
stockholders of the Company and the election and qualification of their
successors. Officers of the Company are appointed annually by, and serve at the
discretion of, the Board of Directors. As the directors shall be elected by a
plurality of the votes of the shares of our Common Stock present in person or
represented by Proxy at the Annual Meeting, those 6 nominees for director
receiving the most votes of the shares present in person or represented by Proxy
at the Annual Meeting will be elected as the members of the Company's Board of
Directors, in spite of the fact that no such nominee may receive more than
one-half (1/2) of the total votes cast. Cumulative voting for nominees is not
---
permitted.
9
Committees of the Board of Directors. Pursuant to the Company's Bylaws, the
- --------------------------------------
Board of Directors has formed 3 committees consisting of one or more directors
of the Company. On November 11, 2004, the Board of Directors formed an Audit
Committee, Executive Compensation Committee, and Employee Compensation
Committee. Selection of members of those committees was made by all the members
of the Board of Directors.
Audit Committee. The Audit Committee will be responsible for making
- ------------------
recommendations to the Board of Directors regarding the selection of independent
auditors, reviewing the results and scope of the audit and other services
provided by the Company's independent auditors, reviewing the Company's
financial statements for each interim period, and reviewing and evaluating the
Company's internal audit and control functions. Joel Sebastian and William
Fatica have been appointed by the Board of Directors to serve on the Audit
Committee. No meetings of the members of the Audit Committee have been held.
Executive Compensation Committee. The Executive Compensation Committee will be
- ----------------------------------
responsible for making recommendations to the Board of Directors concerning
salaries and incentive compensation for officers, directors, and executive
employees. It will also administer the Company's 2004 Stock Plan with respect to
compensation of directors, officers, and certain consultants of the Company.
Joel Sebastian, William Fatica, and William (Bill) Rancic have been appointed by
the Board of Directors to serve on the Executive Compensation Committee. No
meetings of the members of the Executive Compensation Committee have been held.
Employee Compensation Committee. The Employee Compensation Committee will be
- ---------------------------------
responsible for making recommendations to the Board of Directors concerning
salaries and incentive compensation for employees of the Company, who are not
officers. Leo Couprie and Taragh Bracken have been appointed by the Board of
Directors to serve on the Employee Compensation Committee. No meetings of the
members of the Employee Compensation Committee have been held.
Compensation of Officers. Since our incorporation, none of our officers have
- --------------------------
received any compensation. At such time as the Company was formed, Peter Nelipa
received 800,000 shares of our Common Stock and Suzanne Lilly received 750,000
shares of our Common Stock.
Compensation of Directors. For their service on our Board of Directors, no
- ----------------------------
director has received any cash compensation. At such time as the Company was
formed, Company issued to Peter Nelipa 800,000 shares of our Common Stock and to
Suzanne Lilly 750,000 shares of our Common Stock, and to Taragh Bracken 600,000
shares of our Common Stock. Additionally, at such time as William Rancic was
appointed as a director the Company, the Company issued to Mr. Rancic 100,000
shares of our Common Stock.
10
At the time Joel Sebastian was appointed as a director of the Company, the
Company issued to Mr. Sebastian (i) 10,000 shares of our Common Stock and (ii)
options to purchase 30,000 shares of our Common Stock for a period of 5 years at
a purchase price of $1.00 per share. At the time William Fatica was appointed as
a director of the Company, the Company issued to Mr. Fatica (i) 10,000 shares of
our Common Stock and (ii) options to purchase 30,000 shares of our Common Stock
for a period of 5 years at a purchase price of $1.00 per share. At the time Leo
Couprie was appointed a director of the Company, the Company issued to Mr.
Couprie (i) 10,000 shares of our Common Stock and (ii) options to purchase
30,000 shares of our Common Stock for a period of 5 years at $1.00 per share. If
Gerry C. Quinn is elected as a director of the Company, the Company shall issue
to Mr. Quinn (i) 125,000 shares of our Common Stock and (ii) options to purchase
75,000 shares of our Common Stock for a period of 5 years at a purchase price of
$1.50 per share.
Employment Agreements. We have not entered into or are a party to any employment
- ----------------------
agreements.
Communications with Directors. The Board of Directors maintains a process for
- -------------------------------
stockholders to communicate with the Board of Directors or any member of the
Board of Directors. Stockholders who desire to communicate with the Board of
Directors should send any communications to the Company's Secretary, c/o Monaco
Group Inc., 20A Voyager Court South, Etobicoke, Ontario, Canada, M9W 5M7. Any
communication must specify the number of shares of our Common Stock beneficially
owned by the shareholder making the communication. The Company's Secretary will
forward such communication to the complete Board of Directors or to any
individual director or directors to whom the communication is directed, unless
the communication is threatening or illegal, uses inappropriate expletive
language or is similarly inappropriate, in which event the Company's Secretary
has the authority to discard the communication or take appropriate legal action
regarding the communication.
The Company does not have a formal policy regarding director attendance at the
Annual Meeting, but the Board of Directors expects that the directors who are
nominated for election at the Annual Meeting will attend the Annual Meeting. The
Company currently does not have a policy with regard to the consideration of any
director candidates recommended by stockholders, except that stockholder
candidates should possess the professional experience and skills and personal
qualities that the Company seeks in director candidates.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
We intend that any transactions by and among the Company and our officers,
directors, principal stockholders, affiliates or advisors will be on terms and
conditions no less favorable to the Company than those terms and conditions
reasonably obtainable from third parties. To date there have been no related
party transactions, other than listed below:
11
Conflicts Related to Other Business Activities. The persons serving as our
- --------------------------------------------------
officers and directors have existing responsibilities and, in the future, may
have additional responsibilities, to provide management and services to other
businesses. As a result, conflicts of interest between us and those other
businesses may occur from time to time.
We will attempt to resolve any such conflicts of interest in our favor. Our
officers and directors are accountable to us and to our stockholders as
fiduciaries, which requires that our officers and directors exercise good faith
and integrity in handling our affairs. A stockholder may be able to commence
legal action on our behalf or on behalf of that stockholder and all other
similarly situated stockholders to recover damages or for other relief in cases
of the resolution of conflicts in any manner prejudicial to us.
Of our officers, Suzanne Lilly currently serves as President of Logex
Warehousing and Distribution Inc., an Ontario corporation ("Logex"). Logex
provides warehousing and distribution services to various companies in the
grocery industry. Ms. Lilly currently devotes approximately one-fourth (1/4) of
her time to Logex. We do not believe that we have any conflicts of interest with
the business of Logex, other than Ms. Lilly's duty to provide management and
services. Ms. Lilly currently devotes approximately twenty hours per week to our
business. We do not believe that we have any conflicts of interest with any
business interest of Peter Nelipa, other than Mr. Nelipa's duty to provide
management and services to other entities. Mr. Nelipa currently devotes
approximately ten hours per week to our business. Additionally, Tyrone Ganpaul
is our vice president. He is also currently the president and a director of
Sweet Valley Foods Inc. We do not believe that we have any conflicts of interest
with the business of Sweet Valley Foods Inc., other than Mr. Ganpaul's duty to
provide management and services.
Each of the persons serving as our directors have existing responsibilities to
other businesses and, in the future, may have additional responsibilities, to
provide management and services to other entities in addition to us.
Related Party Transactions. There have been no related party transactions,
- -----------------------------
except for the following:
Logex Warehousing and Distribution Inc., a corporation controlled by Suzanne
Lilly, our Chief Financial Officer, currently provides us with approximately 650
square feet of office space, which we anticipate will satisfy our requirements
for the next twelve months. This corporation has agreed to provide us with
office space until December 31, 2004 at no charge. Thereafter, we will attempt
to negotiate rental or lease terms with this corporation consistent with
competitive rental rates. This corporation also currently provides warehousing
services to us. This corporation has agreed to provide warehousing services, as
needed, until December 31, 2004, at no cost. Thereafter, if we require the use
of warehousing services from this corporation, it would provide such services,
on a per-use basis, consistent with competitive rental rates. This corporation
currently charges its customers at a rate of $3.75 per pallet for inbound, $3.75
per pallet for outbound and $4.50 per pallet per month for storage.
12
On or about September 30, 2004, Skyway Wholesale Grocers Inc. ("Skyway"),
previously a subsidiary of Burgio Family Holdings Inc., our largest stockholder,
was sold by Burgio Family Holdings Inc. to an unrelated third party. Skyway is a
wholesaler of grocery and related products to various retailers in Canada.
During the 3 month period ending September 30, 2004, our subsidiaries Sweet
Valley Food Corporation and Bayshore Foods Inc. sold products in the amount of
$125,885.00 to Skyway, in the ordinary course of business.
In October 2004, William Rancic was appointed to our Board of Directors. At that
time, we issued to Mr. Rancic 100,000 shares of our Common Stock. Those shares
were issued in a transaction that we believe satisfies the requirements of that
particular exemption from the registration and prospectus delivery requirements
of the Securities Act of 1933, as amended, specified by the provisions of
Section 4(2) of that Act.
On October 4, 2004, we entered into the Share Purchase Agreement with Burgio
Family Holdings Inc., ALBAR, and Monaco Canada. Al Burgio, nominated to be a
director and anticipated to be an executive officer of the Company after the
consummation of the transaction contemplated by the Share Purchase Agreement,
has a significant interest in that transaction which may be different from, or
in addition to, the interest of the other stockholders of the Company.
Specifically, Mr. Burgio owns or controls a significant interest in both Burgio
Family Holdings Inc. and ALBAR, as well as the entities and businesses which
will be acquired by the Company pursuant to the Share Purchase Agreement.
Additionally, the result of the consummation of that transaction, the Company
will assume responsibility for the performance of significant obligations and
undertakings of those entities and businesses.
On July 27, 2004, the Company, by our subsidiary MG Holdings, acquired the
assets of Sweet Valley Foods Inc. ("Sweet Valley") used in the manufacturing,
processing, and selling of sugar in consideration of $80,000.00 Canadian Dollars
in cash, 750,000 shares of exchangeable stock of MG Holdings, and cash
compensation for its inventory. Each share of exchangeable stock of MG Holdings
may be exchanged for 2 shares of our Common Stock. The value of the inventory
purchased from Sweet Valley Foods Inc., as at July 1, 2004, was $282,724.78
Canadian Dollars. Couprie, Fenton Inc., a corporation owned by certain
shareholders of Sweet Valley, has agreed to finance this inventory purchase on a
short-term basis. The cash paid by MG Holdings at closing was $80,000.00
Canadian Dollars. Burgio Family Holdings Inc., our largest shareholder, agreed
to lend us funds to complete this purchase. We formed a new subsidiary, Sweet
Valley Food Corporation, an Ontario corporation, to operate and utilize the
sugar assets acquired. Leo Couprie, a director of Sweet Valley, was appointed to
our Board of Directors. Mr. Couprie is also the Chairman of Couprie, Fenton Inc.
Tyrone Ganpaul, a director and officer of Sweet Valley Foods Inc., has been
appointed our Vice President. When he was appointed, we issued to Leo Couprie
10,000 shares of our Common Stock and options to purchase 30,000 shares of our
Common Stock at $1.00 per share. The shares and options were issued in a
transaction that we believe satisfies the requirements of that particular
exemption from the registration and prospectus delivery requirements of the
Securities Act of 1933, as amended, specified by the provisions of Regulation S.
13
In July 2004, Joel Sebastian and William Fatica were appointed to our Board of
Directors. At that time, we issued to each of Joel Sebastian and William Fatica
10,000 shares of our Common Stock and options to purchase 30,000 shares of our
Common Stock for a period of 5 years at $1.00 per share. Those shares and
options were issued in a transaction that we believe satisfies the requirements
of that particular exemption from the registration and prospectus delivery
requirements of the Securities Act of 1933, as amended, specified by the
provisions of Section 4(2) of that Act.
In June 2004, our subsidiary, Monaco (Canada), sold products in the amount of
$80,342.00 to Sweet Valley Foods Inc., in the ordinary course of business. Since
our acquisition of all the assets related to the sugar business of Sweet Valley
Foods Inc., we do not expect to transact any further business with Sweet Valley
Foods Inc.
On or about July 30, 2003, we issued 120,000 shares of our Common Stock (as
adjusted for a September 29, 2003 stock split) to Peter Nelipa, Suzanne Lilly,
Taragh Bracken, and Burgio Family Holdings Inc. in exchange for $12,000.00.
Those shares were issued in a transaction which we believe satisfies the
requirements of that particular exemption from the registration and prospectus
delivery requirements of the Securities Act of 1933, as amended, specified by
the provisions of Regulation S.
On July 24, 2003, we entered into a Loan Facility Agreement with Burgio Family
Holdings Inc. our largest stockholder. This Loan Facility Agreement allows us to
borrow as much as $20,000.00 at 10% interest per annum on all amounts lent. The
money is accessible upon 7 days notice to Burgio Family Holdings Inc. unsecured
and payable on demand upon 30 days written notice from Burgio Family Holdings
Inc. We believe that the terms of the Loan Facility Agreement were negotiated in
good faith and are as favorable, if not more favorable, than those that could
have been negotiated with at arm's length with an unaffiliated third party
because the loan is unsecured, flexible, and provides a reasonable interest
rate.
Pursuant to an Option Agreement, dated as of July 23, 2003, by and among Peter
Nelipa, our President and Secretary; Suzanne Lilly, our Chief Financial Officer;
Taragh Bracken, our director, and the Company, we have an option to repurchase
as many as 75% of the shares of our Common Stock held by them until July, 2005
in the event they terminate their relationships with the Company. The shares may
be repurchased by us for 120% of the average amount paid for the stock. The
total shares pursuant to this Option Agreement are based on the number of shares
owned by those persons on the date of their termination. As of November 5, 2004,
those persons own an aggregate of 1,635,000 shares of our Common Stock.
On July 23, 2003, Peter Nelipa, Suzanne Lilly, Taragh Bracken and Burgio Family
Holdings Inc. were issued 4,000,000 shares of our Common Stock (as adjusted for
a September 29, 2003 stock split) in exchange for their services relating to
organizing our business, which shares were valued at $40,000.00. Those shares
were issued in a transaction that we believe satisfies the requirements of that
particular exemption from the registration and prospectus delivery requirements
14
of the Securities Act of 1933, as amended, specified by the provisions of
Regulation S.
APPROVAL OF 2004 STOCK PLAN
- ---------------------------
(Proposal 2)
We believe that it is in the best interests of the Company to reserve 1,500,000
shares of our Common Stock pursuant to the terms and subject to the conditions
specified in the Company's Stock Plan ("Plan"), which was approved and adopted
by the Company's Board of Directors on July 2, 2004, and a copy of which is
attached to this Proxy Statement as Exhibit 1. The options and stock issuable
pursuant to the Plan are intended to be incentives to, and encourage stock
ownership by, certain directors, officers, employees and other persons providing
service to the Company, so that they may acquire or increase their proprietary
interests in the success of the Company, and encourage them to remain in the
Company's service.
The Company may register, at the Company's expense, with the Securities and
Exchange Commission, on a Form S-8 registration statement shares of our Common
Stock issuable pursuant to the Plan.
The following summary description of the Plan is qualified in its entirety by
reference to the complete text of the Plan, a copy of which is attached to this
Proxy Statement as Exhibit 1. Any shares of our Common Stock which are subject
to an option which are not used because the option is terminated due to the
termination of the optionees employment with the Company or otherwise not
exercised may again be used for options pursuant to the Plan.
The Plan is administered by the Executive Compensation Committee of the Company.
The Executive Compensation Committee is currently comprised of Joel Sebastian,
William Fatica, and William Rancic.
The Executive Compensation Committee is empowered to select those persons
eligible to be granted options or receive stock awards pursuant to the Plan, to
determine the time or times at which each option or award shall be granted,
whether options will be incentive stock option or non-qualified options, and the
number of shares to be subject to each option or award; and to determine the
time and manner in which each option may be exercised, including the exercise
price and option period, and other terms and conditions of options, all subject
to the terms and conditions of the Plan. The Executive Compensation Committee
has sole discretion to interpret and administer the Plan, and the decisions of
the Executive Compensation Committee regarding the Plan are final.
Incentive stock options granted pursuant to the Plan must have an exercise price
of not less than 100% of the fair market value of our Common Stock on the date
the incentive stock option is granted and it must be exercised within 10 years
from the date of grant. In the case of an incentive stock option granted to an
optionee who owns more than 10% of the total voting securities of the Company on
the date of grant, the exercise price shall be not less than 110% of the fair
15
market value of our Common Stock on the date of grant, and the option period may
not exceed 5 years. Non-qualified stock options granted pursuant to the Plan
must have an exercise price of not less than 85% of the fair market value of our
Common Stock on the date the non-qualified option is granted.
Options may be exercised during a period of time determined by the Executive
Compensation Committee, except that no option (other than an incentive stock
option granted to a stockholder owning more than 10% of the voting securities of
the Company) may be exercised more than 10 years after the date of grant. The
Plan may be wholly or partially amended or otherwise modified, suspended, or
terminated at any time and from time to time by the Board of Directors. The
Board of Directors may not (i) materially impair any outstanding options without
the express consent of the optionee, (ii) materially increase the number of
options subject to the Plan, (iii) materially increase the benefits to optionees
pursuant to the Plan, (iv) materially modify the requirements as to eligibility
to participate in the Plan, or (v) alter the method of determining the option
exercise, price without stockholder approval.
The grant of a non-qualified stock option will not result in the recognition of
taxable income to an option holder. Upon exercise of a non-qualified stock
option, an option holder generally must include an income as compensation in an
amount equal to the amount, if any, by which the fair market value of our Common
Stock on the date of exercise exceeds the option holder's exercise price. The
included amount is treated as ordinary income by the option holder and may be
subject to wage withholding and employment taxes. On the sale of our Common
Stock by the option holder, any appreciation or depreciation and the value of
our Common Stock will be treated as short term or long term capital gain or
loss, depending on whether the option holder holds our Common Stock for more
than one year following exercise of the option.
The grant of an incentive stock option will not result in the recognition of
taxable income to the option holder. An option holder will generally not
recognize taxable income upon exercise of an incentive stock option, although
the amount, if any, by which the fair market value of our Common Stock at the
time of exercise exceeds the exercise price increases alternative minimum
taxable income and may result in alternative minimum tax liability.
There are currently no wage withholding and employment taxes on the exercise of
any incentive stock option or on the sale of incentive stock option shares (our
Common Stock)(even if part of the option holder's profit is ordinary income).
The Company, however, may be required in the future to withhold taxes either at
the time the option holder exercises his or her incentive stock option or when
the holder disposes of his or her incentive stock option shares. Although the
Company is not currently required to withhold tax, the Company is required to
report to the Internal Revenue Service any ordinary income the holder recognizes
as a result of a sale that is a "disqualifying disposition", which is described
below.
The amount and type of tax an option holder will pay when that option holder
sells or otherwise disposes of his or her incentive stock option shares depends
upon how long he or she has held our Common Stock. If an option holder holds our
16
Common Stock acquired upon exercise of an incentive stock option for more than
one year after the date the incentive stock option was exercised and for more
than 2 years after the date the incentive stock option was granted, the option
holder generally will realize long-term capital gain or loss (rather than
ordinary income or loss) upon disposition of the incentive stock option shares.
This gain or loss generally will be equal to the difference between the amount
realized upon such disposition and the amount paid for the incentive stock
option shares upon exercise.
If the option holder disposes of incentive stock option shares before the
expiration of either the one-year holding period or the two-year waiting period
(a "disqualifying disposition"), the option holder generally will recognize
ordinary income equal to the amount, if any, by which the fair market value of
the incentive stock option shares on the date of exercise exceeds the incentive
stock option exercise price. Any additional gain generally will be long-term or
short-term capital gain, depending upon whether the incentive stock option
shares were held for more than one year following the date of exercise by the
option holder. A disposition of incentive stock option shares for this purpose
includes not only a sale or exchange, but also a gift or other transfer of legal
title.
The Company is not entitled to a deduction upon the exercise of an incentive
stock option. If, however, the option holder disposes of the incentive stock
option shares in a disqualifying disposition, the Company generally will be
allowed a deduction equal to the amount of ordinary income recognized by the
option holder in connection with such disposition, subject to certain deduction
limitations.
Option holders who are officers or directors of the Company and are subject to
Section 16(b) of the Securities Exchange Act of 1934 may be subject to special
federal income tax treatment upon exercise of their non-qualified stock option
or incentive stock options and subsequent sale of our Common Stock. These
special rules may affect the timing of the Company's deduction, if any, upon the
exercise of the respective option, or disposition of the underlying stock.
Pursuant to certain circumstances, Section 162(m) of the Internal Revenue Code
of 1986 limits the deduction that the Company may take for otherwise deductible
compensation payable in a particular year to certain of its officers to the
extent that compensation paid to any such officer for such year exceeds
$1,000,000.00. The Company does not presently contemplate making grants of
options to its officers that would, together with other applicable compensation,
exceed $1,000,000.00 in any year for any officer.
Although not intended as an anti-takeover measure by the Board of Directors, one
of the possible effects of the Plan would be to issue additional shares of our
Common Stock, and to increase a percentage of the total number of shares of our
Common Stock issued and outstanding, to the directors and officers of the
Company. Those persons may be considered as part of, or friendly to, incumbent
management and, therefore, in certain circumstances be expected to make
investment and voting decisions in response to a hostile takeover attempt that
may serve to discourage or render more difficult the accomplishment of such an
attempt.
17
In addition, unless the applicable stock option agreement specifies otherwise,
all of an optionees' options may become exercisable completely if (i) the
Company is subject to a change in control before the optionee's service to the
Company terminates; (ii) such options do not remain issued and outstanding;
(iii) such options are not assumed by the surviving corporation or its parent;
and (iv) the surviving corporation or its parent does not substitute options
- ---
with substantially the same terms and conditions for those options granted by
the Company. In the opinion of the Board of Directors, that such acceleration
provision ensures that optionees pursuant to the Plan will be able to exercise
their options as intended by the Board of Directors and stockholders of the
Company prior to any such extraordinary corporate transaction which might serve
to limit or restrict such right. The Board of Directors is, however, presently
unaware of the possibility of the occurrence of any event which would cause the
acceleration of any options.
As of November 17, 2004, the Company had a total of 18 employees, officers,
directors, and consultants eligible to receive options or shares of our Common
Stock pursuant to the Plan. As of November 17, 2004, 90,000 non-qualified stock
options pursuant to the Plan were issued and outstanding and a total of 0
incentive stock options were issued and outstanding. No shares of our Common
Stock have been issued pursuant to Plan.
The favorable vote of a majority of the shares of our Common Stock voting in
person or by proxy at the Annual Meeting is required to approve the Plan. As
noted, the Board of Directors has approved Plan. Stockholders should be aware,
however, that the Board of Directors may be considered as having a conflict of
interest in approving, and recommending that stockholders approve, the Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF THE
- --------------------------------------------------------------------------------
COMPANY'S 2004 STOCK PLAN.
- --------------------------
RATIFICATION OF THE INDEPENDENT AUDITORS - AMISANO HANSON, CHARTERED ACCOUNTANTS
- --------------------------------------------------------------------------------
(Proposal 3)
The Board of Directors of the Company has selected Amisano Hanson, Chartered
Accountants, independent auditors, to audit and comment on our financial
statements for the fiscal year ending December 31, 2004. Amisano Hanson was
responsible for the audit of the Company's financial statements for the fiscal
year ending December 31, 2003.
Stockholder ratification of Amisano Hanson as the Company's independent public
accountant is not required by the Company's Bylaws, or otherwise. The Board of
Directors, however, is submitting the appointment of Amisano Hanson to the
stockholders for ratification as a matter of good corporate practice. If the
stockholders fail to ratify the appointment of Amisano Hanson, the Board of
Directors will consider whether or not to retain Amisano Hanson. If the
selection is ratified, the Board of Directors, in its discretion, may direct the
18
appointment of different independent auditors at any time during the year, if
the Board of Directors determines that such appointment would be in the best
interests of the Company and its stockholders.
The Board of Directors does not expect that any representative of Amisano Hanson
will be present at the Annual Meeting.
Audit Fees. The aggregate fees billed for a fiscal year ended December 31, 2003,
- -----------
for professional services rendered by Amisano Hanson, the Company's principal
accountant for the Company's annual financial statements and review of financial
statements included in the Company's reports to the Securities and Exchange
Commission, including fees for services that are normally provided by Amisano
Hanson in connection with statutory and regulatory filings or engagements for
such fiscal year were $5,450.00.
Audit Related Fees. Amisano Hanson billed the Company $3,200.00 for fees for
- --------------------
consent letters attached as exhibits to our Registration Statement on Form SB-2,
which were reasonably related to the performance of the audit or review of the
Company's financial statements and are not reported in the caption "Audit Fees"
above, in the fiscal year ending December 31, 2003.
Board of Directors Pre-Approval Policy. The Board of Directors does not have a
- -----------------------------------------
written pre-approval policy.
Section 16(a) Beneficial Ownership Reporting Compliance. Section 16(a) of the
- ----------------------------------------------------------
Securities Exchange Act of 1934 as amended, requires that the Company's
directors, executive officers and greater than 10% shareholders file reports
with the Securities and Exchange Commission reporting their initial beneficial
ownership of the Company's equity securities and any subsequent changes to their
respective security holdings. Those persons must also provide the Company with
copies of these reports. Section 16(a) filing requirements applicable to the
Company's officers, directors, and 10% or more beneficial owners of our Common
Stock were not required for the fiscal year ending December 31, 2003.
BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF AMISANO
- --------------------------------------------------------------------------------
HANSON AS AUDITORS FOR THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 2004.
- --------------------------------------------------------------------------------
APPROVAL OF THE SHARE PURCHASE AGREEMENT
- ----------------------------------------
(Proposal 4)
On October 4, 2004, the Company entered into a Share Purchase Agreement with
Burgio Family Holdings Inc., a Canadian corporation; ALBAR Capital Corp., a
Canadian corporation ("ALBAR"); Monaco (Canada) Inc., a Canadian corporation
("Monaco Canada"), regarding the purchase and sale of certain shares of stock
("Share Purchase Agreement"). LF Licensed Products Inc. ("LF Licensed") and LF
Acquisition Corp. are wholly owned subsidiaries of Burgio Family Holdings Inc.
LF Brands Inc. is a wholly owned subsidiary of ALBAR.
19
Subsequent to the date the Share Purchase Agreement was entered into, Loretta
Baking Mix Products Ltd., a Michigan corporation and a wholly owned subsidiary
of LF Brands Inc., signed an obligatory letter of intent to acquire all of the
assets and the operating business of Amendt Corporation, a Michigan corporation
("Amendt") ("Amendt Transaction"), for consideration of as much as
$2,900,000.00, subject to certain financing restrictions. Amendt is a
manufacturer of baking mix products, using the brand name County Fare and
------------
private label products for retail chains.
A summary of the Amendt Transaction is:
o Quest Capital Corp. will lend to Loretta Baking Mix Products Ltd.
$880,000.00 as a secured loan ("Loan") subject to due diligence;
o The proceeds of the Loan shall be for working capital and the purchase
of substantially all the assets of Amendt (which are available for
acquisition because of foreclosure by Monroe Bank & Trust), including
equipment, inventory, accounts receivable, and intangible assets, but
excluding real estate and buildings (it is anticipated that the real
estate and buildings will be sold to a third party for at least
$800,000.00, thereby reducing the consideration required for the
Amendt Transaction);
o Loretta Baking Mix Products Ltd. shall create and issue to the sole
shareholder of Amendt, who also is a guarantor of the indebtedness to
Monroe Bank & Trust, shares of its preferred stock with a value of as
much as $1,400,000.00; and those shares of that preferred stock shall
be exchangeable, at the option of the holder thereof, for 350,000
shares of our Common Stock.
o The Loan shall be due and payable in full on or before December 15,
2005;
o Loretta Baking Mix Products Ltd. shall provide to Quest Capital Corp.
a first priority security interest in favor of Quest Capital Corp. for
all of the present and after acquired personal property of Loretta
Baking Mix Products Ltd.;
o The Company will grant to Quest Capital Corp. a first priority
security interest in favor of Quest Capital Corp. for all of the
Company's present and after acquired personal property; and
o Al Burgio shall provide an unlimited personal guaranty for the Loan.
LF Brands Inc. owns 6,000 shares of the capital stock of Golden Gate Flour
Corporation, which is 60% of the issued and outstanding shares of Golden Gate
Flour Corporation. 2047810 Ontario Inc. owns the remaining 4,000 shares of
capital stock of Golden Gate Flour Corporation. LF Brands Inc. has the option to
acquire from 2047810 Ontario Inc. all of those 4,000 shares on November 27,
2004. There can be no guarantee or assurance that LF Brands Inc. will be granted
an extension of time to exercise that option.
20
Monaco Canada is a wholly owned subsidiary of the Company.
Pursuant to the provisions of the Share Purchase Agreement, the Company has
agreed to guarantee all of the obligations of Monaco Canada to Burgio Family
Holdings Inc. and ALBAR, including, but not limited to, the (i) obligation to
pay dividends regarding the Class A Preferred Stock to be issued by Monaco
Canada, if and when declared, and (ii) redemption of that Class A Preferred
Stock by Monaco Canada and payment of the applicable purchase price therefor
when notified by the holders of that Class A Preferred Stock, if they desire
that such redemption occur. Additionally, the Company has agreed to guarantee
that operating line of credit in the amount of $2,000,000.00 (Canadian Dollars)
extended by the Bank of Montreal to Loretta Foods Limited; and that line of
credit is currently secured by the assets of Loretta Foods Limited and
guaranteed by Burgio Family Holdings Inc.
LF Acquisition owns 3 shares of the Capital Stock of Loretta Foods Limited,
which are all of the issued and outstanding shares of Loretta Foods Limited.
Pursuant to the provisions of the Share Purchase Agreement, at such time as
reasonably practicable after the approval by the Company's shareholders of the
Share Purchase Agreement, Monaco Canada will acquire from Burgio Family Holdings
Inc. 1,500 shares of LF Licensed. Additionally, pursuant to the provisions of
the Share Purchase Agreement, Monaco Canada will acquire from Burgio Family
Holdings Inc. 100 shares of LF Acquisition. In exchange for those 1,500 shares
of LF Licensed and 100 shares of LF Acquisition, Monaco Canada shall issue to
Burgio Family Holdings Inc. 3,000,000 shares of Series A Preferred Stock of
Monaco Canada.
Additionally, pursuant to the provisions of the Share Exchange Agreement, Monaco
Canada will acquire from ALBAR those 100 shares of capital stock issued by LF
Brands and presently owned by ALBAR. In exchange for those 100 shares of LF
Brands, Monaco Canada shall issue to ALBAR 7,000,000 shares of Monaco Canada's
Class A Preferred Stock.
A summary of the designations, preferences, and rights regarding that Class A
Preferred Stock are:
o all shares of the Class A Preferred Stock shall be prior, both as to
payment of dividends and as to distributions of assets upon
liquidation, dissolution or winding up of Monaco Canada, whether
voluntary or involuntary, to all of the common stock;
o the holders of the Class A Preferred Stock shall be entitled to
receive, from the net profits of Monaco Canada, dividends of the
annual rate of $.04 (Canadian Dollars) per share per annum payable
quarterly no later than the 15th day of the month following the
quarterly period and accruing until paid, beginning and assessed,
commencing and assessed on the first full quarter following issuance.
The amount of dividends payable shall be computed on the basis of a
21
360 day year of four 90 day quarters. The holders of Monaco Canada's
common stock shall be entitled to all remaining profits which the
Board of Directors may determine to distribute to holders of that
common stock as dividends;
o in the event of the liquidation, dissolution or winding up of the
Monaco Canada, whether voluntary or involuntary, holders of the Class
A Preferred Stock shall be entitled to receive from the assets of
Monaco Canada, whether such assets are stated capital or surplus of
any nature, an amount equal to the dividends accumulated thereon until
the date of final distribution to such holders which have not been
paid, without interest, and in an amount equal to $1.00 (Canadian
Dollars) per share, before any payment should be made or any assets
distributed to holders of Monaco Canada's common stock;
o Monaco Canada is not entitled to redeem the Class A Preferred Stock.
o Each share of Class A Preferred Stock shall be retractable, after 7
years, at the option of the holder thereof at $1.00 (Canadian Dollars)
per share plus, in each case, an amount in cash equal to all dividends
on the Class A Preferred Stock accrued and unpaid thereon, pro rata to
the date fixed for retraction (such amount is hereinafter referred to
as the "Retraction Price").
o Not less than 30 days and not more than 60 days prior to the
retraction date notice by first class mail, postage prepaid, shall be
given to Monaco Canada. Each such notice of retraction shall specify
the date fixed for retraction and the Retraction Price. Payment will
be made up on presentation and surrender of the shares of the Class A
Preferred Stock and that on and after the retraction date, dividends
will cease to accumulate on such shares.
o The shares of Class A Preferred Stock shall not be convertible at the
option of the holder thereof.
o The Class A Preferred Stock should not have any voting rights
regarding any corporate business, except for that business that
directly affects the existence and rights and obligations of the Class
A Preferred Stock; and
o During such time as the Class A Preferred Stock is issued and
outstanding, the Company shall not, without the affirmative vote or
consent of the holders of at least one-half (1/2) of all issued and
outstanding shares of Class A Preferred Stock voting separately as a
class, amend, alter, or repeal (by merger or otherwise) any provision
of the Amended Articles of Incorporation, or the Bylaws of Monaco
Canada, so as to affect adversely the relative rights, preferences,
qualifications, limitations, and restrictions of the Class A Preferred
Stock.
22
A copy of the PROPOSED VOTING POWERS, RIGHTS, DESIGNATIONS, PREFERENCES AND
QUALIFICATIONS of the Class A Preferred Shares of Monaco Canada is attached to
this Proxy Statement as Exhibit 5.
LF Acquisition is indebted to Burgio Family Holdings Inc. in the amount of
$1,778,884 (Canadian Dollars). The terms and conditions of that loan are
specified in that Vendor Loan Secured Debenture, a copy of which is attached to
this Proxy Statement marked as Exhibit 4. As security for the indebtedness
evidenced by that Secured Debenture, Burgio Family Holdings Inc. has a security
interest in those 100 shares of capital stock issued by LF Acquisition and all
of the assets of LF Acquisition. Accordingly, Burgio Family Holdings Inc. has a
first priority in those 100 shares and those assets, as a secured creditor, and
that security interest will terminate only when the indebtedness evidenced by
that Secured Debenture is paid completely.
The Board of Directors believes that the transaction contemplated by the Share
Purchase Agreement provides the Company's shareholders with growth and strategic
opportunities that would not be available to the Company on a stand alone basis.
Specifically, the approval of that transaction will allow the Company and its
shareholders to participate in a larger and more diverse food service industry.
The Company's stockholders should be aware that Al Burgio, nominated to be a
director and anticipated to become an executive officer of the Company after the
consummation of the transaction contemplated by the Share Purchase Agreement,
has a significant interest in that transaction which may be different from, or
in addition to, the interest of the other stockholders of the Company.
Specifically, Mr. Burgio owns or controls a significant interest in Burgio
Family Holdings Inc. and ALBAR and the entities and businesses which will be
acquired pursuant to the Share Purchase Agreement. Additionally, the result of
the consummation of that transaction, the Company will assume responsibility for
the performance of significant obligations and undertakings of those entities
and businesses. Mr. Burgio, as a result of his influence regarding Burgio Family
Holdings Inc. and ALBAR, will participate in the dividends declared for and the
other preferences relating to the Class A Preferred Stock.
Conditions to the consummation of the transaction contemplated by the provisions
of the Share Purchase Agreement include:
o the effectiveness of this Proxy Statement and the absence of any
proceedings or threatened proceedings by the Securities and Exchange
Commission to suspend the effectiveness of this Proxy Statement;
o the approval and adoption by the Company's stockholders of the Share
Purchase Agreement and the transaction contemplated by that agreement;
o the absence of legal prohibitions having the effect of preventing or
prohibiting the consummation of that transaction;
23
o the absence of breaches of the representations and warranties
specified in the Share Purchase Agreement that may result in a
material adverse effect on the representing and warranting party; and
o the material performance of each party's obligations pursuant to the
Share Purchase Agreement.
When legally permissible, a party may decide to waive a condition to its
obligation to complete that transaction, although that condition has not been
satisfied.
The ability of the Company to realize the anticipated benefits of the
transaction contemplated by the Share Purchase Agreement will depend, on part,
on the ability of the Company to integrate the businesses of the acquired
entities with the business of the Company. The acquisition of shares of capital
stock, as contemplated by the provisions of the Share Purchase Agreement, is a
complex, costly, and time-consuming process. The difficulties encountered in
such an acquisition include, among others;
o retaining key employees;
o consolidating corporate and administrative infrastructure;
o minimizing the diversion of the Company's management's attention from
ongoing business concerns; and
o coordinating geographically separate organizations.
The Company cannot assure its stockholders that the acquisition of those
businesses will result in the realization of the full and complete benefits
anticipated by the Company as result of that acquisition.
The Company has incurred and will incur substantial costs in connection with the
proposed acquisition. These costs are primarily associated with the fees of
attorneys and accountants. In addition, the Company has diverted management
resources in an effort to complete that transaction. If that transaction is not
consummated, the Company will have incurred significant costs, including the
diversion of management resources for which it will have received little or no
benefit. In addition, if that transaction is not consummated, the Company may
experience a negative reaction from the financial markets and the Company's
collaborative partners, customers, and employees. Each of these factors may
adversely affect the Company's financial results and operations.
The Board of Directors and management of the Company have regularly reviewed the
Company's situation considering the changing competitive environment of the food
service industry, with the objective of determining its long term strategic plan
24
and evaluating strategic alternatives available to enhance stockholder value.
Although the Company believes that it has positive future prospects on a stand
alone basis, it is also aware of the risks of operating on such a basis. As
result, from time to time, the Company's management have had conversations with
various companies to explore opportunities to improve the competitive situation
of the Company in the food service industry, including collaboration agreements
and business combination transactions. Specifically, the Company has had
discussions with management of the entities and businesses which will be
acquired pursuant to the Share Purchase Agreement regarding those opportunities.
Following a full discussion, the Company's Board of Directors, having determined
that the acquisitions of those entities and businesses specified in the Share
Purchase Agreement was in the best interests of the Company and its
stockholders, adopted resolutions approving the Share Purchase Agreement and
resolved to recommend that the Company's stockholders approve and adopt the
Share Purchase Agreement. The Company's Board of Directors provided the
executive officers of the Company with delegated authority to complete the
negotiation of the Share Purchase Agreement and consummation of the transaction
contemplated by that agreement.
On October 4, 2004, the parties executed the Share Purchase Agreement.
Pursuant to the provisions of the Share Purchase Agreement, on the closing of
the transactions contemplated by the Share Purchase Agreement, Monaco Canada and
the Company were to cause LF Acquisition Corp. to pay no less than the
equivalent of $500,000.00(Canadian Dollars) of the indebtedness evidenced by
that Secured Debenture; provided, however, Burgio Family Holdings Inc. has
waived that requirement for LF Acquisition Corp to pay that amount on the
closing of the transaction contemplated by the Share Purchase Agreement.
Additionally, at such time, Al Burgio will be appointed to the Board of
Directors of the Company and Chief Executive Officer and Chairman of the Board
of the Company.
On December 31, 2003, Burgio Family Holdings Inc. and Mary Penny entered into
and executed a share purchase agreement with an assignment to LF Acquisition
Corp. ("Penny Agreement"). A copy of the Penny Agreement is attached to this
Proxy Statement as Exhibit 6.
On the closing of the transaction contemplated by the Share Purchase Agreement,
Monaco Canada and the Company will jointly and severally become liable with
Burgio Family Holdings Inc. for all of the debts, obligations, and liabilities
of Burgio Family Holdings Inc. to Mary Penny, specified by the provisions of the
Penny Agreement, including, but not limited to, the obligation to pay the
balance of the purchase price to Mary Penny and comply completely with the
Loretta Foods Limited Share Pledge Agreement by and among Burgio Family Holdings
Inc. and Mary Penny. A copy of that Share Pledge Agreement is attached to this
Proxy Statement as Exhibit 7.
25
Additionally, on the closing of the transaction contemplated by the Share
Purchase Agreement, Monaco Canada and the Company shall guarantee and indemnify
Burgio Family Holdings Inc. and ALBAR from any and all liability, loss, costs,
expenses, interest, penalties, and claims of any kind and nature whatsoever
which at any time or from time to time may be paid, incurred, or asserted
against Burgio Family Holdings Inc. or ALBAR regarding the line of credit
provided by the Bank of Montreal to Loretta Foods Limited in the principal
amount of $2,000,000.00 (Canadian Dollars).
On the closing of the transaction contemplated by the Share Purchase Agreement,
Burgio Family Holdings Inc. and the Company shall agree that the indebtedness
evidenced by that Secured Debenture shall become due and payable if (i) the
issued and outstanding shares of our Common Stock at any time exceeds 12,500,000
shares, on a fully diluted basis; or (ii) the total liabilities of the Company
and its subsidiaries, considered on a combined and consolidated basis, exceed
$17,500,000.00 (Canadian Dollars).
Approval of the Share Purchase Agreement requires the affirmative vote of the
holders of a majority of the "disinterested" shares of our Common Stock voting
in person or by proxy at the Annual Meeting. "Disinterested Shares" are those
shares held by shareholders who do not have any interest in or to the
transactions contemplated by the Share Purchase Agreement. As of the date of
this Share Purchase Agreement, the only shares issued and outstanding by the
Company which are not "disinterested" are those shares owned by Burgio Family
Holdings Inc. If so approved, the transaction is expected to close on or about
January 3, 2005. A copy of the Share Purchase Agreement is attached to this
Proxy Statement as Exhibit 2.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR APPROVAL OF THE
- --------------------------------------------------------------------------------
SHARE PURCHASE AGREEMENT.
- -------------------------
ADOPTION OF NEW BYLAWS FOR THE COMPANY
- --------------------------------------
(Proposal 5)
Certain provisions of the Company's present Bylaws are vague regarding certain
matters. As a result the Board of Directors of the Company believes that it is
in the best interests of the Company and its stockholders that new Bylaws be
adopted for the Company. A copy of the new, proposed Bylaws is attached to this
Proxy Statement marked as Exhibit 3.
The only differences between the new, proposed Bylaws are the provision relating
to the number of directors of the Company and the filing of vacancies on the
Board of Directors. The relevant provision of the existing Bylaws of the Company
specifies that the number of directors constituting the whole board shall be at
least 1 and not more than 10. The similar provision in the new, proposed Bylaws
specifies that the number of directors of the Company shall be 7.
Additionally, the relevant provision of the existing Bylaws of the Company
specifies that filling of any vacancy on the Board of Directors may be filled by
a vote of a majority of the remaining directors in an office, although less than
26
a quorum, provided there are a minimum of 2 remaining to make such decisions;
otherwise such decisions shall also require shareholder approval. The new,
proposed Bylaws do not require a minimum of 2 directors remaining to make such a
decision. Specifically, in the event there is only 1 director remaining, that
director can make any and all decisions regarding filling vacancies on the
Company's Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR APPROVAL OF THE
- --------------------------------------------------------------------------------
ADOPTION OF NEW BYLAWS OF THE COMPANY.
- --------------------------------------
APPROVAL OF AMENDMENT TO CERTIFICATE OF INCORPORATION OF COMPANY TO CHANGE THE
- --------------------------------------------------------------------------------
COMPANY'S NAME FROM MONACO GROUP INC. TO LORETTA FOOD GROUP INC.
- --------------------=================----=======================
(Proposal 6)
The Company was incorporated in Delaware on July 21, 2003 as Monaco Group Inc.
-----------------
The Company's business is the brokerage, sales, merchandising, and distribution
of grocery and consumer products in Canada and the United States of America to
independent and chain grocery stores, discount stores, drug stores, convenience
stores, and other distributors. The reason for the name change is to distinguish
the Company from its competitors and create a new market for its services. The
Board of Directors believes that the name Loretta Food Group Inc. should focus
-----------------------
awareness on the public regarding the Company's acquisition of new suppliers.
First, by the Company's acquisition of Loretta Foods Limited, LF Acquisition
Corp., and LF Brands Inc., the Company acquired a long-standing and
well-respected leader in the canned foods and spice industry and flour industry.
Second, by the Company's acquisition of certain assets of the sugar division of
Sweet Valley Foods Inc., an Ontario corporation, the Company plans to
manufacture, process, and distribute sugar. Additionally, by the Company's
acquisition of all of the issued and outstanding shares of Bayshore Foods Inc.,
an Ontario corporation, the Company anticipates becoming involved in the snack
food business. Therefore, the name change is consistent with the Company's
effort to establish a national presence for our products and services and the
products and services of our clients.
The Board of Directors has chosen to change the Company's name in deference to
Loretta Foods' 48-year history and to the high industry regard for the Loretta
Foods' most popular brands and products manufactured pursuant to licensing
agreements with certain national organizations.
A copy of the amendment to the Company's Certificate of Amendment of Certificate
of Incorporation changing the Company's name to Loretta Food Group Inc. is
------------------------
attached to this Proxy Statement marked as Exhibit4.
27
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR APPROVAL OF THE
- --------------------------------------------------------------------------------
AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO CHANGE THE NAME OF
- --------------------------------------------------------------------------------
THE COMPANY TO LORETTA FOOD GROUP INC.
- ---------------=======================
APPROVAL OF ELECTION OF GERRY C. QUINN AS A MEMBER OF OUR BOARD OF DIRECTORS.
- -----------------------------------------------------------------------------
(Proposal 7)
We believe that the election of Gerry C. Quinn to the Board of Directors of the
Company will augment and strengthen the management of the Company. Mr. Quinn has
significant experience in managing publicly traded company and has a significant
financial and accounting background. To induce Mr. Quinn to join the Company's
Board of Directors, the Company proposes to issue to Mr. Quinn, in the event he
is elected to that Board of Directors, (i) 125,000 shares of our Common Stock
and (ii) options to purchase 75,000 shares of our Common Stock for a period of 5
years at a purchase price of $1.50 per share. In the event Mr. Quinn resigns as
a director of the Company before the expiration of 6months from the date of his
election, all of those shares and warrants shall be cancelled by the Company.
Additionally, in the event Mr. Quinn resigns as a director of the Company on a
date sooner than 12 months following the date of his election, one-half of those
shares and those warrants shall be cancelled by the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE TO APPROVE THE ISSUANCE
- --------------------------------------------------------------------------------
TO MR. QUINN OF THOSE SHARES AND THOSE OPTIONS.
- -----------------------------------------------
OTHER MATTERS
- -------------
The Board of Directors of the Company knows of no other matters to be brought
before the Annual Meeting. If, however, other matters should come before the
Annual Meeting, it is the intention of each person specified in the Proxy to
vote such Proxy in accordance with his or her judgment on such matters.
QUARTERLY REPORT ON FORM 10-QSB
- -------------------------------
A copy of the Company's Quarterly Report on Form 10-QSB filed with the
Commission August 19, 2004, is available without charge to stockholders and may
be obtained by writing to the Company at 20 A Voyager Court South, Etobicoke,
Ontario, Canada, M9W 5M7.
STOCKHOLDER PROPOSALS
- ---------------------
Any proposals of security holders which are intended to be presented at next
year's annual meeting must be received by the Company at its principal executive
offices on or before April 30, 2005, in order to be considered for inclusion in
the Company's proxy materials relating to that annual meeting.
28
PROXY
-----
MONACO GROUP INC.
-----------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF MONACO GROUP
- --------------------------------------------------------------------------------
INC., A DELAWARE CORPORATION ("COMPANY").
- -----------------------------------------
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE
- --------------------------------------------------------------------------------
UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
- -----------------------------------------------------------------------------===
THE PROPOSALS INDICATED, AND IN ACCORDANCE WITH THE DISCRETION OF THE PROXY
- --------------------------------------------------------------------------------
HOLDER REGARDING ANY OTHER BUSINESS. ALL OTHER PROXIES HERETOFORE GIVEN BY THE
- --------------------------------------------------------------------------------
UNDERSIGNED IN CONNECTION WITH THE ACTIONS PROPOSED HEREIN ARE HEREBY EXPRESSLY
- --------------------------------------------------------------------------------
REVOKED. THIS PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS VOTED BY WRITTEN
- --------------------------------------------------------------------------------
NOTICE TO THE SECRETARY OF THE COMPANY, BY ISSUANCE OF A SUBSEQUENT PROXY OR BY
- --------------------------------------------------------------------------------
VOTING IN PERSON AT THE ANNUAL MEETING.
- ---------------------------------------
INSTRUCTIONS. Except with respect to the election of directors, to vote in favor
- -------------
of a proposal, circle the phrase "FOR approval". To vote against a proposal,
---
circle the phrase "AGAINST approval". To abstain from voting on a proposal,
-------
circle the phrase "ABSTAIN".
-------
The undersigned stockholder of Monaco Group Inc., a Delaware corporation,
("Company"), hereby constitutes and appoints Peter Nelipa, with the power to
appoint his substitute, as attorney and proxy, to appear, attend and vote all of
the shares of common stock of the Company standing in the name of the
undersigned on the record date at the Annual Meeting of Stockholders of the
Company to be held at 11:00 a.m., Eastern Standard Time, on December 17, 2004,
at the Mayfair Conference Room of the Wyndham Bristol Place Hotel located at 950
Dixon Road, Etobicoke, Ontario M9W 5N4, and at any adjournment thereof, upon the
following:
1. To elect seven (7) directors as follows:
FOR all nominees listed below, except WITHHOLD AUTHORITY
--- ------------------
as marked to the contrary below to vote for all nominees
listed below
Additional Instructions: To withhold authority to vote for any individual
- ------------------------
nominee, strike a line through that nominee's name specified below.
Taragh Bracken Joel Sebastian Al Burgio Gerry C. Quinn
William C. Fatica Leo Couprie William Rancic
2. To approve and adopt the Company's 2004 Stock Plan;
FOR approval AGAINST approval ABSTAIN
--- ------- -------
3. To ratify the selection of Amisano Hanson, Chartered Accountants, to audit
the financial statements of the Company for the fiscal year ending December 31,
2004;
FOR approval AGAINST approval ABSTAIN
--- ------- -------
1
4. To approve the Share Purchase Agreement by and among the Company; Burgio
Family Holdings Inc., an Ontario corporation; ALBAR Capital Corp., an Ontario
corporation; and Monaco (Canada) Inc., the Company's wholly owned subsidiary;
FOR approval AGAINST approval ABSTAIN
--- ------- -------
5. To approve the adoption of new Bylaws for the Company;
FOR approval AGAINST approval ABSTAIN
--- ------- -------
6. To amend the Certificate of Incorporation of the Company to change its name
from Monaco Group Inc. to Loretta Food Group Inc.
FOR approval AGAINST approval ABSTAIN
--- ------- -------
7. To approve the issuance to Gerry C. Quinn, a nominee for election to the
Board of Directors of the Company, of 125,000 shares of our Common Stock and
options to purchase 75,000 shares of our Common Stock.
FOR approval AGAINST approval ABSTAIN
--- ------- -------
8. To vote in his or her discretion on such other business as may properly
come before the meeting, or any adjournment thereof.
Please mark, date, sign and return this Proxy promptly in the enclosed envelope.
If shares of the Company's common stock are held by joint tenants, both joint
tenants should sign this Proxy. If signing as attorney, executor, administrator,
trustee, or guardian, please specify your complete title as such. If shares of
the Company's common stock are held by a corporation, please sign in full that
corporation's name and execute this proxy by the President or other authorized
officer of that corporation. If shares of the Company's common stock are held by
a partnership, please execute this proxy in that partnership's name by an
authorized general partner or other authorized representative of that
partnership.
Dated:
---------------- ------------------------------------
(Signature of Shareholder)
------------------------------------
(Printed Name of Shareholder)
Dated:
---------------- ------------------------------------
(Signature of Shareholder)
------------------------------------
(Printed Name of Shareholder)
PLEASE CHECK IF YOU ARE PLANNING TO ATTEND THE MEETING.
- ---
2